Indianapolis CPA Sentenced for Participation in Illegal Tax Shelter

Source: United States Department of Justice Criminal Division

Defendant Helped Clients in Mississippi and Elsewhere File Returns Claiming False Business Deductions

An Indiana CPA was sentenced yesterday to three years in prison for assisting in the preparation of false tax returns on behalf of clients who participated in an illegal tax shelter.

The following is according to court documents and statements made in court: between 2013 and 2022, Jason L. Crace prepared income tax returns for clients that claimed millions of dollars in false deductions for so-called “royalty payments.”  However, as Crace knew, these “royalty payments” were merely circular flows of money designed to give the appearance of genuine business expenses. Typically, a client would send money to bank accounts controlled by scheme promoters who then sent the money — minus a fee — back to a different bank account controlled by the client. In this way, tax shelter participants retained control of the money they transferred, while falsely deducting the transfers as business expenses on their tax returns. One of the scheme’s promoters, Stephen T. Mellinger III, previously pleaded guilty and was sentenced to eight years in prison for his role promoting the scheme.

In total, Crace’s preparation of false tax returns claiming fraudulent “royalty” deductions caused a loss to the IRS of more than $2.5 million.

In addition to his prison sentence, the court sentenced Crace to serve one year of supervised release and to pay restitution of $2,532,936.

Acting Deputy Assistant Attorney General Karen E. Kelly of the Justice Department’s Tax Division and Acting U.S. Attorney Patrick Lemon for the Southern District of Mississippi made the announcement.

IRS Criminal Investigation is investigating the case.

Trial Attorneys Richard J. Hagerman, William M. Montague, and Matthew C. Hicks of the Justice Department’s Tax Division and Assistant U.S. Attorney Charles W. Kirkham for the Southern District of Mississippi are prosecuting the case.

Defense News in Brief: CMSAF Flosi highlights Airmen’s agility, readiness during East Africa tour

Source: United States Airforce

CMSAF Flosi met with Airmen during a recent multi-base visit, where he observed how small, agile teams are delivering results in one of the most strategically significant and operationally complex regions in the world.

From low-resource expeditionary hubs to forward operating locations facing real threats, Airmen are staying mission-focused, supporting one another and delivering results in demanding conditions.The visit began at Camp Lemonnier, where Flosi received mission briefings from 449th Air Expeditionary Group leadership and visited squadron work centers. Operating in a constrained environment, Airmen there continue to deliver essential capabilities with flexibility and focus. They are leveraging available technologies to counter a growing small unmanned aerial system threat in the region, an evolving operational concern requiring agile solutions at the tactical edge.

Chief Master Sgt. of the Air Force David Flosi answers questions
Chief Master Sgt. of the Air Force David Flosi answers questions from Airmen assigned to the 475th Expeditionary Air Base Squadron during a Q&A session at Manda Bay, Kenya, July 12, 2025. The visit gave Flosi the opportunity to engage directly with Airmen across East Africa, address their concerns and recognize their contributions to regional security. (U.S. Air Force photo by Tech. Sgt. Timothy Hayden)

“The AFRICOM AOR is a challenging environment,” Flosi said. “You continue to operate in a low-resource setting, executing the mission with focus and flexibility to counter threats in the region.”

The senior leader then traveled to Camp Simba, Manda Bay, Kenya, where the deployed team is embodying the “Mission Ready” mindset. Airmen are stepping outside their core Air Force Specialty Codes to fill mission gaps, support each other and sustain forward operations, often in joint and host-nation integrated environments.

Chief Master Sgt. Ben Weavers, senior enlisted leader of the 475th Expeditionary Air Base Squadron, said the visit highlighted the growing strategic relevance of Manda Bay.

“It was great to highlight the strong partnership we share at Manda Bay with our host nation Kenyans, sister services and tenant units,” Weavers said. “They were impressed with what our Airmen are doing in support of our nation.”

Weavers said the visit helped reframe the narrative of Manda Bay from a site that was formerly attacked by enemy combatants to a vital node of partner engagement and operational readiness.

“We’ve moved beyond the legacy of the 2020 attack to a stronger security posture that allows us to focus on partnership building,” he explained. “We’ve conducted weekly knowledge exchanges with our Kenyan partners across disciplines like medical, maintenance, air transportation, civil engineering, and more.”

