District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Joaquin “El Chapo” Guzman Loera Has Arrived in the United StatesRead the Press Release
Joaquin Archivaldo Guzman Loera, known by various aliases including “El Chapo,” has arrived in the United States to face criminal charges in connection with his leadership of the Mexican organized crime syndicate known as the Sinaloa Cartel.
Guzman Loera is charged in six separate indictments throughout the United States; however, the indictment filed in the Eastern District of New York contains a provision that he must first enter the United States in that district to preserve the Eastern District of New York indictment. As such, Guzman Loera landed at Long Island MacArthur Airport in Islip, New York.The Justice Department extends its gratitude to the Government of Mexico for their extensive cooperation and assistance in securing the extradition of Guzman Loera to the United States.
Additional details regarding the time and place of Guzman Loera’s initial appearance in U.S. District Court are forthcoming.
Joaquin “El Chapo” Guzman Loera Extradited to United StatesRead the Press Release
Joaquin Archivaldo Guzman Loera, known by various aliases including “El Chapo,” has been extradited and is en route to the United States to face criminal charges in connection with his leadership of the Mexican organized crime syndicate known as the “Sinaloa Cartel.”
Guzman Loera is charged in six separate indictments throughout the United States.
The Justice Department extends its gratitude to the Government of Mexico for their extensive cooperation and assistance in securing the extradition of Guzman Loera to the United States.
Additional details regarding the time and place of Guzman Loera’s initial presentation in court are forthcoming.
Deputy Attorney General Sally Q. Yates Statement on the Clemency InitiativeRead the Press Release
Deputy Attorney General Sally Q. Yates released the following statement on the Clemency Initiative:
“In late August, we made a promise: that the Department of Justice would review and make a recommendation to President Obama on every commutation petition from a drug offender then in our possession. I’m proud to say we kept that promise. The Office of the Pardon Attorney has now processed more than 16,000 petitions since the launch of the Clemency Initiative in April 2014, ensuring that President Obama had the information he needed to evaluate worthy cases up until the final week of his presidency. With 1,715 commutations in total, this undertaking was as enormous as it was unprecedented, and I am incredibly grateful to the teams of people who devoted their time and energy to the project since its inception. By restoring proportionality to unnecessarily long drug sentences, this Administration has made a lasting impact on our criminal justice system.”
United States Files Consent Decree of Permanent Injunction Against California Dietary Supplement Manufacturer to Stop Distribution of Adulterated and Misbranded Dietary SupplementsRead the Press Release
The Department of Justice filed a proposed consent decree of permanent injunction in the U.S. District Court for the Central District of California against VivaCeuticals Inc., doing business as Regeneca Worldwide, and its CEO Matthew A. Nicosia, to prevent violations of the Federal Food, Drug and Cosmetic Act (FDCA). Defendants have agreed to cease all operations as part of a settlement with the Department.
According to a complaint filed by the Department of Justice’s Consumer Protection Branch in November 2015, the defendants violated the FDCA by failing to manufacture dietary supplements in accordance with the FDA’s current good manufacturing practice (CGMP) regulations. The complaint also alleged that the defendants violated the FDCA by manufacturing and distributing a product called RegeneSlim Appetite Control (RegeneSlim), which contained the unsafe food additive 1, 3 dimethylamylamine (DMAA), and failing to disclose the presence of DMAA in RegeneSlim’s labeling. The complaint further alleged that the defendants violated the FDCA by marketing RegeneSlim to be used in the cure, mitigation, treatment or prevention of disease, thereby causing RegeneSlim to be an unapproved new drug and a misbranded drug.
The government’s enforcement action resulted from a series of U.S. Food and Drug Administration (FDA) inspections of the defendants’ manufacturing facility that found recurring FDCA violations of the same nature as those alleged in the complaint, and which the defendants failed to correct despite FDA warnings.
“When dietary supplement manufacturers place unsafe and undisclosed ingredients in their products and disregard CGMP regulations, they put the public health at risk,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Department of Justice will continue to work closely with the FDA to prevent dietary supplement manufacturers from jeopardizing public health.”
The defendants agreed to settle the litigation through a consent decree that would permanently prohibit them from committing violations of the FDCA. The consent decree requires the defendants to cease all operations, and requires that if the defendants wish to resume manufacturing dietary supplements or drugs in the future, the FDA first must determine that the defendants’ manufacturing practices have come into compliance with the law. The proposed decree is currently awaiting judicial approval.
This matter was handled by Trial Attorneys Clint Narver and Monica Groat of the Civil Division’s Consumer Protection Branch, with assistance from Claudia Zuckerman of the FDA’s Office of the Chief Counsel.
For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at http://www.justice.gov/civil/consumer-protection-branch.
Statement on the Departure from the Justice Department of Principal Deputy Associate Attorney General Bill BaerRead the Press Release
Principal Deputy Associate Attorney General and former Assistant Attorney General for Antitrust Bill Baer will depart the Justice Department at the conclusion of the Obama Administration on January 20.
“For the last four years, Bill Baer has led the Office of the Associate Attorney General and the Antitrust Division with exceptional talent and energy,” said Attorney General Loretta E. Lynch. “Under his leadership, the department secured major litigation victories and settlements that have yielded real benefit to American consumers. Bill deftly executed enforcement actions to address a wide range of misconduct, from fraud in the issuance of residential mortgage-backed securities, to international price-fixing cartels, to anticompetitive merger agreements. And he has shown a special devotion to our veterans through his many contributions to the department’s efforts to uphold the rights and well-being of servicemembers and their families. Throughout his tenure at the Justice Department, Bill has demonstrated an unwavering commitment to our mission, and I want to thank him for his extraordinary service, his outstanding leadership, and his friendship.”
“Serving with the dedicated men and women of the Justice Department has been the privilege of a lifetime,” said Principal Deputy Associate Attorney General Baer. “I am proud to have contributed to the Department’s record of accomplishment over the past four years. I will forever be grateful to the President and Attorneys General Lynch and Holder for the opportunity to serve the American people and further the cause of justice.”
Under Baer’s leadership, the Department in just the last week secured record settlements totaling $13.3 billion from Deutsche Bank, Credit Suisse, and Moody’s for misconduct in connection with residential mortgage-backed securities (RMBS). The Department also sued Barclays and two of its former executives for their alleged RMBS misconduct. Baer also issued a policy memorandum detailing the minimum requirements a corporation must meet to earn credit for cooperating in the resolution of civil matters.
Baer tirelessly advocated for those who serve our country in uniform, leading the Department’s Servicemembers and Veterans Initiative. The Initiative enforces laws that protect employment, voting, and financial rights of servicemembers, veterans, and their families. Baer’s stewardship as Chair of the Initiative’s coordinating committee ensured that the Initiative has a permanent home within the Office of the Associate Attorney General and remains connected to each litigating component and U.S. Attorney’s Office.
Baer’s 40 months as head of the Antitrust Division produced unprecedented results. Since early 2013 the Division has filed criminal charges against 77 corporations, convicted 67, and obtained a record $6.3 billion in criminal fines and penalties. It jailed 84 individuals with an average term of 17 months and secured the first-ever extradition for an antitrust offense. As a result of a joint investigation with the Criminal Division, four banks pleaded guilty to conspiring to manipulate the price of U.S. dollars and euros exchanged in the foreign currency exchange spot market, and a fifth bank saw its deferred prosecution agreement revoked for its role in the conspiracy. The five – Citicorp, JPMorgan Chase & Co., Barclays PLC, UBS AG and The Royal Bank of Scotland plc – agreed to pay criminal fines totaling more than $2.7 billion. Thus far, two individuals have pleaded guilty and three more have been charged for their participation in foreign currency manipulation.
Robust civil antitrust enforcement was another hallmark of Baer’s tenure at the Department. The Division successfully challenged or secured abandonment of 25 anticompetitive transactions, including Halliburton/Baker Hughes, the proposed combination of two of the three largest globally-integrated oilfield services providers. The Division successfully challenged at trial and unwound Bazaarvoice’s acquisition of its primary competitor in the market for ratings and reviews platforms, PowerReviews. The Division is currently awaiting rulings following bench trials challenging Anthem’s acquisition of Cigna and Aetna’s purchase of Humana. The Division also preserved competition through divestitures in many markets. After DOJ sued, Anheuser-Busch InBev agreed to divest Grupo Modelo’s entire U.S. business to an independent competitor. The Division’s challenge to the US Airways and American Airlines merger resulted in a settlement opening up landing slots and making critical gates available in our nation’s most constrained airports – relief that produced enduring procompetitive, output enhancing effects. A later case blocked United Airlines from monopolizing take-off and landing slots at Newark.
Some 35 civil conduct cases produced meaningful outcomes for competition and consumers. The Division’s court victory against Apple restored competitive conditions for e-book sales and prevented the company and its senior executives from conspiring to thwart competition in the future. EBay was barred from entering into anticompetitive agreements with other high tech firms not to hire or solicit each other’s employees. Disgorgement of ill-gotten corporate gains was another priority. The Division’s action against Twin America yielded $7.5 million in disgorgement, and Flakeboard America Ltd was compelled to disgorge $1.15 million of unlawful profits.
Working together with federal and state colleagues and with competition enforcers around the globe, the Antitrust Division successfully urged that competition principles guide policymakers in sectors ranging from transportation and energy to intellectual property and the internet.
Baer was confirmed by the U.S. Senate as Assistant Attorney General for the Antitrust Division on December 30, 2012. He was the longest-serving Assistant Attorney General of the Antitrust Division in modern times.
Prior to joining the Justice Department, Baer was Partner and Head of the Antitrust Practice Group in the law firm of Arnold & Porter LLP. He earlier served as Director of the Bureau of Competition at the Federal Trade Commission. He is a graduate of Lawrence University and Stanford Law School.
Southern California Residents Plead Guilty to Hiding Millions of Dollars in Secret Foreign Bank AccountsRead the Press Release
Three Orange County, California residents pleaded guilty today to willfully failing to report their foreign bank accounts in Switzerland and Israel, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division.
Dan Farhad Kalili, 55, a resident of Irvine, California, together with his brother, David Ramin Kalili, 52, and his brother-in-law, David Shahrokh Azarian, 67, residents of Newport Coast, California, admitted that they willfully failed to file Reports of Foreign Bank and Financial Accounts (FBARs) with the Internal Revenue Service (IRS) regarding secret bank accounts in Switzerland and in Israel that each respectively maintained and controlled, many for well over a decade. These secret accounts held assets that reached into the millions of dollars.
“The days of being able to safely hide income and assets offshore and evade U.S. tax have come to an end,” said Principal Deputy Assistant Attorney General Ciraolo. “The United States and foreign jurisdictions are sharing information and working together to ensure that citizens around the world are paying their fair share. The guilty pleas entered today are yet another example of what awaits U.S. taxpayers who continue to flout the law.”
“David and Dan Kalili and David Azarian disregarded their legal responsibility to file the required report of foreign bank accounts and report all their income and interest,” said Chief Richard Weber of IRS Criminal Investigation. “Regardless of where the money is hidden around the world, IRS-CI will follow the sophisticated financial transactions and ensure everyone is held accountable for the taxes they are required to pay.”
According to the documents filed with the court, and statements made in connection with the defendants’ guilty pleas:
Beginning in May 1996, and continuing through at least 2009, Dan Kalili opened and maintained several undeclared offshore bank accounts at Credit Suisse Group (Credit Suisse) in Switzerland. He also opened and maintained several undeclared offshore bank accounts from at least 1998 through 2008 at UBS AG (UBS) in Switzerland. Similarly, David Kalili opened and maintained several undeclared accounts at Credit Suisse in Switzerland, from February 1999 through at least 2009, and at UBS in Switzerland, from October 1993 through at least 2008. Dan and David Kalili also maintained joint undeclared Swiss bank accounts at both UBS and Credit Suisse beginning in 2003 and 2004, respectively. Meanwhile, Azarian opened and maintained several of his own undeclared accounts at Credit Suisse in Switzerland from May 1994 through at least 2009, and at UBS in Switzerland from April 1997 through at least 2008.
In July 2006, Dan Kalili, with the assistance of Beda Singenberger (Singenberger), a Swiss citizen who owned and operated a financial advisory firm called Sinco Truehand AG, opened an undeclared account at UBS in the name of the Colsa Foundation, an entity established under the laws of Liechtenstein. Singenberger was indicted in the Southern District of New York on July 21, 2011, for conspiring to defraud the United States, evade U.S. income taxes, and file false U.S. tax returns. Singenberger remains a fugitive. As of May 2008, the Colsa Foundation account at UBS held approximately $4,927,500 in assets.
Each of the defendants took affirmative steps to prevent their assets in UBS and Credit Suisse from being discovered. Dan Kalili opened an undeclared account at Swiss Bank A in the name of the Colsa Foundation and in May 2008, transferred his assets from the UBS Colsa Foundation account to Swiss Bank A. He later made partial disclosure of the Swiss Bank A Colsa account on his individual income tax returns. In 2009, Dan Kalili opened undeclared accounts at Israeli Bank A and at Bank Leumi, both in Israel. In June 2009, he closed the joint undeclared account at Credit Suisse he held with David Kalili, as well as his own undeclared account, and transferred the funds. Shortly before its closure, the undeclared joint account of Dan and David Kalili at Credit Suisse held approximately $2,561,508 in assets. As of December 2009, Dan Kalili’s undeclared account at Israeli Bank A held assets valued at approximately $1,569,973, and his undeclared account at Bank Leumi held assets valued at approximately $2,497,931.
Similarly, in August 2008, David Kalili opened an undeclared account at Israeli Bank A in Israel, into which he transferred funds from his UBS accounts. He later partially declared the Israeli Bank A account on his individual income tax returns. As of August 2009, David Kalili’s undeclared account at Israeli Bank A held assets valued at approximately $1,369,489.
In August 2008, Azarian, also opened an undeclared account at Israeli Bank A in Israel, and in May 2009, he closed his undeclared account held at Credit Suisse and transferred the funds to Israeli Bank A. Azarian later partially declared this Israeli Bank A account on his individual income tax returns. At the time of its closure, Azarian’s undeclared account at Credit Suisse held assets valued at approximately $1,903,214.
For each year from 2006 through 2009, Dan Kalili, David Kalili, and Azarian, as U.S. citizens, were required, but willfully failed, to report their ownership and control over foreign bank accounts through the timely filing of FBARs with the IRS disclosing their signatory or other authority over the various undeclared accounts held at UBS, Credit Suisse, Israeli Bank A, and Bank Leumi, each having an aggregate value of more than $10,000 during each of these years.
U.S. District Judge Andrew J. Guilford of the Central District of California scheduled sentencing for April 24. Dan Kalili, David Kalili, and Azarian each face a statutory maximum sentence of five years in prison, a period of supervised release, restitution and monetary penalties. In addition, each defendant agreed to pay a civil penalty for willfully failing to file FBARs. Dan Kalili agreed to pay a civil penalty of $2,674,329, David Kalili agreed to pay a civil penalty of $1,325,121 and Azarian agreed to pay a civil penalty of $951,607.
Principal Deputy Assistant Attorney General Ciraolo commended special agents of IRS-CI, who conducted the investigation, and Assistant Chief Jorge Almonte and Trial Attorney Jason M. Scheff of the Tax Division, who are prosecuting the case. Principal Deputy Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office for the Central District of California for its substantial assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Justice Department Reaches Settlement with Duke Energy Corporation for Violating Premerger Notification and Waiting Period RequirementsRead the Press Release
Duke to Pay $600,000 for Prematurely Taking Control of the Osprey Energy Center
The Department of Justice announced today a settlement with Duke Energy Corporation (Duke) for violating the reporting and waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The settlement requires Duke to pay $600,000 in civil penalties to resolve the department’s charges that, after agreeing to purchase the Osprey Energy Center (Osprey) from Calpine Corporation, Duke took control of Osprey’s business before filing required HSR Act notifications and waiting for the expiration of the mandatory waiting period for antitrust review.
The Justice Department’s Antitrust Division today filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia, along with a proposed settlement that, if approved by the court, would resolve the lawsuit.
“Parties cannot obtain control of the companies they are acquiring until the end of the premerger waiting period,” said Acting Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division. “The Antitrust Division remains vigilant against such ‘gun-jumping’ and takes action when parties to a reportable transaction stop competing independently before the review period has ended.”
The HSR Act requires companies planning transactions that meet certain thresholds to file premerger notification documents with the department and the Federal Trade Commission (FTC) and to observe a mandatory waiting period. During the waiting period, acquirers are prohibited from obtaining “beneficial ownership” of the assets they seek to acquire. A party may prematurely obtain beneficial ownership of a business by, among other things, assuming the risk or potential benefit of changes in the value of the business or exercising control over day-to-day business decisions before the end of the HSR waiting period. This conduct is sometimes referred to as “gun jumping.” HSR Act violators are subject to civil penalties.
The complaint alleges that at the same time that Duke agreed to purchase Osprey, Duke entered into a so-called “tolling agreement” that immediately gave Duke control over Osprey’s output and gave Duke the right to receive the day-to-day profits and losses from Osprey’s business. As a result, from the moment the tolling agreement went into effect, Osprey ceased to be an independent competitor. This occurred before Duke made its required HSR Act notifications and before it had observed the required waiting period.
Duke generates and sells electric power on a retail and/or wholesale basis in numerous local markets throughout the United States. Duke is headquartered in Charlotte, North Carolina. One of Duke’s wholly owned subsidiaries, Duke Energy Florida Inc., sells wholesale and retail power in various areas of Florida. The Osprey Energy Center is a combined-cycle natural gas-fired electrical generating facility located in Auburndale, Florida. Before Osprey was acquired by Duke, Osprey was owned and operated by Calpine Corporation.
Duke Complaint Duke CIS Duke Explanation Duke PFJ Duke StipulationJustice Department Reaches Agreement to Ensure Destruction of Timber Believed to Have Been Harvested in Violation of Peruvian LawRead the Press Release
The Department of Justice announced today that 24 pallets of timber seized by the U.S. Department of Homeland Security, Homeland Security Investigations (HSI) on December 20, 2015, at the Port of Houston, Texas for violation of the Lacey Act and customs law were destroyed in accordance with a settlement agreement reached by the United States and the importer of the timber, Oregon-based Popp Forest Products Inc. The agreement ensures that timber that the U.S. government maintains was harvested in violation of Peruvian law will not enter the U.S. stream of commerce.
The Lacey Act, which is the oldest wildlife protection law in the United States, prohibits importing, exporting, transporting, or receiving timber harvested in violation of foreign laws that regulate the harvesting of such timber. This is the first time the United States has taken such action under the Lacey Act, which was amended in 2008 to include timber products.
“We all have a stake in the sustainability of the world’s forests, which provide habitat for endangered wildlife, and mitigate global warming by drawing carbon from the atmosphere, among many other benefits,” said John C. Cruden, Assistant Attorney General for the Environment and Natural Resources Division. “The interdependence of the world’s ecosystems and natural resources is the foundation of the Lacey Act, the nation’s oldest environmental law. The law also provides us the tools to prevent illegally harvested timber from entering the U.S. marketplace and undercutting lawfully obtained products.”
“We are pleased to have reached a settlement in this case,” said Mark Dawson, Special Agent in Charge of HSI in Houston. “HSI will continue to work with our foreign and domestic partners to ensure imports to the U.S. are conducted in accordance with U.S. laws and regulations.”
