District Not Recorded

A Chicago, Illinois-based clinical psychologist was charged in an indictment filed on Jan. 3, for his participation in a health care fraud scheme involving approximately $3.2 million in allegedly fraudulent claims billed to Medicare for psychological counseling and psychological testing for severely mentally disabled adults that was never actually performed.

Assistant Attorney General Brian Benczkowski of the Justice Department’s Criminal Division, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office and Special Agent in Charge Jeffrey S. Sallet of the FBI’s Chicago Field Office made the announcement

Hubert Dolezal, Ph.D., 78, of Chicago, was charged in an indictment filed in the Northern District of Illinois with 15 counts of health care fraud.   

According to the indictment, from December 2012 to June 2018, Dolezal allegedly engaged in a scheme to bill Medicare for psychological counseling, psychological testing and neuropsychological testing of severely mentally disabled adults living in community-based housing.  The indictment alleges that Dolezal defrauded Medicare through submission of claims for services that were never performed, and for services performed on a routine, rather than an as-needed basis.  The indictment also alleges that Dolezal was also double-paid for services, collecting payment from Medicare and the organization running the community-based housing.

The indictment alleges that Dorezal submitted approximately $4.4 million in fraudulent claims to Medicare, and that Medicare paid a total of approximately $3.2 million on those claims.

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 HHS-OIG and the FBI.  Trial Attorney Leslie S. Garthwaite of the Criminal Division’s Fraud Section is prosecuting the case. 

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and the U.S. Department of Health and Human Services (HHS) to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  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.

A California doctor was sentenced to 42 months in prison on Jan. 22  for his role in a Medicare kickback conspiracy involving a Los Angeles-area home health agency. 

Kanagasabai Kanakeswaran, M.D., 65, of Lancaster, California, was sentenced by U.S. District Judge Philip S. Gutierrez of the Central District of California, who also ordered Kanakeswaran to forfeit $509,662 to the United States.  Following a six-day trial, Kanakeswaran was convicted by a federal jury in Los Angeles, California, on Aug. 23, 2018, on one count of conspiracy to pay and/or receive kickbacks for Medicare referrals and four counts of receiving kickbacks for Medicare referrals. 

According to evidence presented at trial, from 2008 to 2016, Kanakeswaran and others engaged in a conspiracy to refer Medicare patients to Star Home Health Resources (Star), a home health agency located in La Verne, California in exchange for illegal kickback payments.  Kanakeswaran received cash kickback payments, as well as kickback payments by check through a company Kanakeswaran owned called Digital Perfection Corporation, the evidence showed. The evidence presented at trial showed that Kanakeswaran received illegal kickbacks from Star in the amount of $509,662.

As a result of the conspiracy, the owners and operators of Star submitted claims to Medicare based on the Medicare beneficiaries that Kanakeswaran referred to Star, and Medicare paid approximately $4.1 million based on those claims, the evidence showed.

This case was investigated by HHS-OIG and the FBI.  Trial Attorney Claire Yan of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Alexander F. Porter of the Major Frauds Section of the Central District of California are prosecuting the case.

The Department of Justice announced that on Dec. 28, 2018 Los Angeles-based Avanti Hospitals LLC (Avanti) and six of its owners will pay the federal government $8.1 million to settle claims that they violated the False Claims Act by submitting, or causing Avanti’s subsidiary, Memorial Hospital of Gardena (Gardena Hospital), to submit false claims to the Medicare and Medicaid programs for medical services referred by a physician who received kickbacks and other improper payments from Gardena and other Avanti affiliates. 

“Financial arrangements that improperly compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patient needs,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division.  “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs.”

The government alleged that the payments from Avanti, Gardena Hospital and at least two other Avanti affiliates to a high-referring physician violated the Anti-Kickback Statute and the Physician Self-Referral Law, commonly known as the Stark Law.  The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs.  The Stark Law prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper compensation arrangement.  Both the Anti-Kickback Statute and the Stark Law are intended to ensure that a physician’s medical judgment is not distorted by improper financial incentives and is instead based only on the best interests of the patient.

The settlement announced resolved allegations that Avanti, Gardena Hospital and at least two other Avanti affiliates provided compensation to a physician they engaged as a medical director that (1) exceeded fair market value for his services, and (2) was an attempt to incentivize him to refer patients to Gardena Hospital.   

“Illegal kickbacks paid to doctors for referrals burden our healthcare system, drive up insurance costs for everyone, and corrupt the doctor-patient relationship,” said United States Attorney Nick Hanna for the Central District of California. “Patients are not commodities who can be sold to the highest bidder, especially when the bills are ultimately being paid by American taxpayers.”

Avanti and Gardena Hospital have also entered into a corporate integrity agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG). 

“Patients and taxpayers rightly should expect that referrals be based on sound medical judgement, not driven by thinly veiled bribes, as alleged here,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.  “Our compliance agreement with Avanti and Gardena Hospital contains strong monitoring and reporting provisions to help ensure that people in government health programs will be protected.”  

The settlement partially resolves allegations originally brought in a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act by Dr. Joshua Luke, the former C.E.O. of Gardena Hospital.  The act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery.  The government may intervene and file its own complaint in such a lawsuit.  Dr. Luke will receive approximately $1.6 million from the federal government.

The government’s intervention in this matter illustrates its emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act.  Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

This matter was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California, and the Department of Health and Human Services Office of Inspector General.

The case is docketed as U.S. ex rel. Luke, State of California ex rel. Luke v. Gardena Hospital, L.P. DBA Memorial Hospital of Gardena, Avanti Hospitals, LLC, et al., CV 15-08732 FMO (C.D. Cal.) (PARTIALLY UNDER SEAL).  The claims resolved by the settlement are allegations only; there has been no determination of liability.

A commodities trader at an Australian proprietary trading firm (Trading Firm A) pleaded guilty on Dec. 26, 2018 to spoofing in connection with his fraudulent and deceptive trading activity in the E-mini S&P 500 futures contracts market on the Chicago Mercantile Exchange (CME).

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Special Agent in Charge Jeffrey S. Sallet of the FBI’s Chicago Field Office made the announcement.

Jiongsheng (“Jim”) Zhao, 31, of Sydney, Australia, pleaded guilty before U.S. District Judge John J. Tharp Jr. of the Northern District of Illinois to one count of spoofing.  Zhao was extradited to the United States on Nov. 16 and made his first court appearance on Nov. 19.  Sentencing is scheduled for July 19, 2019 before Judge Tharp.

“For almost four years, Jim Zhao placed thousands of phony orders for E-mini S&P 500 futures contracts that he never intended to execute—all in an effort to fraudulently move the market to his own advantage,” said Assistant Attorney General Benczkowski.  “The Department and our law enforcement partners will use every tool at our disposal to identify and prosecute those who engage in manipulative trading activity on U.S. markets.”

As part of his plea, Zhao admitted that from approximately July 2012 through March 2016, he placed thousands of orders for E-mini S&P 500 futures contracts on the CME, a commodities exchange operated by CME Group Inc., that, at the time Zhao placed the orders, he intended to cancel before execution (the Spoof Orders).  Zhao admitted that typically he engaged in this trading strategy when he already had an order for E-mini S&P 500 futures contracts pending in the market that he did want to execute, but that was not being filled (the Primary Order).  Zhao admitted that he would place the Spoof Orders on the opposite side of the market from the Primary Order with the goal to induce other market participants to trade against his Primary Order.  This trading strategy, Zhao admitted, was intended to inject materially false and misleading liquidity and price information into the E-mini S&P 500 futures contracts market by placing the Spoof Orders in order to deceive other market participants about the existence of supply and demand.  The Spoof Orders were designed to artificially move the price of E-mini S&P 500 futures contracts in a direction that was favorable to Zhao, and to the detriment of other market participants.  In pleading guilty, Zhao admitted that he placed the Spoof Orders in order to generate profits (or mitigate losses) for himself and Trading Firm A, and that Trading Firm A kept a percentage of Zhao’s trading profits, ranging at various times from 20 percent to 50 percent.

According to admissions in the plea agreement, in approximately March 2016, the CME began an investigation into Zhao’s trading activity in connection with the E-mini S&P 500 futures contracts.  As part of that investigation, Zhao submitted to a CME interview, and provided the CME with written responses to explain his trading activity, including three specific examples of Zhao’s trading activity.  In a written response submitted to the CME, Zhao stated that all of the orders identified in the three examples were part of either a “scalping” or spread trading strategy and were placed with the intention to execute.  In truth and in fact, however, Zhao admitted as part of his plea that when providing this response to the CME, he knew that he had placed certain large orders identified in each example with the intent, at the time they were placed, to cancel them before execution (i.e., the large orders were Spoof Orders).  Zhao admitted that his statement to the CME that he placed these large orders with the intention that they be filled was false and misleading, and that he made this false statement in order to falsify, conceal and cover up his spoofing conduct.

This case is the result of an ongoing investigation by the FBI’s Chicago Field Office.  The International Crime Cooperation Central Authority of the Australian Government Attorney-General’s Department, the Australian Federal Police and the Criminal Division’s Office of International Affairs provided significant assistance in connection with the arrest and extradition of Zhao.  The Commodity Futures Trading Commission’s Division of Enforcement and the Australian Securities and Investments Commission also provided substantial assistance in this case.

Trial Attorney Matthew F. Sullivan and Assistant Chief Justin D. Weitz of the Criminal Division’s Fraud Section are prosecuting the case.

Individuals who believe that they may be a victim in these cases should visit the Fraud Section’s Victim Witness website for more information.

Michael McWhorter, de 29 años, y Joe Morris, de años 23, ambos vecinos de Clarence, Illinois, se declararon culpables hoy ante múltiples cargos, entre ellos cargos relacionados con derechos civiles federales, ante el Tribunal de Distrito Federal en St. Paul, Minnesota. La Fiscal Federal para el Distrito de Minnesota, Erica H. MacDonald; el Fiscal Federal para el Distrito Central de Illinois, John C. Milhiser; el Fiscal General Auxiliar de la División de Derechos Civiles, Eric S. Dreiband; y la Agente Especial Encargada de la División del FBI en Minneapolis, Jill Sanborn, anunciaron hoy las declaraciones de culpabilidad.

«Los acusados cometieron una serie de delitos violentos sin precedentes en múltiples estados que aterrorizaron comunidades, entre ellos los miembros del Centro Islámico Dar al-Farooq en Minnesota. Los actos delictivos de los acusados son reprehensibles y antitéticos a nuestros valores como nación. Cada individuo tiene derecho a vivir libre de la amenaza de violencia y discriminación, no importa quién es, en qué creen o dónde rezan», declaró la Fiscal Federal Erica H. MacDonald. «La dedicación y colaboración de nuestras agencias asociadas de orden público en varias jurisdicciones para llevar a estos acusados ante la justicia es un poderoso ejemplo de nuestra devoción a la búsqueda de justicia para toda víctima y al enjuiciamiento, con todo el peso de la ley, de cualquier individuo que intente amenazar los derechos civiles de otro mediante la comisión de delitos de odio tan viles».

«Seguiremos trabajando con nuestras agencias federales y estatales asociadas para identificar y enjuiciar a grupos peligrosos y radicales que elijan aterrorizar a nuestras comunidades», afirmó el Fiscal Federal John C. MilHeiser.

«Todas las personas merecen vivir libres de violencia y miedo, independientemente de religión o lugar de culto», comentó el Fiscal General Auxiliar de la División de Derechos Civiles, Eric Dreiband. «El Departamento de Justicia se ha comprometido a hacer que los autores de delitos de odio rindan cuentas ante la ley de sus acciones delictivas y peligrosas, cometidas contra miembros inocentes de la comunidad».

«Este delito no solo fue un ataque contra el objetivo pretendido, sino que tuvo la intención de amenazar e intimidar a una comunidad entera. Debido a ese enorme impacto, la investigación de este delito y de otros parecidos es una de las prioridades principales del FBI», dijo Jill Sanborn, la Agente Especial Encargada de la División del FBI en Minneapolis. «El FBI tiene el deber de defender los derechos civiles y nuestros agentes en las oficinas locales en Minneapolis y Springfield, juntos con el Equipo de Tarea Conjunta contra el Terrorismo, investigaron este caso rápidamente en cooperación con la Agencia de Control de Bebidas Alcohólicas, Tabaco, Armas de Fuego y Explosivos (ATF, por sus siglas en inglés), la Policía de Bloomington y otras agencias del orden público asociadas con una única meta: llevar a los terroristas ante la justicia y, más importante aún, ayudar a la comunidad de Dar al-Farooq a empezar a sentirse segura nuevamente».

Los acusados McWhorter y Morris se declararon culpables en el Distrito de Minnesota ante cargos federales que se habían originado en el Distrito de Minnesota y el Distrito Central de Illinois. Las declaraciones ante los cargos que se originaron en el Distrito Central de Illinois se declararon en Minnesota, conforme a la Norma Federal 20 de Procedimiento Penal, que permite la transferencia de cargos para declaraciones de culpabilidad y la imposición de la condena. McWhorter, Morris y su coacusado Michael Hari, de 47 años, fueron acusados formalmente de poseer una ametralladora, de confabular a interferir en el comercio mediante amenazas y violencia (la ley de Hobbs) y de intentar a provocar un incendio, en una acusación formal sustitutiva del 2 de mayo del 2018 en el Distrito Central de Illinois. McWhorter, Morris y Hari fueron acusados formalmente en el Distrito de Minnesota el 21 de junio del 2018 ante cargos federales de derechos civiles y de posesión y uso de un dispositivo destructivo en apoyo de un delito federal de odio.

McWhorter y Morris se declararon culpables hoy ante el Juez Superior del Tribunal Federal de Distrito Donovan Frank. El acusado Hari sigue bajo custodia en el Distrito Central de Illinois.[1]

Según las declaraciones de culpabilidad de McWhorter y Morris, durante el verano del 2017, Michael Hari organizó un grupo de milicianos en el centro de Illinois, el que finalmente fue llamado los «White Rabbits» [Conejos Blancos], al que se unieron McWhorter y Morris, junto con otros individuos adicionales.

Conforme a las declaraciones de culpabilidad de McWhorter y Morris y documentos presentados ante el tribunal, el 4 y el 5 de agosto del 2017, McWhorter, Morris y Hari manejaron un camión alquilado desde Illinois hasta el Centro Islámico de Dar al-Farooq («DAF») en Bloomington, Minnesota. Dejaron atrás sus teléfonos celulares en Illinois y evitaron las autopistas de peaje en un intento de pasar desapercibidos. Los acusados pararon en su ruta para comprar diésel y gasolina, lo que Hari mezcló en un contenedor de plástico. A una hora de Minnesota, Hari divulgó a McWhorter y Morris que tenía una bomba de fabricación casera en el camión (que se había creado con materiales comprados previamente) y que iban a bombardear una mezquita.

Tal y como McWhorter y Morris admitieron en las audiencias en las que se declararon culpables, ellos dos, juntos con Hari, llegaron al Centro Islámico DAF aproximadamente a las 5 de la madrugada el 5 de agosto del 2017. Morris empleó un mazo para romper una ventana del Centro Islámico DAF y tiró adentro de edificio el contenedor de plástico que contenía la mezcla de diésel y gasolina. McWhorter encendió la mecha de la bomba de fabricación casera que Hari había construido y tiró la bomba la fabricación casera por la ventana rota del Centro Islámico DAF. Según los documentos judiciales, la ventana rota estaba en la oficina del Imam del Centro Islámico DAF. Cuando la bomba de fabricación casera explotó, se encendió la mezcla en el contenedor de plástico, lo cual provocó daños sustanciales por fuego y humo a la oficina del Imam, junto con daños por agua causados cuando se activó el sistema de aspersores del edificio. McWhorter y Morris volvieron corriendo al camión, donde Hari les esperaba en el asiento del conductor, y volvieron a Illinois. En el momento de la explosión, estaban presentes en la mezquita congregantes que habían acudido a las oraciones matinales. No obstante, la oficina del Imam estaba desocupada, por lo que el bombardeo no causó víctimas mortales o lesiones.

Según sus declaraciones de culpabilidad, Hari había elegido el Centro Islámico DAF por ser un lugar de culto musulmán. McWhorter y Morris admitieron que el bombardeo fue un intento de espantar a los musulmanes y hacerles creer que no son bienvenidos en los Estados Unidos y que deben abandonar el país. Por otra parte, los acusados también declararon que su objetivo fue el Centro Islámico DAF porque los tres creían que estaba lo suficiente lejos del centro de Illinois por lo que era poco probable que los sospecharían del ataque.

Como parte de sus declaraciones de culpabiliad, McWhorter y Morris admitieron que participaron en la invasión armada de un hogar en Ambia, Indiana, el 16 de diciembre del 2017, donde ellos, fingiendo ser policías, llevaban armas, entre ellos dos que se habían convertido ilegalmente en ametralladoras. McWhorter y Morris también llevaron a cabo, juntos con Hari, robos a mano armada de dos sucursales de Wal-Mart, una en Watseka, Illinois y otro en Mt. Vernon, Illinois, el 2 de diciembre del 2017 y el 17 de diciembre del 2017, respectivamente.

McWhorter y Morris también admitieron que, juntos con el coacusado Hari, intentaron prender fuego a una clínica de salud de mujeres que se llama Women’s Health Practice en Champaign, Illinois, el 7 de noviembre del 2017. Morris admitió que había roto un cristal y colocado un dispositivo incendiario en Women’s Health Practice y que había encendido una tira de magnesio que se estaba utilizando como mecha. No obstante, el dispositivo no se encendió y fue encontrado en el suelo por un empleado de Women’s Health Practice al llegar esa mañana a su trabajo.

El Buró Federal de Investigaciones está encabezando la investigación.

Los Fiscales Federales Auxiliares para el Distrito Minnesota, John Docherty y Julie E. Allyn, con la ayuda del Abogado de Litigios Timothy Visser, de la División de Derechos Civiles, son responsables del enjuiciamiento de este caso. El equipo también trabajo estrechamente con el Fiscal Federal Auxiliar Eugene Miller de la Fiscalía Federal para el Distrito Central de Illinois.

