BATON ROUGE, LA - United States Attorney Donald J. Cazayoux, Jr., announced today that a Federal Grand Jury has returned an indictment charging GEORGE L. GRACE, SR., age 67, of St. Gabriel, Louisiana, with eleven (11) counts of violating the Racketeer Influenced and Corrupt Organizations Act (RICO), bribery involving a federally-funded entity, making false statements, obstruction of justice, mail fraud, wire fraud, use of an interstate facility in aid of racketeering, and forfeiture. If convicted, GRACE, who is the Mayor of the City of St. Gabriel, Louisiana, faces up to 180 years imprisonment and a $2,750,000 fine.

The indictment alleges that GRACE used his official position as Mayor to obtain and attempt to obtain money and other things of value potentially worth millions of dollars from a Baton Rouge businessman, a Houston businessman, and businesspeople associated with a conceptual product known as the Cifer 5000 in connection with transactions GRACE believed were worth millions of dollars.

The indictment alleges that, among other things:

• GRACE attempted to extort a Houston businessman on three separate occasions,
including attempting to obtain a significant interest in a multi-million dollar project.

• GRACE attempted to corruptly persuade a Baton Rouge businessman, who sold products to the City of St. Gabriel, to conceal from the FBI that GRACE had received cash payments from the Baton Rouge businessman.

• GRACE took bribes to use his position as Mayor to take favorable action in connection with a series of transactions involving real estate in St. Gabriel.

• GRACE took bribes to use his position as Mayor to promote and to obtain money for a conceptual product known as the “Cifer 5000.”

U.S. Attorney Cazayoux stated: “This office will continue to aggressively pursue public corruption wherever it exists, whether in small towns or big cities. Corrupt public officials undermine the integrity of our governments and the ability to conduct fair and honest business. They cannot, and will not, be tolerated.”

FBI Special Agent-in-Charge David Welker stated: “Today’s indictment continues to demonstrate the FBI’s commitment to identify, investigate, and bring to justice those public employees who are bent on enriching themselves at the expenses of the taxpayers. The FBI, along with our law enforcement partners and the U.S. Attorney’s Office, simply will not tire and will not falter in our pursuit of public corruption in the State of Louisiana.”

DHS-OIG Inspector General Richard Skinner stated: “DHS-OIG will continue to be committed to working with our law enforcement partners to identify and aggressively investigate all allegations of public corruption and extortion concerning DHS program funds.”

This ongoing investigation is being conducted by the Federal Bureau of Investigation and the U.S. Attorney’s Office with assistance from the U.S. Department of Homeland Security, Office of Inspector General, and the U.S. Department of Housing and Urban Development, Office of Inspector General. This matter is being prosecuted by Assistant United States Attorney Corey R. Amundson who serves as the Senior Deputy Chief of the Criminal Division.

NOTE: An indictment is a determination by a grand jury that probable cause exists to believe that offenses have been committed by a defendant. The defendant is presumed innocent until and unless proven guilty at trial.

23 September Levonne Stewart Indictment

BATON ROUGE WOMAN ARRESTED FOR FILING FALSE TAX RETURNS

BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr. announced that a Federal Grand Jury returned a sealed indictment on September 15, 2010, charging LEVONNE STEWART, 42, of Baton Rouge, Louisiana, with conspiracy to file false claims for tax refunds, wire fraud, and aggravated identity theft. The indictment was unsealed after Special Agents with the Internal Revenue Service Criminal Investigation arrested STEWART this morning. STEWART faces a maximum sentence of 74 years in prison and a fine of up to $1,500,000.

The indictment alleges that, from January 2007 through April 2007, STEWART conspired with others, including Sheila Cage and Clarissa Ayo, to obtain the names and social security numbers of various individuals and to prepare false and fraudulent federal income tax returns for filing with the IRS. The conspiracy included falsely claiming that taxpayers had been self-employed and had earned income to maximize the refund amount obtained.

Sheila Cage was charged in a bill of information with conspiracy to file false claims for tax refunds, wire fraud, and aggravated identity theft. She pled guilty on June 4, 2009, and admitted to an intended loss of $1,184,882.83. Clarissa Ayo was charged in a bill of information with conspiracy to file false claims for tax refunds, wire fraud, and aggravated identity theft. She pled guilty on June 29, 2010, and admitted to her involvement with tax returns claiming $136,076.67.

James C. Lee, Special Agent in Charge of Internal Revenue Service Criminal Investigation, stated, "IRS Criminal Investigation is determined to stop these false tax refund schemes. False tax claims are theft from the government, and we will continue to aggressively pursue those who file false tax returns to claim refunds for which they are not entitled."

The investigation of STEWART was conducted by the Internal Revenue Service Criminal Investigation, United States Secret Service, and Social Security Administration. The case is being prosecuted by Assistant United States Attorney Rich Bourgeois.