The agreement reached between the United States and Popp Forest Products resolves allegations that the timber was harvested in Peru without proper authorization as required under Peruvian law or outside an approved zone. These allegations were based on a report HSI received from the Peruvian government under a Customs Mutual Assistance Agreement, providing the results of an inspection carried out in the areas in which the timber was allegedly harvested. According to the report, the timber could not be the species authorized for harvest. This finding was corroborated in testing by the U.S. Forest Service’s Forest Products Laboratory, which concluded that samples taken from the shipment were not the species authorized for harvest.
As part of the agreement, Popp Forest Products agreed to bear all costs associated with the transportation, destruction, and disposal of the seized timber. The United States agreed to waive further civil enforcement action, administrative fines or civil penalties for the alleged violations of the Lacey Act. This civil agreement does not bind any criminal prosecuting authority, whether federal, state, or local.
The settlement is the result of a coordinated effort by the Environment and Natural Resource Division’s Wildlife and Marine Resources Section, HSI, Immigration and Customs Enforcement, and Customs and Border Protection.
INTERPOL Washington helps Canada close a 19 year-old murder caseRead the Press Release
INTERPOL Washington—the U.S. National Central Bureau (USNCB)--investigative work played a key role in locating one of Canada’s ten most wanted persons. On December 16, 2016 a Canadian jury convicted John Boulachanis, 42, of first degree murder. In 1997, Boulachanis murdered Robert Tanguay, 32, in Riguad, Quebec, Canada, and then lived as an international fugitive under various aliases in Canada and the United States for over a decade. During this time he was sought by Canadian authorities and was the subject of an INTERPOL Red Notice. Boulachanis remained out of sight for years until Canada’s INTERPOL National Central Bureau (NCB) in Ottawa asked INTERPOL Washington to assist in the cold fugitive case because of new leads developed in Quebec.
To break this case, investigators in Canada and the United States shared and disseminated lead information between the two INTERPOL NCBs, and used all resources available to Canadian and U.S. investigators in a concerted effort to locate and apprehend Boulachanis. For the United States, INTERPOL Washington served as a centralized information repository in the effort to assist Canadian law enforcement with the location and capture of the fugitive in June 2011. INTERPOL Washington reviewed historical records and conducted analysis related to the fugitive and his aliases and collected information from U.S. law enforcement agencies which assisted in Boulachanis’ apprehension in Canada. The apprehension of Boulachanis was the result of outstanding cooperation and collaboration by INTERPOL Washington; the U.S. Marshals Service; the Pinellas County Sheriff’s Office (Florida); the Franklin County Sheriff’s Office (Virginia); Surete du Quebec – Canada, Major Crimes Unit; and INTERPOL Ottawa.
A component of the U.S. Department of Justice, INTERPOL Washington is co-managed by the U.S. Department of Homeland Security. As the designated representative to INTERPOL on behalf of the Attorney General, INTERPOL Washington serves as the national point of contact for all INTERPOL matters, coordinating international investigative efforts among member countries and the more than 18,000 local, state, federal, and tribal law enforcement agencies in the United States.
Environment and Natural Resources Division and National Association of Attorneys General Announce Guidelines for Joint State-Federal Civil Environmental EnforcementRead the Press Release
The Department of Justice’s Environment and Natural Resources Division and the National Association of Attorneys General announced the availability today of Guidelines for Joint State/Federal Civil Environmental Enforcement Litigation. A workgroup of litigators from the Environment and Natural Resources Division, the NAAG’s National Attorneys General Research and Training Institute, and state attorney general offices developed these guidelines as a revision to a document originally issued in 2003.
The Guidelines provide a general framework for cooperation between sovereigns in joint civil environmental enforcement litigation and derive from lessons learned in such cases over many years. They include both organizational and substantive suggestions on common topics that arise in joint civil enforcement matters, including case management and settlement issues, pre-filing considerations, and information sharing. They also include several appendices with sample documents and reference information.
“Cooperative federalism is fundamental to the structure and effectiveness of our Nation’s environmental laws, and the Environment and Natural Resources Division vigorously pursues opportunities to partner with our state and local counterparts in environmental enforcement,” said Assistant Attorney General John C. Cruden. “In doing so, we combine sovereigns, reduce costs, and obtain more comprehensive results for the American people. These Guidelines draw on the expertise of a variety of litigators and will be a valuable resource to environmental enforcement colleagues at all levels of government. I am grateful to the National Association of Attorneys General for partnering with the Division on this project.”
“The National Attorneys General Training and Research Institute appreciated the opportunity to work with U.S. Department of Justice’s Environment and Natural Resource Division staff in this collaborative effort to provide information that it anticipates will be helpful to our members,” said Chris Toth, Deputy Executive Director of the National Association of Attorneys General and Director of the National Attorneys General Training and Research Institute (NAGTRI). “Most importantly, NAGTRI would like to offer an extended thank you to attorneys from the New York and Michigan Offices of the Attorney General who worked diligently on this endeavor.”
You can access the Guidelines on the ENRD website.
Two Members of Cowboys Gang Plead Guilty to Racketeering Conspiracy, Attempted Murder and Related OffensesRead the Press Release
Two members of the Cowboys street gang have pleaded guilty to racketeering conspiracy and attempted murder in aid of racketeering for their roles in gang-related shootings in South Carolina.
Acting Assistant Attorney General David Bitkower of the Justice Department’s Criminal Division; Special Agent in Charge C.J. Hyman of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Charlotte, North Carolina, Field Division; Special Agent in Charge Nick S. Annan of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Atlanta Field Office; Solicitor Duffie Stone of the 14th Judicial Circuit; Solicitor David Pascoe of the First Circuit; Sheriff R.A. Strickland, of the Colleton County, South Carolina, Sheriff’s Office; Chief Wade Marvin of the Walterboro, South Carolina, Police Department; Sheriff Al Cannon of the Charleston County, South Carolina, Sheriff’s Office; Sheriff L. C. Knight of the Dorchester County, South Carolina, Sheriff’s Office; Captain Jon Rogers of the Summerville, South Carolina, Police Department; Director Jerry Adger of the South Carolina Department of Probation, Parole and Pardon Services; and Chief Mark Keel of the South Carolina Law Enforcement Division made the announcement.
Christopher Sean Brown, aka Rougish, 23, of Walterboro, pleaded guilty today to attempted murder in aid of racketeering activity. Matthew Rashaun Jones, aka Boogie Mac, 23, also of Walterboro, pleaded guilty today to racketeering conspiracy. Both defendants admitted their involvement and membership in the Cowboys street gang.
According to admissions made in connection with the plea agreements, the Cowboys is a violent criminal street gang operating in South Carolina since at least 2009, with members who resided in an area known as the “Eastside” of Walterboro. Members of the Cowboys show their allegiance by wearing red, white and blue clothing and carrying rags in these colors, including depictions of the American flag. Further, members of the Cowboys greet each other and show their membership in the gang using a set of hand-signs intended to evoke the shape of a “b.” This hand sign also shows an affiliation with the “Bloods” gang. Members of the Cowboys also show allegiance to the gang by having the words “Cowboy(s)” or “GMC” tattooed to some part of their body.
As part of their plea agreements, Brown and Jones admitted that during the time of the conspiracy, they and other members of the Cowboys were involved in robberies, attempted murder and narcotics trafficking. On or about May 30, 2013, Brown and Jones participated in a drive-by shooting. Specifically, Brown and Jones, both passengers in the vehicle, admitted that they fired multiple shots at a residence where suspected members of the Dooley Hill gang – a rival of the Cowboys – were believed to reside.
As part of his plea agreement, Jones admitted that on or about May 12, 2011, he shot at a person whom he believed was an associate of a rival gang, which had an ongoing dispute with the Cowboys. This shooting led to a retaliatory shooting on May 14, 2011, during which an innocent bystander was shot and injured.
Brown, Jones and seven other members and associates of the Cowboys gang were charged in a Feb. 9, 2016, indictment with racketeering conspiracy and related offenses including attempted murder in aid of racketeering and firearms offenses. An indictment is not evidence of guilt. All defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
ATF, HSI, the Colleton County Sheriff’s Office, the Walterboro Police Department, Charleston County Sheriff’s Office, the Dorchester County Sheriff’s Office, the Summerville Police Department and the First Circuit Solicitor’s Office are investigating the cases. The Criminal Division’s Organized Crime and Gang Section is prosecuting indictments against the Cowboys gang in partnership with the 14th Circuit Solicitor’s Office.
NCR Corporation Agrees to End Litigation and Complete Massive Superfund Cleanup at Wisconsin’s Fox RiverRead the Press Release
The Department of Justice’s Environment and Natural Resources Division and the U.S. Environmental Protection Agency announced a major settlement today that requires NCR Corporation to complete one of the nation’s largest Superfund cleanup projects at Wisconsin’s Lower Fox River and Green Bay Site. An enormous amount of cleanup and natural resource restoration work has already been done in the area under a set of partial settlements, an EPA administrative cleanup order, and court orders in a federal lawsuit brought by the United States and the State of Wisconsin. The final phase of cleanup taken on by NCR will cost up to $200 million or more over the next few years. The total cleanup costs for the Fox River Site will exceed $1 billion. The cleanup work will reduce the risks to humans and wildlife posed by polychlorinated biphenyls (PCBs) in bottom sediment of the Fox River and Green Bay.
“After years of hard fought litigation, this settlement requires NCR to take full responsibility for completing this important cleanup effort,” said Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division. “Lawsuits and settlements like this vindicate the principle that polluters should pay the cost of Superfund cleanups, rather than the taxpayers. And, we are pleased that our co-plaintiff, the state of Wisconsin, is also a key part of this settlement.”
“Fox River is a treasure – and it’s been polluted for too long. People should be able to swim, boat, and eat fish from all parts of the river,” said Acting EPA Region 5 Administrator Robert A. Kaplan. “This cleanup will ensure that PCB levels continue to reduce downstream as they have upstream.”
The cleanup remedy for the Fox River Site was jointly-selected by EPA and the Wisconsin Department of Natural Resources. The remedy will remove much of the PCB-containing sediment from the Fox River by dredging. In other portions of the River, contaminated sediment is being contained in place with specially-engineered caps. The dredging and capping will reduce PCB exposure and greatly diminish downstream migration of PCBs to Green Bay. The sediment cleanup began in the uppermost segment of the River in 2004. Under this settlement, NCR has committed to complete the final phase of remediation by the end of 2018.
In 2010, the United States and Wisconsin sued NCR and other parties in a Superfund lawsuit to require them to continue the ongoing cleanup at the Site. The defendants in the government’s lawsuit included paper companies that contaminated the sediment when they made and recycled a particular type of PCB-containing “carbonless” copy paper. NCR and its affiliates produced that paper with PCBs from the mid-1950s until 1971.
This settlement requires NCR to take on sole responsibility for completing all remaining sediment cleanup work at the Site. NCR has done much of the dredging and capping under protest during the last several years, with some funding and assistance from two other defendants, Georgia-Pacific Consumer Products LP and P.H. Glatfelter Company. Once NCR finishes its work, Georgia-Pacific and Glatfelter will have primary responsibility for long-term monitoring and cap maintenance activities under prior court orders from the litigation. The settlement with NCR also resolves the government’s potential claims against Appvion, Inc., which purchased NCR’s paper manufacturing facilities in the Fox River Valley in the late 1970s. Appvion will not be involved in the remaining cleanup work at the Site.
The United States and Wisconsin reached prior settlements with most of the other parties that contributed to the PCB contamination at the Site. The prior settlements included $105 million for natural resource damage assessment activities and natural resource restoration projects selected jointly by federal, state, and tribal government trustees.
The proposed settlement is in the form of a consent decree that must be approved by the federal judge overseeing the legal proceedings over the Fox River Site. If approved, this settlement would end the government’s litigation with NCR and Appvion. The United States and Wisconsin would continue pursuing unresolved claims against Glatfelter for reimbursement of government costs of planning and overseeing the cleanup. Unlike Glatfelter, Georgia-Pacific previously settled with the governments and paid a share of the government’s unreimbursed costs.
The government’s settlement with NCR and Appvion also would narrow the legal claims in a separate federal lawsuit that NCR and Appvion filed against other parties for an overall allocation of the costs associated with the Fox River Site. The claims against most of the original defendants in that case have been settled, but NCR and Appvion are still litigating with Georgia-Pacific and Glatfelter. Under their proposed settlement with the government, NCR and Appvion have agreed to give up most of their claims against Georgia-Pacific and Glatfelter, and NCR and Appvion would be protected against most of the counterclaims filed against them by Georgia-Pacific and Glatfelter.
Today’s settlement, lodged with the U.S. District Court for the Eastern District of Wisconsin, will be subject to a 30-day public comment period after notice of the settlement is published in the Federal Register. To view the consent decree or to submit a comment, visit the department’s website: www.justice.gov/enrd/Consent_Decrees.html.
For more information on cleanup activities at the Lower Fox River and Green Bay Superfund Site, go to the Environmental Protection Agency’s website: https://www3.epa.gov/region5/cleanup/foxriver/
Mitchell Rales to Pay $720,000 Civil Penalty for Violating Antitrust Premerger Notification RequirementsRead the Press Release
The Justice Department’s Antitrust Division, at the request of the Federal Trade Commission (FTC), filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., against Mitchell Rales for violating the premerger notification and waiting period requirements of the Hart-Scott-Rodino (HSR) Act of 1976 when he acquired voting securities of Colfax Corporation in 2011, and of Danaher Corporation in 2008. At the same time, the department filed a proposed settlement, subject to approval by the court, under which Rales has agreed to pay a $720,000 civil penalty to resolve the lawsuit.
The HSR Act imposes notification and waiting period requirements for transactions meeting certain size thresholds so that they can undergo premerger antitrust review. Federal courts can assess civil penalties for premerger notification violations under the HSR Act in lawsuits brought by the department. The maximum civil penalty for an HSR violation increased from $16,000 per day to $40,000 per day effective Aug. 1, 2016.
Further details about this matter are described in the FTC’s press release issued today, and in the attached complaint and competitive impact statement.
Consistent with the requirements of the Tunney Act, the proposed settlement, along with the competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Daniel P. Ducore, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.
Rales Complaint Rales CIS Rales Explanation Rales Final Judgment Rales StipulationJustice Department, EPA and the Navajo Nation Announce Settlement for Cleanup of 94 Abandoned Uranium Mines on the Navajo NationRead the Press Release
The United States and the Navajo Nation have entered into a settlement agreement with two affiliated subsidiaries of Freeport-McMoRan, Inc, for the cleanup of 94 abandoned uranium mines on the Navajo Nation. Under the settlement, valued at over $600 million, Cyprus Amax Minerals Company and Western Nuclear, Inc., will perform the work and the United States will contribute approximately half of the costs. The settlement terms are outlined in a proposed consent decree filed today in federal court in Phoenix, Arizona. With this settlement, funds are now committed to begin the cleanup process at over 200 abandoned uranium mines on the Navajo Nation.
The work to be conducted is subject to oversight of the U.S. Environmental Protection Agency (EPA), in collaboration with the Navajo Nation Environmental Protection Agency.
“This remarkable settlement will result in significant environmental restoration on Navajo lands and will help build a healthier future for the Navajo people,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “We appreciate the extraordinary commitment by Freeport’s affiliated subsidiaries to clean up 94 mines, and to achieve this settlement without litigation. The Justice Department is always ready to work cooperatively with the Navajo Nation and responsible private parties to address the legacy of uranium mining on Navajo lands.”
“This historic settlement will clean up almost twenty percent of the abandoned mines on the Navajo Nation,” said Acting Regional Administrator, Alexis Strauss for the EPA Pacific Southwest. “Cleaning up the uranium contamination continues to be a top environmental priority for our Regional office.”
The Navajo Nation encompasses more than 27,000 square miles within Utah, New Mexico and Arizona in the Four Corners area. The unique geology of the region makes the Navajo Nation rich in uranium, a radioactive ore in high demand after the development of atomic power and weapons at the close of World War II. Many private entities, including Cyprus Amax (a successor-in-interest to Vanadium Corporation of America and Climax Uranium Company) and Western Nuclear, mined approximately thirty million tons of uranium ore on or near the Navajo Nation between 1944 and 1986. The federal government, through the Atomic Energy Commission (AEC), was the sole purchaser of uranium until 1966, when commercial sales of uranium began. The AEC continued to purchase ore until 1970. The last uranium mine on the Navajo Nation shut down in 1986.
Many Navajo people worked in and near the mines, often living and raising families in close proximity to the mines and mills where ore was processed. Since 2008, federal agencies—including EPA, the Department of Energy, the Bureau of Indian Affairs, the Department of the Interior, the Nuclear Regulatory Commission and the Indian Health Service—have collaborated to address uranium contamination on the Navajo Nation. The federal government has invested more than $130 million to address the legacy of abandoned uranium mines on Navajo lands. EPA has also compiled a list of 46 “priority mines” for cleanup and performed stabilization or cleanup work at 9 of those mines. Further, EPA’s cleanup efforts have generated over 100 jobs for Navajo citizens and work for several Navajo owned businesses. The settlement announced today includes 10 priority mines and is expected to create many jobs for Navajo workers.
This settlement agreement resolves the claims of the United States on behalf of EPA against Cyprus Amax and Western Nuclear; of the Navajo Nation against the United States, and against Cyprus Amax and Western Nuclear; and of Cyprus Amax and Western Nuclear against the United States. Cyprus Amax and Western Nuclear agree to perform removal site evaluations, engineering evaluations and cost analyses, and cleanups at the 94 mines. In return for that commitment, the United States, on behalf of the Department of the Interior and the Department of Energy, agrees to place $335 million into a trust account to help fund the cleanup.
In April 2014, the Justice Department and EPA announced in a separate matter that approximately $985 million of a multi-billion dollar settlement of litigation against subsidiaries of Anadarko Petroleum Corp. will be paid to EPA to fund the clean-up of approximately 50 abandoned uranium mines in and around the Navajo Nation, where radioactive waste remains from Kerr-McGee mining operations. EPA commenced field work with the proceeds from this settlement last year. In addition, the United States previously entered into two settlement agreements with the Navajo Nation to fund cleanups at 16 priority mines and investigations at an additional 30 mines for which no viable responsible private party has been identified.
The proposed consent decree, lodged in the U.S. District Court for the District of Arizona, is subject to a 30-day public comment period and approval by the federal court. Information about submitting a public comment is available at: www.justice.gov/enrd/consent-decrees
Justice Department Settles Immigration-Related Discrimination Claim Against J.E.T. Holding Co. Inc.Read the Press Release
The Justice Department reached a settlement today to resolve the department’s claims that J.E.T. Holding Co. Inc. discriminated against U.S. citizens and certain work-authorized immigrants in violation of the Immigration and Nationality Act (INA). J.E.T. is a company based in Saipan, Commonwealth of the Northern Mariana Islands (CNMI), that operates a restaurant, bowling alley and an amusement center.
