District Not Recorded

The Justice Department today announced that it has reached a settlement with Rose Acre Farms Inc. (Rose Acre), which is based in Indiana and is one of the largest egg producers in the United States. The settlement resolves a long-standing lawsuit filed by the Justice Department alleging that Rose Acre violated the Immigration and Nationality Act (INA) by discriminating against work-authorized non-U.S. citizens when verifying their work authorization.  

The Department’s amended complaint, filed on Nov. 7, 2012, alleged that from at least June 2009 to Dec. 22, 2011, Rose Acre routinely required work-authorized non-U.S. citizens to present a Permanent Resident Card or Employment Authorization Document to prove their work authorization, but did not require specific documents from U.S. citizens. All work-authorized individuals, whether U.S. citizens or non-U.S. citizens, have the right to choose which valid documentation to present to prove they are authorized to work. The antidiscrimination provision of the INA prohibits employers from subjecting employees to unnecessary documentary demands based on employees’ citizenship or national origin. 

“The INA makes clear that when employers verify the identity and work authorization of employees, they must not treat employees differently based on their citizenship or national origin,” said Acting Assistant Attorney General John Gore of the Civil Rights Division. “This case demonstrates the Department’s commitment to ensuring that employers implement the employment eligibility verification process in a manner that is non-discriminatory.”

Under the settlement, Rose Acre will pay a civil penalty of $70,000; train its employees on the INA’s anti-discrimination provision; and be subject to departmental monitoring for two years.  

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 antidiscrimination provision of the INA.  The statute prohibits, among other things, citizenship, immigration 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 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, should contact IER’s worker hotline for assistance.

WASHINGTON, D.C. – El Departamento de Justicia hoy anunció que ha alcanzado un acuerdo  con Rose Acre Farms, Inc. («Rose Acre»), uno de los principales productores de huevos en los Estados Unidos cuya sede se encuentra en Indiana.  El acuerdo resuelve un pleito entablado desde hace mucho tiempo por el Departamento de Justicia, en el cual este alega que Rose Acre vulneró la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés) al discriminar a trabajadores que no eran ciudadanos de los EE. UU pero que sí disponían de permiso para trabajar a la hora de verificar su autorización para trabajar.

La denuncia enmendada del Departamento, que se presentó el 7 de noviembre del 2012, alegó que desde al menos junio del 2009 hasta el 22 de diciembre del 2011, Rose Acre, de forma rutinaria, requirió que trabajadores que no eran ciudadanos de los EE. UU. pero que sí disponían de permiso para trabajar presentaran una tarjeta de residencia permanente o documento de autorización para demostrar su autorización para trabajar, mientras que no requerían documentos específicos a ciudadanos estadounidenses. Todos aquellos individuos con autorización, ya sean ciudadanos o no, tienen el derecho a elegir cuáles documentos válidos desean presentar para demostrar que están autorizados para trabajar. La disposición antidiscriminatoria de la INA prohíbe que los empleadores sometan a sus empleados a requisitos documentales innecesarios con base en la ciudadanía o nacionalidad de origen de los mismos.

«La INA deja claro que cuando los empleadores verifican la identidad y autorización para trabajar de sus empleados, ellos no pueden tratar a los empleados de una forma diferente por motivos de su ciudadanía o nacionalidad de origen», declaró el Fiscal General Auxiliar en funciones, John Gore, de la División de Derechos Civiles. «Este caso demuestra el compromiso del Departamento a asegurar que los empleadores implementen el proceso de verificación de la elegibilidad para trabajar de una forma que no sea discriminatoria».

Conforme el acuerdo, Rose Acre pagará sanciones civiles que ascienden a $70,000, capacitará a sus empleados en cuanto a la disposición antidiscriminatoria de la INA y se someterá a la supervisión por parte del Departamento durante dos años.  

La Sección de Derechos de Inmigrantes y Empleados (IER, por sus siglas en inglés), que anteriormente se conocía como la Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración, que pertenece a la División, es responsable de aplicar la disposición antidiscriminatoria de la INA. Entre otras cosas, esta ley prohíbe la discriminación por motivos de estatus de ciudadanía o nacionalidad de origen en los procesos de contratación, despido o reclutamiento o recomendación por comisión; prácticas documentales injustas; y represalias y la intimidación.

Para más información sobre protecciones contra la discriminación en el empleo en virtud de las leyes migratorias, llame a la línea directa de la IER para trabajadores al 1‑800‑255-7688 (1‑800-237-2515, TTY para personas con discapacidades auditivas); llame a la línea directa de la IER para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con discapacidades auditivas); inscríbase a un seminario en línea gratuito; mande un correo electrónico a [email protected] o visite la página web de la IER en inglés o español.  

Aquellos postulantes o empleados que creen haber sido sometidos a otros requisitos documentales por motivos de su nacionalidad de origen o su estatus migratorio o de ciudadanía en los procesos de contratación, despido o reclutamiento o recomendación por comisión deben llamar a la línea directa de la IER para trabajadores para pedir ayuda.

Attorney General Jeff Sessions issued the following statement on Friday’s Deferred Action for Childhood Arrivals (DACA) order in the U. S. District Court for the District of Columbia: "We strongly disagree with the district court’s decision on Friday in the Deferred Action for Childhood Arrivals (DACA) case.  The executive branch’s authority to simply rescind a policy, established only by a letter from the Secretary of the Department of Homeland Security, is clearly established. The Department of Justice will take every lawful measure to vindicate the Department of Homeland Security’s lawful rescission of DACA.

"The last administration violated its duty to enforce our immigration laws by directing and implementing a categorical, multipronged non-enforcement immigration policy for a massive group of illegal aliens. This wrongful action left DACA open to the same legal challenges that effectively invalidated another program they established—Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA). DAPA’s implementation was blocked by the U.S. Court of Appeals for the Fifth Circuit and never entered into effect. These two policies declared by officials of the previous administration—by policy letters only—had been considered by Congress and rejected. 

"The Trump Administration’s action to withdraw the policy letters simply reestablished the legal policies consistent with the law. Not only did the Trump Administration have the authority to withdraw this guidance letter, it had a duty to do so. As former President Obama previously said, the changes they attempted to effect through this policy letter can only be lawfully achieved by congressional action. The judicial branch has no power to eviscerate the lawful directives of Congress—nor to enjoin the executive branch from enforcing such mandates. 

"We have recently witnessed a number of decisions in which courts have improperly used judicial power to steer, enjoin, modify, and direct executive policy.  This ignores the wisdom of our Founders and transfers policy making questions from the constitutionally empowered and politically accountable branches to the judicial branch.  It also improperly undermines this Administration’s ability to protect our nation, its borders, and its citizens.  The Trump Administration and this Department of Justice will continue to aggressively defend the executive branch's lawful authority and duty to ensure a lawful system of immigration for our country."

A federal grand jury has returned an indictment, which was unsealed today, charging a Roanoke, Virginia tax return preparer with aiding and assisting in the preparation of false tax returns and filing a false personal tax return, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Thomas T. Cullen for the Western District of Virginia.

According to the indictment, Saint Julien Pierre owned and operated a tax return preparation business, JP Tax Services, LLC in Roanoke.  The indictment alleges Pierre aided and assisted in the preparation of 2013 and 2014 tax returns for his clients that falsely claimed residential energy credits, fuel tax credits, and itemized deductions, including, charitable contributions and unreimbursed employee expenses, in order to fraudulently increase their refunds.  The indictment further charges Pierre with filing a false 2013 tax return for himself, on which he fraudulently sought the same fuel tax credit that he falsely claimed on his clients’ returns.

If convicted, Pierre faces a statutory maximum sentence of three years in prison for each count of preparing false tax returns and three years in prison for the count related to his own tax return.  He also faces a period of supervised release, restitution, and monetary penalties.  An indictment is an accusation.  A defendant is presumed innocent until proven guilty.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Cullen thanked special agents of IRS Criminal Investigation, who conducted the investigation, Tax Division Trial Attorney Lauren A. Archer and Assistant United States Attorney Charlene R. Day of the Western District of Virginia, who are prosecuting the case.

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

Acting Assistant Attorney General John Gore, U.S. Attorney Benjamin G. Greenberg for the Southern District of Florida, Katherine Fernandez Rundle, Miami-Dade State Attorney, Robert F. Lasky, Special Agent in Charge, Federal Bureau of Investigation (FBI), Miami Field Office, and Troy Walker, Special Agent in Charge, Florida Department of Law Enforcement (FDLE), today announced that former Biscayne Park Police Officers Charlie Dayoub and Raul Fernandez pleaded guilty today to depriving a 16-year old juvenile, “T.D.,” of his Civil Rights by falsely arresting T.D. for four unsolved burglaries.

As noted at the hearing and in court filings, on June 13, 2013, former officers Dayoub and Fernandez were both working on duty for the Village of Biscayne Park Police Department. On June 13, their supervisor instructed them to unlawfully arrest and falsely charge T.D., a juvenile previously known to Chief RA and Dayoub, for unsolved burglaries that had occurred in Biscayne Park. Dayoub and Fernandez complied with Chief RA’s instructions and falsely arrested T.D. Fernandez wrote narratives containing fabricated information in support of the four arrest affidavits that falsely claimed an investigation revealed that T.D. had committed the four burglaries. Dayoub signed and attested that the contents of the affidavits were true even though he, like the supervisor and Fernandez, knew that no evidence existed to substantiate the arrest. T.D. was subsequently arrested for the four burglaries.

Dayoub and Fernandez both pleaded guilty to count two of a superseding indictment charging each defendant with deprivation of T.D.’s civil rights, under color of law, in violation of Title 18, United States Code, Section 242. The defendants are both facing up to one year of incarceration as a result of their guilty pleas. The Court set the sentencing date for both of the defendants on Oct. 16.

This case is being investigated by the FBI, including the FBI Miami Area Corruption Task Force, and FDLE, and assisted by the Miami-Dade State Attorney’s Office. This case is being prosecuted by Assistant U.S. Attorney Harry C. Wallace, Jr., Department of Justice Trial Attorney Donald W. Tunnage, and Assistant State Attorney Trent Reichling.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A North Carolina man was sentenced yesterday to one year and one day in prison to be followed by three years of supervised release for his role in dog fighting activities, announced Acting Assistant Attorney General Jeffrey H. Wood of the Justice Department’s Environment and Natural Resources Division, U.S. Attorney Matthew G.T. Martin for the Middle District of North Carolina and Special Agent in Charge Bethanne M. Dinkins for the U.S. Department of Agriculture’s Office of Inspector General.

On Jan. 12, Brexton Redell Lloyd, 54, of Eagle Springs, North Carolina, pleaded guilty to one felony count of conspiracy and two felony counts of possession and training a dog intended for use in an animal fighting venture, contrary to the animal fighting provisions of the federal Animal Welfare Act.  

According to documents filed with the court, Lloyd participated with Justin “Jay” Love and others in a multi-state dog fighting conspiracy. These documents describe Lloyd and Love’s attempt to set up a dog fight between Lloyd and an unknown opponent in October 2015 and Lloyd’s breeding and training activities. Court documents further note that last year, federal agents seized 13 pitbull-type dogs from Lloyd’s residence. Ten of the dogs were secured outdoors by excessive chains, wearing thick collars, and positioned so that each dog was out of reach of any other dog. The other dogs were housed individually in pens. The water in the dogs’ bowls was frozen. Two of the four adult dogs seized exhibited scars consistent with dog fighting, and a third adult dog had four fractured teeth. In addition to the dogs, agents seized items related to training dogs for dog fighting purposes, including: a spring pole, a dog harness, and a hanging scale. Agents also seized veterinary supplies, including intravenous fluids, intravenous administration sets stated for “Veterinary Use Only,” injectable and other antibiotics, a 100-count package of syringes, blood-clotting medications such as Blood Stop Powder, and a skin stapler. 

“Animal cruelty like the conduct in this case has no place in a civilized society,” said Acting Assistant Attorney General Wood. “Yesterday’s sentencing sends a strong message that we are bringing to justice those who engage in illegal dog fighting and that anyone who engages in this conduct does so at the risk of significant jail time.”

“Dog fighting isn’t entertainment, it’s organized crime, and it has no place in our society,” said United States Attorney Matthew G.T. Martin for the Middle District of North Carolina.  Martin added, “I thank our law enforcement partners at the Department of Agriculture, the Federal Bureau of Investigation, the Moore County Sheriff’s Office, and the N.C. State Highway Patrol for their exceptional coordination in bringing this defendant to justice.”

“The provisions of the Animal Welfare Act were designed to protect animals from being used in illegal fighting ventures, which often entail other forms of criminal activity involving drugs, firearms and gambling,” said Special Agent in Charge Dinkins for USDA OIG. “Together with the Department of Justice, animal fighting is an investigative priority for USDA OIG, and we will work with our law enforcement partners to investigate and assist in the criminal prosecution of those who participate in animal fighting ventures.”

This case is part of Operation Grand Champion, a coordinated effort across numerous federal judicial districts to combat organized dog fighting. The phrase “Grand Champion” is used by dog fighters to refer to a dog with more than five dog fighting “victories.” To date, over one hundred dogs have been rescued as part of Operation Grand Champion, and either surrendered or forfeited to the government. The Humane Society of the United States assisted with the care of the dogs seized by federal law enforcement.

This case was investigated by USDA OIG and FBI, with assistance from the Moore County Sheriff’s Office and the North Carolina Highway Patrol, and was prosecuted by Trial Attorney Erica H. Pencak of the Justice Department’s Environmental Crimes Section and Assistant U.S. Attorney JoAnna G. McFadden of the Middle District of North Carolina. 

          SHAWN N. ANDERSON, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that defendant JOSEPH B. PANGELINAN JR. was sentenced by Chief Judge Frances Tydingco-Gatewood, District Court of Guam, for the crime of Receipt of Child Pornography, in violation of 18 U.S.C. § 2252A(a)(2) and (b)(1). Pangelinan previously pled guilty to the charge and admitted to utilizing a peer- to-peer (P2P) network to receive approximately 2,280 images and 17 movies that depicted the sexual abuse of young children.  The Court ordered 97 months imprisonment, five years of supervised release, $17,000 in restitution for the child victims, and forfeiture of a computer. Pangelinan was also ordered to register with the Sex Offender Registry in any jurisdiction in which he lives, works or attends school.  Under federal law, his period of registration will extend for 25 years.

          U.S. Attorney Anderson states, “Our office will continue to aggressively pursue child predators under the Project Safe Childhood initiative. Unfortunately, victims of child pornography suffer for many years from the trauma of abuse and the repeated distribution of depictions of the crime. I applaud the hard work of our federal law enforcement partners at Homeland Security Investigations in bringing this defendant to justice.”

          Assistant Special Agent in Charge of Homeland Security Investigations (HSI) John Duenas said, “Today’s prison sentence is fitting for someone who robs children of their innocence and continues to sexually exploit them by producing and trading the illegal images with predators around the world. Investigating this type of criminal activity is a priority for HSI and we will continue to dedicate our resources to identify and bring to justice other child predators who victimize children in this same manner.”

          The U.S. Attorney additionally reminds defendants who have committed sexual abuse of children that, under federal and local law, all sex offenders have a duty to register and keep their registration current with the Sex Offender Registry in their jurisdiction. Sex offenders who travel to Guam and who reside on Guam must inform the Guam Sex Offender Registry where they reside, work, or attend school. They must also periodically update their registration information. The U.S. Attorney notes that the Sex Offender Registry was created in order to protect the public by protecting victims, preventing further victimization and informing the public of the whereabouts of sex offenders. Guam’s Sex Offender Registry can be found online at www.guamcourts.org (link is external).

          U.S. Department of Justice’s Project Safe Childhood (PSC) Initiative is a nationwide commitment to aggressively prosecute defendants who engage in the sexual victimization of children and adults, possess or receive child pornography, and sex offenders who fail to register with the jurisdiction’s Sex Offender Registry. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc.

          The investigation was conducted by Homeland Security Investigations. The case was prosecuted by Rosetta San Nicolas, an Assistant United States Attorney for the United States Attorney’s Office in the District of Guam.

The U.S. Department of Justice and the U.S. Environmental Protection Agency (EPA) announced a settlement agreement with Anchor Glass Container Corporation today that will resolve alleged Clean Air Act violations at all six of Anchor’s container glass manufacturing facilities located in Florida, Georgia, Indiana, Minnesota, New York and Oklahoma and improve the company’s compliance with federal [and state] clean air laws. Under the proposed settlement, Anchor will install pollution controls to cut emissions of nitrogen oxide (NOx), sulfur dioxide (SO2) and particulate matter (PM) at its container glass manufacturing facilities. The states of Indiana and Oklahoma participated in the settlement.

“In this settlement, Anchor Glass Container Corporation has agreed to bring all of its manufacturing facilities into compliance with Clean Air Act requirements, which will help reduce harmful air pollutants to ensure the health and safety of communities in six states,” said Acting Assistant Attorney General Jeffrey H. Wood for the Justice Department’s Environment and Natural Resources Division. “The Justice Department will continue to work closely with the EPA and to partner with states to ensure compliance with federal clean air laws nationwide.”

“Under the terms of today’s settlement, Anchor Glass Container Corporation will take steps to reduce harmful air emissions from its facilities,” said Susan Bodine, EPA’s Assistant Administrator for the Office of Enforcement and Compliance Assurance.  “The resulting pollution reductions will mean cleaner and clearer air for communities in six states.” 

