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Source: US FBI

BIRMINGHAM, Ala. – A father and daughter have been charged with devising a scheme to misuse CARES Act funds, announced U.S. Attorney Prim F. Escalona and Federal Bureau of Investigation Special Agent in Charge Carlton L. Peeples.

An information filed yesterday in United States District Court charges Kenneth L. Phillips, 62, of Birmingham, and Danielle A. Phillips, 30, of Birmingham, with conspiracy to commit wire fraud.

According to the information, Kenneth Phillips, a retired Lieutenant Colonel in the U.S. Army, was the founder and CEO of Priority Soldier, Inc. (PSI).  His daughter, attorney Danielle Phillips, held various roles with PSI including Chief Operating Officer and in-house legal counsel. PSI’s stated mission is to strengthen military families by advocating, educating, and addressing critical issues affecting veterans and their families. 

The information alleges that in November 2020, the defendants submitted a fraudulent proposal to the State of Alabama requesting COVID-19 grant funding to operate an online program to assist veterans dealing with PTSD in coping with the then-ongoing COVID-19 pandemic.  The defendants received approximately $1.9 million dollars in funding, but rather than use the funds for their intended purpose, began transferring funds to their personal bank accounts. After paying themselves a combined salary of more than $400,000 during the one month the program operated, the defendants in January 2021 represented to the Alabama Department of Finance that PSI had spent all but $54,617.04, which they returned.  In reality, more than $1.4 million remined in the PSI bank account, which the defendants used to purchase personal items such as luxury sports cars, watches, and diamond jewelry for their own personal benefit. 

In conjunction with the charge, the government also filed a plea agreement with both Kenneth and Danielle Phillips. Both must appear before a judge to enter a guilty plea.

The maximum penalty for conspiracy is five years in prison. 

The FBI investigated the case. Assistant United States Attorney Ryan S. Rummage is prosecuting the case.

An information contains only charges.  A defendant is presumed innocent unless and until proven guilty.

Source: US FBI

BIRMINGHAM, Ala. – An assistant to Representative John Rogers has been indicted by a federal grand jury in connection with schemes to defraud the Jefferson County Community Service Fund, announced U.S. Attorney Prim F. Escalona, Federal Bureau of Investigation Special Agent in Charge Carlton L. Peeples, and Internal Revenue Service, Criminal Investigation Acting Special Agent in Charge Demetrius Hardeman.

A 21-count indictment filed this week in United States District Court charges Varrie Johnson Kindall, 58, of Chelsea, with one count of conspiracy to commit wire and mail fraud, 14 counts of wire fraud, 3 counts of mail fraud, 1 count of money laundering, and 2 counts of obstruction of justice. These charges arise from an investigation of wrongdoing in connection with the Jefferson County Community Service Fund. In June, former Representative Fred L. Plump, Jr., pleaded guilty to conspiring with Kindall and resigned from the Alabama House of Representatives.

According to the indictment, in 2015 the Alabama Legislature passed Alabama Act No. 2015-226 (the “Act”) and authorized the Jefferson County Commission to levy and distribute a one percent sales tax and a one percent use tax to benefit the public welfare and enhance the education of the children of Jefferson County. Jefferson County began levying the new taxes in or about August 2017. The Act required the County to distribute the tax revenue according to certain specified priorities, including paying debt incurred during school construction, increasing the County’s general fund, giving funds to each board of education serving students in the County, and for certain other purposes set forth in the Act.

The Act created the Jefferson County Community Service Fund (the “Fund”), which was subsidized by approximately $3.6 million annually from the new taxes. The Act also created the Jefferson County Community Service Committee (the “Committee”), the four members of which were elected by members of the Jefferson County House and Senate delegations. The Committee was responsible for ensuring that the Fund was used only for the purposes set forth in the Act, which included to support public entities and projects such as schools, libraries, museums, parks, zoos, neighborhood associations, athletic facilities, youth sports associations, road construction, the performing arts, police departments, the sheriff’s office, fire departments, and certain nonprofit entities. Each Representative and Senator representing Jefferson County could make recommendations to the Committee of expenditures from their allotted amount of the Fund. These recommendations were made on a form created by the Committee that required certain certifications by the legislator. The organization receiving the funds was required to submit information about the organization and confirm that it intended to use the money for a public purpose. During each fiscal year from 2018 to 2022, each Representative was allocated approximately $100,000 and each Senator was allocated approximately $240,000 from the Fund.

The indictment identifies certain relevant parties. Representative John Rogers was a long-serving member of the Alabama House of Representatives. Fred L. Plump, Jr. served as the Executive Director of the Piper Davis Youth Baseball League (“Piper Davis”), a nonprofit organization that claimed to provide a positive sporting experience for inner city youth in Jefferson County. Defendant Varrie Johnson Kindall was Rogers’ personal and professional assistant. Individual #1 was the Founder of Organization #1.

