Henry County Marijuana Grow House Operators Indicted; 10 Charged on Related Drug Trafficking and Firearms Crimes

The United States Attorney’s Office, along with the David G. Wilhelm Organized Crime Drug Enforcement Task Force (OCDETF) Strike Force and the Henry County Police Department announce today (April 8) that 10 individuals have been indicted for alleged drug trafficking and firearms-related crimes stemming from their operation of marijuana grow houses in Henry County. This week, nine of the 10 defendants were arrested and arraigned in United States Magistrate Court for the Northern District of Georgia.

United States Attorney Sally Quillian Yates said of the case, “Through the David G. Wilhelm OCDETF Strike Force, the U.S. Attorney’s office works with local and state law enforcement agencies to target drug trafficking organizations that impact us locally and regionally. The federal prosecution of this organization for this conspiracy has a direct impact on the local community in Henry County, and regionally in the Northern District of Georgia, by making us all safer through the removal of dangerous grow houses from the community, and by having fewer drugs and guns on the streets.”

Rodney G. Benson, Special Agent in Charge of the DEA Atlanta Field Division said, “The mission of DEA is unwavering—we combat drug trafficking organizations by investigating those who criminally distribute dangerous drugs which cause immeasurable damage to our communities. Today’s enforcement activity is a perfect example of the law enforcement community working together to remove violent criminals from our streets.”

Henry County Police Chief Keith Nichols said, “I appreciate the hard work and dedication that our narcotics unit put into working this case. These indoor grows are a relatively new problem here in Henry County and we are becoming more familiar in working these types of cases. Getting these individuals out of our community is a huge benefit to our law abiding citizens, and I know they appreciate it too. I would also like to thank the federal law enforcement authorities that assisted us with this case, helping bring it to a successful resolution.”

According to United States Attorney Yates, the charges, and other information presented in court: In the fall of 2010, federal, state, and local law enforcement agencies began investigating a marijuana grow house organization operating in Henry County and elsewhere. The organization allegedly coordinated the construction of hydroponic marijuana grow houses at four separate locations. Several members of the organization possessed firearms in support of the illegal narcotics trafficking activities. As part of the investigation, in November and December 2010, agents searched four separate marijuana grow house operations in Henry County that were constructed in residential homes with independent grow lighting, irrigation and nutrient systems designed to cultivate and grow marijuana plants for distribution. Agents also searched several of the residences of the defendants. Investigators found that three of the houses had been set up specifically as grow houses, and not to house residents. Those houses were located in Stockbridge, Georgia, at 925 Hemphill Road; 1680 Jodeco Road; and, 436 Hood Road. A fourth house, located at 166 Alexander Drive in McDonough, Georgia, was used as both a residence and a grow house. Items seized during the investigation include 340 plants of marijuana, 52 guns, at least 50 grams of methamphetamine, and over $384,000 in cash.

In March 2011, a federal grand jury returned a four-count indictment related to this grow house operation, which was unsealed on April 5, 2011, after the arrests. The indictment charges the defendants with various criminal offenses including conspiring to manufacture, distribute, and possess with intent to distribute over 100 plants of marijuana; substantive drug trafficking charges; and possession of firearms in furtherance of drug trafficking crimes. Those arrested include:

* JOSHUA MCCULLOUGH, 37, of Stockbridge, Georgia;
* JIMMY RAY WHORTON, 56, of Stockbridge, Georgia;
* SANDRA WHORTON, 49, of Stockbridge, Georgia;
* JAMES MCKENZIE, 29, of McDonough, Georgia;
* KARRY AUTRY, 30, of McDonough, Georgia;
* HOLLY AUTRY, a/k/a “Holly Fritzius,” 27, of McDonough, Georgia;
* BRAIN PREWITT, 33, of Griffin, Georgia;
* PAUL BUNCH, 36, of Stockbridge, Georgia; and
* IRA BUTLER, 46, of Stockbridge, Georgia.

JOSEPH TILLMAN, 41, of Griffin, Georgia, remains at large. Members of the public are reminded that the indictment contains only allegations. A defendant is presumed innocent of the charges and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.

The investigation and prosecution of this case is a coordinated effort with the Henry County Police Department and the David G. Wilhelm OCDETF Strike Force, which is comprised of Special Agents of U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI); the Drug Enforcement Administration (DEA); Internal Revenue Service-Criminal Investigation (IRS-CI); the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); the United States Marshal Service (USMS); and the Federal Bureau of Investigation (FBI), working with other state and local law enforcement agencies.

Special Assistant United States Attorney Michael Smith and Assistant United States Attorney Michael Brown are prosecuting the case.

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International Hacker Arraigned After Extradition

SERGEI TŠURIKOV, 26, of Tallinn, Estonia, has been extradited to the United States. TŠURIKOV appeared today and was arraigned before United States Magistrate Judge E. Clayton Scofield III, on federal charges of conspiracy to commit wire fraud, wire fraud, conspiracy to commit computer fraud, computer fraud, and aggravated identity theft. TŠURIKOV was indicted by a federal grand jury on these charges on November 10, 2010, along with VIKTOR PLESHCHUK, 29, of St. Petersburg, Russia; OLEG COVELIN, 29, of Chişinău, Moldova; and an unidentified individual. The indictment also charged IGOR GRUDIJEV, 32, RONALD TSOI, 32, EVELIN TSOI, 21, and MIHHAIL JEVGENOV, 34, each of Tallinn, Estonia, with access device fraud offenses.

United States Attorney Sally Quillian Yates said of the case, “In November 2008, in just one day, an American credit card processor was hacked in perhaps the most sophisticated and organized computer fraud attack ever conducted. Almost exactly one year later, the leaders of this attack were charged. With cooperation from law enforcement partners around the world, and most particularly in Estonia, we have now extradited to Atlanta one of the leaders of this ring. This success would not have been possible without the efforts of the victim, and unprecedented cooperation from various law enforcement agencies worldwide.”

“Computer hackers who steal from American financial networks must be held accountable for their crimes, whether they operate here or abroad,” said Assistant Attorney General Breuer. “The Department of Justice, working hand in hand with our international law enforcement partners, is committed to denying these criminals safe haven outside the United States and will vigorously investigate and prosecute these crimes.”

