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Source: United States Department of Justice Criminal Division

Frederick Smith, 56, of Cordova, Tennessee, was sentenced yesterday for his role in an eight-defendant scheme to defraud COVID-19 disaster relief programs (including the Economic Injury Disaster Loan (EIDL) program and the Paycheck Protection Program (PPP) of over $17 million. All eight defendants previously pleaded guilty to charges of wire fraud and have now been sentenced to a total of 96 months in prison and 45 months of home detention.

Details of the sentencings are below:

• Rodrick Flowers, 49, of Memphis, Tennessee, 58 months in prison;
• Frederick Smith, 56, of Cordova, Tennessee, 23 months in prison;
• Jarvys Jones, 40, of West Memphis, Arkansas, 12 months in prison;
• Mary Payne, 63, of Memphis, Tennessee, six months in prison, followed by five months of community confinement, followed by five months of home detention;
• Cleveland Wells, 67, of Memphis, Tennessee, one month in prison, followed by five months of home detention;
• LaTonya Herman, 46, of Memphis, Tennessee, one month in prison, followed by five months of home detention;
• Brian Mays, 41, of Olive Branch, Mississippi, 18 months of home detention; and
• Krystall Sherrod, 36, of Memphis, Tennessee, 12 months of home detention.

According to court documents, the defendants obtained funds under the EIDL program and PPP by submitting false and fraudulent loan applications prepared by Flowers and others on behalf of businesses and entities that the defendants owned, knowing that the applications contained false statements and misrepresentations about the entities’ number of employees, gross revenues, average monthly payroll, and more.  The defendants then used the loan funds for purposes not authorized by the EIDL program or PPP, including for personal expenses.

Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division; Special Agent in Charge Joel Weaver of the U.S. Treasury Inspector General for Tax Administration (TIGTA); Special Agent in Charge Edwin S. Bonano of the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG); and Special Agent in Charge Karston Gaardner of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) Dallas Regional Office made the announcement.

TIGTA, FHFA-OIG, and FDIC-OIG investigated the case.

Trial Attorneys Ariel Glasner, David Hamstra, and Matthew Kahn of the Criminal Division’s Fraud Section are prosecuting the case.

Source: United States Department of Justice Criminal Division

Maurice Hopkins, 32, of Mt. Holly, North Carolina, appeared before U.S. Magistrate Judge Susan C. Rodriguez for the Western District of North Carolina today and pleaded guilty to a federal civil rights violation for threatening eight individuals with force because of their race, color, religion, and national origin.

According to filed plea documents and today’s court hearing, on June 8, 2024, Hopkins threatened eight individuals with a firearm inside a pizza restaurant in Charlotte. When Hopkins encountered the victims, who were a group of friends getting pizza at the time, he asked if they were American. Hopkins then proceeded to harass the victims calling them terrorists, demanding they speak English, telling them to go back to their country, and making other statements because of the victims’ race, color, religion, and national origin. Court records show that Hopkins made multiple threats, including threatening to punch the victims in the face and go retrieve a firearm and return to kill them. Hopkins then left the restaurant and returned minutes later, walking through the doorway with a loaded AR-15 style rifle. The victims immediately fled through the door in the rear of the restaurant.

As Hopkins admitted in court today, he threatened the eight individuals with force because of their race, color, religion, and national origin and because they were enjoying the goods, services, and facilities of the restaurant.

Hopkins pleaded guilty to one count of interference with federally protected activities, which carries a maximum penalty of 10 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Hopkins remains in federal custody. A sentencing date has not been set.

Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division, U.S. Attorney Russ Ferguson for the Western District of North Carolina, and Special Agent in Charge James C. Barnacle Jr. of the FBI Charlotte Field Office made the announcement.

The FBI Charlotte Field Office investigated the case.

Assistant U.S. Attorney Nick J. Miller for the Western District of North Carolina and Trial Attorney Chloe Neely of the Civil Rights Division’s Criminal Section are prosecuting the case.

