Central Texas Lawyer Guilty of Swindling Colombian Drug Trafficking Clients

Department of Justice
U.S. Attorney’s Office
Eastern District of Texas

FOR IMMEDIATE RELEASE

Tuesday, October 29, 2019

SHERMAN, Texas – A Central Texas criminal defense lawyer was found guilty of federal violations related to an international fraud scheme involving his Colombian cocaine trafficking clients, announced U.S. Attorney Joseph D. Brown and FBI Special Agent in Charge Matthew J. DeSarno of the Dallas Field Office today.

James Morris Balagia, 62, of Manor, Texas was found guilty by a jury of five federal charges today following a two week trial before U.S. District Judge Amos Mazzant.

According to information presented in court, Balagia, also known as Jamie Balagia, also known as The DWI Dude,
DUI Dude Van

had a law practice with offices in San Antonio and Manor specializing in defending clients charged with violations such as driving while intoxicated and drug possession. In 2014, Balagia conspired with Florida private investigator, Chuck Morgan, and Colombian attorney, Bibiana Correa Perrea to swindle Colombian drug traffickers under the guise of bribing officials in the United Sates. During meetings in Colombia and in Collin County, Texas, the group represented that in exchange for inflated “attorney fees,” they were in contact with government officials in the United States who would accept bribes resulting in either the dismissal of their criminal charges or significant reductions in their U.S. federal prison sentences. In reality, there were no bribes or government officials.

The Office of Foreign Assets and Control (OFAC) had previously designated Balagia’s Colombian clients as “Specially Designated Narcotics Traffickers.” These individuals were considered some of the biggest drug traffickers in the world. As such, they were on an OFAC list, essentially freezing their assets and prohibiting U.S. persons from engaging in any financial transactions or dealings with them unless they had received an OFAC license. In order to comply with federal requirements under the “Kingpin Act,” Balagia was advised to obtain an OFAC license on multiple occasions but failed to do so.

As part of the scheme, Balagia provided Colombian co-conspirators with his personal bank account number and routing number. Evidence at trial showed multiple deposits over several months into the account in amounts intended to avoid federal cash transaction reporting requirements. The cash deposits were made at bank counters across the United States by anonymous individuals with daily deposits totaling just under the $10,000 reporting threshold. Additionally, at least four bulk cash payments were made to Balagia in amounts ranging from approximately $70,000 to $120,000. Balagia admitted to driving from his San Antonio office to a mall parking lot in Katy, Texas, where he was given a shopping bag filled with bundles of cash from either an unknown individual, or an individual who identified himself only as “Coco.” In an attempt to conceal these payments, Balagia failed to report the payments as required by federal law.

Balagia was indicted by a federal grand jury on Dec. 15, 2016. Bibiana Correa Perea pleaded guilty and was sentenced to 84 months in federal prison on June 29, 2018. Chuck Morgan pleaded guilty and was sentenced to 72 months in federal prison on Mar. 8, 2018.

Balagia was found guilty of conspiracy to commit money laundering; obstruction of justice, violation of the Kingpin Act; conspiracy to commit wire fraud; and conspiracy to obstruct justice.

“This defendant-and his group-were running a scam on drug dealers – some of the biggest drug dealers in the world,” said U.S. Attorney Joe Brown. “Fortunately for him, these drug dealers chose to turn him into the FBI rather than handle it any other way. It is important for the American justice system that we prosecute those who represent that the justice system is for sale. The Colombians, and criminals in every other country that we deal with, need to understand things don’t work that way in the United States. When we have lawyers representing that officials can be bought, we take that very seriously.”

“The defendant used his position as an attorney to not only steal from drug lords, but also to sell out the U.S. justice system in order to line his own pockets,” said FBI Special Agent in Charge Matthew J. DeSarno of the Dallas Field Office. “The FBI prioritizes all cases of public corruption and we will continue to hold these officials accountable for using their positions to benefit financially.”

This case is the result of an extensive joint investigation by the Organized Crime Drug Enforcement Task Force (OCDETF). The principal mission of the OCDETF program is to identify, disrupt and dismantle the most serious drug trafficking, weapons trafficking and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply.