Atlanta FBI Special Agent in Charge Brian D. Lamkin stated, “Complex cyber based criminal investigations such as this are becoming all too prevalent. The advances in technology, while aiding the corporate world and the consumer, also aid the criminal in conducting well coordinated fraud or theft based schemes, often across international borders. The FBI extends its gratitude to those international partners who not only assisted with this investigation but with the extradition to the U.S. of one of its chief ring leaders in this multimillion dollar, multi-national theft ring.”

According to United States Attorney Yates, the charges and other information presented in court: During November 2008, PLESHCHUK, TŠURIKOV, and COVELIN allegedly obtained unauthorized access into the computer network of “RBS WorldPay,” the U.S. payment processing division of the Royal Bank of Scotland Group PLC, located in Atlanta. The indictment alleges that the group used sophisticated hacking techniques to compromise the data encryption that was used by RBS WorldPay to protect customer data on payroll debit cards. Payroll debit cards are used by various companies to pay their employees. By using a payroll debit card, employees are able to withdraw their regular salaries from an ATM.

Once the encryption on the card processing system was compromised, the hacking ring allegedly raised the account limits on compromised accounts, and then provided a network of “cashers” with 44 counterfeit payroll debit cards, which were used to withdraw more than $9 million from over 2,100 ATMs in at least 280 cities worldwide, including cities in the United States, Russia, Ukraine, Estonia, Italy, Hong Kong, Japan and Canada. The $9 million loss occurred within a span of less than 12 hours.

The hackers then allegedly sought to destroy data stored on the card processing network in order to conceal their hacking activity. The indictment alleges that the “cashers” were allowed to keep 30 to 50 percent of the stolen funds, but transmitted the bulk of those funds back to TŠURIKOV, PLESHCHUK, and other co-defendants, using means such as WebMoney accounts and Western Union. Upon discovering the unauthorized activity, RBS WorldPay immediately reported the breach, and has substantially assisted in the investigation.

Throughout the duration of the cashout, PLESHCHUK and TŠURIKOV allegedly monitored the fraudulent ATM withdrawals in real-time from within the computer systems of RBS WorldPay. Once the withdrawals were completed, PLESHCHUK and TŠURIKOV allegedly attempted to conceal their activities in the RBS WorldPay computer network by destroying and attempting to destroy data.

TŠURIKOV was not only an alleged hacker, but also distributed fraudulently obtained debit card account numbers and PIN codes to IGOR GRUDIJEV, who, in turn, allegedly distributed the information to Defendants RONALD TSOI, EVELIN TSOI, and MIHHAIL JEVGENOV in Estonia. Together, RONALD TSOI, EVELIN TSOI, and MIHHAIL JEVGENOV allegedly withdrew funds worth approximately $289,000 in U.S. funds from ATMs in Tallinn, Estonia.

The indictment contains 16 counts. Count One charges PLESHCHUK, TŠURIKOV, COVELIN, and a fourth unidentified individual of conspiracy to commit wire fraud. Counts Two through Ten are substantive wire fraud charges brought against PLESHCHUK and TŠURIKOV, aided and abetted by COVELIN and the unidentified hacker, based on the computer commands sent from outside the United States to the computer network of RBS WorldPay in the Northern District of Georgia. Count Eleven charges PLESHCHUK, TŠURIKOV, COVELIN, and the fourth individual with conspiracy to commit computer fraud. Counts Twelve through Fourteen are substantive charges of computer fraud against the defendants. Count Fifteen charges these defendants with aggravated identity theft based on the prepaid payroll card account numbers and associated PIN codes they transferred, possessed, and used without authorization in committing the wire fraud. Count Sixteen charges RONALD TSOI, EVELIN TSOI, and JEVGENOV, aided and abetted by GRUDIJEV, with access device fraud.

The indictment seeks forfeiture of over $9.4 million of proceeds of the crimes from the defendants.

PLESHCHUK, TŠURIKOV, COVELIN, and the unidentified defendant each face a maximum sentence of up to 20 years for conspiracy to commit wire fraud and each wire fraud count; up to five years for conspiracy to commit computer fraud; up to five or 10 years for each count of computer fraud; a two-year mandatory minimum for aggravated identity theft; and fines up to $3.5 million dollars. The charges against GRUDIJEV, the TSOI's, and JEVGENOV carry a maximum of up to 15 years’ incarceration for each count and a fine of up to $250,000. In determining the actual sentence, the court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

The early detection of fraudulent ATM withdrawal activities in Tallinn, Estonia led to an immediate response by the Estonian Central Criminal Police. Their investigative efforts led to the prompt identification of TŠURIKOV, GRUDIJEV, the TSOIs, and JEVGENOV. Cooperation between the Hong Kong Police Force and the FBI also led to a parallel investigation, resulting in the identification and arrest of two individuals who were responsible for withdrawing RBS WorldPay funds from ATM terminals in Hong Kong. The Netherlands Police Agency National Crime Squad High Tech Crime Unit and the Netherlands National Prosecutor’s Office provided key assistance in the investigation.

Since the United States indictment was announced in November 2009, TŠURIKOV, GRUDIJEV, the TSOI’s, and JEVGENOV have been convicted in Estonia of fraud relating to ATM withdrawals. TŠURIKOV has now been extradited from Estonia to the United States to answer to the charges in the United States’ indictment.

Members of the public are reminded that the indictment contains only allegations. A defendant is presumed innocent of the charges and it will be the government's burden to prove a defendant's guilt beyond a reasonable doubt at trial.

This case is being investigated by special agents of the Federal Bureau of Investigation. Assistance was provided by international law enforcement partners. The United States Secret Service also participated in the investigation. RBS World Pay immediately reported the crime and has substantially assisted in the investigation.

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Augusta Man Charged with Interstate Travel to Engage in Illicit Sexual Conduct and with Producing Child Pornography

ROBERT FRANCIS KWASNIAK, 38, of Augusta, Georgia, has been indicted by a federal grand jury on charges of interstate traveling to engage in illicit sex with a minor; producing child pornography; and possessing child pornography.

United States Attorney Edward J. Tarver said, “This defendant has been charged with producing child pornography and traveling across state lines to engage in illicit sex with a minor. Our children deserve protection from those who abuse and prey on them. The U.S. Attorney’s Office will continue to aggressively prosecute individuals involved in the sexual exploitation of children.”

The indictment of KWASNIAK arises out of a joint investigation by the Georgia Bureau of Investigation, the North Carolina Bureau of Investigation, and the Federal Bureau of Investigation. The indictment alleges KWASNIAK traveled to North Carolina to engage in sexual acts with a 15-year-old girl.

