South Sound Doctor Sentenced to More Than 12 Years in Prison for Health Care Fraud, Tax Crimes, and Drug Distribution

South Sound Doctor Sentenced to More Than 12 Years in Prison for Health Care Fraud, Tax Crimes, and Drug Distribution 
Doctor’s Mother Also Sentenced for Health Care Fraud and Tax Crimes

U.S. Attorney’s OfficeMarch 29, 2012

Western District of Washington(206) 553-7970

Antoine Johnson, 41, a former resident of Aberdeen, Washington, and his mother, Lawanda Johnson, 63, were sentenced today in U.S. District Court in Tacoma for more than two dozen federal felonies connected with their operation of four health care clinics in Western Washington, announced U.S. Attorney Jenny A. Durkan. The Johnsons were convicted in November 2011, following a three-week jury trial. Antoine Johnson was sentenced to 151 months in prison, three years of supervised releajse, and $1,281,873 in restitution for 24 counts of health care fraud, four counts of filing false income tax returns, and five counts of illegal drug distribution. Lawanda Johnson was sentenced to 87 months in prison, three years of supervised release, and $1,227,746 in restitution for 24 counts of health care fraud and six counts of filing false income tax returns. Orders of criminal forfeiture of funds were also entered. Sentencing them to the high end of the guidelines range, U.S. District Judge Ronald B. Leighton said the Johnsons “manipulated the standard of care for patients, they have manipulated the rules of reimbursement, they manipulated the Hippocratic Oath, they manipulated the Justice system...they have invented more excuses than they distributed pills.”

“Antoine Johnson not only defrauded taxpayers, he betrayed his oath as a doctor to ‘do no harm.’ Instead of healing his patients, he fed their addiction for narcotic painkillers to satisfy his own greed,” said U.S. Attorney Jenny A. Durkan. “Mother and son ruined many lives, sent the bill to taxpayers, and then filed false tax returns.”

According to testimony at trial and records in the case, in 2008, law enforcement investigated information obtained by the Grays Harbor County Drug Task Force and the Washington State Medicaid Fraud Control Unit that the clinics were dispensing a high number of prescriptions for narcotic pain medications without examining the patients. Antoine Johnson was the only medical doctor employed by the four clinics, the “Broadway Clinic” in Aberdeen and the “Johnson Family Practice” clinics in Tacoma, Lakewood, and Lacey. Dr. Johnson churned out prescriptions for Schedule II controlled substances such as Oxycodone and Methadone. Evidence introduced at trial indicated that these clinics had thousands of patients and over half of those patients were prescribed controlled substances by Dr. Johnson. These prescriptions were refilled for months and years at a time. Often, the patients would come to the clinic, get their weight and blood pressure taken by a nursing assistant, and then pick up a Schedule II prescription that had been pre-signed by Dr. Johnson. Sometimes a family member of a patient would pick up a prescription for another family member but was required to pay a $75 or $100 fee to the clinic for the signed prescription.

“One of the things Mr. Johnson claimed he did was serve disadvantaged communities, but he actually caused them great harm,” said Laura M. Laughlin, Special Agent in Charge of the FBI Seattle office. “Mr. Johnson turned patients into addicts and facilitated others in drug dealing. This is an egregious case of someone who is well placed to heal and treat deserving people but instead used his medical license to advance his greed at the expense of his neighbors’ health.”

The health care fraud investigation began following an audit by the Washington State Department of Social and Health Services (DSHS) of Medicaid billing practices at the clinics. Testimony and evidence at trial showed that the clinics, through their business manager, Lawanda Johnson, and their only medical doctor, Antoine Johnson, consistently billed for a higher level of service than was actually provided. Evidence introduced at trial showed that the clinic routinely billed Medicaid and Labor and Industries for high-level service even though a patient was only in the clinic for a refill of a controlled substance medication and only had the patients’ vitals taken.

“Dr. Johnson and his mother inflated bills for office visits and had taxpayers pick up the tab. Worse yet, too often, little or no medical services were provided other than writing prescriptions for highly addictive pain pills,” said Ivan Negroni, Special Agent in Charge for the Office of Inspector General of the Department of Health and Human Services region serving Washington. “As in this case, we will work in tight coordination with state and other federal agencies to shut off the flow of dangerous prescription drugs.”

“Today’s sentencing of Dr. Johnson and his mother sends a clear message to rogue physicians who dispense medications to patients without regard for their health, while stealing our nation’s precious healthcare dollars,” said Kenneth J. Hines, the IRS Special Agent in Charge of the Pacific Northwest. “IRS will investigate when greed is the motivation for medical professionals to betray their patients. Our role in this case included determining the total amount of loss to the American taxpayer from both the tax and health care frauds.”

