Mexican Drug Kingpin Sentenced to 43 Years in U.S. Prison

April 11, 2018
By David Lee

DALLAS (CN) – A federal judge on Wednesday sentenced the boss of the La Familia Michoacan drug cartel whose arrest led to the revenge killing of 12 Mexican police officers to over 43 years in federal prison.

U.S. District Judge Ed Kinkeade sentenced Arnoldo Rueda-Medina, 48, in Dallas and ordered him to pay $5 million in fines – an amount the judge acknowledged was a “drop in the bucket.”

Known as “La Minsa,” Rueda-Medina pleaded guilty in September 2017 to one count of conspiracy with intent to distribute drugs and one count of conspiracy to launder money. The judge ordered a 520-month sentence on the drug charge and 240 months on the conspiracy charge, to run concurrently.

Mexican authorities extradited Rueda-Medina to the United States in January after arresting him in the state of Michoacan in July 2009.

An unidentified Mexican federal police officer testified Wednesday that he will never get over the “cowardly assassination” of his fellow officers after Rueda-Medina’s arrest.

Prosecutors say cartel members unsuccessfully tried to free Rueda-Medina after his arrest, attacking the police station where he was held and engaging in a firefight with police on the streets of Morelia in Michoacan.

“On July 13, 2009, a group of 12 officers were kidnapped, tortured, and murdered.  A note found at the scene where the bodies were dumped stated ‘Vengan por otro, los estamos esperando’ (‘Come for another, we are waiting for you’),” prosecutors said in a written statement. “At least four other officers and two Mexican Marines were killed by LFM operatives responding to the arrest of Arnoldo Rueda-Medina.”

Formed in the 1980s, La Familia Michoacan is accused of producing thousands of kilograms of methamphetamine in laboratories in Michoacan. The cartel then smuggles the drugs into stash houses in the Dallas-Fort Worth area through border checkpoints near Tijuana, Mexico, and Laredo, Texas, according to court filings.

“The drug proceeds that were collected were delivered to cartel members or associates in Mexico either by way of bulk cash smuggling in vehicles utilized by LFM couriers or through money remitters such as Western Union,” prosecutors said.

U.S. Attorney Nealy Cox thanked Mexican authorities for their “critical assistance and sacrifice” in the case.

Prosecutors say Rueda-Medina was sanctioned by the U.S. Department of the Treasury in 2010 under the Foreign Narcotics Kingpin Designation Act, which blocked all of his property subject to U.S. jurisdiction and virtually froze all of his assets. The law also bans American citizens and companies from doing business with him.

From Courthouse News.


Texas Regulators Find Rampant Cryptocurrency Fraud

April 11, 2018
By David Lee
AUSTIN, Texas (CN) – Texas securities regulators said they found widespread fraud in dozens of cryptocurrency offerings that were investigated, warning the public to learn how to identify safer investment options.

FILE – In this April 3, 2013 photo, Mike Caldwell, a 35-year-old software engineer, holds a 25 Bitcoin token at his shop in Sandy, Utah. Bitcoin is an online currency that allows people to make one-to-one transactions, buy goods and services and exchange money across borders without involving banks, credit card issuers or other third parties. Texas securities regulators said they found widespread fraud in dozens of other cryptocurrency offerings. (AP Photo/Rick Bowmer, File)

The Texas State Securities Board, or SSB, issued a 14-page investor report Tuesday stating its attorneys and investigators opened 32 investigations into cryptocurrency offerings starting Dec. 18, finding that none of the promoters were registered to sell securities in the Lone Star State in violation of the Texas Securities Act.

“At least five promoters all but ignored investing risks by guaranteeing returns, some as high as 40 percent per month,” the board said in a written statement. “Only 11 promoters provided potential investors with a physical address, leaving investors with little recourse if they lost their money, and six of the offerings involved payment of a commission to investors who recruited new investors into the scheme.”

The board said 19 of the companies claimed to accept Bitcoin, the best known cryptocurrency, as an investment, to trade or to invest in businesses and technologies involving Bitcoin.

Cryptocurrency refers to a form of digital currency that uses encryption techniques to regulate the generation of new units and verify the transfer of existing units.

Mainstream interest in cryptocurrencies grew substantially last year as the value of Bitcoin has spiked by several thousand percent in recent years. It remains a speculative and highly volatile investment due to sudden, sharp price swings.

The SSB warns that there are “abundant signs of a cryptocurrency mania” and mentions other popular cryptocurrencies including Ethereum, Dogecoin, Potcoin and Ponzicoin – a “parody art performance” where the issuer refunded investor money.

