A once high-flying Arlington startup is now at the center of a federal fraud case.
Trustify, a Crystal City-based technology firm that provided an online marketplace for private investigations, went bankrupt last year. Just two years prior to that, the company moved into a swanky new office and was touted by the governor’s office for its plan to create 184 new jobs in Arlington.
Now, federal prosecutors are charging CEO and co-founder Danny Boice with investment fraud, saying he bilked investors out of millions of dollars while overstating the company’s financial performance.
From the U.S. Attorney’s Office for the Eastern District of Virginia:
The CEO and co-founder of Trustify Inc. (Trustify), a privately-held technology company founded in 2015 and based in Arlington, Virginia, was charged in an indictment unsealed today for his alleged role in a fraud scheme resulting in millions of dollars of losses to investors.
Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney G. Zachary Terwilliger for the Eastern District of Virginia, and Assistant Director in Charge Timothy R. Slater of the FBI’s Washington Field Office made the announcement.
Daniel Boice, 41, of Alexandria, Virginia, was charged with five counts of wire fraud, one count of securities fraud, and two counts of money laundering.
The indictment alleges that, beginning in 2015, Boice fraudulently solicited investments in Trustify, a privately-held technology start-up company that connected customers with private investigators. Boice allegedly raised approximately $18.5 million from over 90 investors by, among other things, falsely overstating Trustify’s financial performance. The indictment also alleges that Boice made false statements to investors about the amount of investor funds that he would personally receive, while diverting a substantial amount of the investor money to his own benefit.
The charges in the indictment are merely allegations, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The FBI’s Washington Field Office is investigating the case. The U.S. Securities and Exchange Commission provided assistance and is also filing a civil complaint against the defendant for related conduct. Trial Attorney Blake Goebel of the Criminal Division’s Fraud Section and Special Assistant U.S. Attorney Russell Carlberg of the Eastern District of Virginia are prosecuting the case. The department would also like to thank the Virginia State Corporation Commission for its assistance.
Individuals who believe they may be a victim in this case should contact the Victim Witness Services Unit of the U.S. Attorney’s Office for the Eastern District of Virginia at 703-299-3700 for more information.
Trustify co-founder Jennifer Mellon, who was also married to Boice, received a federal appointment as the company went belly-up. She is not named in the indictment.
In an ARLnow profile in 2017, Boice discussed why the internet was great for the private investigation business, saying that it “provides the perfect catalyst for puffing up your Facebook profile or LinkedIn or lying about not being in a relationship when you’re on Tinder, all those things.”
“The internet makes a great accelerator for dishonesty,” said Boice.
Luis Arnoldo Flores-Reyes, also known as Maloso or Lobo, 37, is alleged to have been engaged in “a racketeering conspiracy that included extortion, drug trafficking, murder and a conspiracy to commit murder” as a member of MS-13’s Sailors Clique.
He is charged with conspiracy to participate in a racketeering enterprise, conspiracy to distribute controlled substances, and conspiracy to interfere with interstate commerce by extortion.
Prosecutors say Flores-Reyes trafficked marijuana and cocaine Langley Park, Md., and extorted illegal business owners in Langley Park and Wheaton, Md. He is also accused of ordering the murders of rival gang members in Houston, Texas.
MS-13 is an international gang with ties to El Salvador and is one of America’s largest street gangs.
More from a U.S. Justice Department press release:
A federal grand jury returned an indictment yesterday charging an alleged MS-13 member residing in Arlington, Virginia with
The indictment was announced by Acting Assistant Attorney General John P. Cronan; Acting U.S. Attorney Stephen M. Schenning for the District of Maryland; Special Agent in Charge Andre Watson of the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Assistant Director in Charge Andrew W. Vale of the FBI Washington Field Office; Special Agent in Charge Karl C. Colder of the U.S. Drug Enforcement Agency (DEA); Chief Henry P. Stawinski III of the Prince George’s County Police Department; Prince George’s County State’s Attorney Angela D. Alsobrooks; Chief Douglas Holland of the Hyattsville Police Department; Chief J. Thomas Manger of the Montgomery County Police Department; and Montgomery County State’s Attorney John McCarthy.