Chief Master Sgt. of the Air Force David Flosi assists munitions Airmen
Chief Master Sgt. of the Air Force David Flosi assists munitions Airmen assigned to the 776th Expeditionary Air Base Squadron with assembling a precision-guided munition at Chabelley Airfield, July 13, 2025. Flosi visited deployed Airmen across East Africa to engage with them directly, gain insight into their mission capabilities, and recognize their contributions to regional security. (U.S. Air Force photo by Tech. Sgt. Timothy Hayden)
Chief Master Sgt. of the Air Force David Flosi poses for a photo
Chief Master Sgt. of the Air Force David Flosi, third from right, poses for a photo with 475th Expeditionary Air Base Squadron Airmen following the conclusion of his Q&A panel as part of a visit to Manda Bay, Kenya, July 12, 2025. The visit allowed the senior leader to engage directly with Airmen across East Africa, addressing their concerns and recognizing their contributions to regional security. (U.S. Air National Guard photo by Staff Sgt. Kevin Ray J. Salvador)
CMSAF and Sgt launch done
Chief Master Sgt. of the Air Force David Flosi assists U.S. Air Force Staff Sgt. Logan Terrell, a Small Unmanned Aircraft System program manager assigned to the 475th Expeditionary Air Base Squadron, with launching a Puma drone during a visit to Manda Bay, Kenya, July 12, 2025. The visit allowed Flosi to connect with Airmen across East Africa, hear their concerns, and recognize their contributions to regional security. (U.S. Air Force photo by Tech. Sgt. Timothy Hayden)

Lt. Col. Michael S. Ryan, commander of the 475th EABS, described the visit as a success, noting the valuable engagement between deployed personnel and senior leadership.

“CMSAF was able to interact with our deployed Airmen. The question-and-answer session allowed for two-way communication between Department of the Air Force leadership and our Airmen accomplishing the mission,” Ryan said. “We provided CMSAF the importance of Manda Bay and the mission here,” he added.

“We showcased our Airmen and the uniqueness of this deployment. Everything we do here is by, through and with the Kenyans.”

He also noted the positive response from his team.

“Multiple Airmen thanked local leadership for the opportunity to interact with CMSAF,” Ryan said. “This allowed them the opportunity to speak what is on their minds to our highest level of leadership.”

On the final day of the tour, Flosi visited Chabelley Airfield, where Airmen support critical intelligence, surveillance and reconnaissance operations. Here, he helped build a laser-guided bomb and observed how Airmen and Soldiers are detecting and deterring UAS threats with advanced counter-sUAS systems.

These missions play out just miles from the People’s Liberation Army Support Base in Djibouti, a visible reminder of the region’s strategic weight and the importance of maintaining a consistent, capable U.S. presence.

A consistent theme across locations was the deployment of small Unit Type Codes rather than fully aligned teams. Leaders noted that aligning future rotations with the Air Force’s Unit of Action concept, sending cohesive, trained teams that arrive and operate together from day one, may help improve readiness and continuity in the region.

“The missions you support are vital to regional security,” Flosi said. “You’re holding the line, and your work underscores the strategic significance of this region and the importance of a consistent and capable U.S. presence.”

 

United States Unseals Civil Action Filed Against Approximately $2M in Digital Currency Involved in Hamas Fundraising

Source: United States Department of Justice Criminal Division

The Justice Department and the U.S. Attorney’s Office for the District of Columbia today announced the unsealing of a civil forfeiture action against approximately $2 million dollars in digital currency held by Tether Limited (Tether) and Binance Holdings LTD (Binance) accounts connected with Buy Cash Money and Money Transfer Company (BuyCash), a Gaza-based money transfer business that was involved in financially supporting Hamas – a designated Foreign Terrorist Organization (FTO) – as well as its agents and collaborators.

“Terrorist organizations like Hamas and their affiliates rely on shadowy financial networks to fund their deadly operations,” said Attorney General Pamela Bondi. “By seizing millions in cryptocurrency, the Justice Department is aggressively dismantling the financial infrastructure of terrorism and refusing to allow our digital currency platforms to become safe havens for terrorist financing.”

“The forfeiture action executed today is an example of how diligently our office works to prevent any actions from taking place that support foreign terrorist organizations,” said U.S. Attorney Jeanine Ferris Pirro for the District of Colombia. “Our partnership with other law enforcement agencies strengthens us to uphold the safety of the American people from entities that threaten the security of our citizens.”

