District Not Recorded

Attorney General Loretta E. Lynch released the following statement regarding the shooting in Baton Rouge, Louisiana:

“I have been briefed on the ongoing situation in Baton Rouge, Louisiana, and I will continue to monitor events throughout the day.  Although information about this morning's incident is still coming in, we do know that at least three officers are feared dead and several others are wounded.  Agents from the FBI and ATF are on the scene, and the Department of Justice will make available victim services and federal funding support, and will provide investigative assistance to the fullest extent possible.

“For the second time in two weeks, multiple law enforcement officers have been killed in the line of duty.  There is no place in the United States for such appalling violence, and I condemn these acts in the strongest possible terms.  I pledge the full support of the Department of Justice as the investigation unfolds.  Our hearts and prayers are with the fallen and wounded officers, their families, and the entire Baton Rouge community in this extraordinarily difficult time.”

Today, in a settlement agreement with the Navajo Nation, the United States agreed to provide funding necessary to continue clean-up work at abandoned uranium mines on the Navajo Nation.  Specifically, the United States will fund environmental response trusts to clean up 16 priority abandoned uranium mines located across the Navajo Nation. The agreement also provides for evaluations of 30 more abandoned uranium mines, and for studies of two abandoned uranium mines to determine if groundwater or surface waters have been affected by those mines.  

The work to be conducted is subject to the joint oversight and approval of the Navajo Nation Environmental Protection Agency and the United States Environmental Protection Agency (EPA).  The United States previously provided funding for evaluations at the 16 priority mines in a “Phase 1” settlement executed in 2015.  

“This second phase agreement takes the next step in ensuring the cleanup of abandoned mines that pose the most significant risks to people’s health and initiates the evaluations of additional mines for future cleanup,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “Addressing the legacy of uranium mining on Navajo lands reflects the commitment of the Justice Department and the Obama Administration to fairly and honorably resolve the historic grievances of American Indian tribes and build a healthier future for their people.”

“We’re very pleased to continue this vital work to address the legacy of uranium mining on the Navajo Nation,” said Acting Regional Administrator Alexis Strauss for the EPA’s Pacific Southwest office. “In the last decade, the EPA has remediated 47 homes, provided safe drinking water to 3,013 families in partnership with the Indian Health Service and conducted field screening at all 523 mines.”

The Navajo Nation encompasses more than 27,000 square miles within Utah, New Mexico and Arizona in the Four Corners area.  The unique geology of the region makes the Navajo Nation rich in uranium, a radioactive ore in high demand after the development of atomic power and weapons at the close of World War II.  Approximately four million tons of uranium ore were extracted during mining operations within the Navajo Nation from 1944 to 1986.  The federal government, through the Atomic Energy Commission (AEC), was the sole purchaser of uranium until 1966, when commercial sales of uranium began.  The AEC continued to purchase ore until 1970.  The last uranium mine on the Navajo Nation shut down in 1986.

Many Navajo people worked in and near the mines, often living and raising families in close proximity to the mines and mills.  Since 2008, federal agencies including EPA, the Department of Energy, the Bureau of Indian Affairs, the Department of the Interior, the Nuclear Regulatory Commission and the Indian Health Service have collaborated to address uranium contamination on the Navajo Nation.  The federal government has invested more than $100 million to address abandoned uranium mines on Navajo lands.  EPA has also compiled a list of 46 “priority mines” for cleanup and performed stabilization or cleanup work at 9 mines. Further, EPA work cleaning up mines has generated 94 jobs for Navajo workers.

This settlement agreement resolves the claims of the Navajo Nation pertaining to costs of engineering evaluations and cost analyses, and cleanups, at the 16 priority mines for which no viable responsible private party has been identified, as well as the costs of evaluations at another 30 such mines, two water studies, and modest costs for pre-assessment of natural resources damages.  In April 2014, the Justice Department and EPA announced in a separate matter that approximately $985 million of a multi-billion dollar settlement of litigation against subsidiaries of Anadarko Petroleum Corp. will be paid to EPA to fund the clean-up of approximately 50 abandoned uranium mines in and around the Navajo Nation, where radioactive waste remains from Kerr-McGee mining operations.  EPA commenced field work with the proceeds from this settlement earlier this year.

A federal grand jury in Charleston, South Carolina, returned an indictment today charging Aegean Shipping Management S.A. and Aegeansun Gamma Inc. with obstruction of an agency proceeding, conspiracy and failing to keep accurate pollution control records, the Justice Department announced.  Three engineering officers were charged with related offenses.

The charges stem from the 2015 falsification of records and obstruction designed to cover up overboard discharges of oily mixtures and machinery space bilge water from the Liberian-flagged chemical tanker, T/V Green Sky.  The vessel’s management company, Aegean Shipping Management of Liberia and the vessel’s owner, Aegeansun Gamma of the Republic of the Marshall Islands, are charged with failing to maintain an accurate oil record book as required by the Act to Prevent Pollution from Ships (APPS), a U.S. law which implements the International Convention for the Prevention of Pollution from Ships, commonly known as “MARPOL.”  The companies were also charged with falsification of records, obstruction and conspiracy.

The individuals, Panagiotis Koutoukakis and Herbert Julian, both former Chief Engineers of the T/V Green Sky and Nikolaos Bounovas, the former Second Engineer onboard the vessel, were charged with aiding and abetting the failure to maintain an accurate oil record book, falsification of federal records and conspiracy.  Julian is facing an additional obstruction charge.

The investigation into illegal activity onboard the vessel began in late August 2015 when the vessel arrived in the Port of North Charleston, South Carolina and members of the engine room staff told the U.S. Coast Guard that they had been ordered to bypass the ship’s oil water separator on multiple occasions.  In a related case, on Feb. 18, the former captain of the T/V Green Sky, Genaro Anciano, pleaded guilty to one count of obstruction for knowingly making false and misleading oral and written statements in an effort to impede the Coast Guard’s investigation of the bypass allegations.

The defendants are scheduled to be arraigned in Charleston on July 26.  An indictment is merely an accusation and defendants are presumed innocent unless and until proven guilty in a court of law.

The case was investigated by agents of the Coast Guard Investigative Service.  The case is being prosecuted by Christopher Hale of the Justice Department’s Environmental Crimes Section and Assistant U.S. Attorney Matt Austin of the U.S. Attorney’s Office for the District of South Carolina.

The U.S. District Court for the District of Minnesota entered a consent decree of permanent injunction against Kwong Tung Foods Inc. (Kwong Tung Foods) doing business as Canton Foods; the firm’s president and owner, Vieta C. Wang; and vice president, Juney H. Wang, to prevent the distribution of adulterated noodles and sprouts, the Department of Justice announced today. 

The Department filed a complaint on July 14, in the U.S. District Court for Minnesota at the request of the U.S. Food and Drug Administration (FDA).  The complaint alleged that Kwong Tung Foods violated the federal Food, Drug and Cosmetic Act by causing noodles and sprouts to be adulterated in that they have been prepared, packed and/or held under insanitary conditions whereby the food may have become contaminated with filth or have been rendered injurious to health.  According to the complaint, the insanitary conditions included failure to exclude pests and rodents from the facility, failure to maintain equipment and failure to ensure adequate employee sanitation. 

“Kwong Tung Foods was repeatedly warned about the insanitary conditions at its Minneapolis food facility,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will continue to work aggressively to protect consumers from adulterated food and enforce our nation’s food safety laws.”

In conjunction with the filing of the complaint, the defendants agreed to be bound by a permanent injunction.  As part of the settlement, the defendants represented that they have ceased receiving, preparing, processing, packing, holding, or distributing any type of food at or from any location.  Under the permanent injunction, if the defendants seek to resume such activity, they must take specific steps to improve the firm’s manufacturing practices, and then receive written approval from FDA. 

According to the complaint, in October 2015, FDA inspected Kwong Tung Foods’ facility, located at 1840 E. 38th Street in Minneapolis, and observed numerous insanitary practices, including the defendants’ failure to take necessary precautions to protect against contamination and maintain buildings in good repair.  Specifically, according to the complaint, FDA observed evidence of live and dead pests and rodents in production rooms, a black mold-like substance and debris on production equipment, inadequate employee sanitation practices, and potential cross-contamination with major allergens.  In addition, FDA observed condensate dripping onto finished bean sprouts, according to the complaint.

FDA inspected Kwong Tung Foods’ facility twice in 2014.  As alleged in the complaint, FDA also observed failures to exclude pests from the facility and to adequately maintain equipment and employee sanitation practices. 

Under federal law, food processors are required to comply with current good manufacturing practices provided by FDA regulation.  The complaint alleged that the defendants violated the law by causing food to become adulterated while it was held for sale after shipment of one or more of its components in interstate commerce. 

The government is represented by Trial Attorney Alistair Reader of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Bahram Samie of the U.S. Attorney’s Office for the District of Minnesota, with the assistance of Associate Chief Counsel for Enforcement Jennifer Kang of the Food and Drug Division, Office of General Counsel, Department of Health and Human Services.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the District of Minnesota, visit its website at http://www.justice.gov/usao-mn.

The Department of Justice, Office of Community Oriented Policing Services (COPS Office) today announced it will conduct a comprehensive after-action assessment of the Orlando Police Department’s (OPD) response to the mass shooting that took place on June 12 at the Pulse nightclub in Orlando, Florida.

“I commend Orlando Police Chief John Mina for his leadership in asking for this assessment,” said COPS Office Director Ronald Davis. “The lessons learned from this independent, objective and critical review of such a high-profile incident will benefit not only the Orlando Police Department and its community; it will also serve to provide all law enforcement critical guidance and recommendations for responding to future such incidents.”

“Chief Mina has proven to be a tremendous leader of the Orlando Police Department,” said U.S. Attorney A. Lee Bentley, III of the Middle District of Florida. “His decision to seek an independent review of the law enforcement response to the Pulse nightclub shootings is another example of his effective leadership. The results of this review should help not only the Orlando Police Department, but also other law enforcement agencies forced to deal with terrorist attacks.”

Through its Critical Response Technical Assistance program, the COPS Office will bring in a technical assistance provider and use subject matter experts to assess OPD’s preparation and response to the mass shooting, strategies and tactics used during the incident, and how the department is managing the aftermath of the mass casualty event.

The Critical Response Technical Assistance program was designed to provide targeted technical assistance to law enforcement agencies dealing with high-profile events, major incidents or sensitive issues of varying need. The program has been used in a number of other cities, including Minneapolis, Minnesota; San Bernardino, California; Ferguson, Missouri; Tampa, Florida; and Pasco, Washington. Previous after-action assessments have provided valuable guidance on lessons learned and serve as an important tool to help the law enforcement profession advance and grow.

The COPS Office, headed by Director Ronald Davis, is a federal agency responsible for advancing community policing nationwide. Since 1995, COPS has invested more than $14 billion to advance community policing, including grants awarded to more than 13,000 state, local, and tribal law enforcement agencies to fund the hiring and redeployment of more than 127,000 officers and provide a variety of knowledge resource products including publications, training, and technical assistance. For additional information about COPS, please visit www.cops.usdoj.gov.

The Department of Justice announced today that the restructuring of the $1.5 billion transaction between Tullett Prebon Group Ltd. (Tullett Prebon) and ICAP plc addresses the Department’s concerns that the transaction would violate Section 8 of the Clayton Act by creating an interlocking directorate.  An interlocking directorate is where one person – or an agent of one person or company – sits on the board of directors of two competitors.

As originally structured, the transaction would have resulted in ICAP owning 19.9 percent of Tullett Prebon and having the right to nominate one member of Tullett Prebon’s board of directors.  Given that ICAP and Tullett Prebon would continue to compete after the transaction, the department had serious concerns that ICAP’s ability to nominate a Tullett Prebon board member would create an interlocking directorate in violation of Section 8 of the Clayton Act.  The revised agreement will provide that ICAP will not own any part of Tullett Prebon after the transaction and will have no right to nominate a member of Tullett Prebon’s board of directors.

“Robust competition depends on competitors being actually independent of each other – that’s what Section 8 requires,” said Principal Deputy Assistant Attorney General Renata Hesse of the department’s Antitrust Division.  “As originally proposed, this deal would have violated that core principle – creating a cozy relationship among competitors.”

Section 8 of the Clayton Act was enacted to provide a bright line rule prohibiting interlocking directorates which could otherwise facilitate coordination among competitors.  Section 8 serves a prophylactic purpose “to nip in the bud incipient violations of the antitrust laws by removing the opportunity or temptation to such violations through interlocking directorates,” according to United States v. Sears, Roebuck & Co., 111 F. Supp. 614, 616 (S.D.N.Y. 1953). 

During the investigation, the division cooperated with the United Kingdom’s Competition and Markets Authority, the Australian Competition and Consumer Commission and the Competition Commission of Singapore.

Tullett Prebon, a publicly-held British corporation headquartered in London, United Kingdom, and operating in the United States, is a leading provider of voice, hybrid and purely electronic brokerage services across asset classes.  Tullett Prebon reported 2015 annual revenues of $1.18 billion.

ICAP is also headquartered in London and operates in the United States.  After the transaction, the company will be called NEX Group Ltd. and will focus on providing electronic trading platforms for numerous asset classes and associated market data and services.  ICAP reported annual revenues of $1.78 billion for its fiscal year ending March 2016.

The Justice Department announced today that a federal jury convicted the Chief of Police of Stevenson, Alabama, Daniel Winters, 56, of two counts of deprivation of civil rights under color of law: one count for beating an arrestee, identified as D.F., and one count for failing to protect the victim from harm.  

According to evidence presented at trial, on March 22, 2015, Winters and a civilian friend went to a residence to investigate suspicions that property had been stolen from the friend’s business and was located at the residence.  Upon arrival, Winters and his friend entered the residence without a search warrant and encountered the victim, D.F.  Winters and his friend then began to beat D.F.  The beating moved outside where Winters and his friend continued to strike and kick the victim in front of the residence.  Over the course of approximately five minutes, Winters not only participated in the beating, but stood by watching his friend beat D.F. and did nothing to stop it.   A passing motorist called 911 to report the beating.  D.F. was left bloody with wounds to his face, chest and back and was taken to the jail at the Stevenson Police Department.  While at the jail, D.F. began to spit up blood.  A jailor requested Winters’ permission to call an ambulance, but Winters refused the request.  Eventually, the jailor received permission from another supervisor and D.F. was transported to a hospital where he received medical attention.

“This police chief abused his authority, broke the law and violated the public trust,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “When law enforcement leaders engage in egregious, unlawful conduct – as this defendant did here – they do a disservice to the thousands of hard-working officers who perform their difficult, demanding jobs each day with integrity and distinction.”

“Civil rights enforcement is a priority of our office and the trial team on this case did an excellent job of putting the evidence together and presenting it to the jury,” said U.S. Attorney Joyce White Vance of the Northern District of Alabama. 

