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Tag: Ann Arbor

Stejskal: The Not-So Shocking Revelation About Some Asian Spas in the U.S.

Greg Stejskal served as an FBI agent for 31 years and retired as resident agent in charge of the Ann Arbor office.

By Greg Stejskal
ticklethewire.com

Last week in Jupiter, Florida, the Orchids of Asia Day Spa was raided and closed allegedly for being a prostitution business, a brothel. Making it a prominent story on national news was the identity of one of the spa customers, Robert Kraft, the billionaire owner of the New England Patriots. Kraft has been charged with soliciting prostitution.

Robert Kraft

Surprising to me was the reaction of law enforcement and the media. It reminded me of that iconic scene from the movie, “Casablanca:”

The local police chief, Captain Louis Renault (Claude Rains) is closing Rick’s American Café. When asked why he’s closing the Café, Renault replies. “I am shocked – shocked – to find that gambling (think prostitution) is going on here!” After delivering that line, the croupier hands Renault a stack of bills and says, “Your winnings sir.” Renault thanks the croupier and quickly walks away.

I find it hard to believe that the media and law enforcement like Capt. Renault didn’t know that many storefront Asian spas/massage parlors are in fact brothels. The story that follows was posted in 2009 on the federal law enforcement website, ticklethewire.com. 

In 1999, the Ann Arbor (MI) Police Department came to me with a proposal. AAPD wanted to know if the FBI would be willing to help investigate Asian spas/massage parlors in Ann Arbor, and prosecute them federally. There were five Asian spas in Ann Arbor, and they strongly suspected that the spas were fronts and were actually brothels. At the time I was the senior agent in the local FBI office and knew next to nothing about Asian spas.

Greg Stejskal

I consulted with US Attorney’s Office (USAO) in the Eastern District of Michigan and FBIHQ. I got the go ahead and learned there were other similar cases being pursued elsewhere in the country. We would coordinate our investigation with those other cases. Further, there were national implications involved, e.g., organized crime, indentured servitude, immigrant smuggling, human trafficking and sexual exploitation which the then US Attorney General had made a priority. The Asian spa/brothel seemed to be a national phenomenon.

I went back to AAPD and told them we could pursue the spas federally, but only if AAPD was willing to commit to a long-term investigation. To AAPD’s credit it made that commitment.

At the outset of the case, we understood the spas could be shut down like the speakeasies of the prohibition era, but to have any lasting impact the owners had to be identified and prosecuted. It was relatively easy to show there was prostitution occurring in these spas, the trick (no pun intended) was to prove the owners had knowledge that prostitution was occurring, and they were profiting from it.

All the spas in Ann Arbor were run by Korean Americans. (We code-named our investigation Seoul Provider.) Surveillance and telephone pen-registers indicated some interaction between spas in Ann Arbor and all over the country. All the spas we became aware of in Michigan and Ohio were run by Korean Americans, and they all had very similar operating procedures.

The working girls were almost exclusively Asian and lived on the premises and seldom left. They moved from one spa to another after six weeks to two months often in other parts of the country. The spas were usually managed by older Asian women, who were in effect madams. Often the spas would have the working girls sign agreements making them independent contractors, thus giving the owners plausible deniability as to knowledge of sexual activity. The working girls were in almost all cases uncooperative with law enforcement and could not be relied upon as potential witnesses. Despite the women being exploited, most had very limited skills, little English language capability and were in an indentured servitude status. Many were told the expenses that were incurred to get them to and into the US was a debt and had to be repaid.

The spas operated seven days a week with very long hours, e.g., 10 AM – 2 AM. (not the kind of hours of operation in legitimate massage parlors and probably a clue). The spas would set fees such as $45 for a half hour and $60 for an hour massage. Generally, these fees went to the house. The money for sex was added to the initial fee and was negotiated based on the agreed sexual activity. The money for sex was split between the house and the girls. All the spas we investigated accepted credit cards. This turned out to be a key element in proving the owners’ knowledge.

Read more »

Hunting for The Joker

By Greg Stejskal
ticklethewire.com

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In the Spring of 1989, a drama fraught with irony began playing out in Austria. A Jewish American family, a mother and her two grown sons, were fighting extradition to the US. About 50 years before, Jewish families were desperately trying to leave Austria for safe havens like the U.S.

