Prison Time in BP Fund and Disaster Fraud
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Henry Gutierrez, Postal Inspector in Charge, U.S. Postal Inspection Service, Miami Field Office, and David Wickersham, Special Agent in Charge, U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, Dallas Region, announced that Joseph Harvey and Anja Karin Kannell, most recently of Lighthouse Point, Florida, were sentenced today in Miami federal court for their involvement in a series of disaster-related fraud schemes, including the largest financial loss case to date arising from claims filed in connection with the April 2010 Deepwater Horizon pollution incident in the Gulf of Mexico.
Harvey was previously convicted after trial on 40 of the 41 charges against him. Kannell was convicted on 34 of the 38 charges against her. They were charged with multiple counts of mail fraud, wire fraud, access device fraud, and aggravated identity theft, all in connection with fraudulent claims filed by the two defendants for purported lost income and harm resulting from the BP oil spill, hurricanes, and other natural disasters dating back to 2008, in violation of Title 18, United States Code, Sections 1341, 1343, 1029(a)(2) and (b)(1), 1028A(a)(1) and (c)(5), and 2.
At today’s sentencing, Senior U.S. District Judge James Lawrence King sentenced Harvey and Kannell each to a total term of imprisonment of 159 months, followed by terms of supervised release of 5 years and 2 years, respectively. Their sentences include a 24-month mandatory consecutive term for engaging in aggravated identity theft in the course of their criminal conduct. In addition, the Court ordered restitution of more than $440,000 to victims of their offenses and ordered forfeiture of $441,000 to the United States. Both defendants have been detained as flight risks since being arrested by U.S. Postal Inspectors in October 2011.
In June 2010, BP established the Gulf Coast Claims Facility (GCCF) to administer, mediate, and settle certain claims of individuals and businesses for costs, damages, and other losses incurred as a result of oil discharges due to the April 20, 2010 explosion and fire on the Deepwater Horizon oil rig in the Gulf of Mexico. In August 2010, the GCCF began receiving and processing such claims for costs, damages, and other losses incurred as a result of the Deepwater Horizon incident, paying the claims from the $20 billion Trust Fund established for that purpose.
The jury convicted Harvey and Kannell for filing fraudulent claims against the BP Oil Spill Trust Fund, using thirty-four assumed identities from August 2010 through January 2011. According to evidence presented during the trial, the defendants used the actual names and social security numbers of individuals residing in Florida, but submitted addresses located in Louisiana, Mississippi, Alabama, and the Florida Panhandle. Payments were issued to the defendants through accounts established under fictitious names in San Antonio, Texas. The scheme was carried out through mailings and by use of the internet.
In total, Harvey and Kannell filed claims seeking more than $1 million, and succeeded in causing approximately $380,000 to be paid into the Texas accounts. The defendants then withdrew the funds using an ATM card issued in a fictitious account holder’s name at machines throughout South Florida, and by sending wire transfers in large amounts to rent luxury homes, and purchase high-end vehicles and boats.
The defendants were also convicted of using unauthorized access devices consisting of unique GCCF Claim numbers assigned to their fictitious claims, and of possessing and using without lawful authority the social security numbers of three identity theft victims in December 2010.
In another part of their scheme, the defendants were convicted of mail and wire fraud involving the disaster relief efforts in Louisiana in the aftermath of Hurricanes Gustav and Ike in 2008. The evidence established that at least 47 fraudulent claims, using the personal information of identity theft victims, against the Louisiana Workforce Commission, which was administering the Disaster Unemployment Assistance program, on behalf of the U.S. Department of Labor and the Federal Emergency Management Agency (FEMA). Harvey and Kannell also were convicted of filing multiple fraudulent claims against FEMA, asserting that they suffered losses and injuries, and were qualified for disaster assistance as a result of severe storms, tornadoes, and flooding in Mississippi in April and May 2011.
Lastly, Harvey and Kannell filed 76 fraudulent claims for benefits against the employment security agencies of North Dakota and New York State, which administered Disaster Unemployment Assistance programs funded by FEMA to offset the impact of the Valentine’s Day 2011 storm that caused severe flooding in Minot and Bismark, North Dakota, and the impact of Tropical Storm Irene on certain upstate counties in New York State in August 2011.
Although not directly charged in the case, the government presented evidence of the filing by the defendants of fraudulent federal income tax returns in 2010 and 2011, utilizing many of the same stolen identities, resulting in illicit refunds to them of over $284,000 from the Internal Revenue Service. The Court considered this conduct in formulating the sentence in the case.
Mr. Ferrer commended the investigative efforts of the U.S. Postal Inspection Service and the Department of Labor, Office of Inspector General. Mr. Ferrer also thanked the Department of Justice, the New York State Department of Labor, Office of Special Investigations, Job Service North Dakota, the Louisiana Workforce Commission, DHS Federal Emergency Management Agency, and DHS Office of Inspector General. The case was being prosecuted by Assistant U.S. Attorneys Thomas Watts-FitzGerald and Timothy Abraham.
Members of the public can report fraud, waste, abuse, or allegations of mismanagement involving disaster relief operations, including the 2010 Deepwater Horizon oil spill, through the National Center for Disaster Fraud (NCDF) Disaster Fraud Hotline at 877-NCDF-GCF (623-3423), the Disaster Fraud Fax at 225-334-4707, or the Disaster Fraud e-mail at firstname.lastname@example.org.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.