The Johnsons closed their clinics and left the United States shortly after search warrants were executed at the four clinics and the residence of Lawanda Johnson in January 2009. The pair fled the United States, driving to Canada, from where they flew to Scotland and then to Madagascar. The United States State Department worked with the FBI and Madagascar authorities, resulting in the return of the Johnsons to the United States, where they were arrested and held for trial. The Department of Health revoked Dr. Johnson’s license to practice medicine while the Johnsons were in Madagascar. Dr. Johnson’s efforts to contest the revocation of his license upon his return to the United States were unsuccessful.

The case was investigated by the FBI, the Health and Human Services Office of the Inspector General (HHS-OIG), and the Internal Revenue Service Criminal Investigations (IRS-CI).

The case is being prosecuted by Assistant United States Attorneys Susan Loitz and Brian Werner.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at 206-553-4110 or Emily.Langlie@USDOJ.Gov.

Florida Man Pleads Guilty to Computer Intrusion and Wiretapping Scheme Targeting Celebrities 

U.S. Attorney’s OfficeMarch 26, 2012

Central District of California(213) 894-2434

LOS ANGELES—A Florida man pleaded guilty today to a series of cyber-related crimes relating to his hacking into the personal e-mail accounts of more than 50 individuals associated with the entertainment industry.

Christopher Chaney, 35, of Jacksonville, Florida, pleaded guilty to nine felony counts of a 28-count first superseding indictment, including unauthorized access to protected computers in furtherance of wiretapping and wire fraud, unauthorized damage to protected computers resulting in more than $5,000 loss and physical harm, and wiretapping. At the conclusion of the hearing, United States District Court Judge S. James Otero ordered Chaney taken into custody.

During the hearing, Chaney admitted that from at least November 2010 to October 2011, he hacked into the e-mail accounts of Scarlett Johansson, Mila Kunis, Renee Olstead, and others by taking the victims’ e-mail addresses, clicking on the “Forgot your password?” feature, and then re-setting the victims’ passwords by correctly answering their security questions using publicly available information he found by searching the Internet. Once Chaney gained exclusive control of the victims’ e-mail accounts, he was able to access all of their e-mail boxes. While in the accounts, Chaney also went through their contact lists to find e-mail addresses of potential new hacking targets.

In pleading guilty to the wiretapping charges, Chaney admitted that, for most victims, he also changed their e-mail account settings by inserting his alias e-mail address into the forwarding feature so that a duplicate copy of all incoming e-mails to the victims—including any attachments—would be sent virtually simultaneously to Chaney without the victims’ knowledge. Most victims did not check their account settings, so even after they regained control of their e-mail accounts, Chaney’s alias address remained in their account settings. As a result, for many victims, copies of their incoming e-mails, including attachments, were sent to Chaney for weeks or months without their knowledge, causing Chaney to receive thousands of victim e-mails. In addition, when a victim reset his/her password to regain control of the account, Chaney sometimes hacked into the account again and reset the password, sometimes multiple times, in order to continue illegally accessing that victim’s account.

Chaney admitted that as his hacking scheme became more extensive, he began using a proxy service called “Hide My IP” because he knew what he was doing was illegal and wanted to “cover his tracks” so that law enforcement agents could not trace the hacking back to his home computer. Even after his home computers were seized by law enforcement agents pursuant to a federal search warrant, but before he was arrested, Chaney used another computer to hack into another victim’s e-mail account.

Chaney further admitted that as a result of his hacking scheme, he obtained numerous private communications, private photographs, and confidential documents from the victims’ e-mail accounts. The confidential documents included business contracts, scripts, letters, driver’s license information, and Social Security information. On several occasions, after hacking into victim accounts, Chaney sent e-mails from the hacked accounts to friends of the victims, fraudulently posing as the victims to request more private photographs. Chaney downloaded many of the confidential documents and photographs he stole to his home computer, where he saved them on his hard drive in separate computer file folders. Chaney e-mailed many of the stolen photographs to others, including another hacker and two gossip websites. As a result, some of those stolen photographs, several of which were explicit, were later posted on the Internet.

“Today’s guilty pleas shine a bright light on the dark underworld of computer hacking,” said United States Attorney André Birotte, Jr., whose office prosecuted the case. “This case demonstrates that everyone, even public figures, should take precautions to shield their personal information from the hackers that inhabit that dark underworld. It also demonstrates that the Department of Justice will take whatever steps are necessary to protect Americans from harm in cyberspace.”

