U.S. Attorney’s Office

Northern District of Illinois

FOR IMMEDIATE RELEASE

Friday, April 30, 2021

Two Men Indicted for Allegedly Trafficking Firearms in Chicago Area

CHICAGO — Two men have been indicted by a federal grand jury in Chicago for allegedly trafficking firearms.

SCOTT TREECE, 33, of Rockford, Ill., and KYLE HALL, 21, of Skokie, Ill., illegally dealt firearms in the Northern District of Illinois from November 2020 to January 2021, according to an indictment unsealed today in U.S. District Court in Chicago. In social media postings in January, Treece offered to purchase firearms in Georgia on behalf of others and distribute the guns in the Chicago area, according to a criminal complaint against Treece previously filed in the case. In one of his social media postings, Treece allegedly posted an image of ammunition and stated, “I’m tellin y’all no bread no poles so y’all better make your minds up I already got 2 [expletive] who sent bread so.”

Treece was arrested in February after he sold a loaded handgun for $550 to a buyer who, unbeknownst to Treece, was cooperating with law enforcement, the complaint states. The transaction allegedly occurred in a retail store parking lot in Addison, Ill.

Treece and Hall pleaded not guilty today during arraignments in federal court in Chicago. Treece remains detained in federal custody, while Hall was ordered released with bond conditions.

The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Kristen deTineo, Special Agent-in-Charge of the Chicago Field Division of the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives. Assistant U.S. Attorney Jasmina Vajzovic represents the government.

The indictment charges Treece with one count of dealing firearms without a license, two counts of illegally possessing firearms as a previously convicted felon, and one count of witness tampering. The witness tampering charge alleges that while in custody following his arrest, Treece instructed an individual not to speak to law enforcement about Treece’s alleged trafficking offenses and to tell another person to do the same.

Hall is charged with one count of dealing firearms without a license, and one count of knowingly selling and disposing a firearm to a convicted felon, Treece.

The public is reminded that an indictment contains only charges and is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. Witness tampering is punishable by up to 20 years in federal prison. The counts for illegal possession and selling a firearm to a convicted felon each carry a maximum sentence of ten years. Dealing firearms without a license is punishable by up to five years. If convicted, the Court must impose reasonable sentences under federal sentencing statutes and the advisory U.S. Sentencing Guidelines.

https://www.justice.gov/usao-ndil/pr/two-men-indicted-allegedly-trafficking-firearms-chicago-area

U.S. Attorney’s Office

Eastern District of Virginia

FOR IMMEDIATE RELEASE

Friday, April 30, 2021

Jury Convicts Former Virginia Beach Investment Advisor and Williamsburg Attorney of $25 Million Nationwide Investment Fraud

NORFOLK, Va. – A federal jury convicted two individuals today for their roles in a nationwide investment fraud scheme that resulted in over $25 million in losses to more than 300 victims, most of whom were elderly.

“As proven during a four-week trial, these defendants and their co-conspirators defrauded hundreds of unsuspecting investors out of over $25 million, draining their retirement accounts and leaving a trail of financial and emotional devastation for the victims,” said Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia. “The jury’s verdicts bring us one step closer to securing justice for the victims of these damaging, manipulative, and life-altering schemes.”

According to court records and evidence presented at trial, Daryl Bank, 51, of Port St. Lucie, Florida, ran an investment fraud scheme from approximately January 2012 through July 2017, based in the Tidewater area and Port St. Lucie, and operating across the country. Bank and his co-conspirators—including attorney Billy Seabolt, 56, Raeann Gibson, 49, of Florida, and Roger Hudspeth 51, of Suffolk—deceived hundreds of unsuspecting investors, most of whom were at or near retirement age, by convincing them to invest in companies owned and controlled by Bank. At Bank’s direction, co-conspirators stole significant portions of investment contributions to fund their criminal enterprise and Bank’s lavish lifestyle.

