Department of Justice

U.S. Attorney’s Office

Northern District of Illinois

FOR IMMEDIATE RELEASE

Thursday, May 26, 2022

Former Illinois State Representative Sentenced to Nearly Five Years in Federal Prison for Participating in Bribery Scheme

CHICAGO — Former Illinois State Rep. LUIS ARROYO has been sentenced to nearly five years in federal prison for participating in a bribery scheme involving a fellow state lawmaker and Arroyo’s private lobbying client, a sweepstakes gaming company.

Arroyo, 67, of Chicago, pleaded guilty last year to a federal wire fraud charge.  U.S. District Judge Steven C. Seeger imposed a 57-month prison sentence Wednesday after a hearing in federal court in Chicago.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Emmerson Buie, Jr., Special Agent-in-Charge of the Chicago Field Office of the FBI; and Justin Campbell, Special Agent-in-Charge of the Chicago office of the IRS Criminal Investigation Division.  The government was represented by Assistant U.S. Attorney James P. Durkin.

Arroyo represented the 3rd District in the Illinois House of Representatives from 2006 to 2019.  He has also managed Spartacus 3 LLC, a private lobbying firm in Chicago.

In 2018 and 2019, Arroyo accepted thousands of dollars in bribes from the gaming company, Collage LLC, in the form of checks made payable to Spartacus.  In exchange for those bribes, Arroyo promoted legislation in the Illinois House of Representatives related to the sweepstakes industry and advised other state lawmakers to support the legislation. 

In August 2019 Arroyo offered to have payments made to an Illinois state senator in return for the senator’s support of sweepstakes-related legislation. On Aug. 22, 2019, Arroyo met with the senator at a restaurant in Skokie, Ill., and provided him with a $2,500 check from Collage as an initial bribe payment, with the expectation that the senator would receive similar payments for 12 months. Arroyo told the senator, “This is the jackpot,” and then wrote the name of the senator’s nominee on the company’s check. The nominee’s name was used for the purpose of concealing the illicit payment.

Department of Justice

U.S. Attorney’s Office

Northern District of Illinois

FOR IMMEDIATE RELEASE

Wednesday, May 25, 2022

Federal Grand Jury Indicts Suburban Chicago Police Chief for Allegedly Corruptly Accepting Money From Local Businessman

CHICAGO — The Chief of Police in the village of Summit, Ill., corruptly accepted money from a local businessman intending to be influenced and rewarded in connection with the transfer of a liquor license to another individual, according to a federal indictment.

The indictment returned Tuesday in U.S. District Court in Chicago alleges that Chief JOHN KOSMOWSKI conspired with a Summit building inspector to accept more than $5,000 from the businessman in 2017.  The pair accepted the money intending to be influenced and rewarded in connection with the transfer of a liquor license to another person, the indictment states.  Kosmowski allegedly received a cash payment from the businessman on March 23, 2017, and then gave the building inspector a portion of it.

The charges allege that Kosmowski met with the building inspector earlier this year and informed him of the federal investigation into the payment.  During the meeting, Kosmowski allegedly sought to corruptly persuade the building inspector to mischaracterize the purpose of the payment from Kosmowski to the inspector by falsely suggesting that it was a loan, the indictment states.

The indictment charges Kosmowski, 54, of Lockport, Ill., with one count of bribery conspiracy, one count of bribery, and one count of obstruction of justice.  The building inspector, WILLIAM MUNDY, 59, of Summit, Ill., is charged with one count of bribery conspiracy and one count of filing a false tax return.  Arraignments in federal court in Chicago have not yet been scheduled.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Emmerson Buie, Jr., Special Agent-in-Charge of the Chicago Field Office of the FBI; and Justin Campbell, Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago.  The government is represented by Assistant U.S. Attorneys Tiffany Ardam and Jimmy L. Arce.

The public is reminded that an indictment is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. If convicted, the Court must impose reasonable sentences under federal statutes and the advisory U.S. Sentencing Guidelines.

Department of Justice

U.S. Attorney’s Office

Eastern District of New York

FOR IMMEDIATE RELEASE

Friday, May 20, 2022

Panamanian Intermediaries Each Sentenced to 36 Months for International Bribery and Money Laundering Scheme

Earlier today, at the federal courthouse in Brooklyn, Luis Enrique Martinelli Linares (Luis Martinelli Linares) and Ricardo Alberto Martinelli Linares (Ricardo Martinelli Linares) were each sentenced to 36 months’ imprisonment and a $250,000 fine for their roles in a massive bribery and money laundering scheme involving Odebrecht S.A. (Odebrecht), a Brazil-based global construction conglomerate.  The proceedings were held before United States District Judge Raymond J. Dearie.

Breon Peace, United States Attorney for the Eastern District of New York, Kenneth A. Polite Jr., Assistant Attorney General of the Justice Department’s Criminal Division, and Michael J. Driscoll, Assistant Director-in-Charge of the Federal Bureau of Investigation, New York Field Office (FBI), announced the sentences.

“The Martinelli brothers used American banks to commit their selfish, greedy fraud – and now it is the American legal system serving justice with today’s sentencing, especially for the people of Panama,” stated United States Attorney Peace. “Together, the Department of Justice, this Office and our law enforcement partners stand firm against international corruption and will use all tools at our disposal to root it out.”

“Ricardo and Luis Martinelli Linares directed millions of dollars in bribes through U.S. banks to their own Swiss accounts in order to help Odebrecht gain corrupt influence at the highest levels of the Panamanian government,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “Today’s sentences show that the Department of Justice remains committed to prosecuting individuals who enable and profit from laundering corrupt payments to foreign officials through the U.S. financial system, as well as those who attempt to spend the proceeds of corruption in the United States.”

“The defendants laundered millions of dollars in bribes through the U.S. financial system to benefit a close relative and maintain their luxury lifestyles,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “Today’s sentencing shows that the FBI and our law enforcement partners are committed to bringing to justice anyone who enables the corruption of public officials for personal gain.”

The overarching Odebrecht scheme involved the payment of more than $700 million in bribes to government officials, public servants, political parties, and others in Panama and other countries around the world to obtain and retain business for the company.  On December 21, 2016, Odebrecht pleaded guilty in the Eastern District of New York to a criminal information charging it with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act for its involvement in the bribery and money laundering scheme. 

In December 2021, both defendants pleaded guilty to conspiracy to commit money laundering and admitted that they had agreed with others to establish offshore bank accounts in the names of shell companies to receive and disguise over $28 million in bribe proceeds from Odebrecht for the benefit of a close relative, a high-ranking public official in Panama.  According to court documents, approximately $19 million of the bribes were transferred through U.S. banks.  Luis Martinelli Linares also used some of the proceeds of the scheme to purchase a $1.7 million yacht and a $1.3 million condominium in the United States, and Ricardo Martinelli Linares spent hundreds of thousands of dollars in proceeds to pay personal expenses. 