“Protecting the health and safety of Indiana residents is one of my office’s top priorities,” said Indiana Attorney General Curtis Hill. “Settlements such as this one help ensure that future generations will breathe cleaner air, and I’m grateful for the collaboration of our federal and state partners in bringing about this positive result.”

“I am pleased with the results of the settlement and hopeful this will help protect Oklahoma’s future,” said Executive Director Scott Thompson for the Oklahoma Department of Environmental Quality.

Today’s settlement resolves allegations that Anchor violated the Clean Air Act when it failed to seek permits for New Source Review major modifications at its container glass facilities. Anchor’s facilities manufacture beer bottles, liquor bottles, other beverage bottles, jars, and other glass containers. 

Under this settlement, Anchor will implement pollution controls to reduce its NOx emissions at nine of its eleven furnaces (two furnaces already have pollution controls installed), and the company will meet more stringent NOx emissions limits at all of its furnaces. Anchor will also implement pollution controls and take other actions to reduce SO2 and PM emissions. The settlement also requires Anchor to install and operate continuous emissions monitors for NOx and SO2 at all eleven of its glass furnaces and to install continuous opacity monitors required by the Clean Air Act.  The company will spend approximately $40 million in implementing these pollution reduction changes to its facilities.

This settlement will result in substantial reductions of NOx, SO2 and PM emissions at Anchor’s plants. NOx emissions will be reduced by over 2,000 tons per year, SO2 emissions will be reduced by over 700 tons per year and PM emissions will be reduced by over 100 tons per year. Additionally, Anchor will complete two mitigation projects, a woodburning appliance change-out project and a project to repower, retrofit, or replace vehicle diesel engines, further reducing NOx, SO2, and PM emissions.

As part of this settlement, Anchor will also pay a $1.1 million civil penalty. 

NOx, SO2 and PM, three key pollutants emitted from glass manufacturing plants, have numerous adverse effects on human health and are significant contributors to acid rain, smog, and haze. The pollutants are converted in the air into fine particles of particulate matter that can cause severe respiratory and cardiovascular impacts and premature death. Reducing these harmful air pollutants will benefit the communities located near the Anchor plants, particularly communities disproportionately impacted by environmental risks and vulnerable populations, including children.

The proposed consent decree was lodged today in the U.S. District Court for the Middle District of Florida and is subject to a 30-day public comment period and final court approval. Information about submitting a public comment is available at: www.justice.gov/enrd/consent-decree/us-et-al-v-anchor-glass-container-corporation 

For more information about the settlement: www.epa.gov/enforcement/anchor-glass-container-corporation-clean-air-act-settlement

NOTE: The settlement agreement can be found here.

The Justice Department today reached a settlement agreement with the Philadelphia Police Department (PPD) to resolve allegations that it violated Title II of the Americans with Disabilities Act (ADA) by denying deaf and hard of hearing individuals full and equal opportunities to participate in and benefit from PPD’s programs, services, and activities. Specifically, the Department alleged that PPD did not take appropriate steps to ensure that communications with deaf and hard of hearing individuals were as effective as communications with others, and did not provide auxiliary aids and services that were necessary to ensure the provision of effective communication.

The Department initiated an investigation in response to a complaint that PPD had not provided effective communication to a deaf detainee. In the course of its investigation, the Department interviewed a number of deaf individuals—ranging from detainees to crime victims—who contended that PPD denied them effective communication. The Department also interviewed PPD representatives and reviewed PPD’s policies and practices relating to the provision of auxiliary aids and services to individuals who are deaf or hard of hearing. Based on the investigation, the Department determined that PPD had not met its obligations to provide effective communication as required by the ADA.

“Deaf and hard of hearing individuals are entitled to full and equal opportunities to communicate with police officers and to benefit from police services,” said Acting Assistant Attorney General John Gore. “We commend the Philadelphia Police Department, which is taking steps to ensure that Philadelphia’s deaf and hard of hearing community members are provided effective communication and auxiliary services.”

The ADA mandates that public entities, such as PPD, take appropriate steps to ensure that communications with people with disabilities are as effective as communications with others. In meeting the effective communication obligation, public entities are not required to take any action that would result in a fundamental alteration in the nature of their service, program or activity or in undue financial and administrative burdens.

PPD represents that since the Department’s investigation, it has been steadfast in its efforts to improve its provision of effective communication. PPD has developed comprehensive ADA policies and practices, including policies that help law enforcement personnel understand how to secure appropriate auxiliary aids and services for deaf and hard of hearing individuals. PPD has also developed a comprehensive training program to educate its personnel on the ADA’s effective communication obligation. PPD further asserts that it is ensuring reliable access to American Sign Language interpreters.

Under the three-year agreement, PPD will adopt ADA policies and procedures on effective communication and appropriate auxiliary aids or services, train personnel on the ADA, provide accessible telephone equipment, and pay eight aggrieved individuals a total of $97,500.

Those interested in finding out more about this settlement or the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov. ADA complaints may be filed online at http://www.ada.gov/complaint/.

As part of The Department of Justice’s review of nearly 1,300 legacy antitrust judgments, the Antitrust Division today announced that it has opened a review of the Paramount Consent Decrees, which for over seventy years have regulated how certain movie studios distribute films to movie theatres.  The purpose of the review is to determine whether or not the decrees should be terminated or modified.  

The Antitrust Division announced in April its initiative to terminate legacy antitrust judgments, stating that it would review all such judgments to identify those that no longer serve to protect competition.  The initiative was undertaken because many of the final judgments that the Division entered into from the earliest days of the Sherman Act until the late 1970s do not include sunset provisions or express termination dates.  Consequently, those judgments are perpetual, regardless of whether there have been subsequent industry or technological changes that might make those judgments either ineffective in protecting competition or even anticompetitive themselves.  

In particular, the Paramount Decrees have regulated how certain movie studios distribute films to movie theatres since the Supreme Court’s decision in United States v. Paramount, 334 U.S. 131 (1948).  For example, the decrees ban various motion picture distribution practices, including block booking (bundling multiple films into one theatre license), circuit dealing (entering into one license that covered all theatres in a theatre circuit), resale price maintenance (setting minimum prices on movie tickets), and granting overbroad clearances (exclusive film licenses for specific geographic areas).  Given that these decrees do not have any sunset provisions or termination dates, the Division will thoroughly review them to determine whether they still serve the American public and are still effective in protecting competition in the motion picture industry.  

“The Paramount Decrees have been on the books with no sunset provisions since 1949.  Much has changed in the motion picture industry since that time,” said Makan Delrahim, Assistant Attorney General for the Justice Department’s Antitrust Division.  “It is high time that these and other legacy judgments are examined to determine whether they still serve to protect competition.  Today, we take an important step forward in the process of reviewing the Paramount Decrees.”   

Since the district court entered the Paramount Decrees, the motion picture industry has undergone considerable change.  None of the Paramount defendants own a significant number of movie theatres.  Additionally, unlike seventy years ago, most metropolitan areas today have more than one movie theatre.  The first-run movie palaces of the 1930s and 40s that had one screen and showed one movie at a time, today have been replaced by multiplex theatres that have multiple screens showing movies from many different distributors at the same time.  Finally, consumers today are no longer limited to watching motion pictures in theatres.  New technology has created many different distribution and viewing platforms that did not exist when the decrees were entered into.  After an initial theatre run, today’s consumers can view motion pictures on cable and broadcast television, DVDs, and over the Internet through streaming services.  

As a consequence of all of these changes, and the fact that the decrees have been in place for over seventy years, the Department has opened a review to determine whether the decrees should be modified or terminated.

The Antitrust Division has posted an invitation for public comment on its public website (https://www.justice.gov/atr/paramount-decree-review), inviting interested persons, including motion picture producers, distributors, and exhibitors, to provide the Division with information or comments relevant to whether the Paramount Consent Decrees still are necessary to protect competition in the motion picture industry.  The period for public comment ends October 4, 2018.*

* The original version of this release stated the public comment period is 30 days, which has been extended to 60 days.

The Department of Justice is pleased to announce expansion of the Tribal Access Program (TAP), a program providing federally recognized Tribes the ability to access and exchange data with the national crime information databases for both civil and criminal purposes.  

The department will accept applications from Aug. 1 to Oct. 1, 2018.  Interested Tribes may apply by using this link: www.justice.gov/tribal/tribal-access-program-fy-2019-application. Tribes that are selected for participation will be notified by Oct. 15, 2018, and deployment activities will begin shortly thereafter; deployment to all selected Tribes will be completed by Sept. 30, 2019.

“President Trump and Attorney General Sessions are committed to reducing violent crime in Indian Country,” said Deputy Attorney General Rod Rosenstein. “Today’s announcement is another example of this commitment and the administration’s efforts to ensure Tribal police have access to the innovative tools and resources they need to ensure public safety and promote the rule of law.” 

“The Tribal Access Program has been instrumental in ensuring tribal protection orders are entered into federal criminal databases. This alerts law enforcement departments throughout the nation to their existence, and prevents covered individuals from illegally purchasing firearms. TAP also provides an easy platform for entering sex offender registrations into the National Sex Offender Registry. In short, it is a critical law enforcement and public safety tool for Indian country,” noted Woodrow Star, Chairman of the Law and Order Committee and Member of the Board of Trustees, Confederated Tribes of the Umatilla Indian Reservation.   

TAP is funded by the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking (SMART), the Office of Community Oriented Policing Services (COPS) and for 2019, the Office for Victims of Crime (OVC).  Given the funding sources, eligible tribes must have a sex offender registry authorized by the Adam Walsh Child Protection and Safety Act, a law enforcement agency that is not a Bureau of Indian Affairs direct service agency, or will utilize the TAP system to assist in providing services to victims of crime.

Under TAP, Tribes have successfully begun entering information directly into the federal databases, resulting in nearly 600 sex offender registrations and over 550 sex offender check-ins, nearly 300 instances of data entry that would prohibit someone from being able to purchase a firearm, over 1000 orders of protection entered or modified and over 4,200 finger-print based record checks for civil purposes that include employment, tribal housing placement and personnel/volunteers who have regular contact with or control over Indian children.

For FY19, the Department of Justice offers TAP services through one of the following two methods:

• TAP-LIGHT:  The department provides software that provides full access (both query and entry capabilities) to national crime information databases such as National Criminal Information Center (NCIC), the Interstate Identification Index (III) and the International Justice and Public Safety Network (Nlets) for both criminal and civil purposes; and
• TAP-FULL: The department provides the same basic capabilities as TAP-LIGHT listed above, and also provides an additional hardware/software solution in the form of a kiosk-workstation that provides the ability to submit and query fingerprint-based transactions via FBI’s Next Generation Identification (NGI) for both criminal and civil purposes.

Criminal agencies that may participate include law enforcement agencies, prosecutors, criminal courts, jails, and probation departments.  Civil agencies and programs that may participate include agencies whose staff/volunteers have contact with or control over Indian children; public housing agencies; child support enforcement agencies; Head Start programs; social service agencies that investigate allegations of abuse, neglect, and exploitation of children; civil courts that issue orders of protection, restraining orders, or other keep away orders and sex offender registration programs.

TAP supports Tribes in analyzing their needs for national crime information and provides appropriate solutions, including a state-of-the-art biometric/biographic kiosk workstation with capabilities to process finger and palm prints, take mugshots and submit records to national databases, as well as the ability to access Criminal Justice Information Services (CJIS) systems for criminal and civil purposes through the Department of Justice’s Criminal Justice Information Network.  TAP, which is managed by DOJ’s Chief Information Officer, provides specialized training and assistance for participating Tribes, including computer-based training, and on-site instruction, as well as a 24x7 Help Desk.  

By September 2018, TAP will be deployed to 47 tribes (both TAP-FULL and TAP-LIGHT) with over 180 Tribal criminal justice and civil agencies participating. 

For more information about TAP, click here + www.justice.gov/tribal/tribal-access-program-tap. 

For a list of the 47 Tribes currently participating in tap, click here.  + www.justice.gov/file/1001376/download. 

A Detroit-area physician pleaded guilty today to conspiracy to distribute controlled substances for his participation in a scheme to unlawfully distribute more than 23,000 pills of Oxycodone. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Matthew Schneider of the Eastern District of Michigan, Special Agent in Charge Timothy Slater of the FBI’s Detroit Field Office, 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 Timothy J. Plancon of the U.S. Drug Enforcement Administration (DEA)’s Detroit Field Office made the announcement.

Alex Kafi, M.D., 70, of West Bloomfield, Michigan, pleaded guilty to one count of conspiracy to distribute controlled substances before U.S. District Judge Victoria A. Roberts of the Eastern District of Michigan.  Sentencing has been scheduled for Jan. 9, 2019 before Judge Roberts.   

As part of his guilty plea, Kafi admitted that from 2013 through May 2017, he engaged in a scheme where he wrote medically unnecessary prescriptions for Oxycodone in exchange for cash.  Kafi wrote these fraudulent prescriptions often without ever meeting or communicating with the patient.  Instead, Kafi conspired with patient marketers, who provided lists of patients to Kafi, along with $300 per prescription of Oxycodone.  Kafi admitted the scheme involved approximately 693,000 mg of Oxycodone and he agreed to forfeit $617,208.00, which were proceeds of his criminal activity.  

This case was investigated by the FBI, HHS-OIG and the DEA.  Trial Attorney Steven Scott 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 HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  The Medicare Fraud Strike Force operates in nine locations nationwide.  Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 3,500 defendants who collectively have falsely billed the Medicare program for over $12.5 billion.  

          SHAWN N. ANDERSON, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that defendant LOVELIA C. MENDOZA, age 36, from Dededo, was sentenced in District Court to an eight-year term of imprisonment, to be followed by five years of supervised release, for Possession with Intent to Distribute Fifty Grams or More of Methamphetamine. The Court also ordered Mendoza to pay a mandatory $100 assessment fee. In addition, defendants convicted of a federal drug offense may no longer qualify for certain federal benefits.

          On April 17, 2017, agents and task force officers with the Drug Enforcement Administration conducted a search of Mendoza’s residence.   They discovered approximately 537.19 net grams of methamphetamine hydrochloride (“ice”) and approximately 30 gross grams of cocaine. Mendoza was also in possession of $98,555.00 in United States currency, Western Union receipts, plastic Ziploc bags, two fabricated glass pipes, digital scales, a "Pringles" container(s) with a hidden compartment, cut plastic straws, a Sony digital camera, thumb drive, Samsung tablet, Samsung cellular phone, and other digital devices.  The evidence revealed that Mendoza possessed the drugs with the intent to distribute them to another person. On May 18, 2017, Mendoza pled guilty to the charge of Possession with Intent to Distribute Fifty Grams or More of Methamphetamine, in violation of 21 U.S.C. § 841(a)(1).

          This prosecution was the result of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation. The OCDETF program provides supplemental federal funding to federal and local agencies involved in the investigation of drug-related crimes. The Drug Enforcement Administration was the lead investigative agency.  Assistance was also provided by the Superior Court of Guam Probation Office. Assistant United States Attorney Rosetta San Nicolas prosecuted this case for the United States Attorney’s Office for the District of Guam.

The Department of Justice announced today that it has signed an Addendum to a non-prosecution agreement with Bank Lombard Odier & Co., Ltd., of Zurich Switzerland.  The original non-prosecution agreement was signed on December 31, 2015. 

The Swiss Bank Program, which was announced on August 29, 2013, provided a path for Swiss banks to resolve potential criminal liabilities in the United States relating to offshore banking services provided to United States taxpayers.  Swiss banks eligible to enter the program were required to advise the Department by December 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts.  Swiss banks participating in the program were required to make a complete disclosure of their cross-border activities, provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers had a direct or indirect interest, cooperate in treaty requests for account information, and provide detailed information about the transfer of funds into and out of U.S.-related accounts, including undeclared accounts, that identifies the sending and receiving banks involved in the transactions. 

The Department executed non-prosecution agreements with 80 banks between March 2015 and January 2016.  The Department imposed a total of more than $1.36 billion in Swiss Bank Program penalties, including more than $99 million in penalties from Lombard Odier.  Pursuant to today’s agreement, an addendum to Lombard Odier’s non-prosecution agreement, Lombard Odier will pay to the Department an additional sum of $5,300,000, and will provide to the Department supplemental information regarding its U.S.-related account population, which now includes 88 additional accounts.  

Every bank that signed a non-prosecution agreement in the Swiss Bank Program had represented that it had disclosed all of its U.S.-related accounts that were open at each bank between August 1, 2008, and December 31, 2014.  Each bank also represented that it would, during the term of the non-prosecution agreement, continue to disclose all material information relating to its U.S.-related accounts.  In reaching today’s agreement, Lombard Odier acknowledges that there were certain additional U.S.-related accounts that it knew about, or should have known about, but that were not disclosed to the Department at the time of the signing of the non-prosecution agreement.  Lombard Odier provided early self-disclosure of their unreported U.S.-related accounts and has fully cooperated with the Department.   

“The Department of Justice and Internal Revenue Service have capitalized on information obtained under the Swiss Bank Program to analyze the flow of money of U.S. tax evaders from closed Swiss bank accounts to banks in other countries.  As a result, the Department has learned more about the methods of those who continue to evade their tax obligations and those institutions that assist them,” said Richard E. Zuckerman, Principal Deputy Assistant Attorney General of the Department of Justice’s Tax Division.  “I urge any banks that aided and abetted in these schemes, or that have received money from closed Swiss bank accounts owned or controlled by persons or entities that are U.S. related, to contact the Tax Division and disclose complete and accurate information about these activities before they are contacted by the Division or the IRS.” 

