Department of Justice

JUST IN: Arlington Startup CEO Facing Federal Fraud Charges

By ARLnow.com

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.

Feds to Take County Land By Eminent Domain for Cemetery Expansion

By ARLnow.com
1/6

The Dept. of Justice has filed a civil action that would seize nine acres of county land on the eastern end of Columbia Pike by eminent domain, in order to expand Arlington National Cemetery.

The suit appears to be part of the long-standing plan to expand the cemetery around the Air Force Memorial, and includes no indication of resistance from the county. Arlington endorsed the federal proposal in April, which realigns and upgrades a portion of Columbia Pike in exchange for the county-owned land next to the cemetery.

As of Tuesday morning neither the Justice Department nor the county responded to requests for comment by ARLnow.

The action was announced Monday, with the DOJ touting it as a win for both military veterans and local residents.

“When completed, the Arlington National Cemetery Southern Expansion Project will provide for approximately 60,000 additional burial sites, including an above ground columbarium,” said a press release. “The expansion will extend the timeline for Arlington National Cemetery to continue as an active military cemetery.”

“The expansion project will benefit Arlington County and its residents by, among other things, burying overhead power lines and incorporating the Air Force Memorial and surrounding vacant land into Arlington National Cemetery,” the press release continues. “The project will transform Columbia Pike from South Oak Street to Washington Boulevard by re-aligning and widening it. The project includes streetscape zones with trees on both sides of Columbia Pike, adding a new dedicated bike path, and widening pedestrian walkways. The project also provides for the construction of a new South Nash Street.”

The full press release is below.

(more…)

Morning Notes

By ARLnow.com

Special County Board Meeting Planned — On Thursday at 6 p.m., the Arlington County Board “will hold a special meeting for a listening session on racial justice, systemic racism and policing. The County Board special meeting will be conducted using electronic means.” [Arlington County]

County Commissions Still Mostly Inactive — “Faced with a growing rebellion over the lack of meetings by Arlington government advisory panels, County Board members and top staff on June 13 offered (slightly defensive) apologies – but not much of a roadmap forward. Board members were responding to a June 9 letter sent to them by 25 chairs of advisory groups, complaining that the local government has been lagging in re-starting meetings that largely have been on hold since the COVID-19 pandemic struck in March.” [InsideNova]

Pandemic Affects College Plans — From a 60 Minutes segment on Sunday: “The struggle extends to those already in college who are laboring to pay tuition and are weighed down by debt like 20-year-old Katherine Trejo of Arlington, Virginia. The daughter of a single mom from Bolivia, Katherine was supposed to graduate from George Mason next year. She is the first person in her family to attend college.” [CBS News]

Summer School Registration Underway — “Registration for distance learning secondary summer school is underway. Elementary students who qualify to participate in the Elementary Summer Learning Program will automatically be registered by APS.” [Arlington Public Schools]

Guilty Plea in Case Involving Arlington Company — “A former Arlington business executive pleaded guilty today to embezzling nearly $8 million that was intended to settle claims by children who alleged they were victims of medical malpractice. According to court documents, Joseph E. Gargan, 59, of Round Hill, was the Chief Executive Office of the Pension Company, Inc., an Arlington business that would execute settlement agreements entered into between civil litigants.” [Dept. of Justice]

ARLnow Operating Remotely — Since the first confirmed local coronavirus case in March, ARLnow’s employees have been working from home. We plan to continue working remotely until 2021, and may continue to have most employees work remotely most of the time after that. [Washingtonian]

Morning Notes

By ARLnow.com

Ray’s the Steaks Closing — “Washington will soon lose a carnivorous institution. Ray’s the Steaks, an unfussy Arlington chophouse that’s operated in the neighborhood for 17 years, will close after service on Saturday, June 15, says chef/owner Michael Landrum.” [Washingtonian]

DOJ Announces APS Settlement — “Today the Department of Justice’s Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of Virginia announced a settlement agreement with Arlington Public Schools that will bolster English language services to the district’s approximately 5,000 students who are not proficient in English.” [Dept. of Justice]

Flags Fly Half Mast for Va. Beach — Flags at Arlington County buildings are flying half mast in honor of the victims of the Virginia Beach mass shooting. [Twitter]