Winters faces a statutory maximum sentence of 20 years in prison for the civil rights charges.  Sentencing is scheduled for Oct. 27, 2016, before U.S. District Judge Madeline H. Haikala of the Northern District of Alabama.

This case is being investigated by the FBI and Alabama’s State Bureau of Investigation.  The matter is being prosecuted by Deputy Chief Laura Hodge of the Northern District of Alabama and Trial Attorney Samantha Trepel of the Civil Rights Division’s Criminal Section.

The heads of the antitrust agencies of the United States and Japan met today in Washington for their 35th Bilateral Competition Consultation.  Principal Deputy Assistant Attorney General Renata Hesse of the U.S. Department of Justice’s Antitrust Division and Federal Trade Commission Chairwoman Edith Ramirez participated in high level meetings with senior officials from Japan’s Fair Trade Commission (JFTC), including JFTC Chairman Kazuyuki Sugimoto.   

The discussions covered a wide range of topics, including recent enforcement developments, antitrust policy and enforcement involving intellectual property and technology and international enforcement cooperation.  The purpose of the meeting is to reinforce ties of cooperation and share knowledge in light of the increasing internationalization of antitrust enforcement. 

“The fact that this is our 35th bilateral meeting is a testament to the depth and strength of our relationship,” said Principal Deputy Assistant Attorney General Hesse.  “Given the importance of our economic ties and our shared interests in antitrust, we are incredibly fortunate to have such a close and productive relationship with the JFTC.”

“We value our longstanding and productive relationship with the JFTC,” said Chairwoman Ramirez.  “The opportunity to exchange views on both current enforcement efforts as well as cutting edge policy issues such as intellectual property and the sharing economy helps to advance enforcement cooperation and the development of sound competition policies globally.”

The United States-Japan bilateral competition consultations date back to 1976, making them the U.S. antitrust agencies’ longest-running annual consultations with any foreign antitrust agency. 

The Justice Department announced today it has reached an agreement with the Omaha Performing Arts Society (OPAS) resolving an Americans with Disabilities Act (ADA) complaint against the Orpheum Theater in Omaha, Nebraska.

The department alleged that OPAS failed to ensure that, to the maximum extent feasible, the theater provided access to individuals with disabilities as required after the theater underwent a renovation.

“The ADA requires that when doing renovations, public accommodations must ensure their facilities are readily accessible and fully usable by people with disabilities,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “We commend the Omaha Performing Arts Society for cooperating with the Justice Department and taking quick action to implement the necessary reforms.”

The ADA requires alterations of existing theaters to comply with certain ADA Standards for Accessible Design.  Under the settlement agreement, OPAS will provide 20 wheelchair and companion seating locations and 20 designated aisle accessible seats dispersed throughout the theater.  OPAS will also install a permanent lift to provide an accessible route from the orchestra floor to the stage floor and it will revise its ticketing and pricing policies to afford individuals with disabilities an equal opportunity to purchase accessible seats. 

For more information about the ADA and today’s agreement, individuals may access the ADA web page at www.ada.gov.htm or call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY).

Omaha Performing Arts Society. 

A Jamaica, New York, resident pleaded guilty today in the U.S. District Court for the Eastern District of New York to one count of conspiracy to defraud the United States, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Nafeesah Hines, 46, who worked at the U.S. Food and Drug Administration (FDA), admitted that between 2008 and 2012, she participated in a scheme to submit false tax returns seeking fraudulent income tax refunds in excess of $3.4 million to the Internal Revenue Service (IRS).  According to the indictment, Hines worked with Rodney Chestnut, a retired New York City Department of Correction officer, and Clive Henry, a former IRS employee in the business of preparing tax returns, to recruit clients to this scheme, which involved using fraudulent IRS Forms 1099-OID to falsely claim refunds of taxes that were never paid over to the IRS.  The indictment alleged that Hines, Chestnut, and Henry collected fees from clients based on a percentage of the refunds received, and supplied the clients with correspondence containing false and frivolous claims to send to the IRS in response to IRS warning letters regarding the false tax returns.

In 2013, a federal court permanently enjoined Hines from promoting a tax fraud scheme involving fraudulent Forms 1099-OID and from preparing tax returns for anyone other than herself.

U.S. District Judge Kiyo A. Matsumoto scheduled Hines’ sentencing for Oct. 11.   She faces a statutory maximum sentence of five years in prison, a term of supervised release, and monetary penalties.  Chestnut and Henry previously pleaded guilty to conspiracy to defraud the United States.  Their sentencing hearings are pending.

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Mark Kotila and Jeffrey A. McLellan 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.

Preparer Who Allegedly Fabricated Business Losses, Claimed Fraudulent Credits and Misreported Self-Employment Income for Customers Ordered to Stop Preparing Returns

According to a lawsuit the United States filed in April, a Birmingham, Alabama, tax return preparer continually and repeatedly prepared federal income tax returns that understated her clients’ liabilities or overstated their refunds.  Now a federal court in Birmingham has permanently barred her from preparing tax returns for others and it has ordered her to give the United States a list of her customers since 2014.

Jessica Leverett aka Jessica Harris, owns and operates a number of different tax return preparation businesses in and around Birmingham, including Tax Money Now, Dynamic Tax Services, Dynamic Tax Solutions and Express Money Tax, the civil complaint alleged.  Leverett’s businesses prepared returns that fabricate Schedule C businesses and business losses to offset their customers’ taxable income from other sources or to increase the customers’ Earned Income Tax Credit, according to the complaint.  The complaint also alleged that Leverett’s businesses prepare returns that claim education credits that Leverett’s customers are not entitled to receive and that misreport self-employment income as household employee wages in order to avoid the self-employment tax.

The Internal Revenue Service (IRS) examined 264 returns prepared by Leverett’s businesses and found that 206 understated the customer’s tax due, the complaint alleges.  Altogether, Leverett’s activities may have caused the United States to lose over $2.5 million in understated taxes and/or fraudulent refunds, according to the complaint.   Leverett did not file a response challenging the government’s allegations.

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.

Attorney General Loretta E. Lynch released the following statement regarding the attack in Nice, France: 

“I join the President in condemning what appears to be a horrific terrorist attack in Nice, France.  My thoughts and prayers are with the families and loved ones of those lost and wounded.  The Department of Justice has reached out to our French counterparts to offer our assistance in the investigation.”

Company is Fourth Firm Charged in Conspiracy Among Major International Ocean Shipping Lines

Wallenius Wilhelmsen Logistics AS (WWL), a Norwegian corporation, has agreed to plead guilty and pay a $98.9 million criminal fine for its involvement in a conspiracy to fix prices of international ocean shipments of roll-on, roll-off cargo to and from the Port of Baltimore and other locations in the United States, the Department of Justice announced today. 

According to the one-count felony charge filed today in the U.S. District Court for the District of Maryland, WWL conspired with other roll-on, roll-off ocean shipping lines from at least February 2000 until at least September 2012 to fix prices, rig bids, and allocate customers. Roll-on, roll-off cargo is non-containerized cargo that can be rolled onto and off of an ocean-going vessel.  Examples of such cargo include new and used cars and trucks and mining, construction, and agricultural equipment.  

“WWL and its co-conspirators cheated their customers for years by fixing the prices of ocean shipping services for cars, trucks, and other cargo essential to our nation’s economy,” said Principal Deputy Assistant Attorney General Renata B. Hesse, head of the Justice Department’s Antitrust Division.  “The Antitrust Division, working together with our law enforcement colleagues, will continue to hold the ocean shipping companies and executives who perpetrated this scheme accountable for their crimes.”

“These charges brought today, and for the prior eight executives charged, outline a deceptive scheme to destabilize competition in the marketplace,” said Special Agent in Charge Kevin Perkins of the FBI’s Baltimore Division. “Those who engage in this type of criminal activity with the intent on corrupting our economy will be identified and brought to justice. To ensure we don’t erode the public’s trust in the competitive bidding process, the FBI will continue to work with the Antitrust Division to ensure the integrity of competition across all industries.”

WWL is the fourth company to agree to plead guilty in the investigation, which has resulted in over $230 million in agreed-upon fines.  In addition, eight executives have been charged for their participation in the conspiracy.  Four have already pleaded guilty and been sentenced to prison terms.  The other four executives have been indicted, but remain fugitives from justice.

In addition to paying its fine, WWL has agreed to cooperate with the department’s ongoing antitrust 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 international roll-on, roll-off ocean shipping industry, which is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Baltimore Field Office, along with assistance from the U.S. Customs and Border Protection Office of Internal Affairs, Washington Field Office/Special Investigations Unit.  Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal I Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Baltimore Field Office at 410-265-8080.

Evercare Hospice and Palliative Care will pay $18 million to resolve False Claims Act allegations that it claimed Medicare reimbursement for hospice care for patients who were not eligible for such care because they were not terminally ill, the Justice Department announced today.  Evercare, now known as Optum Palliative and Hospice Care, is a Minnesota-based provider of hospice care in Arizona, Colorado and other states across the United States.

Hospice care is special end-of-life care for terminally ill patients intended to comfort the dying.  When a terminally ill Medicare patient elects hospice, Medicare no longer covers traditional medical care designed to improve or heal the patient.  Only Medicare patients who have a life expectancy of six months or less are considered terminally ill and eligible for the Medicare hospice benefit. 

“Today’s settlement reflects the Justice Department’s continuing efforts to combat health care fraud and protect the nation’s elderly and most vulnerable citizens,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Our seniors rely on the hospice program to provide them with quality care, dignity and respect when they are terminally ill and need end-of-life care.  It is, therefore, critically important that we hold accountable those hospice providers that bill for medically unnecessary services in order to get higher reimbursements from the Medicare program. Such abuses threaten a vulnerable population and jeopardize this important benefit for others under the program.  The Justice Department will continue to protect taxpayer dollars and ensure that this critical benefit is available for Medicare patients who truly need it.” 

This settlement resolves a lawsuit brought by the government alleging that Evercare knowingly submitted or caused to be submitted false claims to Medicare for hospice care from Jan. 1, 2007, through Dec. 31, 2013, for Medicare patients who were not eligible for the Medicare hospice benefit because Evercare’s medical records did not support that they were terminally ill.  The government’s complaint alleged that Evercare’s business practices were designed to maximize the number of patients for whom it could bill Medicare without regard to whether the patients were eligible for and needed hospice.  These business practices allegedly included discouraging doctors from recommending that ineligible patients be discharged from hospice and failing to ensure that nurses accurately and completely documented patients’ conditions in the medical records. 

The allegations resolved by this settlement arose from whistleblower lawsuits initially filed by former employees of Evercare under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  The Act allows the United States to intervene in the lawsuits, which it did in this case.  The share to be awarded in this case has not yet been determined. 

“The decision to put someone into hospice care is an emotionally wrenching one for the patient and the patient’s family,” said U.S. Attorney John Walsh for the District of Colorado.  “When hospice companies exploit and overbill Medicare by having people in hospice when they do not belong there, it jeopardizes this important benefit for others.  We will not tolerate such conduct.  The District of Colorado and the Department of Justice’s Civil Fraud Section deserve substantial credit for achieving this result in this Evercare Hospice case.”

“Hospice care is only medically necessary and reimbursable by Medicare for terminally ill patients with a life expectancy of six months or less,” said Special Agent in Charge Steven Hanson of the Department of Health and Human Services’ Office of Inspector General (HHS-OIG).  “We will continue to vigorously investigate health care companies that put their own profits above the medical needs of patients to ensure that companies bill Medicare only for reimbursable health care services.” 

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $30 billion through False Claims Act cases, with more than $18.3 billion of that amount recovered in cases involving fraud against federal health care programs.

This settlement is the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Colorado and HHS-OIG. 

The lawsuits resolved by this settlement, which were consolidated in the District of Colorado, are captioned United States ex rel. Fowler and Towl v. Evercare Hospice, Inc., et al., No. 11-cv-00642 (D. Colo.) and United States ex rel. Rice v. Evercare Hospice, Inc., No. 14-cv-01647 (D. Colo.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.  

Thirteen Branches in Northeast Ohio to Be Divested

The Department of Justice announced today that Huntington Bancshares Incorporated and FirstMerit Corporation have agreed to sell 13 branches in Northeast Ohio, with approximately $737.8 million in deposits, to resolve antitrust concerns that arose from Huntington’s planned acquisition of FirstMerit.  As a result of the acquisition, Huntington will become the largest bank in Ohio based on deposits.

Under their agreement with the department, the companies have agreed to divest two branches in Ashtabula County and 11 branches in Stark County, Ohio.  The divested assets will include the deposits and loans associated with the divested branches.  The companies have also agreed to suspend existing, and not to enter into new, non-compete agreements with their branch managers and loan officers located in Ashtabula County and Stark County, Ohio, for a period of 180 days following the consummation of their merger.  Further, the companies have agreed to sell or lease branches closed within two years of the consummation of the merger in Ashtabula County or Stark County, Ohio, to FDIC-insured depository institutions offering deposit and credit services to small businesses.

“Families and small businesses rely on banks in their communities to keep their money safe and provide them credit for important purchases and investments,” said Principal Deputy Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division.  “Today’s settlement protects banking customers in Ashtabula County and the Greater Canton area by ensuring that they continue to have access to competitively priced banking products.” 

The proposed merger is subject to the final approval of the Board of Governors of the Federal Reserve System.  The department said that it will advise the Federal Reserve Board that it will not challenge the merger provided that: the parties divest the branch offices, associated loans and deposits and the entire customer relationships associated with the divestiture branches; the parties commit to the Federal Reserve Board that they will comply with the agreement with the department; and the parties’ commitments to the department are included as a condition to any order the Federal Reserve Board enters allowing the transaction.

Huntington is the holding company of The Huntington National Bank, Columbus, Ohio, with approximately $73 billion in assets.  Huntington operates more than 750 branches and 1,500 ATMs in Ohio, Indiana, Kentucky, Michigan, Pennsylvania and West Virginia.  Huntington specializes in full-service commercial, small business, and consumer banking services, as well as services ranging from mortgage banking to equipment leasing.

FirstMerit is the holding company of FirstMerit Bank, N.A., Akron, Ohio, with approximately $26.1 billion in assets.  With about 370 branches and 400 ATMs in Ohio, Illinois, Michigan, Pennsylvania and Wisconsin, FirstMerit provides a large range of banking and other financial services to consumers and businesses.

A list of the branches to be divested is attached. 