23 September Martinez Sentenced

OPERATION GATORBAIT DRUG DEFENDANT SENTENCED TO 188 MONTHS

BATON ROUGE, LA - United States Attorney Donald J. Cazayoux, Jr. announced today that NICK HENRY MARTINEZ, age 30, Houston, Texas, was sentenced today in federal court by Chief Judge Ralph E. Tyson. MARTINEZ was sentenced to 188 months imprisonment, followed by a term of supervised release of five years, and a $300 special assessment.

MARTINEZ, a Houston resident, supplied cocaine to Willie Jones, who ran one of the largest cocaine distribution organizations prosecuted in the district. MARTINEZ previously pled guilty to conspiring with Willie Jones, Jr., Kenya Smith, Malchai L. Tillman, Dedrick Dionell Turner, Courtney Demon Clayton, Kimberly Shawn Smith, Reginald D. Allen, Dwayne T. Wicker, Troy A. Johnson, Jason Tyrone Patterson, Jose Ricardo Ramirez, Suzanna Marie Voelker, Jose Angel Ramirez, Mario Arteaga, and Roberto Truijillo to distribute five kilograms or more of cocaine and fifty grams or more of crack cocaine. All of the defendants have been convicted.

These charges were a result of “Operation Gator Bait,” an extensive investigation conducted by the Organized Crime and Drug Enforcement Task Force (OCDETF) for the Middle District of Louisiana. The OCDETF is a multi-agency task force formed to investigate and prosecute criminal groups and individuals who organize, direct, finance, or are otherwise engaged in high level drug trafficking and related financial crimes. The OCDETF is comprised of agents from the Baton Rouge Resident Office of Drug Enforcement Administration, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Internal Revenue Service-Criminal Investigation Division, and the U.S. Marshal's Service. Other participating members in this OCDETF investigation included the Louisiana Alcohol, Tobacco Control Board, the Louisiana State Police, the East Baton Rouge Parish Sheriff's Office, the West Baton Rouge Parish Sheriff=s Office, the Ascension Parish Sheriff=s Office, the Baton Rouge Police Department, and the Gonzales Police Department. This OCDETF investigation was coordinated by the United States Attorney's Office, with Deputy Criminal Chief Jennifer Kleinpeter serving as the OCDETF prosecutor.

United States Attorney Cazayoux remarked, “This case is an excellent example of the complicated multi-state drug trafficking investigations that the federal government is uniquely equipped to handle. The Baton Rouge DEA office and local law enforcement officials worked closely with the Houston DEA office to make certain that not only the local cocaine distributors, but also their sources in Houston were identified and prosecuted in order to dismantle the entire drug trafficking organization. ”

This OCDETF operation successfully identified eleven local members of the drug trafficking organization and the five Houston residents who were supplying the cocaine to the Baton Rouge organization. The Houston residents were also prosecuted in this case.

16 September Blackmore Sentenced

BATON ROUGE MAN SENTENCED TO 16 YEARS

BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr. announced that
LAROY A. BLACKMORE, age 28, of Baton Rouge, Louisiana, who was convicted of being a felon in possession of a firearm, was sentenced today by Chief Judge Ralph E. Tyson.

Noting BLACKMORE’S extensive criminal history, including his convictions for burglary and aggravated flight from a police officer, Judge Tyson observed that BLACKMORE possessed the firearm while on parole for taking contraband to and from a penal institution. Finding that BLACKMORE was an armed career criminal, the Court sentenced him to a term of imprisonment of 16 years and five years of supervised release.

While patrolling an apartment complex in Baton Rouge, a Baton Rouge Police Officer encountered BLACKMORE sleeping in a car with the driver’s door open and an odor of marijuana coming from the car. When awakened, BLACKMORE pulled a Smith and Wesson .40 caliber from his pants and fled into a wooded area behind the apartment complex. As police tried to take him into custody, he struck an officer and ran. After his arrest, police found a small amount of marijuana in his pocket. Later, while BLACKMORE was being processed into parish prison, a deputy with the East Baton Rouge Parish Prison found a plastic bag containing ecstasy in his body cavity.

The investigation of BLACKMORE was conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Baton Rouge City Police Department. The case was prosecuted by Assistant U.S. Attorney Catherine M. Maraist.

9 September Davis sentenced to Fourteen Years

CRACK DEALER SENTENCED TO FOURTEEN YEARS

BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr. announced that SANDY DAVIS, age 30, of Baton Rouge, Louisiana, was sentenced today in federal court. DAVIS was sentenced to serve a term of imprisonment of one hundred and sixty-eight months followed by a term of supervised release of five years.

On April 27, May 3, and July 5, 2006, DAVIS sold over fifty (50) grams of crack cocaine. Having sold approximately 6.5 ounces of crack cocaine, DAVIS was indicted by the grand jury and on February 6, 2009, DAVIS pled guilty as charged. Thereafter, while in the West Baton Rouge Parish Prison awaiting sentencing, law enforcement agents found, on two separate occasions, a cellular telephone in the defendant’s possession. Louisiana law makes it a felony for an inmate to possess a cell phone.

