Former Ohio State Representative Clayton R. Luckie, II Sentenced to Three Years in Prison

COLUMBUS, OH—Edward J. Hanko, Special Agent in Charge (SAC) of the Cincinnati Division of the Federal Bureau of Investigation (FBI), and Franklin County Prosecutor Ron O’Brien today announced that former Dayton-area State Representative Clayton R. Luckie, II pleaded guilty to eight felonies and one misdemeanor and was sentenced to three years in prison in relation to acts committed while serving in the Ohio General Assembly.
Special Agent in Charge Hanko stated, “When public officials betray the trust that has been given to them, it can have a devastating impact on our system of government. These officials are accountable for their actions and when they violate the law, there are very real consequences.” SAC Hanko went on to say, “I would like to thank Prosecutor Ron O’Brien and his staff for their hard work in this investigation and the plea negotiations. This is another example of federal, state, and county officials working together in pursuit of justice.”
Specifically, Luckie pleaded guilty to one count of money laundering, one count of grand theft, six counts of election falsification (one for each year he was in office), and one count of failure to disclose on state ethics disclosure statements. As a part of the plea agreement, Luckie will also have to make restitution in the amount of $11,893 to the State of Ohio Treasury for the salary he received as a state representative following his indictment on October 10, 2012.
Luckie was first appointed to the House of Representatives in 2006 and withdrew his name from the November 2012 ballot when he acknowledged the existence of this criminal investigation. However, he did not resign and served the remainder of his term until December 31, 2012.
The original 49-count indictment against Luckie alleged a pattern of intent to steal campaign funds, spend these funds for personal use, and falsify required financial disclosure forms to cover up these unlawful acts.
SAC Hanko noted that the sentence was the result of a lengthy investigation by FBI special agents with the support of FBI professional staff in the Columbus Resident Agency.

C. Ray Nagin, Former New Orleans Mayor, Indicted on Federal Bribery, Honest Services Wire Fraud, Money Laundering, Conspiracy, and Tax Charges

NEW ORLEANS—C. Ray Nagin, 56, a resident of Frisco, Texas, and formerly the mayor of New Orleans, was charged in a 21-count indictment with bribery, honest service wire fraud, money laundering, conspiracy, and filing false tax returns, announced U.S. Attorney Dana J. Boente, FBI Special Agent in Charge Michael Anderson, and Internal Revenue Service-Criminal Investigation (IRS-CI) Special Agent in Charge James Lee.
According to today’s federal grand jury indictment, between December 2004 and the present, Nagin and several others participated in a conspiracy to commit bribery and honest services wire fraud. The indictment alleges that Nagin, in his role as chief executive, devised a scheme to defraud the city of New Orleans and its citizens of his honest services through bribery and a kickback scheme, whereby Nagin used his public office and official capacity to provide favorable treatment, including awarding contracts, that benefitted business and financial interest of individuals providing him with bribes and kickbacks in the form of checks, cash, granite inventory, wire transfers, personal services, and free travel. The indictment charges Nagin with accepting numerous bribes and payoffs from consultants and contractors, money laundering conspiracy, and filing false tax returns for the years 2005 to 2008.
“This office will continue its history of investigating and prosecuting public corruption,” said U.S. Attorney Dana J. Boente. “This is an important part of the office’s mission to serve the citizens of the Eastern District of Louisiana and make certain they have honest public officials.”
“This indictment should serve as a reminder to current and former public officials that, in the interest of full accountability, the FBI pursues corruption even after an official leaves office,” said Michael Anderson, Special Agent in Charge of the FBI’s New Orleans Field Office.
“IRS will continue to do our part to hold the elected officials of New Orleans accountable for their actions,” stated Damon Rowe, IRS-CI Acting Special Agent-in-Charge. “No one is excused from obeying the laws of this country.”
According to the indictment, in January 2005, Nagin created Stone Age LLC, a granite company based in New Orleans.
The indictment alleges, among other things, that Nagin accepted approximately $72,250 in bribes from Rodney Williams and his company, Three Fold Consultants LLC. The indictment also alleges Nagin accepted bribes from Frank Fradella, including $50,000, granite inventory, and nine payoffs in the form of wire transfers from Fradella totaling $112,500. In some cases, money was deposited into Nagin’s Stone Age corporate account, or free granite inventory was provided to Stone Age.
If convicted of conspiring with others to commit bribery and honest services wire fraud (count one), Nagin faces statutory penalties of up to five years in prison, a $250,000 fine, and three years of supervised release. If convicted of accepting a bribes (counts two through seven), Nagin faces statutory penalties of up to 10 years in prison, a $250,000 fine, and three years of supervised release on each count. If convicted of accepting payoffs that caused interstate wire communications to occur between Louisiana and other states (counts eight through 16), Nagin faces statutory penalties of up to 20 years in prison, a $250,000 fine, and three years of supervised release on each count. If convicted of conspiring to commit money laundering (count 17), Nagin faces statutory penalties of up to 10 years in prison, a $250,000 fine, and three years of supervised release. If convicted of filing false tax returns for years 2005 through 2008 (counts 18 through 21), Nagin faces statutory penalties of up to three years in prison, a $100,000 fine, and three years of supervised release on each count.
The indictment also contains notices of forfeiture which puts the defendant on notice that the government intends on forfeiting any and all property and profits concerned with and/or derived from any illegal activity referenced in the indictment.
U.S. Attorney Boente reiterated that today’s indictment describes allegations and that the guilt of the defendant must be proven beyond a reasonable doubt.
The case was investigated by the FBI, the IRS-CI, and the New Orleans Office of Inspector General. U.S. Attorney Boente would also like to acknowledge the assistance provided by the New Orleans Inspector General’s Office and the Metropolitan Crime Commission. The case is being prosecuted by Assistant U.S. Attorneys Matthew M. Coman and Richard R. Pickens, II.

