District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
United States Settles with United Parcel Service for Overcharging Federal Agencies under General Services Administration ContractRead the Press Release
The Department of Justice announced today that United Parcel Service Inc. (UPS) has agreed to pay the United States $8.4 million to resolve allegations that it overcharged federal agencies for package delivery services under a General Services Administration (GSA) contract.
“Contractors are expected to carefully comply with the pricing requirements of GSA contracts and other federal contracts,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “This settlement demonstrates that the government will hold accountable contractors that overcharge federal agencies by failing to follow the pricing terms of federal contracts.”
The settlement announced today resolves allegations that from 2007 to 2014, UPS failed to follow the Price Reductions Clause of the GSA contract, which required UPS to provide GSA with certain lower prices offered to another customer, resulting in the government paying more than it should have for package deliveries. Under the GSA contract, which is known as a Multiple Award Schedule Contract, UPS provided ground delivery service and air delivery service. The settlement covers ground delivery service.
"GSA's Office of Inspector General will continue to work with the Department of Justice to put the taxpayer first," said GSA Inspector General Carol Fortine.
This matter was jointly investigated by the GSA, Office of the Inspector General, and the Department of Justice’s Civil Division. The claims settled in this case are allegations only, and there has been no determination of liability.
Settlement with the Department of Justice and the EPA Prohibits Performance Diesel Inc. from Selling Diesel Engine Defeat DevicesRead the Press Release
Today, the U.S. Department of Justice and the Environmental Protection Agency (EPA) announced a settlement with Performance Diesel Inc. (PDI) to resolve alleged violations of the Clean Air Act (CAA) associated with the manufacture, sale and installation of aftermarket products that defeat the emissions control systems of heavy-duty diesel engines. As part of the settlement, PDI has agreed to stop the sale of all products the government alleges violate the CAA. PDI will also pay a civil penalty of $1,100,000 over two years due to their limited financial ability to pay a higher penalty.
“This settlement prohibits PDI from selling illegal devices that defeat motor vehicle emissions controls and make an end run around federal laws that protect the public’s health,” said Principal Deputy Assistant Attorney General Jonathan D. Brightbill of the Justice Department’s Environment and Natural Resources Division. “The Justice Department will not tolerate this abuse of law and will continue to prosecute those responsible for trading in these illegal products.”
“Performance Diesel Inc. manufactured, sold and installed thousands of aftermarket defeat devices, and as a result thousands of heavy-duty trucks now operate without the filters, catalysts and other emissions controls that keep our air clean,” said EPA Assistant Administrator for Enforcement and Compliance Assurance Susan Bodine. “Today’s settlement will prevent future violations by requiring PDI to ensure that their products do not adversely affect emissions.”
The United States alleges that PDI sold at least 5,549 aftermarket products that defeat the emissions control systems of heavy-duty diesel engines in violation of the CAA. Before May 1, 2018, PDI manufactured, sold and installed electronic tuning software, known as “tunes,” that allowed PDI to disable emissions control devices, or otherwise bypass, defeat or render inoperative parts of the engine used to comply with CAA emission standards. PDI’s aftermarket products are designed for use with numerous models of heavy-duty diesel engines manufactured by Caterpillar, Cummins, Detroit Diesel, International and Paccar.
Included in the terms of this settlement, PDI must:
- Stop sale of all products that violate the CAA according to the government’s complaint.
- For new tuning products, demonstrate a reasonable basis that their products do not increase emissions by obtaining a California Air Resources Board (CARB) Executive Order (EO) prior to manufacture, sale, offering for sale and installation of products.
- For existing products not currently covered by a CARB EO, demonstrate a reasonable basis by submitting a complete application to CARB that covers the tunes prior to manufacture, sale, offering for sale and installation. Under this consent decree, a complete application includes emission test results sufficient to satisfy CARB’s requirements for obtaining a CARB EO.
The settlement has been lodged in the U.S. District Court for the State of Utah for a period of 30 days for public notice and comment. The first penalty payment is due within thirty days of entry of the Consent Decree. To read the Consent Decree: https://www.justice.gov/enrd/consent-decrees.
EPA has recently added a National Compliance Initiative on Stopping Aftermarket Defeat Devices for Vehicles and Engines. This case is an important step in that initiative. To read about EPA’s National Compliance Initiative: https://www.epa.gov/enforcement/national-compliance-initiative-stopping-aftermarket-defeat-devices-vehicles-and-engines.For more information on the settlement, please visit: https://www.epa.gov/enforcement/performance-diesel-inc-clean-air-act-settlement-information-sheet.
New Orleans Man Pleads Guilty to Felon in Possession of a FirearmRead the Press Release
NEW ORLEANS – U.S. Attorney Peter G. Strasser announced that GERARD LAWLESS, age 39, of New Orleans, pled guilty on September 11, 2019 to a one-count superseding bill of information charging him with being a felon in possession of a firearm, in violation of 18 U.S.C. §§ 922(g)(1) and 924(a)(2).
According to court documents, on August 4, 2018, LAWLESS possessed a Ruger .38 caliber firearm in New Orleans. LAWLESS had previously been convicted of a felony offense punishable by more than 1 year of imprisonment in the Orleans Parish Criminal District Court.
LAWLESS faces a maximum sentence of 10 years imprisonment, a fine of up to $250,000, up to three years of supervised release, and a mandatory $100 special assessment.
U.S. Attorney Strasser praised the work of the Federal Bureau of Investigation, Drug Enforcement Administration, and New Orleans Police Department in investigating this case. Assistant United States Attorneys Elizabeth Privitera and Jonathan L. Shih are in charge of the prosecution.
This prosecution is part of an extensive investigation by the Organized Crime Drug Enforcement Task Force (“OCDETF”). OCDETF is a joint federal, state and local cooperative approach to combat drug trafficking and is the nation’s primary tool for disrupting and dismantling major drug trafficking organizations, targeting national and regional level drug trafficking organizations and coordinating the necessary law enforcement entities and resources to disrupt or dismantle the targeted criminal organization and seize their assets.
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Justice Department Seeks to Shut Down Florida Tax Return PreparersRead the Press Release
The United States filed a civil injunction suit seeking to bar Simple Solutions FL LLC, Angela Nurse, Joe Leon, and Wendy Edwards from owning or operating a tax return preparation business and preparing tax returns for others, the Justice Department announced today.
The complaint, filed in United States District Court in Orlando, Florida, also requests that the court require Nurse, Leon, Edwards, and Simple Solutions FL LLC to disgorge ill-gotten fees that they obtained from the U.S. Treasury through the alleged false tax return preparation.
The government’s complaint alleges that the defendants prepare and file tax returns to falsely increase their customers’ refunds, and profit through high, often undisclosed fees—at the expense of their customers and the Treasury. The complaint alleges that the defendants engaged in misconduct, including:
• Falsely claiming the Earned Income Tax Credit;
• Fabricating businesses and related business income and expenses;
• Fabricating deductions, such as charitable contributions and phony job-related expenses; and
• Reporting fabricated income tax withholdings
The complaint further alleges that Nurse and Edwards previously prepared tax returns at D&M Tax Services, and that Leon prepared returns at UJM Tax Services. In a separate action, the court previously barred the owners of D&M Tax Solutions and UJM Tax Services from owning or operating a tax preparation business and preparing tax returns for others.
The government alleges that Simple Solutions FL LLC operates at two locations that were previously occupied by D&M Tax Solutions, in Daytona Beach and Palatka. In addition, the complaint alleges that the business operates at a third location in Bunnell.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams and taxpayers seeking a return preparer should remain vigilant. The IRS has information on its website for choosing a return preparer and has launched a free directory of federal tax preparers.
In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Harvey Man Sentenced for Multiple RobberiesRead the Press Release
NEW ORLEANS – SAMUEL TAYLOR (“TAYLOR”), age 25, of Harvey, Jefferson Parish, Louisiana, was sentenced today to 198 months in the Bureau of Prisons to be followed by a term of five (5) years of supervised release for Hobbs Act Robbery in violation of Title 18, United States Code, Section 1951(a), Bank Robbery with a Firearm in violation of Title 18, United States Code, Sections 2113(a) and (d), Conspiracy to Commit Bank Robbery with a Firearm in violation of Title 18, United States Code, Sections 371, 2113(a) and (d), and two counts of Brandishing a Firearm during a Crime of Violence, in violation of Title 18, United States Code, Section 924(c), announced United States Attorney Peter G. Strasser.
On the morning of Wednesday, September 27, 2017, members of the New Orleans Police Department responded to a complaint of an active burglary of a residence in uptown New Orleans, Louisiana. Police entered the residence, and discovered TAYLOR and his two co-defendants inside of the residence. Law enforcement officers also located a loaded Harrington and Richardson “Pardner” Pump 12 gauge shotgun and a Taurus .38 caliber revolver handgun in the residence, as well as homemade ski masks.
Law enforcement agents determined TAYLOR and the other defendants were using the residence as a safe house in anticipation of an armed robbery of a bank on South Carrollton Avenue in New Orleans. Agents also determined that TAYLOR had been responsible for the September 7, 2017, armed robbery of the Fidelity Bank on General De Gaulle Boulevard, in the Algiers neighborhood of New Orleans, as well as the July 9, 2017, armed robbery of the Dollar General store in Avondale, Louisiana.
U.S. Attorney Strasser praised the work of the Federal Bureau of Investigation’s Violent Crime Task Force, officers with the New Orleans Police Department, and deputies with the Jefferson Parish Sheriff’s Office. The prosecution of was handled by Assistant U.S. Attorney Myles Ranier.
Former Union Official Pleads Guilty to Interstate Transportation of Stolen PropertyRead the Press Release
A former president of Local 2463 of the American Federation of Government Employees pleaded guilty today to Interstate Transportation of Stolen Property, in connection with his theft of tens of thousands of dollars from the union, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and District Director Mark Wheeler of the Department of Labor’s Office of Labor Management Standards Washington District Office.
Audonus A. Duplessis, 25, of Washington, D.C., appeared before Judge Richard J. Leon in the U.S. District Court for the District of Columbia and pleaded guilty to the sole count in an indictment returned against him in June 2018. Judge Leon scheduled sentencing of this matter for Dec. 5, 2019.
According to a statement of facts signed by Duplessis in connection with his guilty plea,
Duplessis stole more than $80,000 from the union during his tenure as President of Local 2463, making unauthorized cash withdrawals from the Local’s checking account and charging purchases of personal items to a debit card associated with that account. As charged in the indictment, on Sept. 25, 2017, Duplessis withdrew $11,300 from the Local 2463 checking account at a Wells Fargo branch in Washington, D.C. He then transported that stolen money to the Honda dealership in Tysons Corner, Virginia, where he used it to purchase a 2013 Dodge Charger for his personal use. Other unauthorized items that Duplessis purchased with union money included clothing from Armani, a Smith & Wesson 9mm handgun and a subscription to an online dating service.
The American Federation of Government Employees (AFGE) represents over 700,000 federal and D.C. government workers nationwide. Local 2463 represents approximately 2,400 employees at the Smithsonian Institution and Kennedy Center, the majority of whom are located in the Washington, D.C. area. Duplessis, a security guard at the Smithsonian Museum of African-American History and Culture, was elected to serve as President of Local 2463 in May 2017. While serving as President, Duplessis worked one day a week at the Smithsonian and received four days of “official time” to work full-time at the union.
The case was investigated by the U.S. Department of Labor, Office of Labor-Management Standards and Office of Inspector General. The case is being prosecuted by Trial Attorney Alexander Gottfried of the Criminal Division’s Organized Crime and Gang Section.
Former District of Columbia Attorney Sentenced to Prison for $2 Million Investment Fraud Scheme and Failure to File Tax ReturnRead the Press Release
A former District of Columbia attorney was sentenced to prison today in U.S. District Court in the District of Columbia for operating a fraudulent trading program for investors and failing to file a tax return announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
Brynee Baylor, was sentenced to 25 months in prison for conspiracy and securities fraud, one year of prison (concurrent) for her other fraud convictions and for failure to file a tax return and pay taxes, three years of supervised release, and restitution to her victims in the amount of $2.2 million dollars. In May 2019, a jury convicted Baylor of one count of conspiracy to commit securities fraud, one count of securities fraud, and five counts of first-degree fraud under District of Columbia law. In June 2019, Baylor pleaded guilty to one count of willfully failing to timely file a 2010 individual income tax return and to pay taxes.
According to court documents, Baylor, a former partner in the D.C. law firm Baylor & Jackson PLLC, conspired with a Pennsylvania man and his company, the Milan Group, to recruit investors to a purported trading program. Investors were promised extremely large profits in a short time with little or no risk.
The evidence presented at trial showed that in 2010 and 2011, Baylor caused more than $2 million of investor funds to pass through the Baylor & Jackson lawyer trust account. More than half of the investor funds were used for the benefit of Baylor, the Pennsylvania man, the Milan Group, and Baylor & Jackson. Baylor falsely assured investors that the purported trading program was legitimate and that she had personally observed investors successfully complete transactions with the Milan Group. In reality, the Milan Group did not complete any such transactions and the investors lost all their funds.
In 2011, the Securities and Exchange Commission (SEC) sued Baylor and others for fraud in connection with the purported trading program. In 2013, Baylor was permanently enjoined from promoting investment programs and ordered to pay disgorgement and a civil penalty.
Principal Deputy Assistant Attorney General Zuckerman thanked the SEC for its invaluable assistance and commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorneys Jeffrey McLellan and Eric Powers of the Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Attorney General William P. Barr Announces Corey F. Ellis as Acting Director of the Executive Office for U.S. AttorneysRead the Press Release
Attorney General William P. Barr today announced that Corey F. Ellis has been named Acting Director of the Executive Office for U.S. Attorneys (EOUSA). Ellis is filling the position that has been held since December 2017 by James A. Crowell IV, who was nominated by President Donald Trump and confirmed by the U.S. Senate to serve as a judge on the Superior Court of the District of Columbia.
“Jim Crowell has provided exemplary leadership to EOUSA and the United States Attorneys’ community,” said Attorney General Barr. “Jim’s commitment to ensuring justice is served for everyone has been the hallmark of his distinguished career. The Department’s loss is very much the Judiciary’s gain.”
Prior to this appointment, which will be effective September 16, Ellis served in several positions in the Office of the Deputy Attorney General, including Chief of Staff to Deputy Attorney General Rod J. Rosenstein. Before joining the Deputy Attorney General's office, Ellis was the First Assistant United States Attorney in the U.S. Attorney’s Office for the Western District of North Carolina, where he began as an Assistant United States Attorney in 2005. During his tenure in the United States Attorney’s Office, Mr. Ellis handled a range of cases including organized crime, computer hacking and intellectual property, international money laundering, public corruption, violent crimes, financial fraud and capital crime cases.
“I look forward to continuing to work with Corey in his new role as Director of EOUSA,” said Attorney General Barr. “As a career prosecutor with a stellar record, he brings a wealth of experience and knowledge about the United States Attorneys’ community to the job, and I am confident he will help continue to build upon our many successes in enforcing the rule of law, deterring crime, and bringing criminals to justice.”
StarKist Ordered to Pay $100 Million Criminal Fine for Antitrust ViolationRead the Press Release
StarKist Co. was sentenced to pay a criminal fine of $100 million, the statutory maximum, for its role in a conspiracy to fix prices for canned tuna sold in the United States. StarKist was also sentenced to a 13-month term of probation.
StarKist faced a criminal fine of up to $100 million, the statutory maximum, for its participation in a conspiracy to fix the prices of canned tuna fish from as early as November 2011 through at least as late as December 2013. As part of today’s sentencing hearing, U.S. District Judge Edward M. Chen found that StarKist had not proven that its financial circumstances justified a lower criminal fine. The Antitrust Division opposed StarKist’s request for a fine reduction, arguing that StarKist had sufficient financial resources to pay a $100 million criminal fine. In addition to the criminal fine and term of probation, StarKist has also agreed to cooperate in the Antitrust Division’s ongoing investigation.
“Today’s result demonstrates our commitment to enforcing the antitrust laws aggressively against companies that fix prices,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “Hard-working Americans deserve the benefits of open competition when they spend their hard-earned money on items that stock kitchen shelves. When a corporation cheats customers at the checkout line, the Antitrust Division will hold it accountable to the greatest extent.”
“The consequences for greedy companies who cheat the marketplace and American consumers are significant and clear,” said FBI San Francisco Special Agent in Charge John F. Bennett. “The FBI, along with our law enforcement colleagues, will continue to pursue those who conspire to fix prices and bring them to justice.”
A total of six charges have resulted from an ongoing federal antitrust investigation into the packaged-seafood industry, which is being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Field Office. Anyone with information on price fixing, bid rigging or other anticompetitive conduct related to the packaged-seafood industry should contact the Antitrust Division’s San Francisco Office at 415-934-5300, visit www.justice.gov/atr/contact/newcase.html, or call the FBI tip line at 415-553-7400.
DEA Proposes to Reduce the Amount of Five Opioids Manufactured in 2020, Marijuana Quota for Research Increases by Almost a ThirdRead the Press Release
The U.S. Drug Enforcement Administration (DEA) is proposing to reduce the amount of five Schedule II opioid controlled substances that can be manufactured in the United States next year compared with 2019, per the Notice of Proposed Rulemaking being published in the Federal Register tomorrow and available for public inspection here today.
DEA proposes to reduce the amount of fentanyl produced by 31 percent, hydrocodone by 19 percent, hydromorphone by 25 percent, oxycodone by nine percent and oxymorphone by 55 percent. Combined with morphine, the proposed quota would be a 53 percent decrease in the amount of allowable production of these opioids since 2016.
DEA proposes to increase the amount of marijuana that can be produced for research by almost a third over 2019’s level, from 2,450 kilograms to 3,200 kilograms, which is almost triple what it was in 2018. This will meet the need created by the increase in the amount of approved research involving marijuana. Over the last two years, the total number of individuals registered by DEA to conduct research with marijuana, marijuana extracts, derivatives and delta-9-tetrahydrocannabinol (THC) has increased by more than 40 percent, from 384 in January 2017 to 542 in January 2019.
“The aggregate production quota set by DEA each calendar year ensures that patients have the medicines they need while also reducing excess production of controlled prescription drugs that can be diverted and misused,” said Acting Administrator Uttam Dhillon. “DEA takes seriously its obligations to both protect the public from illicit drug trafficking and ensure adequate supplies to meet the legitimate needs of patients and researchers for these substances.”