At sentencing, the defendant was found not to have provided truthful information to authorities surrounding the extent of his drug trafficking activities. Before imposing his sentence, Chief Judge Ralph E. Tyson observed that DAVIS had an extensive criminal record which included arrests for crimes of violence.

The investigation of DAVIS was conducted by the Drug Enforcement Administration, Louisiana State Police, Baton Rouge Police Department, East Baton Rouge Parish Sheriff’s Office, West Baton Rouge Parish Sheriff’s Office, Ascension Parish Sheriff’s Office, and Gonzales Police Department. The case was prosecuted by Assistant United States Attorney Robert W. Piedrahita.

1 September Smith and Lewis Indictment

MAYOR AND CHIEF OF POLICE OF PORT ALLEN, LOUISIANA, INDICTED

BATON ROUGE, LA - United States Attorney Donald J. Cazayoux, Jr., announced today that a Federal Grand Jury has returned an indictment charging DEREK A. LEWIS, age 49, of Port Allen, Louisiana, and FREDERICK W. SMITH, age 39, of Port Allen, Louisiana, with twenty-two (22) counts of violating the Racketeer Influenced and Corrupt Organizations Act (RICO), mail fraud, wire fraud, use of an interstate facility in aid of racketeering, and forfeiture. If convicted, LEWIS, who is the Mayor of the City of Port Allen, faces up to 190 years imprisonment and a $3,500,000 fine. If convicted, SMITH, who is the Chief of Police for the City of Port Allen, faces up to 130 years imprisonment and a $2,750,000 fine.

The indictment alleges that the defendants obtained cash and other things of value worth approximately $20,000 from businesspeople in exchange for using their official positions with the City of Port Allen for the benefit of the businesspeople in connection with transactions represented to be worth over $5,000,000. The indictment alleges the following areas of bribery:

* LEWIS took bribes to use his position as Mayor to promote and to obtain money for a conceptual product known as the “Cifer 5000.”

* LEWIS and SMITH took bribes in exchange for SMITH using his position as Chief of Police to fraudulently provide confidential law enforcement information to businesspeople.

* SMITH took bribes in exchange for using his position as Chief of Police to write a letter to a Connecticut prosecutor seeking leniency for an individual he believed was facing drug charges.

* SMITH took bribes in exchange for corruptly dismissing traffic tickets.

* SMITH took bribes in exchange for using his position as Chief of Police to provide the businesspeople with official Port Allen Police Department badges.

* SMITH took a bribe in exchange for using his position as Chief of Police to agree to commission one of the businesspeople as an official police officer with the Port Allen Police Department.

U.S. Attorney Cazayoux stated: “Public corruption, particularly within law enforcement agencies, cannot and will not be tolerated. My office, together with the FBI and our other federal, state, and local partners, will continue to aggressively pursue such matters wherever the evidence and facts take us.”

FBI Special Agent-in-Charge David Welker stated: “Today's indictment demonstrates the continued commitment of the FBI and its law enforcement partners to identify and root out public corruption wherever we find it in Louisiana.”

This ongoing investigation is being conducted by the Federal Bureau of Investigation and the U.S. Attorney’s Office with assistance from the U.S. Department of Housing and Urban Development, Office of Inspector General. This matter is being prosecuted by Assistant United States Attorney Corey R. Amundson who serves as the Senior Deputy Chief of the Criminal Division.

NOTE: An indictment is a determination by a grand jury that probable cause exists to believe that offenses have been committed by a defendant. The defendants are presumed innocent until and unless proven guilty at trial.

27 August FEMA Press Release

KATRINA FRAUD

BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr. announced today that August 29, 2010, marks the five year anniversary of Katrina. In an effort to reduce suffering after Katrina, Federal Emergency Management Agency provided relief funds to those in need. However, some persons fraudulently applied for and received these FEMA funds.

In September 2005, the Attorney General created the Hurricane Katrina Fraud Task Force, designed to deter, investigate, and prosecute disaster-related federal crimes such as charity fraud, identity theft, procurement fraud, and insurance fraud. The Hurricane Katrina Fraud Task Force includes members from the FBI, the Federal Trade Commission, the Postal Inspector’s Office, and the Executive Office of the United States Attorneys, among others.

As a result of the work of this task force, the United States Attorney’s Office of the Middle District of Louisiana has convicted over 174 persons in the nine surrounding parishes and has collected over 1.8 million dollars in fraud related monies.

United States Attorney Cazayoux stated: “Our goal is to ensure that the persons who fraudulently obtained these funds after this natural disaster were prosecuted and that their prosecution will serve as a warning to those in the future who would steal funds which are intended for those in great need.”

26 August Kenya Smith Sentencing

DRUG DEFENDANT SENTENCED TO 125 MONTHS

BATON ROUGE, LA - United States Attorney Donald J. Cazayoux, Jr. announced today that KENYA BUNARD SMITH, age 33, of Baton Rouge, Louisiana, was sentenced today in federal court by United States Chief Judge Ralph E. Tyson. SMITH was sentenced to 125 months imprisonment, followed by a term of supervised release of 5 years, and a $500 fine.