Luis Arnoldo Flores-Reyes, aka Maloso and Lobo, 37, is charged in a four-count superseding indictment that alleges that from at least 2015 through January 2018, he was a member and associate of the Sailors Clique of MS-13 and that he engaged in a racketeering conspiracy that included extortion, drug trafficking, murder and a conspiracy to commit murder. The defendant is also charged with drug trafficking conspiracy and conspiracy to interfere with interstate commerce by extortion. Flores-Reyes is in custody.
According to the indictment, MS-13 is a national and international gang composed primarily of immigrants or descendants from El Salvador. Branches or “cliques” of MS-13, one of the largest street gangs in the United States, operate throughout Prince George’s County and Montgomery County, Maryland. Eleven other individuals were previously charged in this case with racketeering conspiracy, conspiracy to commit murder in aid of racketeering, drug trafficking conspiracy and conspiracy to interfere with interstate commerce by extortion.
For a period of time beginning at least in 2015 through in or about 2017, members of the Sailors Clique, including Flores-Reyes, are alleged to have extorted owners of illegal businesses in the Langley Park and Wheaton areas of Maryland, with the extortion proceeds being sent to El Salvador to benefit MS-13. In addition, between 2015 and 2018, members of the Sailors clique, including Flores-Reyes, are alleged to have trafficked narcotics, including marijuana and cocaine in Langley Park, Maryland, with the proceeds benefiting the gang.
More specifically, in January 2018, Flores-Reyes gave directions to members of MS-13 in Houston, Texas that they should purchase a gun and shoot rival gang members who were believed to have killed a member of MS-13. On or about Jan. 28, 2018, members of MS-13 in Houston, Texas shot at and attempted to kill suspected rival gang members while Flores-Reyes and other MS-13 members, including MS-13 members in El Salvador, monitored the shooting by phone.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent until proven guilty at some later criminal proceedings.
Trial Attorney Catherine K. Dick of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys William D. Moomau and Daniel C. Gardner of the U.S. Attorney’s Office for the District of Maryland are prosecuting this case.
Photo via U.S. Immigration and Customs Enforcement
(Updated at 5 p.m.) A nearly $1.8 million home in Clarendon may be subject for forfeiture to the federal government as a result of the case against former Trump campaign chair Paul Manafort.
A 12-count indictment of Manafort, accusing him of laundering money and failing to register as a foreign lobbyist, details his alleged transfer of money from overseas shell companies to buy cars, luxury goods and expensive real estate.
Among the properties is a home on the 1000 block of N. Edgewood Street, adjacent to to Green Pig Bistro and steps from the heart of Clarendon. Arlington County property records show the house, first built in 1920, was purchased in September 2012 for $1.9 million and is currently assessed at just over $1.75 million. Manafort’s daughter, Andrea, is listed as the owner.
The indictment alleges that the home was purchased with money transferred from a shell company in Cyprus and seeks its forfeiture, along with the forfeiture of three Manafort-linked properties in New York.
Another official involved in President Trump’s campaign, Rick Gates, was also named in the indictment, as part of the investigation by special counsel Robert Mueller into Russian meddling in the 2016 presidential election.
The men, all in their 20s and all residents of the District, are being charged in federal court as their alleged crime spree took them across state lines.
From the U.S. Attorney’s Office for the Eastern District of Virginia:
A federal grand jury has returned an indictment charging four Washington, D.C. residents for their alleged roles in 19 separate armed robberies in the Washington, D.C., metro area.
According to allegations in the indictment, from Nov. 1, 2016 to April 12, Desmar Rashad Gayles, Andrew Bernard Duncan, Anton Durrell Harris, and Lamont Kortez Gaines committed a total of 19 armed robberies of commercial establishments and three carjackings, allegedly using two of the vehicles that they carjacked to commit some of the armed robberies. In ten of the armed robberies, the defendants used an Intratec 9 mm semi-automatic pistol with an extended magazine. That firearm was recovered in Harris’ residence on April 13 with the extended magazine fully loaded and a round in the chamber.
Among other jurisdictions, the men are accused of seven robberies and a carjacking in Alexandria and one armed robbery in Arlington.
