Georgia Man and Woman Indicted for Defrauding Investors

GEOFFREY A. GISH, 56, of Marietta, Georgia, was arraigned yesterday before United States Magistrate Judge Janet King on charges that he and another individual operated a Ponzi scheme. A federal grand jury returned an indictment on August 24, 2010, charging GISH and MYRA J. ETTENBOROUGH, 55, of Roswell, GA, with conspiracy and mail and wire fraud arising out of their operation of GISH’s business, Weston Rutledge Financial Services, Inc. (“Weston Rutledge”), which was located in Marietta and, later, Roswell, Georgia. ETTENBOROUGH appeared for her initial appearance on the indictment on Friday.

United States Attorney Sally Quillian Yates said, “Investors lost millions of dollars that they were told was successfully invested and was generating earnings on their investment. Instead, Mr. Gish and Ms. Ettenborough allegedly made false promises and diverted the money to other uses, including their own personal benefit.”

Brian D. Lamkin, Special Agent in Charge, FBI Atlanta Field Office, stated: “The loss amounts sustained by the many victims in this investment fraud scheme represent the greed of those responsible. While it is hard to avoid becoming a victim of these aggressive and well constructed schemes when the facts and figures being provided are blatantly falsified, people should always be extremely cautious of promises of high rates of returns.”

According to United States Attorney Yates, the indictment and other information presented in court: Beginning in 2005 and continuing to May 17, 2006, GISH and ETTENBOROUGH conspired to defraud and defrauded investment clients of Weston Rutledge by fraudulently misrepresenting the ways in which they used their clients’ money and the purported earnings that the clients’ investments generated. On May 17, 2006, a federal judge froze Weston Rutledge’s assets and appointed a receiver to take over Weston Rutledge and find any and all assets derived from the alleged fraud for return to investors. Despite having received almost $29 million in investments from its clients, Weston Rutledge’s bank accounts had only approximately $1 million of the money raised from investors left when it was placed into receivership. The indictment alleges that GISH and ETTENBOROUGH used the invested funds for a variety of purposes that were different than the purposes and uses represented to investors. None of these uses returned any principal, earnings, or profits to Weston Rutledge that were consistent with or that supported the representations that GISH and ETTENBOROUGH made to investors about the earnings and profits generated with their funds.

The indictment alleges that GISH operated, controlled, and was the primary salesperson for Weston Rutledge, which was headquartered in Marietta, Georgia until August 2005, and thereafter at an office in Roswell, Georgia. GISH also established an office for Weston Rutledge in Denton, Texas. ETTENBOROUGH was Weston Rutledge’s Office Manager, responsible for managing its day-to-day operations, answering questions from investors about their accounts at Weston Rutledge, and maintaining Weston Rutledge’s various bank accounts, including the bank accounts established to receive and disburse investment funds raised from investors.

The indictment alleges that Weston Rutledge’s investment offerings included three pooled investment funds or entities named or referred to as “Zamindari Capital,” the “Lexington International Fund,” (the “Lexington Fund”) and “Oxford Adams.” Zamindari Capital purportedly was involved in bond or note trading “projects” or “programs” that varied in length. The Lexington Fund purportedly was involved in currency trading. Oxford Adams purportedly was involved in index or options investing.

The indictment alleges that to obtain investments, GISH made false representations to investors and potential investors about the uses, security, and profits and earnings of investments in Zamindari Capital and the Lexington Fund. When meeting with investors and potential investors, GISH falsely represented that funds invested in Zamindari Capital would be held in a bank account that was blocked, would not be touched, and not depleted during the course of the investment. GISH falsely represented that money invested in the Lexington Fund would be used for currency trading. GISH falsely promised that Zamindari Capital produced gains of 10-15 percent per month and that Lexington produced gains of 4-8 percent per month depending on the amount invested. GISH provided investors and caused investors to be provided with written materials repeating and confirming these false promises and representations.

The indictment alleges that ETTENBOROUGH, as Weston Rutledge's Office Manager, falsely portrayed to investors that Zamindari Capital and the Lexington Fund were successful investments that generated the returns and “earnings” that GISH promised and caused to be promised. GISH and ETTENBOROUGH sent investors monthly statements that falsely reflected earnings on and the growth of their funds invested in Zamindari Capital and the Lexington Fund. These statements showed increases in investors’ total account balances as a result of purported earnings or gains from the supposed investments.