“Mr. Chaney’s admission to compromising victim accounts, utilizing both technically and socially engineered means, demonstrates the persistence and extent to which a hacker will go to obtain private information,” said Steven Martinez, Assistant Director in Charge of the FBI’s Los Angeles Field Office. “This case sends an important message to all users of Internet-accessible media that practicing good computer security makes us less vulnerable to this type of attack. The FBI remains committed to investigating cyber adversaries who target protected computers, whether of private citizens or the nation’s critical infrastructure.”

Each charge of unauthorized access to a protected computer carries a maximum of five years in prison, each charge of unauthorized damage to a protected computer carries a maximum charge of 10 years in prison, and each charge of wiretapping carries a maximum of five years in prison. As a result of all of today’s guilty pleas, Chaney faces a total statutory maximum sentence of 60 years in federal prison. In addition to the possible prison term, as part of his plea agreement filed in federal court, Chaney agreed to forfeit his computers and related devices seized during the investigation, to pay restitution to all of the victims for any losses they suffered, and to comply with strict restrictions regarding his future use of computers and computer-related devices. In exchange, the government agreed to dismiss the remaining counts, including nine counts of aggravated identity theft, at the time defendant is sentenced.

Chaney is scheduled to be sentenced by United States District Judge S. James Otero on July 23, 2012.

The investigation of this case was led and conducted by the Federal Bureau of Investigation.

Kansas City Business Owner Pleads Guilty to Multi-Million-Dollar Bank Fraud Conspiracy

U.S. Attorney’s Office March 23, 2012

Western District of Missouri (816) 426-3122

— filed under: Financial, Fraud, Press Release, White-Collar Crime

KANSAS CITY, MO—David M. Ketchmark, Acting United States Attorney for the Western District of Missouri, announced that the owner of several used car dealerships in the Kansas City, Missouri metropolitan area pleaded guilty in federal court today to his role in a bank fraud conspiracy that resulted in losses of millions of dollars by several financial institutions.

John A. Hart III, 51, of Kansas City, pleaded guilty before U.S. District Judge Ortrie D. Smith to the charge contained in an information that was filed today in lieu of the September 21, 2011 federal indictment.

Between May 2000 and February 2009, Hart operated several used car dealerships at various locations, including Better Than New Automobiles LLC, On Time Auto, and Hart Family Motors.

Hart and others obtained loans and lines of credit from various financial institutions in connection with vehicles involved in his auto sales business. Hart admitted that he provided false and fraudulent financial information to obtain loans and lines of credit. Hart also admitted that he obtained multiple loans in which the same vehicle was pledged as collateral, and failed to disclose to the financial institutions that vehicles pledged as collateral for loans were already encumbered at another financial institution or in another loan.

Hart also admitted that he and his wife borrowed more than $1 million from First Missouri National Bank between November 15, 2006 and March 26, 2008. They provided copies of their 2004 and 2005 income tax returns to the bank. However, according to today’s plea agreement, they did not actually file their 2004 and 2005 returns until 2009. The filed returns were materially different than the tax returns submitted to the bank in support of their loan application. According to the plea agreement, the filed returns claimed a much lower adjusted gross income.

The government believes the loss attributed to Hart is between $2.5 million and $7 million. Under the terms of today’s plea agreement, Hart reserves his right to argue what the appropriate loss calculation should be at the sentencing hearing.

Under federal statutes, Hart is subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Acting U.S. Attorney David M. Ketchmark. It was investigated by the FBI.

Microsoft Raids Tackle Online Crime

Excerpt from an article in

The New York Times

Monday, March 26, 2012

Microsoft Raids Tackle Online Crime

By NICK WINGFIELD and NICOLE PERLROTH

SEATTLE — Microsoft employees, accompanied by United States marshals, raided two nondescript office buildings in Pennsylvania and Illinois on Friday, aiming to disrupt one of the most pernicious forms of online crime today — botnets, or groups of computers that help harvest bank account passwords and other personal information from millions of other computers.

With a warrant in hand from a federal judge authorizing the sweep, the Microsoft lawyers and technical personnel gathered evidence and deactivated Web servers ostensibly used by criminals in a scheme to infect computers and steal personal data. At the same time, Microsoft seized control of hundreds of Web addresses that it says were used as part of the same scheme.

The sweep was part of a civil suit brought by Microsoft in its increasingly aggressive campaign to take the lead in combating such crimes, rather than waiting for law enforcement agencies to act. The company’s targets were equipment used to control the botnets, which criminals, known as bot-herders, use for ill intent.

Microsoft has a big interest in making the Internet a safer place. Despite inroads made by Apple and others in some parts of the technology business, Microsoft’s Windows operating system still runs the vast majority of the computers connected to the Internet. The prevalence of its software has made Windows the most appealing target for online criminals, and the security holes they discover in the software are a persistent nuisance for Windows users.