Chief Executive Officer of Superior Discount Coins Appears in Court in Colorado for Defrauding Gold Coin Investors of More Than $2.4 Million

DENVER—James P. Burg, age 61, formerly of Fairplay, Colorado, faces fraud charges related to a scheme to defraud gold coin investors, the U.S. Attorney’s Office, the FBI, the IRS-CI, and the U.S. Postal Inspection Service announced. Burg was indicted by a federal grand jury in Denver on November 6, 2012, for charges of wire fraud, mail fraud, money laundering, and failure to file tax returns. The indictment remained sealed until his arrest in California on November 29, 2012. Burg then appeared in U.S. District Court for the Southern District of California. In court there, Burg was ordered to be detained and transferred by U.S. Marshals from California to Colorado. Burg’s first Colorado court appearance occurred on January 2, 2013, where he was advised of his rights and the charges pending against him. He appeared in court on January 7, 2013, and again on January 14, 2013, for the purpose of a detention hearing. On January 14, 2013, U.S. Magistrate Judge Michael E. Hegarty ordered that Burg could be released prior to trial on a $50,000 secured property or cash bond. Once released on that pre-trial bond, Magistrate Judge Hegarty ordered Burg to a halfway house (once bed space is available), pending the resolution of the criminal case.
According to the indictment, beginning on or about October 1, 2007, and continuing through and including on or about January 12, 2012, in Colorado and elsewhere, James P. Burg devised and intended to devise a scheme to defraud customers that ordered coins from a business known as Superior Discount Coins and Gold Run Investments and for obtaining money from those customers by means of materially false and fraudulent pretenses, representations, and promises. Burg took and received $2,464,099 from customers that ordered coins, and he failed to deliver the coins as promised.
As part of the scheme, Burg represented that he was the chief executive officer of a company known as Superior Discount Coins (SDC) and that SDC was in the business of selling coins. Burg also conducted business using a company known as Gold Run Investments (GRI) and represented that GRI was in the business of selling coins. At times, Burg operated GRI using the alias “Tim Burke.” Burg advertised and solicited customers through radio advertisements and over the Internet using websites he controlled, including; www.superiordiscountcoins.com, www.yourcoinbroker.com, and www.goldruninvestments.net.
Burg misrepresented and promised customers that if they ordered coins from SDC or GRI and paid him for those coins, he would deliver the coins to them or to accounts designated by them. He sent and caused to be sent to customers that ordered coins from SDC or GRI invoices stating amounts of money owed for the coins and, in some cases, providing information about a bank account to which the customers should transfer their money to purchase the coins.
The money Burg received from customers was not used to purchase coins for such customers, but instead he converted the money to his own use and benefit. Burg refused to refund money to customers in several instances where the customers requested a return of their money after he failed to deliver coins as originally promised. To prevent the scheme’s detection, Burg sometimes filled customers’ orders for coins only after such customers threatened to take legal action or report him to law enforcement authorities. Burg used one customer’s payment for coins to refund funds to another customer.
For calendar years 2006, 2007, 2008, and 2009, Burg failed to file income tax returns with the Internal Revenue Service as required by law. These returns were required to be filed with the IRS on April 15 following the subsequent above mentioned years.
“A core mission of the U.S. Attorney’s Office is to protect victims from scam artists who try to trick them out of their hard earned money,” said U.S. Attorney John Walsh.
“The FBI has made protecting innocent investors a priority,” said FBI Special Agent in Charge James Yacone. “As such, we will vigorously investigate those who engage in schemes to swindle and defraud.”
“The U.S. Postal Inspection Service has no shortage of investment investigations and this is another example of greed overcoming honest business practices,” said Adam Behnen, Inspector in Charge, with the U.S. Postal Inspection Service. “These criminal charges illustrate the commitment of the U.S. Postal Inspection Service to protect the American public by investigating individuals who use the U.S. mail to further their schemes.”
“Fraud schemes are often described as a house of cards and will eventually fall apart exposing the individuals responsible,” said Stephen Boyd, Special Agent in Charge, IRS-Criminal Investigation, Denver Field Office. “This is a great example of federal agencies working together.”
Burg was charged with six counts of wire fraud, nine counts of mail fraud, four counts of money laundering, and four counts of willful failure to file tax returns. If convicted of the wire fraud and mail fraud counts, he faces not more than 20 years in federal prison, and a fine of up to $250,000 per count. If convicted of the money laundering counts, he faces not more than 10 years in federal prison and a fine of up to $250,000 per count. If convicted of failing to file tax returns, he faces not more than one year in federal prison and a fine of up to $25,000 per count.
This case was investigated by special agents with the Federal Bureau of Investigation (FBI), the IRS-Criminal Investigation, and the U.S. Postal Inspection Service.
Burg is being prosecuted by Assistant U.S. Attorney Timothy Neff.
The charges contained in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.

