District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Deputy Attorney General Sally Q. Yates Statement on the President’s Recent Clemency DecisionsRead the Press Release
Deputy Attorney General Sally Q. Yates released the following statement following President Obama’s clemency announcement today:
“Today’s announcement by the President to commute the prison sentences of another 61 individuals demonstrates his commitment to ensuring a fair and just criminal justice system. The clemency initiative that the President announced in 2014 is an important part of the Department’s overall criminal justice reform efforts. Through cooperative bipartisan efforts with Congress, the U.S. Sentencing Commission and reform advocacy groups, we hope to soon realize systemic change in the length of prison sentences for these low-level drug offenders and to provide better tools for a safe and successful reentry into the community. The Department fervently shares the President’s commitment to equal and fair justice under law and we will continue to work tirelessly to achieve this goal.”
Department of Justice Launches 10 Regional Elder Justice Task ForcesRead the Press Release
Today, the Department of Justice announced the launch of 10 regional Elder Justice Task Forces. These teams will bring together federal, state and local prosecutors, law enforcement, and agencies that provide services to the elderly, to coordinate and enhance efforts to pursue nursing homes that provide grossly substandard care to their residents.
“Millions of seniors count on nursing homes to provide them with quality care and to treat them with dignity and respect when they are most vulnerable,” said Acting Associate Attorney General Stuart F. Delery. “Yet, all too often we have found nursing home owners or operators who put their own economic gain before the needs of their residents. These task forces will help ensure that we are working closely with all relevant parties to protect the elderly.”
The Elder Justice Task Forces will include representatives from the U.S. Attorneys’ Offices, state Medicaid Fraud Control Units, state and local prosecutors’ offices, the Department of Health and Human Services (HHS), state Adult Protective Services agencies, Long-Term Care Ombudsman programs and law enforcement.
“The Department of Justice has a long history of holding nursing homes and long-term care providers accountable when they fail to provide their Medicare and Medicaid residents with even the most basic nursing services to which they were entitled,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “By bringing everyone to the table, we will be able to more effectively and quickly pursue nursing homes that are jeopardizing the health and well-being of their residents.”
The 10 Elder Justice Task Forces will be launched in the following Districts: Northern District of California, Northern District of Georgia, District of Kansas, Western District of Kentucky, Northern District of Iowa, District of Maryland, Southern District of Ohio, Eastern District of Pennsylvania, Middle District of Tennessee and the Western District of Washington.
“We believe that by actively participating in the Elder Justice Task Forces announced today through joint investigations, sharing information and regular meetings; we will strengthen our efforts nationally to protect the most vulnerable of our population who reside in our nursing homes and other care facilities,” said Keesha Mitchell, President of the National Association of Medicaid Fraud Control Units and the Director of the Ohio Medicaid Fraud Control Unit.
“The HHS Office of Inspector General (OIG) continues to pursue nursing home operators who provide potentially harmful care to residents who are often unable to protect themselves,” said Chief Counsel to the Inspector General Gregory Demske of HHS. “Creating these task forces sends a message to those in charge of caring for these beneficiaries that grossly substandard care will not be tolerated.”
“The Administration for Community Living was created to help ensure that older adults and people with disabilities are able to live the lives they want, with the people they choose, fully participating in their communities,” said Becky Kurtz, Director of the Office of Long-Term Care Ombudsman Programs at the Administration for Community Living. “Our mission includes supporting their basic right to live with dignity, free from abuse. We appreciate the Department of Justice’s leadership on this important initiative and applaud its long-standing commitment to elder justice efforts.”
“Our most vulnerable citizens deserve the highest quality care and attention,” said Executive Director Kathleen Quinn of the National Adult Protective Services Association. “This initiative will help insure that long-term care facilities provide it. The Department of Justice is to be commended for this, and indeed all its efforts, to protect the millions of elder abuse victims in this country.”
The Elder Justice Task Forces reflect the department’s larger strategy and commitment to protecting our nation’s seniors, spearheaded by the department’s Elder Justice Initiative. The Elder Justice Initiative coordinates and supports the Department’s law enforcement efforts and policy activities on elder justice issues. It plays an integral role in the department’s investigative and enforcement efforts against nursing homes and other long-term care entities that deliver grossly substandard care to Medicare and Medicaid beneficiaries. The Elder Justice Initiative will be providing litigation support and training to the Elder Justice Task Forces. Learn more about the Justice Department’s Elder Justice Initiative at http://www.justice.gov/elderjustice/.
TERMINIX Companies Agree to Pay $10 Million for Applying Restricted-Use Pesticide to Residences in the U.S. Virgin IslandsRead the Press Release
The pest control corporation Terminix International Company LP (TERMINIX LP) and its U.S. Virgin Islands operation Terminix International USVI LLC (TERMINIX, USVI), were charged today with multiple violations of the Federal Insecticide, Fungicide and Rodenticide Act for illegally applying fumigants containing methyl bromide in multiple residential locations in the U.S. Virgin Islands, including the condominium resort complex in St. John where a family of four fell seriously ill last year after the unit below them was fumigated, the Department of Justice and the Environmental Protection Agency (EPA) announced today.
In a plea agreement, TERMINIX LP and TERMINIX, USVI agreed to pay a total of $10 million in criminal fines, community service and restitution payments. Except for completing one government contract at the Port of Baltimore, TERMINIX LP has stopped using pesticides containing methyl bromide in the United States and U.S. Territories. Under the agreement TERMINIX, USVI will pay $5 million in fines and $1 million in restitution to the EPA for response and clean-up costs at the St. John resort. TERMINIX LP will pay a fine of $3 million and will fund a $1 million community service project in the U.S.V.I. The plea agreement is subject to approval by the district court.
“When misused, highly toxic pesticides can have catastrophic consequences, and that’s why those who are certified to apply them must do so responsibly and lawfully,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “The facts in this case show the Terminix companies knowingly failed to properly manage their pest control operations in the U.S. Virgin Islands, allowing pesticides containing methyl bromide to be applied illegally and exposing a family of four to profoundly debilitating injuries. While on probation the companies are required to demonstrate to the EPA changes to their internal management and systems to ensure this type of tragedy does not reoccur.”
“This prosecution demonstrates the importance of complying with environmental laws and regulations,” said U.S. Attorney Ronald W. Sharpe of the District of the Virgin Islands. “Tragically, the defendants' failure to do so resulted in catastrophic injuries to the victims and exposed many others to similar harm. The United States Attorney’s Office is committed to the enforcement of environmental laws and will take all necessary steps to hold those who violate these laws criminally accountable and to protect residents and visitors of the Virgin Islands.”
“When you break a law that protects public health, there are real victims and real consequences, as this case tragically shows,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “This incident illustrates how important it is for EPA to enforce environmental laws and hold anyone accountable for endangering our safety. Today’s charges should send a clear message to the industry, and directs important funds toward training programs to help ensure this can’t happen again.”
In 1984 EPA banned the indoor use of methyl bromide products. The few remaining uses are severely restricted. Pesticides containing methyl bromide in the U.S. are restricted-use due to their acute toxicity, meaning that they must only be applied by a certified applicator. Health effects of acute exposure to methyl bromide are serious and include central nervous system and respiratory system damage. Pesticides can be very toxic and it is critically important that they be used only as approved by EPA.
After the government began its investigation, TERMINIX LP voluntarily ceased its use of methyl bromide in the U.S. and in U.S. territories, except for one remaining supervised government contract.
According to the information filed in federal court in the U.S. District Court of the Virgin Islands today, the defendants knowingly applied restricted-use fumigants at the Sirenusa resort in St. John for the purpose of exterminating household pests on or about Oct. 20, 2014, and on or about March 18, 2015. The companies were also charged with applying the restricted-use pesticide in 12 residential units in St. Croix and one additional unit in St. Thomas between September 2012 and February 2015.
According to the factual basis of the plea agreement, TERMINIX, USVI provided pest control services in the Virgin Islands including fumigation treatments for Powder Post Beetles, a common problem in the islands. These fumigation treatments were referred to as “tape and seal” jobs, meaning that the affected area was to be sealed off from the rest of the structure with plastic sheeting and tape prior to the introduction of the fumigant. Customers were generally told that after a treatment persons could not enter the building for a two to three-day period.
On or about March 18, 2015, two employees of TERMINIX, USVI, performed a fumigation pesticide treatment at the lower rental unit of Building J at Sirenusa in St. John. The upper unit in Building J was occupied by a Delaware family of four. Via various means, methyl bromide from the lower unit migrated to the upper unit of Building J, causing serious injury to and hospitalization of the entire family.
EPA regional staff responded immediately to the incident in St. John, securing the scene, performing testing and addressing the contamination. Within days, the EPA sent out a pesticide use warning to pesticides applicators in Puerto Rico and the U.S. Virgin Islands, followed by a broader pesticide notice to regulators in all states, the British Virgin Islands, and to other Caribbean and Latin American countries.
As a special condition of the companies’ three year probation, the defendants shall make good faith efforts to resolve past and future medical expenses for the family through separate civil proceedings. If they do not do so before the end of the probationary period, they would be subject to an order of restitution and the government may petition the District Court to reopen the sentencing proceedings to seek recovery of past and future medical and other expenses.
The $10 million penalty includes $8 million in criminal fines, $1 million in restitution to the EPA for response and clean-up costs, and a $1 million community service payment to the National Fish and Wildlife Foundation for the purpose of engaging a third party to provide training to pesticide applicators in the U.S. Virgin Islands.
The case was investigated by EPA Criminal Investigation Division working cooperatively with the Virgins Islands government and, the Agency for Toxic Substances and Disease Registry.
Senior Litigation Counsel Howard P. Stewart of the Department of Justice, Environmental Crimes Section, and Assistant U.S. Attorney Kim L. Chisholm of the District of the Virgin Islands are prosecuting the case with assistance of Patricia Hick, EPA Region II Regional Criminal Enforcement Counsel.
The investigation is ongoing.
For more information about EPA’s pesticide program and its requirements, visit www.epa.gov/pesticides/.
Mississippi Woman Pleads Guilty in Terrorism InvestigationRead the Press Release
Jaelyn Delshaun Young, 20, of Starkville, Mississippi, pleaded guilty today in the Northern District of Mississippi to conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization.
The plea was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Felicia C. Adams of the Northern District of Mississippi and Special Agent in Charge Donald Alway of the FBI’s Jackson, Mississippi, Division.
Young pleaded guilty before Chief U.S. District Judge Sharion Aycock of the Northern District of Mississippi to conspiring with Muhammad Oda Dakhlalla to provide material support to ISIL. Dakhlalla pleaded guilty to the same charge on March 13, 2016. Young was remanded to the custody of the U.S. Marshals Service to await sentencing, which will be scheduled at a later date.
The investigation was conducted by the FBI’s Jackson Division Joint Terrorism Task Force and the Washington Field Office. The case is being prosecuted by Assistant U.S. Attorneys Clay Joyner and Bob Norman of the Northern District of Mississippi and Trial Attorney Rebecca Magnone of the National Security Division’s Counterterrorism Section.
Judge Orders New Jersey Investor to Serve a Year in Prison for Bid Rigging at Tax Lien AuctionsRead the Press Release
Thirteen Individuals and Three Companies Have Been Convicted or Pleaded Guilty in the Investigation to Date
A former bidder for a Pennsylvania tax liens investment company was sentenced to serve a prison term of 12 months and one day and pay a $25,000 criminal fine for conspiring to rig bids at New Jersey tax lien auctions, the Department of Justice announced today.
James Jeffers Jr., of Mount Holly, New Jersey, was sentenced today by U.S. District Judge Susan D. Wigenton of the District of New Jersey. Jeffers was convicted by a jury on Oct. 2, 2015 after a multi-week criminal trial. The jury found Jeffers guilty of violating Section One of the Sherman Act by conspiring to allocate and rig bids at municipal tax lien auctions that were held in the state of New Jersey from at least 1998 until at least February 2009. Jeffers’s conviction resulted from his conduct as a bidder for Crusader Servicing Corp., which pleaded guilty in September 2012 to participating in the same conspiracy. Jeffers also bid for Crusader’s successor company during the conspiratorial period.
Jeffers participated with others in the conspiracy not to bid against one another at municipal tax lien auctions. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.
Today’s charge is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorney’s offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. For more information on the task force, visit www.stopfraud.gov.
This ongoing investigation is being conducted by the Antitrust Division’s New York Office and the FBI’s Atlantic City, N.J., office. Including Jeffers, a total of thirteen individuals and three companies have been convicted or have pleaded guilty as part of the investigation. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.
Federal Court Permanently Bars Detroit-Area Tax Preparer from Preparing Federal Tax ReturnsRead the Press Release
The U.S. District Court for the Eastern District of Michigan has issued an order permanently barring Mia Jordan, a Southfield, Michigan, tax preparer, from preparing federal tax returns for others, the Justice Department announced today. Jordan consented to the civil injunction order.
According to the complaint, Jordan operated a business that provided tax return preparation support services under the name MIA-FILE as recently as 2014. The complaint states that Jordan, through MIA-FILE, prepared approximately 371 tax returns for tax processing years 2013 and 2014. The Internal Revenue Service (IRS) closed examinations on 94 of the tax returns prepared by MIA-FILE, and 87, or 95 percent, of those examined returns resulted in additional tax assessments, the complaint alleges. Many of the returns that Jordan prepared for customers allegedly contained false deductions and credits, including inflated deductions for charitable contributions, home mortgage interest and real estate taxes. The complaint also states that the returns manipulated taxpayer data for the purposes of claiming the Earned Income Tax Credit, for which the customer would otherwise be ineligible.
The United States alleged in the complaint that the actual purpose of MIA-FILE was to permit Jordan’s cousin, Nataki Davis, formerly known as Nataki Barnes, to continue to prepare tax returns herself and together with Jordan, despite an IRS investigation into Davis’s own abusive tax return preparation practices. In June 2013, Davis was enjoined for a period of five years from preparing tax returns either individually or through any individual or entity working in concert with her. On Jan. 8, 2016, the U.S. District Court for the Eastern District of Michigan entered an agreed injunction order permanently barring Davis from preparing returns.
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.
Tennessee and New York-Based Defense Contractors Agree to Pay $8 Million to Settle False Claims Act Allegations Involving Defective Countermeasure Flares Sold to the U.S. ArmyRead the Press Release
The Department of Justice announced today that Kilgore Flares Company and one of its subcontractors, ESM Group Inc., have agreed to pay a total of $8 million to resolve allegations that they violated the False Claims Act by selling or conspiring to sell defective infrared countermeasure flares to the U.S. Army and, in the case of ESM, knowingly evading customs duties owed to the United States. Tennessee-based Kilgore Flares manufactures and sells electronics and energetic products, such as flares, to the U.S. military. ESM Group, located in New York, manufactures magnesium powder supplied to the chemical, welding and pyrotechnics industries. ESM imported magnesium powder used in the flares from the People’s Republic of China (PRC), which it sold to Kilgore Flares.
“The Department of Justice is committed to ensuring that contractors do not cut corners in manufacturing critical items sold to the U.S. military,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “These settlements also show that the department will aggressively pursue those who avoid paying duties to gain an unfair business advantage over competitors who abide by the rules.”
The U.S. military uses infrared countermeasure flares to divert enemy heat-seeking missiles away from U.S. military aircraft. A primary component of these flares is ultrafine magnesium powder, which combined with other materials, provides ignition and enables the flares to burn at high temperatures and at rates that mimic an aircraft’s engine. Kilgore’s contracts with the army prohibited the use of magnesium powder from foreign countries (except Canada) in order to maintain domestic manufacturing capability in the interest of national defense.
The United States alleged that from July 2003 through May 2005, ESM knowingly misrepresented the content of ultrafine magnesium powder imported from the PRC in order to avoid paying antidumping duties owed to the United States. Antidumping duties protect against foreign companies “dumping” products on the U.S. market at prices below cost. The U.S. Department of Commerce assesses and U.S. Customs and Border Protection (CBP) collects these duties to protect U.S. businesses and level the playing field for domestic products. At the time of the imports alleged in this case, ultrafine magnesium powder from the PRC was subject to a 305 percent antidumping duty.
The government further alleged that from March 2005 through August 2006, Kilgore used the illegally imported Chinese magnesium powder purchased from ESM in the countermeasure flares it sold to the U.S. Army. The Chinese magnesium powder allegedly violated both the requirement for domestically produced powder and engineering specifications required by the contracts.
Kilgore and ESM agreed to pay $6 million and $2 million, respectively, to resolve the government’s allegations.
“Our warfighters– along with everyone who relies upon them, including their families – need to know that the equipment they use is of the highest quality and dependability,” said U.S. Attorney William J. Hochul Jr. of the Western District of New York. “In this case, the magnesium flares made by Kilgore were literally the last line of defense for our brave aviators. Because of today’s resolution, Kilgore will now ensure that similar incidents do not happen in the future.”
