District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
UOG Invites U.S. Attorney to Speak at Public Corruption ConferenceRead the Press Release
ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), was invited to speak at the University of Guam (UOG) School of Business and Public Administration’s Conference on November 25, 2015. The School of Business and Public Administration’s purpose for the conference was to “explore the role of government and business leaders in tackling the challenges of corruption, gaining the trust of the community to preserve confidence in our administration of government, and identifying strategies and courses of action to eliminate corruption.” The conference included sessions on improving public policy, recommending policy solutions and strategically planning for the future.
Attorney General Loretta E. Lynch Statement on Yesterday's Attack in ColoradoRead the Press Release
Attorney General Loretta E. Lynch released the following statement on yesterday’s attack in Colorado Springs, Colorado:
“This unconscionable attack was not only a crime against the Colorado Springs community, but a crime against women receiving healthcare services at Planned Parenthood, law enforcement seeking to protect and serve, and other innocent people. It was also an assault on the rule of law, and an attack on all Americans' right to safety and security. Justice Department attorneys, the FBI, and the ATF are on the scene to offer assistance and review the situation.
“We stand ready to offer any and all assistance to the District Attorney and state and local law enforcement as they move forward with their investigation. And in the days ahead, our thoughts and prayers will be with the victims of this horrific attack – including Officer Garrett Swasey, who gave his life in order to keep others safe. We wish a speedy recovery for those who were injured, and peace and strength for the loved ones of the fallen.”
OCDETF-Sponsored National Heroin ConferenceRead the Press Release
ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), attended the National Heroin Conference held on November 18-19, 2015, in Atlanta, Georgia. The conference was sponsored by the Organized Crime Drug Enforcement Task Force (OCDETF).
OCDETF is a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies. The participants of the OCDETF Program include the 94 U.S. Attorneys’ Offices, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the DEA, the Federal Bureau of Investigation (FBI), the Internal Revenue Service (IRS), the U.S. Coast Guard, the U.S. Immigration and Customs Enforcement (ICE), the U.S. Marshals Service, the Criminal and Tax Divisions of the U.S. Department of Justice and numerous State and local agencies.
The OCDETF-Sponsored National Heroin Conference was attended by DEA heads, OCDETF Coordinators and U.S. Attorneys from U.S. Attorney’s Offices. The purpose of the conference was to collaborate to combat the growing epidemic of heroin and opioid abuse in the United States.
South Florida-Based Government Contractor Pleads Guilty to Tax FraudRead the Press Release
A Fort Lauderdale, Florida based government contractor pleaded guilty today in the U.S. District Court for the Southern District of Florida to filing a false income tax return, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.
According to court documents, Maxim Silinsky, 44, owned an aircraft-leasing and parts-supply company called Simplex Corporation. Simplex contracted with the federal government to lease Russian aircraft to the U.S. Air Force for training purposes and to supply parts and equipment to U.S. military forces deployed to Afghanistan.
Silinsky used a complex web of domestic and foreign corporate entities and financial accounts to facilitate his underpayment of both corporate and individual income tax for the years 2007 through 2010. Silinsky filed false corporate tax returns for these years that overstated Simplex’s expenses. For the years 2008 through 2010, Silinsky also filed false individual income tax returns on which he understated the amount of income he received from the business. To conceal his fraud from the Internal Revenue Service (IRS), Silinsky transferred approximately $1.7 million from Simplex to nominee bank accounts he controlled and disguised the transfers as costs of goods sold, which led to overstated costs-of-goods-sold expenses on Simplex’s corporate returns. In 2012, during an audit of Simplex’s 2008 corporate return, Silinksy made false statements to the IRS about these expenses. Silinksy also purchased real estate using funds he diverted from the business and titled the property in nominee names to hide his involvement with these purchases. Additionally, a family member served as a nominee shareholder of a shell corporation that Silinsky established to receive income from Simplex on his behalf. While taxes were paid on the funds diverted to the shell corporation, the arrangement allowed Silinsky to pay taxes on this money at a lower rate. In the plea documents, Silinsky also admitted that he was involved in making illicit payments to a government contractor and U.S. military personnel.
At his Feb. 2, 2016 sentencing, Silinsky faces a statutory maximum sentence of three years in prison, a fine of up to $250,000, or twice the loss caused by the offense and restitution to the IRS.
Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, the U.S. Air Force’s Office of Special Investigations and the U.S. Department of Defense’s Office of the Inspector General, who investigated this case and Trial Attorneys Charles M. Edgar Jr. and Jason H. Poole of the Tax Division, who are prosecuting this case. Ciraolo also thanked the U.S. Attorney’s Office of the Southern District of Florida for their substantial assistance.
Additional information about the Tax Division and its enforcement efforts against stolen identity tax refund fraud may be found on the division’s website.
President of North Carolina Board of Funeral Service and Business Partner Plead Guilty to Conspiracy to Defraud the United StatesRead the Press Release
Two North Carolina businessmen pleaded guilty in the U.S. District Court in the Middle District of North Carolina to conspiracy to defraud the United States, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand of the Middle District of North Carolina.
Kenneth Dale Stainback, 61, of Burlington, North Carolina, pleaded guilty on Nov. 24 and Stephen Ray Smith, 60, of Mebane, North Carolina pleaded guilty on November 23. According to court documents and statements in court, Stainback and Smith conspired to defraud the United States by filing false corporate tax returns for McClure Funeral Service (McClure). Stainback, Smith and another co-conspirator bought McClure in 2004 and began diverting gross receipts from the business and omitting that income from the corporation’s tax returns. The co-conspirators opened a checking account at Mid-Carolina Bank for the purpose of diverting funds from McClure, including commission checks from insurance providers and checks from clients for payment of services. The co-conspirators wrote checks to themselves from this account, with Stainback and Smith receiving the vast majority of the diverted funds. Stainback also opened another bank account at SunTrust Bank, which he used to divert additional funds from McClure without the knowledge of his co-conspirators. Finally, the co-conspirators also pocketed cash payments from clients of McClure. In order to conceal discovery of their scheme, the co-conspirators deleted and altered invoices in the business’s accounting system. Stainback and Smith also closed their bank account at Mid-Carolina bank after being contacted by the Internal Revenue Service (IRS) regarding the corporate tax returns.
During the 2009 through 2012 fiscal years, Stainback, Smith and the other co-conspirator diverted more than $419,000 from McClure. These diverted funds were not reported on McClure’s corporate tax returns, which resulted in a corporate tax loss of $158,530.11. Stainback and Smith also failed to report the diverted funds on their individual income tax returns.
In addition to owning McClure, Stainback also serves as the President of the North Carolina Board of Funeral Service.
Stainback and Smith each face a statutory maximum sentence of five years in prison, a $250,000 fine and restitution to the IRS. The court set sentencing for Smith and Stainback on March 24, 2016.
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 Clifton T. Barrett of the Middle District of North Carolina and Trial Attorney Kathryn A. Kimball of the Justice Department’s Tax Division, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Justice Department Sues to Shut Down Abusive Tax Scheme Involving Improper Deductions for Donating TimesharesRead the Press Release
The United States filed a civil injunction suit seeking to bar James Tarpey, a Montana-based attorney, Project Philanthropy, Inc. (a District of Columbia corporation which does business as Donate for a Cause) and Timeshare Closings, Inc. (a Colorado corporation which does business as Resort Closings, Inc.) from promoting an allegedly abusive timeshare donation scheme, the Justice Department announced today. The United States also filed suit against three of Tarpey’s associates – Ron Broyles of California, Curt Thor of Washington and Suzanne Crowson of Montana – all of whom, according to the complaint, assisted Tarpey in facilitating the timeshare donation scheme.
According to the complaint, which was filed in the U.S. District Court for the District of Montana, the timeshare donation scheme encourages timeshare owners to donate their unwanted timeshares to Donate for a Cause, a tax-exempt entity organized and operated by Tarpey. The complaint states that customers are falsely promised “generous” tax savings and that the defendants purportedly determine the “fair market value” of the timeshare by selecting an independent, third-party appraiser. The United States further alleged that Tarpey’s customers (the timeshare owners) pay significant processing fees to Resort Closings, Inc. to transfer the timeshares to Donate for a Cause. According to the complaint, Tarpey, Broyles, Thor and Crowson appraise the customers’ timeshares in a manner which does not comply with the law and which significantly overvalues the timeshares. According to the complaint, the appraisals fail to comply with regulations governing appraisals submitted with federal tax returns, contain substantive errors and omissions, fail to comply with generally accepted appraisal standards and grossly overvalue the timeshares. In addition, Tarpey, Broyles, Thor and Crowson are legally prohibited from appraising the timeshares for which their customers claimed federal tax deductions because they are too closely affiliated with Donate for a Cause, the complaint alleges.
Finally, as stated in the complaint, Tarpey’s customers then claim improper and grossly inflated charitable contribution deductions on their tax returns for both the overvalued timeshares and the processing fees paid to Resort Closings, Inc. The complaint alleges that Donate for a Cause is simply used as a conduit to briefly hold title to timeshares before they are sold for a fraction of the appraised amount. For example, the complaint alleges that one customer transferred a timeshare to Donate for a Cause that had originally been purchased for $10,597.50. Donate for a Cause used eBay’s charity platform to sell that timeshare to a third party for only $81, yet Tarpey appraised that timeshare for $8,740, the complaint states.
According to the complaint, the timeshare donation scheme was aggressively marketed via the Internet and through national and local media outlets, including ABC 7 News in Los Angeles, California; Fox 10 News in Phoenix, Arizona; the TODAY Show and Fox 4 News in Kansas City, Missouri. Clips of these news-based promotions are posted on the front page of the Donate for a Cause website.
In the past decade, the Tax Division has obtained injunctions against hundreds of tax return preparer and tax fraud promoters. 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.
Justice Department Announces Privatbank IHAG Zürich AG Reaches Resolution Under Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that Privatbank IHAG Zürich AG (IHAG) reached a resolution under the department’s Swiss Bank Program. IHAG will pay a penalty of more than $7 million.
“Through the information provided by IHAG and other Swiss banks in the Program, the department has unraveled the various schemes and identified the foreign jurisdictions used by U.S. taxpayers to conceal their foreign accounts,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. “Foreign financial institutions and other entities that facilitated U.S. tax evasion should come forward and cooperate now, before time runs out.”
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
- Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
- Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreement signed today, IHAG agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a penalty in return for the department’s agreement not to prosecute this bank for tax-related criminal offenses.
IHAG, a private bank established in 1949 and based in Zurich, Switzerland, is part of a privately-owned and diversified group of companies of which the top holding company is IHAG Holding AG (IHAG Holding). IHAG formerly maintained a branch office in Lugano, Switzerland, which closed in 2009.
Despite understanding that U.S. taxpayers had a legal duty to report to the Internal Revenue Service (IRS) and pay taxes on the basis of all their income, including income earned in accounts maintained at IHAG, IHAG intentionally opened and maintained accounts that were undeclared with the knowledge that, by doing so, IHAG was helping these U.S. taxpayers violate their legal duties.
In a few instances, IHAG assisted certain recalcitrant U.S. persons in further concealing undisclosed accounts by moving the funds to another jurisdiction and returning the funds to IHAG in a different name in order to conceal the U.S. persons’ ownership of the assets and enable the recalcitrant accountholders to continue to maintain undeclared accounts at IHAG. For example, a family of U.S. persons held assets at IHAG in the name of a Liechtenstein foundation, and another unrelated U.S. person held funds in the name of a Panama foundation. These foundation structures were designed to conceal the true beneficial ownership of the assets. In the case of the Panama foundation, IHAG assisted the U.S. person in creating the foundation. The value of the assets in the two accounts together totaled approximately $63 million.
To assist these U.S. clients in further concealing their assets and evading U.S. taxes, in order to maintain these recalcitrant individuals as IHAG clients, IHAG personnel – with the assistance of an unaffiliated fiduciary services firm in Zurich and with the knowledge and approval of bank management – moved assets from the two foundation accounts to an unaffiliated bank in Hong Kong. The funds then returned to IHAG under the name of a Singapore entity wholly owned by IHAG’s parent company, IHAG Holding, so that the accounts would bear no trace of the U.S. persons’ beneficial interest in the assets held in the accounts. The multi-step scheme also involved an entity in Hong Kong in which IHAG Holding owned a minority interest.
This scheme enabled the assets to be stripped of any indicia of U.S. ownership. In effectuating this scheme, IHAG took advantage of Swiss law, which allowed IHAG in these circumstances to treat the accounts as if know-your-customer review of the accounts had occurred in Singapore. Accordingly, IHAG did not apply Swiss know-your-customer requirements when the accounts returned to IHAG under a different name. IHAG’s files for the accounts deliberately did not contain any documentation of the U.S. persons’ interest in the assets in the accounts. IHAG knowingly and willfully committed tax fraud with respect to those accounts.
In a few other instances, IHAG assisted clients in establishing foundations used to hold their assets at IHAG. The U.S. persons who were the beneficial owners of the foundation accounts were properly identified as beneficial owners of the foundations on certain forms pursuant to Swiss know-your-customer rules. However, the foundations were identified as the beneficial owner on IRS Forms W-8BEN, thereby masking the true beneficial ownership of the accounts by U.S. persons.
For example, in 2006, an account held in the name of a Panama company was opened. In connection with the opening of the account, bank documents identified a U.S. person as the beneficial owner of the assets. However, a Form W-8BEN signed by two Swiss citizens and a citizen of Liechtenstein falsely declared that the Panama company was the beneficial owner. The U.S. person instructed IHAG not to communicate with him by phone and insisted on using code names when communicating with IHAG.
IHAG also offered a variety of traditional Swiss banking services that it knew could assist, and that did assist, U.S. taxpayers in concealing assets and income from the IRS. These services included hold mail, as well as accounts opened in the name of pseudonyms.
Since Aug. 1, 2008, IHAG held a total of 182 U.S.-related accounts with a high value of approximately $791 million. IHAG will pay a penalty of $7.453 million.
In accordance with the terms of the Swiss Bank Program, IHAG mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. While U.S. accountholders at IHAG who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement. With today’s announcement of this non-prosecution agreement, noncompliant U.S. accountholders at IHAG must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
“The signing of these agreements is not only significant for the banks and for IRS-Criminal Investigation, but also for the thousands of accountholders who used these banks to hide their money offshore to criminally defraud the United States tax system,” said Chief Richard Weber of IRS-Criminal Investigation. “As we delve into the details provided by these agreements, we learn more about who they are and how they hid their money from the government. Those who circumvent offshore disclosure laws no longer have room to hide.”
Acting Assistant Attorney General Ciraolo thanked the IRS and in particular, IRS-Criminal Investigation and the IRS Large Business & International Division for their substantial assistance. Acting Assistant Attorney General Ciraolo also thanked Kathleen E. Lyon, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis and Attorney Kimberle E. Dodd of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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Justice Department Announces Deutsche Bank (Suisse) SA Reaches Resolution under Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that Deutsche Bank (Suisse) SA (Deutsche Bank Suisse) reached a resolution under the department’s Swiss Bank Program. Deutsche Bank Suisse will pay a penalty of more than $31 million.
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
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Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
- Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreement signed today, Deutsche Bank Suisse agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a penalty in return for the department’s agreement not to prosecute this bank for tax-related criminal offenses.
Deutsche Bank Suisse is headquartered in Geneva, Switzerland, with additional offices in Zurich and Lugano, Switzerland and is part of the Deutsche Bank Group. From at least August 2008 through August 2013, Deutsche Bank Suisse enabled some U.S. taxpayers to evade their U.S. tax and filing obligations, resulting in the filing of false income tax returns with the Internal Revenue Service (IRS) and allowing U.S. taxpayers to hide offshore assets from the IRS.
Deutsche Bank Suisse offered a variety of services and permitted some practices that it knew could and did assist U.S. taxpayers in concealing assets and income from the IRS. Deutsche Bank Suisse offered hold mail services, and notes written by Deutsche Bank Suisse employees on some hold mail forms explained that the client’s mail was not delivered or picked up because the client resided in the United States and his or her account was “not declared.” Deutsche Bank Suisse also provided U.S. beneficial owners with debit cards linked to accounts held at Deutsche Bank Suisse or credit cards whose balances the U.S. beneficial owners instructed Deutsche Bank Suisse to pay from accounts held at the bank. Use of these cards by U.S. taxpayers facilitated their access to or use of undeclared funds on deposit at Deutsche Bank Suisse. Deutsche Bank Suisse processed standing orders for checks in amounts less than $10,000 to be sent on a monthly basis into the United States, and in at least two instances those checks were issued to the U.S. beneficial owners from accounts held in the name of Liechtenstein foundations.