Principal Deputy Assistant Attorney General Zuckerman thanked Trial Attorney Kimberly M. Shartar, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis, and Attorney Kimberle E. Dodd of the Tax Division.

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

A federal grand jury sitting in the Eastern District of Michigan returned an indictment today charging a Walled Lake, Michigan restaurant owner with 24 counts of failing to account for and pay over employment taxes and one count of willful failure to file an income tax return, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division.

According to the indictment, Johni Semma owned Bayside Sports Bar & Grill (“Bayside”), a restaurant, and The Coliseum, an adult entertainment business.   As the owner of Bayside, Semma was allegedly responsible for collecting and paying over Bayside’s employment taxes.   The indictment charges that during 2008 to 2015, Bayside accrued employment tax liabilities of more than $1 million and that Semma withheld those taxes from the pay of the restaurant’s employees.  Semma then allegedly failed to fully pay over the amounts he withheld to the Internal Revenue Service (IRS). 

The indictment further alleges that in 2012, Semma sold The Coliseum for more than $6 million with approximately $3.5 million of the purchase price paid during 2012.  Despite receiving considerable income from the sale of The Coliseum and other sources, Semma allegedly did not file a 2012 income tax return. 

If convicted, Semma faces a statutory maximum of five years in prison for each count of failure to pay over the employment taxes.  He faces a statutory maximum of one year in prison for the one count of willful failure to file his income tax return.  In addition, he faces a period of supervised release, restitution, and monetary penalties.  An indictment is an accusation.  A defendant is presumed innocent unless and until proven guilty.

Principal Deputy Assistant Attorney General Zuckerman commended special agents of IRS Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys Kenneth Vert and Brittney Campbell, who are prosecuting the case.

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

Today, the Department of Justice’s Civil Rights Division and the Department of Labor (DOL) expanded their collaboration to better protect U.S. workers from discrimination by employers that prefer to hire temporary visa workers over qualified U.S. workers. This new partnership, memorialized in a Memorandum of Understanding (MOU), establishes protocols for the agencies to share information, refer matters between them, and train each other’s employees, with the goal of better protecting U.S. workers. This partnership will enhance the Civil Rights Division’s efforts to stop companies from discriminating against U.S. workers and assist the Department of Labor’s Employment and Training Administration in identifying noncompliance with its foreign labor certification process. 

In 2017, the Civil Rights Division launched the Protecting U.S. Workers Initiative, which is aimed at targeting, investigating, and taking enforcement measures against companies that discriminate against U.S. workers in favor of foreign visa workers. Under this Initiative, the Civil Rights Division has opened dozens of investigations; filed one lawsuit; and reached settlement agreements with three employers. Since the Initiative’s inception, employers have agreed to pay or distributed over $285,000 in back pay to affected U.S. workers. The Employment and Training Administration has assisted the Division’s efforts under this Initiative and today’s partnership expands and formalizes that relationship.

The Civil Rights Division has also increased its collaboration with other federal agencies, including the Departments of State and Homeland Security, to combat discrimination and abuse by employers improperly using temporary visa workers. Today’s MOU expands on the Division’s existing partnership with DOL. In 2017, the Division entered into a similar ongoing partnership with DOL’s Wage and Hour Division to combat discrimination and violations of other federal worker protection laws by facilitating the agencies’ information sharing. 

“Employers should hire workers based on their skills, experience, and authorization to work; not based on discriminatory preferences that violate the law,” said Acting Assistant Attorney General John Gore of the Civil Rights Division. “Our partnership with DOL, formalized today, significantly enhances the Civil Rights Division’s ability to identify employers that favor temporary visa holders over U.S. workers who can do the job.”

“Streamlining the process for information sharing between the Department of Labor and the Department of Justice will help protect U.S. workers from unlawful discrimination,” said Rosemary Lahasky, Deputy Assistant Secretary for DOL’s Employment and Training Administration. “This partnership will help ensure U.S. workers are prioritized to fill jobs.”

The Employment and Training Administration’s Office of Foreign Labor Certification (OFLC) has statutory and regulatory authority to certify employers seeking certain employment-based visas, including H-2A and H-2B visas.  These visa programs require employers to first seek and hire available U.S. workers before hiring visa workers.

The Civil Rights Division’s Immigrant and Employee Rights Section (IER) is responsible for enforcing the anti-discrimination provision of the Immigration and Nationality Act.  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.  An employer that prefers to hire temporary visa workers over available, qualified U.S. workers may be discriminating in violation of this law.

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, can file a charge or contact IER’s worker hotline for assistance.

For more information on OFLC and its activities, please visit https://www.foreignlaborcert.doleta.gov

A Charlottesville, Virginia man was sentenced today to 276 months in prison for production of child pornography, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Thomas T. Cullen of the Western District of Virginia and Special Agent in Charge Patrick J. Lechleitner of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations Washington, D.C. field office.

Richard Wellbeloved-Stone, 57, pleaded guilty in the U.S. District Court for the Western District of Virginia to one count of production of child pornography.  Senior U.S. District Judge Norman K. Moon presided over the sentencing and ordered him to serve a lifetime of supervised release following his prison sentence.  

Wellbeloved-Stone, a high school teacher in Charlottesville, was discovered by law enforcement after chatting online with an undercover agent from the United Kingdom about sexually abusing a young child.  A search warrant executed at Wellbeloved-Stone’s home recovered several images of child pornography produced by Wellbeloved-Stone of at least two young minor victims.

“As a high school science teacher, the defendant held a position of great trust in our society – a trust he abused when he produced horrific images of young children,” said Assistant Attorney General Benczkowski.  “Today’s sentence reflects the unwavering commitment of our prosecutors and law enforcement partners to combat child pornography and to hold offenders accountable for their deplorable crimes.”

“This defendant, through his heinous acts, betrayed the trust of the Charlottesville community,” said U.S. Attorney Cullen. “We are grateful for the hard work of our federal, state, and local law-enforcement partners in bringing him to justice and making our community safer.”

“Child predators are the worst type of criminals,” said HSI Special Agent in Charge Lechleitner.  “They prey on innocent children for their own self-gratification.  While we can’t undo Wellbeloved-Stone’s actions, today’s sentence ensures he can’t victimize anyone else.” 

This case was investigated by HSI Washington, D.C., the Charlottesville Police Department, the Virginia State Police, the Albemarle County Police Department and the Criminal Division’s Child Exploitation and Obscenity Section’s (CEOS) High Technology Investigative Unit.

This case was prosecuted by Trial Attorney Leslie Williams Fisher of the Criminal Division’s CEOS and Assistant U.S. Attorney Nancy Healey.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child exploitation and abuse launched in May 2006 by the Department of Justice.  Led by U.S. Attorney’s Offices and CEOS, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

The Department of Justice announced today that Swiss-based Mirelis Holding S.A. reached a resolution with the Tax Division. 

“The agreement reached today demonstrates the Department’s resolve toward ending the practice of using Swiss bank accounts to evade one’s taxes,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division. “The Department will continue to pursue culpable banks and asset management and investment advisory firms that assist U.S. clients in their concealment of assets and the evasion of their U.S. tax obligations.”

According to the terms of the non-prosecution agreement signed today, Mirelis Holding S.A. (formerly known as Mirelis InvestTrust S.A.) agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts, and pay $10.245 million to the United States, in return for the Department’s agreement not to prosecute this entity for tax-related criminal offenses.

Mirelis operated as a Geneva-based securities trading institution licensed by the Swiss Financial Market Supervisory Authority (“FINMA”).  Mirelis was established in 1997 to provide independent portfolio and asset management services following the sale of a minority ownership interest held by Mirelis’s controlling family and associates in Société Bancaire Julius Baer S.A. After its establishment, Mirelis was initially permitted to offer its independent portfolio and asset management services to certain clients of the Geneva branch of Bank Julius Baer & Co. Ltd (which was formerly Société Bancaire Julius Baer S.A.) with whom the employees or officers of Mirelis had a previous relationship. The assets of clients who accepted the offer of Mirelis’s asset management services remained custodied at the Geneva branch of Bank Julius Baer & Co. Ltd. (“Julius Baer”), which has entered into a deferred prosecution agreement with the Department of Justice.  In addition to providing services to individuals and entities based in Switzerland, at all relevant times, Mirelis provided custodial and independent portfolio and asset management services to U.S. taxpayer-clients.

At the end of 2012, Mirelis and Atlas Capital S.A. (“Atlas”), another securities trading institution based in Geneva licensed by FINMA, entered into a share purchase agreement, pursuant to which Mirelis acquired, and subsequently merged with Atlas effective in May of 2013.  Mirelis continued to serve clients as both an independent asset manager and as a custodian until May of 2014 when Mirelis transferred its activities to Hyposwiss Private Bank Genève S.A. (“Hyposwiss”), a Swiss private bank that has entered into a non-prosecution agreement with the Department,  pursuant to a reverse merger and acquisition of Hyposwiss by Mirelis.

During the Applicable Period, August 1, 2008, through December 31, 2014, the aggregate maximum balance of the assets under management of Mirelis’s U.S. taxpayer-clients was in 2008 and was approximately $315 million, consisting of both assets held in custody at Mirelis and assets held at third-party depository institutions.  Mirelis provided custodial account services for approximately 177 U.S. Related Accounts  and portfolio and asset management services to an additional approximately 95 U.S. Related Accounts that were custodied at third-party banks.  Following the transfer of its activities to Hyposwiss in 2014, Mirelis ceased to conduct any of its former activities (including its provision of independent portfolio and asset management services and its custody of client assets) except for the custody of the accounts of 17 U.S. taxpayer-clients on a temporary basis prior to closure.

Since it began its operations, Mirelis was aware that its U.S. taxpayer-clients had a legal duty to report to the IRS, pay taxes on the basis of, all of the income, including income earned in accounts at Mirelis.  Despite being aware of the obligations of its U.S. taxpayer-clients to report to the IRS and pay taxes on income earned in accounts maintained outside of the United States, Mirelis opened, maintained, and serviced accounts for U.S. taxpayer-clients where Mirelis knew or had reason to know that the U.S. taxpayer-clients were not complying with these obligations or were using their accounts outside of the United States to evade U.S. taxes and reporting requirements, filing false tax returns with the IRS, and/or concealing assets maintained outside of the United States from the IRS (hereinafter, “undeclared assets”).

On several occasions, Mirelis facilitated the concealment of U.S. taxpayer-clients’ undeclared accounts through the closure of accounts and transfer of account funds (in whole or in part and temporarily or permanently) to other accounts held at Mirelis where the named account holder and/or beneficial owner were not U.S. persons and may or may not have been related to the U.S. taxpayer-client.

On at least four occasions, in or about 2011 or 2012, Mirelis facilitated the introduction of U.S. taxpayer-clients to the Singapore-based representatives of a trust company, who advised the U.S. taxpayer-clients to create non-U.S. trusts and fund non-U.S. life insurance policies.  Mirelis agreed to accept and effect the transfer of the funds held in the U.S. taxpayer-clients’ accounts pursuant to instructions despite knowing or having reason to know that these U.S. taxpayer-clients were likely to use the advice received from the trust company to conceal their ownership of undeclared assets. The funds were transferred to accounts at a third-party depository financial institution outside of Switzerland in the name of a non-U.S. life insurance company that had issued policies owned by the non-U.S. trusts created by Mirelis’s U.S. taxpayer-clients. Mirelis provided independent portfolio and asset management services for these accounts and listed the account holders and clients as the life insurance company. In all four instances, Mirelis believes that the U.S. taxpayer-clients subsequently entered into an offshore voluntary disclosure program (the “OVDP”) offered by the IRS.

In order to reduce the chances of undeclared accounts being discovered, Mirelis opened and falsely designated at least one account as a non-U.S. account when it knew the account holder was in fact a U.S. person. Prior to August 2008, Mirelis opened an account using the client’s U.S. passport. When this account was closed in 2009, the account holder withdrew all funds in cash. In 2010, Mirelis opened another account for the same client, but this time used the client’s non-U.S. passport. The account documents were completed without mention of the client’s U.S. citizenship, which was then known to Mirelis.

On at least five occasions, Mirelis effected the transfer of funds from one U.S.  Related Account owned or beneficially owned by individual U.S. taxpayer-clients to other U.S. Related Accounts maintained at Mirelis owned by U.S. limited liability companies, which in turn were owned by U.S. trusts with U.S. beneficiaries. The accounts owned by the limited liability companies were all later closed and the custody of their funds transferred to another Swiss bank (a so-called Category 1 bank) while the independent portfolio and asset management services were provided by Mirelis Advisors, a wholly owned subsidiary that is a registered investment adviser with the SEC.  Mirelis effected these transfers without knowing or checking whether the U.S. taxpayer-clients of the original accounts were compliant with their U.S. tax and reporting obligations.

In order to assist U.S. taxpayer-clients for whom Mirelis provided independent portfolio and asset management services, Mirelis agreed to accept custody of at least eight U.S. Related Accounts from Julius Baer, despite knowing that the beneficial owners of such accounts were U.S. taxpayers, that the accounts held undeclared assets, and that the accounts were being terminated by Julius Baer due to the U.S. taxpayer-client’s U.S. citizenship or residency.  Mirelis agreed to accept these accounts at least in part on the assurances of its U.S. taxpayer-clients that they would enter into the OVDP.  Mirelis’s Management Committee put in place a special policy for such accounts requiring the provision of IRS Forms W-9 and waivers of bank secrecy under the QI regime; however, in certain instances, the Form W-9 was not signed or the account did not hold U.S. securities. At least seven of the U.S. taxpayer-clients associated with these accounts ultimately entered into the OVDP.

Even after instituting a policy to only serve U.S. taxpayer-clients in full compliance with U.S. tax and securities laws in 2010, during a transition period of one year, Mirelis continued to provide both custodial and independent portfolio and asset management services to U.S. taxpayer-clients despite knowing or having reason to know that the U.S. taxpayer-clients were not in full compliance with their U.S. tax and information reporting obligations with respect to several accounts maintained at Mirelis and several accounts maintained at third-party banks.

The services provided by Mirelis to its clients also included a number of  traditional Swiss banking services that Mirelis knew or had reason to know could and did in fact assist its U.S. taxpayer-clients in holding undeclared assets, including providing “hold-mail” services whereby Mirelis would hold all account correspondence and statements at its offices until physically retrieved by the client in Switzerland.  In addition, Mirelis provided or assisted in the provision of “numbered” account services whereby the account holder’s name was replaced on all correspondence with just  the account number or a code name even though Mirelis’s internal records would show the name and identity of the account holder.  These services aided in reducing or eliminating paper trails and beneficial ownership information for undeclared accounts and assets of certain of Mirelis’s U.S. taxpayer-clients. 

Mirelis also assisted in the establishment of trusts and entities (collectively, “structures”) for U.S. taxpayer-clients with both accounts maintained at Mirelis and accounts maintained at third-party depository financial institutions, in particular at a Category 1 Bank, by making referrals to known purveyors of such structures both within and outside of Switzerland.  Mirelis knew or had reason to know that these purveyors often operated structures in contravention of corporate formalities and/or Mirelis’s own policies and procedures and that one purpose of these structures was to add an additional layer of nominal ownership to conceal the U.S. taxpayer-clients’ ownership of undeclared accounts.

With respect to at least 24 U.S. Related Accounts maintained by Mirelis, Mirelis obtained or accepted IRS Forms W-8BEN (or substitute self-certification forms) from these entity account holders that falsely indicated the beneficial owner of the undeclared account was the non-U.S. entity itself and not the U.S. taxpayer-client. These false Forms W-8BEN directly contradicted the Swiss Forms A that Mirelis obtained identifying the U.S. taxpayer-clients as the true beneficial owners of the accounts.  Despite knowing that one of the purposes of these arrangements was to further conceal the ownership of undeclared accounts, Mirelis did not contest the claims made on the Forms W-8BEN or equivalent.

With respect to its asset management services to U.S. taxpayer-clients, Mirelis’s responsibility was solely to manage the investment of the assets of the external U.S. taxpayer-clients held on deposit at the third-party financial institutions. Those institutions undertook all other aspects of managing the client relationship, including the responsibility for procuring, updating, and maintaining all “know your customer” and anti-money laundering and terrorism financing information regarding account holder and beneficial owner.

Mirelis, in connection with the due diligence performed following the Atlas acquisition, learned, among other things, that Atlas provided hold mail and numbered account services, assisted in the establishment of structures for U.S. persons, accepted (or did not contest) false IRS Forms W-8BEN regarding the true beneficial ownership of the account; and opened at least 107 accounts in the names of Panamanian corporations in which the beneficial owners were U.S. persons.  Most of those 107 accounts were established by one Swiss attorney. 

Mirelis took remedial steps starting in 2011 with respect to its then-existing U.S. taxpayer-clients, including implementing a new cross-border policy in June 2011, encouraging clients to enter the OVDP, and shifting its declared clients to its then-newly SEC-registered subsidiary, Mirelis Advisors, S.A.

Mirelis submitted a letter of intent to participate as a Category 2 bank in the Department’s Swiss Bank Program in December 2013.  Although it was ultimately determined that Mirelis was not eligible for the Swiss Bank Program due to its structure as both an asset management firm and a bank, Mirelis is required under today’s agreement to fully comply with the obligations imposed under the terms of that program.  Mirelis has fully cooperated with the Department of Justice in this investigation, including undertaking a separate and thorough review of the provision of independent portfolio and asset management services to U.S. taxpayer-clients with accounts maintained at third-party depository financial institutions and encouraging a significant number of its remaining non-compliant U.S. taxpayer-clients to participate, or provide proof of prior participation, in OVDP covering many of the U.S. Related Accounts maintained by Mirelis during the Applicable Period. 