The indictment alleges that GISH and ETTENBOROUGH used the money invested in Zamindari Capital and the Lexington Fund for a variety of uses and purposes that were different than those represented to investors. These uses and purposes included payments to investors who requested withdrawals or distributions of principal and earnings from their Zamindari Capital, Lexington Fund, and Oxford Adams investments; transfers to third parties purportedly for or in connection with investments or, in certain cases, as loans; payments and transfers to GISH and for his personal benefit; payment of Weston Rutledge’s operating expenses, including ETTENBOROUGH’s salary, other employee salaries, office rent, and travel expenses; payment of commissions to the sales representative working out of the Denton, Texas, office; payments to investors for referring new investors; and transfers to other Weston Rutledge bank accounts that GISH and ETTENBOROUGH established that were not related to Zamindari Capital or the Lexington Fund.

The indictment alleges that Weston Rutledge, Zamindari Capital, and the Lexington Fund did not receive significant and meaningful funds, earnings, and gains back from and as a result of GISH and ETTENBOROUGH's uses of investor money. GISH and ETTENBOROUGH's representations about Zamindari Capital and Lexington Fund earnings and gains, including the account statements that they sent and caused to be sent to investors, were not supported by and consistent with any earnings and gains returned or received from the supposed investments and loans made with investor funds. GISH and ETTENBOROUGH allegedly concealed and failed to disclose these material facts to investors.

The indictment alleges that in December 2005, and until it was placed into receivership on May 17, 2006, Weston Rutledge did not have sufficient funds on hand to satisfy all investor requests for withdrawals of principal and earnings. To help fund requested withdrawals, GISH and ETTENBOROUGH attempted to retrieve some of the money they had sent to a third party as a purported investment or loan. GISH and ETTENBOROUGH were unsuccessful and received no money back. GISH and ETTENBOROUGH delayed paying certain withdrawal requests until they could fund requested withdrawals with money from other investors.

The indictment charges one conspiracy count and 10 counts of mail and wire fraud. The conspiracy charge carries a maximum possible sentence of up to five years and a fine of up to $250,000. Each of the mail and wire fraud charges carry a maximum possible sentence of up to 20 years in prison and a possible 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.

Members of the public are reminded that the indictment only contains charges. The 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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Marietta Man Sentenced to Prison for Receiving Child Pornography

JUSTIN CROY, 25, of Marietta, Georgia, was sentenced June 28 by United States District Judge Charles A. Pannell, Jr. to serve six years in federal prison on a charge of receiving child pornography.

United States Attorney Sally Quillian Yates said of the case, “This defendant possessed a large collection of videos depicting the violent rape, molestation, and exploitation of the most vulnerable among us—our children. This office will continue to work with federal, state, and local law enforcement agencies to prosecute those who choose to use the Internet to proliferate images of the violent sexual assault of children.”

CROY was sentenced to six years in prison to be followed by 10 years of supervised release. CROY was convicted of these charges by a federal jury on March 19, 2010, after a four-day trial.

According to United States Attorney Yates, the charges and other information presented in court: In January 2009, a detective with the Smyrna Police Department was conducting an online, undercover investigation regarding the sexual exploitation of children. During the investigation, the detective received information that someone residing at the defendant's residence was involved with child pornography. In March 2010, officers with the Cobb County Police Department's Crimes Against Children Unit executed a search warrant at CROY's residence and recovered computer equipment that contained over 100 videos of prepubescent children, including infants and toddlers, being sexually assaulted.

The images recovered from CROY's computer equipment were sent to the National Center for Missing and Exploited Children's Victim Identification Program, where many of the children depicted in the images were determined to be known victims of child exploitation. The defendant’s child pornography collection included a video titled “The Pre Teen Toy Story” that provided step-by-step instructions on how to sexually assault infants and toddlers, including tips on how to avoid detection. CROY confessed to authorities that he had downloaded and repeatedly viewed the child pornography.

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 was investigated by the Crimes Against Children Unit of the Cobb County Police Department and the Smyrna Police Department.

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Defendants Sentenced for Telemarketing Stock Fraud Scheme

JOHN A. REECE, 57, of St. Augustine, Florida, and PATRICK J. SOLTIS, 47, of Hoschton, Georgia were sentenced today by United States District Judge Clarence Cooper to federal prison for operating a telemarketing scheme in Marietta, Georgia, that defrauded dozens of foreign individuals into investing hundreds of thousands of dollars in fraudulent companies.