The Proposed Aggregate Production Quotas and Assessment of Annual Needs being published in the Federal Register addresses more than 250 Schedule I and II controlled substances and three List I chemicals, which include ephedrine, pseudoephedrine, and phenylpropanolamine. This reflects the total amount of substances needed to meet the country’s legitimate medical, scientific, research, industrial and export needs for the year and for the maintenance of reserve stocks. DEA endeavors to set production limits at a level required to meet these needs, without resulting in an excessive amount of these potentially harmful substances.
In setting the aggregate proposed quota (APQ), DEA considers data from many sources, including estimates of the legitimate medical need from the Food and Drug Administration; estimates of retail consumption based on prescriptions dispensed; manufacturers’ disposition history and forecasts; data from DEA’s internal system for tracking controlled substance transactions; and past quota histories. As a result of new laws and regulations that took effect in 2018, the number of factors that DEA considers in setting the APQ has increased. Information on these factors and how they were assessed appears in the Notice.
The five opioid substances were subject to special scrutiny following the enactment last year of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act, known as the SUPPORT Act, which requires DEA to “estimate the amount of diversion of the covered substance that occurs in the United States” and “make appropriate quota reductions. DEA’s estimates of the amount of diversion that took place for each of these five opioid substances and how those estimates were calculated appear in the Notice.
Interested parties may submit public comments on the proposed APQ until 11:59 p.m. on October 10, following the instructions in the Notice. After taking the comments into account, DEA will publish another notice later in the year informing the public of the established APQ. After that, DEA allocates individual manufacturing and procurement quotas to those manufacturers that apply for them. DEA may revise a company’s quota at any time during the year if change is warranted due to increased sales or exports, new manufacturers entering the market, new product development, or product recalls.
281 Arrested Worldwide in Coordinated International Enforcement Operation Targeting Hundreds of Individuals in Business Email Compromise SchemesRead the Press Release
WASHINGTON – Federal authorities announced September 10, 2019 a significant coordinated effort to disrupt Business Email Compromise (BEC) schemes that are designed to intercept and hijack wire transfers from businesses and individuals, including many senior citizens. Operation reWired, a coordinated law enforcement effort by the U.S. Department of Justice, U.S. Department of Homeland Security, U.S. Department of the Treasury, U.S. Postal Inspection Service, and the U.S. Department of State, was conducted over a four-month period, resulting in 281 arrests in the United States and overseas, including 167 in Nigeria, 18 in Turkey and 15 in Ghana. Arrests were also made in France, Italy, Japan, Kenya, Malaysia, and the United Kingdom (UK). The operation also resulted in the seizure of nearly $3.7 million.
BEC, also known as “cyber-enabled financial fraud,” is a sophisticated scam often targeting employees with access to company finances and businesses working with foreign suppliers and/or businesses that regularly perform wire transfer payments. The same criminal organizations that perpetrate BEC also exploit individual victims, often real estate purchasers, the elderly, and others, by convincing them to make wire transfers to bank accounts controlled by the criminals. This is often accomplished by impersonating a key employee or business partner after obtaining access to that person’s email account or sometimes done through romance and lottery scams. BEC scams may involve fraudulent requests for checks rather than wire transfers; they may target sensitive information such as personally identifiable information (PII) or employee tax records instead of, or in addition to, money; and they may not involve an actual “compromise” of an email account or computer network. Foreign citizens perpetrate many BEC scams. Those individuals are often members of transnational criminal organizations, which originated in Nigeria but have spread throughout the world.
“The Department of Justice has increased efforts in taking aggressive enforcement action against fraudsters who are targeting American citizens and their businesses in business email compromise schemes and other cyber-enabled financial crimes,” said Deputy Attorney General Jeffrey Rosen. “In this latest four-month operation, we have arrested 74 people in the United States and 207 others have been arrested overseas for alleged financial fraud. The coordinated efforts with our domestic and international law enforcement partners around the world has made these most recent actions more successful. I want to thank the FBI, more than two dozen U.S. Attorney’s Offices, U.S. Secret Service, U.S. Postal Inspection Service, Homeland Security Investigations, IRS Criminal Investigation, U.S. Department of State’s Diplomatic Security Service, our partners in Nigeria, Ghana, Turkey, France, Italy, Japan, Kenya, Malaysia, and the UK, and our state and local law enforcement partners for all of their hard work to combat these fraud schemes and protect the hard-earned assets of our citizens. Anyone who engages in deceptive practices like this should know they will not go undetected and will be held accountable.”
“The FBI is working every day to disrupt and dismantle the criminal enterprises that target our businesses and our citizens,” said FBI Director Christopher A. Wray. “Cooperation is the backbone to effective law enforcement; without it, we aren’t as strong or as agile as we need to be. Through Operation reWired, we’re sending a clear message to the criminals who orchestrate these BEC schemes: We’ll keep coming after you, no matter where you are. And to the public, we’ll keep doing whatever we can to protect you. Reporting incidents of BEC and other internet-enabled crimes to the IC3 brings us one step closer to the perpetrators.”
“The Secret Service has taken a multi-layered approach to combating Business Email Compromise schemes through our Global Investigative Operations Center (GIOC),” said U.S. Secret Service Director James M. Murray. “Domestically, the GIOC assists Secret Service Field Offices and other law enforcement partners with analysis and investigative tactics to enhance the impact of local BEC investigations. Internationally, the GIOC targets and identifies transnational organized crime networks that perpetrate these cyber-enabled financial fraud schemes. Through this approach, the Secret Service continues to strive to protect the citizens of the United States and our financial infrastructure from these complex crimes.”
“Homeland Security Investigations (HSI), together with its law enforcement partners, has proven once again, that cyber-enabled financial fraud will not be tolerated in the United States,” said Acting Director Matthew T. Albence of U.S. Immigration and Customs Enforcement (ICE). “Operation reWired sends a clear message to criminals, that no matter how or where crimes are committed, we will do everything within our means to dismantle criminal enterprises that seek to manipulate U.S. institutions and taxpayers.”
“The consequences of this type of fraud scheme are far reaching, affecting not only people in the United States, but also across the world,” said Chief Postal Inspector Gary Barksdale. “This investigation is just another example of how effective law enforcement agencies can be when they join forces. By working together, we can keep our communities and our vulnerable populations safe from financial exploitation. The U.S. Postal Inspection Service is proud to be at the forefront of the fight against fraud and Postal Inspectors will continue to adapt to the ever changing landscape to stop the scammers and protect our customers.”
“In unraveling this complex, nationwide identity theft and tax fraud scheme, we discovered that the conspirators stole more than 250,000 identities and filed more than 10,000 fraudulent tax returns, attempting to receive more than $91 million in refunds,” said Chief Don Fort of IRS Criminal Investigation. “We will continue to work with our international, federal and state partners to pursue all those responsible for perpetrating this fraud, preying on innocent victims and attempting to cheat the U.S. out of millions of dollars.”
“The investigation of these crimes crossed international borders,” said Director Todd J. Brown of the U.S. Department of State’s Diplomatic Security Service (DSS). “Today’s charges are another successful example of our commitment to working together with both foreign colleagues abroad as well as local, state and federal law enforcement partners here at home in the pursuit of those who commit cyber-related financial crimes.”
A number of cases involved international criminal organizations that defrauded small to large sized businesses, while others involved individual victims who transferred high dollar funds or sensitive records in the course of business. The devastating effects these cases have on victims and victim companies affect not only the individual business but also the global economy. According to the Internet Crime Complaint Center (IC3), nearly $1.3 billion in loss was reported in 2018 from BEC and its variant, Email Account Compromise (EAC), nearly twice as much as was reported the prior year. BEC and EAC are prevalent scams and the Justice Department along with our partners will continue to aggressively pursue and prosecute the perpetrators, including money mules, regardless of where they are located.
Money mules may be witting or unwitting accomplices who receive ill-gotten funds from the victims and then transfer the funds as directed by the fraudsters. The money is wired or sent by check to the money mule who then deposits it in his or her own bank account. Usually the mules keep a fraction for “their trouble” and then wire the money as directed by the fraudster. The fraudsters enlist and manipulate the money mules through romance scams or “work-at-home” scams, though some money mules are knowing co-conspirators who launder the ill-gotten gains for profit.
BEC scams are related to, and often conducted together with, other forms of fraud such as:
- “Romance scams,” where victims are lulled into believing they are in a legitimate relationship, and are tricked into sending or laundering money under the guise of assisting the paramour with an international business transaction, a U.S. visit, or some other cover story;
- “Employment opportunities scams,” where victims are convinced to provide their PII to apply for work-from-home jobs, and, once “hired” and “overpaid” by a bad check, to wire the overpayment to the “employer’s” bank before the check bounces;
- “Fraudulent online vehicle sales scams,” where victims are convinced they are purchasing a nonexistent vehicle and must pay for it by sending the codes of prepaid gift cards in the amount of the agreed upon sale price to the “seller;”
- “Rental scams,” where a scammer agrees to rent a property, sends a bad check in excess of the agreed upon deposit, and requests the overpayment be returned via wire before the check bounces; and
- “Lottery scams,” where victims are convinced they won an international lottery but must pay fees or taxes before receiving the payout.
Starting in May 2019, this coordinated enforcement action targeted hundreds of BEC scammers. Law enforcement agents executed over 214 domestic actions including arrests, money mule warning letters, and asset seizures and repatriations totaling nearly $3.7 million. Local and state law enforcement partners on FBI task forces across the country, with the assistance of multiple District Attorney’s Offices, also arrested alleged money mules for their role in defrauding victims.
Among those arrested on federal charges in BEC schemes include:
- Following an investigation led by the FBI’s Chicago Division, Brittney Stokes, 27, of Country Club Hills, Illinois, and Kenneth Ninalowo, 40, of Chicago, Illinois, were charged in the Northern District of Illinois with laundering over $1.5 million from proceeds of BEC scams. According to the indictment, a community college and an energy company were defrauded into sending approximately $5 million to fraudulent bank accounts controlled by the scammers. Banks were able to freeze approximately $3.6 million of the $5 million defrauded in the two schemes. Law enforcement officials seized a 2019 Range Rover Velar S from Stokes and approximately $175,909 from Stokes and Ninalowo.
- As a result of a joint investigation by the FBI, HSI, and DSS, Opeyemi Adeoso, 44, of Dallas, Texas, and Benjamin Ifebajo, 45, of Richardson, Texas, were arrested and charged in the Northern District of Texas with bank fraud, wire fraud, money laundering, and conspiracy. Adeoso and Ifebajo are alleged to have received and laundered at least $3.4 million. In furtherance of their scheme, they are alleged to have assumed 12 fictitious identities and defrauded 37 victims from across the United States.
- As part of a larger investigation by the FBI and the USSS in Miami, Yamel Guevara Tamayo, 36, of Miami, Florida, and Yumeydi Govantes, 39, of Miami, Florida, were charged in the Southern District of Florida with laundering more than $950,000 of proceeds of BEC scams. The two individuals were also responsible for recruiting approximately 18 other individuals to serve as money mules, who laundered proceeds of BEC scams for an international money laundering network. The victims of the BEC scams included title companies, corporations, and individuals. The individuals were indicted June 18, 2019 and arrested June 20, 2019. The change of plea for both individuals is scheduled for Sept. 16.
- In an investigation by FBI Atlanta, two individuals were charged in the Northern District of Georgia for their involvement in a Nigeria-based BEC scheme that began with a $3.5 million transfer of funds fraudulently misdirected from a Georgia-based health care provider to accounts across the United States. Two Nigerian nationals, Emmanuel Igomu, 35, of Atlanta, Georgia, and Jude Balogun, 29, of San Francisco, California, have been arrested on charges of aiding and abetting wire fraud for their part in receiving and transmitting monies derived from the BEC.
- Following an investigation by the FBI, Cyril Ashu, 34, of Austell, Georgia; Ifeanyi Eke, 32, of Sandy Springs, Georgia; Joshua Ikejimba, 24, of Houston, Texas; and Chinedu Ironuah, 32, of Houston, Texas, were charged in the Southern District of New York with one count of conspiracy to commit wire fraud and one count of wire fraud for their involvement in a Nigeria-based BEC scheme that impacted hundreds of victims in the United States, with losses in excess of $10 million.
An indictment is merely an allegation and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The cases were investigated by the FBI, U.S. Secret Service, U.S. Postal Inspection Service, ICE’s Homeland Security Investigations (HSI), IRS Criminal Investigation and U.S. Department of State’s Diplomatic Security Service. U.S. Attorney’s Offices in the Districts of Arizona; Central, Eastern and Southern California; Colorado; Delaware; Southern Florida; Northern Georgia; Northern Illinois; Kansas; Eastern Louisiana; Massachusetts; Nebraska; Nevada; Southern New York; Middle North Carolina; Northern Ohio; Oregon; Northern, Western and Southern Texas; Western Tennessee; Eastern Virginia; Eastern Washington, and elsewhere have ongoing investigations some of which have resulted in arrests in Nigeria. The Justice Department’s Computer Crime and Intellectual Property Section, Money Laundering and Asset Recovery Section, and Office of International Affairs of the Criminal Division provided assistance. District Attorney’s Offices of Harris County, Texas; Fort Bend County, Texas; and Washington County, Arkansas are handling state prosecutions. Additionally, private sector partners and the Nigerian Economic and Financial Crimes Commission, Ghana Police Service (GPS) and Economic and Organized Crime Office (EOCO), Turkish National Police (TNP) Cyber Department, Direction Centrale de la Police aux Frontieres (PAF) of France, Squadra Mobile Di Caserta and Italian National Police, National Police Agency of Japan, Tokyo Metropolitan Police Department (TPMD), Royal Malaysian Police, Directorate of Criminal Investigations (DCI) of Kenya and the National Crime Agency (NCA), North Wales Police, Metropolitan Police Service and Hertfordshire Constabulary of the UK provided significant assistance.
This operation serves as a model for international cooperation against specific threats that endanger the financial well-being of each member country’s residents. Deputy Attorney General Rosen expressed gratitude for the outstanding efforts of the participating countries, including law enforcement actions that were coordinated and executed by the Economic and Financial Crimes Commission (EFCC) in Nigeria to curb business email compromise schemes that defraud businesses and individuals alike.
The Justice Department’s efforts to confront the growing threat of cyber-enabled financial fraud led to the formation of the BEC Counteraction Group (BCG), which assists U.S. Attorney’s Offices and the Department with the coordination of BEC cases and the centralization of related expertise. The BCG facilitates communication and coordination between federal prosecutors, serves as a bridge between federal prosecutors and federal agents, centralizes and manages institutional knowledge and training, and participates in efforts to educate the public about protecting themselves and their organizations from BEC scams.
The BCG draws upon the expertise of the following sections within the Department’s Criminal Division: the Computer Crime and Intellectual Property Section, which regularly investigates and prosecutes cases involving computer crimes, including network intrusions; the Fraud Section, which manages complex litigation involving sophisticated fraud schemes; the Money Laundering and Asset Recovery Section, which brings experience in seizing assets obtained through criminal activity; the Office of International Affairs, which plays a central role in securing international evidence and extradition; and the Organized Crime and Gang Section, which contributes strategic guidance in prosecuting complex transnational criminal cases.
Operation reWired was funded and coordinated by the FBI and the Justice Department’s International Organized Crime Intelligence and Operations Center (IOC-2) and follows “Operation Wire Wire,” the first coordinated enforcement action targeting hundreds of BEC scammers. That effort, announced in June 2018, resulted in the arrest of 74 individuals, the seizure of nearly $2.4 million, and the disruption and recovery of approximately $14 million in fraudulent wire transfers.
Victims are encouraged to file a complaint online with the IC3 at bec.ic3.gov. The IC3 staff reviews complaints, looking for patterns or other indicators of significant criminal activity, and refers investigative packages of complaints to the appropriate law enforcement authorities in a particular city or region. The FBI provides a variety of resources relating to BEC through the IC3, which can be reached at www.ic3.gov.
For more information on BEC scams, visit: https://www.ic3.gov/media/2019/190910.aspx.# # #
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Massachusetts Chiropractor Sentenced to Prison for Tax EvasionRead the Press Release
The owner of a chiropractic business was sentenced to 6 months in prison for tax evasion after pleading guilty to the charge in June 2019, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
Richard Rogers, a Northborough, Massachusetts chiropractor, operated his practice from his residence. According to court documents, Rogers evaded his taxes from 2012 through 2016 by concealing his income from the Internal Revenue Service (IRS). Rogers encouraged his clients to pay in cash and used a nominee bank account to negotiate check payments when he was not paid in cash. He paid creditors using postal money orders, and used credit card accounts opened with a fictitious social security number. Rogers also concealed the ownership of his residence by titling the property in the name of a trust. Rogers did not file federal tax returns from at least 2008 through 2016, despite his obligation to do so.
United States District Judge Timothy S. Hillman also ordered Rogers to pay $155,164 in restitution to the IRS.
Principal Deputy Assistant Attorney General Zuckerman thanked special agents of IRS-Criminal Investigation, who conducted the investigation, and Assistant Chief John N. Kane and Trial Attorney Carl F. Brooker of the Tax Division, who prosecuted the case.
Joint Statement by U.S. Attorney General William Barr and Minister of Justice of Georgia Thea TsulukianiRead the Press Release
Credit: Department of JusticeOn September 10, 2019, United States Attorney General William Barr met with Georgian Minister of Justice Thea Tsulukiani, to reaffirm the law enforcement partnership between the United States Department of Justice and the Ministry of Justice of Georgia.
Both officials recognized that an independent judiciary, an effective criminal justice system and the protection of human rights, particularly those of the most vulnerable members of society, such as children, are fundamental to the rule of law and an accountable government and democracy.
Attorney General Barr noted the excellent level of cooperation between the United States and Georgia on extradition matters and mutual legal assistance. Minister Tsulukiani, in turn, expressed gratitude for the capacity building support provided by the United States Department of Justice, the Office of Overseas Prosecutorial Development, Assistance, and Training (OPDAT) and its Tbilisi-based Resident Legal Advisors (RLA), particularly in terms of legislative drafting advice and skills development training within the criminal justice sector.
The Attorney General and Minister of Justice committed to continue cooperation in support of Georgia’s efforts to advance judicial reforms and further modernize the country’s criminal justice system. In particular, they expressed an intent to explore opportunities for the Department of Justice to furnish expertise and assistance to the Ministry of Justice with its work to reform Georgia’s penitentiary and probation systems with enhanced rehabilitation and resocialization services.