Prior to the civil settlements with Kilgore and ESM, five former employees and agents of ESM pleaded guilty to criminal offenses related to the magnesium importation scheme, including ESM’s former president, Charles Wright. The criminal defendants were ordered to pay more than $14 million in restitution.
“These civil settlements demonstrate the continued commitment of the Defense Criminal Investigative Service (DCIS) and our partner agencies to pro-actively identify individuals and groups intent on providing substandard, substituted products to the U.S. military in exchange for unwarranted exorbitant profits,” said Special Agent in Charge Craig W. Rupert of the U.S. Department of Defense Inspector General, DCIS. “Such schemes, perpetrated by dishonest contractors and individuals, place the American Warfighter in danger, erode public confidence and undermine the mission of our military services. The DCIS and its law enforcement partners will continue to tirelessly pursue and investigate procurement fraud allegations in order to safeguard our military members and to shield America’s investment in national defense.”
“The components of U.S. military equipment are held to rigorous standards to ensure our military superiority and the safety of our warfighters,” said Special Agent in Charge James Spero of Homeland Security Investigations (HSI) Buffalo. “When short cuts are taken, lives are put at risk. This settlement ensures that the companies involved are held responsible for their actions and further emphasizes HSI’s commitment to ensuring that the sale and distribution of products used by our military is done with integrity.”
The settlement with ESM resolved a lawsuit filed under the whistleblower 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. The lawsuit was filed by Reade Manufacturing Company, a domestic manufacturer of magnesium powder. The act also allows the whistleblower to receive a share of any funds recovered through the lawsuit. Reade Manufacturing received $400,000 as part of the settlement with ESM.
The settlements with Kilgore and ESM were the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of New York, U.S. Army Criminal Investigation Command, Defense Contract Audit Agency, DCIS, U.S. Immigration and Customs Enforcement’s HSI Buffalo and U.S. Customs and Border Protection. Additional technical support was provided by the Army Sustainment Command at Rock Island Arsenal, Ill. and the Army Research, Development and Engineering Command at Picatinny Arsenal, New Jersey.
The lawsuit against ESM is captioned United States ex rel. Reade Manufacturing Co. v. ESM Group, Inc., Civ. No. 10 - CV - 504-S (W.D.N.Y.). The claims resolved by these settlements are allegations only; there has been no determination of liability except as admitted by the individual defendants in the criminal proceedings.
Tennessee Business Owner Pleads Guilty to Failing to Pay More Than $6.8 Million in Employment TaxesRead the Press Release
A Germantown, Tennessee, resident and business owner pleaded guilty to one count of failing to pay over employment taxes to the Internal Revenue Service (IRS), announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Edward L. Stanton III of the Western District of Tennessee.
“Employers such as Larry Thornton are required by law to withhold taxes from their employees’ wages, hold those funds in trust, and pay over those funds to the IRS,” said Acting Assistant Attorney General Ciraolo. “Willful failure to comply with this requirement is a crime, and prosecution of those responsible remains among the Tax Division’s top priorities. Those individuals who choose to maintain their business and line their pockets with the trust funds of their employees are stealing from the U.S. Treasury – plain and simple and will face heavy consequences including incarceration.”
According to court documents, Larry Thornton, 66, was the majority owner, president and chief executive officer of Software Earnings Inc. (SEI), a Memphis company that produced and installed check processing. Thornton was also the 100 percent owner, CEO and president of First Touch Payment Solutions LLC (First Touch), a Memphis company that provided merchant services for credit card processing. Thornton, as CEO and president of SEI and First Touch, had ultimate and final decision-making authority regarding SEI’s and First Touch’s business activities and had authority to exercise significant control over SEI’s financial affairs. As part of his plea, Thornton admitted that he was responsible for collecting, accounting for and paying over to the IRS federal income taxes and Federal Insurance Contributions Act (FICA) taxes that were withheld from the wages of SEI and First Touch’s employees.
Beginning in the second quarter of 2007, Thornton caused SEI to stop paying over the taxes required to be withheld from SEI’s employees’ paychecks and caused SEI to stop timely filing Employer’s Quarterly Federal Tax Returns, Forms 941, with the IRS. Beginning in the first quarter of 2010, Thornton caused First Touch to stop paying over the taxes required to be withheld from First Touch’s employees’ paychecks and caused First Touch to fail to timely file Forms 941 with the IRS. Between 2007 and 2011, Thornton collected more than $6.8 million in employment taxes from SEI and First Touch employees’ paychecks, but failed to pay those collected taxes over to the IRS. Thornton also failed to pay his companies’ matching share of FICA taxes during those years. During the same 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 the guilty plea, Thornton admitted that his fraudulent conduct caused a tax loss of more than $8.9 million to the IRS.
“Business owners have a responsibility to withhold income taxes for their employees and then remit those taxes to the Internal Revenue Service on behalf of those employees,” said Special Agent in Charge Tracey D. Montaño of IRS Criminal Investigation. “Employment tax evasion not only results in the loss of tax revenue to the U.S. government, it also results in the loss of future social security or Medicare benefits for the employees. Failure to pay over withheld taxes is a serious offense. IRS Criminal Investigation will vigorously pursue anyone who, at the expense of their hard working employees, collects taxes and uses the proceeds for their own personal gain, rather than to fulfilling their employer obligations.”
Thornton faces a statutory maximum sentence of five years in prison, three years of supervised release, a fine and restitution. Under the terms of the plea agreement, Thornton has agreed to pay more than $10 million in restitution to the IRS. The sentencing is set for July 22.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Stanton commended special agents of IRS Criminal Investigation, who investigated the case and Assistant U.S. Attorney Damon Griffin of the Western District of Tennessee and Trial Attorney Robert J. Boudreau of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Connecticut Insurance Salesman Convicted of Tax FraudRead the Press Release
Defendant Attempted to Obstruct IRS with False Tax Returns and Threatening Correspondence
A Newington, Connecticut, insurance salesman was convicted of tax fraud today in the U.S. District Court for the District of Connecticut in Hartford following a seven-day jury trial, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
Terry DiMartino, 62, was convicted of one count of corruptly interfering with the due administration of the internal revenue laws, two counts of filing false tax returns and five counts of willfully failing to file tax returns. DiMartino was an insurance salesman for numerous insurance companies located in Connecticut and elsewhere. Despite earning millions of dollars in insurance commissions over the last decade, DiMartino did not file accurate tax returns or pay the taxes owed.
“As we approach the end of the tax return filing season, today’s verdict serves as a clear reminder that willfully failing to file, filing false returns, and attempting to obstruct the Internal Revenue Service (IRS) are crimes and those U.S. taxpayers who engage in such criminal conduct face prosecution, substantial fines and restitution, and prison,” said Acting Assistant Attorney General Ciraolo. “The department is committed to working with its partners in the IRS to enforce our nation’s tax laws by holding offenders such as Mr. DiMartino accountable.”
According to the evidence presented at trial, DiMartino attempted to obstruct the IRS by mailing false documents to the IRS, including three false tax returns for the 2007 tax year, one of which requested a fraudulent $14 million refund. He sent false and threatening correspondence to the IRS in an attempt to defeat the IRS’s assessment, collection and investigative efforts. He submitted false and threatening correspondence to insurance companies that sought to cooperate with the IRS collection activities. DiMartino also set up nominee entities which he used to divert his insurance commissions. He used the nominees to hide and conceal assets to prevent the IRS from collecting on his tax liabilities. DiMartino has not filed an accurate individual income tax return since the 1996 tax year.
“The IRS enforces the nation’s tax laws, but also takes particular interest in cases where someone, for their own personal benefit, has taken what belongs to others to include the American taxpayer,” said Special Agent in Charge Manny Muriel, IRS Criminal Investigation. “Taxes are the price we pay for the public goods and services we want; yet Mr. DiMartino tried to undermine and corrupt the tax system when he attempted to steal $14 million in taxpayer money. Furthermore, he tried to intimidate insurance companies that sought to cooperate with the IRS. As the stewards of your tax dollars, the IRS will stand to protect and defend the American taxpayer.”
U.S. District Judge Alvin W. Thompson set sentencing for July 20. DiMartino faces a maximum sentence of three years in prison for the charge of obstructing the IRS, three years in prison for each of the false tax return charges and one year in prison for each count of willfully failing to file tax returns. DiMartino also faces monetary penalties.
Acting Assistant Attorney General Ciraolo commended agents of IRS Criminal Investigation, who investigated the case and Trial Attorneys Erin B. Pulice and Jason M. Scheff 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.
Georgia Resident Pleads Guilty to Laundering Proceeds from a Stolen Identity Tax Refund Fraud SchemeRead the Press Release
An Austell, Georgia, resident pleaded guilty today to one count of money laundering, 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.
According to court documents, Rapheal Atebefia, his co-defendants and others obtained the means of identification of actual individuals, including their names and social security numbers and used this information to access the Internal Revenue Service’s (IRS) “Get Transcript” database. Get Transcript is an IRS web application program that enabled individuals to access their tax filing information. The stolen names and the information obtained from Get Transcript were used to file false income tax returns.
Atebefia and his co-conspirators obtained prepaid debit cards from stores located in multiple states and registered the cards in the names of the stolen identities. These debit cards were used to receive the income tax refunds requested on the false tax returns. To conceal this fraudulent scheme, the prepaid debit cards were then used to purchase money orders. Atebefia deposited the money orders into his bank accounts and then structured cash withdrawals of the proceeds in order to prevent the bank from filing Currency Transaction Reports.
Atebefia faces a statutory maximum sentence of 20 years in prison. A sentencing date has not been set. He also faces monetary penalties, restitution and forfeiture.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Horn commended special agents of IRS-Criminal Investigation and the U.S. Postal 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.
Ex-Employee Pleads Guilty to Conspiring to Defrauding New York Power AuthorityRead the Press Release
A former senior investigator of the New York Power Authority (NYPA) pleaded guilty today to charges of conspiring to defraud NYPA and for filing a false 2010 tax return to hide substantial income from the government, the Department of Justice, the Internal Revenue Service and the New York State Inspector General announced.
Between 2009 and 2012, Stephen Sheridan, of Valley Cottage, New York, conspired to defraud NYPA in connection with a $3 million landscaping and maintenance contract. Sheridan helped the owner of the landscaping company skim money that should have gone to the employees who did the work, and fraudulently receive reimbursement from NYPA for fake, “no show” employees. As a result, Sheridan and his co-conspirator received money that was supposed to go to the working employees. In connection with the scheme, Sheridan also filed a false tax return for 2010, according to the two-count felony charge filed in U.S. District Court of the Southern District of New York.
“The defendant schemed to keep money from the NYPA contract that should have gone to the employees who actually did the work,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “And he doubled down on this crime by hiding that extra income from the IRS. The division will continue to work with our partners at the FBI, IRS and New York Inspector General to hold accountable individuals who corrupt the public procurement process.”
“Government employees have access to money and influence the general public doesn’t,” said Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office. “The belief that no one is watching can lead to greed and corruption. This case should prove the FBI and our law enforcement partners won’t stop weeding out those in power who try gaming the system.”
“Mr. Sheridan, for his own personal benefit, not only took advantage of the NYPA, but of the employees who were contracted to do work for it and law abiding taxpayers,” said Special Agent in Charge Shantelle P. Kitchen of the IRS Criminal Investigation New York Field Office. “He is now held accountable for the money he diverted and kept for his own use. IRS Criminal Investigation remains committed to ensuring that everyone pays their fair share of taxes.”
“This former employee used his insider knowledge to corrupt the State contracting process, steal from taxpayers and undercut hard-working employees trying to make an honest, living wage,” said New York State Inspector General Catherine Leahy Scott. “I will continue dedicating the resources of my office and working with local and federal law enforcement partners to fight waste, fraud and abuse in New York and bring to justice anyone who defrauds the state and takes advantage of the labor force.”
Sheridan’s fraud conspiracy charge carries a maximum penalty of 20 years in prison; his tax charge carries a maximum penalty of three years in prison. Each charge carries a maximum fine of $250,000, which may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. Sheridan will also be ordered to pay restitution to NYPA.
The charges against Sheridan arose from an investigation initiated by the New York State Inspector General and are part of an ongoing joint federal and state investigation of bid rigging, fraud and tax-related offenses in the award of contracts at NYPA’s facility in White Plains, New York. This is the third charge to result from the investigation. In June 2015, Thomas Delaney pleaded guilty to conspiring to defraud NYPA and to a tax violation, and in December 2015, Peter Shine pleaded guilty to a tax violation. This ongoing investigation is being conducted by the Antitrust Division’s New York Office with the assistance of the FBI, the IRS Criminal Investigation and the New York State Office of the Inspector General. NYPA is cooperating with the investigation. Anyone with information on bid rigging or other anticompetitive conducted related to the award or performance of municipal and state contracts should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258 or visit http://www.justice.gov/atr/contact/newcase.html.
U.S. Bureau of Prisons Corrections Officer Sentenced in Connection with Assault of Prison Inmate and Falsifying ReportsRead the Press Release
The Justice Department announced today that U.S. Bureau of Prisons Corrections Officer William Houghton, 32, was sentenced to one year and a day in prison in connection with the beating of a federal inmate and the subsequent submission of false reports.
Houghton previously pleaded guilty to violating the civil rights of an inmate inside the Coleman Correctional Facility in Coleman, Florida, on March 22, 2014, by striking the inmate repeatedly in the head and face. Houghton admitted that the inmate did not make any physically aggressive movements, show signs of imminent violence towards the defendant or clench his fists prior to the assault. While the inmate was on the ground, Houghton continuously told the inmate to stop resisting even though he was not resisting in any way, the defendant admitted. Houghton also pleaded guilty to submitting two false reports in connection with the incident, falsely stating that the inmate had attempted to assault him and omitting the fact that Houghton had repeatedly punched the inmate.
“When correction officers violate the civil rights of those they pledge to protect, they threaten the trust that all of us place in law enforcement to keep us safe and secure,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “The Department of Justice will continue its vigorous efforts to ensure that when people abuse their law enforcement authority to break the law, we hold them accountable for their actions.”
This case was investigated by the FBI and the Justice Department’s Office of Inspector General, and prosecuted by Trial Attorneys Jared Fishman and Maura White of the Civil Rights Division’s Criminal Section.
Seven Iranians Working for Islamic Revolutionary Guard Corps-Affiliated Entities Charged for Conducting Coordinated Campaign of Cyber Attacks Against U.S. Financial SectorRead the Press Release
One Defendant Also Charged with Obtaining Unauthorized Access into Control Systems of a New York Dam
A grand jury in the Southern District of New York indicted seven Iranian individuals who were employed by two Iran-based computer companies, ITSecTeam (ITSEC) and Mersad Company (MERSAD), that performed work on behalf of the Iranian Government, including the Islamic Revolutionary Guard Corps, on computer hacking charges related to their involvement in an extensive campaign of over 176 days of distributed denial of service (DDoS) attacks.
Ahmad Fathi, 37; Hamid Firoozi, 34; Amin Shokohi, 25; Sadegh Ahmadzadegan, aka Nitr0jen26, 23; Omid Ghaffarinia, aka PLuS, 25; Sina Keissar, 25; and Nader Saedi, aka Turk Server, 26, launched DDoS attacks against 46 victims, primarily in the U.S financial sector, between late 2011 and mid-2013. The attacks disabled victim bank websites, prevented customers from accessing their accounts online and collectively cost the victims tens of millions of dollars in remediation costs as they worked to neutralize and mitigate the attacks on their servers. In addition, Firoozi is charged with obtaining unauthorized access into the Supervisory Control and Data Acquisition (SCADA) systems of the Bowman Dam, located in Rye, New York, in August and September of 2013.
The indictment was announced today by Attorney General Loretta E. Lynch, Director James B. Comey of the FBI, Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Preet Bharara of the Southern District of New York.
“In unsealing this indictment, the Department of Justice is sending a powerful message: that we will not allow any individual, group, or nation to sabotage American financial institutions or undermine the integrity of fair competition in the operation of the free market,” said Attorney General Lynch. “Through the work of our National Security Division, the FBI, and U.S. Attorney’s Offices around the country, we will continue to pursue national security cyber threats through the use of all available tools, including public criminal charges. And as today’s unsealing makes clear, individuals who engage in computer hacking will be exposed for their criminal conduct and sought for apprehension and prosecution in an American court of law.”
“The FBI will find those behind cyber intrusions and hold them accountable — wherever they are, and whoever they are,” said Director Comey. “By calling out the individuals and nations who use cyber attacks to threaten American enterprise, as we have done in this indictment, we will change behavior.”