SMITH was a significant player in one of the largest cocaine distribution organizations prosecuted in the district. SMITH previously pled guilty on March 11, 2009, to conspiring with Willie Jones, Jr., Malchai L. Tillman, Dedrick Dionell Turner, Courtney Demon Clayton, Kimberly Shawn Smith, Reginald D. Allen, Dwayne T. Wicker, Troy A. Johnson, Jason Tyrone Patterson, Nick Henry Martinez, Jose Ricardo Ramirez, Suzanna Marie Voelker, Jose Angel Ramirez, Mario Arteaga, and Roberto Truijillo to distribute five kilograms or more of cocaine and fifty grams or more of crack cocaine. All of the defendants have been convicted.

Some of SMITH’S co-conspirators have also been sentenced in this matter: Malchai Tillman, 293 months imprisonment; Kimberly Smith, 72 months imprisonment; Reginald Allen, 105 months imprisonment; Troy Johnson, 97 months imprisonment; and Jason Patterson, 120 months imprisonment.

These charges were a result of “Operation Gator Bait,” an extensive investigation conducted by the Organized Crime and Drug Enforcement Task Force (OCDETF) for the Middle District of Louisiana. The OCDETF is a multi-agency task force formed to investigate and prosecute criminal groups and individuals who organize, direct, finance, or are otherwise engaged in high level drug trafficking and related financial crimes. The OCDETF for the Middle District of Louisiana is comprised of agents from the Baton Rouge Resident Office of DEA, FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Internal Revenue Service-Criminal Investigation Division, and the U.S. Marshal's Service. Other participating members in this OCDETF investigation included the Louisiana Alcohol, Tobacco Control Board, the Louisiana State Police, the East Baton Rouge Parish Sheriff's Office, the West Baton Rouge Parish Sheriff=s Office, the Ascension Parish Sheriff=s Office, the Baton Rouge Police Department, and the Gonzales Police Department. This OCDETF investigation was coordinated by the United States Attorney's Office for the Middle District of Louisiana, with Deputy Criminal Chief Jennifer Kleinpeter serving as the OCDETF prosecutor on the case.

United States Attorney Cazayoux remarked, “This case is an excellent example of the complicated multi-state drug trafficking investigations that the federal government is uniquely equipped to handle. The DEA and it’s local task force members and Deputy Criminal Chief Jennifer Kleinpeter did an outstanding job of tracking the cocaine back to the originating city, identifying and prosecuting the defendants providing the cocaine and completely dismantling the drug trafficking operation.”

This OCDETF operation successfully identified eleven local members of the drug trafficking organization and the five Houston residents who were supplying the cocaine to the Baton Rouge organization. The Houston residents were also prosecuted in this case.

Suzanne Voelker was arrested on the Baton Rouge charges, in Houston, at a stash house utilized by the organization. The search executed after her arrest resulted in the seizure of 26.5 kilograms of cocaine valued at more than $500,000, 848 grams of crack cocaine, 1,500 pills of 3,4 methylenedioxymethamphetamine (MDMA or ecstasy), 1,000 hydrocodone pills, and five pounds of marijuana. Agents also recovered thousands of rounds of ammunition and numerous loaded firearms including semi-automatic rifles; FN Herstal, Model Five-Seven, 5.7 x 28 mm pistols; FN Herstal, Model FS2000, 5.56 mm carbines; 22LR caliber pistols; UZI Model A, 9mm rifles; 9mm sub-machine guns including one with a silencer; a Coharie, Model CA89, 9mm assault weapon; a Smith and Wesson, Model 38-2 Ladysmith, .38 special revolver; a green metallic ammunition box containing an aggregate total of 1,303 rounds of ammunition of various calibers; and 3,132 assorted rounds of ammunition of various calibers. A number of the above firearms had been stored in suitcases and appeared to have been prepared to be secreted in vehicles for shipment. Agents also recovered ten .37mm red flares, eleven .37mm smoke signal rounds, one Blackhawk ballistic vest, Balaklava (black tactical mask/hood), one Night Owl Optics night-vision goggles and approximately $85,186 in U.S. currency. The subsequent arrest of three others defendants, Jose Angel Ramirez, Roberto Trujillo, and Mario Arteaga, resulted in the discovery and seizure of more than 800 marijuana plants, more than 1,100 pounds of cultivated marijuana and more than 20 firearms.

26 August Courtney Sentencing

DEFENDANT SENTENCED TO TWO YEARS FOR LYING

BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr., announced today that Cherie Marie Courtney, age 42, a resident of Plaquemine, Louisiana, was sentenced by Chief Judge Ralph E. Tyson of the U.S. District Court to serve two years in federal prison for perjury.