281 Arrested Worldwide in Coordinated International Enforcement Operation Targeting Hundreds of Individuals in Business Email Compromise SchemesRead the Press Release
Federal authorities announced today a significant coordinated effort to disrupt Business Email Compromise (BEC) schemes that are designed to intercept and hijack wire transfers from businesses and individuals, including many senior citizens. Operation reWired, a coordinated law enforcement effort by the U.S. Department of Justice, U.S. Department of Homeland Security, U.S. Department of the Treasury, U.S. Postal Inspection Service, and the U.S. Department of State, was conducted over a four-month period, resulting in 281 arrests in the United States and overseas, including 167 in Nigeria, 18 in Turkey and 15 in Ghana. Arrests were also made in France, Italy, Japan, Kenya, Malaysia, and the United Kingdom (UK). The operation also resulted in the seizure of nearly $3.7 million.
BEC, also known as “cyber-enabled financial fraud,” is a sophisticated scam often targeting employees with access to company finances and businesses working with foreign suppliers and/or businesses that regularly perform wire transfer payments. The same criminal organizations that perpetrate BEC also exploit individual victims, often real estate purchasers, the elderly, and others, by convincing them to make wire transfers to bank accounts controlled by the criminals. This is often accomplished by impersonating a key employee or business partner after obtaining access to that person’s email account or sometimes done through romance and lottery scams. BEC scams may involve fraudulent requests for checks rather than wire transfers; they may target sensitive information such as personally identifiable information (PII) or employee tax records instead of, or in addition to, money; and they may not involve an actual “compromise” of an email account or computer network. Foreign citizens perpetrate many BEC scams. Those individuals are often members of transnational criminal organizations, which originated in Nigeria but have spread throughout the world.
“The Department of Justice has increased efforts in taking aggressive enforcement action against fraudsters who are targeting American citizens and their businesses in business email compromise schemes and other cyber-enabled financial crimes,” said Deputy Attorney General Jeffrey Rosen. “In this latest four-month operation, we have arrested 74 people in the United States and 207 others have been arrested overseas for alleged financial fraud. The coordinated efforts with our domestic and international law enforcement partners around the world has made these most recent actions more successful. I want to thank the FBI, more than two dozen U.S. Attorney’s Offices, U.S. Secret Service, U.S. Postal Inspection Service, Homeland Security Investigations, IRS Criminal Investigation, U.S. Department of State’s Diplomatic Security Service, our partners in Nigeria, Ghana, Turkey, France, Italy, Japan, Kenya, Malaysia, and the UK, and our state and local law enforcement partners for all of their hard work to combat these fraud schemes and protect the hard-earned assets of our citizens. Anyone who engages in deceptive practices like this should know they will not go undetected and will be held accountable.”
“The FBI is working every day to disrupt and dismantle the criminal enterprises that target our businesses and our citizens,” said FBI Director Christopher A. Wray. “Cooperation is the backbone to effective law enforcement; without it, we aren’t as strong or as agile as we need to be. Through Operation reWired, we’re sending a clear message to the criminals who orchestrate these BEC schemes: We’ll keep coming after you, no matter where you are. And to the public, we’ll keep doing whatever we can to protect you. Reporting incidents of BEC and other internet-enabled crimes to the IC3 brings us one step closer to the perpetrators.”
“The Secret Service has taken a multi-layered approach to combating Business Email Compromise schemes through our Global Investigative Operations Center (GIOC),” said U.S. Secret Service Director James M. Murray. “Domestically, the GIOC assists Secret Service Field Offices and other law enforcement partners with analysis and investigative tactics to enhance the impact of local BEC investigations. Internationally, the GIOC targets and identifies transnational organized crime networks that perpetrate these cyber-enabled financial fraud schemes. Through this approach, the Secret Service continues to strive to protect the citizens of the United States and our financial infrastructure from these complex crimes.”
“Homeland Security Investigations (HSI), together with its law enforcement partners, has proven once again, that cyber-enabled financial fraud will not be tolerated in the United States,” said Acting Director Matthew T. Albence of U.S. Immigration and Customs Enforcement (ICE). “Operation reWired sends a clear message to criminals, that no matter how or where crimes are committed, we will do everything within our means to dismantle criminal enterprises that seek to manipulate U.S. institutions and taxpayers.”
“The consequences of this type of fraud scheme are far reaching, affecting not only people in the United States, but also across the world,” said Chief Postal Inspector Gary Barksdale. “This investigation is just another example of how effective law enforcement agencies can be when they join forces. By working together, we can keep our communities and our vulnerable populations safe from financial exploitation. The U.S. Postal Inspection Service is proud to be at the forefront of the fight against fraud and Postal Inspectors will continue to adapt to the ever changing landscape to stop the scammers and protect our customers.”
“In unraveling this complex, nationwide identity theft and tax fraud scheme, we discovered that the conspirators stole more than 250,000 identities and filed more than 10,000 fraudulent tax returns, attempting to receive more than $91 million in refunds,” said Chief Don Fort of IRS Criminal Investigation. “We will continue to work with our international, federal and state partners to pursue all those responsible for perpetrating this fraud, preying on innocent victims and attempting to cheat the U.S. out of millions of dollars.”
“The investigation of these crimes crossed international borders,” said Director Todd J. Brown of the U.S. Department of State’s Diplomatic Security Service (DSS). “Today’s charges are another successful example of our commitment to working together with both foreign colleagues abroad as well as local, state and federal law enforcement partners here at home in the pursuit of those who commit cyber-related financial crimes.”
A number of cases involved international criminal organizations that defrauded small to large sized businesses, while others involved individual victims who transferred high dollar funds or sensitive records in the course of business. The devastating effects these cases have on victims and victim companies affect not only the individual business but also the global economy. According to the Internet Crime Complaint Center (IC3), nearly $1.3 billion in loss was reported in 2018 from BEC and its variant, Email Account Compromise (EAC), nearly twice as much as was reported the prior year. BEC and EAC are prevalent scams and the Justice Department along with our partners will continue to aggressively pursue and prosecute the perpetrators, including money mules, regardless of where they are located.
Money mules may be witting or unwitting accomplices who receive ill-gotten funds from the victims and then transfer the funds as directed by the fraudsters. The money is wired or sent by check to the money mule who then deposits it in his or her own bank account. Usually the mules keep a fraction for “their trouble” and then wire the money as directed by the fraudster. The fraudsters enlist and manipulate the money mules through romance scams or “work-at-home” scams, though some money mules are knowing co-conspirators who launder the ill-gotten gains for profit.
BEC scams are related to, and often conducted together with, other forms of fraud such as:
- “Romance scams,” where victims are lulled into believing they are in a legitimate relationship, and are tricked into sending or laundering money under the guise of assisting the paramour with an international business transaction, a U.S. visit, or some other cover story;
- “Employment opportunities scams,” where victims are convinced to provide their PII to apply for work-from-home jobs, and, once “hired” and “overpaid” by a bad check, to wire the overpayment to the “employer’s” bank before the check bounces;
- “Fraudulent online vehicle sales scams,” where victims are convinced they are purchasing a nonexistent vehicle and must pay for it by sending the codes of prepaid gift cards in the amount of the agreed upon sale price to the “seller;”
- “Rental scams,” where a scammer agrees to rent a property, sends a bad check in excess of the agreed upon deposit, and requests the overpayment be returned via wire before the check bounces; and
- “Lottery scams,” where victims are convinced they won an international lottery but must pay fees or taxes before receiving the payout.
Starting in May 2019, this coordinated enforcement action targeted hundreds of BEC scammers. Law enforcement agents executed over 214 domestic actions including arrests, money mule warning letters, and asset seizures and repatriations totaling nearly $3.7 million. Local and state law enforcement partners on FBI task forces across the country, with the assistance of multiple District Attorney’s Offices, also arrested alleged money mules for their role in defrauding victims.
Among those arrested on federal charges in BEC schemes include:
- Following an investigation led by the FBI’s Chicago Division, Brittney Stokes, 27, of Country Club Hills, Illinois, and Kenneth Ninalowo, 40, of Chicago, Illinois, were charged in the Northern District of Illinois with laundering over $1.5 million from proceeds of BEC scams. According to the indictment, a community college and an energy company were defrauded into sending approximately $5 million to fraudulent bank accounts controlled by the scammers. Banks were able to freeze approximately $3.6 million of the $5 million defrauded in the two schemes. Law enforcement officials seized a 2019 Range Rover Velar S from Stokes and approximately $175,909 from Stokes and Ninalowo.
- As a result of a joint investigation by the FBI, HSI, and DSS, Opeyemi Adeoso, 44, of Dallas, Texas, and Benjamin Ifebajo, 45, of Richardson, Texas, were arrested and charged in the Northern District of Texas with bank fraud, wire fraud, money laundering, and conspiracy. Adeoso and Ifebajo are alleged to have received and laundered at least $3.4 million. In furtherance of their scheme, they are alleged to have assumed 12 fictitious identities and defrauded 37 victims from across the United States.
- As part of a larger investigation by the FBI and the USSS in Miami, Yamel Guevara Tamayo, 36, of Miami, Florida, and Yumeydi Govantes, 39, of Miami, Florida, were charged in the Southern District of Florida with laundering more than $950,000 of proceeds of BEC scams. The two individuals were also responsible for recruiting approximately 18 other individuals to serve as money mules, who laundered proceeds of BEC scams for an international money laundering network. The victims of the BEC scams included title companies, corporations, and individuals. The individuals were indicted June 18, 2019 and arrested June 20, 2019. The change of plea for both individuals is scheduled for Sept. 16.
- In an investigation by FBI Atlanta, two individuals were charged in the Northern District of Georgia for their involvement in a Nigeria-based BEC scheme that began with a $3.5 million transfer of funds fraudulently misdirected from a Georgia-based health care provider to accounts across the United States. Two Nigerian nationals, Emmanuel Igomu, 35, of Atlanta, Georgia, and Jude Balogun, 29, of San Francisco, California, have been arrested on charges of aiding and abetting wire fraud for their part in receiving and transmitting monies derived from the BEC.
- Following an investigation by the FBI, Cyril Ashu, 34, of Austell, Georgia; Ifeanyi Eke, 32, of Sandy Springs, Georgia; Joshua Ikejimba, 24, of Houston, Texas; and Chinedu Ironuah, 32, of Houston, Texas, were charged in the Southern District of New York with one count of conspiracy to commit wire fraud and one count of wire fraud for their involvement in a Nigeria-based BEC scheme that impacted hundreds of victims in the United States, with losses in excess of $10 million.
An indictment is merely an allegation and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The cases were investigated by the FBI, U.S. Secret Service, U.S. Postal Inspection Service, ICE’s Homeland Security Investigations (HSI), IRS Criminal Investigation and U.S. Department of State’s Diplomatic Security Service. U.S. Attorney’s Offices in the Districts of Arizona; Central, Eastern and Southern California; Colorado; Delaware; Southern Florida; Northern Georgia; Northern Illinois; Kansas; Eastern Louisiana; Massachusetts; Nebraska; Nevada; Southern New York; Middle North Carolina; Northern Ohio; Oregon; Northern, Western and Southern Texas; Western Tennessee; Eastern Virginia; Eastern Washington, and elsewhere have ongoing investigations some of which have resulted in arrests in Nigeria. The Justice Department’s Computer Crime and Intellectual Property Section, Money Laundering and Asset Recovery Section, and Office of International Affairs of the Criminal Division provided assistance. District Attorney’s Offices of Harris County, Texas; Fort Bend County, Texas; and Washington County, Arkansas are handling state prosecutions. Additionally, private sector partners and the Nigerian Economic and Financial Crimes Commission, Ghana Police Service (GPS) and Economic and Organized Crime Office (EOCO), Turkish National Police (TNP) Cyber Department, Direction Centrale de la Police aux Frontieres (PAF) of France, Squadra Mobile Di Caserta and Italian National Police, National Police Agency of Japan, Tokyo Metropolitan Police Department (TPMD), Royal Malaysian Police, Directorate of Criminal Investigations (DCI) of Kenya and the National Crime Agency (NCA), North Wales Police, Metropolitan Police Service and Hertfordshire Constabulary of the UK provided significant assistance.
This operation serves as a model for international cooperation against specific threats that endanger the financial well-being of each member country’s residents. Deputy Attorney General Rosen expressed gratitude for the outstanding efforts of the participating countries, including law enforcement actions that were coordinated and executed by the Economic and Financial Crimes Commission (EFCC) in Nigeria to curb business email compromise schemes that defraud businesses and individuals alike.
The Justice Department’s efforts to confront the growing threat of cyber-enabled financial fraud led to the formation of the BEC Counteraction Group (BCG), which assists U.S. Attorney’s Offices and the Department with the coordination of BEC cases and the centralization of related expertise. The BCG facilitates communication and coordination between federal prosecutors, serves as a bridge between federal prosecutors and federal agents, centralizes and manages institutional knowledge and training, and participates in efforts to educate the public about protecting themselves and their organizations from BEC scams.
The BCG draws upon the expertise of the following sections within the Department’s Criminal Division: the Computer Crime and Intellectual Property Section, which regularly investigates and prosecutes cases involving computer crimes, including network intrusions; the Fraud Section, which manages complex litigation involving sophisticated fraud schemes; the Money Laundering and Asset Recovery Section, which brings experience in seizing assets obtained through criminal activity; the Office of International Affairs, which plays a central role in securing international evidence and extradition; and the Organized Crime and Gang Section, which contributes strategic guidance in prosecuting complex transnational criminal cases.
Operation reWired was funded and coordinated by the FBI and the Justice Department’s International Organized Crime Intelligence and Operations Center (IOC-2) and follows “Operation Wire Wire,” the first coordinated enforcement action targeting hundreds of BEC scammers. That effort, announced in June 2018, resulted in the arrest of 74 individuals, the seizure of nearly $2.4 million, and the disruption and recovery of approximately $14 million in fraudulent wire transfers.
Victims are encouraged to file a complaint online with the IC3 at bec.ic3.gov. The IC3 staff reviews complaints, looking for patterns or other indicators of significant criminal activity, and refers investigative packages of complaints to the appropriate law enforcement authorities in a particular city or region. The FBI provides a variety of resources relating to BEC through the IC3, which can be reached at www.ic3.gov.
For more information on BEC scams, visit: https://www.ic3.gov/media/2019/190910.aspx.- “Romance scams,” where victims are lulled into believing they are in a legitimate relationship, and are tricked into sending or laundering money under the guise of assisting the paramour with an international business transaction, a U.S. visit, or some other cover story;
Long Island Business Owner Pleads Guilty to Obstructing Tax LawsRead the Press Release
In Central Islip, New York, a Brentwood, New York, business owner pleaded guilty to corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
According to court filings and facts presented at the plea proceeding, Jose Cerritos (Cerritos) owned and operated La Centro Americana Corp. (La Centro), a wholesale food distribution business based in Bay Shore, New York, that sold imported food products for resale to New York metropolitan area customers. Cerritos diverted cash receipts from the business bank accounts, which caused La Centro’s tax returns for 2011 and 2012 to significantly underreport the size of the business - and its profits - to the Internal Revenue Service (IRS). He also filed his own individual income tax returns, falsely understating the income he received from La Centro. Cerritos also gave the IRS false business records, which purported to show La Centro’s yearly sales for 2011 and 2012, but omitted millions of dollars in gross receipts for each year.
United States District Court Judge Joanna Seybert, who accepted Cerritos’ guilty plea, scheduled sentencing for March 6, 2020. Cerritos faces a statutory maximum sentence of three years in prison. He also faces a period of supervised release, restitution, and monetary penalties.
Principal Deputy Assistant Attorney General Zuckerman thanked special agents of the Internal Revenue Service-Criminal Investigation, who conducted the investigation, and Trial Attorneys Sarah Ranney and Mark Kotila of the Tax Division, who are prosecuting the case.
Justice Department Hosts National Public Safety Partnership Symposium, Partners with U.S. Cities to Reduce Violent CrimeRead the Press Release
The Department of Justice today renewed its commitment to reducing violent crime in America, holding its third annual National Public Safety Partnership Symposium.
The National Public Safety Partnership provides a framework for enhancing federal support of state, local and tribal law enforcement officials and prosecutors as they investigate and pursue violent criminals, specifically those involved in gun crime, drug trafficking and gang violence.
“The National Public Safety Partnership is a hallmark program of this administration,” said Katharine T. Sullivan, Principal Deputy Assistant Attorney General for the Department’s Office of Justice Programs. “It effectively works to reduce violent crime, a priority of both Attorney General Barr and President Trump.”
Jon Adler, Director of the Bureau of Justice Assistance – which oversees the partnership program – announced $28 million to provide training and technical assistance to designated partnership sites, as well as to support law enforcement-led and prosecution-based crime reduction efforts in cities across the nation. Funds will also support crime gun intelligence centers in eight sites across the country. These centers focus on the immediate collection, management and analysis of crime gun evidence, such as shell casings, in real time, in an effort to identify violent criminals, disrupt criminal activity and prevent future violence.
“These funds are just the tip of the spear to help law enforcement develop and implement innovative – and proven – strategies to help increase public safety,” said Adler. “In coming weeks, the Justice Department will continue to announce funding awards to communities in support of law enforcement’s commitment to drive down violent crime, aid crime victims and improve justice systems.”
This year’s symposium, which lasts through Sept. 11, brings together more than 400 law enforcement leaders, prosecutors and other officials representing 17 of 41 partnered cities across the U.S. Law enforcement officials from the tristate area surrounding Memphis are also attending.
In June, Attorney General William P. Barr announced the addition of 10 cities and counties to the National Public Safety Partnership, which provides advanced training and technical assistance to cities and counties with elevated rates of violent crime.
“The addition of 10 more partnered sites this year is another critical step in fulfilling President Trump’s commitment to reducing violent crime in America,” said Adler. “The three-year engagement between the Department and each partnered city allows agencies to respond to the diverse needs within their jurisdictions by streamlining access to federal resources for those communities most affected by violent crime.”
To date, the Justice Department has worked with more than 40 cities under the National Public Safety Partnership (PSP) program. Many participating cities have already seen dramatic reductions in violent crime. For example, in Memphis, carjackings decreased 43 percent year-to-date, from March 2018 to March 2019. Additionally, collaboration between the Memphis Police Department and the Federal Bureau of Investigation to process cold-case sexual assault kits resulted in the conviction of a sexual predator in May 2019 who was responsible for kidnapping and raping six women, and attempting to kidnap and rape a seventh, over a period of seven years.