The subjects of the extradition were Linda Leary and sons, Paul and Richard Heilbrunn. They fled to Austria from Indiana in anticipation of an indictment that was returned by a Federal Grand Jury in November, 1987. The indictment ran 136 pages and contained 53 counts variously charging 34 people. Paul and Richard were specifically charged with running a massive marijuana smuggling and distribution operation, legally termed a “Continuing Criminal Enterprise” (CCE). According to the indictment the ring operated from 1975 to 1985. It distributed more than 150,000 lbs. and took in more than $50 million in cash. The figures were subsequently revised upward to 250,000 lbs. and $50 to $100 million. It would prove to be the biggest marijuana ring ever prosecuted by the US.

Paul Heilbrunn was characterized as the ring leader of the enterprise. Testimony later depicted him as both respected and feared. He was referred to as “Melech,” Hebrew for king. Although Paul was a high school dropout, he was by all accounts a brilliant businessman. Prior to the indictment, he was believed to be a successful commodities trader in Indianapolis and wrote a column on trading for the local newspaper. He was a bon vivant who favored three-piece suits, frequented the finest restaurants and drove a top of the line BMW. He on several occasions rented jets and flew his friends to such events as the Super Bowl and the NCAA basketball finals.

His older brother, Richard, on the other hand was described as a big Teddy bear. He lived on a farm and usually wore flannel shirts and jeans. Richard supervised operations while Paul was the CEO.

Their mother, Linda Leary, was twice married and divorced. She had kept the name of her second husband. Leary was prominent in the Indianapolis community. She was the head of the Indiana League of Women Voters and president of the local chapter of the National Council of Jewish Women.

Leary was also involved in her sons’ business ventures. An early venture was dubbed Heilbrunn and Friends, ostensibly it was a health food distribution business -a good front for marijuana distribution. The “friends” were high school buddies who had setup marijuana sales networks at colleges they attended. But soon the network was supplying customers outside the campuses in eleven Midwestern states. Most of the marijuana came by ship from Columbia, Jamaica and Thailand – an exotic global operation. It was then trucked to Indiana where it was stored in barns that were owned or rented by the Heilbrunn organization.

Paul Heilbrunn had structured the organization so that information stovepiped, that is, information moved up and down, but only flowed between members as was necessary. This limited what any member could divulge should they choose to cooperate with law enforcement.

Paul also had attorneys set up offshore corporations in the Bahamas and Panama to launder the proceeds from the marijuana operation. Linda Leary was designated as the head of several of these corporations. Much of the laundered money was transferred back into the US and used to fund loans often for Indiana businesses.

In the present the paradigm has changed – now with so many states legalizing marijuana, it’s almost like looking back on prohibition. The Heilbrunns and their cohorts weren’t protesting the illegality of marijuana. Rather like the bootleggers, they were taking advantage of a restricted market. They could set the price, had little competition and the profits were tax free.

The Beginning of the End of The Empire

The beginning of the end for the Heilbrunn empire occurred when in 1983 a cocaine dealer was arrested. The dealer had previously worked for the Heilbrunns, but had been let go for drug use. He offered to tell what he knew about the Heilbrunn operation as part of plea bargain. There is no honor among thieves and little to none among drug dealers.

After the arrest of the cocaine dealer, law enforcement meticulously put together a case against the Heilbrunn organization which culminated in the 1987 federal indictment. Most of the 34 people charged were known to the federal grand jury that returned the indictment with the notable exception of one indictee who was referred to as “John Doe, also known as the Joker” like Batman’s nemesis. There were also two female subordinates to the Joker – named as Jane Does, aka, “Tipper and Topper.” (This probably was a disappointment to comic book purists who were anticipating a female code name like Catwoman.)

While the Heilbrunns were fighting extradition, most of the indictees were prosecuted and convicted. Some cooperated and agreed to testify against others including the Heilbrunns. In one of the co-conspirator’s trial, there was testimony about the Joker. He was depicted as “Paul Heilbrunn’s trusted and valued peer,” whose Michigan based operation did business with Heilbrunn and his associates. But no one in the Heilbrunn organization other than Paul himself seemed to know Joker’s true identity.