Información sobre los acusados:

MICHAEL MCWHORTER, 29 años

Clarence, Illinois

Condenado:

• Impedir intencionalmente e intentar impedir, mediante la fuerza y amenazas de fuerza, el libre ejercicio de creencias religiosas, 1 cargo
• Portar y emplear un dispositivo destructivo durante y en relación con la comisión de delitos de violencia, 1 cargo
• Posesión de una ametralladora, 1 cargo
• Confabular a interferir en el comercio mediante amenazas y violencia, 1 cargo
• Intento de provocar un incendio, 1 cargo

 
JOE MORRIS, 23 años

Clarence, Illinois

Condenado:

• Impedir intencionalmente e intentar impedir, mediante la fuerza y amenazas de fuerza, el libre ejercicio de creencias religiosas, 1 cargo
• Portar y emplear un dispositivo destructivo durante y en relación con la comisión de delitos de violencia, 1 cargo
• Posesión de una ametralladora, 1 cargo
• Confabular a interferir en el comercio mediante amenazas y violencia, 1 cargo
• Intento de provocar un incendio, 1 cargo

 
MICHAEL HARI, 47 años

Clarence, Illinois

Cargos en el Distrito de Minnesota:

• Intencionalmente desfigurar, dañar y destrozar bienes inmuebles religiosas por motivos del carácter religioso de tales bienes, 1 cargo
• Impedir intencionalmente e intentar impedir, mediante la fuerza y amenazas de fuerza, el libre ejercicio de creencias religiosas, 1 cargo
• Confabular a cometer delitos graves federales mediante el uso de incendios y explosivos, 1 cargo
• Portar y emplear un dispositivo destructivo durante y en relación con la comisión de delitos de violencia, 1 cargo
• Posesión de un dispositivo destructivo no registrado, 1 cargo

Cargos en el Distrito Central de Illinois [2]:

• Posesión de una ametralladora, 1 cargo
• Confabular a interferir en el comercio mediante amenazas y violencia, 1 cargo
• Intento de provocar un incendio, 1 cargo
• Posesión por un delincuente de un arma de fuego, 1 cargo

###

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Fiscalía Federal, Distrito de Minnesota: (612) 664-5600

[1] Los cargos contra el acusado Michael Hari son acusaciones, y se lo considera inocente mientras no se pruebe su culpabilidad.

[2] La acusación formal sustitutiva agrega cargos nuevos contra cuatro hombres del centro de Illinois

Skadden, Arps, Slate, Meagher & Flom LLP has entered into a settlement agreement with the Department of Justice, resolving its liability for violations of the Foreign Agents Registration Act (FARA), announced Assistant Attorney General for National Security John Demers.

According to the Agreement, Skadden acted as an agent of the Government of Ukraine within the meaning of FARA, 22 U.S.C. § 611 et seq., by contributing to a public relations campaign directed at select members of the U.S. news media in 2012.  Moreover, in 2012 and 2013, Skadden received multiple inquiries from the Department’s FARA Registration Unit about its role in that campaign. A partner then at Skadden made false and misleading statements to the FARA Unit, which led it to conclude in 2013 that the firm was not obligated to register under FARA. The facts, when uncovered, showed that Skadden was indeed required to register in 2012, and, under the Agreement, it will do so retroactively.

“Law firms should handle inquiries from the federal government the same way they would counsel their clients to: with appropriate due diligence to ensure the honesty of their response,” said Assistant Attorney General Demers.  “Skadden’s failure to do so, and reliance on only the representations of the lead partner on the matter, hid from the public that its report was part of a Ukrainian foreign influence campaign.  FARA protects the integrity of the American political system by enabling Americans to consider the identity of the speaker as they evaluate the substance of the speech.”  Assistant Attorney General Demers added, “The Department appreciates Skadden’s more recent extensive cooperation in the investigation of this matter, which facilitated its resolution.” 

In addition to agreeing to register under FARA, Skadden has agreed to pay the U.S. Treasury more than $4.6 million, which it received in fees and expenses for its work with Ukraine, and will ensure that it has formal, robust procedures for responding to inquiries concerning its conduct from any federal government entity and ensuring FARA compliance as to its engagements on behalf of foreign clients.

The Agreement acknowledges that Skadden has already taken substantial steps to comply with its terms, and so long as the firm continues to comply with it, the Department will not undertake any action against the firm relating to any of the conduct described in the Agreement and its Appendix.

Background of the Investigation

According to the Agreement, in the spring of 2012, Ukraine, Ministry of Justice (MOJ), with the assistance of Paul Manafort, hired Skadden to write a report (Report) on the evidence and procedures used during the 2011 prosecution and trial of former Prime Minister Yulia Tymoshenko and to address various questions regarding its fairness.  Skadden also agreed to advise Ukraine in connection with a second, potential future prosecution of Tymoshenko.  Although the engagement letter between Skadden and the MOJ stated that Skadden would be paid its customary fees and expenses, the contract Skadden signed with the MOJ, and which the MOJ made public, stated that the law firm would be paid only 95,000 Ukrainian hryvynas, which is approximately $12,000.  Skadden understood that a Ukrainian business person would be paying its fees, which the law firm received from a Cypriot bank account of an entity named Black Sea View Ltd., which Manafort controlled.  Skadden was eventually paid $4,657,568.91 for its work on behalf of the MOJ.  The arrangements with the Ukrainian business person, the amounts paid, and advice on a second criminal prosecution of Tymoshenko were not disclosed in connection with the issuance of the Report.

Soon after it began work for the MOJ, Skadden became aware that Ukraine intended to use the Report as part of a public relations campaign to influence U.S. policy and public opinion toward Ukraine.  After that point, Skadden’s lead partner for the Ukraine engagement took steps to advance the public relations campaign.  In the fall of 2012, shortly after a meeting in New York with Manafort and a representative from Ukraine’s public relations firm to finalize the Report and discuss the media strategy for its rollout, the lead partner contacted a journalist at a national newspaper and asked whether the journalist would take a call from a lobbyist for Ukraine about the Report in advance of its release.  Then, shortly before Ukraine released the report on December 13, 2012, the lead partner again contacted the journalist and arranged for delivery of the Report to the journalist, both via email and in person.  On December 12, 2012, the lead partner spoke with the national newspaper about the Report and provided a quotation for attribution. 

The lead partner’s pre-release outreach to the journalist was consistent with Ukraine’s media strategy for the Report, which including leaking the Report prior to its official release so as to “effectively set the agenda for subsequent coverage.”

FARA requires those in the U.S. who engage in political activities on behalf of foreign principals, which include foreign governments, to make a variety of written public disclosures to the Department of Justice.  Based on its awareness of and involvement in Ukraine’s public relations campaign, Skadden had an obligation to register with the Department of Justice under FARA, but it failed to do so.  If Skadden had registered, it would have had to disclose, among other things, the full amount it was being paid, the source of those payments, and the full scope of the work it was doing on behalf of the MOJ.

Five days after news articles appeared about the Report, the FARA Unit sent Skadden a letter, seeking information about its activities on behalf of Ukraine in order to assist the FARA Unit in determining whether Skadden had a registration obligation.  This was the first of several requests for information the FARA Unit made to Skadden. 

In both written and oral responses to the FARA Unit between February 6, 2013, and October 11, 2013, Skadden, in reliance on the lead partner, made false and misleading statements including, among other things, that Skadden provided a copy of the Report only in response to requests from the media and spoke to the media to correct misinformation about the report that the media was already reporting.  The firm also submitted documents to the FARA unit that were false.

The FARA Unit made a determination that Skadden did not have a registration obligation in connection with its work for Ukraine, and it based that conclusion on the false and misleading information Skadden had provided.  Before making its representations to the FARA Unit, Skadden had conducted no investigation to confirm the information the lead partner was providing to the FARA Unit and to other partners at the firm.

The investigation and negotiation of the Agreement was handled by Jason B.A. McCullough, a Trial Attorney in the Counterintelligence and Export Control Section, which includes the FARA Registration Unit, with assistance from the Federal Bureau of Investigation’s Counterintelligence Division.

In the January 15, 2019 memorandum to all U.S. Attorneys, the Deputy Attorney General set a 90-day grace period on implementing the Office of Legal Counsel's (OLC) new opinion during which federal prosecutors should not apply the Wire Act to non-sports-related betting or wagering.  This 90-day grace period will allow anyone affected to review the opinion and bring their gambling-related operations into compliance, if necessary.  The Deputy Attorney General also indicated that, to ensure continuity across the country, any Wire Act charges must be reviewed and approved by the Criminal Division’s Organized Crime and Gang Section.  This new review-and-approval requirement will be codified in the Justice Manual. 

The Department of Justice, the Environmental Protection Agency (EPA) and the State of California announced today a settlement with Fiat Chrysler Automobiles N.V., FCA US, and affiliates (Fiat Chrysler) for alleged violations of the Clean Air Act and California law. Fiat Chrysler has agreed to implement a recall program to repair more than 100,000 noncompliant diesel vehicles sold or leased in the United States, offer an extended warranty on repaired vehicles, and pay a civil penalty of $305 million to settle claims of cheating emission tests and failing to disclose unlawful defeat devices. Fiat Chrysler also will implement a program to mitigate excess pollution from these vehicles.  The recall and federal mitigation programs are estimated to cost up to approximately $185 million. In a separate settlement with California, Fiat Chrysler will pay an additional $19 million to mitigate excess emissions from more than 13,000 of the noncompliant vehicles in California. In addition, in a separate administrative agreement with the United States Customs and Border Protection, Fiat Chrysler will pay a $6 million civil penalty to resolve allegations of illegally importing 1,700 noncompliant vehicles.

The Environmental Protection Agency and California settlement (EPA/California Settlement) resolves claims of EPA and California relating to Fiat Chrysler’s use of defeat devices to cheat emission tests. Defeat devices are design elements (in this case software functions) installed in vehicles that reduce the effectiveness of the emission control system during normal on-road driving conditions. The affected vehicles are model year 2014 through 2016 Ram 1500 and Jeep Grand Cherokee vehicles equipped with “EcoDiesel” 3.0 liter engines.

Today’s settlement does not resolve any potential criminal liability. The settlement also does not resolve any consumer claims or claims by individual owners or lessees who may have asserted claims in the ongoing multidistrict litigation. In addition to its separate settlement addressing excess emissions for affected vehicles in California, the state of California has also entered into another separate settlement with Fiat Chrysler resolving alleged violations of California consumer protection laws relating to the affected vehicles.

“The Department of Justice is committed to the full and fair enforcement of the laws that protect our nation’s environment,” said Principal Deputy Associate Attorney General Jesse Panuccio. “Fiat Chrysler broke those laws and this case demonstrates that steep penalties await corporations that engage in such egregious violations.  Assistant Attorney General Jeff Clark, and his team in the Environment and Natural Resources Division, are to be commended for  securing significant relief in this case for the American people.”

“Fiat Chrysler deceived consumers and the federal government by installing defeat devices on these vehicles that undermined important clean air protections,” said EPA Acting Administrator Andrew Wheeler. “Today’s settlement sends a clear and strong signal to manufacturers and consumers that EPA will vigorously enforce the nation’s laws designed to protect the environment and public health.”

As alleged in the civil complaint filed by the United States Justice Department on behalf of EPA on May 23, 2017, Fiat Chrysler equipped over 100,000 EcoDiesel Ram 1500 and Jeep Grand Cherokee vehicles (Model Years 2014-2016) sold in the United States with illegal and undisclosed software that causes the emission control system to operate differently during emission control tests than when it is driven on the road. When the vehicle is being tested for compliance with EPA or California emission standards, the software activates full emission controls. In contrast, during real world driving, the software features reduce or deactivate emission controls, reducing the effectiveness of the vehicles’ emission control systems. The United States alleged that one or more of these software features, as configured in Fiat Chrysler’s vehicles, are defeat devices. The result is vehicles that meet emission standards during standard regulatory testing, but that emit air pollutants, including oxides of nitrogen (NOx), at a higher rate when the vehicles are on the road, much higher than the EPA and California emission standards allow. NOx pollution contributes to harmful ground-level ozone and fine particulate matter, pollutants associated with a range of serious health effects, including asthma attacks, respiratory illnesses, and other respiratory-related or cardiovascular-related effects, including damage to lung tissue and premature death.

EPA discovered these defeat devices in Fiat Chrysler’s vehicles during vehicle emission testing EPA performed in 2015 and 2016 at the National Vehicle and Fuel Emissions Laboratory (NVFEL).

Recall Program and Corporate Reforms

The EPA/California Settlement requires Fiat Chrysler to implement a recall and repair program to remove all defeat devices in the vehicles and replace the vehicles’ software so that they comply with EPA and California emission standards. Fiat Chrysler tested vehicles with the new software and demonstrated to EPA and California that the repaired vehicles will meet the applicable emission standards. EPA and California also tested the repaired vehicles and determined that they perform the same on emission tests as they do under normal driving conditions. Fiat Chrysler must repair at least 85% of the vehicles within two years or face stiff penalties. Fiat Chrysler must offer an extended warranty for vehicles that are repaired. Fiat Chrysler also must test repaired vehicles for five years to ensure the vehicles continue to meet emission standards over time and will pay additional penalties if the vehicles fail to meet those standards. 

The settlement further requires Fiat Chrysler to implement corporate governance, organizational and technical process reforms to minimize the likelihood of future Clean Air Act violations, and to hire a compliance auditor for three years to oversee and assess the effectiveness of these reforms.

Mitigation Program

The EPA/California Settlement requires Fiat Chrysler to implement a federal mitigation program to offset the environmental impacts of the non-compliant vehicles by reducing NOx emissions in the atmosphere. Fiat Chrysler will be required to work with one or more vendors of aftermarket catalytic converters to improve the efficiency of 200,000 converters that will be sold in the 47 states that do not already require the use of the California-mandated high efficiency gasoline vehicle catalysts. Such converters are purchased by vehicle owners to replace out-of-warranty catalytic converters. The mitigation program under the EPA/California Settlement is expected to fully mitigate NOx emissions caused by Fiat Chrysler’s violations across the country outside of California. The State of California’s separate mitigation program will fully address excess NOx from affected vehicles in California.

Additional Settlement

The Plaintiffs’ Steering Committee has secured a settlement for consumers with FCA and Bosch. Class members will receive between $990 and $3,075—an aggregate value of over $300 million if all class members participate—plus an extended warranty and an emissions fix also provided for in the EPA/California Settlement. Under California's separate consumer settlement, FCA also must provide consumers with the relief contained in the PSC agreement. For more information, consumers can go to EcoDieselSettlement.com or call FCA at 1-833-280-4748.

EPA/California Settlement Consent Decree

The EPA/California Settlement Consent Decree will be lodged in federal court in the Northern District of California and there will be a period of 30 days for public notice and comment. The penalty is due within 30 days of the court’s entry of the Consent Decree.

For more information on the settlement visit: https://www.epa.gov/enforcement/fiat-chrysler-automobiles-clean-air-act-civil-settlement-information-sheet

NOTE: The consent decree can be found here: https://www.justice.gov/enrd/consent-decree/file/1123866/download#Consent Decree with Attachments A - F  

The Department of Justice’s Civil Rights Division and the U.S. Equal Employment Opportunity Commission (EEOC) today signed a new Memorandum of Understanding (MOU) to prevent and address workplace harassment in state and local government. The EEOC and the Justice Department seek to enhance the effectiveness of the nation’s equal employment opportunity enforcement in the state and local government sector to ensure the efficient use of resources and a consistent enforcement strategy. The EEOC has ramped up its role as enforcer, educator, and leader on harassment in the workplace, and this MOU enhances those efforts.

EEOC Acting Chair Victoria A. Lipnic and Assistant Attorney General Eric Dreiband signed the MOU on Dec. 21 in Washington, D.C.

“All Americans are entitled to work with dignity in a place that is free of unlawful and discriminatory harassment,” said Assistant Attorney General Eric Dreiband. “Last February, the Justice Department’s Civil Rights Division launched an initiative to fight sexual harassment in the workplace. We are also diligently working to prosecute cases of racial and other forms of illegal discrimination. Through our strong partnership with the EEOC, we will continue to identify harassment claims, prosecute lawbreakers, seek relief for victims, and fight to eliminate harassment from the workplace.”

“I am pleased to be able to renew our work with the Department of Justice in this regard,” said Acting Chair Lipnic. “Harassment at work can have a devastating impact on people. The employees in the public sector deserve as much of our attention on this issue as those in the private sector.” Lipnic added, “I especially want to thank EEOC Commissioner Charlotte Burrows for her attention to issues in this sector. I look forward to using her years of experience at the Department of Justice to help us move forward with our important work.”

EEOC Commissioner Charlotte A. Burrows stated, “Anyone who suffers workplace harassment deserves prompt relief. I commend Acting Chair Lipnic and Assistant Attorney General Dreiband for their leadership in taking this important step to enhance the federal response in harassment investigations.”

The EEOC and the Department of Justice share enforcement authority for employment discrimination claims involving state and local government employers under Title VII of the Civil Rights Act. The EEOC receives, investigates, and mediates charges of discrimination against such public employers. Where the EEOC finds reasonable cause to believe an unlawful employment practice has occurred, the agency works with the employer to negotiate a mutually agreeable resolution to the charge. If conciliation of a charge fails, the EEOC refers the charge and its investigative file to the Justice Department, which has sole authority within the federal government to file a lawsuit against state and local governments under Title VII.

The agencies’ shared concern over the need for immediate action to prevent further harm in some harassment cases, including sexual harassment, led the EEOC and the Justice Department to amend the MOU. It now includes provisions for the expedited coordination of any charge involving state or local government employers where the EEOC’s preliminary investigation of a charge reveals that immediate action is needed to prevent further harm. In those cases, the EEOC will provide the Justice Department with the information necessary to obtain an injunction, temporary or preliminary relief, in federal court for the affected employees, pending the final outcome of the charge. 

The MOU and information about Title VII and other federal employment laws is available on the Employment Litigation Section of the Civil Rights Division’s website or the EEOC’s website.

The EEOC advances opportunity in the workplace by enforcing federal laws prohibiting employment discrimination. More information is available at www.eeoc.gov. Stay connected with the latest EEOC news by subscribing to our email updates.

NOTE: The 2018 False Claims Act statistics can be found here.

The Department of Justice obtained more than $2.8 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2018, Principal Deputy Associate Attorney General Jesse Panuccio and Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division announced today.  Recoveries since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $59 billion.