Parking Is Point of Contention for Redevelopment — “Some surface parking at the Crystal House apartments is set to stick around, even as the Crystal City property gets redeveloped — and that’s worrying Arlington planners reviewing the project.” [Washington Business Journal]

‘Move Over’ Month in Arlington — “Move Over Awareness Month, recognized each June, is a statewide safety campaign designed to reduce the risk of injury or death to emergency personnel by raising motorist awareness of Virginia’s Move Over law.” [Arlington County]

New Priest for Arlington Cathedral — “Effective Thursday, June 27, 2019 and in accordance with the clergy appointments made by the Most Reverend Michael F. Burbidge, Bishop of Arlington. the Very Reverend Patrick L. Posey, V.F., will be leaving his current position as Pastor of Saint James Catholic Church in Falls Church, to become the new Rector of the Cathedral of Saint Thomas More in Arlington.”

Feds Seek Settlement with APS, Alleging English-Learning Students Need More Help

By Airey

The School Board is expected to sign a settlement with the U.S. Department of Justice over allegations that Arlington Public Schools has provided inadequate help for students learning English.

“In 2015-2016, a complaint was filed regarding service concerns for our English Learners at Jefferson,” said APS spokesman Frank Bellavia, referring to Thomas Jefferson Middle School (TJMS).

“The settlement provides specifics on actions that APS will continue to take to meet the needs of our English Learners,” he told ARLnow in an email Monday. “This settlement agreement provides a mutually agreed upon resolution in lieu of litigation.”

DOJ’s 19-page settlement gives APS 33 requirements to comply with, including that TJMS teachers and administrative officials be trained in English Learning (EL) program requirements. It also seeks to “ensure that ELs are not over-identified as needing special education services based on their language barriers in elementary schools and are not denied timely evaluations for suspected disabilities at TJMS.”

Bellavia said APS already has procedures in place to prevent English-learning being confused with special needs.

“For example, through the Arlington Tiered System of Support, all students are provided with core instruction and interventions based on their needs,” he said.

The settlement also stipulates that APS begin to translate copies of special education documents like Individualized Education Programs (IEPs) and 504 plans for disabilities into the languages spoken by EL students’ families.

“As part of the settlement agreement, we will now translate the framework into the four major languages of our families (Spanish, Amharic, Arabic and Mongolian),” said Bellavia, who added that the IEP framework is now only translated into Spanish. “We will also let parents know that the full IEP or 504 will be available for translation if requested.”

“Except in an emergency, the District will not use students, family or friends of limited English proficient parents, or Google Translate for interpretation of District- or school-generated documents or for any other translation or interpreter services,” the settlement notes.

Nineteen percent of APS students in 2017 were enrolled in EL learning programs, according to the most recent reports shared by the School Board. Among students in Pre-K through high school that year, Spanish was the most common foreign language spoken (22.8 percent of students), followed by Amharic (2.4 percent), Arabic (2.2 percent), Mongolian (1.8 percent), and Bengali (1 percent).

Although the new federal settlement only names TJMS, it notes that the recommendations apply to all of APS’ EL programs.

The document is currently listed on the consent agenda for the School Board’s Thursday meeting, a place usually reserved for items expected to pass without debate.

The settlement will not be finalized until DOJ officials and School Board Chair Reid Goldstein sign it.

If Goldstein signs the document, APS would also agree to do the following:

  • Tracking each student’s progress in EL programs and record the information in their permanent record.
  • Reporting compliance updates to the DOJ for review starting this October and until July 2022.
  • Conducting a three-year “longitudinal analysis” of all its EL programs, due for DOJ review by August 2022.
  • Develop a plan to “actively recruit” English as a Second Language (ESL)-certified teachers within 90 days of signing the settlement.

Failure to comply could mean APS violates the 1974 Equal Educational Opportunities Act, which requires schools provide the same opportunities for all students regardless of race, gender, or language.

DOJ did not respond to a request for comment for more information about the settlement.

The agency has settled with dozens of school districts over similar complaints in recent years, including Prince William County in 2013.

Bellavia told ARLnow that compliance with the settlement would not affect APS’ budget for the next fiscal year.