Texas Securities Commissioner Travis J. Iles warned the public the investigations show “significant risks” lie in investments that supposedly use cryptocurrencies to enrich investors.

“There is a lot of hype surrounding cryptocurrencies, but the companies offering investments are often not disclosing all the information investors need to make an informed decision,” he said in a statement. “Investors risk giving their hard-earned money to anonymous promoters hiding behind websites who have no intention of making good on their promises.”

The report stated that at least six of the investigated promoters were actively recruiting sales agents without verifying they were registered with the SSB. It notes that the board is not regulating cryptocurrencies themselves, only investments that claim to use them in an investment program.

The report comes three months after the board halted a sale by Ashford, England-based cryptocurrency firm BitConnect, issuing an emergency cease-and-desist order.

The SSB claims its promoters misled investors and promised annualized returns of over 100 percent. It claims $4.1 billion of BitConnect Coins, or BCC, was placed into the company’s online marketplace, that the company is not registered to sell securities in Texas, and that BCC is not a registered security either.

“BitConnect has disclosed virtually nothing about its principals, financial condition, or strategies for earning profits for investors,” the board said at the time. “It has not provided a physical address in England.”

The SSB said Tuesday the value of BCC cratered to “nearly zero” after it took action.

Texas was the first state securities regulator in the country to enter such an order against a cryptocurrency firm and has entered the most orders of any state regulator.

The board says it has opened approximately 60 investigations so far involving cryptocurrency investments.

Democratic States Fight Texas’ Attempt to Kill Obamacare

April 10, 2018
David Lee

FORT WORTH (CN) — Sixteen Democratic attorneys general intervened Monday in Texas’ lawsuit to kill Obamacare, disagreeing that the Republican-controlled Congress’ gutting of the individual mandate tax penalty last year leaves the law unconstitutional.

Led by California Attorney General Xavier Becerra, the intervenors say Texas’ lawsuit against the federal government is “based on a dubious legal claim with the sole goal of stripping Americans of their health care.”

Becerra told reporters that “we can’t and we won’t go back” to the days before the Affordable Care Act.

“In California, millions of people receive quality, affordable health care under the ACA, many for the first time,” Becerra said at a news conference.

“In addition, the proponents of the Texas lawsuit want to eliminate the preventive care and prescription drug benefits for working families, seniors and people with disabilities. To roll back the clock and risk the health of millions of Americans is irresponsible and dangerous.”

Becerra said California stands to lose over $160 billion in health-care funding and that citizens in the intervening states stand to lose $500 billion if Texas’ lawsuit succeeds.

His 37-page motion to intervene says Illinois will lose almost $50 billion and New York more than $57 billion.

Texas Attorney General Ken Paxton and Wisconsin Attorney General Brad Schimel, both Republicans, led a 20-state coalition in suing the federal government in February.

They say Congress’ ending of the individual mandate tax penalty in the Tax Cuts and Jobs Act of 2017 guts the constitutionality of the ACA, citing the U.S. Supreme Court’s reasoning that the individual mandate would be an unconstitutional exercise of federal power without the tax penalty. The high court reached that conclusion when it upheld Obamacare subsidies in 2015.

Becerra said Obamacare has survived almost 70 repeal attempts since it was passed into law in 2010.

“But courts have routinely rejected claims that would have gutted its key reforms,” the motion states. “In the landmark [National Federation of Independent Businesses v. Sebelius (2012)] decision, the Supreme Court upheld the constitutionality of the individual mandate — a requirement that certain people pay a penalty for not obtaining health insurance.”

The intervenors disagree with the plaintiffs’ claim that the law should be thrown out as a whole, saying Congress merely reduced the individual mandate tax penalty, from 2.5 percent to zero.

“This change, effective in 2019, did not repeal any statutory provision of the ACA,” the motion states. “Yet plaintiffs rely on this change to ask this Court to strike down the entire ACA.”

Paxton’s office did not answer telephone calls requesting comment late Monday evening.

Texas and Wisconsin are joined in the lawsuit by Alabama, Arkansas, Arizona, Florida, Georgia, Indiana, Kansas, Louisiana, Maine, Mississippi, Missouri, Nebraska, North Dakota, South Carolina, South Dakota, Tennessee, Utah and West Virginia.

California’s motion to intervene is joined by Connecticut, Delaware, Hawaii, Illinois, Kentucky, Massachusetts, Minnesota, North Carolina, New Jersey, New York, Oregon, Rhode Island, Virginia, Vermont, Washington, and the District of Columbia.