Tarver emphasized that an indictment is only an accusation and is not evidence of guilt. The defendant is entitled to a fair trial, during which it will be the Government’s burden to prove guilt beyond a reasonable doubt.

Tarver commented that this case was brought as part of Project Safe Childhood, which is a nationwide U.S. Department of Justice initiative designed to protect children from online exploitation and abuse. Led by the United States Attorneys’ Offices, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as identify and rescue victims.

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Fulton County Deputy Sheriff Indicted on Corruption, Drug, and Firearm Offenses

ANTHONY C. ATWATER, 32, of Atlanta, Georgia, a deputy with the Fulton County Sheriff’s Office, has been indicted by a federal grand jury on corruption, drug, and firearm offenses. ATWATER is scheduled to make his initial appearance before United States Magistrate Judge Russell G. Vineyard at 1:30 p.m. this afternoon.

United States Attorney Sally Quillian Yates said, “In exchange for cash payments, this deputy sheriff allegedly provided protection for drug deals. He chose to protect suspected drug dealers rather than protect the public. This office and our law enforcement partners will continue to investigate and prosecute corrupt public officials at all levels of government who abuse their positions to line their own pockets.”

FBI Atlanta Acting Special Agent in Charge Jeffrey C. Mazanec said, “It is paramount that the public maintain the highest level of trust in the law enforcement officers charged with protecting the citizens of Fulton County. These charges serve as a reminder that nobody is above the law, and that the FBI is committed to work with all parts of the law enforcement community to prevent the erosion of public trust that accompany such incidents.”

Fulton County Sheriff Ted Jackson said, “When an officer who has taken the oath to serve and protect violates the law, it tarnishes and damages the reputations of those who are committed to doing the right thing. The Fulton County Sheriff's Office has been aware of this investigation since January and has cooperated fully with the FBI and will continue to do so. This deputy was arrested by the FBI, during roll call this morning, sending a message that criminal behavior of any type will not be tolerated. This does not reflect on the many men and women who put their lives on the line for public safety on a daily basis.”

According to United States Attorney Yates, the indictment and evidence presented in court: Between January and March 2010, ATWATER, in exchange for $4,000 in cash payoffs, used his position as a sheriff's deputy to provide armed protection for alleged drug dealers. The indictment alleges that on two separate occasions, January 23, 2010, and March 12, 2010, ATWATER attempted to aid and abet drug deals involving cocaine. In each instance, he knowingly possessed a firearm in furtherance of the drug trafficking crime.

Members of the public are reminded that the indictment contains only allegations. A defendant is presumed innocent of the charges and it will be the government's burden to prove a defendant's guilt beyond a reasonable doubt at trial.

This case is being investigated by special agents of the FBI and the Internal Revenue Service-Criminal Investigation.

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Three Members of a “Reverse” Mortgage Fraud Ring Charged

JONATHAN ALFRED KIMPSON, 27, of Lithonia, Georgia, and GIA HARRIS, 26, of Atlanta, Georgia, have been indicted by a federal grand jury on charges of conspiracy to commit financial institution fraud involving so-called "reverse" mortgages. KIMPSON was also charged with aggravated identity theft and wire fraud. KELSEY TORREY HULL, 38, of Lithonia, Georgia, was charged on February 25, 2010, in a Criminal Information related to the same scheme, on a charge of financial institution fraud and conspiracy.

Acting United States Attorney Sally Quillian Yates said, “These defendants are charged with profiting from the corruption of an FHA-insured program designed to assist seniors with either cash for equity in their home or with funds toward the purchase of a home. These defendants allegedly altered real estate records, used fake documents, and posed as realtors. This abuse of the system took money away from qualified senior citizens who need these funds. With these charges, we have taken the first steps to stop this crime and to reverse the damage these crimes have caused.”

Inspector General Kenneth Donahue, U.S. Department of Housing and Urban Development (HUD) said, “HUD's Home Equity Conversion Mortgages Program was created to help senior citizens find greater financial security through FHA-insured reverse mortgages loans. The HUD Office of Inspector General will aggressively investigate those who would prey on America's senior citizens through reverse mortgage fraud, and encourages anyone having knowledge of such schemes to contact our HUD hotline at 1-800-347-3735.”

KIMPSON and HARRIS were indicted separately on February 24, 2010, and HULL was charged in a Criminal Information the next day. The indictments and information were unsealed upon the arrest of KIMPSON and HARRIS when they appeared before United States Magistrate Judge Linda T. Walker today and entered not guilty pleas to the charges.

According to Acting United States Attorney Yates, the charges and other information presented in court: Reverse mortgages were designed to assist with the financial security of seniors, ages 62 or older. There are two types of reverse mortgages. In a “refi-reverse,” the senior homeowner receives money from the lender for a portion of their equity in the home they own. In a “purchase money reverse,” the senior homeowner receives money from the lender toward the purchase of a new home. Under both types of reverse mortgages, the senior does not have to repay the lender for as long as the senior lives in the home. However, refi-reverse mortgages fund only a percentage of the property value, requiring significant equity to remain in the property, and purchase money reverse mortgages require a significant down payment from senior borrowers, to establish equity in the property.

The indictment charges that KIMPSON, HARRIS, and HULL, in an attempt to take advantage of the system, allegedly faked the required down payments by the senior citizen to establish the equity needed in the home to qualify for the FHA-insured reverse mortgages. The defendants did this through bogus “gift” letters in amounts between $50,000 and $105,000. They used fake “HUD-1" Settlement Statements reflecting the sale of non-existent assets closed by fictitious law firms to show the source of the required down payments. All down payments were actually supplied by the defendants, not the senior citizens, to be returned to the defendants upon the reverse loan closings, along with profits far in excess of the true sales prices of the properties. The return of such payments to the defendants was disguised as seller proceeds or lien payoffs. All such reverse mortgages included fraudulently inflated appraisals.

KIMPSON’s charge of aggravated identity theft and wire fraud relates to a scheme to use stolen identities of realtors. KIMPSON allegedly used realtor passwords obtained in his and relatives' names, and in the stolen identities of other realtors. With that information, he allegedly falsified Georgia MLS records to create fake property sales at inflated amounts to support many of the properties' fraudulent appraisals.