"The U.S. Attorney’s Office for the Western District of Tennessee is proud to participate in the National Public Safety Partnership Initiative here in Memphis and Jackson, Tennessee,” said U.S. Attorney Michael Dunavant. “PSP has allowed us to receive meaningful federal resources of law enforcement training and technical assistance in an innovative framework to enhance data-driven, evidence-based local strategies for violence reduction. The good work of the PSP team stakeholders, including the commitment to targeted enforcement by our federal, state and local law enforcement partners, has resulted in significant reductions in the violent crime rate in key categories, such as business robbery, carjacking and reported gun crimes. We are thankful for all of these resources from the Department of Justice, and we are committed to the continued effective use of these PSP tools to further reduce violent crime in the future."
Other PSP sites have achieved notable successes, as well. For example, New Orleans, Louisiana, ended 2018 with its lowest number of homicides since the early 1970s. In Milwaukee, Wisconsin, homicides declined in 2018 for a third straight year after hitting a peak in 2015.
In addition to local law enforcement and prosecutorial leaders from the participating PSP sites, components in attendance at this year’s symposium include: the Federal Bureau of Investigation; the Office of Community Oriented Policing Services; the Office of Justice Programs; the Office on Violence Against Women; the U.S. Attorneys’ Offices; the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives; the U.S. Drug Enforcement Administration; and the U.S. Marshals Service.
The Justice Department created the National Public Safety Partnership and the Task Force on Crime Reduction and Public Safety in response to President Trump’s Feb. 9, 2017, Executive Order charging the agency with leading a national effort to combat violent crime. The Department announced the formation of the National Public Safety Partnership initiative in June 2017.
For more information about the PSP sites and the Justice Department’s work to reduce violent crime and enhance public safety, visit https://www.nationalpublicsafetypartnership.org.
Owner and Chief Executive Officer of Telemedicine Company Pleads Guilty to $424 Million Conspiracy to Defraud Medicare and Receive Illegal Kickbacks in Exchange for Orders of Durable Medical EquipmentRead the Press Release
The owner and chief executive officer (CEO) of a telemedicine company pleaded guilty today for his role in one of the largest health care fraud schemes ever investigated by the FBI and the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) and prosecuted by the Department of Justice, which resulted in charges in April 2019 against 24 defendants.
Lester Stockett, 52, of Medellin, Colombia, pleaded guilty today to one count of conspiracy to defraud the United States and pay and receive health care kickbacks, and one count of conspiracy to commit money laundering. Stockett was the owner of Video Doctor USA (Video Doctor) and Telemed Health Group LLC (AffordADoc) (collectively, the Video Doctor Network), and was the CEO of AffordADoc. In connection with his plea agreement, Stockett agreed to pay $200 million in restitution to the United States, as well as forfeit assets and property traceable to proceeds of the conspiracy to defraud the United States and conspiracy to commit money laundering. Stockett’s sentencing is set for Dec. 16 before U.S. District Judge Madeline Cox Arleo of the District of New Jersey, who accepted his plea today.
“This CEO and his co-conspirators lined their own pockets with hundreds of millions of dollars by exploiting telemedicine technology meant to help elderly and disabled patients in need of health care,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “Today’s plea shows that the Department of Justice remains laser-focused on uprooting corporate health care fraud schemes, especially those built on the backs of the most vulnerable members of our community.”
“Health care fraud results in billions of dollars in losses and affects a multitude of people across American communities,” said FBI Assistant Director Robert Johnson. “We take violations of these laws extremely seriously. The FBI will use our full investigative resources and continue to collaborate with HHS-OIG, IRS-CI, and other partners to stop this type of illegal activity.”
“The extent of Mr. Stockett's fraud and money laundering, literally, knew no bounds,” said Special Agent in Charge Gregory W. Ehrie of the FBI’s Newark Field Office. “From the U.S. to Latin America, the Philippines, and the Dominican Republic, the FBI followed the trail of ill-gotten gains back to Stockett and his conspirators. They stole precious federal funds earmarked to assist the elderly. His admission today should resonate with anyone who is committing fraud against the U.S. government – the FBI will find you and your criminal efforts will not pay off.”
“This global scheme that took advantage of hundreds of thousands of vulnerable individuals was fueled by unbounded greed without regard for the rules of law,” said Deputy Inspector General for Investigations Gary L. Cantrell of the U.S. Department of Health and Human Services Office of Inspector General. “We will continue to work with our law enforcement partners to bring to justice those that prey on unsuspecting beneficiaries and steal from taxpayer-funded health care programs.”
“Bribes and illegal kickbacks will not be tolerated as part of our nation’s healthcare system,” said Special Agent in Charge John R. Tafur of IRS Criminal Investigation, Newark Field Office. “Medical equipment should only be ordered when medically necessarily, not when criminals wish to line their own pockets. Today’s guilty plea should let the American public know that IRS Criminal Investigation and our law enforcement partners will continue to root out individuals like Mr. Stockett who look to illegally profit off of our health care system.”
In connection with his guilty plea, Stockett admitted that he and others agreed to solicit and receive illegal kickbacks and bribes from patient recruiters, pharmacies, brace suppliers and others in exchange for arranging for doctors to order medically unnecessary orthotic braces (braces) for beneficiaries of Medicare and other insurance carriers. The beneficiaries were contacted through an international telemarketing network that lured hundreds of thousands of elderly and/or disabled patients into a criminal scheme that crossed borders, involving call centers in the Philippines and throughout Latin America.
Stockett admitted that, in order to obtain the orders that were transmitted in exchange for kickbacks and bribes, he and other executives and employees of the Video Doctor Network paid illegal kickbacks and bribes to health care providers to order medically unnecessary braces for Medicare beneficiaries. Many of these orders were written after only a short telephone call between the health care provider and the beneficiary, with whom the health care provider had no prior doctor-patient relationship.
Stockett and others transferred the brace orders to co-conspirator brace suppliers to support more than $424 million in false and fraudulent claims to Medicare that were submitted by brace suppliers, he admitted. Medicare paid these brace suppliers in excess of $200 million for these claims.
Stockett admitted that he and other executives and employees of the Video Doctor Network were aware that it was a violation of the Anti-Kickback Statute for the Video Doctor Network or its owners or investors to receive money, directly or indirectly, from patient recruiters, purported marketers or marketing organizations, brace suppliers or pharmacies. Stockett and his co-conspirators concealed the illegal kickbacks and bribes by causing them to be paid indirectly through nominee companies and bank accounts, opened by Stockett and others in nominee names both in the United States and in foreign countries, including in the Dominican Republic, Stockett admitted. Stockett further admitted that he and others hid the existence of the foreign companies and bank accounts by making, or causing to be made, false statements to financial institutions and falsely reporting to the IRS and others that they and others had no influence over foreign bank accounts.
In addition, Stockett admitted that he and other owners and executives of the Video Doctor Network schemed to defraud investors and others by making false and fraudulent representations that the Video Doctor Network was a legitimate telemedicine enterprise that made revenue of “$10 million per year” and “20% profit” from payments by beneficiaries who enrolled in a membership program and paid for the telemedicine consultations. These statements were false because revenue was obtained by the Video Doctor Network through the receipt of illegal kickbacks and bribes, Stockett admitted.
With regard to money laundering, Stockett admitted that beginning about March 2016 and continuing to about April 2019, he and other owners and executives of the Video Doctor Network conspired to engage in domestic and international money laundering. Specifically, Stockett and his coconspirators transferred in excess of approximately $10 million in illegal kickback payments that they received, from a bank account of PCS CC LLC, a corporation located in the United States, to the bank account of Droneza Consulting, a corporation located in the Dominican Republic. Stockett and others then transferred more than $9.8 million from a bank account of Droneza Consulting to bank accounts of AffordADoc in the United States, in order to conceal that the Video Doctor Network was receiving kickbacks from brace suppliers in exchange for arranging for doctors to write orders that the Video Doctor Network provided to the brace suppliers, Stockett admitted.
Stockett was charged along with Creaghan Harry, 51, of Highland Beach, Florida, and Elliot Loewenstern, 56, of Boca Raton, Florida, in an indictment charging one count of conspiracy to defraud the United States and pay and receive health care kickbacks and four counts of health care kickbacks. Stockett and Harry were separately charged with one count of conspiracy to commit money laundering. The case against Harry and Loewenstern is pending before Judge Arleo. Trial has not been set.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by the FBI, HHS-OIG and IRS-CI. Acting Assistant Chief Jacob Foster and Trial Attorney Darren Halverson of the Criminal Division’s Fraud Section are prosecuting the case.
The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
Any doctors or medical professionals who have been involved with alleged fraudulent telemedicine and DME marketing schemes – including Video Doctor USA and AffordADoc – should call to report this conduct to the FBI hotline at 1-800-CALL-FBI.
Additional documents related to the investigation and prior indictments are available here: https://www.justice.gov/opa/documents-and-resources-april-9-2019-press-release-health-care-fraud.
Houston Attorney Convicted of Offshore Tax Evasion SchemeRead the Press Release
A Houston, Texas, attorney was convicted today of one count of conspiracy to defraud the United States and three counts of tax evasion, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Department of Justice’s Tax Division and U.S. Attorney Ryan K. Patrick for the Southern District of Texas.
According to the evidence presented at trial, Jack Stephen Pursley, also known as Steve Pursley, conspired with a former client to repatriate more than $18 million in untaxed income that the client had earned through his company, Southeastern Shipping. Knowing that his client had never paid taxes on these funds, Pursley designed and implemented a scheme whereby the untaxed funds were transferred from Southeastern Shipping’s business bank account, located in the Isle of Man, to the United States. Pursley helped to conceal the movement of funds from the Internal Revenue Service (IRS) by disguising the transfers as stock purchases in United States corporations owned and controlled by Pursley and his client.
At trial, the government proved that Pursley received more than $4.8 million and a 25% ownership interest in the co-conspirator’s ongoing business for his role in the fraudulent scheme. For tax years 2009 and 2010, Pursley evaded the assessment of and failed to pay the income taxes he owed on these payments by, among other means, withdrawing the funds as purported non-taxable loans and returns of capital. The government showed at trial that Pursley used the money he garnered from the fraudulent scheme for personal investments, and to purchase assets for himself, including a vacation home in Vail, Colorado and property in Houston, Texas.
Judge Lynn Hughes has set sentencing for Dec. 9. Pursley faces a statutory maximum sentence of five years in prison for the conspiracy count, and five years in prison for each count of tax evasion. He also faces a period of supervised release, monetary penalties, and restitution.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Patrick commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Sean Beaty, Grace Albinson, and Jack Morgan of the Tax Division, who prosecuted this case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Federal Court Shuts Down Orlando Tax Return PreparerRead the Press Release
The United States District Court for the Middle District of Florida has permanently barred defendant Gladys Quiles from preparing federal tax returns for others, the Justice Department announced today.
The complaint filed by the United States alleged that Quiles did not sign the tax returns she prepares and does not identify herself in any way on the returns, instead operating as a “ghost preparer.” The complaint further alleged that she repeatedly and continually prepared tax returns that understated liabilities and overstated refunds. Her alleged schemes included fabricating business income or expenses reported on Schedule C, Profit or Loss from Business, and deducting false employee business expenses on Schedule A, Itemized Deductions.
The injunction was entered against Quiles by default because she failed to defend against the government’s allegations. The complaint alleges that Quiles lives in Orlando, Florida.
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2019 and taxpayers seeking a return preparer should remain vigilant. Ghost preparers neither sign the returns they prepare nor include their Preparer Tax Identification Number (PTIN) on those returns, despite their obligations to do so. The IRS has cautioned taxpayers about ghost preparers because ghost preparers can hurt honest taxpayers who are simply trying to do the right thing and file a legitimate tax return. The IRS has information on its website about selecting a return preparer and has launched a free directory of federal tax preparers.
In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Austin Man Sentenced to Prison in Tax Fraud SchemeRead the Press Release
Two Austin, Texas, residents were sentenced today for criminal offenses arising out of a seven-year scheme to defraud the Internal Revenue Service (IRS), announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
United States District Court Judge Xavier Rodriguez sentenced Michael Herman to 21 months in prison, and Cynthia Herman to five years of probation. On May 20, 2019, an Austin jury convicted Michael Herman and Cynthia Herman (the “Hermans”) of conspiring to defraud the United States by impeding and impairing the IRS and filing false 2010 and 2011 individual income tax returns. Michael Herman was also convicted of filing false 2010 through 2012 corporate income tax returns.
According to evidence introduced at trial and witness testimony, the Hermans owned and operated: Cindy’s Gone Hog Wild, a restaurant and bar in Travis County, Texas, and two restaurants in Bastrop County, Texas, Cindy’s Downtown and Hasler Brothers Steakhouse. The Hermans skimmed cash from the restaurants by depositing only a portion of the cash receipts into their business bank accounts and reporting only those limited deposits on the corporate and individual income tax returns. The Hermans also paid for personal expenses out of the business accounts, including repair of their swimming pool, utilities for their home and the salary of a household employee. As a result, the personal returns filed by the Hermans falsely underreported income and businesses’ corporate returns and falsely deducted personal expenses as business expenses.
Judge Rodriguez also ordered the defendants to pay $157,719 in restitution, and Michael Herman to serve three years of supervised release.
Principal Deputy Assistant Attorney General Zuckerman thanked agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorneys Robert A. Kemins and David Zisserson, who prosecuted the case. Principal Deputy Assistant Attorney General Zuckerman also thanked the U.S. Attorney’s Office for the Western District of Texas (Austin Division) for their substantial assistance.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Justice Department Sues to Block Novelis's Acquisition of AlerisRead the Press Release
The Department of Justice filed a civil antitrust lawsuit today seeking to block Novelis Inc.’s proposed acquisition of Aleris Corporation in order to preserve competition in the North American market for rolled aluminum sheet for automotive applications, commonly referred to as aluminum auto body sheet.
The Antitrust Division’s lawsuit alleges that the transaction would combine two of only four North American producers of aluminum auto body sheet. Automakers rely on Novelis and Aleris to produce aluminum parts for automobiles to make cars lighter, more fuel-efficient, safer and more durable. The department filed its lawsuit in the U.S. District Court for the Northern District of Ohio.
The Antitrust Division has agreed with defendants to refer the matter to binding arbitration should certain conditions be triggered. The arbitration would resolve the issue of product market definition. The arbitration would take place pursuant to the Administrative Dispute Resolution Act of 1996 (5 U.S.C. § 571 et seq.) and the Antitrust Division’s implementing regulations (61 Fed. Reg. 36,896 (July 15, 1996)). This would mark the first time the Antitrust Division is using this arbitration authority to resolve a matter.
“Automakers increasingly need aluminum auto body sheet to satisfy American consumers’ demand for larger vehicles that are lighter and more fuel-efficient. The loss of a competing supplier of aluminum auto body sheet ultimately would harm American car buyers,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “This arbitration would allow the Antitrust Division to resolve the dispositive issue of market definition in this case efficiently and effectively, saving taxpayer resources. Alternative dispute resolution is an important tool that the Antitrust Division can and will use, in appropriate circumstances, to maximize its enforcement resources to protect American consumers.”
As alleged in the complaint, Aleris is an aggressive competitor whose expansion into the North American market had an immediate impact on pricing in North America. If this deal were allowed to proceed, Novelis would lock up 60 percent of projected total domestic capacity and the vast majority of uncommitted capacity, enabling the company to raise prices, reduce innovation and provide less favorable terms of service to the detriment of automakers and ultimately American consumers. Novelis’s acquisition of Aleris would eliminate a rival it described as “poised for transformational growth.” The complaint quotes internal presentations and emails describing an anticompetitive rationale for the transaction:
- Novelis worried that Aleris could be sold to a “[n]ew market entrant in the US with lower pricing discipline” than Novelis, and that an “[a]lternative buyer [was] likely to bid aggressively and negatively impact pricing” in the market.
- “[A]n acquisition by us as the market leader will help preserve the industry structure versus a new player . . . coming into our growth markets and disturbing the industry structure to create space for himself, while hurting us the most.”
Novelis is a Canadian corporation headquartered in Atlanta, Georgia. It offers flat-rolled aluminum products in three segments: automotive, beverage can and specialty products. In the fiscal year ending March 31, 2019, Novelis’s revenues were approximately $12.3 billion. Novelis is a wholly-owned subsidiary of Hindalco Industries Ltd., an Indian company headquartered in Mumbai, India.
Aleris is a Delaware corporation headquartered in Cleveland, Ohio. It offers flat-rolled aluminum products to the automotive, aerospace, and building and construction industries, among others. In 2018, Aleris’s revenues were approximately $3.4 billion.
Judge Decides CVS-Aetna Final Judgment is in the Public Interest and Grants United States' MotionRead the Press Release
A federal district court in Washington, D.C. today entered a final order giving effect to the settlement that the Department of Justice reached with CVS Health Corporation and Aetna Inc., which required the parties to divest Aetna’s Medicare Part D prescription drug plan (PDP) business for individuals in order to proceed with their $69 billion merger. The divestiture to WellCare Health Plans Inc., an experienced health insurer focused on government-sponsored health plans, including Medicare Part D individual prescription drug plans, resolved the department’s competition concerns with the underlying transaction.
“I am pleased with the Court’s decision finally to enter the judgment as ‘well within the reaches of the public interest’ !” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “The divestiture of Aetna’s individual PDP business provides a comprehensive remedy to the harms the Justice Department identified. The entry of the Final Judgment protects seniors and other vulnerable customers of individual PDPs from the anticompetitive effects that would have occurred if CVS and Aetna had merged their individual PDP businesses.”
The department’s Antitrust Division, along with the offices of five state Attorneys General, filed a civil antitrust lawsuit on Oct. 10, 2018, in the U.S. District Court for the District of Columbia to enjoin the proposed transaction. At the same time, the department and the Plaintiff States filed the proposed settlement, which the Court entered today. The participating state Attorneys General offices represent California, Florida, Hawaii, Mississippi and Washington.
CVS, headquartered in Woonsocket, Rhode Island, is the nation’s second-largest provider of individual prescription drug plans, with approximately 4.8 million members. It also operates a retail pharmacy chain and a pharmacy benefit manager called Caremark. CVS earned revenues of approximately $185 billion in 2017.
Aetna, headquartered in Hartford, Connecticut, was the nation’s third-largest health-insurance company and fourth-largest individual prescription drug plan insurer, with over two million prescription drug plan members. Aetna earned revenues of approximately $60 billion in 2017.