While U.S. account holders at Mirelis who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.  Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts.  On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement.  With today’s announcement of this non-prosecution agreement, noncompliant U.S. clients of Mirelis must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.  The IRS recently announced that the Offshore Voluntary Disclosure Program will close on September 28, 2018.

Principal Deputy Assistant Attorney General Zuckerman of the Justice Department’s Tax Division thanked the IRS and in particular, IRS-Criminal Investigation and the IRS Large Business & International Division for their substantial assistance.  Principal Deputy Assistant Attorney General Zuckerman also thanked Trial Attorneys Charles M. Duffy and Henry C. Darmstadter, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis, and Attorney Kimberle E. Dodd.

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

The Department of Justice today announced that it has reached a settlement agreement with the City of Jacksonville, Florida (the “City”) to resolve allegations that the City’s promotional practices for positions in the Jacksonville Fire and Rescue Department (JFRD) violated Title VII of the Civil Rights Act of 1964. Title VII is a federal law that prohibits employment discrimination on the basis of race, color, sex, national origin, or religion. The proposed settlement agreement, which must still be approved by a federal judge, finalizes an agreement in principle reached by the parties in January 2017. 

In a joint motion filed by the parties today in the United States District Court for the Middle District of Florida, the Justice Department, the City, the International Association of Fire Firefighters (the “Union”), the Equal Employment Opportunity Commission (EEOC), and various private plaintiffs asked the court to enter a provisional order that sets out the terms of the settlement agreement. Under the terms of the settlement, the City agrees to develop new promotional examinations for the selection of certain positions in the JFRD. The City also will offer settlement promotions to qualified African Americans and will establish a $4.9 million settlement fund for eligible claimants.

“The Justice Department is committed to enforcing Title VII to remove unlawful discriminatory barriers.  The Settlement Agreement announced today ensures that all promotional candidates in the JFRD are given a fair opportunity to compete for advancement,” said John Gore, Acting Assistant Attorney General of the Civil Rights Division. 

The proposed settlement agreement will resolve the complaint filed by the Justice Department in federal court on April 23, 2012, a separate lawsuit filed against the Union by the EEOC, and claims brought against the City and/or Union by various private plaintiffs, including the National Association for the Advancement of Colored People, Jacksonville Branch, and the Jacksonville Brotherhood of Firefighters.   

This matter was handled for the United States by Jay Adelstein, Hector Ruiz, Brian McEntire, Jeremy Monteiro, Sharyn Tejani, and Clare Geller, all current or former attorneys in the Civil Rights’ Division’s Employment Litigation Section. Additional information about Title VII and other federal employment laws is available on the Civil Rights Division’s website at https://www.justice.gov/crt

WASHINGTON - A Coral Springs, Florida, tire retailer was sentenced today in the Southern District of Florida for conspiracy to defraud the Government, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Benjamin G. Greenberg for the Southern District of Florida. 

Nestor Bastidas, 53, of Coral Springs, was sentenced to 12 months and one day in prison for conspiring to impede and impair the Internal Revenue Service with respect to excise taxes on tires.

According to documents and information provided to the court, Bastidas owned and operated The Fat Tires, Co., a tire retailer located in Coral Springs, Florida.  Under federal law, tires marked for highway use are subject to federal excise tax.  A tire importer is liable for the excise tax when the tires are sold.  The importer typically passes on the cost of the excise tax to their customers and tire retailers.  The law, however, provides for a refund of the excise tax if tires are exported overseas rather than sold domestically.  

Bastidas purchased taxable tires from Banlu, Inc. and Banlu Tires, Inc., tire importers owned by co-conspirator Angel Gomez.  Bastidas then purchased false bills of lading from International Trade-Logistics Services, Inc., a logistics company owned by another co-conspirator,Luis Gomez.  The false bills of lading purported to show that the tires were exported offshore to the Dominican Republic and elsewhere.  Both co‑conspirators knew, however, that Bastidas never exported tires.  Bastidas gave Angel Gomez the false bills of lading, and Angel Gomez did not charge Bastidas the excise taxes due on the tires.  Angel Gomez, then, filed with the IRS false Forms 720, Quarterly Federal Excise Tax Returns, which did not report the sale of the tires to Bastidas. Bastidas also purchased tires from, and submitted false bills of lading to, other tire importers from February 2013 through June 2016.  Bastidas’ submission of false bills of lading caused a loss to the United States of approximately $335,000.

In addition to the term of imprisonment, U.S. District Court Chief Judge K. Michael Moore ordered Bastidas to serve three years of supervised release and pay $335,174 in restitution to the IRS.     

Bastidas previously entered a guilty plea on April 25, 2018.  Luis Gomez pleaded guilty to conspiring to defraud the Government on May 23, 2018 and is scheduled to be sentenced on August 8, 2018.  Angel Gomez entered his guilty plea to the same conspiracy charge on June 13, 2018, and is scheduled to be sentenced on August 22, 2018.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Greenberg commended special agents of IRS-Criminal Investigation, who investigated the case, and Tax Division Trial Attorney Mara Strier, Tax Division Assistant Chief Greg Tortella, and Assistant U.S. Attorney Kevin Larsen, who prosecuted the case.

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

The Justice Department announced today that Sorensen Gross Construction Company (Sorensen) and its corporate vice president, Khalil Saab, have agreed to pay $2.481 million to resolve allegations that they submitted false claims for payment under a construction contract funded by the United States Agency for International Development (USAID).

“Contractors who misrepresent their eligibility for government contracts undermine the government procurement process,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “The Justice Department will take action to protect that process, including safeguards designed to create American jobs.”

The settlement announced today resolves allegations related to a contract between Sorensen, a Michigan-based U.S. company, and the Jordan Government’s Ministry of Public Works and Housing (Ministry) for a project to build or renovate 16 schools in Aqaba, Jordan (Aqaba Project) that was financed by USAID.  In addition to funding the Aqaba Project, USAID approved the solicitation for bids, prequalified bidders, and approved the selection of Sorensen as the prime contractor and the terms of its contract with the Ministry.   Pursuant to the contract, Sorensen could not subcontract more than 50 percent of the work on the Aqaba Project, and any subcontract valued at more than $100,000 had to be preapproved by USAID and the Ministry. In addition, the contract limited subcontracts with Jordanian companies to $5 million. 

The United States contends that Sorensen subcontracted almost the entirety of the work on the Aqaba Project to a local Jordanian company, Concorde, in violation of the contract terms.  The United States further contends that Sorensen and Mr. Saab falsely certified that Sorensen was performing work under the contract and that Sorensen invoiced USAID for work performed by Concorde.  Sorensen then transferred payments it received from USAID to Concorde for the work that Concorde performed. 

“USAID OIG remains committed to helping protect U.S. government investments in overseas development projects,” said USAID Inspector General Ann Calvaresi Barr.  “Complying with project specifications is not enough, if contracts are not awarded fairly and for a reasonable, competitive price.  Arrangements hidden from USAID regarding actual subcontracting percentages disadvantage the U.S. taxpayer as well as project beneficiaries.  We thank the DOJ Civil Fraud Section for partnering with us to ensure this violation was properly addressed.”

This case was handled by the Justice Department’s Civil Division, Commercial Litigation Branch, and the USAID, Office of Inspector General.  The claims settled in this case are allegations only; there has been no determination of liability.

The Court of Appeals for the Ninth Circuit upheld the IRS’s assertion of transferee liability against the former shareholders of a closely held corporation who participated in a so-called “Midco” transaction, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman and Deputy Assistant Attorney General Travis A. Greaves of the Justice Department’s Tax Division.

In a Midco transaction, the shareholders of a closely held corporation owning appreciated assets seek to “cash out” without bearing the full tax burden resulting from the conversion of the assets to cash.  They do so by purporting to sell their stock to a Midco promoter for an amount far greater than the after-tax value of the corporation, based on the promoter’s professed ability to eliminate the corporation’s taxable gain resulting from the asset sale.  But the promoter’s gain-elimination strategy is false, and by the time the IRS discovers the ploy, the corporation no longer has any assets.

In Slone v. Commissioner, the IRS sought to collect the corporation’s unpaid tax from the former (selling) shareholders as the deemed recipients of a fraudulent transfer by the corporation, arguing that the stock sale should be disregarded and the transaction recharacterized as, in substance, a liquidating distribution by the corporation to the former shareholders.  The Ninth Circuit, reversing the U.S. Tax Court, agreed with the IRS’s characterization of the substance of the transaction and held that such substance controls for purposes of both federal tax law and the applicable (Arizona) fraudulent-transfer law. 

Principal Deputy Assistant Attorney General Zuckerman and Deputy Assistant Attorney General Greaves thanked Tax Division attorneys Francesca Ugolini and Arthur Catterall, who handled the case on appeal for the government.

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

The Justice Department today filed a denaturalization lawsuit against the former leader of a drug organization responsible for conspiring to distribute more than 40 kilograms of cocaine and 1,600 kilograms of marijuana, conduct he allegedly concealed during his naturalization proceedings. The civil complaint was filed in federal court in the Northern District of Florida.

“It is important for the Department of Justice to protect the integrity of the naturalization process,” said Acting Associate Attorney General Jesse Panuccio. “In this case, the defendant allegedly concealed his serious criminal activity—large-scale drug trafficking that put the health and safety of our communities at risk.  We cannot tolerate, and will zealously pursue, this kind of fraudulent activity.”

Melchor Munoz aka Melchor Munoz-Correa, 42, a native of Mexico, was convicted pursuant to a guilty plea in 2012 of conspiracy to distribute and possess with intent to distribute five kilograms or more of cocaine and 100 kilograms or more of marijuana, in violation of 21 U.S.C. § 841(a)(1), (b)(1)(A)(ii), and (b)(1)(B)(vii). As admitted in his criminal proceedings, Munoz distributed to co-conspirators an average of 80 pounds of marijuana on approximately 60 separate occasions between 2008 and 2010, keeping 400 to 500 pounds of marijuana, gallon zip-lock bags of methamphetamine, and multiple blocks of cocaine on hand most of the time. In 2012, the U.S. District Court for the Northern District of Florida found that Munoz was a leader of the drug organization and sentenced him to 188 months’ imprisonment and five years of supervised release.  Munoz is currently serving his sentence at a federal prison in Jesup, Georgia.

Although Munoz’s crimes began while he was a permanent resident of the United States, he was not arrested and his criminal proceedings did not occur until after he had naturalized. The civil denaturalization complaint alleges that Munoz concealed and affirmatively misrepresented his criminal conduct throughout his naturalization proceedings, and that his application would have been denied had immigration authorities known about his drug conspiracy. 

“This criminal led a drug organization responsible for conspiring to distribute massive amounts of cocaine and marijuana, all while he defrauded the government during his naturalization process,” said Derek Benner, HSI Deputy Executive  Associate Director. “Today he is being held accountable for his lies and stands to lose one of the greatest benefits our country offers, citizenship, which he obtained by defrauding immigration authorities.”

The case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Civil Division’s Office of Immigration Litigation, District Court Section (OIL-DCS). The case is being prosecuted by Trial Attorney Ari Nazarov of OIL-DCS, with support from ICE’s Orlando Office of the Chief Counsel and ICE-HSI Tallahassee.

The claims made in the complaint are allegations only, and there has been no determination of liability.

A former police officer with the Village of Biscayne Park pleaded guilty today in federal court in Miami to conspiracy to deprive a person of his civil rights and deprivation of civil rights under color of law. Acting Assistant Attorney General John Gore for the Justice Department’s Civil Rights Division; Benjamin G. Greenberg, United States Attorney for the Southern District of Florida; Katherine Fernandez Rundle, Miami-Dade State Attorney; Robert F. Lasky, Special Agent in Charge, FBI, Miami Field Office; and Troy Walker, Special Agent in Charge, Florida Department of Law Enforcement (FDLE), made the announcement. 

Guillermo Ravelo, 37, of Miami, Florida, was charged by a superseding information with depriving a person of his civil rights under color of law, in violation of Title 18, United States Code, Section 242 (Count 1); and conspiracy to deprive a person of his civil rights, in violation of Title 18, United States Code, Section 241 (Count 2). For each count, Ravelo faces a statutory maximum sentence of ten years in prison, three years of supervised release, and up to a $250,000 fine.  His sentencing is scheduled for Oct. 4 before U.S. District Court Judge Cecilia M. Altonaga in Miami.

According to the allegations contained in the information, on Jan. 23, 2013 and Feb. 26, 2014, at the direction of a Biscayne Park Police Department Supervisor, Ravelo falsely arrested a victim identified as “C.D.” and another victim identified as “E.B.”  C.D. was charged with two residential burglaries, and E.B. was charged with five vehicle burglaries; despite the supervisor and Ravelo knowing that no evidence existed linking either of the victims to these crimes. In a separate incident, on April 7, 2013, Ravelo responded to a request for assistance from another Biscayne Park police officer who had conducted a traffic stop.  During the arrest of the driver, Ravelo assaulted the driver by striking him with his fists while the victim was handcuffed and caused bodily injury.

This case is being investigated by the FBI, including the FBI Miami Area Corruption Task Force, and FDLE, and assisted by the Miami-Dade State Attorney’s Office.  This case is being prosecuted by Assistant U.S. Attorney Harry C. Wallace, Jr., Department of Justice Trial Attorney Donald W. Tunnage, and Assistant State Attorney Trent Reichling.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.

A federal grand jury in New Orleans, Louisiana, returned a six-count human trafficking and hate crime indictment relating to the abuse of D.P., a 22-year-old woman with disabilities, in Amite, Louisiana. Raylaine Knope, 42, Terry J. Knope, II, 45, Jody Lambert, 23, and Taylor Knope, 20, are charged with one count of conspiring to obtain the forced labor of D.P., in violation of 18 U.S.C. § 1594(b); one count of forced labor, in violation of 18 U.S.C. § 1589; and one count of using force and threats of force to interfere with D.P.’s federal Fair Housing Act rights because of her disability, in violation of 42 U.S.C. § 3631. Raylaine Knope and Terry J. Knope, II are also charged with one count of attempted sex trafficking of D.P., in violation of 18 U.S.C. §§ 1591 and 1594(a); and Terry J. Knope, II is charged with one count of a hate crime for shooting D.P. with a BB gun because of her disability, in violation of 18 U.S.C. § 249(a)(2), and one count of theft of government funds for stealing D.P.’s federal disability benefits, in violation of 18 U.S.C. § 641. In addition, in a related matter, Bridget Lambert, 21, was separately charged in a one-count Bill of Information for conspiring to obtain the forced labor of D.P., in violation of 18 U.S.C. § 371.

The forced labor, forced labor conspiracy, and Fair Housing Act charges against Raylaine Knope, Terry J. Knope, II, Jody Lambert, and Taylor Knope carry a statutory maximum penalty of life imprisonment. The sex trafficking charge against Raylaine Knope and Terry J. Knope, II, carries a mandatory minimum penalty of fifteen years imprisonment, with a statutory maximum penalty of life imprisonment. The hate crime charge and the theft of government funds charge against Terry J. Knope, II, each carry a statutory maximum penalty of ten years imprisonment. The separate conspiracy charge against Bridget Lambert carries a statutory maximum penalty of five years’ imprisonment.

An indictment and a bill of information are formal accusations of criminal conduct, not evidence of guilt. The defendant is presumed innocent unless and until proven guilty.

This case was investigated by the FBI Field Office in New Orleans, Louisiana, and is being prosecuted by Trial Attorneys Risa Berkower and Nicholas Reddick of the Justice Department’s Civil Rights Division, and Assistant United States Attorney Julia Evans, of the U.S. Attorney’s Office for the Eastern District of Louisiana.

Two former employees of Deutsche Bank AG, a global financial institution, were charged in an indictment returned by a Chicago federal grand jury yesterday with engaging in fraudulent and manipulative trading involving precious metals futures contracts, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Assistant Director in Charge William Sweeney of the FBI’s New York Field Office.

James Vorley, 38, of the United Kingdom, and Cedric Chanu, 39, of France and the United Arab Emirates, were each charged in the Northern District of Illinois with one count of conspiracy to commit wire fraud affecting a financial institution and one count of wire fraud affecting a financial institution.  

The indictment alleges that Vorley and Chanu, who were employed as traders at Deutsche Bank AG—Vorley based in London; Chanu based in London and Singapore—engaged in a years-long conspiracy to defraud other traders on the Commodity Exchange Inc., which was an exchange run by the Chicago Mercantile Exchange Group.  The defendants and their co-conspirators, including former Deutsche Bank AG trader David Liew, are alleged to have defrauded other traders by placing fraudulent orders that they did not intend to execute in order to create the appearance of false supply and demand and to induce other traders to trade at prices, quantities and times that they otherwise would not have traded.  The indictment further alleges that Vorley, Chanu, Liew and others placed such fraudulent and manipulative orders by themselves and in coordination with other traders at Deutsche Bank AG, including each other.

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.  

This case was investigated by the FBI’s New York Field Office.  Assistant Deputy Chief Carol Sipperly and Trial Attorneys Michael T. O’Neill and Cory E. Jacobs of the Criminal Division’s Fraud Section are prosecuting the case.