In 2001, Deutsche Bank Suisse entered into a Qualified Intermediary (QI) Agreement with the IRS. Under a QI Agreement, if an accountholder wished to trade in U.S. securities without being subjected to mandatory U.S. tax withholding, the accountholder’s bank was required to obtain the consent of the accountholder to disclose his or her identity to the IRS. However, after signing its QI Agreement, Deutsche Bank Suisse continued to service certain U.S. customers without disclosing their identity to the IRS and without regard for the impact of U.S. criminal law on that decision.
Prior to October 2008, Deutsche Bank Suisse’s position was that it could service a U.S. client without reporting the U.S. taxpayer’s interest in the account to the IRS so long as it prohibited the accountholder from trading in U.S. securities or the account was an account nominally structured in the name of a non-U.S. entity accompanied by an IRS Form W-8BEN or equivalent bank document. In the latter circumstances, U.S. clients, with the assistance of their external advisors, would create an entity, such as a Liechtenstein foundation, Panamanian corporation or British Virgin Islands corporation, and pay a fee to third parties to act as corporate directors. Those third parties, at the direction of the U.S. client, would then open a bank account at Deutsche Bank Suisse in the name of the entity or transfer funds from a pre- existing account from another bank. Deutsche Bank Suisse employees provided prospective U.S. clients with referrals to external advisors who could assist with the creation and management of such an entity. In some instances, Deutsche Bank Suisse made insufficient efforts to determine whether such an entity was valid for U.S. tax purposes.
Deutsche Bank Suisse maintained and serviced accounts beneficially owned by U.S. taxpayers that were held by entities created in countries such as Liechtenstein, Liberia, Panama and the British Virgin Islands, some of which were operated by the U.S. beneficial owners in violation of corporate governance provisions. In certain cases involving a non-U.S. entity, Deutsche Bank Suisse was aware that a U.S. client was the true beneficial owner of the account. Despite this, Deutsche Bank Suisse would sometimes obtain from the entity’s directors a Form W-8BEN or equivalent bank document that falsely declared that the beneficial owner was not a U.S. taxpayer. In some of these cases, Deutsche Bank Suisse permitted the accounts to trade in U.S. securities without reporting account earnings or transmitting withholding taxes to the IRS, as required by the QI Agreement.
Deutsche Bank Suisse has cooperated fully with the department during its participation in the Swiss Bank Program. Deutsche Bank Suisse conducted an internal investigation that included interviews of relationship managers and members of management; review of account files; review of emails; and review of applicable policies, procedures and compliance training materials. Deutsche Bank Suisse provided a comprehensive and detailed in-person presentation to the department, with accompanying documentation, regarding the findings of its internal investigation and how it structured, operated and supervised its cross-border business. Deutsche Bank Suisse assisted and agreed to continue to assist U.S. authorities in preparing treaty requests to the Swiss competent authority for account records of U.S. clients, including by identifying accounts that may meet the standard for information exchange under an applicable treaty. On a rolling basis and prior to the execution of its non-prosecution agreement, Deutsche Bank Suisse also provided aggregate and account-level information regarding U.S.-related accounts that were closed since Aug. 1, 2008.
Since Aug. 1, 2008, Deutsche Bank Suisse had 1,072 U.S.-related accounts with an aggregate maximum value of approximately $7.65 billion. Deutsche Bank Suisse will pay a penalty of $31.026 million.
In accordance with the terms of the Swiss Bank Program, Deutsche Bank Suisse mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. While U.S. accountholders at Deutsche Bank Suisse who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement. With today’s announcement of this non-prosecution agreement, noncompliant U.S. accountholders at Deutsche Bank Suisse must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division thanked the IRS and in particular, IRS-Criminal Investigation and the IRS Large Business & International Division for their substantial assistance. Acting Assistant Attorney General Ciraolo also thanked John E. Sullivan and Thomas G. Voracek, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis and Attorney Kimberle E. Dodd of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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Justice Department Settles Immigration-Related Discrimination Claim Against Sunny Grove Landscaping & Nursery Inc.Read the Press Release
The Justice Department reached an agreement today with Sunny Grove Landscaping & Nursery Inc. (Sunny Grove), a landscaping company in Ft. Myers, Florida. The settlement resolves the department’s investigation of Sunny Grove for discrimination against work-authorized non-U.S. citizens in violation of the Immigration and Nationality Act (INA).
Under the settlement agreement, Sunny Grove will pay $7,500 in civil penalties to the United States and undergo department-provided training on the anti-discrimination provision of the INA. Sunny Grove will be subject to departmental monitoring and reporting requirements.
“The Civil Rights Division is committed to protecting work-authorized individuals from discriminatory practices in the employment eligibility verification process,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “We commend Sunny Grove for working cooperatively with the division to resolve this matter.”
The investigation found that Sunny Grove discriminated against lawful permanent residents by requiring them to produce permanent resident cards to prove their work authorization, whereas U.S. citizens were permitted to choose whatever valid documentation they wanted to prove their work authorization. Lawful permanent residents do not have to show their permanent resident cards when they start working. Like all workers, they can choose whatever valid documentation they want to establish their employment authorization, and many lawful permanent residents have the same work authorization documents as U.S. citizens.
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA. The statute prohibits, among other things, citizenship status and national origin discrimination in hiring, firing or recruitment or referral for a fee; document abuse; retaliation; and intimidation.
For more information about protections against employment discrimination under immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php, email [email protected]; or visit OSC’s website at www.justice.gov/crt/about/osc.
Applicants or employees who believe they were subjected to: different documentary requirements based on their citizenship status, immigration status or national origin; or discrimination based on their citizenship status, immigration status or national origin in hiring, firing, or recruitment or referral, should contact OSC’s worker hotline for assistance.
Sunny Grove Settlement Agreement
Justice Department Asks Federal Court to Shut Down Utah Promoters of Solar Energy Tax Fraud SchemeRead the Press Release
Two Utah companies are running a nationwide abusive scheme that purports to use false tax deductions and claims of the solar energy credit to reduce their customers’ federal income tax liability, according to a complaint filed today by the Justice Department. The United States’ complaint seeks to stop Utah companies RaPower-3 LLC and International Automated Systems Inc.; Utah residents R. Gregory Shepard and Neldon Johnson; Nevada company LTB1 LLC and Oregon resident Roger Freeborn, from facilitating and promoting the allegedly abusive tax scheme.
According to the complaint filed in the U.S. District Court for the District of Utah, the defendants promote an abusive tax scheme based on a purported solar energy generation facility in Millard County, Utah. The suit alleges that the defendants claim to own and operate technology that offers a “disruptive” and “revolutionary” approach to capturing and using solar energy. But, according to the complaint, the defendants’ so-called technology is a sham.
“The Department of Justice and the IRS work aggressively to detect, investigate and shut down schemes that purport to allow others to avoid paying their proper federal income tax,” said Acting Assistant Attorney General Caroline D. Ciraolo for the Tax Division. “If a tax scheme sounds too good to be true, it probably is.”
The complaint alleges that the defendants purport to sell “solar thermal lenses” – component parts of their technology – to individual customers. According to the complaint, the defendants claim that a customer who purportedly purchases a lens is entitled to claim depreciation and other business-related expenses and the solar energy credit on the customer’s individual income tax return. Under the proper circumstances, the Internal Revenue Code allows a taxpayer engaged in a trade or business to take certain tax deductions for expenses the taxpayer incurs while generating income; likewise, if all of the requirements are met, the tax law allows an “energy credit” for certain “energy property.” But there are specific requirements a taxpayer must meet in order to lawfully claim either kind of tax benefit.
According to the complaint, the defendants know, or have reason to know, that their statements to customers and potential customers about tax benefits in connection with promoting their solar energy scheme are false or fraudulent. The complaint cites a number of reasons that the defendants allegedly know, or have reason to know, about the falsity of their statements, including that the lenses and the facility do not and will not produce solar energy that could be collected and used for any purpose that Congress intended to encourage through tax credits and that their customers are not engaged in any legitimate trade or business related to the scheme.
The complaint alleges that the Internal Revenue Service (IRS) has disallowed defendants’ customers’ claims of illegitimate tax benefits from the solar energy scheme. According to the complaint, defendants’ customers, who reside around the country, have filed at least 70 cases which are currently pending in Tax Court. The complaint estimates that the harm to the U.S. Treasury from those Tax Court cases alone is more than $4 million.
The government’s complaint further alleges that the defendants engaged in a multi-level marketing scheme to enrich themselves by encouraging customers to “sponsor” additional individuals to buy lenses. According to the complaint, some of the defendants’ customers have recruited others to buy into the scheme, in exchange for a commission. In addition to stopping the marketing of the alleged tax scheme, the complaint seeks disgorgement of all income that the defendants earned through the alleged scheme and to stop the defendants from preparing tax returns or other tax documents for anyone else.
Abusive tax structures and return preparer fraud are both among the IRS’ Dirty Dozen Tax Scams for 2015. 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 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.
El Departamento de Justicia Resuelve una Queja de Discriminación Relacionada con la Inmigración Contra Sunny Grove Landscaping & Nursery Inc.Read the Press Release
WASHINGTON, D.C. – El Departamento de Justicia llegó a un acuerdo hoy con Sunny Grove Landscaping & Nursery Inc. (Sunny Grove), una compañía de paisajismo en Ft. Myers, Florida. El acuerdo resuelve la investigación por parte del Departamento de Sunny Grove por motivos de las acusaciones de que este hubiese discriminado a individuos que no eran ciudadanos de los EE. UU. pero que tenían autorización para trabajar, en violación de la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés).
Conforme al acuerdo, Sunny Grove pagará 7.500 $ en sanciones civiles a los Estados Unidos y se someterá a capacitación dirigida por el departamento sobre la disposición antidiscriminatoria de la INA. Sunny Grove quedará sujeto a los requisitos de supervisión y notificación del Departamento.
“La División de Derechos Civiles se compromete a proteger a los individuos con autorización para trabajar de prácticas discriminatorias en el proceso de verificación de elegibilidad de empleo,” declaró la Subprocuradora General Interina, Vanita Gupta, la Jefa de la División de Derechos Civiles. “Aplaudimos a Sunny Grove por su cooperación con la División en la resolución de este asunto.”
La investigación encontró que Sunny Grove había discriminado a residentes permanentes legales al requerir que presentasen tarjetas de residencia permanente para demostrar su autorización para trabajar, mientras que a los ciudadanos de los EE. UU. se les permitió elegir los documentos válidos que querían mostrar para probar su autorización para trabajar. Los residentes permanentes legales no tienen ninguna obligación de presentar sus tarjetas de residencia permanente al comenzar a trabajar. Como todo trabajador, pueden usar los documentos válidos de su elección para establecer su autorización para trabajar, y en muchos casos, los documentos de autorización para trabajar que tienen los residentes permanentes legales son iguales a los que tienen los ciudadanos de los EE. UU.
La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC, por sus siglas en inglés) es responsable de aplicar la disposición antidiscriminatoria de la INA. Entre otras cosas, esta ley prohíbe la discriminación por motivos de estatus de ciudadanía y nacionalidad de origen en la contratación, el despido o el reclutamiento o la recomendación por comisión; el abuso documental; las represalias o la intimidación.
Para más información sobre las protecciones contra la discriminación en el empleo bajo las leyes migratorias, llame a la línea directa de la OSC para trabajadores al 1-800-255-7688 (1‑800-237-2515, TTY para personas con discapacidades auditivas); llame a la línea directa de la OSC para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con discapacidades auditivas); matricúlese para un seminario en línea gratuito en www.justice.gov/crt/about/osc/webinars.php; mande un correo electrónico a [email protected] o visite la página web de la OSC en www.justice.gov/crt/about/osc.
Los solicitantes o empleados que creen que fueron sometidos a requerimientos discriminatorios (durante la verificación de elegibilidad de empleo) por motivo de su ciudadanía, estatus migratorio u origen nacional; o en discriminación basada en estatus de ciudadanía, estatus migratorio o en origen nacional en la contratación, el despido o el reclutamiento o referencia por comisión deberán llamar a la línea directa para trabajadores mencionada arriba y serán atendidos.
Alabama Woman Sentenced for Role in $20 Million Stolen Identity Tax Fraud RingRead the Press Release
Conspired With Others to File False Tax Returns Using Stolen Names and Social Security Numbers
A Phenix City, Alabama woman was sentenced today to serve more than seven years in prison for her role in a stolen identity refund fraud (SIRF) conspiracy, 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 announced today.
Talashia Hinton aka LayLay and LaLa, 24, was sentenced to 94 months in prison to be followed by three years of supervised release and ordered to pay restitution in the amount of $7,173,704. According to court documents and evidence presented at the sentencing hearing, Hinton participated in a large-scale SIRF scheme in which participants filed more than 8,000 false tax returns for 2012 and 2013 fraudulently claiming more than $20 million in federal income tax refunds from the Internal Revenue Service (IRS). Hinton worked with Keshia Lanier, who supplied her with IRS Electronic Filing Identification Numbers (EFINs) in the names of sham tax preparation businesses and stolen personal information, including names and social security numbers. Hinton used the EFINs and stolen personal information to prepare and file false income tax returns that fraudulently claimed tax refunds. At the direction of Lanier, Hinton also obtained stolen identities from Tamika Floyd, who stole names from a databases maintained by the state of Alabama. Hinton used some of those names to file false returns, emailed some of the names to Lanier and delivered other names to another co-conspirator, Tracy Mitchell and her family, who used the names to file false returns. Hinton then directed the IRS to pay the refunds by issuing U.S. Treasury checks and direct deposits onto prepaid debit cards.
Hinton pleaded guilty in August to conspiracy to defraud the government with respect to claims and aggravated identity theft. Lanier, Mitchell and Floyd also previously pleaded guilty for their roles in the SIRF scheme. In May, Tamika Floyd was sentenced to 87 months in prison; in August, Tracy Mitchell was sentenced to 159 months in prison and in September, Lanier was sentenced to 180 months in prison.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Michael C. Boteler and Gregory P. Bailey of the Tax Division and Assistant U.S. Attorney Jonathan Ross of the Middle District of Alabama, who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
University of Florida Agrees to Pay $19.875 Million to Settle False Claims Act AllegationsRead the Press Release
The University of Florida (UF) has agreed to pay the United States $19.875 million to settle allegations that the university improperly charged the U.S. Department of Health and Human Services (HHS) for salary and administrative costs on hundreds of federal grants, the Department of Justice announced today. The grants in question were administered from the UF campuses in Gainesville and Jacksonville, Florida.
“The monies utilized by HHS to fund important medical research and clinical programs across the nation are both precious and limited,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Today’s settlement demonstrates that the Department of Justice will pursue grantees that knowingly divert those funds from the projects for which they were provided.”
“As the U.S. Department of Health and Human Services (HHS) awards more grant dollars than any other government agency, prudent oversight of those funds is absolutely essential,” said HHS Regional Inspector General for Audit Lori S. Pilcher. “Grantees must have internal controls promoting accountability and transparency,” she said. “Taxpayers should expect nothing less.”
The University of Florida receives millions of dollars in grant funding from HHS on hundreds of grants each year. The settlement announced today resolves the alleged misuse of grant funds awarded by HHS to UF between 2005 and December 2010. The United States contended that the university overcharged hundreds of grants for the salary costs of its employees, where it did not have documentation to support the level of effort claimed on the grants for those employees. The government also contended that UF charged some of these grants for administrative costs for equipment and supplies when those items should not have been directly charged to the grants under federal regulations. Lastly, UF allegedly inflated costs charged to HHS grants awarded at its Jacksonville campus for services performed by an affiliated entity, Jacksonville Healthcare Inc.
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 $26.5 billion through False Claims Act cases, with more than $16.7 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch and the HHS Office of the Inspector General, Office of Audit Services and Office of Investigations.
