District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
International Competition Network Marks its 15th Annual Conference Promoting International Convergence and CooperationRead the Press Release
Showcases Work on Merger Remedies, Unilateral Conduct and Agency Assessment
At its annual meeting, the International Competition Network (ICN) approved new work on crafting remedies in merger review, agency assessment and performance measurement, cartel investigative powers, market studies, competition agency ethics programs, and advocacy to the business community, the Justice Department’s Antitrust Division announced today. The ICN also presented the outcome of a network-wide assessment to guide its operations, agenda and future work plans, known as its “Second Decade initiative.”
The ICN held its 15th annual conference, hosted by the Competition Commission of Singapore (CCS), on April 26-29, 2016. More than 500 delegates from more than 75 jurisdictions participated, including competition experts from international organizations and the legal, business, consumer and academic communities. Principal Deputy Assistant Attorney General Renata Hesse of the Department of Justice’s Antitrust Division and Federal Trade Commission Chairwoman Edith Ramirez led the U.S. delegation. The conference showcased the achievements of ICN working groups on unilateral conduct, agency effectiveness, mergers, cartels and competition advocacy.
Principal Deputy Assistant Attorney General Hesse moderated a panel on monopolization and the global economy. The panel was part of the Unilateral Conduct Working Group’s on-going project on the analytical framework for single firm conduct enforcement, exploring various perspectives to inform and articulate common principles of sound competition analysis. The Unilateral Conduct Working Group, co-chaired by the Justice Department, promotes convergence and sound enforcement of laws and policies applicable to conduct by firms with substantial market power.
“The ICN has become a crucial instrument for dialogue, cooperation, and convergence within the global antitrust community,” said Principal Deputy Assistant Attorney General Hesse. “The Annual Conference provides us all with an opportunity to reflect on the great progress that has been made in competition policy and enforcement around the world, as well as the challenges that lie ahead. This practical cooperation with many other jurisdictions helps to create a strong foundation for more effective enforcement in a globalized economy. We look forward to continuing our work with ICN and its members on these important issues in the coming year.”
Chairwoman Ramirez spoke on a panel about disruptive innovation and competition issues. She highlighted the FTC’s advocacy relating to emerging internet peer-to-peer platforms, as reflected in a 2015 FTC Workshop on the Sharing Economy. This panel was the culmination of a CCS-led special project devoted to government advocacy and disruptive innovation that also produced a comparative report based on input from 44 competition agencies. Chairwoman Ramirez also accepted an award for the FTC’s advocacy work involving the sharing economy as part of the Annual ICN/World Bank Advocacy Contest, which recognizes and promotes successful advocacy initiatives by ICN members.
“Since its founding 15 years ago, ICN has become the premier forum for promoting convergence and cooperation in competition enforcement,” said Chairwoman Ramirez. “In developing consensus-based, common-sense guidance on enforcement, the ICN helps its members be effective champions for competition and consumers.”
The Unilateral Conduct Working group provided an update of its work on the Analytic Framework for Assessing Unilateral Conduct. Over the past year, the group received position papers and held teleconferences on two topics: what is substantial market power and what conduct is exclusionary. The working group also announced the launch of a new project to analyze the effects of vertical restraints in online markets.
The Agency Effectiveness Working Group, co-chaired by the FTC from 2012 to 2016, addresses competition agency strategy, operations, and procedures. The working group developed reports on agency ethics and measuring agency performance, which were adopted at the conference. An agency’s commitment to its ethics rules and the evaluation of its actions are core components of agency governance. Evaluation, and the accountability it reinforces, can provide an informed foundation for future agency planning and enforcement choices and helps justify the resources an agency receives for its mission. The working group also presented new on-line training modules on setting up a new competition agency, setting priorities, conducting dawn raids in cartel investigations, applying economic analytical tools, and addressing state restraints – adding to the ICN’s Training on Demand online curriculum.
The ICN’s members also adopted the Merger Remedies Guide presented by the Merger Working Group. The guide details the overarching principles that form the basis of merger remedies and provides practical guidance on how these principles inform the design and implementation of merger remedies. The Justice Department and the FTC were active contributors to the development of the Guide. Following the conference, the FTC will co-chair the Merger Working Group.
The ICN’s Cartel Working Group presented two new work products designed to aid members’ cartel enforcement efforts: a catalogue of agency investigative powers and a framework for sharing non-confidential information. The framework aims to facilitate improved cooperation among member agencies. Working group discussions at the conference addressed effective detection and deterrence, enforcement cooperation, leniency, compliance and sanctions.
The Advocacy Working group presented an update of its Market Studies Good Practices Handbook and online Market Studies Information Store, a unique resource of over 600 competition agency market studies spanning 10 years and covering more than 30 jurisdictions. The working group also expanded its web-based toolbox on competition advocacy, providing examples of agency messages to business on the benefits of competition.
The results of the ICN’s Second Decade initiative reinforced the network’s commitments to inclusive engagement with its members and non-governmental advisors, experience sharing and the exchange of best practices among members, promotion of convergence and cooperation around sound enforcement approaches, and international advocacy for competition principles to the benefit of member agencies, consumers, and economies worldwide.
The ICN was created in October 2001, when the FTC and the Justice Department joined antitrust agencies from 13 other jurisdictions to increase understanding of competition policy and promote convergence toward best practices around the world. The ICN now comprises 132 member agencies from 120 jurisdictions.
More resources are available on the ICN website.
FACT SHEET: During National Reentry Week, Reducing Barriers to Reentry and Employment for Formerly Incarcerated IndividualsRead the Press Release
President Obama Establishes Federal Interagency Reentry Council
An estimated 70 million or more Americans have some kind of criminal record. Each year, more than 600,000 individuals are released from Federal and State prisons, and millions more are released each year from local jails. Promoting the rehabilitation and reintegration of individuals who have paid their debt to society makes communities safer by reducing recidivism and victimization; assists those who return from prison, jail, or juvenile justice facilities to become productive citizens; and saves taxpayer dollars by lowering the direct and collateral costs of incarceration.
Providing incarcerated individuals with job and life skills, education programming, and mental health and addiction treatment increases the likelihood that they will be successful when released. Policies that limit opportunities for people with criminal records create barriers to employment, education, housing, health care, and civic participation. All of these are critical to reducing recidivism and strengthening communities.
As part of National Reentry Week, the Administration has taken a series of steps to reform the federal approach to reentry by addressing barriers to reentry, supporting state and local efforts to do the same, and engaging the private sector to provide individuals who have earned a second chance the opportunity to participate in the American economy.
Today, the President will sign a Presidential Memorandum establishing the Federal Interagency Reentry Council to lead the Government’s work on the rehabilitation and reintegration of individuals returning to their communities from prisons and jails. The Attorney General has successfully led a Cabinet-level working group for the last five years, and this Memorandum will build on that success and ensure that the Federal Government will continue this important work.
The Administration is taking important steps to reduce barriers to employment for formerly incarcerated individuals:
- The Office of Personnel Management (OPM) is publishing a proposed rule that would prohibit federal agencies from asking questions about criminal and credit history to applicants for tens of thousands of jobs in the competitive service, as well as the career senior executive service, until a conditional offer of employment has been made. People with criminal records are already eligible to compete for the vast majority of federal jobs; the proposed rule builds on current practice at many agencies by ensuring that hiring managers are making selection decisions based solely on applicants' qualifications.
Early inquiries into an applicant's criminal history may discourage motivated, well-qualified individuals who have served their time from applying for a federal job. Early inquiries could also lead to the disqualification of otherwise eligible candidates, regardless of whether an arrest actually resulted in charges or a conviction, and regardless of whether consideration of an applicant's criminal history is justified by business necessity. These barriers to employment unnecessarily narrow the pool of eligible and qualified candidates for federal employment, while also limiting opportunities for those with criminal histories to obtain the means to support themselves and their families.
The rule would also allow agencies to request exceptions where there are legitimate job-related reasons why they might need to obtain a candidate's background information sooner in the hiring process. Unless an exception is granted, only after a conditional job offer is made will candidates be asked questions about criminal and credit history that may bear on their suitability for federal employment.
- The Presidential Memorandum directs all agencies and departments to review their procedures for conducting a suitability determination for a job applicant with a criminal record. These suitability determinations evaluate each individual’s character and conduct and consider such factors as the relevance of any past criminal conduct to the job; the nature, seriousness, recency, and circumstances of any criminal conduct; the age of the individual at the time of the conduct; contributing societal conditions; and whether any efforts have been made toward rehabilitation.
- The Presidential Memorandum directs all agencies with discretion to grant or deny occupational licenses to revise their procedures, consistent with the need to protect public safety, to ensure that a criminal record is not an automatic disqualifier and that the determination to grant or deny a licenses is made after consideration of all relevant facts and circumstances.
Engaging the Private Sector and Honoring Champions of Change
The President continues to call on members of the private sector to improve their communities by creating a pathway to a job for a formerly incarcerated individual. On April 11th, the White House hosted 19 companies to launch the Fair Chance Business Pledge, including American Airlines, Busboys and Poets, The Coca-Cola Company, Facebook, Georgia Pacific, Google, Greyston Bakery, The Hershey Company, The Johns Hopkins Hospital and Health System, Koch Industries, Libra Group, PepsiCo, Prudential, Starbucks, Uber, Under Amour/Plank Industries, Unilever and Xerox.
In the two weeks since these initial companies took the pledge, an additional 93 companies and organizations have joined the pledge, including Microsoft, Best Buy, Lyft, Kellogg Company, Staples, TrueBlue, the Oklahoma City Thunder, Catholic Charities USA, NAACP, Manufacturing Alliance of Philadelphia, American Civil Liberties Union, the American Sustainable Business Council and dozens of small and medium-sized companies from across the country.
Together, these 112 companies and organizations employ well over 1.5 million people. By joining the pledge, they are committing to take action to reduce barriers to a second chance, such as “banning the box,” ensuring information regarding a criminal record is considered in the proper context, and engaging in hiring practices that do not unnecessarily place jobs out of reach for those with criminal records. Companies and organizations interested in joining the pledge can continue to do so by visiting www.whitehouse.gov/fairchancepledge.
This past Wednesday, the White House honored 10 individuals as “White House Champions of Change for Expanding Fair Chance Opportunities.” These individuals were recognized for their leadership and tireless work to remove barriers to a second chance for those with a criminal records.
Additional Federal Agency Actions To Reduce Barriers During National Reentry Week
As part of National Reentry Week, the Federal Interagency Reentry Council agencies have announced additional steps to improve the rehabilitation and reintegration of formerly incarcerated individuals:
- The Council of Economic Advisors released a report, “Economic Perspectives on Incarceration and the Criminal Justice System,” and hosted an event with the Brennan Center for Justice and the American Enterprise Institute focused on the economic impact of the criminal justice system and identified cost-effective ways to reduce crime and incarceration rates.
- The Department of Justice (DOJ) announced its “Roadmap to Reentry,” outlining five evidence-based principles of reform to be implemented by the Bureau of Prisons to ensure DOJ’s commitment to reentry is incorporated throughout incarceration – from intake to release.
- Attorney General Lynch sent a letter to governors asking them to allow individuals reentering the community to exchange their corrections identification card for a state identification cards or to accept a corrections identification card as a form of identification. The lack of state-issued identification is another common barrier in getting a job, housing, or opening a bank account.
- The U.S. Attorneys’ Offices and Bureau of Prisons are hosting hundreds of events in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, including job fairs and resource fairs, mock interview sessions, resume workshops, family engagement events.
- The Department of Housing and Urban Development (HUD) released guidance on the application of Fair Housing Act standards to the use of criminal records by providers of housing and guidance for public housing authorities on excluding the use of arrest records in housing decisions.
- HUD and DOJ announced recipients of $1.75 million in grants for Public Housing Authorities and nonprofit legal service organizations to assist young people residing in public housing or who would be residing in public housing but for their criminal record.
· The Department of Health and Human Services released guidance clarifying that individuals in state or local halfway houses and those on probation or parole are not excluded from Medicaid and describing how states can better facilitate access to Medicaid services for individuals reentering the community.
- The Department of Veterans Affairs (VA) is participating in 120 events at Bureau of Prison facilities and VA medical centers to serve justice-involved Veterans. VA’s Veterans Justice Outreach initiative is active in over 350 Veterans Treatment Courts and other Veteran-focused court programs and 1,284 local jails.
District Court Enters Permanent Injunction Against Former Owner and Operator of Compounding Pharmacies to Enjoin Distribution of Certain Sterile Drugs ProductsRead the Press Release
The U.S. District Court for the Middle District of Florida entered a permanent injunction against Paul W. Franck, who has owned and operated numerous compounding pharmacies, to enjoin the distribution of certain sterile drugs products, the Department of Justice announced today.
“The American people must be protected from compounded sterile drugs that pose a risk to the public health,” 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 deter compounding pharmacies that distribute adulterated or misbranded drugs and put patients at risk of significant harm.”
The department filed a complaint in the District Court at the request of the Food and Drug Administration (FDA), alleging that Franck violated the federal Food, Drug and Cosmetic Act (FDCA) by causing drugs to become adulterated and misbranded while such drugs were held for sale after shipment of one or more of their components in interstate commerce.
As alleged in the complaint, Franck has owned and operated numerous compounding pharmacies in the state of Florida over the past 20 years and he was responsible for providing final approval for all decisions concerning manufacturing and quality operations. The complaint alleged that the defendant and/or his employees manufactured, processed, packed, labeled, held and/or distributed drugs, including sterile drugs such as antibiotics, antivirals, cardiovascular drugs, drugs for pain management and total parental nutrition.
In conjunction with the filing of the complaint, Franck agreed to settle the case. The permanent injunction entered by the court requires that Franck cannot manufacture, hold or distribute any sterile drugs at or from his facility unless and until his facility, equipment, processes and procedures used to manufacture, hold, or distribute drugs are established, maintained, operated and administered in conformity with the permanent injunction and all applicable laws and regulations and are adequate to prevent such drugs from becoming adulterated or misbranded as defined in the order. Franck must also, among other things, establish and maintain a system to report to FDA all adverse drug experiences associated with his drugs.
The complaint alleged that a FDA inspection of Franck’s Lab Inc., doing business as Trinity Care Solutions in May 2014, found conditions establishing that the drugs manufactured and distributed by the defendant were adulterated. For example, FDA observed dead spiders, beetles, ants, wasps and cockroaches in the ceiling panel directly above the sterile manufacturing area, the area where non-sterile gowns were stored and donned, and the sink where employees prepared for sterile processing. In addition, as alleged in the complaint, FDA found other insanitary conditions, such as lack of sufficient physical barriers to prevent the introduction of contamination from nearby construction; lack of positive air pressure in the clean room relative to surrounding rooms which compromises the cleanliness of the clean room’s air; and materials around the laminar flow hood’s vent that were not cleanable and were potential sources of viable and non-viable particles. The complaint alleged that the defendant violated the FDCA by causing articles of drug to become adulterated, in that they are prepared, packed, or held under insanitary conditions whereby they may have been rendered injurious to health, while such drugs were held for sale after shipment of one or more of their components in interstate commerce.
The complaint also alleged that FDA inspected the defendant’s pharmacy, Franck’s Lab Inc. dba Franck’s Compounding Pharmacy, between March and May 2012. As alleged in the complaint, FDA initiated this inspection following reports of eye infections in patients who had been administered an injectable sterile eye solution, Brilliant Blue G (BBG) and/or injectable drug products containing triamcinolone (triamcinolone drugs) that had been compounded by Franck’s Lab. As alleged in the complaint, FDA laboratory analysis of samples of the defendant’s compounded BBG collected during this inspection revealed that the drug was contaminated with a fungus as well as other microorganisms, and these fungus-type organisms matched the clinical isolates from patients who developed eye infections after administration of this drug.
The complaint alleged, among other things, that the defendant violated the FDCA by causing drugs to become adulterated in that they consisted in whole or in part of a filthy, putrid, or decomposed substance, while such drugs were held for sale after shipment of one or more of their components in interstate commerce and that because the defendant’s purportedly sterile drugs contained microbiological contamination, the defendant’s labeling for such drugs was false or misleading. According to the complaint, as of March 2013, the U.S. Center for Disease Control had identified 47 cases of eye infections among 45 patients in nine states linked to exposure to the defendant’s BBG and/or triamcinolone drugs.
In addition, as noted in the complaint, the defendant has conducted a number of recalls of drugs over the years manufactured and distributed from his pharmacies.
As part of the proposed consent decree submitted to the court, the defendant represented that as of the date of the entry of the decree, he is not engaged in the manufacture, holding, or distribution of any drugs, nor he is causing the manufacture, holding, or distribution of drugs. The permanent injunction provides that if the defendant intends to resume manufacturing, holding or distributing any drugs at or from his facility, he shall notify FDA in advance of doing so.
The permanent injunction includes limited, precise exceptions for drugs for animal use or any drug for which the defendant is the sponsor of a new drug application approved by FDA.
“Mr. Franck risked the health of the American public by compounding drugs under unacceptable conditions,” said Director Janet Woodcock of the FDA’s Center for Drug Evaluation and Research. “Today’s action reflects the FDA’s continued efforts to take appropriate and aggressive enforcement action against those who put patients’ health at risk by choosing not to follow the law.”
The government is represented by Trial Attorney Roger Gural of the Civil Division’s Consumer Protection Branch, with the assistance of Senior Counsel Michele Svonkin of the Department of Health and Human Services’ Office of General Counsel – Food and Drug Division.
Byram Healthcare and Hollister, Inc. to Pay $20.9 Million to Resolve Kickback AllegationsRead the Press Release
The Department of Justice announced today that Hollister Inc. (Hollister), a manufacturer of disposable health care products, and Byram Healthcare Centers Inc. (Byram), a supplier of medical products, have agreed to pay $11.44 million and $9,372,882.50, respectively, to resolve allegations that Hollister paid unlawful kickbacks to Byram and that Byram received unlawful kickbacks from Hollister and several other manufacturers, with the intent to induce Byram to conduct promotional campaigns designed to refer patients to the manufacturers’ products. The settlement with Byram also calls for the company to pay $127,117.50 to the state of California to resolve allegations that Byram submitted falsely inflated claims to that state’s Medicaid program, Medi-Cal, in violation of California regulations.
“This settlement demonstrates the Justice Department’s continuing determination to prevent manufacturers and suppliers of medical devices covered by federal health care programs from paying or receiving kickbacks,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “We will not permit such illegal payments to taint the decision-making of those who serve the beneficiaries of these important programs.”
“We are committed to rooting out commercial bribery, especially in the healthcare industry where the payment of kickbacks erodes patients’ trust in the quality of their medical care,” said U.S. Attorney Carmen M. Ortiz for the District of Massachusetts. “These unlawful cash incentives also threaten the integrity of the health care system and siphon taxpayer dollars from our nation’s health care programs.”
“The FBI will aggressively investigate companies that engage in kickback schemes at the expense of both patients and taxpayers,” said Special Agent in Charge Harold H. Shaw of the FBI’s Boston Field Division. “Those who seek to exploit the nation’s health care system through bribes or other fraudulent conduct will be held accountable for their actions.”
The settlement with Hollister resolves allegations that, from 2007 through 2014, it paid kickbacks to Byram in return for marketing promotions, conversion campaigns and other referrals of patients to Hollister’s ostomy and continence care products. On seven occasions from 2007 through 2012, Hollister allegedly agreed to pay Byram the costs of bonus commissions (sometimes called spiffs) that Byram paid to its sales personnel for each new patient order for a Hollister product. In addition, each year from 2009 to 2014, Hollister allegedly agreed to pay Byram $200,000, for “catalog funding” that was actually intended to induce Byram’s recommendation of Hollister products to patients.
The settlement with Byram resolves the same catalog funding claims, as well as allegations that, in 2012 and 2013, Byram received numerous kickbacks from Hollister and three other manufacturers of ostomy and continence care products, namely Coloplast Corp., Montreal Ostomy and Safe N’ Simple, in return for Byram’s agreement to conduct promotional campaigns and to refer patients to the manufacturers’ products. The settlement with Byram also resolves allegations by the United States and the state of California that Byram submitted falsely inflated claims to the California Medi-Cal program in violation of California’s upper billing limit regulation, Cal. Code Regs., tit. 22, § 51008.1, which limits the amount a provider can bill for certain products. The United States and the state of California allege that, when Byram billed Medi-Cal for Coloplast urology products that Byram sold to Medi-Cal beneficiaries, Byram knowingly failed to account for substantial discounts that Byram knew, at the time it billed the Medi-Cal program, materially reduced the prices it paid for the products.
In connection with the False Claims Act settlement, Byram has also entered into a corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).
