Summary of recent cases brought by the US Attorney in Northern District of Illinois: January 15, 2023
U.S. Navy Veteran Indicted for Allegedly Swindling Navy Members in Investment Fraud Scheme
December 14, 2022
CHICAGO — A United States Navy veteran has been indicted on federal criminal charges for allegedly swindling retired and active-duty Navy members in an investment fraud scheme.
ROBERT L. MURRAY, JR, 43, of Chicago, was charged with four counts of wire fraud in an indictment returned Monday in U.S. District Court in Chicago.
The indictment alleges that after retiring from the Navy, Murray occasionally traded securities online from his residence. He later founded an investment fund called Deep Dive Strategies LLC, which purported to invest in publicly traded securities. Murray solicited investors, including retired and active-duty Navy members, by portraying himself on social media as a skilled and successful options trader with an effective algorithm for trading securities, the indictment states.
The indictment alleges that Murray failed to invest or trade with all of the money provided to him by investors, instead using a portion of their funds to pay his personal expenses, including shopping, restaurant, and travel expenses. With the investor funds that Murray did use to conduct trades, he lost most of those funds by placing a highly risky bet on the “meme stock” GameStop, the indictment alleges. When investors later requested an accounting of their funds, Murray disregarded or refused their requests, the indictment states.
As a result of the scheme, investors lost all of the funds they entrusted to Murray to invest on their behalf, an amount totaling more than $342,000, the indictment states.
Each count of wire fraud is punishable by up to 20 years in federal prison.
Drug Trafficker Sentenced to Seven Years in Prison for Operating Cocaine Delivery Service in Chicago Area
December 16, 2022
CHICAGO — A drug trafficker who conspired with his father and several others to operate a cocaine delivery service in the Chicago area has been sentenced to seven years in federal prison.
TONY J. CAYUELA, also known as “Tone Kapone,” 43, of Chicago, operated a drug trafficking organization that in 2018 distributed cocaine to hundreds of customers in the Chicago area. Tony J. Cayuela packaged wholesale quantities of cocaine into one-gram bags for retail sale and dispatched drivers to complete deliveries to customers. One of the drivers was Tony Cayuela’s father, TONY F. CAYUELA, 68, of Chicago.
Federal law enforcement shut down the drug trafficking organization during a multi-year investigation known as “Operation Flawed Deal.” During the probe, authorities seized multiple bank accounts, more than a kilogram of cocaine, a Mercedes G63 sport-utility vehicle, and two handguns. All 18 defendants charged in the investigation, including the Cayuelas, pleaded guilty and admitted their roles in the trafficking operation. In addition to the drug conspiracy, Tony J. Cayuela also pleaded guilty to a money laundering charge.
U.S. District Judge Jorge L. Alonso sentenced Tony J. Cayuela on Dec. 6, 2022. The other 17 defendants were previously sentenced, including ANEES USMANI, also known as “Ace,” of Chicago, who received eight years in prison.
The case was part of an Organized Crime Drug Enforcement Task Force operation. OCDETF identifies, disrupts, and dismantles the highest-level drug trafficking organizations and other criminal networks that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies.
“The convictions and federal prison sentences in this operation should serve as a warning to those who distribute poison in our communities: We will prosecute you to the fullest extent of the law,” said U.S. Attorney Lausch. “Our federal and local law enforcement partners in this operation performed exemplary work to dismantle a significant drug trafficking organization.”
“Operation Flawed Deal should serve as a beacon of hope to our community, a message that we won't tolerate drugs in our neighborhoods, and those who disobey the law will be brought to justice,” said FBI Acting SAC Morales. “The FBI is honored to work with our state, local, and federal partners to protect the American people every day.”
“This sentencing signals an important victory for the American public,” said IRS-CI SAC Campbell. “The role of IRS Criminal Investigation in narcotics investigations is to follow the money and financially disrupt and dismantle major drug trafficking organizations. One of the government's most powerful weapons is the ability to seize the assets associated with narcotics-related crime. We are proud to work hand-in-hand with our law enforcement partners to bring these criminals to justice.”