“Every year, the submission of false claims to the government cheats the American taxpayer out of billions of dollars,” said Principal Deputy Associate Attorney General Panuccio. “In some cases, unscrupulous actors undermine federal healthcare programs or circumvent safeguards meant to protect the public health.  In other instances, deceitful contractors overcharge our military or sell faulty equipment to our law enforcement agencies.  Such fraud will not be tolerated by the Department of Justice.  The nearly three billion dollars recovered by the Civil Division represents the Department’s continued commitment to fighting fraudsters and cheats on behalf of the American taxpayer.”

“The False Claims Act was originally passed in response to rampant fraud perpetrated against the United States military during the Civil War. Back then, crooked contractors defrauded the Union Army by selling it sick mules, lame horses, sawdust instead of gunpowder, and rotted ships with fresh paint.  Unfortunately, what we see today is just a modern version of the same thing — deceptive and fraudulent practices directed at the U.S. government and the American taxpayer,” said Assistant Attorney General Jody Hunt. “The Department of Justice has placed a high priority on rooting out and pursuing those who cheat government programs for their own gain. The recoveries announced today are a message that fraud and dishonesty will not be tolerated.”

Of the $2.8 billion in settlements and judgments recovered by the Department of Justice this past fiscal year, $2.5 billion involved the health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians.  This is the ninth consecutive year that the Department’s civil health care fraud settlements and judgments have exceeded $2 billion.  The recoveries included in the $2.5 billion reflect only federal losses but, in many of these cases, the Department was instrumental in recovering additional millions of dollars for state Medicaid programs.

In addition to combatting health care fraud, the False Claims Act serves as the government’s primary civil remedy to redress false claims for federal funds and property involving a multitude of government operations and contracts.  These areas range from defense and national security to import tariffs and small business programs. 

In 1986, Congress strengthened the Act by increasing incentives for whistleblowers to file lawsuits alleging false claims on behalf of the government.  These whistleblower, or qui tam, actions comprise a significant percentage of the False Claims Act cases that are filed.  If the government prevails in a qui tamaction, the whistleblower, also known as the relator, receives up to 30 percent of the recovery.  Whistleblowers filed 645 qui tam suits in fiscal year 2018, and this past year the Department recovered over $2.1 billion in these and earlier filed suits. 

Health Care Fraud

The Department investigates and resolves matters involving a wide array of health care providers, goods, and services.  The Department’s health care fraud enforcement efforts recover money for federal programs that fund health care for our nation’s most vulnerable and deserving citizens, such as Medicare, Medicaid, and TRICARE.  But just as important, the Department’s vigorous pursuit of health care fraud prevents billions more in losses by deterring those who might otherwise try to cheat the system for their own gain.

The largest recoveries involving the health care industry this past year came from the drug and medical device industry.  In one matter, AmerisourceBergen Corporation and certain of its subsidiaries paid $625 million to resolve allegations that they sought to circumvent important safeguards intended to preserve the integrity of the nation’s drug supply and profit from the repackaging of certain drugs supplied to cancer-stricken patients. Of that amount, $581.8 million was paid to the federal government and $43.2 million was paid to state Medicaid programs.   https://www.justice.gov/opa/pr/amerisourcebergen-corporation-agrees-pay-625-million-resolve-allegations-it-illegally.  In another matter, the medical device manufacturer Alere paid $33.2 million to resolve allegations that it sold a materially unreliable testing device that was intended to aid clinicians in the diagnosis of drug overdoses, acute coronary syndrome and other serious conditions.  Of the $33.2 million paid by Alere, $28.4 million was returned to the federal government and $4.8 million was returned to state Medicaid programs.  https://www.justice.gov/opa/pr/alere-pay-us-332-million-settle-false-claims-act-allegations-relating-unreliable-diagnostic. 

The Department has investigated efforts by drug manufacturers to facilitate increases in drug prices by funding the co-payments of Medicare patients. Congress included co-pay requirements in the Medicare program, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs.  This year, pharmaceutical company United Therapeutics Corporation, a seller of pulmonary arterial hypertension (PAH) drugs, paid $210 million to resolve allegations that it used a foundation as an illegal conduit to pay the co-pay obligations of thousands of Medicare patients taking its PAH drugs.  https://www.justice.gov/usao-ma/pr/united-therapeutics-agrees-pay-210-million-resolve-allegations-it-paid-kickbacks-through.  In addition, the drug manufacturer Pfizer paid approximately $23.85 million to resolve claims that it used a foundation as a conduit to pay the co-pays of Medicare patients taking Pfizer drugs.  The government alleged that Pfizer raised the price of one of those drugs by 40 percent in just three months.  https://www.justice.gov/opa/pr/drug-maker-pfizer-agrees-pay-2385-million-resolve-false-claims-act-liability-paying-kickbacks.

The Department also reported substantial recoveries from other health care providers.  In a matter that came to light in part by a voluntary disclosure by the company to the Department, HealthCare Partners Holdings LLC (HCP), doing business as DaVita Medical Holdings LLC, paid $270 million to resolve its liability for providing inaccurate information that caused Medicare Advantage Organizations (MAOs) to receive inflated Medicare payments. DaVita acquired HCP, a large California-based independent physician association, in 2012 and disclosed to the government various improper practices that were instituted by HCP.  In addition, this settlement resolved whistleblower allegations that HCP engaged in “one-way” chart reviews in which it scoured its patients’ medical records to find additional diagnoses that enabled managed care plans to obtain added revenue from the Medicare program. At the same time, however, it ignored inaccurate diagnosis codes revealed by its reviews that, if deleted, would have decreased Medicare reimbursement or required the plans to repay money to Medicare.  https://www.justice.gov/opa/pr/medicare-advantage-provider-pay-270-million-settle-false-claims-act-liabilities.  In 2017, the Department filed suit against UnitedHealth Group Inc. (UHG) alleging similar allegations that UHG knowingly obtained inflated risk adjustment payments based on untruthful and inaccurate information about the health status of beneficiaries enrolled in UHG’s Medicare Advantage Plans throughout the United States.  https://www.justice.gov/opa/pr/united-states-intervenes-second-false-claims-act-lawsuit-alleging-unitedhealth-group-inc. That litigation is ongoing.

In a matter that concluded in both a civil recovery and criminal plea, the former hospital chain Health Management Associates (HMA) paid over $216 million to resolve civil allegations that it billed government health care programs for more-costly inpatient services that should have been billed as observation or out-patient services, paid illegal remuneration to physicians in return for patient referrals to HMA hospitals, and inflated claims for emergency department facility fees.  In addition to these civil recoveries, HMA’s subsidiary, Carlisle HMA Inc., pleaded guilty to one count of conspiracy to commit health care fraud arising from illegal conduct designed to aggressively increase admissions to the hospital and paid a $35 million monetary penalty.  https://www.justice.gov/opa/pr/hospital-chain-will-pay-over-260-million-resolve-false-billing-and-kickback-allegations-one.  In another matter, William Beaumont Hospital, a regional hospital system based in the Detroit, Michigan area, paid $84.5 million to resolve allegations of improper relationships with eight referring physicians intended to induce patient referrals. https://www.justice.gov/opa/pr/detroit-area-hospital-system-pay-845-million-settle-false-claims-act-allegations-arising.

As some of the matters described illustrate, the Department continued to place great importance on enforcing the safeguards contained within the Anti-Kickback Statute (AKS).  This law was enacted to ensure that clinical decisions and medical services are provided to patients based on their medical needs and not on the improper financial considerations of providers. Congress has made clear that claims submitted to federal health care programs in violation of the AKS are “false” claims for purposes of the False Claims Act.

Procurement Fraud

In the past year, the Department also pursued a variety of fraud matters involving the government’s purchase of goods and services.  Toyobo Co. Ltd. of Japan and its American subsidiary, Toyobo U.S.A. Inc., f/k/a Toyobo America Inc. (collectively, Toyobo), paid $66 million to resolve claims that they sold defective Zylon fiber used in bullet proof vests that the United States purchased for federal, state, local, and tribal law enforcement agencies.  The United States further alleged that between at least 2001 and 2005, Toyobo, the sole manufacturer of Zylon fiber, knew that Zylon degraded quickly in normal heat and humidity and that this degradation rendered bullet proof vests containing Zylon unfit for use.  The United States alleged that Toyobo nonetheless actively marketed Zylon fiber for bullet proof vests, published misleading data that understated the degradation problem and, when one body armor manufacturer recalled some of its Zylon-containing vests in late 2003, started a public relations campaign designed to influence other body armor manufacturers to keep selling Zylon-containing vests.  Toyobo’s actions allegedly delayed by several years the government’s efforts to determine the true extent of Zylon degradation.  Finally, in August 2005, the National Institute of Justice (NIJ) completed a study of Zylon-containing vests and found that more than 50 percent of used vests could not stop bullets that they had been certified to stop.  Thereafter, all Zylon-containing vests were decertified for use.  With this year’s Toyobo settlement, more than $132 million has been recovered by the Department in False Claims Act matters involving the manufacture, distribution or sale of Zylon by body armor manufacturers, weavers, and international trading companies. https://www.justice.gov/opa/pr/japanese-fiber-manufacturer-pay-66-million-alleged-false-claims-related-defective-bullet.

United Kingdom marine services contractor, Inchcape Shipping Services Holdings Limited, and certain of its subsidiaries paid $20 million to resolve allegations that they overbilled the U.S. Navy under contracts to provide services to Navy ships at ports in several regions throughout the world, including southwest Asia, Africa, Panama, North America, South America and Mexico.  In its suit, the government alleged that Inchcape knowingly overbilled the Navy by submitting invoices that overstated the quantity of goods and services provided, billing at rates in excess of applicable contract rates, and double-billing for some goods and services. https://www.justice.gov/opa/pr/united-states-settles-lawsuit-alleging-contractor-falsely-overcharged-us-navy-ship-husbanding.

In another matter, TrellisWare Technologies Inc., a communications company located in San Diego, California, paid over $12 million to settle allegations that it was ineligible for multiple Small Business Innovation and Research (SBIR) contracts it had entered into with the Navy, Army, and Air Force.  The SBIR program is designed to stimulate technological innovation by funding small businesses to engage in federal research and development efforts.  The United States alleged that TrellisWare was not eligible for SBIR awards because it was actually a majority-owned subsidiary of a large company at the time it was awarded and performed the SBIR contracts.  https://www.justice.gov/usao-sdca/pr/san-diego-communications-company-pays-more-12-million-settle-false-claim-act.

In addition, 3M Company, headquartered in St. Paul, Minnesota, paid $9.1 million to resolve allegations that it knowingly sold dual-ended Combat Arms Earplugs to the United States military without disclosing defects that hampered the effectiveness of the hearing protection device.  https://www.justice.gov/opa/pr/3m-company-agrees-pay-91-million-resolve-allegations-it-supplied-united-states-defective-dual.

Other Fraud Recoveries

The number and variety of judgments and settlements announced during fiscal year 2018 illustrate the diversity of fraud cases pursued by the Department. For example, in February 2018, Deloitte & Touche LLP agreed to pay $149.5 million to resolve potential False Claims Act liability arising from Deloitte’s role as the independent outside auditor of Taylor, Bean & Whitaker Mortgage Corp. (TBW), a failed originator of mortgage loans insured by the Federal Housing Administration (FHA) in the Department of Housing and Urban Development (HUD).  Deloitte served as TBW’s independent outside auditor during the time TBW had been engaged in a long-running fraudulent scheme involving, among other things, the purported sale of fictitious or double-pledged mortgage loans.  The United States alleged that Deloitte’s audits knowingly deviated from applicable auditing standards and therefore failed to detect TBW’s fraudulent conduct and materially false and misleading financial statements.  https://www.justice.gov/opa/pr/deloitte-touche-agrees-pay-1495-million-settle-claims-arising-its-audits-failed-mortgage. 

The False Claims Act was also used this past year to redress avoidance of antidumping duties that are in place to protect against foreign companies “dumping” products on the U.S. market at prices below cost.  The Department of Commerce assesses, and the Department of Homeland Security’s Customs and Border Protection collects, these duties to protect U.S. businesses and level the playing field for domestic products.  This year, the Virginia-based home furnishings company, Bassett Mirror Company, paid $10.5 million to resolve allegations that it knowingly made false statements on customs declarations to avoid paying antidumping duties on wooden bedroom furniture imported from the People’s Republic of China (PRC).  The Department alleged that between January 2009 and February 2014, Bassett Mirror evaded these antidumping duties by knowingly misclassifying the furniture as non-bedroom furniture on its official import documents.  At the time of the alleged conduct in this case, wooden bedroom furniture from the PRC was subject to a 216 percent antidumping duty; non-bedroom furniture was not subject to an antidumping duty. https://www.justice.gov/opa/pr/bassett-mirror-company-agrees-pay-105-million-settle-false-claims-act-allegations-relating. Similarly, textile importer American Dawn Inc. agreed to pay over $2.3 million to resolve allegations that it intentionally misclassified goods imported into the United States, such as bath and shop towels as polishing cloths, in order to pay lower tariff rates.  https://www.justice.gov/usao-ndga/pr/textile-importer-resolves-false-claims-act-allegations-0.

And in a matter illustrating the government’s continuing efforts to hold accountable those who seek to take improper advantage of a program that allows companies to remove gas from federal lands upon payment of royalties to the federal government, Citation Oil & Gas Corp. and its affiliates, Citation 2002 Investment Limited Partnership and Citation 2004 Investment Limited Partnership, paid $2.25 million to resolve allegations that they underpaid royalties owed on natural gas produced from federal lands in Wyoming. https://www.justice.gov/opa/pr/citation-companies-agree-pay-225-million-settle-civil-false-claims-act-allegations.

Holding Individuals Accountable

The Department continued its commitment to use the False Claims Act and other civil remedies to deter and redress fraud by individuals as well as corporations.  For example, after a two-week jury trial, the Department obtained judgments totaling more than $114 million against three individuals who were found to have paid physicians illegal remuneration disguised as “handling fees” of between $10 and $17 for each patient they referred to two blood testing laboratories: Health Diagnostic Laboratory of Richmond, Virginia (HDL), and Singulex Inc., of Alameda, California (Singulex). The government also introduced evidence at trial that this kickback scheme resulted in physicians referring patients to HDL and Singulex for medically unnecessary tests, which were then billed to federal health care programs. https://www.justice.gov/opa/pr/united-states-obtains-114-million-judgment-against-three-individuals-paying-kickbacks.

In another kickback case, based on the jury’s verdict for the United States, the court awarded judgment of $5.5 million against neurosurgeon Dr. Sonjay Fonn, his fiancé Ms. Deborah Seeger, and their professional corporations DS Medical and Midwest Neurosurgeons.  The evidence showed that Dr. Fonn performed spinal fusion surgery using implants for which his fiancé received commissions, which were used to benefit Dr. Fonn in the form of lavish purchases such as a yacht and home improvements.  https://www.justice.gov/usao-edmo/pr/federal-judge-trebles-damages-and-imposes-civil-penalties-against-cape-girardeau.  

In addition, former professional cyclist Lance Armstrong paid $5 million to resolve a lawsuit alleging that his admitted use of performance-enhancing drugs and methods (PEDs) resulted in the submission of millions of dollars in false claims for sponsorship payments to the U.S. Postal Service (USPS), which sponsored Armstrong’s cycling team during six of the seven years Armstrong was deemed the winner of the Tour de France.  The lawsuit alleged that Armstrong and his team regularly and systematically employed PEDs, that Armstrong made numerous false statements denying his PED use, and that Armstrong took active measures to conceal his PED use during the USPS sponsorship and even after the sponsorship ended.  https://www.justice.gov/opa/pr/lance-armstrong-agrees-pay-5-million-settle-false-claims-allegations-arising-violation-anti.

Prime Healthcare Services Inc., Prime Healthcare Foundation Inc., and Prime Healthcare Management Inc. (collectively “Prime”), and Prime’s Founder and Chief Executive Officer, Dr. Prem Reddy, paid $65 million to settle allegations that 14 Prime hospitals in California knowingly submitted false claims to Medicare by admitting patients who required only less costly, outpatient care and by billing for more expensive patient diagnoses than the patients had. Dr. Reddy paid $3.25 million of the overall settlement. https://www.justice.gov/opa/pr/prime-healthcare-services-and-ceo-pay-65-million-settle-false-claims-act-allegations. Dr. Arthur S. Portnow of Sarasota, Florida, the owner and operator of Arthur S. Portnow, P.A., d/b/a Apple Medical and Cardiovascular Group, d/b/a Apple Medical Group, agreed to pay $1.95 million to resolve allegations that he and his practice violated the False Claims Act by knowingly seeking reimbursement for medically unnecessary ultrasound tests that were performed on Medicare beneficiaries.  The government also alleged that Dr. Portnow falsified patient records in an effort to justify those unnecessary ultrasounds.  https://www.justice.gov/usao-mdfl/pr/sarasota-physician-agrees-pay-195-million-resolve-false-claims-act-allegations.  Dr. Michael Frey, M.D., a pain management specialist and one of the two principal owners of Advanced Pain Management Specialists P.A. in Fort Myers, Florida, agreed to pay $2.8 million to resolve allegations that he violated the False Claims Act in a number of ways, including receiving illegal kickbacks and by ordering medically unnecessary laboratory tests.  https://www.justice.gov/usao-mdfl/pr/fort-myers-pain-management-physician-pleads-guilty-healthcare-offenses-and-agrees-28.

Recoveries in Whistleblower Suits

Of the $2.8 billion in settlements and judgments reported by the government in fiscal year 2018, over $2.1 billion arose from lawsuits filed under the qui tamprovisions of the False Claims Act.  During the same period, the government paid out $301 million to the individuals who exposed fraud and false claims by filing these actions.

The number of lawsuits filed under the qui tam provisions of the Act has grown significantly since 1986, with 645 qui tam suits filed this past year – an average of more than 12 new cases every week.

“Whistleblowers have played a vital role in unmasking fraudulent schemes that might otherwise evade detection,” said Assistant Attorney General Jody Hunt.  “The taxpayers owe a debt of gratitude to those who often put much on the line to expose such schemes.”