“Health care product manufacturers that financially reward suppliers in exchange for the referral of business can improperly direct patients to certain products over others,” said Special Agent in Charge Phillip M. Coyne of HHS-OIG. “We will continue to investigate such wasteful business arrangements.”
The settlements resolve allegations in a whistleblower lawsuit filed by two former employees and one current employee of Coloplast 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 whistleblowers’ share of the Hollister and Byram settlements has not been determined. Claims against two other defendants in the lawsuit, Coloplast Corp. and Liberator Medical Supply Inc., were resolved in December 2015 for a total of $3.66 million. The settlements announced today bring the total recovery in the case to $24.6 million. The whistleblowers are pursuing certain additional claims in the case.
The investigation was conducted by the FBI and HHS-OIG. The case was handled by the U.S. Attorney’s Office for the District of Massachusetts with assistance from the Civil Division’s Commercial Litigation Branch.
The case is captioned United States ex rel. Herman, et al. v. Coloplast Corp., et al. Case No. 11-cv-12131-RWZ (D. Mass.). The claims resolved by the settlements are allegations only, and there has been no determination of liability.
Twenty-Five Miami-Area Defendants Charged with Submitting $26 Million in False Claims to the Medicare Part D ProgramRead the Press Release
Charges were filed today against 25 Miami-area defendants in three separate cases for their alleged participation in various schemes to defraud Medicare of approximately $26 million in false claims through the Medicare Part D program.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Assistant Special Agent in Charge William J. Maddalena of the FBI’s Miami Division and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services-Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.
“These cases build on our recent efforts to focus on Medicare prescription drug benefit fraud, targeting those who take advantage of the fastest-growing component of the Medicare program,” said Assistant Attorney General Caldwell. “Working with our partners in the Medicare Fraud Strike Force, the Criminal Division uses cutting-edge data analysis techniques to identify emerging fraud schemes and to stay ahead of the criminal curve.”
“Those who commit Medicare fraud through the filing of false claims, payment or receipt of kickbacks, or fraudulent medical practices jeopardize the integrity of the government benefit programs that countless citizens rely on for their well-being,” said U.S. Attorney Ferrer. “The U.S. Attorney’s Office and our law enforcement allies will continue to pro-actively identify for prosecution the individuals who pay kick-backs for the unauthorized use of Medicare benefits for their own illicit financial gain.”
“The actions of the FBI and our partners in the Medicare Fraud Strike Force have disrupted several health care fraud operations today,” said Assistant Special Agent in Charge Maddalena. “Unfortunately, South Florida remains ground zero for these types of scams. As such, we will continue to pursue those individuals who pay kickbacks and fraudulently bill for medical services that are not necessary or ever provided.”
“A dangerous trend is fraudulent pharmacy billing for drugs,” said Special Agent in Charge Richmond. “But exploitation of the Medicare prescription drug benefit will not be tolerated and suspects will face aggressive investigation and prosecution.”
United States v. Antonio Hevia et al. charges 18 defendants for their participation in a scheme to defraud the Medicare Part D program through false claims from eight separate Miami-Dade County area pharmacies. The defendants each face various charges from among the following offenses included in the indictment: conspiracy to commit health care fraud and wire fraud; substantive counts of health care fraud; and conspiracy to defraud the United States and pay and receive health care kickbacks. The indictment alleges that the fraud scheme was orchestrated by Pedro Torres, 43, of North Bay Village, Florida, and Antonio Hevia, 53, of Miami, who recruited individuals to be the owners of pharmacies in Miami-Dade County, which were then used to submit false and fraudulent claims to the Medicare Part D program. Hevia and Torres allegedly controlled pharmacies that were used to facilitate the fraudulent scheme, including: Sun View Pharmacy, K.A.R. Pharmacy, Lola Pharmacy, Latin Quarters Drug Store, Lily and Rosy Pharmacy, Norton Pharmacy, Health Star Pharmacy and Supply, Ultra Medical Services and OMG Pharmacy Discount. Torres and Hevia allegedly instructed the staff at the respective pharmacies to submit false and fraudulent claims for millions of dollars for prescription drugs that were not medically necessary and not provided to the Medicare Part D beneficiaries. Medicare beneficiaries were frequently referred to the pharmacies by patient recruiters, who received kickbacks for referring patients. The 18 co-conspirators are charged as owners and/or patient recruiters in the fraudulent scheme. As a result of the filing of false and fraudulent claims, Medicare made approximately $16.7 million in payments.
Assistant U.S. Attorney James Hayes of the Southern District of Florida is prosecuting this case.
United States v. Kenia Gonzalez et al. charges Julio Espinosa Moret, 40; Kenia Gonzalez Fernandez, 41; Frank Dunier Perez, 39; and Luzbella Nunez de la Torre, 47, all of Miami, with conspiracy to defraud the United States and pay and receive kickbacks and for receiving kickbacks. The indictment alleges that the defendants solicited and received kickbacks and bribes to recruit Medicare beneficiaries and induce the Medicare beneficiaries to obtain prescriptions for pharmaceutical drugs to be used in conjunction with the submission of claims to the Medicare Part D Program through OMG Pharmacy.
Trial Attorney Vasanth Sridharan of the Criminal Division’s Fraud Section is prosecuting this case.
United States v. Ronald Diaz, et al. charges Ronald Diaz, 28, Mercedes Maya, 30, and Gladys Cabrera, 28, all of Miami, with various charges, including conspiracy to commit health care fraud, health care fraud and money laundering. The indictment alleges that Diaz is the named owner of Total Pharmacy, New Life Community Pharmacy, La Botica Pharmacy, La Botica Pharmacy No 02, Solutions Drug Store, M & P Pharmacy, La Roca Pharmacy and Richard’s Pharmacy Discount, pharmacies located in Miami-Dade County, that purportedly provided prescription drugs to Medicare beneficiaries. Diaz, Maya and Cabrera allegedly submitted and caused the submission of claims via interstate wires that falsely and fraudulently represented that various health care benefits, primarily prescription drugs, were medically necessary, prescribed by a doctor and had been provided by these pharmacies to Medicare beneficiaries. As a result of these claims, Medicare prescription drug plan sponsors, through their pharmacy benefit managers, made approximately $10,428,019 in payments that were funded by the Medicare Part D program to the pharmacies.
Assistant U.S. Attorney Christopher Clark of the Southern District of Florida is prosecuting this case.
The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 by the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since its inception in March 2007, the Medicare Fraud Strike Force has charged over 2,300 defendants who have collectively billed the Medicare program for more than $7 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
In the Southern District of Florida, nearly 900 individuals have been charged for their involvement in more than $2.5 billion in fraudulent Medicare billings.
Part D prescription medicine coverage is the fastest-growing area of the Medicare program. Last year alone, more than $120 billion was spent on the Medicare Part D program, up from $78 billion in 2010. Based on U.S. Government Accountability Office estimates, as much as $10 billion of last year’s $120 billion in Medicare Part D spending may be fraudulent. The Department of Justice, along with its law enforcement partners, is committed to aggressively targeting Part D fraud.
The Medicare Fraud Strike Force investigated the various cases with assistance from the FBI and HHS-OIG.
An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
Hevia et al Indictment
Fernandez et al Indictment
Diaz et al Indictment
Justice Department Requires Divestitures in Keycorp’s Acquisition of First Niagara Financial Group Inc.Read the Press Release
Eighteen Branches in Greater Buffalo, New York, to Be Divested
The Department of Justice announced today that KeyCorp and First Niagara Financial Group Inc. have agreed to sell 18 of First Niagara’s branches in and around Buffalo, New York, with approximately $1.7 billion in deposits, to resolve antitrust concerns that arose from KeyCorp’s planned acquisition of First Niagara. The department said that the divestitures will ensure that the transaction does not harm competition for retail banking services in the Greater Buffalo area. As a result of the acquisition, KeyCorp will become the 13th largest bank in the nation, with about $135 billion in assets, $99.8 billion in deposits and more than 1000 branches across 15 states.
Under their agreement with the department, the companies have agreed to divest 13 branches in Erie County and 5 branches in Niagara County, New York. The divested assets will include the commercial 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 small business and middle market relationship managers and their retail regional and branch managers, in the state of New York, 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 the state of New York to other depository institutions.
“Americans value the convenience of retail bank branches,” said Principal Deputy Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division. “Today’s agreement will ensure that customers in Buffalo and other New York markets will continue to enjoy the benefits of competition among banks with retail branch networks.”
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.
KeyCorp is a financial holding company headquartered in Cleveland with approximately $95 billion in total assets. KeyCorp, through its subsidiary KeyBank N.A., operates 972 branches in 12 states: Ohio, New York, Washington, Oregon, Indiana, Colorado, Utah, Maine, Florida, Michigan, Alaska and Vermont. With two major business segments, Key Community Bank and Key Corporate Bank, KeyBank serves individuals, small and mid-sized businesses and corporate clients.
First Niagara Financial Group Inc. is a financial holding company headquartered in Buffalo with approximately $39 billion in total assets. Providing retail and commercial banking services, First Niagara, through its subsidiary First Niagara Bank N.A., operates 394 branches in New York, Pennsylvania, Connecticut and Massachusetts. First Niagara focuses on traditional banking products that include loans, deposits and insurance.
A list of the branches to be divested is attached.
Attachment A
Justice Department Releases National Guide for Sexual Abuse Medical Forensic Examinations of ChildrenRead the Press Release
The Department of Justice’s Office on Violence Against Women (OVW) today released the National Protocol for Sexual Abuse Medical Forensic Examinations – Pediatric (Pediatric SAFE Protocol). The Pediatric SAFE Protocol is a guide for health care providers who conduct sexual abuse medical forensic examinations of prepubescent children, and other professionals and agencies/facilities involved in coordinating with health care providers to facilitate medical forensic care in cases of sexual abuse of juveniles.
The Pediatric SAFE Protocol recommendations are organized into two broad sections. The first section focuses on guiding communities in laying a foundation of approaches and practices that support successful response during the exam process to disclosures or suspicions of sexual abuse in prepubescent children. The second section focuses on the various components of the sexual abuse medical forensic exam process.
According to the Pediatric SAFE Protocol, the primary goals of a pediatric sexual abuse medical forensic examination are threefold: address the health care needs of prepubescent children who disclose sexual abuse or for whom sexual abuse is suspected; promote their healing; and gather forensic evidence for potential use within the criminal justice and/or child protection systems.
The protocol builds upon existing state, federal, tribal and national and international resources, as well as research related to community response to child sexual abuse and pediatric sexual abuse medical forensic examinations, and is intended to supplement, not supplant, existing protocols.
The Pediatric SAFE Protocol was created to supplement the National Protocol for Sexual Assault Medical Forensic Examinations, Adults/Adolescents (SAFE Protocol). First released in 2004, it is a voluntary best practices guide for criminal justice and health care professionals responding to adult and adolescent sexual assault victims. In 2013, the Attorney General released a second edition of the SAFE Protocol that reflected the latest scientific advancements as well as the changes in practice since 2004. In August, 2013, OVW issued a companion document to the SAFE Protocol, which was focused on assisting correctional facilities to implement the SAFE Protocol. Following the release of the second edition, OVW partnered with the International Association of Forensic Nurses to develop the Pediatric SAFE Protocol to address the unique challenges of sexual abuse medical forensic examinations of prepubescent children.
OVW, headed by Principal Deputy Director Bea Hanson, provides leadership in developing the nation’s capacity to reduce violence against women through the implementation of the Violence Against Women Act (VAWA) and subsequent legislation. Created in 1995, OVW administers financial and technical assistance to communities across the country that are developing programs, policies and practices aimed at ending domestic violence, dating violence, sexual assault and stalking. More information is available at www.justice.gov/ovw. Assistant Attorney General Karol V. Mason for the Office of Justice Programs and Principal Deputy Director Hanson also authored a blog post today on the importance of the Pediatric SAFE Protocol.
Alabama and Georgia Residents Sentenced to Prison for Involvement in Stolen Identity Tax Refund Fraud SchemeRead the Press Release
Two men who conspired to file more than 1,200 false tax returns using stolen identities were sentenced to prison today, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.
Ernest James Simmons Jr., 29, of Phenix City, Alabama, was sentenced to 24 months and 15 days in prison followed by five months of home detention and Calvin J. Perry, 28, of Atlanta, Georgia, was sentenced to 32 months in prison. Simons and Perry each pleaded guilty in December 2015 to one count of conspiracy to defraud the government with respect to filing false income tax refund claims and one count of aggravated identity theft.
According to court documents and evidence presented at the sentencing hearing, between 2010 and 2012, Simmons and Perry conspired with Perry’s mother, Pamela Ann Smith, to run a large-scale stolen identity refund fraud scheme from Smith’s tax return preparation business, Jaycal Tax Service, in Phenix City. Smith recruited her son Perry, and Perry’s friend, Simmons, to participate in the scheme. As part of the conspiracy, Smith, Perry and Simmons opened multiple bank accounts and post office boxes. They filed more than 1,200 federal income tax returns using the stolen personal identification information of actual individuals, which included their names and social security numbers. Simmons was directly connected to false returns claiming more than $700,000 in fraudulent refunds and Perry was directly connected to false returns claiming over $1 million in fraudulent refunds. U.S. Treasury checks were mailed to physical addresses and post office boxes and then deposited into multiple bank accounts, all under the control of Simmons, Perry and Smith. Perry personally obtained more than $300,000 and Simmons personally obtained more than $150,000, from the scheme.
In addition to the prison term, U.S. District Judge Myron H. Thompson ordered Perry and Simmons each to serve three years of supervised release. Perry was also ordered to pay restitution in the amount of $308,152 and Simmons was ordered to pay restitution in the amount of $167,194. In February, Smith was sentenced to serve 51 months in prison after pleading guilty for her role in the scheme.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck commended special agents of Internal Revenue Service–Criminal Investigation, who investigated the case and Trial Attorneys Gregory P. Bailey, Michael C. Boteler and Robert J. Boudreau of the Tax Division and Assistant U.S. Attorney Jonathan Ross of the Middle District of Alabama, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Wyeth and Pfizer Agree to Pay $784.6 Million to Resolve Lawsuit Alleging That Wyeth Underpaid Drug Rebates to MedicaidRead the Press Release
The Department of Justice announced today that pharmaceutical companies Wyeth and Pfizer Inc. have agreed to pay $784.6 million to resolve allegations that Wyeth knowingly reported to the government false and fraudulent prices on two of its proton pump inhibitor (PPI) drugs, Protonix Oral and Protonix IV. Pfizer, which is headquartered in New York City, acquired New Jersey-based Wyeth in 2009, approximately three years after Wyeth had ended the conduct that gave rise to the settlement.
“This settlement demonstrates our unwavering commitment to hold pharmaceutical companies responsible for pursuing pricing schemes that attempt to manipulate and overcharge federal health care programs – programs that protect the poor and disabled – for drugs sold to commercial customers at much lower prices,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.
“This significant settlement illustrates that the government will not permit drug companies to dodge their obligations to the Medicaid program or create elaborate pricing schemes to deceive Medicaid into paying more than it should for drugs,” said U.S. Attorney Carmen Ortiz for the District of Massachusetts. “This settlement, after years of hard-fought litigation, shows our commitment to ensuring that healthcare businesses do not take advantage of the federal health insurance programs which serve those who need assistance most.”
PPI drugs are used to treat symptoms of, among other things, acid reflux. In a complaint filed in 2009, the government alleged that Wyeth failed to report deep discounts on Protonix Oral and Protonix IV that it made available to thousands of hospitals nationwide. As part of the settlement, Wyeth and Pfizer do not deny the government’s allegations.
According to the government’s complaint, Wyeth sold Protonix Oral and Protonix IV through a bundled sales arrangement in which a hospital could earn deep discounts on both drugs if it placed them on formulary and made them “available” within the hospital. Through this bundled arrangement, Wyeth sought to induce hospitals to buy and use Protonix Oral, which hospitals otherwise would have had little incentive to use, because other pre-existing oral PPI drugs were priced competitively and were considered to be as safe and effective. Wyeth wanted to control the hospital market because patients discharged from the hospital on Protonix Oral were likely to stay on the drug for long periods of time, rather than switch to competing PPIs, during which time payers, including Medicaid, would pay nearly full price for the drug.
Under the Medicaid program, which is the nation’s provider of health insurance to the poor and disabled, drug companies must report to the government the best prices they offer other customers for their brand name drugs. Based on these reported best prices, the drug companies pay rebates to the state Medicaid programs so that Medicaid, a large purchaser of drugs, receives the benefit of the same discounts drug companies offer to other large customers in the marketplace.
The government alleged that Wyeth hid from Medicaid the bundled discounts Wyeth gave to hospitals on Protonix Oral and Protonix IV. As a result, Wyeth wrongfully avoided paying hundreds of millions of dollars in rebates to Medicaid during the period from 2001 to 2006. Under the terms of today’s settlement, Wyeth will pay $413,248,820 to the federal government and $371,351,180 to state Medicaid programs.
“When we make agreements with others we expect follow-through,” said Special Agent in Charge Phillip Coyne of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Similarly, taxpayers rightly expect large pharmaceutical companies will not falsely report prices to boost profits. Any drug company shirking those responsibilities can expect to be held accountable for its deception.”
“This litigation and settlement demonstrate the commitment of my office and other state attorneys general across the country to ensuring that pharmaceutical companies live up to their obligations to the Medicaid program,” said New York Attorney General Eric T. Schneiderman.
The settlement resolves allegations filed under the False Claims Act by Lauren Kieff, a former hospital sales representative for the pharmaceutical company AstraZeneca Pharmaceuticals, LP, and William St. John LaCorte, a physician practicing in New Orleans, Louisiana. Under the False Claims Act, private parties may sue on behalf of the government for false claims for government funds and to receive a share of any recovery. The relator share in this case will be $98,058,190 and will be paid from the proceeds of the federal and state settlements.
The settlement was the result of close cooperation between the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Massachusetts, the state attorneys general and other law enforcement entities including Medicaid Fraud Control Units, and the HHS-OIG.
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 billion through False Claims Act cases, with more than $17.5 billion of that amount recovered in cases involving fraud against federal health care programs. The case is captioned United States ex rel. Kieff and LaCorte v. Wyeth and Pfizer, Inc., Nos. 03-12366 and 06-11724-DPW (D. Mass.).
U.S. Attorney’s Office Hosts Reentry Seminar in Tucson as Part of National Reentry WeekRead the Press Release
TUCSON, Ariz. – The Department of Justice has designated the week of April 24-30, 2016, as “National Reentry Week.” Reentry is a key priority of the Department and involves helping formerly-incarcerated individuals successfully reenter their communities, and avoid recidivism, by competing for jobs, attaining stable housing, and supporting their families.
On April 25, 2016, as part of National Reentry Week, the Arizona U.S. Attorney’s Office partnered with the U.S. Probation Office, the Federal Bureau of Prisons, and several faith-based and non-governmental agencies to host a “What Happens Now” seminar in Tucson. The event was geared toward the families of federal inmates scheduled to be released to Pima County in the coming months. During the seminar, family members were encouraged to support their loved ones’ transition from prison, to maintain ongoing communication with their loved ones, and to provide positive reinforcement.
“Inmates should have a meaningful second chance to rebuild their lives, and their family relationships, after they have paid their debt to society,” said U.S. Attorney John S. Leonardo. “Promoting reentry is crucial to making our communities stronger and safer.”
RELEASE NUMBER: 2016-035_Reentry Initiative
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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Follow the U.S. Attorney’s Office, District of Arizona, on Twitter @USAO_AZ for the latest news.
Justice Department Seeks to Shut Down Alabama Tax Return PreparerRead the Press Release
Preparer Allegedly Fabricates Businesses Losses, Claims Fraudulent Credits In Order to Understate Her Customers’ Tax or Overstate their Refunds
A number of tax return preparation businesses in the Birmingham, Alabama area unlawfully understate their customers’ income tax liabilities and overstate refunds by making deliberate misstatements on the returns, according to a new civil lawsuit filed by the Justice Department today. The suit, filed in federal court in Birmingham, asks the court to permanently bar Jessica Leverett aka Jessica Harris, from preparing tax returns for others. The suit also asks the court to order Leverett to turn over a list of all of the tax returns she has prepared.
According to the complaint, Leverett owns and operates a number of different tax preparation businesses in the area, including Tax Money Now, L.L.C., Dynamic Tax Services, Dynamic Tax Solutions and Express Money Tax. The government’s complaint alleges that Leverett and her associates prepared returns that fabricate self-employment businesses and business losses to offset their customers’ taxable income from other sources and to increase their customers’ Earned Income Tax Credit. When a customer does have a small business, the complaint alleges, Leverett and her associates mischaracterize the business income as household employee wages in order to avoid paying the required self-employment tax. The complaint also alleges that Leverett’s businesses claim education credits that the customers are not entitled to receive.
