Allen, Texas man indicted for insurance fraud

An Allen man has been indicted for federal crimes arising from a scheme to extract Unemployment Insurance benefits under the Coronavirus Aid, Relief, and Economic Security Act using the stolen identity of others, announced Davilyn Walston, spokesperson for U.S. Attorney Brit Featherston.

Hilton Ray Kersh, 64, was charged in an indictment filed in the Eastern District of Texas with seven counts of illegal transactions with an access device and seven counts of aggravated identity theft. The indictment alleges that Kersh used multiple bank cards issued to individuals other than himself to withdraw funds from ATMs.

The debit cards had been loaded with UI benefit funds based on unemployment relief applications made to the Texas Workforce Commission pursuant to the CARES Act.

The individuals whose names appear on the debit cards - and whose names were used to apply for the benefits - did not authorize Kersh to use their identities. If convicted, Kersh faces up to 15 years in federal prison for the illegal transactions with an access device charges and two additional years for the aggravated identity theft charges.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department's response to the pandemic, please visit https://www.justice.gov/coronavirus.

Federal Grand Jury indicts company executives in employee fraud scheme

A federal grand jury in Texas has indicted former executives and company leaders at Electronic Transactions Systems Corporation for their conduct in defrauding approximately 7,000 merchant clients out of millions of dollars, Walston said.

Edward Walsh Vaughan, 58, of California; Hadi Akkad, 49, of Virginia; Jill Hall Mandichak, 43, of Virginia; Sean Lynch, 50, of Virginia; Katherine Nguyen, 38, of North Carolina; and Gina Ellingsen, 43, of Minnesota, were all charged with conspiracy to commit wire fraud. Vaughan and Akkad were also charged with money laundering conspiracy.

ETS was a card processing company located in Virginia that provided equipment and services to facilitate credit and debit card payment transactions for merchant clients, including government municipalities, private businesses, and charity organizations throughout the country. According to the indictment, between 2012 and 2019, the defendants, at the direction of ETS president Ed Vaughan, are alleged to have defrauded ETS merchant clients by deliberately disguising a portion of their processing fees for thousands of clients.

The indictment describes how the defendants executed their fraud, including by embedding the hidden markups in "Interchange fees," misleading merchant clients in emails and contracts, and failing to disclose the true fee structure in billing and account statements.

The indictment also details how Vaughan and Akkad used the fraudulently obtained funds to personally enrich themselves through multimillion-dollar bonuses, luxury vehicles and private aircraft, and high-end real estate purchases.

In addition, because the fraud was concealed prior to ETS' acquisition, Vaughan received an additional $107 million, and Akkad received $33 million from the sale of the company.

If convicted, the defendants each face up to 30 years in federal prison.

Mexican national sentenced for attempted prison escape

A Mexican national has been sentenced for an attempted prison escape in the Eastern District of Texas, Walston said.

Juan Fidencio Romo-De La Rosa, 39, of Muzquiz, Coahuila, Mexico, pleaded guilty on Dec. 28, 2021, to escape from federal custody and was sentenced to 27 months in federal prison by U.S. District Judge Thad Heartfield on July 27, 2022.

The 27-month sentence was ordered to be served following an eight-year sentence De La Rosa was already serving at the time of the attempted escape. De La Rosa was previously convicted of transporting illegal aliens for financial gain and being a felon in possession of a firearm in 2019 in the Western District of Texas.

According to court documents, on Oct. 7, 2020, officers at the Federal Correctional Institute (FCI)-Beaumont-Medium were alerted to an active fence alarm. Federal Bureau of Prisons (BOP) officers found an injured and bloodied inmate, identified as De La Rosa, in the process of climbing the outer perimeter razor wire fence.

De La Rosa, bleeding from the razor wire, had already cleared an interior fence during his attempted escape. Upon being caught, De La Rosa surrendered to the guards at gun point without incident.

This case was investigated by the FBI and Federal Bureau of Prisons and prosecuted by Special Assistant U.S. Attorney Nicole Stratso.