The claims resolved by the settlement are allegations only; there has been no determination of liability.
Husband and Wife Indicted for Filing False Retaliatory Liens Against Two Federal Judges and Other Government EmployeesRead the Press Release
A federal grand jury sitting in Eugene, Oregon, returned a superseding indictment yesterday against a couple previously residing in Coquille, Oregon, charging them with one count of conspiracy to file false retaliatory liens and four counts of filing false retaliatory liens against government employees for performing their official duties, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced. The original indictment was returned on March 18.
According to the superseding indictment, Ronald D. Joling and Dorothea Joling were convicted in October 2014 on various criminal charges related to their federal income taxes. While on pretrial release in that case, the Jolings filed false retaliatory liens claiming that multiple federal employees each owed the Jolings $100.003 million. The federal employees against whom these false liens were filed included two federal judges assigned to the criminal tax case, the clerk of the court for the U.S. District Court for the District of Oregon and the Assistant U.S. Attorney who prosecuted the criminal tax case. The liens were publicly filed with the Secretary of State for the state of California.
The Jolings were scheduled to be sentenced in the criminal tax case on April 22, but failed to appear in court. They were fugitives until arrested on Oct. 5, in Flagstaff, Arizona. The Jolings are currently in the custody of the U.S. Marshals Service. Arraignment in the retaliatory lien case is scheduled for Nov. 23, before Judge Michael J. McShane. Sentencing in the criminal tax case is scheduled for Dec. 10, before Chief Judge Ann L. Aiken. If convicted in the retaliatory liens case, the Jolings each face a statutory maximum sentence of 40 years in prison and a $1 million in fines.
An indictment merely alleges that a crime has been committed and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
This case is being investigated by the Internal Revenue Service–Criminal Investigation, and prosecuted by Senior Litigation Counsel Jen E. Ihlo and Trial Attorney Thomas A. Agnello of the Tax Division.
Cert Petition Filed in the Case of Texas vs. United StatesRead the Press Release
Attached please find a PDF version of the petition for a writ of certiorari in State of Texas, et al vs. United States of America, et al filed Friday, November 20, 2015.
Attorney General Loretta E. Lynch Statement on the Attack in MaliRead the Press Release
Attorney General Loretta E. Lynch released the following statement on today’s attack in Mali:
“The Department of Justice stands with our international partners in condemning the appalling attack in Mali. This was a shameful assault on innocent people by terrorists intent on sowing panic and fear. But I want to make clear to our enemies: fear will not take hold, nor will terror dictate our course, or that of our allies. Instead, a tragedy like today’s reinforces our commitment to the values that separate us from the attackers, and serves to cement the ideals that make us who we are: freedom, opportunity, and justice.
“I understand that the State Department has now confirmed one American death in the attacks and I would like to send my condolences to the family and friends during this difficult time.
“In the days ahead, the Department of Justice and the Obama Administration will continue to coordinate with our allies around the world to bring terrorists to justice and to assist victims of terror in any way possible. We will continue our work to protect the American people. And we will continue to stand with all Americans in upholding the values that our nation represents.”
Three Companies and Three Individuals Charged in Fatal 2012 Gulf of Mexico Oil Drilling Platform ExplosionRead the Press Release
Black Elk Energy Offshore Operations LLC, Grand Isle Shipyards Inc., Wood Group PSN Inc., as well as Don Moss, 46, of Groves, Texas, Curtis Dantin, 50, of Cut-Off, Louisiana, and Christopher Srubar, 40, of Destrehan, Louisiana, have been charged with crimes for a November 2012 explosion on an oil production platform that resulted in the death of three workers, the injury of others and an oil spill, announced the Department of Justice’s Environment and Natural Resources Division and the U.S. Attorney’s Office for the Eastern District of Louisiana.
According to the indictment, the defendants were involved in different capacities while construction work was being done of the West Delta 32 platform when it exploded. Black Elk Energy Offshore Operations LLC and Grand Isle Shipyards Inc. are charged with three counts of involuntary manslaughter, eight counts of failing to follow proper safety practices under the Outer Continental Shelf Lands Act (OCSLA) and one count of violating the Clean Water Act. Wood Group PSN Inc., Moss, Dantin and Srubar are charged with felony violations of OCSLA and the Clean Water Act.
“Workers lives can depend on their employer’s faithfulness to the law, not least of all those working in oil and gas production where safety must be a paramount concern,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and natural Resources Division. “The Justice Department is committed to enforcing the nation’s bedrock environmental laws that protect the environment, and the health and safety of all Americans.”
“The energy sector represents a vital industry in this region, but its work must be performed responsibly,” state U.S. Attorney Kenneth Polite for the Eastern District of Louisiana. “Today’s indictment underscores that we will hold accountable all parties – both businesses and individuals – whose criminality jeopardizes our environment or risks the loss of life.”
“Developing domestic sources of energy must be done responsibly and safely,” said Assistant Special Agent in Charge Dan Pflaster of EPA’s Criminal Enforcement Program in Louisiana. “EPA will continue to work with its law enforcement partners to hold companies fully accountable for illegal conduct and to assure compliance with laws that protect the public and the delicate Gulf Coast ecosystem from harm.”
The Outer Continental Shelf Lands Act and federal regulations govern welding and activities that generate heat or sparks, known as “hot work,” on oil production platforms in U.S. waters. Because this work can be hazardous and cause explosions, regulations mandate specific precautions that must be taken before the work can commence. For instance, before hot work can be performed, pipes and tanks that had contained hydrocarbons must be isolated from the work or purged of hydrocarbons. Gas detectors and devices used to prevent gas from travelling through pipes must be used. According to the Indictment, these safety precautions were not followed and an explosion causing the deaths of three men and a spill resulted
An indictment is only an allegation of wrongdoing and the defendants are presumed innocent unless proven guilty at trial.
The case was investigated by the U.S. Department of Interior Office of Inspector General and EPA’s Criminal Investigations Division. The case is being prosecuted by Emily Greenfield of the U.S. Attorney’s Office for the Eastern District of Louisiana and by Kenneth E. Nelson of the Environmental Crimes Section of the Department of Justice.
Offshore Oil Platform Operator Agrees to More Than $41 Million in Penalties for Unauthorized Oil Discharges and Improper Operations in Gulf of MexicoRead the Press Release
In the continuing joint enforcement action by the U.S. Department of the Interior’s Bureau of Safety and Environmental Enforcement (BSEE) and the U.S. Environmental Protection Agency (EPA) and in a separate BSEE administrative action, ATP Oil & Gas Corp. ATP has agreed to resolve actions under the Clean Water Act (CWA) and the Outer Continental Shelf Lands Act (OCSLA) concerning unauthorized discharges of oil and chemicals from a floating oil and gas production platform into the Gulf of Mexico, announced the Department of Justice, BSEE and EPA. The two agreements impose a combined total of $41.85 million in judicial and administrative penalties for the violations.
The first settlement agreement, lodged today in the U.S. District Court for the Eastern District of Louisiana, resolves all U.S. claims against ATP in a case filed in February 2013. The United States alleges that ATP discharged oil and an unauthorized chemical dispersant into the Gulf of Mexico from ATP’s oil and gas production platform known as the ATP Innovator. A BSEE inspection of the ATP Innovator in March 2012 revealed alleged unlawful discharges of oil and a piping configuration that routed an unpermitted dispersant – a chemical mixture to break up oil – into the facility’s wastewater discharge pipe to mask excess oil being discharged into the ocean. At the time of the discovery, ATP was the operator of the facility and ATP Infrastructure Partners (ATP-IP) was the non-operating owner. The ATP Innovator was operating in the Mississippi Canyon area of the Gulf of Mexico, approximately 45 nautical miles offshore of southeastern Louisiana. The platform was removed from the deepwater production site in 2013 and towed to port in Corpus Christi, Texas. ATP is going through a Chapter 7 bankruptcy proceeding and is no longer operating. The penalty and injunctive relief claims against ATP-IP were settled last year and approved by the court in May of this year.
The settlement agreement resolves the judicial claims against ATP by imposing a CWA civil penalty of $38 million. Injunctive relief concerns related to the safe future operation of the ATP Innovator were addressed by ATP-IP in a prior settlement.
A related settlement agreement approved today by the U.S. Bankruptcy Court for the Southern District of Texas resolves the U.S. claim for judicial and administrative penalties that was filed in the bankruptcy action. Through the settlement, ATP agrees to an allowed unsecured claim of $38 million for the judicial civil penalty judgment specified in the District Court Settlement Agreement.
In addition, ATP agrees in the Bankruptcy Settlement Agreement to an administrative penalty of $3.85 million for related violations of OCSLA regulations. BSEE cited ATP for several violations of OCSLA related to the oil discharges and other improper operations on the platform that were identified during the March 2012 inspection and ATP appealed some of those citations to the Department of the Interior’s Board of Land Appeals (IBLA). Through the Bankruptcy Settlement Agreement, the $3.85 million administrative penalty for the citations will be treated as a final allowed claim in the bankruptcy case.
“ATP’s illegal and unsafe actions in the Gulf of Mexico warrant this concerted enforcement effort to deter it and others in the oil and gas industry from committing similar misconduct,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “No operator should place oil production goals ahead of protection of its workers or the marine environment.”
“This case serves as a reminder that BSEE will thoroughly investigate illegal conduct in offshore oil and gas operations and will aggressively pursue enforcement actions where appropriate,” said Director Brian Salerno of BSEE. “We will continue to work with the Department of Justice, the EPA and our other federal partners to bring these types of actions against companies that break the law and put their workers or the environment at risk.”
“Protecting the Gulf means protecting one of the nation’s most vital economic and ecologic resources,” said Regional Administrator Ron Curry, EPA. “Companies operating in the Gulf must do their part in ensuring it remains as healthy and productive as possible.”
The proposed settlement agreement is subject to a 30-day public comment period and court review and approval. A copy of the Settlement Agreement is available on the Department of Justice website at: www.justice.gov/enrd/consent-decrees.
Justice Department Settles Immigration-Related Discrimination Claim Against McDonald’sRead the Press Release
The Justice Department announced today that it reached a settlement with McDonald’s USA LLC and its corporate affiliates and subsidiaries (McDonald’s) resolving allegations that McDonald’s discriminated against immigrant employees of McDonald’s-owned restaurants.
The department’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) opened its investigation based on information received on its worker hotline. The investigation found that McDonald’s had a longstanding practice of requiring lawful permanent residents to show a new permanent resident card when their original document expired, even though the law prohibits this practice. The investigation further found that the company did not make the equivalent request to its U.S. citizen employees who showed documents that later expired, and that those lawful permanent residents who were asked and could not provide a new card were not allowed to work, some even losing their jobs as a result. This investigation and today’s settlement agreement only address actions by McDonald’s, not its franchises.
“Employers cannot hold lawful permanent residents to a higher standard by placing additional documentary burdens upon them during the employment eligibility verification process,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “Requiring unnecessary documentation of individuals based on their citizenship or immigration status is discriminatory, and the Department of Justice will not hesitate to enforce the law and protect the rights of work-authorized immigrants. We commend McDonald’s for its cooperation throughout this investigation and for committing to compensate its current and former employees who lost wages due to these practices.”
Lawful permanent residents have authorization to live and work in the United States on a permanent basis. As proof of that status, a lawful permanent resident receives a permanent resident card, commonly called a “Green Card,” but lawful permanent residents are eligible for multiple documents that show their eligibility to work. Lawful permanent residents do not have to show their permanent resident cards when they start working. Like all workers, they can choose whatever valid documentation they want to establish their employment authorization. While most permanent resident cards contain an expiration date, as a general matter, card holders have permanent work authorization so the expiration of the card does not mean they lose their right to work or their status. Lawful permanent residents who decide to show an unexpired permanent resident card are not required to present any additional documentation when their card expires, and employers cannot request additional documents from them. Moreover, the anti-discrimination provision of the Immigration and Nationality Act (INA) prohibits employers from placing additional documentary burdens on work-authorized employees during the employment eligibility verification process because of their citizenship or immigration status.
Under the settlement agreement, McDonald’s will pay $355,000 in civil penalties to the United States, undergo monitoring for 20 months and train its employees on the INA’s anti-discrimination provision.
The settlement agreement also requires McDonald’s to compensate lawful permanent resident employees of McDonald’s-owned restaurants who lost work or lost their jobs due to these documentary practices. Lawful permanent residents who worked for a corporate-owned McDonald’s location (not a franchise) between Sept. 23, 2012, and March 1, 2015, may be eligible for compensation if they were fired or forced to miss work because they could not show a new card when their permanent resident card was set to expire. More information on the process for obtaining back wages is found in the settlement agreement’s claims procedure http://www.justice.gov/crt/united-states-department-justice-settlement-mcdonald-s-usa-llc.
Current and former McDonald’s employees with questions about this matter may call 1-844-401-3737 or email [email protected].
OSC is responsible for enforcing the anti-discrimination provision of the INA. Among other things, this law prohibits citizenship status and national origin discrimination in hiring, firing or recruitment or referral for a fee; discrimination in the employment eligibility verification process; retaliation; and intimidation. Trial Attorneys Jennifer Deines and Silvia Dominguez-Reese and Equal Opportunity Specialist Joann Sazama of the Civil Rights Division worked on this case.
For more information about protections against employment discrimination under immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php, email [email protected]; or visit OSC’s website at www.justice.gov/crt/about/osc.
McDonald's Settlement Agreement
Justice Department Announces Three Banks Reach Resolutions Under Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that BNP Paribas (Suisse) SA (BNPP), KBL (Switzerland) Ltd. (KBL Switzerland) and Bank CIC have reached resolutions under the department’s Swiss Bank Program. These banks will collectively pay penalties totaling more than $81 million and continue to cooperate with the department.
“As reflected in today’s agreements, we continue to shine a bright light on the individuals and institutions that have used so-called ‘secret Swiss bank accounts’ to engage in and assist U.S. tax evasion,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. “The department, working hand in hand with the IRS, is actively pursuing criminal and civil cases against those engaged in such conduct.”
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
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Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
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Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreements signed today, each bank agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay penalties in return for the department’s agreement not to prosecute these banks for tax-related criminal offenses.
BNPP has had a presence in Switzerland since 1872. BNPP is headquartered in Geneva, Switzerland, and has branches in Zurich, Basel and Lugano, Switzerland. In 2008, BNP Paribas Bank Group agreed to acquire the worldwide operations of Fortis Bank, which was at the time the largest bank in Belgium. This merger closed in May 2010, and its terms required BNPP to absorb Fortis Banque (Suisse) SA.
BNPP opened and maintained accounts for U.S. taxpayers in the name of non-U.S. corporations, foundations, trusts or other legal entities, in which U.S. taxpayers concealed their beneficial ownership of the accounts. BNPP readily accepted accounts in which external trust companies created and administered offshore structures incorporated or based in offshore locations such as the British Virgin Islands, Panama, Liechtenstein and Liberia, for certain of BNPP’s U.S. clients. In certain instances, BNPP took instructions directly from U.S. beneficial owners with power of attorney over the account, including instructions for cash withdrawals, with the funds going directly to the true U.S. beneficial owner.
BNPP also has a Corporate and Institutional Banking (CIB) business line. CIB clients use the expertise of BNPP for specific commercial transactions, and CIB does not provide private banking services. CIB maintained a small number of U.S.-related accounts. In one case, a wealth management relationship manager omitted the existence of a CIB client’s U.S. passport in opening a wealth management account for that client.
Starting in 2003, BNPP issued a policy requiring U.S. residents opening new accounts to provide an IRS Form W-9 and certification that the person was aware of, and fully complied with, tax requirements pertaining to foreign accounts maintained by U.S. persons. BNPP also held mandatory training sessions in 2005 and 2007 to ensure that wealth management employees were aware of and followed its policies for U.S. persons. Despite these policies, BNPP disregarded evidence that many of the accounts were not in fact properly declared, facilitating the tax avoidance schemes of accountholders.
Certain employees of BNPP understood that certain U.S. taxpayers who maintained accounts at BNPP were not complying with their U.S. reporting obligations, and BNPP offered a variety of traditional Swiss banking services that it knew could assist, and did in fact assist, certain U.S. clients in the concealment of assets and income from the Internal Revenue Service (IRS). For example, BNPP maintained 338 numbered accounts and agreed to hold bank statements and other mail.