Justice Department Settles Immigration-Related Discrimination Claim Against Security CompanyRead the Press Release
The Department of Justice announced today that it has reached a settlement agreement with U.S. Security Associates Inc. (USSA), which was recently acquired by Allied Universal Holdco LLC (Allied Universal) – the largest private security firm in the United States. Prior to its acquisition, USSA provided security services to hospitals, schools, financial institutions, government facilities, events, and other businesses. The settlement resolves a claim that USSA’s Falls Church, Virginia office violated the anti-discrimination provision of the Immigration and Nationality Act (INA) by discriminating against work-authorized non-U.S. citizens when verifying their work authorization. The settlement applies to USSA and Allied Universal.
“The Department of Justice is committed to ensuring that employers do not unlawfully discriminate because of citizenship status or national origin when requesting documents to verify employees’ work authorization,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “We are pleased that USSA and its successor, Allied Universal, have agreed to resolve this matter with the Division and ensure that their Falls Church office complies with the anti-discrimination provision of the INA.”
The Department’s independent investigation concluded that, from at least Jan. 1, 2015, to July 30, 2018, USSA’s Falls Church, Virginia, office required lawful permanent residents to provide specific documentation to prove their work authorization, while not imposing a similar requirement on U.S. citizens. Federal law allows all work-authorized individuals, regardless of citizenship status, to choose which valid, legally acceptable documents to present to demonstrate their ability to work in the United States. The anti-discrimination provision of the INA prohibits employers from requesting more or different documents than necessary to prove work authorization based on employees’ citizenship status or national origin.
Under the settlement, USSA or its successor will pay $194,000 in civil penalties to the United States and be subject to departmental monitoring and reporting requirements. Additionally, certain employees will be required to attend training on the requirements of the INA’s anti-discrimination provision.
The Division’s Immigrant and Employee Rights Section (IER) is responsible for enforcing the anti-discrimination provision of the INA. Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; unfair documentary practices; and retaliation and intimidation.
For more information about protections against employment discrimination under immigration laws, call IER’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call IER’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar; email [email protected]; or visit IER’s English and Spanish websites.
Applicants or employees who believe they were subjected to retaliation; different documentary requirements based on their citizenship, immigration status, or national origin; or discrimination based on their citizenship, immigration status, or national origin in hiring, firing, or recruitment or referral for a fee, should contact IER’s worker hotline for assistance.
District Court Orders Tennessee Companies and Their Owner to Stop Distributing Unapproved New Drugs and Misbranded and Adulterated Dietary SupplementsRead the Press Release
A federal court entered a consent decree of permanent injunction against defendants Basic Reset and Biogenyx, as well as their owner, Fred R. Kaufman III, and Kimberly Kaufman, the Department of Justice announced today. The permanent injunction enjoins the defendants from distributing unapproved new drugs and misbranded and adulterated dietary supplements, and a misbranded and adulterated device in violation of the federal Food, Drug, and Cosmetic Act (FD&C Act).
The Department filed a complaint in the Middle District of Tennessee on Aug. 26, at the request of the U.S. Food and Drug Administration (FDA), alleging, among other things, that defendants unlawfully distributed unapproved new drugs and an adulterated and misbranded device. Defendants market their drugs and device with claims that their products can be used to diagnose, cure, mitigate, treat, or prevent conditions, such as inflammation, chronic diarrhea, bacterial infections, head lice, allergies, and pain. The FDA has not approved Basic Reset’s or Biogenyx’s drugs or device for any use.
“Drug and dietary supplement distributors who do not comply with the law risk endangering consumers,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “We work closely with the FDA in our efforts to enforce the laws that are designed to keep consumers safe.”
“The public has the right to expect that products perform according to claims included in their labeling and that the products are safe for use,” said U.S. Attorney Don Cochran. “FDA regulations exists to safeguard consumers and when those regulations are circumvented we will take whatever action is necessary to protect the public.”
“Americans expect and deserve products that meet appropriate standards for quality. To ensure safe use by consumers, it’s important that companies who sell products adhere to standards set forth by the FD&C Act, including product labeling and quality,” said Acting FDA Commissioner Ned Sharpless, M.D. “Despite previous warnings, Basic Reset and Biogenyx placed consumers at risk by distributing certain products in violation of current good manufacturing practice (CGMP) requirements and products which failed to adequately meet labeling standards. The U.S. Food and Drug Administration remains fully committed to taking enforcement action against companies and owners who place unsuspecting American consumers at risk.”
The complaint also alleges that Basic Reset and Biogenyx misbranded and adulterated dietary supplements. Several of Defendants’ dietary supplements are missing information on their labels required by law. FDA inspections also uncovered numerous violations of the agency’s CGMP regulations for dietary supplements, including failing to establish and follow written procedures to review and investigate product complaints and failing to establish specifications to assure that the products they receive for labeling are adequately identified and consistent with the purchase order. Because Defendants failed to follow CGMP regulations, their dietary supplements are adulterated under the FD&C Act.
Basic Reset/Biogenyx is an own label distributor of various drugs, dietary supplements, and a device, and include, but are not limited to, AquaLyte, Bee Gold, Beta Factor, Body Mass Reset, CBD Reset, Dino-Min, Earth Wash, Energy FX, GH-C, Ionyte, Mello-Tonin, Miracle Facelift Masque, Nuovi Firming Masque, Nuovi Skin Toner, pH-FX, Q-min, SlimUp, TrimUp, Vibrant Energy Drink, and Energy FX.
As part of the court-ordered permanent injunction, Basic Reset, Biogenyx, and the other defendants are prohibited from receiving, labeling, holding, or distributing dietary supplements, drugs, or devices at their facility until they, among other things, recall their drugs, dietary supplements, and device, hire qualified experts, and receive written permission from the FDA to resume operations.
The United States is represented by Trial Attorney Charles Biro of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Christopher Sabis of the U.S. Attorney’s Office for the Middle District of Tennessee, with the assistance of Associate Chief Counsel Laura Akowuah of the FDA’s Office of the Chief Counsel.
Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch.
Four Peruvians Sentenced for Overseeing Spanish-Speaking Call Centers That Threatened and Extorted U.S. ConsumersRead the Press Release
Four residents of Lima, Peru, charged with overseeing a series of call centers that threatened and extorted Spanish-speaking victims in the United States, have been sentenced to prison, the Department of Justice and U.S. Postal Inspection Service announced.
Jesus Gutierrez Rojas, 37, Alexandra Podesta Bengoa, 38, Virgilio Polo Davila, 43, and Omar Portocarrero Caceres, 39, were extradited from Peru in April. Each pleaded guilty to extortion and has now been sentenced to prison by U.S. District Court Judge Roy K. Altman in Fort Lauderdale. As part of his guilty plea, Gutierrez admitted that he oversaw a series of affiliated call centers in Peru that falsely told Spanish-speaking victims across the United States that they had incurred debts and would suffer various consequences for failure to pay off the debts that they did not, in fact, owe. As part of their guilty pleas, Podesta, Polo, and Portocarrero admitted that they managed and supervised three of these affiliated call centers that used extortion to obtain money from vulnerable U.S. consumers.
Yesterday, Judge Altman sentenced Gutierrez to 51 months in federal prison for his role overseeing the affiliated call centers and sentenced Podesta and Polo to 46 months imprisonment. Judge Altman sentenced Portocarrero to 46 months in federal prison on July 24. Each defendant was also ordered to serve three years’ supervised release following their terms of incarceration and to make restitution payments to the victims of their scheme.
“The Department of Justice is committed to identifying and prosecuting foreign-based fraud schemes that target and extort U.S. consumers,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “Today’s prison sentences reflect that those who unlawfully take advantage of U.S. consumers by phone cannot escape justice by placing their calls from abroad. The Department of Justice’s Consumer Protection Branch will continue to work hand-in-hand with our Transnational Elder Fraud Strike Force partners to bring to justice international fraudsters who prey on vulnerable U.S. consumers.”
As part of their guilty pleas, Podesta, Polo, and Portocarrero each admitted that their Peruvian call centers contacted U.S. consumers, many of whom were elderly and vulnerable, using Internet-based calls. Falsely claiming to be attorneys and government representatives, Podesta, Polo, Portocarrero, and their employees falsely told victims that they failed to pay for or receive a delivery of products and threatened them into paying fraudulent settlements for nonexistent debts. The callers falsely threatened victims with lawsuits, negative marks on their credit reports, imprisonment, or immigration consequences if they did not immediately pay for the purportedly delivered products and “settlement fees.” Many victims made monetary payments based on these baseless extortionate threats.
Gutierrez was the general manager of a larger company where he worked in partnership with Podesta, Polo, Portocarrer, and others to facilitate their extortion scheme. The defendants’ associates in Miami collected the payments from thousands of victims across the U.S.
“The reach of our U.S. justice system is long,” said U.S. Attorney for the Southern District of Florida Ariana Fajardo Orshan. “The sentences imposed demonstrate that we are committed to prosecuting those individuals who threaten U.S. consumers no matter where they are located.”
“The U.S. Postal Inspection Service will continue to aggressively pursue and bring to justice international criminal enterprises that prey on our most vulnerable citizens by fraudulently using the U.S. Mail to further their schemes,” said Acting Miami Division Postal Inspector in Charge Lesley Allison.
At Portocarrero’s July 24 sentencing, Judge Altman said that the brazen, large-scale nature of the defendants’ scheme was “shocking.” Judge Altman noted that the defendants exploited “the most vulnerable people in our country” and said that their offense conduct was “terribly disgraceful.”
With yesterday’s three sentencings by Judge Altman, all five defendants who have been charged in connection with this large-scale extortion scheme have now been sentenced to terms of imprisonment.
Trial Attorney Phil Toomajian of the Department of Justice’s Consumer Protection Branch is prosecuting the case. The U.S. Postal Inspection investigated the case. The Criminal Division’s Office of International Affairs secured the extradition of the defendants, and the U.S. Attorney’s Office of the Southern District of Florida, the Diplomatic Security Service, and the Peruvian National Police provided critical assistance.
Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors. In particular, this past March the Department announced the largest elder fraud enforcement action in American history, charging more than 260 defendants in a nationwide elder fraud sweep. The Department has likewise conducted hundreds of trainings and outreach sessions across the country since the passage of the Act.
Drug Enforcement Administration Special Agent Convicted of Perjury, Obstruction of Justice, and Falsification of Government RecordsRead the Press Release
WASHINGTON - A U.S. Drug Enforcement Administration (DEA) special agent was convicted on August 27, 2019 by a federal jury in New Orleans, Louisiana of perjury, obstruction of justice and falsifying government records.
After a seven-day trial, Chad A. Scott, 51, of Covington, Louisiana, was found guilty of two counts of perjury, three counts of obstruction of justice and two counts of falsifying government records. U.S. District Judge Jane Triche Milazzo of the Eastern District of Louisiana, who presided over the trial, has scheduled sentencing for Dec. 4, 2019.
According to the evidence presented during the seven-day trial, Scott, while a DEA special agent in New Orleans, committed these crimes in and around the New Orleans, Louisiana, and Houston, Texas, areas. Specifically, the evidence showed that Scott directed a Houston-based drug trafficker to buy a Ford F-150 truck worth approximately $43,000 and forfeit the truck to Scott as part of the drug trafficker’s cooperation. Scott then falsified the seizure paperwork for the truck in various aspects, including falsely claiming that he had seized the truck in New Orleans instead of Houston, in order to facilitate the vehicle being forfeited and given to Scott as his official government vehicle.
“Chad Scott violated his sworn commitment to serve the public and uphold justice, dishonoring the special trust that we place in each of our federal law enforcement agents,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “Today’s conviction sends a clear message to the public that malfeasance by federal law enforcement officers will not be tolerated.”
“The conviction of Chad Scott reinforces the message that no one is above law,” said FBI Assistant Special Agent in Charge Riedlinger. “Scott’s actions were selfish and placed an unnecessary stain on an otherwise stellar agency. We commend our partners at the DEA for their unprecedented level of cooperation throughout this investigation.”
“The criminal justice system relies on law enforcement agents to act with integrity and honesty. By soliciting bribes and compromising cases, Scott undermined the values he swore to uphold as a federal agent,” said Special Agent in Charge Robert A. Bourbon of the Justice Department’s Office of the Inspector General (DOJ-OIG). “The Office of the Inspector General will continue to be vigilant that corrupt law enforcement agents are held accountable.”
“At its core, DEA is a law enforcement agency committed to faithful and effective service to our country and its citizens, as well as uncompromising personal and institutional integrity,” said DEA Chief Inspector Brian McKnight. “Throughout the course of this investigation and its ultimate trial, DEA was appreciative of the professionalism and support that we received from our law enforcement partners.”
Additionally, the evidence showed that Scott convinced the same Houston-based drug trafficker, as well as another drug trafficker in Houston, to testify falsely at a federal trial in New Orleans as to the identification of a major cocaine and heroin supplier in the Houston area. Along with obstructing justice by inducing this false testimony, Scott then himself committed perjury during a motion session as well as during the federal trial, the evidence showed. After a trial including this false testimony, the alleged supplier was found guilty. Once Scott’s actions and the false testimony came to light, the case against the alleged supplier was dismissed by the court at the request of the United States.
Scott has been indefinitely suspended as a DEA special agent.
Two other former Tangipahoa Parish, Louisiana Sheriff’s Office deputies who were serving as DEA task force officers in New Orleans have pleaded guilty in this investigation. Karl Emmett Newman, 52, of Kentwood, Louisiana, pleaded guilty to unlawfully carrying a firearm in furtherance of an August 2015 robbery, which was disguised as the execution of a search warrant, as well as misappropriating money confiscated by the DEA during another search. Johnny Domingue, 30, of Maurepas, Louisiana, pleaded guilty to possession of cocaine and misappropriating money confiscated by the DEA.
Scott is additionally charged, along with Rodney Gemar, 43, of Ponchatoula, Louisiana, a former Hammond, Louisiana police officer and DEA task force officer, with various counts, including unlawful conversion of property by a government officer or employee and removing property to prevent seizure. Trial on those charges is set for October 2019. Those charges are only allegations and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This case was initially investigated by the Louisiana State Police and later investigated by the FBI’s New Orleans Field Division, DEA-OPR and DOJ-OIG. Acting Deputy Chief Charles Miracle of the Criminal Division’s Narcotic and Dangerous Drug Section and Trial Attorney Timothy Duree of the Criminal Division’s Fraud Section are prosecuting the case.
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District Court Orders Texas Company to Stop Selling Adulterated FoodRead the Press Release
A federal court permanently enjoined a Houston, Texas, company from processing and distributing adulterated seafood products in violation of federal law, the Department of Justice announced today.
The entered consent decree of permanent injunction follows an August 2019 complaint filed by the Department for the U.S. Food and Drug Administration (FDA) in the U.S. District Court for the Southern District of Texas. The complaint alleged that Topway Enterprises, doing business as Kazy’s Gourmet, and the principals of the business, Jeff Liao, Ying Chen, and Adwin Liao, sold ready-to-eat fish and fishery products in a facility with serious insanitary conditions. Specifically, the complaint alleged that FDA inspections found that the defendants failed to adequately control the growth of Listeria monocytogenes (L. mono) at their facility.
The defendants agreed to settle the litigation by the entered consent decree of permanent injunction. As part of the settlement, the defendants must comply with specific remedial measures set forth in the injunction. In addition, the settlement provides safeguards to ensure that future processing of ready-to-eat raw fish at the defendants’ facility comports with the requirements of the law. The filing of the complaint and agreed settlement follows FDA’s decision in July 2019 to exercise its authority under federal law to suspend the defendants’ food facility registration. The complaint alleges that, since the suspension, the defendants have taken positive steps to correct the problems at their facility.
“The Department of Justice is committed to enforcing laws designed to ensure that the food we put on our tables is safe,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “We will continue to work with the FDA to take steps necessary to protect the public from potentially unsafe food.”
“One of our many important enforcement priorities is to help ensure food is safe,” said U.S. Attorney Ryan K. Patrick. “This action will help ensure compliance with federal law and FDA rules and regulations. I’m glad we were able to reach this resolution.”
“After documenting food safety violations at the Topway facility, the FDA took action to suspend Topway’s food facility registration, which prohibits the company from selling or distributing food from the facility into commerce,” said FDA Deputy Commissioner for Food Policy and Response Frank Yiannas. “We are happy the company is taking steps to correct the severe problems at their facility and the FDA continues to work with the company as it brings its facility into compliance.”
This matter was handled by Trial Attorney Joshua D. Rothman of the Civil Division’s Consumer Protection Branch, with the assistance of Assistant U.S. Attorney Andrew A. Bobb of the U.S. Attorney’s Office for the Southern District of Texas and Senior Counsel Barbara Alkalay of the Food and Drug Administration’s Office of the Chief Counsel.
For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at https://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Southern District of Texas, visit its website at https://www.justice.gov/usao-sdtx.
Department of Justice Announces Fifth Expansion of Program to Enhance Tribal Access to National Crime Information DatabasesRead the Press Release
The Department of Justice is pleased to announce the fifth expansion of the Tribal Access Program (TAP), a program providing federally recognized tribes with enhanced ability to access and exchange data with the national crime information databases for both criminal justice and non-criminal justice purposes.
TAP provides federally recognized tribes the ability to access and exchange data with national crime information databases for both civil and criminal purposes and provides training as well as software and biometric/biographic kiosk workstations to process finger and palm prints. TAP also gives Tribes the ability to take mugshots and submit information to FBI CJIS. By the end of 2019, TAP will be deployed to more than 70 tribes with over 300 Tribal agencies participating.
The department will accept applications from September 1 through October 31, 2019. Eligible tribes that are selected for participation will be notified in November.
“The TAP program continues to give a growing number of tribes the ability to share criminal and civil information, and the access to data that helps solve crimes and protect the public,” said Deputy Attorney General Jeffrey A. Rosen. “The TAP program is just one example of our commitment to tribal, state, and local law enforcement partnerships that strengthen public safety across the United States.”
Utilizing TAP, tribes have registered sex offenders; entered orders of protection for notice and enforcement nationwide; run criminal histories that resulted in arrests and warrants being served; entered bookings and convictions; and completed thousands of fingerprint-based record checks for non-criminal justice purposes such as screening employees or volunteers who work with children.
For FY20, the department offers TAP services through one of the following two methods:
- TAP-LIGHT: The department provides software that provides full access (both query and entry capabilities) to national crime information databases such as National Crime Information Center (NCIC), the Interstate Identification Index (III) and the International Justice and Public Safety Network (Nlets) for both criminal and civil purposes; and
- TAP-FULL: The department provides the same basic capabilities as TAP-LIGHT listed above, and also provides an additional hardware/software solution in the form of a kiosk-workstation that provides the ability to submit and query fingerprint-based transactions via FBI’s Next Generation Identification (NGI) for both criminal and civil purposes.