United States Attorney Sally Quillian Yates said of the case, “These defendants ran an investment boiler room operation using telemarketers to pressure their unsuspecting victims into investing thousands of dollars in a variety of phony ventures. The defendants have now been sentenced to federal prison and ordered to pay restitution to their innocent victims.”

REECE was sentenced to six years and six months in prison to be followed by three years of supervised release, and ordered to pay restitution in the amount of $582,639. SOLTIS, who cooperated with the government and received a sentence reduction as a result, was sentenced to three years and five months in prison to be followed by three years of supervised release, and ordered to pay restitution in the amount of $301,601. REECE was convicted of these charges after pleading guilty on January 11, 2010. SOLTIS was convicted after pleading guilty on October 15, 2008.

According to United States Attorney Yates, the charges and other information presented in court: REECE and SOLTIS lied to investors in 2002 to entice them to invest in a shell company, Wolf & Soltis Holdings, LLC. Through telemarketers they hired to sell the stock in unsolicited transactions, the defendants falsely claimed that Wolf & Soltis had substantial business operations and plans to expand in a number of areas. In fact the company was bogus, had no operations, assets, revenues, or even employees, other than the hired telemarketers.

As part of the scheme, the defendants claimed that they owned a private bottled water company, were involved with the University of Minnesota to develop a tree species that grew more quickly, and owned a cosmetics company for which entertainment personality Raquel Welch was the spokesperson. All of these claims were false. In truth, the defendants pocketed the lion’s share of the money they received from investors and used the rest to pay their telemarketers, telephone bills, and related expenses. After a disagreement with SOLTIS, REECE began to operate a second fraudulent telemarketing scheme through an entity he operated known as “Wellington Group,” purportedly selling shares in “Australian Biofund Investments, Ltd.” (ABIL), based on material misrepresentations and omissions. REECE retained the vast majority of the money invested in Wellington, but failed to disclose that fact and even falsely informed investors that there was no commission associated with their investments.

To execute their fraud, REECE and SOLTIS ran a boiler room with high-pressure telemarketers they hired to call hundreds of potentially vulnerable victims each day from call lists they had purchased. In addition to providing call lists to the telemarketers, REECE developed scripts for them to use in selling the fraudulent investments. The call lists targeted foreign investors in English speaking countries. The defendants intentionally targeted foreign investors in part to avoid, or at least delay, the scrutiny of U.S. law enforcement. As a result, the overwhelming majority of the victims live in foreign countries, primarily Australia and Canada. The defendants’ schemes resulted in a loss of over $600,000 to the victims.

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

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Atlanta Chiropractors Indicted for Health Care Fraud

ANDREW L. SOKOL, 41, and JULIE B. WEISBERG, 35, both of Marietta, Georgia, were arraigned October 9, 2009, on felony charges of fraudulently submitting millions of dollars of insurance claims to Blue Cross Blue Shield and other private insurers for physical therapy services that were not actually provided.

Acting United States Attorney Sally Quillian Yates said, “These defendants allegedly billed Blue Cross Blue Shield and other private insurers over $11 million for physical therapy services they did not provide, when in fact they were providing massages, personal training, and chiropractic adjustments to their patients. Health care fraud ultimately affects everyone, in higher premiums and higher service costs, and we will vigorously prosecute those who abuse the system.”

Atlanta FBI Special Agent in Charge Gregory Jones said of the case, “Health care providers who abuse their positions by filing fraudulent insurance claims for personal financial gain are a very real problem to the health care industry itself. Loss amounts in these criminal fraud cases often demonstrate a level of greed that is hard to comprehend. The FBI will continue to work with its law enforcement partners as well as industry experts in combating health care fraud.”

“IRS Criminal Investigation continues to be actively involved in deterring Health Care Fraud, in conjunction with the Law Enforcement,” said Reginael D. McDaniel, Special Agent in Charge. “CI's role is to follow the money trail from the initial criminal act to the perpetrator who received the financial benefit.”

According to Acting United States Attorney Yates, the charges and other information presented in court, SOKOL is a licensed chiropractor who owned and operated “WellnessOne” chiropractic clinics in Marietta, Buckhead, Duluth, Vinings, and other locations in metro Atlanta. WEISBERG is also a licensed chiropractor, married to SOKOL, and was a partner in WellnessOne of Marietta, the most profitable of the clinics.