In 2010, Bank, then a registered securities broker, was barred from the securities industry by the Financial Industry Regulatory Authority (FINRA). Undeterred, Bank created a private equity company called Dominion Private Client Group (Dominion) and continued to sell unregistered securities on his own and through insurance salesmen across the country. Billy Seabolt served as Dominion’s legal counsel and was involved in the development of many of the fraudulent investments and corporations.

The conspirators made material misrepresentations and omissions to sell illiquid, highly speculative investment vehicles. Based on these fraudulent representations, unsuspecting investors cashed out of 401(k) and other retirement accounts to invest in Bank’s investment vehicles, without knowing that Bank immediately transferred 20%–70% of the investors’ funds to companies that he controlled in the form of purported “fees.” As a result of this investment fraud scheme, the victims suffered losses in excess of $25 million.

Bank was convicted of conspiracy, mail and wire fraud, selling unregistered securities, securities fraud, and money laundering. He faces a maximum penalty of over 300 years in prison when sentenced on September 20. Seabolt was convicted of conspiracy and mail fraud, and he faces a maximum penalty of 75 years in prison when sentenced on September 15. Actual sentences for federal crimes are typically less than the maximum penalties. A federal district court judge will determine any sentence after taking into account the U.S. Sentencing Guidelines and other statutory factors.

Gibson pleaded guilty to conspiracy and was sentenced to 10 years in prison in February 2020. Hudspeth pleaded guilty to investment advisor fraud and money laundering and was sentenced to over 12 years in prison in May 2018.

Raj Parekh, Acting U.S. Attorney for the Eastern District of Virginia; Brian Dugan, Special Agent in Charge of the FBI’s Norfolk Field Office; Darrell J. Waldon, Acting Special Agent in Charge, Washington, D.C. Field Office, IRS-Criminal Investigation (IRS-CI); and Peter R. Rendina, Inspector in Charge of the Washington Division of the U.S. Postal Inspection Service, made the announcement after U.S. District Judge Raymond A. Jackson accepted the verdicts. The U.S. Attorney’s Office extends its appreciation to the Virginia State Corporation Commission’s Division of Securities.

Assistant U.S. Attorneys Melissa E. O’Boyle, Elizabeth M. Yusi, and Andrew Bosse prosecuted the case.

https://www.justice.gov/usao-edva/pr/jury-convicts-former-virginia-beach-investment-advisor-and-williamsburg-attorney-25

>>13552583

>Bank was convicted of conspiracy, mail and wire fraud, selling unregistered securities, securities fraud, and money laundering. He faces a maximum penalty of over 300 years in prison when sentenced on September 20

Judge threw the book at the spook

Former CEO Of Live Well Financial Convicted In Connection With $200 Million Bond Fraud Scheme

According to the evidence presented during the trial:

Live Well’s Bond Portfolio and Repurchase Agreements

Live Well was a Richmond, Virginia-based company that originated, serviced, and securitized government-guaranteed reverse mortgages known as Home Equity Conversion Mortgages (“HECMs”). In or about 2014, Live Well acquired a portfolio of approximately 15 bonds, each entitling the holder to receive a portion of the interest payments, but not the principal payments, from a particular pool of reverse mortgages (“HECM IO bonds.”). Live Well purchased the HECM IO bond portfolio for approximately $50 million. At the same time that Live Well purchased the HECM IO bond portfolio, HILD established within Live Well a New York City-based trading desk to manage and grow Live Well’s bond portfolio.

Live Well financed the acquisition and growth of its bond portfolio through a series of loans in which Live Well used its bond portfolio as collateral. The majority of Live Well’s lenders were securities dealers whose lending arrangements with Live Well were structured as bond repurchase agreements, also known as “repo agreements.” A repo agreement is a short-term loan in which both parties agree to the sale and future repurchase of an asset within a specified contract period. The seller sells the asset to the lender with a promise to buy it back at a specific date and at a price that includes an interest payment. Functionally, a repo agreement is a collateralized loan in which title of the collateral is transferred to the lender. When the loan is repaid by the borrower, the collateral is returned to the borrower through a repurchase. Additionally, at least one of Live Well’s lenders was an FDIC-insured bank, and its lending arrangement with Live Well was structured as a secured loan, with certain bonds held as collateral by a third-party custodian.