The department’s investigation found evidence that between approximately January 2016 and June 2016, J.E.T. engaged in a pattern or practice of refusing to hire U.S. citizens and other work-authorized individuals, including lawful permanent residents, for several dishwasher positions. The department concluded that J.E.T. failed to consider qualified U.S. citizen applicants and others based on their citizenship or immigration status because of a preference for hiring non-immigrant foreign workers with CW-1 visas. The CW-1 visa grants temporary work authorization to its beneficiaries and is only available in the CNMI. CNMI employers may apply to the CNMI Department of Labor for permission to hire workers under the CW-1 visa program after advertising vacant positions and certifying that no qualified local workers are available for hire.
Under the terms of the settlement, J.E.T. will pay a civil penalty of $12,000, establish a back pay fund of $40,000 to compensate qualified claimants for any lost wages through a claims process, train its workers on the anti-discrimination provision of the INA and be subject to department monitoring.
“This settlement reflects the Justice Department’s firm commitment to ensuring that we protect the rights of workers in all U.S. jurisdictions,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “We commend J.E.T. for its cooperation in achieving this settlement and for taking steps to ensure that workers don’t face discriminatory barriers in the hiring process. ”
“The U.S. Attorney’s Office is committed to protecting the civil rights of all workers and ensuring that employers are not discriminating against individuals based on their citizenship or national origin or immigration status, in violation of the anti-discrimination provision of the INA,” said U.S. Attorney Alicia A.G. Limtiaco of the Districts of Guam and the Northern Mariana Islands. “We all have the right to be treated equally and fairly.”The U.S. Attorney’s Office in the CNMI coordinated with the Justice Department’s Civil Rights Division in its investigative efforts, and will provide assistance during the back pay claims process.
Potential back pay claimants include those who applied for a dishwasher position with J.E.T. between Dec. 13, 2015, and May 14, 2016. Individuals who believe they are potential claimants should contact [email protected] or 202-307-3092, or [email protected] or 671-479-4139.
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA. The law prohibits, among other things, citizenship, immigration status and national origin discrimination in hiring, firing or recruitment or referral for a fee; unfair documentary practices in employment eligibility verification; retaliation and intimidation.
To learn more about the protections against employment discrimination under immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php; email [email protected]; or visit OSC’s website at www.justice.gov/crt/about/osc.
Applicants or employees who believe they were subjected to: different documentary requirements based on their citizenship status, immigration status or national origin; or discrimination based on their citizenship status, immigration status or national origin in hiring, firing or recruitment or referral, should contact the worker hotline above for assistance.
JET Settlement AgreementAhmet Okumus to Pay $180,000 Civil Penalty for Violating Antitrust Premerger Notification RequirementsRead the Press Release
The Justice Department’s Antitrust Division, at the request of the Federal Trade Commission (FTC), filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., against Ahmet Okumus for violating the premerger notification and waiting period requirements of the Hart-Scott-Rodino (HSR) Act of 1976 when he acquired voting securities of Web.com Group, Inc. in 2016. At the same time, the department filed a proposed settlement, subject to approval by the court, under which Okumus has agreed to pay a $180,000 civil penalty to resolve the lawsuit.
The HSR Act imposes notification and waiting period requirements for transactions meeting certain size thresholds so that they can undergo premerger antitrust review. Federal courts can assess civil penalties for premerger notification violations under the HSR Act in lawsuits brought by the department. The maximum civil penalty for an HSR violation increased from $16,000 per day to $40,000 per day effective Aug. 1, 2016.
Further details about this matter are described in the FTC’s press release issued today, and in the attached complaint and competitive impact statement.
Consistent with the requirements of the Tunney Act, the proposed settlement, along with the competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Daniel P. Ducore, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.
Okumus Complaint Okumus CIS Okumus Explanation Okumus Final Judgment Okumus StipulationThe Justice Department and EPA Reach Clean Water Act Settlement with Pepco to Reduce Pollution to Anacostia RiverRead the Press Release
The Department of Justice and the U.S. Environmental Protection Agency announced today a settlement with the Potomac Electric Power Company (Pepco) for alleged violations of Pepco’s Clean Water Act permit at its service center located in Anacostia. Under the settlement, Pepco will implement a number of measures to reduce metals in stormwater entering into its drainage system and will install an in-pipe treatment system to further treat the stormwater, which discharges into the Anacostia River. Pepco also will pay a civil penalty of $1.6 million. Pepco also agreed to perform a mitigation project to eliminate stormwater discharges from another outfall at the facility, and will pay an additional stipulated penalty of $500,000 if it fails to put the project into operation.
The United States filed its complaint in October, 2015, in the US District Court for the District of Columbia and alleged violations of limits in the EPA Clean Water Act Permit for metals, including copper, zinc, iron and nickel, and total suspended solids (TSS). The consent decree filed with the court today requires Pepco to put into place Best Management Practices or BMPs to prevent the metals and other pollutants from entering into Pepco’s stormwater drainage system, including booms and filters at each drain leading into the system, as well as enhanced inspections and other measures. In addition, Pepco will install in-pipe treatment systems in several areas to remove the metals from the stormwater in the drainage system until the permit limits are met. Pepco also will implement a mitigation project using vegetation and a holding pond to capture and treat stormwater that currently drains from the Benning Street facility into the Anacostia River.
At 8.7 miles, the Anacostia River is a major tributary of the Potomac River, which ultimately flows into the Chesapeake Bay. The Anacostia River is impaired for organics, heavy metals and sediment. EPA and its state partners, including the District of Columbia, have focused efforts on addressing pollution in the Anacostia River in the past decade, through Clean Water Act permits, judicial consent decrees and other regulatory mechanisms.
“This agreement will aid the continuing recovery of the Anacostia River by cleaning up contaminated stormwater from this Pepco facility,” said Assistant Attorney General John C. Cruden. “This is part of the ongoing and substantial efforts by EPA and the Department of Justice to address sources of water pollution and bring great American rivers like the Anacostia back to health. I have personally kayaked the River and know its importance in our Washington, D.C. ecosystem.”
“Controlling stormwater runoff is essential to protecting and restoring our urban waterways” said EPA Regional Administrator Shawn M. Garvin. “This settlement underscores EPA’s commitment to continuing the progress that we and our partners have made along the Anacostia.”
The Pepco facility historically included a power plant that was shut down in 2012 and has been removed. The property is also the subject of an on-going study and clean-up of soil and other contamination being performed under a consent decree with the District of Columbia Department of Energy and Environment.
On March 28, 2016, the District Court granted the request of the Anacostia Riverkeeper, an environmental organization, to intervene in the lawsuit.
The consent decree was lodged in the District Court for the District of Columbia. Notice of the lodging will appear in the Federal Register. The Decree is subject to a public comment period of not less than 30 days before the consent decree can be entered by the court. The consent decree can be viewed at www.justice.gov/enrd/consent-decrees.
Justice Department and Federal Trade Commission Announce Updated International Antitrust GuidelinesRead the Press Release
The Department of Justice and the Federal Trade Commission (FTC) issued today revised Antitrust Guidelines for International Enforcement and Cooperation. These guidelines update the 1995 Antitrust Enforcement Guidelines for International Operations and provide guidance to businesses engaged in international activities on questions that concern the agencies’ international enforcement policy as well as the agencies’ related investigative tools and cooperation with foreign authorities.
The revised guidelines reflect the growing importance of antitrust enforcement in a globalized economy and the agencies’ commitment to cooperating with foreign authorities on both policy and investigative matters.
“Anticompetitive conduct that crosses borders can adversely affect our commerce with foreign nations. The department’s antitrust enforcement is focused on ending that conduct in order to protect consumers and businesses in the United States,” said Acting Assistant Attorney General Renata Hesse, in charge of the Department of Justice’s Antitrust Division. “The Antitrust Guidelines for International Enforcement and Cooperation released today provide important, up to date guidance to businesses engaged in international operations on our enforcement policies and priorities; the changes we have made to the international guidelines, last issued in 1995, reflect developments in the department’s practices and in the law over the last 22 years. Developed jointly with the FTC, the Guidelines are another powerful example of the benefits of collaboration between our Agencies.”
“The agencies’ enforcement of the U.S. antitrust laws now frequently involves activity outside the United States, increasingly requiring collaboration with international counterparts,” said Chairwoman Edith Ramirez of the FTC. “The Guidelines we are issuing today explain to the business and antitrust communities our current approaches to international enforcement policy and related investigative tools, and cooperation. They are the product of the excellent working relationship between our two agencies.”
The revisions describe the current practices and methods of analysis the agencies employ when determining whether to initiate and how to conduct investigations of, or enforcement actions against, conduct with an international dimension. The Antitrust Guidelines for International Enforcement and Cooperation are different from the 1995 guidelines in several important ways. In particular, they:
Add a chapter on international cooperation, which addresses the Agencies’ investigative tools, confidentiality safeguards, the legal basis for cooperation, types of information exchanged and waivers of confidentiality, remedies and special considerations in criminal investigations;
Update the discussion of the application of U.S. antitrust law to conduct involving foreign commerce, the Foreign Trade Antitrust Improvements Act, foreign sovereign immunity, foreign sovereign compulsion, the act of state doctrine and petitioning of sovereigns, in light of developments in both the law and the Agencies’ practice; and
Provide revised illustrative examples focused on the types of issues most commonly encountered.The agencies issued proposed revisions for public comment on Nov. 1, 2016, in response to which comments were received from practitioners, academics, economists, and other stakeholders. Public comments are available at https://www.justice.gov/atr/guidelines-and-policy-statements-0/antitrust-guidelines-international-enforcement-and-cooperation-2017.
The Antitrust Guidelines for International Enforcement and Cooperation are available on the Department’s website at https://www.justice.gov/atr/internationalguidelines/download and the FTC’s website at www.ftc.gov/InternationalGuidelines.
The FTC vote approving the 2017 Antitrust Guidelines for International Enforcement and Cooperation was 3-0.
Antitrust Guidelines for International Enforcement and Cooperation
Justice Department Sues KleinBank for Redlining Minority Neighborhoods in MinnesotaRead the Press Release
The Justice Department today filed a lawsuit against KleinBank alleging that the bank engaged in unlawful “redlining” of majority-minority neighborhoods in the Minneapolis-St. Paul metropolitan area. “Redlining” is the discriminatory practice by banks or other financial institutions of denying or avoiding providing credit services to consumers because of the racial or ethnic demographics of the neighborhood in which the consumer lives.
The lawsuit, filed in the U.S. District Court for the District of Minnesota, alleges that KleinBank violated the Fair Housing Act and Equal Credit Opportunity Act, which prohibit financial institutions from discriminating on the basis of race and color in their mortgage lending practices. The complaint alleges that from 2010 to at least 2015, KleinBank structured its residential mortgage lending business in such a way as to avoid serving the credit needs of neighborhoods where a majority of residents are racial and ethnic minorities.
The bank’s alleged redlining practices include: excluding majority-minority neighborhoods from the area it serves; locating branch offices and mortgage loan officers in majority-white neighborhoods, but not in majority-minority neighborhoods; and targeting marketing and advertising exclusively toward residents of majority-white neighborhoods. From 2010 to 2015, comparable lenders generated applications in majority-minority neighborhoods at over five times the rate of KleinBank and made loans in majority-minority neighborhoods at over four times the rate of KleinBank.
“Redlining produces an unequal and unlevel playing field for borrowers in minority neighborhoods,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “Cases like this one demonstrate the Justice Department’s strong commitment to hold banks accountable for continuing and perpetuating historic trends of inequality in residential mortgage lending.”
The Justice Department’s enforcement of fair lending laws is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section. Since 2010, the division has provided over $1.6 billion in monetary relief for individual borrowers and impacted communities through its enforcement of the Fair Housing Act, ECOA and the Servicemembers Civil Relief Act. The Attorney General’s annual reports to Congress on ECOA enforcement highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications/.
The Civil Rights Division is a member of the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
Additional information about fair lending enforcement by the Justice Department can be found on the department’s website at www.justice.gov/fairhousing.
KleinBank Complaint KleinBank Exhibit A KleinBank Exhibit BJustice Department Awards $500,000 to Initiate Video-Based Services for Deaf VictimsRead the Press Release
Today the Justice Department’s Office on Violence Against Women (OVW) announced an award of $500,000 to the Vera Institute of Justice’s Center on Victimization and Safety to create a plan for establishing a National Deaf Service Line that will enable Deaf victims of domestic violence, sexual violence, dating violence and stalking to speak directly with a Deaf advocate or an individual who is fluent in their preferred mode of communication via video phone 24 hours per day, seven days per week.
For many Deaf individuals, the most effective form of communication is in-person, using sign language or an assistive communication device. Services that are most responsive to the needs of Deaf victims are firmly rooted in Deaf culture and provided by individuals who use the same mode of communication, but such services are often not available because of the limited number of culturally Deaf-specific domestic violence and sexual assault programs.
“Clear communication is essential to helping victims find and receive the services they need,” said OVW’s Principal Deputy Director Bea Hanson. “The National Deaf Service Line will give Deaf victims an enhanced means of accessing safe, culturally appropriate services.” While in-person services remain the best option, remote services, provided by a Deaf advocate, via video phone are the next best option.
The Vera Institute of Justice has worked extensively to end domestic and sexual violence in the lives of individuals with disabilities and Deaf individuals through trainings, technical assistance, conferences and a number of key Deaf-specific initiatives.
With this award, OVW is entering the first of a two-phase project; phase two will be the implementation of the plan the Vera Institute of Justice will developed. The plan will include description of how the National Deaf Service Line will complement the services currently offered to the Deaf community by the National Domestic Violence Hotline.
OVW provides leadership in developing the nation’s capacity to reduce violence against women through the implementation of the Violence Against Women Act (VAWA) and subsequent legislation. Created in 1995, OVW administers financial and technical assistance to communities across the country that are developing programs, policies and practices aimed at ending domestic violence, dating violence, sexual assault and stalking. In addition to overseeing 21 federal grant programs, OVW often undertakes initiatives in response to special needs identified by communities facing acute challenges. For more information on OVW, please visit www.justice.gov/ovw.
Environment and Natural Resources Division Announces 2016 One of its Most Successful Years in HistoryRead the Press Release
The Department of Justice’s Environment and Natural Resources Division announced today the publication of its accomplishments in 2016, documenting one of the most successful years in its history of over a century, including the highest recoveries in environmental enforcement, record-setting recoveries in natural resource damages, and the highest criminal penalties handed down in individual vessel pollution and Lacey Act trafficking cases.
“I am extremely proud and grateful to have led the men and women of this division through a landmark year in its long history of protecting, defending and preserving the environment and natural resources of this great nation,” said Assistant Attorney General John C. Cruden. “Together, we brought justice and an immense restoration effort to the Gulf shores spoiled by Deepwater Horizon, and resolution to automobile consumers and all Americans deprived of clean air by Volkswagen’s deceit. And we ended, fairly and honorably, the vast majority of protracted litigation that has stood in the way of a stronger nation-to-nation relationship between the United States and American Indian tribes.”
The division’s responsibilities are broad: enforcing the nation’s civil and criminal pollution-control laws, defending environmental challenges to federal agency programs and activities, representing the United States in matters concerning the stewardship of the nation’s natural resources and public lands, acquiring real property, bringing and defending cases under the wildlife protection statutes, and litigating cases concerning the resources and rights of Indian tribes and their members.
The division’s work in its traditional areas of responsibility continued apace throughout 2016, but the year was highlighted by three extraordinary events: (1) completing the historic settlement with BP arising out of the tragic Deepwater Horizon oil spill into the Gulf of Mexico, (2) bringing a Clean Air Act case against Volkswagen and finalizing an exceptional consent decree, which will impact over a half million diesel car owners; and (3) resolving multiple tribal trust cases by reaching court-approved settlements with 17 additional tribes.
The first key enforcement success was the final entry in April 2016 of the consent decree in the Department’s record-breaking settlement with BP in the Deepwater Horizon oil spill litigation in which the United States and the five Gulf Coast states secured payments in excess of $20 billion to resolve their claims against BP. This settlement is the largest in the history of federal law enforcement for a single defendant, and it includes the largest-ever Clean Water Act civil penalty and the largest-ever recovery of damages for injuries to natural resources.
Next, ENRD took important steps toward resolving the civil Clean Air Act violations alleged in the United States’ complaint relating to Volkswagen’s use of devices designed to defeat vehicle emissions tests on approximately 580,000 model year 2009-2016 2.0 and 3.0 liter diesel vehicles sold or leased in the United States. In June 2016, German automaker Volkswagen AG and related entities (Volkswagen) agreed to a settlement relating to the 2.0 liter vehicles, under which it will spend up to $14.7 billion to offer consumers a buyback of the vehicles, and potentially also offer (if approved by regulators) an emissions modification to substantially reduce emissions; fund air pollution reduction projects; and invest in green technology. And, in December, ENRD completed another settlement with Volkswagen that addresses the 3.0 liter vehicles and is valued at approximately $1 billion. Under that agreement, Volkswagen must offer to buy back the older model year 2009-2012 vehicles, and potentially offer an emissions modification (if approved by regulators). For the newer model year 2013-2016 vehicles, if Volkswagen successfully demonstrates that the vehicles can be repaired to comply with the certified emissions standards, they must offer that option and will not be required to offer to buy back those vehicles. Volkswagen also must fund additional air pollution reduction projects like those approved by the court in the 2.0 liter settlement.
In addition to the BP and Volkswagen litigation, the division successfully litigated over 790 cases and handled nearly 7,000 cases, matters, and appeals in 2016. ENRD achieved over $14 billion in civil and criminal fines, penalties, and costs recovered.
The division continued its robust program of prosecuting shipping companies and crew for the intentional discharges of pollutants from ocean-going vessels in U.S. waters. At the end of fiscal year 2016, criminal penalties imposed in these cases totaled more than $363 million in fines and more than 32 years of confinement. And in December 2016, ENRD obtained the largest-ever criminal penalty involving deliberate vessel pollution when it concluded the prosecution of Princess Cruise Lines Ltd. The company pleaded guilty to seven felony charges and will pay a $40 million penalty.
ENRD attorneys also devoted substantial effort to defending key rules at the heart of this Administration’s commitment to safeguard clean air and clean water. The division is defending EPA’s Clean Power Plan—the Agency’s historic Clean Air Act rulemaking that takes action on climate change by reducing greenhouse gases from power plants. The rule has faced challenges from over 100 state and industry parties, with the cases consolidated in West Virginia v. EPA. The division’s vigorous defense of the rule culminated in a marathon six-hour oral argument before a 10-judge en banc panel of the U.S. Court of Appeals for the District of Columbia Circuit. An evaluation of ENRD’s defense of other EPA Clean Air Act regulations indicates that the division prevailed in over 90 percent during 2015 and 2016.
In addition to this critically important pollution-control work, the division protected the American taxpayer both through its careful and successful handling of agency land acquisitions and through vigorous and effective defense of cases alleging that government actions took property in violation of the Fifth Amendment, ensuring that the government did not pay more than market value in providing just compensation to landowners. ENRD’s efforts helped federal agencies carry out vital federal programs that serve a variety of important interests, such as promoting the use of renewable energy to foster energy independence. To that end, ENRD defended agency decisions regarding solar projects on public land, and prosecuted those who engaged in renewable fuel fraud—criminal conduct that undermines the renewable fuel standard program Congress created to curtail greenhouse gas emissions and expand the nation’s renewable fuels sector.