In 1986, Senator Charles Grassley and Representative Howard Berman led the successful efforts in Congress to amend the False Claims Act to, among other things, encourage whistleblowers to come forward with allegations of fraud.  In 2009 and 2010, additional improvements were made to the False Claims Act and its whistleblower provisions.   Congress also included in the False Claims Act authority for the government to dismiss cases, and during the past year the government made increasing use of this tool to help prioritize the use of government resources.   

Finally, Assistant Attorney General Hunt commended the many dedicated public servants throughout the Department’s Civil Division and the U.S. Attorneys’ Offices, as well as the agency Offices of Inspector General and the many other federal and state agencies that contributed to the Department’s False Claims Act recoveries this past fiscal year. “The accomplishments announced today would not have been possible but for the hard work of the men and women throughout the government who work tirelessly to protect the interests of taxpayers,” said Assistant Attorney General Jody Hunt.  “I have served in the Civil Division for many years and it is now my great honor to lead this Division.  I am grateful to work alongside so many passionate, dedicated, and talented employees who have committed their careers to serving the American people and defending the interests of our great nation.”

****

Except where indicated, the government’s claims in the matters described above are allegations only and there has been no determination of liability.  The numbers contained in this press release may differ slightly from the original press releases due to accrued interest.

WASHINGTON –Acting Attorney General Matthew Whitaker today announced that, pursuant to President Trump’s Executive Order 13777 and the Department of Justice’s November 2017 memorandum ending the practice of regulation by guidance, the Department is rescinding 69 additional guidance documents that are unnecessary, outdated, inconsistent with existing law, or otherwise improper.

In making the announcement, Acting Attorney General Whitaker said:

"Under the Constitution, Congress writes our laws and the Executive Branch carries them out," Acting Attorney General Whitaker said. "Congress has given us a specific process for implementing regulations, and we have to follow it. Unfortunately, not every previous Administration has done that, and some have overstepped their lawful authority by issuing guidance documents that impose new obligations on parties outside of the Executive Branch and go further than existing law allows. The Trump Administration has already rescinded dozens of guidance documents that were improper, outdated, unnecessary, or inconsistent with current law, and today we are rescinding dozens more. We will continue this effort to restore the rule of law and our constitutional order because this government is accountable to the American people.”

In March 2017, President Donald Trump issued Executive Order 13777, which calls for agencies to establish Regulatory Reform Task Forces, chaired by a Regulatory Reform Officer, to identify existing regulations for potential repeal, replacement, or modification. Principal Deputy Associate Attorney General Jesse Panuccio chairs the Department of Justice Task Force, which is continuing its review of existing guidance documents that should be repealed, replaced, or modified.

 The Task Force identified 25 guidance documents for repeal in December 2017, 24 guidance documents for repeal in July 2018, and has identified 69 more documents to announce for repeal this month. 

The list of 69 total guidance documents that the Department of Justice is announcing withdrawal of today is as follows:

1. ATF Rev. Ruling 69-114.
2. ATF Ruling 77-25.
3. ATF Ruling 77-26.
4. ATF Ruling 75-30.
5. ATF Ruling 77-13.
6. ATF Ruling 80-22.
7. ATF Procedure 80-7.
8. ATF Ruling 80-23.
9. Open Letter to all FFLs dated Aug. 31, 2006.
10. Open Letter dated Aug. 22, 2001. 
11. Open Letter dated  Nov. 20, 2001.
12. Open Letter dated Nov. 4, 2008.
13. Open Letter to Washington FFLs dated Aug. 12, 2011.
14. 53 Open Letters dated February 1994.
15. Open Letter to all Federal Explosives Licensees and Permittees dated Feb. 12, 2003.  
16. Dear Colleague Letter on Nondiscriminatory Administration of School Discipline dated Jan. 8, 2014.
17. Overview of the Supportive School Discipline Initiative dated Jan. 8, 2014.

Acting Attorney General Matthew G. Whitaker today released the following statement:

"The Pan Am 103 bombing changed this country and it changed law enforcement forever," Acting Attorney General Matthew Whitaker said. "At the time, it was the deadliest terrorist attack on American civilians in our history. The victims came from across America and from every walk of life. College students coming home for Christmas, a couple on their honeymoon, an outstanding Department of Justice prosecutor, and more than 200 other innocent people were targeted by terrorists. In response to that unspeakable tragedy, law enforcement changed the way we investigate terrorism, the way we collaborate with one another, and the way we provide services to crime victims. It is right that the law enforcement community stops today to remember this tragedy, to honor the victims and their families, and to once again recommit ourselves to preventing acts of terror from victimizing the American people ever again."

A Colombian national was arrested in Colombia and extradited to Pittsburgh, Pennsylvania last night on charges related to his alleged role in the robbery of an employee of a New York business that sold jewelry and gemstones.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Scott W. Brady for the Western District of Pennsylvania, Special Agent in Charge Robert Allan Jones of the FBI’s Pittsburgh Field Division and Chief T. Robert Amann for the Northern Regional Police Department in Wexford, Pennsylvania made the announcement.

Oscar Javier Rodriguez Roa, 35, of Bogota, Columbia, was charged by indictment unsealed today in the Western District of Pennsylvania with one count of conspiracy to commit Hobbs Act Robbery and one count of Hobbs Act Robbery.  Roa is scheduled to make his initial court appearance in U.S. District Court in Pittsburgh today at 1:45 p.m. EST before U.S. Magistrate Judge Maureen P. Kelly. 

The indictment alleges that on May 8, 2013, in the Western District of Pennsylvania, Roa and others conspired to rob and robbed an employee of a New York business that sold jewelry and gemstones.  Roa and others allegedly took jewelry and gemstones from the employee against his will by actual and threatened force, violence, and fear of injury. 

The investigation of this case was led by the FBI’s Pittsburgh Field Division, with the assistance of the Northern Regional Police Department.  The Justice Department’s Office of International Affairs provided significant support with the defendant’s extradition.    

Assistant U.S. Attorney Charles A. Eberle of the U.S. Attorney’s Office for the Western District of Pennsylvania and Trial Attorney Leshia Lee-Dixon of the Criminal Division’s Organized Crime and Gang Section in the Justice Department are prosecuting the case.

The charges in the indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Acting Attorney General Matthew G. Whitaker today released the following statement: 

"Because of loopholes in our laws, tens of thousands of illegal aliens have been able to enter this country, make meritless asylum claims, and then be released and disappear into the United States. But the Trump administration has been taking steps to close these loopholes and eliminate the incentives to come here illegally.  Today the Trump Administration has taken an historic step that will reverse the trends and help restore the rule of law at the border. The Department of Justice will do its part and ensure that we make available the necessary and appropriate resources in light of this historic agreement. Thanks to this and other Trump Administration decisions, the days of our generosity being abused are coming to an end."

A federal grand jury returned a seventh superseding indictment Monday charging nine men in connection with a conspiracy to participate in a racketeering enterprise known as La Mara Salvatrucha, or MS-13.

Charged in the seven-count superseding indictment are Junior Noe Alvarado-Requeno, aka “Insolente,” and “Trankilo,” 22, of Landover, Maryland; Michael Eduardo Contreras, aka “Katra,” and “Insoportable,” 24, of Silver Spring, Maryland; Luis Fernando Orellana-Estrada, aka “Pinguino,” 19, of Hyattsville, Maryland; Kevin Alexander Soriana-Hernandez, aka “Brocha,” 19, of Riverdale, Maryland; Carlos Daniel Cardenas-Banegas, aka “Perrico,” 20, of Riverdale, Maryland; Wilfredo Cardenas-Banegas, aka “Torro,” 25, of Riverdale, Maryland; Luis Arnoldo Flores-Reyes, aka “Maloso,” and “Lobo,” 37, of Arlington, Virginia; Miguel Angel Corea Diaz, aka “Reaper,” 36, of Long Branch, New Jersey, Jairo Arnaldo Jacome, aka “Abuelo,” 36, of Langley Park, Maryland.

Assistant Attorney General Brian A. Benczkowski for the Justice Department’s Criminal Division, U.S. Attorney Robert K. Hur for the District of Maryland, Assistant Director in Charge Nancy McNamara of the FBI Washington Field Office, Special Agent in Charge Gordon B. Johnson of the FBI Baltimore Field Office, Acting Special Agent in Charge Cardell T. Morant of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Baltimore Field Office, Acting Special Agent in Charge Scott Hoernke of the U.S. Drug Enforcement Administration (DEA) Washington Field Division, Chief J. Thomas Manger of the Montgomery County Police Department, Chief Henry P. Stawinski III of the Prince George’s County Police Department, Interim Chief Amal Awad of the Hyattsville Police Department, Prince George’s County State’s Attorney Aisha Braveboy and Montgomery County State’s Attorney John McCarthy made the announcement.

The superseding indictment alleges that from at least prior to in or about 2015 through at least in or about January 2018, the defendants, as members and associates of MS-13, engaged in a racketeering conspiracy that included extortion, drug trafficking, money laundering, robbery, murder, and conspiracy to commit murder.  Jacome was a member and associate of the Langley Park Salvatrucha Clique of MS-13.  All other defendants were members and associates of the Sailors Clique of MS-13. 

Alvarado-Requeno, Contreras, Orellana-Estrada, Soriana-Hernandez, Wilfredo Cardenas-Banegas, Carlos Cardenas-Banegas, and Flores-Reyes were charged in a previous indictment with conspiracy to participate in a racketeering enterprise for their alleged involvement in a variety of violent acts taken by the Sailors Clique of MS-13, including multiple murders. Corea Diaz and Jacome are also charged with RICO conspiracy in the seventh superseding indictment, in which additional murders have been charged. Specifically, the indictment charges that in June 2016, Alvarado-Requeno and Contreras allegedly planned with and directed other members and associates of MS-13 to search for and murder gang rivals known as “chavalas” in and around Hyattsville, Maryland. On June 8, 2016, Alvarado-Requeno and Contreras directed lower-ranking members of MS-13 to murder two individuals who were believed to be members of the 18th Street gang. Pursuant to this plan and as directed by Alvarado-Requeno and Contreras, MS-13 members and associates stabbed the two victims to death in Hyattsville, Maryland.

The indictment further charges that, on Dec. 4, 2016, Alvarado-Requeno, Contreras, Jacome and other members and associates of MS-13 allegedly traveled to Germantown, Maryland with a machete and other weapons with the purpose of murdering an individual as punishment for his infractions against the gang. They stabbed the victim to death, but fled the area leaving the victim’s body near a creek. The next day, Jacome and other members and associates of MS-13 returned to Germantown to bury the body of the victim.

The indictment further charges that, on March 27, 2017, Contreras, Alvarado-Requeno, Flores-Reyes, and Corea-Diaz allegedly arranged for members and associates of the Sailors Clique to travel from Maryland to Lynchburg, Virginia for the purpose of murdering an individual in the Lynchburg area. Flores-Reyes provided the vehicle in which the members and associates drove and called them to provide encouragement to murder the victim. The victim was murdered that same day in Bedford County, Virginia. On March 27 and March 28, 2017, multiple individuals were arrested in connection with the murder. Contreras, Alvarado-Requeno, Flores-Reyes, and Corea-Diaz made phone calls on those dates trying to locate the individuals who had gone to Virginia to commit the murder. Two of the participants in the murder escaped from Bedford County and were hidden in Maryland by members and associates of the Sailors Clique.

In addition to the new charges in the RICO conspiracy, Alvarado-Requeno, Contreras and Jacome are charged in the superseding indictment with murder in aid of racketeering and conspiracy to commit murder in aid of racketeering in connection with the Dec. 4, 2016 murder. Alvarado-Requeno is also charged in the superseding indictment with murder in aid of racketeering and conspiracy to commit murder in aid of racketeering in connection with a Gaithersburg, Maryland murder that took place on June 16, 2016.  Jacome is charged with conspiracy to interfere with interstate commerce by extortion.  All defendants are in custody.

According to the superseding indictment, MS-13 is a national and international gang composed primarily of immigrants or descendants from El Salvador.  Branches or “cliques” of MS-13, one of the largest street gangs in the United States, operate throughout Prince George’s County and Montgomery County, Maryland. 

The charges in the indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

FBI Washington and Baltimore Field Offices, HSI Baltimore, DEA Washington Field Office, the Prince George’s County Police Department, the Montgomery County Police Department, the Prince George’s State’s Attorney’s Office, the Hyattsville Police Department, and the Montgomery County State’s Attorney’s Office investigated this case.  Trial Attorney Francesca Liquori of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys William D. Moomau, Catherine K. Dick and Daniel C. Gardner of the District of Maryland are prosecuting this case.

A Suffolk County, New York, resident pleaded guilty today to failing to account for and pay over employment taxes to the Internal Revenue Service (IRS), announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division. 

According to court documents, Scott Warner owned and operated a temporary employment agency in Suffolk County, New York, that did business under multiple names, including Around the Clock Staffing Inc., Your Staffing Service Inc., Your Staffing Services Inc., Revlis Consulting Corp., and City Consulting Corp.  Warner was responsible for withholding federal income tax, Social Security and Medicare taxes from his employees’ wages, paying the taxes over to the IRS, and filing employment tax returns.  Despite this obligation, Warner failed to pay over to the IRS approximately $687,480 withheld from employee wages from Oct. 2012 through Dec. 2016. 

Warner faces a maximum sentence of five 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 IRS Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys Mark Kotila and Ann M. Cherry, who are prosecuting this case. 

The Justice Department today announced that it has reached a settlement agreement with Sinai Health System Inc. (Sinai) in Chicago, Illinois.   Sinai serves the health care needs of the approximately 1.5 million people who reside within its service areas -- Chicago’s west and southwest sides -- and comprises Mount Sinai Hospital Medical Center of Chicago, Holy Cross Hospital, Schwab Rehabilitation Hospital and Care Network, Sinai Children’s Hospital, Sinai Community Institute, Sinai Medical Group, and Sinai Urban Health Institute.  The settlement resolves a claim that Sinai violated the anti-discrimination provision of the Immigration and Nationality Act (INA) by discriminating against non-citizen employees when verifying their work authorization. 

The Department’s independent investigation concluded that, from at least Jan. 1, 2016, to Sept. 30, 2017, a human resources employee responsible for verifying employees’ work authority routinely required newly hired non-U.S. citizen employees to provide specific documentation issued by the Department of Homeland Security to prove employment eligibility.  In contrast, U.S. citizen employees were permitted to present the documentation of their choice to establish their work authorization.  Federal law allows individuals, regardless of citizenship status, the right to choose which document to present, from a range of valid documents, to demonstrate their authority to work in the United States.  The anti-discrimination provision of the INA prohibits employers from subjecting employees to unnecessary documentary demands based on employees’ citizenship status or national origin.

“Employers are reminded that the employment eligibility verification process is intended to confirm an employee’s work authorization, not their immigration status,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division.  “The Division commends Sinai for its commitment to complying with the anti-discrimination provision of the INA.”

Under the settlement, Sinai will pay $7,000 in civil penalties to the United States and be subject to departmental monitoring and reporting requirements.  The agreement also requires certain employees to attend training on the requirements of the INA’s anti-discrimination provision, and Sinai will make available IER materials containing information about IER and the anti-discrimination provision of the INA at various locations.  

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; 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.

Eight Dallas, Texas-area pharmacy owners and marketers were charged in an indictment unsealed today for their roles in a scheme involving approximately $92 million in compound drug claims to TRICARE and the U.S. Department of Labor (DOL), which were allegedly the product of over $9.1 million in illegal kickbacks.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, Special Agent in Charge Michael Mentavlos of the Defense Criminal Investigative Service (DCIS) Southwest Field Office, Special Agent in Charge Steven Grell of the U.S. Department of Labor - Office of Inspector General’s (DOL-OIG) Dallas Region and Special Agent in Charge CJ Porter of the Office of Inspector General for the U.S. Department of Health and Services (HHS-OIG) made the announcement.

Richard Hall, 48; Scott Schuster, 47; Dustin Rall, 43; George Lock Paret, 34; and Michael Ranelle, 49, all of Fort Worth, Texas; John Le, 43, of Dallas; Quintan Cockerell, 37, of Manhattan Beach, California; and Turner Luke Zeutzius, 36, of Horseshoe Bay, Texas, were each charged in an indictment filed Dec. 12 in the Northern District of Texas with one count of conspiracy to defraud the United States and pay and receive kickbacks.  Hall, Schuster, Rall, and Le were each additionally charged with four counts of paying kickbacks.  Zeutzius was additionally charged with two counts of receiving kickbacks and Ranelle and Cockerell were each charged with one count of receiving kickbacks.  Hall, Schuster, Rall, Le and Ranelle were arrested yesterday and had their initial court appearances before U.S. Magistrate Judge Irma C. Ramirez in Dallas.   Paret, Cockerell and Zeutzius self-surrendered this morning and will have their initial court appearances today at 2 p.m. CST before Judge Ramirez.

According to the indictment, from May 2014 to September 2016, Hall, Schuster, Rall, Paret, Le and their co-conspirators allegedly engaged in a scheme to pay kickbacks and bribes for the referral of TRICARE and DOL beneficiaries to obtain expensive compound drugs.  Hall, Shuster and Rall were co-owners of Rxpress Pharmacy and Xpress Compounding, compound pharmacies located at 1000 W. Weatherford St. in Fort Worth. 

As alleged in the indictment, Rxpress and Xpress were separate in name only; Rxpress Pharmacy and Xpress Compounding employed the same staff, operated out of the same building, and utilized a call center to direct prescriptions depending on whether the prescriptions were for private or federal insurance.  The indictment alleges that both companies utilized the same marketers but paid them differently depending on whether they were receiving a commission on a federal or private prescription, in order to disguise the illegal kickback payments on federal prescriptions.  Specifically, Hall, Schuster, Rall, Paret and Le allegedly devised a scheme to make kickback payments to marketers through Xpress Compounding for the referral of federal prescriptions.  These marketers were allegedly set up as sham “W-2” employees to appear as though they were bona fide employees of Xpress Compounding.  At the same time, these marketers were paid as 1099 contractors by Rxpress Pharmacy, the indictment alleges. 

The indictment alleges that as a result of the scheme, Zeutzius was paid approximately $4.4 million, Cockerell (through an unnamed person) was paid approximately $2.1 million, and Ranelle was paid approximately $2.6 million in illegal kickbacks, for a total of approximately $9.1 million in illegal kickbacks. 