The KIMPSON indictment charges a conspiracy count which carries a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000, a wire fraud count with a maximum sentence of up to 30 years in prison and a fine of up to $250,000, and three aggravated identity theft counts which each carry a maximum sentence of up to two years in prison and a fine of $250,000 with at leas two years required to be imposed consecutive to the sentence on the other counts. The HARRIS indictment charges a conspiracy count which carries a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000. The HULL Criminal Information charges a bank fraud count which carries a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000, and a conspiracy count which carries a maximum sentence of up to 30 years in prison and a fine of up to $1,000,000. In determining the actual sentence upon any convictions in these cases, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

Members of the public are reminded that the indictments and information contain only allegations. A defendant is presumed innocent of the charges and it will be the government's burden to prove a defendant's guilt beyond a reasonable doubt at trial.

These cases are being investigated by Special Agents of the HUD-Office of Inspector General and the Federal Bureau of Investigation (FBI). Assistance in this case is also being provided by the U.S. Department of Treasury Financial Crimes Enforcement Network (FINCEN) and the Georgia Multiple Listing Service.

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Waynesboro Woman Charged with Conspiring to Defraud the United States with False Tax Returns

Edward J. Tarver, United States Attorney for the Southern District of Georgia, announced February 9 that Charlene Hughes of Waynesboro, Georgia was indicted last week by a federal grand jury sitting in Savannah and charged with Conspiracy to Defraud the United States in violation of Title 18, United States Code, Section 286. At her initial court appearance yesterday in the federal courthouse in Augusta, U.S. Magistrate Judge W. Leon Barfield stated the defendant would be released from custody once she deposited with the Court ten percent of her $10,000 bond.

The Indictment arises out of a joint investigation by the Internal Revenue Service - Criminal Investigations (IRS-CI) and the Federal Bureau of Investigation (FBI) into Hughes’ alleged involvement with more than twenty-five fraudulent tax returns which falsely claimed more than $90,000 in refunds between April 2006 and August 2007. The Indictment alleges that these fraudulent tax returns contained false Form W-2 information, including false employers and wages. United States Attorney Tarver stated, “As we near the height of this year's tax filing season, those who might consider preparing false tax returns should be aware of the severe consequences of doing so. This indictment emphasizes that the IRS, the FBI and the United States Attorney's Office will aggressively pursue anyone who attempts to defraud America's tax system.”

Tarver emphasized that an indictment is only an accusation and is not evidence of guilt. The defendant is entitled to a fair trial, during which it will be the Government’s burden to prove guilt beyond a reasonable doubt. If convicted, the defendant faces a maximum statutory penalty of ten (10) years imprisonment and a $250,000 fine.

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International Effort Defeats Major Hacking Ring

VIKTOR PLESHCHUK, 28, of St. Petersburg, Russia; SERGEI TŠURIKOV, 25, of Tallinn, Estonia; and OLEG COVELIN, 28, of Chişinău, Moldova, along with an unidentified individual, have been indicted by a federal grand jury on charges of conspiracy to commit wire fraud, wire fraud, conspiracy to commit computer fraud, computer fraud, and aggravated identity theft. IGOR GRUDIJEV, 31, RONALD TSOI, 31, EVELIN TSOI, 20, and MIHHAIL JEVGENOV, 33, each of Tallinn, Estonia, have been indicted by a federal grand jury on charges of access device fraud.

Acting United States Attorney Sally Quillian Yates said of the case, “Last November, in just one day, an American credit card processor was hacked in perhaps the most sophisticated and organized computer fraud attack ever conducted. Today, almost exactly one year later, the leaders of this attack have been charged. This investigation has broken the back of one of the most sophisticated computer hacking rings in the world. This success would not have been possible without the efforts of the victim, and unprecedented cooperation from various law enforcement agencies worldwide.”

In Washington, D.C., Assistant Attorney General of the Criminal Division Lanny A. Breuer said, “The charges brought against this highly sophisticated international hacking ring were possible only because of unprecedented international cooperation with our law enforcement partners, particularly between the United States and Estonia. Through our close cooperation, both nations have demonstrated our commitment to identifying sophisticated attacks on U.S. financial networks that are directed and operated from overseas and our commitment to bringing the perpetrators to justice.”

FBI Atlanta Special Agent in Charge Greg Jones said, “Through the diligent efforts of the victim company and multiple law enforcement agencies within the United States and around the world, the leaders of a technically advanced computer hacking group were identified and indicted in Atlanta, sending a clear message to cyber-criminals across the globe. Justice will not stop at international borders but continue with the on-going cooperation between the FBI and other agencies such as the Estonian Central Criminal Police and the Netherlands Police Agency.”

According to Acting United States Attorney Yates, the charges and other information presented in court: During November, 2008, PLESHCHUK, TŠURIKOV, and COVELIN allegedly obtained unauthorized access into the computer network of “RBS WorldPay,” the U.S. payment processing division of the Royal Bank of Scotland Group PLC, located in Atlanta. The indictment alleges that the group used sophisticated hacking techniques to compromise the data encryption that was used by RBS WorldPay to protect customer data on payroll debit cards. Payroll debit cards are used by various companies to pay their employees. By using a payroll debit card, employees are able to withdraw their regular salaries from an ATM.

Once the encryption on the card processing system was compromised, the hacking ring allegedly raised the account limits on compromised accounts, and then provided a network of “cashers” with 44 counterfeit payroll debit cards, which were used to withdraw more than $9 million from over 2,100 ATMs in at least 280 cities worldwide, including cities in the United States, Russia, Ukraine, Estonia, Italy, Hong Kong, Japan and Canada. The $9 million loss occurred within a span of less than 12 hours.

The hackers then allegedly sought to destroy data stored on the card processing network in order to conceal their hacking activity. The indictment alleges that the “cashers” were allowed to keep 30 to 50 percent of the stolen funds, but transmitted the bulk of those funds back to TSURIKOV, PLESHCHUK and other co-defendants, using means such as WebMoney accounts and Western Union. Upon discovering the unauthorized activity, RBS WorldPay immediately reported the breach, and has substantially assisted in the investigation.

Throughout the duration of the cashout, PLESHCHUK and TŠURIKOV allegedly monitored the fraudulent ATM withdrawals in real-time from within the computer systems of RBS WorldPay. Once the withdrawals were completed, PLESHCHUK and TŠURIKOV allegedly attempted to conceal their activities in the RBS WorldPay computer network by destroying and attempting to destroy data.