Attachment A - Huntington FirstMerit Branches to be Divested

A Cumberland, Virginia, resident pleaded guilty to one count of corruptly endeavoring to impair and impede the due administration of the internal revenue laws, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Richard Alex, a self-employed low-voltage electrician, admitted that he did not file a timely or valid tax return for more than a decade.  For tax years 1998 and 2000 through 2003, Alex filed a tax return on which he falsely claimed that he had not earned any income.  Alex failed to file any tax returns for the 2004 through 2013 tax years, despite receiving income above the filing threshold each year, as well as numerous warnings and notices from the Internal Revenue Service (IRS).

According to court documents, Alex attempted to conceal his assets and income to prevent the IRS from collecting his unpaid taxes.  Starting in 2004, Alex used bank accounts held in the names of nominees to receive income he earned from dispatch companies for subcontract work.  Alex also provided false information to a tax return preparer for the purpose of preparing federal tax returns for Alex’s nominee business, Cole Data Services.

Alex’s sentencing hearing is scheduled for Oct. 5.  He faces a statutory maximum sentence of three years in prison.  Alex also faces financial penalties and a term of supervised release.

Acting Assistant Attorney General Ciraolo commended special agents of IRS–Criminal Investigation, who investigated the case, and thanked the U.S. Attorney’s Office for the Western District of Virginia for their assistance, as well as Trial Attorney Sean Beaty of the Tax Division and Assistant U.S. Attorney C. Patrick Hogeboom, who are prosecuting the case.

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

Two Kentucky residents were sentenced to prison today after pleading guilty in January to conspiring to defraud the United States with respect to claims, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Kerry B. Harvey of the Eastern District of Kentucky.

Patsy Carnes and Diana Hill were sentenced to 22 and 16 months in prison, respectively.  According to court documents, during the years 2011 and 2012, Hill and Carnes worked at the Bailey Switch Pawn Shop in Knox County, Kentucky.  There, they conspired with Billy Ray Hamilton and Brian Hamilton, to submit false federal tax returns, sometimes intentionally using personal identifying information without the permission of the named taxpayer.

To advance the conspiracy, Hill and Carnes received and collected taxpayer information, including personal identifying information and provided that information to Billy Ray Hamilton and Brian Hamilton for use in the preparation of false tax returns.  Carnes received the fraudulently obtained tax refunds and opened as the sole signature authority of bank accounts into which she knew that some of the fraudulently obtained tax refunds would be deposited.  

In addition to the prison terms, U.S. District Judge Amul R. Thupar of the Eastern District of Kentucky ordered Hill to serve three years of supervised release and pay restitution to the Internal Revenue Service (IRS) in the amount of $226,652.89.   Judge Thupar ordered Carnes to serve three yearsof supervised release and pay restitution to the IRS in the amount of $226,652.89.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Harvey commended special agents of IRS–Criminal Investigation, 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.

Attorney General Loretta E. Lynch and Deputy Attorney General Sally Q. Yates released the following statements today on the passing of Associate Deputy Attorney General David Margolis, senior-most career employee at the Department of Justice.

Statement by Attorney General Lynch:    

“David Margolis was a dedicated law enforcement officer and a consummate public servant who served the Department of Justice – and the American people – with unmatched devotion, remarkable skill and evident pride for more than half a century.  From his earliest days as a hard-charging young prosecutor with a singular sense of style to his long tenure as one of the department’s senior leaders, David took on our nation’s most pressing issues and navigated our government’s most complex challenges.  To generations of Justice Department employees, he was a respected colleague, a trusted advisor and most importantly, a beloved friend.  We are heartbroken at his loss and he will be deeply missed.  My thoughts and prayers are with David’s family, his friends and all who loved him.”

Statement by Deputy Attorney General Yates:

“David Margolis was the personification of all that is good about the Department of Justice.  His dedication to our mission knew no bounds, and his judgment, wisdom and tenacity made him the “go-to” guy for department leaders for over 50 years.  David was a good and loyal friend to all of us, and his loss leaves a gaping hole in the department and in our hearts.”

As part of the federal government’s ongoing efforts to address unlawful dietary supplements, the Department of Justice announced today criminal cases against three individuals for violations of the federal Food, Drug and Cosmetic Act (FDCA) related to purported disease cures.  Each of the three individuals was also the subject of a civil case brought by the department, which they have now agreed to settle by entry of consent decrees of permanent injunction. 

Each of the individuals and companies is alleged to have marketed and sold products as treatments for serious diseases including herpes, cancer, Alzheimer’s and AIDS, without obtaining approval from the U.S. Food and Drug Administration (FDA) to distribute such products as drugs. 

“These enforcement actions highlight the department’s continued focus on unlawful dietary supplements, including unsupported cures for serious diseases such as cancer, Alzheimer’s, and herpes,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Consumers desperate for help, including Americans facing serious illnesses, sometimes turn to untested substances and forgo proven therapies.  The Department of Justice is committed to seeking out those firms that risk public health in favor of profit.”

Guy Lyman and Flor Nutraceuticals LLC                            

Today, the United States filed a criminal information in the U.S. District Court for the Eastern District of Louisiana, charging Guy Lyman of New Orleans, Louisiana, with one misdemeanor count of introduction of an unapproved new drug into interstate commerce in violation of the FDCA.  The information alleges that Lyman distributed the product Herpaflor as a herpes treatment, without receiving approval from FDA to distribute Herpaflor.

The United States simultaneously filed a civil complaint against Lyman and his company, Flor Nutraceuticals LLC, in the Eastern District of Louisiana.  The civil complaint alleges that the defendants sold liquid and tablet drug and dietary supplement products named Herpaflor, which they intended as herpes treatments, but that the products were not approved by FDA.  Lyman and Flor Nutraceuticals agreed to a consent decree of permanent injunction to prohibit the sale of Herpaflor as a treatment for herpes.  The consent decree, which is subject to court approval, was also filed today. 

James Hill

Today, the United States also filed a criminal information in the U.S. District Court for the Middle District of Florida, charging James Hill of Ocala, Florida, with one misdemeanor count of distributing an unapproved new drug in violation of the FDCA.  The information alleges that Hill distributed the unapproved new drug Viruxo Immune Support (Viruxo) as a treatment for herpes.

The Justice Department previously announced the entry of a consent decree of permanent injunction against Hill on Feb. 26, to resolve a civil complaint filed against him in the Middle District of Florida.  The injunction prohibits Hill from selling Viruxo as a herpes treatment.

Clifford Woods and Clifford Woods LLC

The Justice Department also announced today that Clifford Woods, of Los Angeles, California, pleaded guilty to a criminal charge for distribution of an unapproved new drug and agreed to entry of a consent decree.  On May 9, Woods pleaded guilty in U.S. District Court for the Central District of California to a one-count information alleging that he promoted and distributed the product Taheebo Life Tea as a treatment for cancer, despite the fact that the product had not been approved as a drug by the FDA.

Woods, along with his company, Clifford Woods LLC, also agreed to a consent decree of permanent injunction to prohibit them from selling products as cures for a variety of diseases.  The consent decree, which was entered by the Court on June 27, resolves a civil complaint that the department filed against Woods and Clifford Woods LLC in the Central District of California.  The civil complaint alleged that the defendants, doing business as Vibrant Life, sold products that they promoted as treatments for cancer, type 2 diabetes, Alzheimer’s disease, HIV infection and AIDS.  For instance, the complaint alleged that the defendants promoted certain products “as a treatment for cancer,” as having “shown results in tumor reduction,” and as being able to “change a cancer cell into a non-malignant cell.”   The complaint further alleged that the defendants defrauded consumers by promoting certain products to cure, mitigate, treat, or prevent a disease despite the absence of well-controlled clinical studies or other credible scientific substantiation to support those claims.  

Principal Deputy Assistant Attorney General Mizer thanked the Postal Inspection Service for its thorough investigation of these cases.  The government is represented in the three criminal cases by Trial Attorney Ann Entwistle and in the three civil cases by Trial Attorney Daniel Zytnick, both of the Civil Division’s Consumer Protection Branch.  The government is also represented in the civil case against Hill by Assistant U.S. Attorney Lacy R. Harwell Jr. of the U.S. Attorney’s Office for the Middle District of Florida.  Deputy Chief Counsel Perham Gorji and Senior Counsel Claudia J. Zuckerman of the Department of Health and Human Services’ Office of General Counsel – Food and Drug Division provided assistance in these cases.  Further assistance was provided by the U.S. Attorney’s Offices for the Eastern District of Louisiana, Middle District of Florida, and Central District of California.

For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch.  

ValueAct to Pay $11 Million for Investing in Halliburton and Baker Hughes without Notifying Antitrust Authorities

The Department of Justice announced today that ValueAct has agreed to pay $11 million to settle allegations that certain ValueAct entities violated the reporting and waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”).  As part of the settlement, ValueAct has also agreed to injunctive relief designed to prevent future violations. 

On Nov. 17, 2014, Baker Hughes and Halliburton – two of the three largest providers of oilfield products and services in the world – announced their plan to merge in a deal valued at $35 billion.  Thereafter, ValueAct, an activist investment firm, purchased over $2.5 billion of Halliburton and Baker Hughes voting shares without complying with the HSR Act’s notification requirements.  According to a complaint filed on April 4, 2016 in the U.S. District Court for the Northern District of California, ValueAct purchased these shares with the intent to influence the companies’ business decisions – including decisions related to the merger – and therefore could not rely on the limited “investment-only” exemption to the HSR Act’s notification requirements.  The complaint details how ValueAct used its access to senior executives of both Halliburton and Baker Hughes to attempt to influence the companies’ proposed merger and other aspects of their businesses.  Halliburton and Baker Hughes abandoned their proposed merger on May 2, 2016 after the Antitrust Division sued to block it in U.S. District Court for the District of Delaware.

“ValueAct acquired substantial stakes in Halliburton and Baker Hughes in the midst of our antitrust review of the companies’ proposed merger, and used its position to try to influence the outcome of that process and certain other business decisions,” said Principal Deputy Assistant Attorney General Renata Hesse, head of the Justice Department’s Antitrust Division.  “ValueAct was not entitled to avoid the HSR requirements by claiming to be a passive investor, while at the same time injecting itself in this manner.  The HSR notification requirements are the backbone of the government’s merger review process, and crucial to our ability to prevent anticompetitive mergers and acquisitions.  Today’s record penalty and important injunctive relief demonstrate our continued commitment to vigorous enforcement of these important notification and waiting period requirements.”

The HSR Act imposes notification and waiting period requirements for transactions meeting certain size thresholds to ensure that such transactions undergo premerger antitrust review by the department and the Federal Trade Commission.  The HSR Act has a narrow exemption for acquisitions of less than 10 percent of a company’s outstanding voting securities if the acquisition is made “solely for the purposes of investment” and the purchaser has no intention of participating in the company’s business decisions. 

Federal courts can assess civil penalties for premerger notification violations under the HSR Act in lawsuits brought by the department.  The current maximum civil penalty for an HSR violation is $16,000 per day; however, the maximum penalty will increase to $40,000 per day effective Aug. 1, 2016.

As part of the settlement, ValueAct agreed to pay a record $11 million.  The highest fine previously paid for an HSR violation was $5.67 million.  ValueAct is also enjoined from relying on the “investment-only” exemption when it intends to influence, or is considering influencing, certain basic business decisions, including those relating to merger and acquisition strategy, corporate restructuring, and the company’s pricing, production capacity, or production output.

ValueAct is an investment firm headquartered in San Francisco that manages over $16 billion on behalf of investors.

As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in The Federal Register.  Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Kathleen S. O’Neill, Chief, Transportation, Energy & Agriculture Section, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8000, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the U.S. District Court for the Northern District of California may enter the final judgment upon finding that it serves the public interest.

ValueAct Explanation

ValueAct Complaint

ValueAct CIS

ValueAct PFJ

ValueAct Stipulation with Proposed Order

More than 1,500 Victims of Fraud

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 sales manager of a multi-million dollar fraudulent mortgage modification scheme. 

Charles Wayne Farris, 55, of Aliso Viejo, 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. 

“This defendant supervised dozens of telemarketers who used lies and false promises to take money from struggling homeowners for a worthless service,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to prosecute all kinds of mass-marketing and telemarketing fraud schemes, especially those that prey on vulnerable victims.”

“This defendant managed an entire team of people whose sole job was to lure struggling home owners into the fraud scheme,” said U.S. Attorney Eileen Decker of the Central District of California. “It is because of Mr. Farris that so many people were victimized for so much money.”

Farris admitted that, between October 2008 and June 2009, he participated in a scheme to induce homeowners to pay between $3,500 and $5,500 for the services of the Rodis Law Group (RLG) and a successor entity, America’s Law Group (ALG).  RLG and ALG advertised on radio stations nationwide, urging struggling homeowners to call a toll-free number and stating 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.

Farris supervised a sales force of dozens of telemarketers who fielded calls from struggling homeowners.  At Farris’s direction and using scripts that he created, the telemarketers 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 defendants in this case preyed upon vulnerable homeowners facing the loss of their home and callously took advantage of what hope they had left,” said Assistant Director in Charge Deirdre L. Fike of the FBI’s Los Angeles Field Office. “Paid advertisements can lend a veneer of credibility to any scam, and I would encourage anyone considering paying fees up front for services to be skeptical before handing over hard earned money.”

In a plea agreement filed in federal court, Farris admitted that the RLG and ALG schemes fraudulently obtained approximately $9 million from more than 1,500 victims. His sentencing is on April 17, 2017.

Farris was charged along with two co-defendants, Bryan D’Antonio and Ronald Rodis.  Rodis pleaded guilty to one count of conspiracy to commit mail and wire fraud on June 27.  D’Antonio is charged with 23 felony counts.  He is charged with nine counts of wire fraud and one count of conspiracy to commit wire fraud.  Each of these counts carries a statutory maximum penalty of 20 years in prison.  In addition, D’Antonio is charged with 13 counts of criminal contempt for violating a 2001 federal court order, which permanently banned D’Antonio from participating in future telemarketing operations.  Criminal contempt of court has no statutory maximum penalty.  D’Antonio is scheduled for trial beginning Sept. 20.

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.

A Newport Beach, California, man pleaded guilty today for his role as a salesman at fraudulent debt relief firms that offered to settle credit card debts but instead took victims’ payments as undisclosed up-front fees, the Justice Department and U.S. Postal Inspection Service announced.

John Vartanian, 57, pleaded guilty to one count of an indictment alleging conspiracy to commit mail fraud and wire fraud in connection with companies known as Nelson Gamble & Associates (Nelson Gamble) and Jackson Hunter Morris & Knight LLP (Jackson Hunter).  According to the indictment, the conspirators portrayed the debt relief companies as law firms and attorney-based companies that would negotiate favorable settlements with creditors.  Clients made monthly payments expecting the money to go toward settlements.  The conspirators instead took at least 15 percent of the total debt as company fees, with the first six months of payments going almost entirely toward undisclosed up-front fees. 