WellnessOne allegedly offered massage, personal training, and chiropractic services to its patients, but the indictment alleges these services were fraudulently billed to insurance companies as physical therapy. SOKOL and WEISBERG allegedly targeted MBNA and Bank of America employees because the Blue Cross Blue Shield policies covering those employees provided generous chiropractic and physical therapy insurance benefits. To attract these “patients” to WellnessOne clinics, SOKOL and WEISBERG designed and implemented frequent promotions, giving bank employees who came in for a massage or chiropractic adjustment gifts cards in the amount of $50, $25, or $10, and restaurant and free gasoline cards; raffle tickets offering the chance to win BMW and Hummer leases or $5,000; frozen turkeys and pies at Thanksgiving and Christmas; gift bags containing supplements, vitamins, lumbar and cervical pillows, and weight loss patches; and free catered lunches in the clinics. SOKOL and WEISBERG also waived these patients’ co-payments and deductibles, resulting in the patients being compensated – with gift cards and other items of value – while paying nothing for the massages and chiropractic adjustments they received at WellnessOne.

From January 2005 through September 2007, SOKOL and WEISBERG allegedly employed licensed medical doctors and physical therapists in order to bill massage as physical therapy, even though these licensed providers never saw the majority of patients and massage therapists were actually giving the massages. Several medical providers quit when they realized WellnessOne was billing insurers under their names for services they did not perform. In addition to using false provider names and billing codes, SOKOL allegedly directed that services be billed on different days and under different tax identification numbers to conceal the fraud from insurers.

Beginning in 2006, SOKOL and WEISBERG allegedly permitted patients to visit a local gym in the Atlanta area and then fraudulently billed those gym visits to insurers as physical therapy. When that arrangement ended, SOKOL allegedly had small gyms built in the WellnessOne clinics and fraudulently billed personal training sessions to insurers as physical therapy.

The indictment also alleges SOKOL and WEISBERG set quotas for employees and pressured the medical doctors on staff to order unnecessary tests and procedures, so that insurers could be billed more. SOKOL and WEISBERG allegedly had receptionists ask patients to sit in “wobble chairs” and lay on “hydro beds” for a few minutes before their massages and chiropractic adjustments, so that insurers could also be billed for these “therapies,” and had them automatically fit patients for two sets of shoe orthotics that were billed to insurers. The indictment alleges that as a result of the conspiracy and scheme to defraud, the defendants caused the submission of over $11 million in fraudulent insurance claims for physical therapy procedures to Blue Cross Blue Shield and other private insurers.

SOKOL and WEISBERG were indicted by a federal grand jury on October 6, 2009. The indictment charges SOKOL with one count of conspiracy, 53 counts of health care fraud, 3 counts of mail fraud, and 5 counts of money laundering. The indictment charges WEISBERG with one count of conspiracy, 24 counts of health care fraud, and 3 counts of mail fraud. The indictment also includes a forfeiture provision.

The conspiracy charge carries a maximum sentence of 10 years in prison, the health care fraud counts each carry a maximum of 10 years in prison, the mail fraud counts each carry a maximum of 20 years in prison, and the money laundering counts each carry a maximum of 10 years in prison. Each conspiracy, health care fraud, and mail fraud count carries a maximum fine of up to $250,000. Each money laundering count carries a maximum fine of up to $250,000 or, in the alternative, a fine of up to twice the amount of criminally derived property involved in the transaction. A forfeiture provision in the indictment seeks any and all ill-gotten gains from the alleged scheme, including a personal property at 3306 Hadleigh Court, in Marietta, Georgia.

Members of the public are reminded that the indictment only contains charges. The defendants are presumed innocent of the charges and it will be the government’s burden to prove the defendants’ guilt beyond a reasonable doubt at trial.

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Justice Department Seeks to Shut Down Georgia Tax Preparer

/PRNewswire/ -- The United States has sued a tax return preparer in Marietta, Ga., seeking to bar him from preparing federal tax returns for others, the Justice Department announced today. According to the Government complaint, Robert Knupp of Marietta prepares federal income tax returns for customers, claiming large fraudulent tax refunds. Court papers filed in the case allege that Knupp prepared a tax return in which he claimed a fraudulent refund for one customer of more than $2 million.

The suit alleges that Knupp employs a tax fraud scheme that relies on false IRS Forms 1099-OID claims to report fictitious tax withholding on his customers' returns and then claims refunds of huge amounts. The complaint further alleges that the scheme is part of a growing trend among tax defiers to file frivolous tax returns and forms in an attempt to escape their federal tax obligations and steal from the U.S. Treasury.