According to the complaint, the Internal Revenue Service (IRS) has examined 264 returns prepared by Leverett’s businesses and found that 206 understate the tax owed by Leverett’s customers by thousands of dollars on average. The complaint alleges that Leverett’s activities may have caused the United States to lose over $2.5 million in understated taxes and/or fraudulent refunds.
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.
Justice Department Reminds Employers of Their Employment Tax ResponsibilitiesRead the Press Release
Civil and Criminal Enforcement Actions Are Taken Against Employers and Individuals Who Violate Employment Tax Laws
With the first quarterly employment tax returns of 2016 due April 30, the Justice Department reminds employers that they have a legal responsibility to collect and pay over to the Internal Revenue Service (IRS) taxes withheld from their employees’ wages. For employers and other responsible persons who fail to withhold, report, and pay employment taxes to the IRS, the Department is committed to enforcing federal employment tax laws through both civil litigation and criminal prosecutions.
Employers Must Comply with Employment Tax Laws
Employers in the United States are required to collect, account for, and pay over to the IRS tax withheld from employee wages, including federal income tax and taxes under the Federal Insurance Contributions Act (FICA), including old-age, survivors, and disability insurance taxes, also known as social security taxes, and the hospital insurance tax, also known as Medicare taxes. Employers also have an independent responsibility to pay their matching portion of social security and Medicare taxes.
Tax withheld from employee wages accounts for approximately 70 percent of annual revenue collected by the IRS. When last measured, underreported and unpaid employment taxes represented approximately $72 billion of the overall tax gap in the United States. As of September 2015, more than $59 billion of tax reported on employment tax returns remained unpaid.
“Employers who comply with our nation’s tax laws are entitled to a level playing field,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. “Those individuals and entities that fail to withhold employment tax, or withhold and fail to pay employment taxes over to the IRS, not only steal from their employees and the U.S. Treasury, but gain an unfair competitive advantage over businesses down the street and across the country. The Department and its colleagues in the IRS have increased their efforts in this area, and are holding delinquent employers accountable.”
“Fairness in the employment tax arena is an important part of the nation’s tax system,” said IRS Commissioner John Koskinen. “The IRS is committed to working with the Justice Department to protect this important area, and there’s a long list of efforts we’ve taken in both civil and criminal investigation areas when employers try to evade their legal responsibilities and, in the process, gain an advantage over their competitors who are honoring their legal responsibilities. In addition, the IRS is taking new steps to identify and contact employers falling behind on their payments before they file their tax returns, offering to assist them earlier in the process to head off steeper interest and penalty charges. This effort not only provides an important service, it could help prevent the need for future enforcement activity.”
Willful Failure to Comply with Federal Employment Tax Laws is a Crime
An individual’s failure to comply with employment-tax obligations is not simply a civil matter. Employers who view amounts withheld from employee wages as a personal slush fund, treat withheld employment taxes as a loan from the government that can be repaid if and when they see fit, or whose business model is based on a continued failure to pay employment tax, are engaging in criminal conduct and face prosecution, imprisonment, monetary fines and restitution. According to statistics provided by IRS Criminal Investigation, in the 2015 fiscal year, individuals convicted of employment tax crimes were sentenced to an average of 24 months in prison. Recent prosecutions include:
- Employers using employment taxes for personal expenses
In March 2016, Larry C. Thornton, the owner, president, and chief executive of a Tennessee-based check-processing company and a credit-card processing company, pleaded guilty to failing to pay more than $6.8 million in employment taxes. Thornton admitted that he was responsible for collecting, accounting for and paying over to the IRS the employment taxes withheld from the wages of his companies’ employees, but from the second quarter of 2007 until at least the second quarter of 2011, Thornton caused the companies to stop paying over the taxes required to be withheld from the companies’ employees’ paychecks and caused the companies to stop timely filing Employer’s Quarterly Federal Tax Returns (Forms 941) with the IRS. During the years that Thornton failed to comply with his employment tax obligations, he spent over $6.2 million on personal expenses, including house and condominium payments; vehicle, yacht, and motorcycle loan payments; personal travel; and start-up funding for his wife’s beauty boutique. As part of his guilty plea, Thornton admitted that his fraudulent conduct caused a tax loss of more than $8.9 million, and agreed to pay restitution of more than $10 million.
In June 2015, Wilbur Anthony Huff, a Kentucky man who controlled a professional employer organization (PEO) located in Tampa, Florida, was sentenced to 12 years in prison for both committing various tax crimes that caused more than $50 million in losses to the IRS and engaging in a massive fraud scheme. The PEO was paid to manage the payroll and tax and workers’ compensation insurance obligations of its client companies. However, instead of paying the $53 million in taxes that the PEO’s clients paid to the PEO and owed the IRS, Huff stole the money, diverting millions of dollars to fund his investments in unrelated business ventures and paid his family members’ personal expenses, including mortgages on Huff’s homes, rent payments for his children’s apartments, staff and equipment for Huff’s farm, and designer clothing, jewelry, and luxury cars. The court also ordered Huff to pay more than $108 million in restitution.
- Employers using employment taxes to pay other creditors
In July 2015, Maria Elizabeth Townsend, the president and majority shareholder of a Washington-based electrical contractor was sentenced to 40 months in prison and ordered to pay $3.3 million in restitution to the IRS for failing to pay over employment taxes to the IRS. For 16 quarters between 2005 and 2009, Townsend withheld over $3 million in employment taxes but failed to pay those taxes to the IRS. Instead, between April 2007 and September 2009, Townsend authorized the disbursement of over $31 million in company funds to pay the company’s vendors and employees, a large dividend to one of her partners, $300,000 toward payment of her joint personal income tax obligations, more than $260,000 to family members, and personal expenses including constructing a pool at her residence, and buying a boat and personal vehicles.
- Employers paying employees in cash to avoid employment tax
In April 2016, Kyle Archie, the owner of several Reno, Nevada landscaping and rock hauling businesses pleaded guilty to one count of failure to pay over employment taxes. Archie admitted that, although he collected these taxes from his employees’ wages and held them in trust, he failed to pay over the employment taxes to the IRS. In documents filed with the court, the government alleged that Archie paid employees’ overtime wages in cash to avoid employment tax obligations. While failing to pay employment tax due, Archie used available funds to build a house, purchase motor vehicles and personal watercraft, and travel. Linda Archie, Kyle’s mother and the bookkeeper for the businesses, pleaded guilty to one count of willful failure to file a tax return, admitting that between 2003 and 2009, she failed to file Employer’s Quarterly Federal Tax Returns (Forms 941) on behalf of these businesses to account for the taxes that were withheld from the employees’ wages. The Archies stipulated that the tax loss caused by their crimes exceeded $545,000. They are scheduled to be sentenced on August 15.
In July 2015, Eric Anderson, the owner of three New York construction companies, was sentenced to serve 18 months in prison and was ordered to pay more than $1 million in restitution. Anderson used a commercial check cashing service to cash more than $10.5 million in checks paid to his construction companies and used a portion of the cash to pay his employees “under the table,” while failing to collect and pay over employment taxes to the IRS.
- Employers filing false employment tax returns
In October 2015, James Pielsticker, former chief executive officer and president of Arrow Trucking Company, was sentenced to serve 7 ½ years in prison and ordered to pay $21 million in restitution for conspiring to defraud the United States and to commit bank fraud, and for attempting to evade his individual income taxes. Pielsticker, his chief financial officer, James Moore, and others withheld employment tax from Arrow’s employees’ wages but did not report or pay over the tax to the IRS, despite knowing they were required to do so. The conspirators paid Pielsticker’s personal expenses and submitted fraudulent invoices to induce a bank to pay unwarranted funds. After cooperating with the government and testifying against Pielsticker, Moore was sentenced to 35 months in prison.
In July 2015, Happy Asker, the president, founder, and public face of the Happy’s Pizza franchise, a chain based in Farmington Hills, Michigan, was sentenced to 50 months in prison and ordered to pay $2.5 million in restitution to the IRS. Evidence at trial established that from 2004 through 2011, Asker, along with others, executed a systematic and pervasive scheme to defraud the IRS. Gross sales and payroll amounts were substantially underreported on numerous corporate income tax returns and payroll tax returns filed for nearly all 60 Happy’s Pizza franchise locations. From 2008 to 2010, Asker and his co-conspirators diverted for personal use more than $6.1 million in cash gross receipts from approximately 35 different Happy’s Pizza stores in the Detroit area, Illinois and Ohio. In total, Asker and certain employees and franchise owners failed to report to the IRS approximately $3.84 million of gross income and approximately $2.39 million in payroll taxes from the various Happy’s Pizza franchises.
Delinquent Employers also face Civil Litigation and Injunctions
Employers that ignore their employment tax obligations will face civil enforcement efforts, including federal lawsuits to enjoin noncompliance, ensure future compliance, and collect amounts due.
In the last year, federal courts have entered permanent injunctions against delinquent employers across the country, requiring the timely deposit of payroll taxes and filing of employment tax returns, notice to the IRS that the requisite deposits have been made and notice to the IRS if the employer, or someone working at the employer’s behest, begins operating a new business. The injunctions also preclude defendants from assigning property or making payments to other creditors until the employment tax obligations accruing after the date of the injunction are paid. Injunctions have been entered against a Los Angeles County pizza parlor and its owner, a Washington-based dentist, the owner of a Delaware donut shop, a South Carolina trucking company, and a Baltimore-area marble and granite importer, just to name a few. Since Jan. 1, the Department has filed 16 complaints and obtained 10 permanent injunctions against delinquent employers, and additional actions are forthcoming.
When individuals and entities subject to these injunctions knowingly violate the terms of the injunction, the Tax Division stands ready to seek orders of civil or criminal contempt, including incarceration, to bring the defendants into compliance.
Liability Extends to Responsible Individuals
Any individual who is responsible for ensuring that employment taxes are collected, accounted for, and paid over to the IRS, and willfully fails to do so may be subject to a civil penalty equal to the amount of the unpaid withholdings. This civil penalty, referred to as the trust fund recovery penalty, may be imposed even if the individual uses the employment tax to pay other creditors or keep the business afloat. Individuals subject to these penalties include, but are not limited to, bookkeepers, managers, treasurers, and corporate officers. The Department assists the IRS to defend challenges to trust fund recovery penalty assessments, and to ensure that such assessments are collected.
In August 2015, a federal court in Michigan held that Eric Kus and Roger Byrne, the chairman and the president of an automobile interior trim manufacturer, were liable for unpaid employment taxes even though they did not know that the taxes were unpaid. The court found that they “recklessly disregarded known risks” that the employment taxes would not be paid because they relied on the company’s controller, who they knew had previously failed to pay employment taxes when they were due.
In July 2015, the Court of Federal Claims ruled that Douglas Waterhouse, a vice president and partial owner of a California glass design and installation company, was individually liable for unpaid employment tax based on his authority, and therefore responsibility, over the company’s finances, even though he was not involved in day-to-day operations. The court found that Waterhouse acted willfully because, despite knowledge of the outstanding employment tax liabilities, he chose to continue operating the business and sought payments for vendors and employees instead of the IRS.
“The American taxpayer should not be forced to subsidize businesses that refuse to comply with the tax laws,” said Acting Assistant Attorney General Ciraolo. “The Justice Department and the IRS will continue to identify, investigate, and hold accountable those individuals and businesses that willfully evade their employment tax obligations.”
For more information about civil and criminal employment tax enforcement efforts, visit the Tax Division’s website.
Hitachi Chemical Co. Ltd. to Plead Guilty for Fixing Price of Electrolytic CapacitorsRead the Press Release
Second Company to Plead Guilty in Ongoing Investigation
Hitachi Chemical Co. Ltd. will plead guilty for conspiring with competitors between 2002 and 2010 to fix prices for electrolytic capacitors sold to customers in the United States and elsewhere, the Department of Justice announced today.
“Hitachi Chemical subsidiaries and co-conspirators fixed the prices of capacitors, a fundamental component of widely used electronic products,” said Deputy Assistant Attorney General Brent Snyder. “This is the second guilty plea in this investigation, and we will continue to pursue companies and individuals that conspire to undermine competition for technology components of all shapes and sizes.”
“We will not tolerate the behavior of companies or individuals who attempt to profit unfairly from business practices that ultimately hurt our economy and the consumer,” said Acting Special Agent in Charge Bertram Fairries of the FBI’s San Francisco Division. “We will pursue and bring to justice those who commit these types of crimes.”
Electrolytic capacitors store and regulate electrical current in a variety of electronic products, including computers, televisions, car engine and airbag systems, home appliances and office equipment.
The one-count felony charge was filed today in the U.S. District Court of the Northern District of California in San Francisco. In addition to pleading guilty to that charge and paying a criminal fine, Tokyo-based Hitachi Chemical has agreed to cooperate in the department’s ongoing investigation. The plea agreement is subject to court approval.
On Jan. 21, 2016, NEC TOKIN Corp. pleaded guilty to participating in the same worldwide conspiracy from 2002 to 2013 and was sentenced to pay a fine of $13.8 million. On March 12, 2015, a grand jury indicted Takuro Isawa, a former Global Sales General Manager for one of the capacitor manufacturers, for his participation in the conspiracy.
The charge today results from a federal antitrust investigation being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Field Office into price fixing, bid rigging and other anticompetitive conduct in the capacitor industry. Anyone with information related to the focus of this investigation should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI tip line at 415-553-7400.
District Court Enters Permanent Injunction Against San Francisco Rice Noodle Company and Senior Officers to Stop Distribution of Adulterated ProductsRead the Press Release
The U.S. District Court for the Northern District of California entered a consent decree of permanent injunction against Kun Wo Food Products Inc. (Kun Wo) and the firm’s co-owners, Zi Xing Liu and Zi Cheng Liu, to prevent the distribution of adulterated rice noodles, the Department of Justice announced today.
The department filed a complaint in the Northern District of California on April 12, at the request of the U.S. Food and Drug Administration (FDA). The complaint alleged that the defendants have a history of processing rice noodles under insanitary conditions. As detailed in the complaint, the company prepared, processed, manufactured, packed, held and distributed rice noodles to local customers in the San Francisco area. The complaint alleged that Zi Xing Lui has ultimate authority over all of the firm’s operations, including financial expenditures, production processes and employee supervision and that Zi Cheng Liu shares responsibility with Zi Xing Liu for the firm’s production processes and is also responsible for product distribution.
In conjunction with the filing of the complaint, the defendants agreed to settle the litigation and 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 first inform FDA, take specific steps to improve the firm’s manufacturing practices, and then receive written approval from FDA.
“Kun Wo Food Products was repeatedly informed that the sanitation practices at its facility were deficient,” said Principal Deputy Assistant Attorney Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Department of Justice will continue to aggressively pursue food companies and individuals responsible for the production of food under insanitary conditions in order to protect the American people and make sure America’s food supply is safe.”
According to the complaint, a 2016 inspection by FDA documented that defendants failed to take all necessary precautions to prevent food handlers from contaminating food with microorganisms or foreign material. For example, as alleged in the complaint, an employee used the vat containing rice soaking for the day’s production to rinse her bare hands after handling equipment. In addition, as noted in the complaint, during a 2015 inspection, FDA documented employees using the vat containing soaking rice to rinse their bare hands, rags and buckets after using the rags and buckets to clean the production area with detergent. The complaint also alleged that employees touched dirty equipment and then used their bare, unwashed hands to grab rice noodles for packaging. The complaint further alleged that during the most recent inspection, FDA found that machines used to steam, cool, slice and weigh the rice noodles were covered in grease and grime, causing the first sheet of rice noodles coming off the production machine to contain particulate matter.
According to the complaint, the most recent inspection also found that condensate dripped from a hose suspended from the ceiling into the vat containing soaking rice. Also, as noted in the complaint, condensate dripped from a copper pipe, with a green and black film on its surface, into a grinder containing rice for processing.
Further, the complaint alleged that during the 2015 inspection, FDA swabbed various surfaces in the firm’s production area, including the buckets used during processing and found the presence of bacterial contamination at the facility -- L. mono was identified on the exterior of one bucket and L. seeligeri was found on the exterior of another bucket. The complaint alleged that the firm’s employees routinely submerged these buckets in the water that contained soaking rice.
L.mono is the bacterium that causes the disease listeriosis. The most serious forms of listeriosis can cause meningitis and septicemia. L. seeligeri does not cause disease; however, it is a marker indicating that conditions are favorable for the survival and growth of L. mono.
Under federal law, food processors are required to comply with current good manufacturing practices provided by FDA regulation. Failure to follow such regulations renders food adulterated under the Federal Food, Drug, and Cosmetic Act. In this matter, the complaint alleged that 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 Kathleen Konopka of the Civil Division’s Consumer Protection Branch, with the assistance of Senior Counsel Claudia Zuckerman of the U.S. Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.
California-Based Z Gallerie LLC Agrees to Pay $15 Million to Settle False Claims Act Suit Alleging Evaded Customs DutiesRead the Press Release
The Department of Justice announced today that Z Gallerie LLC has agreed to pay $15 million to resolve allegations that the company engaged in a scheme to evade customs duties on imports of wooden bedroom furniture from the People’s Republic of China (PRC), in violation of the False Claims Act. Z Gallerie sells upscale furniture and accessories in stores across the United States and through the Internet. The company is headquartered in Los Angeles, California.
“This settlement reflects the Department of Justice’s commitment to ensure that those who import and sell foreign-made goods in the United States comply with the law, including laws meant to protect domestic companies and American workers from unfair competition abroad,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Department of Justice will zealously pursue those who seek an unfair advantage in U.S. markets by evading the duties owed on goods imported into this country.”
The Department of Commerce assesses, and the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) collects, duties to protect U.S. manufacturers from unfair competition abroad by leveling the playing field for domestic products. The particular duties at issue in this case are antidumping duties, which protect domestic manufacturers against foreign companies “dumping” products on U.S. markets at prices below cost. Imports of wooden bedroom furniture manufactured in the PRC have been subject to antidumping duties since 2004.
The settlement announced today resolved allegations that Z Gallerie evaded antidumping duties on wooden bedroom furniture imported from the PRC from 2007 to 2014, by misclassifying, or conspiring with others to misclassify, the imported furniture as pieces intended for non-bedroom use on documents presented to CBP. For example, Z Gallerie allegedly sold certain Bassett Mirror Company products, including a six-drawer dresser and three-drawer chest, as part of a bedroom collection; however, these goods were misidentified on CBP documents, using descriptions such as “grand chests” and “hall chests,” in order to avoid paying antidumping duties on wooden bedroom furniture.
“Savannah is home to one of the fastest growing ports in the country, handling almost 10 percent of all the containerized cargo volume in the United States,” said U.S. Attorney Edward J. Tarver for the Southern District of Georgia. “This U.S. Attorney’s Office will work hard to make sure those using the Port of Savannah play by the rules, and to hold those who try to cheat their way out of paying customs duties accountable.”
“Under the new Trade Facilitation and Trade Enforcement Act, CBP will likely see an increase in these types of settlements as the streamlined processes take effect concerning allegations of duty evasion,” said CBP Commissioner R. Gil Kerlikowske. “The Act reinforces CBP’s existing authorities and tools to collect and investigate public allegations of duty evasion improving the overall effectiveness and enforcement of CBP law enforcement actions concerning illicit trade activity, specifically in the area of antidumping and countervailing duty evasion schemes.”
“Companies that intentionally mislabel shipments or misrepresent the value of goods being imported into the United States to avoid paying the appropriate duties do so in an attempt to create an unfair advantage over businesses that play by the rules,” said Special Agent in Charge Nick S. Annan of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) in Atlanta. “This type of activity hurts legitimate U.S. businesses and, by extension, our overall national economy. Uncovering these types of schemes will continue to be a major investigative priority for ICE HSI.”
The allegations resolved by the settlement were originally brought by whistleblower Kelly Wells, an e-commerce retailer of furniture, under the qui tam provisions of the False Claims Act. The act permits private parties to sue on behalf of the United States those who falsely claim federal funds or, as in this case, those who avoid paying funds owed to the government or cause or conspire in such conduct. The act also allows the whistleblower to receive a share of any funds recovered. Wells will receive $2.4 million as her share of the settlement.
The investigation was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Southern District of Georgia, CBP and HSI Atlanta.
The claims resolved by this settlement are allegations only; there has been no determination of liability.
Deputy Attorney General Sally Q. Yates Announces Family-Friendly Prison Policies to Strengthen Inmate-Familial BondsRead the Press Release
NOTE: The prepared remarks for the Deputy Attorney General are attached as a PDF.
National Reentry Week Initiatives Aimed at Children of Incarcerated Parents and Enhancing Communication and Coordination Between Inmates and Family Members
As part of National Reentry Week, Deputy Attorney General Sally Q. Yates today announced several family-friendly initiatives aimed at strengthening the bonds between inmates and their children and families. The Deputy Attorney General also announced the launch of a new reentry hotline for returning citizens seeking help navigating life outside prison.