“The Tribal Access Program now in use by the San Pasqual Band of Mission Indians Police Department has been one of the very best investigative tools that could have been obtained by that department,” said San Pasqual Tribal Chairman Stephen W. Cope. “Investigators from the Police Department, using various systems in the TAP program, identified a drug dealer responsible for counterfeit oxycodone/fentanyl pills that caused the death of a tribal member. That dealer was surveilled and arrested while doing a 200-pill deal. A search warrant served on his home revealed another batch of 200 fentanyl pills and a large quantity of heroin and cocaine.”
“Tulalip Tribes have utilized the Tribal Access Program since 2016, for several programs which has expanded Tulalip’s access to criminal justice information,” said Tulalip Tribal Chairperson Teri Gobin. “We are able to register and track sex offenders entering and residing in Tulalip to provide better oversight and protections for our members and community. It has been instrumental in running our background checks of applicants who will have direct supervision over children to ensure our youth are being safely cared for. Lastly, our child welfare department is able to have fingerprint criminal background checks processed to review potential placements to ensure our children are in safe homes. We are quite pleased with the ease of use and prompt return of useful information.”
TAP relies on federal laws that provide tribes access for specific purposes, which include:
- Criminal justice uses: law enforcement, corrections, probation/parole, prosecution, criminal courts and pretrial services.
- Non-criminal justice uses: sex offender registry, housing, child support enforcement, agencies whose employees or volunteers have contact with or control over Indian children, Head Start programs, social service agencies that investigate allegations of abuse or neglect, and civil courts that issue orders of protection.
Given the funding sources, eligible tribes must have and agree to use TAP for:
- A sex offender registry authorized by the Adam Walsh Child Protection and Safety Act;
- A law enforcement agency that has arrest powers; or
- Any use that provides services to victims of crime, such as a Tribal Court which issues orders of protection
TAP is funded by the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking (SMART), the Office of Community Oriented Policing Services (COPS), and the Office for Victims of Crime (OVC). TAP is co-managed by the Office of the Chief Information Officer (OCIO) and Office of Tribal Justice (OTJ).
For more information about TAP, visit: www.justice.gov/tribal/tribal-access-program-tap
Third Point Funds to Pay $609,810 Civil Penalty and Be Subject to Injunction for Violating Antitrust Premerger Notification RequirementsRead the Press Release
The Justice Department announced today that it will require Third Point LLC and three funds it manages (Third Point Offshore Fund Ltd., Third Point Ultra Ltd., and Third Point Partners Qualified L.P.) to pay a $609,810 civil penalty and be subject to injunction for violating antitrust premerger notification requirements in connection with the three funds’ acquisition of shares of DowDupont Inc.
The Justice Department’s Antitrust Division, at the request of the Federal Trade Commission (FTC), filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C. against Third Point LLC and three funds it manages for violating the premerger notification and waiting period requirements of the Hart-Scott-Rodino (HSR) Act of 1976. At the same time, the department filed a proposed settlement, subject to approval by the court, under which the three Third Point funds have agreed collectively to pay a $609,810 civil penalty to resolve the lawsuit. The settlement also includes injunctive relief, under which Third Point LLC and the three funds are prohibited from undertaking similar acquisitions without complying with notification and waiting period requirements of the HSR Act.
The HSR Act imposes notification and waiting period requirements for transactions meeting certain size thresholds so that they can undergo premerger antitrust review. Federal courts can assess civil penalties for premerger notification violations under the HSR Act in lawsuits brought by the department. The maximum civil penalty for an HSR violation, which is adjusted annually, is currently $42,530 per day.
Further details about this matter are described in the FTC’s press release issued today, and in the attached complaint and competitive impact statement.
As required by the Tunney Act, the proposed settlement, along with the competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Kenneth A. Libby, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, D.C. 20580. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the final judgment upon a finding that it serves the public interest.
Drug Enforcement Administration Special Agent Convicted of Perjury, Obstruction of Justice and Falsification of Government RecordsRead the Press Release
A U.S. Drug Enforcement Administration (DEA) special agent was convicted yesterday by a federal jury in New Orleans, Louisiana of perjury, obstruction of justice and falsifying government records.
After a seven-day trial, Chad A. Scott, 51, of Covington, Louisiana, was found guilty of two counts of perjury, three counts of obstruction of justice and two counts of falsifying government records. U.S. District Judge Jane Triche Milazzo of the Eastern District of Louisiana, who presided over the trial, has scheduled sentencing for Dec. 4, 2019.
According to the evidence presented during the seven-day trial, Scott, while a DEA special agent in New Orleans, committed these crimes in and around the New Orleans, Louisiana, and Houston, Texas, areas. Specifically, the evidence showed that Scott directed a Houston-based drug trafficker to buy a Ford F-150 truck worth approximately $43,000 and forfeit the truck to Scott as part of the drug trafficker’s cooperation. Scott then falsified the seizure paperwork for the truck in various aspects, including falsely claiming that he had seized the truck in New Orleans instead of Houston, in order to facilitate the vehicle being forfeited and given to Scott as his official government vehicle.
“Chad Scott violated his sworn commitment to serve the public and uphold justice, dishonoring the special trust that we place in each of our federal law enforcement agents,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “Today’s conviction sends a clear message to the public that malfeasance by federal law enforcement officers will not be tolerated.”
“The conviction of Chad Scott reinforces the message that no one is above law,” said FBI Acting Special Agent in Charge Anthony T. Riedlinger. “Scott’s actions were selfish and placed an unnecessary stain on an otherwise stellar agency. We commend our partners at the DEA for their unprecedented level of cooperation throughout this investigation.”
“The criminal justice system relies on law enforcement agents to act with integrity and honesty. By soliciting bribes and compromising cases, Scott undermined the values he swore to uphold as a federal agent,” said Special Agent in Charge Robert A. Bourbon of the Justice Department’s Office of the Inspector General (DOJ-OIG). “The Office of the Inspector General will continue to be vigilant that corrupt law enforcement agents are held accountable.”
“At its core, DEA is a law enforcement agency committed to faithful and effective service to our country and its citizens, as well as uncompromising personal and institutional integrity,” said DEA Chief Inspector Brian McKnight. “Throughout the course of this investigation and its ultimate trial, DEA was appreciative of the professionalism and support that we received from our law enforcement partners.”
Additionally, the evidence showed that Scott convinced the same Houston-based drug trafficker, as well as another drug trafficker in Houston, to testify falsely at a federal trial in New Orleans as to the identification of a major cocaine and heroin supplier in the Houston area. Along with obstructing justice by inducing this false testimony, Scott then himself committed perjury during a motion session as well as during the federal trial, the evidence showed. After a trial including this false testimony, the alleged supplier was found guilty. Once Scott’s actions and the false testimony came to light, the case against the alleged supplier was dismissed by the court at the request of the United States.
Scott has been indefinitely suspended as a DEA special agent.
Two other former Tangipahoa Parish, Louisiana Sheriff’s Office deputies who were serving as DEA task force officers in New Orleans have pleaded guilty in this investigation. Karl Emmett Newman, 52, of Kentwood, Louisiana, pleaded guilty to unlawfully carrying a firearm in furtherance of an August 2015 robbery, which was disguised as the execution of a search warrant, as well as misappropriating money confiscated by the DEA during another search. Johnny Domingue, 30, of Maurepas, Louisiana, pleaded guilty to possession of cocaine and misappropriating money confiscated by the DEA.
Scott is additionally charged, along with Rodney Gemar, 43, of Ponchatoula, Louisiana, a former Hammond, Louisiana police officer and DEA task force officer, with various counts, including unlawful conversion of property by a government officer or employee and removing property to prevent seizure. Trial on those charges is set for October 2019. Those charges are only allegations and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
This case was initially investigated by the Louisiana State Police and later investigated by the FBI’s New Orleans Field Division, DEA-OPR and DOJ-OIG. Acting Deputy Chief Charles Miracle of the Criminal Division’s Narcotic and Dangerous Drug Section and Trial Attorney Timothy Duree of the Criminal Division’s Fraud Section are prosecuting the case.
Detroit Area Businessperson Pleads Guilty to Payroll Tax CrimeRead the Press Release
A Walled Lake, Michigan, businessperson, who owned a restaurant and an adult entertainment facility, pleaded guilty today to willful failure to pay over employment taxes and failure to file an individual income tax return, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.
According to the indictment and the plea agreement, Johni Semma owned Bayside Sports Bar & Grill (Bayside), a restaurant, and “The Coliseum,” an adult entertainment business. As the owner of Bayside, Semma was responsible for collecting and paying over Bayside’s employment taxes. From the first quarter of 2008 through the first quarter of 2015, Semma caused the restaurant to withhold payroll taxes from employees’ paychecks, but filed only two of the 29 Forms 941 required for those quarters and failed to pay over to the Internal Revenue Service (IRS) approximately $1.3 million in employment taxes. Although Semma sold “The Coliseum” in 2012 for more than $6 million, he did not pay the delinquent payroll taxes. Semma also did not file a 2012 individual income tax return, resulting in a tax loss of approximately $463,000.
United States District Court Judge Paul D. Borman scheduled Semma’s sentencing for Jan. 30, 2020. Semma faces up to six years in prison, as well as a term of supervised release and monetary penalties. Semma also agreed to pay almost $1.8 million in restitution to the IRS.
Principal Deputy Assistant Attorney General Zuckerman commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys Kenneth Vert and Brittney Campbell, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the Division’s website.
Assistant Attorney General Makan Delrahim Announces Selection of Kathy O'Neill as the Antitrust Division's New Senior Director of Investigation and LitigationRead the Press Release
Assistant Attorney General Makan Delrahim of the Justice Department's Antitrust Division today announced the elevation of Section Chief Kathy O’Neill to the new role of Senior Director of Investigations and Litigation. O’Neill, who most recently served as Chief of the Antitrust Division’s Transportation, Energy and Agriculture Section, will serve in the division’s front office as the senior-most career civil antitrust attorney, with responsibility over all civil merger and conduct investigations and litigation.
“Kathy has proven her extraordinary talent as a leader in the Antitrust Division time and again, helping bring a number of blockbuster investigations to successful resolutions in recent years. Her leadership, breadth of experience and advocacy have been invaluable, and in her new role she will be able to work closely with all of our civil section leadership to ensure that we carry out our mission on behalf of American consumers efficiently and effectively,” said Assistant Attorney General Delrahim.
O’Neill has been with the Antitrust Division for 12 years. Prior to joining the Antitrust Division, she worked as an assistant attorney general for the New York State Attorney General, an attorney advisor for the Federal Communications Commission and in private practice. O’Neill has played a leading role in advancing numerous high-profile matters, including the Antitrust Division’s investigation and settlement of Bayer’s proposed acquisition of Monsanto; the division’s civil investigation of a big-rigging conspiracy by several South Korea-based companies, which resulted in record-setting settlements under Section 4A of the Clayton Act; and the division’s successful challenge to Halliburton’s proposed acquisition of Baker Hughes. O’Neill also played a prominent role in the litigation and settlement of U.S. v. US Airways Group Inc. and AMR Corp in 2013 and the Antitrust Division’s successful litigation efforts in U.S. v. NCM and Screenvision in 2015, U.S. v. AT&T Inc., T-Mobile USA Inc. and Deutsche Telekom AG in 2011 and U.S. v. JBS S.A. in 2008.
O’Neill received her J.D. from Tulane Law School and her B.A. from the University of Pennsylvania.
Sex Offender Sentenced to 15 Months ImprisonmentRead the Press Release
SHAWN N. ANDERSON, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that defendant TIMOTHY ROKE CEPEDA was sentenced in the United States District Court of Guam to 15 months imprisonment and five years of supervised release. This sentence follows Cepeda’s guilty plea on May 21, 2019, to Failure to Register as a Sex Offender, in violation of 18 U.S.C. § 2250. Cepeda was also ordered to attend a Sex Offender Treatment Program at the Bureau of Prisons. Upon release, he must register with the Sex Offender Registry in any jurisdiction where he lives, works or attends school. The Court also authorized probation officers to search any of his electronic devices. In addition, Cepeda is prohibited from employment that would place him in direct contact with minors.
The U.S. Attorney reminds defendants who have committed sexual offenses that, under federal and local law, all sex offenders have a duty to register and keep their registration current with the Sex Offender Registry in their jurisdiction. Sex offenders who travel to Guam and reside on island must inform the Guam Sex Offender Registry where they reside, work or attend school. They must also periodically update their registration information. The Sex Offender Registry was created in an effort to protect the public and potential victims, prevent further victimization, and inform the public of the whereabouts of sex offenders. Guam’s Sex Offender Registry can be found online at the website for the Judiciary of Guam. www.guamcourts.org (link is external). The Department of Justice also funds the Dru Sjodin National Sex Offender Public Website (NSOPW) mobile application, which provides free access to sex offender data nationwide.
U.S. Attorney Anderson noted that this prosecution was part of the Department of Justice’s Project Safe Childhood (PSC) initiative, a nationwide commitment to aggressively prosecute sexual predators who victimize children and adults, possess or receive child pornography, and otherwise fail to register with a Sex Offender Registry.
The U.S. Marshals Service conducted the investigation. The case was prosecuted by Rosetta L. San Nicolas, an Assistant United States Attorney in the District of Guam.
Justice Department Files Employment Discrimination Lawsuit Against Baltimore County Alleging Race Discrimination by Its Police Department in the Hiring of Entry-Level Police Officers and CadetsRead the Press Release
The Department of Justice announced today that it has filed an employment discrimination lawsuit under Title VII of the Civil Rights Act of 1964 (Title VII) against Baltimore County and the Baltimore County Police Department (BCPD). The lawsuit alleges that since Jan. 1, 2013, BCPD has engaged in unintended employment discrimination against African American applicants for entry-level police officer and cadet positions by making hiring decisions based on the results of hiring examinations that were not job-related and that disproportionately excluded African American applicants. Through this lawsuit, the United States seeks a Court order that would require BCPD to utilize selection procedures that comply with Title VII, and to provide individual remedies to African American former applicants who are shown to be entitled to them.
“Employers must be mindful that an employment selection device, like a test, must be shown to be job-related if it disproportionately excludes members of one of Title VII’s protected groups,” stated Assistant Attorney General Eric Dreiband of the Justice Department’s Civil Rights Division.
Title VII is a federal law that prohibits discrimination in employment on the basis of race, color, sex, national origin, and religion. More information about Title VII and other federal employment laws is available on the Civil Rights Division’s website at www.justice.gov/crt.
Houston, Texas Agrees to Implement Comprehensive Measures Aimed at Eliminating Sanitary Sewer Overflows and Illegal Discharges from Wastewater Treatment PlantsRead the Press Release
In a settlement agreement with the U.S. Environmental Protection Agency (EPA) and the Texas Commission on Environmental Quality (TCEQ), the city of Houston, Texas, has agreed to implement a comprehensive set of corrective measures and improvements to the city’s sewer system to resolve longstanding problems with sanitary sewer overflows (SSOs) and discharges into various water bodies of pollutants in excess of permitted limits from the city’s 39 wastewater treatment plants.
The agreement, upon final approval by a U.S. District Court Judge, will resolve the city’s noncompliance with the Clean Water Act (CWA) and provisions of the Texas Water Code (TWC). These violations were alleged in a joint Complaint filed on Sept. 20, 2018, by the U.S. Department of Justice, on behalf of EPA, and the state of Texas, on behalf of the TCEQ. The city also has agreed to pay a civil penalty of $4.4 million, which will be shared equally with the State of Texas.
“The settlement, done in partnership with the state of Texas, will see that the city of Houston attains compliance with state and federal environmental laws by expanding its wastewater treatment capacity and thus reducing sewage overflows into city streets and waterways,” said Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Environment and Natural Resources Division. “The city should have acted faster to make the necessary infrastructure investments to avoid public health problems but today’s settlement is a substantial step towards meeting the legal requirements enacted to protect the public from unsanitary conditions, dangerous bacteria, and the contagious diseases that pose intolerable risks to the city’s residents and visitors.”
“Fixing Houston’s sewer system will be a massive undertaking. But it is necessary to protect public health and the environment,” said Susan P. Bodine, EPA Assistant Administrator for the Office of Enforcement and Compliance Assurance. “EPA and the State of Texas worked with the city to develop a comprehensive solution that will improve the quality of life of Houston’s citizens as well as the quality of water in and around Houston.”
“This settlement sets a roadmap of what needs to be done to preserve health and safety for millions of Texans and protect our state’s water resources for generations to come,” said Texas Attorney General Ken Paxton. “We will continue working alongside our federal partner to assure the city of Houston fulfills all its obligations under this agreement and the laws of Texas.”
The city of Houston operates one of the largest sewer systems in the nation, which serves nearly two million people. The system includes more than 6,000 miles of sewer lines, 390 lift stations, and more than 120,000 manholes.
To come into compliance with the CWA and the TWC, the city will implement over a period of 15 years extensive measures to prevent SSOs and effluent violations, at an estimated cost of $2 billion.
Preventing raw sewage in the form of SSOs from going onto the streets of the city and from entering waters of the United States and waters of the state eliminates a significant threat to human health and the environment. These discharges have contributed to bacteria contamination of Houston water bodies, degraded water quality, and contain viruses that may cause illnesses.
During implementation of the work required under the consent decree the release of raw sewage from the city’s sewer system will be reduced by approximately six million gallons a year. Currently, this sewage is entering various water bodies in, around and near the city, including the Buffalo Bayou and the Houston Ship Channel.
Under the consent decree, Houston will address the insufficient capacity of its sewer system in identified areas where large-volume SSOs have occurred during major rain events. In addition, some non-wet weather SSOs occurring in the city over the years have been caused by defective conditions such as cracked and broken sewer lines. The city has agreed to conduct a system-wide inspection of all its gravity sewer lines and manholes to assess their structural condition. The city will annually remediate no less than 150 miles of sewer lines based upon the results of the inspection and assessment. Further, to address another major cause of SSOs in the form of blockages caused by debris and fats, oil and grease (FOG), the city will implement two major cleaning programs. Under the first program, the city will target SSO-prone areas for cleaning in the first two years and complete cleaning of all gravity sewer lines in the first 10 years of the consent decree with additional cleaning requirements thereafter. A second cleaning program will target areas that require more frequent cleaning to prevent SSOs from occurring, primarily due to FOG.
