District Not Recorded

The Justice Department today filed a lawsuit alleging that several mortgage loan modification service providers violated the federal Fair Housing Act and Equal Credit Opportunity Act by intentionally discriminating against Hispanic homeowners by targeting them for predatory mortgage loan modification services and interfering with their ability to receive financial assistance to maintain their homes.  The defendants named in the lawsuit are The Home Loan Auditors LLC, Century Law Center LLC, SOE Assistance Center Inc., Spieker Law Office and the principals of these entities: Omar Alcaraz, Araceli Castro, Oralia Gutierrez, Hortencia Leon, Raul Luna, Elena Ramirez and David Spieker.

The complaint, which was filed today in the U.S. District Court for the Northern District of California, alleges that the defendants engaged in a pattern or practice of marketing to and encouraging Hispanic homeowners to pay approximately $5,000 for unnecessary and ineffective loan audits.  The defendants told the homeowners that audits were essential for a loan modification, but in fact the audits had no impact on the loan modification process and provided no financial benefit.  As part of their advertised loan modification service, the defendants encouraged their clients to stop making mortgage payments and instructed them to cease contact with their lenders.  This conduct resulted in many homeowners defaulting on their mortgage payments and ultimately losing their homes.

This lawsuit arose as a result of complaints filed with the U.S. Department of Housing and Urban Development (HUD) by two of the defendants’ former clients.  The complainants elected to have the case heard in federal court and HUD referred the case to the Justice Department.

“Intentionally targeting any community or person with predatory mortgage services because of their ethnicity or national origin violates federal law, harms working families and hurts our entire economy,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “The defendants in this case tried to exploit Hispanic communities and homeowners already suffering from abusive, discriminatory financial practices during the Great Recession that drove the American housing market into crisis and our economy into freefall.  The Justice Department’s lawsuit serves as a stark reminder and sends a clear message that we will work tirelessly to ensure that all homeowners can access mortgage services free from discrimination.”

“Hispanic families struggling to stay in their homes do not need empty promises that make their housing and financial situation worse,” said Gustavo F. Velasquez, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity.  “HUD is gratified that the Department of Justice is taking action against individuals and companies that victimize homeowners because of where they come from or because they speak Spanish or other languages.”

The Civil Rights Division and other agencies involved in this matter are part of the Financial Fraud Enforcement Task Force, established by President Obama 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.

Anyone with information on the loan modification services provided by The Home Loan Auditors LLC, Century Law Center LLC, SOE Assistance Center Inc. or Spieker Law Office should contact the Civil Rights Division’s Housing and Civil Enforcement Section at 1-800-896-7743 (press 1 to continue in English, and select option 5) or at [email protected]. 

A copy of the complaint, as well as additional information about fair lending enforcement by the Justice Department, can be found at www.justice.gov/fairhousing.  Fighting illegal lending discrimination is a top priority of the Justice Department.  More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.

THLA Complaint

Defendant Illegally Obtained Federal Contracts Meant for Small, Disadvantaged Businesses 

Walter Crummy, a former officer and owner of MCC Construction Company (MCC), pleaded guilty to a federal charge of conspiring to commit wire fraud.  Crummy also agreed to pay forfeiture in the amount of $105,618.

The plea was announced by Acting Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division; U.S. Attorney Channing D. Phillips of the U.S. Attorney’s Office for the District of Columbia; Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office; Inspector General Peggy E. Gustafson for the Small Business Administration (SBA); Inspector General Carol Fortine Ochoa of the U.S. General Services Administration (GSA); Special Agent in Charge Brian J. Reihms, of the Central Field Office of the Defense Criminal Investigative Service (DCIS) and Director Frank Robey of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).     

According to court documents, MCC and others conspired with two companies that were eligible to receive federal government contracts set asides for small, disadvantaged businesses with the understanding that MCC would illegally perform all of the work.  In so doing, MCC was able to win 27 government contracts worth over $70 million from 2008 to 2011.  The scope and duration of the scheme resulted in a significant number of opportunities lost to legitimate small and disadvantaged businesses.

 “We will continue to work with our colleagues at the U.S. Attorney’s Office and in law enforcement to protect the integrity of federal contracting programs,” said Acting Assistant Attorney General Hesse. 

 “Walter Crummy knowingly participated in a scheme that allowed MCC Construction Company to illegally cash in on federal contracts designated for small disadvantaged businesses.  This prosecution shows our determination to maintain the integrity of federal contracting programs meant to aid small, disadvantaged businesses,” said U.S. Attorney Phillips.  “We will continue to work with our law enforcement partners to identify and prosecute those who abuse these programs at the expense of deserving businesses.”

“The FBI and our law enforcement partners are committed to upholding the integrity of the federal contracting process and protecting opportunities intended for small and economically disadvantaged businesses,” said Assistant Director in Charge Abbate.  “Those who cheat the system through unlawful, fraudulent means are harming small businesses and stealing from American taxpayers, and they will be held accountable under the law."

“Those who commit fraud in SBA’s preferential contracting programs will face justice,” said SBA Inspector General Gustafson.  “The integrity of SBA’s programs is vital to honest, hard-working small business owners across the nation.  I want to thank the U.S. Attorney’s Office and our law enforcement partners for their leadership and dedication to serving justice.”

“Federal vendors who use deceitful practices to game the small business set-aside program will be held accountable,” said GSA Inspector General Ochoa.

“The Defense Criminal Investigative Service is committed to working with our partner agencies to combat fraud impacting the Department of Defense's vital programs and operations and maintain the integrity of the procurement system,” said Special Agent in Charge Reihms.

Crummy, 63, of Morrison, Colorado, was charged in a criminal information on July 27, 2016, in the U.S. District Court for the District of Columbia with one count of conspiring to commit wire fraud.  He waived the requirement of being charged by way of federal indictment, agreed to the filing of the information and accepted responsibility for his criminal conduct.  The charge carries a statutory maximum of five years in prison and potential financial penalties.

The Honorable Ketanji Brown Jackson scheduled a sentencing hearing for Dec. 13.  

Court documents state that MCC violated the provisions of the SBA 8(a) program.  The SBA 8(a) development program is designed to award contracts to businesses that are owned by “one or more socially and economically disadvantaged individuals.”  To qualify for the 8(a) program, a business must be at least 51 percent owned and controlled by a U.S. citizen (or citizens) of good character who meet the SBA’s definition of socially and economically disadvantaged.  The firm must also be a small business (as defined by the SBA) and show a reasonable potential for success.  Participants in the 8(a) program are subject to regulatory and contractual limits.  Also, under the program, the disadvantaged business is required to perform a certain percentage of the work.  For the types of contracts under investigation here, the SBA 8(a)-certified companies were required to perform 15 percent or more of the work with its own employees.

Court documents also state that Crummy drafted corporate documents between MCC and one of the SBA-eligible companies whereby MCC would provide all labor, equipment, materials, safety and supervision and in return receive 97 percent of the contract task order amount.  This agreement by its terms meant that the SBA-eligible company would be violating SBA rules and regulations and would instead collect a 3 percent fee for allowing their small business status to be used.

Earlier this year, MCC pleaded guilty to conspiring to commit fraud on the United States by illegally obtaining government contracts that were intended for small, disadvantaged businesses and agreed to pay $1,769,924 in criminal penalties and forfeiture.  In June, Thomas Harper, another former officer and owner of MCC, pleaded guilty to conspiring to obstruct proceedings before a department or agency.

The investigation is being conducted by the FBI’s Washington Field Office, the Inspector General for the U.S. Small Business Administration (SBA), the Inspector General of the U.S. General Services Administration (GSA), the Central Field Office of the Defense Criminal Investigative Service (DCIS) and the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU).

The prosecution is being handled by Assistant U.S. Attorney Matt Graves and John Marston of the U.S. Attorney’s Office for the District of Columbia and Assistant Chief Craig Y. Lee and Trial Attorneys Kevin B. Hart and Justin P. Murphy of the Antitrust Division.

El Departamento de Justicia entabló hoy una demanda en la que alega que varios proveedores de servicios de modificación de préstamos hipotecarios violaron la Ley de Vivienda Justa y la Ley de Igualdad de Oportunidades de Crédito al discriminar intencionalmente a propietarios hispanos al ofrecerles servicios de modificación de préstamos hipotecarios predatorios e interferir en su capacidad de recibir asistencia financiera para conservar sus hogares.  Los demandados nombrados en la demanda son The Home Loan Auditors LLC, Century Law Center LLC, SOE Assistance Center Inc., Spieker Law Office y los directores de estas entidades: Omar Alcaraz, Araceli Castro, Oralia Gutierrez, Hortencia Leon, Raul Luna, Elena Ramirez y David Spieker.

La demanda, entablada hoy en el Tribunal Federal de Distrito del Distrito Norte de California, alega que los demandados exhibieron un patrón o práctica de comercialización a propietarios hispanos, incentivándolos a que pagaran alrededor de $5.000 por auditorias de préstamo innecesaria e inefectivas.  Los demandados dijeron a los propietarios que las auditorías eran esenciales para la modificación de préstamo. Sin embargo, las auditorías no tenían ningún impacto en el proceso de modificación de préstamo y no brindaban ningún beneficio financiero.  Como parte del servicio de modificación de préstamos que publicitaban, los demandados incentivaban a los clientes a dejar de realizar los pagos de sus hipotecas y les indicaban que cesaran el contacto con sus prestamistas.  Esta conducta tuvo como resultado que muchos propietarios pasaron a estar en situación de mora en el pago de sus cuotas hipotecarias y, finalmente, perdieran sus hogares.

Esta demanda surgió como resultado de denuncias presentadas al Departamento de Vivienda y Desarrollo Urbano de EE.UU. [Department of Housing and Urban Development (HUD)] por dos ex clientes de los demandados.  Los denunciantes eligieron que se tratara el caso en el tribunal federal y HUD remitió el caso al Departamento de Justicia.

“Tener como objetivo intencional a cualquier comunidad o persona con servicios hipotecarios predatorios debido a su grupo étnico u origen nacional viola la ley federal, perjudica a familias trabajadoras y hace daño a nuestra economía entera,” señaló la Secretaria de Justicia Auxiliar Adjunta Principal Vanita Gupta, a cargo de la División Civil del Departamento de Justicia.  “Los demandados en este caso trataron de explotar a comunidades hispanas y propietarios que ya sufrían debido a prácticas financieras abusivas y discriminatorias durante la Gran Recesión que causó la crisis del mercado de la vivienda de EE.UU. y la caída libre de nuestra economía.  La demanda entablada por el Departamento de Justicia sirve de fuerte recordatorio y transmite el claro mensaje de que trabajaremos sin descanso para permitirles a todos los propietarios de vivienda acceso a servicios hipotecarios libres de discriminación.”  

“Las familias hispanas que luchan por permanecer en sus hogares no necesitan promesas vacías que solo empeoran su situación de vivienda y financiera,” señaló Gustavo Velásquez, Secretario Adjunto de Vivienda Justa e Igualdad de Oportunidades con el Departamento de Vivienda y Desarrollo Urbano de los Estados Unidos.  “HUD se siente complacido que el Departamento de Justicia esté actuando contra personas y compañías que victimicen a dueños de casa debido a su país de origen o porque hablen español u otros idiomas.”

La División de Derechos Civiles y otras agencias que participan en el caso forman parte del Grupo de Trabajo de Coacción contra el Fraude Financiero, establecido por el Presidente Obama para llevar adelante una iniciativa agresiva, coordinada y proactiva para investigar y enjuiciar los delitos financieros.  El grupo de trabajo incluye a representantes de una amplia gama de dependencias federales, autoridades reguladoras, inspectores generales y miembros de las fuerzas del orden público estatales y locales, quienes, trabajando juntos, aprovechan un poderoso espectro de recursos de coacción penal y civil.  El grupo de trabajo está trabajando para mejorar la labor en todo el poder ejecutivo federal, y con asociados estatales y locales, para investigar y enjuiciar delitos financieros importantes, asegurar un castigo justo y eficaz para quienes cometan delitos financieros, combatir la discriminación en los mercados de préstamos y financieros, y recuperar fondos para las víctimas de delitos financieros.  Para obtener más información sobre el grupo de trabajo, visite www.StopFraud.gov.

Cualquier persona con información sobre los servicios de modificación de préstamos prestados por The Home Loan Auditors LLC, Century Law Center LLC, SOE Assistance Center Inc. o Spieker Law Office debe comunicarse con la Sección de Vivienda y Cumplimiento de la Ley Civil de la División de Derechos Civiles llamando al 1-800-896-7743, presione el 2 para continuar en español y seleccione la opción 5 o escribiendo a [email protected].

Se encuentra una copia de la demanda, así como información adicional sobre las iniciativas del Departamento de Justicia, de cumplimiento de ley asociadas al otorgamiento de préstamos justos, en www.justice.gov/fairhousing.  La lucha contra la discriminación ilegal respecto del otorgamiento de préstamos es una de las principales prioridades del Departamento de Justicia.  Encontrará más información sobre la División de Derechos Civiles y las leyes que hace valer en www.justice.gov/crt.

THLA Demanda (en inglés)

WASHINGTON – El Departamento de Justicia entabló hoy una demanda en la que alega que varios proveedores de servicios de modificación de préstamos hipotecarios violaron la Ley de Vivienda Justa y la Ley de Igualdad de Oportunidades de Crédito al discriminar intencionalmente a propietarios hispanos al ofrecerles servicios de modificación de préstamos hipotecarios predatorios e interferir en su capacidad de recibir asistencia financiera para conservar sus hogares.  Los demandados nombrados en la demanda son The Home Loan Auditors LLC, Century Law Center LLC, SOE Assistance Center Inc., Spieker Law Office y los directores de estas entidades: Omar Alcaraz, Araceli Castro, Oralia Gutierrez, Hortencia Leon, Raul Luna, Elena Ramirez y David Spieker. 

La demanda, entablada hoy en el Tribunal Federal de Distrito del Distrito Norte de California, alega que los demandados exhibieron un patrón o práctica de comercialización a propietarios hispanos, incentivándolos a que pagaran alrededor de $5.000 por auditorias de préstamo innecesaria e inefectivas.  Los demandados dijeron a los propietarios que las auditorías eran esenciales para la modificación de préstamo. Sin embargo, las auditorías no tenían ningún impacto en el proceso de modificación de préstamo y no brindaban ningún beneficio financiero.  Como parte del servicio de modificación de préstamos que publicitaban, los demandados incentivaban a los clientes a dejar de realizar los pagos de sus hipotecas y les indicaban que cesaran el contacto con sus prestamistas.  Esta conducta tuvo como resultado que muchos propietarios pasaron a estar en situación de mora en el pago de sus cuotas hipotecarias y, finalmente, perdieran sus hogares. 

Esta demanda surgió como resultado de denuncias presentadas al Departamento de Vivienda y Desarrollo Urbano de EE.UU. [Department of Housing and Urban Development (HUD)] por dos ex clientes de los demandados.  Los denunciantes eligieron que se tratara el caso en el tribunal federal y HUD remitió el caso al Departamento de Justicia.

“Tener como objetivo intencional a cualquier comunidad o persona con servicios hipotecarios predatorios debido a su grupo étnico u origen nacional viola la ley federal, perjudica a familias trabajadoras y hace daño a nuestra economía entera,” señaló la Secretaria de Justicia Auxiliar Adjunta Principal Vanita Gupta, a cargo de la División Civil del Departamento de Justicia.  “Los demandados en este caso trataron de explotar a comunidades hispanas y propietarios que ya sufrían debido a prácticas financieras abusivas y discriminatorias durante la Gran Recesión que causó la crisis del mercado de la vivienda de EE.UU. y la caída libre de nuestra economía.  La demanda entablada por el Departamento de Justicia sirve de fuerte recordatorio y transmite el claro mensaje de que trabajaremos sin descanso para permitirles a todos los propietarios de vivienda acceso a servicios hipotecarios libres de discriminación.”  

“Las familias hispanas que luchan por permanecer en sus hogares no necesitan promesas vacías que solo empeoran su situación de vivienda y financiera,” señaló Gustavo Velásquez, Secretario Adjunto de Vivienda Justa e Igualdad de Oportunidades con el Departamento de Vivienda y Desarrollo Urbano de los Estados Unidos.  “HUD se siente complacido que el Departamento de Justicia esté actuando contra personas y compañías que victimicen a dueños de casa debido a su país de origen o porque hablen español u otros idiomas.” 