Between fiscal year 2018 and fiscal year 2022, Representative Rogers was allocated approximately $500,000 by the Fund. Rogers directed approximately $400,000 of those discretionary funds to Piper Davis. In turn, Plump gave approximately $200,000 to defendant Kindall.

The indictment alleges that from in or about March 2019, and continuing through April 2023, Kindall conspired with Plump and others to defraud and obtain money from the Fund. It is alleged that it was part of the conspiracy that Rogers, with Kindall’s assistance, recommended during each fiscal year that most of his allotment of Fund money be paid to Piper Davis. In turn, Plump agreed to pay kickbacks to Kindall. Plump and Kindall submitted false and fraudulent information to the Committee about Piper Davis’ intended use of Fund money. Upon receipt and deposit of Fund checks, Plump gave checks to Kindall for approximately one-half of the amount of Fund money received by Piper Davis. On two occasions Kindall engaged in money laundering by moving large sums of illegally obtained money between bank accounts.

Additionally, the indictment alleges that, in 2019, Kindall committed wire fraud by assisting Rogers in directing Fund money to Organization #1 and then requiring Individual #1 to pay kickbacks to her. The indictment alleges further that, after learning about the federal investigation into the fraud scheme, Kindall attempted to obstruct justice by asking Individual #1 to give false information to federal agents and offering Individual #1 additional grant money as a bribe.

The maximum penalty for the conspiracy and substantive fraud counts is twenty years in prison and a $250,000 fine. The maximum penalty for money laundering is ten years in prison and a $250,000 fine. The maximum penalty for obstruction of justice is twenty years in prison and a $250,000 fine. The maximum penalty for obstruction of justice by bribery is five years in prison and a $250,000 fine.

The Federal Bureau of Investigation and Internal Revenue Service Criminal Investigation investigated the case. Assistant United States Attorneys George Martin and Catherine Crosby are prosecuting the case.

An indictment contains only charges.  A defendant is presumed innocent unless and until proven guilty.  

Source: US FBI

BIRMINGHAM, Ala. – Last week, Eugene Douglas Reid, III, 48, of Vestavia, was convicted of distribution and transportation of child pornography, following a three-day jury trial before U.S. District Court Judge R. David Proctor.  U.S. Attorney Prim F. Escalona and Federal Bureau of Investigation Special Agent in Charge Carlton L. Peeples made the announcement.

In 2020, FBI Milwaukee, in collaboration with the Winnebago County Sheriff’s Office, was investigating numerous groups of individuals engaged in the receipt, possession, distribution and possible production of child sexual abuse material through a proactive operation. As part of the FBI’s Operation, online covert employees documented these illegal activities and forwarded the documentation for further investigation to the appropriate FBI field office. The evidence at trial established that Reid had distributed and transported numerous videos and images of child sexual abuse material on the Kik messaging application in various private groups during the first half of 2020. 

The maximum penalty for distribution of child pornography and transportation of child pornography is 20 years in prison, and a term of post-imprisonment supervised release of at least 5 years up to life.

The FBI Birmingham’s Child Exploitation Human Trafficking Task Force investigated the case with the assistance of FBI Milwaukee Division, Winnebago County Sheriff’s Office, Vestavia Hills Police Department, Jefferson County Sheriff’s Office, and the Alabama Law Enforcement Agency. Assistant U.S. Attorneys Kristen S. Osborne and R. Leann White are prosecuting the case. 

The case was brought as part of Project Safe Childhood, a nationwide initiative launched by the Department of Justice in May 2006 to combat the growing epidemic of child sexual exploitation and abuse.  Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, and to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

Source: US FBI

            WASHINGTON – An Alabama man pleaded guilty today to a felony charge for his actions during the breach of the U.S. Capitol on Jan. 6, 2021. His actions and the actions of others disrupted a joint session of the U.S. Congress convened to ascertain and count the electoral votes related to the 2020 presidential election.

            Kaleb Dillard, 27, of Columbia, Alabama, pleaded guilty in the District of Columbia to one count of assaulting, resisting, or impeding certain officers, a felony offense. U.S. District Court Judge Jia M. Cobb scheduled a sentencing hearing for Oct. 27, 2023.  

            According to court documents, Dillard traveled from his home in Alabama to attend the “Stop the Steal” rally on Jan. 6, 2021, in Washington, D.C. After the rally, Dillard made his way to the Capitol building and emerged at the front of the crowd gathered near the East Rotunda Doors. Here, court documents say that Dillard used a metal tool to smash a window of the doors.

            Court documents say that, at approximately 2:26 p.m., Dillard forced his way past officers attempting to close the doors and entered the Capitol building. Dillard then grabbed a U.S. Capitol police officer, who was attempting to close the doors, from behind and threw the officer to the ground.