BNPP also processed requests for cash withdrawals by U.S. taxpayers from accounts being closed. For example, in early 2012, after part of an account was transferred to a bank in Malaysia, a BNPP employee gave instructions for the withdrawal of the balance of the account in the amount of 238,000 Swiss francs. In November 2009, in light of BNPP’s policy that non-compliant U.S. accounts be closed, an accountholder received permission to withdraw $731,000 in cash, with several employees coordinating the withdrawal so that the accountholder need not “waste time at the cash desk.” And in August and September of 2009, after a BNPP employee informed an accountholder that BNPP had adopted a new U.S.-related account policy, the employee and accountholder agreed that the client would come to BNPP before Sept. 5, 2009, to withdraw the remaining account balance and close the account. Instructions were given to allow the client to withdraw $255,838, as well as 49,233 euros.
Throughout its participation in the Swiss Bank Program, BNPP provided full cooperation to the department. BNPP described in detail the structure of its U.S. cross-border business, including but not limited to the policies BNPP put in place to comply with U.S. law, a summary of the top 20 U.S.-related accounts by assets under management value, a redacted summary of external asset managers and relationship managers with U.S.-related accounts by assets under management and substantial information about U.S.-related accounts associated with external asset managers and relationship managers. BNPP provided a list of the names and functions of all individuals who structured, operated or supervised the cross-border business at BNPP and also provided relevant information concerning its relationship managers.
Since Aug. 1, 2008, BNPP held and managed approximately 760 U.S.-related accounts with a peak value of approximately $1.2 billion in assets under management. BNPP will pay a penalty of $59.783 million.
KBL Switzerland is based in Geneva, with branches in Zurich and Lugano, Switzerland. An additional branch located in Lausanne closed in 2014. KBL Switzerland implemented a strategy from 2009 through May 2010 that substantially sought to increase KBL Switzerland’s assets under management and the business that KBL Switzerland did with external asset managers. The implementation of this strategy led KBL Switzerland to open and maintain significant numbers of U.S.-related accounts, including some accounts for U.S. taxpayers who had been exited from UBS, Credit Suisse or other banks.
KBL Switzerland opened and maintained accounts for certain U.S. taxpayers in the names of corporations, foundations, trusts or other legal entities that were organized in non-U.S. jurisdictions, such as Panama, the British Virgin Islands or Liechtenstein. For many of these accounts, KBL Switzerland accepted IRS Forms W-8BEN or substitute forms that falsely represented that the legal entities that owned the structured accounts had no U.S. taxpayer beneficial owners. KBL Switzerland knew, or had reason to know, that the true beneficial owners of these accounts were U.S. taxpayers. KBL Switzerland also knew, or had reason to know, that certain of these U.S. taxpayers were utilizing the accounts for personal purposes without formal corporate authorization.
In one instance, a KBL Switzerland relationship manager assured a U.S. taxpayer client, who had not provided a Form W-9, that KBL Switzerland would not reveal his identity to the United States. In a separate instance, a different KBL Switzerland relationship manager assured a U.S. taxpayer client that, because of Swiss bank secrecy laws, Switzerland would not freely exchange account information with the United States. And in at least one instance, a KBL Switzerland relationship manager advised a U.S. taxpayer client to avoid bringing account information into the United States.
On the instructions of the U.S. taxpayer clients, KBL Switzerland moved or restructured the assets of U.S.-related accounts in ways that concealed the U.S. nature of those accounts. In late 2009 and early 2010, KBL Switzerland followed the instructions of two external asset managers, concerning four separate U.S.-related accounts that were directly held by U.S. taxpayer clients of KBL Switzerland, to restructure the assets of the accounts into new insurance-policy accounts. These insurance wrapper accounts were titled in the name of a Liechtenstein insurance company for the benefit of the same underlying U.S. taxpayer clients with the same underlying assets. Restructuring the form in which their assets were held at KBL Switzerland allowed these U.S. taxpayers to further hide their identities and undeclared accounts from the IRS and U.S. law enforcement.
In 2012, KBL Switzerland briefly implemented a flawed account closing policy that had the unintended effect of closing a number of U.S.-related accounts through substantial and/or successive asset withdrawals. In one of these instances, KBL Switzerland permitted a U.S. taxpayer client to close an account through a single cash withdrawal of nearly $2 million. In another one of these instances, KBL Switzerland allowed a U.S. taxpayer client to close a structured entity account by using assets in the account to purchase gold worth nearly $200,000, which the U.S. taxpayer client subsequently withdrew in closing the account.
On request of its clients, including undeclared U.S. taxpayers, KBL Switzerland provided Swiss travel cash cards issued by third parties. KBL Switzerland would fund these travel-cash cards with assets maintained in accounts belonging to U.S. taxpayer clients, which enabled U.S. taxpayer clients to access the assets of undeclared accounts wherever they chose, including in the United States. KBL Switzerland also permitted U.S. taxpayer clients to access and utilize the value of assets held in undeclared accounts through loans that were secured by their undeclared assets on deposit with KBL Switzerland.
KBL Switzerland committed to providing full cooperation to the U.S. government and has made timely and comprehensive disclosures regarding its U.S. cross-border business. Among other things, KBL Switzerland has described in detail the structure of its cross-border business for U.S.-related accounts including, but not limited to:
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The policies and lack of oversight that contributed to the misconduct committed by KBL Switzerland relationship managers and their supervisors;
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Data on desks and employees with elevated concentrations of U.S.-related accounts;
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Information on key external asset managers that had significant involvement with U.S.-related accounts;
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The names and positions of compliance officers and senior managers; and
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Written narratives on its largest and most problematic U.S.-related accounts.
Since Aug. 1, 2008, KBL Switzerland maintained 277 U.S.-related accounts having a maximum aggregate dollar value in excess of $255 million. KBL Switzerland will pay a penalty of $18.792 million.
Bank CIC is a subsidiary of the French financial group Crédit Mutuel-CIC, one of the largest banking groups in France. In addition to its main office in Basel, Bank CIC has eight branches, all in Switzerland: Lausanne, Zurich, Geneva, Lugano, Locarno, Neuchatel, Fribourg and Sion.
Although Bank CIC did not target U.S. taxpayer-clients, many of Bank CIC’s front-office personnel had some exposure to at least one or more U.S.-related accounts as part of their general client service functions. Periodically, U.S. clients were accepted as walk-ins or referred to Bank CIC by other clients.
Bank CIC offered a variety of traditional Swiss banking services, including hold mail and numbered accounts, that it knew or should have known could assist, and did in fact assist, U.S. clients in the concealment of assets and income from the IRS. A Bank CIC manager or relationship manager communicated with a U.S. taxpayer client through methods such as facsimile and calling prepaid mobile phones at the U.S. taxpayer-client’s request. Bank CIC also allowed accounts with U.S. beneficial owners to be held in the name of non-U.S. entities.
Since Aug. 1, 2008, Bank CIC had 261 U.S.-related accounts, comprising approximately $228 million in assets under management. Bank CIC will pay a penalty of $3.281 million.
In accordance with the terms of the Swiss Bank Program, each bank mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. While U.S. accountholders at these banks who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement. With today’s announcement of these non-prosecution agreements, noncompliant U.S. accountholders at these banks must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
“Today's resolutions with large and small financial institutions reflect the Swiss Bank Program’s continued success,” said acting Deputy Commissioner International David Horton of the IRS Large Business & International Division (LB&I). “Working with the Department of Justice, we will use the information received from these resolutions to track down U.S. taxpayers who sought to evade taxes by hiding their assets in offshore accounts.”
“The amount of money associated with each agreement is not insignificant, but even more significant is the amount of data that we will receive as a result of the Swiss Bank Program,” said Chief Richard Weber of IRS-Criminal Investigation (CI). “At this point, we’ve already learned so much about the formerly hidden world of offshore banking. This information enables us to vigorously pursue noncompliant individual U.S. taxpayers and guides us in the development of innovative partnerships and methodologies to combat a wide variety of international tax evasion techniques.”
Acting Assistant Attorney General Ciraolo thanked the IRS and in particular, IRS-CI and IRS LB&I for their substantial assistance. Ciraolo also thanked Carl D. Wasserman, Paul G. Galindo and Kaycee M. Sullivan, who served as counsel on these matters, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis and Attorney Kimberle E. Dodd of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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Justice Department Announces Funding Opportunities for Federally-Recognized Tribes and Tribal ConsortiaRead the Press Release
Grants Available to Support Public Safety Projects in Indian Country
The U.S. Department of Justice today announced the opening of the grant solicitation period for comprehensive funding to American Indian and Alaska Native tribal governments and tribal consortia to support public safety, victim services and crime prevention improvements. The department’s Fiscal Year (FY) 2016 Coordinated Tribal Assistance Solicitation (CTAS) posts today at /media/1097216/dl?inline.
“Since 2010, the CTAS program has helped tribes develop their own comprehensive approaches to making their communities safer and healthier,” said Acting Associate Attorney General Stuart F. Delery. “CTAS grants have funded more than 1,400 programs to better serve crime victims, promote community policing and strengthen justice systems.
CTAS is administered by the Department of Justice’s Office of Justice Programs (OJP), including its Bureau of Justice Assistance (BJA), Office of Juvenile Justice and Delinquency Prevention (OJJDP) and the Office for Victims of Crime (OVC); and the Department of Jusitce’s Office of Community Oriented Policing Services (COPS) and Office on Violence Against Women (OVW). The funding can be used to enhance law enforcement, bolster adult and juvenile justice systems, prevent and control juvenile delinquency, serve native victims of crime including, child abuse, sexual assault, domestic violence and elder abuse victims; and support other efforts to combat crime.
Applications for CTAS are submitted through the Department of Justice’s Grants Management System (GMS), which enables grantees to register and apply for CTAS online. Applicants must register with GMS prior to submitting an application. The application deadline is Feb. 23, 2016, at 9:00 P.M. EST.
The FY 2016 CTAS reflects improvements and refinements from earlier versions. Feedback was provided to the department during tribal consultations and listening sessions, and survey assessments, which include tribal leaders’ requests to improve and simplify the department grant-making process. Changes to department grant programs, enacted with the passage of the Tribal Law and Order Act, are incorporated into the CTAS solicitation and in the appropriate purpose areas. More information about all changes to the FY 2016 CTAS Solicitation is available on the CTAS fact sheet at: /media/1097226/dl?inline.
For the FY 2016 CTAS, a tribe or tribal consortium will submit a single application and select from any or all of the nine competitive grant programs referred to as “purpose areas.” This approach allows the department’s grant-making components to consider the totality of a tribal nation’s overall public safety needs.
The nine purpose areas (PA) are:
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PA1 - Public Safety and Community Policing (COPS)
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PA2 - Comprehensive Tribal Justice Systems Strategic Planning (BJA)
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PA3 - Justice Systems and Alcohol and Substance Abuse (BJA)
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PA4 - Corrections and Correctional Alternatives (BJA)
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PA5 - Violence Against Women Tribal Governments Program (OVW)
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PA6 - Children’s Justice Act Partnerships for Indian Communities (OVC)
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PA7 - Comprehensive Tribal Victim Assistance Program (OVC)
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PA8 - Juvenile Justice Wellness Courts (OJJDP)
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PA9 - Tribal Youth Program (OJJDP)
Tribes or tribal consortia may also be eligible for non-tribal, government-specific (non-CTAS) federal grant programs and are encouraged to explore other funding opportunities for which they may be eligible. Additional funding information may be found at the Department of Justice’s Tribal Justice and Safety website at www.justice.gov/tribal or the www.grants.gov website.
Today’s announcement is part of the Department of Justice’s ongoing initiative to increase engagement, coordination and action on public safety in tribal communities.
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INOAC Corp. to Pay $2.35 Million for Fixing Prices on Auto PartsRead the Press Release
INOAC Corp. has agreed to plead guilty and to pay a $2.35 million criminal fine for its role in a conspiracy to fix prices and rig bids on certain plastic interior trim automotive parts installed in cars sold to U.S. consumers.
According to the felony charge filed today in the U.S. District Court of the Eastern District of Kentucky, INOAC, based in Nagoya, Japan, and others conspired from as early as June 2004 until at least September 2012 to fix prices and rig bids on parts sold to Toyota Motor Corp., including certain of its subsidiaries and affiliates in the United States and elsewhere.
“INOAC corrupted the competitive process by agreeing with its competitors to fix the prices of certain automotive parts installed in Toyota cars sold in the United States,” said Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division. “Working with the FBI and our other law enforcement partners, the Antitrust Division will continue to protect American car buyers and hold automotive part suppliers accountable for their illegal conduct.”
“The FBI is committed to aggressively investigating individuals who engage in criminal conduct that corrupts the global marketplace,” said Special Agent in Charge Howard S. Marshall of the FBI’s Louisville Division. “We will continue our work with the Department of Justice Antitrust Division to uncover schemes aimed at creating an unfair competitive advantage by way of price fixing, bid rigging or other illegal means.”
Today’s plea is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.
Including INOAC, 38 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. INOAC is being prosecuted by the Antitrust Division’s Chicago Office and the FBI’s Louisville Field Office, Covington Resident Agency, with assistance from the U.S. Attorney’s Office of the Eastern District of Kentucky.
Anyone with information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Louisville Field Office at 502- 263-6000.
Gasoline Refiner to Reduce Emissions at Utah Facility to Resolve Clean Air Act ViolationsRead the Press Release
The Department of Justice and the U.S. Environment Protection Agency (EPA) today announced a settlement with HollyFrontier Corporation subsidiaries (HollyFrontier Refining & Marketing LLC, Frontier El Dorado Refining LLC, Holly Refining & Marketing Company—Woods Cross LLC and Navajo Refining Company LLC) that resolves alleged Clean Air Act violations regarding fuel quality emissions standards and testing requirements at three HollyFrontier facilities. Under a consent decree lodged today in the U.S. District Court for the District of Columbia, HollyFrontier will implement a mitigation project at its refinery in Salt Lake City, Utah, to offset past emissions and pay to the United States a $1.2 million civil penalty.
“This agreement will benefit public health by requiring retrofits of storage tanks at HollyFrontier facilities that will reduce volatile organic compound emissions and use next generation technology to verify these reductions,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and natural Resources Division. “This settlement shows that fuel refiners can and must meet the nation’s standards for controlling the emissions that cause ground level ozone and serious health problems for Americans.”
“Fuel emissions standards help safeguard our nation’s air quality and public health,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “This settlement not only means cleaner air for communities in Salt Lake City, it helps ensure a level playing field for fuel refiners that follow the law.”
The Clean Air Act requires fuel refiners to ensure the conventional gasoline they produce meets volatility standards, referred to as Reid Vapor Pressure (RVP) standards. As gasoline evaporates, volatile organic compounds (VOCs) are released, which react in sunlight to form low-level ozone. Breathing ozone can trigger a variety of health problems including chest pain, coughing, throat irritation and congestion and can worsen bronchitis, emphysema and asthma. VOCs also include a wide variety of hydrocarbons, some of which are hazardous air pollutants such as benzene, toluene, xylene and ethyl benzene.
HollyFrontier disclosed to the EPA that three of its refineries—the Navajo Refinery in Artesia, New Mexico, the Woods Cross Refinery in Woods Cross, Utah, and the El Dorado Refinery in El Dorado, Kansas—produced approximately 42 million gallons of gasoline that was introduced into commerce in the Utah, Texas, Arizona, New Mexico and Idaho markets that exceeded the applicable RVP standards. HollyFrontier reported to the EPA that these violations are estimated to have resulted in about 10 excess tons of VOC emissions.
Under the settlement, HollyFrontier will install new equipment on two tanks at its Salt Lake refinery to reduce potentially-toxic VOC emissions by about 96 tons over the lifetime of the consent decree. The company will be required to use next generation pollutant detection technology during the implementation of the mitigation projects and be required to hire a third party to verify its compliance status for the mitigation projects. Due to the enduring nature of the projects, environmental benefits accruing as a result of these projects are anticipated to continue for many years. The facility where the pollution controls will be installed is located in an area that may present environmental justice concerns.
EPA’s Next Generation Compliance Strategy promotes advanced emissions and pollutant detection technology so that regulated entities, the government and the public can more easily see pollutant discharges, environmental conditions and noncompliance.