Microsoft’s involvement in what had been considered largely a law enforcement function — fighting computer crime — is the brainchild of Richard Boscovich, a former federal prosecutor who is a senior lawyer in Microsoft’s digital crimes unit. That group watches over fraud that could affect the company’s products and reputation.

Armenian Power Member and Three Armenian Power Associates Convicted in Los Angeles for Roles in Identity Theft Ring 

U.S. Department of JusticeMarch 22, 2012

Office of Public Affairs(202) 514-2007/TDD (202) 514-1888

WASHINGTON—After a five week trial, four defendants have been convicted for their roles in one of the largest bank fraud and identity theft schemes in California history, with dozens of victims in four states and millions of dollars in losses.

The convictions were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Andre Birotte, Jr. of the Central District of California; Assistant Director in Charge of the FBI’s Los Angeles Field Office Steven Martinez; and Special Agent in Charge of the U.S. Secret Service (USSS) Joseph Beaty.

Arman Sharopetrosian, Karen Markosian, Artush Margaryan, and Kristine Ogandzhanyan were found guilty of conspiring to commit bank fraud, attempted bank fraud, and various counts of aggravated identity theft. Sharopetrosian, Markosian, and Ogandzhanyan waived a jury trial and consented to trial by the judge, and Margaryan proceeded with a jury trial.

Yesterday, U.S. District Judge David O. Carter found Ogandzhanyan, 28, of Burbank, California, guilty of one count of bank fraud conspiracy, two counts of attempted bank fraud, and four counts of aggravated identity theft. On March 16, 2012, the judge found Sharopetrosian, 33, of Burbank, guilty of one count of bank fraud conspiracy, four counts of bank fraud, and seven counts of aggravated identify theft. On March 16, 2012, the judge also found Markosian, 39, of Glendale, California, guilty of one count of bank fraud conspiracy, one count of attempted bank fraud, and two counts of aggravated identity theft. A jury convicted the fourth defendant, Artush Margaryan, 28, of Van Nuys, California, on March 16, 2012 of one count of bank fraud conspiracy, one count of attempted bank fraud, and three counts of aggravated identity theft.

Evidence was presented at trial that Sharopetrosian is a member of the Armenian Power organized crime group, and Margaryan, Markosian, and Ogandzhanyan are Armenian Power associates.

According to evidence presented at trial, Sharopetrosian directed the massive fraud scheme along with co-defendant Angus Brown while the two were incarcerated at Avenal State Prison. Using cellular telephones that were smuggled into the prison, Sharopetrosian and Brown worked from behind bars to coordinate with others, including Ogandzhanyn, Markosian, and Margaryan, to obtain confidential bank profile information and steal money from victim account holders. Often targeting high-value bank accounts, the defendants used account holders’ personal identifying information—including names, Social Security numbers, and dates of birth—to impersonate victims in phone calls to the bank. The defendants gathered account information, transferred funds between victims’ accounts, and placed unauthorized check orders for the accounts. They then stole the checks, obtained the victims’ signatures from public documents, and paid conspirators to cash the forged checks. Over the course of the six-year conspiracy, the defendants and their co-conspirators caused more than $10 million dollars in losses to victims in Southern California, Nevada, Arizona, and Texas.

“These defendants, including two individuals who were operating from a prison cell, perpetrated a massive fraudulent scheme on behalf of a dangerous criminal enterprise,” said Assistant Attorney General Breuer. “As members and associates of Armenian Power, they stole sensitive personal and financial information from innocent consumers and caused millions of dollars in losses. Whether organized criminal groups traffic in drugs, commit financial fraud or wreak other havoc to keep themselves going, they must be stopped. We are doing everything possible to shut down dangerous gangs like Armenian Power.”

“The safety and sanctity of confidential financial information is paramount in today’s society,” said U.S. Attorney Birotte. “Identity theft is a fundamental invasion of consumer privacy that cannot be tolerated. These convictions demonstrate that violators, whoever and wherever they may be, will be caught and will be prosecuted to the fullest extent of the federal law.”

“The defendants were convicted in a trial that uncovered a sophisticated and lengthy scheme that targeted victims in multiple states and included disturbing details, such as orders made from within prison walls and assistance from bank insiders enlisted by the defendants,” said FBI Assistant Director Martinez. “This case is also indicative of the growing trend of gang or organized crime-affiliated groups now engaging in identity theft and other financial crimes in furtherance of their enterprise.”