“The forfeiture action unsealed today demonstrates that no matter what lengths terrorism financers take to obscure their illegal transactions, the FBI will aggressively disrupt the transmission of illicit proceeds intended to support designated terrorist organizations like Hamas,” said Assistant Director in Charge Steven J. Jensen of the FBI Washington Field Office.

BuyCash, and one of its owners, Ahmed M. M. Alaqad, have been suspected of supporting various terrorist organizations including Hamas, ISIS, Al-Qaida affiliates and others. After the October 2023 attacks on Israel, BuyCash and Alaqad were designated as having materially supported Hamas under Executive Order 13224 by the U.S. Department of Treasury Office of Foreign Asset Control (OFAC). Since 2017, BuyCash and Alaqad have supported several foreign terrorist organizations. In 2017, BuyCash was used for the procurement of large quantities of online infrastructure on behalf of ISIS. In September 2019, BuyCash was used to receive funds from a known Al-Qaida affiliate. In 2019, law enforcement identified various instances where BuyCash, with the direct support of Alaqad, directly aided in the transfer of fiat currency to known individuals and entities in support of Hamas. In June 2021, Israel’s National Bureau for Counter Terrorist Financing seized various digital currency accounts connected to Hamas and the Izz-al-Din Qassam Brigades, including one involving BuyCash.

The complaint describes a detailed scheme whereby users utilized BuyCash to fund accounts held by Tether and Binance to obfuscate their financial support of international terrorist organizations, including Hamas. Before and after the October 2023 attacks, one account was reported to have received at least $4 million to support Hamas.

The government’s forfeiture action targets multiple accounts previously seized from Tether and Binance connected to BuyCash and removed approximately $2 million dollars from streams of funds supporting international terrorism.

A civil forfeiture complaint contains mere allegations. The burden to prove forfeitability in a civil forfeiture proceeding is upon the government.

The FBI Washington D.C. Field Office is investigating the case.

Assistant U.S. Attorneys Rajbir S. Datta and Thomas Saunders for the District of Columbia are prosecuting the case with assistance from Trial Attorney Allison Ickovic of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Deputy Chief Alicia Cook of the National Security Division. Critical assistance was provided by Paralegal Specialists Brian Rickers, Gina Torres, and the Department of Justice’s Office of International Affairs.  

Washington Hunting Guide and Outfitting Company Enter Guilty Pleas to Lacey Act Crime

Source: United States Department of Justice Criminal Division

Branden Trager of Brush Prairie, Washington, and his guiding company Mayhem Services LLC pleaded guilty yesterday in federal court in Tacoma to violating the Lacey Act.

In pleading guilty, Trager admitted he and Mayhem Services violated the Migratory Bird Treaty Act (MBTA) during a January 2023 hunting trip in western Washington and then transported the taken birds in violation of the Lacey Act. Enacted 125 years ago, the Lacey Act protects the nations wildlife resources by prohibiting wildlife violations that cross state or international borders. Trager also acknowledged that in 2022 he brought hunters into British Columbia, Canada, where he guided waterfowl hunting trips targeting the harlequin duck. He could not operate as a hunting guide under Canadian law.

The harlequin duck (Histrionicus histrionicus) is a small sea duck with a habitat ranging from Alaska to California. Hunters prize the harlequin as a trophy and as part of a challenge to hunt 41 North American waterfowl species. Washington closed harlequin hunting for the 2022-2023 season, but limited hunting remained open in British Columbia.

According to plea agreements filed in court, the recommended fines are $100,000 for Trager and $75,000 for Mayhem Services. The parties also agreed to recommend that the court order the defendants to make a public statement expressing contrition and emphasizing the importance of hunting, guiding, and wildlife regulations. Sentencing is scheduled for Oct. 16.

According to a Joint Factual Statement filed in court, the MBTA prohibits, among other things, taking migratory birds using a motor vehicle; taking migratory birds by using a vehicle to concentrate, drive, or rally them; taking migratory birds in excess of daily bag limits; taking or crippling a migratory bird and not make reasonable efforts to retrieve it; and transporting taken migratory birds belonging to another individual without tagging them. Taking includes pursuing, hunting, shooting, wounding, killing, trapping, capturing, or collecting.