“Like past nation state-sponsored hackers, these defendants and their backers believed that they could attack our critical infrastructure without consequence, from behind a veil of cyber anonymity,” said Assistant Attorney General Carlin. “This indictment once again shows there is no such veil – we can and will expose malicious cyber hackers engaging in unlawful acts that threaten our public safety and national security.”
“The charges announced today respond directly to a cyber-assault on New York, its institutions and its infrastructure,” said U.S. Attorney Bharara. “The alleged onslaught of cyber-attacks on 46 of our largest financial institutions, many headquartered in New York City, resulted in hundreds of thousands of customers being unable to access their accounts and tens of millions of dollars being spent by the companies trying to stay online through these attacks. The infiltration of the Bowman Avenue dam represents a frightening new frontier in cybercrime. These were no ordinary crimes, but calculated attacks by groups with ties to Iran’s Islamic Revolutionary Guard and designed specifically to harm America and its people. We now live in a world where devastating attacks on our financial system, our infrastructure and our way of life can be launched from anywhere in the world, with a click of a mouse. Confronting these types of cyber-attacks cannot be the job of just law enforcement. The charges announced today should serve as a wake-up call for everyone responsible for the security of our financial markets and for guarding our infrastructure. Our future security depends on heeding this call.”
According to the indictment unsealed today in federal court in New York City:
DDoS Attacks
The DDoS campaign began in approximately December 2011, and the attacks occurred only sporadically until September 2012, at which point they escalated in frequency to a near-weekly basis, between Tuesday and Thursdays during normal business hours in the United States. On certain days during the campaign, victim computer servers were hit with as much as 140 gigabits of data per second and hundreds of thousands of customers were cut off from online access to their bank accounts.
Fathi, Firoozi and Shokohi were responsible for ITSEC’s portion of the DDoS campaign against the U.S. financial sector and are charged with one count of conspiracy to commit and aid and abet computer hacking. Fathi was the leader of ITSEC and was responsible for supervising and coordinating ITSEC’s portion of the DDoS campaign, along with managing computer intrusion and cyberattack projects being conducted for the government of Iran. Firoozi was the network manager at ITSEC and, in that role, procured and managed computer servers that were used to coordinate and direct ITSEC’s portion of the DDoS campaign. Shokohi is a computer hacker who helped build the botnet used by ITSEC to carry out its portion of the DDoS campaign and created malware used to direct the botnet to engage in those attacks. During the time that he worked in support of the DDoS campaign, Shokohi received credit for his computer intrusion work from the Iranian government towards his completion of his mandatory military service requirement in Iran.
Ahmadzadegan, Ghaffarinia, Keissar and Saedi were responsible for managing the botnet used in MERSAD’s portion of the campaign, and are also charged with one count of conspiracy to commit and aid and abet computer hacking. Ahmadzadegan was a co-founder of MERSAD and was responsible for managing the botnet used in MERSAD’s portion of the DDoS campaign. He was also associated with Iranian hacking groups Sun Army and the Ashiyane Digital Security Team (ADST), and claimed responsibility for hacking servers belonging to the National Aeronautics and Space Administration (NASA) in February 2012. Ahmadzadegan has also provided training to Iranian intelligence personnel. Ghaffarinia was a co-founder of MERSAD and created malicious computer code used to compromise computer servers and build MERSAD’s botnet. Ghaffarinia was also associated with Sun Army and ADST, and has also claimed responsibility for hacking NASA servers in February 2012, as well as thousands of other servers in the United States, the United Kingdom and Israel. Keissar procured computer servers used by MERSAD to access and manipulate MERSAD’s botnet, and also performed preliminary testing of the same botnet prior to its use in MERSAD’s portion of the DDoS campaign. Saedi was an employee of MERSAD and a former Sun Army computer hacker who expressly touted himself as an expert in DDoS attacks. Saedi wrote computer scripts used to locate vulnerable servers to build the MERSAD botnet used in its portion of the DDoS campaign.
For the purpose of carrying out the attacks, each group built and maintained their own botnets, which consisted of thousands of compromised computer systems owned by unwitting third parties that had been infected with the defendants’ malware, and subject to their remote command and control. The defendants and/or their unindicted co-conspirators then sent orders to their botnets to direct significant amounts of malicious traffic at computer servers used to operate the websites for victim financial institutions, which overwhelmed victim servers and disabled them from customers seeking to legitimately access the websites or their online bank accounts. Although the DDoS campaign caused damage to the financial sector victims and interfered with their customers’ ability to do online banking, the attacks did not affect or result in the theft of customer account data.
DDoS Botnet Remediation
Since the attacks, the Department of Justice and the FBI have worked together with the private sector to effectively neutralize and remediate the defendants’ botnets. Specifically, through approximately 20 FBI Liaison Alert System (FLASH) messages, the FBI regularly provided updated information collected from the investigation regarding the identity of systems that been infected with the defendants’ malware and operating as bots within the malicious botnets. In addition, the FBI conducted extensive direct outreach to Internet service providers responsible for hosting systems that have been infected with the defendants’ malware to provide them information and assistance in removing the malware to protect their customers and other potential victims of the defendants’ unlawful cyber activities. Through these outreach efforts and the cooperation of the private sector, over 95 percent of the known part of the defendants’ botnets have been successfully remediated.
Bowman Dam Intrusion
Between Aug. 28, 2013, and Sept. 18, 2013, Firoozi repeatedly obtained unauthorized access to the SCADA systems of the Bowman Dam, and is charged with one substantive count of obtaining and aiding and abetting computer hacking. This unauthorized access allowed him to repeatedly obtain information regarding the status and operation of the dam, including information about the water levels, temperature and status of the sluice gate, which is responsible for controlling water levels and flow rates. Although that access would normally have permitted Firoozi to remotely operate and manipulate the Bowman Dam’s sluice gate, Firoozi did not have that capability because the sluice gate had been manually disconnected for maintenance at the time of the intrusion.
Remediation for the Bowman Dam intrusion cost over $30,000.
* * *
All seven defendants face a maximum sentence of 10 years in prison for conspiracy to commit and aid and abet computer hacking. Firoozi faces an additional five years in prison for obtaining and aiding and abetting unauthorized access to a protected computer at the Bowman Dam.
An indictment is merely an accusation and all defendants are presumed innocent unless proven guilty in a court of law.
The case was investigated by the FBI, including the Chicago; Cincinnati; New York; Newark, New Jersey; Phoenix; and San Francisco Field Offices. This case is being prosecuted by Assistant U.S. Attorney Timothy T. Howard of the Southern District of New York, with the substantial assistance of Deputy Chief Sean M. Newell of the National Security Division’s Counterintelligence and Export Control Section.
Fathi et al Indictment.pdf
Malian National Pleads Guilty to Conspiracy to Murder U.S. DiplomatRead the Press Release
Alhassane Ould Mohamed, aka Cheibani, 46, a citizen of Mali, pleaded guilty in the Eastern District of New York to conspiring to murder a U.S. diplomat stationed in Niamey, Niger, in December 2000.
The guilty plea was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Robert L. Capers of the Eastern District of New York and Assistant Director in Charge Diego Rodriguez of the FBI New York Field Office.
According to court filings and facts presented during the plea proceeding, in the early morning hours of Dec. 23, 2000, Mohamed and a co-conspirator accosted a group of employees of the U.S. Embassy in Niger as they left a restaurant in Niamey. Carrying a pistol and an AK-47 assault rifle, the two men approached Department of Defense official William Bultemeier as he was about to enter his car, which displayed diplomatic license plates clearly indicating that it belonged to the U.S. Embassy. After demanding that Bultemeier turn over the keys to the diplomatic vehicle, the defendant and his co-conspirator shot Bultemeier and Staff Sergeant Christopher McNeely, the Marine Detachment Commander for the U.S. Embassy in Niger at the time, who had run to Bultemeier’s aid. Mohamed and his fellow assailant then drove away in the U.S. Embassy vehicle.
Bultemeier died of the injuries inflicted by the gunshot wounds. Staff Sergeant McNeely survived the shooting and later retired from the Marine Corps as a Master Sergeant.
Today’s plea took place before U.S. District Judge William F. Kuntz II of the Eastern District of New York. At sentencing on April 26, 2016, as part of the agreement, the defendant faces an agreed-upon sentence of 25 years in prison.
The case is being prosecuted by Assistant U.S. Attorneys Zainab Ahmad, Margaret Lee and Melody Wells of the Eastern District of New York with assistance provided by Trial Attorney Jennifer Levy of the National Security Division’s Counterterrorism Section.
Louisiana Check Cashers Plead Guilty to Conspiracy, Tax Charges and Agree to Forfeit $4.12 MillionRead the Press Release
Two residents of Kenner, Louisiana, pleaded guilty today before Federal District Court Judge Lance M. Africk of the Eastern District of Louisiana for crimes related to the operation of their check cashing business, VJ Discount Inc., announced Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division and U.S. Attorney Kenneth A. Polite for the Eastern District of Louisiana.
Susantha Wijetunge, aka VJ, 52, pleaded guilty to conspiring to defraud the United States by impeding and impairing the Internal Revenue Service (IRS), to file false reports with government agencies regarding these transactions and to commit mail and wire fraud. His spouse, Manula Wijetunge, aka Manu, 48, pleaded guilty to willfully filing a false tax return. As part of their guilty pleas, the defendants and certain corporate entities they control agreed to the forfeiture of approximately $4.12 million dollars.
According to publicly filed documents, defendants Susantha Wijetunge and Manula Wijetunge owned VJ Discount Inc., a Louisiana corporation that operated a convenience store and check cashing business in Kenner. Susantha Wijetunge, VJ Discount Inc. and others cashed fraudulently obtained tax refund checks for multiple co-conspirators, for which they charged a higher fee than normal. Often, these transactions involved multiple checks and tens of thousands of dollars. In order to conceal this illegal activity, Susantha Wijetunge and others filed false reports with the government, or failed to file them as required by law.
Susantha Wijetunge also admitted to filing multiple false tax returns that underreported business and individual income to the IRS. Both Susantha Wijetunge and Manula Wijetunge admitted that VJ Discount Inc. had third party check deposits of more than $59 million in 2011; $47 million in 2012; and $66 million in 2013. Despite this large volume of business, the defendants’ individual income tax returns reported total individual income of less than $100,000 per year. Manula Wijetunge pleaded guilty to willfully filing a false 2013 individual income tax return.
Susantha Wijetunge faces a statutory maximum term of five years in prison and Manula Wijetunge faces a statutory maximum term of three years in prison. They also face fines, forfeiture, the costs of prosecution and restitution. Sentencing is set for July 14.
Acting Assistant Attorney General Ciraolo and U. S. Attorney Polite commended special agents of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and IRS-Criminal Investigation, who investigated the case and Assistant U.S. Attorneys Hayden Brockett and David Haller and Trial Attorney Michael Hatzimichalis of the Tax Division, who are prosecuting the case.
Justice Department Sues Wyoming State Agency for Sex DiscriminationRead the Press Release
The Department of Justice announced today that it has filed a lawsuit against the Wyoming Military Department alleging that it discriminated against a female former employee on the basis of her sex when it failed or refused to take timely remedial actions when she was sexually harassed by her male supervisor.
According to the complaint, the supervisor’s persistent and prevalent sexual harassment led to a hostile work environment based on sex, in violation of Title VII of the Civil Rights Act of 1964. Title VII is a federal statute that prohibits employment discrimination on the basis of race, color, religion, sex or national origin.
The department’s complaint, filed today in the U.S. District Court for the District of Wyoming, alleges that the former employee was regularly subjected to sexual harassment in the workplace by her immediate supervisor, the former director of the Wyoming Military Department’s Youth Challenge Program. The supervisor’s unwelcome conduct included unwanted emails about his personal life with his then wife; unwanted written expressions of affection for the employee, including songs and poems; and invasion of her work space to discuss personal issues to such a degree that it interfered with her ability to do her work and that she found it necessary to invent pretext to get away from him. The employee repeatedly rejected these advances and requested that her supervisor cease all of his unwanted behavior, but the supervisor persisted in his conduct. The employee filed multiple complaints with the Wyoming Military Department indicating that her supervisor’s behavior was unwelcome, that she had asked him to stop his unwanted attentions and that he failed or refused to do so.
According to the complaint, the employee received no effective assistance from the Wyoming Military Department in remedying her claims despite her complaints to both its human resources department and management officials. The combination of the supervisor’s actions and the agency’s lack of assistance caused the employee to resign.
“Title VII ensures that no woman should have to choose between keeping her job and enduring sexual harassment in the workplace,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “When employers learn about allegations of sexual harassment, the law requires that they take swift action to protect victims and hold perpetrators accountable.”
The Equal Employment Opportunity Commission (EEOC) received a charge of sex discrimination filed by the former employee. The EEOC’s Denver Field Office, in the Phoenix District, investigated the matter and found reasonable cause to believe that the Wyoming Military Department discriminated against the former employee. After unsuccessful conciliation efforts, the EEOC referred the matter to the department.
The lawsuit seeks declaratory and injunctive relief requiring the Wyoming Military Department to implement employment policies that prevent hostile work environment harassment based on sex. The United States will also seek to obtain “make whole” relief, including monetary damages, for the victim.
The case was brought by the Civil Rights Division’s Employment Litigation Section. Enforcing federal employment discrimination laws is a top priority for the Justice Department. Additional information about Title VII and other federal employment laws is available on the Civil Rights Division’s website at www.justice.gov/crt.
Alabama Loan Company Employee Pleads Guilty to Stealing Identities Used to File False Income Tax ReturnsRead the Press Release
A Montgomery County, Alabama, resident pleaded guilty today to one count of conspiracy to commit wire fraud and one count of aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama. According to court documents, between January 2013 and August 2015, Wendy Huff, worked at two loan companies in Montgomery, Alabama, and had access to the means of identification of customers, including their names, social security numbers and dates of birth. Huff agreed to steal names from her employers and provide them to James Vernon Battle, identified as a co-conspirator in the indictment. The government alleges that Battle used those names to file over 335 returns claiming more than $400,000 in fraudulent refunds and that he directed the Internal Revenue Service (IRS) to issue the anticipated tax refunds in the form of prepaid debit cards and U.S. Treasury checks, which were mailed to addresses in Montgomery including Huff’s residence. Huff subsequently delivered the prepaid debit cards to Battle. The government further alleges that Battle brought several U.S. Treasury checks to Huff’s workplace where she used her position to cash them. Huff returned half of the proceeds to Battle and kept the balance for herself. Huff faces a statutory maximum sentence of five years in prison for the conspiracy charge and a mandatory minimum sentence of two years in prison for the aggravated identity theft charge, which will be in addition to any other term of imprisonment she receives. She also faces substantial monetary penalties and restitution. Sentencing is set for July 14. Battle’s trial is scheduled to begin during the week of April 11. Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck Jr. commended special agents of IRS-Criminal Investigation and the U.S. Secret Service, who investigated the case and Trial Attorneys 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 are prosecuting this case. Additional information about the Tax Division and its enforcement efforts may be found on the Division’s website.
U.S. Marshals Service National Operation Nets More Than 8,000 FugitivesRead the Press Release
Operation Violence Reduction12 Nabs Most Dangerous Criminals
Today, Deputy Attorney General Sally Q. Yates and U.S. Marshals Service Deputy Director David Harlow announced that for the second consecutive year, the U.S. Marshals Service has conducted a high-impact national fugitive apprehension initiative focusing on the country’s most violent offenders. This six-week initiative, called Operation Violence Reduction12 (Operation VR12), resulted in the arrest of 8,075 gang members, sex offenders and other violent criminals.
“Through Operation VR-12, over 8,000 violent fugitives who preyed on our communities were tracked down, arrested and put behind bars,” said Deputy Attorney General Yates. “Thanks to the strategic and focused efforts of the U.S. Marshals Service and their law enforcement partners, our nation’s streets are now rid of over 500 accused murderers, 600 gang members and nearly 1,000 sex offenders. Fugitives initiated gun battles, forced barricaded standoffs, assaulted officers and did everything they could to evade arrest – but our Deputy Marshals, together with their law enforcement partners, stood firm and succeeded in capturing the bad guys.”
“We applied a strategically focused approach to locate and apprehend the nation’s most dangerous fugitives,” said Deputy Director Harlow. “By removing these violent offenders from the streets, the communities they preyed upon can immediately feel more secure. Operation VR12 was about using our expertise and law enforcement partnerships to significantly impact our communities by focusing on the worst of the worst violent criminals.”
While Operation VR12 was conducted nationwide in all 94 federal judicial districts, U.S. Marshals focused special attention on 12 selected locations experiencing upticks in violent crime: Baltimore; Brooklyn, New York; Camden, New Jersey; Chicago; Compton, California; Fresno, California; Gary, Indiana; Milwaukee; New Orleans; Oakland, California; Savannah, Georgia; and Washington, D.C.