One person in the Joker’s organization had been identified and prosecuted for having stored a 40,000 lb. load purchased by the Joker from Heilbrunn. That person was James Shedd who owned a barn in Ypsilanti Twp. just southeast of Ann Arbor where the load was stored. (Shedd had also previously been the manager of the Sidetrack Bar, a locally famous and historical place in Ypsilanti.) Shedd had refused a plea deal and would not identify the Joker. That stand may have been based more on compensation from the Joker than honor.

It became a personal challenge for me to identify the Joker. It was a matter of pride. The Joker was a huge marijuana dealer who had been operating in my territory with impunity.

There was an individual who had become disenchanted with the Joker’s enterprise and reportedly had a falling out. I decided to see what if anything I could learn from him that might identify the Joker.

Over the next several months, we periodically met for coffee. We talked about a lot of things: sports, politics and although nothing specific was discussed, drugs. Slowly I gained his trust. I explained to him I would never disclose his identity, and any information he provided would be reported in such a way as to not divulge his identity. At no time did he ask me about any payment for information nor did I offer him any compensation. We both understood if he were to provide information, it would be because it was the right thing to do.

We began to discuss some specific things regarding marijuana distribution in Michigan. In early 1989, I asked him if he could help me identify the Joker. His reply was, yes, he could help – he could tell me who the Joker was – he was James Hill.

I immediately began to investigate James Hill. I found that James F. Hill owned a house in an affluent part of Ann Arbor. He also owned a business in Ann Arbor, an ice cream shop on Main Street, “The Lovin’ Spoonful.” And he owned and lived on an 80-acre farm just west of Ann Arbor. Hill had a master’s degree from the University of Chicago. Hill had no criminal record except he had been arrested for a traffic violation in 1973. It was nothing serious, but there was an arrest photo.

I sent a copy of the photo to Indianapolis, and after seeing the photo several of cooperating witnesses identified James Hill as the person they knew as the Joker.

The FBI Ann Arbor Office

Indianapolis obtained an arrest warrant for Hill, aka, the Joker. Early the next morning we set up an arrest team at Hill’s farm. When he was observed leaving the farm, we arrested him and took him to the Ann Arbor FBI office. I explained to Hill that he had been identified as the Joker in a federal indictment from Indiana charging him with multiple drug trafficking violations, and he would be taken to Detroit to be arraigned. He would likely remain in custody until he was transported to Indianapolis. He didn’t really question anything and seemed to have expected to be arrested. He indicated he would be cooperative, but he didn’t want to be interviewed until he got to Indianapolis.

When the media learned of Hill/the Joker’s arrest at the arraignment, they wanted to know how he had been identified. Rather than say nothing and encourage speculation, I made a statement that one of the cooperating witnesses in Indiana had identified him which was partially true.

Hill was removed to Indiana and did cooperate. Tipper and Topper were identified as sisters, Jennifer and Patricia Hanlon of Ann Arbor. They later pleaded guilty and were each sentenced to six years.

In late 1989, the Heilbrunns lost their two-year fight against extradition and were returned to the US.

In  October 1990, Hill pleaded guilty and agreed to testify against the Heilbrunns. In his plea agreement, Hill admitted to having received several 1,200 to 2,000 lb. shipments of marijuana starting in 1976. Then between March and November 1985, Hill received marijuana shipments of 18,000 lbs., 20,000 lbs., 40,000 lbs. and a pair of 2,000 lb. loads from the Heilbrunn organization. Hill said he made his last payment to Heilbrunn in 1986. By then he had paid the Heilbrunn organization about $20 million for more than 100,000 lbs. marijuana.

James Hill was sentenced to 20 years. Because he had pleaded to having run a Continuing Criminal Enterprise all of his assets were subject to forfeiture. The US District Court Judge said that Hill would have received harsher punishment if not for his cooperation.

In January 1991, Linda Leary also pleaded guilty and agreed to testify against her sons. She was subsequently sentenced to nine years.

There was no trial of the Heilbrunns. Paul and Richard pleaded guilty in April, and in July 1991, they were sentenced. Richard got 13 years. Paul, the King, who had also pleaded to CCE, received 28 years. Thus, ended the Heilbrunn empire.

To my knowledge no one ever learned the identity of the source who identified the Joker.

 

 

Stejskal: Unmasking The Joker

Greg Stejskal served as an FBI agent for 31 years and retired as resident agent in charge of the Ann Arbor office.

