Less than a month after he was granted compassionate release during COVID-19 and let out of federal prison early in a drug-and-money laundering case, Johnell Lee Cleveland schemed to make money through insurance fraud, a government benefits scam and pushed a woman to sell sex and turn over the proceeds to him, a prosecutor said.
On Tuesday, a federal judge sentenced Cleveland, nicknamed “Bankroll Johnny,” to nine years in prison, accepting the recommended sentence reached in a negotiated plea deal.
U.S. District Judge Michael W. Mosman called it a “very troubling” case for both the breadth of crimes Cleveland committed and how quickly he returned to committing them after his release from custody.
Cleveland, 42, made no statement. Before deputy marshals led him out of the courtroom, he turned back toward the approximately 20 relatives in the public gallery who came to support him and said, “Love you all, appreciate it!”
In 2019, Cleveland had been sentenced to four years and nine months in prison for fentanyl distribution and money laundering. His release date was set for late March 2022. But he convinced U.S. District Judge Robert E. Jones to grant him compassionate release to a federal halfway house on Aug. 4, 2020, about 19 months before his scheduled release, due to health conditions, including diabetes, hypertension and asthma, that weren’t being treated during his time in prison during the COVID-19 pandemic.
Cleveland quickly returned to his old ways, according to the government.
Twenty-four days after his release, he and an alleged accomplice submitted a bogus application to State Farm Insurance for a policy to cover nine pieces of jewelry, providing written appraisals.
The insurer issued a policy for $105,800 for 12 months, ending in late August 2021, without examining the watches, rings or necklaces. If the insurer had, it might have learned that the jewelry had been seized by federal agents years earlier in Cleveland’s 2018 drug trafficking case, according to Assistant U.S. Attorney Peter Sax.
Cleveland’s accomplice reported the jewelry stolen from her Las Vegas home in February 2021 and Cleveland emailed State Farm a “sworn statement” of loss and submitted an insurance claim to recover the appraised value of the purportedly stolen jewelry, according to court records.
The claim was false — there never was a burglary and Cleveland never had the jewelry when he sought the insurance policy, Sax wrote to the court.
That wasn’t the end of Cleveland’s crimes.
He also fraudulently applied for and collected pandemic unemployment benefits from the state Employment Department, lying that he was without a job due to the COVID-19 pandemic when he actually was in prison at the time and wasn’t eligible. He obtained $32,115 in benefits, according to the prosecution.
When arrested in November 2021, agents found a hidden Beretta Nano, a loaded micro-compact pistol, hidden in a secret compartment in the driver’s side door panel of the car he was driving. As a convicted felon, Cleveland was prohibited from carrying a gun.
Further, soon after his August 2020 release from custody, Cleveland convinced a woman from out of state to fly to Portland, professing his love for her and promised to buy her a used Jaguar, according to Sax. But once she arrived, he said the car purchase fell through and he needed her to make money to help him with future business ventures through prostitution.
He also directed her to travel out of state to Arizona, California, Illinois, Nevada, Washington and Washington, D.C., to engage in commercial sex acts, according to Sax. He had her get a tattoo of his first name on her hand beside a crown, which she did, and threatened to harm her if she didn’t turn over all the money she made, Sax said.
She estimated she gave Cleveland between $250,000 to $300,000 from money she made through prostitution, court records show.
Prosecutors said Cleveland laundered the money through a bottled water company called Necci Hydrage H20, though the company wasn’t registered in his name, according to Sax. Cleveland described himself as the company’s chief executive officer, and social media advertised the bottled water as a “high end invigorating replenishment for an Upscale night life and lifestyle!”
Once back in custody, Cleveland communicated via email and phone with the woman’s family to try to dissuade her from testifying against him, according to Sax.
A second woman told investigators that Cleveland had bragged about being a pimp, sexually assaulted her and physically abused her after he had gotten out of prison, according to court records.
Cleveland was arrested in November 2021 and indicted on charges of wire fraud, being a felon with a gun, sex trafficking by force or coercion and money laundering.
In February he pleaded guilty to two counts of wire fraud, being a felon with a gun and money laundering. Under the deal, Cleveland avoided facing the charge of sex trafficking by force, fraud or coercion, which carries a 15-year mandatory minimum sentence upon conviction. He was represented by Assistant Federal Public Defender Ryan Costello.
Prosecutors described the main victim as “highly vulnerable” and said agents haven’t been able to locate the other victim since last summer.
Mosman said he accepted the joint recommended sentence — “but not without some reluctance, because I feel he represents a very serious danger to the community.”
The judge recommended Cleveland serve his time in a federal prison in Oregon. He thanked Cleveland’s family members for attending the hearing and said he hoped they would visit Cleveland and help steer him on a positive path once he completes his newest sentence and is on seven years of federal supervision.
“Last time you got out, it didn’t go well,” Mosman said.
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