Finally, the city has agreed to implement a number of measures as early action projects to address SSOs and effluent violations within the first few years of the consent decree. Several of the early action projects involve wastewater treatment plants. The city, the United States and the state identified 10 wastewater treatment plants that have experienced a significant number of effluent violations, including such pollutants as E. Coli, ammonia and total suspended solids. The city will implement improvements and repairs that will address the causes of violations at these plants, as well as implement a maintenance program to cover all of its wastewater treatment plants. As additional early action projects, the City will renew / replace more than 100 lift stations and more than 35 miles of the sewer system’s force main sewer lines, which transmit wastewater under pressure.
The consent decree was lodged in the U.S. District Court for the Southern District of Texas, Houston Division. The consent decree is subject to a 30-day public comment period before the court can give final approval and enter the consent decree as a final judgment, at which time it will become effective. The consent decree is available at www.justice.gov/enrd/consent-decrees.
For more information, visit: https://www.epa.gov/enforcement/city-houston-clean-water-act-settlement-information-sheet.
Gavin Reyes Duenas Sentenced to Prison in Drug Trafficking CaseRead the Press Release
SHAWN N. ANDERSON, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that defendant GAVIN REYES DUENAS, age 33, from Talofofo, was sentenced in the United States District Court of Guam to 87 months imprisonment for Attempted Possession with Intent to Distribute Fifty Grams or More of Methamphetamine, in violation of 21 U.S.C. § 841(a)(1). The Court also ordered five years of supervised release following imprisonment, 100 hours of community service, and a mandatory $100 assessment fee. In addition, defendants convicted of a federal drug offense may no longer qualify for certain federal benefits.
On November 19, 2016, the U.S. Postal Inspector and the Drug Enforcement Administration intercepted two packages in the mail. The packages were found to contain approximately 3,113.9 net grams of methamphetamine hydrochloride (“ice”). Further investigation revealed that Duenas used his family’s post office box to receive the ice. Once in his possession, Duenas intended to distribute the drug on island. He also expected to receive some of the drug as payment from his supplier. At the time of his arrest, Duenas possessed methamphetamine pipes, syringes, scales, Ziploc baggies and $43,335.00 in U.S. currency.
U.S. Attorney Anderson stated, “Federal law enforcement continues to aggressively pursue drug trafficking activity on Guam. This case demonstrates the benefits of effective partnerships and the results of long term investigations. Our office vigorously enforces federal drug laws at every opportunity. We will also obtain the forfeiture of illegal proceeds whenever possible. While our distance from the mainland is great, we will similarly seek any off island sources of supply and hold them accountable.” This case was the result of a joint investigation by the U.S. Postal Service and the Drug Enforcement Administration. The case was prosecuted by Rosetta L. San Nicolas, an Assistant United States Attorney in the District of Guam.
DEA Announces Steps Necessary to Improve Access to Marijuana ResearchRead the Press Release
The Drug Enforcement Administration today announced that it is moving forward to facilitate and expand scientific and medical research for marijuana in the United States. The DEA is providing notice of pending applications from entities applying to be registered to manufacture marijuana for researchers. DEA anticipates that registering additional qualified marijuana growers will increase the variety of marijuana available for these purposes.
Over the last two years, the total number of individuals registered by DEA to conduct research with marijuana, marijuana extracts, derivatives and delta-9-tetrahydrocannabinol (THC) has increased by more than 40 percent from 384 in January 2017 to 542 in January 2019. Similarly, in the last two years, DEA has more than doubled the production quota for marijuana each year based on increased usage projections for federally approved research projects.
“I am pleased that DEA is moving forward with its review of applications for those who seek to grow marijuana legally to support research,” said Attorney General William P. Barr. “The Department of Justice will continue to work with our colleagues at the Department of Health and Human Services and across the Administration to improve research opportunities wherever we can.”
“DEA is making progress in the program to register additional marijuana growers for federally authorized research, and will work with other relevant federal agencies to expedite the necessary next steps,” said DEA Acting Administrator Uttam Dhillon. “We support additional research into marijuana and its components, and we believe registering more growers will result in researchers having access to a wider variety for study.”
This notice also announces that, as the result of a recent amendment to federal law, certain forms of cannabis no longer require DEA registration to grow or manufacture. The Agriculture Improvement Act of 2018, which was signed into law on Dec. 20, 2018, changed the definition of marijuana to exclude “hemp”—plant material that contains 0.3 percent or less delta-9 THC on a dry weight basis. Accordingly, hemp, including hemp plants and cannabidiol (CBD) preparations at or below the 0.3 percent delta-9 THC threshold, is not a controlled substance, and a DEA registration is not required to grow or research it.
Before making decisions on these pending applications, DEA intends to propose new regulations that will govern the marijuana growers program for scientific and medical research. The new rules will help ensure DEA can evaluate the applications under the applicable legal standard and conform the program to relevant laws. To ensure transparency and public participation, this process will provide applicants and the general public with an opportunity to comment on the regulations that should govern the program of growing marijuana for scientific and medical research.
The Notice of Application is available here: https://www.federalregister.gov/documents/2019/08/27/2019-18456/bulk-manufacturer-of-controlled-substances-applications-bulk-manufacturers-of-marihuana.
Attorney General William P. Barr Invites Romanian Minister of Justice Ana Birchall for Meeting in SeptemberRead the Press Release
Attorney General Barr today invited Romanian Minister of Justice Ana Birchall to meet with him in Washington this coming September. The Department of Justice has worked closely with Ana Birchall and views her as a vital and trusted partner in the fight against corruption. Her leadership comes at a vital time for Romania, where controversies have raised questions about Romania’s commitment to rule of law values and have diminished public trust and caused increasing concern in the international community. Under Birchall’s leadership, Romania can once again be a model in the region for progress on anti-corruption issues.
The Attorney General and Minister Birchall first met in June in Bucharest, Romania, where Minister Birchall hosted the U.S./EU Justice and Home Affairs Ministerial, during the Romanian Presidency of the Council of the European Union.
In a bilateral meeting, the Attorney General and Minister discussed the U.S.-Romania Strategic Partnership, which is important for both our nations’ continued security and prosperity. The close collaborative relationship between the law enforcement agencies of Romania and the United States has resulted in significant joint successes in the fight against transnational crime, particularly in the areas of cybercrime-related fraud, narcotics trafficking, and human trafficking. These successes have protected citizens in both our countries.
In particular, during their June meeting, Minister Birchall emphasized her commitment to ensuring that Romania takes all steps necessary to strengthen its anti-corruption laws and processes. In their meeting in September, the Attorney General and Minister will discuss how the U.S. Department of Justice can assist the Minister, and her Ministry, in this vital task. The Department of Justice welcomes this opportunity to meet again with a valued and trusted partner who is committed to fighting for the rule of law.
United States Settles with Southeastern Grocers to Reduce Ozone-Depleting Emissions at Grocery Stores in the Southeastern StatesRead the Press Release
Southeastern Grocers Inc. and its subsidiaries BI-LO LLC and Winn-Dixie Stores Inc. (together, “SEG”), owners and operators of regional grocery store chains BI-LO LLC, Winn-Dixie Stores Inc., Fresco y Más and Harveys Supermarket, have agreed to reduce emissions of potent ozone depleting gases from refrigeration equipment at 576 stores under a proposed settlement with the U.S. Department of Justice and the U.S. Environmental Protection Agency to resolve alleged violations of the Clean Air Act. Under the settlement, SEG will spend an estimated $4.2 million over the next three years to reduce coolant leaks from refrigerators and other equipment and improve company-wide compliance. SEG will also pay a $300,000 civil penalty.
The United States alleged that SEG violated the Clean Air Act by failing to promptly repair leaks of class I and class II refrigerants, ozone-depleting substances used as coolants in refrigerators. SEG also failed to keep adequate servicing records of its refrigeration equipment and failed to provide information about its compliance record.
“This consent decree will help assure SEG’s future compliance with the Clean Air Act’s ozone-depletion program — by requiring leak monitoring, centralized computer recordkeeping, and searchable electronic reporting to EPA,” said Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice’s Environment and Natural Resources Division.
“Through this settlement, Southeastern Grocers will implement concrete steps to reduce leaks of ozone depleting gases from the refrigeration equipment in their stores,” said EPA Assistant Administrator for Enforcement and Compliance Assurance Susan Bodine. “These steps will not only help to prevent damage to the environment, but should also help save energy.”
SEG will now implement a corporate refrigerant compliance management system to comply with federal stratospheric ozone regulations and to detect and repair leaks through a new bi-monthly leak monitoring program. In addition, SEG will achieve and maintain an annual corporate-wide average leak rate of 17.0 percent through 2022, well below the grocery store sector average of 25 percent. SEG must also use non-ozone depleting advanced refrigerants at all new stores, and an additional 15 existing, non-advanced refrigerant stores.
EPA regulations issued under the Clean Air Act require that owners or operators of commercial refrigeration equipment that contain over 50 pounds of ozone-depleting refrigerants repair any leaks within 30 days. Damage to the ozone layer results in dangerous amounts of cancer-causing ultraviolet solar radiation, increasing skin cancers and cataracts. An added benefit of repairing refrigerant leaks is improved energy efficiency of the system, which can save electricity.
The settlement is the fourth in a series of national grocery store refrigerant cases, including cases previously filed against Safeway Inc., Costco Wholesale Corp., and Trader Joe’s Co.
Southeastern Grocers Inc., and its subsidiaries BI-LO LLC and Winn-Dixie Stores Inc., all headquartered in Jacksonville, Florida, are privately held companies which own and operate regional grocery store chains BI-LO LLC, Winn-Dixie Stores Inc., Fresco y Más and Harveys Supermarket in the southeastern U.S., with 576 stores located in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina and South Carolina and have a projected revenue of $8.45 billion in for the 2019 fiscal year.
The settlement was lodged today in the U.S. District Court for the Middle District of Florida and is subject to a 30-day public comment period and final court approval. It will be available for viewing at https://www.justice.gov/enrd/consent-decrees.
Justice Department Approves Sinclair Broadcasting's Acquisition of Divested Fox Regional Sports NetworksRead the Press Release
On Dec. 13, 2017, The Walt Disney Company entered into an agreement to acquire certain assets and businesses from Twenty-First Century Fox, including Fox’s 22 regional sports networks (RSNs). After an investigation, the Justice Department’s Antitrust Division filed a civil antitrust lawsuit on June 27, 2018, in the U.S. District Court for the Southern District of New York to block the proposed transaction. At the same time, the Department filed a proposed settlement that, if approved by the court, would resolve the Department’s competitive concerns.
The proposed settlement requires Disney to divest Fox’s RSNs. On May 3, 2019, Disney and Sinclair Broadcasting entered into an agreement (the Divestiture Transaction), under which Sinclair proposes to acquire the RSNs, except the New York Yankees-affiliated YES Network, from Disney. The Department, after an investigation, approved Sinclair’s acquisition of the 21 RSNs. Under the terms of the proposed Final Judgment filed with the court, the Department has the sole discretion to approve the divestiture of the Fox RSNs to one or more acquirers.
“In exercising its discretion, the Antitrust Division has a duty to ensure that competition will be preserved for the American consumer, here the sports fan,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “Sinclair’s acquisition of the divested regional sports networks addresses the harm the Division identified in its review of the Disney-Fox transaction.”
Based upon its investigation, the Department did not find that the Divestiture Transaction would lead to competitive harm, and found that Sinclair has the incentive to use the RSNs to compete in all affected markets and that Sinclair has sufficient business experience and financial capabilities to compete effectively in the affected markets over the long term.
Lake County Sheriff’s Office Deputy Charged with Civil Rights Offenses for Shooting an Unarmed Person and Lying to InvestigatorsRead the Press Release
A Lake County Sheriff’s Office Deputy, Richard Palmer, 58, was indicted today on charges that he used unreasonable force by shooting an unarmed woman and misleading state investigators about the circumstances of his actions, announced Assistant Attorney General Eric Dreiband of the Department of Justice’s Civil Rights Division and FBI Special Agent in Charge Rachel Rojas of FBI’s Jacksonville Division.
According to the indictment, on Oct. 11, 2016, Palmer, while on duty as a Lake County Sheriff’s Office Deputy, shot a woman whose hands were visible and empty. Palmer’s actions resulted in bodily injury to her. Palmer later misled investigators by falsely justifying the shooting, claiming that the woman’s left hand was in her pocket, that the woman was pulling her left hand out of her pocket, and that he saw a dark object in her left hand.
Palmer faces a maximum statutory penalty of 10 years in prison for his use of unreasonable force, 20 years in prison for his false statements, and fines. An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty.
The case was investigated by the FBI’s Jacksonville Division. Special Legal Counsel Mark Blumberg and Trial Attorneys Maura White and Anna Gotfryd of the Justice Department’s Civil Rights Division are prosecuting the case.
Five Fraudsters Indicted for Million Dollar Scheme Targeting Thousands of U.S. Servicemembers and VeteransRead the Press Release
A 14-count indictment has been unsealed today in San Antonio, Texas, charging five individuals with coordinating an identify-theft and fraud scheme targeting servicemembers and veterans. The charged defendants, who were based both in the Philippines and the United States, are alleged to have used the stolen personal identifying information (PII) of thousands of military members to access Department of Defense and Veterans Affairs benefits sites and steal millions of dollars.
The defendants, Robert Wayne Boling Jr., Fredrick Brown, Trorice Crawford, Allan Albert Kerr, and Jongmin Seok, were charged with multiple counts of conspiracy, wire fraud, and aggravated identify theft based on their alleged leading roles in the theft and exploitation of victim PII to conduct their fraud scheme. Boling (a U.S. citizen), Kerr (an Australian citizen), and Seok (a South Korean citizen) were arrested in the Philippines. Brown and Crawford, both U.S. citizens, were arrested in Las Vegas and San Diego respectively. Brown has been detained pending trial. Crawford is awaiting a detention hearing.
“The crimes charged today are reprehensible and will not be tolerated by the Department of Justice. These defendants are alleged to have illegally defrauded some of America’s most honorable citizens, our elderly and disabled veterans and servicemembers,” said Attorney General William P. Barr. “Through today’s action, the Department is honoring our pledge to target elder fraud schemes, especially those committed by foreign actors using sophisticated means, and to protect the veterans of our great country. I am proud of the quick and effective work done on this case by our Consumer Protection Branch and the U.S. Attorney’s Office for the Western District of Texas, with strong investigative support from the Departments of Defense and Veterans Affairs. We all will continue to work together to ensure that our veterans and servicemembers are protected from fraud.”
“Our message is pretty simple,” said U.S. Attorney Bash. “It doesn’t matter where on this planet you reside. If you target our veterans, we’re coming for you. Our veterans were willing to risk everything to protect this Nation from foreign threats. Now it’s our turn to seek justice for them.”
“The compromise of personally identifiable information can significantly harm our service members, veterans and their families and we will aggressively investigate such matters,” said Glenn A. Fine, Principal Deputy Inspector General, performing the duties of the Inspector General of the Department of Defense Office of Inspector General. “This indictment and the coordinated actions of our criminal investigative component, the Defense Criminal Investigative Service, demonstrate our commitment to swift action against those who attempt to enrich themselves through identify theft, money laundering, and conspiracy. The DoD OIG, working in partnership with the Department of Justice, will continue to identify, disrupt, and bring to justice those who threaten military members, retirees, and veterans through fraud and corruption.”
“VA is working with DoD to identify any instances of compromised VA benefits accounts,” said James Hutton, VA assistant secretary for public and intergovernmental affairs. “Just as importantly, VA has taken steps to protect Veterans’ data and are instituting additional protective measures.”
According to the indictment, the defendants’ identity-theft and fraud scheme began in 2014 when Brown, then a civilian employee at a U.S. Army installation, stole thousands of military members’ PII, including names, dates of birth, social security numbers, and Department of Defense identification numbers. Brown is alleged to have then provided the stolen information to Boling, who exploited the information in various ways together with his Philippines-based co-defendants Kerr and Seok.
As asserted in the indictment, Boling, Kerr, and Seok specifically used the stolen information to compromise a Department of Defense portal designed to enable military members to access benefits information online. Once through the portal, the defendants are alleged to have accessed benefits information. Access to these detailed records enabled the defendants to steal or attempt to steal millions of dollars from military members’ bank accounts. The defendants also stole veterans’ benefits payments. After the defendants had compromised military members’ bank accounts and veterans’ benefits payments, Boling allegedly worked with Crawford to recruit individuals who would accept the deposit of stolen funds into their bank accounts and then send the funds through international wire remittance services to the defendants and others. Evidence of the defendants’ scheme was detected earlier this year, advancing the investigation that led to the indictment.
The unsealed indictment was announced today in San Antonio by U.S. Attorney John Bash of the Western District of Texas, Deputy Assistant Attorney General David Morrell, and Director Gustav Eyler of the Department of Justice’s Consumer Protection Branch.
The Departments of Defense and Veterans Affairs are coordinating with the Department of Justice to notify and provide resources to the thousands of identified victims. Announcements also will follow regarding steps taken to secure military members’ information and benefits from theft and fraud.
An indictment merely alleges that crimes have been committed. All defendants are presumed innocent until proven guilty beyond a reasonable doubt.
The United States is represented by Trial Attorneys Ehren Reynolds and Yolanda McCray Jones of the Department of Justice’s Consumer Protection Branch and Assistant United States Attorney Joseph Blackwell of the U.S. Attorney’s Office for the Western District of Texas. The matter was investigated by agents of the Defense Criminal Investigative Service, and counsel Matthew Freund, along with substantial investigative support from the U.S. Postal Inspection Service, the U.S. Army Criminal Investigation Command, and the Veterans Benefits Administration’s Benefits Protection and Remediation Division. The U.S. Department of State’s Diplomatic Security Service, Philippine law enforcement partners, and the U.S. Attorneys’ Offices for the District of Nevada, the Southern District of California, and the Eastern District of Virginia also provided assistance. Resources from the Department of Justice’s Servicemembers and Veterans Initiative and its Transnational Elder Fraud Strike Force aided in the matter’s investigation and prosecution.
Since President Trump signed the bipartisan Elder Abuse Prevention and Prosecution Act (EAPPA) into law, the Department of Justice has participated in hundreds of enforcement actions in criminal and civil cases that targeted or disproportionately affected seniors. In particular, this past March, the Department announced the largest elder fraud enforcement action in American history, charging more than 260 defendants in a nationwide elder fraud sweep. The Department has likewise conducted hundreds of trainings and outreach sessions across the country since the passage of the Act.