Luis Martinelli Linares and Ricardo Martinelli Linares were initially arrested at el Aeropuerto Internacional la Aurora in Guatemala on July 6, 2020, pursuant to a provisional arrest request from the United States, as they were attempting to depart Guatemala on a private plane.  The defendants were charged on February 4, 2021, in an indictment in connection with this bribery and money laundering scheme.  Both defendants were ultimately extradited from Guatemala. 

The case is being prosecuted by Assistant United States Attorney Alixandra Smith of the Office’s Business and Securities Fraud Section, Trial Attorney Michael Culhane Harper of the Criminal Division’s Fraud Section, and Trial Attorneys Michael Redmann and Barbara Levy of the Criminal Division’s Money Laundering and Asset Recovery Section.  Assistant United States Attorneys Laura Mantell and Tanisha Payne of the Office’s Asset Recovery Section are handling forfeiture matters.  The FBI’s International Corruption Unit in New York is investigating this case.

The Defendants:

LUIS ENRIQUE MARTINELLI LINARES
Age: 40
Panama City, Panama

RICARDO ALBERTO MARTINELLI LINARES
Age: 43
Panama City, Panama

E.D.N.Y. Docket No. 21-CR-65 (RJD)

Department of Justice

Office of Public Affairs

FOR IMMEDIATE RELEASE

Thursday, May 26, 2022

Justice Department Secures Forfeiture of Maryland Property Purchased with $3.5 Million in Alleged Corruption Proceeds Linked to Ex-President of The Gambia

The Department of Justice, pursuant to a court-ordered default judgment and final order of forfeiture entered on May 24, has secured the forfeiture of a Potomac, Maryland, property acquired with approximately $3.5 million in alleged corruption proceeds by the former President Yahya Jammeh of The Gambia, through a trust set up by his wife, Zineb Jammeh.

The judgment is the result of a civil forfeiture complaint filed by the United States in July 2020 seeking the forfeiture of the Maryland property. As alleged in the complaint, Yahya Jammeh corruptly obtained millions of dollars through the misappropriation of stolen public funds and the solicitation of bribes from businesses seeking to obtain monopoly rights over various sectors of the Gambian economy. Jammeh conspired with his family members and close associates to utilize a host of shell companies and overseas trusts to launder his alleged corrupt proceeds throughout the world, including through the purchase of a multimillion-dollar mansion in Potomac, Maryland. With this entry of final judgment, ownership of that Maryland property has now been forfeited to the United States along with all rental income generated by the property since the filing of the amended complaint in August 2020. The United States intends to sell the property, and recommend to the Attorney General that the net proceeds from the sale of the forfeited property be used to benefit the people of The Gambia harmed by former President Jammeh’s acts of corruption and abuse of office. 

“The Department of Justice is committed to using the rule of law to forfeit assets traceable to alleged foreign corruption,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “This case demonstrates our ability to work with foreign partners to secure the forfeiture of assets allegedly derived from illicit bribes and stolen funds despite complex attempts to disguise the proceeds and their intended recipients.” 

“Corrupt foreign officials will not be allowed to hide illegal proceeds in Maryland or anywhere else in the United States,” said U.S. Attorney Erek L. Barron for the District of Maryland. “We will use all the tools at our disposal to track down and seek to repatriate those funds.”

“Maryland real estate is not a shelter for funds for corrupt rulers who have stolen from their countrymen,” said Acting Special Agent in Charge Selwyn Smith of Homeland Scurity Investigations (HIS) Baltimore. “Working with our domestic and foreign partners, HSI Baltimore has been able to recover property purchased with ill-gotten gain. From here, we will focus our efforts into returning those funds to the people of The Gambia, from whom they were stolen.”    

The investigation was conducted by HSI’s Illicit Proceeds and Foreign Corruption Investigations Group in Miami, with the assistance of the HSI Office of the Special Agent in Charge for Baltimore and the HSI Attaché Office in Dakar, Senegal.

The case is being handled by Trial Attorneys Steven Parker and Kaycee Sullivan of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant U.S. Attorney Jennifer Wine for the District of Maryland. Substantial assistance was provided by the Justice Department’s Office of International Affairs. The department also thanks the government of The Gambia for its assistance.

The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section, in partnership with federal law enforcement agencies, and often with U.S. Attorneys’ Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by these acts of corruption and abuse of office. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to kleptocracy@usdoj.gov.

Department of Justice

U.S. Attorney’s Office

Eastern District of Missouri

FOR IMMEDIATE RELEASE

Thursday, June 2, 2022

Two current, one former St. Louis aldermen indicted on corruption charges

ST. LOUIS – Two current and one former St. Louis aldermen, including board President Lewis Reed, have been indicted on federal charges accusing them of misusing their offices on multiple occasions in multiple ways in exchange for cash bribes and other things of value.

Reed, 22^nd Ward Alderman Jeffrey L. Boyd and former 21^st Ward Alderman John Collins-Muhammad were all indicted May 25. Collins-Muhammad resigned his office on May 12, 2022 due to the ongoing criminal investigation.  They are scheduled to turn themselves in and make their first appearance in court Thursday at 1 p.m. Reed is facing two bribery-related charges. Collins-Muhammad has been indicted on two bribery-related charges and one charge of honest services bribery/wire fraud. Boyd is facing two bribery related charges and a separate, two count wire fraud indictment alleging he fraudulently sought $22,000 from his insurance company for damage to vehicles that he falsely claimed to own.

The main indictment alleges Collins-Muhammad and Reed helped a small business owner obtain a lucrative property tax abatement in exchange for a series of cash bribes related to  what the indictment refers to as “project A.”

The indictment also alleges that in “project B,” Boyd accepted cash to help the business owner buy a city-owned property for tens of thousands of dollars less than it was worth, and accepted more cash to help the business owner obtain a lucrative tax abatement for that project.

Project A:

The indictment lays out a years-long scheme in which Collins-Muhammad, and later Reed, sought to help the business owner, referred to in the indictment as “John Doe,” obtain a significant property tax abatement for a new gas station and convenience store development in Collins-Muhammad’s ward. Doe estimated that the abatement could be worth $20,000 to $30,000 per year over at least 10 years, the indictment says.  In all, Reed accepted $9,000 in cash from Doe, the indictment alleges. Collins-Muhammad accepted $7,000 cash, $3,000 in campaign contributions, a new iPhone 11 and a 2016 Volkswagen CC sedan in exchange for his help, the indictment alleges.  Collins-Muhammad and Reed ultimately worked to pass Board Bills which provided the property tax abatement for Project A.

During Reed’s 2021 run for mayor, Doe also gave Reed $6,000 total in cash and $3,500 in campaign contributions for Reed’s help in Doe’s ultimately unsuccessful attempt to obtain Minority Business Enterprise certification for his trucking company, and for help in winning contracts for city construction projects, the indictment alleges.