Arlington Man Charged in ‘Violent Racketeering Conspiracy’

By Bridget Reed Morawski

A federal grand jury indicted an Arlington man yesterday (March 15) on charges relating to alleged MS-13 gang involvement.

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

Morning Notes

By ARLnow.com

Air Force Memorial (Flickr pool photo by Brian Irwin)

Justice Dept. Investigating Arlington Jail — The Justice Department has launched an investigation into treatment of deaf inmates at the Arlington County Detention Center. That follows a lawsuit by a deaf inmate who said he was not given access to a sign language interpreter during a six-week stay at the jail. [Associated Press]

Deer Takes the Stage at Signature Theatre — A deer wandered onto the stage at Signature Theatre in Shirlington on Tuesday. The deer apparently entered through a loading dock while crews were working on the set for an upcoming production. [NBC Washington]

‘Most Wanted’ Deadbeats — The Arlington Sheriff’s Office is making a push to promote a program for tracking down “deadbeat parents” who are late on child support payments. Many of the addresses on file for deadbeat parents are no longer valid, so deputies have taken to finding the offenders on social media. [Connection Newspapers]

Flickr pool photo by Brian Irwin

Arlington Resident, Fmr. CIA Officer Pleads Guilty to Covert Disclosure

By ARLnow.com

A former CIA officer who lives in Arlington has pleaded guilty to revealing the name of a covert CIA officer to a journalist.

John Kiriakou, 48, agreed to a 30 month prison sentence for disclosing the covert officer’s name. The crime was detailed in a statement of facts entered in the case.

From a U.S. Department of Justice press release:

Former CIA officer John Kiriakou, 48, of Arlington, Va., pleaded guilty today to disclosing to a journalist the name of a covert CIA officer and also admitted to disclosing information revealing the role of another CIA employee in classified activities.

Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia, and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after the plea was accepted by U.S. District Judge Leonie M. Brinkema.

Kiriakou pleaded guilty today to one count of intentionally disclosing information identifying a covert agent. As part of the plea agreement, the United States and Kiriakou agree that a sentence of 30 months in prison is the appropriate disposition of this case. Sentencing has been scheduled for Jan. 25, 2013.

“The government has a vital interest in protecting the identities of those involved in covert operations,” said U.S. Attorney MacBride. “Leaks of highly sensitive, closely held and classified information compromise national security and can put individual lives in danger.”

“Disclosing classified information, including the names of CIA officers, to unauthorized individuals is a clear violation of the law,” said Assistant Director in Charge McJunkin. “Today’s plea would not be possible without the hard work of the prosecutors and FBI Special Agents and analysts who brought this case to justice, and who will continue to pursue those who ignore their obligations to protect national security secrets.”

According to court records, the case is a result of an investigation triggered by a classified filing in January 2009 by defense counsel for high-value detainees at Guantanamo Bay, Cuba. This filing contained classified information the defense had not been given through official government channels, including photographs of certain government employees and contractors. The investigation revealed that on multiple occasions one of the journalists to whom Kiriakou illegally disclosed classified information, in turn, disclosed that information to a defense team investigator. This information was reflected in the classified defense filing and enabled the defense team to take or obtain surveillance photographs of government personnel. The government has made no allegations of criminal activity by any members of the defense team for the detainees.

Kiriakou was a CIA intelligence officer between 1990 and 2004, serving at headquarters and in various classified overseas assignments. Upon joining the CIA in 1990 and on multiple occasions in following years, Kiriakou signed secrecy and non-disclosure agreements not to disclose classified information to unauthorized individuals. In a statement of facts filed with his plea agreement, Kiriakou admitted that he made illegal disclosures about two CIA employees and their involvement in classified operations to two journalists (referenced as “Journalist A” and “Journalist B” in court records) on multiple occasions between 2007 and 2009.

Kiriakou admitted that, through a series of emails with Journalist A, he disclosed the full name of a CIA officer (referred to as “Officer A” in court records) whose association with the CIA had been classified for more than two decades. In addition to identifying the officer for the journalist, Kiriakou also provided information that helped the journalist link the officer to a particular classified operation.