From Courthouse News

Striking Oklahoma Teachers Share Their Demands

April 6, 2018
By David Lee

OKLAHOMA CITY (CN) – Oklahoma teachers spelled out the terms for ending their strike for the first time Friday, five days after they walked off the job to protest low wages and inadequate public education funding.

Alicia Priest, president of the Oklahoma Education Association, told a cheering crowd at the state capitol that the strike would end if the Oklahoma Legislature passed a measure eliminating a capital gains tax exemption and if Governor Mary Fallin vetoes a bill repealing a hotel and motel tax.

Priest did not commit to what percentage of the resulting revenue should go toward public education.

“The reality is all state agencies need funding because of cuts to all services,” Priest said at a press conference Friday. “We are here asking for education funding because investing in education is investing in the economic future of our state.”

Even if the teachers’ demands are met, Priest emphasized that these were only the terms for ending the strike, and that she still wants additional funding for education. But state lawmakers have said this year’s budget has already passed and that no changes are forthcoming.

Oklahoma teachers reached their breaking point after enduring no pay raises since 2008. State lawmakers tried to avert a strike by passing measures in the past week to raise teacher salaries by $6,100 annually and support staff salaries by $1,250 annually, as well as increase education funding by $50 million. But the increases were only a fraction of what the teachers wanted, so the strike moved forward.

The Senate approved two additional bills on Friday that are designed to raise $40 million more for schools. One would expand tribal gambling in the state to include games with a ball or dice, while the other imposes sales tax on certain internet sales.

Fallin, a Republican, has endured heavy criticism for supporting tax cuts and business subsidies that have eroded state agency budgets. She angered teachers on Tuesday when she compared their demands to teenagers “that want a better car.”

According to an Associated Press report, defiant teachers have loudly jingled their keys at the capitol since those comments, chanting, “Where is our car?”

Oklahoma’s largest school districts in Oklahoma City and Tulsa will remain closed Monday due to the strike, but several teachers in rural districts that have chosen not to close have returned to work.

From Courthouse News.

Dallas Lawyer Gets 8 Years for Lewd Conduct

April 6, 2018
By David Lee

DALLAS (CN) — A Dallas attorney was sentenced Thursday to eight years in state prison and denounced by fellow attorneys for masturbating in front of teenage girls he hired for his law office.

Rayan Dhanesh Ganesh, 34, of Coppell, was sentenced by state District Judge Amber Givens-Davis. After a three-day trial, a Dallas County jury convicted him Wednesday on two counts of indecency with a child by exposure. Ganesh was immediately taken into custody and booked into the county jail Thursday night, according to jail records.

Prosecutors asked the judge to consider the large number of other attorneys in the gallery Thursday, deploring that Ganesh’s actions had tarnished the profession.

“He has made us look horrible,” said Assistant District Attorney Michael Snipes. “He used his position as a lawyer to victimize little girls.”

Ganesh is also facing seven counts of barratry for allegedly roaming the halls of the Frank Crowley Courts Building to solicit clients.

Three of his victims testified Thursday. Now 17 years old, one unidentified girl said Ganesh approached her mother to solicit her as a client at the courthouse two years ago. She said Ganesh offered her a job though she was just 15 years old and had no experience.

She testified that only younger girls worked at the office and that she was rejected when she asked if her brother could work there. She said Ganesh masturbated in front of her two times: once when he was looking at pornography at his desk and once when he was driving her home.

Prosecutors said that as a lawyer, Ganesh easily could have looked up the state criminal laws regarding his conduct.

“He could have closed the book and put away his penis,” said Assistant District Attorney Keena Miller. “We would not be here right now”

Several attorneys also testified Thursday, saying Ganesh was known to go from floor to floor to solicit new clients for himself.

Telephone calls to Ganesh’s Dallas law office were not answered Thursday afternoon. He graduated from South Texas College of Law in Houston in 2012 and is under a fully probated suspension, according to the State Bar of Texas.

From Courthouse News.

Former Dallas Superintendent Admits to Taking Bribes

April 2, 2018
By David Lee

DALLAS (CN) – The former superintendent of the failed Dallas County Schools bus agency admitted Monday to taking $3 million in bribes in exchange for handing out $70 million in school bus stop-arm camera contracts.

Rick Sorrells will plead guilty to one count of conspiracy to commit honest services wire fraud, according to court filings.

He faces up to 20 years in federal prison and a $250,000 fine. Prosecutors want to seize a Maserati GHI, a Porsche Cayenne, over $66,000 in jewelry and over $12,000 from Sorrells’ bank accounts.