The division also made great strides toward advancing environmental justice through all of its work. ENRD’s Counsel for Environmental Justice continued to work closely with attorneys throughout the division, both to improve awareness and understanding of environmental justice issues and to make sure ENRD resolves cases in ways that provide real, concrete results for low-income and vulnerable communities that have suffered disproportionately from damage to the environment.
ENRD also focused on promoting and defending tribal sovereignty, treaty obligations, and the rights of Indian tribes, as well as resolving long-standing disputes with tribes. In particular, ENRD continued its initiative to resolve tribal trust cases, reaching settlements with 17 tribes for almost $493 million between January 1 and September 26, 2016, alone. These settlements add to already-historic efforts in settling these lawsuits. Since January 20, 2009, the division has settled the claims of 104 tribes for a total of $3.35 billion. These settlements represent a significant milestone in improving the government-to-government relationship between the United States and Indian tribes.
The division’s work also helps ensure effective stewardship of the nation’s public lands, natural resources and animals, including fighting for the survival of the world’s most iconic species and marine resources, and working across the government and the globe to end the illegal trade in wildlife. Here, too, ENRD continued to achieve outstanding results. Along with senior leadership from the Departments of State and the Interior, Assistant Attorney General Cruden co-chairs the Presidential Task Force on Wildlife Trafficking, which unites 17 federal agencies to combat the pernicious trade in wildlife that is decimating many species throughout the world and undermining global security.
ENRD brought some of the most significant wildlife prosecutions in our history this year, particularly in the timber trafficking case against Lumber Liquidators. That case yielded a total of $13.15 million in penalties, the largest financial penalty for timber trafficking under the Lacey Act, which makes it a crime to import timber taken in violation of the laws of a foreign country and to transport falsely labeled timber across international borders into the U.S. In Operation Crash, a multi-year, ongoing effort targeting illegal trade of horns from highly endangered rhinoceroses and elephant ivory, the Department thus far has secured combined prison sentences of nearly 34 years, fines of over $2 million, and forfeiture and restitution of $5.5 million.
In addition to these notable achievements, this year the division began vigorously implementing its newly acquired responsibility for criminal worker safety prosecutions and enforcement of animal welfare statutes. ENRD and the U.S. Attorneys’ Offices are already working under the new worker safety initiative with several offices within the Department of Labor, including the Occupational Safety and Health Administration, to investigate and prosecute worker endangerment violations. And ENRD took several steps to support enforcement of federal animal welfare statutes, such as conducting training and co-hosting a highly successful conference that brought together federal, state and local leaders to map out a coordinated strategy for the future.
The division also brought criminal charges against nine defendants for their roles in a multi-state dog fighting conspiracy; in coordination with these cases, the United States seized 79 dogs, and ENRD civil attorneys negotiated the surrender of 71 of these dogs—making them potentially available for adoption—and are seeking civil forfeiture of the remaining dogs. The division is just beginning this important work, but it will continue to move forward.
As 2016 drew to a close, the division accepted an award from the Partnership for Public Service, which ranked the Environment and Natural Resources Division as the #2 best place to work in the federal government, as well as the best place to work in the Department of Justice. With more than 300 federal agency subcomponents competing, ENRD’s new rank places it well into the top 1% of all federal workplaces. This honor is truly a testament to the passion, commitment, and professionalism of the extraordinary men and women in this division.
To read more about the ENRD’s work over the past year, you can read the Accomplishments Report.
DOJ and FTC Issue Updated Antitrust Guidelines for the Licensing of Intellectual PropertyRead the Press Release
Update Reaffirms Role of Guidelines while Reflecting Developments in the Law
and the Agencies’ Enforcement and Policy WorkThe Department of Justice and the Federal Trade Commission issued today updated Antitrust Guidelines for the Licensing of Intellectual Property (IP Licensing Guidelines) that explain how the federal antitrust agencies evaluate licensing and related activities involving patents, copyrights, trade secrets and know-how. This update modernizes the IP Licensing Guidelines, which the agencies jointly issued in 1995, so they may continue to play a fundamental role in the agencies’ analysis of the licensing of intellectual property rights and provide guidance to the public and the business community about the agencies’ enforcement approach to intellectual property licensing.
The agencies announced the proposed update of the IP Licensing Guidelines and made a draft available for public comment in August 2016. As described in that announcement, the proposed update reflected intervening changes in statutory and case law, as well as relevant enforcement and policy work, including the agencies’ 2010 Horizontal Merger Guidelines. During a 45-day comment period, the agencies received public comments from academics, private industries, law associations and non-profit organizations, which are available here. After carefully reviewing and considering the comments, the agencies have now finalized the update.
“Our modernized IP Licensing Guidelines continue to apply an effects-based analysis that puts the focus on evaluating harm to competition, not on harm to any individual competitor, and support procompetitive intellectual property licensing that can promote innovation,” said Acting Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division. “The comments we received were helpful in completing this update and also serve more broadly to better our understanding of some of today’s very complex antitrust issues that involve intellectual property rights.”
“Today, the Commission reaffirms its commitment to an economically grounded approach to antitrust analysis of IP licensing,” said Chairwoman Edith Ramirez of the FTC. “A strong and competitive IP licensing system benefits consumers and fosters innovation, by helping to ensure that inventors realize an appropriate return on their investment.”
In response to the desire of some commenters for the guidelines to more specifically address additional IP licensing activities, the agencies reiterate that the flexible effects-based enforcement framework set forth in the IP Licensing Guidelines remains applicable to all IP licensing activities. In addition, the business community may consult the wide body of DOJ and FTC guidance available to the public – in the form of published agency reports, statements, speeches and enforcement decisions – which rely on this analytical framework and further illuminate each agency’s analysis of a variety of conduct involving intellectual property, including standards-setting activities and the assertion of standards-essential patents.
The updated IP Licensing Guidelines are available on the Department of Justice’s website here and the Federal Trade Commission’s website here.
Antitrust Guidelines for the Licensing of Intellectual Property
Chilean Chemicals and Mining Company Agrees to Pay More Than $15 Million to Resolve Foreign Corrupt Practices Act ChargesRead the Press Release
Chilean chemicals and mining company Sociedad Química y Minera de Chile (SQM) agreed to pay a criminal penalty of more than $15 million in connection with payments to politically-connected individuals in Chile in violation of the Foreign Corrupt Practices Act (FCPA), announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.
According to the company’s admissions, SQM knowingly failed to implement internal controls sufficient to ensure that payments from a fund under the control of one of its officers and high-level executives were made for services received and in compliance with Chilean law. Between 2008 and 2015, SQM made donations to dozens of foundations controlled by or closely tied to Chilean politicians. During this period, for example, SQM funneled approximately $630,000 to foundations controlled by a Chilean official with influence over the government’s mining plans in Chile, a key segment of SQM’s business.
SQM also admitted to falsifying its books and records to conceal payments to vendors associated with politicians, logging them as consulting and professional services SQM never received. For example, in 2009, SQM paid approximately $11,000 to the sister-in-law of a Chilean official, recording the payment in SQM’s books as a payment for services received, despite the fact that the official’s sister-in-law submitted the false invoice solely to disguise payment to a Chilean senatorial campaign.
In total, SQM admitted having paid nearly $15 million between 2008 and 2015 to vendors despite having no evidence any goods or services were actually received.
SQM entered into a deferred prosecution agreement (DPA) in connection with a criminal information filed today in the District of Columbia, charging the company with one count of failing to implement internal controls and one count of falsifying its books and records. Pursuant to its agreement with the department, SQM agreed to pay a criminal penalty of $15,487,500; continue to cooperate with the department’s investigation; enhance its compliance program; implement rigorous internal controls; and retain an independent corporate compliance monitor for a term of two years, with a third year of self-reporting to occur thereafter.
The Criminal Division’s Fraud Section reached this resolution based on a number of factors, including the fact that SQM did not voluntarily disclosure the FCPA violations, but did cooperate with the department’s investigation after news of Chilean prosecutors’ investigation of the company surfaced in media reports. SQM received a 25 percent reduction off the low end of the applicable U.S. Sentencing Guidelines fine range because of its full cooperation and substantial and ongoing remediation. Because many of SQM’s compliance enhancements were more recent, and therefore have been subjected to a relatively short period of testing, the DPA imposes an independent compliance monitor. However, due to the company’s size and risk profile, as well as the enhancements the company has already made, the term of the monitor will be two years and the company will be permitted SQM to self-report for the final year of the agreement.
In a related matter, SQM reached a settlement on Jan. 13, 2017, with the Securities and Exchange Commission (SEC), pursuant to which it will pay a $15 million civil monetary penalty.
Trial Attorneys Lorinda Laryea and Jonathan Robell of the Criminal Division’s Fraud Section prosecuted the case, which was previously handled by former Fraud Section Trial Attorney John-Alex Romano.
The Fraud Section appreciates the significant cooperation provided by the SEC in this matter. The Criminal Division’s Office of International Affairs and the FBI’s International Operations Division also provided assistance during the investigation.
The Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the department’s FCPA enforcement matters can be found at www.justice.gov/criminal/fraud/fcpa.
Zimmer Biomet Holdings Inc. Agrees to Pay $17.4 Million to Resolve Foreign Corrupt Practices Act ChargesRead the Press Release
Subsidiary Agrees to Plead Guilty to Violating the Foreign Corrupt Practices Act
Zimmer Biomet Holdings Inc. (Zimmer Biomet), an Indiana-based manufacturer of orthopedic and dental implant devices, has agreed to pay a $17.4 million criminal penalty in connection with a scheme to pay bribes to government officials in Mexico and for violations of the internal controls provisions of the Foreign Corrupt Practices Act (FCPA) involving the company’s operations in Mexico and Brazil. Zimmer Biomet had been in breach of a 2012 deferred prosecution agreement (DPA) with the department resolving an earlier investigation into FCPA violations committed by Biomet Inc., which became part of Zimmer Biomet in 2015.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Assistant Director Stephen Richardson of the FBI’s Criminal Investigative Division made the announcement.
“Zimmer Biomet had the opportunity to avoid criminal charges but its misconduct allowed the bribes to continue,” said Assistant Attorney General Caldwell. “Zimmer Biomet is now paying the price for disregarding its obligations under the earlier deferred prosecution agreement. In appropriate circumstances the department will resolve serious criminal conduct through alternative means, but there will be consequences for those companies that refuse to take these agreements seriously.”
“Zimmer Biomet failed to rectify their misconduct and get back on track in compliance with the law, and now they are facing the consequences of their corrupt actions,” said Assistant Director Richardson. “The FBI will not stand idly by when companies operate outside the law and attempt to play by different rules in the marketplace. We remain vigilant and committed to holding those accountable who disregard the rule of law in the United States.”
According to admissions made in the resolution documents, even after the 2012 DPA between the department and Biomet, the company knowingly and willfully continued to use a third-party distributor in Brazil known to have paid bribes to government officials on Biomet’s behalf. Biomet also failed to implement an adequate system of internal accounting controls at the company’s subsidiary in Mexico, despite employees and executives having been made aware of red flags suggesting that bribes were being paid. By failing to require appropriate due diligence and documentation and contracts for payments to third parties, Biomet allowed its Mexican subsidiary, Biomet 3i Mexico S.A. de C.V. (3i Mexico), to pay bribes to Mexican customs officials through customs brokers and sub-agents so 3i Mexico could import contraband dental implants into Mexico. Importing those products into Mexico violated Mexican law because they lacked proper registration or labeling.
Zimmer Biomet entered into a three-year DPA tin connection with a superseding criminal information, filed today in the District of Columbia, charging the company with failing to implement a system of effective internal accounting controls. Pursuant to its agreement with the department, Zimmer Biomet agreed to pay a $17.4 million criminal penalty and retain an independent corporate compliance monitor for three years.
JERDS Luxembourg Holding S.ár.l. (JERDS), an indirect subsidiary of Zimmer Biomet, agreed to plead guilty to a one-count criminal information, also filed in the District of Columbia, charging it with causing Biomet to violate the books and records provisions of the FCPA through the actions of 3i Mexico, a wholly-owned subsidiary of JERDS. The plea agreement is subject to court approval. The case was assigned to Senior U.S. District Judge Reggie B. Walton of the District of Columbia and the change of plea is scheduled to take place on Jan. 13, 2017 at 3:45 p.m.
In related proceedings, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against Zimmer Biomet whereby the company agreed to pay to the SEC disgorgement of $6.5 million including pre-judgment interest and $6.5 million as a civil penalty.
The Criminal Division’s Fraud Section reached this resolution based on a number of factors, including that Zimmer Biomet was in breach of the 2012 DPA between Biomet and the department. That agreement resolved an earlier investigation by the department into violations of the FCPA committed by Biomet, including the bribery of government officials in Argentina, Brazil and China as well as the falsification of the company’s financial records to conceal the true nature of the bribe payments. Pursuant to the 2012 DPA, Biomet had been required to retain an independent compliance monitor. The monitor’s term was extended for one year in 2015, due to both the bribery in Brazil and Mexico and the fact that the Zimmer Biomet compliance program did not meet the requirements of the 2012 DPA. At the conclusion of the extended period, the independent monitor was unable to certify that the company’s compliance program satisfied the requirements of the 2012 DPA and the department notified Zimmer Biomet that it was deemed to be in breach of the agreement. Zimmer Biomet fully cooperated with the current investigation and provided to the Fraud Section all relevant facts known to the company, including information about individuals involved in the misconduct. Nevertheless, because Zimmer Biomet failed to implement an effective compliance program and committed additional crimes while under a DPA and monitorship, the current DPA requires Zimmer Biomet retain an independent compliance monitor for a term of three years.
The FBI’s International Corruption Squad in Washington, D.C., investigated the case. Assistant Chief Tarek J. Helou and Trial Attorney John Borchert of the Fraud Section prosecuted the case. The Office of International Affairs also provided substantial assistance in this matter.
The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Court Documents:
Zimmer Superseding Information Zimmer DPA JERDS InformationThe Department of Justice Releases New Report on the Attorney General’s Twelve-City Community Policing Tour and Regional Justice ForumsRead the Press Release
As part of the Department’s commitment to working with communities and law enforcement to build stronger relationships and mutual trust, Attorney General Loretta E. Lynch today announced the release of the “Attorney General’s Community Policing Report,” a summary of the Attorney General’s twelve-city Community Policing Tour and the Department of Justice’s four Regional Justice Forums. The Attorney General’s Community Policing Tour Report builds on President Obama’s priorities to engage with law enforcement and other members of the community to implement key recommendations from the Final Report of the President’s Task Force on 21st Century Policing.
“This document is not meant to be a comprehensive, step-by-step guide, but, rather, a useful blueprint—a window into what citizens across the nation are doing to build stronger bonds between police and the people they serve,” said Attorney General Lynch. “I hope that this report will help inspire ideas and foster cooperation in communities from coast to coast—so that, together, we can continue our work toward a stronger, a safer, and a more united nation.”
During the Community Policing Tour, Attorney General Lynch visited 12 jurisdictions in two phases. Phase I focused on jurisdictions that had addressed difficult histories of mistrust between communities and law enforcement through strong collaboration and innovation. During this phase, the Attorney General traveled to Cincinnati, Ohio; Birmingham, Alabama; East Haven, Connecticut; Pittsburgh, Pennsylvania; Seattle, Washington; and Richmond, California. Phase II highlighted cities that had made outstanding progress implementing the six key pillars identified in the Final Report of the President’s Task Force on 21st Century Policing. During this phase, the Attorney General visited Miami/Doral, Florida; Portland, Oregon ; Indianapolis, Indiana; Fayetteville, North Carolina; Phoenix, Arizona; and Los Angeles, California, with each site focusing on one of the report’s pillars.
In the wake of the horrific tragedies of the summer of 2016 in Baton Rouge, Louisiana; Dallas, Texas; and St. Paul, Minnesota, the Attorney General and Deputy Attorney General Sally Q. Yates convened a series of Regional Justice Forums with members of the local law enforcement, youth, faith, non-profit and civil rights communities. These meetings were designed to help local stakeholders critically examine community policing issues in their respective cities and regions and to seek concrete solutions together. The Attorney General convened Justice Forums in Detroit, Michigan and Newark, New Jersey. The Deputy Attorney General hosted forums in Denver, Colorado, and Atlanta, Georgia.
This report chronicling the community policing work of the Department of Justice highlights innovative local approaches to policing that help foster stronger ties between officers and the people they are sworn to serve and protect. The document is meant to serve as a tool for communities and law enforcement agencies seeking to deepen their own commitment to community policing principles and practices.
Second Foreign Currency Exchange Dealer Pleads Guilty to Antitrust ConspiracyRead the Press Release
A foreign currency exchange (FX) dealer became the second person to plead guilty to conspiring to fix prices in the FX market, the Justice Department announced today.
According to the one-count information filed in the U.S. District Court for the Southern District of New York, Christopher Cummins was a dealer of Central and Eastern European, Middle Eastern and African (CEEMEA) currencies on the FX desk of a New York-based financial institution. From approximately January 2007 until July 2013, Cummins and FX dealers at competing institutions conspired to suppress and eliminate competition by fixing prices in CEEMEA currencies, in violation of the Sherman Act, 15 U.S.C. § 1. As part of this conspiracy, Cummins and his co-conspirators manipulated prices on an electronic FX trading platform through the creation of non-bona fide trades, coordinated the placement of bids and offers on that platform and agreed on currency prices they would quote specific customers, among other conduct. Under his plea agreement, Cummins has agreed to cooperate with the department’s ongoing investigation into the FX market.
“Collusion by FX dealers for the purpose of fixing foreign currency exchange rates is no different than collusion regarding traditional products and services that the Antitrust Division routinely prosecutes,” said Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division. “The exchange rate manipulation pursued by the charged CEEMEA FX dealers and their co-conspirators, like any other form of price fixing, was intended to stymie free competition that promotes market integrity and fair pricing.”“The Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG) is dedicated to ensuring integrity in the financial services industry,” said Inspector General Jay N. Lerner of the FDIC OIG. “This is the second guilty plea in this price-fixing case and attests to the value of cooperative working relationships among law enforcement.”
In addition to the guilty plea by Cummins, another FX dealer pleaded guilty on January 4, 2017, to fixing prices of CEEMEA currencies, three individuals were charged on Jan. 10, 2017 for conspiring to fix prices and rig bids for the euro – U.S. dollar currency pair, and the Justice Department’s Criminal Division charged two FX executives with fraud, on July 20, 2016, for conspiring to defraud a client of their bank through a front running scheme. These individual charges follow guilty pleas by major banks. On May 20, 2015, Citicorp, JPMorgan Chase & Co., Barclays PLC and The Royal Bank of Scotland plc pleaded guilty at the parent level and agreed to pay collectively more than $2.5 billion in criminal fines for their participation in an antitrust conspiracy to manipulate the price of U.S. dollars and euros exchanged in the FX market.
This antitrust investigation is being conducted by the Antitrust Division’s New York Office with the assistance of the FDIC OIG and the FBI’s Washington Field Office. The Criminal Division’s Fraud Section also provided substantial assistance in this matter.
A violation of the Sherman Act, 15 U.S.C. § 1, carries a maximum penalty of ten years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by victims if either amount is greater than the statutory maximum.
The charge was brought in connection with the President Obama’s Financial Fraud Enforcement Task Force. The president established the task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.