That robbery happened in March, at a store near Shirlington, according to Arlington County Police.
From an ACPD crime report:
ROBBERY, 2017-03190011, 4000 block of S. Four Mile Run Drive. At approximately 12:35 a.m. on March 19, officers responded to the report of an armed robbery that had just occurred. Three masked male suspects entered a store and confronted the employee and a customer inside. One suspect brandished a firearm and demanded money from the register, while another suspect demanded money from the customer. The suspects then fled the scene with an undisclosed amount of cash. The first suspect is described as a black male, approximately 5’10”-6’00” tall and weighed 140-170 lbs. He was wearing a black winter coat, dark jeans, dark colored shoes, black gloves, and a black mask. The second suspect is described as a black male, approximately 5’03”-5’06” tall and was wearing a black coat, black pants, black shoes, black gloves, and a black mask. The third suspect is described as a black male, approximately 5’03”-5’06” tall and was wearing a black hooded sweatshirt, black pants, dark shoes, black gloves, and a mask. The investigation is ongoing.
Dr. Derron McRae Simon, who ran the WithinMe MD medical clinic at 5275 Lee Hwy in Arlington, has been indicted on charges that he ran an oxycodone distribution ring.
Starting in February 2013, federal prosecutors say Simon and five co-conspirators wrote, filled and sold fraudulent prescriptions for more than 11,000 oxycodone pills and “other controlled substances.” The pills had a total value of nearly $750,000 and Simon sold the prescriptions for between $500 and $1,000, according to prosecutors.
“Simon allegedly wrote and sold hundreds of prescriptions for oxycodone and other controlled substances, despite knowing that the individuals in whose names the prescriptions were written were abusing, misusing, distributing, and/or selling the drugs,” according to a press release. “Simon allegedly had never met many of these purported patients, and he also wrote prescriptions in the names of his five co-conspirators, as well as friends, relatives, and fictitious individuals.”
Simon, 45, is listed as a Midlothian, Va. resident. Among the co-conspirators named by prosecutors is Arlington resident Linda Dao, 21, and Falls Church residents Ereida Escobar, 23, and Michael Harris, 21. They are charged with conspiracy to distribute and dispense controlled substances and possession with the intent to distribute controlled substances.
“According to the indictment, Simon directed Escobar, a receptionist and medical assistant at Simon’s practice, to confirm calls from pharmacists seeking to verify his oxycodone prescriptions,” the press release said. “Simon also allegedly directed Escobar to create fraudulent patient history forms and medical records to make it appear that these individuals were actually legitimate patients.”
The FBI’s Washington Field Office investigated the case.
All six suspects are facing up to 20 years in prison and a fine if convicted on the conspiracy or possession charges. Simon faces an addition one to 40 years in prison if convicted on three separate charges of distributing a controlled substance to persons under the age of 21. Simon and another conspirator are also charged with identity fraud.
Yelp reviews for the WithinMe clinic — which specialized in weight loss and hormone therapy — were not complimentary, especially after the clinic closed.
“I think they went out of business,” one reviewer said. “I have no idea what is going on. No one is answering the phones and the vm is full without even an answering machine introduction”
“If I could give no stars I would,” said another reviewer. “I purchased a groupon and had an appointment on June 23rd – I still have not recieved [sic] the B-12 shots.”
Photo via Google Maps
The McDonnells are accused of receiving numerous high-value gifts from businessman Jonnie Williams Sr. in exchange for McDonnell using his influence to benefit Williams’ Richmond-area business, Star Scientific.
The 43-page indictment lists more than $140,000 worth of luxury goods, golf equipment, clothing and dietary supplements subject to federal seizure should the McDonnells be convicted.
McDonnell’s four-year term in office ended Jan. 11.
From a Department of Justice press release:
According to the indictment, from April 2011 through March 2013, the McDonnells participated in a scheme to use the former governor’s official position to enrich themselves and their family members by soliciting and obtaining payments, loans, gifts and other things of value from Star Scientific, a Virginia-based corporation, and “JW,” then Star Scientific’s chief executive officer. The McDonnells obtained the things of value in exchange for the former governor performing official actions on an as-needed basis to legitimize, promote and obtain research studies for Star’s products, including the dietary supplement Anatabloc®.