While the Internal Revue Service (IRS) detects and stops most fraudulent refund claims, Knupp's fraudulent tax return preparation has resulted in the IRS's issuance of over $65,000 in erroneous refund payments to his customers. The government alleges that the total amount of fraudulent refunds requested on the returns Knupp prepared or filed in 2009 was approximately $11 million.

Customers who participate in this tax fraud scheme may be subject to sizeable penalties for filing returns with excessive refund claims -- including a penalty equal to 20 percent of the amount improperly claimed. The penalty applies even if, as usually happens, the IRS detects the false claim and blocks a tax refund. Thus a taxpayer improperly claiming a $2 million refund could be liable for a $400,000 penalty as well as other penalties and possible criminal prosecution.

"Taxpayers should report any tax preparer who suggests reporting fictitious tax withholding on a tax return by following instructions available at www.irs.gov," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department's Tax Division. "These schemes carry a high price -- steep civil penalties and, where appropriate criminal prosecution -- for preparers who promote them and for their customers who sign false tax returns."

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Atlanta Area Lawyer Sentenced to Over 10 Years in Prison for Operating a $40 Million “Ponzi” Investment Scheme

ROBERT P. COPELAND, 47, of Marietta, Georgia, was sentenced today by United States District Judge Beverly B. Martin to serve over 10 years in federal prison on a charge of wire fraud, relating to a $40 million investment fraud scheme.

United States Attorney David E. Nahmias said, “Many victims lost their life savings and retirements as a result of this massive and long-running scam, perpetrated by a lawyer who purposefully solicited retirees. He will now receive the retribution and punishment that this devastating crime requires.”

COPELAND was sentenced to 10 years, one month in prison to be followed by 3 years of supervised release, and ordered to pay restitution of approximately $16.7 million. The United States has also seized or frozen numerous assets relating to COPELAND’s scheme, including 12 real estate properties, bank accounts, artwork, jewelry, automobiles, and stock certificates. COPELAND pleaded guilty to the charge on April 9, 2009.

According to United States Attorney Nahmias and other information presented in court: COPELAND, a Marietta-based real estate and elder law attorney, operated a fraudulent investment scam, commonly known as a “Ponzi” scheme, from at least 2004 through early 2009. He solicited individuals directly, through seminars he participated in, and through financial planners to whom he paid commissions in exchange for referrals of investment clients. COPELAND falsely represented that he would use an investor’s money in lucrative real estate financing and/or development activities, such as by funding a mortgage or bridge loan to a real estate purchaser who needed financing.

Typically, COPELAND would promise returns as high as 15% every 6 to 12 months, and would furnish the investor a note and security deed that would purport to document the investor’s secured interest in a particular piece of real estate. Based on these representations, COPELAND raised more than $40 million since 2004 from hundreds of investors nationwide. Some of these investments constituted retirement funds.

COPELAND’s investment business was a scam. He was engaged in little if any real estate financing, development, or other profit-making activities with investor funds. The notes and security deeds he furnished investors were in almost all cases bogus. Instead of using investor funds in the ways he had represented, he operated a so-called “Ponzi” scheme. In other words, COPELAND used new investments to pay earlier investors the distributions that he had promised. When the time came to pay the new investors, he would have to solicit and take in yet more investments. This created an unsustainable and ever-expanding mountain of debt. When the scheme collapsed in early 2009, COPELAND was left owing over $28 million to over 125 victims.

The case remains under investigation.

This case is being investigated by Special Agents of the FBI. The U.S. Securities and Exchange Commission is pursuing a related civil enforcement action.

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Defendant Found Guilty of Conspiracy to Support Terrorists

After a bench trial held last week in the Northern District of Georgia, U.S. District Judge William S. Duffey, Jr., announced today that Syed Haris Ahmed, 24, has been found guilty of conspiracy to provide material support to terrorists.

"This case has never been about an imminent threat to the United States, because in the post-9/11 world we will not wait to disrupt terrorism-related activity until a bomb is built and ready to explode," said David E. Nahmias, U.S. Attorney for the Northern District of Georgia. "The fuse that leads to an explosion of violence may be long, but once it is lit - once individuals unlawfully agree to support terrorist acts at home or abroad - we will prosecute them to snuff that fuse out. This investigation is connected to arrests and convictions of multiple terrorist supporters in Atlanta and around the world - all before any innocent people were killed. I commend the agents, prosecutors, and support staff who have worked so hard for so long to gather and present the evidence that led to today's guilty verdict."