For more information about the task force, please visit www.StopFraud.gov. Anyone with information concerning price fixing or other anticompetitive conduct in the FX marketplace should contact the New York Office of the Antitrust Division at (212) 335-8000, call the Antitrust Division’s Citizen Complaint Center at (888) 647-3258 or visit www.justice.gov/atr/contact/newcase.html.
Cummins Information
Pittsburgh Tax Attorney and Owner of Iceoplex Sentenced to Prison for Employment Tax FraudRead the Press Release
A Pittsburgh, Pennsylvania man was sentenced to 48 months in prison today in the U.S. District Court for the Western District of Pennsylvania after being convicted of failing to collect, account for and pay over employment taxes following a jury trial in September 2016, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division.
According to court documents and the evidence presented at trial, between 2004 and 2015, Steven Lynch, 61, a tax attorney, co-owned and operated the Iceoplex at Southpointe, a recreational sports facility located in Washington County, Pennsylvania. Iceoplex included a fitness center, ice rink, soccer court, restaurant and bar. Lynch controlled the finances for these businesses and was responsible for collecting, accounting for, and paying over tax withheld from employee wages, and timely filing quarterly employment tax returns. The jury found that between 2012 through 2015, Lynch failed to timely pay over to the Internal Revenue Service (IRS) more than $790,000 in taxes withheld from the wages of the employees for these businesses.
“Companies deserve to compete on a level playing field,” said Principal Deputy Assistant Attorney General Ciraolo. “Business owners and operators who choose not to pay over to the United States the taxes that they withheld from their employees’ wages are stealing from the U.S. Treasury and should plan on facing prosecution and incarceration.”
“As the person who controlled the finances on behalf of the different Iceoplex businesses, Steven Lynch, a tax attorney, was entrusted with the significant responsibility to collect and turn over all IRS withholding taxes,” said Special Agent in Charge Akeia Conner of IRS Criminal Investigation (CI). “His failure to pay over the withheld taxes is a violation that IRS Criminal Investigation takes very seriously. Today, justice is served and Mr. Lynch is being held accountable for his criminal actions.”
In addition to the prison term imposed by U.S. District Judge Arthur Schwab, Lynch was ordered to serve three years of supervised release and to pay $793,145 in restitution to the IRS and a $75,000 fine.
Principal Deputy Assistant Attorney General Ciraolo commended the special agents of IRS-CI, who conducted the investigation, and Trial Attorneys Jeffrey Bender and Brittney Campbell of the Tax Division, who prosecuted the case. Principal Deputy Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office in the Western District of Pennsylvania for their substantial assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Justice Department Settles Pregnancy Discrimination Lawsuit Against Palm Beach County, Florida, School BoardRead the Press Release
The Justice Department today filed a proposed consent decree with the Palm Beach County, Florida, School Board to resolve a pregnancy discrimination lawsuit brought by the department under Title VII of the Civil Rights Act of 1964.
According to the department’s complaint, the board discriminated on the basis of sex against Assistant Principal Anne Williams Dorsey of the Palm Beach County School District by unlawfully demoting her. The department alleges that after Dorsey became pregnant, her supervisor reassigned her to a position with less pay and benefits and filled her former position by replacing her with a male colleague she had trained. The department further alleges that Dorsey’s demotion was also unlawful retaliation against her for her efforts to report sexual harassment allegations, made by a third employee, against the male colleague who replaced her in her former position.
Under the consent decree, which still must be approved by the U.S. District Court for the Southern District of Florida, the board has agreed to pay $350,000 in back pay and compensatory damages to Dorsey. In addition, the board must review and revise its anti-discrimination policies and procedures to ensure that it protects its employees from discrimination on the basis of sex, including pregnancy, and unlawful retaliation. The board must also provide training to its employees on its anti-discrimination policies and procedures.
“No woman should face discrimination for her decision to have a family,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “Women like Anne Williams Dorsey deserve the full enforcement of this nation’s employment discrimination laws, which ensure that they do not lose valuable positions, pay or benefits because of their pregnancies.”
“The U.S. Attorney’s Office is committed to preventing pregnancy discrimination and ensuring workplace equity,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “A woman should never have to choose between having a family and pursuing her professional career. We are pleased that the Palm Beach County School Board has agreed to review its policies and procedures to ensure that it promotes a professional environment that is fully compliant with Title VII. Our Office will continue to enforce the right of pregnant employees to be free from employment discrimination and retaliation.”
Title VII is a federal statute which prohibits employment discrimination on the basis of sex (including pregnancy), race, color, national origin or religion. Title VII also prohibits retaliation against an employee who opposes an unlawful employment practice, makes a charge of discrimination or participates in an investigation, proceeding or hearing under the Civil Rights Act.
Dorsey initially filed charges of sex discrimination and retaliation with the Equal Employment Opportunity Commission’s Miami Field Office, which investigated the matter, determined there was reasonable cause to believe discrimination had occurred and referred the matter to the Justice Department.
The case is being handled by Trial Attorneys Nadia Said and Louis Whitsett of the Civil Rights Division’s Employment Litigation Section and Assistant U.S. Attorney Veronica Harrell-James of the Southern District of Florida
The continued enforcement of Title VII is a priority of the Justice Department’s Civil Rights Division. Additional information about Title VII and other federal employment laws is available on the Civil Rights Division’s website at www.justice.gov/crt.
Justice Department Reaches Agreement with City of Baltimore to Reform Police Department’s Unconstitutional PracticesRead the Press Release
The Justice Department announced today that it has entered into a court enforceable agreement with the city of Baltimore to resolve the department’s findings that the Baltimore City Police Department (BPD) engages in a pattern and practice of conduct that violates the First, Fourth and 14th Amendments of the Constitution as well as federal anti-discrimination laws.
The consent decree, filed today in the U.S. District Court for the District of Maryland, creates a pathway toward lasting reform within BPD. The decree’s requirements focus on building community trust, creating a culture of community and problem-oriented policing, prohibiting unlawful stops and arrests, preventing discriminatory policing and excessive force, ensuring public and officer safety, enhancing officer accountability and making needed technological upgrades. Under the agreement, the parties will jointly recommend an independent monitor to the court to assess whether the requirements of the agreement are being implemented. The independent monitor will report publicly on BPD’s implementation efforts on a regular basis. In the joint motion filing the decree, the parties requested that the court provide an opportunity for members of the public and stakeholders throughout Baltimore to provide written submissions to the court about the proposed decree, and then hold a public hearing.
“Last August, we concluded that the Baltimore Police Department had engaged in conduct that deprived the people of Baltimore of the rights and protections guaranteed to every American, and that the deeply-rooted mistrust between law enforcement officers and the community they serve harmed all who call Baltimore home,” said Attorney General Loretta E. Lynch. “After thorough, good-faith negotiations, the Department of Justice and the city of Baltimore have agreed to enter into a court-enforceable consent decree to remedy the violations identified in our investigation. The reforms in this consent decree will help ensure effective and constitutional policing, restore the community’s trust in law enforcement, and advance public and officer safety. We could not be prouder to partner with the people of Baltimore on this journey towards making their city a community that protects the dignity, rights, and safety of all its people.”
“Under the consent decree, the city and BPD will implement comprehensive reforms to end the legacy of Baltimore’s ‘zero tolerance’ policing,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “In its place, BPD will empower its officers to engage in proactive, community-oriented policing. And given our experiences in many other cities, I firmly believe that when focused, measurable and detailed reforms are implemented effectively, they restore community trust and advance officer and public safety.”
Under the consent decree, the city of Baltimore and BPD will implement comprehensive reforms that will ensure that:
- Baltimore establishes a Community Oversight Task Force to recommend reforms to the current system of civilian oversight.
- BPD adopts a policing approach that is community-oriented and based on problem solving principles.
- Officers’ voluntary interactions are professional and courteous, and officers conduct all investigatory stops, searches and arrests in a manner that protects people’s rights.
- BPD provides equal protection of the law for all individuals, including providing impartial policing services.
- Officers use appropriate de-escalation techniques and attempt to resolve incidents without force when possible; use force in a manner that is proportional to the threat presented; and BPD’s use of force policies, training and review systems provide sufficient guidance, skills and accountability.
- BPD transports detainees in a manner that keeps them safe.
- Officers respect the First Amendment rights of all persons.
- BPD investigates sexual assault thoroughly and without gender bias.
- Baltimore conducts an assessment to minimize youth involvement with the juvenile and criminal justice systems, as appropriate, and that officers approach interactions with youth in a manner appropriate to their age.
- Baltimore conducts an analysis of gaps in the city’s mental health system in consultation with a committee of behavioral health experts and service providers, and BPD instructs and dispatches officers who are properly trained in interacting with people in crisis or with behavioral health disabilities when a police response is appropriate.
- Allegations of employee misconduct are fully, fairly and efficiently investigated; that all investigative findings are supported by the appropriate standard of proof and documented in writing; and that all officers who commit misconduct are held accountable pursuant to a disciplinary system that is fair, consistent and provides due process.
- Officers receive necessary equipment, policy guidance, training and support to do their jobs safely and effectively, and BPD performs a staffing study to ensure a sufficient number of officers and supervisors.
The Justice Department announced its findings in August 2016 following a thorough investigation into BPD started in May 2015. The department found that BPD made stops, searches and arrests without the required justification; used enforcement strategies that unlawfully subjected African Americans to disproportionate rates of stops, searches and arrests; used excessive force; and retaliated against individuals for their constitutionally-protected expression. The pattern or practice resulted from systemic deficiencies that persisted within BPD for many years and exacerbated community distrust of the police, particularly in African-American communities.
In October 2014, city and BPD leadership requested to enter a collaborative reform process with the Justice Department’s Office of Community Oriented Policing Services (COPS office). After the Civil Rights Division opened the pattern-or-practice investigation in May 2015, the COPS office and the Justice Department’s Office of Justice Programs have continued to offer federal resources, such as technical assistance, to the BPD, city officials and community leaders.
This investigation was conducted by the Civil Rights Division’s Special Litigation Section with the assistance of law enforcement professionals pursuant to the pattern or practice provision of the Violent Crime Control and Law Enforcement Act of 1994. Since 2009, the Special Litigation Section has opened 25 investigations into law enforcement agencies. The section is enforcing 20 agreements with law enforcement agencies, including 15 consent decrees and one post-judgment order. The division also recently released a comprehensive report that provides an overview of the police reform work done under pursuant to the Violent Crime Control and Law Enforcement Act of 1994, which can be found at the following link: https://www.justice.gov/crt/file/922421/download.
For more information on the Civil Rights Division and the Special Litigation Section, please visit www.justice.gov/crt.
Baltimore Consent Decree Baltimore Consent Decree Fact Sheet Pattern or Practice Accomplishments DocumentVolkswagen AG Agrees to Plead Guilty and Pay $4.3 Billion in Criminal and Civil Penalties; Six Volkswagen Executives and Employees are Indicted in Connection with Conspiracy to Cheat U.S. Emissions TestsRead the Press Release
Volkswagen AG (VW) has agreed to plead guilty to three criminal felony counts and pay a $2.8 billion criminal penalty as a result of the company’s long-running scheme to sell approximately 590,000 diesel vehicles in the U.S. by using a defeat device to cheat on emissions tests mandated by the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB), and lying and obstructing justice to further the scheme, the Justice Department announced today.
In separate civil resolutions of environmental, customs and financial claims, VW has agreed to pay $1.5 billion. This includes EPA’s claim for civil penalties against VW in connection with VW’s importation and sale of these cars, as well as U.S. Customs and Border Protection (CBP) claims for customs fraud. In addition, the EPA agreement requires injunctive relief to prevent future violations. The agreements also resolve alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).
The Criminal Case:
VW is charged with and has agreed to plead guilty to participating in a conspiracy to defraud the United States and VW’s U.S. customers and to violate the Clean Air Act by lying and misleading the EPA and U.S. customers about whether certain VW, Audi and Porsche branded diesel vehicles complied with U.S. emissions standards, using cheating software to circumvent the U.S. testing process and concealing material facts about its cheating from U.S. regulators. VW is also charged with obstruction of justice for destroying documents related to the scheme, and with a separate crime of importing these cars into the U.S. by means of false statements about the vehicles’ compliance with emissions limits. Under the terms of the plea agreement, which must be accepted by the court, VW will plead guilty to all these crimes, will be on probation for three years, will be under an independent corporate compliance monitor who will oversee the company for at least three years, and agrees to fully cooperate in the Justice Department’s ongoing investigation and prosecution of individuals responsible for these crimes.
In addition, a federal grand jury in the Eastern District of Michigan returned an indictment today charging six VW executives and employees for their roles in the nearly 10-year conspiracy. Heinz-Jakob Neusser, 56; Jens Hadler, 50; Richard Dorenkamp, 68; Bernd Gottweis, 69; Oliver Schmidt, 48; and Jürgen Peter, 59, all of Germany, are charged with one count of conspiracy to defraud the United States, defraud VW’s U.S. customers and violate the Clean Air Act by making false representations to regulators and the public about the ability of VW’s supposedly “clean diesel” vehicles to comply with U.S. emissions requirements. The indictment also charges Dorenkamp, Neusser, Schmidt and Peter with Clean Air Act violations and charges Neusser, Gottweis, Schmidt and Peter with wire fraud counts. This case has been assigned to U.S. District Judge Sean F. Cox of the Eastern District of Michigan.
Schmidt was arrested on Jan. 7, 2017, in Miami during a visit to the United States and appeared in federal court there on Monday. The other defendants are believed to presently reside in Germany.
Today’s announcement was made by Attorney General Loretta E. Lynch, EPA Administrator Gina McCarthy and Assistant Administrator Cynthia Giles, Deputy Attorney General Sally Q. Yates, FBI Deputy Director Andrew McCabe, Acting Deputy Secretary Russell C. Deyo for the Department of Homeland Security, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division and Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.
“Volkswagen’s attempts to dodge emissions standards and import falsely certified vehicles into the country represent an egregious violation of our nation’s environmental, consumer protection and financial laws,” said Attorney General Lynch. “Today’s actions reflect the Justice Department’s steadfast commitment to defending consumers, protecting our environment and our financial system and holding individuals and companies accountable for corporate wrongdoing. In the days ahead, we will continue to examine Volkswagen’s attempts to mislead consumers and deceive the government. And we will continue to pursue the individuals responsible for orchestrating this damaging conspiracy.”
“When Volkswagen broke the law, EPA stepped in to hold them accountable and address the pollution they caused,” said EPA Administrator McCarthy. “EPA’s fundamental and indispensable role becomes all too clear when companies evade laws that protect our health. The American public depends on a strong and active EPA to deliver clean air protections, and that is exactly what we have done.”
“This wasn’t simply the action of some faceless, multinational corporation,” said Deputy Attorney General Yates. “This conspiracy involved flesh-and-blood individuals who used their positions within Volkswagen to deceive both regulators and consumers. From the start of this investigation, we’ve been committed to ensuring that those responsible for criminal activity are held accountable. We’ve followed the evidence—from the showroom to the boardroom—and it brought us to the people whose indictments we’re announcing today.”
“Americans expect corporations to operate honestly and provide accurate information,” said Deputy Director McCabe. “Volkswagen’s data deception defrauded the U.S. government, violated the Clean Air Act and eroded consumer trust. This case sends a clear message to corporations, no matter how big or small, that if you lie and disregard rules that protect consumers and the environment, you will be caught and held accountable.”
“Blatant violations of U.S. customs and environmental laws will not be tolerated, and this case reinforces that,” said Acting Deputy Secretary Deyo. “These actions put our economy, consumers and citizens at risk, and the Department of Homeland Security and U.S. Customs and Border Protection will continue to take every step necessary to protect the American people.”
According to the indictment, the individuals occupied the following positions within the company:
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Heinz-Jakob Neusser: from July 2013 until September 2015, Neusser worked for VW as head of Development for VW Brand and was also on the management board for VW Brand. From October 2011 until July 2013, Neusser served as the head of Engine Development for VW.
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Jens Hadler: from May 2007 until March 2011, Hadler worked for VW as head of Engine Development for VW.
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Richard Dorenkamp: from 2003 until December 2013, Dorenkamp worked for VW as the head of VW’s Engine Development After-Treatment Department in Wolfsburg, Germany. From 2006 until 2013, Dorenkamp led a team of engineers that developed the first diesel engine that was designed to meet the new, tougher emissions standards in the United States.
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Bernd Gottweis: from 2007 until October 2014, Gottweis worked for VW as a supervisor with responsibility for Quality Management and Product Safety.
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Oliver Schmidt: from 2012 through February 2015, Schmidt was the General Manager in charge of the Environment and Engineering Office, located in Auburn Hills, Michigan. From February 2015 through September 2015, Schmidt returned to VW headquarters to work directly for Neusser, including on emissions issues.
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Jürgen Peter: Peter worked in the VW Quality Management and Product Safety Group from 1990 until the present. From March 2015 until July 2015, Peter was one of the VW liaisons between the regulatory agencies and VW.
According to the charging documents and statement of facts filed with the court, in 2006, VW engineers began to design a new diesel engine to meet stricter U.S. emissions standards that would take effect by model year 2007. This new engine would be the cornerstone of a new project to sell diesel vehicles in the United States that would be marketed to buyers as “clean diesel,” a project that was an important strategic goal for VW’s management. When the co-conspirators realized that they could not design a diesel engine that would both meet the stricter NOx emissions standards and attract sufficient customer demand in the U.S. market, they decided they would use a software function to cheat standard U.S. emissions tests.
VW engineers working under Dorenkamp and Hadler designed and implemented a software to recognize whether a vehicle was undergoing standard U.S. emissions testing on a dynamometer or it was being driven on the road under normal driving conditions. The software accomplished this by recognizing the standard published drive cycles. Based on these inputs, if the vehicle’s software detected that it was being tested, the vehicle performed in one mode, which satisfied U.S. NOx emissions standards. If the software detected that the vehicle was not being tested, it operated in a different mode, in which the vehicle’s emissions control systems were reduced substantially, causing the vehicle to emit NOx up to 40 times higher than U.S. standards.
Disagreements over the direction of the project were articulated at a meeting over which Hadler presided, and which Dorenkamp attended. Hadler authorized Dorenkamp to proceed with the project knowing that only the use of the defeat device software would enable VW diesel vehicles to pass U.S. emissions tests. Starting with the first model year 2009 of VW’s new “clean diesel” engine through model year 2016, Dorenkamp, Neusser, Hadler and their co-conspirators installed, or caused to be installed, the defeat device software into the vehicles imported and sold in the United States. In order to sell their “clean diesel” vehicles in the United States, the co-conspirators lied to the EPA about the existence of their test-cheating software, hiding it from the EPA, CARB, VW customers and the U.S. public. Dorenkamp, Neusser, Hadler, Gottweis, Schmidt, Peter and their co-conspirators then marketed, and caused to be marketed, VW diesel vehicles to the U.S. public as “clean diesel” and environmentally-friendly.