La División de Derechos Civiles y otras agencias que participan en el caso forman parte del Grupo de Trabajo de Coacción contra el Fraude Financiero, establecido por el Presidente Obama para llevar adelante una iniciativa agresiva, coordinada y proactiva para investigar y enjuiciar los delitos financieros.  El grupo de trabajo incluye a representantes de una amplia gama de dependencias federales, autoridades reguladoras, inspectores generales y miembros de las fuerzas del orden público estatales y locales, quienes, trabajando juntos, aprovechan un poderoso espectro de recursos de coacción penal y civil.  El grupo de trabajo está trabajando para mejorar la labor en todo el poder ejecutivo federal, y con asociados estatales y locales, para investigar y enjuiciar delitos financieros importantes, asegurar un castigo justo y eficaz para quienes cometan delitos financieros, combatir la discriminación en los mercados de préstamos y financieros, y recuperar fondos para las víctimas de delitos financieros.  Para obtener más información sobre el grupo de trabajo, visite www.StopFraud.gov.

Cualquier persona con información sobre los servicios de modificación de préstamos prestados por The Home Loan Auditors LLC, Century Law Center LLC, SOE Assistance Center Inc. o Spieker Law Office debe comunicarse con la Sección de Vivienda y Cumplimiento de la Ley Civil de la División de Derechos Civiles llamando al 1-800-896-7743, presione el 2 para continuar en español y seleccione la opción 5 o escribiendo a [email protected]. 

Se encuentra una copia de la demanda, así como información adicional sobre las iniciativas del Departamento de Justicia, de cumplimiento de ley asociadas al otorgamiento de préstamos justos, en www.justice.gov/fairhousing.  La lucha contra la discriminación ilegal respecto del otorgamiento de préstamos es una de las principales prioridades del Departamento de Justicia.  Encontrará más información sobre la División de Derechos Civiles y las leyes que hace valer en www.justice.gov/crt.

A congressional staffer was charged yesterday with five counts of willfully failing to file a tax return, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division and U.S. Attorney Dana J. Boente for the Eastern District of Virginia.

According to the criminal information and affidavit, Isaac Lanier Avant of Arlington, Virginia, is a staff member employed by the U.S. House of Representatives since approximately 2002.  For tax years 2009 through 2013, Avant earned annual wages of over $170,000, but did not timely file a personal income tax return for any of those years.  In May 2005, Avant filed a form with his employer that falsely claimed he was exempt from federal income taxes.  Avant did not have any federal tax withheld from his paycheck until the Internal Revenue Service (IRS) mandated that his employer begin withholding in January 2013. 

If convicted, Avant faces a statutory maximum sentence of one year in prison for each count, as well as a term of supervised release and monetary penalties. 

An information merely alleges that crimes have been committed and defendants are presumed innocent until proven guilty beyond a reasonable doubt.

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Boente thanked special agents of IRS-Criminal Investigation and the FBI, who investigated the case, and Assistant U.S. Attorney Jack Hanly and Assistant Chief Todd Ellinwood of the Tax Division, who are prosecuting the case.

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

Attorney General Loretta E. Lynch announced today the appointment of U.S. Attorney Richard S. Hartunian for the Northern District of New York as chair of the Attorney General’s Advisory Committee of U.S. Attorneys (AGAC).  Attorney General Lynch also appointed U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan to serve as vice chair.  Both appointments are effective immediately.

“The Attorney General’s Advisory Committee plays an essential role in shaping the Justice Department’s policies, implementing its programs, and ensuring that equal justice and the rule of law are upheld throughout the United States,” said Attorney General Lynch.  “As a former chair of the AGAC, I know firsthand the significant duties required of the committee’s leaders, and I am certain that U.S. Attorneys Richard Hartunian and Barbara McQuade are ready to assume the responsibility of chairing such an important and distinguished body.  They are both seasoned prosecutors, exemplary law enforcement officers, and devoted public servants, and I look forward to benefitting from their long experience and wise counsel as we advance the department’s vital work in the months ahead.  I congratulate them on their new posts, and I once again thank former U.S. Attorney John Walsh for his outstanding service as AGAC chair over the last 20 months.”

U.S. Attorney Hartunian has been the vice chair of the AGAC since January 2015.  He was appointed to the AGAC in 2013 and has served as the co-chair of the Border and Immigration Subcommittee, as well as a member of the subcommittees focused on Native American issues, Health Care Fraud and Environmental Crimes.  He has served as U.S. Attorney for the Northern District of New York since January of 2010.  Before that, he had been an Assistant U.S. Attorney there since 1997 and the district’s Narcotics Chief and Organized Crime Drug Enforcement Task Force Coordinator since 2006. 

U.S. Attorney Hartunian is a 1983 cum laude graduate of Georgetown University and a 1986 graduate of the Albany Law School of Union University.  He was engaged in the private practice of law in Albany from 1987 to 1990.  He served as an Assistant District Attorney in Albany County from 1990 to 1997, where his work on narcotics and violent crime cases led to his designation as a Special Assistant U.S. Attorney in 1994.

In May of 2010, U.S. Attorney Hartunian was honored by the Armenian Bar Association as the first U.S. Attorney of Armenian descent. 

U.S. Attorney McQuade was appointed to the AGAC in April 2013 and has previously served as co-chair of the Terrorism and National Security Subcommittee.  She also served on subcommittees addressing civil rights and border security.  She became the first woman to serve as U.S. Attorney for the Eastern District of Michigan when she took office in January of 2010.  She was an Assistant U.S. Attorney in Detroit, Michigan, for 12 years, including service as Deputy Chief of the National Security Unit. 

U.S. Attorney McQuade is a 1987 graduate of the University of Michigan and a 1991 graduate of the University of Michigan Law School.  Before becoming a federal prosecutor, she practiced law in a Detroit firm and served as a law clerk to a U.S. District Judge.  From 2003 to 2009, U.S. Attorney McQuade was as an adjunct law professor at the University of Detroit Mercy School of Law.

While U.S. Attorney McQuade replaces U.S. Attorney Hartunian as vice chair, U.S. Attorney Hartunian replaces former U.S. Attorney John Walsh for the District of Colorado as chair.  

The AGAC was created in 1973 to serve as the voice of the U.S. Attorneys and to advise the Attorney General on policy, management and operational issues impacting the offices of the U.S. Attorneys.

Rubycon, Elna and Holy Stone Are Latest Companies to Plead Guilty in Ongoing Investigation

Rubycon Corporation, Elna Co., Ltd. and Holy Stone Holdings Co., Ltd. will plead guilty for their roles in a conspiracy to fix prices for electrolytic capacitors sold to customers in the United States and elsewhere, the Department of Justice announced today. 

“The Antitrust Division has now charged five companies and one individual for their participation in this international price-fixing conspiracy,” said Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division.  “The electrolytic capacitors conspiracy affected millions of American consumers who use electronic devices containing capacitors every day.”

Electrolytic capacitors store and regulate electrical current in a variety of electronic products, including computers, televisions, car engine and airbag systems, home appliances and office equipment. 

The division filed one-count felony charges against each of the three companies in U.S. District Court in San Francisco today.  In addition to pleading guilty to the charges against them, each company has agreed to pay a criminal fine and cooperate with the division’s ongoing investigation.  The plea agreements are subject to court approval. 

Previously, NEC TOKIN Corp. and Hitachi Chemical Co. Ltd. pleaded guilty to participating in the same worldwide conspiracy.  NEC TOKIN was sentenced to pay a fine of $13.8 million in January 2016, and Hitachi Chemical was sentenced to pay a fine of $3.8 million in June 2016.  On March 12, 2015, a grand jury indicted Takuro Isawa, a former Global Sales General Manager for one of the capacitor manufacturers, for his alleged participation in the conspiracy.  

The charges today results from an ongoing federal antitrust investigation being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Field Office into price fixing, bid rigging and other anticompetitive conduct in the capacitor industry.  Anyone with information on price fixing, bid rigging or other anticompetitive conduct related to the capacitors industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI tip line at 415-553-7400.

Elna Information

Holy Stone Information

Rubycon Information

Filed False Claims for Refund Causing Loss of More Than $1 Million

A Nashville, Tennessee, woman was sentenced today to 18 months in prison for filing false claims for refund, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division and U.S. Attorney David Rivera for the Middle District of Tennessee. 

Karen Liane Miller, 61, admitted that from about August 2008 until about July 2009, she knowingly prepared and submitted multiple false federal income tax returns to the Internal Revenue Service (IRS) on behalf of her friends, family and herself.  The returns reported false amounts of taxable income on attached Forms 1099-OID (Original Issue Discount) and Forms 1099-A that Miller created and fraudulently represented to have been issued by financial institutions.  The returns also reported identical or near-identical false amounts of federal income tax withheld from the fictitious income to generate claims for tax refunds that were significantly higher than what the taxpayers were entitled to receive.  Miller filed 48 fraudulent tax returns that falsely claimed more than $19.8 million in refunds.  The IRS issued $1,003,238 in refunds for eight of the 48 fraudulent returns.

In addition to the prison term, Miller was ordered to serve two years of supervised release and to pay restitution to the IRS in the amount of $939,835.62.

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Rivera commended special agents of IRS–Criminal Investigation, who investigated the case and Trial Attorneys Alexander Effendi and Nathan Brooks of the Tax Division and Assistant US Attorney Carrie Daughtrey, who are prosecuting the case.

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

Spent $6.2 million on Personal Expenses from Business Accounts while Failing to Pay U.S. Treasury

A Germantown, Tennessee, resident and business owner was sentenced today to one year in prison and ordered to pay more than $10 million in restitution for failing to pay over employment taxes to the Internal Revenue Service (IRS), announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division and U.S. Attorney Edward L. Stanton III of the Western District of Tennessee.

“Payment of employment taxes is not optional,” said Principal Deputy Assistant Attorney General Ciraolo.  “Nor are such withholdings an interest-free source of money to be tapped to make payments on lavish personal expenses.  The sentence that Mr. Thornton received today reflects not just the harm that his actions caused to the U.S. Treasury but also the financial risks he placed on his employees by deliberately not filing their W-2 forms with Social Security on a timely basis.”

According to court documents, Larry Thornton, 67, was the majority owner, president and chief executive officer (CEO) of Software Earnings, Inc. (SEI), a Memphis company that produced and installed check processing.  Thornton was also the 100 percent owner, CEO and president of First Touch Payment Solutions, LLC (First Touch), a Memphis company that provided merchant services for credit card processing.  Thornton, as CEO and president of SEI and First Touch, had ultimate and final decision-making authority regarding SEI’s and First Touch’s business activities and had authority to exercise significant control over SEI’s financial affairs.  Thornton admitted that he was responsible for collecting, accounting for, and paying over to the IRS federal income taxes and Federal Insurance Contributions Act (FICA) taxes that were withheld from the wages of SEI and First Touch’s employees.

Beginning in the second quarter of 2007, Thornton caused SEI to stop paying over the taxes required to be withheld from SEI’s employees’ paychecks and caused SEI to stop timely filing Employer’s Quarterly Federal Tax Returns, Forms 941, with the IRS.  Beginning in the first quarter of 2010, Thornton caused First Touch to stop paying over the taxes required to be withheld from First Touch’s employees’ paychecks and caused First Touch to fail to timely file Forms 941 with the IRS.  Between 2007 and 2011, Thornton collected more than $6.8 million in employment taxes from SEI and First Touch employees’ paychecks, but failed to pay those collected taxes over to the IRS.  Thornton also failed to pay his companies’ matching share of FICA taxes during those years.  During that time period, two of Thornton’s full-time accountants – both of whom were certified public accountants (CPAs) – warned Thornton about his failure to pay over employment taxes.  Both CPAs resigned their positions due to Thornton’s unwillingness to comply with his employment tax obligations.

During the same years in which Thornton failed to comply with his employment tax obligations, Thornton spent more than $6.2 million from the business bank accounts on personal expenses, including house and condominium payments; vehicle, yacht and motorcycle loan payments; personal travel; and start-up funding for his wife’s beauty boutique.  According to court documents, Thornton also failed to file personal and corporate income tax returns.  As part of the guilty plea, Thornton admitted that his illegal conduct caused a tax loss of more than $8.9 million to the IRS.

“Larry Thornton’s efforts to conceal from IRS millions of dollars generated by his businesses afforded him a plush lifestyle for several years,” said U.S. Attorney Stanton.  “But his illegal and illicit acts also have earned him a stint in federal prison and a multimillion-dollar restitution fee.  We will continue to work with our law enforcement partners to pursue and bring to justice anyone who violates the nation’s tax laws.”

“Employment tax evasion results in the loss of tax revenue to the U.S. government and the loss of future social security or Medicare benefits for the employees,” said Special Agent in Charge Tracey D. Montaño of IRS Criminal Investigation (CI).  “Failure to pay over withheld taxes is a serious offense.  Corporate executives like Mr. Thornton have a responsibility to withhold income taxes for their employees and then remit those taxes to the IRS.  IRS Criminal Investigation will vigorously pursue anyone who collects these taxes and uses the funds for their own personal gain.”  

In addition to the prison term, Thornton was ordered to serve two years of supervised release.  Thornton was also ordered to pay restitution in the amount of $10,822,728.99 to the IRS. 

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Stanton commended special agents of IRS–CI, who investigated the case and Assistant U.S. Attorney Damon Griffin of the Western District of Tennessee and Trial Attorney Robert J. Boudreau of the Tax Division, who prosecuted the case.

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

A Georgia real estate investor pleaded guilty today for his role in bid-rigging and bank fraud conspiracies in connection with public real estate foreclosure auctions in Georgia, the Justice Department announced today. 

Otto Gogolin admitted that he agreed not to bid against other real estate investors at certain public real estate foreclosure auctions in an effort to subvert the competitive process.  Additionally, according to court documents, Gogolin and his co-conspirators defrauded banks that owned the mortgage notes.  Gogolin admitted to participating in the conspiracy in Forsyth County, Georgia, from July 2008 to December 2011. 

According to court documents filed in this case in the U.S. District Court for the Northern District of Georgia, the conspirators artificially suppressed the prices of properties sold at certain public real estate foreclosure auctions by agreeing not to outbid one another and then made and received payoffs to each other.  Among other methods, the conspirators allegedly held secret “second auctions” of properties they had obtained through rigged bids and then divided the auction proceeds that otherwise would have gone to pay off the mortgage and other secured debt holders and, in some cases, to the previous owner of the foreclosed home.

Including the charges filed against Gogolin, 23 defendants have been charged in connection with the department’s ongoing investigation into bid rigging and fraudulent schemes involving real estate foreclosure auctions in the Atlanta area, 21 of whom have either pleaded guilty or agreed to plead guilty.  In addition to the cases filed in Georgia, the Antitrust Division has recently filed similar cases in Alabama, North Carolina and California.  More than 100 defendants in total have been indicted or have pleaded guilty for rigging foreclosure auctions and lining their own pockets at the expense of banks and homeowners going through foreclosures.

These charges have been filed as a result of the ongoing investigation being conducted by the Antitrust Division’s Washington Criminal II Section, the FBI’s Atlanta Division and the U.S. Attorney’s Office of the Northern District of Georgia, in connection with the president’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 bid rigging or fraud related to public real estate foreclosure auctions should contact the Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 888-647-3258, or visit http://www.justice.gov/atr/report-violations.

Gogolin Information

Return Preparer Allegedly Claimed Fraudulent Education and Fuel Credits

Today a federal court in Miami, Florida, permanently enjoined Rose M. Chazulle and her company, RMC Professional Services Corporation, from preparing federal tax returns for others.  The defendants agreed to the civil injunction orders entered against them.   In addition to barring the defendants from preparing, filing, or assisting in the preparation or filing of federal tax returns and amended returns, the court ordered the defendants to deliver a copy of the injunction to all of their customers since Jan. 1, 2010.

According to the complaint, the defendants prepared federal income tax returns for customers that falsely claimed:

• Refundable credits, including American Opportunity Tax Credit and Lifetime Learning Credit for customers who did not incur educational costs and otherwise did not qualify for these credits;
• Fuel tax credits for customers who had no businesses of any kind, even though the credit can only be taken when fuel is used for certain business purposes or to operate a school bus;
• Fabricated business losses, claimed on Schedule C, Profit or Loss from Business, even though the customers did not have a business; and
• Wages described as household help income in order to falsely claim an Earned Income Tax Credit or to create a larger refund than the customer otherwise would have been able to claim.

Return preparer fraud is one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams for 2016.  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.

The Department of Justice and the U.S. Environmental Protection Agency (EPA) today announced a settlement with Harley-Davidson Inc., Harley-Davidson Motor Company Group LLC, Harley-Davidson Motorcycle Company Inc. and Harley-Davidson Motor Company Operations Inc. (collectively Harley-Davidson), that requires the companies to stop selling and to buy back and destroy illegal devices that increase air pollution from their motorcycles and to sell only models of these devices that are certified to meet Clean Air Act emissions standards.  Harley-Davidson will also pay a $12 million civil penalty and spend $3 million to mitigate air pollution through a project to replace conventional woodstoves with cleaner-burning stoves in local communities. 