Collins-Muhammad is also accused of accepting $3,000 after setting up a meeting with a public official who could steer business to Doe’s trucking company. Collins-Muhammad later asked for $2,500 more on behalf of the official, but instead used it to buy a 2008 Chevrolet Trailblazer, the indictment alleges.

Project B:

A separate scheme set out in the main indictment involved Doe’s purchase of a commercial property on Geraldine Avenue in St. Louis from the city’s Land Reutilization Authority, which owns and sells vacant property.  The property was in Boyd’s ward.

Collins-Muhammad introduced Doe to Boyd so Boyd could help in the purchase, telling Doe that he would have to pay cash for Boyd’s help, the indictment says. Through Boyd’s assistance, Doe eventually was able to buy the property from the LRA for $14,000. The LRA valued it at $50,000, and Doe estimated it would have cost $250,000 if privately sold, the indictment alleges.  Boyd also submitted and sponsored a board bill which provided a substantial property tax abatement for Doe’s Project B.  

Boyd accepted a total of $9,500 in cash from Doe related to Project B, and Doe also made free repairs worth $1,611 to Boyd’s 2006 Chevrolet Impala and $733 to his Kia van, the indictment alleges.  Collins-Muhammad received an additional $1,000 cash for introducing Doe to Boyd.

Boyd was indicted in a separate case on two counts of wire fraud for a scheme in which he and Doe are accused of agreeing to split the proceeds of insurance fraud related to a Jan. 17, 2021 vehicle accident at Doe’s used car lot in Jennings, Missouri.

After Doe learned his insurance company would not cover the damage, Boyd suggested falsely claiming that three of the damaged vehicles were owned by his used car company, The Best Place Auto Sales on Dr. Martin Luther King Drive in St. Louis, the indictment alleges.

Boyd filled out Missouri Department of Revenue bill of sale and certificate of title forms for the three vehicles, fraudulently backdating the sales dates to Jan. 2 and falsely claiming Boyd’s company had paid $22,000 for the vehicles, the indictment says. Boyd also falsely sought a $50 per vehicle, per day storage fee from Boyd’s insurance company for the damaged vehicles. Boyd’s insurance company ultimately rejected the claim.

If convicted of the main indictment, Reed’s and Boyd’s charges carry maximum penalties of 10  years and five years in prison, respectively, and a $250,000 fine.  Collins-Muhammad’s honest services bribery/wire fraud charge carries a maximum penalty of 20 years in prison and a $250,000 fine. One of his bribery charges carries a 10-year maximum and the other has a five-year maximum. Boyd’s additional wire fraud charges related to the automobile insurance scheme carry maximum penalties of 20 years and a $250,000 fine.  Restitution is also mandatory.  In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.

The case was investigated by the Federal Bureau of Investigation.  Assistant United States Attorney Hal Goldsmith is prosecuting the case.

The charges contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

Department of Justice

U.S. Attorney’s Office

District of New Jersey

FOR IMMEDIATE RELEASE

Thursday, June 2, 2022

Former Bank Employee Admits $8 Million Fraud and Bribery Scheme

NEWARK, N.J. – A Morris County, New Jersey, man today admitted conspiring to commit bank fraud and accepting bribes, U.S. Attorney Philip R. Sellinger announced.

Kurt Phelps, 53, of Flanders, New Jersey, pleaded guilty by videoconference before U.S. District Judge Kevin McNulty to an indictment charging him with one count of conspiracy to commit bank fraud and one count of bank bribery. Three of Phelps’ conspirators previously pleaded guilty in connection with the fraud scheme.    

According to documents filed in this case and statements made in court:

From 2013 through 2019, Phelps and his conspirators carried out a scheme to defraud Phelps’ employer, a bank. They obtained millions of dollars of credit from the bank for Starnet Business Solutions Inc. a now defunct New Jersey-based printing company where Phelps’ conspirators worked. Phelps’ conspirators paid him large cash bribes in connection with the fraud scheme

In 2013, Starnet received a line of credit from the bank after providing materially false financial information. The bank not only allowed Starnet to maintain the line of credit, at various times it increased the line of credit. By 2018, the line of credit was worth approximately $8 million, and Starnet has not repaid it

Phelps was aware that financial information Starnet provided to the bank for the line of credit was materially false, and coached Starnet on how to defraud the bank. Phelps would review draft financial information for Starnet and provide feedback on how his conspirators should falsify the information before submission. Phelps also worked to ensure that the bank did not detect the fraud scheme by helping Starnet avoid audits and other quality control measures employed by the bank. 

Phelps solicited large cash bribes – tens of thousands of dollars at a time – from Starnet in connection with the fraud scheme. Phelps’ conspirators pooled cash to pay Phelps bribe payments. Over the course of the conspiracy, Phelps accepted hundreds of thousands of dollars in cash bribes. 

The conspiracy to commit bank fraud and bank bribery charges each carry a maximum potential penalty of 30 years in prison and a $1 million fine, or twice the gross gain or loss from the offense, whichever is greatest. Sentencing is scheduled for Oct. 3, 2022.

U.S. Attorney Sellinger credited special agents of the FBI, under the direction of Acting Special Agent in Charge Michael Messenger in Newark, with the investigation leading to today’s guilty plea.

The government is represented by Assistant U.S. Attorney Heather Suchorsky of the Economic Crimes Unit.

Department of Justice

Office of Public Affairs

FOR IMMEDIATE RELEASE

Monday, June 6, 2022

Former Mayor of Puerto Rico Municipality Sentenced for Accepting Bribes

A former mayor of a municipality in Puerto Rico was sentenced today to two years in prison for his involvement in a bribery scheme in which he received monthly cash payments in exchange for awarding municipal contracts.

Luis Arroyo-Chiqués, 56, of Rincon, pleaded guilty in December 2021 to one count of conspiracy to engage in a bribery scheme. According to court documents and statements made in connection with his plea and sentencing, Arroyo-Chiqués was the mayor and highest-ranking government official in the municipality of Aguas Buenas from 2005 until 2016. In 2017, Arroyo-Chiqués negotiated with Individual B for a waste collection contract for Company A, which was owned and operated by Individual A. In exchange for the 10-year waste collection contract, Individual A agreed to pay Arroyo-Chiqués bribes of $10,000 per month ($1.00 per house for 10,000 houses in the municipality). The agreement was arranged so that Arroyo-Chiqués would be paid $5,000 per month for the life of the contract and Individual B would be paid $5,000 per month. This payment was made in cash every month from 2016 and continued even after Arroyo-Chiqués left office in 2016. The last payment to Arroyo-Chiqués occurred in June 2021.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney W. Stephen Muldrow for the District of Puerto Rico, Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division, and Special Agent in Charge Joseph Gonzalez of the FBI San Juan Field Office made the announcement. 

The FBI San Juan Field Office investigated the case.

Trial Attorney Nicholas W. Cannon of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Seth A. Erbe for the District of Puerto Rico are prosecuting the case.