The announcement was made following the Deputy Attorney General’s visit to the Bureau of Prisons’ (BOP) female facility in Bryan, Texas, and a subsequent stop at Santa Maria Hostel, a residential reentry center for women in Houston.
The family-friendly initiatives announced and highlighted by the Deputy Attorney General include expanding video-conferencing visitation; a pilot program that engages children of incarcerated parents in positive youth development activities; guidance and training for BOP staff on how to make visitation spaces more child friendly and interact with children in a developmentally appropriate way; educating inmates on how to keep in contact with children who may be in foster care; tip sheets for parents, correctional staff and mentors to support children of incarcerated parents; and a new interagency partnership to develop model policies that can be used by state and local prison facilities to help strengthen family ties.
In addition to the department’s efforts to promote family engagement, the Deputy Attorney General announced the launch of the first ever reentry hotline (1‐877‐895‐9196) for individuals who have been released from federal custody and their families. The hotline, which opened this week, will aid returning citizens who need help finding government and private resources to aid their successful reentry. That includes help in determining how to get a copy of their birth certificate, where to start a job search and where to find legal aid service providers, among other crucial resources. The Deputy Attorney General toured the hotline’s control center during her visit to the BOP facility in Bryan today. The hotline is staffed by female inmates working for Federal Prison Industries, BOP’s largest reentry program.
“Assisting inmates in maintaining family relationships while they are in prison is not only good for the individuals returning from prison and their families, it’s good for the community as well, because when a person has a strong support system when they are released, they are less likely to re-offend,” said Deputy Attorney General Yates. “Doing everything we can to equip inmates to be successful when they leave prison, including assisting them in maintaining family relationships, is one of the most important things we can do for the safety of our communities.”
As laid out yesterday in Principle III of the Attorney General’s “Roadmap to Reentry,” research shows that close and positive family relationships reduce recidivism, improve an individual’s likelihood of finding and keeping a job after leaving prison and ease the harm to family members separated from their loved ones. To help ensure that all returning citizens have a robust support system, prisons must have significant opportunities for family engagement.
The BOP initiatives announced and highlighted by the Deputy Attorney General today include:
- Expansion of the pilot program that provides video services for visitation to all of BOP’s female facilities by June 2016 and development of an implementation plan to expand the video services visitation program to all of BOP’s facilities.
- A children of incarcerated parents pilot program at four BOP facilities. BOP is working with the Office of Juvenile Justice and Delinquency Prevention on this pilot program, which engages children of incarcerated parents in positive youth development activities and includes their parents in these activities. The programs are scheduled to begin in June 2016, following the awarding of $1.3 million in grant funding to service providers last September. Facilities chosen for the pilot are in Connecticut, New York, West Virginia and Pennsylvania.
- Development of “best practices” guidance and training for BOP staff regarding interacting with children in a developmentally appropriate way during visitation and creating visiting spaces at BOP facilities that are welcoming to children. Specifically, wardens will be encouraged to consider the potential stress and anxiety some children experience when visiting their incarcerated parents. The suggested best practices include making waiting areas and children’s centers child-friendly and encouraging positive conversations between prison staff and children visitors.
The Deputy Attorney General also announced and highlighted three interagency initiatives developed to support incarcerated parents and their children:
- Guide for Incarcerated Parents who have Children in the Child Welfare System. This guide, co-authored by the Department of Health and Human Services (HHS) and BOP, is a resource to help incarcerated parents who have children in foster care better understand how the child welfare system works so that they can stay in touch with their children and stay involved in decisions regarding their children's well-being. The guide offers best practices on how to communicate with social workers, information about federal child welfare laws and where to find additional assistance.
- Educational “tip sheets” to support children of incarcerated parents. The department-funded and HHS-managed children of incarcerated parents website on youth.gov released yesterday three new “tip sheets” focused on providing easy and practical information to support children who have parents in the criminal justice system. The tip sheets include:
- Tips for incarcerated parents. This resource will provide strategies for parents to help them prepare their child for visiting a prison facility in order to make the experience less intimidating and more positive. It includes information about child development, ways to prepare in order to reduce possible stress and trauma and suggested family-friendly activities;
- Tips for correctional staff and volunteers. This resource provides tips to correctional staff and volunteers about positive child interaction during prison visits. It includes information on how child development may be impacted by parental incarceration and provides strategies on how to support positive communication to mitigate some of the stress of visiting; and
- Tips for mentors. This resource provides mentors working with children of incarcerated parents with information about the unique challenges this population of children may face and how they may be able to better support the mentor-child relationship with this unique context in mind.
- New partnership to develop model family strengthening policies for states and localities. The Bureau of Justice Assistance, National Institute of Corrections and HHS are partnering to support a $1 million effort to develop family strengthening policies that can be implemented in state and local correctional facilities in order to reduce the traumatic impact of parental incarceration on children. Model policies may include, but are not limited to: child development training for correctional staff; family-friendly visiting policies and procedures; parenting programming offered in correctional facilities; family reunification and/or reentry planning; and other issues that impact incarcerated parents and their children.
The Departments of Justice and Housing and Urban Development to Award $1.75 Million to Help Justice-Involved Youth Find Jobs and HousingRead the Press Release
Juvenile Reentry Assistance Program Will Reduce Barriers to Housing, Jobs and Education
In an effort to help young people involved in the justice system find jobs and housing, the U.S. Departments of Justice and Housing and Urban Development (HUD) today announced $1.75 million for Public Housing Authorities (PHAs) and nonprofit legal service organizations to address the challenges justice-involved individuals face when trying to find work and a place to call home. The grantees are listed below.
Under the Juvenile Reentry Assistance Program (JRAP), funded through the department’s Second Chance Act funds, HUD and the Department of Justice are teaming up to help young Americans who’ve paid their debt to society rehabilitate and reintegrate back into their communities. JRAP funding was awarded to Public Housing Agencies who have a partnership with a nonprofit legal service organization with experience providing legal services to juveniles. Read local summaries of the grants.
U.S. Attorney General Loretta Lynch and HUD Secretary Julián Castro announced the funding during a news conference with local leaders in Philadelphia today.
“The future of our nation depends upon the future of our young people – including young people who have become involved with our justice system,” said Attorney General Lynch. “By helping justice-involved youth find decent jobs and stable housing after they return home, these critical grants provide a foundation for a fresh start and offer a path towards productivity and purpose. In the months ahead, the Department of Justice will continue helping justice-involved youth enrich their lives and improve our country.”
“Reconnecting young people who've paid their debt to society to decent jobs and housing allows them to turn the page and become active, productive members of their communities,” said Secretary Castro. “These grants offer a helping hand to those who deserve a second chance so they have a real opportunity to reach their full potential.”
Having a juvenile or a criminal record can severely limit a person’s ability to seek higher education, find good employment or secure affordable housing. Today, there are nearly 55,000 individuals under age 21 in juvenile justice facilities, and approximately 185,000 young adults aged 18 to 24 in state and federal prisons. These collateral consequences create unnecessary barriers to economic opportunity and productivity. President Obama and members of his Cabinet, via the Federal Interagency Reentry Council, continue to take impactful steps to ensure those exiting the justice system become productive, law-abiding citizens. Today’s announcement is consistent with HUD’s recently released guidance on the application of Fair Housing Act Standards to the use of criminal records by providers of housing and real estate-related transactions, and the recent guidance for public housing authorities and owners of federally-assisted housing on excluding the use of arrest records in housing decisions.
To help alleviate collateral consequences associated with a juvenile or criminal record, JRAP assists young people up to age 24 residing in public housing, or who would be residing in public housing but for their record, by:
- Expunging, sealing, and/or correcting juvenile or adult records; as permitted by state law;
- Assisting targeted youth in mitigating/preventing collateral consequences such as reinstating revoked or suspended drivers’ licenses;
- Counseling regarding legal rights and obligations in searching for employment;
- Providing guidance for readmission to school; and
- Creating or modifying child support orders and other family law services, and more.
# # #
HUD's mission is to create strong, sustainable, inclusive communities and quality affordable homes for all.
More information about HUD and its programs is available on the Internet
at www.hud.gov and http://espanol.hud.gov.
You can also connect with HUD on social media and follow Secretary Castro on
Twitter and Facebook or sign up for news alerts on HUD's Email List.2016 Juvenile Re-entry Assistance Program Grants
State
Recipient
City
Amount
Partner
*Matched
Amount
CA
Housing Authority of the City of Los Angeles
Los Angeles
$100,000
Public
Counsel
$1,390,650
CT
Housing Authority of the City of Hartford
Hartford
$100,000
Center for Children's
Advocacy,
Inc.
$25,000
IL
Chicago Housing Authority
Chicago
$100,000
Bluhm Legal
Clinic,
Northwestern
University
School of Law
$55,216
IL
Housing Authority of Cook County
Chicago
$100,000
LAF
$25,000
IN
The City of East Chicago Housing Authority
East Chicago
$100,000
Indiana Legal
Services,Inc.
$172,000
LA
Housing Authority of the City of Shreveport
Shreveport
$100,000
Legal Services
of North
Louisiana, Inc.
$109,811
LA
Housing Authority of New Orleans
New Orleans
$100,000
Southeast
Louisiana Legal
Services
$240,463
MA
Boston Housing Authority
Boston
$100,000
Greater Boston
Legal Services Inc.
$32,549
MO
St. Louis Housing Authority
St. Louis
$100,000
St. Louis School of
Law Legal Clinic
$99,202
NJ
Housing Authority of the City of Camden
Camden
$53,464
Rutgers Law School
Reentry Clinic
$35,825
NY
Syracuse Housing Authority
Syracuse
$100,000
Center for
Community
Alternatives
$58,744
NY
New York City Housing Authority
New York
$100,000
Youth Represent, Inc.
$88,412
NY
Albany Housing Authority
Albany
$100,000
Legal Aid Society
of Northeastern
New York
$81,000
OH
Cuyahoga Metropolitan Housing Authority
Cleveland
$100,000
Legal Aid Society
of Cleveland
$123,200
OH
Akron Metropolitan Housing Authority
Akron
$100,000
University of Akron
School of Law
$174,115
PA
Philadelphia Housing Authority
Philadelphia
$100,000
Community Legal
Services of
Philadelphia
$25,000
RI
The Housing Authority of the City of Providence
Providence
$100,000
Rhode Island Legal
Services, Inc.
$27,161
WI
Housing Authority of the City of Milwaukee
Milwaukee
$100,000
Legal Action of
Wisconsin
$25,000
TOTAL: $1,753,464
Justice Department Allows Charter’s Acquisition of Time Warner Cable and Bright House Networks to Proceed with ConditionsRead the Press Release
Conditions Prohibit Charter from Imposing Restrictions that Impede Online Video Distributor Access to Video Content
The Department of Justice announced today a settlement that permits Charter Communications Inc. to complete its $78 billion proposed acquisition of Time Warner Cable Inc. (TWC) and its related $10.4 billion acquisition of Bright House Networks LLC (BHN) from Advance/Newhouse Partnership. The settlement forbids the merged company, referred to as “New Charter,” from entering into or enforcing agreements that could make it more difficult for online video distributors (OVDs) to obtain video content from programmers.
The Justice Department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the merger, along with a proposed settlement that, if approved by the court, would resolve the competitive harm alleged in the lawsuit. The department’s complaint alleges that, as a result of the proposed merger, New Charter would have greater incentive and ability to impose or broaden contractual restrictions on programmers that limit their ability to distribute their content through OVDs. According to the complaint, TWC has been an industry leader in seeking such restrictions; with its much larger subscriber base, New Charter would have even more to gain from frustrating OVD competition.
The Chairman of the Federal Communications Commission (FCC) today will circulate an order that would approve the combination of Charter, TWC and BHN subject to conditions. The department and the FCC consulted extensively to coordinate their reviews of the proposed merger and devise remedies that were both consistent and comprehensive.
“Online video distributors offer consumers greater choices for video services,” said Principal Deputy Assistant Attorney General Renata B. Hesse, head of the Antitrust Division. “This merger would have threatened competition by increasing the merged company’s leverage to demand that programmers limit their licensing to these online providers. Together with our counterparts at the FCC, we have secured comprehensive relief and we will work together to closely monitor compliance to ensure that New Charter will not have the power to choke off this important source of disruptive competition and deny consumers the benefits of innovation and new services.”
According to the department’s complaint, the combination of Charter, TWC and BHN into New Charter would create the second-largest cable company and the third-largest multi-channel video programming distributor (MVPD) in the United States, with over 17 million video subscribers. As the complaint explains, TWC has been the most aggressive MVPD in the industry in securing Alternative Distribution Means (ADM) clauses in its contracts with programmers that either prevent the programmer from distributing its content to OVDs or place certain restrictions on such online distribution. The complaint alleges that New Charter, which will have almost 60 percent more subscribers than TWC standing alone, would have even more to gain from imposing ADMs and other contractual provisions that make OVDs less competitive. As a result, the complaint alleges that the merger would likely result in a substantial lessening of competition for video programming distribution services.
Under the terms of the proposed settlement, New Charter will be prohibited from entering into or enforcing any agreement with a programmer that forbids, limits or creates incentives to limit the programmer’s provision of content to one or more OVDs. The settlement further provides that New Charter will not be able to avail itself of other distributors’ most favored nation (MFN) provisions if they are inconsistent with this prohibition. The settlement also prohibits New Charter from retaliating against programmers for licensing to OVDs. The department said that it would continue to closely monitor developments in the industry and would vigorously enforce compliance with the proposed settlement to ensure that New Charter does not use the influence it will have as one of the nation’s largest MVPDs to restrict or discourage programmers from licensing their content to OVDs.
The department said it also examined whether the merger would allow New Charter to become an unavoidable gatekeeper for internet-based services, including OVDs, that rely on a broadband connection to reach consumers. The department previously expressed significant concerns about an earlier attempt to acquire TWC by Comcast Corporation, which is significantly larger than Charter, because that transaction would have enabled the combined firm to control access to nearly 60 percent of high-speed broadband subscribers, and would likely have resulted in higher internet interconnection fees that could have limited OVDs’ ability to compete effectively with traditional MVPDs. The order circulated by the FCC Chairman today would impose an obligation on New Charter to make interconnection available on a non-discriminatory, settlement-free basis to companies that meet basic criteria. In light of the remedy sought by the FCC Chairman, the department elected not to pursue duplicative relief in its own lawsuit.
Charter is a Delaware corporation headquartered in Stamford, Connecticut. It is the third-largest cable company in the United States and the sixth-largest MVPD, with over 4.3 million video subscribers across 28 states. Charter’s reported revenues for 2014 were approximately $9.1 billion.
TWC is a New York corporation with its headquarters in New York City. With approximately 11 million video subscribers across 30 states, TWC is the second-largest cable company in the United States and the fourth-largest MVPD. TWC’s 2014 reported revenues were approximately $22.8 billion.
Advance/Newhouse is a New York partnership with headquarters in East Syracuse, New York, and is the sole owner of BHN, a Delaware limited liability company headquartered in East Syracuse. BHN is the sixth-largest cable company in the United States and the ninth-largest MVPD. BHN’s cable systems serve approximately 2 million video subscribers across six states. BHN’s 2014 revenues were approximately $3.7 billion.
The department will file a competitive impact statement after the FCC adopts an order allowing the merger to proceed. As required by the Tunney Act, after the department has filed its competitive impact statement, the proposed settlement will be published in the Federal Register. At such time, any person may submit written comments concerning the proposed settlement during a 60-day comment period to Scott Scheele, Chief, Telecommunications & Media Enforcement Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 7000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon finding that it is in the public interest.
Charter Complaint
Charter PFJ
Charter Explanation
Charter Stipulation
Department of Justice Announces New Reforms to Strengthen the Federal Bureau of PrisonsRead the Press Release
Attorney General Lynch Releases Roadmap to Reentry: The Justice Department’s Vision to Reduce Recidivism through Federal Reentry Reforms
As part of National Reentry Week, Attorney General Lynch today in Philadelphia announced the “Roadmap to Reentry,” the Department’s comprehensive vision to reduce recidivism through reentry reforms at the Federal Bureau of Prisons (BOP). These efforts will help those who have paid their debt to society prepare for substantive opportunities beyond the prison gates, promote family unity, contribute to the health of our economy, advance public safety and sustain the strength of our communities.
Each year, more than 600,000 citizens return to our neighborhoods after serving time in federal and state prisons. Another 11.4 million individuals cycle through local jails. And nearly one in three Americans of working age have had some sort of encounter with the criminal justice system — mostly for relatively minor, non-violent offenses, and sometimes from decades in the past. The long-term impact of a criminal record prevents many people from obtaining employment, housing, higher education, and credit — and these barriers affect returning individuals even if they have turned their lives around and are unlikely to reoffend.
The principles outlined in the “Roadmap to Reentry” are aligned with the work of the Federal Interagency Reentry Council which has been working since its creation five years ago to reduce recidivism and improve employment, education, housing, health and child welfare outcomes.
PRINCIPLES TO REDUCE RECIDIVISM THROUGH REENTRY REFORMS AT THE FEDERAL BUREAU OF PRISONS
Principle I
Upon incarceration, every inmate should be provided an individualized reentry plan tailored to his or her risk of recidivism and programmatic needs.
The Department is enhancing BOP’s risk and needs assessment tools to inform development of reentry plans tailored to the specific criminogenic needs of each incarcerated individual.
Principle II
While incarcerated, each inmate should be provided education, employment training, life skills, substance abuse, mental health, and other programs that target their criminogenic needs and maximize their likelihood of success upon release.
The Department, through BOP, has launched an effort to assess its education programs, life skills programs, and job skills programs to ensure these programs are evidence-based and targeted to the criminogenic needs of inmates.
Principle III
While incarcerated, each inmate should be provided the resources and opportunity to build and maintain family relationships, strengthening the support system available to them upon release.
The Department is enhancing the number and types of opportunities available for people in federal prisons to strengthen family relationships during their term of incarceration.
Principle IV
During transition back to the community, halfway houses and supervised release programs should ensure individualized continuity of care for returning citizens.
In order to ensure that Residential Reentry Centers (RRC) are fulfilling their vital role in the reentry process, the Department, with assistance from outside consultants, is undertaking a robust evaluation and assessment of the RRC experience to develop a specific plan for implementing improvements to the existing RRC model that will provide residents enhanced reentry support and reduce recidivism.
Principle V
Before leaving custody, every person should be provided comprehensive reentry-related information and access to resources necessary to succeed in the community.
The Department is developing reentry-specific tools and support services to help returning citizens succeed after leaving federal custody.
As part of the national effort to increase awareness about these challenges, the Attorney General also sent a letter to governors with a request to permit citizens returning to their communities to exchange their Bureau of Prisons inmate identification card and authenticated release documentation for state identification, or for these documents to satisfy the primary identification document requirement for state-issued identification. Without government-issued identification, men and women leaving correctional facilities face extreme challenges securing employment and housing, registering for school, opening bank accounts as well as accessing other benefits, such as health care, that are critical to successful reintegration.
Leadership from across the Administration will be traveling around the country to make policy announcements in support of National Reentry Week. They will also be encouraging federal partners and grantees to work closely with stakeholders like federal defenders, legal aid providers and other partners across the country to increase the impact of these efforts. National Reentry Week events are being planned in all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands. U.S. Attorney’s Offices alone are hosting over 200 events and BOP facilities are holding over 370 events.
Additional Resources:
National Reentry Week Webpage
REPORT: Roadmap to Reentry
INFOGRAPHIC: Roadmap to Reentry
FACT SHEET: BOP Reentry
FACT SHEET: Federal Interagency Reentry Council
FACT SHEET: Fair Chance Business Pledge
REPORT: CEA Report
Un Presunto Traficante De Drogas Extraditado Desde México Al Distrito Este De CaliforniaRead the Press Release
Sacramento, Calif. – El viernes, 1 de abril de 2016, Álvaro Ríos-Madrid, 57 años de edad, y residente de Guamúchil, Sinaloa, México fue extraditado formalmente a los Estados Unidos por México para enfrentarse a cargos narcóticos federales, anunció el Procurador Federal de los Estados Unidos Benjamín B. Wagner.
El 13 de diciembre de 2012, un gran jurado federal en Sacramento acusó a Ríos-Madrid de un cargo de conspiración para distribuir cocaína y dos cargos por la utilización de teléfonos para facilitar la distribución de narcóticos.