“These scams take advantage of vulnerable consumers trying to climb out of debt,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will continue to prosecute fraudulent debt relief schemes.”

“We are gratified with today’s plea, not only on behalf of our postal inspectors who exposed these conspirators for the scammers they were, but for the many unsuspecting victims who were seeking to climb out from their debts but instead were thrown into even deeper financial holes,” said Inspector in Charge Regina L. Faulkerson of Criminal Investigations, U.S. Postal Inspection Service.  “People who rely on the U.S. mail expect what they receive will be truthful, honest communication – free from false statements and from attempts to further victimize them.  I appreciate the work of the Consumer Protection Branch in bringing the last of these fraudulent credit repair conspirators to justice.”

“This defendant preyed upon victims that were already burdened by significant debt,” said U.S. Attorney Eileen M. Decker for the Central District of California.  “He gave them false hope while stealing the money that could have been used to reduce their obligations.”

The scheme ran from February 2010 to September 2012.  Vartanian admitted that he did not tell customers during sales calls that the companies charged significant up-front fees.  Additionally, he admitted that he falsely told customers that the companies were backed by a law group and that money would be refunded if customers were not satisfied.  When his co-conspirators changed the name of the company from Nelson Gamble to Jackson Hunter in 2011 because of customer complaints, Vartanian continued to make the same pitch without disclosing that the new company was essentially the same as the old company.  In speaking with unhappy customers, the conspirators at Jackson Hunter blamed past problems on Nelson Gamble and denied requests for refunds of money paid to Nelson Gamble.

Vartanian faces a statutory maximum sentence of 20 years in prison.  The court set a sentencing date of Oct. 17 before U.S. District Judge Dale S. Fischer in Los Angeles.  Four other defendants previously pleaded guilty in connection with the same scheme: Jeremy Nelson of Laguna Nigel, California, Elias Ponce of Santa Ana, California, Christopher Harati of Anaheim, California, and Athena Maldonado of Lake Forest, California.  The defendants have not yet been sentenced. 

In September 2012, the Federal Trade Commission brought a civil case against Nelson and the companies, alleging that the defendants misrepresented debt relief services offered to consumers.  (See https://www.ftc.gov/enforcement/cases-proceedings/122-3030-x120048/nelson-gamble-associates-llc-et-al). The case was settled by entry of a consent decree in August 2013.

Principal Deputy Assistant Attorney General Mizer commended the Postal Inspection Service team assigned to the Civil Division’s Consumer Protection Branch for their investigative efforts and thanked the U.S. Attorney’s Office for the Central District of California for their contributions to the case. The case is being prosecuted by trial attorneys Alan Phelps and James Harlow of the Consumer Protection Branch. 

For more information about the Consumer Protection Branch, visit its website at http://www.justice.gov/civil/consumer-protection-branch. 

Defendant Failed to Report More Than $6 Million in Gross Receipts

A Subway franchisee and resident of Alexandria, Virginia, was sentenced to more than two years in prison today for conspiracy to defraud the United States, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Dana J. Boente for the Eastern District of Virginia.

Obayedul Hoque, was sentenced to 30 months in prison followed by two years of supervised release by U.S. District Judge Liam O’Grady.  Judge O’Grady ordered Hoque to pay a $20,000 fine and $2,022,106 in restitution to the Internal Revenue Service (IRS) for tax liabilities for the years 2008 through 2013.

According to court documents, Hoque owned and operated Skyhill Shell, a gas station in Alexandria and multiple Subway restaurant franchises in Washington, D.C., Arlington, Virginia, and Alexandria.  Hoque admitted that between 2008 and 2014, he and his co-conspirators, who were managers of some of the Subway franchises and the gas station, conspired to defraud the United States for the purpose of obstructing the IRS in the ascertainment and collection of individual and corporate income taxes.  Hoque and his co-conspirators did not deposit all of the gross receipts of the gas station or the Subway franchises into the corporate or partnership bank accounts.  Instead, Hoque and the managers retained a portion of the gross receipts for their personal benefit and failed to report those funds to the IRS.  For the Subway franchises that had no co-conspirator managers, Hoque retained all of the unreported gross receipts for himself. 

For the period of 2008 through 2013, point of sales records for the Subway franchises reflected total sales of $20,805,667.  However, Hoque and his co-conspirators provided false monthly sales figures to the accounting firm to prepare the Subway entities’ tax returns.  As a result, Hoque and his co-conspirators caused false corporate and partnership tax returns to be filed for the Subway franchises which reported sales of only $14,377,696.  Hoque and his co-conspirators also caused false corporate tax returns to be filed on behalf of Skyhill Shell.  For some years, some of the entities did not file tax returns with the IRS.   Additionally, Hoque filed false individual income tax returns with the IRS.  Hoque admitted that his conduct caused a tax loss to the IRS of between $1.5 million and $3.5 million. 

Acting Assistant Attorney General Ciraolo and U.S. Attorney Boente thanked special agents of IRS-Criminal Investigation, who investigated the case and Assistant U.S. Attorney Uzo Asonye and Assistant Chief Caryn Finley and Trial Attorney Kimberly Shartar 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.

According to a civil complaint the United States filed in 2014, a Chicago-based tax return preparer prepared returns that falsely claimed that recipients of discrimination awards related to a class-action lawsuit could claim large deductions on their federal tax returns and that falsely inflated the amount of wages that city of Chicago employees claimed were withheld from their paychecks.  Now a federal court has completely barred this tax return preparer from preparing tax returns for others.

Victor M. Crown promoted two false and fraudulent schemes through which he claimed that his customers could obtain significant federal income tax refunds, the complaint alleged.  In the first scheme, as set out in the complaint, Crown falsely inflated the amount of income tax that was withheld from his customers’ paychecks because the city of Chicago purportedly calculated an incorrect withholding amount.  Taxpayers may not claim a withholding credit larger than the amount that was actually withheld from their wages.  The second scheme is founded on the 1969 class-action lawsuit Shakman v. Democratic Organization of Cook County, et al., No. 69-cv-2145 (N.D. Ill.), according to the United States’ complaint.  Shakman was a discrimination case against the city of Chicago that alleged that the city improperly used political patronage when hiring and promoting public officials.  As part of an agreed Shakman settlement order, the city set up a $12 million fund to compensate claimants for violations of the federal district court’s orders.  Claims were submitted to the court-appointed monitor, who was responsible for evaluating the claims and, if justified, assigning a monetary award amount.  According to the United States’ complaint against Crown, Crown asserted that his customers who were Shakman award recipients were entitled to claim net operating loss deductions for the difference between their claim and the amount they actually received in their award.  The federal tax law does not permit a deduction in the amount of a denied discrimination claim.

In explaining its reasons for enjoining Crown, the court noted that the scope of Crown’s misconduct involved “at least 2,900 fraudulent tax returns,” as well as his “failure to accept responsibility and cease his operations.”  The court’s injunction order forbids Crown from preparing tax returns for others and from making false statements about securing any tax benefit by virtue of receiving or not receiving an award in the Shakman litigation.  It also requires Crown to give the United States a list of all his tax-preparation customers since 2010.

Return preparer fraud is one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams for 2016.  The IRS has some tips on its website for choosing a tax preparer and has launched a free directory of federal tax preparers.  In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters.  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 announced today that it is returning approximately $1.5 million to Taiwan, the proceeds of the sale of a forfeited New York condominium and a Virginia residence that the United States alleged in its complaint were purchased with the proceeds of bribes paid to the family of Taiwan’s former President Chen Shui-Bian.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Executive Associate Director Peter T. Edge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) made the announcement.

According to the civil forfeiture complaints filed in this case, Yuanta Securities Co. Ltd. paid a bribe of 200 million New Taiwan dollars (equivalent to approximately $6 million USD) to former First Lady Wu Shu-Jen in 2004, during former President Chen Shui-Bian’s administration.  The bribe was allegedly paid to ensure that the president would use his power so that the Taiwan authorities would not oppose Yuanta’s bid to acquire a financial holding company.  The former first family used Hong Kong and Swiss bank accounts, shell companies and a St. Kitts and Nevis trust to transfer the bribe proceeds needed to purchase the properties in Keswick, Virginia, and New York.  The properties were owned by the former first family of Taiwan through two limited liability companies.  In October 2012, U.S. District Courts in Virginia and in New York entered final forfeiture judgments against these two properties without opposition by the record owners.  The United States then sold these two properties and obtained approximately $1.5 million in proceeds, which is being returned to Taiwan. 

“The Kleptocracy Initiative was established to prevent corrupt leaders from using the United States as a safe haven for their ill-gotten gains,” said Assistant Attorney General Caldwell.  “We are committed to rooting out foreign official corruption and preventing corrupt officials from enjoying their spoils in the United States.  We appreciate the cooperation of Taiwan law enforcement in this matter.”

“After many years of collaborative work, we are happy to return these funds to their rightful owners,” said Executive Associate Director Edge.  “This is part of an ongoing effort by HSI to identify and seize illegal assets in the United States obtained by corrupt foreign leaders who abuse our financial systems in order to conceal the illicit proceeds of their crimes.  HSI special agents in our 62 offices in 43 countries will continue to work with our domestic offices and international law enforcement partners to hold these individuals accountable.”

ICE-HSI investigated the case, with assistance from the agency’s attaché in Hong Kong, HSI Miami's Foreign Corruption Investigation Group and the Taiwan Supreme Prosecutors Office’s Special Investigations Division.  Trial Attorney Jennifer Wallis and former Deputy Chief Linda Samuel of the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) prosecuted the case.  The Criminal Division’s Office of International Affairs also provided valuable assistance. 

The Justice Department’s Kleptocracy Asset Recovery Initiative is carried out by a dedicated team of prosecutors in AFMLS, working in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and, where appropriate, return those proceeds to benefit those harmed.  Individuals with information about possible proceeds of foreign corruption located in or laundered through institutions in the United States should contact federal law enforcement or send an email to [email protected].

HSI’s Foreign Corruption Investigations Group targets corrupt foreign officials around the world who attempt to utilize U.S. financial institutions to launder illicit funds.  The group conducts investigations into the laundering of proceeds emanating from foreign public corruption, bribery or embezzlement.  The objective is to prevent foreign derived ill-gotten gains from entering the U.S. financial infrastructure, to seize identified assets in the United States and repatriate these funds on behalf of those affected.

An Oregon, Ohio, psychiatrist pleaded guilty to tax evasion today in the U.S. District Court for the Northern District of Ohio, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Sandra Vonderembse admitted that despite earning compensation in excess of $240,000 per year from 2009 through 2011 as a psychiatrist working for multiple businesses and the state of Ohio, she falsely claimed zero taxable income and zero tax owing for each of those years on federal tax returns.  In tax years stretching back to 2005, Vonderembse failed to pay taxes due on her income and filed tax returns falsely claiming taxable income as “None.”  From 2005 to 2011, she also had her earnings paid to nominee entities to conceal income from the Internal Revenue Service (IRS) and sent fake financial instruments to the IRS in purported payment of her taxes.  

Vonderembse faces a statutory maximum sentence of five years in prison, as well as a term of supervised release.  She has agreed to pay restitution to the IRS in the amount of $565,000. 

Acting Assistant Attorney General Ciraolo commended special agents of IRS - Criminal Investigation, who investigated the case and Assistant U.S. Attorney Noah Hood and Trial Attorneys Jack Morgan and Jeffrey McLellan of the Justice Department’s Tax Division, who are prosecuting the case.

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

A federal grand jury sitting in Chicago, Illinois, returned an indictment, which was unsealed yesterday, charging four Chicago-area residents with conspiracy to commit theft of government money, wire fraud, theft of government money, aggravated identity theft and access device fraud, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.

The indictment charges Roxann Gist, Dominique King, Nellyvette Mojica and Rosa Alverio, with conspiracy to commit theft of government money.  Gist and King also are charged with wire fraud, aggravated identity theft and access device fraud.  Mojica and Alverio also are charged with theft of government money.

According to the indictment, Gist and King used the means of identification of other individuals without their knowledge and consent in order to prepare and file false tax returns that claimed large tax refunds.  The refund checks were mailed to addresses in the Chicago area or electronically deposited into bank accounts controlled by the defendants and others.  After Mojica and Alverio received a number of the fraudulent refund checks into accounts under their control, they split the proceeds with Gist and King.  From 2012 to 2015, the defendants and others received in excess of $1.3 million in fraudulent tax refunds.

If convicted, the defendants each face a statutory maximum sentence of five years in prison for the conspiracy count.  Gist and King also face a statutory maximum sentence of 20 years in prison for wire fraud, 10 years in prison for access device fraud and a mandatory minimum sentence of two years in prison for each count of aggravated identity theft, which must run consecutive to any other sentence imposed by the court.  Mojica and Alverio also face a statutory maximum sentence of 10 years in prison for the theft of government money counts.  In addition, the defendants face potential fines, forfeiture and restitution.

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

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Ryan R. Raybould and Timothy M. Russo of the Tax Division, who are prosecuting this case.

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

A former Coöperatieve Centrale Raiffeisen-Boerenleebank B.A. (Rabobank) derivatives trader, who worked in Hong Kong and Singapore as the bank’s Head of Money Market and Derivatives Trading for Northeast Asia, pleaded guilty today to conspiracy to commit wire fraud and bank fraud for his role in a scheme to manipulate the London InterBank Offered Rate (LIBOR) to Rabobank’s advantage.    

Assitant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antiturst Division and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office made the announcement. 

Paul Thompson, 50, of Dalkeith, Western Australia, pleaded guilty before U.S. District Judge Jed S. Rakoff of the Southern District of New York, who set sentencing for Nov. 9, 2016. 

“Confidence in the integrity of our financial markets is critical to the stability of the U.S. economy,” said Assistant Attorney General Caldwell.  “Trillions of dollars in derivative contracts, loans, consumer debt and other financial products are linked to LIBOR, but Thompson schemed to manipulate this important benchmark to advantage his bank’s own trading positions.  This case demonstrates that we will work with our partners around the world to bring to justice those whose crimes threaten our financial markets, wherever they reside.”

“The defendant conspired to manipulate LIBOR, putting his interests above those who depend on LIBOR as a reliable, impartial reference rate,” said Deputy Assistant Attorney General Snyder.  “The Antitrust Division will continue to work with our colleagues in the Criminal Division and the FBI to ensure that individuals who conspire to cheat or manipulate markets are held accountable for their crimes.”

“In today’s plea, a former Rabobank executive admitted to his role in conspiring to manipulate the LIBOR interest rate to his bank’s advantage,” said Assistant Director in Charge Abbate.  “This multi-year investigation represents the ongoing effort of the FBI and its domestic and international law enforcement and regulatory partners to identify and stop those who commit complex financial crimes effecting the United States, no matter where they operate or reside.”