These defendants are four of 20 defendants who were charged with operating the bank fraud and identity theft scheme in one of a series of federal indictments unsealed on February 16, 2011. The indictments allege various federal crimes against members and associates of the Armenian Power criminal organization. To date, 19 of the 20 defendants charged in the bank fraud indictment have been convicted, including Brown. One defendant, Faye Bell, was arrested earlier this year and is still awaiting trial.

Sharopetrosian, Margaryan, Markosian, and Ogandzhanyan face maximum sentences of 30 years in federal prison for each count of bank fraud, 30 years for each count of conspiracy to commit bank fraud, and additional mandatory two year sentences for each count of aggravated identity theft.

Sentencing for all four defendants is scheduled for August 6, 2012 before Judge Carter.

The case is being prosecuted by Assistant U.S. Attorneys Martin Estrada and Joseph McNally of the Central District of California and Trial Attorney Cristina Moreno of the Organized Crime and Gang Section in the Justice Department’s Criminal Division. The case was investigated by the Eurasian Organized Crime Task Force, which includes the FBI, the USSS, the Los Angeles Police Department, the Glendale Police Department, the Burbank Police Department, the Internal Revenue Service, and the U.S. Immigration and Customs Enforcement.

ACI Worldwide Named a Leader in IDC Marketscape: Financial Crimes Management 2012 Vendor Assessment

ACI Worldwide Named a Leader in IDC MarketScape: Financial Crimes Management 2012 Vendor Assessment

Proactive Risk Manager™ Recognized for Real-Time Pattern Recognition Abilities, Customizable Alerts, and Reporting Options

Wednesday, March 21, 2012

(New York, N.Y. - March 21, 2012) - ACI Worldwide (Nasdaq: ACIW), a leading international provider of payment systems, today announced it has been ranked in the “Leader” category for financial crimes management by leading industry analyst firm IDC Financial Insights in the recent IDC MarketScape report, Financial Crimes Management 2012 Vendor Assessment.

ACI’s ranking is based on its flagship fraud detection product, Proactive Risk Manager. IDC Financial Insights stated, “Proactive Risk Manager's greatest strength is its integration with ACI's other payment products, particularly its BASE24-eps card processing system and its MTS wire and ACH systems. This integration enables Proactive Risk Manager to operate almost entirely in real time. Real-time alerting and decisioning continues to be a primary selling point, reflecting the product's roots in the card market.”

Shesh Gorur, vice president & product line manager, ACI Worldwide, said, “We are delighted to be recognized as a Leader by IDC in this report. Our goal is to provide a product that is both flexible and powerful, supporting our customers’ current needs while allowing them to react to the evolving world of payments fraud.”

As defined by the report, financial crime management includes the IT solutions that anticipate, detect, analyze, and prevent fraudulent transactions, money laundering, and employee financial misconduct through the use of one or more of the following: decision trees, neural networks, predictive scoring models, network link analysis, scenario matching, data mining, case management, and entity and device profiling.

Proactive Risk Manager is a comprehensive enterprise fraud detection solution to help card issuers, merchants, acquirers and financial institutions combat financial crime. By monitoring account activity across all lines of business, Proactive Risk Manager enables users to see more fraudulent activity in a shorter amount of time, minimizing losses and helping to preserve the customer relationship. Proactive Risk Manager combines the power of predictive analytics and expertly defined rules for fast, accurate and flexible response to the evolving and growing nature of fraud and money laundering.

For more information on Proactive Risk Manager please visitwww.aciworldwide.com/proactiveriskmanager.

Former XM Employee Pleads Guilty to Embezzlement Scheme

Former Employee Pleads Guilty to Conspiracy Charge in $900,000 Embezzlement Scheme Against XM Satellite Radio 
She Conspired to Take Money Intended for Vendors

U.S. Attorney’s OfficeMarch 16, 2012

District of Columbia(202) 514-7566

WASHINGTON—Valencia Person, 54, of Suitland, Maryland, pled guilty today to a federal conspiracy charge stemming from a scheme in which she helped embezzle more than $900,000 from her former employer, XM Satellite Radio, announced U.S. Attorney Ronald C. Machen Jr. and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.

Person pled guilty before the Honorable Reggie B. Walton in the U.S. District Court for the District of Columbia to one count of conspiracy to commit wire fraud. Sentencing is scheduled for June 8, 2012. The charge carries a maximum statutory penalty of five years in prison. However, under federal sentencing guidelines, Person faces a likely sentence of 24 to 30 months in prison and a fine of up to $50,000.

As part of the plea agreement, Person agreed to a money judgment of at least $909,924, representing the amount of proceeds from the crime. She also is subject to an order to make restitution.