Additional information about the Consumer Protection Branch and its enforcement efforts can be found at www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Western District of Texas, visit its website at https://www.justice.gov/usao-wdtx. Information about the Department of Justice’s Elder Fraud Initiative is available at www.justice.gov/elderjustice; information on the Servicemember and Veterans Initiative is at https://www.justice.gov/servicemembers.
Witness Indicted for False Declarations Before a Grand Jury and Obstruction of JusticeRead the Press Release
A federal grand jury has indicted a Washington woman for false declarations before the grand jury and obstruction of justice.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Special Agent in Charge Raymond Duda of the FBI’s Seattle Field Office and Chief of Police Carmen Best of the Seattle Police Department made the announcement.
According to the indictment unsealed today in the Western District of Washington, on Feb. 28, 2018, Shawna Reid, 34, of Everett, Washington, made false material declarations to a federal grand jury when she denied before the federal grand jury that she previously told a Seattle Police Department Detective and FBI Special Agent during an interview on Aug. 23, 2017, that Suspect #1 told her that Suspect #1 bragged about involvement in the murder of a judge or attorney that lives on top of a hill. Reid further denied before the federal grand jury that she previously told the detective and special agent on Aug. 23, 2017, that Suspect #1 bragged that the murder victim was someone of importance like a judge or an attorney general.
According to the indictment, Reid is also charged with obstruction of justice for making false material statements to law enforcement officials on Aug. 25, 2017, and Dec.7, 2017, and then on Feb. 28, 2018, before a federal grand jury. All of the false statements pertained to whether Suspect #1 told Reid about Suspect #1’s involvement in the murder of a lawyer, judge, or attorney general who lived on a hill.
The charges and allegations contained in an indictment are merely accusations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The investigation was conducted by the FBI and the Seattle Police Department. Section Chief David Jaffe and Trial Attorneys Joseph Wheatley and Matthew Hoff of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Steven D. Clymer are prosecuting this case.
Precious Metals Trader Pleads Guilty to Conspiracy and Spoofing ChargesRead the Press Release
A former precious metals trader at the London, Singapore and New York offices of a U.S. bank (Bank A) pleaded guilty today to conspiracy and spoofing charges, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office.
Christian Trunz, 34, of London, England, pleaded guilty in the Eastern District of New York to an information charging him with one count of conspiracy to engage in spoofing and one count of spoofing. Today’s pleas were accepted by U.S. District Judge Pamela K. Chen. Sentencing is scheduled for Feb. 19, 2020. Trunz resigned from his position as an Executive Director at Bank A earlier today.
According to admissions made as part of his plea and other statements made in court, between approximately July 2007 and August 2016, Trunz placed thousands of orders that he did not intend to execute for gold, silver, platinum and palladium futures contracts traded on the New York Mercantile Exchange Inc. (NYMEX) and Commodity Exchange Inc. (COMEX), which are commodities exchanges operated by CME Group Inc. Trunz learned to spoof from more senior traders, and spoofed with the knowledge and consent of his supervisors.
This case is the result of an ongoing investigation by the FBI’s New York Field Office. The Commodity Futures Trading Commission’s Division of Enforcement provided assistance in this case. Trial Attorneys Avi Perry and Matthew F. Sullivan of the Criminal Division’s Fraud Section are prosecuting the case.
Trunz is cooperating with the ongoing investigation.
Justice Department Sues to Block Sabre's Acquisition of FarelogixRead the Press Release
The Department of Justice filed a civil antitrust lawsuit today seeking to block Sabre Corporation’s $360 million acquisition of Farelogix, Inc. The Department said that Sabre and Farelogix compete head-to-head to provide booking services to airlines. Booking services are IT solutions that allow airlines to sell tickets and ancillary products through traditional brick-and-mortar and online travel agencies to the traveling public. The Department said that the acquisition would eliminate competition that has substantially benefitted airlines and consumers.
The Antitrust Division’s lawsuit alleges that the transaction would allow Sabre, the largest booking services provider in the United States, to eliminate a disruptive competitor that has introduced new technology to the travel industry and is poised to grow significantly.
“Sabre’s proposed acquisition of Farelogix is a dominant firm’s attempt to take out a disruptive competitor that has been an important source of competition and innovation,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “If allowed to proceed, the acquisition would likely result in higher prices, reduced quality, and less innovation for airlines and, ultimately, traveling American consumers.”
As alleged in the complaint, Sabre is the dominant provider of booking services in the United States with over 50 percent of airline bookings through travel agencies. Sabre operates a global distribution system, or GDS, which is a digital platform that provides booking services to airlines in addition to other functionality. For many years, Sabre has operated outdated technology and resisted innovation. Farelogix is an innovative technology company that has stepped in to address the needs of airlines and their customers.
As alleged in the complaint, Farelogix has injected much-needed competition and innovation into stagnant booking services markets. Airlines have successfully leveraged their ability to turn to Farelogix to negotiate lower fees with Sabre and the other GDSs, and to reduce their reliance on GDSs for booking services. Farelogix has also pioneered the development of new technology that empowers airlines to make a wider array of offers to travelers who book tickets through travel agencies. This new technology enables airlines to make more varied and personalized offers to consumers who book through travel agents, including bundles of ancillary products such as wi-fi, lounge passes, entertainment options, and meals – choices not available to travelers through Sabre’s legacy technology.
According to the complaint, filed in the U.S. District Court for the District of Delaware, Sabre executives have acknowledged that acquiring Farelogix would eliminate a competitive threat and further entrench Sabre in booking services. For example, on the day Sabre announced its intention to buy Farelogix, Sabre’s chief sales officer texted a colleague that one major U.S. airline would “hate” it. The colleague replied, “Why, because it entrenches us more?” Similarly, a Farelogix executive observed that buying the company would allow Sabre to “tak[e] out a strong competitor vs. continued competition and price pressure.”
As alleged in the complaint, Sabre’s attempt to acquire Farelogix follows many other attempts by Sabre to neutralize its competitor, including a campaign to “shut down Farelogix.” Indeed, Farelogix has long complained about Sabre’s tactics, alleging that Sabre has sought to stifle competition. For example, in 2013, Farelogix’s CEO alleged that “Sabre has wielded its monopoly power in an attempt to destroy Farelogix and prevent competition. . . .” And just last year, Farelogix’s CEO told European antitrust authorities that Sabre and the other two major GDSs “continue to leverage significant market power to preserve their market position and stifle innovation.” Now that Farelogix has gained a foothold in booking services and is poised to grow, Sabre seeks to eliminate this scrappy competitor once and for all by acquiring it.
Sabre Corp. is a Delaware corporation headquartered in Southlake, Texas. Sabre operates the largest global distribution system in the United States. Sabre’s 2018 revenues were approximately $3.9 billion.
Farelogix, Inc. is a Delaware corporation headquartered in Miami, Florida. Farelogix offers a next-generation booking services solution, known as Open Connect. In 2018, Farelogix earned approximately $42 million in revenues.
International Law Enforcement Cooperation Leads to Brazilian Takedown of Significant Human SmugglersRead the Press Release
Earlier today, extensive coordination and cooperation efforts between United States and Brazilian law enforcement and prosecution authorities culminated in the Brazil Federal Police (DPF) conducting a significant enforcement operation to disrupt and dismantle a transnational criminal organization. The human smuggling organization targeted is alleged to be responsible for the illicit smuggling of scores of individuals from East Africa and the Middle East, into Brazil, and ultimately to the United States. The enforcement operation included the execution of multiple search warrants and the arrests of three prolific, Brazil-based human smugglers on Brazilian charges: Abdifatah Hussein Ahmed (a Somalian national); Abdessalem Martani (an Algerian national); and Mohsen Khademi Manesh (an Iranian national).
“We commend today’s efforts by our Brazilian counterparts to take decisive action under their recently enacted human smuggling laws against criminal networks that threaten the national security of Brazil, the United States and other nations,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “Such collaborative efforts with our foreign law enforcement partners show our collective resolve to hold international human smugglers to account to the fullest extent of the law.”
Assistance provided by U.S. authorities was coordinated under the Extraterritorial Criminal Travel Strike Force (ECT) program, a joint partnership between the Justice Department, Criminal Division’s Human Rights and Special Prosecutions Section (HRSP) and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI). The ECT program focuses on human smuggling networks that may present particular national security or public safety risks, or present grave humanitarian concerns. ECT has dedicated investigative, intelligence and prosecutorial resources. ECT coordinates and receives assistance from other U.S. government agencies and foreign law enforcement authorities.
HSI Boston led U.S. investigative support efforts, working in concert with HSI Brasilia, HSI San Diego, the HSI Human Smuggling Unit ECT program, Enforcement and Removal Operations, the International Organized Crime Intelligence and Operations Center, the HSI Liaison to the U.S. Department of Defense, U.S. Southern Command, Operation CITADEL, BITMAP, and the National Targeting Center – Investigations. The Justice Department, both Criminal Division’s HRSP and the Office of International Affairs, provided significant legal and other assistance in this matter.
Former Bank Executive Found Guilty in $15 Million Construction Loan Fraud SchemeRead the Press Release
A former Kansas bank executive was found guilty by a federal jury yesterday for his participation in a bank fraud scheme to obtain a $15 million construction loan for certain bank customers based upon false and fraudulent representations. The loan was shared among 26 Kansas banks.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Special Agent in Charge Justin R. Bundy of the Federal Deposit Insurance Corporation Office of Inspector General’s (FDIC-OIG) Kansas City Regional Office, Special Agent in Charge Timothy R. Langan of the FBI’s Kansas City Field Office and Special Agent in Charge Catherine Huber of the Federal Housing Finance Agency Office of Inspector General’s (FHFA-OIG) Central Region Office made the announcement.
Troy A. Gregory, 52, of Lawrence, Kansas, was found guilty of four counts of bank fraud and two counts of false statements, as charged in a November 2017 indictment. The jury failed to reach a verdict as to one count of conspiracy. Sentencing is scheduled for Jan. 28, 2020, before U.S. District Judge Carlos Murguia of the District of Kansas, who presided over the trial.
According to the evidence submitted at trial, Gregory was a bank executive and loan officer who had made millions of dollars in loans to a group of borrowers who were struggling to make payments on the loans. Beginning in approximately late 2007, Gregory began the process of making a $15.2 million construction loan to build an apartment complex to that same group of borrowers. Gregory’s bank shared this loan with 25 other Kansas banks. Gregory made and caused others to make false statements to the banks about the strength of the borrowers, the debt status of the apartment property and the existence of approximately $1.7 million in certificates of deposit for collateral on the loan, all to get the loan approved. Instead of using the loan funds promised for building the apartments, Gregory immediately diverted over $1 million of the loan to pay for part of the certificates of deposit pledged as collateral, pay off debt on the apartment property, and make payments on unrelated loans, the evidence showed. Other Kansas banks that shared in this loan would not have participated in the loan without the false representations and promises. The banks ultimately wrote off millions of dollars on the $15.2 million construction loan, the evidence showed.
The FDIC-OIG, IRS-CI, FBI and FHFA-OIG are investigating this matter. Trial Attorney Andrew R. Tyler and Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section are prosecuting the case.
American Airlines Inc. Agrees to Pay $22 Million to Settle False Claims Act Allegations for Falsely Reporting Delivery Times of U.S. Mail Transported InternationallyRead the Press Release
The Justice Department announced today that American Airlines Inc. has agreed to pay approximately $22.1 million to resolve its alleged liability under the False Claims Act for falsely reporting the times it transferred possession of United States mail to foreign postal administrations or other intended recipients under contracts with the United States Postal Service (USPS). American Airlines is an international airline headquartered in Fort Worth, Texas.
“We expect companies doing business with the government to comply with their contractual obligations,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice vigorously pursues all manner of fraudulent conduct that undermines the benefits that the government has bargained for.”
USPS contracted with American Airlines to take possession of receptacles of United States mail at six locations in the United States or at various Department of Defense and State Department locations abroad, and then deliver that mail to numerous international and domestic destinations. To obtain payment under the contracts, American Airlines was required to submit electronic scans of the mail receptacles to USPS reporting the time the mail was delivered at the specified destinations. The contracts specified penalties for mail that was delivered late or to the wrong location. Today’s settlement resolves allegations that scans submitted by American Airlines falsely reported the time it transferred possession of the mail.
“The U.S. Postal Service contracts with commercial airlines for the safeguarding and timely delivery of U.S. Mail to foreign posts, including the mail sent to our soldiers deployed to foreign operating bases,” said Scott Pierce, Special Agent in Charge, USPS Office of Inspector General. “The Office of Inspector General supports the Postal Service by aggressively investigating allegations of contractual non-compliance within the mail delivery process, including the falsification of delivery information. Our special agents worked hand-in-hand with the Department of Justice’s Civil Division to help ensure a reasonable resolution and we applaud the exceptional work by the investigative and legal team.”
This matter was handled by the Civil Division’s Commercial Litigation Branch, the USPS Office of the Inspector General, and the USPS Office of General Counsel.
The claims settled by this agreement are allegations only, and there has been no determination of liability.
Commercial Flooring Contractor Agrees to Plead Guilty to Antitrust ChargeRead the Press Release
PCI FlorTech Inc., an Illinois-based commercial flooring contractor, has been charged for its role in a long-running conspiracy to rig bids and fix prices for commercial flooring services and products sold in the United States, the Department of Justice announced today.
PCI FlorTech has agreed to plead guilty and pay a $150,000 criminal fine for its role in the conspiracy and to cooperate in the Division’s ongoing investigation. PCI FlorTech’s charge follows the guilty plea of a former vice president of another commercial flooring contractor.
According to a one-count felony charge filed today in U.S. District Court for the Northern District of Illinois in Chicago, PCI FlorTech engaged in a conspiracy to suppress and eliminate competition in the commercial flooring market by submitting complementary bids to ensure that the designated company would win the bidding. PCI FlorTech participated in the conspiracy from at least as early as 2009 until at least June 2017.
“Today marks the first charge brought against a corporation for rigging bids and undermining the competitive process that consumers—including schools and charities—depend upon to get a competitive price for flooring,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. “We will continue to investigate and prosecute contractors and their executives who cheat in the bidding process.”
“PCI FlorTech illegally conspired to elevate bid prices, ultimately cheating the public out of the competitive pricing necessary to complete construction projects,” said Special Agent in Charge Jeffrey S. Sallet, FBI Chicago. “This charge demonstrates that the FBI is committed to working with its government partners to hold contractors accountable when they attempt to profit at their community’s expense.”
A violation of the Sherman Act carries maximum penalties of a $100 million criminal fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The charges are the result of an ongoing federal antitrust investigation into bid rigging, price fixing, and other anticompetitive conduct in the commercial flooring industry, conducted by the Antitrust Division’s Chicago Office and the FBI’s Chicago Field Division.
Anyone with information on bid rigging, price fixing, or other anticompetitive conduct related to the commercial flooring industry should contact the Antitrust Division’s Chicago Office at 312-984-7200 or visit https://www.justice.gov/atr/contact/newcase.html.
Attorney General William P. Barr Appoints New Leadership Team at the Bureau of PrisonsRead the Press Release
Attorney General William P. Barr today announced he will appoint Dr. Kathleen Hawk Sawyer as the Director of the Federal Bureau of Prisons (BOP) and Dr. Thomas R. Kane as the Deputy Director of the Federal Bureau of Prisons (BOP). Dr. Hawk Sawyer previously served as Director of BOP from 1992 – 2003.
“I am pleased to welcome back Dr. Hawk Sawyer as the Director of the Federal Bureau of Prisons. Under Dr. Hawk Sawyer’s previous tenure at the Bureau, she led the agency with excellence, innovation, and efficiency, receiving numerous awards for her outstanding leadership, “ said Attorney General Barr. “I am also pleased to announce Dr. Thomas R. Kane as the Deputy Director of BOP. Dr. Kane served in the Bureau for over thirty years under four Attorneys General and is known for his expertise and proficiency in prison management and organization. During this critical juncture, I am confident Dr. Hawk Sawyer and Dr. Kane will lead BOP with the competence, skill, and resourcefulness they have embodied throughout their government careers. I would also like to thank Hugh Hurwitz, Acting Director of BOP, for his dedication and service to the Bureau over the last fifteen months. I have asked Mr. Hurwitz to return to his responsibilities as Assistant Director of BOP’s Reentry Services Division, where he will work closely with me in overseeing the implementation of one of the Department’s highest priorities, the First Step Act.”
Dr. Kathleen Hawk Sawyer began her Bureau of Prisons career in 1976 as a psychologist at the Federal Correctional Institution (FCI) in Morgantown, West Virginia, and subsequently held positions of increasing responsibility as Chief of Psychology Services at Morgantown; Senior Instructor at the Bureau of Prisons' Staff Training Academy (STA) in Glynco, Georgia; Associate Warden at FCI Fort Worth, Texas; the Bureau's Chief of Staff Training at STA; and Warden at FCI Butner, North Carolina. In May 1989, she was selected as Assistant Director for the Program Review Division, where she was responsible for developing and implementing a system of internal controls for all Bureau operations. In 1992, Attorney General Barr appointed Dr. Hawk Sawyer as Director of BOP. While serving as Director for over a decade, she introduced the Forward Thinking Initiative, which was designed to prepare the agency to meet future demands and conditions. Additionally, she implemented reengineering initiatives intended to identify and eliminate unnecessary or redundant functions in order to maximize staff attention to inmates and yield agency-wide cost savings. While Director, Dr. Hawk Sawyer received numerous awards for service and leadership, including the Attorney General's Award for Excellence in Management in 1992, the Presidential Rank Award for Meritorious Service in 1994 and 2000, and the Presidential Distinguished Executive Award in 1997. She served as Director until she retired in 2003.
Dr. Thomas R. Kane served in the Bureau of Prisons from 1977 to 2018, including 30 years in multiple senior leadership positions such as Chief of Staff, Assistant Director, Deputy Director, and Acting Director under four Attorneys General. While at BOP, he provided long-term leadership for the enhancement of processes to assess prisoner risk level and need for treatment, as well as the BOP business process by reengineering initiatives resulting in significant organizational cost efficiencies and process improvement. Additionally, he served as a member of the FBI Advisory Policy Board for Criminal Justice Information Services, the District of Columbia Sentencing Commission, and the BOP Health Services Governing Board. Dr. Kane received numerous awards and other recognition throughout his career, including the Attorney General’s Medallion, two Meritorious Presidential Rank Awards, and the BOP Distinguished Service Medal. Dr. Kane also serves as a member of the American Psychological Association and the American Correctional Association.