Around 2012, hardware failures developed in certain of the diesel vehicles. VW engineers believed the increased stress on the exhaust system from being driven in the “dyno mode” could be the cause of the hardware failures. In July 2012, VW engineers met with Neusser and Gottweis to explain what they believed to be the cause of the hardware failures and explained the defeat device. Gottweis and Neusser each encouraged further concealment of the software. In 2014, the co-conspirators perfected their cheating software by starting the vehicle in “street mode,” and, when the defeat device realized the vehicle was being tested, switching to the “dyno mode.” To increase the ability of the vehicle’s software to recognize that it was being tested on the dynamometer, the VW engineers activated a “steering wheel angle recognition feature.” With these alterations, it was believed the stress on the exhaust system would be reduced because the engine would not be operating for as long in “dyno mode.” The new function was installed in existing vehicles through software updates. The defendants and other co-conspirators falsely represented, and caused to be represented, to U.S. regulators, U.S. customers and others that the software update was intended to improve durability and emissions issues in the vehicles when, in fact, they knew it was used to more quickly deactivate emission control systems when the vehicle was not undergoing emissions tests.
After years of VW selling their “clean diesel” vehicles in the United States that had the cheating software, in March 2014, West Virginia University’s Center for Alternative Fuels, Engines and Emissions published the results of a study commissioned by the International Council on Clean Transportation (ICCT). The ICCT study identified substantial discrepancies in the NOx emissions from certain VW vehicles when tested on the road compared to when these vehicles were undergoing EPA and CARB standard drive cycle tests on a dynamometer. Rather than tell the truth, VW employees, including Neusser, Gottweis, Schmidt and Peter, pursued a strategy to disclose as little as possible – to continue to hide the existence of the software from U.S. regulators, U.S. customers and the U.S. public.
Following the ICCT study, CARB, in coordination with the EPA, attempted to work with VW to determine the cause for the higher NOx emissions in VW diesel vehicles when being driven on the road as opposed to on the dynamometer undergoing standard emissions test cycles. To do this, CARB, in coordination with the EPA, repeatedly asked VW questions that became increasingly more specific and detailed, and tested the vehicles themselves. In implementing their strategy of disclosing as little as possible, Neusser, Gottweis, Schmidt, Peter and their co-conspirators provided EPA and CARB with testing results, data, presentations and statements in an attempt to make it appear that there were innocent mechanical and technological problems to blame, while secretly knowing that the primary reason for the discrepancy was their cheating software that was installed in every VW diesel vehicle sold in the United States. The co-conspirators continued this back-and-forth with the EPA and CARB for over 18 months, obstructing the regulators’ attempts to uncover the truth.
The charges in the indictment are merely accusations and each defendant is presumed innocent unless and until proven guilty.
The case was investigated by the FBI and EPA-CID. The prosecution and corporate investigation are being handled by Securities and Financial Fraud Unit Chief Benjamin D. Singer and Trial Attorneys David Fuhr, Alison Anderson, Christopher Fenton and Gary Winters of the Criminal Division’s Fraud Section; Trial Attorney Jennifer Blackwell of the Environment and Natural Resources Division’s Environmental Crimes Section; and from the U.S. Attorney’s Office for the Eastern District of Michigan, Criminal Division Chief Mark Chutkow and White Collar Crime Unit Chief John K. Neal and Assistant U.S. Attorney Timothy J. Wyse. The Justice Department’s Office of International Affairs also assisted in the case. The Justice Department also extends its thanks to the Office of the Public Prosecutor in Braunschweig, Germany.
The Civil Resolutions:
The first civil settlement resolves EPA’s remaining claims against six VW-related entities (including Volkswagen AG, Audi AG and Porsche AG) currently pending in the multidistrict litigation before U.S. District Judge Charles R. Breyer of the Northern District of California. EPA’s complaint alleges that VW violated the Clean Air Act by selling approximately 590,000 cars that the United States alleges are equipped with defeat devices and, during normal operation and use, emit pollution significantly in excess of EPA-compliant levels. VW has agreed to pay $1.45 billion to resolve EPA’s civil penalty claims, as well as the civil penalty claim of CBP described below. The consent decree resolving the Clean Air Act claims also resolves EPA’s remaining claim in the complaint for injunctive relief to prevent future violations by requiring VW to undertake a number of corporate governance reforms and perform in-use testing of its vehicles using a portable emissions measurement system of the same type used to catch VW’s cheating in the first place. Today’s settlement is in addition the historic $14.7 billion settlement that addressed the 2.0 liter cars on the road and associated environmental harm announced in June 2016, and $1 billion settlement that addressed the 3.0 liter cars on the road and associated environmental harm announced in December 2016, which together included nearly $3 billion for environmental mitigation projects.
A second civil settlement resolves civil fraud claims asserted by U.S. Customs and Border Protection (CBP) against VW entities. VW entities violated criminal and civil customs laws by knowingly submitting to CBP material false statements and omitting material information, over multiple years, with the intent of deceiving or misleading CBP concerning the admissibility of vehicles into the United States. CBP enforces U.S. customs laws as well as numerous laws on behalf of other governmental agencies related to health, safety, and border security. At the time of importation, VW falsely represented to CBP that each of the nearly 590,000 imported vehicles complied with all applicable environmental laws, knowing those representations to be untrue. CBP’s relationship with the importing community is one based on trust, and this resolution demonstrates that CBP will not tolerate abrogation of importer responsibilities and schemes to defraud the revenue of the United States. The $1.45 billion paid under the EPA settlement also resolves CBP’s claims.
In a third settlement, VW has agreed to pay $50 million in civil penalties for alleged violations of FIRREA. The Justice Department alleged that a VW entity supported the sales and leasing of certain VW vehicles, including the defeat-device vehicles, by offering competitive financing terms by purchasing from dealers certain automobile retail installment contracts (i.e. loans) and leases entered into by customers that purchased or leased certain VW vehicles, as well as dealer floorplan loans. These financing arrangements were primarily collateralized by the vehicles underlying the loan and lease transactions. The department alleged that certain of these loans, leases and floorplan financings were pooled together to create asset-backed securities and that federally insured financial institutions purchased certain notes in these securities. Today’s FIRREA resolution is part of the department’s ongoing efforts to deter wrongdoers from using the financial markets to facilitate their fraud and to ensure the stability of the nation’s financial system.
Except where based on admissions by VW, the claims resolved by the civil agreements are allegations only.
The civil settlements were handled by the Environmental and Natural Resources Division’s Environmental Enforcement Section, with assistance from the EPA; the Civil Division’s Commercial Litigation Branch; and CBP.
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Court documents:
VW AG Plea Agreement
VW AG Third Partial Consent Decree
VW AG Notice of Third Partial Consent Decree
VW AG Third Superseding Information
Firrea Settlement Agreement
VW AG CPB Settlement
VW AG Second Superseding Indictment-
Justice Department Seeks to Shut Down Florida and North Carolina Tax Return PreparersRead the Press Release
The owners and operators of the tax return preparation businesses Q A Tax Service Inc., Unik Tax Refund, D&M Tax Solutions, LED Tax Services, and UJM Tax Services prepare false tax returns, according to three separate civil suits filed by the United States. The government seeks court orders barring the owners and operators of these businesses from preparing tax returns for others and owning and operating a tax return preparation business. The government also requests court orders requiring these owners and operators to disgorge the gross receipts they obtained from the preparation of federal tax returns that make, among other things, false claims.
The government filed the first of these three suits, in federal court in Orlando, Florida, against two of the owners and operators of Q A Tax Service Inc., Vicky Barwick of Orlando, Florida and Jasmine Morales of Winter Garden, Florida. According to that complaint, Q A Tax Service Inc. has store locations in Florida, Illinois, Indiana, and North Carolina. The government filed the second of these suits, in federal court in Fayetteville, North Carolina, against another owner and operator of Q A Tax Service Inc., Tanisha Salmon of Fayetteville.
The government filed the third suit, in federal court in Orlando, Florida, against the owners and operators of the following tax return preparation businesses, each of which has locations in Florida:
- Unik Tax Refund LLC – Yves Demesmin of Mt. Dora, Florida;
- UJM Tax Services LLC – Joseph Demesmin of Boca Raton, Florida;
- LED Tax Services – Elie Dorceus of Boynton Beach, Florida; and
- D&M Tax Solutions – Mario Cooper and Dia Fleming of Palm Coast, Florida.
In these complaints, the government alleges that Barwick, Morales, Salmon, Yves Demesmin, Joseph Demesmin, Dorceus, Cooper, and Fleming (the defendants) each use, in their respective businesses, a model previously used by the tax return preparation business formerly known as LBS Tax Services. Since 2014, the United States has sued nearly a dozen former LBS franchisees and managers and obtained court orders requiring these individuals to disgorge millions of dollars in fees, in addition to barring these individuals from owning and operating a tax return preparation business and from preparing tax returns for others.
The government alleges in its complaints that the defendants used the LBS model to prepare and file false tax returns to fraudulently increase their customers’ refunds and profit through exorbitant and often undisclosed fees—all at the expense of their customers and the U.S. Treasury. Specifically, the complaints allege that the defendants engage in fraudulent activity, including:
- Falsely claiming the Earned Income Tax Credit;
- Fabricating businesses and related business income and expenses;
- Fabricating deductions, particularly for unreimbursed employee business expenses; and
- Charging deceptive and unconscionable fees.
The Internal Revenue Service (IRS) is reminding taxpayers that the 2017 individual income tax return filing season begins Jan. 23, and there is information available on the IRS’s website. Return preparer fraud was one of the IRS’s Dirty Dozen Tax Scams for 2016 and taxpayers seeking a return preparer should remain vigilant. The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Department of Justice to Announce Consent Decree with City of BaltimoreRead the Press Release
****** MEDIA ADVISORY ******
Attorney General Lynch Will Also Deliver Capstone Speech on Community Policing
Attorney General Loretta E. Lynch will travel to Baltimore THURSDAY, JAN. 12, to announce a consent decree with the City of Baltimore.
Later that day, the Attorney General will deliver a capstone speech on community policing that will outline the Justice Department’s efforts to highlight collaborative programs and policing practices in jurisdictions around the country that are dedicated to advancing public safety, strengthening police-community relations, and fostering mutual trust and respect.
PRESS CONFERENCE WITH THE CITY OF BALTIMORE
WHO: Attorney General Loretta E. Lynch
Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice
Department’s Civil Rights Division
Baltimore Mayor Catherine Pugh
Commissioner Kevin Davis of the Baltimore City Police Department
WHAT: Press conference to announce a consent decree with the city of Baltimore.
WHEN: THURSDAY, JANUARY 12, 2017
10:30 a.m. EST
WHERE: Baltimore City Hall
Ceremonial Room
250 City Hall, 100 N. Holliday St.
Baltimore, MD 21202
OPEN PRESS (Camera Preset by for K9 Sweep: 9:45 a.m. EST //
Final Access: 10:10 a.m. EST)
NOTE: All media must present government-issued photo I.D. (such as a driver’s license as well as valid media credentials). Press inquiries regarding logistics should be directed to Anthony McCarthy at [email protected] or (443) 902-1763.
COMMUNITY POLICING CAPSTONE SPEECH AT THE UNIVERSITY OF BALTIMORE SCHOOL OF LAW
WHAT: Attorney General Loretta E. Lynch will deliver her capstone speech
on community policing.
WHO: Attorney General Loretta E. Lynch
Principal Deputy Assistant Attorney General Vanita Gupta,
head of the Civil Rights Division
Director Ronald Davis of the Office of Community Oriented Policing Services
WHEN: THURSDAY, JANUARY 12, 2016
4:00 p.m. EST
WHERE: University of Baltimore School of Law
John and Frances Angelos Law Center
Moot Courtroom
1401 N. Charles St.
Baltimore, MD 21201
OPEN PRESS (Camera Preset by for K9 Sweep: 1:15 p.m. EST //
Final Access: 3:45 p.m. EST)
NOTE: Media should RSVP to [email protected]. Questions regarding logistics should go to the Office of Public Affairs. All media must present government-issued photo I.D. (such as a driver’s license) as well as valid media credentials.Three Former Traders for Major Banks Indicted in Foreign Currency Exchange Antitrust ConspiracyRead the Press Release
A federal grand jury returned an indictment against three former traders of major banks for their alleged roles in a conspiracy to manipulate the price of U.S. dollars and euros exchanged in the foreign currency exchange (FX) spot market, the Justice Department announced today.
The one-count indictment, filed in the U.S. District Court for the Southern District of New York, charges Richard Usher (former Head of G11 FX Trading-UK at an affiliate of The Royal Bank of Scotland plc, as well as former Managing Director at an affiliate of JPMorgan Chase & Co.), Rohan Ramchandani (former Managing Director and head of G10 FX spot trading at an affiliate of Citicorp) and Christopher Ashton (former Head of Spot FX at an affiliate of Barclays PLC) with conspiring to fix prices and rig bids for U.S. dollars and euros exchanged in the FX spot market.
“Whether a crime is committed on the street corner or in the corner office, no one gets a free pass simply because they were working for a corporation when they broke the law,” said Deputy Attorney General Sally Q. Yates. “Today’s indictment reiterates our commitment to holding individuals accountable for corporate misconduct.”
“The charged conspiracy involved competitors manipulating the exchange rate for the hundreds of billions of dollars traded on foreign exchange markets for their benefit and to the detriment of their customers,” said Principal Deputy Associate Attorney General Bill Baer. “We previously secured criminal convictions of the financial institutions involved in the misconduct. Today we seek to hold accountable the individuals who conspired on their behalf.”
“These former bank traders are alleged to have gained an unfair advantage on their counterparts by committing corporate fraud involving the manipulation of the foreign currency exchange,” said Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office. “Their actions affected worldwide trading positions in the global marketplace. Today’s announcement reinforces the FBI’s commitment to investigate and prosecute individuals responsible for criminally interfering with the global financial markets.”
The indictment follows the May 20, 2015 agreements of Barclays PLC, Citicorp, JPMorgan Chase & Co., and The Royal Bank of Scotland plc to plead guilty to conspiring to fix prices and rig bids for U.S. dollars and euros exchanged in the FX spot market, and to pay criminal fines totaling more than $2.5 billion. On Jan. 5, 2017, the federal district court in Connecticut accepted those plea agreements and sentenced the banks accordingly.
The charge in the indictment carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by victims if either amount is greater than $1 million.
According to the indictment, from at least December 2007 through at least January 2013, Usher, Ramchandani and Ashton (along with unnamed co-conspirators) conspired to fix prices and rig bids for the euro – U.S. dollar currency pair. Called “the Cartel” or “the Mafia,” this group of traders participated in telephone calls and electronic messages, including near-daily conversations in a private electronic chat room, to carry out their conspiracy. Their anticompetitive behavior included colluding around the time of certain benchmark rates known as fixes, such as coordinating their orders and trading to manipulate the price of the currency pair by the time of the fix. In another example of collusion, the conspirators coordinated their orders and trading to manipulate the price of the currency pair, such as by refraining from entering orders or trading at certain times.
The charge in the indictment is merely an allegation, and the defendants are presumed innocent unless and until proven guilty.
The Department of Justice has now charged six individuals in the FX investigation. On July 20, 2016, fraud charges were brought by the Justice Department’s Criminal Division against two FX executives for conspiring to defraud a client of their bank through a front running scheme. On Jan. 4, 2017, an antitrust charge and plea agreement were announced for a trader in connection with a conspiracy to manipulate emerging market FX rates.
This investigation is being conducted by the FBI’s Washington Field Office. This prosecution is being handled by the Antitrust Division’s New York Office. The Criminal Division’s Fraud Section also provided substantial assistance in this matter.
The charge in this case was brought in connection with the President Obama’s Financial Fraud Enforcement Task Force. The president established the task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.
For more information about the task force, please visit www.StopFraud.gov. Anyone with information concerning price fixing or other anticompetitive conduct in the FX market should contact the Antitrust Division’s Citizen Complaint Center at (888) 647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI tip line at (415) 553-7400.
Usher et al. Indictment
Statement by Attorney General Loretta E. Lynch on the Sentencing of Dylann RoofRead the Press Release
Attorney General Loretta E. Lynch released the following statement on the sentencing of Dylann Roof:
“On June 17, 2015, Dylann Storm Roof sought out and opened fire on African-American parishioners engaged in worship and bible study at Emanuel African Methodist Episcopal Church in Charleston, South Carolina. He did so because of their race. And he did so to interfere with their peaceful exercise of religion. The victims in the case led lives as compassionate civic and religious leaders; devoted public servants and teachers; and beloved family members and friends. They include a young man in the bloom of youth and an 87-year-old grandmother who still sang in the church choir. We remember those who have suffered, and especially those that lost their lives: Cynthia Graham Hurd, 54; Susie Jackson, 87; Ethel Lance, 70; Rev. DePayne Middleton Doctor, 49; Rev. Clementa Pinckney, 41; Tywanza Sanders, 26; Rev. Daniel Simmons Sr., 74; Sharonda Coleman-Singleton, 45; and Myra Thompson, 59.
“Today, a jury of his peers considered the actions Roof took on that fateful day, and they rendered a verdict that will hold him accountable for his choices.
“No verdict can bring back the nine we lost that day at Mother Emanuel. And no verdict can heal the wounds of the five church members who survived the attack or the souls of those who lost loved ones to Roof’s callous hand. But we hope that the completion of the prosecution provides the people of Charleston – and the people of our nation – with a measure of closure. We thank the jurors for their service, the people of Charleston for their strength and support, and the law enforcement community in South Carolina and throughout the country for their vital work on this case.”
Volkswagen Executive Charged for Alleged Role in Conspiracy to Cheat U.S. Emissions TestsRead the Press Release
Oliver Schmidt, a Volkswagen (VW) engineer, was charged in a criminal complaint unsealed today for his alleged role in a nearly decade-long conspiracy to defraud U.S. regulators and U.S. Volkswagen customers by implementing software specifically designed to cheat U.S. emissions tests in hundreds of thousands of Volkswagen “clean diesel” vehicles.
Assistant Attorney General Leslie R. Caldwell of the Criminal Division, Assistant Attorney General John C. Cruden of the Environment and Natural Resources Division and U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan made the announcement.
Schmidt, 48, a resident of Germany, was charged with one count of conspiracy to defraud the United States, to commit wire fraud and to violate the Clean Air Act. Schmidt was arrested on Jan. 7, 2017, in Miami and will make an initial appearance today, Jan. 9, 2017, at 2:00 p.m. EST before U.S. Magistrate Judge William C. Turnoff of the Southern District of Florida.
According to the complaint, Schmidt joined VW in or about 1997, and from 2012 to March 2015 was general manager for VW in Auburn Hills, Michigan, where he was primarily responsible for communicating and coordinating with U.S. regulatory agencies, including the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB). In March 2015, Schmidt was promoted to principal deputy of a senior manager of VW and returned to VW headquarters in Wolfsburg, Germany, where he played a direct role in VW’s response to questions from U.S. regulators.
In about 2006, VW employees based in Germany in the engine development department started to design a new “EA 189” 2.0-liter diesel engine for sale in the United States. When employees realized that they could not design a diesel engine that would meet the stricter U.S. emissions standards, they allegedly designed and implemented software to recognize whether a vehicle was undergoing standard U.S. emissions testing on a dynamometer or being driven on the road under normal driving conditions (the defeat device) in order to cheat the emissions tests.