The government’s complaint, filed today along with the settlement, alleges that Harley-Davidson manufactured and sold approximately 340,000 illegal devices, known as “super tuners,” that, once installed, caused motorcycles to emit higher amounts of certain air pollutants than what the company certified to EPA.  Aftermarket defeat devices like these super tuners alter a motor vehicle’s emissions controls and are prohibited under the Clean Air Act for use on vehicles that have been certified to meet EPA emissions standards.  Harley-Davidson also made and sold more than 12,000 motorcycles that were not covered by an EPA certification that ensures a vehicle meets federal clean air standards.

“Given Harley-Davidson’s prominence in the industry, this is a very significant step toward our goal of stopping the sale of illegal aftermarket defeat devices that cause harmful pollution on our roads and in our communities,” said Assistant Attorney General John C. Cruden, head of the Justice Department’s Environment and Natural Resources Division.  “Anyone else who manufactures, sells, or installs these types of illegal products should take heed of Harley-Davidson’s corrective actions and immediately stop violating the law.”

“This settlement immediately stops the sale of illegal aftermarket defeat devices used on public roads that threaten the air we breathe,” said Assistant Administrator Cynthia Giles of EPA’s Office of Enforcement and Compliance Assurance.  “Harley-Davidson is taking important steps to buy back the ‘super tuners’ from their dealers and destroy them, while funding projects to mitigate the pollution they caused.”

Since January 2008, Harley-Davidson has manufactured and sold two types of tuners, which when hooked up to Harley-Davidson motorcycles, allow users to modify certain aspects of a motorcycles’ emissions control system.  These modified settings increase power and performance, but also increase the motorcycles’ emissions of hydrocarbons and nitrogen oxides (NOx).  These tuners have been sold at Harley-Davidson dealerships across the country. 

The Clean Air Act requires motor vehicle manufacturers to certify to EPA that their vehicles will meet applicable federal emissions standards to control air pollution and every motor vehicle sold in the U.S. must be covered by an EPA-issued certificate of conformity.  The Clean Air Act prohibits manufacturers from making and selling devices that bypass, defeat, or render inoperative a motor vehicle’s EPA-certified emissions control system.  The act also prohibits any person from removing or rendering inoperative a motor vehicle’s certified emissions control system and from causing such tampering.  The complaint alleges violations of both these provisions. 

Under the settlement, Harley-Davidson will stop selling the illegal aftermarket defeat devices in the United States by August 23.  Harley-Davidson will also offer to buy back all such tuners in stock at Harley-Davidson dealerships across the country and destroy them.  The settlement requires the company to obtain a certification from the California Air Resources Board (CARB) for any tuners it sells in the United States in the future.  The CARB certification will demonstrate that the CARB-certified tuners do not cause Harley-Davidson’s motorcycles to exceed the EPA-certified emissions limits.  Harley-Davidson will also conduct tests on motorcycles that have been tuned with the CARB-certified tuners and provide the results to EPA to ensure that its motorcycles remain in compliance with EPA emissions requirements.  In addition, for any super tuners that Harley-Davidson sells outside the United States in the future, it must label them as not for use in the United States. 

The complaint also alleges that Harley-Davidson made and sold more than 12,000 motorcycles from model years 2006, 2007 and 2008 that were not covered by an EPA certificate of conformity.  A certificate of conformity covers only the motorcycle models that were included in the certification application and that are listed on the certificate.  These 12,000 motorcycles were models that were not included in Harley-Davidson’s applications and that were not listed as covered by the relevant certificate.  Under the consent decree, Harley-Davidson will ensure that all of its future motorcycle models intended for sale in the United States are fully certified by EPA. 

Hydrocarbon and NOx emissions contribute to harmful ground-level ozone and NOx also contributes to fine particulate matter pollution. Exposure to these pollutants has been linked with a range of serious health effects, including increased asthma attacks and other respiratory illnesses.  Exposure to ozone and particulate matter has also been associated with premature death due to respiratory-related or cardiovascular-related effects.  Children, the elderly and people with pre-existing respiratory disease are particularly at risk of health effects from exposure to these pollutants.  The woodstove project, which Harley-Davidson will undertake in conjunction with an independent third party, will eliminate excess air pollution caused by using the illegal tuners by providing cleaner-burning stoves to designated local communities, thereby assuring better air quality in the future.

EPA discovered the violations through a routine inspection and information Harley-Davidson submitted after subsequent agency information requests. 

The settlement, a proposed consent decree lodged in the U.S. District Court for the District of Columbia, is subject to a 30-day public comment period before it can be entered by the court as final judgment.  To view the consent decree or to submit a comment, visit the department’s website: www.justice.gov/enrd/Consent_Decrees.html.

More information about today’s settlement: https://www.epa.gov/enforcement/harley-davidson-clean-air-act-settlement. 

Skimmed Cash and Gave Preparer False Set of Books to Evade Reporting Nearly $4 Million in Sales

A federal jury sitting in the District of Nevada found the former co-owner of three Las Vegas, Nevada, liquor stores guilty of conspiracy to defraud the United States, assisting in filing false corporate tax returns and tax evasion, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division and U.S. Attorney Daniel G. Bogden of the District of Nevada.

According to the evidence at trial, Jeffrey Nowak and his co-defendant, Ramzi Suliman, jointly owned and operated liquor stores in Las Vegas.  At their first liquor store, Super Liquor Store South Strip, Nowak and Suliman conspired to skim cash receipts and maintain a double set of books in order to underreport income to their accountant and tax return preparer.  One set of books was an accurate accounting of sales, while a second set of books fraudulently omitted nearly $4 million in cash receipts skimmed from the business.  Nowak and Suliman provided the fraudulent books to their accountant-return preparer, causing the return preparer to create false corporate tax returns that underreported gross receipts and taxable income.  Nowak and Suliman also had their individual income tax returns prepared to falsely underreport their income and tax owed.  For tax years 2006 to 2009, Nowak reported a total income tax owed of only $313, when in fact Nowak owed more than $400,000.  The total tax loss from the conspiracy is nearly $1 million.

“Cash sales are not an opportunity for business owners to shortchange the government or produce multiple sets of books,” said Principal Deputy Assistant Attorney General Ciraolo.  “Owners are subject to the same legal obligations that their W-2 employees comply with every pay period – they must accurately report their income to the IRS and pay their fair share of taxes.  As Mr. Nowak learned today, if they refuse to do so, the Department of Justice and the IRS will work to see that they are identified and held accountable.”

“When business owners willfully skim cash and cause their true income to be underreported to the IRS, they are stealing from the U.S. Treasury,” said U.S. Attorney Bogden. “The IRS and our office take these cases seriously, and we will continue to seek judgments, injunctions, and criminal convictions that often carry substantial prison sentences, restitution and financial penalties.”

“The license to run a business is not a license to avoid paying taxes,” said Special Agent in Charge Tara Sullivan for the Internal Revenue Service’s Criminal Investigations (IRS-CI).  “Mr. Nowak’s misconduct, skimming nearly $4 million from his business and filing false tax returns, cheated all Americans, since we all pay our fair share for the government services and protections that we enjoy.”

A sentencing date has been scheduled for Nov. 17.  Nowak faces a statutory maximum sentence of five years in prison on the charge of conspiracy to defraud the United States, five years on each charge of tax evasion and three years on each charge of assisting in the preparation and filing of false tax returns.  He also faces supervised release and substantial monetary penalties.  Suliman pleaded guilty in July 2014 to conspiring to defraud the United States and is awaiting sentencing.

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Bogden commended special agents of IRS-CI, who investigated the case and Assistant U.S. Attorney Kathryn C. Newman for the District of Nevada and Trial Attorney Eric C. Schmale of the Tax Division, who prosecuted the case.

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

A Ukiah, California, restaurateur pleaded guilty today before U.S. District Judge Edward M. Chen for the Northern District of California to corruptly endeavoring to obstruct the due administration of the internal revenue laws and to harboring illegal aliens for profit, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, U.S. Attorney Brian J. Stretch of the Northern District of California, Special Agent in Charge Ryan Spradlin of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and Special Agent in Charge Michael T. Batdorf of the Internal Revenue Service’s Criminal Investigation (IRS-CI).

Yaowapha Ritdet, 56, admitted that she knowingly hired Thai nationals who were illegally present in the United States to work at her restaurants, Ruen Tong Thai Cuisine and Walter Café, both located in Ukiah.

Ritdet further admitted that she underpaid employees and instructed them not to speak to anyone about their immigration status.  Ritdet also admitted that she willfully filed false individual income tax returns for tax years 2007 through 2011, failing to disclose gross receipts, sales and income received from her two restaurants, as well as rental income and a foreign bank account and failed to accurately report employment taxes owed for her restaurant employees, who were paid in cash.

Ritdet is scheduled to be sentenced on Feb. 22, 2017.

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Brian J. Stretch commended special agents of IRS-CI and HSI, who investigated the case; the U.S. Department of Labor, Wage and Hour Division, which identified the underpayment of wages and overtime; and Trial Attorney Charles A. O’Reilly of the Tax Division and Assistant U.S. Attorney Jose A. Olivera, who are prosecuting the case.

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

A Salt Lake City-based heir location services provider and its co-owner have been indicted for participating in a conspiracy to allocate customers with another heir location firm, the Department of Justice announced today.   

According to the one-count felony indictment filed today in the U.S. District Court for the District of Utah, Kemp & Associates Inc. and its co-owner and vice president, Daniel J. Mannix, conspired with a competitor to suppress and eliminate competition by agreeing to allocate customers of heir location services sold in the United States between 1999 and 2014. 

Heir location firms identify people who may be entitled to an inheritance from the estate of someone who died without a will.  The heir location firms then enter into agreements with those people to help secure their inheritances in exchange for a fee.

“For over a decade, the defendants schemed to line their pockets at the expense of beneficiaries,” said Acting Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division.  “These charges underscore the division’s commitment to hold heir location services executives and their companies accountable for cheating heirs whose relatives died without a will.”

With today’s charges, three executives and two companies have been charged as a result of the ongoing federal antitrust investigation into customer allocation, price fixing, bid rigging and other anticompetitive conduct in the heir location services industry, which is being conducted by the Antitrust Division’s Chicago Office and the FBI’s Salt Lake City Division, with assistance from the U.S. Attorney’s Office of the District of Utah and the U.S. Attorney’s Office of the Northern District of Illinois. 

Anyone with information concerning the focus of this investigation should contact the Antitrust Division’s Chicago Office at 312-984-7200, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Salt Lake City office at 801-579-1400.

Kemp & Mannix Indictment

 

Court Orders Return Preparer to Return to Her Customers the Portion of Their Refunds Diverted to Her Own Account

A federal court in Greenbelt, Maryland, held Barbara Lynn McCarthy in contempt for preparing federal income tax returns in violation of a prior order that prohibited her from acting as a return preparer.  In 2014, the District Court enjoined McCarthy, who formerly operated as Barbara’s Tax Service, from preparing tax returns.  

After entry of injunction, the Internal Revenue Service (IRS) discovered that McCarthy continued preparing tax returns despite the court’s order banning her from doing so.  The court held a hearing on Aug. 11, to determine whether McCarthy had prepared returns in violation of the court’s injunction.  At the hearing the government established that McCarthy violated the court’s order and the court has now ordered McCarthy to return to her customers the portions of their tax refunds McCarthy diverted to herself.  The court also ordered McCarthy to pay the United States $2,500 for her actions after the injunction.  Finally, the court ordered McCarthy to provide the government with a list of all tax returns she prepared since the injunction was put in place.    

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2016.  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.

The Department of Justice today released A Record of Progress and a Roadmap for the Future – a report of the Federal Interagency Reentry Council (Reentry Council) that provides an overview of the Council’s accomplishments to date and lays out a path forward.  Originally an informal collaboration among federal agencies, President Barack Obama formally established the Reentry Council in 2016 with a mission to make communities safer by reducing recidivism and victimization; help those who return from prison and jail to become productive citizens; and save taxpayer dollars by lowering the direct and collateral costs of incarceration.  The report charts a course for implementing policy changes and ensuring the council’s efforts continue to serve as a guide to the reentry field. 

“All too often, returning citizens face enormous barriers that persist long after they have paid their debts to society – and with over 600,000 people released from federal and state prisons every year, how we treat reentering individuals is a question with far-reaching implications for all of us,” said Attorney General Loretta E. Lynch.  “That’s why the Reentry Council is dedicated to expanding access to the foundations of a stable life – employment, education, housing, healthcare, and civic participation – so that formerly incarcerated individuals can receive a true second chance, and so that every American can enjoy stronger and safer communities.”

Comprised of more than 20 federal agencies, the Reentry Council works to improve outcomes related to employment, education, housing, health and child welfare.  Reentry Council agencies coordinate and leverage existing federal resources; dispel myths and clarify policies; elevate programs and policies that work; and reduce the policy barriers to successful reentry.

The Justice Department first convened the Reentry Council in 2011, in an effort to engage a wide range of federal agencies in developing and advancing innovative and comprehensive approaches to reentry.  Over the last five years the Reentry Council has continued to meet in order to expand the range of tools that the government uses to ensure that individuals returning to the community from prison or jail have a meaningful chance to rebuild their lives and reclaim their futures.  On April 29, 2016, President Obama issued a Presidential Memorandum formally establishing the Reentry Council, recognizing the work that the council has achieved thus far, and enabling the council to continue its work going forward.  The Reentry Council is co-chaired by Attorney General Lynch and Domestic Policy Council Director Cecilia Muñoz.

In addition to the Reentry Council report, the department is issuing a Reentry Week After Action Report.  During the inaugural National Reentry Week the department sponsored over 550 events designed to improve reentry outcomes and raise awareness of the importance of successful reentry.  U.S. Attorney’s Offices alone hosted over 200 events, and Bureau of Prisons facilities held more than 370 events.  Partners across the federal government also held events – as did state, local and nonprofit agencies across the country.  Events took place in all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands.  National Reentry Week took place on April 23 – April 30, 2016.

The Departments of Justice, Health and Human Services, Housing and Urban Development, Homeland Security and Transportation today issued joint guidance to help ensure that recipients of federal financial assistance do not discriminate against individuals and communities on the basis of race, color or nation origin when providing emergency preparedness, response and recovery services.

Title VI of the Civil Rights Act of 1964 prohibits discrimination on the basis of race, color or national origin in federally-funded programs or activities.  Discrimination in a recipient’s emergency response measures violates Title VI of the Civil Rights Act of 1964.

The guidance suggests a series of steps recipients can adopt now to ensure compliance: 

• Share information about housing, health services or other emergency-related services and nondiscrimination rights to diverse racial, ethnic and Limited English Proficient (LEP) populations;
• Engage with and seek input from diverse racial, ethnic and LEP populations to determine how best to tailor emergency planning, response and recovery efforts; 
• Widely disseminate evacuation and disaster preparedness plans, including to LEP populations;
• Ensure that all entities know that most public services for protection of life and safety provided by recipients of federal financial assistance do not have immigration status restrictions; and
• Routinely collect and analyze information about the potentially affected populations to help ensure effective, nondiscriminatory allocation of resources and services. 

“In times of emergency, the law requires that federal funding recipients provide equal services to all people and all communities,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “This guidance will help ensure that individuals in need of assistance are not discriminated against during future hurricanes, wildfires and other catastrophic events.”

“Our guidance reminds recipients that Title VI compliance obligations are not up for debate,” said Director Leslie Proll of the Departmental Office of Civil Rights for the Department of Transportation.  “It applies at all times and cannot be waived before, during, or in the aftermath of emergencies and disasters.”  

Additionally, two new resources are being issued today to assist recipients of federal financial assistance: the Department of Justice’s Tips and Tools for Reaching Limited English Proficient Communities in Emergency Preparedness, Response and Recovery; and the Department of Health and Human Services’ Checklist for Recipients of Federal Financial Assistance, which facilitates the integration of the whole community into emergency-related activities.

“Discriminatory practices in health care can be life-threatening and this is especially true in emergencies and disaster situations,” said Director Jocelyn Samuels of the Department of Health and Human Services’ Office for Civil Rights.  “This guidance will help leaders in the emergency management community understand their obligations under Title VI and the critical steps they can take to best serve the whole community, including individuals with access and functional needs.”

Both resources and the guidance can be found on the agencies’ websites and the new civil rights section of the Federal Emergency Management Agency (FEMA) website at www.fema.gov/media-library/assets/documents/26070.

“Discrimination has no place in the disaster response and recovery process.” said Director Willisa Donald of FEMA’s Office of Equal Rights.  “Everyone must be treated equally when it comes to supporting survivors in their greatest time of need and this guidance will build on our work to make sure those we partner with share our values of fairness and equality.”