The Scheme to Mismark the Bond Portfolio

Live Well’s financing agreements with all but one of the lenders required that any bond that Live Well sought to borrow against be priced by a third-party pricing source in order to determine the market value of the bond as of the measurement date. The lenders then used the value of the bond, coupled with the application of a haircut of generally 10% to 20%, to determine the amount of money to lend Live Well.

The lenders generally relied on a particular widely utilized subscription service (the “Pricing Service”) to price various securities. In or about September 2014, HILD and his co-conspirators embarked on a scheme to cause the Pricing Service to publish valuations for the bonds that far exceeded actual market prices. By doing so, the conspirators induced the lenders to extend credit to Live Well far in excess of the prices for which the bonds could be sold in the market. The inflated prices were based on a set of market assumptions that the conspirators called “Scenario 14.”

HILD was aware that if the lenders had known that the Pricing Service was publishing bond prices that did not reflect fair value, meaning the price at which a lender could sell the bond in the market if necessary to recoup its capital, they would have refused to use those prices in determining how much money to loan to Live Well. To prevent the Pricing Service and the lenders from learning that the prices did not reflect market value, HILD directed his co-conspirators at Live Well to take steps to conceal their provision of inflated marks to the Pricing Service. Ultimately, due to the asset overvaluation and the purchase of additional bonds using the capital generated by the scheme, Live Well grew the purported value of its bond portfolio to over $500 million by December 2016.

In addition to using the liquidity generated by the scheme to expand Live Well’s bond portfolio, in or about September 2016, HILD used $18 million generated from the repo lenders to buy out the preferred stockholders in Live Well. The elimination of the preferred stockholders gave HILD control of the company and allowed him to substantially increase his personal compensation. Accordingly, HILD’s compensation jumped from approximately $1.4 million in 2015, to approximately $5 million in 2016, approximately $9.7 million in 2017, and over $8 million in 2018.

In or about late 2018, the chief financial officer of Live Well resigned after HILD refused to reduce the compensation he was receiving from the company. In or about May 2019, the company’s interim chief financial officer informed HILD that he would not sign the company’s interim financial statements because he believed that the company’s carrying value for the HECM IO bond portfolio was significantly overstated. In or about May 2019, Live Well announced that it would cease operations and unwind.

>>13552628

After the announcement of Live Well’s closing, Live Well’s interim chief financial officer provided a balance sheet to Live Well’s lenders showing that Live Well had reduced the value of its bond portfolio by over $200 million.

HILD, 46, of Richmond, Virginia, was convicted of five counts: one count of conspiracy to commit securities fraud; one count of conspiracy to commit wire and bank fraud; one count of securities fraud; one count of wire fraud; and one count of bank fraud. Count One carries a maximum sentence of five years in prison, Counts Two, Four, and Five each carry a maximum sentence of 30 years in prison, and Count Three carries a maximum sentence of 20 years in prison. The charges also contain a maximum fine of $5 million, or twice the gross gain or loss from the offense.

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

HILD is scheduled to be sentenced at 10:00 a.m. on August 20, 2021, by U.S. District Judge Ronnie Abrams, who presided over the trial.

https://www.justice.gov/usao-sdny/pr/former-ceo-live-well-financial-convicted-connection-200-million-bond-fraud-scheme

U.S. Attorney’s Office

Middle District of Florida

FOR IMMEDIATE RELEASE

Friday, April 30, 2021

Jury Convicts Palm Bay Man Of Transporting And Possessing Child Sex Abuse Material

Orlando, Florida – A federal jury has found Xzavier Scholtens (20, Palm Bay) guilty of one count of transporting and one count of possessing child sex abuse material. Scholtens faces a maximum penalty of 20 years in federal prison and a lifetime term of supervised release for each offense. His sentencing hearing is scheduled for July 20, 2021.