The charges were the result of Courtney’s false testimony at the trial of Shawn Decareaux Kilgarlin in October 2003 on charges of mail fraud and obstruction of justice in connection with Kilgarlin’s fabrication of drug test results regarding two employees of a scaffolding company. As a result of Courtney’s false testimony, Kilgarlin was acquitted of one of the counts of mail fraud; she was, however, found guilty of one count of mail fraud and one count of obstruction of justice.

The case was investigated by the United States Environmental Protection Agency and was prosecuted by Senior Litigation Counsel M. Patricia Jones and Senior Deputy Criminal Chief Corey R. Amundson.

United States Attorney Cazayoux pledged to investigate and vigorously prosecute others who undermine the integrity of the criminal justice system by committing perjury or otherwise obstructing the administration of justice.

18 August Nelson Superseding Indictment

MAYOR OF NEW ROADS INDICTED

BATON ROUGE, LA - The Office of the United States Attorney announced today that, as part of an ongoing investigation known as Operation Blighted Officials, a Federal Grand Jury has returned a superseding indictment charging THOMAS A. NELSON, JR., age 40, of New Roads, Louisiana, with violating the Racketeer Influenced and Corrupt Organizations Act (RICO), wire fraud, using an interstate facility in aid of racketeering, making false statements to the FBI, and forfeiture. If convicted, NELSON, who is the Mayor of the City of New Roads, Louisiana, faces up to 65 years imprisonment and a $1,750,000 fine.

The superseding indictment alleges that NELSON obtained thousands of dollars in cash and other things of value, such as tickets to sporting events, luxury hotel rooms, and meals from businesspeople in exchange for using his position as Mayor for the benefit of the businesspeople in connection with transactions NELSON believed were worth millions of dollars. The superseding indictment further alleges that NELSON deprived the citizens of New Roads of his honest services as Mayor and lied to the Federal Bureau of Investigation.

12 August Waters Indictment

FORMER ROSEDALE RESIDENT INDICTED FOR EMBEZZLING OVER $490,000

BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr. announced that a federal grand jury returned an indictment today charging THERESA G. WATERS, age 45, formerly of Rosedale, Louisiana, and currently a resident of Murfreesboro, Tennessee, with embezzlement from an employee benefit plan, in violation of 18 U.S.C. § 644.

The Indictment alleges that WATERS began working for the South Central Laborers Training and Apprenticeship Fund (the “SCLTAF”), in Livonia, Louisiana, in September of 2003. The SCLTAF was an employee welfare benefit fund for the benefit of various union contractors throughout Louisiana, Texas, Arkansas, Mississippi, and Oklahoma. The Indictment alleges that beginning in or about December of 2004 and continuing until in or about October of 2008, WATERS devised a scheme to embezzle from the SCLTAF by, among other things, making personal purchases and charges using her SCLTAF-issued credit card and then using SCLTAF funds to pay for the purchases. The Indictment also alleges that WATERS concealed her scheme by altering the SCLTAF’s credit card statements as they were received and maintaining a set of fraudulently-altered statements that omitted any reference to her purchases. The Indictment alleges that WATERS embezzled approximately $490,700 through her scheme.

If convicted, WATERS could receive a maximum sentence of ten years imprisonment and a fine of up to $250,000 or twice the gross gain derived from the offense. The court may also order restitution.

Roger Hilburn, Dallas Regional Director of the Department of Labor’s Employee Benefits Security Administration, said, “I hope this sends a clear message to all who sponsor or transact business with employee benefit plans that the federal government will aggressively pursue those who commit crimes against employees and retirees of private-sector pension and health plans."

The case was investigated by the United States Department of Labor’s Employee Benefits Security Administration and the Pointe Coupee Parish Sheriff’s Office, with valuable assistance from the West Baton Rouge Parish Sheriff’s Office and the United States Department of Labor’s Office of Inspector General. The case is being prosecuted by Assistant United States Attorneys Alan Stevens and René Salomon.

NOTE: An indictment is a determination by a grand jury that there is probable cause to believe that an offense has been committed by the defendant. The defendant, of course, are presumed innocent until and unless they are proven guilty at trial.

23 July Johnson J Guilty Plea

OPERATION BLIGHTED OFFICIALS

FORMER PORT ALLEN CITY COUNCIL MEMBER CONVICTED OF RACKETEERING

BATON ROUGE, LA - United States Attorney Donald J. Cazayoux, Jr., announced today that, in connection with the ongoing corruption investigation dubbed “Operation Blighted Officials,” JOHNNY L. JOHNSON, SR., age 62, of Port Allen, Louisiana, appeared before Chief U.S. District Court Judge Ralph E. Tyson and pled guilty to a Bill of Information charging him with using an interstate facility in aid of racketeering, in violation of Title 18, United States Code, Section 1952, and forfeiture. JOHNSON faces a maximum sentence of five years imprisonment and a $250,000 fine.