"This prosecution underscores the importance of international and domestic cooperation in combating terrorism," said David Kris, Assistant Attorney General for National Security. "The agents, analysts and prosecutors involved in this case and in related investigations around the world deserve a special thanks for their efforts."

"Protecting the United States from terrorist attacks is the highest priority of every FBI employee," said FBI Atlanta Special Agent in Charge Gregory Jones. "Working with our law enforcement and intelligence community partners, the FBI was fortunate enough to have disrupted and dismantled a group whose stated goal was to provide support to those engaged in terrorism. I would like to thank the men and women of the Atlanta Joint Terrorism Task Force (JTTF) who, for over a year and a half, painstakingly pursued this defendant and others as they conspired and devised ways to achieve their dangerous goals. The conviction in this case validates the FBI's approach that we do not need to wait, nor should we wait, for an individual to be caught with his hands on a bomb before we recognize and respond to the threat."

According to U.S. Attorney Nahmias and the evidence presented during the trial:

Ahmed is a naturalized U.S. citizen who was born in Pakistan and raised in Marietta and Dawsonville, Ga. At trial, the government presented evidence that, beginning in late 2004 and early 2005, Ahmed unlawfully agreed (conspired) with others to provide material support to terrorists engaged in violent jihad. The evidence indicated that the material support consisted of: (1) Ahmed and other individuals who would provide themselves as personnel to engage in violent jihad, and (2) property, namely, video clips of symbolic and infrastructure targets for potential terrorist attacks in the Washington, D.C., area, including the United States Capitol, which were taken by Ahmed and his principal alleged co-conspirator and then sent to "the jihadi brothers" abroad.

At trial, the government presented evidence that Ahmed and his co-conspirators used the Internet to develop relationships and maintain contact with each other and with other supporters of violent jihad in the United States, Canada, the United Kingdom, Pakistan, and elsewhere. In support of the conspiracy, in March 2005 Ahmed traveled with his principal co-conspirator to Toronto, Canada, to meet with other co-conspirators and discuss their plans to travel to Pakistan in an effort to attend a paramilitary training camp operated by a terrorist organization, as well as potential targets for terrorist attacks in the United States.

In April 2005, Ahmed and his principal co-conspirator traveled to the Washington, D.C., area to take the casing videos, which the government's evidence showed they made to establish their credentials with other violent jihad supporters as well as for use in violent jihad propaganda and planning. Ahmed's co-conspirator sent several of the video clips to Younis Tsouli, a/k/a "Irhabi007" (Arabic for "Terrorist 007"), a propagandist and recruiter for the terrorist organization Al Qaeda in Iraq, and to Aabid Hussein Khan, a/k/a "Abu Umar," a facilitator for the Pakistan-based terrorist organizations "Lashkar-e-Tayyiba" and "Jaish-e-Mohammed." Both Tsouli and Khan have since been convicted of terrorism offenses in the United Kingdom.

The government also presented evidence at trial that in July 2005, Ahmed traveled from Atlanta to Pakistan in an unsuccessful attempt to enter a training camp and ultimately engage in violent jihad. After returning to Atlanta to resume his studies at Georgia Tech in August 2005, Ahmed expressed regret at his failure to join violent jihadists, conducted internet research on topics such as high explosives and evading surveillance, and discussed his intent to make another attempt to enter a violent jihad training camp.

In March 2006, however, Ahmed was approached by FBI agents and agreed to a series of voluntary, non-custodial interviews over the course of eight days. Amid efforts to deny his illegal activities and mislead the agents, Ahmed made increasingly incriminating statements. Efforts by the FBI to obtain Ahmed's cooperation in the ongoing international terrorism investigation ended after the FBI discovered that Ahmed was surreptitiously contacting his principal co-conspirator, who was then in Bangladesh, to advise him of the FBI investigation and to warn him not to return to the United States. The conspiracy to provide material support to terrorists did not result in any known acts of terrorism.

Ahmed was arrested in Atlanta on March 23, 2006, on the original indictment in this case, which charged him with one count of material support of terrorism. He has been in custody since that time. The initial indictment was unsealed and publicly announced on April 20, 2006, after the arrest of the alleged principal co-conspirator in Bangladesh. Superseding indictments added three additional charges.