TŠURIKOV was not only an alleged hacker, but also distributed fraudulently obtained debit card account numbers and PIN codes to IGOR GRUDIJEV, who, in turn, allegedly distributed the information to Defendants RONALD TSOI, EVELIN TSOI, and MIHHAIL JEVGENOV in Estonia. Together, RONALD TSOI, EVELIN TSOI, and MIHHAIL JEVGENOV allegedly withdrew funds worth approximately $289,000 in U.S. funds from ATMs in Tallinn, Estonia. Charges based on these transactions are pending in Estonia.

The indictment charges sixteen counts. Count One charges PLESHCHUK, TŠURIKOV, COVELIN, and a fourth unidentified individual of conspiracy to commit wire fraud. Counts Two through Ten are substantive wire fraud charges brought against PLESHCHUK and TŠURIKOV, aided and abetted by COVELIN and the unidentified hacker, based on the computer commands sent from outside the United States to the computer network of RBS WorldPay in the Northern District of Georgia. Count Eleven charges PLESHCHUK, TŠURIKOV, COVELIN, and the fourth individual with conspiracy to commit computer fraud. Counts Twelve through Fourteen are substantive charges of computer fraud against the defendants. Count Fifteen charges these defendants with aggravated identity theft based on the prepaid payroll card account numbers and associated PIN codes they transferred, possessed, and used without authorization in committing the wire fraud. Count Sixteen charges RONALD TSOI, EVELIN TSOI, and JEVGENOV, aided and abetted by GRUDIJEV, with access device fraud.

The indictment seeks forfeiture of over $9.4 million of proceeds of the crimes from the defendants.

PLESHCHUK, TŠURIKOV, COVELIN, and the unidentified defendant each face a maximum sentence of up to 20 years for conspiracy to commit wire fraud and each wire fraud count; up to 5 years for conspiracy to commit computer fraud; up to 5 or 10 years for each count of computer fraud; a 2 year mandatory minimum for aggravated identity theft; and fines up to $3.5 million dollars. The charges against GRUDIJEV, the TSOI's, and JEVGENOV carry a maximum of up to 15 years incarceration for each count and a fine of up to $250,000. In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

The early detection of fraudulent ATM withdrawal activities in Tallinn, Estonia led to an immediate response by the Estonian Central Criminal Police. Their investigative efforts led to the prompt identification of TŠURIKOV, GRUDIJEV, the TSOIs, and JEVGENOV. TŠURIKOV is presently in custody in Estonia on charges related to access device fraud. The extradition of TŠURIKOV to the United States is currently in process. Access device fraud charges are also pending in Estonia against GRUDIJEV, the TSOI’s, and JEVGENOV. Cooperation between the Hong Kong Police Force and the FBI also led to a parallel investigation, resulting in the identification and arrest of two individuals who were responsible for withdrawing RBS WorldPay funds from ATM terminals in Hong Kong. The Netherlands Police Agency National Crime Squad High Tech Crime Unit and the Netherlands National Prosecutor’s Office provided key assistance in the investigation.

Members of the public are reminded that the indictment contains only allegations. A defendant is presumed innocent of the charges and it will be the government's burden to prove a defendant's guilt beyond a reasonable doubt at trial.

This case is being investigated by Special Agents of the Federal Bureau of Investigation. Assistance was provided by international law enforcement partners. The United States Secret Service also participated in the investigation. RBS World Pay immediately reported the crime and has substantially assisted in the investigation.

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Rome Man Charged With Tricking Employer into Paying More Than $4 Million for Non-Existent Timber

AARON FREEMAN, 49, of Rome, Georgia, and eight other Georgia men have been indicted by a federal grand jury for allegedly taking part in a scheme that caused FREEMAN’s employer, Temple Inland Inc., to pay more than $4.8 million for timber that did not exist. FREEMAN and seven of his co-defendants made their initial appearances in federal court in Rome today before United States Magistrate Judge Walter E. Johnson.

“Temple Inland operates a paper mill outside of Rome that processes hundreds of truckloads of timber every day,” said Acting United States Attorney Sally Quillian Yates. “FREEMAN was a scale house operator who allegedly manipulated the scales at the paper mill to credit cooperating drivers with delivering non-existent truckloads of timber. Temple Inland, a major employer in northwest Georgia, was defrauded into paying more than $4.8 million for these phantom deliveries of timber, and the drivers shared that money with FREEMAN.”

According to Acting United States Attorney Yates, the charges, and other information presented in court, FREEMAN was a scale house operator at the Temple Inland paper mill in Floyd County between June 2003 and June 2006. FREEMAN allegedly learned how to manipulate the scale house computer system to produce two weight readings when a single truck passed through the paper mill’s scale – a reading for the weight of the timber actually delivered, and a second reading for a phantom load. FREEMAN then recruited drivers to take credit for the phantom loads, and the drivers shared their payments with FREEMAN. The defendants are charged as follows:

FREEMAN and KEVIN FIELDS, 31, of Forsyth, Georgia; CURTIS HART, 52, and JASON JOSEPH, 32, both of Macon; ROGER CARTHERN, 63, and ANDREW CARTHERN, 40, both of Jefferson; J. DAVID CARTHERN, 64, of Commerce; ROBERT FRANK FERGUSON, JR., 56, of Maysville; and GEORGE TATE, 40, of Hartwell, are charged with conspiracy to commit wire fraud. The offense of wire fraud conspiracy is punishable by up to 20 years in prison and a fine of $250,000 per count. FREEMAN, FIELDS, HART, and JOSEPH are also charged with several counts of aiding and abetting each other to commit wire fraud, which is punishable by up to 20 years in prison and a fine of $250,000 per count. In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

The indictment charges that between September 2004 and June 2006, as the result of FREEMAN’s manipulation of the scale house computer at the Temple Inland paper mill, the corporation paid approximately $3.35 million for phantom deliveries that FIELDS claimed to have delivered. The indictment charges that FIELDS shared this money with FREEMAN. The indictment further charges that FIELDS recruited JOSEPH, whom Temple Inland paid over $910,000 for phantom deliveries – when in fact, JOSEPH never made a single delivery. The indictment alleges that FIELDS instructed JOSEPH to keep 15 percent of that money for personal benefit and another 20 percent to pay his state and federal income taxes, and to give him the remaining 65 percent, which FIELDS shared with FREEMAN. The indictment also charges that FIELDS recruited his father, HART, whom Temple Inland paid approximately $111,000 for phantom deliveries.