More information about EPA’s Next Generation Compliance Strategy is available at: http://www2.epa.gov/compliance/next-generation-compliance.
For more information on the settlement or to read the consent decree, visit http://www.justice.gov/enrd/consent-decrees.
El Departamento de Justicia Resuleve una Queja de Discriminación Relacionada con la Inmigración Contra Mcdonald’sRead the Press Release
WASHINGTON – El Departamento de Justicia anunció hoy que había llegado a un acuerdo con McDonald’s USA LLC y sus filiales y subsidiarios (McDonald’s) que resuelve las acusaciones de que McDonald’s hubiese discriminado a inmigrantes que son empleados de restaurantes que son propiedad de McDonald’s.
La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC, por sus siglas en inglés) del Departamento de Justicia abrió su investigación con base en la información que recibió a través de su línea directa para trabajadores. La investigación encontró que McDonald’s tenía una práctica de mucho tiempo de obligar a los residentes permanentes legales a mostrar una nueva tarjeta de residencia permanente al vencerse el documento original, a pesar de que la Ley prohíba dicha práctica. Más aún, la investigación encontró que la compañía no pidió lo mismo de sus empleados que sí eran ciudadanos estadounidenses y que habían presentado documentos que luego vencieron y que a aquellos residentes permanentes legales a los que se les pidió que mostraran una nueva tarjeta y que no pudieron hacerlo no se les permitió trabajar; como resultado, algunos perdieron sus trabajos. Esta investigación y el acuerdo de hoy solamente abordan acciones tomadas por McDonald’s y no por ninguna de sus franquicias.
“Los empleadores no pueden establecer estándares más estrictos para residentes permanentes legales al imponerles mayores requisitos documentales durante el proceso de verificación de la elegibilidad de empleo,” declaró la Subprocuradora General Interina, Vanita Gupta, la Jefa de la División de Derechos Civiles. “Requerir documentos innecesarios de ciertos individuos por motivos de su estatus migratorio o de ciudadanía es un acto de discriminación, y el Departamento De Justicia no dudará en ejecutar la ley y proteger los derechos de inmigrantes con autorización para trabajar. Aplaudimos a McDonald’s por su cooperación a lo largo de esta investigación y por comprometerse a indemnizar a sus empleados actuales y previos que perdieron sueldos debido a estas prácticas.”
Los residentes permanentes legales están autorizados para vivir y trabajar en los Estados Unidos de forma permanente. Para probar este estatus, los residentes permanentes legales reciben una tarjeta de residencia permanente, a la que se suele llamar “Tarjeta Verde” o “Green Card,” pero los residentes permanentes legales son elegibles para varios documentos distintos que les sirven para demostrar su elegibilidad para trabajar.
Los residentes permanentes legales no tienen ninguna obligación de presentar sus tarjetas de residencia permanente al comenzar a trabajar. Mientras que la mayoría de las tarjetas de residencia permanente contienen una fecha de vencimiento, por lo general, los titularlos de tales cartas cuentan con autorización permanente para trabajar, por lo que el vencimiento de la tarjeta no implica la pérdida de su estatus o derecho a trabajar. Los residentes permanentes legales que deciden enseñar una tarjeta de residencia permanente vigente no tienen ninguna obligación de presentar documentos adicionales al vencerse su tarjeta, y los empleadores no pueden solicitarles documentos adicionales. Asimismo, la disposición antidiscriminatoria de la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés) prohíbe que los empleadores soliciten documentos adicionales a sus empleados con autorización para trabajar durante el proceso de verificación de elegibilidad de empleo por motivo de su estatus migratorio o de ciudadanía.
Conforme al acuerdo, McDonald’s pagará 355.000 $ en sanciones civiles a los Estados Unidos, se someterá a 20 meses de supervisión y capacitará a sus empleados en cuanto a la disposición antidiscriminatoria de la INA.
El acuerdo también requiere que McDonald’s indemnice a aquellos residentes permanentes legales que son empleados de restaurantes que son propiedad de McDonald’s y que perdieron horas laborales o sus trabajos debido a estas prácticas documentales. Es posible que los residentes permanentes legales que trabajaron para un local de McDonald’s que es propiedad de la empresa (es decir, no es franquicia) entre el 23 de septiembre del 2012 y el 1 de marzo del 2015 sean elegibles para recibir dicha indemnización si fueron despedidos o se vieron obligados a faltar en el trabajo porque no pudieron mostrar una nueva tarjeta cuando su tarjeta de residencia permanente original venció. Para más información sobre el proceso de obtener pagos retroactivos, véase el procedimiento para reclamaciones del acuerdo http://www.justice.gov/crt/united-states-department-justice-settlement-mcdonald-s-usa-llc.
Los empleados actuales y previos de McDonald’s que tengan preguntas en cuanto a este asunto deberán llamar al 1-844-401-3737 o bien mandar un correo electrónico a [email protected].
La OSC es responsable de aplicar la disposición antidiscriminatoria de la INA. Entre otras cosas, esta ley prohíbe la discriminación por motivos de estatus de ciudadanía y nacionalidad de origen en la contratación, el despido o el reclutamiento o la recomendación por comisión; la discriminación en el proceso de verificación de la elegibilidad de empleo; las represalias o la intimidación. Las Abogadas Litigantes Jennifer Deines y Silvia Dominguez-Reese y la Especialista en la Igualdad de Oportunidades Joann Sazama de la División de Derechos Civiles trabajaron en este caso.
Para más información sobre las protecciones contra la discriminación en el empleo bajo las leyes migratorias, llame a la línea directa de la OSC para trabajadores al 1-800-255-7688 (1‑800-237-2515, TTY para personas con discapacidades auditivas); llame a la línea directa de la OSC para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con discapacidades auditivas); matricúlese para un seminario en línea gratuito en www.justice.gov/crt/about/osc/webinars.php; mande un correo electrónico a [email protected] o visite la página web de la OSC en www.justice.gov/crt/about/osc.
United States Joins Lawsuit Alleging That Inchcape Shipping Services Overcharged the United States Navy for Ship Husbanding ServicesRead the Press Release
The government announced today that it has joined a lawsuit alleging that Inchcape Shipping Services Holdings Limited and certain of its subsidiaries (collectively, Inchcape) violated the False Claims Act by knowingly overbilling the U.S. Navy for ship husbanding services from years 2005 to 2014. Inchcape is a marine services contractor headquartered in the United Kingdom.
As a ship husbanding services provider, Inchcape arranged for the provision of goods and services to Navy ships at ports in several regions throughout the world, including southwest Asia, Africa, Panama, North America, South America and Mexico. Inchcape’s services typically included the provision of food and other subsistence items, arrangement of local transportation, waste removal, telephone services, ship-to-shore transportation and force protection services. The lawsuit, which was unsealed today, alleges that Inchcape knowingly overbilled the Navy by submitting invoices that overstated the quantity of goods and services provided, billed at rates in excess of applicable contract rates and double-billed for certain goods and services.
“Those who contract with the federal government and accept taxpayer dollars must follow the rules,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Department of Justice will not tolerate contractors who submit false claims to defraud the armed forces or any other agency of the United States.”
“Ensuring that federal contractors deliver the goods and services at the agreed upon prices in return for receiving the taxpayers’ money is a priority for the U.S. Attorney’s Office,” said U.S. Attorney Channing D. Phillips of the District of Columbia. “This lawsuit reflects our commitment to combat fraud against federal government agencies.”
“The Department of the Navy continues to hold contractors accountable for the agreements they have made to supply our fleet,” said Captain Amy Derrick, a senior spokeswoman for the Department of the Navy. “We also continue to expect strict adherence to higher standards within the Department and expect the same from industry.”
The lawsuit was brought under the qui tam, or whistleblower, provisions of the False Claims Act by three former employees of Inchcape, Noah Rudolph, Andrea Ford and Lawrence Cosgriff. Under the act, a private citizen may bring suit on behalf of the United States and share in any recovery. The government may intervene in the case, as it has done here. The False Claims Act allows the government to recover treble damages and penalties from those who violate it.
The case is being handled jointly by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the District of Columbia, with assistance from the Department of the Navy and the Naval Criminal Investigative Service.
The case is captioned United States ex rel. Rudolph v. Inchcape Shipping Services Holdings Limited, et al., No. 1:10-cv-01109 (D.D.C). The claims alleged in the case are allegations only, and there has been no determination of liability.
Oregon Attorney Indicted for Employment Tax FraudRead the Press Release
A federal grand jury sitting in Portland, Oregon, returned an indictment yesterday charging a resident of Lake Oswego, Oregon, with 10 counts of willfully failing to collect, truthfully account for and pay over federal employment taxes to the United States, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
According to the allegations in the indictment, Gary B. Bertoni, had the responsibility to collect, truthfully account for and pay over to the Internal Revenue Service (IRS) federal employment taxes withheld from the wages of the employees of his law firm, Bertoni & Associates LLC. Beginning in approximately the first quarter of 2009 and continuing through 2011, Bertoni failed to pay over to the IRS employment taxes withheld from his employees’ wages as they became due. The indictment further alleges that Bertoni failed to remit monies withheld from employees’ wages for various employee benefits, including health insurance and retirement account contributions. Instead, Bertoni caused his law firm to make thousands of dollars of expenditures for his personal benefit during the 2009 through 2011 calendar years, including payments to his personal bank account totaling more than $300,000.
If convicted, Bertoni faces a statutory maximum sentence of 50 years in prison, a maximum fine of $2.5 million and restitution to the IRS.
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 agents of IRS-Criminal Investigation, who are investigating the case and Trial Attorneys Stuart A. Wexler and Quinn P. Harrington of the Tax Division, who are prosecuting the case.
Louisiana Business Owners Plead Guilty to Filing False Individual Income Tax ReturnsRead the Press Release
Two owners of a Metairie, Louisiana, business each pleaded guilty to one count of willfully filing false 2011 income tax returns today, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Kenneth A. Polite of the Eastern District of Louisiana.
Rommel Cordova, 35, of Luling, Louisiana, and Saul Ramirez, 43, of Kenner, Louisiana, pleaded guilty before U.S. District Court Judge Mary Ann Vial Lemmon. They were both charged on Nov. 4, in a single Bill of Information with willfully filing false 2011 individual income tax returns. According to court documents, Cordova and Ramirez owned and operated Skill Labor Provider Inc. a Metairie labor services business. Cordova and Ramirez each owned 50 percent of the business and shared equally in its net income.
As part of their guilty pleas, Cordova and Ramirez admitted that during calendar years 2010 and 2011, they cashed and caused to be cashed, checks made payable to Skill Labor Provider Inc. and other business checks at a check cashing business in Kenner. Cordova and Ramirez caused false corporate income tax returns for Skill Labor Provider Inc. for the years 2010, 2011 and 2012 to be prepared that did not accurately report the gross receipts, labor expenses deductions, or net income of the business. During this period, the corporate tax returns underreported the business’s gross receipts by more than $6 million. Cordova and Ramirez also separately filed their respective individual income tax returns for tax years 2010, 2011 and 2012, on which they failed to accurately report the amounts of business income they received from Skill Labor Provider Inc.
At sentencing, each defendant faces a statutory maximum sentence of three years in prison, one year of supervised release, a fine of $250,000, or twice the gross gain or loss caused by the offense, a $100 special assessment and restitution to the Internal Revenue Service (IRS).
Acting Assistant Attorney General Ciraolo and U. S. Attorney Polite commended special agents of the IRS—Criminal Investigations and Homeland Security Investigations, who investigated the case and Assistant U.S. Attorney Hayden Brockett and Tax Division Trial Attorney Michael P. Hatzimichalis, who are prosecuting the case.
Former Sales Executive Pleads Guilty to Participation in Color Display Tube ConspiracyRead the Press Release
A former executive of a large Taiwan-based color display tube (CDT) manufacturing company pleaded guilty late yesterday for his participation in a global conspiracy to fix prices of CDTs, a type of cathode ray tube (CRT) used in computer monitors and other specialized applications.
Chun-Cheng (Alex) Yeh, a resident of Taiwan, agreed to plead guilty to conspiring to fix prices, reduce output and allocate market shares of CDTs beginning as early as May 1999 until at least March 2005. Yeh was indicted by a federal grand jury in the Northern District of California on March 30, 2010. The plea agreement is subject to court approval.
“Our pursuit of those whose anticompetitive conduct abroad harms U.S. consumers does not stop with indictment,” said Deputy Assistant Attorney General Brent Snyder of the Antitrust Division’s Criminal Enforcement Program. “We will use all of the tools available to us to ensure that those whose conduct results in criminal charges will be brought to justice should they choose to become fugitives.”
According to the indictment, Yeh, a former director of sales, and co-conspirators agreed to fix CDT prices and reduce output by shutting down CDT production lines for periods of time. Yeh and co-conspirators also agreed to allocate shares for the CDT market overall and for certain customers. The conspirators exchanged sales, production, market share and pricing information for the purposes of implementing, monitoring and enforcing their agreements.
Yeh is the first individual to plead guilty in connection with the CDT investigation. On May 17, 2011, Samsung SDI Company Ltd. pleaded guilty and paid a $32 million criminal fine for its role in the CDT conspiracy. Four other indicted individuals remain fugitives. On Aug. 18, 2009, Wen Jun (Tony) Cheng was indicted for his participation in the CDT conspiracy. On Nov. 9, 2010, Seung-Kyu (Simon) Lee, Yeong-Ug (Albert) Yang and Jae-Sik (J.S.) Kim were also indicted for their participation in the CDT conspiracy.
Yeh is charged with violating the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the maximum fine.
The federal antitrust investigation into price fixing and other anticompetitive conduct in the CRT industry is being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Field Office. Anyone with information on price fixing or other anticompetitive conduct related to the CRT industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html, or call the FBI tip line at 415-553-7400.
Yeh Plea Agreement (1.64 MB)
FBI's James Comey Swears in New Interpol Washington DirectorRead the Press Release
On November 17, 2015, Director of the Federal Bureau of Investigation James B. Comey administered the oath of office for new Interpol Washington Director Geoffrey S. Shank. The installation ceremony was held in the Great Hall of the Robert F. Kennedy Department of Justice Building. Director Comey provided remarks that highlighted the values of partnership and cooperation, underlining both the domestic and international work of Interpol Washington. He also congratulated the members of Director Shank’s family, who were in attendance at the ceremony.
Other guest speakers at the event included Acting Director of the U.S. Marshals Service, Director Shank’s home agency, David L. Harlow; Assistant Secretary for International Affairs at the U.S. Department of Homeland Security Alan D. Bersin; and Deputy Assistant Attorney General and Controller and recently elected Interpol Executive Committee Delegate, Jolene A. Lauria.
After taking the oath of office, Director Shank addressed the audience by acknowledging the challenges that law enforcement faces in the future and Interpol Washington’s commitment to adopting the methods necessary to bring international criminals to justice. “In order to continue to be effective in this world, law enforcement must evolve as our enemies do,” said Director Shank. “By continuing to grow the information nexus that is Interpol Washington, we improve our nation’s effective counterweight to the criminal and terrorist networks of the Information Age.”
Among those in attendance were Associate Deputy Attorney General Armando Bonilla; representatives from domestic federal, state, and local law enforcement agencies; representatives of international partners and embassies such as Mexico, Montenegro, and Turkey; and the staff of Interpol Washington, who the Director thanked profusely for their dedication to the agency, justice, and public service.
Justice Department and Federal Partners Announce Enforcement Actions of Dietary Supplement CasesRead the Press Release
Criminal Charges Brought against Bestselling Supplement Manufacturer
As part of a nationwide sweep, the Department of Justice and its federal partners have pursued civil and criminal cases against more than 100 makers and marketers of dietary supplements. The actions discussed today resulted from a year-long effort, beginning in November 2014, to focus enforcement resources in an area of the dietary supplement market that is causing increasing concern among health officials nationwide. In each case, the department or one of its federal partners allege the sale of supplements that contain ingredients other than those listed on the product label or the sale of products that make health or disease treatment claims that are unsupported by adequate scientific evidence.
Among the cases announced today is a criminal case charging USPlabs LLC and several of its corporate officers. USPlabs was known for its widely popular workout and weight loss supplements, which it sold under names such as Jack3d and OxyElite Pro.