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

The Court of Appeals for the Ninth Circuit yesterday upheld the validity of amendments to the cost-sharing regulation under I.R.C. § 482 (Treas. Reg. § 1.482-7), announced Principal Deputy Assistant Attorney General Richard E. Zuckerman and Deputy Assistant Attorney General Travis A. Greaves of the Justice Department’s Tax Division.  The regulatory amendments clarified that (1) the term “costs” under § 1.482-7 includes stock-based compensation costs, and (2) a cost-sharing arrangement produces results that are consistent with an arm’s-length result if, and only if, each controlled participant’s share of the costs of intangible development equals its share of reasonably anticipated benefits attributable to such development.

In the consolidated cases, Altera Corporation & Subsidiaries v. Commissioner of Internal Revenue, Case Nos. 16-70496 & 16-70497, the Ninth Circuit reversed a decision of the U.S. Tax Court, and held that the regulatory amendments were both procedurally valid under the Administrative Procedure Act (APA) and substantively valid under the test set forth in Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 461 U.S. 837 (1984).  The court held that the amendments satisfied the APA because Treasury’s rationale could be “reasonably discerned” from the preambles to the proposed and final amendments, each of which referred extensively to the legislative history of the 1986 amendment of § 482.  The court further held that the amendments were substantively valid under Chevron’s two-step analysis because (1) § 482 does not speak directly to the matters covered by the regulatory amendments, and (2) the regulatory amendments represent a permissible construction of § 482 since they are “entirely consistent with Congress’s rationale for amending § 482 [in 1986] in the first place.”

Principal Deputy Assistant Attorney General Zuckerman thanked Tax Division attorneys Richard Farber and Arthur Catterall, who handled the case on appeal for the government.

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

Rashad Sabree, 37, of Boston, Massachusetts, pleaded guilty today in federal court in District of Maine to two counts of sex trafficking by force, fraud, or coercion, announced Acting Assistant Attorney General John Gore of the Justice Department’s Civil Rights Division, U.S. Attorney Halsey B. Frank of the District of Maine, Harold H. Shaw, Special Agent in Charge, FBI Boston Division, and Peter C. Fitzhugh, Special Agent in Charge, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Boston.

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.

“This defendant committed sex trafficking by exploiting the opioid addictions of these women, using their vulnerability to coerce them into commercial sex for his gain,” said Acting Assistant Attorney General John Gore. “The Department of Justice will continue to work tirelessly to seek justice on behalf of victims and survivors of human trafficking.”

“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.”

“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 plea, Sabree is accepting responsibility 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.”

“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.”  

In accordance with the plea agreement, the defendant faces a sentence of 15 to 17 years in prison. He is further subject to a maximum fine of $250,000 and mandatory restitution to the victims. Sentencing will be scheduled on a later date after the U.S. Probation Office completes its presentence investigation report.

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), through the interagency ACTeam Initiative of the Departments of Justice, Homeland Security and Labor. 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 the FBI, U.S. Immigration and Customs Enforcement’s HSI, and the Biddeford Police Department, with assistance from the Maine State Police and the Sanford, Kittery, and Portland Police Departments. It is being prosecuted by Assistant U.S. Attorney Julia Lipez and Trial Attorney William E. Nolan of the Civil Rights Division’s Human Trafficking Prosecution Unit.

Good morning and thank you Marc Nichols for that gracious introduction, and thanks to both you and Jeannine D’Amico Lemker for co-hosting this important event.

It is truly a pleasure to be here with all of you as part of the ACI’s 9th Global Forum on Anti-Corruption Compliance in High Risk Markets.

I’ve always admired ACI’s mission and programs.  Just last year, while still in private practice, I participated in the ACI’s 34th International Conference on the Foreign Corrupt Practices Act (FCPA).  While I wear a different hat today, it is wonderful to be back.

In fact, today is particularly meaningful for me, as this marks my first time at an event like this since joining the Department of Justice as a Deputy Assistant Attorney General in the Criminal Division.

In my current role, I am tasked with overseeing both the Fraud Section, which houses the FCPA Unit, as well as the Appellate Section.

And, of course, we recently marked a particularly important milestone for the Criminal Division, as our newest Assistant Attorney General (AAG), Brian Benczkowski, was confirmed and took the reins of our Division just a few short days ago.  

Under Brian’s leadership, we will continue the Division’s commitment to the rule of law, along with our efforts to ensure fairness and consistency in our investigations and resolutions, particularly as it relates to corporate enforcement and compliance.

Before I move on to my substantive remarks, let me say a word about Principal Deputy Assistant Attorney General John Cronan, who did an amazing job managing the Division as our Acting AAG since last year, overseeing many key developments, including the largest healthcare fraud takedown in the Department’s long history. 

Today, I plan to focus on our efforts to investigate and stamp out global corruption, with a particular focus on implications for mergers and acquisitions.

As I think we can all agree, corruption is a virus that saps scarce resources and undermines public trust.

Corruption also harms law-abiding companies by tilting the playing field in favor of companies who are willing to break the rules to get ahead.  

As our Attorney General and Deputy Attorney General have both made abundantly clear, fighting corruption and ensuring a level playing field for law-abiding companies remains a significant priority for the Department. 

At the same time, we are striving to make sure that our robust approach to fighting corruption, and corporate enforcement generally, is done in a way that is also fair and just.

We at the Department fully recognize that even within otherwise good companies, ones with robust compliance programs and strong cultures of compliance, there can exist one or a few bad apples.  Similarly, we understand that through acquisitions, otherwise law-abiding companies can sometimes inherit problems that are not of their own making.

These are some of the reasons why we continue to hold individual wrongdoers responsible for corporate criminal conduct, demonstrating our continued focus on individual accountability.  

In this regard, we’ve announced guilty pleas by 10 individuals in foreign bribery cases so far this year.  

In the sprawling and ever-growing investigation and prosecution of corruption at Venezuela’s state-owned oil company, PDVSA, we have announced charges against five additional former foreign officials this year, and we announced the 12th guilty plea in the case just two weeks ago.

Moreover, criminal prosecutions of corporations continue where misconduct was particularly serious or pervasive, but at the same time, we are working to avoid imposing excessive corporate penalties that harm innocent shareholders, employees, and other stakeholders.

On the FCPA corporate front, we’ve resolved five corporate FCPA cases this year, resulting in $512 million in corporate U.S. criminal fines, penalties, and forfeiture.  

Among these resolutions was the matter involving Societe Generale, the first ever coordinated resolution with French authorities.  This case marks a continuation of our efforts to work more closely with our foreign counterparts, both in terms of investigations and as it relates to our resolutions.

And we are striving to give credit where credit is due.

For example, in the FCPA resolution with TLI, the U.S. nuclear transportation company, the company received more lenient treatment due to its significant cooperation and remediation.

On the individual prosecutions front, the Department has secured guilty pleas by the company’s former co-President and the foreign official who received the bribes, and has indicted the other co-President.

While resolutions like these are important, we have also been making great strides in the way we are approaching FCPA and other corporate enforcement matters.

As you all know, last year we revised the Department’s guidelines with regard to FCPA enforcement by making what was previously the FCPA self-disclosure pilot program permanent.  

This change enshrines our approach to FCPA enforcement in the U.S. Attorneys Manual as the FCPA Corporate Enforcement Policy.

Since its roll out, Department leadership has spoken extensively on the Policy, so I’m not going to spend much time on it, except to point out how the Policy furthers our commitment to rewarding companies that try to do the right thing.

This means companies that promptly report misconduct, fully cooperate with the Department, and enact effective remedial measures after misconduct is detected will be presumed eligible for a declination of prosecution, subject to disgorgement of ill-gotten gains.

The Policy also includes incentives for companies that fail to promptly self-disclose, but otherwise meet the Policy’s cooperation and remediation terms.

While it is still early to gauge the full effectiveness of the Policy, we were pleased to reach the first corporate declination under the FCPA Policy earlier this year in declining prosecution against Dunn & Bradstreet.  

In that case, the company engaged in responsible corporate conduct after discovering misconduct in connection with hiring practices by its acquired subsidiaries in China.  Because the company satisfied the rigorous requirements of the Policy, the company received a declination and the Department gave the company credit for its disgorgement as part of a $9 million payment in a related SEC administrative proceeding.

Credit for disgorgement to the SEC points to another recent policy change under this Administration – this one involving a perceived practice of “piling on” by the various enforcement agencies in corporate settlements by imposing duplicative fines and other financial penalties. 

Importantly, this new policy for greater coordination and to avoid “piling on” is now enshrined in the U.S. Attorneys Manual, and applies across the Department.

A perfect example of putting the anti-piling on policy into practice is the resolution I mentioned involving Societe Generale.

In that case, the Department credited 50 percent of the fine to French authorities in connection with the FCPA portion of the resolution.

Moreover, to better inform the public, companies and compliance professionals, we are making declination letters public for cases that are resolved under the FCPA Corporate Enforcement Policy, as we did in connection with the pilot program.

In the case of Dunn & Bradstreet, some of the factors that led to the declination include:

• the fact that the company identified the misconduct and promptly and voluntary self-disclosed the conduct to the Department; 
• the thorough internal investigation undertaken by the company; 
• its full cooperation in the matter, including identifying all individuals involved in or responsible for the misconduct, providing the Department all facts relating to that misconduct, making current and former employees available for interviews, and translating foreign language documents to English; 
• enhancements to its compliance program and its internal accounting controls; 
• full remediation, including terminating the employment of 11 individuals involved in the misconduct in China, including an officer of the China subsidiary and other senior employees of one subsidiary, and disciplining other employees by reducing bonuses, reducing salaries, lowering performance reviews, and formally reprimanding them; 
• and disgorgement to the SEC.

 As a result, the company avoided criminal sanctions.

From my experience as a defense attorney, I think it is fair to say this is a just resolution for the company.

I know firsthand the difficult decisions that management must make when they uncover misconduct.

Senior management and boards of directors have to weigh many factors when deciding how to respond to misconduct, and whether to self-report.

In the past, many of these decisions were made in a relative vacuum in the sense that no one could predict in any concrete way how the Department would respond.  While the facts of every case will be different, and will be the primary drivers as to the outcome, we are doing what we can to give clarity in terms of how companies will be treated.

Because companies are rational actors, driven by market and financial factors, it was often an impediment to decision-making not to know what consequences a company might face if it chose to self-report and cooperate with the government.  

The Department’s new policies and revised approach to FCPA and corporate enforcement are purposely designed to speak to well-functioning, good corporate actors and inspire rationale decision-making in favor of greater reporting and cooperation.  We hope to incentivize companies to invest in effective compliance programs and robust control systems to prevent misconduct and, in the event of a detected violation, to take full advantage of our enforcement approach.

By fostering a climate in which companies are fairly and predictably treated when they report misconduct, we hope to increase self-reporting and individual accountability — an outcome that is beneficial both for companies and the Department.  

While we have made great strides in the past year and a half relating to the Department’s approach to corporate enforcement, and the FCPA in particular, one area where we would like to do better is with regard to mergers and acquisitions, particularly when such activity relates to high-risk industries and market.

Currently, the DoJ/SEC Resource Guide to the FCPA, which was released in 2012, provides some guidance on this.  In particular, the Guide recognizes that in the past the Department and SEC have declined to take action where companies voluntarily disclosed and remediated, and cooperated with the government. 

The Guide also notes that “a successor company’s voluntary disclosure, appropriate due diligence, and implementation of an effective compliance program may also decrease the likelihood of an enforcement action regarding an acquired company’s post-acquisition conduct when pre-acquisition due diligence is not possible.”

Furthermore, after laying out several M&A best practices, the Guide states that the “DOJ . . . will give meaningful credit to companies who undertake these actions, and, in appropriate circumstances, DOJ . . . may consequently decline to bring enforcement actions.”

While these policies are sound, I know from experience that “may” decline is a significant sticking point for corporate management when deciding whether and how to proceed with a potential merger or acquisition. There is a big difference between a theoretical outcome and one that is concrete and presumptively available. 

At the Department, we know that there are many benefits when law-abiding companies with robust compliance programs are the ones to enter high-risk markets or, in appropriate cases, take over otherwise problematic companies.

Not only can the acquiring company help to uncover wrongdoing, but more importantly the acquiring company is in a position to right the ship by applying strong compliance practices to the acquired company.

We want to encourage this sort of activity.  We certainly don’t want the specter of enforcement to be a risk factor that impedes such activity by good actors, and instead cedes the field to non-compliant companies. At bottom, it makes good economic sense and helps stamp out corruption when the Department adopts policies that foster greater corporate compliance.

When an acquiring company conducts robust due diligence that unearths wrongdoing, reports that conduct to the Department, and engages in remedial measures, including extending already robust compliance to the acquired company, it frees up resources for the Department that may have otherwise been expended investigating the acquired company.

These resources can then be directed to other cases, not only in the FCPA context, but also to other areas such as opioid enforcement, human trafficking, and crimes impacting vulnerable victims, like children and the elderly.

For these reasons, I want to make clear that we intend to apply the principles contained in the FCPA Corporate Enforcement Policy to successor companies that uncover wrongdoing in connection with mergers and acquisitions and thereafter disclose that wrongdoing and provide cooperation, consistent with the terms of the Policy.

We believe this approach provides companies and their advisors greater certainty when deciding whether to go forward with a foreign acquisition or merger, as well as in determining how to approach wrongdoing discovered subsequent to a deal.

We are fully cognizant that in some instances an acquiring company has limited access to a target company’s data and records, perhaps even more so when the target company is in a high risk jurisdiction.

In those instances, if an acquiring company unearths wrongdoing subsequent to the acquisition, we want to encourage its leadership to take the steps outlined in the FCPA Policy, and when they do, we want to reward them, accordingly for stepping up, being transparent, and reporting and remediating the problems they inherited.

Similarly, when an acquiring company encounters corruption issues during the due diligence process, we would encourage it to come to the Department for guidance through our FCPA Opinion Procedures before moving forward with an acquisition. Although it may take a little more time – and we can, to a degree, expedite our analysis based on timing needs – it sometimes makes sense to slow down to assess risks.  In particular with high risk mergers and acquisitions, let me repeat the famous line from the English playwright, William Congreve:  “Married in haste, we can repent at leisure.”  

On the Fraud Section’s FCPA website, we currently post Opinion Procedure Releases going back to 1993.  But not enough companies are taking advantage of this process.  I’ve recently reviewed the list, and the most recent incident of use is from 2014.  That shouldn’t be the case.  But for purposes of today, that release is illustrative of the value of engaging in the opinion process.

In that case, a multinational company headquartered in the U.S. sought an opinion on whether the Department would bring an enforcement action against it if it acquired a foreign consumer products company.  The acquiring company conducted pre-acquisition due diligence on the target and uncovered evidence of apparent improper payments.  The acquirer took pre-closing steps to remediate the target’s anti-corruption issues, and anticipated fully integrating the target into its compliance and reporting structure within one year of closing.

While the opinion recognized that there was no U.S. nexus to the conduct, which would have precluded prosecution, in any event, the opinion also pointed to the fact that no contracts or assets acquired through bribery would remain in operation post-acquisition, and that no financial benefit would be derived from such contracts.  Based on these facts, the opinion concluded that the Department would not take any action against the acquiring company.

In our view, the opinion process is a tremendous resource and we want to encourage greater use of it going forward.  

Moreover, when a company relies on this procedure on the front end, but later uncovers wrongdoing post-acquisition, we want management and the company’s advisors to feel comfortable disclosing it to the Department, knowing that they will be treated fairly under the principles of the FCPA Corporate Enforcement Policy. 

This is not to say that wrongdoers will be getting a pass for corrupt behavior that occurred in the past in an acquired entity. Far from it. The Department continues to focus on individual accountability, and those responsible for past wrongdoing or the concealment of wrongdoing will continue to be investigated and prosecuted. 

As advisors and compliance professionals, you are on the front lines of detecting and preventing corruption and other misconduct.  

You are at tasked with advising your companies and your clients to ensure that businesses operate in compliance with the law. As such, you are often put in the position of evaluating risk in time-sensitive transactions.   

In that role, one thing I hope you will take away from my comments and those of my colleagues is that the Department of Justice should be viewed as a partner, not just an adversary.  

When business and industry work with the Department, rather than against it, our public institutions and our country are stronger for it.

With that, I am happy to take a few questions, as time allows.

A Concord, Virginia man was sentenced to prison today for tax and currency structuring charges, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Thomas T. Cullen for the Western District of Virginia.

Barry Edwards, 54, was sentenced to 36 months in prison on one count of filing a fraudulent 2013 tax return and one count of conspiring to structure cash transactions.

According to court documents and information provided to the court, Barry and his wife Joanne Edwards created two purported religious missions in 2006, which they used as nominees to receive income Barry Edwards earned selling nutritional supplements. The couple deposited this income into bank accounts held in nominee names. They then withdrew more than $475,000 in cash from these accounts, in increments less than $10,000, to evade bank-reporting requirements. The couple deposited the withdrawn funds into their own bank accounts to pay personal expenses, including car payments and their children’s tuition. Barry Edwards also used the cash to purchase a five-acre farm in Concord, Virginia. The couple jointly filed fraudulent 2013 through 2015 tax returns with the Internal Revenue Service (IRS) that did not fully report their income.

In addition to the term of imprisonment, U.S. District Court Judge Norman K. Moon ordered Barry Edwards to serve three years of supervised release. Mr. Edwards was also ordered to pay $7,929.00 in restitution to the IRS for unpaid taxes.