“Complying with Title VI requirements, as well as requirements to ensure equal access to persons with disabilities as required by federal civil rights law, becomes even more important during emergencies and disasters in order to ensure that no one is unjustly denied critical services and support,” said Megan H. Mack, Officer for Civil Rights and Civil Liberties of the Department of Homeland Security.  “The guidance embraces the principles of the National Preparedness Goal and National Planning Frameworks in which the federal government seeks to enable the whole community, including but not limited to those from racial and ethnically diverse backgrounds, and persons with limited English proficiency, to contribute to and benefit from national preparedness.”

“Families who lose their homes to natural disasters shouldn’t have their loss compounded by discrimination at a time when they are struggling to put that essential component of their lives back together,” said Gustavo F. Velasquez, Assistant Secretary for Fair Housing and Equal Opportunity for the Department of Housing and Urban Development.  “The joint guidance makes it clear that recipients of federal funding have an obligation to treat every person affected by national emergencies equally.”

The Civil Rights Division and the agencies’ offices for civil rights are responsible for enforcing Title VI by ensuring that their recipients of federal financial assistance do not discriminate on the bases of race, color or national origin.  Additional information about these offices is available through the following links:

Department of Justice’s Civil Rights Division at www.justice.gov/crt; Office of Justice Program’s Office of Civil Rights at http://ojp.gov/about/offices/ocr.htm; Office for Access to Justice at www.justice.gov/atj; Department of Homeland Security’s Office for Civil Rights and Civil Liberties at www.dhs.gov/office-civil-rights-and-civil-liberties; Department of Health and Human Service’s Office for Civil Rights at www.hhs.gov/ocr/; Department of Housing and Urban Development’s Fair Housing and Equal Opportunity Office at www.portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp; and Department of Transportation’s Departmental Office of Civil Rights at www.transportation.gov/civil-rights.   

Emergency Preparedness Guidance

Tips and Tools for Reaching Limited English Proficient Communities in Emergency Preparedness

Checklist for Recipients of Federal Financial Assistance

Los Departamentos de Justicia, Salud y Servicios Humanos, Vivienda y Desarrollo Urbano, Seguridad Nacional y Transporte emitieron hoy directrices conjuntas para ayudar a asegurar que los beneficiarios de asistencia financiera federal no  discriminen en contra de personas y comunidades sobre la base de la raza, el color o el origen nacional al ofrecer servicios de preparación, respuesta y recuperación ante emergencias. 

El Título VI de la Ley de Derechos Civiles de 1964 prohibe la discriminación sobre la base de la raza, el color o el origen nacional en programas o actividades financiadas por el gobierno federal.  La discriminación en las medidas de respuesta a emergencias de un receptor de financiamiento viola el Título VI de la Ley de Derechos Civiles de 1964. 

La directriz sugiere una serie de medidas que los receptores pueden tomar ahora para garantizar el cumplimiento:

• Transmitir información sobre vivienda, servicios de salud u otros servicios relacionados con las emergencias y los derechos de no discriminación a diversos sectores raciales, étnicos y con fluidez limitada en inglés de la población. 
• Involucrarse con diversos sectores raciales, étnicos y con fluidez limitada en inglés de la población y pedirles su opinión para determinar cuál es la mejor manera de personalizar iniciativas de planificación, respuesta y recuperación frente a emergencias; 
• Diseminar ampliamente planes de evacuación y preparación para desastres, lo que incluye a sectores con fluidez limitada en inglés de la población;
• Asegurarse de que todas las entidades sepan que la mayoría de los servicios públicos para la protección de la vida y la seguridad ofrecidos por beneficiarios de asistencia financiera federal no tienen restricciones por estado inmigratorio;
• Recabar y analizar periódicamente información sobre las poblaciones potencialmente afectadas para ayudar a asegurar una distribución eficaz y no discriminatoria de recursos y servicios. 

“En momentos de emergencia, la ley exige que los beneficiarios de financiamiento federal ofrezcan igualdad de servicios a todas las personas y comunidades,” dijo la Fiscal General Adjunta Auxiliar Vanita Gupta, líder de la División de Derechos Civiles del Departamento de Justicia.  “Esta directriz ayudará a garantizar que las personas que necesitan asistencia no sean discriminadas durante futuros huracanes, incendios forestales y otros eventos catastróficos.”

“Nuestra directriz les recuerda a los receptores que las obligaciones de cumplimiento del Título VI no están sujetas a debate,” dijo Leslie Proll, Directora de la Oficina Departamental de Derechos Civiles del Departamento de Transporte.  “Se aplica en todo momento y no puede dejar de aplicarse antes, durante o después de emergencias y desastres.” 

Además, hoy se están publicando dos nuevos recursos para ayudar a los receptores de asistencia financiera federal: los Consejos y Herramientas del Departamento de Justicia para dar alcance a comunidades con fluidez limitada en inglés en la preparación, respuesta y recuperación ante emergencias; y la Lista de Verificación del Departamento de Salud y Servicios Humanos para los receptores de asistencia financiera federal, que facilita la integración de toda la comunidad a actividades relacionadas con las emergencias.  

“Las prácticas discriminatorias en la atención médica pueden poner en riesgo la vida y esto es especialmente cierto en situaciones de emergencias y desastres,” dijo Jocelyn Samuels, Directora de la Oficina de Derechos Civiles del Departamento de Salud y Servicios Humanos.  “Esta directriz ayudará a los líderes de la comunidad de gestión de emergencias a comprender sus obligaciones bajo el Título VI y las medidas críticas que pueden tomar para brindar un mejor servicio a toda su comunidad, lo que incluye a personas con necesidades funcionales y de acceso.”

Ambos recursos y la directriz se encuentran en los portales de las agencias y el portal de la nueva sección de derechos civiles de la Agencia Federal para el Manejo de Emergencias [Federal Emergency Management Agency (FEMA)] en www.fema.gov/media-library/assets/documents/26070.

“La discriminación no tiene cabida en el proceso de respuesta y recuperación ante desastres,” dijo Willisa Donald, Directora de la Oficina de Igualdad de Derechos de la FEMA.  “Todas las personas deben ser tratadas con igualdad cuando se trate de apoyar a los sobrevivientes en su momento de mayor necesidad y esta directriz apoyará nuestra labor para asegurarnos de que las personas con las que nos asociemos compartan nuestros valores de justicia e igualdad.”

“El cumplimiento de los requisitos del Título VI, así como de los requisitos para garantizar la igualdad de acceso a personas con discapacidades según lo exigido por las leyes federales de derechos civiles, se hace aún más importante durante emergencias y desastres para garantizar que no se le deniegue a nadie injustamente servicios y apoyo cruciales,” dijo Megan H. Mack, Funcionaria de Derechos Civiles y Libertades Civiles del Departamento de Seguridad Nacional.  “La directriz incorpora los principios de la Meta de preparación nacional y los Marcos de planificación nacional en los que el gobierno federal busca permitir que toda la comunidad, que incluye a personas con orígenes raciales y étnicos diversos y a personas con fluidez limitada en inglés, contribuya a la preparación nacional y se beneficie con ella.”

“Las familias que pierden sus hogares por desastres naturales no deberían sufrir un agravamiento de su situación por culpa de la discriminación en un momento en que sufren por recomponer ese componente esencial de sus vidas,” dijo Gustavo F. Velasquez, Secretario Auxiliar de Vivienda Justa e Igualdad de Oportunidades para el Departamento de Vivienda y Desarrollo Urbano.  “La directriz conjunta deja en claro que los receptores de financiamiento federal tienen la obligación de tratar equitativamente a todas las personas afectadas por emergencias nacionales.”

La División de Derechos Civiles y las oficinas de derechos civiles de las agencias son responsables de hacer cumplir el Título VI asegurándose de que sus receptores de asistencia financiera federal no discriminen sobre la base de la raza, el color o el origen nacional.  En los siguientes enlaces se puede encontrar información adicional sobre estas oficinas:

División de Derechos Civiles del Departamento de Justicia en www.justice.gov/crt; Oficina de Derechos Civiles de la Oficina de Programas Judiciales en http://ojp.gov/about/offices/ocr.htm; Oficina de Acceso a la Justicia en https://www.justice.gov/atj; la Oficina de Derechos Civiles y Libertades Civiles del Departamento de Seguridad Nacional en https://www.dhs.gov/office-civil-rights-and-civil-liberties;  Oficina de Derechos Civiles del Departamento de Salud y Servicios Humanos en www.hhs.gov/ocr/;  Oficina de Vivienda Justa e Igualdad de Oportunidades del Departamento de Vivienda y Desarrollo Urbano en http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp; y  Oficina Departamental de Derechos Civiles del Departamento de Transporte en https://www.transportation.gov/civil-rights.   

La Directriz

***Photos Below***

In the wake of the recent tragedies in Baton Rouge, Louisiana; Dallas; and St. Paul, Minnesota, Attorney General Loretta E. Lynch convened the first in a series of regional Justice Forums on Aug. 3, 2016, at Wayne State University in Detroit, with regional stakeholders from the law enforcement, youth, faith, non-profit and civil rights communities.  The Attorney General, along with other department officials, hosted the Justice Forum to create a working group setting for local community leaders, youth advocates, law enforcement, and state and local officials to critically examine police-community issues in their respective cities and regions and seek solutions together.  Attorney General Lynch was also joined by U.S. Attorney Barbara McQuade of the Eastern District of Michigan, U.S. Attorney Patrick Miles of the Western District of Michigan, Assistant Attorney General Karol Mason of the Office of Justice Programs, head of the Civil Rights Division Vanita Gupta, Director Ron Davis of the Office of Community Oriented Policing Services (COPS Office), and Director Paul Monteiro of the Community Relations Service (CRS).

“Law enforcement agencies cannot provide effective policing without the trust of the communities they serve,” said U.S. Attorney McQuade.  “The Justice Forum in Detroit gave stakeholders a chance to hear different perspectives, explain the challenges they face, and gain a deeper understanding for how police and community can work together to improve public safety and advance the cause of justice.”

During the working meeting, community members and stakeholders proposed ideas related to training and education, officer safety and wellness, community engagement, positive police-community encounters, diversity, data collection, crisis response, resources, transparency and officer accountability.  Many of the ideas focused on strengthening the community from the ground up by building stronger ties between law enforcement and the community – including training for officers and the public on mental health, wellness, and implicit bias; promoting diversity in police departments to reflect their communities; better funding for public education; devoting more resources to community policing efforts; and engaging media to capture positive examples of police-community interactions. 

In addition to the various policy ideas raised at the Detroit Justice Forum, below are a few examples demonstrating specific ways in which the local Detroit, Flint and Dearborn communities are working collaboratively to strengthen police-community relations and engagement.

• Establish and support groups like ALPACT (Advocates and Leaders for Police and Community Trust), which bring together police and community stakeholders on regular basis to discuss police and community relations, promote community trust, and reduce tension.  ALPACT has met on a regular basis for 15 years, and has provided a forum to discuss police-related shootings and other issues that test police and community relationships.  The ongoing relationships between ALPACT members provide a trusting environment where tensions can be voiced and diffused.

• For youth, create programs like the Michigan State Police Youth Leadership Academy, where young people can be exposed to careers in law enforcement and get to know police officers at a personal level as mentors.

• Create more law enforcement-cultural awareness groups, similar to BRIDGES (Building Respect in Diverse Groups to Enhance Sensitivity), which is a partnership between law enforcement agencies and leaders in the Arab and Muslim American communities in the metro-Detroit region.  BRIDGES meets quarterly to provide a forum to address issues of mutual concern and to foster better understanding on topics ranging from cultural sensitivity to hate crimes; from police and community relations to law enforcement policies and procedures.

The Justice Forum series will continue over the next several months in cities across the nation.  And in the coming months, the Department of Justice will release a Justice Forum After-Action Report outlining the specific recommendations presented at the regional working group discussions.  The After-Action Report will provide a rubric for other communities across the country that are seeking ways to help build sustained positive engagement between community members, law enforcement, elected officials and other local stakeholders. 

Copied below is a list of invited organizations and speakers that presented at the Justice Forum in Detroit. 

Speakers:

Attorney General Loretta E. Lynch

U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan

Congressman John Conyers Jr. of the 13th District of Michigan

Detroit Mayor Mike Duggan

Detroit Police Chief James Craig

Dearborn Chief Ronald Haddad

Flint Police Chief Tim Johnson

Presentation Leaders:

Rev. Wendell Anthony, Detroit NAACP

Prosecutor Kym Worthy, Wayne County

Community leader Eva Garza DeWaelsche, SER Metro

Darnell Blackburn, Michigan Commission on Law Enforcement Standards

Marcell Payton, NSO Youth Initiative and MBK-Detroit

Invited Organizations:

Michigan Commission on Law Enforcement Standards

Michigan Association Chiefs of Police

Skillman Foundation, My Brother’s Keeper Detroit

American-Arab Anti-Discrimination Committee (ADC)

NAACP Detroit

New Starlight Baptist Church

Arab American Civil Rights League

Black Lives Matter

Grosse Pointe NAACP

DLIVE Program

Anti-Defamation League

Hudson-Webber Foundation

LGBT Detroit

Greater Grace Temple

Downtown Detroit Partnership

Neighborhood Services Organization

Wayne State University Center for Peace, Conflict Studies

Detroit Hispanic Development Corp.

Michigan Roundtable Diversity/Inclusion

Congress of Communities

New Detroit

Macomb NAACP

Black Family Development

National Action Network

2nd Ebenezer Church

American Civil Liberties Union

Sinai Hospital Trauma Intervention

Equality Michigan

High School and College Students

 

The Justice Department reached an agreement today with TEG Staffing Inc., also known as Eastridge Workforce Solutions, a temporary staffing agency headquartered in San Diego, to resolve allegations that their Mira Mesa, California, office discriminated against work-authorized non-U.S. citizens in violation of the Immigration and Nationality Act (INA).

The department’s investigation found that from at least March 2014 until at least September 2015, Eastridge had a pattern or practice of requesting specific immigration documents from non-U.S. citizens for the Form I-9 and E-Verify processes.  In contrast, Eastridge allowed U.S. citizens to present whichever valid documents they wanted to present to prove their work authorization.  Under the INA, all workers, including non-U.S. citizens, must be allowed to choose whichever valid documentation they would like to present from the Lists of Acceptable Documents to prove their work authorization, such as a driver’s license and unrestricted Social Security card.  It is unlawful for an employer to limit employees’ choice of documentation because of their citizenship or immigration status.

Under the terms of the settlement agreement, Eastridge will pay $175,000 in civil penalties, and among other provisions, will undergo department monitoring and review of its processes for verifying the work authorization of newly hired employees.

“Staffing agencies and employers must comply with federal law to ensure they don’t discriminate against lawful, authorized U.S. workers,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department's Civil Rights Division.  “Workers who get a job through a staffing agency should not confront unfair and unlawful barriers to joining the workforce and contributing to our economy.”

The Civil Rights Division’s 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.

This matter was handled by Equal Opportunity Specialists Tran-Chau Le and Abigail Olson, and Senior Trial Attorney Liza Zamd of the OSC.

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 have been subjected to different documentary requirements based on their citizenship, immigration status or national origin; or discrimination based on their citizenship, immigration status or national origin in hiring, firing or recruitment or referral, should contact OSC’s worker hotline for assistance.

Eastridge Settlement

Two Kentucky men were sentenced to between five and more than six years in prison today after pleading guilty in April and May to conspiring to defraud the United States, 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 Kerry B. Harvey of the Eastern District of Kentucky.

Billy Ray Hamilton and Brian Hamilton were sentenced to serve 60 months and 82 months in prison, respectively.  According to court documents, during the years 2011 and 2012, the Hamiltons conspired with others at the Bailey Switch Pawn Shop in Knox County, Kentucky, to submit false income tax returns to fraudulently obtain tax refunds.  The Hamiltons prepared and electronically submitted to the Internal Revenue Service (IRS) numerous false federal tax returns.  In some cases, they used the identification information of customers of the Bailey Switch Pawn Shop, without their knowledge or consent.  In other cases, they obtained taxpayers’ information through a co-conspirator. 

“Stolen identity refund fraud damages not just the US taxpayer, but also the individuals whose identities are stolen, privacy invaded, and lives turned upside down,” stated Principal Deputy Assistant Attorney General Ciraolo.  “The Department will continue to prosecute offenders such as Billy Ray Hamilton and Brian Hamilton, while at the same time working with the IRS to prevent these crimes from occurring in the first place, by supplying the IRS with real time information on how fraudsters are operating, thereby enhancing the IRS’s capacity to spot phony returns when they are filed and prevent fraudulent refunds from ever being issued.”