The charges in the indictment are merely allegations and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

DCIS, DOL-OIG, the U.S. Department of Health and Human Services Office of Inspector General, the FBI and the U.S. Department of Veterans Affairs Office of Inspector General investigated the case.  Assistant Chief Adrienne Frazior and Trial Attorney Brynn Schiess of the Criminal Division’s Fraud Section are prosecuting the case.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and the U.S. Department of Health and Human Services (HHS) to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  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.

A Washington, D.C. man was sentenced to 18 months in prison for his April attack on a federal prosecutor outside the Superior Court for the District of Columbia, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.

Maurice Hight, 28, who pleaded guilty on Oct. 10 to one count of felony assault on a federal official, was sentenced by U.S. District Judge Paul L. Friedman of the District of Columbia to serve 18 months in prison followed by three years of supervised release.  According to admissions made in connection with his plea agreement, on April 5, 2018, Maurice and his sister and co-defendant, Tiera Hight, 21, were in a courtroom in the Superior Court for the District of Columbia waiting for a verdict against their brother, who was being tried for murder.  After the guilty verdict, Maurice and Tiera Hight exited the courthouse and waited outside.  Several minutes later, the murder victim’s daughter exited the courthouse, escorted by a federal prosecutor.  As they approached the street, Tiera Hight walked directly towards the pair and she and Maurice Hight began to circle them.  Tiera Hight then began to spit on the murder victim’s daughter and physically attacked her.  The federal prosecutor intervened, but Tiera Hight continued her attack.  Maurice Hight then joined the fight, forcibly grabbing the federal prosecutor, pulling her down and punching her in the right side of the face with a closed fist.  The federal prosecutor fell hard to the ground and sustained swelling and bruises to her face and arm.  Two deputy U.S. Marshals in the area placed Maurice Hight under arrest, and Maurice Hight proceeded to spit in the face of one of the deputy U.S. Marshals.  

“The Department of Justice is committed to protecting the safety of our federal officials,” said Assistant Attorney General Benczkowski.  “As this case demonstrates, we will not tolerate any violence against our federal prosecutors for doing their jobs in upholding the rule of law.”

Tiera Hight is scheduled to be sentenced on Feb. 19, 2019 before Judge Friedman.

The Criminal Investigations and Intelligence Unit for the U.S. Attorney’s Office for the District of Columbia investigated this case. Trial Attorneys Jennifer A. Clarke and Lauren Bell of the Criminal Division’s Public Integrity Section are prosecuting the case.

The owner of a Miami, Florida-area pharmacy who caused Medicare to pay more than $8.4 million over a six-year period for prescription drugs that were never provided to beneficiaries was sentenced today to 87 months in prison. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ariana Fajardo Orshan of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.

Antonio Perez Jr., 48, of Miami Beach, Florida, was sentenced by U.S. District Judge Federico A. Moreno of the Southern District of Florida, who also ordered Perez to pay $8,415,824 in restitution and to forfeit the same amount.  Perez was ordered to forfeit four Miami-area properties worth approximately $700,000 and multiple bank accounts totaling over $250,000.  Perez previously pleaded guilty to one count of conspiracy to commit health care fraud.

According to admissions made as part of his plea agreement, Perez was the owner of A.R.A. Medical Services Inc., which did business under the name Valles Pharmacy Discount.  Perez admitted to agreeing to pay illegal health care kickbacks to Medicare beneficiaries in exchange for a promise from the beneficiaries to fill their prescriptions at Valles Pharmacy Discount, and to allow Valles Pharmacy Discount to submit claims to Medicare for prescription drugs that were not provided to the beneficiaries.  Perez also admitted that he submitted claims to Medicare for expensive prescription medications that Valles Pharmacy never purchased, and were never provided to Medicare beneficiaries. 

During the course of the scheme, Medicare paid Valles Pharmacy Discount over $32 million, of which at least $8.4 million was for prescription drugs that Valles Pharmacy never purchased and never provided to Medicare beneficiaries, Perez admitted.

The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.  The case was prosecuted by Trial Attorney Timothy P. Loper of the Fraud Section.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and the U.S. Department of Health and Human Services (HHS) to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  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.

The Justice Department today announced the filing of a complaint in federal district court against Watermark Solutions (Watermark), a private corporation located in Phoenix, Arizona. The complaint alleges that Watermark violated the employment rights of Staff Sergeant Larry Green (SSG Green), a reservist in the United States Air Force, under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).

According to the complaint, filed in United States District Court for the District of Arizona, SSG Green’s requirement to perform service in the Air Force Reserves was a motivating factor in Watermark’s decision to terminate his employment. At the time that SSG Green was hired by Watermark in July 2015, he informed Watermark of his military training obligations as an Air Force Reservist. Prior to his employment with Watermark, SSG Green served his country for six years on active duty and has been a member of the United States Air Force Reserves since 2015.  Despite the fact SSG Green submitted notice of his Reserve training duties when he was hired, the complaint alleges that in June 2016, Watermark terminated SSG Green’s employment within days of being notified of the dates of his pending military training obligations.   

“Our country depends on the men and women who faithfully carry out their military obligations and make personal sacrifices in order to protect our freedoms as Americans,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The Department of Justice is committed to ensuring that the rights of service members, including maintaining their jobs, will be protected when they return to civilian employment from military service or training.”

The lawsuit filed by the United States seeks damages equal to the amount of SSG Green’s lost wages and benefits, as well as liquidated damages resulting from Watermark’s willful failure to comply with USERRA. The lawsuit also seeks SSG Green’s reemployment with the company.

SSG Green initially filed a complaint with the United States Department of Labor’s Veterans’ Employment and Training Service (VETS). The Department of Labor investigated the complaint and attempted to reach resolution between the parties. After resolution failed, VETS referred the complaint to the Department of Justice’s Civil Rights Division, Employment Litigation Section. 

The Justice Department gives high priority to the enforcement of servicemembers’ rights under USERRA.  Additional information about USERRA can be found on the Justice Departments websites at www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.

Today, Acting Attorney General Matthew Whitaker announced that the Department of Justice has amended the regulations of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), clarifying that bump stocks fall within the definition of “machinegun” under federal law, as such devices allow a shooter of a semiautomatic firearm to initiate a continuous firing cycle with a single pull of the trigger. 

Acting Attorney General Whitaker made the following statement:  “President Donald Trump is a law and order president, who has signed into law millions of dollars in funding for law enforcement officers in our schools, and under his strong leadership, the Department of Justice has prosecuted more gun criminals than ever before as we target violent criminals. We are faithfully following President Trump’s leadership by making clear that bump stocks, which turn semiautomatics into machine guns, are illegal, and we will continue to take illegal guns off of our streets.”

On February 20, 2018, President Trump issued a memorandum instructing the Attorney General “to dedicate all available resources to… propose for notice and comment a rule banning all devices that turn legal weapons into machineguns.” In response to that direction the Department reviewed more than 186,000 public comments and made the decision to make clear that the term “machinegun” as used in the National Firearms Act (NFA), as amended, and Gun Control Act (GCA), as amended, includes all bump-stock-type devices that harness recoil energy to facilitate the continuous operation of a semiautomatic firearm after a single pull of the trigger. 

This final rule amends the regulatory definition of “machinegun” in Title 27, Code of Federal Regulations (CFR), sections 447.11, 478.11, and 479.11.  The final rule amends the regulatory text by adding the following language:  “The term ‘machine gun’ includes bump-stock devices, i.e., devices that allow a semiautomatic firearm to shoot more than one shot with a single pull of the trigger by harnessing the recoil energy of the semi-automatic firearm to which it is affixed so that the trigger resets and continues firing without additional physical manipulation of the trigger by the shooter.” Furthermore, the final rule defines “automatically” and “single function of the trigger” as those terms are used in the statutory definition of machinegun.  Specifically,

• “automatically” as it modifies “shoots, is designed to shoot, or can be readily restored to shoot,” means functioning as a result of a self-acting or self-regulating mechanism that allows the firing of multiple rounds through the single function of the trigger;
• “single function of the trigger” means single pull of the trigger and analogous motions.

Because the final rule clarifies that bump-stock-type devices are machineguns, the devices fall within the purview of the NFA and are subject to the restrictions of  18 U.S.C. 922(o).  As a result, persons in possession of bump-stock-type devices must divest themselves of the devices before the effective date of the final rule.  A current possessor may destroy the device or abandon it at the nearest ATF office, but no compensation will be provided for the device.  Any method of destruction must render the device incapable of being readily restored to its intended function. 

The final rule may be found here.

Information and instructions for destruction of the devices will be posted on ATF's website later today.

Please note:  This is the text of the final rule as signed by the Acting Attorney General, but the official version of the final rule will be as it is published in the Federal Register.

A Nigerian national was charged in court documents unsealed today for his role as the alleged ringleader of an international advance-fee scheme that allegedly involved false promises of investment funding by individuals who impersonated U.S. bank officials in person and over the internet to victims around the world, who were told they had to make certain payments before they could supposedly receive their funding.  Proceeds of the scheme were allegedly laundered through U.S. bank accounts and diverted back to the scheme’s perpetrators in Nigeria.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ryan Patrick of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office and Special Agent in Charge Robert Smolich of the U.S. Department of State Office of Inspector General made the announcement. 

Osondu Victor Igwilo, 49, of Lagos, Nigeria, was charged in a complaint filed in the Southern District of Texas in December 2016 and unsealed today.  The complaint charges Igwilo with one count of wire fraud conspiracy, one count of money laundering conspiracy and one count of aggravated identity theft.  Igwilo remains a fugitive.

As alleged in the complaint, Igwilo was the leader of a criminal network of “catchers,” who sent phishing emails to potential victims falsely offering investment funding on behalf of BB&T Corporation, a U.S. bank headquartered in North Carolina.  When victims were interested in the supposed investment funding, Igwilo allegedly dispatched U.S. citizens whom he had recruited over the internet to pose as “representatives” of BB&T to meet in person with the victims and sign a supposed investment agreement on behalf of BB&T.  When traveling to the countries where the victims resided, these representatives, at Igwilo’s direction, would visit the local U.S. embassy or consulate and employ fake documents with fraudulent seals of the U.S. government to deceive the victims into believing that the investment agreement was sponsored by the U.S. government, the complaint alleges.  Igwilo then allegedly used the representatives and catchers to convince victims to make wire payments to bank accounts in the United States on the false belief that such payments were necessary to effectuate the investment agreements.  The holders of the U.S. bank accounts were “money movers,” who disposed of the funds as directed by Igwilo, including by purchasing luxury vehicles, from brands such as Mercedes Benz and Range Rover, and shipping them to Nigeria, the complaint alleges.

Uche Diuno, 52, also of Lagos, was charged in a separate case in a second superseding indictment filed on Oct. 3, 2018 with one count of wire fraud conspiracy, one count of money laundering conspiracy and one count of concealment money laundering.  Diuno was arrested in Paris, France on Sept. 29, 2018 and is awaiting extradition.

As alleged in the second superseding indictment, Diuno was a “chairman” or leader in the scheme, who operated his own network of catchers and money movers alongside Igwilo’s, which he used in furtherance of the same BB&T investment scam. 

Seven other individuals have been charged to date as part of the same investigation including Uju Okigbo, 49, of Houston, Texas, an alleged money mover; Chioma Okafor, 29, of Houston, an alleged money mover; Marita Ranalan Underwood, 62, of Manila, Philippines, an alleged representative; John Christian Rutledge, 65, of Yaphank, New York, an alleged representative; Osa May Martin, 69, of Carthage, Missouri, an alleged representative; Tochukwu Nwosisi, 47, of Indianapolis, Indiana, an alleged money mover and Tiffany Sourjohn, 48, of Miami, Oklahoma, an alleged representative.

Okigbo, Okafor, Rutledge and Sourjohn have pleaded guilty and are awaiting sentencing.  Underwood remains a fugitive.  Martin and Nwosisi are pending trial.     

The charges in the complaint and second superseding indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The case was investigated by the FBI and Department of State Office of Inspector General.  The case is being prosecuted by Trial Attorney William E. Johnston of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Suzanne Elmilady of the Southern District of Texas.  Forfeiture aspects of the case are being handled by Assistant U.S. Attorney Kristine Rollinson of the Southern District of Texas.

Acting Attorney General Matthew Whitaker today released the following statement:

"The Trump administration is taking action to prevent and deter violence in our schools," Acting Attorney General Whitaker said. "The Department of Justice is already directing funding to hire school resource officers, improving our background check systems, and prosecuting violent offenders at record levels. Today's report provides a substantive blueprint for this Administration's next steps to protect our young people. The Department of Justice will continue to support first responders and provide training for law enforcement officers and school personnel. I want to thank all of my fellow commissioners for their hard work on this report and thank the President for making our kids a priority."

The Justice Department’s U.S. Trustee Program (USTP) filed on Friday an objection to a debtor company’s proposed candidate for appointment as a Future Claimants’ Representative (FCR) in a bankruptcy case involving a trust to compensate those suffering from asbestos disease.  An FCR is appointed by the court to protect the interests of those exposed to asbestos products manufactured or sold by a debtor, but who have not yet become sick.  Current claimants are represented by attorneys who often control the asbestos trusts to the detriment of future asbestos victims.

This is the second time this year that the USTP has opposed the selection of a candidate proposed by a debtor company and endorsed by the plaintiffs’ lawyers representing current claimants.

In its objection, the USTP argued that the court is required to select the best candidate without deference to the debtor or plaintiffs’ lawyers.  The objection asserts that the proposed candidate currently serves as FCR for several other trusts and has other connections to trusts that have contained inadequate safeguards against fraudulent claims, inflated professional fees, and other costs that threaten to deplete the trusts and reduce compensation to future claimants.  The USTP asked the court to adopt an open selection process that allows candidates without connections to the professionals in the case or other conflicts to be considered.  As noted in its brief, “the USTP was created to be the ‘watchdog’ for the bankruptcy system to ensure that cases are not administered for the narrow benefit of the lawyers and other professionals instead of stakeholders such as creditors and employees.”

“In recent years, there have been credible allegations—and at least one court has found evidence—of misrepresentation, mismanagement, and abuse in the asbestos trust system,” said Principal Deputy Associate Attorney General Jesse Panuccio.  “A significant contributing factor is the failure of courts to appoint independent future claimants’ representatives who are free from conflicts of interest, including conflicts caused by their involvement in other asbestos trusts.  The Department of Justice is committed to protecting the rights of victims of asbestos disease and the integrity of the bankruptcy system.”  

The USTP is a component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and enforcing the bankruptcy laws.  Learn more about the Program at https://www.justice.gov/ust. 

A Miami, Florida-area woman was sentenced to 78 months in prison to be followed by three years of supervised release today for her role in a $4.65 million health care fraud scheme involving three home health agencies that purported to provide home health services to Medicare patients.   

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ariana Fajardo Orshan of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.

Margarita Palomino, 54, of Homestead, Florida, was sentenced by U.S. District Judge Jose E. Martinez of the Southern District of Florida.  Judge Martinez also ordered Palomino to pay $4,658,241.00 in restitution and to forfeit $186,650.50.  Palomino pleaded guilty on Oct. 10, 2018 to one count of conspiracy to commit health care fraud and wire fraud. 

Palomino worked at Sunshine Home Health Services Inc., Empire Home Health Agency Inc. and Mildred & Marce Home Health Care Services Inc., all in the Miami area.  As part of her guilty plea, Palomino admitted that from approximately January 2010 through approximately January 2014, she accepted kickbacks in return for the referral of Medicare beneficiaries, many of whom did not need or qualify for home health services, to act as patients at the three agencies.  Palomino—who was a physician in Cuba but never licensed in the United States—further admitted that she performed home health care nursing visits and prepared related medical records as if she were a licensed medical professional.  She also admittedly changed claims coding to increase reimbursement by Medicare. 

Palomino admitted that, as a result of false and fraudulent claims submitted as part of this conspiracy, Medicare made payments of at least $4.65 million.

Palomino was charged along with Norma Zayas, 29, of Miami, in an indictment returned on June 7, 2018.  Zayas pleaded guilty and is currently awaiting sentencing. 

The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.  Trial Attorney Emily Gurskis of the Fraud Section and Assistant U.S. Attorney Leslie Wright of the District of Massachusetts (previously a Fraud Section trial attorney) are prosecuting the case.

The Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in 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.

A federal jury in Los Angeles, California found a pharmacy owner guilty today for her role in a Medicare fraud scheme involving more than $1.3 million in fraudulent claims for prescription drugs. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna of the Central District of California, Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Division and Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services

Office of Inspector General’s (HHS-OIG) Los Angeles Regional Office made the announcement.

After a two-day trial, Tamar Tatarian, 39, of Pasadena, California, was convicted of one count of health care fraud and two counts of wire fraud.  Sentencing has been scheduled for Feb. 25, 2019 before U.S. District Judge John F. Walter of the Central District of California, who presided over the trial.  Tatarian was the owner of Akhtamar Pharmacy in Pasadena.

According to evidence presented at trial, from approximately October 2015 through approximately October 2017, Tatarian engaged in a scheme involving the submission of fraudulent claims to Medicare Part D plan sponsors for prescription drugs that Akhtamar Pharmacy never ordered from wholesalers, and thus never dispensed to Medicare beneficiaries.  Tatarian attempted to conceal the fraud through the creation of fake invoices, reflecting wholesale drug purchases by Akhtamar Pharmacy which had, in fact, never taken place.  As a result of this scheme, Tatarian through Akhtamar Pharmacy submitted claims to Medicare for more than $1.3 million in prescription drugs that she never purchased or dispensed to patients, the evidence showed.

This case was investigated by the FBI and HHS-OIG.  Trial Attorney Alexis Gregorian and Assistant Chief A. Brendan Stewart of the Criminal Division’s Fraud Section are prosecuting the case. 

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  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.

The Department of Justice announced today that it will require Gray Television Inc., and Raycom Media Inc., to divest broadcast television stations in nine markets as a condition of resolving a challenge to the proposed $3.6 billion merger between Gray and Raycom.

The Justice Department’s Antitrust Division filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia to block the proposed merger. At the same time, the Division filed a proposed settlement that, if approved by the court, would resolve the suit by remedying the competitive harms alleged in the complaint, through the divestitures and related conditions.