The sweep includes federal court cases in 18 states and was announced today by Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division; Deputy Commissioner for Global Regulatory Operations and Policy Howard Sklamberg J.D. of the Food and Drug Administration (FDA); Acting Deputy Director J. Reilly Dolan of the Federal Trade Commission (FTC)’s Bureau of Consumer Protection; Acting Deputy Chief Inspector Gary Barksdale of the U.S. Postal Inspection Service (USPIS); and Chief Richard Weber of the Internal Revenue Service’s (IRS) Criminal Investigation (CI) Division. The Department of Defense (DoD) and the U.S. Anti-Doping Agency (USADA) are also participating in the sweep to unveil new tools to increase awareness of the risks unlawful dietary supplements pose to consumers and, in particular, to assist service members targeted by illegitimate athletic performance supplements.
“The Justice Department and its federal partners have joined forces to bringing to justice companies and individuals who profit from products that threaten consumer health,” said Principal Deputy Assistant Attorney General Mizer. “The USPlabs case and others brought as part of this sweep illustrate alarming practices the department found—practices that must be brought to the public’s attention so consumers know the serious health risks of untested products.”
During the period of the sweep, 117 individuals and entities were pursued through criminal and civil enforcement actions. Of these, 89 were the subject of cases filed since November 2014.
Criminal Matters
An 11-count indictment was unsealed earlier today against USPlabs LLC, a Dallas firm, which formerly manufactured highly popular workout and weight loss supplements. The indictment charges USPlabs, S.K. Laboratories Inc., based in Anaheim, California, and their operators with a variety of charges related to the sale of those products. Jacobo Geissler, 39, of University Park, Texas, the CEO of USPlabs; Jonathan Doyle, 37, of Dallas, the president of USPlabs; Matthew Hebert, 37, of Dallas, responsible for product packaging design at USPlabs; Kenneth Miles, 69, of Panama City, Florida, the quality assurance executive in charge of compliance at USPlabs; S.K. Laboratories Inc.; Sitesh Patel, 32, of Irvine, California, the vice president of S.K. Laboratories; and Cyril Willson, 34, of Gretna, Nebraska, a consultant to USPlabs, are charged with various counts associated with the unlawful sale of dietary supplements. Additionally, USPlabs, Geissler, Doyle and Hebert are charged with obstruction of an FDA proceeding and conspiracy to commit money laundering.
Four of the defendants were arrested earlier today and the other two will self-surrender. Along with the arrests, FDA and IRS-CI special agents seized assets in dozens of investment accounts, real estate in Texas and a number of luxury and sports cars.
The indictment alleges that USPlabs engaged in a conspiracy to import ingredients from China using false certificates of analysis and false labeling and then lied about the source and nature of those ingredients after it put them in its products. According to the indictment, USPlabs told some of its retailers and wholesalers that it used natural plant extracts in products called Jack3d and OxyElite Pro, when in fact it was using a synthetic stimulant manufactured in a Chinese chemical factory.
The indictment also alleges that the defendants sold some of their products without determining whether they would be safe to use. In fact, as the indictment notes, the defendants knew of studies that linked the products to liver toxicity.
The indictment also alleges that in October 2013, USPlabs and its principals told the FDA that it would stop distribution of OxyElite Pro after the product had been implicated in an outbreak of liver injuries. The indictment alleges that, despite this promise, USPlabs engaged in a surreptitious, all-hands-on-deck effort to sell as much OxyElite Pro as it could as quickly as possible. It was sold at dietary supplement stores across the nation.
“This joint agency effort is a testament to our commitment to protecting consumers from potentially unsafe dietary supplements and products falsely marketed as dietary supplements,” said Deputy Commissioner Sklamberg. “The criminal charges against USPlabs should serve as notice to industry that if products are a threat to public health, the FDA will exercise its full authority under the law to bring justice.”
Today’s criminal charges are among 14 criminal cases prosecuted by the Civil Division’s Consumer Protection Branch and U.S. Attorney’s Offices across the country from November 2014 to November 2015. See this chart. Of the 14 criminal cases prosecuted during this timeframe, 11 cases against 29 individuals and entities have been filed since November 2014.
The charges and allegations in the indictments are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Civil Cases
The Department of Justice also filed in the past week five civil cases seeking injunctive relief against a number of businesses and individuals that allegedly sold supplements as disease cures or that were otherwise in violation of the law. These matters, investigated by USPIS and the FDA, include the following:
- United States v. Clifford Woods LLC, doing business as Vibrant Life, and Clifford Woods. A complaint, filed in the U.S. District Court for the Central District of California, alleges that the defendants unlawfully sold Taheebo Life Tea, Life Glow Plus, Germanium and Organic Sulfur (identified as methyl sulfonyl methane) as treatments for various diseases including Alzheimer’s disease and cancer. The complaint alleges that the defendants’ conduct defrauded consumers through the sale of unapproved new and misbranded drugs.
- United States v. James R. Hill, doing business as Viruxo. A complaint, filed in the U.S. District Court for the Middle District of Florida, alleges that the defendants unlawfully sold a dietary supplement called Viruxo as a treatment for herpes. The complaint alleges that the defendants’ conduct defrauded consumers through the sale of unapproved new and misbranded drugs.
- United States v. Lehan Enterprises, Inc., doing business as Optimum Health, and Lesa Sverid. A complaint, filed in the U.S. District Court for the District of Massachusetts, alleges that the defendants unlawfully sold products called DMSO Cream, DMSO Cream with Aloe and DMSO Roll On as treatments for conditions and diseases including arthritis and cancer. The complaint alleges that defendants sold unapproved new and misbranded drugs.
- United States v. Bethel Nutritional Consulting, Felix Ramirez, and Kariny Ramirez. A complaint, filed in U.S. District Court for the District of New Jersey, alleges that the defendants distribute dietary supplements in a manner that does not conform to current good manufacturing practice for dietary supplements and that they are making claims about the uses for many of the products that render them unapproved and misbranded drugs. Furthermore, FDA testing has revealed that some of defendants’ products contain active pharmaceutical ingredients that are not listed on the products’ labels, including one ingredient that was withdrawn from the market in 2010 because of safety concerns. The defendants in this matter have agreed to be bound by a consent decree of permanent injunction banning them from selling dietary supplements until they come into compliance with the law.
- United States v. VivaCeuticals, Inc., doing business as Regeneca Worldwide, and Matthew Nicosia. A complaint filed in U.S. District Court for the Central District of California alleges that dietary supplements sold by the defendants are adulterated because they are not manufactured in accordance with the FDA’s current good manufacturing practice regulations. One of the dietary supplements, a product called RegeneSlim Appetite Control (RegeneSlim), contains the ingredient 1, 3 dimethylamylamine (DMAA), an unsafe food additive under the federal Food, Drug and Cosmetic Act, but does not declare DMAA as an ingredient. In addition, the defendants market RegeneSlim to be used as a disease cure.
“Postal Inspectors have a long history of effectively enforcing the mail fraud statute to halt snake oil salesmen and medical quacks from using the mails to purvey their wares upon unsuspecting citizens,” said Acting Deputy Chief Postal Inspector Barksdale. “We look at these latest misrepresentations and frauds as ‘old wine in a new bottle.’ Working with our law enforcement and regulatory partners, we hope to protect American consumers by keeping these scams ‘bottled up’.”
Civil actions brought by the FTC as part of the sweep to combat unsubstantiated supplement claims include the following:
- Sunrise Nutraceuticals, LLC. According to the FTC’s complaint, Sunrise, based in Boca Raton, Florida, deceptively claims that its dietary supplement Elimidrol, a “proprietary blend” of herbs and other compounds, alleviates opiate withdrawal symptoms and increases a user’s likelihood of overcoming opiate addiction. The FTC’s complaint alleges, however, that Sunrise’s ads for Elimidrol are deceptive because they are false or unsubstantiated.
- Health Nutrition Products. The FTC’s complaint charged Crystal Ewing, five other individuals and five companies with making false and misleading health and efficacy claims in direct mail ads and on a website owned by Ewing. In ads for W8-B-Gone, CITRI-SLIM 4 and Quick & Easy diet pills, the defendants featured bogus weight-loss experts. Citing fake scientific studies, the defendants also deceptively claimed to have clinical proof that consumers would experience a “RAPID FAT meltdown diet program” that lets them shed five pounds in four days with one pill, or up to 20 pounds in 16 days with four pills. The proposed court orders announced today will settle the FTC’s charges against three defendants involved in the scheme. The order against repeat offender Ewing and her company Classic Productions LLC requires them to admit liability in the case, bans them from selling weight-loss programs, products and services, and imposes a non-suspended judgment of $2.7 million.
- NPB Advertising, Inc. According to the FTC’s complaint filed in the U.S. District Court for the Middle District of Florida’s Tampa Division, Florida-based NPB and others capitalized on the green coffee bean diet fad by using false weight-loss claims and fake news websites to market a dietary supplement called Pure Green Coffee. The proposed court order announced today settles the FTC’s charges, bars the defendants from the deceptive acts and practices described in the complaint and imposes a $30 million judgment that will be suspended upon the sale of certain assets, payment of $160,800, and the collection and turnover of an additional $155,760 that was lent to a third party.
“People looking for a dietary supplement to improve their health have to wade through a swamp of misleading ads,” said Director Jessica Rich of the FTC’s Bureau of Consumer Protection. “Be skeptical of ads for supplements that claim to cure diseases, reverse the signs of aging or cause weight loss without diet or exercise.”
Today’s cases are among 25 civil actions pursued by the Civil Division’s Consumer Protection Branch, U.S. Attorney’s Offices and the FTC from November 2014 to November 2015. Of the 25 actions, 22 civil cases against 60 individuals and entities have been filed since November 2014. To date, courts have entered judicial orders in 11 cases, requiring dietary supplement makers to change their business practices to ensure that they are selling their products in compliance with the law.
Educational materials
As part of today’s sweep, the Uniformed Services University of the Health Sciences’ Consortium for Health and Military Performance partnered, through its Human Performance Resource Center (HPRC), with the USADA to develop educational resources for service members to protect them from risky dietary supplements. Through this partnership, the organizations will jointly launch an online interactive educational module called “Get the Scoop on Supplements: Realize, Recognize, and Reduce Your Risk.” Also launching today are two mobile applications: the HPRC’s Operation Supplement Safety (OPSS) High-Risk Supplement List mobile application for Service members and USADA’s Supplement 411 mobile application for athletes (both accessible via the Google Play and Apple App stores and available to the general public).
These educational products will augment the important information available on USADA’s Supplement411.org website and the OPSS website, including the OPSS High-Risk Supplement List which was launched in February 2015. To access more information available to service members, consult the OPSS website and a recently released video at http://hprc-online.org/blog/decoding-the-dietary-supplement-industry. To access the educational resources USADA provides for athletes and general consumers to help realize, recognize and reduce the risks associated with using supplement products visit USADA’s website http://www.supplement411.org.
“Ensuring readiness of the force is one of the Department of Defense’s top goals,” said Deputy Assistant Secretary of Defense for Health Affairs Dr. Dave Smith of DoD’s Military Health System. “Unsafe dietary supplements are a threat to readiness in DoD.”
“A combined effort like this is vitally important to protecting the health and safety of athletes at every level,” said USADA CEO Travis T. Tygart. “We work to educate athletes on the risks associated with choosing to use supplements, and we will continue to support further action at a national level to prevent dangerous substances and products from being allowed in the marketplace where they can easily be attained by unsuspecting athletes and other consumers.”
To promote today’s joint sweep, the FTC created an infographic to help consumers understand the range of dietary supplement products and claims, the potential risks of taking supplements and questions to ask a health professional before taking any supplements. The FTC also published blogs for consumers and businesses, and has articles and videos with more information at ftc.gov/dietary supplements.
The FDA continues to warn consumers about the risks associated with some over-the-counter products, falsely marketed as dietary supplements, which contain hidden active ingredients that could be harmful. In the last year, the agency has warned of more than 100 products found to contain hidden active ingredients. These products are most frequently marketed for sexual enhancement, weight loss and body building.
Within the last year, the FDA also sent warning letters to manufacturers selling dietary supplements that contain BMPEA and DMBA, two ingredients that do not meet the statutory definition of a dietary ingredient as well as to several companies selling pure powdered caffeine products that the agency determined to be dangerous and present a significant or unreasonable risk of illness or injury to consumers.
Justice Department Settles with McLennan County, Texas, Regarding Accessibility of County Services Under the Americans with Disabilities ActRead the Press Release
The Justice Department announced today an agreement with McLennan County, Texas, to improve access to all aspects of civic life for people with disabilities. McLennan County and the Department of Justice reached an agreement under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the Americans with Disabilities Act (ADA). Under the agreement, the county is required to ensure that people with disabilities can take full advantage of the county’s services, programs and activities. This year, as we celebrate the 25th anniversary of the ADA, it is an ideal time to highlight the impact that the enforcement of this statute has made in the lives of people with disabilities.
“Twenty-five years after the passage of the ADA, we have seen tremendous strides in accessibility nationwide,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “Because of the ADA, local governments like McLennan County are taking responsibility to provide citizens with access to programs, services and activities. Agreements such as this one will have a remarkable impact on the everyday lives of individuals with disabilities and allow them to fully participate as citizens of McLennan County.”
Under the agreement, McLennan County will develop and implement a new county website that is compliant with the web content accessibility guidelines (WCAG) version 2.0; the county will also designate a web accessibility coordinator who will be responsible for coordinating the county’s web accessibility compliance. The county will also ensure that its polling locations are accessible to persons with disabilities. In addition, the county will modify its emergency operations plan to ensure that it is accessible to all persons with disabilities in the event of an emergency. McLennan County will also adopt and implement its Sheriff’s Department Effective Communication Policy for People Who are Deaf or Hard of Hearing. Finally, the agreement requires the county to ensure that its courthouses, buildings, parking lots, parks and toilet rooms are accessible to persons with disabilities.
This agreement was reached under Title II of the ADA, which prohibits discrimination against individuals with disabilities by state and local governments. The three-year agreement will remain in effect until Nov. 16, 2018. The department will actively monitor compliance with the agreement.
For more information about the ADA, today’s agreement, the Project Civic Access initiative or the ADA Best Practices Tool Kit for state and local governments, individuals may access the ADA Web page at http://www.ada.gov/civicac.htm or call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY).
McLennan County Settlement Agreement
Justice Department Announces Maerki Baumann & Co. AG Reaches Resolution Under Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that Maerki Baumann & Co. AG (Maerki Baumann) reached a resolution under the department’s Swiss Bank Program. Maerki Baumann will pay a penalty of more than $23 million.
“Maerki Baumann willfully and actively helped U.S. taxpayers evade their tax obligations and cheat the American public,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. “Today’s agreement reveals the extent of such conduct and holds Maerki Baumann accountable, requiring the bank to make a detailed disclosure of its cross-border activities, pay an appropriate penalty, and provide continuing and extensive cooperation against its representatives, accountholders and other institutions.”
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
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Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreement signed today, Maerki Baumann agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay a penalty in return for the department’s agreement not to prosecute this bank for tax-related criminal offenses.
Maerki Baumann is a family-owned private bank organized under the laws of Switzerland. It is headquartered in Zurich, Switzerland, and has a branch office in Lugano, Switzerland. In the 1990s, Maerki Baumann developed a relationship with a Swiss referral source that introduced clients to Maerki Baumann primarily from the United States. This source was affiliated with an insurance company that also deposited with Maerki Baumann pooled assets from its insurance customers. Maerki Baumann understood that most were U.S. persons. At some point in the late 1990s or early 2000s, Maerki Baumann also began receiving referrals of U.S. clients from an external asset manager based in the United States. These referrals included clients with undeclared accounts.
Although Maerki Baumann had long had U.S. clients, it had no formal U.S. desk or team until 2001, when it consolidated responsibility for U.S. clients into what had been the “Swiss team” and renamed it the “Swiss/U.S. team.” Maerki Baumann increased its focus on its U.S. cross-border business from 2003 to 2005. In 2003, Maerki Baumann hired a relationship manager (RM-1) from the U.S./Canada desk at another bank.