This case is part of the Justice Department’s ongoing efforts to combat public corruption by municipal officials in Puerto Rico. In addition to the above matters, the Public Integrity Section and the U.S. Attorney’s Office for the District of Puerto Rico have recently obtained convictions against other former public officials and contractors in the District of Puerto Rico for soliciting and accepting bribes related to municipal contracts. See United States v. Eduardo Cintrón-Suárez, 22-151 (SCC); United States v. Félix Delgado-Montalvo, 21-463 (RAM); United States v. Oscar Santamaria-Torres, 21-464 (RAM); United States v. Raymond Rodríguez, 21-465 (RAM); and United States v. Ramon Conde-Melendez, 22-221 (PAD). 

Additionally, the department recently obtained indictments charging several former officials and contractors with bribery related to municipal contracts, and those cases are still pending. See United States v. Mario Villegas-Vargas, 21-468 (FAB); United States v. Ángel Pérez-Otero, 21-474 (ADC); United States v. Radamés Benítez-Cardona, 21-475 (PAD); United States v. Javier García-Pérez, 22-185 (ADC); and United States v. Reinaldo Vargas-Rodríguez, 22-186 (PAD).

Department of Justice

U.S. Attorney’s Office

District of Oregon

FOR IMMEDIATE RELEASE

Thursday, May 19, 2022

Former Federal Correctional Officer Pleads Guilty for Role in Bribery and Contraband Smuggling Conspiracy

PORTLAND, Ore.—A former federal correctional officer at the Federal Correctional Institute (FCI) in Sheridan, Oregon pleaded guilty today for his role in a bribery and contraband smuggling conspiracy.

Nickolas Carlos Herrera, 32, pleaded guilty to conspiracy, providing contraband in prison, and accepting a bribe as a public official.

According to court documents, from April 2015 until he was placed on administrative leave in December 2019, Herrera was employed as a correctional officer at FCI Sheridan, a federal prison in Yamhill County, Oregon. Herrera used his position to introduce contraband into the facility for the benefit of select inmates including Donte Hunt, 40, who is in custody pending an October 2022 trial on federal drug, gun, and money laundering charges. In the spring of 2019, Herrera began bringing contraband items such as food, clothing, and cigarettes into the facility, which he gave to Hunt in exchange for money. 

Later, Herrera brought Hunt marijuana; Suboxone, a Schedule III narcotic; Yeezy brand designer sneakers, and a cell phone. Herrera obtained the narcotics and other items from Elizabeth McIntosh, 34, a non-incarcerated associate of Hunt’s. On at least one occasion, Herrera allowed Hunt to use a staff phone at the prison to call McIntosh to arrange the delivery of Suboxone to Herrera. Herrera met McIntosh on multiple occasions to obtain the narcotics and other items for Hunt and accepted payment from McIntosh via transfers of cash and transfers using various digital payment services including PayPal, Apple Cash, and Square.

On September 24, 2020, a federal grand jury in Portland returned an indictment charging Herrera, Hunt, and McIntosh with conspiracy and bribing a public official. Herrera and Hunt were additionally charged with providing contraband in prison.

Herrera and McIntosh were arraigned on November 2 and 4, 2020, respectively. Both were released on conditions. Hunt was arraigned on November 19, 2020 and ordered to continue his pre-trial detention.

Herrera and Hunt face maximum sentences of 25 years in prison, a $750,000 fine, and five years’ supervised released. McIntosh faces a maximum sentence of 20 years in prison, a $500,000 fine, and five years’ supervised released.

U.S. Attorney Scott Erik Asphaug of the District of Oregon made the announcement.

This case was investigated by the FBI with assistance from the Federal Bureau of Prisons. It is being prosecuted by Ethan Knight and Katherine Rykken, Assistant U.S. Attorneys for the District of Oregon.

Department of Justice

U.S. Attorney’s Office

District of Maryland

FOR IMMEDIATE RELEASE

Tuesday, June 7, 2022

Former Senior Maryland Health Official Pleads Guilty to Bribery Conspiracy

Baltimore, Maryland – Isabel FitzGerald, age 52, of Annapolis, Maryland, pleaded guilty today to bribery involving an agent of a program receiving federal funds in relation to a scheme involving information technology contracts with the State of Maryland Department of Human Services. As part of her guilty plea, FitzGerald will be ordered to pay $38,310 in restitution.

The guilty plea was announced by United States Attorney for the District of Maryland Erek L. Barron and Special Agent in Charge Thomas J. Sobocinski of the Federal Bureau of Investigation, Baltimore Field Office.

According to her guilty plea, from February 2007 to August 2013, FitzGerald held several offices in the Maryland State government, including serving as Chief Information Officer of the Department of Human Resources (DHR), as a consultant indirectly compensated by DHR, and as DHR Deputy Secretary of Operations.

While employed as a government agent, from December 2011 to January 2013, FitzGerald received financial benefits from two senior members of an IT Company (Company 2) in exchange for influence in connection with the performance of favorable official acts.  In the process of influencing contracts, FitzGerald used her own company, Aeon Consulting and Technical Services, Inc., to facilitate contracts and favorable business dealings.

As stated in her plea agreement, in July 2011, FitzGerald entered into an agreement to work as a contractor for Company 3.  Company 3 obtained a technology contract with the Montgomery County Department of Health and Human Services (DHHS), an agency that received grant funding from DHR.  In September 2011, FitzGerald agreed to work for Company 3 as a Project Manager on Company 3’s work in Montgomery County and submitted a letter of resignation to DHR indicating that her last official day would be October 14, 2011.

In October 2011, the CEO of Company 2 sought to gain favor with FitzGerald due to her previous role within DHR and her current role with Montgomery County DHHS.  In the same month, the CEO and Company 2 agreed to pay FitzGerald through her company, Aeon, for purportedly providing the services of Person 2.  Per the arrangement, FitzGerald and Aeon entered into contracts resulting in Aeon collecting a balance of $20 per hour worked by Person 2.  This represented Company 2’s entire profit on its contract for the work of Person 2.  Despite this arrangement, Person 2 continued to be supervised by Company 2 employees, not by FitzGerald.

After FitzGerald resigned from her position as DHR Chief Information Officer, an arrangement was made with senior officials of DHR and Montgomery County DHHS that permitted FitzGerald to continue to work for DHR within her new role at Montgomery County DHHS.  FitzGerald acknowledges that she was aware that funding for her position would be paid by DHR and that she was an agent of the state.  As a result of this agreement, FitzGerald agreed to work 20 hours per week for the benefit of DHR, with the ability to work up to 40 hours per week for the benefit of DHR.  In return, DHR increased its grant funds to Montgomery County DHHS for the rate of $110 per hour worked by FitzGerald.  As a result, FitzGerald continued to exercise influence over the business of DHR in a consultant compacity.

After the CEO of Company 2 contacted FitzGerald and requested her assistance in maintaining Company 2’s business in the state of Maryland, FitzGerald and the CEO negotiated an agreement in which FitzGerald would be compensated for her influence to obtain work for Company 2.  FitzGerald did not divulge the existence of this arrangement to any employees of DHR, to include the Secretary of DHR or the Acting CIO, even after she took on the role of a consultant compensated indirectly by DHR. 