“Without the required divestitures, Gray’s merger with Raycom threatens serious competitive harm to cable subscribers and small businesses,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “I am pleased, however, that we have been able to reach a speedy and complete resolution of the Division’s concerns, thanks in part to the parties’ commitment to engage in good faith settlement talks from the outset of our investigation.”

According to the complaint, without the divestitures the merger would eliminate head-to-head competition between Gray and Raycom in the nine local markets in which the divestitures are being required. In each of those markets, the transaction would increase the number of “Big Four” affiliate stations owned by Gray (i.e., affiliates of NBC, CBS, ABC, or FOX), leaving Gray with two or more Big Four stations in each area. The divestiture markets are Knoxville, Tennessee; Toledo, Ohio; Waco–Temple–Bryan, Texas; Tallahassee, Florida–Thomasville, Georgia; Augusta, Georgia; Odessa-Midland, Texas; Panama City, Florida; Albany, Goergia; and Dothan, Alabama.

As a result of the merger, the combined company would likely charge cable and satellite companies higher retransmission fees to carry the combined company’s broadcast stations, resulting in higher monthly cable and satellite bills for millions of Americans.

The merger would also enable the company to charge local businesses and other advertisers higher prices for spot advertising in the divestiture markets. Businesses rely on competition among broadcast station owners to obtain reasonable advertising prices. Gray and Raycom compete with one another for the business of local advertisers, and the proposed merger would eliminate that competition, harming local businesses.

The Antitrust Division has determined that the divestitures would resolve antitrust concerns related to the licensing of Big Four television retransmission consent and the sale of broadcast television spot advertising that would otherwise result from the merger. The divestitures required under the settlement announced today would, if approved by the court, require Gray to sell the Big Four affiliate stations currently owned by either Raycom or Gray in each of the nine markets where the companies have Big Four overlaps. The settlement requires that the divestitures be accomplished in such a way as to satisfy the United States that the divested stations and associated assets will be used by the buyers as part of a viable, ongoing commercial television broadcasting business.

Gray Television Inc. is a Georgia corporation with its headquarters in Atlanta, Georgia.  Gray owns 92 television stations in 56 local markets, of which 83 are Big Four affiliate stations.

Raycom Media Inc. is a Delaware corporation with its headquarters in Montgomery, Alabama.  Raycom owns 51 television stations in 43 local markets, of which 45 are Big Four affiliate stations.

As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Owen Kendler, Chief, Media, Entertainment, and Professional Services Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 4000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

A federal grand jury sitting in the Southern District of Texas returned an indictment on Dec. 12 charging a U.S. Customs and Border Protection (CBP) officer with converting federal funds to his own use, with concealing material facts from CBP, and with making false representations to CBP, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division announced. 

Daniel Lerchbacker, 35, of Conroe, Texas, was charged with three counts of theft for allegedly failing to pay three Canadian entities for expenses that the United States had already provided the funds to cover and for collecting federal funds to which he knew he was not entitled.  Lerchbacker was also charged with two counts of false statements for allegedly submitting to CBP copies of checks as proof of payment, despite knowing that such payments had not, in fact, been made.  Lerchbacker will be arraigned on the charges today at 2 p.m. CST before U.S. Magistrate Judge Christina A. Bryan in U.S. District Court in the Southern District of Texas in Houston.

According to the indictment, Lerchbacker, while stationed in Canada as a CBP officer between December 2015 and December 2017, allegedly received from the U.S. foreign monetary allowances for the lease of his family’s residence and private school education expenses for his children.  During this time, Lerchbacker received the full amount of federal funds that he requested for these expenses, but Lerchbacker allegedly failed to pay a property management company and two private schools a total of approximately $54,460.99 CAD.  Additionally, Lerchbacker allegedly requested, collected, and retained from the United States approximately $24,230.50 CAD in advance funds for educational expenses for his children while knowing that he was to leave Canada before the end of the school year.

An indictment is merely an allegation, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The case is being investigated by the Department of Homeland Security Office of Inspector General and is being prosecuted by Trial Attorney Rebecca Moses of the Criminal Division’s Public Integrity Section.

ALBUQUERQUE – Joe Lee Haines, 36, an enrolled member of the Navajo Nation who resides in Tinian, N.M., was sentenced today in federal court in Albuquerque, N.M., to one year and one day in prison for his child abuse conviction.  Haines will be on supervised release for one year after completing his prison sentence.

On Sept. 17, 2018, Haines pled guilty to child abuse.  He admitted that on Sept. 1, 2017, while he was intoxicated, he placed a rifle into a child’s mouth, accused the child of taking money from him, and threatened to pull the trigger.

The Gallup office of the FBI and the Navajo Nation Division of Public Safety investigated this case.  Assistant U.S. Attorney Kyle T. Nayback prosecuted the case.

The Department of Justice announced today that it has reached a settlement with Nexstar Media Group Inc., one of the largest owners of television stations in the country, as part of its ongoing investigation into exchanges of competitively sensitive information in the broadcast television industry. 

The Department filed an amended complaint today in the case United States v. Sinclair Broadcast Group, Inc., et al., adding Nexstar Media Group Inc. as a defendant.  At the same time, the Department filed a proposed settlement with Nexstar that, if approved by the court, would resolve the competitive harm alleged in the complaint.  The Department filed its original complaint in the case on Nov. 13, 2018, along with proposed settlements with six other television broadcasting companies.

“The Antitrust Division continues its efforts to stop the unlawful exchange of competitively sensitive information in the television broadcast industry,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division.  “Robust competition among broadcast stations allows American businesses to obtain competitive advertising rates.  The unlawful sharing of information reduced that competition and harmed businesses and the consumers they serve.”

According to the amended complaint, Nexstar agreed with other entities in many metropolitan areas across the United States to exchange revenue pacing information, and also engaged in the exchange of other forms of non-public sales information in certain metropolitan areas.  Pacing compares a broadcast station’s revenues booked for a certain time period to the revenues booked in the same point in the previous year.  Pacing indicates how each station is performing versus the rest of the market and provides insight into each station’s remaining spot advertising for the period.

By exchanging pacing information, Nexstar and other broadcasters were better able to anticipate whether their competitors were likely to raise, maintain, or lower spot advertising prices, which in turn helped inform their stations’ own pricing strategies and negotiations with advertisers.  As a result, the information exchanges harmed the competitive price-setting process.

The proposed settlement prohibits the direct or indirect sharing of such competitively sensitive information. The Department has determined that prohibiting this conduct would resolve the antitrust concerns raised as a result of Nexstar’s conduct.  The proposed settlement further requires Nexstar to cooperate in the Department’s ongoing investigation and to adopt rigorous antitrust compliance and reporting measures to prevent similar anticompetitive conduct in the future.  The settlement has a seven year term, and it will continue to apply to stations currently owned by Nexstar, even if those stations are acquired by another company.

Nexstar Media Group Inc. is a Delaware corporation with headquarters in Irving, Texas. It owns or operates 105 television stations across 93 markets and had revenues in excess of $1.2 billion in 2017.

As required by the Tunney Act, the proposed settlement, along with the Department’s competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Owen Kendler, Chief, Media, Entertainment, and Professional Services Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 4000, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

An indictment was unsealed today in the U.S. District Court for the District of Maine charging Shou Chao Li, 37, and Derong Miao, 37, both of Concord, New Hampshire, with one count of conspiracy to engage in interstate transportation and travel for prostitution, two counts of sex trafficking by fraud and coercion, and five counts of interstate transportation for prostitution.  Li was also charged with possessing a victim’s passport as part of the sex trafficking scheme. The indictment was announced by Assistant Attorney General Eric Dreiband of the Justice Department’s Civil Rights Division and U.S. Attorney Halsey B. Frank of the District of Maine.

According to the indictment, defendants Li and Miao operated an interstate prostitution and sex trafficking enterprise between July 2016 and at least February 2018. The defendants targeted Chinese women and recruited them to travel to Maine, where the defendants caused them to engage in prostitution, controlled their movements, and isolated them.  The defendants rented residences and hotel rooms in Maine, Vermont, and New Hampshire for purposes of prostitution, and they employed others outside of Maine to advertise the women on Backpage.com and to communicate with prostitution customers. 

An indictment is merely an accusation, and the defendants are presumed innocent unless and until proven guilty. Li faces up to five years on the passport charge. Both defendants face up to five years in prison on the conspiracy charge, between 15 years’ imprisonment and a maximum sentence of life on the sex trafficking charges, and up to 10 years on the interstate transportation for prostitution charges. Both also face fines up to $250,000 and mandatory restitution. 

The District of Maine is one of six districts designated through a competitive, nationwide selection process as a Phase II Anti-Trafficking Coordination Team (ACTeam). ACTeams focus on developing high-impact human trafficking investigations and prosecutions involving forced labor, international sex trafficking and sex trafficking by force, fraud or coercion through interagency collaboration among federal prosecutors and federal investigative agencies.

The case is being investigated by the Portland and South Portland, Maine and the Manchester, Portsmouth, and Concord, New Hampshire Police Departments; the Cumberland County District Attorney’s Office; the FBI; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; U.S. Department of State’s Diplomatic Security Service; and the U.S. Department of Labor, Office of Inspector General and Wage and Hour Division.  It is being prosecuted by Assistant U.S. Attorney Darcie N. McElwee with assistance from the Civil Rights Division’s Human Trafficking Prosecution Unit.

ALBUQUERQUE – Lane Michael Reed, 24, of Killeen, Texas, was sentenced today in federal court in Albuquerque, N.M., to 25 years in prison for armed robbery, carjacking and firearms charges arising out of a two-day violent crime spree in July 2017.  Reed will be on supervised release for 5 years after completing his prison sentence. 

            On July 19, 2018, Reed pled guilty to robbing the Pecos River Station convenience store in San Miguel County, brandishing a firearm during the robbery, and carjacking.  In entering his guilty plea, Reed also admitted that after the robbery, he attempted to evade arrest by driving at speeds up to 140 miles an hour and discharging his firearm at the law enforcement officers who were pursuing him.  During the pursuit, Reed caused extensive damage to the vehicle he stole as well as the law enforcement vehicles pursuing him.

            The Santa Fe office of the FBI, the New Mexico State Police and the Santa Fe County Sheriff’s Office investigated this case.  Assistant U.S. Attorney George C. Kraehe prosecuted the case under Project Safe Neighborhoods (PSN), the centerpiece of the Department of Justice’s violent crime reduction efforts.  PSN is an evidence-based program proven effective at reducing violent crime. Through PSN, a broad spectrum of stakeholders work together to identify the most pressing violent crime problems in the community and develop comprehensive solutions to address them. As part of this strategy, PSN focuses enforcement efforts on the most violent offenders and partners with locally based prevention and reentry programs for lasting reductions in crime.

Two Kingsmen Motorcycle Club gang members, who were convicted of RICO conspiracy, were sentenced today in the Western District of New York to 15 years and more than four years in prison, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney James P. Kennedy Jr. for the Western District of New York announced.

Gregory Willson, aka “Flip,” 52, of Allegany, New York, and Glen Stacharczyck, aka “Turbo,” 53, of Amherst, New York, were sentenced by U.S. District Judge Elizabeth A. Wolford to serve 180 months and 57 months in prison, respectively. Judge Willson also sentenced Willson and Stacharczyck to serve three years of supervised release following their prison sentence.  Willson pleaded guilty on Nov. 30, 2017 to RICO conspiracy and was also sentenced for being a felon in possession of a firearm.  Stacharczyck pleaded guilty to RICO conspiracy on July 16.

According to the plea agreements of the two defendants, Willson was a member of the Springville Chapter of the Kingsmen Motorcycle Club (KMC) and a KMC Nomad, while Stacharczyck was a member of the North Tonawanda and the South Buffalo Chapters of the KMC.  The KMC operated in Florida, New York, Pennsylvania and Tennessee.  The KMC Nomads did not belong to a particular chapter and were the enforcement and security arm of the KMC.

In September 2009, Willson admitted that he took a female victim from the state of New York to KMC clubhouses in the state of Pennsylvania. While visiting a KMC clubhouse in Meadville, Pennsylvania, Willson punched the victim in the face repeatedly, bloodying her face to the point where her eyes were swollen shut, after the two had a verbal altercation.  Neither the defendant nor any other KMC members or associates called for medical attention.  Willson then brought the woman back to New York where he and his mother cleaned up the female and kept her secluded against her will, for several days, in order to conceal her injuries.

On June 7, 2013, Willson and other KMC members forcibly shut down the Springville Chapter and stripped members of their colors because they were non-compliant members. Brandishing firearms, KMC members struck a victim in the head with a blunt object and stole items from the Springville clubhouse.  They then used bleach to clean areas where the victim bled and cut and removed portions of the rug, which contained blood.  As a result of the assault, Willson was elevated to the position of Nomad within the KMC.  A KMC Nomad was a KMC member that was not required to regularly attend meetings but was expected to serve the interests of the KMC enterprise including fighting other clubs and committing violent crimes.  

On Aug. 3, 2013, while at a KMC party, after learning that the former Springville KMC members were taking pictures wearing KMC patches and taunting the KMC, Willson and others decided to conduct a drive-by shooting. They drove to the former Springville KMC clubhouse where they located the former members.  At that point, they opened the sliding door on the side of the van and one of the defendant’s accomplices fired twice with a shotgun towards the group of former Springville KMC members who were outside.  One of the shots struck a vehicle, which was parked near where one of the targeted former KMC members was standing. 

In addition, Willson stored cocaine for sale at his then-girlfriend’s house in Buffalo, New York.  On Aug. 9, 2013, a firearm belonging to Willson, ammunition and a quantity of cocaine were recovered during the execution of a search at the residence. 

On July 31, 2015, a search warrant was executed at Willson’s Allegany residence and law enforcement officers recovered KMC paraphernalia, a quantity of marijuana, a quantity of psilocybin (“mushrooms”), a firearm and ammunition.  The defendant was previously convicted of felonies in both Federal and Cattaraugus County, New York Court and is legally prohibited from possessing a firearm.

Also, according to the plea agreements, KMC members and associates used and distributed marijuana, cocaine, methamphetamine, and other controlled substances at the North Tonawanda and South Buffalo KMC Chapter Clubhouses.  KMC members were also involved in firearm sales.  Stacharczyck also possessed firearms.

Willson and Stacharczyck are two of 21 KMC members and associates charged in this case. To date, all of the defendants have been convicted or pleaded guilty, including National President David Pirk, who was convicted following a four-month jury trial and will be sentenced on Feb. 28, 2019.

Today’s sentencings are the culmination of an investigation led by the FBI’s Safe Streets Task Force, under the direction of Special Agent in Charge Gary Loeffert. Assisting in the investigation were the FBI Knoxville, Tennessee, and Jacksonville, Florida field offices; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; the Erie County Sheriff’s Office; the Buffalo Police Department; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the New York State Police; the Olean Police Department; the Lancaster Police Department; the Amherst Police Department; the City of North Tonawanda Police Department; the Niagara Frontier Transportation Authority Police; the Cattaraugus County Sheriff’s Department and the Hamburg Police Department.  The case is being prosecuted by Trial Attorney Marianne Shelvey of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Joseph M. Tripi and Brendan T. Cullinane of the Western District of New York. 

The Justice Department announced today that it has reached a settlement with Afni Inc. (Afni), a customer service provider headquartered in Bloomington, Illinois. The settlement resolves a complaint that an Afni location in Tucson, Arizona, discriminated against a lawful permanent resident in violation of the anti-discrimination provision of the Immigration and Nationality Act (INA).

The Department’s investigation, initiated based on a lawful permanent resident’s complaint, concluded that on more than one occasion Afni improperly rejected the worker’s valid documents establishing her work authority, and requested that the worker present more or different documents than necessary based on the worker’s citizenship status. These actions constitute unfair documentary practices in violation of the INA. Under the INA, workers are allowed to choose from lists of acceptable documents to prove that they are authorized to work and employers cannot reject valid documents or specify which documents the workers should present because of their citizenship.   

Under the settlement agreement, Afni will provide back pay to the injured worker and pay a civil penalty to the U.S. Department of the Treasury. Among other requirements, the company will be subject to staff training and monitoring requirements.

“Employers should familiarize themselves with the INA’s anti-discrimination requirements to avoid unnecessary and unlawful document requests that create obstacles for workers based on their citizenship status or national origin,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “We commend Afni for working to ensure that, in the future, employees do not face discriminatory barriers when going through the employment eligibility verification process.”

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; 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.

A federal jury in Atlanta, Georgia, convicted Saleem Hakim, 49, of three counts of failing to file federal income tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

According to court documents and evidence presented at trial, Saleem Hakim was in the business of brokering the sale of precious metals to clients.  As a precious metal broker, Hakim received funds from clients, converted a portion of the funds to precious metals, and kept the remainder for his personal use.  For the years 2011 through 2013, the total amount Hakim retained was in excess of $1 million.  Despite receiving income in excess of the filing thresholds and knowing his obligation to make and file tax returns, Hakim did not file any income tax returns. Hakim is a former resident of Smyrna, Georgia.

Sentencing is scheduled for February 26, 2019.  Hakim faces a maximum of one year in prison on each count, as well as a period of supervised release and monetary penalties.

Principal Deputy Assistant Attorney General Zuckerman commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Jeffrey Bender and Kathryn Sparks of the Tax Division, who are prosecuting this case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

A former U.S. government contractor was charged in an indictment filed today for his alleged role in selling falsified resumes and counterfeit U.S. government training certificates to individuals seeking employment on U.S. government contracts in Afghanistan between 2012 and 2015, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Special Inspector General for Afghanistan Reconstruction John F. Sopko.

Antonio Jones, 39, of Yorktown, Virginia, was charged in the District of South Carolina with one count of conspiracy to defraud government contractors and the United States, nine counts of wire fraud and three counts of false statements.  Jones is scheduled to make his initial appearance in the District of South Carolina on Jan. 22, 2019.

The indictment alleges that Jones created an entity known as Wolverine Inc., through which he offered job placement services to clients seeking employment with U.S. government contractors in Afghanistan and elsewhere.  Jones allegedly falsified his clients’ resumes and manufactured counterfeit U.S. government training certificates for his clients to make them appear more qualified than they actually were.  Jones and his clients then used the falsified documents in job applications that were submitted to U.S. government contractors, the indictment alleges.  At least two U.S. government contractors, one of which was based in the District of South Carolina, working on a multibillion-dollar Defense Department contract hired personnel allegedly based on false documents that Jones created and supplied or caused to be supplied to them.