The Court previously sentenced Joanne Edwards, on May 9, 2018, to 18 months in prison followed by three years of supervised release as well as restitution for filing a fraudulent 2013 tax return and conspiring to structure cash transactions.

Principal Deputy Assistant Attorney General Richard E. Zuckerman and U.S. Attorney Thomas T. Cullen thanked special agents of IRS Criminal Investigation, who conducted the investigation, and Trial Attorney Sean Beaty of the Tax Division and Special Assistant U.S. Attorney Kari Munro, who prosecuted the case.

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

Ali Saleh, 25, of Queens, New York, pleaded guilty today to two counts of attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization. 

The announcement was made by Assistant Attorney General for National Security John C. Demers, U.S. Attorney Richard P. Donoghue for the Eastern District of New York, Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Office, and Commissioner James P. O’Neill of the NYPD.  The plea was accepted by U.S. District Judge William F. Kuntz, II. 

“Saleh was undeterred in his many attempts to travel to join ISIS, and although he failed in these efforts, he turned his attention to assisting others online to join ISIS’s murderous mission in Syria,” said Assistant Attorney General Demers.  “I am grateful to our partners in federal law enforcement and the prosecutors who were able to apprehend and charge Saleh before he could do more damage or harm innocent Americans.”

“Ali Saleh attempted to travel to the Middle East to become an ISIS fighter, funded other foreign fighters, posted instructions to make explosive devices and transported explosive materials,” stated U.S. Attorney Donoghue.  “The defendant’s persistent efforts to aid ISIS were defeated by the outstanding work of law enforcement officers who stopped him before he could do harm.  This Office will continue to work closely with the FBI’s Joint Terrorism Task Force in New York to keep our city safe from terrorists and prevent extremists from travelling abroad to join foreign terrorist organizations.”

“Ali Saleh was persistent in his efforts to become a foreign fighter, but his persistence did not exceed the diligence of law enforcement,” stated FBI Assistant Director-in-Charge Sweeney.  “The defendant went to great lengths to attempt to travel to the Middle East, while funding other foreign fighters in the process. As the FBI’s Joint Terrorism Task Force continuously strives to protect citizens from potential terrorist threats, today’s plea depicts one of the many efforts to achieve this goal.”

“New Yorkers continue to benefit from the NYPD’s robust counterterrorism capabilities and strong working relationships with our law enforcement partners on the Joint Terrorism Task Force,” stated NYPD Commissioner O’Neill.  “Today’s guilty plea shows that in collaboration with the FBI and the Eastern District of New York, our skilled investigators and analysts will stop at nothing to further the critical mission of defending society from acts of terrorism wherever and however, they are being planned.”

According to court filings, Saleh was arrested after repeatedly attempting to travel to the Middle East to become a foreign fighter for ISIS.  In 2013 and thereafter, Saleh became interested in the conflict in Syria, swore an oath of allegiance to ISIS and decided to travel to the Middle East in support of ISIS.  On Aug. 25, 2014, Saleh stated online, “I’m ready to die for the Caliphate, prison is nothing.”  On Aug. 28, 2014, Saleh stated online, “Lets be clear the Muslims in the khilafah [caliphate] need help, the one who is capable to go over and help the Muslims must go and help.”  That same day, Saleh made an airline reservation to travel from New York to Turkey, a country bordering Syria.  The defendant was ultimately prevented from traveling because his parents took away his passport.

Saleh then redirected his efforts to facilitating others’ support of ISIS.  In October 2014, the defendant communicated with an ISIS supporter in Mali through an online messaging platform and sent a wire transfer in the amount of $500 to fund that person’s travel to Syria.  Around the same time period, the defendant communicated with several other individuals in an effort to facilitate their support of ISIS, including known ISIS supporters in the United Kingdom and Australia.

In July 2015, the defendant purchased fireworks containing explosive powder, hid them in a concealed compartment in the trunk of his car, and drove from Indiana towards New York City.  The fireworks contained approximately 1,196 grams of low explosive powder, consisting of both pyrotechnic material and black powder.  Law enforcement agents located a cellphone belonging to Saleh during the time frame when he acquired the explosive powder and discovered on the phone an electronic pamphlet titled, “Muslim Gangs: The Future of Muslims in the West (Ebook 1:  How to Survive in the West).”  The pamphlet provided detailed instructions on how to create a bomb using explosive powder from fireworks.  The pamphlet provided an example of a soda can grenade, and the instructions specifically stated that the soda can should be filled with “[e]xplosive powder (i.e. from Fireworks).”  Saleh posted online the pamphlet’s image of a soda can hand grenade with instructions on how to build an improvised explosive device.  Saleh’s car broke down on the way to New York City and was abandoned by the defendant.

Subsequently, on July 24, 2015, the defendant made a reservation to travel from New York to Egypt, a country bordering Libya, and went to JFK International Airport.  The defendant was ultimately denied boarding.  The defendant subsequently visited three additional international airports in Newark, Philadelphia and Indianapolis, but continued to encounter travel restrictions.  The defendant attempted to circumvent the apparent restrictions on his air travel by planning to take a train from Cleveland to Canada, where he intended to fly out to the Middle East.  After law enforcement intervention, however, the defendant did not board the train and instead returned to New York. 

After his encounters with law enforcement, Saleh changed his online social media moniker and expressed his support for ISIS under new usernames.  On Aug. 24, 2015, the defendant stated online, “I am a terrorist.”  On Sept. 1, 2015, the defendant stated online, “If they aren’t implementing shariah [Islamic law] grab ur gun and implement shariah and see how fast the world turns against u.”  That same day, the defendant also stated online, “Akhi [brother] if implementing sharia [Islamic law] is easy do it in ur neighborhood and defend it from kuffar [the infidels] and give bayah [an oath of allegiance] to IS.”

When sentenced, Saleh faces up to 35 years in prison.  The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes.  If convicted of any offense, the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.

Assistant United States Attorneys Saritha Komatireddy, Margaret E. Lee and Alexander F. Mindlin of the Eastern District of New York are in charge of the prosecution, with assistance provided by Trial Attorneys Lolita Lukose and Jacqueline Barkett of the National Security Division’s Counterterrorism Section.

Preston Q. Howard, 50, of Wright City, Missouri, was sentenced today by Chief United States District Court Judge J. Randal Hall to 24 months in prison for obstructing persons in the free exercise of religious beliefs, in violation of 18 U.S.C. 247(a)(2).  The judge enhanced the sentence because Mr. Howard chose his victims based on their religion, thereby committing a hate crime. When imposing the sentence, Chief Judge Hall noted Howard’s “disturbing pattern of intolerance of many groups of people,” and the Court’s intent to afford a deterrent to similar criminal conduct by Howard and others who may believe and act as he did.

“Threats of violence based on religious beliefs have no place in our country,” said Acting Assistant Attorney General John Gore. “The Civil Rights Division will continue to work tirelessly to prosecute hate crime offenders.”

“Threats made against houses of worship are abhorrent and this Office will work tirelessly to ensure that members of all faiths may worship in peace and without intimidation,” said U.S. Attorney Bobby L. Christine. “The United States Attorney’s Office, in concert with our law enforcement partners, will work tirelessly to protect our houses of worship.”

“The FBI will not tolerate threats and intimidation against anyone because of their religion or their beliefs,” said Murang Pak, Acting Special Agent in Charge (A/SAC) of FBI Atlanta. “No one should feel they have the right to instill fear in our citizens and rob them of their sense of safety in their communities and particularly where they choose to practice their faith.”

According to information presented at Howard’s guilty plea and sentencing hearings, between June 22, 2017, and Aug. 8, 2017, Howard made numerous telephone calls to the Islamic Society of Augusta (ISA), during which he threatened to “kill,” “bomb,” “shoot,” “behead,” “slaughter,” “execute,” “light on fire,” and “murder” members of the mosque, to “hunt down” and “zone in” on Muslims, and to “blow up the mosque.” Howard admitted committing these acts and obstructing or attempting to obstruct the mosque members’ free exercise of their religious beliefs.

In response to Howard’s threats, the ISA upgraded their security system and hired off-duty officers to provide added security during services and community events. Howard was ordered to pay almost $30,000 in restitution to cover those costs. 

The FBI Atlanta Field Division investigated the case. Assistant United States Attorney Nancy Greenwood prosecuted the case on behalf of the United States, in consultation with the Criminal Section of the Civil Rights Division. For any questions, please contact the United States Attorney’s Office at (912) 652-4422.

In a criminal indictment unsealed in the Eastern District of Michigan today, Ibraheem Izzy Musaibli, 28, of Dearborn, Michigan, was charged with providing and attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS), a designated foreign terrorist organization.

The indictment was announced by Assistant Attorney General for National Security John C. Demers, U.S. Attorney Matthew J. Schneider of the Eastern District of Michigan and Timothy R. Slater, Special Agent in Charge of the Detroit, Michigan office of the Federal Bureau of Investigation.

Musaibli, a natural-born U.S. citizen, was detained overseas by Syrian Democratic Forces (SDF) and recently transferred into U.S. custody. Musaibli will be arraigned on the indictment at the federal courthouse in Detroit on Wednesday, July 25, 2018, at 1:00 p.m. EDT.

The indictment alleges that from about April 2015 through June 2018, Musaibli knowingly provided and attempted to provide material support to ISIS, in the form of personnel and services, knowing that ISIS is a terrorist organization and that ISIS engages in terrorism.

“The National Security Division will not tolerate threats to our country from terrorist organizations like ISIS—not least of all those that come from our own citizens,” said Assistant Attorney General Demers.  “Musaibli’s alleged provision of material support to ISIS put the United States at risk and may have endangered the lives of countless innocent people.  I am confident that he will face justice for his crimes, and I hope that his case sends a clear message that we will hold our citizens accountable who are apprehended overseas and tried to join a terrorist organization such as ISIS.  I am also grateful to our law enforcement and military partners who made this prosecution possible.”

“The indictment alleges that, for a substantial period of time, defendant Musaibli provided material support to ISIS — one of the most violent terrorist organizations in the world.  During that same time, American-backed coalition forces were fighting ISIS in Iraq and Syria,” United States Attorney Matthew Schneider stated.  “We will vigorously prosecute anyone who provides, or even attempts to provide, support to terrorists.”  

“The indictment in this case serves as a reminder of the danger posed by those who travel overseas to join forces with ISIS,” said Timothy R. Slater, Special Agent in Charge, Detroit Division of the FBI. “The FBI is determined to find these individuals and bring them to justice.  Bringing charges in these cases will remind others what can happen if they provide assistance to foreign terrorist organizations.”

An indictment is merely a formal charge that a defendant has committed a violation of criminal law and is not evidence of guilt. Every defendant is presumed innocent unless and until proven guilty.

This case is being investigated by the FBI’s Joint Terrorism Task Force.  The case is being prosecuted by Assistant U.S. Attorneys Cathleen Corken and Kevin Mulcahy of the Eastern District of Michigan with assistance from the National Security Division’s Counterterrorism Section.

Today, the U.S. Department of Justice, U.S. Environmental Protection Agency (EPA) and State of West Virginia announced a settlement with CSX Transportation Inc. to resolve its liability for state and federal water pollution violations related to a 2015 oil spill caused by a train derailment in Mount Carbon, West Virginia. Under the terms of the settlement, CSX Transportation will pay penalties of $1.2 million to the United States and $1 million to West Virginia. 

“Federal law requires the transport of oil through communities like Mount Carbon to be done safely, whether by rail or any other mode. When accidents happen and public health or the environment is harmed, the Justice Department will respond with strong action in close coordination with our federal and state partners,” said Acting Assistant Attorney General Jeffrey H. Wood for the Justice Department’s Environment and Natural Resources Division. “Today’s settlement imposes serious fines under the Clean Water Act for the 2015 CSX train derailment in West Virginia and seeks to deter similar incidents from happening in the future. I applaud the joint efforts of DOJ, EPA, and the State of West Virginia on this case.”

“The 2015 CSX train derailment in Mount Carbon, West Virginia caused significant damage and disruption to that community,” said EPA Office of Enforcement and Compliance Assurance Assistant Administrator Susan Bodine. “Through this settlement EPA, DOJ, and the State of West Virginia are holding CSX Transportation accountable for these consequences.”  

On February 16, 2015, a CSX Transportation train with 109 railcars carrying crude oil derailed in Mount Carbon. Twenty-seven tank cars, each containing approximately 29,000 gallons of Bakken crude oil, derailed, and about half of the tank cars ignited. The resulting explosions and fires destroyed an adjacent home and garage. Local officials declared a state of emergency, nearby water intakes were shut down, and residents in the area were evacuated.

EPA and the West Virginia Department of Environmental Protection joined with other federal, state, and local agencies in responding to the incident. In response to federal and state orders, CSX Transportation has taken steps to remedy the damage and disruption caused by the oil spill. Separately, under a state-negotiated provision, CSX Transportation will help improve surface water quality in the area impacted by the oil spill through a contribution of $500,000 to a state-administered fund to upgrade a water treatment facility in Fayette County, West Virginia.

Some of the oil discharged during and following the train derailment flowed into the Kanawha River and Armstrong Creek. Freshwater bodies are particularly sensitive to fuel spills, which may damage fish and bird habitat and threaten drinking water supplies. 

The proposed settlement is subject to a 30-day public comment period and final court approval. To view the consent decree or to submit a comment, visit the department’s website at: www.justice.gov/enrd/Consent_Decrees.html. 

The Department of Justice today announced the release of a public service announcement (PSA) aimed at raising awareness and reaching victims of sexual harassment in housing. To enhance the effectiveness of the campaign, the Department has enlisted the assistance of victims to share their experiences and help convey the message that sexual harassment in housing is a violation of civil rights. The Justice Department and the U.S. Department of Housing and Urban Development (HUD) are working together to distribute the PSA. The PSA is posted on the Department’s Youtube channel and HUD’s Youtube channel.

The Department developed a 60-second video featuring three women who were injured parties in sexual harassment lawsuits brought by the Department under the Fair Housing Act. In the PSA, the women, in their own words, share the stories of how they were harassed and the impact the experience has on their lives.

One victim featured in the video, Stephanie, had a landlord who threatened to evict her if she didn’t have sex with him. “It was something that I didn’t want to do but I had to do it. I didn’t know I had a choice at that time, but now that I do, I want other people to know that they do. [I want] other women to know that they don’t have to take this. This is just uncalled for. It’s unspeakable.” Another victim, Temika, featured experienced a landlord who subjected her to unwanted sexual advances and comments, including exposing himself to her while inside her unit, causing her to scream, “Get out!” and run out of the unit.

The PSA released today is a joint effort between the Department and HUD, designed to raise awareness and make it easier for victims all over the country to find resources and report harassment. HUD distributed the video today to all Public Housing Agencies across the United States. The video is intended to air in all national media markets and will be distributed by social media to followers of the Justice Department and HUD, and amplified by other government agencies, partners, and organizations. In addition, the PSA will be circulated to fair housing groups, legal aid organizations, and other related partners across the country. The Justice Department also previewed the PSA last week at two U.S. Attorneys’ Offices in the Middle District of Florida and the District of Colorado, during separate sexual harassment in housing roundtables, engaging over 80 local law enforcement officers, fair housing organizations, universities, civil rights organizations, and other groups.  

“Unfortunately, there are still too many landlords and managers who attempt to prey on vulnerable individuals. The launch of the nationwide PSAs is an important step in proliferating the stories of brave women and men across the country in order to raise awareness and help other victims,” said John Gore, Acting Assistant Attorney General of the Civil Rights Division. “Our goal at the Justice Department is to make more people aware that no one should have to choose between a home and the right to be free from sexual harassment.”

“A person’s home is where they should feel the safest, not to live in fear of being subjected to sexual harassment,” said Anna María Farías, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity. “This campaign will let the public know that they have help should they find themselves a victim of this type of behavior.  The Justice Department and HUD are committed to working together to address the problem and protect their housing rights.”   

In October 2017, the Justice Department launched an initiative to combat sexual harassment in housing.  In April 2018, the Department announced the nationwide rollout of the initiative, including three major components: a new HUD-DOJ Task Force to combat sexual harassment in housing, an outreach toolkit to leverage the Department’s nationwide network of U.S. Attorney’s Offices, and a public awareness campaign, including a partnership package with relevant stakeholders, launch of a social media campaign, and Public Service Announcements (PSAs) run by individual U.S. Attorney’s offices. The Department and HUD are working together to distribute the PSA as part of the Task Force’s coordinated public outreach efforts.

More information about the Civil Rights Division and the civil rights laws it enforces is available at www.justice.gov/crt. Individuals who believe that they may have been victims of sexual harassment in housing should call the Department at 1-844-380-6178, send an e-mail to [email protected], or contact HUD at 1-800-669-9777.  If you have information or questions about any other housing discrimination, you can contact the Department at 1-800-896-7743.

The Bureau of Justice Assistance (BJA) today awarded $1 million to the Texas Office of the Governor, Criminal Justice Division, to pay overtime expenses for law enforcement officers who responded to the scene of the deadly shootings on May 18 at Santa Fe High School in Santa Fe, Texas. 

The State of Texas, the City of Santa Fe, and Galveston County incurred several million dollars in costs in responding to the incident. State and local officials continue to incur expenses and the grant will defray some of the costs.

"When there is a tragedy, the Department of Justice is there for police and first responders,” said Attorney General Jeff Sessions. “Today, we continue to help state and local police in Texas to rebuild after the tragic murder of ten people at Santa Fe High School. We have provided a total of $1 million to defray their expenses since that terrible day. We honor and respect the law officers who serve at the state, local, and tribal levels, and we continue to support them and their life-saving work every single day."