By Greg Stejskal
ticklethewire.com

In the Spring of 1989, a drama fraught with irony began playing out in Austria. A Jewish American family, a mother and her two grown sons, were fighting extradition to the US. About 50 years before, Jewish families were desperately trying to leave Austria for safe havens like the U.S.

The subjects of the extradition were Linda Leary and sons, Paul and Richard Heilbrunn. They fled to Austria from Indiana in anticipation of an indictment that was returned by a Federal Grand Jury in November, 1987. The indictment ran 136 pages and contained 53 counts variously charging 34 people. Paul and Richard were specifically charged with running a massive marijuana smuggling and distribution operation, legally termed a “Continuing Criminal Enterprise” (CCE). According to the indictment the ring operated from 1975 to 1985. It distributed more than 150,000 lbs. and took in more than $50 million in cash. The figures were subsequently revised upward to 250,000 lbs. and $50 to $100 million. It would prove to be the biggest marijuana ring ever prosecuted by the US.

Greg Stejskal

Greg Stejskal

Paul Heilbrunn was characterized as the ring leader of the enterprise. Testimony later depicted him as both respected and feared. He was referred to as “Melech,” Hebrew for king. Although Paul was a high school dropout, he was by all accounts a brilliant businessman. Prior to the indictment, he was believed to be a successful commodities trader in Indianapolis and wrote a column on trading for the local newspaper. He was a bon vivant who favored three-piece suits, frequented the finest restaurants and drove a top of the line BMW. He on several occasions rented jets and flew his friends to such events as the Super Bowl and the NCAA basketball finals.

His older brother, Richard, on the other hand was described as a big Teddy bear. He lived on a farm and usually wore flannel shirts and jeans. Richard supervised operations while Paul was the CEO.

Their mother, Linda Leary, was twice married and divorced. She had kept the name of her second husband. Leary was prominent in the Indianapolis community. She was the head of the Indiana League of Women Voters and president of the local chapter of the National Council of Jewish Women.

Leary was also involved in her sons’ business ventures. An early venture was dubbed Heilbrunn and Friends, ostensibly it was a health food distribution business -a good front for marijuana distribution. The “friends” were high school buddies who had setup marijuana sales networks at colleges they attended. But soon the network was supplying customers outside the campuses in eleven Midwestern states. Most of the marijuana came by ship from Columbia, Jamaica and Thailand – an exotic global operation. It was then trucked to Indiana where it was stored in barns that were owned or rented by the Heilbrunn organization.

Paul Heilbrunn had structured the organization so that information stovepiped, that is, information moved up and down, but only flowed between members as was necessary. This limited what any member could divulge should they choose to cooperate with law enforcement.

Paul also had attorneys set up offshore corporations in the Bahamas and Panama to launder the proceeds from the marijuana operation. Linda Leary was designated as the head of several of these corporations. Much of the laundered money was transferred back into the US and used to fund loans often for Indiana businesses.

Read more »

The Abduction of GM Executive’s Son Shows Kidnapping Doesn’t Pay

Greg Stejskal was an FBI agent for 31 years and retired as resident agent in charge of the Ann Arbor office.

Greg Stejskal
ticklethewire.com

I was one of more than a dozen FBI agents assigned to surveillance on Braeburn Circle on Ann Arbor’s south side. After a few hours, agent Stan Lapekas, suggested we look in a Dumpster at the townhouse complex for possible evidence. The Dumpster was inside a wood fence enclosure in the parking lot, and we couldn’t be seen from the outside.

After only a few minutes, a car drove in and parked next to the gate. I peeked out and realized the driver was the man we were looking for — a suspect in the kidnapping of the son of a prominent General Motors executive.

In 1975, my first year assigned to the FBI’s Detroit Division, Michigan had four kidnappings. The one everyone remembers is Jimmy Hoffa, a kidnapping/murder that remains unsolved. The other three were kidnappings for ransom.

Ransom kidnappings still happen frequently in areas where law enforcement is weak or corrupt, including parts of the Middle East, Africa, and Latin America. They were once common in the U.S., too. In Public Enemies, America’s Greatest Crime Wave and the Birth of the FBI, 1933-34, Bryan Burrough writes that for some of the notorious gangs of the era, kidnapping was the crime of choice. John Dillinger’s gang specialized in bank robbery, but the Barker/Karpis gang preferred kidnapping. The two gangs were so successful at their respective specialties that Congress made bank robbery and kidnapping federal crimes, empowering the FBI to investigate them.