Thompson is the fourth individual to plead guilty in this matter: Paul Robson, Lee Stewart and Takayuki Yagami, former Rabobank traders, pleaded guilty to one count of conspiracy in connection with their roles in the scheme.  Another former Rabobank employee, Tetsuya Motomura, of Tokyo, has been charged and awaits trial.

LIBOR is an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believe they would be charged if they borrowed from other banks.  LIBOR serves as the primary benchmark for short-term interest rates globally and is used as a reference for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products.  The Bank of International Settlements estimated that as of the second half of 2009, outstanding interest rate contracts tied to LIBOR were valued at approximately $450 trillion.  At the time relevant to the charges, LIBOR was published by the British Bankers’ Association (BBA), a trade association based in London.  LIBOR was calculated for 10 currencies at 15 borrowing periods, known as maturities.  The published LIBOR “fix” for Yen and U.S. Dollar (USD) LIBOR at a specific maturity is the result of a calculation based upon submissions from a panel of 16 banks, including Rabobank. 

According to admissions made in connection with his plea, Thompson traded derivative products tied to the USD and Japanese Yen LIBOR rates.  In an effort to increase the profitability of his derivative positions, Thompson entered into a scheme with several other Rabobank employees to influence the rate to Rabobank’s advantage, he admitted.  Electronic communications offered at Allen and Conti’s trial showed that Thompson schemed with Paul Robson, a former Rabobank trader responsible for submitting Rabobank’s Yen LIBOR rate to the BBA, and others, to make LIBOR submissions calculated to increase the profitability of Thompson’s derivatives positions.  For example, on May 19, 2006, Thompson informed Robson that his net exposure to the three-month duration of the Yen LIBOR rate was 125 billion Yen and asked Robson to “sneak your 3m libor down a cheeky 1 or 2 [basis points] because “it will make a bit of diff for me.”  On Nov. 8, 2006, Thompson wrote to Robson, “Got a few big 3mth fixings in next 2 days, any chance you cud bump [LIBOR] up a couple?”  And on May 10, 2006, Robson informed another Rabobank submitter that, “for info I’ve been asked by my Singapore man [Thompson] to help him out with a silly low 6m fixing today.” 

On Nov. 5, 2015, a federal jury in the Southern District of New York convicted Anthony Allen, formerly Rabobank’s Global Head of Liquidity and Finance, and Anthony Conti, formerly Rabobank’s primary U.S. Dollar LIBOR submitter, for their roles in the scheme.  They were sentenced to 24 months and 12 months and a day in prison, respectively.  On Oct. 29, 2013, Rabobank entered into a deferred prosecution agreement with the department and agreed to pay a $325 million penalty to resolve violations arising from Rabobank’s LIBOR submissions.

The FBI’s Washington Field Office is conducting the investigation.  Senior Litigation Counsel Carol L. Sipperly and Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Trial Attorney Michael T. Koenig of the Antistrust Division are prosecuting the case.  The Criminal Division’s Office of Internaional Affairs has provided assistance in this matter. 

The Justice Department expresses its appreciation for the assistance provided by various enforcement agencies in the United States and abroad.  The Commodity Futures Trading Commission’s Division of Enforcement referred this matter to the department and, along with the U.K. Financial Conduct Authority, has played a major role in the LIBOR investigation.  The Securities and Exchange Commission has also played a significant role in the LIBOR series of investigations and the department expresses its appreciation to the United Kingdom’s Serious Fraud Office for its assistance and ongoing cooperation.  The department has worked closely with the Dutch Public Prosecution Service and the Dutch Central Bank in the Rabobank investigation.  The department also thanked the Australian Attorney-General’s Department, the Australian Federal Police and the Western Australia Police for their assistance.  Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the department is grateful for their cooperation and assistance.

This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  For more information about the task force visit www.stopfraud.gov.  

Conspired with Others to Seek Over $1.5 Million in Fraudulent Refunds

A federal district court judge sentenced a Virginia man today to 47 months in prison for his involvement in a far-reaching stolen identity refund fraud scheme in which he worked with others to seek over $1.5 million in income tax refunds through the filing of fraudulent federal income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Channing D. Phillips of the District of Columbia, Special Agent in Charge Thomas Jankowski of the Internal Revenue Service-Criminal Investigation (IRS-CI), Inspector in Charge Maria L. Kelokates of the U.S. Postal Inspection Service, Washington Division and Assistant Inspector General for Investigations John L. Phillips of the U.S. Department of the Treasury.

Bradley King, 35, of Fredericksburg, Virginia, is among approximately 20 participants in this scheme who have pleaded guilty to charges in the U.S. District Court for the District of Columbia.  According to court documents, the overall case involves the filing of at least 12,000 fraudulent federal income tax returns that sought refunds of at least $42 million. King pleaded guilty earlier this year to one count of conspiracy to defraud the United States with respect to claims, one count of theft of public money and one count of aiding and abetting in fraud and related activity in connection with identification documents.

King was sentenced by U.S. District Judge Ellen S. Huvelle of the District of Columbia. In addition to the prison term, he must also pay $493,436 in restitution to the IRS and a forfeiture money judgment in the amount of $5,400.  Following his prison term, King will be placed on three years of supervised release.

According to the government’s evidence, King participated in a massive and sophisticated stolen identity refund fraud scheme that involved an extensive network of more than 130 people, many of whom were receiving public assistance.  The refunds were sought for tax years 2005 through 2013, often in the names of people whose identities had been stolen, including the elderly, residents of assisted living facilities, drug addicts and incarcerated prisoners.  Returns were also filed in the names of and refunds were issued to, people who were willing participants in the scheme.  The refunds listed more than 400 “taxpayer” addresses located in the District of Columbia, Maryland and Virginia.

According to documents filed with the court, King’s involvement in the scheme began in 2008 and continued through July 2015.  Initially, he permitted co-conspirators to use his name, social security number and residential address for the creation and submission of fraudulent income tax returns.  From March 2010 through July 2015, he recruited others to provide him with means of identification for use in preparing and filing fraudulent returns.  He also recruited others to permit the use of their residential addresses on fraudulent returns that he prepared and filed.  King split the proceeds of the fraudulently obtained U.S. Treasury checks with his co-conspirators.  In addition, he and others used bank accounts for the negotiation of refund checks that were issued in the names of other persons.  Finally, according to the court documents, he sold fraudulently obtained refund checks to another individual in June 2015.

Taking together the losses generated by the use of residential addresses and bank accounts under his control, including checks associated with his co-conspirators, King was responsible for the filing of approximately 444 fraudulent returns that sought more than $1.5 million.  These actions led to a total actual loss of approximately $493,436 to the U.S. Treasury, based on the negotiation of a total of 153 U.S. Treasury checks listing addresses under his control and/or negotiated by his recruits.

In announcing the sentence, Acting Assistant Attorney General Ciraolo, U.S. Attorney Phillips, Special Agent in Charge Jankowski, Inspector in Charge Kelokates and Assistant Inspector General Phillips commended those who investigated the case.   They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office of the District of Columbia, including former Assistant U.S. Attorney Sherri L. Schornstein and Paralegal Specialists Donna Galindo and Julie Dailey.  Finally, they expressed appreciation for the work of Assistant U.S. Attorney Ellen Chubin Epstein of the District of Columbia’s Fraud and Public Corruption Section and Trial Attorneys Jeffrey B. Bender and Thomas F. Koelbl and former Trial Attorney Jessica Moran of the Tax Division, who prosecuted the case. 

Attorney General Loretta E. Lynch released the following statement today regarding the State Department email investigation:

“Late this afternoon, I met with FBI Director James Comey and career prosecutors and agents who conducted the investigation of Secretary Hillary Clinton’s use of a personal email system during her time as Secretary of State.  I received and accepted their unanimous recommendation that the thorough, year-long investigation be closed and that no charges be brought against any individuals within the scope of the investigation.”

Pharmaceutical Innovations Inc., based in Newark, New Jersey, pleaded guilty today to criminal charges and resolved a civil lawsuit arising from the company’s distribution of ultrasound gel contaminated with bacteria, the Department of Justice announced.  The devices at issue are gels that doctors and hospitals use to take ultrasound scans, sonograms, EKGs and similar procedures.

Pharmaceutical Innovations Inc. pleaded guilty before U.S. District Court Judge Esther Salas in Newark federal court to an information charging it with two misdemeanor counts of introducing adulterated medical devices into interstate commerce. In addition to placing the company on two years of probation, Judge Salas ordered the company to pay a criminal fine of $50,000 and to forfeit an additional $50,000 – the approximate value of the adulterated gel.

In a related civil settlement, which was also resolved today,  Pharmaceutical Innovations agreed to the forfeiture and destruction of particular gel products that tested exceptionally high for infectious bacteria and agreed to a permanent injunction that requires independent experts and auditors to conduct regular inspections and certifications at the company’s expense.

“The sale of adulterated medical devices puts patients at great risk,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Device manufacturers that fail to comply with good manufacturing practices, thereby threatening patient safety, will be held accountable.”

“Pharmaceutical Innovations shipped defective products that exposed hospital patients to dangerous bacterial contamination,” said U.S. Attorney Paul J. Fishman for the District of New Jersey.  “Today’s plea agreement and civil settlement require Pharmaceutical Innovations to accept responsibility for the contamination and take the necessary steps to prevent it from happening again.”

According to documents filed in the case and statements made in court:

Doctors and hospitals use ultrasound gel to take ultrasound scans, sonograms, EKGs and similar procedures. In February 2012, a Michigan hospital reported that 16 surgical patients were infected with Pseudomonas aeruginosa, a bacterial pathogen.  The hospital believed the infections were associated with a particular lot of Pharmaceutical Innovations ultrasound gel.

A sample of that lot then tested positive for Pseudomonas aeruginosa.  A second lot was shipped in April 2012 and found to be contaminated with two types of bacteria, Pseudomonas aeruginosa and Klebsiella oxytoca, both at the Michigan hospital, and at the company’s Newark facility.

The U.S. Department of Justice filed suit in October 2014 against Pharmaceutical Innovations and its founder, owner, and longtime president, Gilbert Buchalter.  (Gilbert Buchalter was later dropped from the case; his son, Charles Buchalter, became company president and was added to the case.)  The civil complaint alleged that the company was selling medical devices that the U.S. Food and Drug Administration (FDA) had not approved or cleared, that it was violating current good manufacturing practices and that it failed to take required actions after receiving reports in February 2012 of serious injuries associated with its products. 

The Consent Decree of Permanent Injunction requires Pharmaceutical Innovations to submit a detailed compliance plan to FDA within 20 days, and to have outside experts certify in writing by Oct. 31, that the company meets current good manufacturing practice requirements.  The FDA will then conduct a follow-up inspection at the company’s expense. For the next three years, Pharmaceutical Innovations must hire outside auditors to conduct and submit detailed audit reports to FDA.  In addition, the company will forfeit and pay for the destruction of contaminated “Other Sonic Gel” that the U.S. Marshals Service seized in April 2012 as part of a seizure and forfeiture case filed by the United States.

The criminal investigation in this matter was handled by special agents of the FDA’s Office of Criminal Investigations’ New York Field Office, under the direction of Acting Special Agent in Charge Jeffrey Ebersole. 

The criminal prosecution was handled by Assistant U.S. Attorney R. David Walk Jr. of the U.S. Attorney’s Office for the District of New Jersey’s Health Care and Government Fraud Unit, with the assistance of Associate Chief Counsel Lynn M. Marshall of the Department of Health and Human Services’ Office of General Food-Food and Drug Division.  The civil cases were handled by Trial Attorney Daniel K. Crane-Hirsch of the Civil Division’s Consumer Protection Branch and by Senior Counsel Michele Lee Svonkin and Associate Chief Counsel Julie A. Dohm of the Department of Health and Human Services’ Office of General Counsel–Food and Drug Division.  Additional assistance in the civil cases was provided by Assistant U.S. Attorneys Lucy Muzzy, Marion Purcell, Peter Gaeta and Jacob Elberg of the U.S. Attorney’s Office for the District of New Jersey.

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 District of New Jersey, visit its website at https://www.justice.gov/usao/district/nj.  

En Pointe Gov. Inc., En Pointe Technologies Inc., En Pointe Technologies Sales Inc., Dominguez East Holdings LLC and Din Global Corp., all of Gardena, California, have agreed to resolve allegations that they violated the False Claims Act by falsely certifying that En Pointe Gov. Inc. was a small business in order to obtain contracts set aside for small businesses and underreporting sales under a General Services Administration (GSA) contract to avoid the payment of fees, the Department of Justice announced today.  Under the settlement agreement, the companies have agreed to pay slightly more than $5.8 million.  En Pointe Gov. Inc. is now known as Modern Gov IT Inc.; En Pointe Technologies Sales Inc. is now known as Collab9 Inc.; and En Pointe Technologies Inc. is now known as Dinco Inc.

“Contractors who misrepresent their eligibility for government contracts, or fail to pay amounts owed under those contracts, undermine the integrity of the procurement process,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Justice Department will take action to fully protect taxpayer funds.”

“These companies defrauded the government in two ways, each of which cost taxpayers,” said U.S. Attorney Eileen M. Decker for the Central District of California. “Small businesses, in some cases, are eligible to receive a preference when government contracts are issued. Large companies that fraudulently solicit and obtain contracts under small business set-aside programs, like the companies in this case, not only abuse the system but also harm legitimate small businesses by taking those contracts away from them.”

The government alleged that, between 2011 and 2014, the defendants were liable for false representations that En Pointe Gov. Inc. met Small Business Administration (SBA) requirements to obtain work that was only available to small businesses.  In particular, the government alleged that En Pointe Gov Inc.’s affiliation with the other defendants rendered it a non-small business and, thus, ineligible for the small business set-aside contracts it obtained.

The government also alleged that defendants caused En Pointe Gov. Inc. to file false quarterly reports with the GSA between 2008 and 2015 underreporting sales made under a GSA schedule contract that allowed other federal agencies to purchase from En Pointe.  Under the terms of the contract, En Pointe was supposed to return to GSA a percentage of its sales receipts.  By allegedly misrepresenting the amount of its sales, En Pointe underpaid the fees that it owed to GSA.

“GSA contractors must be forthright in their dealings with the United States,” said GSA Inspector General Carol Fortine Ochoa.

“Federal contracts set aside for small businesses are intended to grow the economic base of the nation,” said SBA Inspector General Peggy E. Gustafson.  “The Office of Inspector General will aggressively investigate such misrepresentations to ensure only eligible businesses are awarded these contracts.  I want to thank the U.S. Department of Justice for its dedication to pursuing justice in this case.”

“This case represents the cooperative effort of SBA and the Department of Justice to uncover and remedy fraud in federal contracting with small businesses,” said SBA General Counsel Melvin F. Williams, Jr.  “Uncovering and pursuing fraud cases is one of SBA’s highest priorities.” 