Later, after FitzGerald learned that she had been named Deputy Secretary of Operations of DHR, FitzGerald directed the CEO of Company 2 to transfer the contract for Person 2 to Kenneth Coffland, with whom she shared a close personal relationship.

pThe total amount of the bribe FitzGerald received was $35,000.  She also directed an additional $3,080 to Coffland.  Co-defendant Coffland was indicted on charges related to the bribery conspiracy in 2017, and a separate charge of extortion under color of official right in 2018 and is scheduled for trial on June 21, 2022.  An indictment is not a finding of guilt.  An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings. 

FitzGerald faces a maximum sentence of 10 years in federal prison followed by three years of supervised release for bribery involving an agent of a program receiving federal funds.  U.S. District Judge Paul W. Grimm has scheduled sentencing for October 13, 2022, at 9:30 a.m.

United States Attorney Erek L. Barron commended the FBI for their work in the investigation.  Mr. Barron thanked Assistant U.S. Attorneys Sean R. Delaney and Jefferson M. Gray, who are prosecuting the case.

For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit www.justice.gov/usao-md and https://www.justice.gov/usao-md/community-outreach.

Department of Justice

U.S. Attorney’s Office

Central District of California

FOR IMMEDIATE RELEASE

Friday, May 27, 2022

San Luis Obispo Man Sentenced to Nearly 2 Years in Federal Prison for Bribing County Supervisor and Filing False Income Tax Returns

          LOS ANGELES – A San Luis Obispo man was sentenced today to 22 months in federal prison for paying a county supervisor approximately $32,000 in bribes – most of them in cash – in exchange for the supervisor’s votes and influence on other votes affecting his cannabis business interests.

          Helios Raphael Dayspring, a.k.a. “Bobby Dayspring,” 36, was sentenced by United States District Judge André Birotte Jr. Dayspring has paid the restitution order of $3,438,793 to the IRS in this case.

          In October 2021, Dayspring pleaded guilty to one count of bribery and one count of subscribing to a false income tax return.

          Dayspring owned, operated, and had a controlling interest in multiple farms that grew cannabis in San Luis Obispo County. He also had ownership interests in businesses that sold marijuana to the public, including in Grover Beach. To further his interests in the farms that grew cannabis in San Luis Obispo County, Dayspring began paying bribes to a San Luis Obispo County supervisor in the fall of 2016 and continued doing so through November 2019.

          In total, Dayspring paid the late Third District supervisor multiple bribes in cash and money orders totaling $32,000. In exchange, the supervisor voted on matters affecting Dayspring’s farms, including voting multiple times in favor of legislation that permitted Dayspring’s farms to operate before it had obtained final permitting approvals.

          In addition to bribing the San Luis Obispo County supervisor, Dayspring attempted to bribe the then-mayor of Grover Beach in exchange for two dispensary licenses in that city. The attempted $100,000 bribe took place during a dinner meeting in September 2017. The mayor did not respond to the offer, and Dayspring did not end up paying the bribe.

          Dayspring also substantially underreported his personal income on his federal tax returns for the years 2014 through 2018, which resulted in the IRS losing more than $3.4 million in tax revenue. For example, for the tax year 2018, Dayspring falsely reported his taxable income as $1,262,894, when in fact his income was greater than $6.5 million.

          Dayspring “had one goal: build a cannabis empire,” prosecutors wrote in a sentencing memorandum. “To accomplish that goal, he would not let anything get in his way, including the law.”

          The FBI and IRS Criminal Investigation investigated this matter.

Assistant United States Attorney Thomas F. Rybarczyk of the Public Corruption and Civil Rights Section prosecuted this case.

Department of Justice

U.S. Attorney’s Office

Eastern District of Michigan

FOR IMMEDIATE RELEASE

Tuesday, June 14, 2022

Former Detroit Police Department Officer Sentenced to Prison for Taking Bribes

DETROIT – A former Detroit Police Department officer was sentenced to prison today for taking $3,200 in cash bribes over an almost two-year period, United States Attorney Dawn N. Ison announced.

Ison was joined in the announcement by James A. Tarasca, Special Agent in Charge, Federal Bureau of Investigation, Detroit Division.

During a hearing today before U.S. District Court Judge George Caram Steeh, Alonzo Jones, 55, of Detroit, Michigan, was sentenced to 15 months in prison and two years of supervised release based on his plea of guilty to accepting bribes. Jones, an officer with the Detroit Police Department for over 30 years, corruptly accepted cash bribes on five separate occasions, totaling $3,200, with the intent to be influenced and rewarded in connection with his duties overseeing and running the Detroit Police Vehicle Auction. The last bribe he took was right before he retired from DPD in May 2021.

United States Attorney Ison said, “Every new police officer takes an oath to uphold our laws and act with integrity.   This officer broke that oath and his crimes are an affront to the citizens of Detroit and the honest officers of the Detroit Police Department who put their lives on the line to protect those citizens.  This sentence shows our office’s commitment to aggressively pursuing police officers who use their trusted positions of authority to enrich themselves.” 

“The public expects law enforcement officers to do their work with honesty and integrity. Instead, Mr. Jones exploited his official position, accepting bribes in exchange for favors related to the Detroit Vehicle Auction. Today, he was held accountable for his criminal conduct,” said James A. Tarasca, Special Agent in Charge of the FBI’s Detroit Division. “Thank you to Chief James White for his cooperation during this investigation and to the men and women of the Detroit Police Department who serve with honor day in and day out. And thank you to the members of the Detroit Area Corruption Task Force for their continued work on Operation Northern Hook.”

Jones was charged as part of the government’s investigation known as “Operation Northern Hook.” Northern Hook is an investigation of corruption within the government and the Police Department of the City of Detroit relating to the towing industry and other matters.

The investigation of this case was conducted by the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Frances Lee Carlson.

The Detroit Area Corruption Task Force member agencies include the FBI, State of Michigan Attorney General’s Office, Michigan State Police, Detroit Police Department, U.S. Customs and Border Patrol-Office of Professional Responsibility, Internal Revenue Service, and U.S. Department of Homeland Security.

Designation of Former Colombian Senator Luis Alberto Gil Castillo for Involvement in Significant Corruption

PRESS STATEMENT

NED PRICE, DEPARTMENT SPOKESPERSON

JUNE 30, 2022Share

The United States is designating former Colombian Senator Luis Alberto Gil Castillo for his involvement in significant corruption.  Gil Castillo solicited and accepted monetary bribes from a subgroup of the then-U.S.-designated foreign terrorist organization (FTO) known as the Autodefensas Unidas de Colombia (AUC). The bribe was accepted in exchange for exercising undue political influence in his official capacity as a member of the Colombian Senate. In addition, Gil Castillo later attempted to bribe a witness in a criminal case against him.  These actions undermined the stability of Colombia’s democratic institutions and the security of the United States against transnational crime and terrorism.