Bob Stempel

The 1932 statute that gives the FBI jurisdiction in kidnapping cases is called the “Lindbergh Law.” There was a proliferation of high-profile kidnappings in the U.S. during the 1930s, but none was more famous than the abduction of Charles Lindbergh Jr., the toddler son of Charles and Anne Lindbergh, in May of that year.

Kidnapping for ransom, out of necessity, requires a victim who is of wealth or has some access to wealth. Not only were the Lindberghs rich, but  Charles may have been the most famous and beloved person in America at the time.

The Lindbergh baby was found dead after a ransom payment, and the crime took several years to solve. Tracking the cash finally led authorities to carpenter Bruno Richard Hauptmann. He was convicted in 1935 and executed a year later.

The Lindbergh Law relies on a presumption that any kidnapping involves interstate commerce. It is a rebuttable presumption, but allows the FBI to investigate a kidnapping without having to first establish some interstate aspect. And so it was that Stan Lapekas and I came to be hiding out by the Dumpster at University Townhouses in November 1975.

Four days earlier, 13-year-old Tim Stempel had been snatched in Bloomfield Township.

Tim was the son of Bob Stempel, a GM vice president on track to become CEO. Stempel received calls at home from the kidnappers, who wanted $150,000. They told him not to go to the police, but Stempel contacted GM security, who in turn contacted the police and the FBI.

Kidnapping a Rich Kid 

Tim had been kidnapped by Darryl Wilson and Clinton Williams, who had decided that a moneymaking project would be to grab a rich family’s kid and hold him for ransom.

They had no specific victim in mind when they drove to the high-income neighborhoods of Bloomfield Township. They passed on a few potential victims for various reasons — playing too close to a house, too young.

Then they spotted Tim Stempel skateboarding. Williams asked the teenager for directions to someone’s house. Tim said he didn’t know the person and started to walk away. Williams pulled a handgun and told him to get in the car.

The boy hit Williams with the skateboard, but Williams tackled him and struck him several times in the head. Williams and Wilson then blindfolded their victim and placed him in the backseat.

They drove to the Ann Arbor townhouse on Braeburn where Williams was staying and transferred the boy to the car’s trunk, where he would remain for 50-some hours. Williams then called Bob Stempel to announce that they had his son. He said he would call back later with instructions.

The police and FBI committed hundreds of officers and agents to the investigation. It was designated a “special” by FBI headquarters; all hands on deck. But it had to be done in such a way as to not alert the kidnappers. The paramount goal in any kidnapping investigation, obviously, is the safe return of the victim.

Stempel got additional calls Nov. 11 and 12. Ultimately he was instructed to go to an empty lot behind a roller skating rink in Inkster. He was to leave the money there, and he would be contacted about his son’s release.

The evening of the “drop,” it was pouring rain. Efforts were made to watch the ransom package, but because of the location and the weather, it was impossible without taking the chance of alerting the kidnappers. The package was retrieved, but whoever made the pickup was not seen. Night vision equipment would have been helpful but was not yet available.

Within a few hours, Tim was released near the drop site.


Darryl Wilson and Clinton Williams in court

An Apparel Store 

Initially there were no suspects, but because much of the activity had occurred in Inkster and nearby, neighborhood investigations were conducted, including a canvass of businesses and homes to determine if anyone had noticed relevant activity.

At an apparel store within a block of the roller rink, an agent learned that two men had spent several hundred dollars in cash for clothes. The serial numbers on the cash matched the numbers recorded from some of the ransom money, and the men who bought the clothes were identified.

The men were interviewed. They said they had driven two other men to the roller rink to pick up the cash. They assumed it contained drug money and accepted several thousand dollars for their trouble.

They identified one of the men as Darryl Wilson and said he lived in Ann Arbor. They didn’t know his address, but an investigation determined that he lived on Braeburn with a relative. A surveillance was set up, and the car used in the kidnapping was found.

That was where things stood when Stan Lapekas and I decided to inspect the Dumpster and Wilson drove up. As soon as he exited the car, Lapekas and I grabbed him and placed him in our backseat, with us sitting very close on each side.