As alleged in the indictment, the McDonnells obtained from JW more than $135,000 in direct payments as gifts and loans, thousands of dollars in golf outings, and numerous other things of value. As part of the alleged scheme, the official actions that Robert McDonnell performed included arranging meetings for JW with Virginia government officials, hosting and attending events at the Governor’s Mansion designed to encourage Virginia university researchers to initiate studies of Star’s products and to promote Star’s products to doctors for referral to their patients, contacting other Virginia government officials as part of an effort to encourage Virginia state research universities to initiate studies of Star’s products, and promoting Star’s products and facilitating its relationships with Virginia government officials.
The indictment further alleges that the McDonnells attempted to conceal the things of value received from JW and Star to hide the nature and scope of their dealings with JW from the citizens of Virginia by, for example, routing things of value through family members and corporate entities controlled by the former governor to avoid annual disclosure requirements. Moreover, the indictment alleges that on Oct. 3, 2012, Robert McDonnell sent loan paperwork to a lender that did not disclose the loans from JW, and on Feb. 1, 2013, the McDonnells signed loan paperwork submitted to another lender that did not disclose the loans. Similarly, the indictment alleges that on Feb. 15, 2013, Maureen McDonnell was questioned by law enforcement about the loans and made false and misleading statements regarding the defendants’ relationship with JW. Three days later, on Feb. 18, 2013, Robert McDonnell is alleged to have sent loan paperwork to one of the previously mentioned lenders disclosing the loans from JW. Additionally, after her interview with law enforcement, Maureen McDonnell allegedly wrote a handwritten note to JW in which she falsely attempted to make it appear that she and JW had previously discussed and agreed that she would return certain designer luxury goods rather than keep them permanently, all as part of an effort to obstruct, influence and impede the investigation.
An indictment is merely an accusation, and the defendants are presumed innocent unless and until proven guilty.
If convicted, the McDonnells could each face a maximum statutory sentence of 20 years in prison and a fine of the greater of $250,000 or twice the gross gain or loss on the conspiracy to commit honest-services wire fraud count, the honest-services wire fraud counts, the conspiracy to obtain property under color of official right count, and the obtaining property under color of official right counts; a maximum statutory sentence of 30 years in prison and a fine of the greater of $1,000,000 or twice the gross gain or loss on the false statement counts; and a maximum statutory sentence of 20 years in prison and a fine of the greater of $250,000 or twice the gross gain or loss on the obstruction of an official proceeding count.
The rest of the press release, after the jump.
An Arlington County Grand Jury indicted James Sylvester Caroline on capital murder and weapons charges for the murder of Tommy Kin Mo Wong.
Caroline is accused of killing Wong during a robbery of the Capital Jewelers store at 3219 Columbia Pike on the afternoon of July 27. Caroline was arrested just days after the murder during a traffic stop on the Arlington/Alexandria border.
Caroline is set to appear in court on Thursday, December 20, to set a trial date.
Prosecutors say Ryan Ackroyd, Jake Davis, Darren Martyn and Hector Xavier Monsegur — alleged members of the “hacktivist” group LulzSec — hacked into PBS servers last year in retaliation for what they perceived to be unfavorable coverage of Wikileaks by the PBS news program “Frontline.” At the time, news outlets reported that LulzSec defaced PBS.org and posted a fake story on the PBS NewsHour website suggesting that the late rapper Tupac Shakur was actually alive and well in New Zealand.
PBS is based in Crystal City and the PBS NewsHour is produced in Shirlington, though prosecutors say the organization’s computer servers were actually located in Alexandria.
Ackroyd and Davis, of the United Kingdom, and Martyn, of Ireland, are each charged with two counts of computer hacking conspiracy. In addition to the PBS hack, they’re also accused of hacking into the systems of Sony Pictures Entertainment, Rockville-based Bethesda Softworks, and other companies.
Monsegur, of New York City, has already pleaded guilty to a host of charges connected with those hacking incidents. See the full list of charges from a United States Attorney’s Office press release.