Scholtens had been indicted on May 27, 2020.

According to testimony and evidence presented at trial, this case arose from an online undercover operation conducted by Homeland Security Investigations agents in McAllen, Texas. The operation targeted individuals who were using a particular online social media platform to trade or distribute child sex abuse images.

On November 19, 2019, Scholtens sent an online message to one of the undercover agents and offered to “trade.” After a brief discussion, Scholtens sent a hyperlink that led to a cloud storage folder containing 12 videos. These videos depicted the sexual abuse of children, ranging from infants to pubescent teenagers.

This case was investigated by Homeland Security Investigations in McAllen, Texas and Rockledge, Florida. It is being prosecuted by Assistant United States Attorney Emily C. L. Chang.

This is another case brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

https://www.justice.gov/usao-mdfl/pr/jury-convicts-palm-bay-man-transporting-and-possessing-child-sex-abuse-material

Sinaloa Cartel Leader Convicted

Director of Media Relations Kelly Thornton (619) 546-9726

NEWS RELEASE SUMMARY – April 30, 2021

SAN DIEGO – Sinaloa Cartel leader Ismael Zambada-Imperial, aka “Mayito Gordo,” pleaded guilty in federal court today to drug trafficking charges following his extradition to the Southern District of California in December 2019. He also agreed to forfeit $5 million in drug trafficking proceeds.

Zambada-Imperial pleaded guilty to all charges in a superseding indictment returned by a federal grand jury in San Diego on July 25, 2014. The indictment also charges his father, the alleged leader of the cartel, Ismael Zambada-Garcia, known as “El Mayo;” as well as another son of El Mayo, Ismael Zambada-Sicairos, known as “Mayito Flaco;” and Ivan Archivaldo Guzman-Salazar, known as “Chapito,” whose father Joaquín “El Chapo” Guzmán Loera was the former leader of the Sinaloa Cartel along with Mayo. Zambada-Imperial was arrested by Mexican authorities in November 2014. Zambada-Garcia, Zambada-Sicairos, and Guzman-Salazar remain fugitives.

In a proceeding today before U.S. District Judge Dana M. Sabraw, Zambada-Imperial accepted responsibility for his role as a leader within the Sinaloa Cartel, acknowledging that he organized the transportation and distribution of thousands of kilograms of controlled substances, including cocaine, heroin, and marijuana for importation from Mexico into the United States. Zambada-Imperial also admitted to directing acts of violence for the purpose of promoting the Sinaloa Cartel’s narcotics trafficking activities. A sentencing hearing is scheduled for April 29, 2022 at 2 p.m. before Judge Sabraw.

>>13552683

The Southern District of California prosecution in this case is part of a multi-year investigation that, in total, has resulted in charges against over 125 people and has had a significant impact on the worldwide operations of the Sinaloa Cartel. This investigation has also offered one of the most comprehensive views to date of the inner workings of one of the world’s most prolific, violent and powerful drug cartels. Cartel members and associates were targeted in this massive investigation involving multiple countries, numerous law enforcement agencies around the United States, a number of federal districts and over 250 court-authorized wiretaps in this district alone.

This case began in late 2011 as an investigation of what was at first believed to be a small-scale drug distribution cell in National City and Chula Vista. It became evident that the drugs were being supplied by the Sinaloa Cartel, and the case evolved into a massive multi-national, multi-state probe that resulted in scores of arrests and seizures of 1,397 kilograms of methamphetamine, 2,214 kilograms of cocaine, 17.2 tons of marijuana, 95.84 kilograms of heroin, and $27,892,706 in narcotics proceeds.

This prosecution is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) Strike Force Initiative, which provides for the establishment of permanent multi-agency task force teams that work side-by-side in the same location. This co-located model enables agents from different agencies to collaborate on intelligence-driven, multi-jurisdictional operations to disrupt and dismantle the most significant drug traffickers, money launderers, gangs, and transnational criminal organizations.

The government’s case is being prosecuted by Assistant U.S. Attorney Matthew J. Sutton.