Ahmed recently waived his right to a jury trial on the conspiracy charge of the second superseding indictment (Count One) and agreed to have the verdict decided by the Court. The other three counts were severed. The bench trial was held on June 1-4, 2009, and the Court then took the verdict under advisement until today.

Judge Duffey delivered the guilty verdict in open court, but sealed his written findings supporting the verdict until the completion of the jury trial of a related case against the alleged principal co-conspirator, which is scheduled to begin on August 3, 2009. Judge Duffey set a hearing for tomorrow, June 11, at 11:00 a.m., for anyone interested in being heard on the sealing of the findings supporting the guilty verdict.

Ahmed could receive a maximum sentence of 15 years in prison, followed by a term of supervised release up to life, 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. A sentencing date will be set after the completion of the alleged co-conspirator's trial.

This case is being investigated by agents and officers of the Atlanta Joint Terrorism Task Force (JTTF), which is led by the FBI, Atlanta Division.

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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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Georgia Attorney Pleads Guilty to Over $28 Million Investment Fraud Scheme‏

ROBERT P. COPELAND, 48, of Marietta, Georgia, pleaded guilty yesterday in federal district court to committing a five-year long investment scam that defrauded more than 125 victims of more than $28 million.

United States Attorney David E. Nahmias said, “This is yet another tragic case in which dozens and dozens of victims lost their hard-earned money in what turned out to be a massive and long-running investment fraud scheme. This case is particularly disturbing because the defendant was a lawyer and many of his victims were senior citizens, some of whom lost their life savings. The defendant is now cooperating in the ongoing investigation and in our efforts to recover whatever assets are left, but he will still face the punishment that this devastating crime requires.”

According to United States Attorney Nahmias, the Criminal Information and other information presented in court: COPELAND, a Marietta-based real estate and elder law attorney, operated a fraudulent investment scam, commonly known as a “Ponzi” scheme, from at least 2004 through early 2009. He solicited individuals directly, through seminars he participated in, and through financial planners to whom he paid commissions in exchange for referrals of investment clients. COPELAND represented that he would use an investor’s money in lucrative real estate financing and/or development activities, such as by funding a mortgage or bridge loan to a real estate purchaser who needed financing. Typically, COPELAND would promise returns as high as 15% every 6 to 12 months, and would furnish the investor a note and security deed that would purport to document the investor’s secured interest in a particular piece of real estate. Based on these representations, COPELAND raised more than $40 million since 2004 from hundreds of investors nationwide. Some of these investments constituted retirement funds.

COPELAND admitted today that his investment business was a scam. He was engaged in little if any real estate financing, development, or other profit-making activities with investor funds. The notes and security deeds he furnished investors were in almost all cases bogus. Instead of using investor funds in the ways he had represented, he operated a “Ponzi” scheme, using new investments to pay earlier investors the distributions that he had promised. When the time came to pay the new investors, he would have to solicit and take in more investments. This created an unsustainable and ever-expanding mountain of debt. When the scheme collapsed in early 2009, COPELAND was left owing over $28 million to over 125 victims.

COPELAND was charged in a Criminal Information earlier this month with one count of wire fraud, which encompasses the entirety of the approximate 5-year long scheme. He pleaded guilty to that charge today. He could receive a maximum sentence of 20 years in prison and a fine of up to $250,000, along with full restitution to all victims and forfeiture of all proceeds of the scheme. 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 United States has already seized or frozen numerous assets relating to COPELAND’s scheme, including 12 real estate properties, bank accounts, artwork, jewelry, and automobiles. As part of his plea agreement, COPELAND is cooperating in the ongoing investigation of this case and in efforts to recover all remaining assets.

Sentencing is scheduled for July 10, 2009, at 2 p.m., before United States District Judge Beverly B. Martin, although the court today noted that the sentencing hearing may be reset to a date later than July 10.

This case is being investigated by Special Agents of the Federal Bureau of Investigation, and is being coordinated with a related civil enforcement action against COPELAND brought by the Atlanta Division of the U.S. Securities and Exchange Commission.

Assistant United States Attorneys Justin S. Anand and Gerald S. Sachs are prosecuting the case.

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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Federal Jury Finds Chiropractor Guilty of $3 Million Health Care Fraud Scam

A jury in federal district court has returned a guilty verdict against DR. WILLIAM STEARNS, DC, 47, of Marietta, Georgia, on 18 charges of health care fraud and five charges of money laundering.