According to reports, on the morning of May 18, the assailant opened fire in a classroom and the school resource officer and state and local law enforcement personnel confronted the shooter. The assailant reportedly threatened to shoot the officers, firing several rounds while arguing with the police. Officers engaged the shooter and allowed for the safe evacuation of other students and faculty.

Ten people were tragically killed and more than a dozen others were injured.

BJA invited the Texas Governor’s Criminal Justice Division, which administers the Edward Byrne Memorial Justice Assistance Grants Program for the state, to apply for the funds. BJA is part of the Justice Department’s Office of Justice Programs.

Funds are made available from the Department’s Fiscal Year 2018 Emergency Federal Law Enforcement Assistance (EFLEA) grant program. The purpose of the EFLEA grant program is to help states respond to unanticipated emergencies that require law enforcement intervention, that are or threaten to become serious and that cannot be addressed with state and local resources alone.

For more information about the Bureau of Justice Assistance, please visit www.bja.gov.

The Office of Justice Programs, headed by Principal Deputy Assistant Attorney General Alan R. Hanson, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice and assist victims. OJP has six bureaus and offices: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime; and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking (SMART). More information about OJP and its components can be found at www.ojp.gov.

WASHINGTON - A federal a grand jury sitting in Fort Worth, Texas returned an indictment yesterday charging a husband and wife and a Texas attorney with conspiring to defraud the United States and separately charging the husband and wife with tax evasion, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Erin Nealy Cox for the Northern District of Texas.

According to the indictment, Thomas and Michelle Selgas, a married couple, conspired with John O. Green, an attorney licensed to practice in the State of Texas, to defraud the United States by obstructing the Internal Revenue Service (IRS) from assessing and collecting the Selgases’ federal income taxes.  The indictment charges that in furtherance of the conspiracy the Selgases transferred personal funds to Green’s IOLTA and that Green would pay personal expenses of the Selgases from his IOLTA.   An IOLTA is bank account used by a lawyer to hold money in trust for clients.  The Selgases allegedly deposited the proceeds from the sale of gold coins and other income into Green’s IOLTAs, rather than accounts in their own name, and then caused their personal expenditures to be paid from Green’s IOLTAs, in order to evade paying their federal income taxes.  The indictment further alleges that all three defendants were involved in the filing of a false partnership tax return related to a partnership co-founded by Thomas Selgas.

If convicted, Thomas and Michelle Selgas face a statutory maximum sentence of five years in prison on the tax evasion charges and five years on the conspiracy.  John Green faces a maximum sentence of five years on the conspiracy.  The defendants also face a period of supervised release, restitution and monetary penalties. An indictment is an accusation.  A defendant is presumed innocent unless and until proven guilty.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Cox and thanked agents of the IRS Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys Robert A. Kemins and Mara Strier, who are prosecuting the case.

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

Mississippi real estate investor Kimberly Foster became the seventh real estate investor to plead guilty in connection with the ongoing investigation into bid rigging at public real estate foreclosure auctions in Mississippi, the Department of Justice announced. 

Felony charges against Foster were filed on June 28, 2018, in the U.S. District Court for the Southern District of Mississippi.  According to those charges, from at least as early as August 20, 2009 through at least as late as December 14, 2016, Kimberly Foster conspired with others not to bid against one another for selected public real estate foreclosure auctions in the Southern District of Mississippi.  Co-conspirators made and received payoffs in exchange for their agreement not to bid.  

“The Division remains committed to holding accountable those who violate the antitrust laws, including real estate investors who take advantage of financial distress to line their own pockets,” said Assistant Attorney General Makan Delrahim of the Department of Justice Antitrust Division.  “Today’s plea, along with the convictions of well over 100 other individuals who rigged foreclosure auctions all across the country, demonstrates that individual accountability remains a top priority for the Division.”  

“Participation in illegal price-fixing at public auctions debilitates the economy and causes harm to those involved in the foreclosure process,” said Special Agent in Charge Christopher Freeze of the FBI in Mississippi. “Perpetrators who attempt to cheat the free market system will be held accountable for their actions.”

The Department stated that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected real estate offered at public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with any remaining proceeds paid to the homeowner. According to court documents, these conspirators paid and received money in connection with their agreement to suppress competition, which artificially lowered the price paid at auction for such homes.

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine.  

The investigation is being conducted by Antitrust Division attorneys in the Washington Criminal II Section and the FBI’s Gulfport Resident Agency, with the assistance of the U.S. Attorney’s Office for the Southern District of Mississippi. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact Antitrust Division prosecutors in the Washington Criminal II Section at 202-598-4000, or visit www.justice.gov/atr/report-violations. 

A jury in the Northern District of California convicted a San Francisco area Certified Public Accountant late yesterday of three counts of aiding and abetting the filing of a false tax return, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and Acting U.S. Attorney Alex G. Tse for the Northern District of California.

According to the evidence presented at trial, Marc Howard Berger, 67, of Walnut Creek, California, willfully assisted in the preparation of three false Form 1040s for G. Steven Burrill for the years 2011, 2012, and 2013.  The guilty verdict followed a three-week jury trial before the Honorable Richard Seeborg, U.S. District Court Judge.

Berger was a CPA and partner with a regional tax preparation firm, Burr Pilger Mayer.  Berger’s client, Burrill, was the owner and CEO of Burrill & Company, Burrill Capital, and several related entities.  Through the entities, Burrill managed venture capital funds, including Burrill Life Sciences Capital Fund III, L.P. (the Fund), a $283 million investment fund focused on the life sciences industry.  Between December 2007 and September 2013, Burrill transferred more than $18 million from the Fund to his management companies in excess of the management fees that were allowable under the agreements that governed the Fund.  Berger intentionally prepared and filed false income tax returns for Burrill that did not report more than $18 million in income, resulting in unpaid taxes of more than $4.7 million.  With Berger’s assistance, Burrill paid no individual income taxes for the years 2009 through 2013.

“The jury’s verdict should serve as a message to all professionals who assist their clients in evading their tax obligations that such assistance will be prosecuted,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman.    

“We are gratified by the jury’s verdict,” said Acting United States Attorney Alex G. Tse.  “Tax preparers must know that they cannot willfully assist clients in defrauding the IRS and failing to pay their fair share.”

Berger and Burrill were both indicted by a federal grand jury on September 14, 2017.  Berger was charged with three counts of aiding and assisting in the preparation of a false tax return.  Berger’s sentencing hearing has not yet been scheduled.  Berger faces a maximum statutory penalty of three years in prison for each count. 

Burrill pleaded guilty on December 7, 2017 to one count of investment-adviser fraud and one count of tax evasion.  Burrill’s sentencing is scheduled for September 25, 2018.  He faces a maximum penalty of five years in prison for investment-adviser fraud and five years in prison for tax evasion.

Berger and Burrill also face a period of supervised release, restitution, and monetary penalties.

Principal Deputy Assistant Attorney General Zuckerman and Acting U.S. Attorney Tse thanked special agents of IRS Criminal Investigation and the Federal Bureau of Investigation, who conducted the investigation, and Assistant U.S. Attorney Robert S. Leach and Tax Division Trial Attorney Lori Hendrickson, who are prosecuting the case with the assistance of Maryam Beros, Lilian Arauz Hasse, Larry Garland, and Bridget Kilkenny. 

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

WASHINGTON - A federal grand jury returned an indictment on June 27, which was unsealed today, charging Hattiesburg, Mississippi certified public accountant Carl Nicholson with one count of conspiring to defraud the United States, four counts of filing false tax returns, and six counts of aiding in the preparation of false tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman, U.S. Attorney Mike Hurst for the Southern District of Mississippi, and Mississippi State Auditor Shad White.

According to the indictment, Nicholson was a CPA doing business in Forest County, Mississippi.  From 2012 to 2015, Nicholson is alleged to have conspired with a local attorney, who was a client of Nicholson, to defraud the Internal Revenue Service by falsely classifying the attorney’s personal expenses as deductible business expenses and filing false tax returns on the attorney’s behalf.  On one occasion, Nicholson is alleged to have directed that a $250,000 payment to one of the attorney’s personal trusts be classified as a business expense.  The indictment also alleges that Nicholson falsified his own tax returns for a four-year period by claiming bogus business expenses. 

“Those who personally defraud taxpayers and help others to do the same for personal profit will face swift and certain justice in this district,” said U.S. Attorney Hurst.  “I commend our agents and state investigators for their tenacity and their unflinching manner in following the evidence wherever it led and bringing this defendant to justice. Mr. Nicholson has skirted the law for too long, and today’s indictment proves that no one can hide from justice.”

If convicted, Nicholson faces a maximum of five years in prison for the conspiracy charge and three years for each charge of filing false tax returns and aiding in the preparation of false tax returns.  He also faces supervised release, restitution and monetary penalties.

Principal Deputy Assistant Attorney General Zuckerman and United States Attorney Hurst thanked special agents of Internal Revenue Service – Criminal Investigation and investigators with the Mississippi Auditor’s Office, who investigated the case, and Assistant United States Attorneys Jay Golden and Fred Harper, as well at Trial Attorney Nathan Brooks, who are prosecuting the case.

An indictment merely alleges that crimes have been committed.  The defendant is presumed innocent until proven guilty beyond a reasonable doubt.

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

FALLS CHURCH, Va. – The Executive Office for Immigration Review (EOIR) this week launched an electronic filing pilot program at the San Diego Immigration Court, marking the first phase of the EOIR Courts & Appeals System (ECAS) initiative.

ECAS is part of an overarching information technology modernization effort at EOIR. Its goal is to phase out paper filing and processing, and to retain all records and case-related documents in electronic format. Once fully implemented, ECAS will further enable the timely, fair, and uniform adjudication of immigration cases across the agency.

“After 16 years of inexcusable delays, I am proud that EOIR’s dedicated work over the past year has culminated in the piloting of a comprehensive electronic filing and case management system,” said EOIR Director James McHenry. “With this important initiative, EOIR joins other court systems in the U.S. that have long provided such capabilities. ECAS will aid the parties and assist judges in hearing cases expeditiously and fairly, and will further augment EOIR’s efforts in tackling the pending case backlog.”

ECAS is expected to benefit EOIR’s adjudicators and staff, as well as, the legal representatives and respondents who appear before EOIR’s courts and Board of Immigration Appeals (BIA) through cost and time savings from the electronic filing and remote records retrieval capabilities it will support.

This pilot program is available, on a voluntary basis, for legal representatives who practice before EOIR in the pilot locations and will test the ECAS functions that facilitate electronic filing and document storage for cases filed with the immigration courts and BIA. During the next few months, the pilot program will expand to immigration courts in Atlanta; Denver; Charlotte, N.C.; Baltimore; and York, Pa.; as well as the BIA. The program will extend to all remaining immigration courts in 2019.

To learn more, visit EOIR’s website: https://www.justice.gov/eoir/internet-immigration-info.

— EOIR —

Attorney General Jeff Sessions announced today the public release of a report produced by the Attorney General’s Cyber-Digital Task Force.  The report provides a comprehensive assessment of the cyber-enabled threats confronting the Nation, and catalogs the ways in which the Department of Justice combats those threats.  Deputy Attorney General Rod Rosenstein formally issued the report in remarks delivered today at the Aspen Security Forum in Aspen, Colorado.

Attorney General Sessions established the Cyber-Digital Task Force within the Department in February 2018 and directed the Task Force to answer two basic questions:  how is the Department responding to global cyber threats?  And how can federal law enforcement accomplish its mission in this area more effectively?  Today’s report answers the first question.  It canvasses a wide spectrum of cyber threats; defines the multi-faceted challenges posed by cyber-enabled crime; describes the Department’s work in detecting, deterring, and disrupting threats; explains how the Department collaborates with other government departments and with the private sector to respond to cyber incidents; and explores how the Department trains and maintains a skilled workforce.

“The Internet has given us amazing new tools that help us work, communicate, and participate in our economy, but these tools can be—and frequently are—exploited by criminals, terrorists, and enemy governments,” Attorney General Sessions said.  “At the Department of Justice, we take these threats seriously.  That is why I am grateful to the members of the Cyber-Digital Task Force for providing me with this thorough, first-of-its-kind report, which comprehensively details the scope of the problem and provides initial recommendations on the most effective ways that the Department can confront cyber threats and keep the American people safe.”

The report begins by focusing on one of the most pressing cyber-enabled threats confronting the Nation: the threat posed by malign foreign influence operations.  Chapter 1 explains what foreign influence operations are and describes how foreign adversaries have used these operations to target our Nation’s democratic processes, including our elections.  It concludes by describing the Department’s efforts to protect the 2018 midterm elections and announces a new Department policy that governs the disclosure of foreign influence operations.

Chapters 2 and 3 discuss other significant cyber threats, particularly those relating to sophisticated cybercrime schemes, and describes how the Department is deploying its capabilities to combat them.  Chapter 4 focuses on the role of the Federal Bureau of Investigation (FBI) in responding to cyber incidents.  Chapter 5 describes the Department’s efforts to recruit and train qualified personnel on cyber matters.  Chapter 6 concludes the report by identifying certain priority policy matters and charting a path for the Task Force’s future work.

The Task Force is chaired by Associate Deputy Attorney General Sujit Raman.  Task Force members include John P. Cronan, now the Principal Deputy Assistant Attorney General in the Criminal Division who until recently served as Acting Assistant Attorney General; John C. Demers, Assistant Attorney General for the National Security Division; Beth A. Williams, Assistant Attorney General for the Office of Legal Policy; John M. Gore, Acting Assistant Attorney General for Civil Rights Division; Andrew E. Lelling, United States Attorney for the District of Massachusetts; Peter A. Winn, the Department’s Acting Chief Privacy and Civil Liberties Officer; and two senior executives at the FBI.  Components from across the Department contributed to the drafting of the Task Force report.  The initial report of the Attorney General’s Cyber-Digital Task Force can be downloaded here, along with a fact sheet here.

Two former employees of a global financial institution were charged in an indictment filed today for their alleged participation in fraudulent and deceptive trading in previous metals futures contracts, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and Assistant Director in Charge William Sweeney of the FBI’s New York Field Office.

Edward Bases, 56, of New Canaan, Connecticut, and John Pacilio, 54, of Southport, Connecticut, were each charged with one count of conspiracy to commit wire fraud affecting a financial institution and commodities fraud.  Bases and Pacilio were also charged with one count of commodities fraud each.  Pacilio was further charged with five counts of spoofing.    

The indictment alleges that Bases and Pacilio, who were employed as precious metals traders at banks in New York, New York, engaged in multi-year schemes to mislead the market for precious metals futures traded on the Commodity Exchange Inc (COMEX), which was an exchange run by the Chicago Mercantile Exchange Group  The defendants and their co-conspirators are alleged to have defrauded market participants by placing orders that they did not intend to execute in order to create the appearance of false supply and demand and to induce other market participants to trade at prices, quantities and times that they otherwise would not have traded.

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.  

This case was investigated by the FBI’s New York Field Office.  Trial Attorneys Ankush Khardori and Jeffery Le Riche of the Criminal Division’s Fraud Section are prosecuting the case

The Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country.

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

A federal grand jury today unsealed an indictment charging El’Shawn Williams, an officer in the Put-in-Bay Police Department, with using excessive force against a man in custody, and then making false statements and writing false reports to cover it up. The indictment alleges that Williams, 28, punched and struck the victim multiple times in the head and body, causing him bodily injury. 

The indictment was announced by Acting Assistant Attorney General for the Civil Rights Division John Gore, United States Attorney Justin Herdman of the Northern District of Ohio, and Special Agent in Charge Stephen D. Anthony of the FBI’s Cleveland Division.

The indictment alleges that after the incident, Williams wrote a report that falsely minimized the force he used and failed to disclose that he struck the victim after the victim was restrained by another officer. It also alleges that Williams gave a false statement to an Ottawa County detective denying that he punched the victim, denying that he struck him in the face, and denying that he struck him after the victim was restrained by another officer.

If convicted, Williams faces a maximum punishment of 10 years imprisonment for the excessive force charge and up to 20 years imprisonment for each obstruction charge. An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.

This case was investigated jointly by the Cleveland Division of the Federal Bureau Investigation and the Ottawa County Sheriff’s Department.  It is being prosecuted by Assistant United States Attorney Michael Freeman of the Northern District of Ohio and Trial Attorney Dana Mulhauser of the Civil Rights Division of the Department of Justice.    

A Bloomfield Hills, Michigan resident, pleaded guilty today in Flint, Michigan to one count of structuring a financial transaction to avoid bank reporting requirements, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.

According to court documents, Scott Zack, who entered his plea today, and David Katz, who pleaded guilty on June 12, owned and operated several medical management companies and a chiropractic facility in Michigan, including Health Systems Medical Management, LLC and Medical Management Partners, LLC.  In July 2013, Scott Zack and David Katz withdrew cash in amounts of less than $10,000 from multiple bank branch locations in order to avoid the requirement that domestic banks file a currency transaction report for transactions in amounts exceeding $10,000.  As part of their pleas, Zack and Katz acknowledged that during the period of their scheme their unlawful conduct involved more than $250,000. 

In a related case, John Anthony Capella of Lantana, Florida pleaded guilty on May 29 to conspiracy to defraud the United States.  According to court documents filed in that case, Capella did so by causing, for example, businesses he controlled to file false documents with the IRS, including a tax return that underreported substantial cash receipts.