The settlements resolve allegations filed in a lawsuit by Minburn Technology Group, LLC (Minburn), a Virginia company that sells information technology products and services, and Anthony Colangelo, Minburn’s managing member.  The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The Act also allows the government to intervene and take over the action, as it did in this case.  Minburn and Mr. Colangelo will receive approximately $1.4 million.

This settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California and the GSA and SBA Inspector General Offices.

The case is captioned United States ex rel. Colangelo et al. v. En Pointe Gov., Inc., et al., CV14-5865-RGK (JPRx) (C.D. Cal.).  The claims resolved by the settlements are allegations only and there has been no determination of liability.

The U.S. District Court for the Southern District of Alabama entered a consent decree of permanent injunction against BEK Catering LLC dba Floppers Foods LLC of Daphne, Alabama, and its co-owners, Billy B. Stembridge and Kyle D. Huxen, to prevent the distribution of adulterated and misbranded seafood products, the Department of Justice announced today. 

The Department filed a complaint in the Southern District of Alabama on July 1, at the request of the U.S. Food and Drug Administration (FDA).  According to the complaint, BEK Catering prepares, processes, packs, holds, and distributes ready-to-eat seafood products, namely seafood soups sold under the names Shrimp Locksley and Mama’s Gumbo.  The complaint alleged that the defendants caused food to become adulterated and misbranded. 

“Adulterated and misbranded seafood products can create serious health risks for consumers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will continue to work aggressively with the FDA to ensure a safe food supply.”

In conjunction with the filing of the complaint, the defendants agreed to settle the litigation and be bound by a consent decree of permanent injunction.  As part of the settlement, the defendants represented that they are no longer engaged in the processing, packing, or holding of fish and fishery products from any location except for activities incidental to product transport and delivery.  Under the permanent injunction, if the defendants intend to resume processing, packing, or holding fish or fishery products at or from any location, beyond activities incidental to transporting and delivering product, they must notify FDA in writing 90 days in advance, comply with specific remedial measures set forth in the injunction, and be subject to FDA inspection. 

According to the complaint, Stembridge is a co-owner of BEK Catering and refers to himself as the firm’s “Managing Partner.”  As alleged in the complaint, Stembridge has ultimate authority over all of the firm’s operations, including major financial expenditures, production processes, product distribution, and employee supervision.  The complaint further alleged that Huxen is a co-owner of BEK Catering, responsible for BEK Catering’s compliance with FDA’s seafood processing regulations and training new employees, and shares responsibility with Stembridge for the firm’s operations.

As alleged in the complaint, the defendants caused the company’s food to become adulterated in that it was prepared, packed, or held under insanitary conditions whereby it may have become contaminated with filth, or whereby it may have been rendered injurious to health.  For example, according to the complaint, during a 2015 inspection, FDA determined that the defendants failed to have adequate control over the risk of C. botulium and C. perfringens growth and toxin formation, failed to have adequate control over the risk of L. mono growth, and failed to have adequate control over the hazards posed by major food allergens and food additives.

C. botulinum is a bacterium that forms spores capable of producing a potent neurotoxin in food.  People are susceptible to C. botulinum’s neurotoxin, and ingestion of even a small amount of the neurotoxin can cause botulism.  Although the incidence of botulism is rare, the disease can cause paralysis and has a high mortality rate if treatment is not prompt and appropriate.

C. perfringen is a bacterium that causes foodborne illness.  High doses of this bacterium can form a toxin in the digestive tract that results in illness.  People can be sickened by C. perfringens’ toxin, which causes diarrhea and abdominal cramps and can produce more severe symptoms in the young and elderly. 

L. mono. is the bacterium that causes listeriosis, a disease commonly contracted by eating food contaminated with L. mono.  Listeriosis can be serious, even fatal, for vulnerable groups such as newborns and people with impaired immune systems.  The most serious forms of listeriosis can result in meningitis and septicemia.  Pregnant women may contract flu-like symptoms from listeriosis, and complications from the disease can result in miscarriage, or a life-threatening infection in the newborn.

As noted in the complaint, FDA has conducted five inspections of BEK Catering’s various manufacturing facilities dating back to 2011, and during each inspection, FDA found similar types of insanitary conditions and repeated violations of seafood Hazard Analysis and Critical Control Point regulations and current Good Manufacturing Practice regulations.

The government is represented by Counsel Melanie Singh of the Civil Division’s Consumer Protection Branch with the assistance of Senior Chief Counsel Claudia Zuckerman of the Food and Drug Division, Office of General Counsel, Department of Health and Human Services.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. 

Three 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 today. 

Jeffrey Wayne Brock, David Wallace “Chuck” Doughty, and Stanley Ralph Sullivan each admitted that they agreed to rig auctions of foreclosed homes in Cobb County from June 2007 until January 2012.  According to court documents filed in the U.S. District Court for the Northern District of Georgia, Brock, Doughty, Sullivan and their co-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 made payoffs to conspirators who had refrained from bidding against them.  As a result, conspirators profited from money that otherwise would have gone to mortgage holders and other secured debt holders, and in some cases, to the owners of foreclosed homes.

“These defendants conspired to corrupt foreclosure auctions that should have benefited lenders and homeowners,” said Principal Deputy Assistant Attorney General Renata Hesse, head of the Justice Department’s Antitrust Division.  “The Antitrust Division will continue to work with our colleagues at the FBI to pursue those who took advantage of disruption caused by the financial crisis to line their own pockets.”

 “Foreclosure auction fraud in Georgia remains a focus for the FBI investigators and federal prosecutors within the Antitrust Division of the U.S. Department of Justice,” said Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Division.  “By the very nature of this criminal act, the bank, and more importantly, the home owner in financial distress, are the victims that these federal laws were created to protect. The FBI will continue to provide investigative assets toward these matters in order to keep the level playing field that the law intended regarding these auctions.”

Including the individuals pleading today, twenty 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.  Eighteen of those have either pleaded guilty or agree 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 its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  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.

FRESNO, Calif. — Late Wednesday afternoon, after a two–day trial, a federal jury found Alfonso Hernandez, 58, of Fresno, guilty of two counts of receiving and distributing child pornography, Acting United States Attorney Phillip A. Talbert announced.

According to evidence presented at trial, in January 2012, agents identified Hernandez’s computer making over 500 separate child pornography files publicly available online to other users within a peer-to-peer file sharing network. A search warrant was executed at Hernandez’s residence, and in a bedroom secured with a deadbolt lock, agents seized a computer and external hard drives that were found to contain child pornography. Ultimately, it was determined that Hernandez had downloaded and shared thousands of child pornography files onto these devices. Hernandez was arrested in September 2014 and has been in custody since that time.

This case is the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Kings County District Attorney’s Office of Investigation, and the Fresno Police Department. Assistant United States Attorneys Brian W. Enos and Vincenza Rabenn are prosecuting the case.

“Defendants who distribute child pornography prey on innocent victims from behind their screens where they often think they cannot be found,” said Ryan L. Spradlin, special agent in charge of HSI San Francisco. “Together with our law enforcement partners, we remain vigilant in our tireless efforts to root out child predators from the shadows that they lurk.”

Hernandez is scheduled to be sentenced by United States District Judge Dale A. Drozd on October 17, 2016. Hernandez faces a mandatory minimum sentence of five years in prison, a maximum statutory penalty of 20 years in prison and a $250,000 fine regarding each count. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.

A Las Vegas-area dentist was sentenced today to 13 months in prison for tax evasion, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Daniel G. Bogden of the District of Nevada.

Leslie Kotler, 56, pleaded guilty in June 2014 to evading his taxes over a nine year period, causing a $600,000 tax loss and admitted to using a number of nominee bank accounts and bogus trusts to hide his income and assets from the Internal Revenue Service (IRS).  Kotler also filed false income tax returns for the years 2008 through 2011 that materially understated his income and filed a false bankruptcy petition in an attempt to delay the IRS’s ongoing efforts to collect the large amount of taxes he owned.

“With today’s sentence, Mr. Kotler is held accountable and pays a heavy price for his egregious conduct in evading both the assessment and payment of taxes,” said Acting Assistant Attorney General Ciraolo.  “The court’s sentence reflects the serious harm caused by those who fail to comply with our nation’s tax laws and will serve to deter other individuals contemplating similar criminal conduct.”

“Leslie Kotler’s attempt to evade taxes by hiding income and filing false tax returns was a theft from the American public,” said Acting Special Agent in Charge Michael Brock of the IRS-Criminal Investigation Las Vegas Field Office.  “To build faith in our nation’s tax system, honest taxpayers need to be reassured that everyone is paying their fair share.  The IRS-Criminal Investigation Division, along with the Department of Justice, will investigate and prosecute those who violate our tax system.”

In addition to the term of imprisonment, U.S. District Judge Andrew Gordon of the District of Nevada ordered Kotler to serve three years of supervised release and pay restitution in the amount of $712,280.  Before his sentencing, Kotler paid a total of $450,429 in back taxes, interest and fraud penalties.

Acting Assistant Attorney General Ciraolo thanked special agents of IRS-Criminal Investigations, who investigated the case and Tax Division Trial Attorney Thomas W. Flynn, who is prosecuting the case.

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

A Baltimore, Maryland, tax return preparer was sentenced today to serve 20 months in prison for aiding and assisting in the preparation of false tax returns for others, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

On February 8, following a five day trial, a federal jury convicted Charles Imariagbe of 15 counts of aiding and assisting in the preparation of false income tax returns.  According to court documents and the evidence presented at trial, between 2008 and 2012, Imariagbe operated a tax preparation business in Baltimore called JC Tax Service Inc.  During that time, Imariagbe prepared false individual income tax returns for at least seven clients for submission to the Internal Revenue Service (IRS).  These tax returns claimed false and fraudulent income and expenses from Schedule C businesses and grossly inflated or wholly fictitious mileage expenses.  The false items on these returns resulted in the clients receiving larger tax refunds than they were entitled to receive.  

In addition to the prison term, U.S. District Judge Ellen L. Hollander ordered Imariagbe to serve three years of supervised release and pay restitution to the IRS in the amount of $151,927.

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Andrew Kameros and Brittney Campbell 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.

The Justice Department and the Republic of El Salvador established a formal partnership today to protect workers from discrimination based on citizenship, immigration status and national origin.  Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, and Salvadoran Ambassador Claudia Canjura De Centeno signed a memorandum of understanding (MOU) between the embassy and its consulates and the division’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC).

As part of the MOU, OSC and the Salvadoran government will collaborate to educate workers about their employment rights and to provide them with the resources needed to protect those rights.  Additionally, the MOU seeks to promote training for employers on their obligations under the anti-discrimination provision of the Immigration and Nationality Act (INA), which prohibits employment discrimination based on citizenship, immigration status and national origin.  Specifically, the MOU provides that:

• OSC will train Salvadoran consular staff on the anti-discrimination provision of the INA, participate in events organized by Salvadoran consulates to educate workers and employers and distribute educational materials to the embassy and its consulates.
• The embassy will establish a system for referring discrimination claims from the embassy and consulates to OSC.

“We welcome our newest partner to help the Civil Rights Division combat unlawful discrimination against workers employed in the United States and we value the ability to work together to achieve this important goal,” said Principal Deputy Assistant Attorney General Gupta.  “We hope that formalizing our partnership with El Salvador will send a clear message to workers that we are eager to assist them.”

Today’s agreement is particularly useful due to the large number of Salvadoran nationals with temporary protected status (TPS), who are eligible to live and work in the United States, but who sometimes encounter discrimination by employers either based on their immigration status or national origin.  TPS is a temporary immigration status granted to eligible nationals of a country designated for TPS under the INA.  During the TPS designation period, TPS beneficiaries are authorized to work in the United States.

OSC is responsible for enforcing the anti-discrimination provision of the INA.  Among other things, this law prohibits citizenship status and national origin discrimination in hiring, firing or recruitment or referral for a fee; discrimination in the employment eligibility verification process; retaliation and intimidation.  In addition to its enforcement work, OSC educates the public on rights and responsibilities under the INA’s anti-discrimination provision.  More information on OSC is available at www.justice.gov/crt/about/osc.

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.   

A Marietta, Georgia, resident pleaded guilty in the U.S. District Court for the Northern District of Georgia today to one count of theft of public money and one count of aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney John A. Horn of the Northern District of Georgia.

Peter Isika, 46, admitted using stolen identities to file at least 50 false tax returns for tax years 2013 and 2014 claiming more than $500,000 in fraudulent refunds.  Isika admitted that he purchased the stolen identities over the Internet and used those identities to obtain the fraudulent tax refunds.  Isika directed the refunds to prepaid debit cards or bank accounts that he controlled.

A sentencing date has not been scheduled for Isika.  He faces a statutory maximum sentence of 10 years in prison for the theft of public money charge and an additional statutory mandatory sentence of two years in prison for aggravated identity theft.  He also faces a term of supervised release and monetary penalties.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Horn commended special agents of the Internal Revenue Service-Criminal Investigation and U.S. Treasury Inspector General for Tax Administration, who investigated the case and Trial Attorneys Jason Poole and Mara Strier of the Tax Division and Assistant U.S. Attorney Kamal Ghali, who are prosecuting the case.

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

An Ocala, Florida, cardiologist, Dr. Asad Qamar, and his practice, the Institute of Cardiovascular Excellence (ICE), will pay $2 million, plus release any claim to $5.3 million in suspended Medicare funds, to resolve a lawsuit alleging that they improperly billed Medicare, Medicaid and TRICARE for medically unnecessary procedures, and paid kickbacks to patients by waiving Medicare copayments irrespective of financial hardship, the Justice Department announced today.  Dr. Qamar also agreed to a three-year period of exclusion from participating in any federal health care program followed by a three-year Integrity Agreement with the Department of Health and Human Services Office of the Inspector General (HHS-OIG).  The settlement relates to two consolidated lawsuits in which the United States intervened on Dec. 22, 2014.

“Billing federal health programs for medically unnecessary procedures is unacceptable – not only does it waste taxpayer funds, but it also puts patients at risk,” said Principal Deputy Assistant Attorney General, Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Today’s settlement evidences the Department of Justice’s firm commitment to protect public funds and to safeguard the well-being of federal health care program beneficiaries.”

The settlement resolves the government’s lawsuit claiming that Dr. Qamar and ICE billed Medicare, Medicaid and TRICARE for excessive, medically unnecessary and inadequately documented peripheral artery interventional services and related procedures.  Many of the cardiovascular procedures for which Dr. Qamar and ICE billed Medicare and the other programs were not indicated by patients’ medical histories or records, or the severity of the patients’ symptoms. 

