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July 13, 2021Phoenix, AZ, United StatesFinancial Crimes

Co-defendant in Marshallese adoption fraud scheme sentenced to prison

PHOENIX – The second defendant of an adoption and financial scheme was sentenced Tuesday to two years in state prison for helping her co-defendant in the operation at the expense of Arizona taxpayers.

Special agents with U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and officers with the Arizona Department of Public Safety (AZDPS) investigated the case. A state Grand Jury indicted Lynwood Jennet and her co-conspirator, Paul Petersen, in October 2019.

“The defendants in this case, knowingly and willfully defrauded taxpayers for the sole purpose of lining their pockets with proceeds stemming from illegal financial activity,” said HSI Special Agent in Charge Scott Brown. “HSI is committed to working with our law enforcement partners to help stop financial fraud and deceptive practices. Let this sentence serve as a reminder – those who believe they won’t be caught are wrong – you will be brought to justice.”

Jennet, of Phoenix, helped Petersen arrange adoptions from the Marshall Islands. Even though Petersen charged families about $35,000 per adoption to cover medical expenses, Jennet helped the birthmothers apply for medical benefits through the Arizona Health Care Cost Containment System (AHCCCS) to pay for their births with tax dollars. The birthmothers should not have qualified for AHCCCS benefits because they were not Arizona residents. Between November 2015 and May 2019, AHCCCS paid for at least 29 births.

In April 2019, a social worker at Mercy Gilbert Medical Center contacted law enforcement after a birthmother listed Jennet as her emergency contact, notary, and interpreter. The social worker told detectives she was the third woman in three weeks to show up at the hospital under similar circumstances.

“Today's sentence demonstrates that if you defraud Arizona taxpayers, you will be held accountable,” said Arizona Attorney General Mark Brnovich. “This investigation and successful prosecution concludes a model example of how local, state and federal law enforcement agencies can work together to serve their communities.”

In December 2019, Jennet pleaded guilty to Conspiracy to Commit Fraudulent Schemes and Artifices, Two Counts of Theft, and Failure to File a Tax Return.

Since December 2019, Jennet has been on house arrest and subject to electronic monitoring. She was taken into custody after the sentencing hearing.

In accordance with Jennet’s plea agreement, she will pay the following restitution:

  • $28,001.97 to AHCCCS
  • $6,591 to the Arizona Department of Revenue (Failure to file Tax Return – Class 5 Felony)

Assistant Attorneys General Evan Malady, Scott Blake, and Blaine Gadow prosecuted the cases.

In April, Paul Petersen was sentenced to five years in state prison for running the fraudulent adoption scheme. Petersen’s sentence will run consecutive to his federal sentence of six years. Arizona's sentencing agreements were not part of a global settlement.

HSI is a directorate of ICE and the principal investigative arm of the U.S. Department of Homeland Security (DHS), responsible for investigating transnational crime and threats, specifically those criminal organizations that exploit the global infrastructure through which international trade, travel and finance move. HSI’s workforce of over 10,400 employees consists of more than 7,100 Special Agents assigned to 220 cities throughout the United States, and 80 overseas locations in 53 countries. HSI’s international presence represents DHS’s largest investigative law enforcement presence abroad and one of the largest international footprints in U.S. law enforcement.

Updated: 07/16/2021