This case was investigated by the Special Inspector General for Afghanistan Reconstruction, the FBI, the Defense Criminal Investigative Service and the U.S. Army’s Criminal Investigation Command.  The case is being prosecuted by Trial Attorney Michael P. McCarthy of the Criminal Division’s Fraud Section.

A former congressional staffer was sentenced today to 18 months in prison and ordered to pay $800,000 in restitution, to be followed by three years of supervised release, for participating in a multi-year scheme to defraud charitable donors of hundreds of thousands of dollars and secretly to funnel the proceeds to pay for personal expenses and to illegally finance campaigns for federal office. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ryan K. Patrick of the Southern District of Texas, Assistant Director in Charge Nancy McNamara of FBI’s Washington Field Office and Special Agent in Charge D. Richard Goss of the IRS Criminal Investigation (IRS-CI) Houston Field Office made the announcement.

Thomas Dodd, 40, of Houston, Texas, was sentenced in the U.S. District Court for the Southern District of Texas by Chief U.S. District Judge Lee H. Rosenthal.  Dodd was also ordered to forfeit $153,044.28 in illicit gains.  Dodd pleaded guilty on March 20, 2017, to one count of conspiracy to commit mail and wire fraud and one count of conspiracy to make conduit contributions and false statements.  As part of his plea, Dodd admitted that he participated in a scheme led by former U.S. Representative Stephen E. Stockman, 62, who was convicted by a federal jury in Houston on April 12 of 23 counts of mail fraud, wire fraud, conspiracy to make conduit contributions and false statements to the Federal Election Commission (FEC), making false statements to the Federal Election Commission, making excessive coordinated campaign contributions, money laundering, and filing a false tax return.  Another of Stockman’s former congressional staffers, Jason T. Posey, 48, of Tupelo, Mississippi, pleaded guilty on Oct. 11, 2017, to one count of mail fraud, one count of wire fraud, and one count of money laundering.

According to the evidence presented at Stockman’s trial, from May 2010 to February 2014, Stockman and his co-defendants solicited $1,250,571.65 in donations from charitable organizations and the individuals who ran those organizations based on false pretenses, then used a series of sham nonprofit organizations and dozens of bank accounts to launder the money before it was used for a variety of personal and campaign expenses. 

Specifically, the evidence established that in 2010, Stockman and Dodd solicited an elderly donor in Baltimore, Maryland for $285,000 to be used for legitimate charitable and educational purposes.  Stockman and Dodd used a sham charity named the Ross Center to funnel the money to be used for a variety of personal expenses.  The evidence further established that, in 2011 and 2012, Stockman and Dodd received an additional $165,000 in charitable donations from the Baltimore donor, much of which Stockman used illegally to finance his 2012 congressional campaign. 

The trial evidence also showed that shortly after Stockman took office as a member of the U.S. House of Representatives in 2013, he and Dodd used the name of another sham nonprofit entity, Life Without Limits, to solicit and receive a $350,000 charitable donation, to be used to create an educational center called the Freedom House.  Stockman, Dodd, and Posey instead used this donation for a variety of personal and campaign expenses, including illegal conduit campaign contributions, a covert surveillance project targeting a perceived political opponent, an in-patient alcoholism treatment for a female associate, and payments for hundreds of thousands of robocalls and mailings promoting Stockman’s candidacy for U.S. Senate in early 2014.

In addition, the evidence established that, in connection with Stockman’s Senate campaign, Stockman and Posey used another sham nonprofit entity to secure a $450,571.65 donation in order to fund a purportedly legitimate independent expenditure promoting Stockman’s candidacy.  The evidence showed that the purportedly independent expenditure was in fact secretly controlled by Stockman, who directed his campaign and Posey to file false affidavits with the FEC covering up Stockman’s involvement. 

Finally, the evidence at trial demonstrated that Stockman failed to pay taxes on any of the $1,250,571.65 in fraudulently acquired donations.  In addition, during the early stages of the investigation, Stockman directed Posey to flee to Cairo, Egypt, for two and a half years so that Posey could not be questioned by law enforcement.

The FBI and IRS-CI investigated the case.  Deputy Chief Robert J. Heberle and Trial Attorney Ryan J. Ellersick of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Melissa Annis of the Southern District of Texas are prosecuting the case. 

The Department of Justice announced that it has received a court order yesterday awarding the United States $857,868 in civil penalties, along with other relief, in the Department’s immigration-related employment discrimination lawsuit against Louisiana-based Technical Marine Maintenance Texas LLC (TMMTX), which provides contract shipyard labor, and Gulf Coast Workforce LLC (GCW), a related company.  The court previously found that the companies violated the Immigration and Nationality Act (INA) by discriminating against workers based on their citizenship status during the employment eligibility verification process. 

The court’s Dec. 10 order follows its June 28 ruling that from at least January 2014 until at least July 2017, TMMTX limited the types of documentation different groups of workers could provide to establish their work authorization based on the workers’ citizenship status.  The United States’ complaint against the company, filed in July 2017, alleged that the company asked U.S. citizens to produce “IDs” and Social Security cards, while requesting immigration documents from non-U.S. citizens.  After the companies refused to comply with court procedures and orders during the litigation, the court sanctioned the companies and held both companies liable for discriminatory documentary practices. The INA prohibits employers from limiting workers’ choice of documentation to present for employment verification based on the workers’ citizenship, immigration status, or national origin.

The Dec. 10 order resolves outstanding issues about the penalties and remedies to be awarded to the United States.  In adopting the Department’s penalty recommendation, the court considered TMMTX’s and GCW’s misconduct during the litigation and the companies’ ongoing failure to submit any evidence to the court.  In addition to the $857,868 civil penalty for which TMMTX and GCW are jointly and severally liable, the court’s order yesterday granted the Department’s request that the companies train their staff on the INA and be subject to departmental monitoring and reporting requirements for three years. 

“The Civil Rights Division works tirelessly to enforce laws that protect U.S. citizens and non-U.S. citizens from discriminatory conduct in the workplace,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division.  “Today’s decision reminds employers that they must take seriously their obligations to avoid citizenship status-based discrimination in the employment eligibility verification process.” 

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; 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.

A former procurement officer of Venezuela’s state-owned and state-controlled energy company, Petroleos de Venezuela S.A. (PDVSA), pleaded guilty today for his role in a scheme to obstruct an investigation relating to bribes paid by the owner of U.S.-based companies to Venezuelan government officials in exchange for securing additional business with PDVSA and payment priority on outstanding invoices.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ryan K. Patrick of the Southern District of Texas and Special Agent in Charge Mark Dawson of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Houston made the announcement.

Alfonso Eliezer Gravina Munoz (Gravina), 56, of Katy, Texas, who previously worked for PDVSA in Houston, Texas, pleaded guilty before U.S. District Judge Kenneth M. Hoyt of the Southern District of Texas in Houston to one count of conspiracy to obstruct an official proceeding.  Gravina is scheduled to be sentenced on Feb. 19, 2019 before Judge Gary H. Miller.  He was charged by indictment on Nov. 15.

Gravina pleaded guilty on Dec. 10, 2015 to one count of conspiracy to launder money and one count of making false statements on his federal income tax return.  Gravina’s plea agreement in that case was a cooperation plea agreement, and it contemplated the possibility that the United States would make a motion to reduce his sentence based on his cooperation.  Under the terms of the plea agreement, Gravina agreed to participate in interviews as requested by the United States, and to provide “truthful, complete and accurate information” to government agents and attorneys. 

According to admissions made in connection with Gravina’s plea in this case, after his plea in December 2015, Gravina met periodically with HSI special agents to provide information regarding corruption at PDVSA.  Despite knowing that U.S. government authorities were investigating corruption at PDVSA, and, specifically, that at the beginning of 2018 the government was focusing on bribes paid by companies controlled by an individual referred to as Co-Conspirator 1 in the indictment in this case, Gravina concealed facts about Co-Conspirator 1’s bribe payments to PDVSA officials in his interviews with the government.  In addition, Gravina informed Co-Conspirator 1 that U.S. government authorities were investigating Co-Conspirator 1, and provided Co-Conspirator 1 with information about the investigation, including the topics discussed in Gravina’s meetings with the government.  This passing of information led to the destruction of evidence by Co-Conspirator 1 and others, and to Co-Conspirator 1’s attempt to flee the country in July 2018.

Gravina becomes the latest individual to plead guilty as part of a larger, ongoing investigation by the U.S. government into bribery at PDVSA.  Including Gravina, the Justice Department has announced the guilty pleas of a total of 15 individuals in connection with the investigation.

HSI Houston is conducting the ongoing investigation with assistance from HSI in Boston and Madrid, as well as from IRS Criminal Investigation.  Trial Attorneys Sarah E. Edwards and Sonali D. Patel of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys John P. Pearson and Robert S. Johnson of the Southern District of Texas are prosecuting the case.  Assistant U.S. Attorney Kristine Rollinson of the Southern District of Texas is handling the forfeiture aspects of the case.

The Fraud Section is responsible for investigating and prosecuting all FCPA matters.  Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

The Justice Department today announced that it has reached a settlement agreement with Walmart Inc. The agreement resolves claims that a Walmart store in Fort Worth, Texas, violated the Immigration and Nationality Act (INA) by unlawfully requesting specific work authorization documents from non-U.S. citizens based on their citizenship status.

The Department initiated an investigation after a lawful permanent resident filed a charge alleging that Walmart fired her on her first day of work because she could not fulfill a human resources employee’s request for a document issued by the Department of Homeland Security (DHS), even though she had already provided other documents sufficient to establish her work authorization.  When the worker protested her firing, a regional supervisor and hiring staff member at another nearby store incorrectly reaffirmed the unnecessary request for a DHS-issued document.  IER’s subsequent investigation concluded that the human resources employee had a practice of requesting unnecessary DHS documents from non-U.S. citizens to establish their work authorization because of their citizenship status.  The INA prohibits employers from (a) rejecting valid work authorization documents, (b) limiting workers’ choice of documentation to present for employment verification, and (c) subjecting workers to different or unnecessary documentary demands, based on the workers’ citizenship, immigration status, or national origin.

After the Department initiated its investigation, Walmart provided $1,944 in back pay to the worker and reinstated her employment.  Under the terms of the settlement, Walmart will pay a civil penalty to the United States, train staff in Fort Worth-area stores, and be subject to departmental monitoring and reporting requirements. 

“Employers should not ask employees for unnecessary work-authorization documents because of their citizenship or immigration status,” said Assistant Attorney General Eric Dreiband. “We are pleased that Walmart has agreed to work with the Department and to provide additional training to relevant employees.”

The Division’s Immigrant and Employee Rights Section (IER), formerly known as the Office of Special Counsel for Immigration-Related Unfair Employment Practices, 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 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.

The former president of a Texas-based non-profit pleaded guilty today for his role in a scheme to conceal the fact that a 2013 Congressional trip to Azerbaijan was funded by the Azerbaijan government.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Jessie K. Liu for the District of Columbia and Assistant Director in Charge Nancy McNamara of the FBI’s Washington Field Office made the announcement.

Kemal Oksuz, aka "Kevin Oksuz," 49, and previously a resident of Arlington, Virginia, pleaded guilty to one count of devising a scheme to falsify, conceal and cover up material facts from the U.S. House of Representatives Committee on Ethics.  Oksuz will be sentenced on Feb. 11, 2019 before U.S. District Court Judge Tanya S. Chutkan for the District of Columbia.

According to admissions made in connection with his guilty plea, Oksuz lied on disclosure forms filed with the Ethics Committee prior to, and following, a privately sponsored Congressional trip to Azerbaijan.  Oksuz falsely represented and certified on required disclosure forms that the Turquoise Council of Americans and Eurasions (TCAE), the Houston non-profit for which Oksuz was president, had not accepted funding for the Congressional trip from any outside sources.  Oksuz admitted to, in truth, orchestrating a scheme to funnel money to fund the trip from the State Oil Company of Azerbaijan Republic (SOCAR), the wholly state-owned national oil and gas company of Azerbaijan, and then concealed the true source of funding, which violated House travel regulations.

A five-count indictment was returned earlier this year in the U.S. District Court for the District of Columbia and ordered unsealed in September.  Oksuz was recently extradited from Armenia where he was detained by authorities, pursuant to a warrant that was issued for his arrest.

The investigation was conducted by the FBI.  The case is being prosecuted by Trial Attorney Marco Palmieri of the Criminal Division’s Public Integrity Section, Assistant U.S. Attorney David Misler and Will Mackie of the National Security Division’s Counterintelligence and Export Control Section. Assistance in the investigation was provided by Trial Attorney Amanda Vaughn of the Public Integrity Section, Assistant U.S. Attorney Jonathan Hooks and former Assistant U.S. Attorney Michelle Bradford of the District of Columbia.  Trial Attorney Natalya T. Savransky of the Criminal Division’s Office of International Affairs handled the extradition request to Armenia.  The Office of International Affairs, along with the U.S. Department of State and cooperating Armenian authorities provided substantial assistance with the extradition.

A former member of the board of directors of a publicly traded healthcare services company was arrested at John F. Kennedy (JFK) International Airport over the weekend for allegedly participating in a wide-spread scheme to defraud investors and others out of hundreds of millions of dollars in connection with a merger transaction designed to convert the company into a private entity, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Craig Carpenito for the District of New Jersey announced. 

Pavandeep Bakhshi, 41, of the United Kingdom, is charged by complaint with one count of conspiracy to commit securities fraud and one count of securities fraud.  Bakhshi was arrested Saturday evening at JFK Airport after arriving on a flight from London.  Bakhshi’s initial court appearance is today at 2:30 p.m. EST before U.S. Magistrate Judge Leda Dunn Wettre for the District of New Jersey.

According to the complaint unsealed this weekend:

From May 2015 through September 2017, Bakhshi and co-conspirators Parmjit Parmar, aka “Paul Parmar” (“Parmar”), Sotirios Zaharis, aka “Sam Zaharis” (“Zaharis”), and Ravi Chivukula (“Chivukula”), allegedly orchestrated an elaborate scheme to defraud a private investment firm and others out of hundreds of millions of dollars in connection with the funding of a transaction to take private a healthcare services company (Company A) traded publicly on the London Stock Exchange’s Alternative Investment Market. To fund the transaction, the private investment firm put up $82 million and a consortium of financial institutions put up another $130 million.  The scheme allegedly utilized fraudulent methods to grossly inflate the value of Company A and trick others into believing that Company A was worth substantially more than its actual value.

The complaint alleges that to present a positive picture of the company’s financial wealth, the conspirators allegedly sought to raise tens of millions of dollars in the public markets, purportedly to fund Company A’s acquisitions of various operating subsidiaries.  In reality, the complaint alleges, a number of those entities either did not exist or had only a fraction of the operating income attributed to them.  The conspirators allegedly funneled the proceeds of these secondary offerings through bank accounts they controlled and used the money for a variety of purposes that had nothing to do with acquiring the purported targets. The money from one of the offerings was instead used to make it appear as if the operating subsidiary had substantial customer revenue when, in fact, the funds were simply transfers of the money that had been raised in the secondary offering, the complaint alleges.  The conspirators allegedly went to great lengths to make it appear that these funds were revenue, concocting phony customers and altering bank statements to make it appear as if the funds were coming from customers.

The conspirators allegedly:

• Created fictitious operating companies that Company A purportedly acquired in sham acquisitions;
• Falsified and fabricated bank records of subsidiary entities in order to generate a phony picture of Company A’s revenue streams;
• Generated fake income streams and phony customers of Company A and its subsidiaries; and
• Made material misrepresentations and omissions to the private investment firm and others.

The defendants’ alleged actions caused the private investment firm and others to value Company A at more than $300 million for purposes of financing the transaction to take the company private.

The alleged scheme was uncovered around September 2017, when the conspirators resigned from their positions with Company A or were terminated. On March 16, Company A and numerous of its affiliated entities filed for bankruptcy, attributing the company’s financial demise, in large part, to the fraud scheme.

The United States filed a criminal complaint against Parmar, Zaharis and Chivukula on May 16 for their alleged roles in the scheme.  Zaharis and Chivukula currently are fugitives.  The United States also filed a separate civil complaint on the same date seeking forfeiture of four properties that Parmar owns or controls, including a house in Colts Neck and three apartments in New York City.  Separately, the U.S. Securities and Exchange Commission filed a civil complaint on May 16 against Parmar, Zaharis and Chivukula.

The investigation was conducted by the FBI.  The U.S. Securities and Exchange Commission’s New York Regional Office provided assistance in the investigation.

The case is being prosecuted by Chief Paul A. Murphy of the U.S. Attorney’s Office’s Economic Crimes Unit, Assistant U.S. Attorney Nicholas P. Grippo of the Economic Crimes Unit, Assistant U.S. Attorney Sarah Devlin of the U.S. Attorney’s Office’s Asset Recovery Money Laundering Unit and Trial Attorney Leslie Lehnert of the Criminal Division’s Money Laundering and Asset Recovery Section,.

The charges and allegations contained in the complaint are merely accusations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

A federal court in Florida sentenced Eugene Marotta, 49, to 46 months in prison, followed by two years of supervised release, for his role in a mail fraud scheme that victimized seniors and other vulnerable victims, the Department of Justice announced today.  The court also ordered restitution to victims.  Marotta is due to surrender to authorities to begin his sentence on Jan. 28, 2019.

The sentence imposed by United States District Judge Beth Bloom follows a guilty plea on Sept. 24, 2018, in which Marotta admitted that he participated in a mail fraud scheme that deceived thousands of victims into sending money to claim a falsely promised $350,000 prize.  The mailings sent to victims purportedly were from a business called Art Masters LLC, d/b/a Palm Beach Liquidation Gallery (PBLG).  Marotta was the registrant of PBLG, a shell company, and was responsible for receiving payments from victims and handling other administrative responsibilities for the scheme.  In his plea, Marotta admitted that victims had in fact won no prizes and never received anything for their submitted money.  The scheme caused more than $1,000,000 in victim losses.  At sentencing, Judge Bloom noted that Marotta and his co-conspirators targeted the elderly and vulnerable.