In order to have the greatest impact on violent crime, Operation VR12 focused on fugitives who had three or more prior felony arrests for crimes such as murder, attempted murder, robbery, aggravated assault, arson, abduction/kidnapping, weapon offenses, sexual assault, child molestation and narcotics. Operation VR12 investigators increased their focus on fugitives accused of sex crimes and on the recovery of missing children.
Between Feb. 1 and March 11, the U.S. Marshals Service used its multi-jurisdictional investigative authority and fugitive task force network to arrest 648 gang members and others wanted on charges including 559 for homicide; and 946 for sexual offenses. In addition, investigators seized 463 firearms, $390,360 in currency and more than 71 kilograms of illegal narcotics. Also during the operation, investigators recovered 17 children who had been abducted and reported missing.
Notable arrests:
Blake Edwards Fitzgerald and Brittany Nicole Harper were the focus of a multi-state investigation that received national media attention. Dubbed a modern-day Bonnie and Clyde, Fitzgerald and Harper were wanted in Missouri, Georgia, Alabama and Florida for multiple charges including kidnapping, armed robbery, burglary and firearms violations. After leading authorities on a multi-day, cat-and-mouse chase and two high-speed pursuits, the duo was located in Pensacola, Florida, on Feb. 5. Fitzgerald was mortally wounded in an exchange of gunfire with officers, while Harper sustained non-life threating gunshot wounds.
Sabino Avila, a documented member of the Two Sixer street gang, was wanted by the Chicago Police Department for home invasion and rape. On Feb. 9, Avila allegedly forced entry into the home of a 54-year-old woman, tied her up and sexually assaulted her. Local authorities asked U.S. Marshals for assistance in locating and apprehending the suspect. He was arrested without incident in Chicago on Feb. 14.
Carl Cooper was wanted by the Baltimore City Police Department for allegedly shooting two elderly siblings in front of a busy shopping center. He was named “Public Enemy #1” by Police Commissioner Kevin Davis. Operation VR12 investigators arrested Cooper in Fayetteville, North Carolina, on March 4.
“Fugitives have a propensity to commit violent criminal acts posing danger to communities and plaguing neighborhoods where we live and work.” said Deputy Director Harlow. “Working with our federal, state and local partners, enforcement initiatives like Operation VR12 severely cripple these criminal activities.”
The concept behind interagency law enforcement operations such as Operation VR12 evolved largely from regional and district task forces. Since the 1980s, the U.S. Marshals Service has combined their resources and expertise with local, state and federal agencies to find and apprehend dangerous fugitives. Operation VR12 continued this tradition.
For more information about Operation VR12, including photographs and B-roll footage, visit www.usmarshals.gov.
Respironics to Pay $34.8 Million for Allegedly Causing False Claims to Medicare, Medicaid and Tricare Related to the Sale of Masks Designed to Treat Sleep ApneaRead the Press Release
Respironics Inc., based in Murrysville, Pennsylvania, has agreed to pay $34.8 million to resolve alleged False Claims Act violations for paying kickbacks in the form of free call center services to durable medical equipment (DME) suppliers that bought its masks for patients with sleep apnea, the Department of Justice announced today.
“The payment of illegal remuneration in any form to induce patient referrals threatens public confidence in the health care system,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Americans deserve to know that when they are prescribed a device to treat a serious health care problem, the supplier’s judgment has not been compromised by illegal payments from equipment manufacturers.
The Anti-Kickback Statute prohibits the knowing and willful payment of any remuneration to induce the referral of services or items that are paid for by a federal healthcare program, such as Medicare, Medicaid or TRICARE. Claims submitted to these programs in violation of the Anti-Kickback Statute are also false claims under the False Claims Act.
The United States alleged that Respironics violated the Anti-Kickback Statute and the False Claims Act by providing free services to DME suppliers to induce them to purchase Respironics masks that treat sleep apnea. Respironics allegedly provided DME companies with call center services to meet their patients’ resupply needs at no charge as long as the patients were using masks that Respironics manufactured; otherwise, the DME companies would have to pay a monthly fee based on the number of patients who used masks manufactured by a competitor of Respironics. The government alleged that the conduct began in April 2012 and continued until November 2015.
“This office has made a substantial commitment to combating fraud,” said U.S. Attorney Bill Nettles of the District of South Carolina. “Our commitment has made this district one of the leaders on behalf of whistleblowers. We hope that those who commit fraud will recognize that it is our goal to make the consequences more than just the cost of doing business.”
Respironics will pay roughly $34.14 million to the federal government and roughly $660,000 to various state governments based on their participation in the Medicaid program.
The settlement resolves a lawsuit originally brought by Dr. Gibran Ameer, who has worked for different DME companies, under the qui tam provisions of the False Claims Act. The Act permits private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Under the civil settlement announced today, Dr. Ameer will receive $5.38 million out of the federal share of the recovery.
“Medical equipment manufacturers that boost profits by providing kickbacks to suppliers will be held accountable for their improper conduct,” said Special Agent in Charge Derrick L. Jackson of the Department of Health and Human Services, Office of Inspector General (HHS-OIG). “We will continue to investigate such business arrangements, which threaten the integrity of federal health care programs.”
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 $27.4 billion through False Claims Act cases, with more than $17.4 billion of that amount recovered in cases involving fraud against federal health care programs.
This settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the District of South Carolina, and HHS Office of Counsel to the Inspector General and Office of Investigations and the National Association of Medicaid Fraud Control Units.
The lawsuit is captioned United States et al. ex rel. Dr. Gibran Ameer v. Philips Electronics North America, et al., Case No. 2:14-cv-2077-PMD (D.S.C.). The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Leaders of Lorenzana Drug Trafficking Organization Convicted on International Narcotics Trafficking ChargesRead the Press Release
Eliu Elixander Lorenzana-Cordon and Waldemar Lorenzana-Cordon, leaders of a Guatemala-based international drug trafficking organization responsible for importing multi-ton quantities of cocaine into the United States, were convicted on international narcotics trafficking charges in the District of Columbia following a four-week trial.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division announced the conviction.
“For well over a decade, the defendants led a major Central American drug trafficking organization responsible for importing tons of cocaine into the United States,” said Assistant Attorney General Caldwell. “This verdict sends a powerful message that the United States and its partners will pursue and obtain justice against international drug traffickers.”
“Eliu and Waldemar Lorenzana-Cordon’s crimes have destroyed families and communities,” said Acting Deputy Administrator Riley. “Their organization fed a pipeline of drugs ultimately sold on American streets, fostering violence and drug addiction. Their conviction marks the end of their criminal reign and the beginning of their life behind bars.”
Eliu, 43, and Waldemar, 49, were each convicted on one count of conspiring to unlawfully import and distribute cocaine into the United States. The defendants were arrested in Guatemala after their indictment on this conspiracy charge and then extradited to the United States.
According to evidence presented at trial, the Lorenzana-Cordons were leaders of an international drug trafficking organization with close ties to the Sinaloa Cartel. Evidence at trial demonstrated that between 1996 and 2009, the defendants and their co-conspirators received, stored and distributed multi-ton quantities of cocaine from Colombia at their properties in Zacapa, Guatemala, for importation into Mexico and then ultimately into the United States.
On April 27, 2010, the Department of Treasury’s Office of Foreign Asset Control designated both defendants as Specially Designated Narcotics Traffickers pursuant to the Foreign Narcotics Kingpin Designation Act due to their significant roles in international narcotics trafficking and their ties to the Sinaloa Cartel, according to evidence presented at trial.
The Drug Enforcement Administration’s 959/Bilateral Investigations Unit and Guatemala City Country Office led the investigation, which was part of the Organized Crime Drug Enforcement Task Force. Trial Attorneys Michael Lang, Stephen Sola and Emily Cohen of the Criminal Division’s Narcotic and Dangerous Drug Section are prosecuting the case. The Criminal Division’s Office of International Affairs provided substantial assistance. The Chicago Police Department and the governments of El Salvador and Panama provided support and assistance in this prosecution. The Justice Department in particular wishes to convey its gratitude to the government of Guatemala for its steadfast commitment, collaboration and assistance in the investigation, extradition and prosecution of this case.
Justice Department Obtains $130,000 Settlement in Lawsuit Against Indiana Mobile Home Park for Discriminating Against Families with ChildrenRead the Press Release
The Justice Department announced that the corporate owner and agent of Gentle Manor Estates have agreed to pay $130,000 to settle a Justice Department lawsuit alleging familial status discrimination. The settlement must still be approved by the U.S. District Court for the Northern District of Indiana.
The lawsuit, filed in May 2015, alleged that Gentle Manor Estates LLC and John Townsend violated the Fair Housing Act by maintaining and enforcing a discriminatory policy of refusing to allow families with children to live at Gentle Manor Estates, a 173-lot mobile home park in Crown Point, Indiana. The allegations were based on evidence generated by the department’s Fair Housing Testing Program, in which individuals pose as renters to gather information about possible discriminatory practices.
“The Fair Housing Act guarantees families with children the right to choose a home without facing unlawful barriers of discrimination,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “The Justice Department will continue its vigorous enforcement of the Fair Housing Act to ensure that equal access to housing – a bedrock of the American dream – remains a reality for all families in our country.”
Under the terms of the proposed settlement, the defendants must pay $100,000 into a settlement fund to compensate victims of discrimination and an additional $30,000 to the government as a civil penalty. In addition, the proposed settlement requires the defendants to implement a nondiscrimination policy, establish new nondiscriminatory application and rental procedures and undergo training on the Fair Housing Act. Anyone who believes that they have been discriminated against by Gentle Manor Estates because they have children should call the Justice Department at 1-800-896-7743, mailbox number 9994 or email the department at [email protected].
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt/.
Gentle Manor Estates Consent Order
Judge Orders Recall of Dangerous MagnetsRead the Press Release
A federal judge yesterday ordered a Colorado company to recall powerful, small magnets that can cause fatal injuries when swallowed, the Justice Department announced.
U.S. District Court Judge Christine M. Arguello of the District of Colorado had previously issued a preliminary injunction that prohibited Zen Magnets LLC and its owner, Shihan Qu, from further sale of the magnets. On Tuesday, Judge Arguello made the injunction against the sale of the magnets permanent, ordered Zen Magnets to conduct a recall in which the company must provide refunds to consumers who return the magnets and directed Zen Magnets to destroy the remaining magnets in the company’s inventory.
The court found that Zen Magnets purchased approximately 917,000 small magnets at a substantial discount from another company that one week later agreed to recall the magnets as part of an agreement with the U.S. Consumer Product Safety Commission (CPSC). Judge Arguello ruled that Zen Magnets violated the Consumer Product Safety Act when it subsequently resold the magnets.
“We are pleased that the district court recognized that putting a dangerous consumer product in a different box and calling it a different name does not permit a company to circumvent a recall,” 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 with the Consumer Product Safety Commission to protect consumers—especially children—by enforcing recalls of dangerous products.”
The company had argued that by placing the magnets in different packaging and selling the magnets under different names, the magnets were no longer covered by the recall. Judge Arguello rejected that argument, saying that Zen Magnets’ interpretation “would allow manufacturers and importers of consumer products to simply circumvent (and effectively disarm)” the Consumer Product Safety Act “by merely repackaging recalled products as they saw fit.”
Judge Arguello noted that Qu knew when his company purchased the magnets in July 2014 that the seller was about to enter into an agreement with the CPSC to recall the magnets and that it was likely that it would soon be illegal to sell the magnets. Nonetheless, Zen Magnets ignored repeated warnings by the CPSC and continued to sell the magnets until the court issued the preliminary injunction last year. Judge Arguello stated that allowing consumers to return the magnets “will reduce the likelihood that such consumers are injured by those products” and would deter future violations of the law by forcing Zen Magnets to issue refunds.
“Thanks to the hard work of Assistant U.S. Attorneys from Colorado and Department of Justice Trial Attorneys, a dangerous product has been successfully removed from the market,” said U.S. Attorney John Walsh for the District of Colorado. “This product is known to harm children, and based on that fact alone, the litigation to remove it was critical to protect consumers.”
“Today’s decision puts the rule of law and the safety of children above the profits sought by Zen Magnets,” said Chairman Elliot F. Kaye for CPSC. “Far too many children have been rushed into hospital emergency rooms to have multiple, high-powered magnets surgically removed from their stomachs. Young children have suffered infections and one child tragically died from swallowing loose magnets that often look like candy. The ruling is a major victory for the safety of consumers. Our pursuit of this case makes clear we will not tolerate the sale of recalled goods in any form. I am pleased that Judge Arguello ordered Zen to issue refunds to consumers, and I urge anyone who purchased these magnets to immediately seek a refund from Zen.”
The magnets at issue are typically sold in sets of hundreds and are commonly marketed and sold as “sculptural” desk toys. According to the CPSC, when a person ingests more than one of the powerful small magnets, the magnets are attracted to each other in the digestive system, creating the potential for serious damage to the intestinal tissue trapped in between or even death.
Zen Magnets is separately challenging a rule issued by the CPSC that prohibits the sale of magnets or magnet sets that are small enough to be swallowed and that have a high degree of magnetic attraction. That rule went into effect and applies only to magnets sold after April 1, 2015. That case remains pending on appeal.
The case is being handled by Senior Litigation Counsel Patrick Jasperse of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorneys Jamie Mendelson and Jacob Licht-Steenfat of the District of Colorado.
Former CEO of $3 Billion TierOne Bank Sentenced to 11 Years in Prison for Orchestrating Scheme to Hide More than $100 Million in Losses from Shareholders and RegulatorsRead the Press Release
The former CEO of TierOne Bank, a $3 billion publicly-traded commercial bank formerly headquartered in Lincoln, Nebraska, was sentenced to 132 months in prison today for orchestrating a scheme to defraud TierOne’s shareholders and to mislead regulators by concealing more than $100 million in losses on loans and declining real estate.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Randall C. Thysse of the FBI’s Omaha, Nebraska, Division and Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Christy Goldsmith Romero made the announcement.
Gilbert G. Lundstrom, 74, of Lincoln, was sentenced by U.S. District Judge John M. Gerrard of the District of Nebraska, who also ordered Lundstrom to pay a $1.2 million fine. The court deferred entering a restitution order until after sentencing. On Nov. 6, 2015, after a two-week jury trial, Lundstrom was convicted of 12 of 13 counts charged, including conspiracy to commit wire fraud and securities fraud, conspiracy to falsify bank entries, wire fraud, securities fraud and falsifying bank entries.
“Today’s sentence shows the Justice Department’s commitment to prosecuting individuals who abuse their corporate positions to commit fraud,” said Assistant Attorney General Caldwell. “Gilbert Lundstrom and his co-defendants’ crimes not only contributed to the collapse of a major regional bank during the financial crisis, but also destroyed the jobs of hundreds of bank employees and led to massive losses for the bank’s shareholders. The defendants recklessly gambled with bank assets and lied to shareholders and government regulators, and through their actions drove a respected regional bank into the ground. They have now been held accountable for their crimes.”
“The entire financial system is dependent upon full and truthful disclosure by the executives of financial institutions and the sentence imposed today sends a message to high level executives who abuse their position of trust,” said Special Agent in Charge Thysse. “The FBI will continue to investigate and bring to justice those who exploit their influence or position for personal gain at the expense of the investing public.”
“Lundstrom is now another bank CEO investigated by SIGTARP to be sentenced to prison,” said Special Inspector General Romero. “He was the architect of the bank’s aggressive and risky growth plan that backfired when the housing bubble burst. Instead of honestly communicating TierOne’s losses, this bank CEO took intricate steps to conceal the bank’s true financial picture and dig the bank into an even deeper financial hole. Lundstrom applied for $86 million in TARP funds on behalf of the bank. This was a critically important conviction and we commend the commitment by the DOJ Criminal Division and the FBI in holding bankers who commit crimes accountable.”
According to the evidence presented at trial, Lundstrom designed an aggressive strategy to expand TierOne’s portfolio beyond traditional lending in Nebraska to riskier areas, including commercial real estate in Las Vegas, which decimated the bank once the financial crisis hit. Trial evidence showed that Lundstrom and his co-conspirators then intentionally concealed more than $100 million in losses in TierOne’s loan and real estate portfolio from investors and regulators and provided inflated figures in its required reports to the U.S. Securities and Exchange Commission (SEC) and the Office of Thrift Supervision. In April 2009, Lundstrom and his co-conspirators learned that TierOne needed to increase its reserves and “loan loss allowance” by between $34 million and $114 million, but concealed this information from shareholders and regulators in TierOne’s financial statements, the evidence showed. In addition, trial evidence demonstrated that during TierOne’s annual shareholder meeting held on May 21, 2009, Lundstrom misrepresented the state of TierOne’s capital ratios and reserves and whether TierOne had applied for TARP funding.
