Mayor Of The Municipality Of Sabana Grande Indicted For Conversion Of Federal Funds, Fraud, And Money Laundering

In a separate indictment, two ex-employees of the municipality of Toa Baja indicted and arrested

  SAN JUAN, Puerto Rico– Miguel G. Ortiz-Vélez, a.k.a. “Papín”, mayor of the municipality of Sabana Grande has been indicted and arrested for his participation in a conspiracy to steal federal funds involving fraudulently obtained contracts from the PR Department of Education (PR DOE), announced U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico. In a separate unrelated indictment, Victor Cruz-Quintero, former Director of Finance, and Ángel Santos-García, former interim Director of Finance of the Municipality of Toa Baja were charged with theft, conversion, and misappropriation of funds from the US Departments of Housing and Urban Development and Health and Human Services. The United States Department of Education, Office of Inspector General, and the Federal Bureau of Investigation are handling the Sabana Grande investigation. The Federal Bureau of Investigation, the United States Department of Housing and Urban Development, Office of Inspector General, and the United States Department of Health and Human Services, Office of Inspector General, are handling the Toa Baja investigation, with the collaboration of the PR Comptroller’s Office.

The indictment charging Ortiz-Velez, returned on July 2, 2018 by a federal grand jury in the District of Puerto Rico, includes six counts: two counts for theft of government money and property, one count for conspiracy to commit wire and mail fraud, two substantive counts of mail fraud, and one count for money laundering. He is also facing forfeiture allegations and a potential money judgment of $2,904,920.00, the value of the two contracts fraudulently obtained from the PR DOE.

According to the indictment, the defendant conspired with Irving Riquel Torres-Rodríguez (who previously pled guilty in two different cases), and others, to engage in deceptive conduct designed to fraudulently obtain federal funds from the US Department of Education and Puerto Rico Department of Education. As part of the agreement, those federal funds would be distributed to: the Municipality of Sabana Grande; Administrative, Environmental and Sports Consultants Corp. (AESC); Torres-Rodríguez- who was the owner of AESC; and others.

Defendant Ortiz-Vélez used his position as Mayor of Sabana Grande to defraud the PR DOE and to fraudulently obtain federal funds as follows:

• Ortiz-Vélez utilized his position as Mayor of Sabana Grande to obtain federal funds from the PR DOE based on material misrepresentations regarding the Municipality’s ability to perform the activities and the scope of the activities subject to the proposals. Ortiz-Vélez, as Mayor of Sabana Grande, subcontracted with AESC and Company F for the complete financing and administration of the projects without the knowledge or consent of the PR DOE. AESC then financed and administered the project for Company F, with an agreement that all profits would be split 40% for AESC and 60% for Company F.
• The Sabana Grande contracts with the PR DOE did not reflect the actual expenses incurred by AESC and Company F in providing the services. As a result, Ortiz-Vélez obtained net proceeds for the municipality, as well as net proceeds for AESC and Company F. For the first project, Verano Educativo, the AESC obtained approximately $549,286.10 in net profits and the Municipality of Sabana Grande obtained net proceeds of approximately $363,686.40, despite the project’s actual cost of approximately $221,747.50.
• For the second project, Desarrollo Contínuo, the Municipality of Sabana Grande, Company F, and AESC split approximately $1,330,612.45 in net profits from the PR DOE contract. The Municipality obtained net proceeds of approximately $391,988 and AESC obtained a net profit of $375,449.78. Company F obtained a net profit of $563,174.67, despite the project’s actual cost of approximately $439,587.55.
• During the period of this scheme, from in or about 2013 to in or about 2016, defendant Miguel G. Ortiz-Vélez received approximately $22,900 in cash contributions from AESC and Torres-Rodríguez.

The second indictment charges Victor Cruz-Quintero and Ángel Roberto Santos-García for, at different times, making unauthorized deposits and transfers of federal funds into the general account and payroll account of the Municipality of Toa Baja in order to pay the municipal payroll and to pay municipal contractors.

On or about October 28, 2014, defendant Victor Cruz-Quintero, as the finance director of the Municipality of Toa Baja, deposited approximately $2,538,164.41 in HUD Section 108 Loan Guarantee Program funds into the municipality’s general fund. These funds were utilized to make payroll payments to municipal employees and to pay various municipal contractors.