DEFENDANT Case Number: 14CR00658-DMS

Ismael Zambada-Imperial, aka Mayito Gordo Age: 35 Culiacan, Mexico

SUMMARY OF CHARGES

Conspiracy to Distribute Controlled Substances for Purpose of Unlawful Importation, in violation of Title 21 U.S.C. §§ 959, 960 and 963; Term of custody including a mandatory minimum 10 years and up to life imprisonment, $10 million fine and five years supervised release.

Conspiracy to Import Controlled Substances, in violation of Title 21 U.S.C. §§ 952, 960 and 963. Term of custody including a mandatory minimum 10 years and up to life imprisonment, $10 million fine and five years supervised release.

AGENCIES

Drug Enforcement Administration

Customs and Border Protection Office of Field Operations

Customs and Border Protection Office of Border Patrol

Internal Revenue Service

Homeland Security Investigations

Department of Justice, Organized Crime Drug Enforcement Task Forces

Department of Justice, Office of Enforcement Operations

Department of Justice, Office of International Affairs

United States Attorney’s Office, Northern District of Illinois

Department of Treasury, Office of Foreign Asset Control

Oceanside Police Department

San Bernardino County Sheriff’s Department

National City Police Department

Chula Vista Police Department

San Diego Police Department

San Diego County District Attorney’s Office

San Diego Law Enforcement Coordination Center

Interpol

https://www.justice.gov/usao-sdca/pr/sinaloa-cartel-leader-convicted

>>>>13552686

>over 250 court-authorized wiretaps in this district alone.

U.S. Attorney’s Office

Middle District of Florida

FOR IMMEDIATE RELEASE

Friday, April 30, 2021

Daytona Beach Drug Trafficking Conspiracy Leaders Sentenced To 30 And 20 Years In Prison

Orlando, Florida – U.S. District Judge Carlos E. Mendoza today sentenced Maxwell Garvice Johnson (29, Ormond Beach) to 30 years in federal prison for his involvement in a drug distribution conspiracy. The court also sentenced Robert Lee Hamilton, Jr. (36, Daytona Beach) to 20 years’ imprisonment. Johnson had pleaded guilty in February 2021. Hamilton had pleaded guilty in December 2020.

According to court documents, from April 3 through July 30, 2020, Johnson, Hamilton, and their conspirators worked to distribute methamphetamine, heroin, fentanyl-laced heroin, and cocaine in the Daytona Beach area. During the investigation, and in a series of searches and arrests, on July 30, 2020, law enforcement officers recovered and identified more than 2 kilograms of fentanyl-laced heroin, over 500 grams of cocaine, and at least 155 grams of methamphetamine that was being distributed by members of Johnson’s organization, as well as loaded firearms and tens of thousands of dollars in drug proceeds. The court ruled that both Hamilton and Johnson’s sentences reflected their leadership and managerial roles in the drug trafficking organization, their maintenance of multiple stash houses for drug distribution, and their possession of firearms.

Eight of nine of the conspirators have pleaded guilty; seven have been sentenced as follows:

Defendant

Federal Prison Term

Maxwell Garvice Johnson

30 years

Robert Lee Hamilton, Jr.

20 years

Jeniver Sebastian Scott, Jr.

10 years

Dawnte Dequine Benjamin Davis

7 years, 8 months

Sharodd Solomon Favors

7 years

Jeremy Rashan Tarrand

5 years, 10 months

Felicia Mae Riley

1 year, 3 months

The court has delayed the sentencing of Shakia Flagler, who pleaded guilty on January 13, 2021. A final defendant, Gena Marie Walker, is scheduled for trial in July 2021.

This case was investigated by the Federal Bureau of Investigation, with assistance from the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Daytona Beach Police Department, and the Volusia County Sheriff’s Office. It is being prosecuted by Assistant United States Attorney Dana E. Hill.

https://www.justice.gov/usao-mdfl/pr/daytona-beach-drug-trafficking-conspiracy-leaders-sentenced-30-and-20-years-prison