In June 2010, following TierOne’s ultimate disclosure of $120 million in loan losses and its subsequent delisting from the NASDAQ exchange, TierOne was shut down by the Federal Deposit Insurance Corporation. At the time of the closure, TierOne had more than 750 employees working at its headquarters in Lincoln and its 69 branch offices located in Nebraska, Iowa and Kansas.
In 2014, co-conspirators James Laphen, 67, of Omaha, TierOne’s former president and chief operating officer, and Don Langford, 65, of College Station, Texas, TierOne’s former chief credit officer, pleaded guilty to multiple felonies in connection with their participation in the scheme. Laphen and Langford are scheduled to be sentenced tomorrow by Judge Gerrard.
The FBI’s Omaha Division and SIGTARP investigated the case. The SEC also provided substantial assistance in the investigation. Trial Attorneys Henry P. Van Dyck and L. Rush Atkinson and Senior Deputy Chief Sandra Moser of the Criminal Division’s Fraud Section prosecuted the case.
Department of Justice Releases Report on Identifying and Preventing Gender Bias in Law Enforcement Response to Sexual Assault and Domestic ViolenceRead the Press Release
The Department of Justice today announced a new publication, Identifying and Preventing Gender Bias in Law Enforcement Response to Sexual Assault and Domestic Violence: A Roundtable Discussion. The report was released at the International Conference on Sexual Assault, Domestic Violence, and Engaging Men & Boys and is published by the Office of Community Oriented Policing Services (COPS Office).
This publication serves as a companion to the guidance on this topic issued by the department on Dec. 15, 2015, and summarizes a roundtable discussion hosted on Aug. 4, 2015. The roundtable was hosted by the COPS Office and the Police Executive Research Forum, in partnership with the department’s Office on Violence Against Women and Civil Rights Division. The roundtable provided an opportunity for stakeholders to share feedback on the department’s guidance. The final guidance, which includes that feedback, has been embraced by multiple law enforcement and advocacy organizations.
“As a retired police chief with close to 30 years in the field, I believe the lessons learned from this publication serve as a stark reminder of the need to ensure victims of sexual assault and domestic violence are not further victimized by gender bias – whether intentional or implicit,” said COPS Office Director Ronald Davis. “I recommend that every law enforcement executive read this report.”
The publication provides recommendations from law enforcement officers and executives, victim advocates, academics, and subject matter experts who attended the August roundtable, and shared insights on improving law enforcement response to victims of sexual assault and domestic violence, particularly amongst vulnerable populations such as the lesbian, gay, bisexual and transgender community; racial, cultural and religious minorities; and immigrants.
The publication recommends:
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Addressing gender bias in agency culture through officer training and accountability;
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Developing clear policies, resources, and partnerships; and
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Applying a survivor-centered approach.
The COPS Office, headed by Director Ronald Davis, is the federal component of the Department of Justice responsible for advancing community policing nationwide. Since 1995, the COPS Office has invested more than $14 billion to advance community policing, including grants awarded to more than 13,000 state, local and tribal law enforcement agencies to fund the hiring and redeployment of more than 127,000 officers and provide a variety of knowledge resource products including publications, training and technical assistance. For additional information about the COPS Office, please visit www.cops.usdoj.gov.
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Attorney General Loretta E. Lynch Statement on Terror Attacks in BrusselsRead the Press Release
Attorney General Loretta E. Lynch released the following statement regarding the attacks in Brussels this morning:
“I stand with President Obama and the American people in condemning this morning’s horrific attacks in Brussels. This was an appalling assault on the people of Belgium, on the European Union and on every nation that stands for peace and the rule of law. The Department of Justice is in contact with our counterparts in Belgium and we have offered any and all assistance that we can bring to bear. In the days ahead, we will continue to work with law enforcement abroad in order to help ensure those responsible are brought to justice. And as we go forward, our thoughts, prayers and deepest condolences will be with the victims and their loved ones.
“If the intent of this attack's perpetrators was to sow conflict and discord – to stoke mistrust and spread fear – they have failed. Today and every day, the people of the United States are joined with our friends in Belgium and around the world in love, compassion and resolve. The words on Belgium’s coat of arms speak for us all: L’Union Fait La Force. Unity Makes Strength.”
United States Files Enforcement Action Against Kansas Food Manufacturer and Company’s Managers to Stop Distribution of Adulterated Food ProductsRead the Press Release
A civil complaint was filed today in the U.S. District Court for Kansas against Native American Enterprises LLC, of Wichita, Kansas; its Vice President and part-owner, William N. McGreevy and is production manager, Robert C. Conner, to stop the distribution of adulterated food, the Department of Justice announced today.
Native American Enterprises LLC (NAE), manufactures and distributes food, namely ready-to-eat (RTE) refried beans and sauces. The complaint alleges that the company’s RTE refried beans and sauces are adulterated in that they have been prepared, packed and/or held under insanitary conditions whereby the food may have become contaminated with filth or have been rendered injurious to health. According to the complaint, the insanitary conditions include the presence of Listeria Monocytogene (L. mono) in NAE’s facility and insanitary employee practices. The department filed the complaint at the request of the U.S. Food and Drug Administration (FDA).
“Insanitary conditions at food processing facilities can present significant risks to consumers and food manufacturers must take steps to minimize those risks,” 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 combat and deter conduct that leads to the distribution of adulterated food to consumers.”
According to the complaint, FDA inspected NAE’s facility, located at 230 N. West Street in Wichita, in August 2015 and collected environmental samples and observed numerous insanitary practices, including the defendants’ failure to manufacture and package food under conditions necessary to minimize microorganism growth, take necessary precautions to protect against contamination and maintain buildings in good repair. Specifically, according to the complaint, FDA observed rain water leaking through the roof in the packaging room, directly above where NAE employees packaged RTE refried beans. In addition, FDA observed cracks and holes in the walls and floor junctures that allow water and debris to collect, prohibit adequate cleaning and could harbor Listeria, according to the complaint.
FDA inspected NAE’s facility twice in 2014. As alleged in the complaint, FDA collected environmental samples during RTE refried bean production during each of the 2014 inspections and found Listeria in the facility. In addition, as alleged in the complaint, FDA also observed a failure to maintain equipment in an acceptable condition through appropriate cleaning and sanitizing.
As alleged in the complaint, L. mono thrives in moist environments, such as food-manufacturing environments. Unless proper precautions are taken, L. mono may become established and grow, and it is difficult to eliminate once it becomes established in a food-manufacturing environment. It is capable of surviving and growing at refrigerated temperatures and in high-salt environments. The complaint alleges that L. mono is a significant public health risk in RTE refried beans and sauces.
The government is represented by Trial Attorney Heide L. Herrmann of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Emily Metzger of the U.S. Attorney’s Office for the District of Kansas, with the assistance of Associate Chief Counsel for Enforcement Sonia W. Nath of the Food and Drug Division, Office of General Counsel, Department of Health and Human Services.
A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.
Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the District of Kansas, visit its website at http://www.justice.gov/usao-ks.
North Carolina Resident Sentenced to Prison for Tax FraudRead the Press Release
A Charlotte, North Carolina, area resident was sentenced to 41 months in prison today for his involvement in a fraudulent tax return scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.
According to court documents and statements in court, in early 2011, Daniel Heggins, 44, and Joan Clark operated Guarantor Manufactures Inc. (GMI), a business that purported to help individuals who were in debt. Heggins and his co-conspirators, including Clark, prepared and filed false tax returns on behalf of GMI’s clients claiming fraudulent tax refunds from the Internal Revenue Service (IRS) in the amount of their clients’ debts. The intended loss of the conspiracy exceeded $4 million. Heggins also charged GMI’s clients bogus filing fees of $2,500 to $5,000 in order to prepare and file the fraudulent returns. Heggins and Clark pleaded guilty to conspiracy to defraud the United States in November 2015.
“While taxpayers are ultimately responsible for the information reported on their returns, they also are entitled to honest and accurate assistance from those paid to prepare their returns,” said Acting Assistant Attorney General Ciraolo. “Heggins and Clark took advantage of clients seeking such assistance, and used their fraudulent scheme to line their own pockets. The department will continue to work with our partners in the Internal Revenue Service to investigate, prosecute and incarcerate such individuals for their criminal conduct, and seek restitution for the victims.”
“As we are in the midst of the annual tax season, it is important for consumers to be cognizant of fraudsters who charge exorbitant fees to prepare tax returns and engage in the submission of fraudulent tax returns,” said U.S. Attorney Rose. “Taxpayers are urged to be wary of using tax return preparation businesses which make unusual or extreme promises and to exercise caution when selecting a tax preparation service.”
“During filing season, I’d like to encourage the taxpayers to heed the old warning, ‘Buyer beware,’” said Special Agent in Charge Thomas J. Holloman III of IRS Criminal Investigation Division (IRS-CI), Charlotte Field Office. “Heggins and Clark perpetrated a scheme in which they offered assistance to clients and then victimized them, through their crimes. While the methods utilized by criminals may change, the constant is that we will be there to make sure they are brought to justice.”
In addition to the prison term, U.S. District Judge District Max O. Cogburn Jr. ordered Heggins to serve three years of supervised release and pay $24,325 in restitution to victims of the fraud, which included former clients and the IRS. Clark was sentenced in February to 20 months in prison for her involvement in the fraudulent refund scheme and for a separate scheme in which she filed fraudulent tax returns in the name of trusts.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rose commended special agents of IRS-Criminal Investigation and the FBI, who investigated the case and Assistant U.S. Attorney Mike Savage of the Western District of North Carolina and Trial Attorney Todd Kostyshak of the Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts can be found on the division’s website.
New Smart on Crime Data Reveals Federal Prosecutors Are Focused on More Significant Drug Cases and Fewer Mandatory Minimums for Drug DefendantsRead the Press Release
The Justice Department today revealed new data from its innovative Smart on Crime Initiative that show charging decisions by federal prosecutors in fiscal year 2015 resulted in prosecutors' focusing on more serious drug cases and fewer indictments carrying a mandatory minimum. Meanwhile, prosecutions of high-level drug defendants have risen and cooperation and plea rates remained effectively the same.
“The promise of Smart on Crime is showing impressive results,” said Deputy Attorney General Sally Q. Yates. “Federal prosecutors are consistently using their discretion to focus our federal resources on the most serious cases and to ensure that we reserve harsh mandatory minimum sentence for the most dangerous offenders. By ensuring fair and proportional sentencing, these policies engender greater trust in our criminal justice system, save federal resources and make our communities more safe. "
As part of the department’s Smart on Crime Initiative – announced in August 2013 – federal prosecutors were instructed to ensure the department’s finite resources are devoted to the most important law enforcement priorities implicating substantial federal interests and to promote fair enforcement of our laws, especially for low-level, non-violent drug offenders.
Since that announcement, prosecutions of serious drug defendants – such as those involving a weapon or leaders of a conspiracy – have increased, and there has been virtually no change in the rates at which defendants cooperate with the government or plead guilty. During the same time, the department has seen steady reductions in charges that trigger mandatory minimums and fewer federal drug charges for low-level, non-violent offenders.
The FY2015 data, provided by the Sentencing Commission, shows:
- Federal prosecutors are being more selective in their drug prosecutions. Even though drug cases are fewer in number, they are more focused on the most serious defendants. There was a 14 percent drop in drug cases brought between FY2012 and FY2014 and an additional 6 percent drop from FY2014 to FY2015, showing a steady downward trend that resulted in nearly 5,000 fewer drug cases between FY2012 and FY2015.
- At the same time, the percentage of those drug defendants with a weapon rose (from 15.1 percent of cases in FY2012 to 16.4 percent of cases in FY2014 and then to 17.3 percent of cases in FY2015). Similarly, the percentage of defendants with an aggravating role steadily increased (from 6.6 percent in FY2012 to 7.1 percent in 2014 and 7.8 percent in 2015).
- Just as prosecutors are focusing on the most serious defendants, they are moving away from low-level offenders and letting state prosecutors take those cases, if they so choose. That fact is clear because prosecutors are charging defendants who qualify for safety valve (by definition, lower-level defendants) less frequently – from 37 percent of cases in 2011 to 32 percent in 2015.
- Federal prosecutors are charging mandatory minimums significantly less frequently. In FY 2012, 38.5 percent of all drug cases had no mandatory minimum, whereas post-Smart on Crime, that number rose to 48.7 percent in FY2014 – the first full year that Smart on Crime was implemented – and then up again to 53.1 percent in FY2015 – meaning less than half of all drug cases involved charges carrying a mandatory minimum.
- Finally, drug defendants are still cooperating with the government to make cases against others. The percentage of motions denoting substantial assistance, or cooperation, from defendants filed in drug cases have remained the same over time. They were filed in 23.1 percent of drug cases in FY2012 and in 23.9 percent of drug cases in FY2015. Guilty plea rates have stayed at roughly 97 percent consistently.
Justice Department Settles Claims Against Barrios Street Realty Inc. for Discriminating Against U.S. WorkersRead the Press Release
The Justice Department reached a historic settlement agreement today with Barrios Street Realty Inc., a company based in Lockport, Louisiana. The agreement resolves claims that the company and its agent, Jorge Arturo Guerrero Rodriguez, discriminated against U.S. workers by preferring to hire foreign workers under the H-2B visa program.
The department’s investigation found that in July 2014, Barrios Street Realty and Guerrero Rodriguez failed to consider or improperly rejected 73 U.S. workers who applied for positions as sheet metal roofers or laborers, and then solicited foreign workers to fill these positions. The department determined that the company’s applications for foreign workers falsely claimed that its earlier efforts to fill the sheet metal and laborer positions failed to identify qualified U.S. workers. Refusing to consider or hire qualified U.S. workers because of their citizenship violates H-2B regulations and the Immigration and Nationality Act’s (INA) anti-discrimination provision.
Under the settlement, Barrios Street Realty must create a back pay fund of $115,000 to compensate U.S. workers, pay $30,000 in civil penalties and be subject to monitoring for a three-year period. In addition, Barrios Street Realty acknowledged in the agreement that its misuse of the H-2B visa program constituted valid grounds for debarment from the program and agreed to a voluntary debarment prohibiting it from seeking H-2B visa workers or any other classification of non-immigrant visa workers from the Department of Labor’s Employment and Training Administration for a period of three years. This represents the first time the department has obtained a voluntary debarment as a remedy for violating the INA’s anti-discrimination provision.
“Federal law prohibits employers from discriminating against U.S. workers in hiring,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “The department is committed to identifying and combating discriminatory hiring preferences that impede the ability of U.S. workers to compete equally for employment.”
Applicants or employees who believe they were subjected to: different documentary requirements based on their citizenship, immigration status or national origin; or discrimination based on their citizenship, immigration status or national origin in hiring, firing, recruitment or referral, should contact the worker hotline above for assistance.
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), within the Justice Department’s Civil Rights Division, is responsible for enforcing the anti-discrimination provision of the INA. The statute prohibits employers from discriminating against workers on the basis of citizenship, immigration status and national origin in hiring, firing, recruiting or referring for a fee, and employment eligibility verification.
For more information about protections against employment discrimination under federal immigration law, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TTY for hearing impaired); call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2525, TTY for hearing impaired) or 202-616-5594; email [email protected]; or visit the website at www.justice/gov/crt/about/osc.
Barrios Settlement Agreement
El Departamento de Justica Resuelve Una Reclamación Presentada en Contra de Barrios Street Realty Por Haber Discriminado a Trabajadores EstadounidensesRead the Press Release
WASHINGTON, D.C. – El Departamento de Justicia llegó a un acuerdo histórico hoy con Barrios Street Realty LLC, una empresa con sede en Lockport, Luisiana. El acuerdo resuelve quejas de que la empresa y su agente, Jorge Arturo Guerrero Rodríguez, hubiesen discriminado a trabajadores estadounidenses al dar preferencia en la contratación a trabajadores extranjeros al amparo del programa de visas H-2B.
La investigación del Departamento halló que en julio del 2014, Barrios Street Realty y Guerrero Rodríguez se negaron a considerar, o bien rechazaron indebidamente, a 73 trabajadores estadounidenses que solicitaron empleo como obreros o techadores de chapas metálicas, y en su lugar reclutaron a trabajadores extranjeros para llenar estas vacantes. El Departamento determinó que las solicitudes que la empresa difundió entre trabajadores extranjeros afirmaron falsamente que en su esfuerzo previo de llenar los puestos para obreros y techadores de chapas metálicas no lograron identificar a trabajadores estadounidenses cualificados. El negarse a considerar o a contratar a trabajadores estadounidenses cualificados por motivos de su ciudadanía representa una violación de los reglamentos H-2B y la disposición antidiscriminatoria de la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés).