Según documentos del tribunal, el Gobierno alega que Ríos-Madrid exportaba regularmente cantidades grandes de cocaína desde México a los Estados Unidos y que utilizaba organizaciones clandestinas de distribución basadas en los Estados Unidos para mover su cocaína a través de una red nacional de paquetería y mensajería a varios Estados incluyendo Utah, Minnesota, Indiana, Ohio, Massachusetts y California. Se alega que Ríos-Madrid ha podido pasar de contrabando regularmente cantidades en multi-kilogramos a los Estados Unidos a través de varios puertos de entrada incluyendo Nogales, Arizona y San Isidro, California. Los ingresos en efectivo de las ventas de la cocaína de Ríos-Madrid sumaban, por término medio, entre $500.000 dólares y $1.3 millones de dólares cada mes. Se acordaba con operarios dentro de los Estados Unidos para que esos ingresos fueran enviados a Ríos-Madrid en México. Como resultado de una investigación de larga duración, la Administración de Control de Drogas (DEA) y otros organismos estatales y federales incautaron grandes cantidades de cocaína y más de $1 millón de dólares en efectivo.
Este caso es el producto de una investigación llevada a cabo por la Administración de Control de Drogas (DEA); el Servicio del Mariscal de los Estados Unidos, las Investigaciones para la Seguridad Nacional (HSI) de Inmigración y Aduanas de los Estados Unidos (ICE); el Departamento para la Seguridad Nacional; las Patrullas de Aduanas y Fronteras de los Estados Unidos; el Departamento del Sheriff del Condado de Sacramento; el Programa para las Áreas de Tráfico de Drogas de Alta Intensidad (HIDTA) del Valle Central; el Departamento de Policía de Sacramento; el Departamento de Justicia de California (Cal MMET); el Destacamento Especial Anti Narcóticos del Área Metropolitana del Condado de San Joaquín; el Departamento de Policía de Elk Grove; el Departamento del Sheriff del Condado de San Joaquín; el Departamento de Policía de Stockton; el Departamento del Sheriff del Condado de Los Ángeles; el Departamento de Policía de Galt; la Patrulla de Carreteras de California; la Patrulla de Carreteras del Estado de Nevada; la Patrulla de Carreteras de Minnesota; la Patrulla de Carreteras del Estado de Kansas; la Patrulla de Carreteras del Estado de Massachusetts y la Patrulla de Carreteras del Estado de Iowa. La Oficina de Asuntos Internacionales del Departamento de Justicia de los Estados Unidos ha prestado asistencia con la extradición. Los Procuradores Federales Auxiliares Michael M. Beckwith y Paul A. Hemesath están procesando el caso.
Si es encontrado culpable, Ríos-Madrid se enfrentaría a una pena máxima establecida por la ley de 10 años a cadena perpetua en prisión, una multa de $10 millones de dólares y de cinco años a cadena perpetua de libertad supervisada. Si es encontrado culpable de la utilización de un teléfono celular para facilitar una infracción de tráfico de drogas, Ríos-Madrid podría enfrentarse a una pena máxima establecida por la ley de cuatro años en prisión y una multa de $250.000 dólares por cada cargo. Cualquier sentencia, no obstante, sería determinada a discreción del tribunal después de la consideración de cualquier factor aplicable establecido por la ley y las Normas para Sentenciar Federales, que toman en cuenta un número de variables. Los cargos son sólo alegaciones; el demandado es presuntamente inocente hasta y a menos que sea comprobado culpable sin duda razonable.
Nevada Business Owner and Bookkeeper Plead Guilty to Federal Employment Tax CrimesRead the Press Release
The owner of several Reno, Nevada landscaping and rock hauling businesses pleaded guilty in federal court today to one count of failure to file over employment taxes, 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. The bookkeeper for the businesses pleaded guilty to one count of willful failure to file taxes.
According to court documents, Kyle Archie, 44, of Reno, was the part owner of Reno Rock Inc., GKPA Inc. and D Rockeries Inc. during the years 2001 through 2010. As part of his plea, Kyle Archie admitted that he was responsible for the day-to-day operations of the businesses and therefore had a legal duty to collect, truthfully account for and pay over to the Internal Revenue Service (IRS) federal income taxes and Federal Insurance Contribution Act taxes that were withheld from the wages of the businesses’ employees during the years 2003 through 2009. Kyle Archie further admitted that although he collected these taxes from his employees’ wages and held them in trust, he failed to pay over the employment taxes to the IRS for the third quarter of 2008.
Linda Archie, 67, of Reno, who is Kyle Archie’s mother, worked as the bookkeeper for Reno Rock Inc., GKPA Inc. and D. Rockeries Inc. during the years 2001 through 2010. In that capacity, she was responsible for maintaining the books and records of the companies and filing documents with various government agencies. In her plea agreement, Linda Archie admitted that between 2003 and 2009 she failed to file Employer’s Quarterly Federal Tax Returns (Forms 941) on behalf of these businesses to account for the taxes that were withheld from the employees’ wages.
U.S. District Judge Miranda M. Du of the District of Nevada set sentencing for Aug. 15. Kyle Archie faces a statutory maximum sentence of five years in prison and a $250,000 fine. Linda Archie faces a statutory maximum sentence of one year in prison and a $100,000 fine. Both defendants have also agreed to pay restitution to the IRS. In the plea agreement, the government asserts that the tax loss is $1,242,260. The defendants have admitted that their actions caused a loss to the IRS of at least $545,000.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Bogden commended special agents of IRS-Criminal Investigation, who investigated the case and Assistant U.S. Attorney Carla B. Higginbotham of the District of Nevada and Trial Attorney Kathleen M. Barry 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.
National Prescription Drug Take Back Day, April 30, 2016Read the Press Release
United States Attorney ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), together with Drug Enforcement Administration (DEA) Resident Agent in Charge Michael Puralewski, announced that the next National Prescription Drug Take Back Day will be on Saturday, April 30, 2016, from 10:00 AM to 2:00 PM.
The following sites have been designated to receive unused prescription drugs:
- Naval Base Guam (Navy Exchange Food Court)
- Agana Shopping Center (Across Vitamin World)
- Agat Village Mayor's Office
- Andersen Air Force Base (Exchange & Commissary)
- Dededo Village Mayor’s Office
- Rota Health Center
- Saipan Commonwealth Health Center
- Tinian Health Center
We would like to remind the public that:
- Unused or expired prescription medications are a public safety issue, leading to accidental poisoning, overdose, and abuse.
- Pharmaceutical drugs can be just as dangerous as street drugs when taken without a prescription or a doctor’s supervision.
- The non-medical use of prescription drugs ranks second only to marijuana as the most common form of drug abuse in America.
- The majority of teenagers abusing prescription drugs get them from family and friends – and the home medicine cabinet.
- Unused prescription drugs thrown in the trash can be retrieved and abused or illegally sold. Unused drugs that are flushed contaminate the water supply. Proper disposal of unused drugs saves lives and protects the environment.
- Take-back programs are the best way to dispose of old drugs.
The first National Prescription Drug Take-Back Day event was held nationwide in September 2010. Guam and the NMI have participated every year since. The purpose of the National Drug Take-Back Initiative is to help prevent increased pill abuse and theft, to encourage the public to rid their household of unused prescription drugs that pose a safety hazard and can contribute to prescription drug abuse, and to provide a venue for persons who want to dispose of unwanted and unused prescription drugs for safe disposal by DEA.
For more information on prescription drug abuse, go to: www.dea.gov, www.getsmartaboutdrugs.com, or www.justthinktwice.com.
Louisiana Company to Pay over $700,000 in Penalties and Costs to Settle U.S. and Louisiana Claims for Atchafalaya River Basin Oil Spills and Violations of Spill Prevention RulesRead the Press Release
In the most recent federal-state coordinated enforcement efforts against oil spills in and around the Gulf of Mexico, ORB Exploration LLC (ORB) has agreed to pay civil penalties and state response costs and to implement corrective measures to resolve alleged violations of the Clean Water Act and state environmental laws stemming from three crude oil spills that occurred in 2013 and 2015 from two of ORB’s Louisiana facilities at Frog Lake and Crocodile Bayou – both located in the Atchafalaya River Basin – as well as violations of Spill Prevention, Control and Countermeasure (SPCC) regulations at ORB’s Frog Lake oil storage barge, announced the Department of Justice, U.S. Coast Guard (USCG) and the Environmental Protection Agency (EPA).
Under a consent decree lodged today in federal court, ORB will pay $615,000 in federal civil penalties for the spills and other Clean Water Act violations, pay the Louisiana Department of Environmental Quality (LDEQ) $100,000 for civil penalties and response costs and carry out injunctive relief measures to improve spill response preparedness and prevent future oil spills.
“This settlement holds ORB accountable for the harms to the environment caused by its oil spills into threatened, sensitive natural areas and requires the company to take important corrective measures including improving its environmental compliance and preventing future spills from its oil production facilities,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “I am grateful for the close relationship with our federal and state partners that brought such a successful resolution to this case”
“Discharges of oil into the navigable waters of the United States are an ongoing concern as they pose an obvious and serious risk to the marine environment,” said Rear Admiral Dave Callahan, Eighth Coast Guard District Commander. “This enforcement action emphasizes our dedication to protecting our natural resources and preventing future pollution from these facilities.”
“Louisiana’s wetlands are vital to the state’s economy, communities and ecology, providing protection from storm surges and habitat for wildlife,” said Regional Administrator Ron Curry for EPA. “Companies must be held accountable when their actions threaten these important natural resources.”
“This joint action shows that LDEQ is committed to pursuing anyone who does something to harm our state’s environment,” said Dr. Chuck Carr Brown, LDEQ Secretary. “Our mission is to protect human health and the environment and those two things are too precious to risk by allowing unscrupulous operators to flout environmental laws in the name of profit.”
As part of a joint action filed with LDEQ, the complaint alleges that ORB spilled over 1,000 barrels of Louisiana crude oil into the Atchafalaya River Basin during the three spills. The largest occurred at Frog Lake in 2013, after a corroded oil transfer pipeline ruptured in a flooded wetland area. The cleanup took over a year and a half and required significant state-federal cooperation. The other two releases occurred in September and October of 2015, from ORB’s Frog Lake and Crocodile Bayou oil production facilities into bayou waters surrounding the facilities.
In the complaint, the United States asserts penalty and injunctive relief claims for the spills. It also alleges Clean Water Act violations for ORB’s failure to comply with a USCG order addressing the 2013 cleanup. The SPCC violations were discovered during a 2015 EPA inspection of ORB’s Frog Lake oil production barge. For its part, LDEQ asserts state-law claims for civil penalties for the discharges, failure to file a timely report and failure to provide updated notice to the state hotline and for reimbursement of LDEQ’s response costs.
The corrective measures ORB is required to take include improving secondary containment capability at the Frog Lake facility, increasing the frequency of facility inspections and monitoring for oil spills, providing additional advance notice to the USCG before any future oil transfer operation and installation of accurate gauges on production and transfer equipment to allow for and improve accountability and spill detection capabilities.
The Clean Water Act makes it unlawful to discharge oil or hazardous substances into or upon the navigable waters of the United States or adjoining shorelines in quantities that may be harmful to the environment or public health. EPA’s SPCC regulations establish procedures, methods and equipment requirements and also require facilities to develop and implement SPCC Plans toward the goal of preventing oil from reaching navigable waters and adjoining shorelines. The penalty paid to the United States will be deposited in the federal Oil Spill Liability Trust Fund managed by the National Pollution Funds Center. Those funds will be available to pay for federal response activities and to compensate for damages when there is a discharge or substantial threat of discharge of oil or hazardous substances to waters of the United States or adjoining shorelines.
The proposed consent decree, lodged in the Middle District of Louisiana, is subject to a public comment requirements and court review and approval. A copy of the consent decree is available on the Department of Justice website at https://www.justice.gov/enrd/consent-decrees.
Georgia Husband and Wife Plead Guilty in Stolen Identity Tax Refund Fraud Scheme Involving IRS “Get Transcript” DatabaseRead the Press Release
Used Stolen Personally Identifiable Information to Gain Access to the Get Transcript Database
An Austell, Georgia husband and wife pleaded guilty today to charges relating to their involvement in a stolen identity income tax refund fraud scheme, 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.
Anthony Alika, 42, pleaded guilty to one count of conspiracy to commit money laundering. His wife Sonia Alika, 27, pleaded guilty to one count of illegally structuring cash withdrawals to evade bank reporting requirements.
“With the number of stolen identity refund fraud victims increasing at an alarming rate, the Justice Department, working with the Internal Revenue Service (IRS) and its other federal, state and local law enforcement partners, remains committed to investigating these abusive schemes and criminal networks, prosecuting these offenders, and seeking lengthy prison terms and monetary penalties,” said Acting Assistant Attorney General Ciraolo. “The guilty pleas of Anthony Alika, Sonia Alika and Rapheal Atebefia in connection with their attempt to infiltrate and abuse the “Get Transcript” database are yet another example of these continued efforts. The investigation and successful prosecution of these defendants sends a clear message to those individuals engaged in, or considering, this criminal conduct that the Department will bring all available resources to bear to hold them accountable.”
“The IRS is committed to working with our law enforcement partners to pursue identity thieves, and we continue to make important progress in Georgia as well as elsewhere across the country,” said IRS Commissioner John Koskinen. “The IRS is also continuing to strengthen its operations and working with state revenue departments and the tax industry to provide further protections for taxpayers against identity theft.”
“Criminals continually discover more sophisticated methods of stealing personal information and unfortunately seek to capitalize on this theft by filing phony tax returns demanding excessive refunds,” said U.S. Attorney Horn. “Because this is a growing problem, we are applying additional resources to help stem the tide and protect both our personal information and precious tax dollars.”
In January 2016, Anthony Alika and Sonia Alika were charged with laundering the proceeds from a stolen identity refund fraud scheme. The indictment alleged that Anthony Alika, along with Rapheal Atebefia, 33, of Austell, Georgia, obtained means of identification of actual individuals, including their names and social security numbers, and used this information to access the IRS “Get Transcript” database. The indictment further alleged that Anthony Alika, Atebefia, and others obtained prepaid debit cards from stores located in multiple states, registered the cards in the names of the stolen identities, filed false income tax returns using the stolen identities and information obtained from the Get Transcript database, and directed the IRS to deposit the tax refunds onto these cards. To conceal their fraud, Anthony Alika, Atebefia and others were alleged to have used the prepaid debit cards to purchase money orders, which Anthony Alika, Sonia Alika and Atebefia deposited into bank accounts and then structured cash withdrawals of the proceeds in order to prevent the bank from filing Currency Transaction Reports (CTRs).
As part of his guilty plea, Anthony Alika admitted that during 2015 he received money orders from several individuals and deposited those money orders into bank accounts in his name or had his wife deposit them into bank accounts in her name. Anthony Alika would then structure out cash withdrawals from his bank accounts in amounts less than $10,000 to evade the bank reporting requirements. Anthony Alika admitted that the funds used to purchase the money orders were the proceeds of illegal activity, including the filing of fraudulent tax returns using stolen identities. Sonia Alika admitted as part of her guilty plea that between February and June 2015, she withdrew more than $250,000 from multiple bank accounts she controlled in amounts less than $10,000 to prevent the bank from filing CTRs.
U.S. District Judge Thomas W. Thrash, Jr. set sentencing for July 27. Anthony Alika faces a statutory maximum sentence of 20 years in prison and Sonia Alika faces a statutory maximum sentence of 10 years in prison. They also face substantial monetary penalties, restitution and forfeiture. In March, Atebefia pleaded guilty to one count of money laundering for his role in this scheme. He is scheduled to be sentenced on June 22.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Horn commended special agents of IRS-Criminal Investigation and the U.S. Postal Inspection Service, who investigated the case and Trial Attorneys Michael C. Boteler and Charles M. Edgar, Jr. of the Tax Division and Assistant U.S. Attorney Brian Pearce of the Northern District of Georgia, who are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Federal Court Bars Mississippi Tax Return Preparer from Preparing Returns for OthersRead the Press Release
The U.S. District Court for the Southern District of Mississippi permanently barred Teresa Chism of Durant, Mississippi, from preparing federal tax returns for others, the Justice Department announced today.
According to the government’s civil complaint, Chism, who operated her business as Lady T. Taxes, prepared federal income tax returns that fraudulently overstated her customers’ claims for refunds. She did so by claiming refundable credits, including the Earned Income Tax Credit (EITC) and credits for education expenses, that her customers either were ineligible to receive, or were not entitled to receive in the amounts claimed on the returns, the complaint alleged. The complaint further alleged that Chism frequently fabricated Forms W-2 and submitted them with a tax return as evidence of a customer’s eligibility for the EITC.
The United States alleged in the complaint that Chism prepared at least 2,845 returns since 2010. Audits of 220 returns prepared by Chism claiming the EITC and/or other refundable credits revealed that 98 percent of these returns claimed credits totaling more than $1 million that Chism’s customers were not eligible to receive, according to the complaint.
Return preparer fraud is one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams for 2016. The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
EOIR Swears in Two Immigration JudgesRead the Press Release
FALLS CHURCH, VA – The Executive Office for Immigration Review (EOIR) today announced the investiture of two immigration judges. Acting Chief Immigration Judge Michael C. McGoings presided over the investiture during a ceremony held April 21, 2016, at the U.S. Court of Appeals for the Armed Forces in Washington, D.C.
After a thorough application process, Attorney General Loretta E. Lynch appointed Kuyomars Golparvar and Robin J. Rosche to their new positions.
“We are pleased to welcome these appointees to the immigration judge corps,” said McGoings. “We look forward to continuing to hire qualified people to fill these important public service positions.”
Biographical information follows.
Kuyomars Golparvar, Immigration Judge, York Immigration Court
Attorney General Loretta E. Lynch appointed Kuyomars Golparvar to begin hearing cases in April 2016. Judge Golparvar received a Bachelor of Arts degree in 1998 from The George Washington University and a Juris Doctor in 2002 from the University of Pittsburgh School of Law. From 2004 through April 2016, Judge Golparvar served in various capacities, including: division chief, section chief, senior advisor to the principal legal advisor, deputy chief counsel, and assistant chief counsel for Immigration and Customs Enforcement, Department of Homeland Security. From 2003 through 2004, Judge Golparvar was an associate attorney for Deasy & Whitehill PC, in Pittsburgh. In 2013, Judge Golparvar joined the faculty at The George Washington University Law School where he serves as an adjunct professor. Judge Golparvar is a member of the District of Columbia and Pennsylvania Bars.
Robin J. Rosche, Immigration Judge, Chicago Immigration Court
Attorney General Loretta E. Lynch appointed Robin J. Rosche to begin hearing cases in April 2016. Judge Rosche received a Bachelor of Science degree in 1997 from the University of Wisconsin-Milwaukee, a Juris Doctor in 2000 from Marquette University Law School, and a Master of Laws in 2005 from the University of London, University College. From 2014 through March 2016, Judge Rosche served as a general attorney for Customs and Border Protection, Department of Homeland Security (DHS). From 2005 through 2014, Judge Rosche served as an assistant chief counsel for Immigration and Customs Enforcement, DHS. From 2000 through 2004, Judge Rosche served as an assistant district attorney for the Milwaukee County District Attorney’s Office. From 1988 through 1997, Judge Rosche served in various capacities including: uniformed patrol officer, undercover officer and detective for the Milwaukee Police Department in Wisconsin. From 1983 through 1987, Judge Rosche served as a security police investigator for the U.S. Air Force at Ramstein Air Base, in Germany. Judge Rosche is a member of the State Bar of Wisconsin.
- EOIR -
The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR's immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR's Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.
Department of Justice to Launch Inaugural National Reentry WeekRead the Press Release
Attorney General Lynch and Secretary Castro to Kickoff National Reentry Week in Philadelphia
Justice Department to Announce New Efforts to Improve Outcomes for Justice-Involved Individuals Including Youth
As part of the Obama Administration’s commitment to strengthening the criminal justice system, the Department of Justice designated the week of April 24-30, 2016, as National Reentry Week. Attorney General Loretta E. Lynch and U.S. Department of Housing and Urban Development Secretary Julián Castro will travel to Philadelphia on MONDAY, APRIL 25, 2016, to hold events as part of National Reentry Week with public housing advocates, legal services providers and community leaders where they will announce new efforts to improve outcomes for justice-involved individuals including youth.
Later in the week, the Attorney General will visit a Federal Bureau of Prisons (BOP) facility in Talladega, Alabama, to highlight reentry programs in prison. Similarly, Deputy Attorney General Sally Q. Yates will visit a federal women’s prison in Texas and will later hold a media availability at Santa Maria Hostel, a specialized residential substance abuse, mental health and trauma facility. Acting Director Thomas Kane of the Bureau of Prisons will accompany both Attorney General Lynch and Deputy Attorney General Yates on their visits.