Former CEO of Subprime Auto Lender Indicted in $54.5 Million Bank Fraud Scheme
December 16, 2022
CHICAGO — The former chief executive officer of a suburban Chicago subprime auto lending company has been charged in federal court with orchestrating a scheme that defrauded a bank of approximately $54.5 million.
JAMES COLLINS was the CEO of Evanston, Ill.-based Honor Finance LLC. From 2015 to 2018, Collins schemed with another top Honor executive to submit false information to the bank about a portfolio of loans made to subprime borrowers, in an effort to maintain a certain level of funding from a line of credit provided to Honor by the bank, according to an indictment returned in U.S. District Court in Chicago. The false information also allowed Collins and his co-schemer to increase the amount of funding they received from a trust established by Honor and the bank to securitize thousands of loans in Honor’s portfolio and sell them as bonds to investors, the indictment states. The indictment alleges that Collins selected delinquent vehicle loans for the trust that he knew were not eligible to be included in the portfolio because Honor and its affiliates had previously advanced money to the borrowers through the use of improper accounting entries. Collins hid the ineligibility of these loans from the bank, bond investors, and rating agencies, the indictment states.
As a result of Collins’s false representations and material omissions regarding the line of credit and the trust, the bank lost approximately $54.5 million, the indictment states.
The indictment charges Collins, 53, of Evanston, Ill., with 15 counts of bank fraud and two counts of securities fraud. Each count of bank fraud is punishable by up to 30 years in federal prison, while each securities fraud count carries a maximum of 20 years.
Man Sentenced to More Than 12 Years in Federal Prison for Illegally Possessing Gun and Drugs in Chicago
December 19, 2022
CHICAGO — A man has been sentenced to more than 12 years in federal prison for illegally possessing a loaded semiautomatic handgun and cocaine at a Chicago gas station.
JEREMY INGRAM, 30, of Chicago, illegally possessed the gun and drugs on July 11, 2019, in the Austin neighborhood on Chicago’s West Side. The firearm had a 16-round magazine attached to it, while the cocaine was packaged in multiple clear baggies. When Chicago Police officers approached Ingram, he attempted to flee in his car. Ingram continued to physically resist the officers as they apprehended and arrested him.
Ingram had previously been convicted of multiple felonies in state court and was not legally allowed to possess a firearm. He was on parole for his most recent felony conviction at the time of the federal offenses.
Ingram pleaded guilty earlier this year to federal firearm and drug charges. U.S. District Judge Robert W. Gettleman on Dec. 14, 2022, imposed a prison sentence of 12 years and seven months.
Businessman Sentenced to Nearly Five Years in Prison for Swindling Hospital in Connection With Attempted Purchases of Personal Protective Equipment
December 20, 2022
CHICAGO — A suburban Chicago businessman has been sentenced to nearly five years in federal prison for swindling millions from a hospital that paid him for scarce personal protective equipment in the early weeks of the Covid-19 pandemic.
DENNIS W. HAGGERTY, JR., 46, of Burr Ridge, Ill., pleaded guilty earlier this year to federal wire fraud and money laundering charges. U.S. District Judge John F. Kness on Monday imposed a 57-month sentence and ordered Haggerty to pay more than $1.9 million in restitution.
Haggerty and two business partners in March 2020 formed a company called At Diagnostics Inc. to sell personal protective equipment. The company agreed to sell 500,000 N95 respirator masks to a hospital in Iowa for $2.495 million. Haggerty created an invoice to reflect the agreement and to instruct the hospital on where to wire the payment. Based on the invoice, the hospital on March 31, 2020, wired the money to a bank account that Haggerty falsely claimed was an At Diagnostics account, but which was actually the account of a different business solely controlled by Haggerty.