In connection with his guilty plea, JOHNSON admitted that, while he was a member of the Port Allen City Council, he and another public official provided false official letters of support to two businesspeople in exchange for tickets to a suite at the Bayou Classic football game. JOHNSON received six of the tickets worth approximately $2,500.

22 July Pinto Sentenced

HONDURAN MAN CONVICTED OF ASSUALTING FEDERAL OFFICERS SENTENCED TO 96 MONTHS

BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr. announced today that Oscar Pinto, 33, of Honduras, was sentenced by U.S. District Court Ralph E. Tyson to serve ninety-six (96) months in prison and three years supervised release.

PINTO had been found guilty after a bench trial on August 24, 2009, of two counts of assaulting United States Customs and Border Protection Agents Richard Treglia and Chad Hickman. In his attempt to evade arrest, PINTO engaged officers in a high-speed chase and later fought with officers and attempted to grab one of the agent’s firearms. PINTO, who was in the United States illegally, had been a fugitive since 2006. United States Attorney Cazayoux remarked, “Border Patrol Agents put their lives on the line, and we are proud to have them protecting our community. The defendant’s sentence, which is the statutory maximum, is an appropriate sentence for someone who endangered the lives of law enforcement officers.”

The case was investigated by Special Agent Tom Goeke of the Federal Bureau of Investigation and prosecuted by Assistant United States Attorney Susan C. Amundson.

22 July Troy Frazier Sentenced

BATON ROUGE MAN SENTENCED TO 120 MONTHS

BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr. announced today that TROY FRAZIER, 31, of Baton Rouge, Louisiana, was sentenced by U.S. District Court Judge James J. Brady to serve one hundred twenty months in prison and five years supervised release.

FRAZIER pled guilty on June 10, 2009, to an indictment charging him with distribution of fifty grams or more of crack cocaine.

The case was investigated by the Drug Enforcement Administration and prosecuted by Assistant United States Attorney Jennifer M. Kleinpeter.

16 July MEDICARE FRAUD STRIKE FORCE CHARGES 94

MEDICARE FRAUD STRIKE FORCE CHARGES 94 DOCTORS, HEALTH CARE COMPANY OWNERS, EXECUTIVES AND OTHERS FOR MORE THAN $251 MILLION IN ALLEGED FALSE BILLING

Early Morning Takedown Leads to Arrests, Charges and Execution of Search Warrants in
Miami, Baton Rouge, Brooklyn, Detroit and Houston

BATON ROUGE, LA – Ninety-four people have been charged for their alleged participation in schemes to collectively submit more than $251 million in false claims to the Medicare program in the continuing operation of the Medicare Fraud Strike Force in Miami; Baton Rouge, La.; Brooklyn, N.Y.; Detroit and Houston, announced Attorney General Eric Holder, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius, FBI Director Robert Mueller and Daniel R. Levinson, Inspector General of HHS. The operation announced today is the largest federal health care fraud takedown since Medicare Fraud Strike Force operations began in 2007.

The joint DOJ-HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing. More than 360 law enforcement agents from the FBI, HHS-Office of Inspector General (HHS-OIG), multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies participated in today’s operation.

“Our continued Strike Force operations reflect the unprecedented commitment that inspired the creation of the Health Care Fraud Prevention and Enforcement Action Team in May 2009,” said Attorney General Holder. “With today’s arrests, we’re putting would-be criminals on notice: Health care fraud is no longer a safe bet. The federal government is working aggressively – and collaboratively – to pursue health care criminals around the country and to bring these offenders to justice.”

“Today’s arrests send a strong message that attempts to defraud Medicare will not be tolerated,” said Secretary Sebelius. “With the help of new tools in the Affordable Care Act, including stiffer penalties and better information sharing, we will continue to work with our federal, state and local partners to stamp out Medicare fraud and protect beneficiaries and the American taxpayer.”

Charges were unsealed today against 94 individuals who are accused of various Medicare fraud-related offenses, including conspiracy to defraud the Medicare program, criminal false claims, violations of the anti-kickback statutes and money laundering. The charges are based on a variety of fraud schemes, including physical therapy and occupational therapy schemes, home health care schemes, HIV infusion fraud schemes and durable medical equipment (DME) schemes. Thirty-six defendants charged in these schemes have been arrested in Miami, New York, Baton Rouge and Detroit and additional arrests are expected throughout the day.

According to the court documents, the defendants charged today participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes, never provided. In many cases, indictments and complaints allege that beneficiaries accepted cash kickbacks in return for allowing providers to submit forms saying they had received the treatments that, in reality, were unnecessary or never provided. Collectively, the doctors, health care company owners, executives and others charged in the indictments and complaints are accused of conspiring to submit more than $251 million in false claims to the Medicare program.

In Miami, 24 defendants were charged for allegedly participating in various fraud schemes that led to approximately $103 million in false billings. According to court documents, the fraud schemes involved fraudulent billing for HIV infusion services, home health care and physical therapy services, DME and pharmaceutical medications. The defendants include owners and operators of companies, doctors, nurses, and patient recruiters, as well as a medical biller who is alleged to have billed approximately $49 million for fraudulent services.