The Lacey Act is the nation’s oldest wildlife trafficking law. It prohibits, among other things, transporting wildlife that had been illegally taken under federal, state, tribal or foreign law. The MBTA is a U.S. law that implemented treaties with Canada and other nations to ensure sustainable populations of migratory birds.

Acting Assistant Attorney General Adam Gustafson of the Justice Department’s Environment and Natural Resources Division made the announcement.

The U.S. Fish and Wildlife Service Office of Law Enforcement led the investigation along with Homeland Security Investigations, British Columbia Conservation Officer Service, and the Washington Department of Fish & Wildlife.

Senior Trial Attorney Ryan Connors and Trial Attorney Sarah Brown of the Justice Department’s Environmental Crimes Section prosecuted the case with assistance from the U.S. Attorney’s Office for the Western District of Washington.

Federal Court Upholds Bureau of Reclamation’s Conversion of Water Service Contracts in Central Valley of California

Source: United States Department of Justice Criminal Division

Last week, a judgment entered by the U.S. District Court for the Eastern District of California confirmed the ability of the Bureau of Reclamation to convert water service contracts to long term repayment contracts pursuant to the Water Infrastructure and Improvements for the Nation Act. The converted contracts eliminate the need for future renewals and associated costs and allow contractors to lower their overall costs by prepaying their share of project construction costs. The converted contracts also benefit the government by facilitating faster repayment of construction costs which can provide funding for future water storage projects.

The Court agreed with Reclamation’s interpretation of the WIIN Act, that

  • the WIIN Act requires contract conversion upon request, and
  • WIIN Act § 4011(a)(4)(c) strips Reclamation of discretion to modify any “water service … contractual rights” other than those related to the financial terms specifically addressed by the WIIN Act.

Because those provisions removed Reclamation’s discretion, Reclamation was not required to conduct an analysis under the National Environmental Policy Act, or consult under the Endangered Species Act, as part of the contract conversions.

Acting Assistant Attorney General Adam Gustafson of the Justice Department’s Environment and Natural Resources Division (ENRD) made the announcement.

Trial Attorneys David Gehlert and Jeff Candrian of ENRD’s Natural Resources Section handled the case. 

Illinois Tax Preparer Sentenced for Role in $3.6M Covid-19 Fraud Scheme

Source: United States Department of Justice Criminal Division

An Illinois man was sentenced yesterday to 42 months in prison for his role in a scheme to fraudulently obtain over $3.6 million in small business loans under the Coronavirus Aid, Relief, and Economic Security Act Paycheck Protection Program (PPP) and COVID19 Economic Injury Disaster Loan (EIDL) program implemented by the Small Business Administration (SBA). 

According to court documents, Farooq Khan, 31, of Chicago, owned and operated Hannan Tax Services (Hannan Tax), a tax preparation company located in Chicago. From approximately May 2020 through October 2021, through Hannan Tax, Khan prepared and facilitated the submission of at least 30 fraudulent applications for loans through the PPP and EIDL program. At the time Kahn prepared and submitted the applications, he knew that the companies for which he sought the loans were non-operational and did not qualify. He also knowingly falsified the information contained in the applications, including the number of employees and tax records attributed to the defunct companies. Khan caused approximately $3.6 million to be fraudulently distributed by the SBA and PPP lenders. He also attempted to obtain at least an additional $588,900 in loans through other EIDL applications that were never funded for nonexistent companies. He personally obtained approximately $1.2 million of the fraudulent loan proceeds.     

Khan pleaded guilty to one count of wire fraud on Feb. 19. At sentencing, he was also ordered to pay $3,645,104 in restitution. 

Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division, Special Agent in Charge Douglas S. DePodesta of the FBI Chicago Field Office, and Special Agent-in-Charge Matthew J. Scarpino of Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) Chicago made the announcement.   

The FBI Chicago Field Office and ICE-HSI are investigating the case. 

Trial Attorney Claire Sobczak Pacelli of the Criminal Division’s Fraud Section is prosecuting the case. 

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Justice Department’s National Center for Disaster Fraud (NCDF) Hotline at 8667205721 or via the NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form

Defense News in Brief: Living Namesake Rides First Set of Sea Trials for DDG 124

Source: United States Navy

In a rare moment of living history, ship namesake and Medal of Honor recipient, Col. Harvey “Barney” Barnum Jr. joined members of future USS Harvey C. Barnum Jr.’s (DDG 124) crew, the Navy programmatic team, and industry partners onboard the ship’s first set of sea trials, departing from General Dynamics Bath Iron Works, July 15.