This public designation is made under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2022. Under this authority, designated officials of foreign governments involved in significant corruption and their immediate family members are generally ineligible for entry into the United States.  The Department is also designating Gil Castillo’s spouse Doris Clemencia Vega Quiróz.  These designations follow the U.S. designation under Section 7031(c) in December 2021 of Gil Castillo’s associate, Carlos Julián Bermeo Casas, a former Colombian prosecutor, for engaging in significant corruption.

Today’s actions reinforce Colombia’s own law enforcement and judicial actions against Gil Castillo and reaffirm the commitment of the United States to combat corruption. The United States continues to stand with all Colombians in support of democracy, the rule of law, and will continue to hold accountable those who abuse public power for personal gain.

Department of Justice

U.S. Attorney’s Office

Southern District of California

FOR IMMEDIATE RELEASE

Friday, June 17, 2022

Honolulu’s Former Prosecuting Attorney Keith Kaneshiro and Businessman Dennis Mitsunaga Indicted in Bribery Scheme

Special Attorneys Michael Wheat (619) 546-8437, Joseph Orabona (619) 546-7951, Janaki Chopra (619) 546-8817, Colin McDonald (619) 546-9144 and Andrew Chiang (619) 546-8756

NEWS RELEASE SUMMARY – June 17, 2022

HONOLULU – Former Honolulu Prosecuting Attorney Keith Mitsuyoshi Kaneshiro and Honolulu businessman Dennis Mitsunaga are charged in an indictment unsealed today with participating in a bribery scheme in which Mitsunaga and his network of employees and affiliates paid Kaneshiro more than $45,000 in campaign contributions to prosecute one of his former employees and violate that employee’s civil rights.

Kaneshiro and Mitsunaga, owner and CEO of Mitsunaga & Associates, Inc., an engineering and architectural firm, were arrested at their homes this morning and will make their first appearances in federal court today before U.S. Magistrate Judge Wes Reber Porter.  Also indicted and arrested today were three of Mitsunaga’s employees – Terri Ann Otani, Aaron Shunichi Fujii and Chad Michael McDonald. All are charged with Conspiracy to Commit Federal Program Bribery and Honest Services Wire Fraud, and Conspiracy Against Rights.

According to the indictment, Mitsunaga wanted a fired employee, identified in court records as L.J.M., to be prosecuted after that employee filed a federal discrimination suit against Mitsunaga’s company. In order to influence the prosecutor’s office to open an investigation and file charges, Mitsunaga steered tens of thousands of dollars to Kaneshiro’s reelection campaigns between 2012 and 2016. In doing so, Mitsunaga circumvented campaign contribution limits by asking for contributions from family members, business partners, employees and subcontractors. The accusations against L.J.M. were baseless and motivated by a desire to intimidate L.J.M., the indictment said.

According to the indictment, in the summer of 2014, after a senior deputy prosecutor in Kaneshiro’s office recommended declining charges against L.J.M., Kaneshiro reassigned the case to a recently hired deputy prosecuting attorney, identified in court records as J.D. Around December 1, 2014, acting on behalf of Kaneshiro, J.D. filed a felony information against L.J.M., charging L.J.M. with four counts of second-degree theft under State of Hawaii law.

The prosecution of L.J.M. continued for several years until her case was dismissed with prejudice in a written order by Hawaii Circuit Judge Karen T. Nakasone on September 15, 2017. The order of dismissal pointed out the “one-sided nature of the investigation” and the fact that the Department of the Prosecuting Attorney “was little more than acting as the recipient of, and conduit for” submissions provided by Mitsunaga & Associates.

The indictment alleges that in exchange for the contributions given to him by defendants Mitsunaga, Otani, Fujii, McDonald and others, Kaneshiro agreed to take official action and exercise his authority as the Prosecuting Attorney for the City and County of Honolulu to open an investigation into and prosecute L.J.M.

“This indictment alleges a Honolulu businessman and others paid more than $45,000 in campaign contributions to Honolulu’s former Prosecuting Attorney to prosecute a former employee,” said U.S. Attorney Randy Grossman in the Southern District of California. “Public officials must conduct their affairs honestly and with integrity. The Department of Justice will work to hold accountable anyone who betrays that duty through the influence of bribes.”  Grossman thanked the FBI in Honolulu and the prosecution team for their work on this case.

“The citizens of Hawaii deserve a government free of corruption,” said Special Agent in Charge Steven B. Merrill of the FBI’s Honolulu Division. “Corruption erodes the public trust and the FBI is committed to ensuring that people cannot buy prosecutions in the State of Hawaii. Thanks to U.S. Attorney Grossman and the prosecution team for their teamwork and commitment to justice.”

DEFENDANTS                                             Case No. CR 22-00048-JMS  

Keith Mitsuyoshi Kaneshiro                           Age: 72                                               Honolulu, HI

Dennis Mitsunaga                                           Age: 78                                               Honolulu, HI

Terri Ann Otani                                              Age: 66                                               Honolulu, HI

Aaron Shunichi Fujii                                      Age: 64                                               Honolulu, HI

Chad Michael McDonald                               Age: 50                                               Kaneohe, HI

SUMMARY OF CHARGES

Conspiracy to Commit Honest Services Fraud and Federal Program Bribery – Title 18, U.S.C., Section 371

Maximum penalty: Five years in prison

Conspiracy Against Rights – Title 18, U.S.C., Section 241

Maximum penalty: Ten years in prison

AGENCY

FBI

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

Department of Justice

U.S. Attorney’s Office

District of Puerto Rico

FOR IMMEDIATE RELEASE

Tuesday, June 21, 2022

Former Mayor of Trujillo Alto Pleads Guilty to Accepting Bribes

SAN JUAN, Puerto Rico – The former mayor of the Municipality of Trujillo Alto, Puerto Rico, José Luis Cruz Cruz, age 62, pleaded guilty today in Puerto Rico to engaging in a bribery conspiracy in which he received cash kickback payments in exchange for the award of municipal asphalt and paving contracts as well as municipal trash removal contracts.

According to court documents, in 2020 and 2021, José Luis Cruz Cruz solicited and accepted multiple kickback payments from Individual A and Individual B via Individual C. Individual A was the owner of an asphalt and paving company awarded municipal contracts in Trujillo Alto. Individual B was the owner of a trash removal company awarded municipal contracts in Trujillo Alto. José Luis Cruz Cruz, as mayor, directed municipal employees to execute these contracts. In 2020 and 2021, José Luis Cruz Cruz agreed with Individual C that Individual C would solicit and obtain cash payments from municipal contractors. During that period, José Luis Cruz Cruz received approximately $10,000 from Individual A and Individual B via Individual C in cash kickback payments.  