Regarding other members of the conspiracy, the indictment charges that as the result of FREEMAN’s creation of phantom loads of timber, Temple Inland paid more than $313,000 to ROGER and ANDREW CARTHERN; more than $112,000 to DAVID CARTHERN and ROBERT FRANK FERGUSON; and more than $160,000 to GEORGE TATE, and all whom shared their money with FREEMAN.

FREEMAN, FIELDS and JOSEPH are also charged with conspiracy to commit money laundering. The money laundering charge is punishable by up to 20 years in prison and a fine of $500,000. The indictment charges that among other money-laundering activities, FIELDS bought a certificate of deposit in the amount of $850,000 using his share of proceeds from the conspiracy.

JOSEPH is the only defendant who did not make his initial appearance in federal court today. He is scheduled to be arraigned at 10:00 a.m. on November 9, 2009.

Members of the public are reminded that the indictment contains only allegations. A defendant is presumed innocent of the charges and it will be the government's burden to prove a defendant's guilt beyond a reasonable doubt at trial.

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Mableton Man Faces Federal Charges Arising Out of Home Depot Kickback Scheme

Update: Ian Jay Evans was found NOT GUILTY August 25, 2010.
Case 1:09-cr-00449-RWS-RGV Document 93 Filed 08/25/10 Page 1 of 1
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
UNITED STATES OF AMERICA
v.
IAN JAY EVANS,
Defendant.
::::::::
CRIMINAL ACTION NO.
1:09-CR-0449-RWS
JUDGMENT AND ORDER OF DISCHARGE
The Jury having returned a verdict of not guilty as to all of the charges in
the Indictment, it is hereby ORDERED and ADJUDGED that Defendant Ian
Jay Evans is not guilty of the charges in the Indictment and is hereby
DISCHARGED from all obligations arising from this case.
SO ORDERED this 25th day of August, 2010.


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IAN JAY EVANS, 49, of Mableton, Georgia, has been indicted by a federal grand jury on one count of conspiracy to commit mail and wire fraud, one count of conspiracy to commit money laundering, and 17 additional counts of money laundering, related to bribes that he allegedly paid to a high-level Home Depot employee. EVANS was arraigned today by United States Magistrate Judge E. Clayton Scofield, III.

IRS Special Agent In Charge Reginael D. McDaniel said, “IRS Criminal Investigation will continue to commit financial expertise to unravel illegal schemes. Our role is to trace the ill-gotten monies to the individuals ultimately responsible for the crime.”

According to Acting United States Attorney Yates, the indictment and information presented in court: From approximately June 2002 through approximately May 2005, EVANS, a former Product Merchant for Home Depot, who left the company in February 2001, paid more than $1.4 million in kickbacks to RONALD DOUGLASS MATHENY II, 49, of Chattanooga, Tennessee, who was, at the time, a Product Merchant at Home Depot. In exchange for the kickbacks he received from EVANS, MATHENY arranged for Home Depot to purchase items through EVANS for resale in Home Depot’s retail stores on less than the most advantageous terms to Home Depot, and to have EVANS supply services to Home Depot and its suppliers on less than the most advantageous terms to Home Depot.

MATHENY was charged in a Criminal Information and pleaded guilty to one count of conspiracy to commit mail fraud and wire fraud and one count of conspiracy to commit money laundering in relation to this kickback scheme on May 19, 2009. MATHENY is scheduled to be sentenced by United States District Judge Richard W. Story on December 3, 2009, at 9:30 a.m.

EVANS could receive a maximum sentence of 20 years in prison on the conspiracy to commit mail and wire fraud, and a maximum sentence of 20 years in prison on the conspiracy to commit money laundering. In addition, EVANS could receive a maximum sentence of 10 years in prison on each of the substantive money-laundering counts. EVANS also could be fined up to $250,000 on each count. In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.

Members of the public are reminded that the indictment against EVANS contains only allegations. EVANS is presumed innocent of the charges, and it will be the government's burden to prove his guilt beyond a reasonable doubt at trial.

Anyone with information on corporate kickbacks and fraud is asked to call the FBI at 404-679-9000.

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Former Polk County Jail Sergeant Charged with Using Excessive Force

JOSHUA DAVID LOWE, 25, of Aragon, Georgia, a former sergeant at the Polk County Jail, has been indicted by a federal grand jury on a felony charge of using excessive force against an inmate. LOWE is scheduled to make an initial appearance before United States Magistrate Judge Walter E. Johnson in Rome on Monday, June 1, 2009, at 10 a.m.

United States Attorney David E. Nahmias said, “The great majority of Georgia’s detention officers serve with honor and courage, often under trying circumstances as they guard the inmates in our jails and prisons. But any officers who abuse their authority by violently assaulting inmates violate the Constitution and face going to prison as inmates.”

Polk County Sheriff Kelly McClendon said, “This type of behavior will not be tolerated in Polk County. We will aggressively deal with it in the most effective and appropriate manner, so that justice will be done.”

According to United States Attorney Nahmias, the indictment, and information in court: On February 7, 2009, LOWE, working as a detention officer, allegedly used excessive force when he struck an inmate at the Polk County Jail. The indictment alleges that this assault violated the inmate’s constitutional right not to be deprived of liberty without due process of law. The Polk County Sheriff’s Department discovered the alleged violation and immediately reported it to the FBI for further investigation. LOWE was terminated as a result of the incident.

Members of the public are reminded that an indictment contains only allegations. A defendant is presumed innocent of the charges and it will be the government's burden to prove the defendant's guilt beyond a reasonable doubt at trial.

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Contractor Living in Marietta, Georgia Charged with Defrauding Cincinnati Leasing Company Out of More Than $1.6 Million

A federal grand jury in Cincinnati on May 20, 2009, indicted Vernon Menifee, 39, of Marietta, Georgia alleging that the contractor defrauded Cincinnati-based Schottco Corporation and Schott Leasing Company out of $1,686,647.30 between 2006 and 2008, United States Attorney Gregory G. Lockhart of the Southern District of Ohio and Keith L. Bennett, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Division announced.

Menifee allegedly claimed that he needed the money to complete construction projects for Hurricane Katrina victims. The projects were never finished and he used at least part of the money to open a bar here.

In 2006, Menifee lived in Georgia and owned a construction business in Cincinnati called Built By Brothers. Some of the construction work was located in New Orleans, Louisiana. Menifee leased construction vehicles and luxury cars from Schott Leasing Company, a subsidiary of Schottco Corp. The indictment alleges that, through a personal associate who worked for Schottco, Menifee set up a wire fraud scheme to transfer money from the company’s accounts to his personal accounts.