As part of the certification process for each new model year, including model years 2009 through 2016, the co-conspirators continued to falsely and fraudulently certify to EPA and CARB that VW diesel vehicles met U.S. emissions standards and complied with the Clean Air Act, according to the complaint affidavit. By the summer of 2015, U.S. regulators had discovered that VW diesel vehicles emitted substantially higher emissions when being driven on the road than when undergoing standard U.S. emissions tests and had repeatedly asked VW for an explanation of this discrepancy. The complaint alleges that Schmidt knew that the reason for this discrepancy was VW’s use of defeat device software. Nevertheless, in the summer of 2015, Schmidt allegedly agreed to travel to the United States to participate in direct conversations with U.S. regulators. According to the complaint, during in-person and teleconference meetings with U.S. regulators, Schmidt hid the existence of the defeat device from the U.S. regulators.
A criminal complaint is merely an accusation, and the accused is presumed innocent unless proven guilty in a court of law.
FBI’s Detroit Office and the EPA-Criminal Investigation Division are investigating the case. Deputy Chief Benjamin D. Singer and Trial Attorney David Fuhr of the Criminal Division’s Fraud Section, Trial Attorney Jennifer L. Blackwell of the Environment and Natural Resource Division’s Environmental Crimes Section and White Collar Crime Unit Chief John K. Neal of the Eastern District of Michigan are prosecuting the case.
Schmidt ComplaintStatement by Attorney General Loretta E. Lynch on Recent Officer Deaths in FloridaRead the Press Release
Attorney General Loretta E. Lynch delivered the following statement on the recent deaths of the two officers in Florida at the beginning of today’s event commemorating National Slavery and Human Trafficking Prevention Month:
“Good afternoon, everyone. Before we begin, I want to take a moment to address the shooting of a police officer this morning in Orlando. Master Sergeant Debra Clayton, a 17-year veteran of the Orlando Police Department, was shot and killed this morning by an individual evading arrest on murder charges. During the subsequent search for the shooter, a deputy sheriff with the Orange County Sheriff’s Office, whose name has not been released, was killed in an auto accident as part of the pursuit. The U.S. Attorney’s Office in the Middle District of Florida is in regular contact with our local counterparts. The FBI, ATF and U.S. Marshals Service are all actively assisting with the search for the perpetrator. We will continue to offer any and all assistance to our state and local partners as they continue to investigate this devastating incident.
“These tragic deaths make clear the great risks that our brave men and women in uniform face each and every day, and the deep and abiding gratitude that our nation owes them for their service. As they are responding to events in their community, they are often the first on the scene of dangerous events – as we saw when they responded to the shootings at the Fort Lauderdale Airport last Friday, when five innocent people lost their lives to a gunman. The U.S. Attorney for the Southern District of Florida, Wilfredo Ferrer, is here with me today, and his office filed federal charges in that matter on Saturday.
“My thoughts and prayers – and those of my colleagues at the Department of Justice – are with the families and loved ones of those lost and wounded in these tragic events.”
Justice Department Seeks to Intervene in Lawsuit over Denial of Rights to Florida Inmates with DisabilitiesRead the Press Release
The Justice Department announced today that it has moved to intervene in Disability Rights Florida Inc., v. Julie Jones, a private lawsuit alleging that the Florida Department of Corrections (FDOC) failed to protect the rights of inmates with disabilities in violation of Title II of the Americans with Disabilities Act (ADA) and Section 504 of the Rehabilitation Act.
In the motion, filed in the Northern District of Florida, the department seeks to join a case brought by Disability Rights Florida Inc. (DRF), a private protection and advocacy group. In the lawsuit, DRF alleges, among other things, that FDOC has excluded inmates with disabilities from its programs, services and activities. DRF also alleges that FDOC failed to provide the means for effective communication for inmates with hearing loss. In the motion, the United States highlighted its substantial legal interest in the outcome of DRF’s case because the department is the primary agency responsible for enforcing the ADA.
“The ADA and Section 504 afford all people with disabilities, including prisoners, the right to fair treatment and effective communication,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “We believe our participation in this case will help to ensure a just outcome for all.”
For more information on the Civil Rights Division, please visit www.justice.gov/crt. For more information on the Civil Rights Division’s Disability Rights Section, please call the department’s toll-free ADA Information Line at 800-514-0301 (TDD 800-514-0383) or visit www.ada.gov.
Florida DOC Motion to Intervene Florida DOC Complaint in InterventionJustice Department Files Lawsuit to Shut Down Detroit Tax Return Preparation BusinessRead the Press Release
Tax Pioneer, a Detroit-area tax return preparation business, and its alleged owner, Dieasha Davis fraudulently maximize tax refunds by falsifying income and deductions on tax returns, according to a civil complaint filed by the Justice Department today. The suit, filed in federal court in Detroit, seeks to permanently bar Davis and Tax Pioneer from preparing federal tax returns for others.
According to the suit, Davis formerly managed and prepared tax returns for a Liberty Tax Service franchisee. Davis’ fraudulent preparation of tax returns allegedly encompasses both her time at Liberty Tax Service and, since 2013, at Tax Pioneer. The government’s complaint against Davis and Tax Pioneer alleges that the defendants improperly prepare tax returns that claim false or inflated income and expenses, bogus dependents, improper filing statuses, and false itemized deductions, all which fraudulently maximized customer refunds and refundable credits.
A few examples alleged in the complaint detail how Davis intentionally reduced her customers’ reported income tax liabilities by reporting false information. In January 2016, Davis prepared a tax return for a customer that reported over $18,500 in losses from a non-existent “Property Management Real Estate” business, according to the complaint. Davis also allegedly claimed a bogus expense deduction for the same customer reporting over $9,800 of fictitious mortgage interest. Also in January 2016, Davis prepared a tax return for another customer and added to this return $6,800 in fictitious wages in order to inflate a claim for the Earned Income Tax Credit (EITC), according to the complaint. The EITC is a benefit for working people who have low to moderate income; this credit can reduce the amount of tax owed and increase the amount of refund. The government alleges that Davis even concocted a Form W-2 to report these fraudulent wages.
The government also alleges that Davis encouraged customers audited by the Internal Revenue Service (IRS) to submit false records. According to the complaint, a preparer at Tax Pioneer reported a fictitious child care business on a customer’s tax return for two years and reported false income and expenses to make the business appear legitimate. The government alleges that after the IRS selected these returns to examine, the customer sought assistance from Tax Pioneer. Davis then provided this customer with blank worksheets, told the customer to add false business expenses and income using different color pens, and provide these bogus documents to the IRS, according to the complaint.
The IRS is reminding taxpayers that the 2017 individual income tax return filing season begins Jan. 23, 2017, and there is information available on the IRS’s website. Return preparer fraud was one of the IRS’s Dirty Dozen Tax Scams for 2016 and taxpayers seeking a return preparer should remain vigilant. The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Attorney General Loretta E. Lynch Announces the Justice Department’s National Strategy to Combat Human TraffickingRead the Press Release
Justice Department Issues Report as Part of the Commemoration of National Slavery and Human Trafficking Prevention Month
As part of National Slavery and Human Trafficking Prevention Month, Attorney General Loretta E. Lynch today announced the Justice Department’s National Strategy to Combat Human Trafficking (National Strategy), as required by the 2015 Justice for Victims of Trafficking Act. In addition to this new National Strategy, every year, the Attorney General also submits the Attorney General’s Annual Report to Congress and Assessment of U.S. Government Activities to Combat Trafficking in Persons, which details the programs and activities carried out by all federal agencies and sets forth recommended goals for the upcoming year. The most recent report, for FY 2015, is available here. The department has also launched www.justice.gov/humantrafficking. This page will serve as a central destination to learn more about the department’s efforts to combat the scourge of human trafficking.
“Human trafficking is one of the most devastating crimes that we confront,” said Attorney General Lynch. “The National Strategy to Combat Human Trafficking summarizes the work that our many components and our U.S. Attorney's Offices are doing to better help survivors and target traffickers. These efforts encourage increased collaboration within the department as well as between the department and our partners in order to build on our successes as we prepare to take on the work that remains.”
The department will implement and maintain the National Strategy in order to enhance the department’s work to combat human trafficking. The National Strategy sets forth plans to enhance coordination within the department and to develop specific strategies within each federal district to stop human trafficking. The National Strategy includes the following:
- An assessment of the threat presented by human trafficking based on FBI case information.
- An account of the work of the department’s components that are most extensively involved in anti-trafficking efforts, including the Civil Rights Division’s Human Trafficking Prosecution Unit; the Criminal Division’s Child Exploitation and Obscenity Section; the U.S. Attorneys’ Offices; the FBI; and various grant-making components within the Office of Justice Programs.
- A description of the district-specific strategies developed by each U.S. Attorney’s Office.
- A discussion of human trafficking and anti-trafficking efforts in Indian Country.
- Information about annual spending dedicated to preventing and combating human trafficking.
- A description of plans to encourage cooperation, coordination and mutual support between the private and non-profit sector and the department to combat human trafficking.
Raising awareness, supporting initiatives that prevent human trafficking and bringing justice to those that bring harm to the vulnerable has been a top priority of Attorney General Lynch. The department’s anti-trafficking efforts involve numerous components engaged in a full spectrum of activities: investigations, prosecutions, services for victims, enforcement initiatives to strengthen anti-trafficking partnerships, innovative prevention efforts, capacity-building programs to advance survivor-centered anti-trafficking strategies and grant funding to state, local and tribal authorities and to non-governmental organizations.
To learn more about the report and the department’s efforts to combat human trafficking visit www.justice.gov/humantrafficking.
National Strategy to Combat Human TraffickingU.S. Nuclear Engineer Pleads Guilty to Violating the Atomic Energy ActRead the Press Release
Szuhsiung Ho, aka Allen Ho, 66, a naturalized U.S. citizen, pleaded guilty to conspiracy to unlawfully engage or participate in the production or development of special nuclear material outside the U.S., without the required authorization from the U.S. Department of Energy (DOE) in violation of the Atomic Energy Act.
Acting Assistant Attorney General for National Security Mary B. McCord and U.S. Attorney Nancy Stallard Harr of the Eastern District of Tennessee made the announcement.
In April 2016, a federal grand jury issued a two-count indictment against Ho; China General Nuclear Power Company (CGNPC), the largest nuclear power company in China, and Energy Technology International (ETI), a Delaware corporation. At the time of the indictment Ho was a nuclear engineer, employed as a consultant by CGNPC and was also the owner of ETI. CGNPC specialized in the development and manufacture of nuclear reactors and was controlled by China’s State-Owned Assets Supervision and Administration Commission.
According to documents filed in the case, beginning in 1997 and continuing through April 2016, Ho conspired with others to engage or participate in the development or production of special nuclear material in China, without specific authorization to do so from the U.S. Secretary of Energy, as required by law. Ho assisted CGNPC in procuring U.S.-based nuclear engineers to assist CGNPC and its subsidiaries with designing and manufacturing certain components for nuclear reactors more quickly by reducing the time and financial costs of research and development of nuclear technology. In particular, Ho sought technical assistance related to CGNPC’s Small Modular Reactor Program; CGNPC’s Advanced Fuel Assembly Program; CGNPC’s Fixed In-Core Detector System; and verification and validation of nuclear reactor-related computer codes.
Under the direction of CGNPC, Ho also identified, recruited, and executed contracts with U.S.-based experts from the civil nuclear industry who provided technical assistance related to the development and production of special nuclear material for CGNPC in China. Ho and CGNPC also facilitated the travel to China and payments to the U.S.-based experts in exchange for their services.
Sentencing has been set for May 17, 2017, at 11:00 a.m., in U.S. District Court in Knoxville, Tennessee. Ho faces a maximum sentence of 10 years in prison and a maximum $250,000 fine. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.
This case was investigated by the FBI, Tennessee Valley Authority-Office of the Inspector General, DOE-National Nuclear Security Administration and U.S. Immigration and Customs Enforcement Homeland Security Investigations, with assistance from other agencies. Assistant U.S. Attorneys Charles E. Atchley Jr. and Bart Slabbekorn of the Eastern District of Tennessee, and Trial Attorney Casey T. Arrowood of the Counterintelligence and Export Control Section and Attorney Jeffrey M. Smith of the Appellate Unit in the National Security Division, represented the U.S.
Two New York Salesmen Sentenced to Prison for Fraudulently Selling Vending Machine BusinessesRead the Press Release
A federal judge sentenced two Long Island, New York, sales representatives to prison for fraudulently selling vending machine businesses, the Justice Department announced today. The defendants worked at Multivend, LLC, d/b/a/ Vendstar, based in Deer Park, New York. Before closing in July 2010, Vendstar made approximately $10 to $12 million in sales per year.
The sentences were imposed this week by U.S. District Court Judge Joan M. Azrack of the Eastern District of New York.
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Scott M. Doumas, 44, of Setauket-East Setau, New York, was sentenced to serve four years in prison and ordered to pay $290,664 in restitution. Doumas worked as a sales representative and sales manager at Vendstar from 1999 to 2009. Doumas was found guilty of mail fraud and conspiracy after a six-week jury trial in 2015.
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Paul E. Raia, 65, of Brookhaven, New York, was sentenced to serve three years in prison and ordered to pay $339,354 in restitution. Raia was a salesman at Vendstar from 2006 to 2010. Raia was found guilty at trial of wire fraud and conspiracy.
The Vendstar investigation began in 2010 and resulted in criminal charges filed against 22 individuals in 2012 and 2013. All 22 of those defendants were convicted, and 18 of them have now been sentenced.
“The Department of Justice will work relentlessly to bring fraudsters to justice and to secure restitution for their victims,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The prison sentences imposed this week are the result of more than six years of hard work, and demonstrate the Department’s commitment to investigating, prosecuting, and punishing those who lie to steal other people’s money without remorse.”
Four additional defendants convicted of fraud in connection with Vendstar are awaiting sentencing.
Vendstar sold business opportunities for plastic bulk vending machines that, for 25 cents, dispensed loose candy and nuts. Vendstar advertised nationwide in newspapers and on the Internet. Vendstar promised to provide everything its customers would need to be successful, including the machines, candy, assistance in finding profitable locations, and ongoing customer support. The sales representatives – with the knowledge and approval of Vendstar’s managers – misrepresented the business opportunity’s likely profits, the amount of money that Vendstar’s prior customers were earning, how quickly customers were likely to recover their investment, the quality of locations that were available for the vending machines, and the level of location assistance that customers would receive from locating companies recommended by Vendstar. Vendstar referred customers to locating companies that did not find profitable locations and regularly changed their names to stay ahead of constant complaints. Vendstar sales representatives also falsely claimed to operate their own profitable vending routes, according to evidence introduced during the trial.
Principal Deputy Assistant Attorney General Mizer commended the U.S. Postal Inspection Service for its thorough investigation. The case was prosecuted by Senior Litigation Counsel Patrick Jasperse and Alan Phelps of the Civil Division’s Consumer Protection Branch. During the last 10 years, approximately 170 individuals have been convicted of fraudulently selling business opportunities in cases prosecuted by the Consumer Protection Branch.
For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at http://www.justice.gov/civil/consumer-protection-branch.
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Justice Department Announces Department-Wide Procedures for Eyewitness IdentificationRead the Press Release
Deputy Attorney General Sally Q. Yates announced today that the Justice Department is issuing, for the first time, department-wide procedures on eyewitness identification, which will apply to agents at FBI, Drug Enforcement Administration (DEA), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the U.S. Marshals Service, and which will guide federal prosecutors when deciding whether to charge a case involving an eyewitness identification. The new procedures were outlined in a memo from Yates to the heads of the department’s law enforcement agencies. The procedures address the use of “photo arrays,” the most common methods used by law enforcement to determine whether a witness can identify the perpetrator of a crime, and are designed to ensure that law enforcement personnel do not suggest to a witness, even unintentionally, that they know which photograph contains the image of the suspect.
“Eyewitness identifications play an important role in our criminal justice system, and it’s important that we get them right,” said Deputy Attorney General Yates. “With today’s procedures, we’re taking one more step to ensure that law enforcement officers obtain the most reliable evidence possible during a criminal investigation and that all Americans can have confidence in the fairness of our criminal justice system.”
The memo issued today establishes a department-wide policy directing that, except in exceptional circumstances, agents should administer photo arrays using either “blind” procedures (where the administrator is not involved in the investigation and does not know what the suspect looks like) or “blinded” procedures (where the administrator takes steps to ensure he or she cannot see the order or arrangement of the photographs viewed by the witness). In addition, the new policy stresses the importance of documenting a witness’s self-reported confidence at the moment of the initial identification, reflecting a growing body of research that such confidence is often a more reliable predictor of eyewitness accuracy that a witness’s confidence at the time of trial. The department’s new procedures call on agents to document the identification either by video- or audio-recording the test, or by having the administrator transcribe the witness’s statement as close to verbatim as possible.
In the memorandum, Yates directed the heads of the department’s law enforcement agencies to update their internal policies to reflect the new guidance and called on all department prosecutors to review the procedures prior to making a decision about whether to charge a suspect who was identified in part through the use of a photo array, whether obtained by federal, state, or local law enforcement officers.
DAG Memo - Procedures for Photo ArraysFormer Vice President of Publicly Traded Company Charged with Orchestrating $100 Million Securities Fraud SchemeRead the Press Release
A former vice president of U.S. operations at a now-defunct publicly traded Canadian oil-services company was indicted with orchestrating a scheme to fraudulently inflate the company’s reported revenue by approximately $100 million.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Inspector in Charge Terrence P. McKeown of the U.S. Postal Inspection Service’s (USPIS) Washington, D.C., Division made the announcement.
Joseph A. Kostelecky, 55, of Dickinson, North Dakota, was charged in an indictment filed yesterday in the District of North Dakota with five counts of wire fraud and one count of securities fraud for his alleged role in the scheme. Kostelecky, who previously worked at Poseidon Concepts Corporation’s field office in Dickinson, made his initial appearance earlier today before U.S. Magistrate Judge Charles S. Miller Jr. of the District of North Dakota.
“The defendant is charged with a $100 million fraud that led to the collapse of an entire company and harm to thousands of individual investors,” said Assistant Attorney General Caldwell. “Today’s indictment again makes clear the department's commitment to protecting the investing public against those who manipulate the markets to enrich themselves.”
“Postal Inspectors will continue to aggressively protect the U.S. mail from being used by fraudsters to further their stock market manipulation schemes,” said Inspector in Charge McKeown.
The indictment alleges that between November 2011 and December 2012, Kostelecky, the sole executive in Poseidon Concepts Corporation’s U.S. division, engaged in conduct that caused the company to falsely report approximately $100 million in revenue from purported contracts with oil and natural gas companies. Kostelecky’s alleged misconduct included fraudulently directing the company’s accounting staff at the U.S. corporate headquarters in Denver to record revenue from such contracts and then assuring management that the associated revenue was collectable, when he knew that such contracts either did not exist or that the associated revenue was not collectable.
When the inflated revenue came to light at the end of 2012, the company’s stock fell precipitously, with shares losing close to $1 billion in value, and the company was forced into bankruptcy. The indictment alleges that Kostelecky perpetrated the scheme in order to inflate the value of the company’s stock price and to enrich himself through the continued receipt of compensation and appreciation of his own stock and stock options.
An indictment is merely an allegation, and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This case was investigated by the USPIS Washington, D.C. Division. Trial Attorneys Anna G. Kaminska and Henry P. Van Dyck of the Criminal Division’s Fraud Section are prosecuting the case. The Securities and Exchange Commission and the U.S. Attorney’s Office of the District of North Dakota provided assistance in this matter.
The Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country. Today’s indictment is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
Justice Department Releases Report on Civil Rights Division’s Pattern and Practice Police Reform WorkRead the Press Release
The Justice Department released a comprehensive report today that provides an overview of the Civil Rights Division’s police reform work under Section 14141 of the Violent Crime Control and Law Enforcement Act of 1994.
The report, “The Civil Rights Division’s Pattern and Practice Police Reform Work: 1994-Present,” is designed to serve as a resource for local law enforcement agencies and communities by making the division’s police reform work more accessible and transparent. It examines a range of topics, including the history and purpose of Section 14141, initiation and methodology of pattern-or-practice investigations, negotiation of reform agreements, the current reform model and its rationale, conclusion of agreements and the impact of pattern-or-practice enforcement on police reform and community-police trust. To supplement the report, the division also published an interactive Police Reform Finder, which allows users to search how reform agreements have addressed specific kinds of policing issues.
“Over the years, countless law enforcement officials and community members have requested additional information about the Civil Rights Division’s policing work,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “We hope stakeholders find our report and interactive tool useful in our collective efforts to advance constitutional policing, strengthen police-community trust and promote officer and public safety.”
Since 2009, the Civil Rights Division has opened 25 investigations into law enforcement agencies and is currently enforcing 19 agreements, including 14 consent decrees and one post-judgment order.
Police Reform Report
Police Reform Finder
Police Reform AccomplishmentsForeign Currency Exchange Dealer Pleads Guilty to Antitrust ConspiracyRead the Press Release
First Individual Plea in Ongoing Investigation
A foreign currency exchange (FX) dealer pleaded guilty to participating in a price-fixing conspiracy in the FX market, the Justice Department announced today.
According to the one-count information filed in the U.S. District Court for the Southern District of New York, Jason Katz was a dealer of Central and Eastern European, Middle Eastern and African (CEEMEA) currencies on the New York FX desks of three successive financial institutions. From approximately January 2007 until July 2013, Katz and FX dealers at competing institutions conspired to suppress and eliminate competition by fixing prices in CEEMEA currencies, in violation of the Sherman Act, 15 U.S.C. § 1. As part of this conspiracy, Katz and his co-conspirators manipulated prices on an electronic FX trading platform through the creation of non-bona fide trades, coordinated the placement of bids and offers on that platform and agreed on currency prices they would quote specific customers, among other conduct. Under his plea agreement, Katz has agreed to cooperate with the department’s ongoing investigation into the FX market.
“These conspirators engaged in blatant collusion and succeeded in manipulating exchange rates for multiple currencies to their advantage,” said Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division. “Conspiracies such as this undermine the integrity of our financial markets, and the Antitrust Division is committed to ensuring that they are pursued and punished.”
“The Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG) is pleased to join the Antitrust Division and our law enforcement colleagues in pursuing this investigation of price fixing in the foreign currency exchange market,” said Acting Inspector General Frederick W. Gibson of FDIC OIG. “We are committed in our efforts to ensure that those who seek to undermine the integrity of the financial services industry will be held accountable.”
Katz is the first individual to plead guilty as a result of the department’s ongoing investigation into antitrust and fraud crimes in the FX market, and the third individual to be charged. On May 20, 2015, four major banks – Citicorp, JPMorgan Chase & Co., Barclays PLC and The Royal Bank of Scotland plc – pleaded guilty at the parent level and agreed to pay collectively more than $2.5 billion in criminal fines for their participation in an antitrust conspiracy to manipulate the price of U.S. dollars and euros exchanged in the FX market. A fifth bank, UBS AG, pleaded guilty to manipulating the London Interbank Offered Rate (LIBOR) and other benchmark interest rates and agreed to pay a $203 million criminal penalty, after breaching its December 2012 non-prosecution agreement resolving the LIBOR investigation. On July 20, 2016, fraud charges were brought by the Justice Department’s Criminal Division against two FX executives for conspiring to defraud a client of their bank through a front running scheme.
This antitrust investigation is being conducted by the Antitrust Division’s New York Office with the assistance of the FDIC OIG and the FBI’s Washington Field Office. The Criminal Division’s Fraud Section also provided substantial assistance in this matter.
A violation of the Sherman Act, 15 U.S.C. § 1, carries a maximum penalty of ten years in prison and a $1 million fine. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by victims if either amount is greater than the statutory maximum.
The charge was brought in connection with the President Obama’s Financial Fraud Enforcement Task Force. The president established the task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.
For more information about the task force, please visit www.StopFraud.gov. Anyone with information concerning price fixing or other anticompetitive conduct in the FX market should contact the New York Office of the Antitrust Division at (212) 335-8000, call the Antitrust Division’s Citizen Complaint Center at (888) 647-3258 or visit www.justice.gov/atr/contact/newcase.html.
Katz InformationJustice Department Files Brief to Address Solitary Confinement of Juvenile Offenders in New YorkRead the Press Release
The Justice Department filed a statement of interest today addressing the harmful effects of subjecting juvenile offenders to solitary confinement. The statement of interest was filed in V.W. et al. v. Conway et al., a class action brought by six juveniles and their parents and natural guardians to challenge the placement of youth in solitary confinement in the Onondaga County Justice Center in Syracuse, New York.
The statement of interest, filed in the U.S. District Court for the Northern District of New York, advances the United States’ position that juveniles should not be placed in restrictive housing, including solitary confinement, as explained in the department’s January 2016 Report and Recommendations Concerning the Use of Solitary Confinement. That report provided that in very rare circumstances, juveniles may be separated from others, but only as a temporary response to behavior posing a serious and immediate risk of physical harm. This statement of interest states that accordingly, the Federal Bureau of Prisons has ended the practice of using restrictive housing for juveniles. The filing also explains that, consistent with scientific consensus from many child psychology experts and researchers that solitary confinement should be banned for juveniles, courts have recognized the developmental vulnerability of juvenile brains and the irreversible damage that solitary confinement can inflict on adolescents.
In V.W. et al. v. Conway et al., the plaintiffs allege that the Onondaga County Sheriff’s Office unconstitutionally imposes solitary confinement on juveniles in its custody at the Justice Center. Plaintiffs describe this practice as involving at least 23 hours a day in an approximately 60 square foot cell with minimal furnishings, inadequate mental health care and virtually no contact with others except for adult inmates in neighboring cells who routinely harass and intimidate them. Plaintiffs allege that between Oct. 1, 2015 and Aug. 31, 2016, at least 86 juveniles were placed in solitary confinement. As a result, the juvenile plaintiffs allege they regularly experience anxiety, hopelessness, irritability, stress, sadness, post-traumatic symptoms, agitation and suicidal ideations.
“Both the Supreme Court and experts in the field agree that juveniles are developmentally different from adults,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “Accordingly, they must be treated differently and provided additional protections while in custody. This brief advances the Justice Department’s efforts to protect juveniles from serious harm to their physical, psychological and social development.”
In recent years, the department has taken several steps to address the use of solitary confinement on juveniles in jails, including the ongoing investigation of the Jefferson County Jail in Alabama and the 2016 investigation and subsequent consent decree in which the Hinds County Jail in Mississippi agreed to eliminate solitary confinement as a disciplinary sanction for juveniles. In 2015, the department investigated and entered into a consent decree with the New York City Department of Correction Jails on Rikers Island, in which the jails agreed to ban punitive solitary confinement for juveniles. In 2014, the department investigated and reached an agreement with the state of Ohio to reduce significantly, and ultimately eliminate, its use of seclusion on young people in its custody.
V.W. et al. v. Conway et al. was filed in December 2015. Plaintiffs filed a motion for class certification in September 2016, and a motion for preliminary injunction in December 2016. The court will hold a hearing on plaintiffs’ motion for preliminary injunction on Jan. 27, 2017.
For more information on the Civil Rights Division, please visit www.justice.gov/crt.
V.W. v. Conway Statement of InterestINTERPOL Washington Highlights of 2016Read the Press Release
INTERPOL Washington had an exciting year in 2016!
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The Department of Justice announced today that it has reached final resolutions with banks that have met the requirements of the Swiss Bank Program. The Program provided a path for Swiss banks to resolve potential criminal liabilities in the United States, and to cooperate in the Department’s ongoing investigations of the use of foreign bank accounts to commit tax evasion. The Program also provided a path for those Swiss banks that were not engaged in wrongful acts but nonetheless wanted a resolution of their status. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the Program.
“The Swiss Bank Program has been and continues to be a vital part of the Justice Department's efforts to aggressively pursue tax evasion,” said Attorney General Loretta E. Lynch. “This groundbreaking initiative has uncovered those who help facilitate evasion schemes and those who hide funds in secret offshore accounts; improved our ability to return tax dollars to the United States; and allowed us to pursue investigations into banks and individuals. I want to thank the Swiss government for their cooperation in this effort, and I look forward to continuing our work together to eradicate fraud and corruption.”
“Working with the Swiss government, we have made financial institutions reform the way they do business,” said Principal Deputy Associate Attorney General Bill Baer. “We are moving toward an era of global financial transparency, and those seeking to violate our nation’s tax laws, or the laws of our treaty partners, will find that the days of hiding funds abroad are over."
“The completion of the resolutions with the banks that participated in the Swiss Bank Program is a landmark achievement in the Department’s ongoing efforts to combat offshore tax evasion,” said Principal Deputy Assistant Attorney General Caroline D. Ciraolo. “We are now in the legacy phase of the Program, in which the participating banks are cooperating, and will continue to cooperate, in all related civil and criminal proceedings and investigations. The Tax Division, working closely with its colleagues throughout the Department and its partners within the Internal Revenue Service (IRS), will continue to hold financial institutions, professionals, and individual U.S. taxpayers accountable for their respective roles in concealing foreign accounts and assets, and evading U.S. tax obligations.”
“The completion of the examination of Category 3 and 4 banks in the Swiss Bank Program marks another milestone in the continued success of this valuable criminal compliance effort,” said Chief Richard Weber of IRS Criminal Investigation (CI). “IRS–CI will continue to partner with DOJ in pursuing those who facilitate or engage in international income tax evasion.”
The Program established four categories of Swiss financial institutions. Category 1 included Swiss banks already under investigation when the Program was announced, and therefore, not eligible to participate. Category 2 was reserved for those banks that advised the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S. related accounts. In exchange for a non-prosecution agreement, the Category 2 banks made a complete disclosure of their cross-border activities, provided detailed information on accounts in which U.S. taxpayers have a direct or indirect interest, are cooperating in treaty requests for account information, are providing detailed information as to other banks that transferred funds into hidden accounts or that accepted funds when those secret accounts were closed, and must cooperate in any related criminal and civil proceedings for the life of those proceedings. The banks were also required to pay appropriate penalties.
Banks eligible for Category 3 of the Program were those that established, with the assistance of an independent internal investigation of their cross-border business, that they did not commit tax or monetary transaction-related offenses and have an effective compliance program in place. The Category 3 banks were required to provide the Department with an independent written report that identified witnesses interviewed and a summary of each witness’s statements, files reviewed, factual findings, and conclusions. In addition, the Category 3 banks were required to appear before the Department and respond to any questions related to the report or their cross-border business, and to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations. Upon satisfying these requirements, Category 3 banks received a non-target letter pursuant to the terms of the Program.
Category 4 of the Program was reserved for Swiss banks that were able to demonstrate that they met certain criteria for deemed-compliance under the Foreign Account Tax Compliance Act (FATCA). Category 4 banks also were eligible for a non-target letter.
Between March 2015 and January 2016, the Department executed non-prosecution agreements with 80 Category 2 banks and collected more than $1.36 billion in penalties. The Department also signed a non-prosecution agreement with Finacor, a Swiss asset management firm, reflecting the Department’s willingness to reach fair and appropriate resolutions with entities that come forward in a timely manner, disclose all relevant information regarding their illegal activities and cooperate fully and completely, including naming the individuals engaged in criminal conduct.
Between July and December 2016, four banks and one bank cooperative satisfied the requirements of Category 3, making them eligible for Non-Target Letters. No banks qualified under Category 4 of the Program.
“Offshore compliance remains an important area of tax administration,” said IRS Large Business & International Division (LB&I) Commissioner Douglas O’Donnell. “We are evaluating incoming information to detect accountholders who have evaded reporting overseas assets and income, and we are using this information to further untangle the web of financial institutions and intermediaries helping with this evasion. We have expanded our investigations to other regions of the world, and we will continue to apply these techniques to help protect honest taxpayers.”
Principal Deputy Assistant Attorney General Ciraolo thanked the IRS and in particular, IRS-CI and the LB&I for their substantial assistance. Principal Deputy Assistant Attorney General Ciraolo also thanked Tax Division Trial Attorneys Kimberle Dodd, Paul Galindo, Mark Kotila, Kathleen Lyon, and Thomas Voracek, who served as counsel on the Category 3 and 4 bank matters, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer and Senior Litigation Counsel Nanette L. Davis of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
General Cable Corporation Agrees to Pay $20 Million Penalty for Foreign Bribery Schemes in Asia and AfricaRead the Press Release
General Cable Corporation, a Kentucky-based manufacturer and distributor of cable and wire, entered into a non-prosecution agreement and agreed to pay a $20 million penalty, reflecting a 50 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range, to resolve the government’s investigation into improper payments to government officials in Angola, Bangladesh, China, Indonesia and Thailand to corruptly gain business in violation of the Foreign Corrupt Practices Act (FCPA), announced Assistant Attorney General Leslie R. Caldwell of the Criminal Division and Assistant Director Stephen Richardson of the FBI’s Criminal Investigative Division.
“General Cable paid bribes to officials in multiple countries in a scheme that involved a high-level executive of the company and resulted in profits of more than $50 million worldwide,” said Assistant Attorney General Caldwell. “But General Cable also voluntarily self-disclosed this misconduct to the government, fully cooperated and remediated. This resolution demonstrates the very real upside to coming in and cooperating with federal prosecutors and investigators. It also reflects our ongoing commitment to transparency.”
“In 2015, International Corruption Squads across the country were formed to address the national and international implications of foreign corruption,” said Assistant Director Richardson. “This settlement is an example of the exceptional efforts of those dedicated squads and investigators. The FBI looks forward to continuing to work with our law enforcement partners to address corruption, no matter how big or small.”
According to General Cable’s admissions, some parent-level and subsidiary-level employees, including executives, knew that some of its foreign subsidiaries used third-party agents and distributors to make corrupt payments to foreign officials in order to obtain and retain business. In one case the foreign subsidiary made corrupt payments directly to foreign officials. The corrupt conduct began in 2002. In 2011, when employees from a General Cable subsidiary expressed concerns to regional and parent-level executives that commission payments were being used for improper purposes, including potentially bribery, General Cable nevertheless failed to implement and maintain a system of internal accounting controls designed to detect and prevent such corruption and otherwise illegal payments.
According to admissions by General Cable made in connection with the resolution, these payments were discussed openly in email messages. For example, in June 2012, a sales agent in Bangladesh emailed an executive and other employees of General Cable’s subsidiary in Thailand and said that a portion of the money that the Thailand subsidiary paid the sales agent would “be shared by decision makers in [the] customer, concerned higher ups in [the] Ministry[,] and some top executives at [the] bidder.” In May 2013, the executive, who had become an executive at General Cable in December 2012, approved a payment to the Bangladeshi sales agent. In addition, in 2011, the same executive, who was at that time working at General Cable’s Thailand subsidiary, informed a General Cable executive that payments to a distributor in Thailand were being used for corrupt purposes. General Cable did not investigate those payments, which continued to be made.
Between 2002 and 2013, General Cable subsidiaries paid approximately $13 million to third-party agents and distributors, a portion of which was used to make unlawful payments to obtain business, ultimately netting the company approximately $51 million in profits.
General Cable entered into a non-prosecution agreement and agreed to pay a criminal penalty of $20,469,694.80 to resolve the matter. As part of the agreement, General Cable has agreed to continue to cooperate with the department in any ongoing investigations and prosecutions relating to the conduct, including of individuals, to enhance its compliance program and to report to the department on the implementation of its enhanced compliance program.
The department reached this resolution based on a number of factors, including that General Cable voluntarily and timely disclosed the conduct at issue, fully cooperated in the investigation and fully remediated. General Cable’s cooperation included conducting a thorough internal investigation; making regular factual presentations and proactively providing updates to the Fraud Section; voluntarily making foreign-based employees available for interviews in the United States; producing documents, including translations, to the Fraud Section from foreign countries in ways that did not implicate foreign data privacy laws; collecting, analyzing and organizing voluminous evidence and information for the Fraud Section; identifying, investigating and disclosing conduct to the Fraud Section that was outside the scope of its initial voluntary self-disclosure; and, by the conclusion of the investigation, providing to the Fraud Section all relevant facts known to it, including information about individuals and third parties involved in the misconduct. General Cable also took extensive remedial measures, including taking employment action against 13 employees who participated in the misconduct, resulting in their departure from the company, and terminating its relationships with 47 third-party agents and distributors who participated in the misconduct. Based on these actions and other considerations, the company received a non-prosecution agreement and an aggregate discount of 50 percent off of the bottom of the U.S. Sentencing Guidelines fine range.
In related proceedings, the U.S. Securities and Exchange Commission (SEC) filed a cease and desist order against General Cable, whereby General Cable agreed to pay approximately $55 million in disgorgement to the SEC, including prejudgment interest. Thus, the combined penalties and disgorgement paid by General Cable is approximately $75.75 million. The Fraud Section appreciates the cooperation and assistance provided by the SEC in this matter.
The FBI’s International Corruption Squad in Washington, D.C., investigated the case. The department appreciates the cooperation and assistance provided by the U.S. Attorney’s Office of the Eastern District of Kentucky in this matter. Trial Attorneys Christopher Cestaro and Lorinda Laryea of the Criminal Division’s Fraud Section prosecuted the case. The Criminal Division’s Office of International Affairs also provided substantial assistance in this matter.
The Criminal Division’s Fraud Section is responsible for investigating and prosecuting all FCPA matters. Additional information about the department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Louisiana Resident Pleads Guilty to Conspiracy to Defraud the United StatesRead the Press Release
WASHINGTON – A Tangipahoa Parish, Louisiana resident pleaded guilty to one count of conspiracy to defraud the United States and to commit theft of public money, wire fraud and aggravated identity theft, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Kenneth A. Polite for the Eastern District of Louisiana.
According to the plea agreement, Jackie Chaney, aka Jackie Scott, 46, admitted to conspiring with others to prepare false tax returns using stolen identities. Chaney admitted that she and her co-conspirators obtained the names and social security numbers of individuals which were used to prepare and file false tax returns. At least one of Chaney’s co-conspirators electronically filed the false tax returns and Chaney and others received the fraudulently obtained refunds in the form of checks or prepaid debit cards. Chaney also admitted that she and her co-conspirators further conspired to convert fraudulently obtained tax refund checks into cash.
Sentencing is scheduled for March 29, 2017 before U.S. District Court Judge Susie Morgan. Chaney faces a statutory maximum sentence of five years in prison for the conspiracy charge, a period of supervised release, restitution and monetary penalties.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Polite commended special agents of the Internal Revenue Service-Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney Hayden Brockett and Trial Attorney Lauren Castaldi of the Tax Division, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.