“The sentences handed down today highlight the seriousness of the defendants’ conduct,” said Special Agent in Charge Tracey D. Montaño of IRS’s Criminal Investigation (CI) Nashville Field Office.  “We will remain vigilant in identifying and investigating those who seek to defraud the American taxpayers by stealing identities and filing false tax returns.”

In addition to the prison terms, U.S. District Judge Amul R. Thapar of the Eastern District of Kentucky ordered Billy Ray Hamilton to serve three years of supervised release and pay restitution to the IRS in the amount of $272,808.98.  Judge Thapar ordered Brian Hamilton to serve three years of supervised release and pay restitution to the IRS in the amount of $221,728.74.

On July 12, co-conspirator Patsy Carnes was sentenced to 22 months in prison, and co-conspirator Diana Hill was sentenced to 16 months in prison, for their roles in the scheme. 

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Harvey commended special agents of IRS – CI, who investigated the case, and Assistant U.S. Attorney Neeraj Gupta of the Eastern District of Kentucky and Trial Attorney Abigail Burger Chingos of the Tax Division, who prosecuted the case.

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

Revisions Undertaken Jointly by the Two Agencies

The Department of Justice’s Antitrust Division and the Federal Trade Commission seek public comment on a proposed update of the Antitrust Guidelines for the Licensing of Intellectual Property, also known as the IP Licensing Guidelines.  The IP Licensing Guidelines, which state the agencies’ antitrust enforcement policy with respect to the licensing of intellectual property protected by patent, copyright and trade secret law and of know-how, were issued in 1995 and are now being updated.

In the past 20-plus years, the IP Licensing Guidelines have served their intended purpose of providing guidance to businesses and the public regarding potential antitrust issues that may arise in the context of intellectual property licenses.  In their 2007 joint report entitled Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition (the “Antitrust IP Report”), the agencies reaffirmed the integral role of the IP Licensing Guidelines in their analysis of antitrust and intellectual property issues.  With the IP Licensing Guidelines as an analytical tool, the agencies have accumulated additional antitrust enforcement experience and policy expertise in this area.  The proposed update announced today reflects this knowledge.  It is intended to modernize the IP Licensing Guidelines without changing the agencies’ enforcement approach with respect to intellectual property licensing or expanding the IP Licensing Guidelines to address other topics and areas that are addressed, for example, in the 2007 Antitrust IP Report.

“The IP Licensing Guidelines have been invaluable to the department’s investigative and enforcement efforts since they were issued in 1995,” said Acting Assistant Attorney General Renata Hesse, in charge of the Department of Justice’s Antitrust Division.  “They have also guided business planning, and they have been cited by courts, in numerous government briefs, business review letters and policy documents.  Although the guidelines are sound, it is time to modernize them to reflect changes in the law since they were issued.”

“Licensing is a cornerstone of a strong system of IP rights because it offers one way that firms can maximize the value of their IP and realize an appropriate return on their investment,” said Chairwoman Edith Ramirez of the Federal Trade Commission.  “These updated guidelines reaffirm our view that U.S. antitrust law leaves licensing decisions to IP owners, licensees, private negotiations and market forces unless there is evidence that the arrangement likely harms competition.”

In the agencies’ view, the IP Licensing Guidelines remain soundly grounded, as a matter of antitrust law and economics, in three basic principles:

• The agencies apply the same antitrust analysis to conduct involving intellectual property as to conduct involving other forms of property, taking into account the specific characteristics of a particular property right.
• The agencies do not presume that intellectual property creates market power.
• The agencies recognize that intellectual property licensing allows firms to combine complementary factors of production and is generally procompetitive.

Nevertheless, the agencies have determined that some revisions are in order because the IP Licensing Guidelines should accurately reflect intervening changes in statutory and case law.  For example, Congress recently enacted the Defend Trade Secrets Act of 2016, creating for the first time a federal cause of action for misappropriation of trade secrets.  Also, the change from a 17-year patent term (from the date of grant) to a 20-year patent term (from the date of filing) effectuated by the Uruguay Round Agreements Act of 1994 was on the verge of taking effect when the IP Licensing Guidelines were issued in 1995.  Similarly, copyright terms are longer now than when the IP Licensing Guidelines were issued.  The proposed updated IP Licensing Guidelines account for these statutory developments. 

Case law developments include the Supreme Court’s decision in Illinois Tool Works, Inc. v. Independent Ink, Inc., in which the Court subscribed to the agencies’ view in the IP Licensing Guidelines that a patent does not necessarily confer market power on the patentee.  Another important development is the Court’s decision in Leegin Creative Leather Products, Inc. v. PSKS, Inc., which held that resale price maintenance (RPM) agreements should be evaluated under the rule of reason, overturning a nearly century-old view of per se illegality.  Although Leegin arose in the context of resale price restrictions on goods sold by retailers, the agencies find that its analysis applies equally to pricing restrictions in intellectual property licensing agreements.  The IP Licensing Guidelines therefore have been amended to reflect rule-of-reason treatment of vertical price agreements.

The agencies are also updating the IP Licensing Guidelines’ discussion of general principles to reflect the research in the FTC’s 2011 Evolving IP Marketplace report.  The agencies also added language to reinforce their longstanding view that “the antitrust laws generally do not impose liability upon a firm for a unilateral refusal to assist its competitors, in part because doing so may undermine incentives for investment and innovation.”

In addition, the agencies are updating the analysis of markets affected by licensing arrangements to mirror the approach taken in the 2010 Horizontal Merger Guidelines.  The IP Licensing Guidelines’ approach to innovation markets has been revised to reflect the agencies’ actual experience with this mode of analysis.  The proposed update retains the concept of “innovation markets,” but refers to them as “Research and Development Markets” to more accurately reflect how these markets have been defined in enforcement actions. 

The agencies are interested in receiving comments on the proposed update from interested parties, including attorneys, economists, academics, consumer groups and the business community.  Interested parties may submit public comments to ATR-LPS-IP Guidelines until Monday, Sept. 26.  Submitted comments will be made publicly available on the agencies’ websites.  

Assistant Attorney General John C. Cruden, head of the Justice Department’s Environment and Natural Resources Division, announced the appointment of Thomas A. Mariani Jr. to serve as Chief of the division’s Environmental Enforcement Section, effective immediately.  Mr. Mariani fills the vacancy left with the departure of W. Benjamin Fisherow in April, who retired as section chief after more than 30 years of public service. 

The Environmental Enforcement Section is responsible for the civil enforcement of our nation’s bedrock environmental laws that control pollution, protect public health and the environment and seek recovery of natural resource damages for the American people.  As chief, Mr. Mariani will lead approximately 200 public servants who comprise the enforcement section.  The section handles a wide range of civil enforcement work, from air, water and land pollution cases to the collection of environmental debts such as cleanup costs.  Prior to serving as Chief, Mr. Mariani spent over five years supervising the pursuit of the United States’ civil environmental claims against BP and others, stemming from the April 2010 Deepwater Horizon, oil-spill disaster in the Gulf of Mexico. That matter culminated in the October 2015 announcement of a $20.8 billion settlement with BP, the largest settlement with a single entity in Justice Department history.  

“Tom Mariani is not only a determined professional, but also a seasoned environmental lawyer and a true leader who has earned the honor of becoming enforcement chief, a position I once occupied,” said Assistant Attorney General Cruden.   “As chief, Tom will be responsible for enforcement of the laws enacted by Congress that protect and preserve the clean air, water and land upon which our nation’s health, fortune and future depend.  Tom’s tireless efforts leading the Deepwater Horizon litigation team helped the nation achieve justice and recoup losses after an unprecedented environmental disaster.  The results of his and many others’ efforts will continue to help speed the Gulf’s recovery in our lifetimes and profoundly benefit generations of Americans to come.” 

Prior to his selection as chief, Mr. Mariani served as a Deputy Chief of the section and, before that, as an Assistant Chief for one of the section’s litigating groups.  He joined the Department of Justice in 1986 through its Honors Program.  He has worked on a wide variety of cases, including, for example, the Clean Air Act coal-fired power plants initiative, the Clean Water Act initiative to address aging sewer infrastructure in cities across the United States, multi-media cases in the steel industry and many Superfund matters.

In addition to his environmental enforcement work, Mr. Mariani has served in assignments at the U.S. Environmental Protection Agency (EPA) and the U.S. Attorney’s Office for the District of Columbia.   He earned his J.D. from the Law School at Columbia University in the city of New York and his undergraduate degree from Hamilton College, in Clinton, New York.

About the Environmental Enforcement Section

The section is one of the largest litigating sections in the Justice Department and includes about one-third of the Environment Division’s lawyers.  The section is responsible for bringing civil judicial actions under most federal laws enacted to protect public health and the environment from the adverse effects of pollution, such as the Clean Air Act, Clean Water Act, Safe Drinking Water Act, Oil Pollution Act, the Resource Conservation and Recovery Act (RCRA) and the Superfund law (CERCLA).  The section carries out this work on behalf of and in collaboration with many federal agencies, including EPA, the National Oceanic and Atmospheric Administration (NOAA), the Department of the Interior and the U.S. Coast Guard. 

The breadth of the section’s practice is extensive and challenging.  It includes cases of national scope, such as cases against multiple members of an identified industry (e.g., petroleum refineries, or glass or cement manufacturers), to obtain broad compliance with the nation’s environmental laws.  Through its enforcement of the Superfund law, the section seeks to compel responsible parties either to clean up hazardous waste sites or to reimburse the United States for the cost of cleanup, thereby ensuring that they and not the public, bear the burden of paying for cleanup.  The Superfund law is also a basis of the section’s actions to recover damages for injury to natural resources that are under the trusteeship of federal agencies.

22 Defendants Charged in Ongoing Investigation

Two Georgia real estate investors pleaded guilty today for their roles in bid-rigging and fraud conspiracies committed at public real estate foreclosure auctions in Georgia, the Department of Justice announced. 

Ellis Galyon and Christopher Anderson each admitted that they agreed with other real estate investors to rig auctions of foreclosed homes in the Atlanta metro area.  According to court documents filed today in the U.S. District Court of the Northern District of Georgia in Atlanta, the conspirators agreed not to compete for the purchase of selected foreclosed homes so that they could win the auctions for those homes with artificially low bids.  The winning bidders then paid off the other conspirators who had refrained from bidding against them.  As a result of Galyon and Anderson’s actions, conspirators profited from money that otherwise would have gone to mortgage holders and other secured debt holders and, in some cases, to the people who owned the foreclosed homes.

 Galyon admitted to participating in the conspiracy in Fulton County between June 2007 and at least July 2011.  Anderson admitted to participating in the conspiracy in Fulton County between December 2007 and October 2011 and in DeKalb County between September 2009 and November 2011. 

Including Galyon and Anderson, twenty-two defendants have been charged in connection with the department’s ongoing investigation into bid rigging and fraudulent schemes involving real estate foreclosure auctions in the Atlanta area.  Twenty of those have either pleaded guilty or agreed to plead guilty. 

These charges have been filed as a result of the ongoing investigation being conducted by the Antitrust Division’s Washington Criminal II Section, the FBI’s Atlanta Division and the U.S. Attorney’s Office of the Northern District of Georgia, in connection with the President’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 bid rigging or fraud related to public real estate foreclosure auctions should contact the Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 888-647-3258 or visit http://www.justice.gov/atr/report-violations.

Second Defendant to Plead Guilty in Ongoing Investigation

An e-commerce retailer pleaded guilty today for conspiring to fix the prices of posters sold online, the Department of Justice announced today.

Trod Ltd. (doing business as Buy 4 Less, Buy For Less and Buy-For-Less-Online), a U.K. company headquartered in Birmingham, England, pleaded guilty to fixing the prices of certain posters sold online through Amazon Marketplace from as early as September 2013 until in or about January 2014.  Trod Ltd. was indicted by a federal grand jury in the Northern District of California in San Francisco on Aug. 27, 2015. 

“E-commerce is among the fastest growing segments of our economy,” said Acting Assistant Attorney General Renata Hesse for the Justice Department’s Antitrust Division.  “For this robust growth to continue, customers must be confident that they will receive the same benefits of vigorous competition on the web as they do at brick-and-mortar stores.  We will continue to ensure that happens by investigating and prosecuting schemes that harm online shoppers.”

According to the indictment, Trod Ltd. and its co-conspirators agreed to adopt specific pricing algorithms for the sale of certain posters sold on Amazon Marketplace, with the goal of offering online shoppers the same price for the same product and coordinating changes to their respective prices.  

This prosecution arose from an ongoing federal antitrust investigation into price fixing in the online wall décor industry, which is being conducted by the Antitrust Division’s San Francisco Office with the assistance of the FBI’s San Francisco Division.  Anyone with information on price fixing or other anticompetitive conduct related to other products in the wall décor industry 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.

A federal grand jury in the Southern District of Florida returned an indictment on July 28, which was unsealed today, charging two Florida income tax return preparers with one count of conspiring to defraud the United States and nine counts each of aiding and assisting in the preparation of false federal income tax returns, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division. 

According to allegations in the indictment, Earl Moise and Shahab Shaukat, both of Palm Beach County, Florida, conspired to prepare false and fraudulent individual income tax returns for others for the 2010 through 2012 tax years.  Moise and Shaukat operated the Stuart, Florida branch of Tax R Us, preparing false returns inside that office.  Additionally, Moise is charged with one count of fraudulently filing his own federal income tax return for 2011.  It is alleged that these tax returns included false education and American Opportunity credits, as well as false statements regarding business income or deductions. 

If convicted, Moise and Shaukat each face a statutory maximum sentence of five years in prison for the conspiracy count and three years in prison for each count of aiding and assisting in the preparation of false tax returns.  In addition, Moise faces a statutory maximum of three years in prison for the one count of filing a false tax return. Both defendants face terms of supervised release, monetary penalties, and the payment of restitution to the Internal Revenue Service (IRS).

An indictment merely alleges that crimes have been committed and defendants are presumed innocent until proven guilty beyond a reasonable doubt.

Principal Deputy Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Gregory P. Bailey and Michael Hatzimichalis of the Tax Division, who are prosecuting the case.

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

The U.S. District Court for the Southern District of Texas issued an order late yesterday significantly expanding the opportunities for eligible Texas voters without specific forms of photo identification to cast valid ballots in upcoming elections. 

According to the order, eligible voters who face a reasonable impediment to obtaining specific forms of photo ID will be able to cast a regular ballot at the polls after signing a simple declaration and presenting a document from a more expansive list.  This solutions echoes provisions already in federal law.

The order follows the outline of an agreement that the Justice Department reached with private plaintiffs and with the state of Texas.  It implements changes in accordance with the July 20, 2016, decision by the full U.S. Court of Appeals for the Fifth Circuit, affirming an earlier ruling that the state’s 2011 photo identification law violated Section 2 of the Voting Rights Act (VRA).

“Our democratic process depends on ensuring that eligible citizens can cast their votes without undue discriminatory hurdles,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “The court’s interim remedy order is a very important step toward a process designed to provide that opportunity for hundreds of thousands of eligible Texans.”

The challenged 2011 photo identification law allowed most registered Texas voters to cast a regular ballot at the polls only if they were able to show one of a few limited forms of photo ID, like a state-issued driver’s license or a license to carry a handgun.  The law also mandated that registered Texans could only use such ID if it was current or expired no more than 60 days beforehand.  The federal court order now allows registered voters with the requisite ID to vote, even if that ID expired up to four years ago.  It also allows registered voters who face a reasonable impediment to obtaining such ID to cast a regular ballot after signing a simple declaration and presenting a voter registration certificate, a certified birth certificate, a current utility bill, a bank statement, a government check, a paycheck or any other government document that displays the voter’s name and address.

More information about the VRA and other federal voting laws is available on the division’s website at www.justice.gov/crt/about/vot/.  Complaints about voter registration practices may be reported to the Civil Rights Division’s Voting Section at 1-800-253-3931.

20160810 Interim Remedy Order

Case Marks First Time the Justice Department has Filed Suit Alleging Unlawful Eviction of Active-Duty Servicemembers

The Justice Department announced today that Lincoln Military Housing, which owns and operates dozens of on-base and off-base military housing communities throughout Southern California, has agreed to pay $200,000 to resolve allegations that it unlawfully evicted active-duty servicemembers and their families by obtaining default judgments against them, in violation of the Servicemembers Civil Relief Act (SCRA).  This is the first case that the Justice Department has filed alleging the unlawful eviction of servicemembers from their homes. 

The SCRA provides servicemembers with protections against certain transactions that could adversely affect their civil legal rights while they are in military service.  Under the SCRA, if a tenant who is on active duty is sued for eviction and does not make an appearance in the case for any reason, the landlord must file an affidavit with the court stating whether the tenant is in military service, showing necessary facts to support the affidavit.  To evict a tenant in California, a landlord must first obtain a court order.  The complaint alleges that Lincoln Military Housing requested default judgments against servicemembers without filing the affidavits required by the SCRA to alert the court of the tenants’ military status.  As a result, servicemembers were put at risk of being evicted without having an opportunity to participate in the case and without having an attorney assigned to represent them.