The indictment also charges that Menifee committed mortgage fraud when he made several false statements including falsely claiming that there were no pending judgments against him when he applied to Countrywide in 2007 for a loan connected with his property in Marietta, Georgia. In September 2006, the U.S. District Court here had ordered him to pay restitution of $895,872 as part of his sentence for conviction on tax evasion and bank fraud charges in connection with a mortgage fraud scheme.

The indictment charges Menifee with 44 counts of aiding and abetting wire fraud, each of which has a maximum possible sentence of 20 years imprisonment. The indictment also charges one count of conspiracy to commit loan fraud, which is punishable by up to five years imprisonment, and one count of making false statements on a loan application, punishable by up to 30 years imprisonment.

Local law enforcement authorities in Georgia arrested Menifee in Marietta on April 10 for violating the conditions of his supervised release. He has been in custody since his arrest.

Lockhart commended the FBI agents who investigated the case, and Assistant U.S. Attorney Jennifer C. Barry, who is prosecuting the case.

An indictment is merely an accusation. A defendant should be presumed innocent until and unless proven guilty in court.

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Two Fulton County Sherriff's Lieuttenants Arrested

Lieutenant ROBERT W. HILL, JR., 46, of Decatur, Georgia, and Lieutenant EARL GLENN, 47, of McDonough, Georgia, both Fulton County Deputy Sheriffs at the Fulton County Jail, were arrested yesterday by FBI agents after a federal grand jury indicted each of them for violating the civil rights of an inmate, obstructing justice, filing a false report, and making false statements to federal agents. The defendants will make their initial appearances before a United States Magistrate Judge later today.

United States Attorney David E. Nahmias said, “About a month ago, we announced that a former Fulton County Jail officer had been charged with federal crimes for allegedly beating an inmate and obstructing the investigation of that and another incident at the jail. We warned that the federal charges should serve as a wake-up call to other officers who have violated the civil rights of jail inmates or who believe they can get away with obstructing our efforts to uncover the truth. Today two more officers - this time two Lieutenants - were arrested at the jail after a federal grand jury indicted them for separate assaults on another inmate and for trying to obstruct our investigation.”

Nahmias continued, “We are continuing to investigate these incidents and others at the Fulton County Jail. Our message today, to any other officers who have been involved in assaults on inmates or obstruction of the truth, is simple: Did you think we were kidding? You will be much better off calling the FBI now, before you too are led out of the jail or your home in handcuffs.”

FBI Atlanta Special Agent in Charge Greg Jones said, “Obstructing an FBI investigation only strengthens our resolve to find the truth and bring to justice those involved in such egregious conduct.”

Fulton County Sheriff Ted Jackson said, “We are continuing to work in concert with the FBI and the United States Attorney’s Office in this ongoing investigation. We will absolutely not tolerate any violation of civil rights and will work to weed out any and all jail personnel who themselves break the law.”

The federal indictment charges HILL with causing injury to a Fulton County Jail inmate by using excessive force against the inmate on August 9, 2008; soliciting subordinates to commit civil rights violations against Fulton County Jail inmates; making a false report about the use of force incident; making a false statement to FBI agents; and obstructing the federal investigation of the matter.

The federal indictment charges GLENN with causing injury to a Fulton County Jail inmate by using excessive force against the inmate on August 9, 2008; making a false report about the use of force incident; making a false statement to FBI agents; and obstructing the federal investigation of the matter.

The maximum sentence for both defendants for the violation of civil rights count is 10 years in prison and a fine of $250,000. The maximum sentence for both defendants for the false report count is 20 years in prison and a fine of $250,000. The maximum sentence for both defendants for the obstruction count is 20 years in prison and a fine of $250,000. The maximum sentence for both defendants for the false statement count is 5 years in prison and a fine of $250,000. The maximum sentence for HILL’s solicitation to commit a civil rights violation is 5 years in prison and a fine of $125,000.

Members of the public are reminded that the criminal complaint contains only allegations. Each defendant is presumed innocent of the charges and it will be the government's burden to prove the defendant's guilt beyond a reasonable doubt at trial.

This case is being investigated by Special Agents of the Federal Bureau of Investigation.

Assistant United States Attorneys Brent Alan Gray and Angela M. Jordan are prosecuting the case.

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Smyrna, Ga., Man Indicted for Tricking Children Into Sending Nude Pictures Over the Internet

/PRNewswire/ -- Michael Macaluso III, 37, formerly of Smyrna, Ga., and now of Marietta, Ga., has been indicted by a federal grand jury on charges of producing, distributing and receiving child pornography, and using a computer to entice a minor to engage in sexual activity, U.S. Attorney for the Northern District of Georgia David E. Nahmias announced today.

Macaluso was arraigned early this afternoon and a bond hearing is now scheduled for April 15, 2009, at 3 p.m. before U.S. Magistrate Judge Alan Baverman.

According to U.S. Attorney Nahmias and the information presented in court: In approximately June 2006, Macaluso allegedly posed online as a 15-year-old male and befriended a 15-year old male in Connecticut. Macaluso allegedly convinced the victim to send him nude pictures and videos of the victim engaging in sexually explicit conduct. When the victim told Macaluso he did not want to send any more pictures, Macaluso allegedly threatened to expose the victim's sexual orientation and post the explicit pictures in a widespread manner on the internet.

Relating to the second victim, in approximately March 2008, Macaluso allegedly posed as a 16-year-old female on the Web site "MySpace.com" and befriended a 14-year-old male in New Jersey. The two communicated online for a period of time, and again Macaluso allegedly convinced the victim to send him nude pictures and videos of the victim engaging in sexually explicit conduct. Eventually, the victim expressed a desire to stop engaging in this activity, and Macaluso then allegedly threatened to post the victim's sexually explicit pictures in a widespread manner on the internet. During a search of Macaluso's computers, agents allegedly found a large number of child pornography images and videos.

The indictment charges Macaluso with two counts of production of child pornography, two counts of distribution of child pornography, two counts of receipt of child pornography, and two counts of using a computer to entice a child to engage in unlawful sexual activity. The production charges carry a mandatory minimum sentence of 15 years in prison and a maximum sentence of 30 years. The distribution and receipt charges carry a mandatory minimum sentence of five years in prison and a maximum sentence of 30 years, and the enticement charges carry a mandatory minimum sentence of 10 years and a potential maximum sentence of life in prison. Each count also carries a fine of up to $250,000.