On various dates from September 2014 through February 2016, Victor Cruz-Quintero made additional deposits and transfers of federal funds from HHS and HUD to the general and payroll accounts of the Municipality of Toa Baja for unauthorized purposes. The indictment identifies seven separate transactions totaling over $1,750,000.While interim finance director of the Municipality of Toa Baja in approximately August and September 2015, defendant Ángel Roberto Santos-García made various transfers of federal funds from HHS and HUD to the general and payroll accounts of the Municipality of Toa Baja for unauthorized purposes. The indictment identifies three separate transactions totaling $650,000.

“Mayor Miguel G. Ortiz-Vélez deceived the public’s trust and used his public office to fraudulently obtain federal funds in order to supplement the finances of the municipality of Sabana Grande,” said U.S. Attorney Rosa Emilia Rodríguez-Vélez. “Corruption and fraud at any level of government betrays the ideals upon which our democracy is built. In regards with the investigation in Toa Baja, we will continue to follow the evidence in order to determine if other municipal officials were involved in the fraudulent scheme announced today.”

“The public must be able to trust the officials who are put in charge of government funds. Anyone who violates that trust will be brought to justice, because the citizens of Puerto Rico deserve no less. The FBI is proud to share this commitment with its partners from the United States Attorney’s Office, the Inspectors General for the Departments of Education, Housing and Urban Development, Health and Human Services, and the Office of the Comptroller of Puerto Rico,” stated Douglas Leff, Special Agent in Charge of FBI, San Juan.

The cases are being prosecuted by Assistant U.S. Attorney Seth Erbe. If found guilty, the defendants are facing possible sentences of up to 10 years for theft of government funds, misappropriation of federal program funds, and money laundering and up to 20 years for mail fraud, and the wire and mail fraud conspiracy.

The charges contained in the indictment are merely accusations. The defendants are presumed innocent unless and until proven guilty.

Pharmacist Sentenced To 4 Years For Illegally Distributing Approximately 100,000 Oxycodone Tablets, Medicare Fraud, And Money Laundering

  Preet Bharara, the United States Attorney for the Southern District of New York, announced that LILIAN JAKACKI, a/k/a/ “Lilian Wieckowski,” was sentenced today by U.S. District Judge Jed Rakoff to four years in prison for illegally distributing 100,000 tablets of oxycodone, Medicare fraud, and money laundering.  JAKACKI pled guilty on July 28, 2016, before Judge Rakoff.

Manhattan U.S. Attorney Preet Bharara said:  “Through her pharmacies in Queens and Brooklyn, Lilian Jakacki dumped 100,000 illegally diverted oxycodone pills into the City’s streets.  Driven by greed, Jakacki abused her pharmacy license, helping to fuel the opioid abuse epidemic that is ravaging too many of our communities.  For her crimes, Jakacki will spend four years in prison and forfeit her ill-gotten gains.”           

According to the allegations in the Indictment and the civil Complaint, and other information in the public record:

Between in or about March 2010 and October 2015, JACKACKI owned and operated two pharmacies in Queens and Brooklyn doing business as “Chopin Chemists.”  During that time period, at these pharmacies, JACKACKI knowingly distributed approximately 100,000 tablets of oxycodone based on fraudulent prescriptions, including prescriptions made out in the names of famous luxury brands, such as Coach and Chanel.  In addition, JACKACKI used the proceeds of that illegal narcotics trade to help finance the purchase of a multimillion-dollar home.  Finally, JACKACKI deliberately overbilled Medicare by more than $500,000, submitting reimbursement claims for medication that she never actually distributed to patients. 

In addition to the prison term, JACKACKI was also directed to forfeit $800,000 and to pay restitution of $520,000.   

Mr. Bharara praised the outstanding investigative work of the DEA’s Tactical Diversion Squad, the U.S. Internal Revenue Service, and the U.S. Department of Health and Human Services.  The DEA’s Tactical Diversion Group includes agents and officers of the DEA, the New York City Police Department, the New York State Police, the Town of Orangetown Police Department, and the Westchester County Police Department.