According to a statement of offense submitted to the Court by Assistant U.S. Attorney Sherri L. Schornstein, Person worked at XM Satellite Radio (now known as Sirius XM Radio Inc.), a corporation based in Washington, D.C., as a coordinator in the Accounts Payable Department. Her duties included responsibility for payments to large vendors.

From 2005 until at least 2008, Person and an XM Satellite Radio Accounts Payable Administrator, Brenda L. Jones, embezzled more than $909,000 from the company. They secretly diverted at least 26 payments, which were supposed to go to XM vendors, to bank accounts held by Jones. They also covered up the activities by altering data in the company’s accounting system. Jones then gave a portion of the monies to Person. Jones resigned in 2006. However, more than $690,000 of the money was transferred into her accounts after she had left the company.

According to Person, she personally benefitted from the scheme in an amount not exceeding $125,000.

Jones, 46, of Lothian, Maryland, pled guilty in January 2012 to one count of conspiracy to commit wire fraud. She is awaiting sentencing.

In announcing the plea, U.S. Attorney Machen and Assistant Director in Charge McJunkin praised those who worked on the case, including the Special Agents of the FBI’s Washington Field Office, as well as Legal Assistant Jared Forney of the U.S. Attorney’s Office. They also commended the efforts of Assistant U.S. Attorney Sherri L. Schornstein, who is prosecuting the case.

Ponzi Scheme

Promoter of Christian Rock Concerts Sentenced to Nearly Five Years in Federal Prison in Ponzi Scheme That Took $1 Million from Victims 

U.S. Attorney’s OfficeMarch 06, 2012

Central District of California(213) 894-2434

SANTA ANA, CA—The owner and operator of a Downey company has been sentenced to 57 months in custody in a wire fraud scheme that collected nearly $1 million from victims who were falsely promised that their money would be used to host Christian rock concerts.

Lauren Baumann, 43, of Downey, the owner of Stewardship Estates, LLC, was sentenced late yesterday by United States District Judge Josephine S. Tucker.

Baumann pleaded guilty in October, admitting in court that she solicited loans from investors with claims that the money would be used to finance “battle of the bands” events featuring Christian rock bands and other music groups that would generate profits from ticket sales and company sponsorships. In some cases, Baumann told investors that the funds would also be used to purchase, refurbish, and resell homes.

In fact, a substantial portion of the investors’ funds was used to pay earlier investors, who thought they were receiving profits from Baumann’s venture. Baumann also used investor funds to pay approximately $10,000 a month to rent a historic mansion in Downey and to pay private school tuition for her children, among other personal expenses.

As a result of Baumann’s scheme, more than two dozen victims in Orange and Los Angeles counties suffered losses totaling nearly $560,000.

When she pleaded guilty, Baumann also admitted that she failed to disclose to investors that she had been convicted of securities fraud in 1999 in a Texas federal court and that she had been found liable in a related civil fraud action brought by the United States Securities and Exchange Commission.

Baumann was ordered to report to begin serving her sentence by April 2. The court will also issue an order requiring that Baumann pay restitution to her victims in the scheme.

The criminal case against Baumann is the result of an investigation by the Federal Bureau of Investigation.

Employee Theft

Former Cessna Employee Sentenced to 18 Months for Stealing Parts from Airplanes

U.S. Attorney’s Office March 05, 2012

District of Kansas (316) 269-6481

— filed under: Intellectual Property Theft, Press Release, White-Collar Crime

WICHITA, KS—A former Cessna employee has been sentenced to 18 months in federal prison for selling stolen aircraft parts on eBay, U.S. Attorney Barry Grissom said today. He also was ordered to pay $130,000 restitution.

Diego Alejandro Paz-Teran, 35, Wichita, Kansas, pleaded guilty to one count of interstate transportation of stolen property. In his plea, Paz-Teran admitted he stole aircraft parts from Cessna and sold them on eBay. According to court documents, the investigation began in November 2008 when an employee of a Rockwell Collins Company distributor saw a Collins AHC-3000 Attitude Reference Computer offered for sale on eBay for $9,000. Knowing that the part was valued at more than $45,000, he contacted the seller and asked for serial numbers. Cessna tracked the serial numbers to a part that was removed from an XLS Plus aircraft while it was being painted.

Investigators found other stolen aircraft parts being sold on the same eBay account and followed records on the account to Teran at his home in Wichita.

Grissom commended the U.S. Department of Transportation-Office of Inspector General, the Sedgwick County Sheriff’s Office, the Federal Bureau of Investigation, and Assistant U.S. Attorney Matt Treaster for their work on the case.