We acted as if we already knew everything but wanted to give him an opportunity to tell his side of the story. After we read him his rights, he almost immediately confessed and gave up his accomplice, Clinton Williams.

We hadn’t had Williams’ name. Wilson also told us where Williams lived. I got several other agents and drove to Williams’ home and arrested him.

Williams also confessed. He told us he had threatened Tim Stempel with a handgun and hit him several times. He said they had kept the boy in the car trunk for over two days. He also said he had called the Stempel home from a pay phone in Inkster.

At Wilson’s apartment, we found $137,000 of the ransom.

L. Brooks Patterson Gets Involved 

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The case and subsequent trial became a bit of a media circus. There was no interstate aspect of the kidnapping that would trigger federal charges, so it was prosecuted in state court in Oakland County. County prosecutor L. Brooks Patterson handled the case. (He would later run for governor, and was just re-elected to his seventh term as the Oakland County executive.)

Because of the media attention, the trial was moved to Leelenau County, in the northwest Lower Peninsula. On the first day of trial, Patterson suspected that Wilson and Williams might be planning to enter a plea, so he put Tim Stempel on the stand.

While locked in the trunk of the car, Tim had carved his name on the inside of the trunk lid with a broken piece of a hacksaw blade he found in the trunk — an ingenious act. Patterson introduced the trunk lid as evidence. He then had me testify to get Williams’ confession on the record with all the damning admissions. The next day, Wilson and Williams entered guilty pleas.

We investigated other kidnappings for ransom in the Detroit Division during my 30-plus years there, but I’m not aware of any that succeeded. All the kidnappers were prosecuted.

In two instances, although a ransom was paid, the victims were murdered. In both those cases, the kidnappers never had any intention of releasing the victims.

In the latter years of my career, there were no kidnappings for ransom in Michigan. They also seem rare elsewhere in the country now. The business model is flawed: although the potential profits would seem to be high, the odds of actually getting  and keeping the money are extremely low.

Stejskal: The Losing Proposition of Kidnapping a GM Executives’ Son

Greg Stejskal was an FBI agent for 31 years and retired as resident agent in charge of the Ann Arbor office.

Greg Stejskal
ticklethewire.com

I was one of more than a dozen FBI agents assigned to surveillance on Braeburn Circle on Ann Arbor’s south side. After a few hours, agent Stan Lapekas, suggested we look in a Dumpster at the townhouse complex for possible evidence. The Dumpster was inside a wood fence enclosure in the parking lot, and we couldn’t be seen from the outside.

After only a few minutes, a car drove in and parked next to the gate. I peeked out and realized the driver was the man we were looking for — a suspect in the kidnapping of the son of a prominent General Motors executive.

Greg Stejskal

Greg Stejskal

In 1975, my first year assigned to the FBI’s Detroit Division, Michigan had four kidnappings. The one everyone remembers is Jimmy Hoffa, a kidnapping/murder that remains unsolved. The other three were kidnappings for ransom.

Ransom kidnappings still happen frequently in areas where law enforcement is weak or corrupt, including parts of the Middle East, Africa, and Latin America. They were once common in the U.S., too. In Public Enemies, America’s Greatest Crime Wave and the Birth of the FBI, 1933-34, Bryan Burrough writes that for some of the notorious gangs of the era, kidnapping was the crime of choice. John Dillinger’s gang specialized in bank robbery, but the Barker/Karpis gang preferred kidnapping. The two gangs were so successful at their respective specialties that Congress made bank robbery and kidnapping federal crimes, empowering the FBI to investigate them.


Bob Stempel

The 1932 statute that gives the FBI jurisdiction in kidnapping cases is called the “Lindbergh Law.” There was a proliferation of high-profile kidnappings in the U.S. during the 1930s, but none was more famous than the abduction of Charles Lindbergh Jr., the toddler son of Charles and Anne Lindbergh, in May of that year.

Kidnapping for ransom, out of necessity, requires a victim who is of wealth or has some access to wealth. Not only were the Lindberghs rich, but  Charles may have been the most famous and beloved person in America at the time.

The Lindbergh baby was found dead after a ransom payment, and the crime took several years to solve. Tracking the cash finally led authorities to carpenter Bruno Richard Hauptmann. He was convicted in 1935 and executed a year later.