Less than two months after two of his employees pleaded guilty to charges stemming from last year’s change-of-government petition drive in Arlington, political strategist Shawn Wilmoth has been indicted on two felony counts of election fraud.
Wilmoth was the president of Signature Masters, the firm that was contracted to collect signatures for last year’s unsuccessful attempt to change Arlington’s form of government. The petition drive was sponsored largely by Arlington’s police and fire unions.
Two of Wilmoth’s signature collectors, Cheryl Simmons and William Cockerham, pleaded guilty to election fraud charges in February. State law specifies that petition signatures must be witnessed by someone who is at least eligible to register to vote. As convicted felons, neither Simmons nor Cockerham were eligible.
In a statement of fact entered as part of Simmons’ guilty plea, prosecutors said that Simmons told Wilmoth that she had been convicted of a felony before she was hired. Nonetheless, prosecutors say Wilmoth hired Simmons to collect signatures at a fee of $3 per signature. Later, when news reports revealed that Simmons was a felon, Wilmoth told the Washington Post that Simmons had passed a background check.
“It was an issue with the background-check company we are dealing with,” he told the paper.
Prosecutors said most of the 55 petitions pages that Simmons signed as a witness were handed to her by Wilmoth at a local Starbucks. Only a few pages, prosecutors said, contained signatures she had actually collected.
An Arlington grand jury handed down an indictment for Wilmoth on March 28. A warrant was then issued for his arrest. He was arrested Friday afternoon in Warren, Mich., according to Assistant Commonwealth’s Attorney Andy Parker. Lt. Eric Schulz of the Warren Police Department confirmed Wilmoth’s arrest and said he was likely being held at the nearby Macomb County Jail.
William Cockerham, accused of making a false statement on a required form, appeared in Arlington County Circuit Court today, was appointed an attorney, and was given a trial date of March 7, according to Assistant Commonwealth’s Attorney Andrew Parker.
Convicted felon and petition drive contractor Cheryl Simmons, who was indicted on the charge of voter fraud on Monday, did not appear in court today, Parker said. She’s expected to attend a hearing on Jan. 3, at which time a trial date will be set.
Simmons and Cockerham both face between one and ten years in prison and up to a $2,500 fine if convicted.
Parker could not say whether additional charges are likely against other Committee for a Better Arlington (CBA) contractors. A group that opposed the petition effort, the Coalition for Arlington Good Government, raised questions over the summer about the conduct of four petition workers, including Simmons and Cockerham.
The Coalition issued the following statement this afternoon.
This summer the Coalition for Arlington Good Government (CAGG) published a report detailing serious irregularities in the collection of signatures for the change of government petition. The report can be found at www.arlingtoncoalition.org.
Our concern, then and now, remains the integrity of Arlington elections, and protecting our community from unethical and illegal efforts that may have been organized by paid out-of-state political operatives to fabricate a local “grass roots” movement. Yesterday’s indictments appear to confirm that the Change of Government effort violated the trust of Arlington voters. We welcome the continued scrutiny by the Commonwealth Attorney’s office of the way in which this petition drive was conducted.
Petition Workers Indicted for Voter Fraud — Two individuals who worked on the unsuccessful effort to change Arlington’s form of government have been indicted for election fraud. William Cockerham and Cheryl Simmons are expected to have their trial dates set this morning. Earlier this year we exposed Simmons as a paroled felon, ineligible to collect the 2,214 petition signatures she claimed to have collected. More from the Washington Post.
ART Bus Lives Up to Its Name — Arlington’s transit agency has deemed its “Art on the ART Bus” experiment a success. The program placed artwork on an ART bus in connection with a new exhibit at the Arlington Arts Center. The arty bus launched on Dec. 11 and will continue rotating throughout the ART system for the next couple of months. More from the Arlington Transit Blog.
Court Appearance for Facebook Bomb Threats Suspect — The Arlington man who threatened via Facebook to place bombs in Georgetown and on Metro trains has been denied bail. Awais Younis, who lives in the Arlington View neighborhood, appeared in U.S. District Court yesterday. A judge ordered the 25-year-old held without bond, saying his arrest provides additional incentive for Younis to carry out his threats. More from WTOP.
Flickr pool photo by Plaszloc