In addition, Kiriakou admitted that he disclosed to Journalists A and B the name and contact information of a CIA analyst, identified in court records as “Officer B,” along with his association with an operation to capture terrorism subject Abu Zubaydah in 2002. Kiriakou knew that the association of Officer B with the Abu Zubaydah operation was classified. Based in part on this information, Journalist B subsequently published a June 2008 front-page story in The New York Times disclosing Officer B’s alleged role in the Abu Zubaydah operation.

Without Kiriakou’s knowledge, Journalist A passed the information he obtained from Kiriakou to an investigator assisting in the defense of high-value detainees at Guantanamo Bay.

Kiriakou also admitted that he lied to the CIA regarding the existence and use of a classified technique, referred to as a “magic box,” while seeking permission from the CIA’s Publications Review Board to include the classified technique in a book.

This case was investigated by the FBI’s Washington Field Office, with assistance from the CIA and the Air Force Office of Special Investigations. Assistant U.S. Attorneys Iris Lan of the Southern District of New York, Mark E. Schneider and Ryan Fayhee of the Northern District of Illinois, and W. Neil Hammerstrom Jr. of the Eastern District of Virginia are prosecuting the case on behalf of the United States.

Morning Notes

By ARLnow.com

Fmr. CIA Officer Charged — Former CIA officer and current Arlington resident John Kiriakou, 47, was charged yesterday with repeatedly leaking classified information to journalists. Kiriakou is best known for his 2007 interview with ABC News in which he described the waterboarding of Abu Zubaydah, a suspected al-Qaeda operative. [Washington Post]

Cigarette Tax Bill Dies in General Assembly — A bill proposed by Del. Patrick Hope (D) that would have raised Virginia’s cigarette tax from 30 cents to the national average of $1.45 has died a quick and unsurprising death in a House of Delegates subcommittee. [Sun Gazette]

Senator’s Arlington Condo for Sale — Florida Sen. Bill Nelson (D) has put his swanky Arlington condo up for sale in advance of his reelection campaign. The condo, which is reportedly on the market for nearly $2 million, is located in the Radnor/Fort Myer Heights neighborhood and overlooks the Iwo Jima memorial. [US News & World Report]

Meet Mikhail Semenko, The Ironic, Fun-Loving (Accused) Spy

By ARLnow.com

Gawker has grabbed a bunch of Facebook photos of Mikhail Semenko, the Arlington travel agent who’s accused of being a secret agent for Russia.

As it turns out, Semenko is a fan of parties, ironic t-shirts and Bill Clinton masks. He has just over 400 Facebook friends, although that number is steadily decreasing as his former friends dissociate themselves from him.

The Wall Street Journal didn’t stop at Facebook. It accessed Semenko’s page on a Russian social networking website.

In 2008 a friend of Semenko said on the site, apparently as a joke, “Hi to our valiant spy deep behind the nasty Americans’ lines. Remember the teachings of Mao: destroy the filthy imperialist economy from within!!”

Photo via Gawker.

Morning Notes: Spies Like Us

By ARLnow.com

“Like a Hollywood movie” — That’s how many news reports describe the bust of an alleged Russian spy ring over the weekend. If the movie was ever produced, much of the action would be set in Arlington. Arlington is the place where three of the 11 suspects lived and were arrested. It is also the site of some intrigue on June 26, 2010. According to court documents, video surveillance cameras installed by the FBI captured one of the suspects, Mikhail Semenko, leaving an envelope containing $5,000 cash at a “drop site” in an unnamed Arlington park.

Residents Describe Arrested Neighbors as Reserved, Ordinary — Neighbors and colleagues of the three arrested Arlington residents say they never imagined that they were in the midst of alleged “secret agents.” Mikhail Semenko worked at Travel All Russia, a Russian travel agency in Lyon Park. He was fluent in four languages, drove a Mercedes S-500, and spent much of his time with his Russian-speaking girlfriend, according to a North Arlington neighbor.

Michael Zottoli and Patricia Mills, meanwhile, had two young children who are now in protective custody, reports ABC 7. Zottoli and Mills each had a Russian accent, a neighbor said, but no one suspected they were part of a spy ring. They lived in the River House Apartments in Pentagon City after moving to the area from Seattle last year, according to court documents.

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