Voters approved the dissolution of Dallas County Schools, or DSC, last year after accusations of corruption and financial mismanagement first surfaced. The agency was tasked with providing school bus services to independent school districts in the county.

Its largest customer, the Dallas Independent School District, has since purchased the agency’s administrative building and several hundred of its buses to transport its own students.

Prosecutors claim an unidentified head of a stop-arm camera system vendor created an account of a nonexistent company to hide payments he made towards Sorrells’ credit cards.

“To disguise the bribe and kickback payments made to Sorrells, Person A funneled a significant portion of the illicit payments through various pass-through companies created and operated by his business associate, Slater Washburn Swartwood Sr., as well as through a law firm,” the 10-page charging document states. “To further disguise the bribe and kickback payments, Sorrells received a portion of the payments through shell companies which he created in his and/or a family member’s name(s) at Person A’s behest.”

Prosecutors claim fake consulting agreements, loans and a real estate business were used to tie payments from Person A to Sorrells. They say the scheme left DCS “in severe debt and teetering on the verge of bankruptcy.”

Sorrells’ attorney, Cynthia Barbare of Dallas, did not immediately respond to an email requesting comment Monday afternoon.

Dallas-area drivers have long been critical of the stop-arm camera systems on school buses. Five drivers sued DCS in Dallas County District Court in October 2016, claiming they were illegally ticketed hundreds of dollars for alleged violations.

They argued the photographic enforcement and administrative adjudication of school bus stop-arm violations were never authorized by the Texas Legislature. They claimed bills that would have allowed the tickets failed in four successive legislative sessions.

From Courthouse News.

‘Affluenza Teen’ Released From Jail After Two Years

April 2, 2018
By David Lee

FORT WORTH, Texas (CN) – “Affluenza” killer Ethan Couch was released from a Texas jail Monday, five years after he killed four people while driving drunk as a juvenile and two years after being imprisoned for violating parole by fleeing to Mexico.

Couch, 20, wore a blue shirt and black hoodie as he was led out of the Tarrant County Corrections Center by his attorneys, Scott Brown and Reagan Wynne, in downtown Fort Worth. Couch was silent as he was surrounded by a large scrum of reporters while news helicopters swarmed overhead.

Couch first made headlines in 2013 as a 16-year-old when former Tarrant County Judge Jean Boyd sentenced him to only 10 years probation and therapy for driving a truck into a crowd of people assisting a stranded vehicle on the side of a road in south Fort Worth. He had faced up to 20 years in state prison on manslaughter charges.

He killed mother and daughter Hollie and Shelby Boyles, youth pastor Brian Jennings and Breanna Mitchell, while seriously injuring several others.

A defense psychologist testified at trial that Couch was the product of “affluenza,” that his family felt their wealth bought privilege and that where was no rational connection between behavior and consequences.

Couch made news again in 2015 when a damning video appeared on social medial showing someone closely resembling him at a beer pong game, which would have been a juvenile parole violation since he was banned from drinking alcohol.

He and his mother, Tonya Couch, were arrested in Puerto Vallarta in December 2015.

She is currently held in the same county jail, awaiting a May trial on charges of money laundering and hindering the apprehension of a fugitive.

Ethan’s father, Fred Couch, was sentenced in December 2016 to one year of probation for impersonating a police officer in an unrelated incident with police in the suburb of North Richland Hills.

Upon deportation from Mexico in 2016, Couch was transferred to adult criminal court and he was sentenced to 180 days in county jail for each of the four people he killed – the maximum sentence allowed under the conditions of his parole. A subsequent appeal of his sentence to the Texas Supreme Court was rejected in April 2017.

Couch will now serve six years of probation, his attorneys said.

“From the beginning, Ethan has admitted his conduct, accepted responsibility for his actions, and felt true remorse for the terrible consequences of those actions,” they said in a written statement. “Now, nearly five years after this horrific event, Ethan does not wish to draw attention to himself.”

Couch is required to wear an alcohol monitor and must stay home between 9 p.m. and 6 a.m. every day. He must also subject himself to monitoring by a substance abuse patch and drug testing and is banned from driving a car without camera-equipped ignition locks, according to a court filing.

Mothers Against Drunk Driving said the conditions of Couch’s parole are of “small consolation” regarding the victims of the tragedy.

“Two years in jail for four people killed is a grave injustice to the victims and their families who have been dealt life sentences because of one person’s devastating decision to drink and drive,” MADD said in a written statement. “The 720 days Ethan Couch served for his crimes shows that drunk driving homicides still aren’t treated as the violent crimes that they are.”

From Courthouse News.