“Too often, justice-involved individuals who have paid their debt to society confront daunting obstacles to good jobs, decent housing, adequate health care, quality education, and even the right to vote,” said Attorney General Lynch. “National Reentry Week highlights the many ways that the Department of Justice – and the entire Obama Administration – is working to tear down the barriers that stand between returning citizens and a meaningful second chance – leading to brighter futures, stronger communities, and a more just and equal nation for all.”
The Obama Administration has taken major steps to make our criminal justice system fairer, more efficient and more effective at reducing recidivism and helping formerly incarcerated individuals contribute to their communities. Removing barriers to successful reentry helps formerly incarcerated individuals compete for jobs, attain stable housing, and support their families. An important part of that commitment is preparing those who have paid their debt to society for substantive opportunities beyond the prison gates, and addressing collateral consequences to successful reentry that too many returning citizens encounter.
Leadership from across the Administration are traveling during National Reentry Week in support of these many events and are encouraging federal partners and grantees to work closely with stakeholders like federal defenders, legal aid providers and other partners across the country to increase the impact of this effort. National Reentry Week events are being planned in all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands. U.S. Attorney’s Offices alone are hosting over 200 events and BOP facilities are holding over 370 events.
ATTORNEY GENERAL LYNCH AND SECRETARY CASTRO HOLD NATIONAL REENTRY WEEK EVENT
WHO: Attorney General Loretta E. Lynch
U.S. Department of Housing and Urban Development Secretary Julián Castro
WHEN: MONDAY, APRIL 25, 2016
2:30 p.m. EDT
WHERE: Raymond Rosen Manor Auditorium
2301 W. Edgley St.
Philadelphia, PA 19121
OPEN PRESS (Media Gather Time: 1:30 p.m. EDT; Final Access: 2:00 p.m. EDT)
NOTE: All media must present government-issued photo I.D. (such as a driver’s license) as well as valid media credentials. Members of the media must RSVP for the above events to Heather Fluit at [email protected] and [email protected] by Monday, Apr. 25, 2016, at 9:00 a.m. EDT. Space is limited and not guaranteed. Press inquiries regarding logistics should be directed to Heather Fluit at [email protected] and [email protected]. Following the event, Attorney General Lynch and Secretary Castro will hold a media availability.
ATTORNEY GENERAL LYNCH VISITS FEDERAL BUREAU OF PRISONS FACILITY IN ALABAMA
WHO: Attorney General Loretta E. Lynch
Acting Director Thomas Kane of the Bureau of Prisons
WHEN: FRIDAY, APRIL 29, 2016
WHERE: FCI Talladega
565 East Renfroe Road
Talladega, AL 35160
POOLED PRESS
NOTE: This event is pooled press. There is no RSVP for this event. Press inquiries should be directed to the Office of Public Affairs at [email protected].
DEPUTY ATTORNEY GENERAL YATES VISITS FEDERAL WOMEN’S PRISON FACILITY AND HOLDS MEDIA AVAILABILITY AT REENTRY CENTER
Federal Women’s Prison
WHO: Deputy Attorney General Sally Q. Yates
Acting Director Thomas Kane of the Bureau of Prisons
WHEN: TUESDAY, APRIL 26, 2016
WHERE: FPC Bryan
1100 Ursuline Avenue
Bryan, TX 77803
OPEN TO PRE-CREDENTIALED MEDIA
NOTE: This event is open only to pre-credentialed media. There is no RSVP for this event.
Media Availability at Reentry Center
WHO: Deputy Attorney General Sally Q. Yates
WHEN: TUESDAY, APRIL 26, 2016
4:30 p.m. CDT / 5:30 p.m. EDT
WHERE: Santa Maria Hostel
2605 Parker Road
Houston, TX 77093
OPEN PRESS (Media Gather Time: 3:30 p.m. CDT / 4:30 p.m. EDT; Final Access: 4:00 p.m. CDT / 5:00 p.m. EDT)
NOTE: All media must present government-issued photo I.D. (such as a driver’s license) as well as valid media credentials. Members of the media must RSVP for the above events to [email protected] by Monday, Apr. 25, 2016, at 5:00 p.m. EDT. Space is limited and not guaranteed. Press inquiries regarding logistics should be directed to Emily Pierce at [email protected] and Wyn Hornbuckle at [email protected].
OTHER WHITE HOUSE AND DEPARTMENT OF JUSTICE EVENTS SURROUNDING NATIONAL REENTRY WEEK INCLUDE:
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On Monday, April 25, 2016, the White House will hold an event with the Brennan Center on the costs of incarceration.
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On Monday, April 25, 2016, Deputy Attorney General Sally Q. Yates will deliver remarks before a screening of “Pull of Gravity” a documentary that follows returning inmates as they encounter reentry obstacles, hosted by the Justice Department as part of National Reentry Week. Assistant Attorney General Leslie R. Caldwell of the Criminal Division will also participate.
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On Monday, April 25, 2016, Director Lisa Foster of the Office for Access Justice will hold a joint event in Los Angeles with the Department of Housing and Urban Development to announce new efforts to improve outcomes for justice-involved youth.
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On Monday, April 25, 2016, Director Lisa Foster of the Office for Access Justice will attend a Conviction and Sentence Alternatives (CASA) Program Graduation Ceremony in Los Angeles.
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On Tuesday, April 26, 2016, Assistant Attorney General Karol V. Mason of the Office of Justice Programs will attend a girls mentoring event at a local detention facility. The event is sponsored by the U.S. Attorney’s Office for the District of Columbia.
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On Tuesday, April 26, 2016, Acting Associate Attorney General Bill Baer will deliver remarks at a reentry event at Central Union Mission, sponsored by the U.S. Attorney’s Office for the District of Columbia. Assistant Attorney General Karol V. Mason of the Office of Justice Programs will participate in Q+A.
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On Tuesday, April 26, 2016, Second Chance Fellow Daryl Atkinson of the Office of Justice Programs will deliver remarks at a reentry simulation in Birmingham sponsored by the U.S. Attorney’s Office for the Northern District of Alabama.
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On Wednesday, April 27, 2016, the White House will host the Fair Chance Opportunities Champions of Change event in South Court Auditorium.Attorney General Loretta E. Lynch will deliver remarks and Deputy Attorney General Sally Q. Yates will moderate a panel at the event.
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On Thursday, April 28, 2016, the head of the Civil Rights Division, Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division will deliver remarks at a reentry event at Mickey Leland Transitional Housing Facility, sponsored by the U.S. Attorney’s Office for the District of Columbia.
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On Friday, April 29, 2016, Principal Deputy Director Bea Hanson of the Office on Violence Against Women will visit a federal women’s prison in West Virginia.
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On Friday, April 29, 2016, the Department of Labor will host a celebration of the 50th Anniversary of the Bonding Program.Deputy Attorney General Sally Q. Yates will deliver remarks at the event.
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Department of Justice and EPA Announce $50 Million Settlement to Clean up Contamination at Eastern Tennessee Superfund SiteRead the Press Release
The Department of Justice and the U.S. Environmental Protection Agency (EPA) today announced that OXY USA Inc., a subsidiary of Occidental Petroleum Company, has agreed to clean up contaminated water and sediments in the Ocoee River and one of its watersheds at the Copper Basin Mining District Superfund Site in Polk County, Tennessee. The settlement requires the company to spend an estimated $40 million to maintain and operate a water treatment system, prevent access by the public to contaminated water and monitor contamination in the Ocoee River.
In addition, OXY USA Inc. will reimburse EPA approximately $10.8 million toward costs incurred in its past cleanup actions at the site. The company will also reimburse EPA and the state of Tennessee for costs incurred by those agencies in overseeing the work required by the settlement
“This settlement is the product of excellent cooperation between private parties, and the state and federal government to find a long term solution to cleaning up the contamination at the Copper Basin site,” said Assistant Attorney General John Cruden of the Justice Department’s Environment and Natural Resources Division. “This agreement will yield lasting benefits for water quality in this Ocoee River watershed.”
“This settlement marks a significant turning point in the remediation and restoration of an area that has borne the brunt of contamination from industrialized operations for over a century,” said Regional Administrator Heather McTeer Toney of EPA’s Southeast Region. “The provisions incorporated by these consent decrees exemplifies the hard work by multiple federal agencies, the state of Tennessee, Tennessee Valley Authority and OXY USA to ensure the remediation and recovery of the Ocoee River and the North Potato Creek and Davis Mill Creek Watersheds continues well into the future.”
“This settlement formalizes the cooperation and commitments exhibited between the company and regulators over the past two decades,” said Tennessee Department of Environment and Conservation Commissioner Bob Martineau. “This major project follows a shared goal of compliance and achievement of long-term water quality performance in the Copper Basin that benefits our natural resources and the citizens of Tennessee.”
Pursuant to earlier agreements with EPA and the state of Tennessee, OXY constructed and installed a system to collect and treat contaminated water and sediments from the Davis Mill Creek watershed prior to discharge in the Ocoee River. Under the settlement lodged today, OXY will continue to operate and maintain the system, including any necessary refurbishments of the plant. In addition, the Tennessee Valley Authority (TVA) agreed to implement measures at its dams along a 38-mile stretch of the Ocoee River in order to prevent contaminants from becoming airborne. EPA will oversee the work, which will implement the cleanup remedy required by the agency’s 2011 and 2014 Records of Decision for the Ocoee River and the Davis Mill Creek watershed, respectively.
From the mid-1800s until 1989, the Copper Basin Mining District Superfund Site was the location of extensive copper, iron and sulfur mining operations, mineral processing and sulfuric acid production. Throughout that time, wastes generated through those operations, which included sulfuric acid, lead, mercury, PCBs and other contaminants, were disposed of in, on and around Davis Mill Creek and North Potato Creek, both of which discharge to the Ocoee River. These contaminants can still be found in the sediments and surface water at the site.
EPA, the Tennessee Department of Environment and Conservation and OXY began response work at the Copper Basin Mining District Superfund Site in 1990. Over the last 25 years, EPA has overseen extensive work at the site, including the construction of two water treatment plants (WTPs). The first WTP went online in 2002 and the second in 2005. To date, 535,231 kilograms of hazardous waste, oil, equipment and soil contaminated with lead and polychlorinated biphenyls have been removed from the site and properly disposed. The volume of water treated to date is 8,266,257,000 gallons at the London Mill Wastewater Treatment Plant, 9,761,564,000 gallons at the Cantrell Flats Wastewater Treatment Plant, and 49,362,271,000 gallons at the North Potato Creek Water Treatment Plant, totaling 67,390,092,000 gallons.
Also under the consent decree, the United States, on behalf of the Department of Defense and the Department of Commerce, agreed to pay OXY approximately $12.6 million to settle claims for OXY’s past and future cleanup costs, based primarily on the United States’ ownership and operation of a portion of the site between 1941 and 1946.
Taking into account the settlement being lodged today and the work previously performed at the site, over $217 million is being devoted to cleaning up the contamination at this site.
The settlement, lodged in the Eastern District of Tennessee today as two consent decrees, will be posted in the Federal Register and available for public comment for a period of 30 days. The consent decree can be viewed on the Justice Department website: www.justice.gov/enrd/Consent_Decrees.html. The Justice Department also concurrently filed a complaint initiating the case that the consent decrees resolve.
For more information on the site, please visit: https://cumulis.epa.gov/supercpad/cursites/csitinfo.cfm?id=0406638
USNCB Strengthens State Access to International SystemsRead the Press Release
For almost a decade, INTERPOL Washington, the United States National Central Bureau (USNCB), has empowered the nation’s law enforcement to utilize both national and INTERPOL criminal indices. The process of linking states together to use INTERPOL systems, known as federation, will assist officers across the country in making determinations about persons or items they encounter in the field: suspected fugitives, victims, stolen vehicles, stolen travel documents, etc.
The national goal of federation is to streamline law enforcement queries into single requests, accessible via an officer’s vehicle or handheld device. Those queries would be routed through various national systems, such as the International Justice and Public Safety Network (Nlets) and National Criminal Information Center (NCIC). Such systems provide information such as a suspect’s name, charges, and threat level. That information enhances the effectiveness of all police action, from an officer’s safety during a traffic stop to informational support for an investigation.
To date, 12 states and the District of Columbia have become consistent users of these services. Their combined 67 million queries for people, vehicles, firearms, and/or travel documents have allowed for the dissemination of information about dangerous criminals, who may be moving within or outside the United States. As more states utilize this service, the likelihood of successfully identifying a suspect increases. Since 2006, the total number of queries made by states has grown exponentially, a growth assisted by the cost to federate being minimal: personnel training, administration, and other ‘soft’ costs. As the program grows, it may be used to increase U.S. law enforcement’s situational awareness in the period following terrorist attacks.
Following the San Bernardino attack in 2015, the USNCB is discussing a federation pilot with the Community Oriented Policing Services (COPS). The component’s close relationship with state and local law enforcement will allow it and the USNCB to identify grants and/or funding streams for federating states.
Two Individuals Charged in Superseding Indictment with Conspiring to Commit Acts of Terrorism Transcending National BoundariesRead the Press Release
Today, David Daoud Wright, aka Dawud Sharif Abdul Khaliq, aka Dawud Sharif Abdul Khaliq, 26, of Everett, Massachusetts, and Nicholas Alexander Rovinski, aka Nuh Amriki, aka Nuh Andalusi, 25, of Warwick, Rhode Island, were charged in a superseding indictment with conspiracy to commit acts of terrorism transcending national boundaries.
The announcement was made by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Carmen M. Ortiz of the District of Massachusetts and Special Agent in Charge Harold H. Shaw of the FBI’s Boston Division.
This charge, as well as additional conspiracy allegations, were included in a new superseding indictment against Wright and Rovinski today. A grand jury in June 2015, charged them with conspiracy to provide material support to the Islamic State of Iraq and the Levant (ISIL). The indictment also charged Wright with conspiracy to obstruct justice and obstruction of justice.
Wright and Rovinski are charged with conspiring with each other, known and unknown conspirators, and Usaamah Abdullah Rahim, 26, Wright’s uncle, to provide material support to ISIL and commit acts of terrorism that transcended national boundaries. On June 2, 2015, Rahim was shot and killed after he attacked law enforcement officers in a Roslindale, Massachusetts, parking lot.
The superseding indictment alleges that, beginning in at least February 2015, Wright began discussing ISIL’s call to kill non-believers in the United States with Rahim and Rovinski and they began plotting and recruiting members for their “martyrdom” operation. In March 2015, Wright drafted organizational documents for a “Martyrdom Operations Cell” and conducted Internet search queries about firearms, the effectiveness of tranquilizers on human subjects and the establishment of secret militias in the United States. Simultaneously, Rahim was communicating with ISIL members overseas, including Junaid Hussain. On Aug. 24, 2015, Hussain was killed in an airstrike in Raqqah, Syria.
As alleged in the indictment, beginning in or about May 2015, Hussain allegedly communicated directly with Rahim. Rahim in turn communicated Hussain’s instructions to Wright, with regard to the murder of an individual residing in New York. Wright, Rovinski and Rahim each allegedly conspired to commit attacks and kill persons inside the United States on behalf of ISIL. In preparation for their attack, Rovinski conducted research on weapons that could be used to behead their victims. Since being arrested, Rovinski has sought to continue their planned attacks and has written letters to Wright from prison discussing ways to take down the U.S. government and decapitate non-believers.
The charge of conspiracy to provide material support provides a maximum sentence of 20 years in prison, a lifetime term of supervised release and a $250,000 fine; conspiracy to obstruct justice provides a maximum sentence of five years in prison, three years of supervised release and a $250,000 fine; obstruction of justice provides a maximum sentence of 20 years in prison, three years of supervised release and a $250,000 fine; conspiracy to commit acts of terrorism transcending national boundaries provides a maximum sentence of life in prison, lifetime supervised release and a $250,000 fine. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
This investigation is being conducted by the Boston Joint Terrorism Task Force (JTTF) and the Rhode Island JTTF with critical assistance from the Boston Police Department; Boston Regional Intelligence Center; Massachusetts State Police; Commonwealth Fusion Center; Everett Police Department; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; Rhode Island State Police; Warwick, Rhode Island, Police Department; Rhode Island Fusion Center; Naval Criminal Investigative Service; and member agencies of the JTTF.
The case is being prosecuted by Assistant U.S. Attorney B. Stephanie Siegmann of the District of Massachusetts’s National Security Unit and Trial Attorney Greg R. Gonzalez of the National Security Division’s Counterterrorism Section.
The details contained in the charging documents are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in the court of law.
Wright Indictment
Texas Artist Pleads Guilty to Failure to File Income Tax ReturnRead the Press Release
A San Antonio, Texas, artist pleaded guilty today in the U.S. District Court for the Western District of Texas in San Antonio to one count of failure to file a tax return, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
According to court documents, Carlos Cortes is an artist who works in the medium of “Faux Bois,” an artistic imitation of wood or wood grains in various media. Cortes’ work has been commissioned by the City of San Antonio along with several San Antonio businesses. According to Internal Revenue Service (IRS) records, Cortes did not file individual income tax returns for 2006, 2007, 2008 and 2009 despite earning gross income well in excess of the filing requirements. Cortes admitted that he had gross income of $62,043 in 2006, $66,138 for 2007, $457,192 for 2008 and $781,847 for 2009.
Cortes will be sentenced on June 21. He faces a statutory maximum sentence of one year in prison and a $100,000 fine. As part of his plea agreement, Cortes agreed to pay restitution to the IRS in the amount of $404,433 to cover the tax due and owing for the years 2006 to 2009.
Acting Assistant Attorney General Ciraolo thanked special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorney Robert Kemins 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.
Sentenciada Una Residente De Roseville Por Estafa De Modificaciones De Préstamos Y Rescates De Embargos Inmobiliarios Orientada a LA Comunidad De Habla HispanaRead the Press Release
SACRAMENTO, California – Ligia Sandoval Spafford (Sandoval), 48 años de edad, y residente de Roseville, fue condenada el jueves por el Juez del Distrito de los Estados Unidos Troy L. Nunley a dos años y tres meses de prisión por una trama que se dirigía a propietarios de viviendas que se encontraban en dificultades económicas, anunció el Procurador de los Estados Unidos Benjamín B. Wagner. Se le ordenó a Sandoval a que se entregara el 9 de junio de 2016.
Sandoval pagó $115,065.00 de dólares en indemnizaciones, la cantidad total de restitución ordenada por el tribunal, para compensar a las víctimas por las pérdidas en que incurrieron como resultado de esta trama fraudulenta. En febrero de 2015, Sandoval y su marido de entonces, Martin Wayne Flanders, 51 años de edad, y residente de Roseville, se declararon culpables de fraudes de correo para llevar a cabo la trama fraudulenta. El 29 de octubre de 2015, Flanders fue condenado a seis años y cinco meses de prisión.
En la declaración de la sentencia, el Juez Nunley dijo: “Ella sabía lo que estaba ocurriendo e incitó a estas personas a que formaran parte en esta trama. Ellos confiaban en ella. … Ella arruinó las vidas de algunas personas. El que ella pagara una indemnización no quita la ansiedad y el miedo que ellos (las víctimas) mantuvieron mientras ocurría esto. Estas víctimas estaban devastadas.”
Según documentos del tribunal, entre los años 2008 y 2010, Flanders cobró tarifas por adelantado a sus clientes por un número de servicios financieros que incluían modificaciones de préstamos, revisiones de préstamos hipotecarios, recuperación de crédito, liberación de deuda, peticiones de bancarrota y un programa para vender casas a “inversionistas” que las alquilaban con la opción a compra. Sandoval y Flanders comerciaban con estos servicios con propietarios de viviendas que se encontraban en dificultades económicas y ponían un énfasis particular en personas de habla hispana. Sandoval, siendo hispano-hablante, promovía los servicios que ella y Flanders, quien no dominaba el español, ofrecían durante un programa de radio que se emitía dos veces a la semana en la zona del “Bay Area” por Radio Luz, una emisora de radio Cristiana en español. Sandoval, una agente de bienes y raíces autorizada, además asistía a Flanders en la trama fraudulenta manteniendo relación con y explicando los servicios a clientes de habla-hispana. Los servicios ofrecidos por Flanders y Sandoval también se anunciaban en Univisión, un canal de televisión en español, y en revistas en español. Cerca de un 98 por ciento de los clientes de los demandados eran de descendencia hispana; algunos hablaban poco o nada de inglés.
Sandoval y Flanders dieron numerosos testimonios falsos a los inversores sobre el éxito de los programas que se ofrecían o, en el caso, de las devoluciones que estaban disponibles si los programas no prosperaban. En intentos de retrasar los procesos de embargo de las viviendas, Sandoval y Flanders también se servían de ofertas ficticias llamadas “ofertas fantasma” para comprar las viviendas de las víctimas a precio reducido en un proceso llamado “short sale,” como también de fingidas peticiones de bancarrota llamadas “bancarrotas de esqueleto” que eran rápidamente desestimadas por el tribunal de bancarrotas. Al menos, entre 25 a 30 individuos pagaron por los servicios que nunca recibieron o no recibieron las devoluciones cuando los programas dejaron de cumplir con lo prometido. Como mínimo, las pérdidas totales de las víctimas fueron de $115,000 dólares. Algunos de los propietarios que no pudieron recibir subsidios fueron embargados por sus entidades de crédito.