United States Attorney David E. Nahmias said, “Today’s verdict sends the message that health care providers who fraudulently bill for their services will be held accountable for their crimes. The Defendant and his partners received millions of dollars to which they were not entitled, by lying to insurers about the services they were providing patients. These lies contribute to the problem of soaring health costs for all, and will be vigorously prosecuted.”

According to United States Attorney Nahmias and the information presented in court:

In 2004, STEARNS and two partners, fellow chiropractors STEVEN LEVINE and CHRISTOPHER TOPEL, operated three clinics around the Atlanta area under the name Comprehensive Care Medical Group (“CCMG”). CCMG, under the Defendant’s direction, fraudulently billed Blue Cross/Blue Shield of Georgia for two separate back pain procedures, costing that insurer alone approximately $3 million. Both LEVINE and TOPEL previously pleaded guilty to the charges.

First, the Defendant and his partners fraudulently billed for a procedure known as Vertebral Axial Decompression (“VAX-D”) – a non-invasive back pain procedure that uses a mechanical table to stretch a patient’s spine. Blue Cross/Blue Shield of Georgia considers VAX-D to be investigational and not medically necessary, and made clear to health care providers that it did not cover the procedure. Thus, the Defendant, along with LEVINE and TOPEL, were convicted of having lied to Blue Cross about what procedures they were performing in order to get paid for this non-covered procedure. Specifically, instead of using the specific billing code assigned to VAX-D, CCMG used a different code that pertained to surgical nerve decompression procedures. The Indictment charged that the Defendant used that code because he and the others knew Blue Cross would pay for it, and would not pay for VAX-D. The proof at trial included testimony from the Defendant’s former employees, several of whom were explicitly instructed to not refer to the procedure as “VAX-D” in patient files.

Second, the Defendant also fraudulently billed for an electrical stimulation procedure using a device known as “Hako-Med.” Instead of billing for a relatively low-paying electrical stimulation procedure, the Defendant instead claimed to be performing surgical procedures known as nerve block injections. This was false, but allowed the Defendant to bill for rates 5-10 times as high as if he had correctly billed for electrical stimulation.

STEARNS could receive a maximum sentence of 230 years in prison and a fine of up to $5,750,000. Sentencing is scheduled for February 12, 2009 at 4:00 pm before United States District Judge Clarence Cooper.

This case was investigated by Special Agents of the Federal Bureau of Investigation along with the U.S. Office of Personnel Management.

Assistant United States Attorneys Teresa D. Hoyt and Justin S. Anand are prosecuting the case.

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Man Pleads Guilty for Role in Scheme to Defraud Department of Veterans Affairs

PRNewswire-USNewswire/ -- The ex-boyfriend of a former Department of Veterans Affairs (VA) social work associate pleaded guilty today for his role in a scheme to defraud the United States of the associate's honest services in connection with her work finding suitable housing and daily care for mentally ill and disabled military veterans, Acting Assistant Attorney General Matthew Friedrich of the Criminal Division and U.S. Attorney David E. Nahmias of the Northern District of Georgia announced.

Darrick O. Frazier, 33, of Atlanta, pleaded guilty before U.S. District Judge Richard W. Story in Atlanta to one count of honest services mail fraud. At sentencing, Frazier faces a maximum sentence of five years in prison, a $250,000 fine and $20,200 in restitution. A sentencing date has not been scheduled. Frazier was indicted on Nov. 14, 2006, along with his ex-girlfriend, Bridgette L. Davidson, 37, who was employed as a social work associate with the VA during the time the alleged criminal scheme occurred. A trial date for Davidson has not been set by the court.

In his guilty plea, Frazier admitted that from approximately November 2001 through March 2002, he and Davidson rented a home in Marietta, Ga., a suburb of Atlanta, to house mentally ill and disabled military veterans in Davidson's care in exchange for monthly federal subsidy payments. Frazier admitted that he and Davidson then falsely represented to VA officials and to the military veterans' legal guardians and custodians that the home was independently owned and a certified personal care home suitable to house and care for the veterans. Frazier also admitted he and Davidson used the rental income obtained from the veterans housed at the facility to pay some of the rent, utilities and related expenses on the rental property, and then kept the excess revenue for their own personal benefit. The facility was shut down in April 2002.

The case is being prosecuted by Trial Attorney Armando O. Bonilla of the Criminal Division's Public Integrity Section, headed by Section Chief William M. Welch II, and Assistant U.S. Attorney Teresa D. Hoyt of the Northern District of Georgia. The case is being investigated by the VA Office of Inspector General.

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