Despite the fact that the servicemembers who are receiving compensation under the settlement were all in military service at the time of their evictions, Lincoln Military Housing filed affidavits stating that no defendants were in military service.

Under the consent order, which is still subject to approval by U.S. District Court for the Southern District of California, Lincoln Military Housing must pay each aggrieved servicemember $35,000, vacate the eviction judgment, forgive any deficiency balance and ask the credit bureaus to remove the evictions from their credit reports.  In addition to compensating the servicemembers, Lincoln Military Housing must pay a civil penalty of $60,000 to the United States.

“Lincoln Military Housing unlawfully evicted active duty servicemembers and their families from their homes,” said Principal Deputy Associate Attorney General Bill Baer.  “This settlement rights that wrong and serves as a powerful reminder that we will protect and defend the rights of those who protect us all.”

“Our servicemembers, who risk their lives to protect our freedom, should never return from duty to find their civil rights violated and their families evicted,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “The Justice Department will continue our vigorous and robust enforcement of the SCRA to safeguard the rights of those who defend us.”

“The Servicemembers Civil Relief Act was designed to protect our servicemembers and their dependents answering our nation’s call to duty,” said U.S. Attorney Laura E. Duffy of the Southern District of California.  “Servicemembers should not have to worry about their families being evicted while they are serving the United States.  We will continue to enforce the laws that protect our warfighters.”

The settlement also requires Lincoln Military Housing to make systemic changes to its business practices, including providing SCRA training to its employees and developing new policies and procedures consistent with the SCRA.  The policies and procedures will require Lincoln Military Housing and its agents to review the Department of Defense Manpower Data Center (DMDC) database and file a proper affidavit of military service before seeking a default judgment against a tenant in an eviction action.

Servicemembers and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance Program office.  Office locations may be found at http://legalassistance.law.af.mil/content/locator.php.  Additional information on the department’s enforcement of the SCRA and other laws protecting servicemembers is available at www.servicemembers.gov.

This matter resulted from a referral to the Justice Department by the Legal Services Support Team at Marine Corps Air Station Miramar.   

This matter was jointly handled by the U.S. Attorney’s Office of the Southern District of California and the Civil Rights Division’s Housing and Civil Enforcement Section.  The department’s investigation was done in coordination with the California Office of the Attorney General, which filed its own case today in state court under California’s Rosenthal Fair Debt Collection Practices Act.

A final rule revising the Justice Department’s Americans with Disabilities Act (ADA) Title II and Title III regulations to implement the requirements of the ADA Amendments Act of 2008 (ADAAA) was made available for public inspection by the Federal Register today.  The final rule will be published in the Federal Register tomorrow and will take effect 60 days after publication, which will be Oct. 11, 2016.

Congress passed the ADAAA in response to several Supreme Court decisions that narrowly interpreted the ADA’s definition of disability, leading ultimately to the exclusion from coverage of individuals with cancer, diabetes, epilepsy, attention deficit hyperactivity disorder, learning disabilities and other disabilities.  The ADAAA made a number of significant changes to the meaning and interpretation of the ADA definition of disability to ensure that the term would be broadly construed and applied without extensive analysis so that all individuals with disabilities could receive the law’s protections.

Although the ADAAA is already in effect and applies to entities covered under Title II and III of the ADA, the department’s changes to its Title II and III regulations will help clarify the interpretation and application of the ADAAA.  These changes also satisfy the Attorney General’s responsibility to publish regulations that are consistent with any congressional changes to the ADA.  

“This final rule clarifies Congress’s original mandate that eliminating discrimination against people with disabilities requires an expansive definition of what disability means and who the law covers,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “The Justice Department’s regulation sets forth clear new rules, new examples and detailed guidance to ensure that courts, covered entities and people with disabilities better understand the ADAAA.”   

The ADAAA’s provisions addressing the definition of disability also apply to Title I of the ADA, for which the Equal Employment Opportunity Commission issued regulations in 2011.  The publication of the Title II and Title III rule tomorrow will ensure that the definition of disability is interpreted consistently for these three titles of the ADA.

For more information about the ADAAA, please visit the department’s ADA website or call the ADA Information Line (1-800-514-0301, 1-800-514-3083, TTY).  A copy of the preview of the final rule posted by the Federal Register on its public inspection desk can be found today at: https://www.federalregister.gov/articles/2016/08/11/2016-17417/amendment-of-americans-with-disabilities-act-regulations-to-implement-the-americans-with.  Once the final rule is published in the Federal Register tomorrow, a copy will be available on the department’s ADA website.

Justice Department Finds a Pattern of Civil Rights Violations by the Baltimore Police Department

The Justice Department announced today that it found reasonable cause to believe that the Baltimore City Police Department (BPD) engages in a pattern or practice of conduct that violates the First and Fourth Amendments of the Constitution as well as federal anti-discrimination laws.  BPD makes stops, searches and arrests without the required justification; uses enforcement strategies that unlawfully subject African Americans to disproportionate rates of stops, searches and arrests; uses excessive force; and retaliates against individuals for their constitutionally-protected expression.  The pattern or practice results from systemic deficiencies that have persisted within BPD for many years and has exacerbated community distrust of the police, particularly in the African-American community.  The city and the department have also entered into an agreement in principle to work together, with community input, to create a federal court-enforceable consent decree addressing the deficiencies found during the investigation. 

“Public trust is critical to effective policing and public safety,” said Attorney General Loretta E. Lynch.  “Our investigation found that Baltimore is a city where the bonds of trust have been broken, and that the Baltimore Police Department engaged in a pattern or practice of unlawful and unconstitutional conduct, ranging from the use of excessive force to unjustified stops, seizures and arrests.  The results of our investigation raise serious concerns, and in the days ahead, the Department of Justice will continue working tirelessly to ensure that all Baltimoreans enjoy the safety, security and dignity they expect and deserve.  I am grateful to all of the community members, local officials, faith leaders and current and former police officers who spoke with us during the course of our inquiry, and whose input will remain critical to our efforts as we move forward.  Additionally, I commend the city and BPD for its proactive and collaborative approach to our inquiry and for demonstrating a strong commitment to restoring public confidence by already taking steps to make needed changes.  I look forward to continuing our work together to implement urgent and necessary reforms.”

“We found that BPD has engaged in a pattern or practice of serious violations of the U.S. Constitution and federal law that has disproportionately harmed Baltimore’s African-American community and eroded the public’s trust in the police,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “The agency also fails to provide officers with the guidance, oversight and resources they need to police safely, constitutionally and effectively.  In communities across America, even in communities where trust has been broken, we’ve seen transformative reform rebuild relationships and advance public safety.  In the weeks ahead, as we negotiate our consent decree with the city, we will seek input from law enforcement and community members.  With the city and commissioner’s commitment to reform, I am optimistic that we will work to drive that same progress in Baltimore.”

In May 2015, Attorney General Lynch announced the comprehensive investigation into the BPD after considering requests from city officials and hearing directly from community members about a potential pattern or practice of constitutional violations.  The investigation focused on BPD’s use of force, including deadly force; stops, searches and arrests; and discriminatory policing.

In the course of its pattern or practice investigation, the department interviewed and met with city leaders and police officials, including BPD Commissioner Kevin Davis, former commissioners and numerous officers throughout all ranks of the police department; accompanied line officers on dozens of ride-alongs in every police district; conducted hundreds of interviews and participated in meetings with community members, activists, and other stakeholders; reviewed hundreds of thousands of pages of police documents, including all relevant policies and training materials; and analyzed BPD’s data on internal affairs, use of force, sexual assault cases and pedestrian stops, searches and arrests.

During the course of its investigation, the department found that the legacy of “zero tolerance” street enforcement, along with deficient policies, training and accountability systems, resulted in conduct that routinely violates the Constitution and federal anti-discrimination law.  Throughout the investigation, the department heard consistently from both the community and law enforcement that BPD requires significant reforms to address problems that undermine its efforts to police constitutionally and effectively.   

The department found reasonable cause to believe that BPD engages in a pattern or practice of:

• Conducting stops, searches and arrests without meeting the requirements of the Fourth Amendment;
• Focusing enforcement strategies on African Americans, leading to severe and unjustified racial disparities in violation of Title VI of the Civil Rights Act and the Safe Streets Act;
• Using unreasonable force in violation of the Fourth Amendment;
• Interacting with individuals with mental health disabilities in a manner that violates the Americans with Disabilities Act; and
• Interfering with the right to free expression in violation of the First Amendment.

The department also identified serious concerns about other BPD practices, including an inadequate response to reports of sexual assault, which may result, at least in part, from underlying gender bias.  Another significant concern identified by the department was transport practices that place detainees at significant risk of harm.

In the agreement in principle, both parties agreed that compliance with the consent decree will be reviewed by an independent monitor.  The agreement in principle highlights specific areas of reform to be included in the consent decree, including:

• Policies, training, data collection and analysis to allow for the assessment of officer activity and to ensure that officers’ actions conform to legal and constitutional requirements;
• Technology and infrastructure to ensure capability to effectively monitor officer activity;
• Officer support to ensure that officers are equipped to perform their jobs effectively and constitutionally; and
• Community policing strategies to guide all aspects of BPD’s operations and help rebuild the relationship between BPD and the various communities it serves. 

The agreement in principle provides a framework for change, but the department will be doing community outreach to solicit input in developing comprehensive reforms.  Comments may be provided by email at [email protected].    

Throughout the department’s investigation, BPD leadership remained receptive to preliminary feedback and technical assistance, and started the process of implementing reforms.  BPD leadership has proactively taken steps to address some of the findings, including updating its policies, instituting new trainings and responding to other issues identified by the department.  While these measures are an important start to cooperative reform, a comprehensive agreement is still needed to remedy all of the department’s findings.   

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).  While the Civil Rights Division opened the pattern or practice investigation in May 2015, the COPS office, the Justice Department’s Office of Justice Programs and others have maintained their ongoing efforts 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.  Over the last seven years, the Special Litigation Section has opened 23 investigations into law enforcement agencies.  The section is enforcing 17 agreements with law enforcement agencies, including 14 consent decrees and one post-judgment order.  For more information on the Civil Rights Division and the Special Litigation Section, please visit www.justice.gov/crt. 

BPD Findings Report

BPD Agreement in Principle

BPD Executive Summary

SPL Police Accomplishments 8.10.16

Douglas daCosta of Livermore, California, has agreed to pay $40,000 to resolve allegations that he submitted false claims to the government for paid sick leave when he worked as a federal law enforcement agent for the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Department of Justice announced today. 

“When a law enforcement officer misuses taxpayer funds, he does a disservice to his colleagues who serve with professionalism and distinction,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “This settlement shows that we will not hesitate to hold individuals accountable if they misuse taxpayer funds.”  

“Federal agents must be held to answer when they breach the public’s trust,” said Special Agent in Charge Elise Chawaga of the Department of Justice Office of Inspector General’s Fraud Detection Office. “The Office of the Inspector General remains vigilant in its effort to uncover government waste, fraud and abuse and to recover all ill-gotten gains.”

The United States alleged that daCosta submitted the false requests while working as a criminal investigator for the ATF’s San Francisco field division in 2009.  From January 2009 until his retirement in June 2009, daCosta claimed more than 80 days of paid sick leave for which he was not eligible, according to the government’s allegations.  Specifically, the United States alleged that daCosta falsely represented to his supervisors that he was undergoing extensive treatment for cancer, going so far as to provide a forged letter from a physician to support his claims.  The government contends, however, that daCosta did not have cancer and was not undergoing any such treatments.  Additionally, at the same time that daCosta was feigning illness to receive paid sick leave from the government, he was working in the private sector, according to the government’s allegations.

This matter was handled by the Civil Division’s Commercial Litigation Branch in conjunction with the Department of Justice’s Office of the Inspector General.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

The Justice Department’s Antitrust Division, at the request of the Federal Trade Commission, filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C. against Caledonia Investments plc for violating the premerger notification and waiting period requirements of the Hart-Scott-Rodino (HSR) Act of 1976 when it acquired voting securities of Bristow Group Inc. in February 2014.  At the same time, the department filed a proposed settlement, subject to approval by the court, under which Caledonia Investments has agreed to pay a $480,000 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.

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, Assistant Director for Compliance, Bureau of Competition, c/o Federal Trade Commission, 600 Pennsylvania Avenue, NW, CC-8416, Washington, D.C. 20580.  E-mailed comments should be sent to: [email protected].  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. 

Caledonia CIS

Caledonia Complaint

Caledonia Explanation

Caledonia PFJ

Caledonia Stipulation

More Than 1,500 Victims Defrauded Out of $9 Million

The Department of Justice announced that an Orange County, California, man pleaded guilty in U.S. District Court in Santa Ana, California, for his role as the owner and operator of a multi-million dollar fraudulent mortgage modification scheme that posed as a successful law firm to defraud struggling homeowners. 

Bryan D’Antonio, 50, of Brea, California, pleaded guilty before U.S. District Court Judge David O. Carter for the Central District of California to one count of conspiracy to commit mail and wire fraud for his role as owner and operator of Rodis Law Group (RLG) and America’s Law Group (ALG).  His sentencing is on Jan. 30, 2017.

“At the height of the mortgage crisis, this defendant, a convicted felon who was prohibited from any business engaged in telemarketing, created two fake law firms that promised struggling homeowners assistance saving their homes and modifying their mortgages,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Despite the many promises, these were telemarketing sales operations that took homeowners’ money and provided no meaningful assistance.”

“D’Antonio preyed on vulnerable victims – struggling homeowners,” said U.S. Attorney Eileen M. Decker of the Central District of California.  “Pretending to offer legal assistance to their victims, D’Antonio and his cohorts actually offered nothing but false hopes and empty promises.  Now, he will be held accountable in federal court for the damage he has caused so many victims.”

D’Antonio was previously convicted of mail and wire fraud and sentenced to four years in federal prison for his participation in a medical billing scheme.  He was also subject to a permanent injunction prohibiting him from having any involvement with any business that engaged in telemarketing or misrepresented the services it would provide.  As part of his plea hearing today, D’Antonio admitted that he started RLG while he was still on supervised release from his prior conviction.  In violation of D’Antonio’s permanent injunction, RLG and ALG sold their services through an extensive telemarketing operation and employees routinely misrepresented the services RLG and ALG would provide. 

D’Antonio admitted that, between October 2008 and June 2009, he participated in a scheme with Ronald Rodis, Charles Wayne Farris and others to induce homeowners to pay between $3,500 and $5,500 for the services of RLG and its successor entity, ALG.  RLG and ALG advertised on radio stations nationwide, urging struggling homeowners to call a toll-free number and stated that the companies consisted of “a team of experienced attorneys” who were “highly skilled in negotiating lower interest rates and even lowering your principal balance.”  In fact, RLG and ALG were telemarketing operations that never had teams of experienced attorneys.  During much of the scheme, Ronald Rodis was the only attorney at RLG.

RLG and ALG telemarketers working for D’Antonio made numerous misrepresentations regarding the companies’ ability to negotiate loan modifications from the homeowners’ mortgage lenders.  For example, the telemarketers stated that RLG and ALG had been in business for 11 years when in fact the company had only opened in October 2008.  They falsely stated that RLG and ALG routinely obtained positive results for homeowners, including lower monthly payments, reductions in principal balance and lower interest rates.  In fact, positive results were rarely achieved for any RLG or ALG clients.  Telemarketers also falsely reiterated that homeowners would have a team of attorneys and real estate professionals assigned to their case.  The telemarketers did not disclose to homeowners that RLG and ALG were owned and operated by Bryan D’Antonio, a convicted felon who was prohibited from engaging in telemarketing           

In a plea agreement filed in federal court, D’Antonio admitted that the RLG and ALG schemes fraudulently obtained approximately $9 million from more than 1,500 victims.

D’Antonio’s co-defendants, Charles Wayne Farris and Ronald Rodis, both previously pleaded guilty to one count of conspiracy to commit mail and wire fraud.

This case was investigated by the FBI and is being prosecuted by Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Joseph T. McNally of the Central District of California.

For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Central District of California, visit its website at https://www.justice.gov/usao-cdca.

Stole Money from Parishioners and Lied to Return Preparer

A priest for the Roman Catholic Diocese of San Jose pleaded guilty today to four counts of tax evasion, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, U.S. Attorney Brian J. Stretch for the Northern District of California and Special Agent in Charge Michael T. Batdorf for the Internal Revenue Service’s Criminal Investigation (IRS-CI).