Este caso ha sido el producto de una investigación llevada a cabo por la Oficina Federal de Investigaciones (FBI). Los Procuradores Auxiliares de los Estados Unidos Todd A. Pickles y Shelley Weger han procesado el caso.
Justice Department Closes Case after Rhode Island Judiciary Reforms Provide Equal Access for Individuals with Limited English ProficiencyRead the Press Release
The Justice Department today announced the closure of its case concerning the provision of language assistance to individuals with limited English proficiency (LEP) in the state court system following the successful implementation of reforms by the Rhode Island Judiciary.
The Rhode Island Judiciary and the Justice Department successfully resolved an investigation of an administrative complaint filed under Title VI of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race, color or national origin in federally funded programs or activities. The complaint alleged that the Rhode Island Judiciary failed to provide interpreters and other language assistance services to LEP court users. In 2012, following extensive negotiations between the Rhode Island Judiciary and the department, Chief Justice Paul A. Suttell of the Rhode Island Supreme Court issued Executive Order No. 2012-05 on language services in the courts to mandate that qualified interpreters and other approved language assistance be provided at no charge for individuals with LEP in all court proceedings, services and programs.
In 2014, the department approved the Rhode Island Judiciary’s language access plan and the parties signed a voluntary resolution agreement that required the successful implementation of the executive order and plan, continued input from a stakeholder committee, compliance with Title VI and two years of monitoring and technical assistance. Today, after the Rhode Island Judiciary completed the conditions for termination of the agreement, the department officially closed the case.
The department and the Rhode Island Judiciary have worked cooperatively to improve how the courts communicate with LEP court users. In addition to adopting the comprehensive language access policy contained in the executive order, the judiciary’s accomplishments include:
• Designating staff qualified to provide services to court customers in languages other than English;
• Posting signage in six languages throughout each court house advising the public of the right to an interpreter at no cost;
• Requiring both parties to state court actions to report interpreter needs data to the court through new e-filing requirements;
• Translating forms and website content into commonly spoken languages in Rhode Island, such as Spanish, Portuguese, Khmer and Cape Verdean;
• Creating a multilingual notice of right to language assistance and adopting a court rule requiring service of the notice upon each defendant in a proceeding;
• And, creating a language services complaint policy and posting a complaint form in multiple languages on the court’s website, in court clerk’s offices and in the Office of Court Interpreters.
“Access to justice requires that all people, including those with limited English proficiency, can fully access and fairly participate in our courts,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “We commend Chief Justice Suttell and staff in the Administrative Office of State Courts for their efforts to make the promise of equal access to justice a reality for all Rhode Island residents.”
The Rhode Island matter was handled by Attorney Paul M. Uyehara of the Civil Rights Division’s Federal Coordination and Compliance (FCS) Section.
The complaint was resolved as part of the initiative by FCS to ensure that state courts comply with the language access requirements of Title VI. To ensure that no LEP individual is denied justice due to a court’s failure 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.
Joint Efforts Globally Distribute 2 Million Child Exploitation LeadsRead the Press Release
In early 2014, INTERPOL Washington, the U.S. National Central Bureau (USNCB), initiated a 30-day pilot program to test how INTERPOL member countries would assimilate data from the National Center for Missing and Exploited Children (NCMEC). The source of the shared information is NCMEC’s Cyber Tipline Reports, the organization’s analytical result for child abuse leads received. To start, the USNCB disseminated NCMEC information to 10 random member countries, excluding child exploitation imagery. National Central Bureaus (NCBs) in other countries could receive the images via requests to the USNCB, however.
By May 2014, the program went live and the service became available to approximately 140 INTERPOL member countries. By November 2015, 1 million leads had been distributed, with 38 countries requesting additional information for follow-up investigations. These leads are distributed electronically, without the need for dedicated personnel resources.
Now, on April 11th, 2016, less than 2 years later, over 2 million leads have been distributed across 130 different countries. The project’s focus is now to develop the ability of NCBs to retrieve the images without involvement from the USNCB.
Among the program’s most recent successes was the arrest of Colin Fisher, a British national operating in Gibraltar. Of the many leads the USNCB distributed, a Cyber Tipline report was utilized by NCB Gibraltar to inform the country’s own law enforcement to locate Fisher. He was charged with multiple counts of possession (and distribution) of indecent images of children. Combined with a voyeurism charge unrelated to the abuse, Fisher is now serving a 3-year, 8-month sentence.
Florida Woman Charged in 18-Count Indictment for Conspiracy to Illegally Export Systems, Components and Documents to ChinaRead the Press Release
Defendant is Charged with Acting as an Illegal Agent of a Foreign Government in the United States Without Prior Notification to the Attorney General, Among Other Crimes
An 18-count superseding indictment was unsealed today charging Amin Yu, 53, of Orlando, Florida, with acting as an illegal agent of a foreign government in the United States without prior notification to the Attorney General, conspiring to defraud the United States and to commit offenses against the United States, committing unlawful export information activities, smuggling goods from the United States, conspiring to and committing international money laundering and making false statements to the U.S. Citizenship and Immigration Services.
The indictment was announced by Assistant Attorney General for National Security John P. Carlin and U.S. Attorney A. Lee Bentley III of the Middle District of Florida.
According to the superseding indictment, from at least 2002 until approximately February 2014, Yu obtained systems and components for marine submersible vehicles from companies in the United States. She did so at the direction of co-conspirators working for Harbin Engineering University (HEU), which is a state-owned entity in the People’s Republic of China. Yu proceeded to illegally export the systems and components to China for use by her co-conspirators in the development of marine submersible vehicles – unmanned underwater vehicles, remotely operated vehicles and autonomous underwater vehicles – for HEU and other state-controlled entities. It is alleged that Yu illegally exported items by failing to file electronic export information as required by U.S. law and also by filing false electronic export information. In particular, Yu completed and caused the completion of export-related documents in which she significantly undervalued the items that she had exported and also provided false end-user information for those items.
An indictment is merely an allegation and every defendant is presumed innocent unless, and until, proven guilty.
If convicted, Yu faces a maximum penalty of 20 years in federal prison on each of the money laundering counts. She faces a maximum sentence of 10 years in prison for acting as an illegal agent of a foreign government and faces a maximum sentence of five years in prison on all other counts. The indictment also notifies Yu that the United States intends to forfeit approximately $2,668,648.92, the alleged traceable proceeds of the offenses.
This case was investigated by the FBI, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Internal Revenue Service-Criminal Investigation and the Naval Criminal Investigative Service. The case is being prosecuted by Assistant U.S. Attorney Daniel C. Irick of the Middle District of Florida and Trial Attorneys David C. Recker and Thea D. R. Kendler of the National Security Division’s Counterintelligence and Export Control Section.
Yu Indictment
Departamento de Justicia Cierra Caso Después de Que las Reformas del Poder Judicial de Rhode Island Brindaran Igualdad de Acceso a Personas con Conocimientos Limitados del InglésRead the Press Release
WASHINGTON – El Departamento de Justicia anunció hoy el cierre de su caso sobre el ofrecimiento de asistencia lingüística a personas con conocimientos limitados del inglés [Limited English Proficiency (LEP)] en el sistema de tribunales estatales después de la implementación exitosa de reformas por parte del Poder Judicial de Rhode Island.
El Poder Judicial de Rhode Island y el Departamento de Justicia resolvieron con éxito una investigación de una demanda administrativa entablada bajo el Título VI de la Ley de Derechos Civiles de 1964, que prohibe la discriminación con base en la raza, el color o el origen nacional en programas o actividades con financiamiento federal. La demanda alegaba que el Poder Judicial de Rhode Island no ofrecía intérpretes y otros servicios de asistencia lingüística a usuarios LEP de los tribunales. En 2012, después de amplias negociaciones entre el Poder Judicial de Rhode Island y el departamento, el Juez Principal Paul A. Suttell de la Corte Suprema de Rhode Island emitió la Orden Ejecutiva No. 2012-05 sobre servicios lingüísticos en los tribunales para exigir que se ofrecieran intérpretes calificados y otros tipos aprobados de asistencia lingüística sin cargo para personas con LEP en todos los procedimientos, servicios y programas judiciales.
En 2014, el departamento aprobó el plan de acceso idiomático del Poder Judicial de Rhode Island y las partes firmaron un acuerdo de resolución voluntaria que exigía la implementación exitosa de la orden ejecutiva y el plan, participación constante de un comité de partes interesadas, cumplimiento con el Título VI y dos años de monitoreo y asistencia técnica. Hoy, después de que el Poder Judicial de Rhode Island completara las condiciones para la rescisión del acuerdo, el departamento cerró oficialmente el caso.
El departamento y el Poder Judicial de Rhode Island han colaborado conjuntamente para mejorar la manera en que los tribunales se comunican con los usuarios LEP de los tribunales. Además de adoptar la política integral de acceso lingüístico incluída en la orden ejecutiva, los logros del poder judicial incluyen:
• Designar a personal calificado para ofrecer servicios a clientes de los tribunales en idiomas que no sean el inglés;
• Colocar carteles en seis idiomas en cada tribunal informándole al público sobre el derecho de contar con un intérprete de manera gratuita;
• Exigir que ambas partes en acciones judiciales estatales informen al tribunal sobre la necesidad de intérprete a través del nuevo requerimiento de presentación electrónica de los escritos;
• Traducción de formularios y contenido de los sitios webs en idiomas comúnmente hablados en Rhode Island, como español, portugués, jemer y caboverdiano;
• Creación de un aviso multilingüe sobre el derecho a asistencia lingüística y adopción de una norma judicial que requiera la entrega del aviso a cada demandado en un procedimiento;
• Y creación de una guía a seguir para la presentación de quejas relacionadas a los servicios lingüísticos y publicación de un formulario de queja en múltiples idiomas en el sitio web, en las secretarías del juzgado y en la Oficina de Intérpretes Judiciales.
“El acceso a la justicia requiere que todas las personas, entre ellas las que tienen conocimientos limitados del inglés, puedan acceder plenamente y participar de manera justa en nuestros tribunales”, dijo la Secretaria de Justicia Auxiliar Adjunta Principal Vanita Gupta, jefa de la División de Derechos Civiles del Departamento de Justicia. “Felicitamos al Juez Principal Suttell y al personal de la Oficina Administrativa de Tribunales Estatales por su labor para hacer realidad la promesa de igualdad de acceso para todos los residentes de Rhode Island”.
El asunto de Rhode Island fue tratado por el Fiscal Paul M. Uyehara de la Sección de Coordinación y Cumplimiento Federal [Federal Coordination and Compliance Section (FCS)] de la División de Derechos Civiles.
La demanda fue resuelta como parte de la iniciativa de la FCS para asegurar que los tribunales estatales cumplan con las exigencias de acceso idiomático del Título VI. Para asegurar que no se le niegue justicia a ninguna persona LEP por la falta de servicios lingüísticos del tribunal, el equipo judicial de la FCS ofrece orientación sobre políticas y asistencia técnica a sistemas judiciales estatales y realiza acciones de coacción en todo el país.
Para obtener información adicional sobre la FCS y el Título VI, por favor visite https://www.justice.gov/crt/fcs. Para acceder a recursos adicionales relacionados con LEP, visite http://www.lep.gov/index.htm.
Former President of Auto Parts Company Pleads Guilty to Participating in Body Sealing Products Bid-Rigging ConspiracyRead the Press Release
The former president of an automotive parts company pleaded guilty today and was sentenced to serve 18 months in a U.S. prison for his role in a conspiracy to fix prices and rig bids for the sale of automotive body sealing products sold in the United States, the Justice Department announced.
Keiji Kyomoto, a former executive of an automotive body sealing products supplier based in Hiroshima, Japan, and former president of its U.S. joint venture, pleaded guilty today in the U.S. District Court for the Eastern District of Kentucky to a single-count indictment charging him with bid rigging and price fixing. As part of his plea agreement, Kyomoto also agreed to pay a $20,000 criminal fine.
“Today’s plea is yet another example of our commitment to holding senior-level executives accountable for corporate wrongdoing,” said Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division. “Whether collusion has affected automobile parts, shipping services, financial products, electronic components or even heir location services, the department has a strong and ever increasing record of prosecuting individuals in order to deter criminal antitrust practices.”
“The FBI is committed to aggressively investigating individuals who engage in criminal conduct that corrupts the global marketplace,” said Special Agent in Charge Howard S. Marshall of the FBI’s Louisville Division. “We will continue our work with the Department of Justice Antitrust Division to uncover schemes aimed at creating an unfair competitive advantage by way of price fixing, bid rigging or other illegal means.”
On Oct. 8, 2015, a federal grand jury in Covington, Kentucky, returned an indictment against Kyomoto and two other individuals, charging them with conspiring to rig bids for and fix the prices of body sealing products sold to Honda Motor Company Ltd., Toyota Motor Corp. and certain of their subsidiaries and affiliates for installation in vehicles manufactured and sold in the United States and elsewhere. Automotive body sealing products consist of body-side opening seals, door-side weather-stripping, glass-run channels, trunk lids and other smaller seals, which are installed into automobiles to keep the interior dry from rain and free from wind and exterior noises.
According to the indictment, Kyomoto and his co-conspirators instructed subordinates at their respective companies to communicate with co-conspirators at other companies in order to allocate sales of, rig bids for and fix the prices of automotive body sealing products; were aware that employees under their supervision were engaging in such communications; and condoned such communications. The indictment further alleged that Kyomoto attended meetings in the United States with co-conspirators during which Kyomoto and the co-conspirators reached agreements regarding sales of automotive body sealing products to Honda and Toyota. The indictment charged Kyomoto with participating in the conspiracy beginning at least as early as September 2003 until at least October 2011. For most of this period, Kyomoto resided in the United States and served as president of an unnamed joint venture with offices in Indiana and Michigan, which manufactured and sold automotive body sealing products.
Today’s guilty plea is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI. A total of 58 individuals and 39 companies have been charged and have agreed to pay more than $2.6 billion in criminal fines. This case was brought by the Antitrust Division’s Chicago Office and the FBI’s Louisville Division, Covington Resident Agency, with the assistance of the FBI’s International Corruption Unit and the U.S. Attorney’s Office of the Eastern District of Kentucky. Anyone with information about anticompetitive conduct in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Louisville Division at 502-263-6000.
Federal Court Shuts Down Eastern Washington Tax Return PreparerRead the Press Release
A federal court entered a permanent injunction yesterday against Grandview, Washington tax return preparer Jose Magana and his business, Genesis Bookkeeping and Accounting. The injunction bars Magana and Genesis Bookkeeping from preparing tax returns for others. Magana and Genesis Bookkeeping admitted in a court filing that they had interfered with the enforcement and administration of the federal tax laws. They agreed to entry of the injunction.
According to the United States’ complaint, Magana and his business have engaged in a pattern of claiming for their clients false or inflated dependency exemptions, inappropriate filing status, and false or inflated Child Tax Credits and Additional Child Tax Credits. Their practice of claiming these false exemptions and credits has resulted in significant lost tax revenues by understating tax liabilities and claiming improper refunds, according to the suit.
Specifically, the suit alleges that, as of March 26, 2015, the Internal Revenue Service (IRS) had examined close to 300 tax returns that Magana and Genesis Bookkeeping and Accounting had filed from 2012 through 2014. Over 95 percent of these examinations resulted in adjustments to tax, with proposed deficiencies averaging approximately $3,150 per return, according to the complaint. The suit alleges that Magana and his business prepared more than 10,000 returns from 2012 through 2014.
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 website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Department of Justice and EPA Announce $78 Million Superfund Settlement to Clean up Groundwater Contamination at Southern California Superfund SiteRead the Press Release
The Department of Justice and the U.S. Environmental Protection Agency (EPA) today announced that a group of 66 companies have agreed to clean up contaminated groundwater at the Omega Chemical Corporation Superfund Site in Whittier, California. The settlement requires the companies to spend an estimated $70 million to install wells and operate a groundwater treatment system. In addition, the parties will reimburse EPA $8 million and the California Department of Toxic Substances Control $70,000 toward costs incurred in those agencies’ past cleanup actions at the site.
“We are pleased that the settling parties have come forward to do the work of cleaning up the groundwater contamination to which they and others contributed,” said Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division. “This settlement makes excellent progress in cleaning up the Omega site and will also put additional systems in place to monitor and evaluate the level of contamination in order to guide future work.”
“Today’s settlement ensures the protection of a vital drinking water source for LA County,” said Regional Administrator Jared Blumenfeld of EPA’s Pacific Southwest Region. “The cleanup of this polluted aquifer is critical because groundwater in the region has been depleted because of the drought.”
“Our current drought has underscored the importance of protecting California’s groundwater resources,” said Director Barbara A. Lee of the California Department of Toxic Substances Control. “It has taken a lot of work between state and federal agencies to get to this point and it is vital we begin the work of cleaning up this aquifer."
Design work on the new treatment system, extraction wells and piping will begin later this year and continue into 2017, with construction expected to begin in 2018. EPA will oversee the work, which will implement the cleanup remedy required by the Agency’s 2011 Record of Decision for three miles of the groundwater plume. The settling parties will also install and sample groundwater monitoring wells later this year to investigate and evaluate the remaining contaminated area at the site to determine what additional remediation is needed.
The former Omega Chemical Corporation facility operated from approximately 1976 to 1991 and was located at 12504 and 12512 Whittier Boulevard, across the street from a residential neighborhood and within one mile of several schools. It handled drums and bulk loads of industrial waste solvents and chemicals that were processed to form commercial products. Subsurface soil and groundwater have high concentrations of trichloroethylene (TCE), perchloroethylene (PCE), Freons and other contaminants. Drinking high levels of TCE and PCE for extended periods of time could cause damage to the nervous system, liver and lungs and increase risk of cancer.
The Omega Superfund Site was placed on Superfund’s National Priorities List in 1999 and extends from Whittier through Santa Fe Springs and into Norwalk. Over the last 20 years, EPA has overseen the removal of more than 2,700 drums as well as more than 9,000 pounds of contaminants from the soil and groundwater. A soil vapor extraction system to address vapor intrusion from the Omega Site has been operating since 2010. A small groundwater pump and treatment system has treated more than 30 million gallons of contaminated groundwater since 2009.
The settling parties include a group of 66 corporations that will conduct the work. An additional 171 parties that have either sent waste to the site or operated in the area and contributed to the contamination, have also agreed to fund a portion of the work.
The settlement, lodged today in federal court in the Central District of California, will be posted in the Federal Register and available for public comment for a period of 30 days. The consent decree can be viewed on the Justice Department website: www.justice.gov/enrd/Consent_Decrees.html. The Justice Department also concurrently filed a complaint initiating the case that the consent decree resolves.
For more information on the site, please visit: www.epa.gov/superfund/omegachemical
Statement from Head of the Civil Rights Division Vanita Gupta Regarding District Court’s Approval of Consent Decree with City of Ferguson, MissouriRead the Press Release
Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, released the following statement regarding the ruling issued by U.S. District Judge Catherine D. Perry of the Eastern District of Missouri approving the department’s consent decree with the city of Ferguson, Missouri:
“Now that the consent decree has been approved by the court, the department is looking forward to working with the city of Ferguson as it implements the decree and continues the essential work to create a police department that the Constitution requires and that residents deserve.”
Montana Man Sentenced to Prison for Marijuana Manufacturing, Tax Evasion and Weapons ChargesRead the Press Release
A Lincoln, Montana, man was sentenced today to five years in prison for manufacturing marijuana, being a felon in possession of a firearm and tax evasion, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Michael W. Cotter for the District of Montana.
Dennis Peiker, 61, was sentenced by U.S. District Court Judge Brian Morris for the District of Montana to serve 60 months in prison, followed by four years of supervised release and ordered to pay $409,819 in restitution to the Internal Revenue Service (IRS). Following a jury trial in August 2015, Peiker was convicted of manufacturing more than 100 marijuana plants. In September 2015, Peiker pleaded guilty to two counts of felon in possession of a firearm and one count of tax evasion. Judge Morris ordered Peiker to forfeit all firearms seized by law enforcement authorities.