Cruz Cruz pleaded guilty to one count of conspiracy to engage in a bribery scheme.  He faces a maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

U.S. Attorney W. Stephen Muldrow for the District of Puerto Rico and Special Agent in Charge Joseph Gonzalez of the FBI San Juan Field Office made the announcement.  The FBI San Juan Field Office investigated the case.

Trial Attorney Nicholas W. Cannon of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Seth A. Erbe for the District of Puerto Rico are prosecuting the case.

This case is part of the Justice Department’s ongoing efforts to combat public corruption by municipal officials in Puerto Rico. In addition to the above matters, the Public Integrity Section and the U.S. Attorney’s Office for the District of Puerto Rico have recently obtained convictions against other former public officials and contractors in the District of Puerto Rico for soliciting and accepting bribes related to municipal contracts. See United States v. Pedro Marrero-Miranda, 22-251(RAM); United States v. Ramon Conde-Melendez, 22-221 (PAD);  United States v. Eduardo Cintrón-Suárez, 22-151 (SCC); United States v. Luis Arroyo-Chiqués, 21-485 (SCC); United States v. Félix Delgado-Montalvo, 21-463 (RAM); United States v. Oscar Santamaria-Torres, 21-464 (RAM); and United States v. Raymond Rodríguez, 21-465 (RAM). 

Additionally, the department recently obtained indictments charging several former officials and contractors with bribery related to municipal contracts, and those cases are still pending. See United States v. Mario Villegas-Vargas, 21-468 (FAB); United States v. Ángel Pérez-Otero, 21-474 (ADC); United States v. Radamés Benítez-Cardona, 21-475 (PAD); United States v. Javier García-Pérez, 22-185 (ADC); and United States v. Reinaldo Vargas-Rodríguez, 22-186 (PAD).

Department of Justice

U.S. Attorney’s Office

Eastern District of Virginia

FOR IMMEDIATE RELEASE

Friday, June 17, 2022

Government Official Pleads Guilty to Accepting Bribes 

NORFOLK, Va. – A General Services Administration (GSA) Contracting Official pleaded guilty today to accepting bribes.

According to court documents, beginning in approximately December of 2015 and continuing through August 2019, Charles W. Jones, 59, of Staunton, accepted bribes from government contractors in return for awarding federal contracts to Contractors USA and SDC Contracting LLC. Jones was employed as a Supervisory Construction Control Representative with the GSA in Richmond. He had responsibility for the management and oversight of construction and renovation projects at certain federal buildings throughout the Norfolk, Richmond, and Alexandria areas, including federal courthouses. Jones received bribes totally $411,192.00 from the President of Contractors USA Inc., in exchange for awarding them federal construction projects. In October of 2019, Jones received a cash payment from the President of SDC Contracting LLC in exchange for awarding a contract valued at approximately $1,369,501.00

The Presidents of Contractors USA, Inc., and SDC Contracting LLC have previously pleaded guilty in the U.S. Federal District Court in Norfolk to related charges.

Jones is scheduled to be sentenced on November 9. He faces a maximum of 15 years in prison. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.

Jessica D. Aber, U.S. Attorney for the Eastern District of Virginia; Eric D. Radwick, Special Agent in Charge of the GSA Office of Inspector General Mid-Atlantic Division; Brian Dugan, Special Agent in Charge of the FBI’s Norfolk Field Office; Christopher Dillard, Special Agent in Charge for the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service (DCIS).; and Greg Gross, Acting Special Agent in Charge of the Naval Criminal Investigative Service (NCIS) Economic Crimes Field Office, made the announcement after U.S. Magistrate Judge Robert J. Krask accepted the plea.

Assistant U.S. Attorney Matthew Heck is prosecuting the case.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information are located on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 2:22-cr-66.

Department of Justice

U.S. Attorney’s Office

District of Puerto Rico

FOR IMMEDIATE RELEASE

Thursday, July 7, 2022

Former Mayor of Guayama, Puerto Rico Sentenced for Accepting Bribes

SAN JUAN, Puerto Rico – The former mayor of the Municipality of Guayama, Puerto Rico, Eduardo Cintrón-Suárez, was sentenced today to 30 months in prison for his involvement in a bribery scheme in which he received cash payments in exchange for executing municipal contracts and approving invoice payments for an asphalt and paving company.

Eduardo Cintrón-Suárez, 54, pleaded guilty in April 2022 to one count of conspiracy to engage in a bribery scheme. According to court documents and statements made in connection with his plea and sentencing, Eduardo Cintrón-Suárez, was the mayor and highest-ranking government official in the municipality of Guayama from 2013 until 2022. Starting in 2013, Cintrón-Suárez executed asphalt and paving contracts and also approved municipal payments to Company A. In exchange, Cintrón-Suárez agreed to receive a kickback payment corresponding to $1.00 per square meter of new asphalt laid by Company A in the municipality of Guayama under the contracts. This kickback scheme continued until approximately February 2021. In addition to the term of imprisonment, the defendant forfeited $114,000 in cash and was sentenced to three years of supervised release.

Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, U.S. Attorney W. Stephen Muldrow for the District of Puerto Rico, Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division, and Special Agent in Charge Joseph Gonzalez of the FBI San Juan Field Office made the announcement. 

The FBI San Juan Field Office investigated the case.

Trial Attorney Nicholas W. Cannon of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Seth A. Erbe for the District of Puerto Rico are prosecuting the case.

This case is part of the Justice Department’s ongoing efforts to combat public corruption by municipal officials in Puerto Rico. In addition to the above matters, the Public Integrity Section and the U.S. Attorney’s Office for the District of Puerto Rico have recently obtained convictions against other former public officials and contractors in the District of Puerto Rico for soliciting and accepting bribes related to municipal contracts. See United States v. Pedro Marrero-Miranda, 22-251(RAM); United States v. Ramon Conde-Melendez, 22-221 (PAD);  United States v. Eduardo Cintrón-Suárez, 22-151 (SCC); United States v. Luis Arroyo-Chiqués, 21-485 (SCC); United States v. Félix Delgado-Montalvo, 21-463 (RAM); United States v. Oscar Santamaria-Torres, 21-464 (RAM); and United States v. Raymond Rodríguez, 21-465 (RAM). 

Additionally, the department recently obtained indictments charging several former officials and contractors with bribery related to municipal contracts, and those cases are still pending. See United States v. Mario Villegas-Vargas, 21-468 (FAB); United States v. Ángel Pérez-Otero, 21-474 (ADC); United States v. Radamés Benítez-Cardona, 21-475 (PAD); United States v. Javier García-Pérez, 22-185 (ADC); and United States v. Reinaldo Vargas-Rodríguez, 22-186 (PAD).

Designation of Former Paraguayan President Horacio Manuel Cartes Jara for Involvement in Significant Corruption

PRESS STATEMENT

ANTONY J. BLINKEN, SECRETARY OF STATE

JULY 22, 2022

The United States is designating former Paraguayan President Horacio Manuel Cartes Jara for his involvement in significant corruption.  Former President Cartes obstructed a major international investigation into transnational crime in order to protect himself and his criminal associate from potential prosecution and political damage.  These actions undermined the stability of Paraguay’s democratic institutions by contributing to public perception of corruption and impunity within the office of the Paraguayan President.  Additionally, these actions enabled and perpetuated Cartes’s recently documented involvement with foreign terrorist organizations and other U.S.-designated entities which undermines the security of the United States against transnational crime and terrorism and threatens regional stability.