Under the federal sentencing guidelines, Balagia faces up to 30 years in federal prison. The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

This case was investigated by the Federal Bureau of Investigation’s Dallas Field Office – Frisco Resident Agency and prosecuted by Assistant U.S. Attorneys Heather H. Rattan and Jay Combs.

Three Port Everglades Employees and Business Owner Sentenced to Prison for Fraud Scheme

Department of Justice
U.S. Attorney’s Office
Southern District of Florida

FOR IMMEDIATE RELEASE

Tuesday, October 29, 2019

Three Port Everglades Employees and Business Owner Sentenced to Prison for Fraud Scheme

U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida and Special Agent in Charge George L. Piro of the FBI’s Miami Field Office announced that Port Everglades employees, William Woessner, 68, of Margate, Florida, David Moore, 43, of Pompano Beach, Florida, and Rajindra Lallharry, 60, of Coral Springs, Florida, and business owner Bryan Zascavage, 57, of Pompano, Florida, were sentenced to prison today for their involvement in a fraud scheme. The defendants had each previously pled guilty to participating in a conspiracy to commit fraud concerning programs receiving federal funds.

According to the court record, including the factual statements in support of the defendants’ guilty pleas, Woessner, Moore, and Lallharry were issued purchase cards or P-cards, which were to be used to buy business related goods and services for Port Everglades. Instead, they utilized the P-cards to engage in schemes to illegally profit from the use of the cards. Zascavage operated a business, Z & Z, Inc., that provided goods and services to the Port. Woessner and Zascavage engaged in a scheme wherein Woessner would direct Zascavage to purchase certain goods. Woessner would pay for the goods using his Port Everglades P-card, but the goods were not sent to Port Everglades. Instead, Woessner utilized the goods at his plumbing company. In addition, Moore and Zascavage engaged in a scheme wherein Zascavage would receive payments for goods ordered by Moore utilizing his Port Everglades P-card. None of the goods would be sent to the Port. Instead, Zascavage and Moore would split the illegally obtained funds. Further, John McGahee and Zascavage engaged in a scheme wherein Zascavage would receive payments for services ordered by McGahee utilizing his Port Everglades P-card. The services ordered by McGahee would not be performed by Zascavage or his company. Zascavage and McGahee would split the illegally obtained funds.

Lallharry’s family owned five separate companies. Lallharry would utilize his P-card to make direct payments to each of the family-owned companies for goods to allegedly be utilized by the Port. The goods were not delivered to the Port. The illegally obtained funds were utilized by Lallharry and his family to pay personal expenses, including approximately $101,790.85 to pay monthly expenses due the Chapter 13 trustee overseeing Lallharry’s bankruptcy.

Lallharry was sentenced by U.S. District Judge William P. Dimitrouleas to 21 months in prison, to be followed by 3 years of supervised release, and was ordered to pay $206,297.74 in restitution (Case No. 19cr60205). After his sentencing, Lallharry was remanded to the custody of the U.S. Marshals Service to begin serving his sentence of imprisonment. Woessner was sentenced by U.S. District Judge Roy K. Altman to 21 months in prison, to be followed by 3 years of supervised release, and was ordered to pay $153,685.88 in restitution (Case No. 19cr60202). Zascavage was sentenced by U.S. District Judge Ursula M. Ungaro to 12 months and 1 day in prison, to be followed by 3 years of supervised release, and was ordered to pay $205,706.90 in restitution (Case No. 19cr60203). Moore was sentenced by Judge Ungaro to 3 months in prison, to be followed by 3 years of supervised release, and was ordered to pay $34,768.86 in restitution (Case No. 19cr60206).

McGahee is scheduled to be sentenced on Nov. 18, 2019 (Case No. 19cr60204).