Peiker evaded the payment of more than $628,000 in federal income tax, penalties and interest for the years 2002 through 2009 by concealing the true nature of his assets, making false statements to IRS officials, and placing funds and property in the names of others. Peiker was previously convicted in 1999 of filing false federal income tax returns. Despite the fact that Peiker is a convicted felon and therefore prohibited from possessing firearms, law enforcement agents seized ammunition and multiple firearms, including a semi-automatic pistol, two single-shot rifles, three automatic rifles and a shotgun, from his residence on two separate occasions in 2011 and 2015. Additionally, when Peiker was arrested in April 2015 following his indictment on the tax evasion charge, law enforcement agents discovered more than 100 marijuana plants at his residence.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Cotter commended special agents of IRS-Criminal Investigation, the Bureau of Alcohol, Tobacco, Firearms, and Explosives and the Lewis and Clark County Sheriff’s Office as part of the Missouri River Drug Task Force, who investigated the case, and Assistant U.S. Attorneys Paulette Stewart and Chad Spraker and Trial Attorney John Mulcahy of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Department of Justice Releases the 2016 National Strategy for Child Exploitation Prevention and InterdictionRead the Press Release
Attorney General Loretta E. Lynch today announced that the Department of Justice released the 2016 National Strategy for Child Exploitation Prevention and Interdiction. The strategy provides a comprehensive threat assessment of the nature and scope of the current dangers facing our nation’s children, including child pornography offenses, sextortion and live-streaming of child sexual abuse, child sex trafficking, child sex tourism and sex offense registry violations. For the first time, the strategy also dedicates an entire section to the unique challenges confronting child exploitation in Indian Country.
“No matter what form child exploitation takes and no matter how technologically advanced it is, it demands the full attention of law enforcement, policymakers, community leaders and service providers alike,” said Attorney General Loretta Lynch. “This strategy examines existing efforts, assesses new threats and plots a course for the future. It identifies innovative ways in which the federal government and its partners can address child exploitation. And it reaffirms our unwavering commitment to ensure that every child in America is able to reach his or her potential, free of violence and abuse.”
The strategy analyzes the work of federal law enforcement agencies and prosecutors, as well as other agencies and offices that play important roles by supporting victims, providing grants to state, local and tribal governments and non-profit partners and educating the public about the dangers of child exploitation. Since FY 2011, the Department of Justice has filed 20,260 Project Safe Childhood (PSC) cases against 19,111 defendants. These cases include prosecutions of child sex trafficking; sexual abuse of a minor or ward; child pornography offenses; obscene visual representation of the sexual abuse of children; selling or buying of children; and many more statutes.
Despite the vigorous and coordinated efforts to combat the different aspects of child exploitation, the department also recognized that more work remains and that the response must continue to evolve with the threat. To that end, the strategy outlines four goals and objectives that build upon the department’s accomplishments in combating child exploitation: investigations and prosecutions; outreach and education; victim services; and policy initiatives.
As part of its public outreach efforts, the department is also unveiling a public service announcement that specifically addresses the issue of sextortion – a crime where someone threatens to distribute your private and sensitive material if you don’t provide them images of a sexual nature, sexual favors or money. Made in conjunction with the National Center for Missing and Exploited Children, the video highlights the ways in which malicious actors can use the internet to obtain and use private material to extort innocent individuals of all ages. The announcement concludes by directing individuals with tips or leads regarding suspected crimes of sexual exploitation to file a report at www.cybertipline.org.
This year marks the 10th anniversary of the Project Safe Childhood (PSC) initiative. PSC is a department initiative launched in May 2006 that aims to combat the proliferation of technology-facilitated sexual exploitation crimes against children. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, PSC marshals federal, state, tribal and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. To learn more about PSC’s work, please visit: https://www.justice.gov/psc.
For more information regarding the National Strategy to Combat Child Exploitation, Prevention and Interdiction, please visit: https://www.justice.gov/psc/national-strategy-child-exploitation-prevention-and-interdiction.
Three Texas Tax Return Preparers Sentenced to Prison for Filing False Tax ReturnsRead the Press Release
Defendants Prepared Tax Returns for Clients that Contained False and Inflated Expenses and Credits
Three El Paso, Texas, residents were sentenced to prison for preparing and conspiring to prepare false income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Richard L. Durbin Jr. for the Western District of Texas.
Belia Mendoza, 60; Margarita Hernandez, 36; and Denise Duchene, 46, were convicted on Feb. 3 following a jury trial of conspiracy to defraud the United States for their involvement in a fraudulent tax return preparation scheme and numerous counts of aiding and assisting in the preparation and filing of materially false tax returns.
“Tax return preparers owe a duty to their clients to prepare true and accurate tax returns for filing with the Internal Revenue Service (IRS),” said Acting Assistant Attorney General Ciraolo. “When preparers intentionally include false items on tax returns, they are not only violating that duty to their clients, but they are also violating the law and exposing themselves to significant penalties, including incarceration.”
“The sentencing of these three tax return preparers sends a clear warning to unscrupulous tax preparers who break the law and abuse the tax system,” said Special Agent in Charge William Cotter of the IRS-Criminal Investigation’s San Antonio Field Office. “Knowingly falsifying documents filed with the IRS is a crime and IRS-Criminal Investigation works year-round pursuing those tax preparers who enrich themselves while cheating their clients and the U.S. Treasury.”
At today’s sentencing hearing, U.S. District Judge Frank Montalvo sentenced Mendoza to 96 months in prison, followed by five years of supervised release and ordered her to pay restitution to the IRS in the amount of $35,391. On April 15, Hernandez was sentenced to 10 months in prison, followed by three years of supervised release and ordered to pay $18,150 in restitution to the IRS. Also on Friday, Duchene was sentenced to 33 months in prison, followed by three years of supervised release and ordered to pay $2,394 in restitution to the IRS.
According to evidence and witness testimony introduced at the trial, Mendoza was the owner of Mendez Tax Services (MTS), a tax preparation business she operated out of her home in El Paso. Hernandez and Duchene, relatives of Mendoza’s, were employees of MTS hired and trained by Mendoza to prepare tax returns for clients for tax years 2008, 2009 and 2010. From February 2009 until June 2011, Mendoza, Hernandez and Duchene conspired to prepare and submit to the IRS numerous false Forms 1040 (U.S. Individual Income Tax Returns).
To maximize their clients’ fraudulently claimed income tax refunds, Mendoza, Hernandez and Duchene placed materially false items on the clients’ tax returns, at times without the knowledge or consent of the clients, including false or inflated figures for unreimbursed employee business expenses, child and dependent care expenses and education credits. Income tax returns prepared by the defendants also included false filing statuses and improperly claimed Earned Income Tax Credits.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Durbin commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorney Joseph M. Giannullo of the Tax Division and Assistant U.S. Attorneys Adrian Gallegos and Rifian Newaz of the Western District of Texas, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the Division’s website.
Justice Department Sues to Stop Miami Tax Return Preparer from Preparing Federal Tax Returns for OthersRead the Press Release
Return Preparer Allegedly Claimed Fraudulent Education, Fuel Credits
Rose M. Chazulle, a tax return preparer in Miami has prepared fraudulent federal tax returns that claim education and fuel credits to which her clients are not entitled, according to a civil lawsuit filed by the Justice Department today. The suit seeks to bar Chazulle and her company, RMC Professional Services Corporation, from preparing federal tax returns for others.
According to the complaint, Chazulle prepared federal income tax returns for customers that falsely claimed refundable credits, including American Opportunity Tax Credit and Lifetime Learning Credit. Chazulle included the false education credits for customers who did not incur educational costs and otherwise did not qualify for this credit, the complaint alleges. In addition, the complaint states Chazulle prepared tax returns that falsely claimed:
- Fuel tax credits for customers who had no businesses of any kind, even though the credit can only be taken when fuel is used for certain business purposes or to operate a school bus;
- Fabricated business losses, claimed on Schedule C, Profit or Loss from Business, even though the customers did not have a business; and
- Wages described as household help income in order to falsely claim a larger Earned Income Tax Credit than the customer otherwise would have been able to claim.
The complaint estimates that Chazulle’s conduct cost the United States over $14 million for the tax years 2011 to 2013.
Return preparer fraud is one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams for 2016. The IRS has some tips on their website for choosing a tax preparer and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Justice Department Asks Federal Court to Shut Down South Florida Tax Return PreparerRead the Press Release
A Broward County, Florida, man prepares fraudulent tax returns and should be barred from preparing federal tax returns for others, according to a civil complaint filed by the Justice Department today.
The civil complaint against Eli St. Phard was filed in the U.S. District Court for the Southern District of Florida. The complaint alleges that St. Phard prepares income tax returns that fraudulently understate 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 are not entitled, or both. According to the complaint, the Internal Revenue Service (IRS) audited 340 of the more than 3,132 returns St. Phard prepared since 2009 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 alleges.
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 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.
Owners of Tax Preparation Business Get Multi-Year Prison Sentences for Filing Bogus Tax Returns for Prison InmatesRead the Press Release
The owners of a tax preparation business that filed fraudulent tax returns on behalf of inmates at various New Jersey prisons were each sentenced today to multi-year prison sentences, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Paul J. Fishman for the District of New Jersey.
Kamal J. James aka Bro Messiah Aziz El, 34, of Seaford, Delaware, and Crystal G. Hawkins aka Sis. Crystal Gabri El, 39, of Laurel, Delaware, were sentenced to 96 and 48 months in prison, respectively. They were previously charged in a superseding indictment with one count of conspiracy, 16 counts of making false claims and three counts of mail fraud. They were convicted on all counts following a one-week trial before U.S. District Judge Peter G. Sheridan for the District of New Jersey, who imposed the sentences today in Trenton, New Jersey federal court.
According to the superseding indictment and the evidence presented at trial:
Between October 2011 and October 2013, James and Hawkins operated Release Refunds, a purported tax preparation business – previously based in Brick, New Jersey, and in Seaford – through which they solicited current and former New Jersey prison inmates as clients and then filed fraudulent tax returns on their behalf. The company is no longer in business.
James and Hawkins sent Release Refunds “promotional” flyers to inmates at various New Jersey prisons and halfway houses offering tax return preparation services. The pair asked inmates interested in Release Refunds’ services to provide basic identification information and to sign income tax returns and other Internal Revenue Service (IRS) documents, but not to include any information about their income or withholdings. James and Hawkins then filled in the missing income information on the return forms, fabricating the inmates’ earnings to trigger fraudulent and inflated refunds.
During the course of the investigation, an undercover IRS-Criminal Investigation agent posing as an inmate in a New Jersey prison submitted a completed Release Refunds form and sent it to James and Hawkins. They then sent the “inmate” blank income tax forms and other IRS documents and instructions to sign the documents. James and Hawkins did not request any financial information from the undercover agent before preparing three fraudulent tax returns – including false income information that James and Hawkins provided – to be filed on behalf of the agent for tax years 2010 through 2012. The fraudulent returns resulted in several thousand dollars in refunds and a $1,485 fee for the defendants.
In addition to the prison terms, Judge Sheridan sentenced both James and Hawkins to three years of supervised release and ordered them to pay restitution in the amount of $570,897.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Fishman credited special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s sentences. They also thanked the U.S. Postal Inspection Service, under the direction of Assistant Inspector in Charge James V. Buthorn and the New Jersey Department of Corrections, under the direction of Commissioner Gary M. Lanigan, for their roles in the case.
The government is represented by Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office Criminal Division in Trenton and former Trial Attorney Thomas Jaworski of the Tax Division.
Massachusetts Man Sentenced to Prison for Role in Stolen Identity Tax Refund Fraud SchemeRead the Press Release
Filed Fraudulent Income Tax Returns Using the Stolen Identities of Puerto Rican U.S. Citizens
A Lawrence, Massachusetts, resident pleaded guilty today to one count of conspiracy to defraud the United States, 14 counts of conversion of government property, two counts of access device fraud and 14 counts of aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Carmen M. Ortiz for the District of Massachusetts, Special Agent in Charge Joel Garland of the Internal Revenue Service–Criminal Investigation’s (IRS-CI) Boston Field Office and Special Agent in Charge Stephen A. Marks of the U.S. Secret Service.
According to the indictment and documents filed with the court, between 2011 and 2015, Juan Santiago, 38, and another individual used the personal identifying information of Puerto Rican U.S. citizens to file fraudulent federal income tax returns. The fraudulent tax returns resulted in the issuance of tax refunds in the form of U.S Treasury checks, which were mailed to addresses in Massachusetts and elsewhere, controlled by Santiago and the other individual. The scheme resulted in thousands of fraudulent income tax returns filed with the IRS during the prosecution years. Santiago distributed a list of 100 stolen identities that were associated with approximately $333,540 in fraudulent tax refunds.
Sentencing is set for July 15. Santiago faces a statutory maximum sentence of five years in prison on the conspiracy charge, five years in prison on each count of conversion of government property and five years in prison on each count of access device fraud. For each count of aggravated identity theft, Santiago faces a mandatory minimum prison term of two years, which will run consecutive to any other term of imprisonment he receives. Santiago also faces monetary penalties.
Acting Assistant Attorney General Ciraolo thanked special agents of IRS-Criminal Investigation and the U.S. Secret Service, who investigated this case and Senior Litigation Counsel Corey Smith of the Tax Division, who prosecuted this case in conjunction with the U.S. Attorney’s Office’s Public Corruption Unit.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Justice Department Seeks to Shut Down Florida Tax Return Preparers and Owner of “Tax MD” Tax Preparation BusinessRead the Press Release
Businesses Allegedly Prepare Fraudulent Tax Returns While Charging Customers Undisclosed, Unconscionable Fees
The United States filed a civil injunction suit seeking to bar Patrick Clarke of Hallandale Beach, Florida, and Ruby Rodriguez of Orlando, Florida, from owning, operating, or franchising a tax return preparation business and preparing tax returns for others, the Justice Department announced today.
The complaint also requests that the court order Clarke and Rodriguez to disgorge the fees that they obtained through the alleged fraudulent tax return preparation. According to the complaint, Clarke owns and operates Tax MD, a tax return preparation business with stores in Florida and North Carolina. Rodriguez allegedly manages one of Clarke’s stores located in Orlando.
According to the complaint, Clarke’s preparers, including Rodriguez, target primarily low to moderate income customers with misleading advertisements, prepare and file fraudulent tax returns to improperly increase their customers’ refunds and profit through unconscionable, exorbitant and often undisclosed fees—all at the expense of their customers and the U.S. Treasury.
The complaint alleges that Clarke’s preparers, including Rodriguez, engage in fraudulent activity, including:
- Falsely claiming the Earned Income Tax Credit;
- Claiming improper filing status (i.e. head of household for married individuals);
- Fabricating businesses and related business income and expenses;
- Fabricating Schedule A deductions, including for unreimbursed employee business expenses; and
- Charging deceptive and unconscionable fees
According to the complaint, Clarke was previously a franchisee of LBS Tax Services. This is one of 10 lawsuits that the Justice Department has filed in Florida against former LBS franchisees or related individuals, including Walner Gachette, Douglas Mesadieu, Jean Demesmin, Kerny Pierre-Louis, Demetrius Scott, Jason Stinson, Wilfrid Antoine, Tonya Chambers, Jehoakim Victor, Lauri Rodriguez, Milot Odne, Christopher Lawrence and Kenneth Aikens.
Return preparer fraud is one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams for 2016. The IRS has some tips on their website for choosing a tax preparer, and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department 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.
Freedom Mortgage Corporation Agrees to Pay $113 Million to Resolve Alleged False Claims Act Liability Arising from FHA-Insured Mortgage LendingRead the Press Release
Freedom Mortgage Corporation has agreed to pay the United States $113 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting single family mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements for the FHA insurance program, the Justice Department announced today. Freedom Mortgage Corporation is headquartered in Mt. Laurel, New Jersey.
“It is imperative that mortgage lenders that participate in the FHA insurance program follow the rules and requirements set forth by HUD,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “We will continue to work with our partners at HUD, its Office of Inspector General, and U.S. Attorneys around the country to protect homeowners and taxpayers from those who knowingly seek to abuse the FHA program for their own gain.”
“Freedom Mortgage did not properly comply with FHA rules for the mortgages it was generating and did not adequately monitor early payment defaults,” said U.S. Attorney Paul J. Fishman for the District of New Jersey. “It also failed to report to HUD the defaults it did discover, as required by its participation in the program. Today’s settlement recognizes those failures and imposes an appropriate sanction.”
During the time period covered by the settlement, Freedom Mortgage Corporation participated as a direct endorsement lender (DEL) in the FHA insurance program. A DEL has the authority to originate, underwrite and endorse mortgages for FHA insurance. If a DEL approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan. Under the DEL program, the FHA does not review a loan for compliance with FHA requirements before it is endorsed for FHA insurance. DELs are therefore required to follow program rules designed to ensure that they are properly underwriting and endorsing mortgages for FHA insurance, to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices and to self-report any deficient loans identified by their quality control program.
The settlement announced today resolves allegations that Freedom Mortgage Corporation failed to comply with certain FHA origination, underwriting and quality control requirements. As part of the settlement, Freedom Mortgage Corporation admitted to the following facts: Between Jan. 1, 2006 and Dec. 31, 2011, it certified mortgage loans for FHA insurance that did not meet HUD underwriting requirements and were therefore not eligible for FHA mortgage insurance. Additionally, Freedom Mortgage Corporation did not adhere to FHA’s quality control (QC) requirements. Between 2006 and 2008, Freedom Mortgage Corporation did not share its early payment default (EPD) QC reviews with production and underwriting management, nor did it require responses to its EPD QC findings from its production or underwriting staff. Due to staffing limitations between 2008 and 2010, Freedom Mortgage Corporation did not always perform timely QC reviews or perform audits of all EPD loans, as required by HUD. An EPD is a loan that becomes 60 days past due within the first six months of the loan. The EPD QC reviews that Freedom Mortgage Corporation did perform revealed high defect rates, exceeding 30 percent between 2008 and 2010. Yet, between 2006 and 2011, Freedom Mortgage Corporation did not report a single improperly originated loan to HUD, despite its obligation to do so. Additionally, in 2012, after identifying hundreds of loans that “possibly should have been self-reported to HUD,” it reported only one. As a result of Freedom Mortgage Corporation’s conduct, HUD insured hundreds of loans that were not eligible for FHA mortgage insurance under the DEL program, and that HUD would not otherwise have insured and subsequently incurred substantial losses when it paid insurance claims on the ineligible loans approved by Freedom Mortgage Corporation.
“This recovery on behalf of the Federal Housing Administration should serve as a reminder of the potential consequences of not following HUD program rules and demonstrates HUD OIG’s continued efforts to combat fraud in the origination of single family mortgages insured by the FHA,” said HUD Inspector General David A. Montoya.
“FHA-approved lenders have a responsibility to comply with underwriting standards,” said HUD’s General Counsel Helen Kanovsky. “We are gratified that Freedom Mortgage Corporation has accepted responsibility for its actions.”
The settlement was the result of a joint investigation conducted by HUD, HUD OIG, the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of New Jersey.
Attorney General Loretta E. Lynch Announces Renata B. Hesse to Serve as Head of Antitrust DivisionRead the Press Release
Attorney General Loretta E. Lynch announced today that Principal Deputy Assistant Attorney General Renata B. Hesse of the Antitrust Division will assume leadership of the Division.
Hesse succeeds Bill Baer, who became the Acting Associate Attorney General.
“Renata Hesse is an outstanding leader, a determined advocate, and a faithful servant of the law,” said Attorney General Lynch. “Through her long record of public service, Renata has developed a wide-ranging and comprehensive expertise in antitrust and intellectual property law that makes her exceptionally qualified for her new position. She has played a key role in some of the most challenging antitrust cases brought by the department in the last 15 years. And she has distinguished herself at every turn through her tireless work ethic, her keen intelligence, and her steadfast commitment to doing justice. I am confident that, under her guidance, the Antitrust Division will continue to excel in its work to ensure free and fair markets and to protect American consumers.”
Before her selection to run the Antitrust Division, Hesse served as the Deputy Assistant Attorney General for Criminal and Civil Operations in the division for almost four years. During this time, she also served as the division’s Acting Assistant Attorney General immediately prior to Baer’s confirmation. Hesse was a career trial attorney in the division between 1997 and 2006, in the last four years of which she served as the Chief of the Networks and Technology Section.
Hesse has also served as a senior counsel to the Chairman of the Federal Communications Commission, where she was responsible for overseeing the FCC’s review of AT&T’s proposed acquisition of T-Mobile, and was a partner at Wilson Sonsini Goodrich & Rosati.
Hesse received her J.D. from the University of California, Berkeley School of Law and her B.A. from Wellesley College.
“I am deeply honored to have been chosen to lead the hardworking men and women of the Antitrust Division,” Hesse said. “For over three years, Bill provided the division with exceptional leadership and sharp judgment and it has been a privilege to work with him. During Bill’s tenure, the division achieved outstanding results in both its criminal and civil enforcement programs. We intend to continue to vigorously enforce the nation’s antitrust laws on behalf of American consumers.”