Haggerty spent part of the money for his personal benefit, including purchasing three luxury automobiles, paying nearly $189,000 to credit card companies, withdrawing more than $147,000 in cash, and paying $20,000 to a personal friend. At Diagnostics never delivered the masks, and when questioned about it by the hospital he falsely claimed that the bank had no record of the hospital’s payment being received. When his business partners questioned Haggerty about the whereabouts of the money, Haggerty altered a bank statement to make it appear as if the hospital’s funds had not been received.
Haggerty also engaged in similar conduct with a hospital in Illinois. After agreeing to sell one million N95 masks for nearly $4.5 million, the hospital requested that an initial payment be sent to an escrow account instead of the account Haggerty provided. When At Diagnostics failed to fulfill the hospital’s order, the money in escrow was returned. The hospital, however, later inadvertently wired more than $933,000 to Haggerty’s account in connection with a second order for 500,000 N95 masks that was never fulfilled. Haggerty spent some of this money for his personal use and did not return any of it.
Haggerty’s sentence included an enhancement for obstruction of justice. In his initial court filings in advance of sentencing, Haggerty claimed that he had relied on a bill of lading purportedly sent by a supplier of the N95 masks, and that he began spending the money from the first hospital believing it was owed to him from his business partners. Haggerty later withdrew those claims and admitted that he had created a fake bill of lading. He acknowledged that his conduct warranted the enhancement.
Chicago Gang Member Sentenced to Nearly 5 Years in Federal Prison for Illegally Possessing Machine Gun and Shooting at Rival Gang Members
January 5, 2023
CHICAGO — A member of a Chicago street gang has been sentenced to nearly five years in federal prison for illegally possessing a machine gun and participating in a shootout with rival gang members on a city sidewalk.
WILLIE GLENN, 25, of Chicago, illegally possessed the firearm on June 21, 2021, while sitting in the driver’s seat of a stolen Infiniti sedan in the Auburn Gresham neighborhood on Chicago’s South Side. The .40-caliber handgun was equipped with a conversion device known as a “Glock switch” or “auto sear,” making it capable of automatically firing more than one shot with a single pull of the trigger. Glenn had previously been convicted in state court of a felony firearm offense and was prohibited by federal law from possessing the gun.
U.S. District Judge John Robert Blakey on Dec. 20, 2022, sentenced Glenn to 57 months in federal prison. In addition to the illegal firearm possession, Judge Blakey found that Glenn fired a shot during a shootout with rival gang members on Dec. 22, 2018. A man in the defendant’s group was wounded in the shootout, which occurred on a sidewalk in the East Beverly neighborhood on Chicago’s South Side.
Former Payroll Manager for Chicago Museum Charged With Misappropriating More Than $2 Million
January 13, 2023
CHICAGO — The former payroll manager for a Chicago museum has been indicted on federal fraud charges for allegedly misappropriating more than $2 million in museum funds.
An indictment returned Thursday in U.S. District Court in Chicago accuses MICHAEL MAURELLO of fraudulently obtaining the museum funds from 2007 to 2020. Maurello caused the museum to deposit money into his personal bank accounts by designating the payments in the payroll system as having been made to other employees or former employees, the indictment states. When the museum’s assistant controller asked Maurello in January 2020 about one of the payments, Maurello falsely stated that the transaction had been a test of the payroll system, the indictment states. Maurello then edited and altered a report from the museum’s payroll system to conceal information about the misappropriated funds, including by falsely changing the employees’ names and the dates and dollar amounts of the payments, the indictment states.
The indictment charges Maurello, 56, of Beach Park, Ill., with two counts of wire fraud and two counts of bank fraud. Arraignment in federal court in Chicago has not yet been scheduled.
The indictment was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Robert W. “Wes” Wheeler, Jr., Special Agent-in-Charge of the Chicago Field Office of the FBI. The government is represented by Assistant U.S. Attorney Corey B. Rubenstein.
Each count of bank fraud is punishable by up to 30 years in federal prison, while each count of wire fraud carries a maximum of 20 years.
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