En el marco del acuerdo, Barrios Street Realty deberá establecer un fondo de pagos retroactivos que asciende a 115.000$ para compensar a trabajadores estadounidenses, pagar 30.000$ en sanciones civiles y someterse a supervisión durante un período de tres años. Asimismo, Barrios Street Realty reconoció en el marco del acuerdo que su uso indebido del programa de visas H-2B constituye un motivo fundado para su inhabilitación del programa y acordó participar en un programa de inhabilitación voluntario que prohibirá que reclute a trabajadores con visas H-2B o cualquier otro tipo de trabajador no inmigrante con visa de la Administración de Capacitación y Empleo del Departamento de Trabajo durante un período de tres años. Esta es la primera vez que el Departamento ha logrado la inhabilitación voluntaria como remedio contra una violación de la disposición antidiscriminatoria de la INA.
“Las leyes federales prohíben que los empleadores discriminen a trabajadores estadounidenses en la contratación,” afirmó la Secretaria de Justicia Auxiliar Adjunta Principal, Vanita Gupta, Directora de la División de Derechos Civiles del Departamento de Justicia. “El Departamento se compromete a identificar y luchar contra preferencias discriminatorias en la contratación que impidan la habilidad de trabajadores estadounidenses de competir, de una forma equitativa, por puestos de trabajo.”
Aquellos postulantes o empleados que creen haber sido sometidos a: requisitos documentales diferentes, basados en su estatus migratorio o de ciudadanía, o bien por su nacionalidad de origen; o discriminación por motivos de su estatus migratorio o de ciudadanía, o por su nacionalidad de origen en los procesos de contratación, despido o reclutamiento o recomendación por comisión deberán comunicarse con la línea directa para trabajadores que aparece a continuación para pedir ayuda.
La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC, por sus siglas en inglés), que corresponde a la División de Derechos Civiles del Departamento de Justicia, es responsable de aplicar la disposición antidiscriminatoria de la INA. Esta ley prohíbe que los empleadores discriminen a sus trabajadores por motivos de su estatus migratorio o de ciudadanía, o bien por su nacionalidad de origen, en los procesos de contratación, despido o reclutamiento o recomendación por comisión; o en el proceso de verificación de la elegibilidad de empleo.
Para más información sobre protecciones contra la discriminación en el empleo en virtud de las leyes migratorias federales, llame a la línea directa de la OSC para trabajadores al 1‑800‑255‑7688 (1‑800-237-2525, TTY para personas con discapacidades auditivas); llame a la línea directa de la OSC para empleadores al 1-800-255-8155 (1-800-237-2525, TTY para personas con discapacidades auditivas) o el 202-616-5594; mande un correo electrónico a [email protected] o visite la página web en www.justice.gov/crt/about/osc.
Bankruptcy Court Approves Alternative Purchaser of Orange County Register and Riverside Press-EnterpriseRead the Press Release
Decision Follows TRO Halting Anticompetitive Sale to Owner of L.A. Times
Today, the Bankruptcy Court for the Central District of California approved Digital First Media as the purchaser of Freedom Communications Inc., publisher of the Register in Orange County and the Press-Enterprise in Riverside County, California. After Tribune Publishing Company, publisher of the Los Angeles Times, had attempted to emerge as the winning bidder in the bankruptcy proceeding, the Department of Justice filed a civil antitrust lawsuit seeking to block Tribune from acquiring Freedom Communications on March 17, 2016. The next day, the Honorable André Birotte Jr., a federal judge in Los Angeles, granted the department’s application for a temporary restraining order to prevent Tribune from acquiring Freedom Communications pending further proceedings.
“Many Americans depend on local newspapers even in this age of electronic information,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “As Judge Birotte held in his well-reasoned opinion, newspapers play an important role in our democracy. Preventing the Los Angeles Times from combining with the Register and the Press-Enterprise will ensure that citizens and advertisers in Southern California continue to benefit from competition and from a diversity of views in their local news coverage. The Antitrust Division will remain vigilant in protecting competition in this important industry.”
In his ruling granting the department’s application for a temporary restraining order, Judge Birotte found that “local newspapers continue to serve a unique function in the marketplace: they are the creators of local content. It further stands to reason that local advertisers in search of print advertising would choose to advertise with local news providers.”
United States Files Suit Against Savannah River Nuclear Solutions LLC and Fluor Federal Services Inc. Related to Work at the Department of Energy Savannah River SiteRead the Press Release
The Justice Department announced today that the United States has filed a complaint under the False Claims Act in the U.S. District Court for the District of South Carolina against Savannah River Nuclear Solutions LLC (SRNS) and Fluor Federal Services Inc. (FFSI) for allegedly overcharging the Department of Energy under a management and operations contract at the Savannah River Nuclear Site in Aiken, South Carolina. SRNS is a joint venture of FFSI, Newport News Nuclear Inc. and Honeywell International.
The case is captioned United States v. Savannah River Nuclear Solutions and Fluor Federal Services, Inc., 1:16-825-JMC (D.S.C). The claims asserted in the United States’ complaint are allegations only, and there has been no determination of liability.
Omron Automotive Electronics Co. Ltd. to Pay $4.55 Million for Bid Rigging on Power Window SwitchesRead the Press Release
Omron Automotive Electronics Co. Ltd has agreed to plead guilty and pay a $4.55 million criminal fine for conspiring to rig bids on power window switches installed in Honda Civics sold to U.S. consumers, the Department of Justice today announced.
“Omron and its co-conspirators targeted the Honda Civic, one of the best-selling cars in the United States, to benefit themselves at the expense of Honda Civic owners,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “Our investigation will continue to hold accountable companies and executives across the auto parts industry who chose to conspire rather than compete.”
According to the felony charge filed in the U.S. District Court for the Eastern District of Michigan, Omron, based in Komaki, Japan, and another manufacturer conspired from 2003 to 2013 to rig bids on power window switches sold to Honda Motor Co. Ltd. That conspiracy extended to sales to Honda’s U.S. subsidiaries and affiliates and the switches involved were installed in Honda Civics sold beginning in 2005 and continuing through 2013. The plea agreement is subject to court approval.
Including Omron, 39 companies and 58 executives have been charged in the division’s ongoing investigation and have agreed to pay a total of more than $2.6 billion in criminal fines. Omron is being prosecuted by the Antitrust Division’s San Francisco Office and the FBI’s Detroit Division, with assistance from the U.S. Attorney’s Office of the Eastern District of Michigan.
Anyone with information on market allocation, price fixing, bid rigging or other anticompetitive conduct related to products in the automotive industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html, or call the FBI’s Detroit Field Office tip line at 313-965-2323.
Nevada Man Convicted of Perpetrating Nationwide Multi-Million Dollar Fraud SchemeRead the Press Release
Defendant Defrauded Investors in Nigerian Oil Scheme and Veterans Affairs and Failed to File a Federal Income Tax Return
A Las Vegas, Nevada, resident, who served in the U.S. Marines Corps, was convicted by a federal jury yesterday in the District of Nevada of multiple fraud charges after an eight-day trial, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
Anton Paul Drago, formerly known as Evan Fogarty, 65, was convicted on all 10 counts of the indictment. The jury found him guilty of one count of conspiracy to commit wire fraud, two counts of wire fraud, three counts of submitting false claims to the U.S. Department of Veterans Affairs, one count of theft of government funds, one count of passing a fictitious financial instrument, one count of making false statements to federal agents and one count of failing to file a federal income tax return.
“Today’s verdict sends a strong message to would-be fraudsters that the Tax Division is committed to not only pursuing defendants who seek to steal from the U.S. Treasury, but also those who take advantage of their fellow citizens through the use of schemes like the one perpetrated by Mr. Drago,” said Acting Assistant Attorney General Ciraolo. “Mr. Drago lied to investors and to a government agency and he now faces prison and substantial monetary penalties.”
The evidence presented at trial established that Drago orchestrated a large-scale Nigerian oil investment fraud scheme. From at least 2004 through 2012, Drago told investors that money they invested would be used for legal fees and business expenses to fund the production, refinement and shipment of crude oil from Nigeria to the Bahamas. Along with co-conspirator Joseph Rizzuti, formerly of Palm City, Florida, Drago also told investors that the money they invested would fund the purchase of an oil refinery in the Bahamas. Drago lied to investors about his background, falsely claiming that he was an engineer and an expert in the oil industry with over 30 years of experience working worldwide. He also falsely told some investors that he was the grandson of the Shell Oil founder and heir to a $500 million trust that he had already spent on the Nigerian oil investment deal. None of these claims were true.
The government also presented evidence to establish that Drago and Rizzuti contracted with investors, promising them a short-term turn around on their investment in just 60 days with a return of up to 400 percent. Unwitting investors gave the conspirators more than $2 million. Instead of investing in a Nigerian oil deal as promised, Drago and Rizzuti used most of the investors’ money for personal expenses. Specifically, Drago spent the money on rent, groceries, memberships at the Tournament Players Club Summerlin golf course and an exclusive activity club in Turnberry Towers, both in Las Vegas, maintenance on his Mercedes Benz, jewelry, travel and luxury purchases at stores such as Louis Vuitton, Nordstrom and Sharper Image. In addition, nearly $1 million of the investors’ money was transferred to unknown bank accounts in China. Despite Drago’s receipt of income from this fraudulent scheme, he failed to timely file his 2007 federal income tax return.
After the disgruntled investors’ money was spent, Drago continued to lie to them about other elaborate oil-related schemes that would make them whole. He attempted to negotiate a fictitious financial instrument purporting to be an International Bill of Exchange worth $10 million at a Wells Fargo Bank branch in Las Vegas. He also lied to federal agents of the Internal Revenue Service (IRS) who were investigating him when he told them that every penny of investor money went to Nigeria.
“The jury’s ability to see through the wall of lies Mr. Drago built to deceive investors sends a positive message to the victims of his scheme and to other victims of fraud around the country,” said Chief Richard Weber of IRS Criminal Investigation (IRS-CI). “By perpetrating this abusive tax scheme and defrauding the U.S. government and victims of this scheme, Mr. Drago set in motion a chain of events that ultimately led to his downfall. IRS-CI is proud to be part of the investigative team that brought Mr. Drago to justice.”
At the same time he was perpetrating the fraudulent Nigerian oil investment scheme, Drago also falsely claimed individual unemployability compensation benefits from the Veterans Affairs (VA). The evidence at trial established that for decades, Drago falsely claimed to have a debilitating military service-connected knee injury and was totally unable to work in any capacity, when in fact he was self-employed and running several businesses. The evidence showed that Drago was active and an avid golfer, spending more than $100,000 on golf-related expenses between 2005 and 2008. Based upon his false claims to the VA, he received thousands of dollars in monthly VA benefits.
U.S. District Court Judge James Mahan set Drago’s sentencing for June 14. Drago faces a statutory maximum sentence of up to 20 years in prison for the wire fraud conspiracy, 20 years in prison for each count of wire fraud, five years in prison for making or presenting false claims, 25 years in prison for passing a fictitious financial instrument, 10 years in prison for theft of government funds, five years in prison for making false statements to federal agents and one year in prison for failing to file a federal income tax return. He also faces mandatory restitution and financial penalties, including more than $2 million in fines as well as the costs of prosecution.
Rizzuti pleaded guilty to conspiracy to commit wire fraud for his role in the Nigerian oil investment fraud scheme and an unrelated charge of obstructing the internal revenue laws. He was sentenced in May 2013 to 80 months in prison. Rizzuti testified against Drago at trial.
Assistant Attorney General Ciraolo commended the special agents of IRS–Criminal Investigation and the Office of Inspector General at the Department of Veterans Affairs, who investigated the case and Trial Attorneys Charles M. Edgar Jr. and Sean Beaty of the Tax Division, who prosecuted the case. Assistant Attorney General Ciraolo also thanked litigation technical support specialist John L. Kost, who provided trial support, and the U.S. Attorney’s Office for the District of Nevada who provided invaluable assistance to the Tax Division.
Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.
Justice Department and City of Ferguson, Missouri, Resolve Lawsuit with Agreement to Reform Ferguson Police Department and Municipal Court to Ensure Constitutional PolicingRead the Press Release
The Justice Department and the city of Ferguson, Missouri, today jointly filed an agreement resolving the United States’ pending lawsuit against Ferguson. The court-enforceable decree, filed in the U.S. District Court for the Eastern District of Missouri, aims to remedy the unconstitutional law enforcement conduct that the Justice Department found during its civil pattern-or-practice investigation into the Ferguson Police Department (FPD) and the Ferguson Municipal Court. The department’s findings were released in a public report issued March 4, 2015.
“The American people must be able to trust that their courts and law enforcement will uphold, protect, and defend their constitutional rights,” said Attorney General Loretta E. Lynch. “The filing of this agreement marks the beginning of a process that the citizens of Ferguson have long awaited – the process of ensuring that they receive the rights and protections guaranteed to every American under the law.”
Under the agreement, Ferguson will implement reforms to bring about constitutional and effective policing, promote officer and public safety, ensure fundamental fairness and equal treatment regardless of race in the municipal court and foster greater trust between police officers and the communities they serve. The areas covered by the agreement include:
- Community policing and engagement: creating a community engagement strategy that requires meaningful engagement between FPD officers and all segments of the Ferguson community.
- Bias-free police and court practices: requiring implicit bias-awareness training of all court staff and FPD personnel and ensuring that Ferguson does not discriminate on the basis of race and other characteristics.
- Stops, searches and arrests: ensuring that FPD’s stop, search, citation and arrest practices adhere to the Fourth Amendment and do not discriminate on the basis of race or any other protected characteristic; and prohibiting Ferguson from developing or implementing any law enforcement action in order to generate revenue.
- First Amendment: protecting all individuals’ First Amendment rights, including their right to record public police activity, lawfully complain about police activity free from retaliation and engage in lawful protest.
- Use of force: reorienting FPD’s use-of-force policies toward de-escalation and avoiding force except where necessary; re-training all officers; and thoroughly, objectively and timely investigating all uses of force.
- Officer supervision: requiring close and effective supervision of officers; requiring FPD officers and other personnel to wear and use body-worn and in-car cameras; and requiring supervisors to review camera footage as part of misconduct and force investigations.
- Accountability: requiring Ferguson and FPD to fully and fairly investigate all allegations of officer misconduct and take corrective and disciplinary action.
- Civilian oversight: establishing a Civilian Review Board to review, make findings and recommend disciplinary action for investigations of complaints involving excessive force, abuse of authority, the use of discriminatory slurs and other misconduct; review FPD policies and training plans; serve on officer hiring and promotion panels; and review crime, racial profiling and complaint data.
- Officer assistance and support: ensuring that officers are provided ready access to support services, including physical and mental health services, and requiring Ferguson to develop protocols to ensure that officers are provided relief support during public demonstrations and periods of civil unrest.
- Recruitment: requiring Ferguson to develop a recruitment plan that will assist FPD in attracting and retaining a highly-qualified officer workforce.
- Mental health crisis intervention: requiring that Ferguson and FPD implement and train officers in specialized responses to incidents involving individuals in mental health crisis.
- Data collection, reporting and transparency: requiring FPD to collect the data on its operations needed for it to continue to learn and improve upon its police and court practices;
- School Resource Officers (SROs): ensuring that Ferguson SROs have the skills to work lawfully, productively and fairly with youth; requiring SROs to divert students toward alternatives; and minimizing the use of force in schools.
- Municipal court reform: enacting reforms to ensure that municipal code enforcement is driven by public safety, not a desire to raise revenue; implementing an amnesty program for all open cases and associated warrants initiated prior to Jan. 1, 2014; eliminating unnecessary fees and altering the court’s fine and warrant practices to ensure due process; increasing transparency of court operations; eliminating the use of secured money bond; ensuring that no person will jailed for being poor; and ensuring the independence of the court from the city prosecutor and the impartiality of the municipal judge.
An independent monitor to be selected by the Justice Department and Ferguson will assess implementation of the consent decree, provide technical assistance to Ferguson and report on Ferguson’s implementation of reforms through periodic public reports. The consent decree requires two consecutive years of compliance by Ferguson before the agreement can be terminated.
“Ferguson residents and police officers deserve a law enforcement system that serves their entire community fairly, safely and effectively,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “The Department of Justice looks forward to working closely with the city as we implement this landmark agreement to ensure that real reform becomes a reality for all people in Ferguson.”
The Justice Department’s investigation uncovered a pattern or practice of unlawful conduct by the FPD and the Ferguson Municipal Court, including: violating the Fourth Amendment by conducting stops without reasonable suspicion and arrests without probable cause, as well as using excessive force; violating the First Amendment by interfering with the right to free expression and the right to record public police activity; and violating the 14th Amendment by engaging in racial discrimination, in both police and related court activity, as well as violating individuals’ due process and equal protection rights in court. The civil investigation was conducted by attorneys and staff from the Civil Rights Division’s Special Litigation Section.