An indictment contains only allegations. A defendant is presumed innocent of the charges and it will be the government's burden to prove a defendant's guilt beyond a reasonable doubt. U.S. Attorney Nahmias said, "We warn our children that they need to know who is really on the other end of their computer, but this case drives that warning home in an unfortunately terrible way. This adult defendant was allegedly posing online as a teenager in an effort to entice other teenagers into sending him pictures and videos of themselves engaged in sexual activity, and then threatening them with widespread exposure when the victims wanted to stop. We urge any other victims to contact the Georgia Bureau of Investigation. We also urge parents to use this case to educate their children about the dangers of internet contact with unknown persons and the loss of control involved in transmitting sexually explicit images of oneself on the internet."

GBI Director Vernon Keenan said, "Sex crimes against children have the highest priority at the GBI. We are working closely with the U. S. Attorney's Office as the federal penalties for such crimes are extremely harsh. Identifying and bringing to justice those who use the Internet to prey on children for sexual purposes is the mission of the 98 federal, state, and local agencies that participate in Georgia's Internet Crimes Against Children Task Force (ICAC). The ICAC Task Force program was created by the U.S. Department of Justice to help state and local law enforcement agencies enhance their investigative response to offenders who use the Internet, online communications systems, or other computer technology to sexually exploit children. Our experience has shown that there may be other victims of this defendant. I would urge any parent who feels their child may have come in contact with Macaluso to contact the GBI's High Technology Unit."

Anyone who may have more information about the case or has had similar contact with the defendant, whose birthdate is April 7, 1972, is encouraged to contact the Georgia Bureau of Investigation's (GBI) High Technology Unit at (404) 270-8870.

This case is being brought as part of Project Safe Childhood. In February 2006, the Attorney General launched Project Safe Childhood, a nationwide initiative designed to protect children from online exploitation and abuse. Led by the United States Attorney's Offices around the country, Project Safe Childhood marshals federal, state and local resources to apprehend and prosecute individuals who exploit children via the Internet. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

This case is being investigated by Special Agents of the GBI.

Assistant U.S. Attorney Corey Steinberg is prosecuting the case.

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Businessman Indicted for Nationwide Fraud Scheme Targeting Christian Audience

JEFFREY W. McLAIN, 52, of Marietta, Georgia, has been indicted by a federal grand jury on charges of mail fraud and wire fraud. McLAIN is expected to appear before a United States Magistrate Judge late this week or early next week. An exact time has not yet been set by the Court.

United States Attorney David E. Nahmias said, “This defendant advertised on Christian radio and used religious themes to sell a so-called ‘guaranteed’ business opportunity. He allegedly defrauded numerous victims of more than $200,000, saying that his so-called system would make them rich, and that it was not only legitimate but had a tone of religious approval. This defendant’s only true mission appears to have been making money by ripping off his customers.”

“U.S. Postal Inspectors are responsible for protecting the sanctity of the nation's mail system. We remain resolute in our investigative efforts to bring those to justice who are responsible for fraudulently utilizing the U.S. Mail system in the furtherance of their schemes. Make no mistake, those who choose this path will not get away with it,” said Martin D. Phanco, Inspector in Charge, Atlanta Division.

According to United States Attorney Nahmias, the indictment and information presented in court: From June 2005 through July 2006, McLAIN operated “Prophet 3H, LLC,” “Prophet 3H, Inc., ” “Georgia Home Health Care License and Certification Institute, Inc.,” (“GHLCI”), and “Healthcare State License and Certification Institute, Inc.,” d/b/a (“HLCI”) (collectively “HLCI”), all located at 1395 Marietta Parkway, Suites 115 and 105, in Marietta, Georgia. McLAIN advertised the businesses to potential customers, claiming they would become millionaires in one year or less by accessing “guaranteed” Medicaid clients.

McLAIN’s advertisements invited prospective customers to learn about his “guaranteed” money-making system at conferences he organized at major hotels and convention centers nationwide. The conferences were typically advertised on Christian radio stations with a large minority audience. “Home Healthcare” charged up to $85 for attendance, and up to $2,400 for the kit that would supposedly enable anyone to implement the system. At the conferences, McLAIN delivered an approximately three-hour motivational speech with religious overtones including comments such as “praise the Lord” and “the Lord taught me business strategy models...and within a year or two years, they became multi-million dollar businesses.”

The indictment alleges that victims were lured by fraudulent claims. In one alleged instance, a radio advertisement in Nashville, Tennessee, featured a testimonial in which the speaker said, “I never would have believed that I could make over $40,000 a month in my healthcare agency,” and “The most rewarding thing about going into healthcare isn’t just the $1.3 million we billed for last year, but serving those who are less fortunate.” McLAIN also claimed that “a $2,400 investment would turn into 15 million dollars, in just five years,” and that participants who agreed to pay his fee would learn how to “[r]etire in 2 to 5 years with an income of $45,000 plus, a month.”

The indictment alleges that these and other claims were false, because the “opportunity” that McLAIN ultimately presented after receiving his customers’ fees was bogus. The “opportunity” began with the suggestion that a customer incorporate two corporations: a healthcare company such as a home healthcare services provider for which the participant would seek Medicaid licensing approval, and a separate non-profit charitable organization. The purpose of the non-profit was to lure Medicaid beneficiaries to divulge their personal identification information, by offering small “donations” in exchange for this information. McLAIN then suggested that the customer would profit either by selling this Medicaid information to McLAIN’s “network,” or by using it to solicit the beneficiary to receive services from the customer’s for-profit health care company.

The indictment alleges that McLAIN purposely omitted material facts, namely that this “opportunity” was illegal in numerous ways. McLAIN’s system would have resulted in violations of the laws pertaining, among things, to the use of non-profit corporations and the conduct of healthcare agencies. Because of the defendant’s fraudulent representations and omissions, purchasers who made substantial investments to pursue this purported legitimate business opportunity could neither establish a business nor realize the wealth as promised by McLAIN. The indictment alleges that there were more than 15 victims, and the total loss amount was over $200,000.

This case is being investigated by federal agents with the United States Postal Inspection Service.

Assistant United States Attorneys Bernita Malloy and Jamila Hall are prosecuting the case.

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