The Lindbergh Law relies on a presumption that any kidnapping involves interstate commerce. It is a rebuttable presumption, but allows the FBI to investigate a kidnapping without having to first establish some interstate aspect. And so it was that Stan Lapekas and I came to be hiding out by the Dumpster at University Townhouses in November 1975.

Four days earlier, 13-year-old Tim Stempel had been snatched in Bloomfield Township.

Tim was the son of Bob Stempel, a GM vice president on track to become CEO. Stempel received calls at home from the kidnappers, who wanted $150,000. They told him not to go to the police, but Stempel contacted GM security, who in turn contacted the police and the FBI.

Kidnapping a Rich Kid 

Tim had been kidnapped by Darryl Wilson and Clinton Williams, who had decided that a moneymaking project would be to grab a rich family’s kid and hold him for ransom.

They had no specific victim in mind when they drove to the high-income neighborhoods of Bloomfield Township. They passed on a few potential victims for various reasons — playing too close to a house, too young.

Then they spotted Tim Stempel skateboarding. Williams asked the teenager for directions to someone’s house. Tim said he didn’t know the person and started to walk away. Williams pulled a handgun and told him to get in the car.

The boy hit Williams with the skateboard, but Williams tackled him and struck him several times in the head. Williams and Wilson then blindfolded their victim and placed him in the backseat.

Read more »

Robin Hood in Reverse — A $1.1 Million Scam

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By Greg Stejskal
ticklethewire.com

In 2005 Female Jones (not her real name), an indigent woman living in public housing in Ann Arbor, Mich., discovered she wasn’t eligible for federal housing assistance. The reason she wasn’t eligible was because it appeared she was already receiving “Section 8” voucher payments. Jones wasn’t aware of receiving any assistance. So it was assumed that there was a bureaucratic snafu, but an investigation revealed something far more nefarious.

Section 8 vouchers are so-called because they are authorized under Section 8 of the Federal Housing Act of 1937, part of the New Deal legislation designed to help people suffering the effects of the Great Depression. In 1974 the Housing Act was amended to create the Section 8 voucher program. Low income people would be eligible for vouchers that would pay a percentage of their rent in approved housing facilities. The money for the program would be provided by U.S. Department of Housing and Urban Development (HUD), but the program would be administered by the state and local public housing agencies.

There was only a limited amount of funding available. So not all eligible people would receive vouchers. In Michigan a waiting list existed and waits of 3-6 years were not uncommon.

Greg Stejskal

Greg Stejskal

The voucher payments were made directly to the indigent tenants’ landlords to minimize the opportunity for fraud. Housing voucher agents working for the state prepared the application forms for the indigent applicants. These agents obtained background information and determined whether the applicants met the eligibility requirements.

Female Jones’ caseworker determined that she was enrolled in the Section 8 program, and voucher payments were being sent to Washtenaw Payee Services, a company that appeared to receive Section 8 payments on behalf of several landlords in Washtenaw County. Because the woman was unaware of the payments, and they were not being received by her landlord, the caseworker reported the problem to the Michigan State Housing Development Authority (MSHDA).

MSHDA’s initial investigation indicated there might be some fraudulent activity. As the Section 8 program is federally funded, they reported their concerns to the FBI, and a joint FBI/MSHDA investigation was begun.

Although Washtenaw Payment Services (WPS) appeared to have an office with a street address, it turned out to be a private mailbox service which is often a red flag in a fraud investigation.

The bank records for WPS were obtained via subpoena. Those records showed that WPS was formed in 1990 when LaToya Cotton filed business papers with Washtenaw County and opened a bank account. Since 1994, about 11 years, WPS had been receiving Section 8 voucher payments ostensibly for landlords of low-income tenants enrolled in the program.

The striking thing was the founder of WPS, LaToya Cotton, was a Michigan housing agent responsible for enrolling prospective low-income applicants for Section 8 vouchers. But even more troubling, it didn’t appear that any money had been paid from the WPS account to any landlords on behalf of the Section 8 enrollees.

LaToya Cotton became a Michigan housing agent for MSHDA in 1994. Very soon thereafter she concocted her scheme.