Two Mexican Nationals Sentenced for Roles in Black Market Peso Exchange Money Laundering Scheme

Source: United States Department of Justice Criminal Division

Two Mexican nationals were sentenced today by U.S. District Judge Keith P. Ellison to 55 months each in prison for their roles in a two-year, multimillion-dollar trade-based money laundering conspiracy to move drug trafficking proceeds through Texas to Mexico.

According to court documents, Mauricio Anzures-Zarate, 53, of Mexico City, Mexico, and Beatriz Salcedo-Carreon, 63, of Guadalajara, Mexico, participated in a sophisticated, international money laundering conspiracy to transfer funds from the sale of illegal drugs in the United States to cartels in Mexico without physically transporting money across the U.S.-Mexico border. The conspirators concealed those funds through the movement of goods between the two countries.

“The defendants used an elaborate, trade-based money laundering scheme to exploit our financial system and transfer the proceeds of illegal drug trafficking from the United States to Mexico,” said Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division. “These financial facilitators actively promoted cartel operations in cities across the United States, which enabled the flow of deadly narcotics into our communities. The Criminal Division will continue to pursue the total elimination of cartels and the money launderers who enable their pernicious activities.”

“The lifeblood of any drug trafficking organization is the uninterrupted flow of cash,” said U.S. Attorney Nicholas J. Ganjei for the Southern District of Texas. “Here, defendants laundered drug proceeds through a sophisticated trade-based scheme. This criminal operation, and others like it, put money in the pockets of the cartels and endangered lives on both sides of the border. Taking this conspiracy out of commission is a great win, but it’s just the beginning.”

“Despite the sophisticated tactics used to conceal profits made from smuggling poison into our country by the Mexican cartels, our expertise enabled us to dismantle their thriving operations,” said Acting Special Agent in Charge William Kimbell of the Drug Enforcement Administration (DEA) Houston Division. “DEA, along with its federal counterparts, has dealt a significant blow to the finances of the Mexican cartels through the incredible investigative work of our agents. If we trace your money activities back to the cartels, you will have your day in court and will face justice.”

“Anzures-Zarate and Salcedo-Carreon thought they could escape justice, but found our reach extends past the money trail they left,” said Acting Special Agent in Charge Lucy Tan of IRS Criminal Investigation’s (IRS-CI) Houston Field Office. “They conspired to use black market peso exchanges, which are one of the classic methods to launder drug dollars, and a method that leaves a traceable trail to the cartels. For businesses that get approached for a quick cash sale to transport goods into Central and South America, remember that we will find you because your greed leaves evidence.”

According to court documents, the defendants directed money couriers to collect drug proceeds in numerous U.S. cities and then transfer the funds to Laredo, Texas, to be laundered through local businesses. As part of the scheme, store owners in downtown Laredo accepted the drug proceeds as payment for merchandise to be exported to businesses in Mexico. In furtherance of the conspiracy, Salcedo-Carreon, Anzures-Zarate, and others instructed the Mexican businesses to transfer pesos to accounts or people in Mexico who were affiliated with cartels. Through this trade-based money laundering scheme, Mexican cartels disguised illicit drug proceeds as legitimate international commercial transactions and received laundered drug proceeds in Mexico without physically transporting cash across the U.S.-Mexico border. Eight other defendants were previously convicted and sentenced for their roles in the money laundering conspiracy. Anzures-Zarate was ordered to pay a money judgement of $1,176,165 and Salcedo-Carreon was ordered to pay a money judgement of $887,269.

The DEA and IRS-CI investigated the case. The Justice Department’s Office of International Affairs and the Criminal Division’s Narcotic and Dangerous Drug Section’s Office of Judicial Attaché in Bogotá, Colombia provided significant assistance in this matter. The Justice Department’s Office of International Affairs worked with law enforcement partners in Mexico to secure the arrest and April 2024 extradition of Salcedo-Carreon.

Trial Attorneys Keith H. Liddle and Stephanie Williamson of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Assistant U.S. Attorneys Lance Watt, Amanda Gould, and former Assistant U.S. Attorney José Angel Moreno for the Southern District of Texas prosecuted the case.