This public designation is made under Section 7031(c) of the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2022.    The Department is also designating Cartes’s adult children Juan Pablo Cartes Montaña, Sofía Cartes Montaña, and María Sol Cartes Montaña.

These designations reaffirm the commitment of the United States to combat corruption, which harms the public interest, hampers countries’ economic prosperity, and curtails the ability of governments to respond effectively to the needs of their people. The United States continues to stand with all Paraguayans in support of democracy and the rule of law and will continue to promote accountability for those who abuse public power for personal gain.

Department of Justice

U.S. Attorney’s Office

Western District of North Carolina

FOR IMMEDIATE RELEASE

Wednesday, July 13, 2022

Former Catawba County Director Of Utilities Is Sentenced To Prison For Accepting Bribes

CHARLOTTE, N.C. – Barry Bryan Edwards, 66, of Hickory, N.C., was sentenced today to a year and a day in prison and one year of supervised release for accepting kickbacks and bribes from a private contractor, announced Dena J. King, U.S. Attorney for the Western District of North Carolina. In addition to the prison term imposed, the Court previously issued a $30,000 money judgement against Edwards.

Robert R. Wells, Special Agent in Charge of the Federal Bureau of Investigation (FBI) in North Carolina, and Robert Schurmeier, Director of the North Carolina State Bureau of Investigation (SBI), join U.S. Attorney King in making today’s announcement.

In February 2022, Edwards pleaded guilty to wire fraud. According to filed documents and today’s hearing, from 2012 to 2018, Edwards and an unnamed individual identified in court documents as the Contractor, devised a bribery and kickback scheme involving Catawba County (the County) government contracts. As Edwards admitted in court, as Director of Utilities and Engineering, Edwards had the authority to review and award contracts on behalf of the County government to private businesses, for engineering and consulting activities related to the County’s landfill, and solid waste and natural gas projects, among others. As court documents show, Edwards admitted to awarding contracts to three businesses associated with the Contractor, all while receiving gifts and other things of value that influenced his decisions, such as expensive meals, tickets to sporting events, and wine-tasting tours, totaling more than $30,000.

Edwards will begin serving his sentence upon designation of a federal facility by the federal Bureau of Prisons.

In making today’s announcement U.S. Attorney King thanked the SBI and the FBI for their investigation of the case.

Assistant United States Attorney Don Gast of the U.S. Attorney’s Office in Asheville prosecuted the case.

Department of Justice

U.S. Attorney’s Office

Eastern District of Michigan

FOR IMMEDIATE RELEASE

Thursday, July 14, 2022

Former President of the Madison District Public Schools Board of Education and a Local Contractor Charged in $560,000 Bribery Scheme 

DETROIT – Albert Morrison, the former President of the Madison District Public Schools Board of Education and local school district contractor, John David, have been charged in a superseding indictment with conspiracy to commit bribery arising out of David’s payments of over $560,000 in bribes to Morrison in exchange for $3.1 million in school contracts to David, U.S. Attorney Dawn N. Ison announced today. The bribery charges were added to the indictment filed on April 6, 2022, that charged Morrison with tax evasion and failure to file tax returns in connection with his failure to report over $500,000 in income from David.

Ison was joined in the announcement by James A. Tarasca, Special Agent in Charge of the Federal Bureau of Investigation, Michigan Division, Sarah Kull, Special Agent in Charge of the Internal Revenue Service Criminal Investigation Division, and John Woolley, Special Agent in Charge of the Department of Education, Office of Inspector General.

Albert Morrison, age 60, and John David, age 64, are charged in the superseding indictment as co-conspirators in a bribery conspiracy count, and they are each separately charged with three counts of bribery concerning programs receiving federal funds. According to the indictment, Morrison was the elected President of the Madison District Public Schools Board of Education from 2012 through 2018.  While Morrison was President, John David was one of the owners of a building maintenance and reconstruction company, Emergency Restoration (a/k/a Emergency Reconstruction), that was awarded over $3.1 million maintenance and construction projects in the Madison District Public Schools. 

David, who was a long-time friend of Morrison, wrote checks from his company to Morrison’s solely owned company, Comfort Consulting, from 2014 through 2018.  Morrison deposited the checks from David into his solely owned bank account. David, through his company, made at least $561,667 in payments to Morrison. David admitted he had to “pay to play” in the school district, and David’s companies received approximately $3,167,275 from the Madison District during the bribery conspiracy. Morrison spent the money from David on personal luxuries such as vacations in Florida and a boat slip.

To keep the payments secret from the school board and the community in the Madison Schools, Morrison, when publicly confronted at a Madison District school board meeting, denied having any financial ties to David or Emergency Restoration.  Morrison and David also failed to disclose to State of Michigan auditors the payments Morrison received from David.

Morrison did not declare to the IRS David’s payments to Comfort Consulting as income in 2014, 2015, 2016, 2017, or 2018.  In a further effort to conceal the payments from David, Morrison did not file a federal income tax return in 2015, 2016, 2017, and 2018. By not declaring to the IRS the payments from David as income, Morrison avoided paying approximately $118,200 in taxes. 

“Children and their parents deserve a school system free of corruption,” said United States Attorney Dawn N. Ison.  “Today’s indictment demonstrates our commitment to ensure that our educational systems put the interests of our kids first.” 

“It is important that contracts funded by our school systems be awarded through a fair and transparent process, not through deals funded by bribes to those in positions of power,” said James A. Tarasca, Special Agent in Charge of the FBI’s Detroit Field Office. “The FBI prioritizes efforts to expose corruption and we will continue to aggressively investigate these allegations alongside our partners at the IRS and Department of Education Office of Inspector General.”

“Honest and law-abiding citizens are fed up with the likes of those who use deceit and fraud to unfairly line their pockets,” said Special Agent in Charge Sarah Kull, Internal Revenue Service, Detroit Field Office.  “Those individuals who engage in this type of financial fraud should know they will not go undetected and will be held accountable.”

An indictment is merely an accusation and is not evidence of guilt.  The defendants are presumed innocent unless and until proven guilty in a court of law.  If convicted, Morrison and David face the following statutory maximum penalties: 5 years in prison for the conspiracy count and 10 years in prison for each of the three bribery counts against each of them.  Morrison faces a statutory maximum penalty of 5 years in prison for each count of tax evasion and 1 year in prison for each count of failure to file tax returns. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The investigation of this case was conducted by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation Division, and the Department of Education. It is prosecuted by Assistant U.S. Attorneys Sarah Resnick Cohen, Karen Reynolds, and Gjon Juncaj.