Ferguson Consent Decree
Ferguson Joint Motion for Entry
Justice Department Files Antitrust Lawsuit to Stop L.A. Times Publisher from Acquiring Competing NewspapersRead the Press Release
Acquisition Would Monopolize Newspapers in Orange and Riverside Counties in California
The Department of Justice filed a civil antitrust lawsuit today seeking to block the acquisition by Tribune Publishing Company, publisher of the Los Angeles Times, of Freedom Communications Inc., publisher of the Register in Orange County, California, and the Press-Enterprise in Riverside County, California. Tribune was selected as purchaser of Freedom’s newspapers following a bankruptcy auction and will seek bankruptcy court approval of its acquisition on March 21. The department is seeking a temporary restraining order to prevent the sale to Tribune from proceeding.
According to the department’s complaint, filed in federal district court in Los Angeles, the Los Angeles Times and the Register together account for 98 percent of newspaper sales in Orange County and the Los Angeles Times and Freedom’s newspapers together account for 81 percent of English-language newspaper sales in Riverside County. Tribune’s acquisition of its most significant competitor would give it a monopoly over newspaper sales in each county and allow it to increase subscription prices, raise advertising rates and invest less to maintain the quality of its newspapers.
“If this acquisition is allowed to proceed, newspaper competition will be eliminated and readers and advertisers in Orange and Riverside Counties will suffer,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “Newspapers continue to play an important role in the dissemination of news and information to readers and remain an important vehicle for advertisers. The Antitrust Division is committed to ensuring that competition in this important industry is protected.”
Tribune Publishing Company is a Delaware corporation headquartered in Chicago. It publishes 11 major daily newspapers across California, Illinois, Florida, Maryland, Connecticut, Virginia and Pennsylvania.
Oregon Man Charged with Using Fictitious Financial Instruments and Failing to File Income Tax ReturnsRead the Press Release
A federal grand jury sitting in Portland, Oregon, returned a superseding indictment yesterday afternoon charging a Hillsboro, Oregon man with 13 counts of making, presenting and transmitting fictitious financial instruments and six counts of willfully failing to file income tax returns, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.
According to the superseding indictment, beginning in or about February 2008 and continuing through at least June 2015, Winston Shrout knowingly devised and participated in a scheme to defraud financial institutions and the United States out of monies by making, presenting and transmitting fictitious financial instruments, which he variously called, among other things, “International Bills of Exchange” and “Non-Negotiable Bills of Exchange.” Shrout claimed that these fictitious financial instruments had monetary value when he knew they were in fact worthless. It is alleged that during the course of his scheme, Shrout produced and issued more than 300 fictitious financial instruments, purported to be worth more than $100 trillion, on his own behalf and for credit to third parties. The superseding indictment further alleges that Shrout promoted and marketed the use of fictitious financial instruments as a way to pay off debts, including federal income taxes, through seminars and private client consultations. Shrout is alleged to have sold recordings of his seminars, templates for fictitious financial instruments, and other materials through his website.
In addition, the superseding indictment alleges that Shrout received income for the years 2009 through 2014 from various sources, including presentations at seminars, licensing fees associated with the sale of products in his name and his business, Winston Shrout Solutions in Commerce, and annual pension payments. It is alleged that Shrout willfully failed to file income tax returns with the Internal Revenue Service (IRS) for those years to report his income, despite being required to do so.
If convicted, Shrout faces a statutory maximum sentence of 25 years in prison on each count of making, presenting and transmitting a fictitious financial instrument and one year in prison for each count of willful failure to file income tax returns.
An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent until proven guilty beyond a reasonable doubt.
Acting Assistant Attorney General Ciraolo thanked special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Stuart A. Wexler and Ryan R. Raybould 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.
North Carolina Man Sentenced to Prison for Bankruptcy and Tax FraudRead the Press Release
A Burlington, North Carolina, man was sentenced today to 24 months in prison for bankruptcy fraud and tax fraud, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Department of the Justice’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
“The department, working with our partners within the IRS, is committed to identifying and prosecuting individuals who lie to or mislead the IRS in an effort to obstruct tax administration and evade the assessment or collection of tax due,” said Acting Assistant Attorney General Ciraolo. “Our system of voluntary compliance only works if individuals like Mr. Blackwell, who abuse the system and cheat their fellow citizens, are held accountable for their criminal conduct.”
“The fraudulent use of bankruptcy and other court proceedings to steal from taxpayers is of grave concern, and the U.S. Attorney’s Office remains vigilant in the effort to hold accountable those who would defraud the government,” said U.S. Attorney Rand.
According to court documents, Faiger Blackwell, 59, owned several businesses, including a funeral home, in North Carolina. In 2007, Blackwell filed for bankruptcy for himself and his funeral home after accumulating more than $300,000 in outstanding federal taxes and more than $1 million in other debts. During the bankruptcy proceedings, Blackwell concealed rental income from the bankruptcy court and instead used the money to pay for business and personal expenses. In July 2009, after the Internal Revenue Service (IRS) levied one of Blackwell’s business bank accounts, he set up another company that was created for banking purposes only and corresponding bank accounts in order to divert funds and circumvent the levy. Blackwell concealed these funds from the bankruptcy court, the IRS, and other creditors and used them to pay for business and personal expenses, including a cruise. Blackwell pleaded guilty in November 2015 to one count of concealment of assets from a bankruptcy estate and one count of impeding the due administration of the internal revenue laws.
In addition to the prison term, Chief U.S. District Court Judge William L. Osteen Jr. for the Middle District of North Carolina ordered Blackwell to serve three years of supervised release following his prison term and also ordered him to pay $404,619.29 in restitution.
“Today’s sentencing of Mr. Blackwell for bankruptcy fraud sends a clear signal for those who may be considering similar actions,” said Special Agent in Charge Thomas J. Holloman III of IRS-Criminal Investigation, Charlotte Field Office. “The bankruptcy system is based on a debtor making a full disclosure of all assets and liabilities. When individuals use this system to evade their debt obligations to the government and their creditors, they are engaging in criminal activity. IRS-Criminal Investigation is proud to work with our law enforcement partners by lending its expertise in these complex financial investigations.”
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rand commended special agents of IRS-Criminal Investigation, who investigated the case and Assistant U.S. Attorney Frank Chut of the Middle District of North Carolina and Trial Attorney Nathan Brooks of the Tax Division, who prosecuted the case.
More information about the Tax Division and its enforcement efforts can be found on the division’s website.
Former CEO of Canadian Hazardous Waste Treatment Company Convicted of Conspiracy to Pay Kickbacks and Committing Major Fraud against the United StatesRead the Press Release
The former Chief Executive Officer of a firm that specialized in the treatment and disposal of contaminated soil was convicted in the District of New Jersey of conspiring to pay kickbacks and committing major fraud against the United States in connection with obtaining subcontracts for the treatment and disposal of contaminated soil at a New Jersey Superfund site overseen by the U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers, the Department of Justice announced today.
John Bennett, of Vancouver, British Columbia, was charged with these crimes in August 2009, extradited from Canada to the United States in November 2014 to face trial, and was convicted today after a three week trial in Newark, New Jersey. Bennett was also the founder and Chairman of the Board of Bennett Environmental Inc., a firm with offices in Vancouver and Toronto.
“John Bennett corrupted the competitive bidding process by paying kickbacks in order to win a Superfund contract. He literally stole money from the United States,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “Thanks to the hard work of our law enforcement agents, antitrust prosecutors, and colleagues in Canada who secured his extradition, a jury of his peers has held him accountable for his crimes.”
Beginning in 2001, Bennett conspired with others at Bennett Environmental to pay kickbacks worth over $1 million to the project manager at Federal Creosote, a Superfund site located in Manville, New Jersey, in an effort to guarantee the award of soil treatment contracts to his company. These kickbacks included money transferred by wire to a co-conspirator’s shell company, lavish trips and entertainment expenses, and personal gifts.
In exchange for these gifts and cash payments, the project manager at Federal Creosote provided Bennett Environmental employees with “last looks” at their competitors’ confidential bids. The provision of these last looks allowed Bennett Environmental to submit its own bid at the last minute and outbid its competitors without independently determining its price, thereby guaranteeing an award to the company and undermining the competitive bid process on this federally-funded project.
According to court testimony by two cooperating witnesses who participated in the scheme with Bennett, he authorized and actively participated in the conspiracy by approving the payment of kickbacks in exchange for last looks and by approving the prices at which Bennett Environmental would bid. This testimony was supported by dozens of emails, memoranda, phone and bank records and other company documents. As a result of the payment of these kickbacks, Bennett Environmental was fraudulently awarded tens of millions of dollars in soil treatment and disposal contracts at Federal Creosote. The conspiracy continued until 2004.
Sentencing is scheduled for June 27, 2016 before Judge Susan D. Wigenton. The fraud conspiracy for which Bennett was found guilty carries a maximum penalty of five years in prison and a $250,000 criminal fine. The major fraud against the United States conviction carries a maximum of ten years in prison and a $1 million criminal fine for individuals. The maximum may be increased to twice the gain derived from the crime or twice the loss.
The investigation at Federal Creosote has resulted in the conviction of 10 individuals and three companies of charges including major fraud against the United States, tax fraud, money laundering and obstruction of justice. Criminal fines and restitution of more than $6 million also have been imposed.
The Federal Creosote investigation was conducted by the Antitrust Division’s New York Office, the EPA’s Office of Inspector General Office and the Internal Revenue Service Criminal Investigation, with the support of the Antitrust Division’s Foreign Commerce Section, the Criminal Division’s Office of International Affairs and with the assistance of the U.S Customs and Border Protection – Department of Homeland Security, and the Canadian Department of Justice – International Assistance Group and the Royal Canadian Mountain Police.
Federal Court Permanently Bars California-Based Tax Preparer from Preparing Federal Tax ReturnsRead the Press Release
The U.S. District Court for the Central District of California has permanently barred Stacy John Sanchez of Orange County, California, from preparing federal tax returns for others, the Justice Department announced today.
The civil injunction order prohibits Sanchez from acting as a federal tax return preparer and from owning, operating, or profiting from tax-return preparation businesses. Sanchez agreed to the entry of the injunction but did not admit the allegations in the civil complaint against him.
According to the complaint, Sanchez owned and operated 12 Liberty Tax Service franchise locations, primarily in the Los Angeles and Las Vegas areas. At these locations, Sanchez and his employees prepared federal income tax returns that, among other things, contained bogus Schedules C (Profit or Loss From Business), fake Form W-2 (Wage and Tax Statement) information and falsely claimed dependents, the suit alleged. These fraudulent returns improperly generated federal income tax refunds and tax credits, such as the Child Tax Credit and Earned Income Credit, for Sanchez’s clients, according to the complaint.
In addition, the complaint alleged that Sanchez and his employees prepared fraudulent income tax returns using stolen names and social security numbers and kept the bogus refunds generated by these identity theft returns. The estimated loss to the U.S. Treasury from Sanchez and his employees’ misconduct is at least $14 million, 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 its website for choosing a tax preparer and has launched a free directory of federal tax preparers. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Canadian Man Detained on Money Laundering Charges Stemming from Conspiracy to Smuggle Narwhal TusksRead the Press Release
Gregory R. Logan was held in custody today, pending his trial on money laundering charges related to a conspiracy to smuggle narwhal tusks from Canada, through Maine, to customers in the continental United States announced Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. Logan, 58, of St. John, New Brunswick, was extradited to the United States on March 11, 2016, to face trial in the U.S. District Court for the District of Maine in Bangor. Judge John A. Woodcock Jr. ruled today that Logan must remain in custody until his trial which is currently scheduled for May 3, 2016.
Logan, a retired member of the Royal Canadian Mounted Police, was indicted in November 2012 and charged with conspiracy, smuggling and money laundering. Logan was arrested in Canada, based on a request from the United States, in December 2013. Logan pleaded guilty to a related wildlife smuggling crime in Canada and the terms of his extradition limit the case against him in the United States to conspiracy to launder money and money laundering. To prove those counts at trial, the United States must show that Logan committed “specified unlawful activities” or “SUAs,” and that he “laundered” the illegal proceeds of those SUAs. As alleged in the indictment, Logan’s SUAs were smuggling narwhal tusks into the United States and then selling them to collectors. Logan then laundered the proceeds by having the money transferred out of the United States in order to further the smuggling conspiracy.
Also charged in the original indictment were Jay G. Conrad of Lakeland, Tennessee, and Andrew J. Zarauskas of Union, New Jersey. Zarauskas was convicted after a jury trial in Bangor and sentenced to 33 months in prison. Conrad has pleaded guilty and is awaiting sentencing.
According to the indictment, starting in 2000, Logan smuggled at least 250 narwhal tusks worth more than $2 million by transporting them across the border in false compartments in his vehicle. Conrad and Zarauskas, and others, bought the narwhal tusks from Logan, knowing the tusks had been illegally imported into the United States and sold or attempted to sell the tusks after their illegal importation. Logan retired from the Royal Canadian Mounted Police in 2003.
Narwhals are medium-sized toothed whales that are native to the Arctic. Given the threats to their population, narwhals are protected domestically by the Marine Mammal Protection Act and internationally by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) – an international treaty to which more than 170 countries, including the United States and Canada, are parties. It is illegal to import narwhals, or their parts, into the United States without a permit and any such importation must be declared to U.S. Customs and Border Protection and the U.S. Fish and Wildlife Service.
“As this case shows, wildlife trafficking can involve millions in illegal transactions, compounding the damage it does to the wealth and diversity of life on our planet,” said Assistant Attorney General Cruden. “By pursuing the criminal financial transactions that flow from trafficking, we are making a less attractive and more costly enterprise. We are extremely grateful to Canadian law enforcement authorities and all of our international partners who are side by side with us in the fight against such trade.”
“Modern wildlife crime investigations often track money as much as they track animals,” said Deputy Chief Ed Grace of Law Enforcement for the U.S. Fish and Wildlife Service. “This case shows the breadth of the illegal wildlife trade, normally associated with elephant ivory and rhino horn. Even species of the deep polar waters are not safe until we extinguish the market for protected animals and with it, the livelihood of criminal profiteers who benefit from their exploitation.”
“There is a global commitment to erase profits from trade in protected marine mammals,” said Assistant Administrator Eileen Sobeck of the National Oceanic and Atmospheric Administration Fisheries. “We're grateful for the cooperation that has led to justice being served and will continue to work with our international, federal and state law enforcement partners to ensure marine resources are protected now and into the future.”
The charges against Logan are merely allegations and he is presumed innocent unless and until proven guilty in a court of law. Money laundering is a felony punishable by a maximum sentence of 20 years in prison and fines of up to $500,000.
The case was investigated by special agents of the National Oceanic and Atmospheric Administration, Office of Law Enforcement; U.S. Fish & Wildlife Service, Office of Law Enforcement; and Wildlife Officers from Environment and Climate Change Canada. The case is being prosecuted by Senior Trial Attorney James B. Nelson and Trial Attorney Lauren D. Steele of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division. The Justice Department’s Office of International Affairs provided substantial assistance.
Attorney General Loretta E. Lynch Statement on President Obama’s Nomination of Chief Judge Merrick Garland to the Supreme CourtRead the Press Release
Attorney General Loretta E. Lynch released the following statement regarding the President’s nomination of Chief Judge Merrick Garland to the Supreme Court:
“I commend President Obama on his nomination of Chief Judge Merrick Garland as an associate justice on the Supreme Court. In all of his prior work – from his time at the Department of Justice, where he prosecuted terrorists like Ted Kaczynski and Timothy McVeigh, to his 19-year service on the United States Court of Appeals for the District of Columbia Circuit – Judge Garland has earned a reputation for fairness and the respect of colleagues across the ideological spectrum. His impeccable credentials, steadfast fidelity to the law and firm devotion to the public interest make him an outstanding choice to sit on our nation's highest court, where I am certain he will serve with integrity and wisdom. I strongly support the President's choice and I urge Congress to approve Judge Garland’s nomination and fill this important position without delay.”
Two North Carolina Residents Sentenced to Prison for Tax FraudRead the Press Release
Two Charlotte, North Carolina, area residents have been sentenced to prison for their involvement in a fraudulent trust tax return scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.
Marlowe Williams, 68, was sentenced today to seven months in prison to be followed by seven months of home confinement as part of his two years of supervised release. Williams’ co-conspirator, Joan Clark, was sentenced on Feb. 18 to 20 months in prison to be followed by two years of supervised release. Williams and Clark were jointly ordered to pay restitution to the Internal Revenue Service (IRS) in the amount of $601,780. In November 2015, both Williams and Clark pleaded guilty to conspiracy to defraud the United States. Clark also pleaded guilty to an additional conspiracy charge connected to another scheme for which she was indicted in May 2015.