Promoter of Cincinnati Grand Prix Pleads Guilty to Fraud, Money Laundering

CINCINNATI—Curtis Boggs, 54, formerly of Harrison, Ohio, pleaded guilty in U.S. District Court to wire fraud and money laundering in connection with a scheme he promoted to bring a Grand Prix race to Cincinnati in 2009.
Carter M. Stewart, United States Attorney for the Southern District of Ohio; Edward J. Hanko, Special Agent in Charge, Federal Bureau of Investigation (FBI); and Darryl Williams, Special Agent in Charge, Internal Revenue Service Criminal Investigation (IRS), announced the pleas entered today before Senior U.S. District Court Judge Susan J. Dlott.
According to court documents, Boggs was employed by an insurance company as a financial advisor in the Southern District of Ohio from 2000 to 2009. Beginning in approximately October 2008 and continuing through approximately August 2009, Boggs solicited his customers and others to invest in silver and gold, or in a grand prix race, through a corporation called Cincinnati Grand Prix (“CGP”). Today, Boggs admitted that, during that period, he fraudulently obtained investments of at least $352,745 for CGP in exchange for shares in the “stock” of CGP.
Boggs devised and intended to devise a scheme and artifice to defraud through fraudulent pretenses, representations, and promises. Specifically, he fraudulently obtained investment funds from individuals wherein the funds were not invested as represented and were diverted in part for his personal benefit. On or about October 27, 2008, in furtherance of his scheme, Boggs wired proceeds of a check from an investor to his personal account to pay property taxes on his house and pay down his personal mortgage debt. On or about October 21, 2008, Boggs laundered money derived from the fraud scheme by using $27,232.63 to buy a Lincoln MKX vehicle for his personal use.
A federal grand jury indicted Boggs in June. He was arrested on October 8, 2012, when he was stopped trying to enter the U.S. from Mexico.
The plea agreement calls for Boggs to serve a sentence of 27 months in prison, pay $352,745.21 in restitution, and forfeit any assets that he received as proceeds of the crimes. The court will conduct a presentence investigation before deciding whether or not to accept the terms of the plea agreement and schedule a date for sentencing.
Stewart commended the cooperative investigation by FBI and IRS agents, as well as Assistant U.S. Attorney Tim Mangan, who is prosecuting the case.

Massachusetts Man Sentenced to 24 Months in Federal Prison on Money Laundering, Gambling, and Tax Violations

CONCORD—John Giannelli, Sr., 66, of Danvers, Massachusetts, was sentenced to 24 months in federal prison today after pleading guilty on September 27, 2012, in the United States District Court for the District of New Hampshire to one count of money laundering, one count of operating an illegal gambling business, and five counts of impeding the administration of the Internal Revenue laws, announced United States Attorney John P. Kacavas.
Giannelli operated a computer based sports betting business while he resided in Peabody, Massachusetts, and then Kingston, New Hampshire. Giannelli controlled access, through the use of user identifications and passwords, to a gambling site and granted access to that site to dozens of agents. Approximately 300 customers making sports related wagers were able to gain access to the site through the agents, and Giannelli was able to monitor the overall betting activity. A forensic analysis of betting records obtained from computers seized at Giannelli’s residence in March 2012 established that the operation generated gross profits of approximately $188,000 over a 12-week period.
The money laundering charges arose from a scheme in which Giannelli was listed as an employee on a former sports betting customer’s business. Giannelli provided the business with cash proceeds generated by the gambling business and, in return, the business issued paychecks to Giannelli, thus making it appear that Giannelli’s income was legitimate. The business also caused to be generated false W-2 forms that Giannelli used to support tax returns filed with the IRS. Between 2003 and 2007, Giannelli laundered approximately $452,000 in proceeds through the scheme. The District Court ordered a money judgment forfeiture in the amount of $452,000.
The investigation was conducted by the Federal Bureau of Investigation and the Internal Revenue Service.