Source: United States Department of Justice Criminal Division

The owner of a New York-based budget and procurement consulting company was sentenced today to six months in prison for rigging bids submitted to dozens of New York City public schools. The defendant and his company were also ordered to pay $141,511 in restitution to the victim, the New York City Department of Education (NYC DOE).

Victor A Garrido of Peekskill, New York, and his company, TranscendBS LLC, pleaded guilty on March 19 to rigging bids to NYC DOE from at least as early as November 2020 through at least as late as January 2023. In his plea agreement, Garrido also admitted to fraudulently obtaining over $20,000 in COVID-19 relief unemployment benefits and to failing to file and pay federal or state income taxes for himself or for his company for tax years 2020 to 2023.

“The Defendant stole money from public school students, and taxpayers more generally, all for his own selfish gain,” said Acting Deputy Assistant Attorney General Omeed A. Assefi of the Justice Department’s Antitrust Division. “The Antitrust Division and its PCSF partners will aggressively prosecute and hold accountable those who defraud American students and the American taxpayer.”

“Let today’s sentence be a warning to those who attempt to cheat the system. You will be held accountable,” said FBI Operations Director Chad Yarbrough of the Criminal Cyber Branch. “The FBI has zero tolerance for those who attempt to rig the system to benefit themselves, inflicting lasting harm on our communities and undermining the principles of fair competition.”

“Bid-rigging with school contracts is thoroughly unacceptable, as it deprives the school district of vital funds and students of a supportive learning environment — and it is a crime that SCI will continue to tirelessly root out,” said Special Commissioner of Investigation Anatasia Coleman of the Office of the Special Commissioner of Investigation for the NYC School District. “SCI is grateful for its continued partnership with the DOJ Antitrust Division and the FBI in bringing this case to justice.”

“Victor Garrido defrauded the New York State Department of Labor by illegally obtaining pandemic-related unemployment insurance benefits. This sentencing underscores the U.S. Department of Labor, Office of Inspector General’s unwavering commitment to safeguard the American workplace from fraud and corruption,” said Special Agent in Charge Jonathan Mellone of the U.S. Department of Labor, Office of Inspector General Northeast Region. “We will continue to work closely with our law enforcement partners to hold accountable those who engage in these criminal activities within our jurisdiction”

According to court documents, Garrido was previously employed by NYC DOE as a business manager where he provided budget and procurement guidance and training to various schools. Shortly after leaving that role, Garrido formed TranscendBS to provide similar services as a consultant to New York City public schools. During the scheme, Garrido, TranscendBS, and their co-conspirators submitted fake, artificially high “competitor” bids to make it appear as if TranscendBS was the lowest bidder for dozens of business consulting services contracts. None of the “competing” bidders actually provided these services. In addition to thwarting NYC DOE’s procurement rules to ensure that TranscendBS obtained the contracts, Garrido priced his services to just under the threshold which would have required additional scrutiny.

The scheme impacted approximately 28 New York City public schools, predominantly in low-income communities. TranscendBS won at least $707,555 in contracts from those schools, resulting in estimated losses to NYC DOE of $141,511.

In connection with his unemployment benefit fraud, Garrido was also ordered to pay $23,100 in restitution to the New York State Department of Labor.

The Antitrust Division’s New York Office prosecuted the case, which was investigated with the assistance of the Special Commissioner of Investigation for the New York City School District, the Federal Bureau of Investigation, and the Office of Inspector General for the U.S. Department of Labor. Trial Attorneys Helen Christodoulou, Kathryn Carpenter, and Maia Lichtenstein are prosecuting the case.

In November 2019, the Justice Department created the Procurement Collusion Strike Force (PCSF), a joint law enforcement effort to combat antitrust crimes and related fraudulent schemes that impact government procurement, grant and program funding at all levels of government—federal, state and local. To learn more about the PCSF, or to report information on bid rigging, price fixing, market allocation and other anticompetitive conduct related to government spending, go to www.justice.gov/procurement-collusion-strike-force. Anyone with information in connection with this investigation can contact the PCSF at the link listed above.