“The Department of Justice will pursue those who defraud Americans through false promises and fraudulent schemes,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division.  “Schemes like this often target the elderly and vulnerable, and shutting them down remains a top priority for the Department.”

“The U.S. Postal Inspection Service has been at the forefront of protecting consumers from fraud schemes for many years,” said Criminal Investigations Group Inspector in Charge Delany De Leon-Colon. “Deceptive solicitations take advantage of the American public with promises of large prizes, when in reality, the scammers are the only ones winning. Investigations like this one let the American public know that Postal Inspectors are working hard to protect them and ensure their confidence in the U.S. Mail.” 

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 February the Department announced the largest elder fraud enforcement action in American history, charging more than 200 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.   

Trial Attorney Ehren Reynolds of the department’s Consumer Protection Branch prosecuted this case.  The U.S. Postal Inspection Service investigated the case.

An owner of a now-defunct Miami pharmacy was sentenced today to 46 months in prison for his participation in a scheme that caused Medicare to pay $2.5 million in false and fraudulent claims for prescription drugs that were never purchased. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ariana Fajardo Orshan of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.

Gregory Sanchez, 44, of Miami Lakes, Florida, was sentenced by U.S. District Judge Ursula Ungaro of the Southern District of Florida.  Judge Ungaro also ordered Sanchez to pay $2,507,942 in restitution, jointly and severally with his co-conspirators, and to forfeit the same amount.  Sanchez pleaded guilty in September 2018 to one count of conspiracy to commit health care fraud.

According to admissions made as part of his plea agreement, Sanchez was an undisclosed co-owner of Med Health Equipment, LLC (Med Health), which purported to operate as a pharmacy.  Sanchez admitted that he and his co-conspirators used Med Health to fraudulently bill Medicare by submitting claims for prescription drugs that Med Health never purchased and never dispensed.  To carry out the fraudulent scheme, Sanchez and his co-conspirators paid and caused the payment of kickbacks to patient recruiters in exchange for the referral of Medicare beneficiaries to Med Health.  As a result of fraudulent claims submitted in connection with the scheme, Medicare paid Med Health approximately $2.5 million, Sanchez admitted.  

Five co-conspirators were charged separately in this case.  Lazaro Perez, 55, of Miramar, Florida, and Maria Estrada, 40, of Doral, Florida, both additional co-owners of Med Health, each pleaded guilty to conspiracy to commit health care fraud and were sentenced in April 2018 and August 2018 to serve 63 and 57 months in prison, respectively.  Yulieth Dominguez Gonzalez, 40, of Miami, pleaded guilty to conspiracy to receive kickbacks and was sentenced in June 2018 to serve 21 months in prison.  Rosa Menendez, 65, of Homestead, Florida, pleaded guilty to conspiracy to commit money laundering and was sentenced in October 2018 to serve 18 months in prison.  Pablo Garcia Menendez, another co-owner of Med Health, was charged by indictment in February 2018 and remains a fugitive. 

All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The FBI and HHS-OIG investigated the case, which was brought as part of the Medicare Fraud Strike Force under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.  Trial Attorney David Snider of the Fraud Section is prosecuting the case.

The Criminal Division’s 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.

A former Information Technology professional was sentenced to 30 months in prison and three years supervised release for conducting cyberstalking and threat campaigns against multiple Washington residents, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Annette L. Hayes of the Western District of Washington.  The victims’ names are being withheld to protect their privacy.

Joel Kurzynski, 39, of Seattle, Washington, was sentenced in the U.S. District Court for the Western District of Washington by U.S. District Judge Robert S. Lasnik. 

According to admissions made in connection with his plea, Kurzynski engaged in an extensive and rapidly escalating cyberstalking campaign that targeted two individuals known to him.  The online campaign involved -- among other things -- death threats, body shaming, and hate speech. Beginning in March 2017, Kurzynski orchestrated numerous spam phone calls to Victim 1. The conduct soon escalated to fake dating profiles wherein Kurzynski portrayed Victim 1 as seeking sadomasochistic or underage relationships. These profiles contained photographs of Victim 1 and his contact information, resulting in solicitations and harassing messages directed toward Victim 1 from multiple strangers.  Kurzynski then sent several anonymous death threats to Victim 1, including the threat, “faggot. Time to die.”  At one point, Kurzynski impersonated a journalist and contacted Victim 1, claiming that an upcoming article would levy sexual misconduct allegations against Victim 1 related to Victim 1’s work with a non-profit youth organization.

Kurzysnki also admitted that in November 2017, he began registering Victim 2 for numerous weight loss and suicide prevention programs, resulting in a wave of calls and emails from entities such as Overeaters Anonymous, Weight Watchers, Yellow Ribbon Suicide Prevention, and others. Within weeks, Kurzynski started sending anonymous death threats to Victim 2, many of which referenced Victim 2’s work address. One threat claimed that he was waiting for her in the lobby, and another that said, “Looking forward to seeing you today and how much you bleed.  Don’t go to the bathroom alone.”

The U.S. Secret Service’s Seattle Field Office investigated the case with substantial assistance from the Seattle Police Department and King County Prosecutor’s Office.  Senior Counsel Frank Lin of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Francis Franze-Nakamura of the Western District of Washington prosecuted the case.

Victims of cyberstalking campaigns such as this often may be hesitant to come forward.  The Justice Department encourages individuals who may be the victims of similar schemes to contact their local law enforcement agencies to report this conduct.

A Washington, D.C. resident pleaded guilty to conspiracy to defraud the United States and aggravated identity theft on December 4, 2018, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and Kelly R. Jackson, Special Agent in Charge of IRS-Criminal Investigation, Washington D.C. Field Office. The guilty plea arose from a scheme to file false tax returns in the names of unemployed individuals that fraudulently claimed refunds. Scutchings and her co-conspirators cashed or deposited more than $1 million in Treasury checks illegally obtained through the scheme.

According to court documents, Sheila Scutchings and her co-conspirators prepared false returns and then filed the returns in the names of co-conspirators and individuals in the community, whose names and Social Security numbers Scutchings and her co-conspirators obtained. Scutchings requested that the Internal Revenue Service (IRS) send the fraudulent refunds to addresses that Scutchings and her co-conspirators controlled. Included among the addresses were Scutchings’s own address and those of members of her family. Scutchings and her co-conspirators then cashed the refund checks at check cashing businesses and deposited them in various bank accounts, including a bank account in Scutchings’s name. In total, more than $350,000 of fraudulently obtained tax refund checks were deposited in Scutchings’s bank account alone.

United States District Judge Rosemary M. Collyer scheduled sentencing for March 5, 2019. Scutchings faces a maximum sentence of five years in prison on the conspiracy charge and a mandatory two years in prison on the aggravated identity theft charge.

Principal Deputy Assistant Attorney General Zuckerman commended special agents of the Department of Treasury – Office of Inspector General and IRS – Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys Thomas Koelbl and William Guappone, who prosecuted the case.

Rashad Sabree, 37, of Boston, Massachusetts, was sentenced today in federal court in the District of Maine to 17 years in prison and ordered to pay restitution after previously pleading guilty to two count of sex trafficking. In sentencing the defendant, U.S. District Court Judge John D. Levy highlighted the degree of cruelty that the defendant’s crimes involved and its impact on the victims. The sentence was announced by Acting Attorney General Matthew Whitaker, Assistant Attorney General Eric Dreiband of the Justice Department’s Civil Rights Division, U.S. Attorney Halsey B. Frank of the District of Maine, Peter C. Fitzhugh, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Boston, and Harold H. Shaw, Special Agent in Charge, FBI Boston Division.

According to court documents, the defendant coerced two young women to engage in commercial sex acts in Maine between December 2015 and Jan. 5, 2016, by exploiting their heroin addictions, verbally abusing them, and threatening them with violence. The defendant controlled the victims by supplying them with just enough heroin to avoid opiate withdrawal, which involves severe pain and physical sickness, and then threatening to cut off their supply and cause them to suffer withdrawal if they refused to engage in commercial sex. On Jan. 5, 2016, a motorist called 911 after observing the defendant striking one of the victims while driving on I-95 towards Massachusetts, resulting in the defendant’s arrest.

"Sex trafficking is a horrific crime against the human dignity of the victims, and a strong sentence like this one is deserved," Acting Attorney General Whitaker said. "This case is particularly cruel because in addition to the defendant’s use of violence and threats, he exploited the victims’ opioid addictions to compel them to perform commercial sex acts for his profit. I want to thank U.S. Attorney Halsey Frank and the District of Maine’s Anti-Trafficking Coordination Team, HSI Boston, FBI Boston, our Maine state and local partner police agencies, and especially AUSA Julia Lipez and Special Litigation Counsel William Nolan of the Department’s Human Trafficking Prosecution Unit for their hard work on this case. I also want to thank the Good Samaritan who reported seeing the defendant strike one of the victims on I-95. Together we have achieved a measure justice for the victims and sent a message to traffickers that this Department of Justice will bring the full force of the law against them."

“This case demonstrates the important role that the public can play in helping to protect those who are vulnerable,” said U.S. Attorney Frank.  “We encourage the public to say something if they see something. Here, thankfully, a good citizen did just that.”

“Homeland Security Investigations is proud to have assisted in this investigation, a case which clearly exposes the false claim that commercial sex trafficking is a so-called “victimless crime,” said Peter C. Fitzhugh, Special Agent in Charge, U.S Immigration and Customs Enforcement’s HSI Boston. “Close law enforcement coordination in this case has allowed justice to be done to the perpetrators of these vicious crimes and to, hopefully, provide some measure of compensation for the victims.” 

“This defendant preyed on the addictions of his victims and brutally exploited them in a scheme driven by cruelty and greed,” said Harold H. Shaw, Special Agent in Charge, FBI Boston Division. “With today's sentencing, Sabree will pay the price for his crimes, while his victims continue to recover from the abuse suffered at his hands. This case demonstrates the FBI's unwavering commitment to work with our law enforcement partners to hold sex traffickers like him accountable.”

The District of Maine is one of six districts designated through a competitive, nationwide selection process as a Phase II Anti-Trafficking Coordination Team (ACTeam). ACTeams focus on developing high-impact human trafficking investigations and prosecutions involving forced labor, international sex trafficking and sex trafficking by force, fraud or coercion through interagency collaboration among federal prosecutors and federal investigative agencies.

The case was investigated by U.S. Immigration and Customs Enforcement’s HSI, the FBI, and the Biddeford Police Department, with assistance from the Maine State Police and the Sanford, Kittery, and Portland Police Departments. It was prosecuted by Assistant U.S. Attorney Julia Lipez and Special Litigation Counsel William E. Nolan of the Civil Rights Division’s Human Trafficking Prosecution Unit.

Kassim Tajideen, the operator of a network of businesses in Lebanon and Africa whom the U.S. Department of the Treasury designated as an important financial supporter to the Hezbollah terror organization, pleaded guilty today to charges associated with evading U.S. sanctions imposed on him.

The announcement was made by Acting Attorney General Matthew G. Whitaker; Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division; Assistant Attorney General for National Security John C. Demers; U.S. Attorney Jessie K. Liu for the District of Columbia; Special Agent in Charge Raymond Donovan of the Special Operations Division of the U.S. Drug Enforcement Administration (DEA); Special Agent in Charge Valerie A. Nickerson of the DEA’s New Jersey Field Division and Commissioner Kevin K. McAleenan of U.S. Customs and Border Protection (CBP).

Tajideen, 63, of Beirut, Lebanon, pleaded guilty before U.S. District Court Judge Reggie B. Walton in the U.S. District Court for the District of Columbia, to conspiracy to launder monetary instruments, in furtherance of violating the International Emergency Economic Powers Act (IEEPA).  Tajideen was designated by the U.S. Department of the Treasury as a Specially Designated Global Terrorist in May 2009 as a result of his provision of significant financial support to Hezbollah, which was named a Foreign Terrorist Organization by the U.S. Department of State.  This designation prohibited Tajideen from being involved in, or benefiting from transactions, involving U.S. persons or companies without a license from the Department of the Treasury.

“This Department of Justice has put a target on Hezbollah,” Acting Attorney General Whitaker said. “In January, we started the Hezbollah Financing and Narcoterrorism Team, and in October, former Attorney General Sessions named Hezbollah one of the five priority organizations for our Transnational Organized Crime Task Force.  The DEA worked for three years to bring this prosecution of a Treasury Department-designated terrorist for sanctions violations to successful completion.  I want to thank the prosecutors and agents Trial Attorney Joseph Palazzo and AUSAs Thomas Gillice, Luke Jones, Karen Seifert, Deborah Curtis, and SAUSA Jacqueline Barkett for helping us achieve this victory today. We are going to keep targeting Hezbollah and other terrorist groups and their supporters, and we are going to keep winning.”

“This guilty plea demonstrates our commitment to vigorously investigate and prosecute violations of U.S. economic sanctions,” said U.S. Attorney Liu. “Through the efforts of law enforcement here and abroad, this defendant has been held accountable for violating laws protecting our national security and foreign policy interests.”

“This is the latest example of DEA’s recent successes against Hezbollah’s global criminal support network and reflects DEA’s determination in combatting this transnational criminal organization,” said Special Agent in Charge Donovan.

 According to the statement of facts signed by Tajideen in conjunction with his plea, after his designation, Tajideen conspired with at least five other persons to conduct over $50 million in transactions with U.S. businesses that violated these prohibitions.  In addition, Tajideen and his co-conspirators knowingly engaged in transactions outside of the United States, which involved transmissions of as much as $1 billion through the United States financial system from places outside the United States.

The plea, which is contingent upon the Court’s approval, calls for an agreed-upon sentence of 60 months in prison. The plea agreement also calls for Tajideen to pay $50 million as a criminal forfeiture in advance of his sentencing.  Tajideen has been detained since extradition to the United States in March 2017 after his arrest overseas.  Sentencing is scheduled to occur on Jan. 18, 2019.

This guilty plea is the result of a three-year investigation by the DEA’s Special Operations Division (SOD)/Counter Narcoterrorism Operations Center (CNTOC) and the DEA New Jersey Field Division, with the assistance by CBP. Assistance was provided by the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

Tajideen’s case falls under DEA’s Project Cassandra, which targets Hezbollah’s global criminal support network - dubbed by the DEA as the Business Affairs Component (BAC) - that operates as a logistics, procurement and financing arm for Hezbollah.  This investigation and others are part of the Department of Justice’s Hezbollah Financing and Narcoterrorism Team (“HFNT”), a component of the Department’s Transnational Organized Crime initiative (TOC).  The HFNT was formed in January 2018 to ensure an aggressive and coordinated approach to prosecutions and investigations, including Project Cassandra cases, targeting the individuals and networks supporting Hezbollah.  Comprised of experienced international narcotics trafficking, terrorism, organized crime, and money laundering prosecutors and investigators, the HFNT works closely with partners like the DEA, the Department of the Treasury, and the Federal Bureau of Investigation, among others, to advance and facilitate prosecutions of Hezbollah and its support network in appropriate cases.

This case is being prosecuted by the Criminal Division’s Money Laundering and Asset Recovery Section, U.S. Attorney’s Office for the District of Columbia, the DEA and CPB’s National Targeting Center Counter Network Division, with assistance from the Criminal Division’s Office of International Affairs and the Counterintelligence and Export Control Section of the National Security Division.

The case is being prosecuted by Trial Attorney Joseph Palazzo of the Money Laundering and Asset Recovery Section and Assistant U.S. Attorneys Thomas A. Gillice, Luke Jones, Karen Seifert and Deborah Curtis and Special Assistant U.S. Attorney Jacqueline L. Barkett of the U.S. Attorney’s Office for the District of Columbia.

The Justice Department today filed a lawsuit alleging that St. Bernard Parish, Louisiana, has discriminated against persons with disabilities in violation of the Fair Housing Act. The lawsuit, filed in the U.S. District Court for the Eastern District of Louisiana, alleges that St. Bernard Parish failed to provide reasonable accommodations to its zoning ordinance by repeatedly refusing to allow two proposed group homes for children with disabilities to operate. The two group homes had satisfied all of the relevant licensing requirements of the State of Louisiana.

“The Fair Housing Act prohibits municipalities from applying their zoning laws in a manner that discriminates against persons with disabilities,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The Civil Rights Division is committed to enforcing the Fair Housing Act zealously to ensure that such discrimination against people with disabilities does not continue to occur.”

“Nondiscriminatory housing is a fundamental right for all Americans, including those with disabilities, according to the Fair Housing Act,” said U.S. Attorney for the Eastern District of Louisiana Peter G. Strasser. “Our office, along with the Department’s Housing and Civil Enforcement section, will continue to protect the rights of all citizens within our district to attain housing.”

 “It’s hard enough for individuals with disabilities to find adequate places to live without having the creation of housing that meets their needs intentionally blocked,” said Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity.  “HUD will continue to work with the Justice Department to take appropriate action anytime housing providers and others in a position to control access to housing violate the Fair Housing Act.”

This case arose when St. Bernard Parish denied reasonable accommodations to allow two group homes, which would have been licensed by the State of Louisiana, to operate in single-family neighborhoods of the Parish. The Parish’s zoning code prohibits group homes from operating in these neighborhoods. There are only 13 group homes operating throughout the State of Louisiana that serve children with disabilities in the same manner as the homes proposed in St. Bernard Parish. The two group home operators filed complaints with the U.S. Department of Housing and Urban Development (HUD) after their requests for reasonable accommodations were denied.

The lawsuit seeks a court order prohibiting St. Bernard from applying its zoning code in a manner that discriminates against persons with disabilities. The lawsuit also seeks monetary damages to compensate victims, as well as payment of a civil penalty. A related case challenging St. Bernard’s conduct was filed by the operators of the two proposed group homes. That case, Angelicare et al. v. St. Bernard Parish, is pending before the U.S. District Court for the Eastern District of Louisiana.

The federal Fair Housing Act prohibits discrimination in housing based on disability, race, color, religion, national origin, sex and familial status. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Justice Department at 1-800-896-7743, e-mail the Justice Department at [email protected], or contact the Department of Housing and Urban Development at 1-800-66-9777 or through its website at https://www.hud.gov/program_offices/fair_housing_equal_opp.

The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.