The government also alleged that to help facilitate this false billing scheme, Dr. Qamar and ICE routinely and indiscriminately waived the 20 percent Medicare copayment, irrespective of the patient’s financial need.  Medicare copayments assure that patients have an incentive to be smart healthcare consumers and avoid unnecessary procedures.  By waiving the required copayments indiscriminately, Dr. Qamar and ICE induced patients to agree to unnecessary and invasive procedures and other services.  Dr. Qamar’s and ICE’s illegal conduct made Dr. Qamar the highest paid Medicare cardiologist in the country in 2012 and 2013.

“Patient safety is of paramount importance,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida.  “When a doctor performs medically unnecessary and invasive procedures on Medicare patients, federal healthcare programs are defrauded and, more importantly, patients’ lives and wellbeing are recklessly put at risk.  This case shows our office’s steadfast commitment to holding medical providers personally responsible for their actions.” 

“When medical professionals act on greed to perform unnecessary, invasive procedures on Medicare and Medicaid patients, both patient health and taxpayer funds are compromised,” said Special Agent in Charge Shimon R. Richmond of HHS-OIG.  “Our agents and investigators will continue to work hard with our law enforcement partners to ensure that health care providers who engage in such illegal behavior are held accountable.”

The allegations resolved by today’s settlement were originally raised in two lawsuits filed pursuant to the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government when they discover evidence that defendants have submitted false claims for government funds and to receive a share of any recovery.  The False Claims Act also permits the government to intervene in such lawsuits, as it has done in these cases.  The cases are captioned United States ex rel. Doe v. Institute of Cardiovasular Excellence, PLLC, ICE Holdings, PLLC, Dr. Asad Qamar, & Dr. Humera Qamar, Case No. 5:11-CV-406-OC-KRS (M.D. Fla.); United States ex rel. Taylor & the State of Florida v. Institute of Cardiovascular Excellence & Dr. Asad Qamar, Case No. 8:14-CV-1454-T-35-EAS (M.D. Fla.).  The relators Dr. Robert A. Green and Ms. Holly A. Taylor will receive $1,327,721 as their share of the settlement.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $29.9 billion through False Claims Act cases, with more than $18.3 billion of that amount recovered in cases involving fraud against federal health care programs. 

This case was handled by the Commercial Litigation Branch of the Department of Justice’s Civil Division, the U.S. Attorney’s Office for the Middle District of Florida, HHS-OIG, and the Defense Health Agency on behalf of the TRICARE program.  The claims asserted by the government are allegations only, and there has been no determination of liability.  

A federal court in Fort Lauderdale, Florida, has permanently barred a Broward County man from preparing federal tax returns for others, the Justice Department announced today.

The United States filed a civil complaint against Eli St. Phard of Oakland Park, Florida, in April.  The complaint alleged that he prepared income tax returns that fraudulently understated his customers’ tax liabilities by falsely claiming deductions for business expenses his customers never incurred; fraudulently overstating his customers’ claims for refunds by falsely claiming education or fuel tax credits to which his customers were not entitled; or both.  According to the complaint, the Internal Revenue Service (IRS) audited 340 of the returns St. Phard prepared and found that St. Phard understated the tax owed on all but five of the 340 returns—a total of more than $1.8 million in understatements.  As a result of St. Phard’s fraudulent activities, many of his customers are now liable for significant tax deficiencies, penalties and interest, the complaint alleged.

In addition to barring St. Phard from preparing federal tax returns, the court ordered St. Phard to give the United States a list of his customers.  St. Phard consented to entry of the order by the U.S. District Court for the Southern District of Florida.  St. Phard admitted, for purposes of this case, that he had engaged in conduct subject to penalty under the federal tax laws, but he did not admit to civil or criminal wrongdoing or to the specific allegations in the complaint.

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.

WASHINGTON – El Departamento de Justicia y la República de El Salvador establecieron hoy una asociación formal para proteger a trabajadores de la discriminación por motivos de su ciudadanía, estatus migratorio o nacionalidad de origen. La Secretaria de Justicia Auxiliar Adjunta Principal, Vanita Gupta, Directora de la División de Derechos Civiles del Departamento de Justicia y la embajadora salvadoreña, Claudia Canjura De Centeno, firmaron un memorando de entendimiento (MOU, por sus siglas en inglés) entre la embajada y sus consulados y la Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas con la Inmigración (OSC, por sus singlas en inglés), que pertenece a la División.

Como parte del MOU, la OSC y el gobierno salvadoreño se comprometen a colaborar para educar a los trabajadores acerca de sus derechos y brindarles los recursos necesarios para proteger tales derechos. Asimismo, el MOU promueve la capacitación para empleadores en cuanto a sus obligaciones al amparo de la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés), que prohíbe la discriminación en el empleo por motivos de ciudadanía, estatus migratorio o nacionalidad de origen. En concreto, el MOU dispone que:

• La OSC capacitará al personal consular salvadoreño en lo que se refiere a la disposición de la INA, participará en eventos organizados por los consulados salvadoreños para educar a los trabajadores y empleadores y distribuirá materiales educativos a la embajada y sus consulados.

• La embajada establecerá un sistema para referir denuncias de discriminación recibidas en la embajada y sus consulados a la OSC.

“Damos la bienvenida a este socio nuevo que ayudará a la División de Derechos Civiles a combatir la discriminación ilícita en contra de empleados que trabajan en los Estados Unidos y sinceramente apreciamos la oportunidad de alcanzar esta meta tan importante,” declaró la Secretaria de Justicia Auxiliar Adjunta Principal, Vanita Gupta.  “Esperamos que la formalización de nuestra asociación con El Salvador mande un mensaje claro a los trabajadores de nuestras ganas de ayudarlos.”

El acuerdo de hoy resulta particularmente útil por el gran número de nacionales salvadoreños con el estatus de protección temporal (TPS, por sus siglas en inglés), los cuales son elegibles para vivir y trabajar en los Estados Unidos pero quienes a veces son discriminados por sus empleadores, ya sea por motivos de su estatus migratorio o por su nacionalidad de origen. El TPS es un estatus migratorio temporal que se extiende a nacionales elegibles de un país designado para el TPS al amparo de la INA. Durante el período de duración del TPS, los beneficiarios del TPS cuentan con autorización para trabajar en los Estados Unidos.

La OSC es responsable de aplicar la disposición antidiscriminatoria de la INA. Entre otras cosas, esta ley prohíbe la discriminación por motivos de estatus de ciudadanía o nacionalidad de origen en los procesos de contratación, despido o reclutamiento o recomendación por comisión; la discriminación en el proceso de verificación de la elegibilidad de empleo; las represalias y la intimidación. Además de sus esfuerzos por aplicar la ley, la OSC se dedica a educar al público en cuanto a los derechos y las responsabilidades al amparo de la disposición antidiscriminatoria de la INA. Si desea más información sobre la OSC, vaya a www.justice.gov/crt/about/osc.

Para más información sobre protecciones contra la discriminación en el empleo en virtud de las leyes migratorias, llame a la línea directa de la OSC para trabajadores al 1‑800‑255-7688 (1‑800-237-2515, TTY para personas con discapacidades auditivas); llame a la línea directa de la OSC para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con discapacidades auditivas); matricúlese para un seminario en línea gratuito en www.justice.gov/crt/about/osc/webinars.php; mande un correo electrónico a [email protected] o visite la página web de la OSC en www.justice.gov/crt/about/osc.  

*******MEDIA ADVISORY*******

Attorney General Loretta E. Lynch and Facebook will hold a Community Policing Town Hall on Facebook Live at Facebook’s Playa Vista Campus, today, THURSDAY, JUNE 30, 2016, at 11:30 a.m. PT/2:30 p.m. ET.  The town hall will be moderated by actor Michael B. Jordan, star of Creed and Fruitvale Station, with participation from actress Yara Shahidi, star of ABC’s Blackish.  The town hall discussion will be live-streamed on the official Facebook Live page and the Justice Department’s social media platforms. 

“One of my top priorities as Attorney General is strengthening relationships between law enforcement officers and the communities we serve and protect,” said Attorney General Lynch.  “We are here on this stop of the Community Policing Tour to show how social media can be used as a vital tool to provide both transparency and opportunity for meaningful interactions into law enforcement thought and policy.”  

This conversation style town hall marks the last official stop on the Attorney General’s 12-city Community Policing Tour and will highlight the social media and technology pillar of the President’s Task Force on 21st Century Policing final report.  The town hall audience will consist of local high school juniors, seniors, college students and LAPD “cadets” – young people who volunteer to work at the LAPD – and 15 officers from the Hollenbeck Police Activities League and LA Sheriff Department.

Attorney General Loretta E. Lynch will travel to Aspen, Colorado, on FRIDAY, JULY 1, 2016, to participate in a moderated arm chair conversation on 21st Century Policing, Civil Rights and Criminal Justice Reform with Jonathan Capehart of the Washington Post at the 2016 Aspen Ideas Festival. 

FACEBOOK TOWN HALL

WHO:             Attorney General Loretta E. Lynch

Michael B. Jordan

Yara Shahidi

WHEN:          THURSDAY, JUNE 30, 2016

11:30 a.m. PDT

WHERE:       Facebook Playa Vista Campus

12025 Waterfront Dr.

Los Angeles, CA 90094

POOLED PRESS: Network Pool KABC-ABC Affiliate 

LIVE STREAMED ON: https://www.facebook.com/DOJ.

NOTE:  Press inquiries regarding logistics should be directed to [email protected].     

Background on the Community Policing Tour:

Including Los Angeles, the Attorney General visited six jurisdictions around the country during this second phase of the tour that have excelled in each of the six pillars discussed in the President’s Task Force on 21st Century Policing final report: (1) Building Trust and Legitimacy; (2) Policy and Oversight; (3) Technology and Social Media; (4) Community Policing and Crime Reduction; (5) Officer Training and Education; and (6) Officer Safety and Wellness.  The trip to Los Angeles highlighted Pillar 3 – Technology and Social Media.  Attorney General Lynch launched the tour in February in Miami Dade County, Florida, and she visited Portland, Oregon, in March as well as Indianapolis, Indiana, in April.  The Attorney General visited Phoenix on Tuesday and is concluding the second phase of the tour with this last stop in Los Angeles.  

COMMUNITY POLICING TOUR

• Pillar 1 – Miami/Doral, Florida – Building Trust and Legitimacy
• Pillar 2 – Fayetteville, North Carolina – Policy and Overnight
• Pillar 3 – Los Angeles, California – Technology and Social Media
• Pillar 4 – Portland, Oregon – Community Policing and Crime Reduction
• Pillar 5 – Phoenix, Arizona – Training and Education
• Pillar 6 – Indianapolis, Indiana – Officer Safety and Wellness

More information on the #CommunityPolicing tour is available at the following page: http://www.justice.gov/ag/community-policing-tour.

The Attorney General’s national Community Policing Tour builds on President Obama’s commitment to engage with law enforcement and other members of the community to implement key recommendations from the President’s Task Force on 21st Century Policing final report.  The first phase of the tour launched on May 19, 2015, in Cincinnati, Ohio, and also included visits to Birmingham, Alabama; Pittsburgh, Pennsylvania; East Haven, Connecticut; Seattle, Washington; and Richmond, California.  

A federal grand jury yesterday returned a four count indictment in the Western District of New York charging two business owners with conspiracy to defraud the United States and filing a false tax return, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney William J. Hochul Jr for the Western District of New York.  

According to the indictment, Lizhong “Tony” Shen and Xiaojie “Lucy” Shun, jointly operated BTL International Company Ltd., a tour and travel service company located in Niagara Falls, New York, between April 2004 and November 2009.  The defendants were married at the time but, in 2009, they separated and Shen stopped working for BTL International.  In January 2011, Shun ceased operation of BTL International and began operating another tour and travel service company, Niagara Falls Universal Inc.

For the tax years 2008 and 2009, Shen and Shun failed to properly report income generated by BTL International to the IRS on both corporate and personal tax returns. Both defendants also signed their 2009 personal tax return knowing the return included incorrect information.  Shen and Shun reported income in the amount of $22,880 but it is alleged they knowingly received a significantly higher income.

In addition, Shun is charged with corruptly endeavoring to obstruct the due administration of the internal revenue laws. The indictment charges that, from April 2010 through April 2013, Shun provided inaccurate information to the accounting firm preparing the 2011 tax return for Niagara Falls Universal, the 2010 and 2011 personal tax returns for the couple and the 2012 tax return for herself.

The defendants face a maximum prison term of five years on the charge of conspiracy to defraud the United States and three years for each charge of filing a false return. Shun faces an additional three year term in prison for the charge of corruptly endeavoring to obstruct the due administration of the internal revenue laws. Both defendants also face a term of supervised release and monetary penalties.

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

Acting Assistant Attorney General Ciraolo and U.S. Attorney Hochul commended special agents of the IRS- Criminal Investigation Division, under the direction of Special Agent in Charge Shantelle P. Kitchen, who are investigating the case, and Assistant U.S. Attorney Trini E. Ross and Thomas F. Koelbl of the Tax Division, who are prosecuting the case.

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 today. 

Michael Stock and Jon Stovall Jr. each admitted that they agreed with other real estate investors to refrain from bidding against one another at public real estate foreclosure auctions in exchange for payoffs.  Stock admitted to participating in the conspiracy in Fulton and DeKalb counties from as early as August 2009 until at least November 2011, and Stovall admitted to participating in Fulton County from as early as October 2008 until at least January 2012.  Additionally, Stock and Stovall admitted to conspiring to use the mail to carry out a scheme to defraud homeowners and mortgage holders.

According to court documents filed today in the U.S. District Court for the Northern District of Georgia, the conspirators agreed not to compete against each other at public real estate foreclosure auctions, artificially suppressed the prices of properties sold at these auctions, and made and received payoffs from each other.  As a result, the conspirators seized money 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.

“These defendants conspired to take money that rightfully belonged to homeowners and lenders,” said Principal Deputy Assistant Attorney General Renata Hesse, head of the Justice Department’s Antitrust Division.  “Those homeowners and lenders have a right to expect that the properties will be sold in free and competitive auctions.  The Antitrust Division will continue to partner with our colleagues at the FBI to aggressively pursue conduct designed to disrupt that process.”

“Foreclosure auction fraud in Georgia remains a focus for the FBI investigators and federal prosecutors within the Antitrust Division of the U.S. Department of Justice.  By the very nature of this criminal act, the bank, and more importantly, the home owner in financial distress, are the victims that these federal laws were created to protect. The FBI will continue to provide investigative assets toward these matters in order to keep the level playing field that the law intended regarding these auctions.”

Including the individuals pleading today, 20 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.  Eighteen 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 its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  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.

A federal grand jury in the District of Montana returned an indictment on May 18, which was unsealed yesterday, charging a resident of Montana and Nevada with one count of corrupt interference with the internal revenue laws, 10 counts of theft of government money and six counts of aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Michael W. Cotter of the District of Montana.