Prior to becoming a housing agent Cotton had setup the WPS account for a legitimate purpose. But after becoming an agent and enrolling applicants for the Section 8 program, she designated WPS as the recipient for some of the applicants’ landlord payments. When the WPS applicants were approved for Section 8 payments, Cotton didn’t tell them they had been approved. Rather, she told them they were not approved, or that they were on the waitlist. None of those enrollees were ever aware that they had been approved for Section 8 payments.

In September 2005, the FBI obtained a search warrant for Cotton’s office. The records seized revealed that during the 11 years that Cotton was a housing agent, she enrolled 100s of Section 8 applicants. Of those applicants she designated WPS as the recipient of landlord payments for about 40 of the enrollees. Cotton would periodically change the WPS enrollees, removing some and adding others. At the time her office was searched, she had eight enrollees whose voucher payments were going to WPS.

All of the money paid into the WPS account was used by Cotton for personal expenses. Over the 11-year period of the fraud, the total amount paid into the account was $1,051,701. She purchased cars, went on vacations. In April 2004, Cotton purchased a 5,237 square foot home for $830,000.  MSHDA figured that the amount embezzled by Cotton could have subsidized housing for 50 families for more than four years.

In January 2006, in front of US District Court Judge Patrick Duggan (The father of current Detroit Mayor Mike Duggan – ironically the mayor has been trying to turn Detroit around after it has been racked by years of public corruption.), Cotton pleaded guilty to a federal indictment charging her with theft from a federally funded program.

Judge Duggan in May 2006 sentenced Cotton to three and a half years incarceration, three years supervised release and ordered her to pay $1.1 million in restitution.  (Cotton’s house was forfeited and sold with the proceeds used to pay a portion of the restitution.)

At the time I was quoted as saying, “She (Cotton) was living in a mansion and there were low-income people on the Section 8 waiting list. It was Robin Hood in reverse.”

 

Stejskal: How the Late University of Michigan Coach Bo Schembechler Inspired FBI’s First Probe Into Steroids in Sports

Greg Stejskal served as an FBI agent for 31 years and retired as resident agent in charge of the Ann Arbor office. His column first appeared in the Ann Arbor Observer. It’s being republished with his permission.

By Greg Stejskal
ticklethewire.com

Featured_stejskal-and-bo_22400The late Bo Schembechler (left) and Greg Stejskal.

In reading recent accounts of state-sponsored use of performance enhancing drugs (PEDs), primarily by Russia, I was struck by how quickly it was decided that the FBI would open an investigation. There hasn’t always been a keen interest in pursuing criminal investigations of PEDs in sports. Arguably, that interest began in Ann Arbor.

In 1988, when I was an agent in the FBI’s Ann Arbor office, Michigan football coach Bo Schembechler asked me to come to his office. Since 1982, I had been making presentations to Bo’s players about sports gambling, drugs, and violence against women.

Now he and Mike Gittleson, the Michigan strength and conditioning coach, wanted to discuss their concerns about the use of anabolic steroids by football players. These synthetic versions of testosterone have very limited legitimate medical uses–but the coaches were seeing athletes who abused them, taking dangerously high doses to promote abnormal growth and strength.

It wasn’t just college players. The coaches told me that even the high school players they were seeing in Michigan’s summer instructional camp were asking not whether they should use steroids but when they should start.

Bo knew the sale and possession of nonprescription steroids had recently been made a felony under federal law. He wanted to know what was being done to enforce the law. I told him I didn’t know but would find out.

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FBI Arrests Man Accused of Contaminating Food at Grocery Stores in Michigan

Surveillance of the suspect, via FBI.

Surveillance of the suspect, via FBI.

Allan Lengel
Deadline Detroit

A man suspected of contaminating food at open food bars in Ann Arbor grocery stores has been taken into custody, the FBI in Detroit announced Tuesday.

Tips from the public directly led to this individual being identified, the FBI said in a press release. Charges has yet to filed and his name was not immediately being released.

The FBI said the suspect has admitted to using a potentially hazardous material to contaminate produce in Ann Arbor area grocery stores, specifically a liquid mixture of hand cleaner, water and Tomcat mice poison.

The stores effected include:

• Whole Foods Market — 990 W. Eisenhower Parkway — Ann Arbor, MI
• Meijer — 3145 Ann Arbor – Saline Road — Ann Arbor, MI
• Plum Market — 375 North Maple Road — Ann Arbor, M