Six Hackers Charged

Six Hackers in the United States and Abroad Charged for Crimes Affecting Over One Million Victims 
Four Principal Members of “Anonymous” and “LulzSec” Charged with Computer Hacking and Fifth Member Pleads Guilty; “AntiSec” Member also Charged with Stealing Confidential Information from Approximately 860,000 Clients and Subscribers of Stratfor

U.S. Attorney’s OfficeMarch 06, 2012

Southern District of New York(212) 637-2600

Five computer hackers in the United States and abroad were charged today, and a sixth pled guilty, for computer hacking and other crimes. The six hackers identified themselves as aligned with the group Anonymous, which is a loose confederation of computer hackers and others, and/or offshoot groups related to Anonymous, including “Internet Feds,” “LulzSec,” and “AntiSec.”

RYAN ACKROYD, a/k/a “kayla,” a/k/a “lol,” a/k/a “lolspoon”; JAKE DAVIS, a/k/a “topiary,” a/k/a “atopiary”; DARREN MARTYN, a/k/a “pwnsauce,” a/k/a “raepsauce,” a/k/a “networkkitten”; and DONNCHA O’CEARRBHAIL, a/k/a “palladium,” who identified themselves as members of Anonymous, Internet Feds, and/or LulzSec, were charged in an indictment unsealed today in Manhattan federal court with computer hacking conspiracy involving the hacks of Fox Broadcasting Company, Sony Pictures Entertainment, and the Public Broadcasting Service (“PBS”). O’CEARRBHAIL is also charged in a separate criminal complaint with intentionally disclosing an unlawfully intercepted wire communication.

HECTOR XAVIER MONSEGUR, a/k/a “Sabu,” a/k/a “Xavier DeLeon,” a/k/a “Leon,” who also identified himself as a member of Anonymous, Internet Feds, and LulzSec, pled guilty on August 15, 2011 in U.S. District Court to a 12-count information charging him with computer hacking conspiracies and other crimes. MONSEGUR’S information and guilty plea were unsealed today. The crimes to which MONSEGUR pled guilty include computer hacking conspiracy charges initially filed in the Southern District of New York. He also pled guilty to the following charges: a substantive hacking charge initially filed by the U.S. Attorney’s Office in the Eastern District of California related to the hacks of HBGary, Inc. and HBGary Federal LLC; a substantive hacking charge initially filed by the U.S. Attorney’s Office in the Central District of California related to the hack of Sony Pictures Entertainment and Fox Broadcasting Company; a substantive hacking charge initially filed by the U.S. Attorney’s Office in the Northern District of Georgia related to the hack of Infragard Members Alliance; and a substantive hacking charge initially filed by the U.S. Attorney’s Office in the Eastern District of Virginia related to the hack of PBS, all of which were transferred to the Southern District of New York, pursuant to Rule 20 of the Federal Rules of Criminal Procedure, in coordination with the Computer Crime and Intellectual Property Section (“CCIPS”) in the Justice Department’s Criminal Division.

Late yesterday, JEREMY HAMMOND, a/k/a “Anarchaos,” a/k/a “sup_g,” a/k/a “burn,” a/k/a “yohoho,” a/k/a “POW,” a/k/a “tylerknowsthis,” a/k/a “crediblethreat,” who identified himself as a member of AntiSec, was arrested in Chicago, Illinois and charged in a criminal complaint with crimes relating to the December 2011 hack of Strategic Forecasting, Inc. (“Stratfor”), a global intelligence firm in Austin, Texas, which may have affected approximately 860,000 victims. In publicizing the Stratfor hack, members of AntiSec reaffirmed their connection to Anonymous and other related groups, including LulzSec. For example, AntiSec members published a document with links to the stolen Stratfor data titled, “Anonymous Lulzxmas rooting you proud” on a file sharing website.

The following allegations are based on the indictment, the information, the complaints, and statements made at MONSEGUR’s guilty plea:

Hacks by Anonymous, Internet Feds, and LulzSec

Since at least 2008, Anonymous has been a loose confederation of computer hackers and others. MONSEGUR and other members of Anonymous took responsibility for a number of cyber attacks between December 2010 and June 2011, including denial of service (“DoS”) attacks against the websites of Visa, MasterCard, and PayPal, as retaliation for the refusal of these companies to process donations to Wikileaks, as well as hacks or DoS attacks on foreign government computer systems.