RM-1 introduced Maerki Baumann to another relationship manager (RM-2), with whom RM-1 had previously worked at another bank and who had significant experience servicing U.S. accounts. Maerki Baumann hired RM-2 in 2005 with the expectation that RM-2 would provide expertise to the U.S. side of Maerki Baumann’s Swiss/U.S. team and actively recruit additional U.S. clients. By the end of 2005, in addition to the head of the Swiss/U.S. team, the U.S. component of Maerki Baumann’s Swiss/U.S. team consisted of three relationship managers, including RM-1 and RM-2. The client base of these relationship managers consisted largely of U.S. clients. Later, these relationship managers were assisted by three junior members of the Swiss/U.S. team. On approximately 35 occasions, relationship managers traveled to the United States to meet with U.S. clients for the purpose of building and maintaining relationships with these clients.
Maerki Baumann terminated RM-2’s employment in 2008. In 2011, RM-2 was charged in a federal court in the United States with conspiring to impede and impair the Internal Revenue Service (IRS) in the ascertainment, computation, assessment and collection of U.S. income taxes, in connection with RM-2’s activities at a bank other than Maerki Baumann.
Maerki Baumann opened, maintained and serviced accounts for U.S. persons that it knew or had reason to know were likely not declared as required by U.S. law. Maerki Baumann also offered a variety of traditional Swiss banking services, including hold mail instructions and numbered accounts, that it knew could assist, and did in fact assist, U.S. clients in the concealment of assets and income from the IRS. The combination of hold mail instructions and numbered accounts on undeclared accounts significantly reduced the ability of the IRS to learn the identities of the U.S. persons.
Maerki Baumann also allowed U.S. persons to maintain accounts held in the name of non-operating non-U.S. corporations or other legal entities that were beneficially owned by these U.S. persons. The jurisdictions in which the entities were incorporated or formed included Liechtenstein, Panama and the British Virgin Islands. On at least two occasions, relationship managers met directly with the beneficial owners of the Maerki Baumann accounts held by the entities.
Between 2004 and 2008, on approximately a monthly basis (but sometimes more often), RM-1 received from U.S. clients checks ranging from just under $10,000 to $85,000, which were drawn on U.S. company accounts in California, for deposit into accounts beneficially owned by those U.S. clients or their designees. The correspondence accompanying the checks stated that the checks were for “materials purchased” and instructed the relationship manager to “process the purchase orders as needed,” and many of the checks themselves bore the notation “see purchase order.” However, there were no purchase orders attached, and Maerki Baumann was never provided with any purchase orders. Additionally, RM-1’s notes state that certain checks were for under $10,000 “in order to avoid any unnecessary attention.” Likewise, with respect to at least two U.S.-related accounts, relationship managers knew between 2003 and 2005 that the client was structuring the transactions to avoid currency transaction reporting requirements.
Relationship managers communicated or discussed communicating with U.S. clients by confidential means. For example, in October 2006, one relationship manager advised a client that if there was a need for urgent contact, he would send the client a card stating “Greetings from [relationship manager].” In another instance, in June 2009, a client’s correspondence to a relationship manager stated, “If there are any questions, please phone me on my cell phone or email me with our usual confidentiality.” In some instances, the accountholders had disclosed to relationship managers that their accounts were undeclared.
Maerki Baumann and its relationship managers also:
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Permitted assets in an account held by a known U.S. person to be transferred in 2006 to a new account held by a life insurance company, known as an “insurance wrapper”;
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Processed requests from U.S. taxpayers for cash or precious metal withdrawals, thus not triggering any transaction reporting requirements;
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Permitted a withdrawal of approximately one million Swiss francs from a U.S. client’s account after the client refused to declare money in the account in the United States;
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Delivered cash withdrawals to U.S. clients in Switzerland; and
- Offered credit, debit or travel cash cards, which facilitated the access to or use of undeclared funds on deposit at Maerki Baumann.
By participating in the Swiss Bank Program, Maerki Baumann has committed to cooperate with the U.S. government in its efforts to identify U.S. persons who engaged in tax evasion and/or fraud. Among other actions, Maerki Baumann has provided full cooperation to allow the United States to be able to request and obtain from Switzerland through the 1996 Convention and the 2009 Protocol, once ratified, the bank files of non-tax compliant U.S. persons. This will result in the United States receiving files identifying U.S. persons who previously held undeclared accounts at Maerki Baumann, directly or through entities.
Since Aug. 1, 2008, Maerki Baumann had 571 U.S.-related accounts, comprising maximum assets under management of approximately $790 million, including assets of declared accounts. Maerki Baumann will pay a penalty of $23.92 million.
In accordance with the terms of the Swiss Bank Program, Maerki Baumann mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. While U.S. accountholders at Maerki Baumann who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement. With today’s announcement of this non-prosecution agreement, noncompliant U.S. accountholders at Maerki Baumann must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
“Today’s resolution with Maerki Baumann & Co. continues our effort to turn the corner on undisclosed offshore accounts,” said acting Deputy Commissioner International David Horton of the IRS Large Business & International Division. “U.S. taxpayers cannot evade their taxes by hiding their assets in offshore accounts. In partnership with the Department of Justice, we continue to track these taxpayers and their hidden accounts down.”
Acting Assistant Attorney General Ciraolo thanked the IRS and in particular, IRS-Criminal Investigation and the IRS Large Business & International Division for their substantial assistance. Acting Assistant Attorney General Ciraolo also thanked Tracy L. Gostyla and Kimberly M. Shartar, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis and Attorney Kimberle E. Dodd of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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Houston Man Charged in Stolen Identity Tax Refund Fraud SchemeRead the Press Release
A Houston, Texas, man was arrested Friday after a federal grand jury sitting in Houston indicted him for three counts of wire fraud, four counts of theft of public money and seven counts of aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.
According to the allegations in the indictment, during 2015, Denzel Roberts was part of a stolen identity refund fraud (SIRF) scheme that used stolen personal identification information, including names and social security numbers, to file false federal income tax returns for tax year 2014. Roberts and others used this stolen information to access the Internal Revenue Service’s (IRS) “Get Transcript” web application to obtain tax information of their identity theft victims and filed fraudulent tax returns in those names. Roberts also opened several bank accounts using a fraudulent passport, directed that the fraudulent tax refunds be deposited into those accounts and withdrew the illicit proceeds.
If convicted, Roberts faces a statutory maximum sentence of 20 years in prison for each count of wire fraud, 10 years in prison for each count of theft of public money and a mandatory sentence of two years in prison for aggravated identity theft. He also faces substantial monetary penalties and restitution.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Magidson commended special agents of IRS-Criminal Investigation and the FBI’s Houston Cyber Task Force, who investigated the case and Trial Attorneys Michael C. Boteler and Grace E. Albinson of the Tax Division, who are prosecuting this case with assistance from Assistant U.S. Attorney Jimmy Sledge of the Southern District of Texas.
An indictment merely alleges that crimes have been committed. The defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
For-Profit College Company to Pay $95.5 Million to Settle Claims of Illegal Recruiting, Consumer Fraud and Other ViolationsRead the Press Release
The United States has reached a landmark global settlement with Education Management Corp. (EDMC), the second-largest for-profit education company in the country, the Department of Justice announced today. The $95.5 million settlement resolves allegations that EDMC violated federal and state False Claims Act (FCA) provisions by falsely certifying that it was in compliance with Title IV of the Higher Education Act (HEA) and parallel state statutes.
“This historic resolution exemplifies the Justice Department’s deep commitment to protecting precious public resources; to defending American consumers; and to standing up for those who are vulnerable to mistreatment, abuse, and exploitation,” said Attorney General Loretta E. Lynch. “Operating essentially as a recruitment mill, EDMC’s actions were not only a violation of federal law but also a violation of the trust placed in them by their students - including veterans and working parents - all at taxpayer expense. In the days ahead, we will continue working with our invaluable partners at the U.S. Department of Education, through initiatives like the inter-agency task force on for-profit education, to ensure that our nation’s aspiring learners are finding and gaining access to educational opportunities that are right for them.”
The primary allegation was that EDMC unlawfully recruited students, in contravention of the HEA’s Incentive Compensation Ban (ICB), by running a high pressure boiler room where admissions personnel were paid based purely on the number of students they enrolled. In addition to resolving these and other FCA claims, the global settlement also encompasses an investigation by a consortium of state Attorneys General, of consumer-fraud allegations involving deceptive and misleading recruiting practices.
“Now more than ever, a college degree is the best path to the middle class, but that path has to be safe for students,” said U.S. Education Secretary Arne Duncan. “This settlement should be a warning to other career colleges out there: We will not stand by while you profit illegally off of students and taxpayers. The federal government will continue to work tirelessly with state attorneys general to ensure that all colleges follow the law.”
EDMC, which is headquartered in Pittsburgh, Pennsylvania, operates nationwide under four post-secondary school brands: the Art Institutes, South University, Argosy University and Brown-Mackie College. Student enrollment across EDMC’s school brands exceeds 100,000 students.
“Companies cannot enrich their corporate coffers at the expense of students seeking a quality education, or on the backs of taxpayers who are funding our critical financial aid programs,” said U.S. Attorney David J. Hickton of the Western District of Pennsylvania. “Today’s global settlement sends an unmistakable message to all for-profit education companies: the United States will aggressively ferret out fraud and protect innocent students and taxpayer dollars from this kind of egregious abuse.”
The settlement resolves four separate FCA lawsuits filed in federal court in Pittsburgh, Pennsylvania, and Nashville, Tennessee, under the qui tam, or whistleblower, provisions of the act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.
The United States and five states intervened and actively litigated one of those four whistleblower lawsuits, United States ex rel. Washington, in the Western District of Pennsylvania. The United States’ complaint in intervention alleged systemic violations of Title IV of the HEA’s ICB and parallel state provisions, which prohibit schools from paying recruiters based on their success in securing enrollments. Specifically, the United States and the plaintiff states claimed that from 2003 to the present, EDMC falsely certified to the U.S. Department of Education and various state offices of higher education that it was complying with the ICB, in order to be eligible to receive the federal grant and loan dollars that compose the majority of EDMC’s revenue. In reality, according to the United States’ complaint in intervention, EDMC was running a high pressure sales business and paid its recruiters based only on the number of students they enrolled. As a result of these allegedly false certifications, EDMC improperly enriched itself for more than 10 years with federal and state grant and loan dollars. More broadly, EDMC’s alleged conduct resulted in exactly the problems that Congress sought to curtail when it enacted the ICB: the enrollment of students in programs for which they lacked the necessary skills and qualifications, unsustainable student debt and default rates and schools’ pursuit of profits ahead of a legitimate educational mission.
“Improper incentives to admissions recruiters result in harm to students and financial losses to the taxpayers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “This settlement shows that by partnering productively, the federal government and the states’ Attorneys General can put a stop to this type of behavior.”
The global settlement with EDMC also resolves three additional federal FCA lawsuits in which the government did not intervene, all involving various violations of Title IV of the HEA by EDMC.
Finally, the global settlement resolves a consumer fraud investigation by a consortium of 40 state Attorneys General, into EDMC’s deceptive and misleading recruiting practices. The consumer fraud settlement requires EDMC to undertake various compliance obligations, including detailed disclosure obligations to students; prohibitions on deceptive or misleading recruiting practices and oversight by an administrator to ensure compliance.
“This civil enforcement action holds EDMC accountable for what we allege were unfair and deceptive recruitment and enrollment practices,” said Iowa Attorney General Tom Miller. “EDMC’s practices were unfair to our state’s students, and they were also unfair to our nation’s taxpayers who backed many of these federal student loans that were destined to fail. This is a rigorous agreement that not only provides some relief to a large number of former students through loan forgiveness, but helps ensure that the company will make substantial changes to its business practices for future students.”
The global settlement amount of $95.5 million reflects EDMC’s financial condition and current ability to pay. The settlement proceeds will be shared among the United States, the co-plaintiff states and the whistleblowers and their counsel in the four FCA cases, and includes funds allocated for the compliance expenses of the state consumer fraud settlement, including the costs of the administrator and the acquisition and use of a sophisticated voice analytics system to record and analyze recruiters’ calls with students. The United States will receive $52.62 million from the settlement, and will pay $11.3 million collectively to the relators in the four qui tam cases.
The FCA lawsuits were handled by Assistant U.S. Attorneys Michael A. Comber, Christy C. Wiegand, Paul E. Skirtich and Colin J. Callahan of the U.S. Attorney’s Office of the Western District of Pennsylvania, Assistant U.S. Attorney Christopher Sabis of the U.S. Attorney’s Office of the Middle District of Tennessee, and Trial Attorney Jay D. Majors of the Commercial Litigation Branch of the Civil Division of the Department of Justice, with assistance from the U.S. Department of Education’s Office of General Counsel and Office of Inspector General.
The cases are captioned United States ex rel. Washington et al. v. Education Management Corp., et al., Civ. No. 07-461 (WDPA); United States ex rel. Sobek v. Education Management Corp., et al., Civ. No. 10-0131 (WDPA); United States ex rel. Laukaitis et al. v. Education Management Corp., et al., Civ. No. 11-601 (WDPA); and United States ex rel. Rainwater v. Education Management Corp., et al., Case No. 3:12-CV-01008 (MDTN). The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Federal Court Permanently Bars a Michigan and Illinois-Based Liberty Tax Service Franchisee from Preparing Federal Income Tax ReturnsRead the Press Release
The U.S. District Court for the Eastern District of Michigan has permanently barred a Liberty Tax Service franchise owner and his companies from preparing federal tax returns for others, the Justice Department announced today.
The civil injunction order prohibits Syed N. Ahmed and his companies from acting as federal tax return preparers and from owning, operating, or profiting from tax-return preparation businesses. Ahmed and his companies agreed to the entry of the injunction but did not admit the allegations in the civil complaint against them.
According to the complaint, Ahmed and his businesses operated at least 10 Liberty Tax Service franchise locations in the Detroit, Michigan, and Chicago, Illinois, areas. The complaint alleged that the defendants’ employees prepared federal income tax returns containing false information in order to illegally generate higher tax refunds or higher refundable credits for their customers. The government alleged that defendants improperly obtained inflated tax refunds and refundable credits for customers by preparing tax returns that included, among other things, false or inflated Schedule C (Profit or Loss From Business) income and expenses, bogus dependents, false filing statuses, improper education credits and false itemized deductions.
The lawsuit further alleged that the defendants’ Liberty Tax franchises prepared 17,759 federal income tax returns between 2010 and 2013. According to the complaint, defendants’ conduct cost the U.S. Treasury $2.8 million, based on audit adjustments the Internal Revenue Service (IRS) made to tax returns for 2010 to 2013 prepared and filed by Ahmed’s Liberty Tax Service franchises. The total harm to the government could be much higher, the complaint states.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2015. 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.
U.S. Attorney Alicia Limtiaco Attends 2015 NAPABA ConventionRead the Press Release
ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), was invited to participate as a panel member at the 2015 National Asian Pacific American Bar Association (NAPABA) Convention which was held on November 3-6, 2015 in New Orleans. U.S. Attorney Florence Nakakuni for the District of Hawaii and U.S. Attorney Carter Stewart for the Southern District of Ohio were also invited as panel members. The panel was entitled, “U.S. Attorney Roundtable: Understanding The Federal Prosecutor,” and described as follows: Post-financial crisis, government regulators have placed renewed focus on criminal and civil enforcement. Federal prosecutions and regulatory actions are among the most challenging matters affecting your company or law firm. Successful resolution of these cases requires an understanding of the thinking and motivation of the federal regulator prosecuting your case. In an inaugural panel for NAPABA, U.S. Attorneys Carter Stewart (S.D. Ohio), Florence Nakakuni (D. Hawaii) and Alicia Limtiaco (D. Guam, D. NMI) will discuss the process, and the factors they consider, in initiating and resolving cases handled in their district. The panelists will also discuss their backgrounds, management policies, and developments at the Department of Justice.
NAPABA is the national voice for the Asian Pacific American legal profession. They promote justice, equity, and opportunity for Asian Pacific Americans. They foster professional development, legal scholarship, advocacy and community involvement. Since its inception in 1988, NAPABA has been at the forefront of national and local activities in the areas of civil rights, combating anti-immigrant backlash and hate crimes, increasing the diversity of the federal and state judiciaries, and professional development.
