Former Deputy Insurance Commissioner Charged with Racketeering in Operation Blighted Officials

BATON ROUGE, LA—United States Attorney Donald J. Cazayoux, Jr. announced that another individual has been charged in Operation Blighted Officials. Richard L. Chambers, Sr., age 67, of LaPlace, Louisiana, has been charged in a bill of information with using an interstate facility in aid of racketeering, in violation of Title 18, United States Code, Section 1952, and forfeiture, pursuant to Title 18, United States Code, Section 982. Chambers faces up to five years in prison, three years of supervised release following imprisonment, a fine of $250,000, and forfeiture of all proceeds from the offense.

According to the bill of information, while serving as Deputy Commissioner for the Louisiana Department of Insurance, Chambers allegedly engaged in two bribery schemes in which he took bribes in exchange for using his official position to (1) steer insurance business and (2) support a conceptual trash can cleaning concept known as the Cifer 5000.

Insurance Kickback Scheme

According to the bill of information, Chambers allegedly created a scheme whereby he would use his official position to steer insurance business from municipalities and other sources to a licensed insurance agent in exchange for bribes. After attempting the scheme with an undependable agent, Chambers enlisted the participation of a different insurance agent to execute the scheme. Unbeknownst to Chambers, the insurance agent he enlisted was an undercover special agent with the Federal Bureau of Investigation.

According to the bill of information, in February 2009, Chambers allegedly arranged to take bribes from the insurance agent consisting of 40 percent of the commissions earned on business Chambers steered to the insurance agent. Chambers subsequently received a $2,000 cash bribe on July 21, 2009, a $3,000 cash bribe on October 16, 2009, and a $500 cash bribe on March 10, 2010. In exchange, Chambers allegedly used and agreed to use his official position to, among other things, steer insurance business to the insurance agent from municipalities such as St. Gabriel, Louisiana, and White Castle, Louisiana. Chambers even wrote a fraudulent letter in his official capacity to the Mayor of Cleveland, Ohio, in an attempt to steer the city of Cleveland’s insurance business to the insurance agent.

Cifer 5000 Bribery Scheme

According to the bill of information, Chambers also engaged in a bribery scheme with an individual he believed to be a venture capitalist affiliated with the insurance agent and involved with a conceptual trash can cleaning product known as the “Cifer 5000.” The Cifer 5000 was a product marketed as an automated waste container cleaning system using specially designed and equipped trucks to clean and sanitize commercial and residential waste containers. Its potential customer pool was represented to be governmental entities. Unbeknownst to Chambers, the venture capitalist was an undercover FBI agent and the Cifer 5000 was a fictitious product created by the FBI.

According to the bill of information, in May 2009, Chambers agreed to provide an official letter of support for the Cifer 5000 in exchange for two cash payments totaling $5,000. Chambers believed the letter would be used to generate significant private investor funding for the Cifer 5000. Chambers took $2,000 in cash from the venture capitalist on May 12, 2009, and the remaining $3,000 in cash the following day. In exchange, Chambers provided the venture capitalist with the official letter of support.

Status of Other Operation Blighted Officials Defendants

George L. Grace, Sr.: In March 2012, the former mayor of St. Gabriel, Louisiana was convicted by a federal jury following a six-week trial of violating RICO, engaging in honest services wire and mail fraud, bribery, obstruction of justice, making false statements, and use of an interstate facility in aid of racketeering. U.S. District Judge Maurice Hicks detained Grace pending his sentencing scheduled in August 2012.

Thomas A. Nelson, Jr.: In June 2011, the former mayor of New Roads, Louisiana was convicted by a federal jury following a two-and-a-half-week trial of violating RICO, engaging in honest services wire fraud, using an interstate facility in aid of racketeering, and making false statements to the FBI. Chief Judge Jackson sentenced Nelson to 132 months in prison.

Maurice Brown: In February 2011, the former mayor of White Castle, Louisiana was convicted by a federal jury following a two-week trial of violating RICO, engaging in honest services wire and mail fraud, and use of an interstate facility in aid of racketeering. Chief Judge Jackson sentenced Brown to 120 months in prison.

Frederick W. Smith: In October 2011, the chief of police for Port Allen, Louisiana was convicted by a federal jury following a two-week trial of 11 counts of violating RICO, engaging in honest services wire and mail fraud, and using an interstate facility in aid of racketeering. Chief Judge Jackson sentenced Smith to 90 months in prison.

Derek Lewis: In July 2011, the former mayor of Port Allen, Louisiana pled guilty to violating RICO and agreed to cooperate with authorities. Chief Judge Jackson sentenced Lewis to 40 months’ imprisonment.

Johnny Johnson: In July 2010, the former member of the Port Allen City Council pled guilty to using an interstate facility in aid of racketeering and agreed to cooperate with authorities. Chief Judge Jackson sentenced Johnson to two years’ probation, with a condition of having to spend six months in a half-way house.

The court has scheduled the initial appearance for 9:00 a.m. on Monday, July 16, 2012, followed by his guilty plea the same day at 9:30 a.m.

This ongoing investigation is being conducted by the Federal Bureau of Investigation and the U.S. Attorney’s Office for the Middle District of Louisiana, with assistance from the U.S. Department of Housing and Urban Development-Office of Inspector General and the U.S. Department of Homeland Security-Office of Inspector General.

Operation Blighted Officials is being prosecuted by Assistant United States Attorneys Corey R. Amundson, M. Patricia Jones, and Michael J. Jefferson.

A bill of information is a charge by the United States Attorney alleging that a defendant has committed an offense. The defendant is presumed innocent until and unless proven guilty at trial or by pleading guilty.