U.S. Attorney Fajardo Orshan commended the investigative efforts of the FBI in connection with this matter. She also thanked the Broward County Sheriff’s Office – Public Corruption Unit, Office of the Broward County Auditors, and Port Everglades Department – Port Director’s Office for their assistance with the investigation. The case was prosecuted by Assistant U.S. Attorney Jeffrey N. Kaplan.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on https://pacer.flsd.uscourts.gov

Former Administrator of Texarkana Assisted Living Facility Guilty of Federal Violations

FOR IMMEDIATE RELEASE

Tuesday, October 29, 2019

Former Administrator of Texarkana Assisted Living Facility Guilty of Federal Violations

TEXARKANA, Texas – A 43-year-old Little Rock, AR man has pleaded guilty to federal violations in the Eastern District of Texas, announced U.S. Attorney Joseph D. Brown today.

Antonio Otero pleaded guilty to an Information charging him with equity skimming today before U.S. Magistrate Judge Barry A. Bryant.

According to information presented in court, from before 2011 until October 2015, Otero was the administrator of the Magnolia Alzheimer’s Assisted Living facility in Texarkana, Texas, and was instrumental in the founding and operation of the facility. In order to secure millions of dollars in necessary funding, Otero obtained a loan that was insured by the U.S. Department of Housing and Urban Development (HUD.) The HUD insured loan provided a favorable interest rate and did not require the owners of the Magnolia to take personal responsibility for the loan in the event of a default. Instead, HUD would suffer the financial loss in the event that the Magnolia defaulted on the loan. As a condition of this federal benefit, Otero and the owners of the Magnolia agreed to be bound by a regulatory agreement with HUD that prohibited them from removing equity from the Magnolia unless the loan was being paid and the Magnolia had surplus cash.

Instead of paying the HUD insured loan, Otero engaged in a scheme to skim equity from the Magnolia. For example, Otero took money from the Magnolia to pay for $3,952 of camera equipment, a $3,247 watch, $2,520 in landscaping for his personal residence, a $27,408 personal mortgage payment, a $12,750 down payment on a personal vehicle, and $1,540 tickets to a Dallas Cowboys football game. Additionally, he took money from the Magnolia and gave it to other individuals, including $13,000 for cosmetic surgery, $5,500 for a loan repayment, and $30,000 in equity distributions. In total, Otero took personal responsibility for causing a loss to the United States in the amount of $2 million. As part of his plea agreement, he has agreed to pay restitution in that amount to the United States.

Under federal statutes, Otero faces up to five years in federal prison at sentencing and restitution to the parties involved. The maximum penalty prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

This case is being investigated by the Fort Worth Office of the U.S. Department of Housing and Urban Development’s Office of Inspector General and prosecuted by Assistant U.S. Attorney Jonathan R. Hornok.

Michigan Defendant Pleads Guilty to Conspiracy to Defraud the IRS and Steal From an Organization Receiving Federal Funds

Department of Justice

Office of Public Affairs

FOR IMMEDIATE RELEASE

Monday, July 15, 2019

Michigan Defendant Pleads Guilty to Conspiracy to Defraud the IRS and Steal From an Organization Receiving Federal Funds

A Boca Raton, Florida, resident pleaded guilty today in Flint, Michigan, to conspiring to impede the lawful functions of the Internal Revenue Service (IRS) and conspiring to steal from an organization receiving federal funds, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.

According to court documents, from January 2013 through December 2017, Scott Jawetz and his co-defendants executed a scheme, using the company Blue Horseshoe Consulting Inc. (Blue Horseshoe), to obtain police reports, stolen from the Detroit Police Department, which contained automobile crash victim information. Jawetz and his co-conspirators used the stolen information to solicit automobile accident victims for medical and chiropractic services. Jawetz and his co-conspirators also underreported to the IRS gross receipts they received from Blue Horseshoe business operations and the total wages Blue Horseshoe paid to its employees.

United States District Court Judge Matthew F. Leitman scheduled sentencing for Jawetz for Jan. 15, 2020. Jawetz faces a maximum sentence of five years in prison and a $250,000 fine on each of the two conspiracy counts. Jawetz also faces a period of supervised release, restitution, and monetary penalties.

Acting Deputy Assistant Attorney General Goldberg thanked special agents of IRS-Criminal Investigation and the Federal Bureau of Investigation, who conducted the investigation, and Tax Division Trial Attorneys Mark McDonald and William Guappone, who are prosecuting the case.

Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.