Father Hien Minh Nguyen, 56, admitted that over a period of four years, he stole money his parishioners donated to the Diocese and willfully evaded paying income taxes on the money he misappropriated each year from 2008 through 2011.  He admitted that he deposited this money into his personal bank account, did not disclose this income to his return preparer, did not keep records of the donations he stole, and filed false income tax returns which did not report this money. 

Father Nguyen also pleaded not guilty to bank fraud charges.  Those charges are still pending. 

“Father Nguyen stole money from his parishioners and filed false returns with the IRS to evade his income tax obligations,” said Principal Deputy Assistant Attorney General Ciraolo.  “The department remains committed to holding all criminal tax offenders accountable for their illegal conduct, regardless of their profession.  No one is above the law.”

Sentencing on the tax evasion convictions has not been scheduled.  Father Nguyen faces a statutory maximum sentence of five years in prison and monetary penalties for each tax evasion conviction. Father Nguyen’s next scheduled appearance is a status conference on the bank fraud charges currently scheduled for Aug. 23.  An indictment is merely an allegation and a defendant is presumed innocent until and unless proven guilty in court.  Father Nguyen pleaded guilty to the tax evasion charges.  He has not pleaded guilty to bank fraud charges and remains presumed innocent of those charges. 

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Brian J. Stretch commended special agents of the IRS-CI, who investigated the case and Trial Attorney Gregory Bernstein of the Tax Division and Assistant U.S. Attorney Thomas Moore of the Northern District of California, who are prosecuting the case.

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

The Department of Justice, the U.S. Environmental Protection Agency (EPA) and the state of New Mexico today announced a settlement with Chevron Mining Inc. (CMI) requiring $143 million in cleanup work at the Chevron Questa Mine Superfund site near Questa, New Mexico.   As part of the settlement, the company will perform a pilot project to cover about 275 acres of the tailing facility where mine waste or “tailings” are stored, operate a water treatment plant and install groundwater extraction systems.  CMI will also pay over $5.2 million to reimburse EPA’s past costs for overseeing cleanup work at the site.  

“This settlement will advance substantial cleanup work at the Questa site, and require actions to prevent future contamination of the Red River,” said Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division.  “This settlement is the product of excellent cooperation between the state and federal governments and CMI to continue the vital cleanup work at the Chevron Questa Mine Site.”

“This settlement builds on the consent decree entered into in September of last year and represents another affirmative step towards remedying the serious environmental damages suffered by this beautiful area of New Mexico as a result of decades of extensive mining activities,” said U.S. Attorney Damon P. Martinez of the District of New Mexico.  “In addition to requiring crucial cleanup work, the settlement includes important measures to prevent further contamination of the environment and provides for extensive monitoring to ensure compliance.”

“Protecting precious water resources is essential to the health of New Mexico’s communities and the state’s economy,” said EPA Regional Administrator Ron Curry. “While mining pollution is a complex issue, EPA and our partners are pleased to see the next phase of the cleanup at the Questa site take shape.”

“This $143 million cleanup is a powerful example of regulatory protections that work,” said Acting Secretary Butch Tongate for the New Mexico Environment Department.  “In addition to the $112 million already collected for environmental work during this administration, the State of New Mexico is pleased with the enforcement of regulations that hold Chevron Mining accountable for the environmental impacts caused by the now-closed Questa Mine which will foster a renewed Questa/Red River destination area.”

The proposed partial consent decree, if approved by the court, will provide for the next phase of the cleanup at the former mine site.   It is the largest settlement of its kind for cleanup work in EPA Region 6. CMI has already completed a number of response projects at the site under previous agreements with EPA, including the cleanup of Eagle Rock Lake and the removal of numerous tailing spills.  The new work will improve efforts to permanently prevent contamination from the site from affecting the Red River and other water resources and further reduce risks for nearby communities and the surrounding environment.  This includes covering and revegetating about 275 acres of the tailings facility, improving and installing new systems that prevent contaminated water from reaching the Red River and operating and maintaining a water treatment plant. The settling parties will also monitor the remedy’s long-term effectiveness at reducing risks to human health and the environment.

The proposed settlement announced today follows on a September 2015 consent decree entered into by the United States, on behalf of the U.S. Fish and Wildlife Service of the Department of the Interior and the Forest Service of the Department of Agriculture, and the State, on behalf of the New Mexico State Office of Natural Resource Trustee, resolving claims for natural resource damages at the Site.  Under that consent decree, CMI paid more than $4.2 million for restoring, replacing or acquiring natural resources damaged by mine activities.  The current consent decree addresses separate claims from the natural resource damages consent decree.

The Chevron Questa Mine, previously known as the Molycorp Mine, operated intermittently from 1919 until 2014, when CMI permanently closed the mine.  Mining operations and waste disposal contaminated soil, sediment, surface water and groundwater.    While the mine was operating, approximately 328 million tons of acid-generating waste rock were excavated and deposited in nine large waste rock piles.  After molybdenum was extracted from ore, the tailing was transported by pipeline to a tailing facility where it was deposited in tailing impoundments.  

The cleanup is being accomplished under the federal Comprehensive Environmental Response, Compensation and Liability Act, commonly known as Superfund.  The Superfund law protects human health and the environment while safeguarding taxpayer dollars by holding parties that contributed to contamination responsible for cleaning it up.  Since 1980, EPA’s Superfund program has managed the cleanup of the nation’s most hazardous waste sites and has responded to environmental emergencies, oil spills and natural disasters.

The public has the opportunity to submit written comments on the consent decree, which is subject to the 30-day comment period and final approval by the court. A copy of the consent decree is available at www.justice.gov/enrd/consent-decrees. 

The Justice Department reached an agreement today with Hartz Mountain Industries Inc. (Hartz) to resolve the department’s investigation into whether the company discriminated against work-authorized non-U.S. citizen job seekers, in violation of the Immigration and Nationality Act (INA).  Hartz is a real estate development and management company based in Secaucus, New Jersey.

The department’s investigation found that Hartz discriminated based on citizenship status by publishing a job posting that required applicants for a particular job opening to be U.S. citizens, in violation of the INA.  Job postings with citizenship preferences or requirements violate the INA by restricting employment opportunities available to work-authorized non-citizens.  While there are exceptions in the INA that allow for specific positions to be subject to citizenship requirements, the position available at Hartz did not meet the criteria.

Under the settlement agreement, Hartz will pay $1,400 in civil penalties to the United States, train its human resources staff on the anti-discrimination provision of the INA, review its policies and be subject to monitoring by the department for a three-year period.

“The Civil Rights Division is committed to identifying and tearing down discriminatory barriers that prevent work-authorized individuals from taking advantage of employment opportunities,” said Principal Deputy Assistant Attorney General Vanity Gupta, head of the Civil Rights Division.  “I commend Hartz for its cooperation during the investigation and for working to resolve this matter expeditiously.”

The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA.  The statute prohibits, among other things, citizenship, immigration status and national origin discrimination in hiring, firing or recruitment or referral for a fee; unfair documentary practices in employment eligibility verification; retaliation; and intimidation.

For more information about 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.

Hartz Mountain Industries Settlement Agreement

Company Pleads Guilty to Fixing Price of Auto Parts for Second Time

Hitachi Automotive Systems Ltd. has agreed to plead guilty and to pay a criminal fine of at least $55.48 million for its role in a conspiracy to allocate markets, fix prices and rig bids for shock absorbers installed in automobiles sold to U.S. consumers, the Justice Department announced today.

According to charges filed in the U.S. District Court of the Southern District of Ohio today, from the mid-1990s until summer 2011 Tokyo-based Hitachi Automotive Systems agreed to allocate the supply of shock absorbers sold to targeted vehicle manufacturers.  To keep prices up, Hitachi Automotive Systems and its co-conspirators also agreed to coordinate on price adjustments requested by the vehicle manufacturers and strived to keep their conduct secret by using code names and meeting in remote locations. 

In 2013, Hitachi pleaded guilty and paid a $195 million fine for fixing the price of starters, alternators and other electrical automotive components. At that time, Hitachi received credit for substantially assisting the division’s investigation. But in the course of providing that assistance Hitachi failed to uncover that it had also conspired to fix the price of shock absorbers.  As a result, the division will recommend a substantial increase in Hitachi’s criminal fine from the bottom of the Guidelines fine range and also recommend that the court place Hitachi on probation for three years.  These recommendations are consistent with the division’s approach in cases where a company fails to uncover the entire scope of its illegal conduct at the time it enters into a plea agreement.

“Hitachi Automotive Systems thwarted the competitive process when it fixed the price of shock absorbers,” said Acting Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division.  “Compounding its error, when it pled guilty in 2013 Hitachi failed to clean house and uncover its participation in the shock absorbers conspiracy.  The division will continue to take a hard line when companies fail to uncover additional anticompetitive behavior.” 

“When companies conspire to fix prices, consumers are the victims,” said Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Division.  “Working with the Department of Justice and our other partners, the FBI will continue to pursue those that illegally scheme to suppress and eliminate competition.”

Hitachi Automotive Systems has agreed to cooperate with the division’s ongoing investigation.  The plea agreement is subject to court approval.

Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  Including Hitachi Automotive Systems, 45 companies and 64 executives have been charged in the division’s ongoing investigation and have agreed to pay a total of more than $2.8 billion in criminal fines. 

Hitachi Automotive Systems is being prosecuted by the Antitrust Division’s Chicago Office and the FBI’s Cincinnati Field Office, with assistance from the U.S. Attorney’s Office of the Southern District of Ohio.  Anyone with information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html, or call the FBI’s Cincinnati Field Office at 513-421-4310.

Hitachi Information

           ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands (NMI),announced that on August 8, 2016, Defendant JAYVIN WYLL UEDA REMOKET was sentenced by the Honorable Frances Tydingco-Gatewood, Chief Judge, District Court of Guam.  Defendant was sentenced to serve 14 years incarceration, to run concurrent to five years incarceration, followed by three years of supervised release. 

           Defendant REMOKET pled guilty on May 15, 2014 to Conspiracy to Distribute Methamphetamine, in violation of Title 21 U.S.C. Sections 846(a)(1) and (b)(1)(C) and to Giving Notice of a Search Warrant, in violation of 18 U.S.C. Section 2232(c).   Defendant REMOKET was a Guam Customs and Quarantine Officer assigned to the Contraband Enforcement Team at the time of the offenses.  He conspired with co-defendants Amos Ueda and Frederick Obak to receive and distribute a package containing 984.3 grams of methamphetamine hydrochloride at a business establishment in Guam, namely Staywell Insurance in Hagatna, Guam.  The contents of the package were to be broken down for later distribution on Guam.   The methamphetamine hydrochloride was concealed within a U.S. Priority Mail package and sent from Washington State to Guam where it was intercepted by the U.S. Postal Inspector.   The Drug Enforcement Administration Forensic Laboratory determined that the methamphetamine had a high purity level of 82.2%.  The street value of 984.3 grams of methamphetamine hydrochloride exceeds $492,150.00.   

           The investigation was conducted by the Guam U.S. Postal Inspector and Drug Enforcement Administration Special Agents as well as Task Force Officers who determined that REMOKET, using his position of authority, attempted to protect the conspiracy by giving notice to his co-defendants of the interception of the package.

           U.S. Attorney Limtiaco stated, "The defendant, at the time of the crimes, was a Guam Customs and Quarantine Officer assigned to the Contraband Enforcement Team. He abused and violated the public's trust by using and exploiting his official position to commit the crimes and gain information to impede the investigation in this case. It is not uncommon for methamphetamine hydrochloride possession and distribution to be associated with violent and other criminal activity.  The drug has destructive and devastating effects on individuals, families and our community.  The U.S. Attorney’s Office is committed to the aggressive prosecution of those offenders who traffic drugs and abuse their positions of authority to commit criminal activity."

           This conviction resulted from the concerted efforts of law enforcement partners in an Organized Crime Drug Enforcement Task Force (OCDETF) investigation.  OCDETF is a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.

           The investigating agencies include the Drug Enforcement Administration (DEA), U.S. Department of Homeland Security/U.S. Immigration and Customs Enforcement (ICE) - Homeland Security Investigations (HSI), U.S. Postal Inspection Service (USPIS), and the Guam Police Department (GPD).  The case was prosecuted by Assistant U.S. Attorney Rosetta San Nicolas.

The former chief executive at Bennett Environmental Inc., a Canada-based company that treats and disposes of contaminated soil, was sentenced today to serve 63 months in prison in connection with the payment of kickbacks to obtain subcontracts at a New Jersey Superfund site overseen by the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers, the Department of Justice announced today.

John Bennett, of Vancouver, British Columbia, was also sentenced to pay a $12,500 criminal fine and $3,808,065 in restitution in U.S. District Court for the District of New Jersey in Newark by Judge Susan D. Wigenton.  Bennett was charged with these crimes in August 2009 and was extradited from Canada to the United States in November 2014 to face trial.  After a three-week jury trial that ended on March 16, 2016, Bennett was convicted of committing major fraud against the United States and conspiring to pay more than $1.3 million in kickbacks and to defraud the United States at the Federal Creosote Superfund site in Manville, New Jersey. 

“Contractors cannot make payoffs to obtain government contracts,” said Acting Assistant Attorney General Renata Hesse for the Justice Department’s Antitrust Division.  “Today’s sentencing reaffirms the division’s dedication to prosecuting executives whose greed and illegal ploys undercut competition and defraud the United States.”

According to court documents, between 2001 and 2004 Bennett conspired with others at Bennett Environmental to pay kickbacks, that included money wired to a co-conspirator’s shell company, lavish trips and entertainment expenses and personal gifts, to the project manager at Federal Creosote in an effort to guarantee the award of soil treatment contracts to his company.  As a result of the payment of these kickbacks, Bennett Environmental was fraudulently awarded tens of millions of dollars in soil treatment and disposal contracts at Federal Creosote, and the company won contracts at higher prices than it otherwise would have bid, causing harm to the EPA. 

The investigation at Federal Creosote has resulted in the conviction of ten individuals and three companies of charges including major fraud against the United States, tax fraud, money laundering and obstruction of justice.  Criminal fines and restitution of more than $6 million also have been imposed and seven of the individuals have been sentenced to serve prison sentences ranging from 5 months to 14 years. 

Anyone with information concerning bid rigging, kickbacks, tax offenses or fraud relating to subcontracts awarded at Federal Creosote or Diamond Alkali Superfund sites should contact the Antitrust Division’s New York Office at 212-335-8000 or visit https://www.justice.gov/atr/contact/newcase.htm. 

           ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), announced that on August 8, 2016, Defendants ERIC TEDTAOTAO AND MACRINA TEDTAOTAO, husband and wife, were sentenced by the Honorable Ramona Manglona, Chief Judge, in the District Court of Guam.   

           Both TEDTAOTAOS pled guilty to Conspiracy to Unlawfully Import Methamphetamine, in violation of Title 21, United States Code, Section 846, 952(a) and 960(b)(3).  ERIC TEDTAOTAO was a Department of Corrections (DOC) officer during the conspiracy.  He was sentenced to serve 71 months incarceration followed by three years of supervised release, and 100 hours of community service. Defendant MACRINA TEDTAOTAO was sentenced to serve 97 months in prison followed by three years of supervised release, and 100 hours of community service.

           On August 4, 2012, Bertha Moore (MACRINA’s aunt) arrived in Guam from the Philippines.  She was detained by Guam Customs and Quarantine who recovered three condoms containing methamphetamine from her rectum.  Moore was transporting the methamphetamine into Guam for ERIC and MACRINA TEDTAOTAO.  Moore was sentenced last year to 87 months in prison.

           U.S. Attorney Limtiaco stated, "Defendant ERIC TEDTAOTAO, at the time of the criminal activity, was a DOC officer and as law enforcement, violated the public's trust.  It is not uncommon for methamphetamine hydrochloride possession and distribution to be associated with violent and other criminal activity.  The drug has destructive and devastating effects on individuals, families and our community.  The U.S. Attorney’s Office is committed to the aggressive prosecution of drug traffickers."

           The investigation was conducted by Special Agents and Task Force Officers of the Drug Enforcement Administration, Bureau of Alcohol, Tobacco, Firearms and Explosives, Guam Police Department, Superior Court of Guam Probation Office, Guam Customs and Quarantine, U.S. Marshals Service, the Filipino National Police and the U.S. State Department.  The case was handled by Assistant U.S. Attorney Clyde Lemons, Jr.

A Houston, Texas, man was sentenced to more than two years in prison today for his role in a stolen identity refund fraud (SIRF) scheme, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Department of Justice’s Tax Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.

Denzel Roberts, 24, was sentenced by U.S. District Judge Lynn N. Hughes of the Southern District of Texas to serve 24 months in prison followed by a two year term of supervised release.  Judge Hughes ordered Roberts to pay $74,341 in restitution to the Internal Revenue Service (IRS).  In May, Roberts pleaded guilty to one count of theft of public money.