According to court documents and statements in court, in early 2011, Williams and Clark established a trust that purported to be for charitable purposes and then filed tax returns in the name of the trust for tax years 2008, 2009 and 2010. Each tax return fraudulently requested a tax refund of $300,000. Williams and Clark established at least two bank accounts in the name of the trust to receive the tax refunds and disburse the funds for personal use. Williams and Clark received $601,780 in tax refunds from the IRS as a result of filing these false tax returns.
Clark was also sentenced for her participation in a separate conspiracy in which she, along with co-defendant Daniel Heggins of Charlotte, operated Guarantor Manufactures Inc. (GMI), a business that purported to help individuals who were in debt. Clark and her co-conspirators in that scheme prepared and filed false tax returns on behalf of GMI’s clients claiming fraudulent tax refunds from the IRS in the amount of their clients’ debts. The intended loss of the conspiracy exceeded $4 million. Heggins pleaded guilty in November 2015 to conspiracy to defraud the United States and is awaiting sentencing.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Rose commended special agents of IRS-Criminal Investigation and the FBI, who investigated the case and Assistant U.S. Attorney Mike Savage of the Western District of North Carolina and Trial Attorney Todd Kostyshak of the Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts can be found on the division’s website.
Statement from Head of the Civil Rights Division Vanita Gupta Regarding Ferguson, Missouri, City Council Vote to Approve Consent DecreeRead 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 Ferguson, Missouri, City Council vote to approve the proposed consent decree with the Department of Justice:
“Tonight, the city of Ferguson, Missouri, took an important step towards guaranteeing all of its citizens the protections of our Constitution. We are pleased that they have approved the consent decree, a document designed to provide the framework needed to institute constitutional policing in Ferguson, and look forward to filing it in court in the coming days and beginning to work with them towards implementation.”
German Shipping Companies Sentenced to Pay $1.5 Million for Illegally Discharging Oil into the OceanRead the Press Release
The German shipping companies Briese Schiffahrts GmbH & Co. KG and Briese Schiffahrts GmbH & Co. KG MS “Extum,” who owned and operated the cargo ship M/V BBC Magellan, pleaded guilty today to failure to maintain an accurate oil record book, in violation of the Act to Prevent Pollution from Ships and tampering with witnesses by persuading them to provide false statements to the U.S. Coast Guard concerning a bypass hose on the vessel that was being used to discharge oil into the sea.
The two companies were sentenced to pay a total of $1.25 million in fines and a $250,000 community service payment to the National Fish and Wildlife Foundation to fund projects that enhance coastal habitats of the Gulf of Mexico and bolster priority fish and wildlife populations. In addition, the ship M/V BBC Magellan is banned from doing business in the United States for the next five years. The pleas and sentences were announced by Assistant Attorney General John C. Cruden for the Justice Department’s Environmental and Natural Resources Division and Acting U.S. Attorney Christopher P. Canova for the Northern District of Florida.
The operation of a marine vessel, such as the M/V BBC Magellan, generates large quantities of waste oil and oil-contaminated waste water. International and U.S. law requires that these vessels use pollution prevention equipment to preclude the discharge of these materials. Should any overboard discharges occur, they must be documented in an oil record book, a log that is regularly inspected by the U.S. Coast Guard.
In March 2015, during an inspection at the Port of Pensacola, the U.S. Coast Guard discovered an improperly attached rubber hose. Officials later determined that, between January and March 2015, the crew of the M/V BBC Magellan, acting on behalf of the vessel’s owner, had installed and illegally used the rubber hose to remove oily wastes from the vessel’s holding tanks and discharged them directly into the ocean. The crew also failed to make the required entries in the vessel’s oil record book. When questioned about the hose’s purpose and how oily wastes were discharged from the ship, the chief engineer instructed other crew members to lie to the Coast Guard.
“Shipping companies that transport commerce across open seas must respect the international laws and obligations of their trade, which exist to prevent the spoiling of oceans and marine habitat,” said Assistant Attorney General Cruden. “This egregious behavior by shipping companies, which included intentional deception and witness tampering, will not be tolerated. We will continue to prosecute companies and their officers for these crimes.”
“Future generations deserve to enjoy clean and safe coastal waters, and we will continue to prosecute environmental crimes to prevent pollution of our natural resources,” said Acting U.S. Attorney Canova. “Our federal environmental laws rightfully require companies to record their oil waste disposal to keep them accountable and to protect our oceans and marine life.”
“When a company knowingly fails to comply with our nation’s environmental laws, it can have a devastating effect on both public health and wildlife,” said Acting Special Agent in Charge Andy Castro of the Environmental Protection Agency’s (EPA) criminal enforcement program in Florida. “The defendants in this case falsified entries in their vessel’s log books to hide the true nature of its open water discharges. Today’s court action should signal to would-be violators that the American people will not allow the flagrant violation of U.S. laws.”
The case was investigated by U.S. Coast Guard Sector Mobile, the U.S. Coast Guard Investigative Service and the EPA. The case was prosecuted by Assistant U.S. Attorney J. Ryan Love for the Northern District of Florida and Trial Attorney Brandy N. Parker of the Environmental Crimes Section of the Department of Justice Environmental and Natural Resources Division.
Former Captain Sentenced for Withholding Evidence Favorable to a Defendant and Obstructing JusticeRead the Press Release
Two Deputies Also Sentenced for Obstructing Justice by Covering up a Fellow Officer’s Use of Force
The Justice Department announced today that Elizabeth Croley, 37, a former captain at the Decatur County, Georgia, Sheriff’s Office, was sentenced to 18 months in prison for willfully withholding evidence favorable to a criminal defendant and for writing a false report to cover up another law enforcement officer’s use of force against a civilian. Robert Wade Umbach, 36, and Christopher Kines, 36, both former deputies at the Decatur County Sheriff’s Office, were also sentenced to 15 months in prison for making false statements to help cover up the use of force.
In June 2015, a federal jury in Albany, Georgia, convicted the defendants after a trial that lasted more than two weeks. The charges arose from a September 2012 incident in which former Grady County, Georgia, Deputy Sheriff Wiley Griffin IV – who is the son of Decatur County Sheriff Wiley Griffin III – used force against Aaron Parrish during an arrest at the Bainbridge BikeFest. The jury found that Croley, Kines and Umbach obstructed justice when they later helped cover up Griffin’s actions. Specifically, the jury convicted Croley of obstructing justice by writing a false report and convicted Kines and Umbach of engaging in misleading conduct by lying to an FBI agent about the incident. Croley was also convicted of violating Aaron Parrish’s constitutionally protected right to a fair trial by intentionally withholding material exculpatory evidence from the district attorney’s office, and in turn, from Aaron Parrish’s criminal defense attorney during a criminal prosecution of Parrish.
During the trial, the jury heard evidence that Griffin struck Parrish in the eye with a metal flashlight while Parrish was being restrained on the ground by other deputies, including defendants Kines and Umbach. The government also presented evidence that, after Parrish complained to the Decatur County Sheriff’s Office about the abuse he had suffered at BikeFest, the sheriff’s office opened a criminal investigation led by Croley that eventually resulted in felony criminal charges against Parrish. During that investigation, Croley took a witness statement from a civilian eyewitness who provided information that would have been materially helpful to Parrish’s defense. However, rather than providing that statement to the district attorney so that it could then be provided to Parrish’s defense attorney for use at trial, Croley intentionally removed the exculpatory statement from the case file. This conduct formed the basis of the civil rights charge on which Croley was convicted.
“When law enforcement officers break the laws they swear to uphold and harm the people they promise to protect, it undermines public trust in our government,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division. “If officers try to lie or withhold evidence, we will vigorously protect the integrity of our justice system by holding them accountable for their actions and safeguarding the civil rights of all Americans.”
“The public rightfully depends on law enforcement officers to uphold the law faithfully,” said Acting U.S. Attorney G.F. “Pete” Peterman of the Middle District of Georgia. “When these defendants withheld important facts and provided false information in this investigation, they subverted the entire process and damaged the public's faith in the integrity of their former fellow officers. They fully deserve the sentences meted out to them today.”
This case was investigated by the FBI’s Atlanta Field Office, and was prosecuted by Trial Attorneys Christine M. Siscaretti and Risa Berkower of the Civil Rights Division’s Criminal Section, with support from the U.S. Attorney’s Office of the Middle District of Georgia.
New York Tax Return Preparer Pleads Guilty to Preparing False Tax ReturnsRead the Press Release
A New York tax return preparer pleaded guilty today in the U.S. District Court for the Eastern District of New York in Central Islip, New York, to one count of aiding and assisting in the preparation of a false tax return, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
According to court documents, Thelma Rodriguez-Garden, 54, owned and operated a tax preparation business called Garden Insurance Agency Corporation, which was located in Bay Shore, New York. Rodriguez-Garden prepared false individual income tax returns for clients of Garden Insurance Agency for tax years 2008 through 2011. On the tax returns, Rodriguez-Garden included grossly inflated or wholly fictitious itemized deductions for unreimbursed employee expenses. The information to which Rodriguez-Garden pleaded guilty alleges that she filed 47 false tax returns that caused a loss to the government of more than $100,000.
“Today’s plea is a reminder that tax return preparers who knowingly include false items on their clients’ returns face criminal investigation, prosecution and incarceration,” said Acting Assistant Attorney General Ciraolo. “Working with its partners within the Internal Revenue Service (IRS), the Tax Division remains committed to pursuing these offenders and holding them accountable for their fraudulent conduct.”
Rodriguez-Garden faces a statutory maximum sentence of three years in prison and a $250,000 fine. As part of her plea agreement, Rodriguez-Garden agreed to pay restitution to the IRS in the amount of $107,459. U.S. District Judge Joseph F. Bianco set sentencing for July 11.
Acting Assistant Attorney General Ciraolo thanked special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Jeffrey Bender and Brittney Campbell 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.
Los Angeles Man Sentenced to 150 Years in Prison for Sexually Abusing Minors in RussiaRead the Press Release
A Los Angeles man was sentenced today to 150 years in prison for sexually abusing three minor girls during trips to Russia over a two-year period, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.
In November 2015, a jury convicted Yusef Yunosovich Abramov, 58, of five felony counts of engaging in illicit sexual conduct in foreign places. U.S. District Judge Otis D. Wright II of the Central District of California also imposed a lifetime term of supervised release.
According to the evidence introduced at trial, in June 2009, Abramov, a dual Russian and U.S. citizen, flew from Los Angeles to Russia, and shortly after his arrival, he raped a 12-year-old girl and threatened to sever her head and play soccer with it if she told anyone about the abuse. The trial evidence showed that in November 2009, Abramov again traveled to Russia and engaged in further sexual abuse of minor girls.
Trial evidence additionally demonstrated that in March 2010, believing that local schoolgirls had contacted the police, Abramov and two accomplices cornered three minor girls. Abramov threatened all three girls while wielding a knife and each man then raped one of the girls. The evidence showed that after threatening the girls’ lives, Abramov continued to rape at least two of the girls during that trip and subsequent trips to Russia.
U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, in cooperation with The Investigative Committee of the Russian Federation and the Moscow City Police, investigated this case. Trial Attorneys Maureen C. Cain and Ravi Sinha of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) prosecuted the case. The Criminal Division’s Office of International Affairs also provided assistance.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Laddie Leon Guerrero Aguigui Sentenced for Receipt of Explosive Materials by Non-LicenseeRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that defendant LADDIE LEON GUERRERO AGUIGUI, age 27, was sentenced on March 9, 2016, in the District Court of Guam to three (3) months imprisonment and, upon release, three (3) years of supervised release to include three (3) months home detention.
On or about June 2, 2014, while in the outside kitchen of his residence, Defendant AGUIGUI possessed commercial electric blasting caps. Defendant AGUIGUI had removed the leg wires from three (3) commercial electric blasting caps by making close cuts to the base of the caps. Defendant AGUIGUI had cut through the cap of the fourth (4) commercial electric blasting cap, which detonated and caused Defendant to be injured. Defendant was then transported to the Emergency Room at Guam Memorial Hospital where he was treated for his injuries. Federal and local law enforcement conducted a scene check of the outside kitchen at Defendant AGUIGUI’s residence and noted, among other things, nine (9) Commercial Electric Blasting Caps. At that time, Defendant AGUIGUI did not possess a federal explosives license within the Federal Licensing System.
U.S. Attorney Alicia A.G. Limtiaco stated, “This case unfortunately demonstrated the serious consequences of misusing explosive materials. Federal licensing requirements help ensure the safe and appropriate use of destructive devices. Our office will continue to support the enforcement of these laws and regulations to protect public safety.”
This case was investigated by Special Agents of the Federal Bureau of Investigation and the Bureau of Alcohol, Tobacco, Firearms and Explosives and prosecuted by Assistant U.S. Attorney Stephen F. Leon Guerrero.
Justice Department Announces Resources to Assist State and Local Reform of Fine and Fee PracticesRead the Press Release
The Department of Justice today announced a package of resources to assist state and local efforts to reform harmful and unlawful practices in certain jurisdictions related to the assessment and enforcement of fines and fees. The resources are meant to support the ongoing work of state judges, court administrators, policymakers and advocates in ensuring equal justice for all people, regardless of financial circumstance.
“The consequences of the criminalization of poverty are not only harmful – they are far-reaching,” said Attorney General Loretta E. Lynch. “They not only affect an individual’s ability to support their family, but also contribute to an erosion of our faith in government. One of my top priorities as Attorney General is to help repair community trust where it has frayed, and a key part of that effort includes ensuring that our legal system serves every American faithfully and fairly, regardless of their economic status.”
The package, which was sent to state chief justices and state court administrators throughout the country, includes the following elements:
- Dear Colleague Letter from the Civil Rights Division and the Office for Access to Justice to provide greater clarity to state and local courts regarding their legal obligations with respect to the enforcement of court fines and fees. The letter addresses some of the most common practices that run afoul of the U.S. Constitution and/or other federal laws, such as incarcerating individuals for nonpayment without determining their ability to pay. The letter also discusses the importance of due process protections such as notice and, in appropriate cases, the right to counsel; the need to avoid unconstitutional bail practices; and due process concerns raised by certain private probation arrangements.
- $2.5 million in competitive grants through the Bureau of Justice Assistance (BJA) to state, local or tribal jurisdictions that, together with community partners, want to test strategies to restructure the assessment and enforcement of fines and fees. The grant program, titled The Price of Justice: Rethinking the Consequences of Justice Fines and Fees, will provide four grants of $500,000 to agencies and their collaborative partners to develop strategies that promote appropriate justice system responses, including reducing unnecessary confinement, for individuals who are unable to pay fines and fees. BJA will award an additional grant of $500,000 to a technical assistance provider. For agencies interested in applying for this funding opportunity, BJA will host an informational webinar on March 28, 2016, at 11:30 a.m. EDT to describe the background, key concepts and requirements of the solicitation. To register, please follow this link.
- Support for the National Task Force on Fines, Fees and Bail Practices, which is led by the Conference of Chief Justices and the Conference of State Court Administrators. The task force is being funded by BJA and is also supported by the State Justice Institute. It is comprised of leaders from the judiciary, state and local government, the advocacy community and the academy. The task force will draft model statutes, court rules and procedures, and will develop an online clearinghouse of best practices. Department officials will also serve as ex officio members of the task force.
- Resource Guide that assembles issue studies and other publications related to the assessment and enforcement of court fines and fees. The resource guide, compiled by the Office of Justice Programs Diagnostic Center, helps leaders make informed policy decisions and pursue sound strategies at the state, local and tribal levels.
Today’s announcement follows a seminal two-day convening held by the Justice Department and the White House in Washington, D.C., on Dec. 2 and 3, 2015. Judges, court administrators, researchers, advocates, prosecutors, defense attorneys and impacted individuals came together to discuss challenges surrounding fines and fees. The convening made plain the existence of unlawful and harmful practices in some jurisdictions and highlighted a number of promising reform efforts already underway. At the meeting, participants and department officials also discussed ways in which the Justice Department could assist courts in their efforts to make needed changes. Participants specifically asked the department to provide legal guidance to state and local actors; to highlight and help develop model practices; and to provide resources for local reform efforts.
The Justice Department is committed to reforming justice-system practices that perpetuate poverty and result in unnecessary deprivations of liberty. The department discussed many of these practices in its March 2015 report on the investigation of the Ferguson, Missouri, police department and municipal court. As discussed at the December 2015 convening, however, these practices can be found throughout the nation. And their effects are particularly severe for the most vulnerable members of our communities, often with a disproportionate impact on racial minorities. The resources released today are aimed at reforming these practices and mitigating their harmful effects.
Fines and Fees Cover Letter