            This case is being prosecuted by the U.S. Attorney’s Office for the District of Columbia and the Department of Justice National Security Division’s Counterterrorism Section. Valuable assistance was provided by the U.S. Attorney’s Office for the Northern District of Alabama.

            The case is being investigated by the FBI’s Washington Field Office, which identified Dillard as #166 on its seeking information photos, and the FBI’s Birmingham Field Office. Valuable assistance provided by the FBI’s Mobile Field Office and the Charleston Resident Agency of the FBI’s Columbia Field Office, as well as the U.S. Capitol Police and the Metropolitan Police Department.

            In the 30 months since Jan. 6, 2021, more than 1,069 individuals have been arrested in nearly all 50 states for crimes related to the breach of the U.S. Capitol, including more than 350 individuals charged with assaulting or impeding law enforcement. The investigation remains ongoing.

            Anyone with tips can call 1-800-CALL-FBI (800-225-5324) or visit tips.fbi.gov.

Source: US FBI

BIRMINGHAM, Ala. – A Gadsden-area pharmacist has been convicted of drug distribution conspiracy and tax crimes, announced U.S. Attorney Prim F. Escalona, Federal Bureau of Investigation Special Agent in Charge Carlton L. Peeples, and Acting Special Agent in Charge Demetrius D. Hardeman of IRS Criminal Investigation (IRS-CI). 

Nathan Thomas Carter, 41, of Gadsden, pleaded guilty today before U.S. District Court Judge R. David Proctor to one count of conspiracy to distribute controlled substances and three counts of filing false federal income tax returns

According to the plea agreement, between 2015 and late 2021, Carter conspired with others to distribute controlled substances including oxycodone and hydrocodone. Between February 2018 and 2023, Carter worked as the pharmacist in charge at Midtown Pharmacy in Gadsden. Between 2018 and 2021, records reflect, Midtown Pharmacy ordered at least 80,000 more dosage units of oxycodone 30 mg than the pharmacy dispensed to patients. Carter diverted opioid pills from the pharmacy and sold those pills to other drug distributors. He regularly took distributor bottles from his pharmacy to his house, where he repackaged the pills in plastic bags for resale. The defendant earned about $150,000 in illicit income, per year, which he failed to report or include on his income tax returns in 2019, 2020, and 2021. According to the plea agreement, during the execution of a search warrant at Carter’ house, authorities found more than $110,000 in cash.

The maximum penalty for conspiracy to distribute controlled substances is twenty years in prison. The maximum penalty for each count of filing false federal income tax returns is three years in prison.

The FBI and IRS investigated the case. Assistant U.S. Attorney J.B. Ward is prosecuting the case. 

Source: US FBI

BIRMINGHAM, Ala. – A Kentucky man was arrested yesterday on child exploitation charges, announced U.S. Attorney Prim F. Escalona and Federal Bureau of Investigation Special Agent in Charge Carlton L. Peeples.

A four-count indictment filed in the U.S. District Court charges Aden Willis Yeager, 21, of Louisville, Kentucky, with one count of production of child pornography, one count of coercion and enticement of a minor, one count of transportation of child pornography, and one count of possession of child pornography arising out of events that occurred between April 2020 and October 2020 in Tuscaloosa County. 

“Summer is here, and children will have an increased online presence.  I encourage parents to have open and ongoing conversations about safe and appropriate online behavior,” U.S. Attorney Escalona said. “My office, in collaboration with our federal, state, and local law enforcement partners, will continue in our efforts to protect our most vulnerable victims – our children.”

If you suspect or become aware of possible sexual exploitation of a child, please contact law enforcement. To alert the FBI Birmingham Office, call 205-326-6166. Reports can also be filed with the National Center for Missing & Exploited Children (NCMEC) or online at www.cybertipline.org.

For information on the FBI’s guidance on child exploitation and protecting children visit https://www.fbi.gov/scams-and-safety/protecting-your-kids.

The case was brought as part of Project Safe Childhood, a nationwide initiative launched by the Department of Justice in May 2006 to combat the growing epidemic of child sexual exploitation and abuse.  Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, and to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

The maximum penalty for production of child pornography is thirty years, and the penalty for coercion and enticement of a minor is ten years to life in prison and a $250,000 fine. The maximum penalty for transportation and possession of child pornography is 20 years in prison and a $250,000 fine.

FBI Birmingham’s Child Exploitation and Human Trafficking Task Force (CEHTTF)investigated the case along with the West Alabama Human Trafficking Task Force and the University of Alabama Police Department. Assistant U.S. Attorney R. Leann White is prosecuting the case.

An indictment contains only charges.  A defendant is presumed innocent unless and until proven guilty.