Honorable Lisa V. Parker scheduled sentencing for February 19, 2019.  Katz and Zack each face a maximum sentence of five years in prison, as well as a period of supervised release, restitution and monetary penalties. 

Capella faces a maximum sentence of five years in prison, a $250,000 fine and three years of supervised release for conspiring to defraud the United States. 

Acting Deputy Assistant Attorney General Goldberg thanked special agents of IRS Criminal Investigation, who conducted the investigation, and Tax Division Trial Attorneys Mark McDonald and William Guappone, who prosecuted this case.  Acting Deputy Assistant Attorney General Goldberg also thanked the United States Attorney’s Office for the Eastern District of Michigan for its substantial assistance during the investigation. 

More information about the Tax Division’s enforcement efforts is available on the Division’s website.

Acting Assistant Attorney General John Gore of the Civil Rights Division and John F. Bash, United States Attorney for the Western District of Texas, today announced that the Department of Justice has reached a settlement agreement with WiFi Alliance, a non-profit organization headquartered in Austin, Texas. The settlement agreement resolves allegations that WiFi Alliance violated the employment rights of Lieutenant Colonel (LTC) Charles O’Donnell, an Army Reservist, under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). USERRA safeguards the rights of uniformed servicemembers, including Reservists, to all benefits of employment following periods of absence due to military service obligations.

According to the complaint, LTC O’Donnell’s military service was a motivating factor in WiFi Alliance’s decision to terminate his employment in 2016 as part of a reduction in force. The layoff was concurrent with his military duty, which supported West Point Admissions at the United States Military Academy.

LTC O’Donnell has served more than 22 years in the Armed Forces. He was a program manager with WiFi Alliance for three years.

Under the terms of the settlement, WiFi Alliance has agreed to pay $62,500 in back pay to LTC O’Donnell. In addition, WiFi Alliance has conducted a company-wide training on servicemember rights, and agreed to review and revise, if necessary, its anti-discrimination policies and procedures to ensure that current and future employees are aware of, and protected by, their USERRA rights.

“The men and women of our Armed Forces expect and are entitled to the peace of mind of knowing that their civilian employment will not be jeopardized because they serve our country,” said Acting Assistant Attorney General John Gore of the Civil Rights Division. “Through this lawsuit, the Department of Justice reaffirms its commitment to protecting the employment rights of the members of our Armed Forces.”

“We are pleased that our office was able to work alongside Acting Assistant Attorney General Gore and the dedicated career attorneys in the Civil Rights Division to obtain an agreement that will ensure that LTC O’Donnell will be compensated and that WiFi Alliance will train its supervisors in order to guarantee continued compliance with USERRA,” said United States Attorney John F. Bash of the Western District of Texas.

LTC O’Donnell initially filed a complaint with the Department of Labor’s Veterans’ Employment and Training Service (VETS), which investigated this matter and attempted to reach a resolution between the parties. After resolution efforts failed, VETS referred the complaint to the Justice Department’s Civil Rights Division, Employment Litigation Section. The lawsuit, filed on March 1, was a collaborative initiative between the Civil Rights Division and the U.S. Attorney’s Office for the Western District of Texas.

Civil Rights Division Trial Attorney Torie Atkinson and Assistant United States Attorney James Dingivan represented LTC O’Donnell in this matter.

The Justice Department’s Civil Rights Division has given high priority to the enforcement of servicemembers’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at http://www.justice.gov/crt/employment- litigation-section and www.servicemembers.gov, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.  

The Department of Justice announced today that NPB Neue Privat Bank (NPB) reached a resolution with the Tax Division.  NPB will pay a penalty of $5 million.

“The Department of Justice is committed to ending the practice of using foreign bank accounts to evade taxes,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division. “Taxpayers and financial institutions should take notice that the Department is continuing to aggressively pursue these cases.”

According to the terms of the non-prosecution agreement signed today, NPB agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a penalty in return for the Department’s agreement not to prosecute this bank for tax-related criminal offenses.

NPB is a Swiss private bank based in Zurich, Switzerland.  Until 2012, NPB conducted a U.S. cross-border banking business that aided and assisted certain of its U.S. clients in opening and maintaining undeclared accounts in Switzerland and concealing the assets and income they held in these accounts from the U.S. government. NPB offered a variety of traditional Swiss banking services that it knew could assist, and did in fact assist, U.S. clients in the concealment of assets and income from the IRS, including the use of numbered accounts and hold mail services. 

NPB signed agreements with individual external asset managers or external asset management firms, whereby clients of the external asset manager could open and maintain accounts at NPB, with account management services being provided by the external asset manager. Almost all of NPB’s U.S. accounts were managed by external asset managers, for whom it provided custodial and limited banking services. In such cases, NPB generally did not contact the clients directly once they had opened their account. The Bank required an external asset manager mandate, so that communication about asset management and investment decisions were done between the U.S. customer and their external asset manager(s). In a few circumstances, NPB managed U.S. customers directly without an external asset manager. In those cases, the Bank required the U.S. customer to sign a direct asset management mandate, allowing the Bank to make investment decisions for the account. 

In 2001, NPB entered into a Qualified Intermediary Agreement (QI Agreement) with the Internal Revenue Service (IRS).  The Qualified Intermediary regime provided a comprehensive framework for U.S. information reporting and tax withholding by a non-U.S. financial institution with respect to U.S. securities. The QI Agreement required NPB to obtain IRS Forms W-9 and to undertake IRS Form 1099 reporting for new and existing U.S. clients engaged in U.S. securities transactions.  Notwithstanding this requirement, NPB chose to continue to service U.S. clients without disclosing their identity to the IRS.  NPB’s view was that it could continue to accept and service U.S. account holders, even if it knew or had reason to believe they were engaged in tax evasion, so long as it complied with the QI Agreement, which in NPB’s view did not apply to account holders who were not trading in U.S.-based securities or to accounts that were nominally structured in the name of a non-U.S.-based entity.  NPB formed this view without consulting legal counsel. 

Between August 1, 2008 and December 31, 2015, NPB held a total of 353 U.S.-related accounts, which included both declared and undeclared accounts, with an aggregate peak year-end value of approximately $400 million in assets under management.

In approximately early 2009, NPB was approached by certain external asset managers who managed accounts on behalf of U.S. taxpayers and were seeking a replacement custodian bank for accounts for U.S. taxpayers that were being closed by other Swiss banks, including UBS AG.  Some of these external asset managers and NPB discussed the long-term trend towards tax compliance in Switzerland and that eventually the external asset managers would only be able to manage accounts that were declared to the U.S. government. Those external asset managers told NPB that they were telling their clients to become tax compliant. However, the external asset managers also made clear to NPB that many of their clients who wished to onboard accounts at the Bank had not yet declared their accounts to the U.S. government. The external asset managers did not promise, and NPB did not require, that all accounts onboarded to NPB would become compliant within a specific period of time. In one instance, however, an external asset manager onboarded accounts from other Swiss banks that the Bank knew were undeclared with no discussion of tax compliance until 2011.

NPB viewed the taking of clients from other banks that were exiting U.S. taxpayers as a business opportunity. During a board of directors meeting held on March 9, 2009, the board unanimously resolved that it would allow U.S. taxpayers to open accounts at NPB, including customers who were forced to exit other banks.  Prior to 2009, NPB had few U.S. clients. At the close of 2008, U.S. Related Accounts held approximately 8 million Swiss francs in assets.  By the end of 2009, NPB had approximately 450 million Swiss francs under management in accounts owned or beneficially owned by U.S. taxpayers, an influx of approximately 442 million Swiss Francs.  Approximately 69% of the U.S.-related assets held by the Bank at the end of 2009 were reported to the U.S. government by the account holder in or before the 2009 tax year.

NPB’s executives hoped that their U.S. customers would eventually fully declare their accounts and keep their money at the Bank after becoming compliant. However, NPB created no written or formal policies to encourage or mandate tax compliance and, in fact, continued to acquire and service non-compliant U.S. taxpayers.

According to NPB executives, beginning in August 2010, NPB decided not to open any new accounts for U.S. customers who were not tax-compliant. NPB did not memorialize this decision in any written policy nor in any executive board or management board meeting minutes. NPB knew in August 2010 that some of its existing U.S. customers were not tax-compliant, but continued to service those accounts. 

Until at least August 2010, NPB did not require a Form W-9 from U.S. clients to open an account.  NPB did not require the completion of Forms W-9 for existing U.S. customers until approximately summer of 2011.

NPB serviced some U.S. customers who structured their accounts so that they appeared as if they were held by a non-U.S. legal structure, such as an offshore corporation or trust, which aided and abetted the clients’ ability to conceal their undeclared accounts from the IRS. At least 89 of NPB’s U.S. Related Accounts, both declared and undeclared, were held in the name of offshore structures, including trusts or corporations purportedly domiciled in Panama, Liechtenstein, the British Virgin Islands, Hong Kong, and Belize.  NPB never assisted customers in setting up such offshore structures.  For accounts held in non-U.S. legal structures opened in 2009 and prior to Summer 2010, NPB did not require the signing of either a Form W-9 or Form W-8BEN.

NPB increased its efforts to obtain tax compliance from its U.S. customers in 2010 and 2011, but continued to service undeclared accounts.  NPB first requested tax compliance evidence from its external asset managers for U.S. clients in August 2011.  NPB serviced the declared and undeclared clients of two external asset managers after their respective indictments in the United States. 

NPB has cooperated with the Department of Justice in this investigation, including by producing information relating to the U.S. taxpayer clients who maintained assets overseas, including the identities of the account holders and/or beneficial owners of more than 88% of assets, and by making multiple executives available for interview by the Department of Justice.

While U.S. accountholders at NPB who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.  Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts.  On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement.  With today’s announcement of this non-prosecution agreement, noncompliant U.S. accountholders at NPB must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.  The IRS recently announced that the Offshore Voluntary Disclosure Program will close on September 28, 2018.

“The non-prosecution agreement with NPB should signal that IRS CI continues its fight against offshore tax evasion,” said Don Fort, Chief IRS-Criminal Investigation. “The IRS devotes considerable resources in the U.S. and abroad to hold accountable those individuals and institutions that seek to cheat the U.S. tax system. I urge anyone not compliant with their tax obligations to consider the offshore voluntary disclosure program before it closes on September 28, 2018.”

Principal Assistant Attorney General Zuckerman of the Justice Department’s Tax Division thanked Senior Litigation Counsel Nanette Davis of the Tax Division and Assistant United States Attorneys Michelle Petersen and Patrick King of the U.S. Attorney’s Office for the Northern District of Illinois and IRS-Criminal Investigation, in particular IRS Special Agent Michael Leach, for their substantial assistance. 

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

A Homestead, Florida, man was arrested on an indictment yesterday, stemming from charges that he surreptitiously produced pornographic audio and video recordings of himself engaging in sexual activity with multiple men and then caused the videos to be posted on one or more subscription-based pornography websites without their knowledge or consent.      

Bryan Deneumostier, 32, also known by the screen name “susanleon33326,” was charged in a five-count indictment in the Southern District of Florida with two counts of illegal interception of oral communications and three counts of record keeping violations. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Benjamin G. Greenberg for the Southern District of Florida, and Special Agent in Charge Mark Selby of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Miami Field Office, made the announcement today.

The indictment, which was unsealed July 18, references three victims whose identities are being withheld to protect their privacy.  Without two of the referenced victims’ knowledge or consent, Deneumostier allegedly recorded his sexual encounters with them, and then caused these videos to be posted on one or more websites.  These two allegedly nonconsensual recordings form the basis of the surreptitious-recording charges.  The indictment further alleges that Deneumostier was a producer of pornography, used performers portrayed in a visual depiction of sexually explicit conduct, and did not ascertain the performers’ identification or age, as required by federal law. 

Any individuals who believe they might be a victim are encouraged to contact HSI at (866) 347-2423.

The investigation is being conducted by HSI.  Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Cary Aronovitz of the Southern District of Florida are prosecuting the case. 

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

WASHINGTON - A resident of Cheyenne, Wyoming and creator of “Fitwall” exercise equipment pleaded guilty today to two counts of willfully failing to file his income tax returns and one count of making a fraudulent application for health care benefits.  The change of plea was announced by Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Mark A. Klaassen for the District of Wyoming, whose offices are engaged in a joint prosecution of this case.

According to court documents, from 2008-2012, Douglas E. Brendle owned and operated Brendle Climbing Systems, LLC, which sold Fitwalls.  In January 2013, Brendle sold the rights to Fitwall to investors, and in exchange received nearly $1.5 million in payments during the period of 2013-2014.  Despite receiving this income, Brendle failed to file individual income tax returns or pay income taxes in 2013 or 2014.  Brendle’s conduct resulted in a tax loss of $404,501.

Additionally, during 2013-2014, Brendle fraudulently received health care benefits for himself and his family from Wyoming Medicaid, a jointly administered federal-state health care program that pays for medical care for eligible low-income individuals and families.  In December 2013, Brendle caused a false renewal application to be filed for Wyoming Medicaid claiming his household had no income.  During 2013–2014, Wyoming Medicaid paid Brendle over $20,000 in benefits to which he and his family were not entitled.

Sentencing is scheduled for September 24, 2018.  Brendle faces a statutory maximum sentence of three years in prison, as well as a period of supervised release, restitution and monetary penalties.

“These cases take substantial time and effort to investigate and prosecute, but serve as a reminder that no person is above the law, and we will hold those accountable who use improper means to avoid taxes,” said U.S Attorney Klaassen.  “We also cannot allow false claims against our health care programs to siphon resources intended to assist our most needy families.” 

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Klaassen commended the work of special agents of Internal Revenue Service Criminal Investigation office in developing the case against Brendle, as well as Assistant U.S. Attorney Eric J. Heimann and Trial Attorney Eric C. Schmale of the Tax Division, who are prosecuting the case.

Additional information about the enforcement efforts of the United States Attorney’s Office and the Tax Division may be found on their respective websites.

Federal Suit Alleges City Discriminated Against City-Employed Registered Nurses and Midwives by not Recognizing their Work as “Physically Taxing”

Acting Assistant Attorney General John Gore for the Justice Department’s Civil Rights Division and Richard P. Donoghue, United States Attorney for the Eastern District of New York, today announced a proposed settlement with the City of New York to compensate City-employed registered nurses and midwives who were subjected to discrimination because they are women.  The United States Attorney’s Office for the Eastern District of New York filed the proposed settlement along with a complaint in federal district court.  According to the allegations of the complaint, the City failed to recognize that the work of predominantly-female registered nurses and midwives was “physically taxing,” while deeming other predominantly-male occupations “physically taxing.”  As a result, City employees in the predominantly-male “physically taxing” jobs were allowed to retire with full pensions as early as age 50, while registered nurses and midwives, who are predominantly female, had to wait until age 55 or 57 to retire with full pensions.

“This Settlement Agreement will provide significant relief to a class of female nurses and midwives employed by the City of New York who were harmed by the City’s discriminatory employment practices,” said Acting Assistant Attorney General John Gore. “We applaud the United States’ Attorney’s Office for the Eastern District of New York for prosecuting this matter and acknowledge the City of New York’s commendable efforts in ensuring that this matter was brought to resolution without protracted litigation.” 

“City nurses and midwives care for sick and injured adults, juveniles, and infants through long days and nights under difficult circumstances, and rightfully should be recognized as doing physically taxing work,” said U.S. Attorney Donoghue. “Equal treatment under law means just that, equal treatment and this Office is committed to ensuring that women are treated fairly and equitably in the workplace.”  He also thanked the Equal Employment Opportunity Commission (EEOC) for its investigative work prior to referring this matter to the U.S. Attorney’s Office.

Beginning in 1968, the City allowed certain City employees with 25 years of service the option of retiring with full pensions beginning at the age of 50, if the employees worked in jobs the City deemed “physically taxing.” At that time, the City refused to recognize the work of registered nurses and midwives, which was performed mostly by women, as “physically taxing,” but did recognize as physically taxing work performed mostly by men in occupations such as Emergency Medical Specialist - EMT, Exterminator, Motor Vehicle Dispatcher, Window Cleaner, Foremen, and Plumbers.

Beginning in 2004, the New York State Nurses Association (NYSNA), a labor union representing City-employed registered nurses and midwives, began requesting that the City recognize the work of registered nurses and midwives  as physically taxing and also allow NYSNA’s qualifying members the option of retiring as early as age 50.  The City denied that request in 2004, and again in 2006 and 2008.  Thereafter, NYSNA and four of its members filed complaints with the EEOC.  The EEOC determined there was reason to believe that the City had discriminated against the nurses when it failed to recognize registered nurse and midwife occupational titles as “physically taxing” in 1968, and again when NYSNA made its requests in 2004, 2006 and 2008.  The EEOC then referred the matter to the U.S. Attorney’s Office.

The settlement applies to a proposed class of approximately 1,665 registered nurses and midwives hired by the City from Sept. 15, 1965, through March 31, 2012.  Subject to court approval, the City would pay these registered nurses and midwives, who would otherwise have been eligible to retire at an earlier age, between $1,000 and $99,000, depending upon their years of qualifying service and the number of years earlier they would have been eligible to retire.  The settlement also provides for the City to pay attorney’s fees and an additional $100,000 to the four nurses who initiated the EEOC complaint which led to today’s result.   

This matter was handled by Eastern District of New York Assistant United States Attorneys John Vagelatos and Michael J. Goldberger.