NAPABA represents the interests of over 40,000 attorneys and approximately 70 national, state, and local bar associations. Its members include solo practitioners, large firm lawyers, corporate counsel, legal services and non-profit attorneys, and lawyers serving at all levels of government. NAPABA engages in legislative and policy advocacy, promotes APA political leadership and political appointments, and builds coalitions within the legal profession and the community at large. NAPABA also serves as a resource for government agencies, members of Congress, and public service organizations about APAs in the legal profession, civil rights, and diversity in the courts.
Photos taken at the Convention:
U.S. Attorney Alicia Limtiaco with U.S. Attorney Carter Stewart from the Southern District of Ohio and U.S. Attorney Florence Nakakuni from the District of Hawaii U.S. Attorney Alicia Limtiaco with NAPABA 2015 President Jin Y. Hwang U.S. Attorney Alicia Limtiaco with U.S. Department of Justice Community Relations Service Director Grand H. LumTexas Resident Convicted of Tax FraudRead the Press Release
Manager of North Carolina Tax Preparation Business Underreported Net Profits
A Fulshear, Texas, woman was convicted yesterday in the U.S. District Court for the Southern District of Texas, after a four-day trial, of three counts of filing false federal tax returns and one count of corruptly endeavoring to obstruct the Internal Revenue Service (IRS), announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
According to the evidence presented at trial, Tamny Denise Westbrooks, 52, was the day-to-day manager of JATS Tax Service, a tax preparation business located in Charlotte, North Carolina. Westbrooks, who worked for JATS as an independent contractor, underreported her net profits by inflating her business expenses for tax years 2007, 2008 and 2009. She also obstructed and impeded the IRS by filing false tax returns for herself and others and by paying workers in cash while failing to file the required W-2 or 1099 forms reporting their compensation.
U.S. District Judge Ewing Werlein Jr. of the Southern District of Texas set Westbrooks’ sentencing for March 18, 2016. Westbrooks faces a statutory maximum sentence of three years in prison and a fine of up to $250,000 for each count of conviction.
Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case and Trial Attorneys Sean P. Beaty and Mara A. Strier of the Justice Department’s Tax Division, who are prosecuting the case. Acting Assistant Attorney General Ciraolo also thanked the U.S. Attorney’s Office of the Southern District of Texas for their substantial assistance.
San Diego Federal Court Enjoins Man Posing as Attorney and CPA from Promoting Bogus Tax Schemes, Preparing ReturnsRead the Press Release
A federal court in San Diego, California, has permanently barred Lawrence Preston Siegel from preparing federal tax returns for others, providing tax advice for compensation or any promise of compensation and working for any business that provides tax advice or prepares tax returns, the Justice Department announced. Siegel is also a fugitive from the State of California, wanted on a 20-count criminal complaint, filed in 2014, charging him with Medi-Cal fraud, grand theft, forgery, identity theft, financial dependent adult abuse and tax evasion.
Judge Gonzalo P. Curiel of the U.S. District Court for the Southern District of California entered the permanent injunction on Nov. 9, after Siegel failed to appear to defend the civil case.
The civil complaint alleges that Siegel impersonated licensed California attorneys and used multiple aliases, including Larry Lave and Yehuda Lave, to falsely represent that he is a licensed attorney and CPA in order to recruit customers and implement his tax fraud schemes. According to the complaint, Siegel resigned from the California bar in 1994 and lost his CPA license in 1997 after he was convicted of federal crimes, including tax evasion. Siegel allegedly never regained either accreditation.
The complaint alleges that among his tax fraud schemes, Siegel falsely advised his customers, typically high earners who own profitable businesses, that they can establish companies in another state, usually Nevada, then treat their California home as an out-of-state corporate office. Siegel claimed that doing so would transform a vast array of non-deductible personal expenses into tax deductible business expenses, according to the complaint. The complaint details how Siegel boasted about this tax fraud scheme in e-mails, including one where Siegel falsely claimed that his customers are entitled to free housing as tax-free compensation from their out-of-state companies and that “[t]he housing can [b]e luxurious and cost thousands a month” because “[t]here is an assumption that corporations don’t waste money.”
In conjunction with his tax fraud schemes, Siegel allegedly prepared customer tax returns. In some instances, Siegel filed tax returns without reviewing them with his customers or obtaining their permission to file them, according to the complaint. Siegel is alleged to have fraudulently claimed customers’ personal purchases as deductible business expenses on tax returns he prepared. For example, the complaint states that Siegel deducted on one couple’s tax returns purchases at Tiffany & Company, Royal Caribbean Cruise Lines, Louis Vuitton and Princess Cruise Lines. Siegel allegedly attempted to conceal these fraudulent deductions from the Internal Revenue Service (IRS) by lumping them together and reporting them as large expenses for “supplies” or “medical records and supplies.”
According to the complaint, Siegel also attempted to delay and obstruct IRS examinations of his customers who entered into Siegel’s tax fraud schemes. Siegel allegedly provided false corporate documents to the IRS in order to deceive auditors, produced bogus contracts to IRS auditors and lied to IRS officials during U.S. Tax Court litigation when asked to confirm information on behalf of his customers.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2014. The IRS has some tips on their website for choosing a tax preparer. In the past decade, the 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 website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Justice Department Requires Springleaf to Divest 127 Branches in 11 States in Order to Complete Acquisition of OneMain FinancialRead the Press Release
The Department of Justice announced today that it will require Springleaf Holdings, Inc. (Springleaf) to divest 127 branches with over $600 million in loan receivables in order for Springleaf to proceed with its proposed $4.25 billion acquisition of OneMain Financial Holdings, LLC (OneMain) from CitiFinancial Credit Company, a wholly owned subsidiary of Citigroup, Inc.
The Antitrust Division, along with the offices of seven state attorneys general, filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed transaction. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit. The participating state attorneys general offices represent Colorado, Idaho, Pennsylvania, Texas, Virginia, Washington and West Virginia.
“Personal installment loans are often a critical lifeline for borrowers with limited credit options, allowing them to pay for unexpected expenses or to consolidate debts,” said Assistant Attorney General Bill Baer, of the Justice Department’s Antitrust Division. “Today’s proposed settlement will ensure that subprime borrowers in over 100 local markets across the United States continue to enjoy the benefits of competition when they seek these important loan products.”
Without the divestiture, subprime borrowers seeking personal installment loans would face fewer choices for these important loan products in local markets located in Arizona, California, Colorado, Idaho, North Carolina, Ohio, Pennsylvania, Texas, Virginia, Washington and West Virginia.
Personal installment loans to subprime borrowers are fixed-rate, fixed-term and fully amortized loan products that are marketed to consumers who have limited access to credit from traditional banking institutions. According to the complaint, Springleaf and OneMain are the two largest providers of personal installment loans to subprime borrowers in the United States. Springleaf and OneMain specialize in the same products (large installment loans typically ranging from $3,000 to $6,000), target the same customer base, and have a large degree of geographic overlap between their branch networks.
Specifically, the complaint alleges that in local markets within and around 126 towns and municipalities in eleven states, Springleaf and OneMain operate branches in close proximity to one another – often within five miles – and face few, if any, other competitors. According to the complaint, the loss of head-to-head competition between Springleaf and OneMain would result in a reduction of consumer choice that likely would drive subprime borrowers to much more expensive forms of credit or leave them with no reasonable alternative.
Under the terms of the proposed consent decree, Springleaf must divest 127 branches in eleven states to Lendmark Financial Services or to an alternative buyer approved by the United States. The divestiture includes all active loans originated or serviced at the divested branches and other assets associated with the branches. Divestiture of the branches to Lendmark will create a new competitor in the provision of personal installment loans to subprime borrowers in Arizona, California, Colorado, Idaho, Ohio, Texas, and Washington. In North Carolina, Pennsylvania, Virginia, and West Virginia, the divestiture will establish Lendmark as a new competitor in some local areas and enhance its competitive presence in others. Taken together, the divestitures will remedy the loss of competition alleged in the department’s complaint.
Springleaf is a Delaware corporation with its headquarters in Evansville, Indiana. Springleaf operates approximately 830 branches in 27 states. Springleaf has a consumer loan portfolio that totals $4 billion.
OneMain is a Delaware limited liability company with its headquarters in Baltimore. OneMain operates approximately 1,139 branches in 43 states. OneMain is a subsidiary of CitiFinancial Credit Company, a holding company that is a wholly-owned subsidiary of Citigroup. OneMain has a consumer loan portfolio that totals $8.4 billion.
As required by the Tunney Act, the proposed consent decree, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.
Springleaf Complaint (596.89 KB)
Springleaf APSO (352.74 KB)
Springleaf CIS (634.75 KB)
Springleaf PFJ (735.57 KB)
Justice Department Announces Standard Chartered Bank (Switzerland) SA Reaches Resolution Under Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that Standard Chartered Bank (Switzerland) SA, en liquidation (SCB Switzerland), reached a resolution under the department’s Swiss Bank Program.
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
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Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
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Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreement signed today, SCB Switzerland agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay penalties in return for the department’s agreement not to prosecute this bank for tax-related criminal offenses.
SCB Switzerland is a private bank with a single office located in Geneva, Switzerland. It is a wholly owned subsidiary of Standard Chartered PLC, a British multinational banking and financial services company headquartered in London. SCB Switzerland joined the Standard Chartered group of entities (the Standard Chartered Group) in May 2008 when Standard Chartered PLC acquired American Express Bank Ltd. As part of that acquisition, Standard Chartered Group acquired American Express Bank (Switzerland) SA, a private bank incorporated in Switzerland in 1987, which thereafter operated under the name SCB (Switzerland) SA.
In early 2014, the Standard Chartered Group decided to cease its Swiss private banking operations for commercial reasons. SCB Switzerland is now in voluntary formal liquidation. Subject to Swiss regulatory approval, SCB Switzerland expects to return its banking license at the end of 2015, and then the entity will continue to exist as a corporation in liquidation until at least the end of 2018, without banking status or supervision by Swiss Financial Market Supervisory Authority FINMA and with no operations other than completing the wind down.
Through its employees and others, SCB Switzerland knew or should have known that some of the U.S. persons who opened or maintained accounts at SCB Switzerland may not have complied with their U.S. income tax and reporting obligations. By establishing and maintaining such accounts, SCB Switzerland provided assistance to certain U.S. persons in evading their U.S. tax obligations. Among other things, SCB Switzerland:
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Agreed to hold account statements and other mail relating to some U.S.-related accounts;
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Provided account statements and other documentation to the accountholder which contained only the account number in order to further insure the secrecy of the identity of the accountholder; and
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Accepted and included in its account records Internal Revenue Service (IRS) Forms W-8BEN (or equivalent documents) provided by the directors of the offshore companies that falsely represented that such companies were the beneficial owners of the assets in those accounts for U.S. federal income tax purposes.
SCB Switzerland opened and maintained accounts for certain U.S. persons in the name of structures, including trusts created by American Express and inherited and maintained by affiliates of SCB Switzerland, which served as the nominal accountholders of bank accounts that held assets that, in reality, belonged to U.S. persons. SCB Switzerland adopted the Advisory Center/Booking Center Model from American Express Bank. This method allowed clients to book and hold accounts in any of Standard Chartered Group’s booking centers, including Geneva, while working with relationship managers at other locations throughout the world. The Group also acquired a trust center from American Express Bank. Trust services were available to eligible clients who wished to set up trusts or private investment companies. The trust centers were located in Guernsey, Singapore and the Cayman Islands. A client could create a trust structure in any one of the trust centers while opening an account in another booking center and working with a relationship manager in another advisory center.
SCB Switzerland maintained one account held by a British Virgin Islands private investment company, of which the beneficial owner was a U.S. citizen. The beneficial owner had provided SCB Switzerland with a false W-8BEN, and SCB Switzerland was unaware of the U.S. citizenship of the beneficial owner until 2010. In 2010, a compliance officer discovered the beneficial owner’s U.S. citizenship through a periodic review of the account that included an Internet search. Nevertheless, SCB Switzerland maintained the account for approximately two years after discovering that the beneficial owner was a U.S. citizen.
Since Aug. 1, 2008, SCB Switzerland held 22 U.S.-related accounts, comprising a peak of aggregated assets under management of $33.1 million. SCB Switzerland will pay a penalty of $6.337 million.
In accordance with the terms of the Swiss Bank Program, SCB Switzerland mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. While U.S. accountholders at SCB Switzerland who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement. With today’s announcement of this non-prosecution agreement, noncompliant U.S. accountholders at SCB Switzerland must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division thanked the IRS and in particular, IRS-Criminal Investigation and the IRS Large Business & International Division for their substantial assistance. Ciraolo also thanked Lisa L. Bellamy, who served as counsel on this matter, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis and Attorney Kimberle E. Dodd of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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Chief Judge Diane P. Wood Receives the Justice Department's 2015 John S. Sherman AwardRead the Press Release
Judge Wood Recognized for Her Lifetime Contributions to the Development of Antitrust Law and Policy
Assistant Attorney General Bill Baer presented the 2015 John S. Sherman Award – the department’s highest antitrust honor – to Chief Judge Diane P. Wood of the U.S. Court of Appeals for the Seventh Circuit. Judge Wood is a leading antitrust scholar and served as a Deputy Assistant Attorney General in the department’s Antitrust Division between 1993 and 1995.
The John Sherman Award is named after Senator John Sherman, who authored our nation’s first antitrust law – the Sherman Act – in 1890. Established in 1994, the Sherman Award recognizes individuals whose commitment to sound antitrust enforcement and policy have made “substantial contributions to the protection of American consumers and the preservation of economic liberty.”
The award was presented to Judge Wood during a ceremony in the Great Hall of the Robert F. Kennedy Department of Justice building. “I cannot think of a more deserving recipient of the department’s highest antitrust honor,” said Deputy Attorney General Sally Quillian Yates. “Chief Judge Wood has consistently demonstrated her commitment to the legal profession and she has been a trailblazer throughout her career for those who aspire to protect economic freedom and opportunity by promoting free and fair competition in the marketplace.”
In presenting the award, Assistant Attorney General Baer said: “Judge Wood has deepened our understanding of antitrust law and competition policy – from the bench, from the halls of academia and here, as part of the Antitrust Division.” He also said that Judge Wood “is the author of a number of influential antitrust opinions,” a “noted scholar” who co-authors “one of the seminal casebooks in antitrust,” and, while at the Antitrust Division, “was the predominate force” behind the revised Enforcement Guidelines for International Operations that to this day “serve as a central tool for [the Division’s] international enforcement efforts.”
Judge Wood is the eleventh person to receive the Sherman Award and the first female recipient. Judge Wood was also one of the first women to clerk on the U.S. Supreme Court when she clerked for Justice Harry Blackman in 1976, and in 1990 she was the first woman to be honored with an endowed chair at the University of Chicago Law School.
This year’s ceremony marked the 125th anniversary of the passage of the Sherman Act, which, as the Supreme Court has observed, is the “Magna Carta of free enterprise” and “as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedom.”
Previous recipients of the Sherman Award include James F. Rill (2012), Robert Pitofsky (2010), Herbert Hovenkamp (2008), Robert H. Bork (2005), Richard A. Posner (2003), Milton Handler (1998), Thomas Kauper and William Baxter (1996), Phillip Areeda (1995), and Howard Metzenbaum (1994).
Attorney General Loretta E. Lynch Statement on the Attacks in ParisRead the Press Release
Attorney General Loretta E. Lynch released the following statement on today’s attacks in Paris:
“We stand in solidarity with France, as it has stood with us so often in the past. This is a devastating attack on our shared values and we at the Department of Justice will do everything within our power to assist and work in partnership with our French law enforcement colleagues.”
Antiques Dealer Sentenced in Manhattan to Two Years in Prison for Smuggling Cups Made from Rhinoceros HornsRead the Press Release
Linxun Liao, 35, a citizen of Canada, was sentenced yesterday in Manhattan federal court to two years in prison for his role in a wildlife trafficking scheme in which he purchased and smuggled 16 “libation cups” carved from rhinoceros horns and worth more than $1 million from the United States to China, announced Assistant Attorney General John C. Cruden for the Environment and Natural Resources Division of the Department of Justice, U.S. Attorney Preet Bharara of the Southern District of New York and Director Dan Ashe of the U.S. