2012 Press Releases
July - September
26 September Wilkerson Sentencing
21 September Stewarts Sentencing
20 September Bouvay Indictment
12 September Cleopatra Shipping Agency Guilty Plea
7 September Oduu Sentencing
6 September Boyette Guilt Plea
27 August Grace Sentencing
21 August Parkman Thompson Conviction
16 August Beavers Guilty Plea
25 July Schlatre et all BOI
20 July Young Sentenced
16 July Chambers Guilty Plea
2 July Chambers Guilty Plea
26 September Wilkerson Sentencing
OWNER OF BATON ROUGE TAX PREPARATION SERVICE SENTENCED AFTER 2 WEEK TRIAL
BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr. announced today that Chief Judge Brian A. Jackson sentenced RONALD WAYNE WILKERSON, 42, of Baton Rouge, Louisiana.
WILKERSON was convicted by a jury on June 1, 2012 of endeavoring to impede the Internal Revenue Service, assisting the preparation of false tax returns, bank fraud, engaging in monetary transactions with criminally derived funds, and money laundering. WILKERSON was sentenced to a term of imprisonment of 92 months in the custody of the Bureau of Prison, a term of 2 years supervised release, and forfeiture of (1) $470,000 already seized as proceeds of the bank fraud and money laundering transactions, (2) the defendant’s interest in the business premises located at 3319 Plank Road which was involved in the criminal activity, and (3) a money judgment in the amount of $485,939.01 which represents the profits WILKERSON received as a result of his convictions for bank fraud and money laundering. Judge Jackson also ordered that WILKERSON pay restitution of $500,959 to HSBC Bank.
During sentencing, Judge Jackson noted that WILKERSON’S fraud on the Internal Revenue Service and HSBC Bank was sweeping and perpetrated on hundreds of poor, un-sophisticated local citizens, which resulted in the taxpayers owing monies to the IRS and HSBC Bank and impaired their credit reports.
The convictions and sentence are a result of WILKERSON causing the preparation of 635 false tax returns, claiming approximately $1,415,388 in false telephone excise tax refunds, to be submitted to the IRS. Based upon the false claims for telephone excise tax refunds, WILKERSON caused the IRS to issue refunds of $119,450. Upon identifying the fraud through proactive data analysis, the IRS refused to refund the remaining false claims of $1,295,938. As a result of the scheme, WILKERSON collected tax preparation fees of approximately $485,939, which funds he attempted to remove from a business bank account on the date that a search of the business premises was conducted for evidence of the scheme.
WILKERSON also submitted many of the 635 false tax returns to HSBC Bank for the purpose of obtaining refund anticipation loans for taxpayers. The bank approved approximately 250 loans and ultimately lost approximately $500,959 as a result of the false tax returns which were supposed to serve as collateral for the refund anticipation loans.
“Return Preparer fraud is a priority for IRS Criminal Investigation and we have committed many resources to investigating and prosecuting cases just like these,” said Jim Lee, Special Agent-in-Charge, IRS-CI, New Orleans Field Office. “Taxpayers should be very selective in choosing a return preparer and have confidence knowing that person will prepare accurate tax returns which will not make fraudulent claims for refunds for which they are not entitled. Return preparer fraud is like a contagious disease, it affects the preparer, the individuals who have filed false information with the Internal Revenue Service, and the banking institutions that provide refund products to the clients,” said Lee. “It is our hope that today’s sentence will send a strong message that tampering with the integrity of our nation’s tax system can result in significant jail time and the forfeiture of both the profits of crime as well as the property which facilitates the commission of the crimes.”
U.S. Attorney Donald J. Cazayoux, Jr., stated, “We will continue to aggressively investigate and prosecute individuals who defraud the IRS and financial institutions. Diverting taxpayer monies to the benefit of corrupt tax preparers will not be tolerated. This investigation is another great example of federal agencies cooperating to combat such illegal activity in our community.”
The investigation of WILKERSON was conducted by the Internal Revenue Service Criminal Investigations. The case was prosecuted by Assistant United States Attorneys Rene Salomon, Jay Thompson, and Leetra Harris.
21 September Stewarts Sentencing
BATON ROUGE COUPLE SENTENCED
TO PRISON FOR HEALTH CARE FRAUD
BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr. announced that HELEN FAYE STEWART, age 43, and HENRY RAY STEWART, age 47, both of Plaquemine, Louisiana, were sentenced yesterday by U.S. District Court Judge James J. Brady as a result of a health care fraud scheme perpetrated in the Baton Rouge area. HELEN STEWART was sentenced to thirty-six (36) months in federal prison and HENRY STEWART was sentenced to forty-six (46) months in federal prison.
Both defendants were also ordered by Judge Brady to pay $1,006,003.83 in restitution and a $100 special assessment. Following their release from imprisonment, both defendants will be required to serve a 2-year term of supervised release.
United States Attorney Donald J. Cazayoux, Jr. stated, “We will continue to prosecute vigorously those who commit Medicare fraud to help protect the integrity of this very important program for disabled Americans and seniors.”
The investigation of this matter was conducted by the U.S. Department of Health and Human Services’ Office of Inspector General, the Federal Bureau of Investigation, and the Louisiana Attorney General’s Office. “These sentencings tell taxpayers the Baton Rouge Medicare Strike Force successfully continues to bring those who defraud health care programs to justice,” said William W. Root, Assistant Special Agent in Charge U.S. Department of Health and Human Services. “The Office of Inspector General appreciates the commitment from the Department of Justice and United States Attorney Donald Cazayoux,” said Root. The case was prosecuted by Assistant United States Attorney Shubhra Shivpuri.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Middle District of Louisiana and the Criminal Division’s Fraud Section.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
20 September Bouvay Indictment
FEDERAL GRAND JURY INDICTS BATON ROUGE MAN
IN CONNECTION TO LSU BOMB THREAT
BATON ROUGE, LA - United States Attorney Donald J. Cazayoux, Jr., announced that the federal grand jury returned an indictment against WILLIAM BOUVAY, JR., age 42, of Baton Rouge, Louisiana, in connection with the bomb threat that on Monday caused the evacuation of LSU’s campus. BOUVAY was charged with one count of willfully conveying false information concerning the attempt to destroy property by means of explosives in violation of Title 18, United States Code Section 844(e). If convicted, BOUVAY faces up to TEN (10) years in prison, three (3) years of supervised release following imprisonment, and a fine of up to $250,000.
U.S. Attorney Cazayoux stated, “This investigation is an example of the strong, collaborative efforts of university, local, state, and federal law enforcement. These investigative agencies moved expeditiously and decisively to identify and prosecute the individual responsible for the recent bomb threat against LSU. We appreciate the dedicated efforts of all agencies involved in quickly resolving this investigation. We will continue to work closely with District Attorney Hillar Moore to achieve the best result possible in this case which wreaked havoc and disrupted the lives of the people of LSU and the entire City of Baton Rouge.”
According to FBI Special Agent-in-Charge Michael J. Anderson, “This investigation should send a clear message to the public, and to those who make such terroristic threats to elicit fear, that the FBI and its law enforcement partners will quickly and fully deploy all available resources to bring such individuals to justice.”
District Attorney Hillar Moore stated, “I again commend the strong efforts of our university, local, state, and federal law enforcement partners in quickly solving this crime. We will continue to work with the U.S. Attorney’s Office in our joint investigation and prosecution.”
“This investigation is an example of the success of law enforcement partnerships at the local, state, and federal level within Louisiana,” said Colonel Mike Edmonson, State Police Superintendent. “The swift culmination of this arrest is indicative of the overwhelming response and resources available to public safety agencies when we work together. I applaud the LSU Administration and the LSU Police Department for their leadership in this investigation.”
“I believe this incident was a prime example of all levels of the law enforcement community working together toward a common goal,” Sheriff Sid Gautreaux said. “That goal was the safety of the students, staff, and visitors on the LSU campus. I was impressed with the way all agencies on the local, state, and federal level worked together not only for the safety of those on campus, but also in the apprehension of the person responsible. I am pleased that the Sheriff’s Office could assist, and we will certainly be there to help anytime we are needed.”
Chief Lawrence Rabalais, LSU Police Department, stated, “The cooperation of the various agencies in this incident is a clear message that this type of action will not be tolerated in our community. The investigation and subsequent arrest, within 48 hours of the incident, are a strong indication of that message.”
The investigation is being conducted by the LSU Police, East Baton Rouge Parish District Attorney’s Office, FBI, ATF&E, U.S. Marshal’s Service, Louisiana State Police, the East Baton Rouge Sheriff’s Office, and Baton Rouge City Police. The case is being prosecuted by Assistant United States Attorney Frederick A. Menner, Jr.
12 September Cleopatra Shipping Agency Guilty Plea
VESSEL COMPANY ADMITS POLLUTION
BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr., announced that, yesterday, CLEOPATRA SHIPPING AGENCY, LTD., a Greek vessel management company, pled guilty to violating the Act to Prevent Pollution from Ships and was sentenced to pay a $300,000 fine and serve a three-year term of probation requiring implementation of an environmental compliance program. U.S. District Judge James J. Brady ordered that $150,000 of the fine be awarded to the CLEOPATRA employee who reported the violation to the United States Coast Guard.
In pleading guilty, CLEOPATRA agreed to the following facts. CLEOPATRA managed and operated the M/V Stellar Wind, an ocean-going bulk carrier. From on or about August 13, 2011, through on or about August 26, 2011, during the vessel’s voyage from Spain to the United States, the Chief Engineer of the vessel caused discharges of bilge water and other oily waste directly into the ocean without using an oily water separator as required by federal and international law. The Chief Engineer, who was required to record all discharges in an Oil Record Book (ORB), did not record the illegal discharges in the ORB. In addition, he made three false entries in the ORB indicating that the oily water separator was used to discharge when in fact it was not. The falsified ORB was later presented to the United States Coast Guard during an inspection of the vessel, while the vessel was moored in the Mississippi River in Ascension Parish. During the inspection, a low-level engine department crew member reported the discharges and the record falsification to a Coast Guard officer.
“This plea and sentence are another great example of the Coast Guard’s unwavering commitment to protecting the marine environment. Coast Guard personnel in Baton Rouge, and around the country, are trained to uncover these violations, and we will continue to work with our partners at the Department of Justice to hold these companies who break the law and endanger the marine environment accountable for their actions. I applaud the tireless efforts of the Department of Justice and our own investigative and legal staffs for their work on this case,” said Rear Admiral Roy A. Nash, Eighth Coast Guard District Commander.
“The oceans must be protected from shipping companies that look to cut corners by dumping waste improperly, said Ivan Vikin, Special Agent-in-Charge of EPA’s criminal enforcement program in Louisiana. “The defendant in this case knowingly discharged oily waste from their vessel into the open water and tried to cover it up. Today’s sentence demonstrates that the U.S. government will not tolerate the flagrant violation of its laws.”
The investigation of CLEOPATRA was conducted by the United States Coast Guard and the United States Environmental Protection Agency. The case was prosecuted by Senior Litigation Counsel M. Patricia Jones.
PREPAID DEBIT CARD SCHEME LEADS
TO 51 MONTHS IN FEDERAL PRISON
BATON ROUGE, LA - United States Attorney Donald J. Cazayoux, Jr. announced today that NDEM ODUU, age 38, of Doraville, Georgia, was sentenced to a term of imprisonment of 51 months by U.S. District Judge Frank J. Polozola. He was ordered to pay a $3,500 fine and $18,314.44 in restitution. The United States also seized over $27,000. ODUU pled guilty to access device fraud related to prepaid debit cards loaded with fraudulently claimed tax refunds.
“The Court sent a clear message that those who commit this type of crime will receive substantial sentences,” stated U. S. Attorney Donald J. Cazayoux, Jr. “This type of fraud costs the taxpayer and causes enormous inconvenience for the identity theft victims.”
On September 18, 2010, Denham Springs Police Officers stopped a vehicle being driven by ODUU for a traffic violation. Officers found counterfeit drivers licenses and numerous prepaid debit cards. ODUU obtained the prepaid debit cards using stolen identifications. The funds on the debit cards were tax refunds paid by the United States Treasury.
“This case represents how an individual utilizes several fraudulent schemes such as identity theft, filing false tax returns and utilizing false identifications to cause financial harm on his victims,” stated Luis Velez, Secret Service Resident Agent-in-Charge. “Together with state and local law enforcement, we will continue to protect the public from criminals engaged in financial crimes.”
Along with the Denham Springs Police Department, this case was investigated by Special Agent Jacquelyn Norris, United States Secret Service. The case was prosecuted by Assistant United States Attorney J. Lane Ewing, Jr.
ZACHARY MAN CONVICTED OF MAIL FRAUD ARISING OUT OF
MULTI-YEAR SCHEME TO DEFRAUD BUSINESS IN BAKER, LOUISIANA
BATON ROUGE, LA - United States Attorney Donald J. Cazayoux, Jr., announced that RICHARD GLENN BOYETTE, age 48, of Zachary, Louisiana, pled guilty yesterday before U.S. District Judge James J. Brady to one count of mail fraud and forfeiture. BOYETTE faces up to twenty (20) years in prison, three (3) years of supervised release following imprisonment, a fine of up to $250,000, and forfeiture of all proceeds from the offense. The sentencing date has yet to be scheduled.
At the hearing, BOYETTE admitted that he worked for Commercial Tire of Louisiana, Inc. (the “company”) from 2001 until November of 2010. For most of that time, BOYETTE served as the company’s Controller. The company is located in Baker, Louisiana, and has offices in Scott and Hammond. In connection with his conviction, BOYETTE admitted that from at least in or about January of 2002 through in or about November of 2010, he defrauded the company and its employees through a series of materially false and fraudulent pretenses, representations, and promises. To execute the scheme, among other acts, the defendant (a) created and approved fraudulent payroll checks to himself, which he was not authorized to receive; (b) obtained fraudulent payroll checks and gained control over the funds; (c) created false entries in the company’s accounting records that falsely reflected that the fraudulent payroll checks had actually been issued to other employees; and (d) prepared and distributed fraudulent W-2s that concealed the stolen funds. The defendant admitted that the loss caused by his scheme exceeded $400,000. The parties will address whether the loss was more than $1,000,000 at the defendant’s sentencing.
U.S. Attorney Cazayoux stated, “This is another example of our commitment to seeking out and prosecuting white collar criminals wherever they are found. This defendant spent eight years defrauding his employer, causing a substantial loss, and using his position of trust within the company to conceal his fraudulent scheme. We appreciate the dedicated efforts of the FBI on this investigation and the assistance we have received from the victim.”
According to FBI Special Agent-in-Charge Michael J. Anderson, “This case should demonstrate our serious commitment to address egregious fraud that harms Louisiana businesses and its employees in this time of already great challenges to the U.S. economy.”
This investigation is being conducted by the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney Alan A. Stevens.
FORMER MAYOR AND PRESIDENT OF THE
NATIONAL CONFERENCE OF BLACK MAYORS SENTENCED TO 22 YEARS
BATON ROUGE, LA - United States Attorney Donald J. Cazayoux, Jr., announced today a historic sentence imposed in connection with Operation Blighted Officials. U.S. District Judge Maurice A. Hicks sentenced GEORGE L. GRACE, SR., age 68, of St. Gabriel, Louisiana, to twenty-two (22) years imprisonment, a $50,000 fine, forfeiture of $22,000, and a year of supervised release following imprisonment. The sentence is based on GRACE’s corrupt activities while serving as the Mayor of St. Gabriel and the President of the National Conference of Black Mayors. It is believed to be the longest public corruption prison sentence in the history of Louisiana.
Earlier this year GRACE was convicted by a jury following a six week trial of violating the Racketeer Influenced and Corrupt Organizations Act (RICO), obstruction of justice, making false statements, mail fraud, wire fraud, bribery involving a federally-funded entity, and use of an interstate facility in aid of racketeering. At sentencing, the court determined that GRACE was responsible for over four different bribery schemes involving over nine (9) million dollars, including schemes to extort businessmen seeking to do business in the city and help victims of Hurricane Katrina.
U.S. Attorney Cazayoux stated: “This historic sentence should send a loud and clear message that those engaged in public corruption will face severe punishment, and hopefully, any public official who might consider such a path will take heed.”
Status of Other Operation Blighted Officials Defendants
Thomas A. Nelson, Jr.: In June 2011, the former Mayor of New Roads, Louisiana, was convicted by a federal jury following a two and a half week trial of violating RICO, engaging in honest services wire fraud, using an interstate facility in aid of racketeering, and making false statements to the FBI. Chief Judge Jackson sentenced Nelson to 132 months in prison.
Maurice Brown: In February 2011, the former Mayor of White Castle, Louisiana, was convicted by a federal jury following a two week trial of violating RICO, engaging in honest services wire and mail fraud, and use of an interstate facility in aid of racketeering. Chief Judge Jackson sentenced Brown to 120 months in prison.
Frederick W. Smith: In October 2011, the Chief of Police for Port Allen, Louisiana, was convicted by a federal jury following a two week trial of 11 counts of violating RICO, engaging in honest services wire and mail fraud, and using an interstate facility in aid of racketeering. Chief Judge Jackson sentenced Smith to 90 months in prison.
Derek Lewis: In July 2011, the former Mayor of Port Allen, Louisiana, pled guilty to violating RICO and agreed to cooperate with authorities. Chief Judge Jackson sentenced Lewis to 40 months imprisonment.
Johnny Johnson: In July 2010, the former member of the Port Allen City Council pled guilty to using an interstate facility in aid of racketeering and agreed to cooperate with authorities. Chief Judge Jackson sentenced Johnson to two years probation, with a condition of having to spend 6 months in a half-way house.
Richard Chambers: In July 2012, the former deputy commissioner of the Louisiana Department of Insurance pled guilty to using an interstate facility in aid of racketeering and agreed to cooperate with authorities. He is set to be sentenced by Chief Judge Jackson in November 2012.
This ongoing investigation is being conducted by the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Middle District of Louisiana, with assistance from the U.S. Department of Housing and Urban Development, Office of Inspector General, and the U.S. Department of Homeland Security, Office of Inspector General.
Operation Blighted Officials is being prosecuted by Assistant United States Attorneys Corey R. Amundson, M. Patricia Jones, and Michael J. Jefferson.
21 August Parkman Thompson Conviction
NEW ORLEANS RESIDENT CONVICTED OF HEALTH CARE FRAUD AND
CONSPIRACY TO PAY AND RECEIVE ILLEGAL REMUNERATIONS
BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr. announced today that a Federal Jury on Tuesday, August 21, 2012, convicted SANDRA PARKMAN THOMPSON, 57, of New Orleans, Louisiana, of health care fraud and conspiracy to pay and receive illegal remunerations.
Thompson faces a maximum sentence of 135 years in prison, fines of $ 3,500,000, and forfeiture of all proceeds of the health care scheme to defraud.
The convictions are a result of THOMPSON’s participation in a scheme to defraud, which also included Young and Beatrice Anyanwu, the owners of the Baton Rouge-based company known as Lobdale Medical Services, and Dr. Anthony Stephen Jase, a physician practicing in New Orleans, Louisiana. As part of the scheme to defraud, THOMPSON and others procured the names and personal information of Medicare beneficiaries in and around the New Orleans area and delivered these names to Dr. Jase, who then signed false and fraudulent prescriptions for power wheelchairs and other durable medical equipment for which the Medicare beneficiaries had no medical need. THOMPSON subsequently delivered the fraudulent prescriptions to the Anyanwus, who submitted claims to Medicare through Lobdale Medical Services for the medically unnecessary equipment. The total billings to Medicare by Lobdale Medicare Services exceeded $1,000,000.
THOMPSON, along with the Anyanwus and Doretha Paul Augustus, another recruiter of Medicare beneficiaries, also participated in a conspiracy to pay and receive illegal remuneration for the durable medical equipment billed by Lobdale. The Anyanwus paid THOMPSON and Augustus a kickback for every claim for power wheelchairs and other durable medical equipment items that were submitted to, and paid by, Medicare. The kickback was based on a percentage of the reimbursement value thereby providing an incentive to recruit beneficiary claims for the most expensive models of durable medical equipment.
Dr. Anthony Stephen Jase pled guilty to the health care fraud scheme to defraud on October 31, 2012. Beatrice and Young Anyanwu pled guilty to the health care fraud scheme to defraud, as well as the illegal remuneration conspiracy, on August 14, 2012.
U.S. Attorney Donald J. Cazayoux, Jr., stated, “We will not tolerate thieves who commit Medicare fraud, as they steal from taxpayers and undermine a vitally important program for our elderly and disabled. As part of a well-coordinated, multi-agency and cross-jurisdictional approach, we will continue to focus on catching those who attempt to defraud the Medicare system and to prosecute them vigorously.”
“I think that hearing from the Medicare recipients themselves made a significant impact on this case,” said Special Agent-in-Charge William Root. “Hearing from one in particular who now needed a manual wheelchair but was unable to receive one from Medicare because the defendant sold her name to the highest bidder for a power wheelchair prescription disturbed us all.”
FBI Special Agent in Charge Michael J. Anderson, stated, “In an age of skyrocketing health care costs and identity theft, we cannot afford to allow such privacy invasions and fraud to further burden American citizens.”
The investigation of THOMPSON was conducted by the Department of Health and Human Service, Office of Inspector General, the Federal Bureau of Investigation, and the Louisiana Department of Justice. The case was prosecuted by Assistant United States Attorneys Catherine M. Maraist, J. Christopher Dippel, Jr., and Reginald E. Jones.
FORMER UNITED STATES COAST GUARD SUPERVISOR CONVICTED OF MAIL FRAUD INVOLVING
STOLEN COAST GUARD EQUIPMENT
BATON ROUGE, LA - United States Attorney Donald J. Cazayoux, Jr., announced that RAYMOND L. BEAVERS, age 48, of Denham Springs, Louisiana, pled guilty today before U.S. District Judge James J. Brady to two counts of mail fraud and forfeiture. BEAVERS faces up to forty (40) years in prison, three (3) years of supervised release following imprisonment, a fine of $500,000, and forfeiture of all proceeds from the offense. The sentencing date has yet to be scheduled.
At today’s hearing, BEAVERS admitted that from approximately July of 2006 through June of 2008, Beavers served as Supervisor of the United States Coast Guard’s Electronic Support Detachment (“ESD”) at the Eighth District in New Orleans, Louisiana. The ESD is a sub-unit of the Coast Guard’s Electronic Support Unit, which provides technical support for all Coast Guard electronic systems and maintains a wide variety of electronics equipment on small boats, patrol boats, shore units, and other facilities.
Beginning in or about February of 2007 and continuing until in or about March of 2008, while supervising the ESD, BEAVERS devised a scheme to defraud the Coast Guard and others and to obtain money. The object of the scheme was to steal electronics equipment from the Coast Guard and sell the equipment for personal profit, often using eBay and PayPal, while misrepresenting such equipment as his own. BEAVERS admitted today that in 2007 and 2008, he sold approximately 28 network computer switches and several other items of the Coast Guard’s electronics equipment, having a value of more than $120,000.
Captain Jon Gage, Commander, CG Base New Orleans, stated, “We take matters like this very seriously in the Coast Guard. We make every effort to fully support investigations into these types of crimes and eventually hold the responsible party accountable. We are thankful for the great partnership and investigative efforts between CGIS, the U.S. Attorney’s Office, and other federal agencies as well as Interpol, to bring this case to prosecution.”
U.S. Attorney Donald J. Cazayoux, Jr., stated, “We appreciate the strong work by the Coast Guard Investigative Service that uncovered the defendant’s scheme and led to this conviction. The defendant took equipment that was intended to be used by the Coast Guard to advance the Coast Guard’s vital mission and auctioned that equipment off over the internet, selling it to the highest bidders. We will continue to work aggressively to prosecute those who abuse their positions of trust to commit fraud.”
This investigation is being conducted by the United States Coast Guard Investigative Service and the U.S. Department of Homeland Security, Office of Inspector General, with assistance from the Louisiana State Police and the Walker Police Department.
The case is being prosecuted by Assistant United States Attorney Alan A. Stevens.
SEVEN CHARGED IN LIFE INSURANCE FRAUD SCHEME
BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr. announced today that seven area residents have been charged for their role in a life insurance fraud scheme. The U.S. Attorney has charged TIMOTHY R. SCHLATRE, 34, of Denham Springs, with mail fraud, money laundering, and asset forfeiture. SCHLATRE faces a maximum sentence of 30 years in prison and fines of up to $500,000 or twice the gross gain or loss from the offense, whichever is larger.
The U.S. Attorney has also charged JASON PAUL AUSTIN, 32, of Walker, JODI MARIE AUSTIN, 34, of Walker, RICKY J. AUSTIN, 49, of Denham Springs, JIMMY O. CASSELS, 33, of Denham Springs, TODD D. CUMMINGS, 34, of Walker, and DENA A. GAUDET, 33, of Denham Springs, each with Conspiracy to Commit Mail Fraud. These individuals each face a maximum sentence of 5 years in prison and a fine of up to $250,000.
The Bills of Information allege that SCHLATRE, using his position as a life insurance agent for New York Life and Lincoln Financial, devised a scheme to defraud New York Life and Lincoln Financial in order to fraudulently receive commission payments by selling life insurance policies based on false statements and representations. Specifically, SCHLATRE submitted false information to the companies regarding the applicant’s net worth and annual income, thereby defrauding New York Life and Lincoln Financial into approving the policies and issuing the commission payments to SCHLATRE to which he was not entitled. Because the policy values were so large, the applicants could not afford to make the premium payments. In order to effectuate his scheme, SCHLATRE further agreed to provide the premium payments on behalf of the applicants. This process, known as “rebating,” was prohibited by both company’s policies as well as state law. In order to conceal the fact that he was the source of the premiums, SCHLATRE deposited money directly into the individual applicant’s bank account. SCHLATRE further misrepresented the source of the premium payments by falsely declaring that he was not paying or allowing the rebating of any premiums.
The Bills of Information further allege that JASON AUSTIN, JODI AUSTIN, RICKY AUSTIN, JIMMY CASSELS, TODD CUMMINGS and DENA GAUDET each conspired with SCHLATRE to obtain life insurance policies by making false statements regarding their net worth and annual income. All are alleged to have provided false information in their written applications as well as in subsequent phone interviews as part of the underwriting process.
The Bills of Information allege that SCHLATRE defrauded New York Life and Lincoln Financial into issuing life insurance policies in excess of $100 million dollars. This resulted in the receipt of commissions to which he was not entitled in excess of hundreds of thousands of dollars.
United States Attorney Donald J. Cazayoux, Jr. stated, “This ongoing investigation is another example of how close cooperation between our federal and state partners results in the effective investigation and prosecution of significant fraudulent schemes. We will continue to pursue all who seek personal benefit through deception.”
“This investigation should be a clear reminder that federal law enforcement's reach into white collar crime extends beyond traditional health care, investment and corporate fraud to bring those responsible to justice,” stated FBI Special Agent-in-Charge Michael J. Anderson.
“People who conspire to create elaborate insurance fraud schemes run a very high risk of prosecution,” stated James C. Lee, Special Agent-in-Charge, IRS Criminal Investigation. “IRS is committed to working diligently with the Department of Justice to dismantle these organizations.”
Louisiana State Inspector General Stephen Street stated, “Mr. Schlatre and his cohorts engaged in a fraud scheme over a period of several years, and will now be held accountable. This case is the latest example of success in OIG’s ongoing partnership with the U.S. Attorney, FBI and IRS in investigating corruption cases.”
The investigation of this matter was conducted by the Federal Bureau of Investigation, the Internal Revenue Service - Criminal Investigation, and the Louisiana Office of Inspector General. The Louisiana Department of Insurance assisted in the investigation. The cases are being prosecuted by Assistant United States Attorney Rich Bourgeois who serves as Deputy Criminal Chief.
NOTE: A Bill of Information is a determination by the U.S. Attorney 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.
BATON ROUGE MAN SENTENCED
FOR FIREARM AND DRUG OFFENSES
BATON ROUGE, LA – United States Attorney Donald J. Cazayoux, Jr. announced yesterday that U.S. District Court Chief Judge Brian A. Jackson sentenced Michael W. Young, age 27, of Baton Rouge, Louisiana, to a term of imprisonment of 180 months and five years supervised release after imprisonment. Young was sentenced pursuant to the Armed Career Criminal Act due to his extensive criminal history involving crimes of violence and drug distribution. Young had previously pled guilty to one count of possession of a firearm by a convicted felon and one count of possession with the intent to distribute marijuana.
On September 27, 2011, Deputy United States Marshals arrived at Young’s residence on Ontario Street in Baton Rouge, Louisiana while searching for a fugitive. When Deputy Marshals entered Young’s residence they discovered a loaded high-capacity SKS rifle, a .9mm handgun, a military-style flak jacket, and a large amount of marijuana and drug paraphernalia. Detectives from the Baton Rouge Police Narcotics Division and Special Agents with the Bureau of Alcohol, Tobacco, Firearms, and Explosives responded to the scene and initiated a joint investigation.
United States Attorney Cazayoux stated, “The Department of Justice is committed to the investigation and prosecution of individuals who pose an extremely high risk to our society when they illegally possess firearms. The Armed Career Criminal Act allows us to hold these dangerous criminals accountable. This successful prosecution would not have happened without the diligent and coordinated effort of the United States Marshals Service, the Baton Rouge Police, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives.”
This matter was investigated by the United States Attorney’s Office for the Middle District of Louisiana, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Baton Rouge Police Department, and the United States Marshals Service. The matter was prosecuted by Assistant United States Attorney Chris Dippel.
FORMER DEPUTY INSURANCE COMMISSIONER CONVICTED OF RACKETEERING IN OPERATION BLIGHTED OFFICIALS
BATON ROUGE, LA - United States Attorney Donald J. Cazayoux, Jr., announced that another public official has been convicted in Operation Blighted Officials. RICHARD L. CHAMBERS, SR., age 67, of LaPlace, Louisiana, pled guilty today before Chief U.S. District Judge Brian A. Jackson to using an interstate facility in aid of racketeering, in violation of Title 18, United States Code, Section 1952, and forfeiture, pursuant to Title 18, United States Code, Section 982. CHAMBERS faces up to five years in prison, three years of supervised release following imprisonment, a fine of $250,000, and forfeiture of all proceeds from the offense. Sentencing is scheduled before Chief Judge Jackson at 9:30 a.m. on Wednesday, November 14, 2012.
At today’s hearing, CHAMBERS admitted that, while serving as Deputy Commissioner for the Louisiana Department of Insurance, he engaged in two bribery schemes in which he took bribes in exchange for using his official position to (1) steer insurance business, and (2) support a conceptual trash can cleaning concept known as the Cifer 5000.
Insurance Kickback Scheme
At today’s hearing, CHAMBERS admitted that he created a scheme whereby he would use his official position to steer insurance business from municipalities and other sources to a licensed insurance agent in exchange for bribes. CHAMBERS admitted that, after attempting the scheme with an undependable agent, CHAMBERS enlisted the participation of a different insurance agent to execute the scheme. Unbeknownst to CHAMBERS, the insurance agent he enlisted was an undercover Special Agent with the Federal Bureau of Investigation.
CHAMBERS admitted that, in February 2009, he arranged to take bribes from the insurance agent consisting of forty (40%) of the commissions earned on business CHAMBERS steered to the insurance agent. CHAMBERS admitted that he received a $2,000 cash bribe on July 21, 2009, a $3,000 cash bribe on October 16, 2009, and a $500 cash bribe on March 10, 2010. In exchange, CHAMBERS admitted that he used and agreed to use his official position to, among other things, steer insurance business to the insurance agent from municipalities such as St. Gabriel, Louisiana and White Castle, Louisiana. CHAMBERS admitted that he even wrote a fraudulent letter in his official capacity to the Mayor of Cleveland, Ohio, in an attempt to steer the City of Cleveland’s insurance business to the insurance agent.
Cifer 5000 Bribery Scheme
At today’s hearing, CHAMBERS also admitted to engaging in a bribery scheme with an individual he believed to be a venture capitalist affiliated with the insurance agent and involved with a conceptual trash can cleaning product known as the “Cifer 5000.” The Cifer 5000 was a product marketed as an automated waste container cleaning system using specially designed and equipped trucks to clean and sanitize commercial and residential waste containers. Its potential customer pool was represented to be governmental entities. Unbeknownst to CHAMBERS, the venture capitalist was an undercover FBI agent and the Cifer 5000 was a fictitious product created by the FBI.
CHAMBERS admitted that, in May of 2009, he agreed to provide an official letter of support for the Cifer 5000 in exchange for two cash payments totaling $5,000. CHAMBERS believed the letter would be used to generate significant private investor funding for the Cifer 5000. CHAMBERS admitted that he took $2,000 in cash from the venture capitalist on May 12, 2009, and the remaining $3,000 in cash the following day. In exchange, CHAMBERS admitted that he provided the venture capitalist with the official letter of support.
Status of Other Operation Blighted Officials Defendants
George L. Grace, Sr.: In March 2012, the former Mayor of St. Gabriel, Louisiana, was convicted by a federal jury following a six week trial of violating RICO, engaging in honest services wire and mail fraud, bribery, obstruction of justice, making false statements, and use of an interstate facility in aid of racketeering. U.S. District Judge Maurice Hicks detained Grace pending his sentencing currently scheduled for 9:00 a.m. on August 27, 2012.
Thomas A. Nelson, Jr.: In June 2011, the former Mayor of New Roads, Louisiana, was convicted by a federal jury following a two and a half week trial of violating RICO, engaging in honest services wire fraud, using an interstate facility in aid of racketeering, and making false statements to the FBI. Chief Judge Jackson sentenced Nelson to 132 months in prison.
Maurice Brown: In February 2011, the former Mayor of White Castle, Louisiana, was convicted by a federal jury following a two week trial of violating RICO, engaging in honest services wire and mail fraud, and use of an interstate facility in aid of racketeering. Chief Judge Jackson sentenced Brown to 120 months in prison.
Frederick W. Smith: In October 2011, the Chief of Police for Port Allen, Louisiana, was convicted by a federal jury following a two week trial of 11 counts of violating RICO, engaging in honest services wire and mail fraud, and using an interstate facility in aid of racketeering. Chief Judge Jackson sentenced Smith to 90 months in prison.
Derek Lewis: In July 2011, the former Mayor of Port Allen, Louisiana, pled guilty to violating RICO and agreed to cooperate with authorities. Chief Judge Jackson sentenced Lewis to 40 months imprisonment.
Johnny Johnson: In July 2010, the former member of the Port Allen City Council pled guilty to using an interstate facility in aid of racketeering and agreed to cooperate with authorities. Chief Judge Jackson sentenced Johnson to two years probation, with a condition of having to spend 6 months in a half-way house.
This ongoing investigation is being conducted by the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Middle District of Louisiana, with assistance from the U.S. Department of Housing and Urban Development, Office of Inspector General, and the U.S. Department of Homeland Security, Office of Inspector General.
Operation Blighted Officials is being prosecuted by Assistant United States Attorneys Corey R. Amundson, M. Patricia Jones, and Michael J. Jefferson.
FORMER DEPUTY INSURANCE COMMISSIONER CHARGED WITH RACKETEERING IN OPERATION BLIGHTED OFFICIALS
BATON ROUGE, LA - United States Attorney Donald J. Cazayoux, Jr., announced that another individual has been charged in Operation Blighted Officials. RICHARD L. CHAMBERS, SR., age 67, of LaPlace, Louisiana, has been charged in a Bill of Information with using an interstate facility in aid of racketeering, in violation of Title 18, United States Code, Section 1952, and forfeiture, pursuant to Title 18, United States Code, Section 982. CHAMBERS faces up to five years in prison, three years of supervised release following imprisonment, a fine of $250,000, and forfeiture of all proceeds from the offense.
According to the Bill of Information, while serving as Deputy Commissioner for the Louisiana Department of Insurance, CHAMBERS allegedly engaged in two bribery schemes in which he took bribes in exchange for using his official position to (1) steer insurance business, and (2) support a conceptual trash can cleaning concept known as the Cifer 5000.
Insurance Kickback Scheme
According to the Bill of Information, CHAMBERS allegedly created a scheme whereby he would use his official position to steer insurance business from municipalities and other sources to a licensed insurance agent in exchange for bribes. After attempting the scheme with an undependable agent, CHAMBERS enlisted the participation of a different insurance agent to execute the scheme. Unbeknownst to CHAMBERS, the insurance agent he enlisted was an undercover Special Agent with the Federal Bureau of Investigation.
According to the Bill of Information, in February 2009, CHAMBERS allegedly arranged to take bribes from the insurance agent consisting of forty (40%) of the commissions earned on business CHAMBERS steered to the insurance agent. CHAMBERS subsequently received a $2,000 cash bribe on July 21, 2009, a $3,000 cash bribe on October 16, 2009, and a $500 cash bribe on March 10, 2010. In exchange, CHAMBERS allegedly used and agreed to use his official position to, among other things, steer insurance business to the insurance agent from municipalities such as St. Gabriel, Louisiana, and White Castle, Louisiana. CHAMBERS even wrote a fraudulent letter in his official capacity to the Mayor of Cleveland, Ohio, in an attempt to steer the City of Cleveland’s insurance business to the insurance agent.
Cifer 5000 Bribery Scheme
According to the Bill of Information, CHAMBERS also engaged in a bribery scheme with an individual he believed to be a venture capitalist affiliated with the insurance agent and involved with a conceptual trash can cleaning product known as the “Cifer 5000.” The Cifer 5000 was a product marketed as an automated waste container cleaning system using specially designed and equipped trucks to clean and sanitize commercial and residential waste containers. Its potential customer pool was represented to be governmental entities. Unbeknownst to CHAMBERS, the venture capitalist was an undercover FBI agent and the Cifer 5000 was a fictitious product created by the FBI.
According to the Bill of Information, in May 2009, CHAMBERS agreed to provide an official letter of support for the Cifer 5000 in exchange for two cash payments totaling $5,000. CHAMBERS believed the letter would be used to generate significant private investor funding for the Cifer 5000. CHAMBERS took $2,000 in cash from the venture capitalist on May 12, 2009, and the remaining $3,000 in cash the following day. In exchange, CHAMBERS provided the venture capitalist with the official letter of support.
Status of Other Operation Blighted Officials Defendants
George L. Grace, Sr.: In March 2012, the former Mayor of St. Gabriel, Louisiana, was convicted by a federal jury following a six week trial of violating RICO, engaging in honest services wire and mail fraud, bribery, obstruction of justice, making false statements, and use of an interstate facility in aid of racketeering. U.S. District Judge Maurice Hicks detained Grace pending his sentencing scheduled in August 2012.
Thomas A. Nelson, Jr.: In June 2011, the former Mayor of New Roads, Louisiana, was convicted by a federal jury following a two and a half week trial of violating RICO, engaging in honest services wire fraud, using an interstate facility in aid of racketeering, and making false statements to the FBI. Chief Judge Jackson sentenced Nelson to 132 months in prison.
Maurice Brown: In February 2011, the former Mayor of White Castle, Louisiana, was convicted by a federal jury following a two week trial of violating RICO, engaging in honest services wire and mail fraud, and use of an interstate facility in aid of racketeering. Chief Judge Jackson sentenced Brown to 120 months in prison.
Frederick W. Smith: In October 2011, the Chief of Police for Port Allen, Louisiana, was convicted by a federal jury following a two week trial of 11 counts of violating RICO, engaging in honest services wire and mail fraud, and using an interstate facility in aid of racketeering. Chief Judge Jackson sentenced Smith to 90 months in prison.
Derek Lewis: In July 2011, the former Mayor of Port Allen, Louisiana, pled guilty to violating RICO and agreed to cooperate with authorities. Chief Judge Jackson sentenced Lewis to 40 months imprisonment.
Johnny Johnson: In July 2010, the former member of the Port Allen City Council pled guilty to using an interstate facility in aid of racketeering and agreed to cooperate with authorities. Chief Judge Jackson sentenced Johnson to two years probation, with a condition of having to spend 6 months in a half-way house.
The Court has scheduled the initial appearance for 9:00 a.m. on Monday, July 16, 2012, followed by his guilty plea the same day at 9:30 a.m.
This ongoing investigation is being conducted by the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Middle District of Louisiana, with assistance from the U.S. Department of Housing and Urban Development, Office of Inspector General, and the U.S. Department of Homeland Security, Office of Inspector General.
Operation Blighted Officials is being prosecuted by Assistant United States Attorneys Corey R. Amundson, M. Patricia Jones, and Michael J. Jefferson.
NOTE: A bill of information is a charge by the United States Attorney alleging that a defendant has committed an offense. The defendant is presumed innocent until and unless proven guilty at trial or by pleading guilty.