According to the indictment, from approximately April 2010 through at least September 2014, Steven D. Pjevach, filed false and fraudulent income tax returns using names and social security numbers that he obtained by posting false help-wanted advertisements on Craigslist.  As part of his scheme, Pjevach opened and caused to be opened bank accounts in other individuals’ names to receive the fraudulently obtained tax refunds.  Pjevach provided false information to these individuals about the reason why he was using their bank accounts and advised one of these individuals to disregard bank correspondence that advised this individual that his bank account was being used to obtain tax refunds.  

If convicted, Pjevach faces a statutory maximum sentence of three years in prison on the charge of corrupt interference with the internal revenue laws, 10 years in prison for each count of theft of government money and a mandatory sentence of two years in prison for each count of aggravated identity theft, which will be in addition to any other term of imprisonment he receives.  He also faces supervised release, a fine and restitution. 

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

Acting Assistant Attorney General Ciraolo and U.S. Attorney Cotter commended special agents of Internal Revenue Service-Criminal Investigation, who investigated the case and Trial Attorney John T. Mulcahy of the Tax Division and Assistant U.S. Attorney Chad C. Spraker of the District of Montana, who are prosecuting the case.

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

In two related settlements, one with the United States and the State of California, and one with the U.S. Federal Trade Commission (FTC), German automaker Volkswagen AG and related entities have agreed to spend up to $14.7 billion to settle allegations of cheating emissions tests and deceiving customers. Volkswagen will offer consumers a buyback and lease termination for nearly 500,000 model year 2009-2015 2.0 liter diesel vehicles sold or leased in the U.S., and spend up to $10.03 billion to compensate consumers under the program. In addition, the companies will spend $4.7 billion to mitigate the pollution from these cars and invest in green vehicle technology.

The settlements partially resolve allegations by the Environmental Protection Agency (EPA), as well as the California Attorney General’s Office and the California Air Resources Board (CARB) under the Clean Air Act, California Health and Safety Code, and California’s Unfair Competition Laws, relating to the vehicles’ use of “defeat devices” to cheat emissions tests.  The settlements also resolve claims by the FTC that Volkswagen violated the FTC Act through the deceptive and unfair advertising and sale of its “clean diesel” vehicles. The settlements do not resolve pending claims for civil penalties or any claims concerning 3.0 liter diesel vehicles.  Nor do they address any potential criminal liability.

The affected vehicles include 2009 through 2015 Volkswagen TDI diesel models of Jettas, Passats, Golfs and Beetles as well as the TDI Audi A3.

“By duping the regulators, Volkswagen turned nearly half a million American drivers into unwitting accomplices in an unprecedented assault on our environment,” said Deputy Attorney General Sally Q. Yates.  “This partial settlement marks a significant first step towards holding Volkswagen accountable for what was a breach of its legal duties and a breach of the public’s trust.  And while this announcement is an important step forward, let me be clear, it is by no means the last.  We will continue to follow the facts wherever they go.”

“Today’s settlement restores clean air protections that Volkswagen so blatantly violated,” said EPA Administrator Gina McCarthy. “And it secures billions of dollars in investments to make our air and our auto industry even cleaner for generations of Americans to come. This agreement shows that EPA is committed to upholding standards to protect public health, enforce the law, and to find innovative ways to protect clean air.”

“Today’s announcement shows the high cost of violating our consumer protection and environmental laws,” said FTC Chairwoman Edith Ramirez. “Just as importantly, consumers who were cheated by Volkswagen’s deceptive advertising campaign will be able to get full and fair compensation, not only for the lost or diminished value of their car but also for the other harms that VW caused them.”

According to the civil complaint against Volkswagen filed by the Justice Department on behalf of EPA on January 4, 2016, Volkswagen allegedly equipped its 2.0 liter diesel vehicles with illegal software that detects when the car is being tested for compliance with EPA or California emissions standards and turns on full emissions controls only during that testing process. During normal driving conditions, the software renders certain emission control systems inoperative, greatly increasing emissions. This is known as a “defeat device.”  Use of the defeat device results in cars that meet emissions standards in the laboratory, but emit harmful NOx at levels up to 40 times EPA-compliant levels during normal on-road driving conditions.  The Clean Air Act requires manufacturers to certify to EPA that vehicles will meet federal emission standards.  Vehicles with defeat devices cannot be certified.

The FTC sued Volkswagen in March, charging that the company deceived consumers with the advertising campaign it used to promote its supposedly “clean diesel” VWs and Audis, which falsely claimed that the cars were low-emission, environmentally friendly, met emissions standards and would maintain a high resale value.

The settlements use the authorities of both the EPA and the FTC as part of a coordinated plan that gets the high-polluting VW diesels off the road, makes the environment whole, and compensates consumers.

The settlements require Volkswagen to offer owners of any affected vehicle the option to have the company buy back the car and to offer lessees a lease cancellation at no cost. Volkswagen may also propose an emissions modification plan to EPA and CARB, and if approved, may also offer owners and lessees the option of having their vehicles modified to substantially reduce emissions in lieu of a buyback.  Under the U.S./California settlement, Volkswagen must achieve an overall recall rate of at least 85% of affected 2.0 liter vehicles under these programs or pay additional sums into the mitigation trust fund.  The FTC order requires Volkswagen to compensate consumers who elect either of these options. 

Volkswagen must set aside and could spend up to $10.03 billion to pay consumers in connection with the buy back, lease termination, and emissions modification compensation program. The program has different potential options and provisions for affected Volkswagen diesel owners depending on their circumstances:

Buyback option: Volkswagen must offer to buy back any affected 2.0 liter vehicle at  their retail value as of September 2015 -- just prior to the public disclosure of the emissions issue. Consumers who choose the buyback option will receive between $12,500 and $44,000, depending on their car’s model, year, mileage, and trim of the car, as well as the region of the country where it was purchased. In addition, because a straight buyback will not fully compensate consumers who owe more than their car is worth due to rapid depreciation, the FTC order provides these consumers with an option to have their loans forgiven by Volkswagen.  Consumers who have third party loans have the option of having Volkswagen pay off those  loans, up to 130 percent of the amount a consumer would be entitled to under the buyback (e.g., if the consumer is entitled to a $20,000 buyback, VW would pay off his/her loans up to a cap of $26,000).

EPA-approved modification to vehicle emissions system: The settlements also allow Volkswagen to apply to EPA and CARB for approval of an emissions modification on the affected vehicles, and, if approved, to offer consumers the option of keeping their cars and having them modified to comply with emissions standards.  Under this option in accordance with the FTC order, consumers would also receive money from Volkswagen to redress the harm caused by VW’s deceptive advertising. 

Consumers who leased the affected cars will have the option of terminating their leases (with no termination fee) or having their vehicles modified if a modification becomes available.  In either case, under the FTC order, these consumers also will receive additional compensation from Volkswagen for the harm caused by VW’s deceptive advertising.  Consumers who sold their TDI vehicles after the VW defeat device issue became public may be eligible for partial compensation, which will be split between them and the consumers who purchased the cars from them as set forth in the FTC order.

Eligible consumers will receive notice from VW after the orders are entered by the court this fall. Consumers will be able to see if they are eligible for compensation and if so, what options are available to them, at VWCourtSettlement.com and AudiCourtSettlement.com. They will also be able to use these websites to make claims, sign up for appointments at their local Volkswagen or Audi dealers and receive updates.  Consumer payments will not be available until the settlements take effect if and when approved by the court, which may be as early as October 2016.

Emissions Reduction Program: The settlement of the company’s Clean Air Act violations also requires Volkswagen to pay $2.7 billion to fund projects across the country that will reduce emissions of NOx where the 2.0 liter vehicles were, are or will be operated. Volkswagen will place the funds into a mitigation trust over three years, which will be administered by an independent trustee.  Beneficiaries, which may include states, Puerto Rico, the District of Columbia, and Indian tribes, may obtain funds for designated NOx reduction projects upon application to the Trustee. Funding for the designated projects is expected to fully mitigate the NOx these 2.0 liter vehicles have and will emit in excess of EPA and California standards.

The emissions reduction program will help reduce NOx pollution that contributes to the formation of harmful smog and soot, exposure to which is linked to a number of respiratory- and cardiovascular-related health effects as well as premature death. Children, older adults, people who are active outdoors (including outdoor workers), and people with heart or lung disease are particularly at risk for health effects related to smog or soot exposure. NO2 formed by NOx emissions can aggravate respiratory diseases, particularly asthma, and may also contribute to asthma development in children.

Zero Emissions Technology Investments: The Clean Air Act settlement also requires VW to invest $2 billion toward improving infrastructure, access and education to support and advance zero emission vehicles. The investments will be made over 10 years, with $1.2 billion directed toward a national EPA-approved investment plan and $800 million directed toward a California-specific investment plan that will be approved by CARB.  As part of developing the national plan, Volkswagen will solicit and consider input from interested states, cities, Indian tribes and federal agencies. This investment is intended to address the adverse environmental impacts from consumers’ purchases of the 2.0 liter vehicles, which the governments contend were purchased under the mistaken belief that they were lower emitting vehicles.

FTC’s Injunctive Relief: The FTC settlement includes injunctive provisions to protect consumers from deceptive claims in the future.  These provisions prohibit Volkswagen from making any misrepresentations that would deceive consumers about the environmental benefits or value of its vehicles or services, and the order specifically bans VW from employing any device that could be used to cheat on emissions tests. 

The provisions of the U.S./California settlement are contained in a proposed consent decree filed today in the U.S. District Court for the Northern District of California, as part of the ongoing multi-district litigation, and will be subject to public comment period of 30 days, which will be announced in the Federal Register in the coming days.  The provisions of the FTC settlement are contained in a proposed Stipulated Final Federal Court Order filed today in the same court. 

To view the consent decree, visit: www.justice.gov/enrd/consent-decrees

To view the FTC proposed order, visit: https://www.ftc.gov/enforcement/cases-proceedings/162-3006/volkswagen-group-america-inc.

Consumer Fact Sheet

VW Partial 2L CD and Appendices

VW Notice of Lodging

Manager of North Carolina Tax Preparation Business Underreported Net Profits

A Fulshear, Texas, woman was sentenced to 40 months in prison today following her conviction on three counts of filing false federal tax returns and one count of corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Tamny Denise Westbrooks, 53, was convicted in November 2015 after a four-day jury trial in the U.S. District Court for the Southern District of Texas.  According to the evidence at trial and court documents, Westbrooks was the day-to-day manager of JATS Tax Service, a tax preparation business located in Charlotte, North Carolina.  Westbrooks, who worked for JATS as an independent contractor, underreported her net profits by inflating her business expenses for tax years 2007, 2008 and 2009.  She also obstructed and impeded the Internal Revenue Service (IRS) by filing false tax returns for herself and others and by paying workers in cash while failing to file the required W-2 or 1099 forms reporting their compensation. 

In addition to her term of imprisonment, Westbrooks was ordered to serve one year of supervised release and to pay restitution in the amount of $273,460 to the IRS.

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Sean Beaty and Mara Strier of the Justice Department’s Tax Division, who prosecuted the case.  Acting Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office of the Southern District of Texas for their substantial assistance.

The Justice Department reached an agreement today with Crookham Company to resolve the department’s allegations that the company discriminated against work-authorized non-U.S. citizens, in violation of the Immigration and Nationality Act (INA).  Crookham, which is based in Caldwell, Idaho, is a seed company that produces hybrid sweet corn, popcorn and onions.

The department’s investigation found that Crookham discriminated against non-U.S. citizens by requiring them to produce either a permanent resident card or employment authorization card to prove their work authorization, whereas U.S. citizens were permitted to choose whichever valid documentation they wanted to present to prove their work authorization.  Under the INA, all workers, including non-U.S. citizens, can choose whichever valid documentation they would like to present from the lists of acceptable documents to prove their work authorization.  It is unlawful for an employer to limit employees’ choice of documentation because of their citizenship or immigration status.

“We commend Crookham Company for its cooperation throughout the investigation and for its quick action to remove any unnecessary and unlawful barriers to employment for work-authorized non-citizens,” said Principal Deputy Assistant Attorney General Vanity Gupta, head of the Justice Department’s Civil Rights Division.  “The company’s approach and this settlement serve as a model for partnerships between the Justice Department and employers who want to do the right thing.”

Under the settlement agreement, Crookham will pay $200,000 in civil penalties to the United States and be subject to monitoring for a three-year period.  Prior to the settlement, Crookham proactively underwent department-provided training on the anti-discrimination provision of the INA and voluntarily implemented other measures to ensure future compliance.

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 statute prohibits, among other things, citizenship status and national origin discrimination in hiring, firing or recruitment or referral for a fee; document abuse; retaliation and intimidation.  The investigation was handled by Senior Equal Opportunity Specialist Alexandra A. Vince of OSC.

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.

Crookham Company Settlement Agreement

The Justice Department announced today that it has reached an agreement with the Kentucky Administrative Office of the Courts to resolve its review of the provision of language assistance service to limited English proficient (LEP) state court users.

The department began working with the Kentucky Administrative Office of the Courts after receiving a complaint alleging national origin discrimination under Title VI of the Civil Rights Act of 1964, following a state court judge’s failure to provide interpreter services to LEP parties.  Title VI requires recipients of federal financial assistance, such as courts, to provide competent language services to LEP individuals in all court proceedings and operations.

During the course of the department’s review, the Kentucky Administrative Office of the Courts has strengthened its language access programming.  Such efforts include creating and implementing a language services complaint system to be translated into a dozen non-English languages, training court staff on the importance of providing appropriate language services and developing systems to improve the efficiency and quality of interpreter services and translations.

As a condition of the agreement, the Kentucky Administrative Office of the Courts has agreed to a 12-month monitoring phase, during which it will provide quarterly updates to the department regarding any developments related to providing language services, as well as any new complaints alleging failure to provide appropriate language assistance services.

“I commend the Kentucky Administrative Office of the Courts for committing to ensure that all individuals, regardless of the language they speak, can fully and fairly access court services and proceedings,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division.  “We look forward to working collaboratively to continue these critical efforts and ensure equal access to justice for all.”

The case was handled by Attorney Dylan Nicole de Kervor of the Civil Rights Division’s Federal Coordination and Compliance (FCS) Section.

The complaint was resolved as part of the FCS court initiative to ensure that state courts comply with Title VI’s language access requirements.  No LEP individual should be denied justice because a court fails to provide language services.  The FCS courts team provides policy guidance and technical assistance to state court systems and undertakes enforcement actions across the country.

For further information about FCS and Title VI, please visit https://www.justice.gov/crt/fcs.  For additional LEP-related resources, please visit http://www.lep.gov/index.htm. 

Kentucky Courts