Between December 2010 and May 2011, members of Internet Feds similarly waged a deliberate campaign of online destruction, intimidation, and criminality. Members of Internet Feds engaged in a series of cyber attacks that included breaking into computer systems, stealing confidential information, publicly disclosing stolen confidential information, hijacking victims’ e-mail and Twitter accounts, and defacing victims’ Internet websites. Specifically, ACKROYD, DAVIS, MARTYN, O’CEARRBHAIL, and MONSEGUR, as members of InternetFeds, conspired to commit computer hacks including: the hack of the website of Fine Gael, a political party in Ireland; the hack of computer systems used by security firms HBGary, Inc. and its affiliate HBGary Federal, LLC, from which Internet Feds stole confidential data pertaining to 80,000 user accounts; and the hack of computer systems used by Fox Broadcasting Company, from which Internet Feds stole confidential data relating to more than 70,000 potential contestants on “X-Factor,” a Fox television show.

In May 2011, following the publicity that they had generated as a result of their hacks, including those of Fine Gael and HBGary, ACKROYD, DAVIS, MARTYN, and MONSEGUR formed and became the principal members of a new hacking group called “Lulz Security” or “LulzSec.” Like Internet Feds, LulzSec undertook a campaign of malicious cyber assaults on the websites and computer systems of various business and governmental entities in the United States and throughout the world. Specifically, ACKROYD, DAVIS, MARTYN, and MONSEGUR, as members of LulzSec, conspired to commit computer hacks including the hacks of computer systems used by the PBS, in retaliation for what LulzSec perceived to be unfavorable news coverage in an episode of the news program “Frontline”; Sony Pictures Entertainment, in which LulzSec stole confidential data concerning approximately 100,000 users of Sony’s website; and Bethesda Softworks, a video game company based in Maryland, in which LulzSec stole confidential information for approximately 200,000 users of Bethesda’s website.

The Stratfor Hack

In December 2011, HAMMOND conspired to hack into computer systems used by Stratfor, a private firm that provides governments and others with independent geopolitical analysis. HAMMOND and his co-conspirators, as members of AntiSec, stole confidential information from those computer systems, including Stratfor employees’ e-mails as well as account information for approximately 860,000 Stratfor subscribers or clients. HAMMOND and his co-conspirators stole credit card information for approximately 60,000 credit card users and used some of the stolen data to make unauthorized charges exceeding $700,000. HAMMOND and his co-conspirators also publicly disclosed some of the confidential information they had stolen.

The Hack of International Law Enforcement

In January 2012, O’CEARRBHAIL hacked into the personal e-mail account of an officer with Ireland’s national police service, the An Garda Siochana (the “Garda”). Because the Garda officer had forwarded work e-mails to a personal account, O’CEARRBHAIL learned information about how to access a conference call that the Garda, the FBI, and other law enforcement agencies were planning to hold on January 17, 2012 regarding international investigations of Anonymous and other hacking groups. O’CEARRBHAIL then accessed and secretly recorded the January 17 international law enforcement conference call, and then disseminated the illegally-obtained recording to others.

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MONSEGUR, 28, of New York, New York, pled guilty to three counts of computer hacking conspiracy, five counts of computer hacking, one count of computer hacking in furtherance of fraud, one count of conspiracy to commit access device fraud, one count of conspiracy to commit bank fraud, and one count of aggravated identity theft. He faces a maximum sentence of 124 years and six months in prison.

ACKROYD, 23, of Doncaster, United Kingdom; DAVIS, 29, of Lerwick, Shetland Islands, United Kingdom; and MARTYN, 25, of Galway, Ireland, each are charged with two counts of computer hacking conspiracy. Each conspiracy count carries a maximum sentence of 10 years in prison.

O’CEARRBHAIL, 19, of Birr, Ireland, is charged in the indictment with one count of computer hacking conspiracy, for which he faces 10 years in prison. He is also charged in the complaint with one count of intentionally disclosing an unlawfully intercepted wire communication, for which he faces a maximum sentence of five years in prison.

HAMMOND, 27, of Chicago, Illinois, is charged with one count of computer hacking conspiracy, one count of computer hacking, and one count of conspiracy to commit access device fraud. Each count carries a maximum sentence of 10 years in prison.

DAVIS is separately facing criminal charges in the United Kingdom, which remain pending, and ACKROYD is being interviewed today by the Police Central e-crime Unit in the United Kingdom. O’CEARRBHAIL was arrested today by the Garda.

The case is being prosecuted by the U.S. Attorney’s Office for the Southern District of New York. The investigation was initiated and led by the FBI, and its New York Cyber Crime Task Force, which is a federal, state, and local law enforcement task force combating cybercrime, with assistance from the PCeU; a unit of New Scotland Yard’s Specialist Crime Directorate, SCD6; the Garda; the Criminal Division’s CCIPS; and the U.S. Attorneys’ Offices for the Eastern District of California, the Central District of California, the Northern District of Georgia, and the Eastern District of Virginia; as well as the Criminal Division’s Office of International Affairs.

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