Thirty-one defendants were charged in Baton Rouge for various schemes allegedly involving fraudulent claims for DME totaling approximately $32 million. The defendants include the owners and operators of nine different purported medical services companies and four doctors, 14 patient recruiters and other individuals who allegedly worked at the medical services companies.

U.S. Attorney Cazayoux stated: “During these times of skyrocketing health care costs, it is imperative that we aggressively investigate and prosecute perpetrators of health care fraud. They line their pockets at the expense of the American taxpayer. This drives up the costs of health care for everybody, and it hurts the long term solvency of Medicare.”

FBI Special Agent in Charge David W. Welker, New Orleans Division, stated: “We will continue to work together with our law enforcement partners to combat those who corrupt our health care system and seek to line their pockets with taxpayer dollars. The citizens deserve a quality health care system free of corruption and fraud. The announcement today of these indictments and arrests reaffirms the commitment of the FBI to aggressively investigate those who perpetrate health care fraud.”

“As today’s strike force actions demonstrate, the HEAT initiative is reaping important results in combating health care fraud,” said Mike Fields, HHS-OIG Special Agent in Charge of the Dallas Region. “Strike Force agents from HHS-OIG and the FBI, along with investigators from the Louisiana Attorney General’s office and Federal prosecutors, have formed a powerful team that responds quickly and forcefully when we see this type of scheme taking place.”

Louisiana Attorney General Buddy Caldwell stated: “Teamwork between federal, state and local agencies is essential in the fight against health care fraud – a crime that costs us all. I want to assure you that the Attorney General’s Medicaid Fraud Control Unit will continue to work with our law enforcement partners to bring to justice those that falsely believe they can steal taxpayer dollars from our Medicaid and Medicare programs.”

Twenty-two defendants were charged in Brooklyn for their alleged participation in schemes to submit fraudulent claims totaling approximately $78 million. These fraud schemes involved false billing for physical and occupational therapy and DME. The defendants include the owners and operators, patient recruiters and employees at three different purported medical clinics and a medical equipment company, as well as three doctors. According to court documents, six of the defendants charged are serial Medicare beneficiaries, who purported to seek medical treatment from numerous providers, causing the submission of multiple claims to Medicare for purported medical treatments.

In Detroit, 11 defendants were charged for their alleged roles in schemes to submit fraudulent claims to Medicare for home health services, nerve conduction tests and injection and infusion therapy sessions. The schemes involved a total alleged fraud of approximately $35 million and five different purported medical services companies.

Four defendants were also charged in Houston for their alleged roles in a $3 million scheme to submit fraudulent claims for DME.

In addition to making arrests around the country, law enforcement agents are executing search warrants in connection with ongoing health care fraud investigations.

“Today’s charges allege attempts by individuals to defraud the Medicare program of $251 million,” said FBI Director Robert S. Mueller, III. “Countless Americans rely on Medicare for their well-being, and the FBI, working in conjunction with our federal agency partners, is resolute in its commitment to stop those who would illegally manipulate the system.”

“Today’s arrests illustrate how health care fraud schemes can replicate virally and migrate rapidly across communities,” said Daniel R. Levinson, Inspector General of HHS. “To combat this fraud, the government’s response must also be swift, agile, and organized – a HEAT initiative goal which is well illustrated by today’s Strike Force actions.”

The Strike Force operations in Miami, Baton Rouge, Brooklyn, Detroit and Houston are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. The HEAT task force, co-chaired by Acting Deputy Attorney General Gary G. Grindler and Deputy Secretary Bill Corr, is made up of top-level law enforcement agents, prosecutors and staff from both departments and their operating divisions. In the May 2009 announcement, Attorney General Holder and Secretary Sebelius announced the expansion of the Strike Force into Detroit and Houston to build upon existing partnerships between the agencies in a heightened effort to reduce fraud and recover taxpayer dollars. In December 2009, Strike Force operations were expanded to Brooklyn, Baton Rouge and Tampa.

Since its inception in March 2007 with Phase One in South Florida and continuing through its most recent expansion into Tampa, Fla., the Strike Force has obtained indictments of more than 810 individuals and organizations that collectively have billed the Medicare program for more than $1.85 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

The cases announced today are being prosecuted and investigated by Strike Force teams comprised of attorneys from the Fraud Section in the Justice Department’s Criminal Division and from the U.S. Attorneys’ Offices for the Southern District of Florida, the Eastern District of New York, the Middle District of Louisiana, the Eastern District of Michigan and the Southern District of Texas; and agents from the FBI and HHS-OIG.

The Railroad Retirement Board Office of Inspector General and the Office of Personnel Management-Office of Inspector General also participated in today’s operation.

An indictment is merely an allegation, and defendants are presumed innocent until and unless proven guilty.