“The Justice Department is committed to aggressively prosecuting those who participate in schemes to steal personal information, infiltrate databases and assume identities in an effort to prepare and file fictitious tax returns seeking to line their pockets with fraudulently obtained refunds,” said Principal Deputy Assistant Attorney General Ciraolo.  “Individuals like Mr. Roberts, who receive the fraudulent refunds, especially through opening bank accounts in fictitious names, play key roles in these illegal schemes and substantially contribute to the loss to the U.S. Treasury and the damage inflicted on identity theft victims.  Working with our law enforcement partners, we will continue to seek lengthy prison terms and substantial monetary penalties for those who engage in this criminal conduct.”

“Today’s sentencing of Denzel Roberts for his role in a stolen identity refund fraud ring emphasizes how seriously IRS-Criminal Investigation (IRS-CI) and our law enforcement partners take the issue of identity theft,” said Chief Richard Weber for IRS-CI.  “Mr. Roberts may have thought that he would not get caught while acting as a conduit for ill-gotten gains, but he will now pay the price for stealing funds from the American tax system and honest citizens.”

According to court documents, Roberts participated in a scheme that used stolen personal identification information to file false federal income tax returns for tax year 2014.  Participants in the scheme obtained means of identification of actual individuals, including their names and social security numbers, and used this information to access the IRS’s “Get Transcript” database.  Using the stolen identities and information obtained from the Get Transcript database, other members of the scheme prepared and filed false tax returns fraudulently requesting refunds.  Roberts admitted using a fraudulent passport to open several bank accounts into which the refunds were deposited.  Roberts then withdrew the illicit proceeds, retaining a portion of the money as a fee and providing the remainder of the funds to others.

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Magidson thanked special agents of IRS-Criminal Investigation and the FBI Houston Area Cyber Crime Task Force, who investigated the case and Trial Attorneys Michael Boteler and Grace Albinson of the Tax Division, who are prosecuting this case with assistance from Assistant U.S. Attorney Jimmy Sledge of the Southern District of Texas.

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

Chiropractor Interfered with IRS Collection Efforts and Retired Firefighter Willfully Failed to File Return

Anna Allen and Martin Armendariz of El Paso, Texas, pleaded guilty today in the U.S. District Court for the Western District of Texas to tax crimes, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division and U.S. Attorney Richard L. Durbin Jr., of the Western District of Texas.

Allen, a practicing chiropractor, and her husband, Armendariz, a retired El Paso firefighter, have not filed federal income tax returns since 2004.  Allen pleaded guilty to evading her 2009 individual income taxes.  Armendariz pleaded guilty to willfully failing to file a 2009 tax return.

According to the statement of facts accompanying the plea agreements, after the Internal Revenue Service (IRS) levied upon Allen’s bank accounts and accounts payable in order to collect back taxes, Allen sent threatening correspondence to her bank regarding the bank’s responses to the IRS’s levy requests and altered her banking habits to prevent any seizures.  Allen also instructed a third party to submit insurance billings on behalf of Allen’s chiropractic business using an Employment Identification Number assigned to another business in order to thwart the IRS’s collection efforts.  Armendariz failed to file a tax return for tax year 2009 for himself and his wife, thereby failing to report more than $211,000 in gross income.

U.S. District Judge Kathleen Cardone of the Western District of Texas set sentencing for both defendants on Oct. 13.  Allen faces a statutory maximum sentence of five years in prison and a maximum fine of $250,000.  Armendariz faces a statutory maximum sentence of one year in prison and a maximum fine of $100,000.

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Durbin commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorney Sean Beaty of the Tax Division and Assistant U.S. Attorney Donna Miller of the Western District of Texas, who prosecuted the case. 

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

Stolen Federal Tax Refunds Obtained from Fraudulent Income Tax Returns

A River Grove, Illinois, woman pleaded guilty today to stealing more than $93,000 from the United States, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division.

According to the plea agreement, Rosa Alverio, 38, admitted that from March 2012 to December 2014, she participated in a scheme to steal money from the United States through the filing of false income tax returns.  Alverio deposited into her bank account income tax refunds that she knew were the proceeds of fraudulent tax returns.  According to the plea agreement, the fraudulent tax returns were filed in people’s names without their knowledge or consent.  Alverio admitted that as part of the scheme she caused 32 fraudulent tax refunds to be deposited into an account that she controlled.

Alverio, along with three codefendants, were charged on June 23, in a 24-count indictment with conspiracy to defraud the Internal Revenue Service (IRS) and theft of public money.  Sentencing is scheduled for Nov. 10.  Alverio faces a statutory maximum sentence of 10 years in prison, along with a fine of up to $250,000, and three years of supervised release. 

Principal Deputy Assistant Attorney General Ciraolo thanked agents of the IRS-Criminal Investigation, who investigated the case and Tax Division Trial Attorneys Ryan R. Raybould and Timothy M. Russo, who are prosecuting the case.  Principal Deputy Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office for the Northern District of Illinois for their substantial assistance in the case. 

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

New Federal Rule Helps States Plan for Historic Funding Increases

The Department of Justice today published a final rule expanding the ability of victim serving agencies and organizations across the nation to reach and serve more crime victims at a time of substantial increases in victim assistance funding.  Victims of Crime Act (VOCA) funding directed to the states for victim assistance has more than quadrupled in the last two fiscal years. 

“Supporting the victims of crime is as essential to the pursuit of justice as making arrests and prosecuting cases,” said Attorney General Loretta E. Lynch.  “This new rule significantly expands state and local agencies’ ability to reach survivors of a wide range of crimes, to help them recover from their ordeals, and to empower them to secure a brighter future for themselves and their loved ones.  I want to thank Congress for their outstanding commitment to the rights and well-being of victims, and I pledge that the Department of Justice will continue to do everything in our power to promote healing, restore lives, and secure meaningful justice for every American affected by crime.”

Federal funding for state victim assistance programs comes from the Crime Victims Fund, a repository of federal criminal fines, forfeitures and special assessments.  This fund does not include tax dollars.  The states, in turn, provide sub-grants to local public agencies and community service providers that help individuals, families and communities recover from both the initial trauma and the long-term effects of victimization. 

Congress raised the appropriations level of the Crime Victims Fund from $745 million in fiscal year 2014 to more than $2.3 billion in fiscal year 2015, effectively quadrupling the amount available for crime victim assistance programs.  Congress raised the cap again to more than $3 billion in fiscal year 2016.

The Victim of Crime Act (VOCA) Formula Victim Assistance Grant Program rule—clarifies and expands support for a continuum of services to crime victims, including:

• comprehensive legal assistance, including victims’ rights enforcement and civil legal assistance related to the victimization;
• transitional housing for victims of domestic violence, human trafficking and other crimes and expanded coverage of relocation expenses;
• forensic interviewing and some medical expenses;
• volunteer trainings, including support for Court Appointed Special Advocates; and
• victim-centered restorative justice.

The rule also emphasizes that programs that serve victims of elder abuse, human trafficking, financial fraud and other crimes are eligible for VOCA funding, and removes language that prevented VOCA funding from supporting services to victims in detention and correctional facilities.  The rule defines the statutory term victim of child abuse, to make clear that the term covers a broad array of harm inflicted on children and includes children who witness violence or who are victims of pornography.

The rule, which replaces the VOCA Victim Assistance Final Program Guidelines, is effective today following a 30 day period for public notice and comment after publication in the Federal Register. Recipients of VOCA Assistance grant funds from the Office for Victims of Crime must comply with the rule after the effective date.  For more information, click here.

Yesterday, a Austin, Texas, businessman was convicted by a federal jury on four counts of filing false tax returns and corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division.

According to the evidence presented at trial, Victor Antolik owned and operated a commercial janitorial business in Austin, San Antonio and Houston, Texas, for which he used a variety of business names, including Diversified Building Services Inc., DBS Services Inc., Partners in Cleaning, PIC Building Services and BSI Industries.  Antolik also earned income as a real estate agent, real estate broker and property manager.  Antolik earned a portion of his real estate income through his companies SGN Realty Inc. and Signature Realty Services.  Antolik submitted to the Internal Revenue Service (IRS) four false individual income tax returns on which he underreported his income for tax years 2004, 2007 and 2008.  In addition, between 1998 and 2014, Antolik attempted to obstruct the IRS by, among other things, attaching altered Forms W-2 and 1099 to his tax returns, providing false information to his accountants that were used to prepare both corporate and individual income tax returns on his behalf and using nominees to conceal income and assets.

“The jury’s verdict holds Mr. Antolik accountable for his decades-long effort to conceal income and obstruct the IRS,” said Principal Deputy Assistant Attorney General Ciraolo.  “Individuals who file false tax returns and fail to pay their fair share threaten the integrity of our nation’s tax system.  The department, working with its partners at the IRS, remains committed to prosecuting those individuals who act as though they are above the law.”       

“Victor Antolik’s attempts to hide his income from the IRS finally caught up with him as a jury found him guilty of filing false returns and impeding the due administration of the IRS,” said Chief Richard Weber of the IRS-Criminal Investigation (IRS-CI). “Individuals who file false returns to avoid paying their fair share of taxes are simply stealing from honest American taxpayers.  The IRS and Department of Justice remain determined and vigilant in ferreting out such schemes and bringing these criminals to justice.”

Antolik faces a statutory maximum sentence of three years in prison on each count, as well as a term of supervised release and monetary penalties.  

Principal Deputy Assistant Attorney General Ciraolo thanked agents of the IRS-CI, who investigated the case and Tax Division Trial Attorneys Robert A. Kemins and David Zisserson, who prosecuted the case.  Principal Deputy Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office for the Western District of Texas for their substantial assistance.   

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

The Department of Justice, the U.S. Environmental Protection Agency (EPA) and the state of Pennsylvania, announced today that Consol Energy Inc., CNX Coal Resources and Consol Pennsylvania Coal Co. LLC (Consol) have agreed to implement extensive water management and monitoring activities to prevent contaminated discharges of mining wastewater from the Bailey Mine Complex (Complex) in Greene and Washington Counties, Pennsylvania, to the Ohio River and its tributaries.

In a consent decree filed in federal court today in Pittsburgh, Pennsylvania, the company also agreed to continue to prevent certain discharges from the Complex, conduct regular long-term-monitoring to ensure sufficient storage capacity to prevent future discharges, develop contingency plans should future discharges become likely and implement an environmental management system to ensure compliance with the Clean Water Act and other applicable environmental laws.  In addition Consol, the largest producer of coal from underground mines in the United States, will pay a $3 million civil penalty for Clean Water Act violations.

“We will continue to vigorously protect our District’s waterways and other vital natural resources,” said U.S. Attorney David J. Hickton for the Western District of Pennsylvania.  “Today’s settlement ensures that our rivers remain safe for future generations to use and enjoy.” 

“Mining operations that discharge to our rivers, lakes and streams have an obligation to comply with our nation’s laws that protect those water bodies, as well as public health,” said Regional Administrator Shawn M. Garvin for the EPA.  “The actions required by today’s settlement represent a major step forward in protecting local waterways and the health of communities.”

The U.S. government’s complaint, filed concurrently with the settlement, alleges chronic exceedances of osmotic pressure (OP) and other limits in Consol’s Clean Water Act discharge permits.  The discharges primarily enter into tributaries of the Ohio River.  OP is the standard used in Pennsylvania to protect aquatic life from excess amounts of total dissolved solids (TDS).  Too much TDS going into a water body can increase the salinity of the water and harm aquatic life and impact drinking water quality.

“Protecting Pennsylvania’s waterways is a top priority of DEP and we will not allow companies to pollute our rivers and streams,” said Acting DEP Secretary Patrick McDonnell.  “CONSOL has agreed to improve their facilities to prevent future discharges, and the actions today will go a long way towards ensuring Pennsylvania’s waters are protected.”

Under the terms of the consent decree, Consol has agreed to:

• Complete and maintain certain water management measures to prevent discharges from certain outfalls at the Complex;
• Monitor and report quarterly and annually, to ensure adequate storage capacity to prevent future discharges;
• Submit and implement a plan for achieving long term compliance through advanced treatment in the event of projected exhaustion of storage capacity; 
• Develop and implement an environmental management system to ensure environmental compliance throughout the Complex; and,
• Pay a $3 million civil penalty.

These measures will continue to reduce TDS in mining waters discharged to streams from the Complex.  EPA estimates that implementation of the consent decree by Consol will eliminate more than 2.5 million pounds of pollutants in the form of TDS.

The consent decree, which is subject to a 30-day public comment period and final court approval, is available at: https://www.justice.gov/enrd/consent-decrees

ASCAP and BMI Licenses Must Continue to Allow Music Users to Publicly Perform All Works Held by Each Organization

The Department of Justice announced today the conclusion of its investigation into proposed modifications to antitrust consent decrees binding the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI), determining that no modifications are warranted at this time.  The investigation by the department’s Antitrust Division also confirmed that the consent decrees require each organization to offer “full-work” licenses that convey to radio stations, television stations, bars, restaurants, digital music services, and other music users the right to publicly perform, without risk of copyright infringement, all works in ASCAP’s and BMI’s repertories.  The Antitrust Division explained the bases for its conclusions in a detailed statement available at https://www.justice.gov/atr/antitrust-consent-decree-review-ascap-and-bmi-2015.

The Antitrust Division opened its investigation in 2014 following requests by ASCAP and BMI that the Antitrust Division join them in proposing modifications to the court-ordered consent decrees.  The Antitrust Division met and spoke with dozens of industry stakeholders on numerous occasions during the course of its investigation, and obtained the input of industry participants and members of the public through public comment solicitations in June 2014 and September 2015.  The Antitrust Division considered the views of all of these stakeholders before reaching its conclusions.

ASCAP and BMI are performing rights organizations that license public performance rights in compositions held by their hundreds of thousands of songwriter and publisher members.  Since 1941, when the United States originally brought civil antitrust lawsuits against ASCAP and BMI, both organizations have been subject to consent decrees, which are designed to prevent anticompetitive effects arising from their collective licensing of music performance rights.  Both consent decrees have been amended periodically since their entry.  The ASCAP consent decree was last amended in 2001 and the BMI consent decree was last amended in 1994. 

Closing Statement

Court Ordered Jailing of Return Preparer for Failure to Obey Court Orders

Today, Kevin Williams, a former tax return preparer, voluntarily surrendered to the U.S. Marshal’s Service.  On July 21, a federal district court in Memphis, Tennessee, issued the warrant for the arrest of Williams for his civil contempt in failing to follow the court’s earlier orders regarding his tax return preparation activities.

On April 4, the U.S. District Court for the District of Tennessee barred Williams, his wife, Stephanie Edmond, and their businesses, the Tax Firm and the Tax Factory, from preparing tax returns.  At that time, the court also ordered Williams and Edmond to turn over to the United States all of the fees they received from preparing returns since Jan. 15.  On July 21, the court determined that Williams not only failed to turn over the fees collected by the Tax Firm to the United States but instead spent funds on a down payment for a Lexus, gambling and new home furnishings.  In addition to these expenditures, the court found that Williams continued to pay his return preparers, including his step-daughter to whom he gave more than $33,000.  Based upon these findings, the court found Williams in civil contempt and ordered him to be incarcerated until he paid $25,000 to the United States. 

In its July 21 order, the district court found Edmond in civil contempt but also determined that she currently lacked the financial resources to pay the United States.  The court ordered that she be jailed if she failed to obtain employment within 90 days and begin to pay the government $25,000 in monthly installments of $500.

Return preparer fraud is one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams for 2016.  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.

A Guilford County, North Carolina, resident pleaded guilty today to four counts of aiding and assisting in the preparation of false tax returns, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina. 

Marvin Flythe, 53, admitted that he ran a tax preparation business in Greensboro, North Carolina, called “TAXHOVA.”  Between January 2012 and January 2015, Flythe admitted preparing and filing numerous individual income tax returns for clients on which he reported false business losses and false unreimbursed employee business expenses.  Flythe maintained a YouTube video channel on which he advertised TAXHOVA.  Flythe admitted to filing at least 36 false returns for clients, for which $130,949 in fraudulent refunds were paid.  Flythe also admitted to filing false personal returns for himself for tax years 2011, 2012 and 2013 and to failing to file his 2014 return.

Flythe is scheduled to be sentenced on Nov. 14.  He faces a statutory maximum sentence of three years in prison for each count of aiding and assisting in the preparation of false tax returns, as well as a term of supervised release and monetary penalties.

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of Internal Revenue Service Criminal Investigation, who investigated the case, and Trial Attorney Robert J. Boudreau of the Tax Division and Assistant U.S. Attorney Anand Ramaswamy of the Middle District of North Carolina, who are prosecuting this case.

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