To learn more about the HEAT team, go to: www.stopmedicarefraud.gov

7 July THOMAS NELSON INDICTED

MAYOR OF NEW ROADS, LOUISIANA, INDICTED

BATON ROUGE, LA – In an ongoing investigation designated “Operation Blighted Officials,” the Office of the United States Attorney announced today that a federal grand jury has returned an indictment charging THOMAS A. NELSON, JR., age 40, of New Roads, Louisiana, with violating the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962, and forfeiture. If convicted, NELSON, who is the Mayor of the City of New Roads, Louisiana, faces up to 20 years imprisonment and a $250,000 fine.

The indictment alleges that NELSON obtained over $22,000 in cash and other things of value, such as tickets to sporting events, luxury hotel rooms, and meals from businesspeople in exchange for using his position as Mayor for the benefit of the businesspeople in connection with transactions NELSON believed were worth over $6,000,000. Specifically, the indictment alleges that, in exchange for the cash and other things of value, NELSON (1) used the City’s robocall system to promote support among residents for the City contracting for the businesspeople’s conceptual product, the Cifer 5000; (2) proposed a City ordinance favorable to the Cifer 5000 and caused notices of such to be printed in the local newspaper; (3) facilitated the passage of a resolution in support of the Cifer 5000 by the state legislature; (4) signed and submitted an official letter of support which he believed would be used to cause $2,000,000 to $3,000,000 in private funding for the Cifer 5000; (5) signed and submitted an official letter of support directed to the U.S. Environmental Protection Agency in connection with a $4,000,000 grant request for the Cifer 5000; and (6) guaranteed that the Cifer 5000 would receive a contract with the City.

FBI Special Agent-in-Charge David W. Welker said, “This is another demonstration of the FBI’s commitment to aggressively pursue public corruption at any level, along with our federal, state and local law enforcement partners and the U.S. Attorney’s Office. We will not tolerate self-dealing among those who are entrusted with providing services or support to our citizens.”

Assistant United States Attorney Stan Lemelle stated, “Public corruption remains a top priority of the District and it’s important that all of our citizens know that no one is above the law.”

7 July MAURICE BROWN AND MARIO BROWN INDICTED

MAYOR AND CHIEF OF POLICE OF WHITE CASTLE, LOUISIANA, INDICTED

BATON ROUGE, LA– In an ongoing investigation designated “Operation Blighted Officials,” United States Attorney Donald J. Cazayoux, Jr., announced today that a federal grand jury has returned an indictment charging MAURICE A. BROWN, age 45, of White Castle, Louisiana, and MARIO D. BROWN, age 40, also of White Castle, Louisiana, with twenty (20) counts of violating the Racketeer Influenced and Corrupt Organizations Act (RICO), mail fraud, wire fraud, use of an interstate facility in aid of racketeering, and forfeiture. If convicted, MAURICE BROWN, who is the Mayor of the Town of White Castle, faces up to 170 years imprisonment and a $3,250,000 fine. If convicted, MARIO BROWN, who is the Chief of Police for the Town of White Castle, faces up to 145 years imprisonment and a $3,000,000 fine.

The indictment alleges that the defendants obtained cash and other things of value worth over $10,000 from businesspeople in exchange for using their official positions with the Town of White Castle for the benefit of the businesspeople in connection with transactions represented to be worth over $5,000,000. According to the indictment, such conduct occurred in connection with three different bribery schemes involving the defendants and the businesspeople.

The indictment alleges that one of the bribery schemes involved MAURICE BROWN obtaining cash and other things of value from businesspeople in exchange for using his position as Mayor to promote and to obtain money for the businesspeople’s conceptual product known as the “Cifer 5000.” The Cifer 5000 was marketed as an automated waste container cleaning system using specially designed and equipped trucks to clean and sanitize commercial and residential waste containers.

The indictment alleges that a second bribery scheme involved the defendants obtaining cash and other things of value from businesspeople in exchange for MARIO BROWN using false representations to obtain confidential law enforcement information from the FBI and providing such information to one of the businesspeople. The indictment alleges that a third bribery scheme involved MARIO BROWN obtaining cash from one of the businesspeople in exchange for using his position as Chief of Police to fraudulently obtain leniency for an individual facing drug charges in Connecticut.

United States Attorney Cazayoux stated, “It is always a sad day when a public official betrays the trust of the citizens he has sworn to represent and protect. I am thankful for the diligence and sophisticated work of the FBI in this case, and am hopeful that all of our citizens will realize that all of us must abide by the law.” Cazayoux encouraged the public to be vigilant and report crimes of public corruption to the FBI.

This ongoing investigation is being conducted by the Federal Bureau of Investigation and the U.S. Attorney’s Office with assistance from the U.S. Department of Housing and Urban Development’s Office of Inspector General. This matter is being prosecuted by Assistant United States Attorney Corey R. Amundson who serves as a Deputy Chief in the Criminal Division.

The United States Attorney's Office

Middle District of Louisiana

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2010 Press Releases

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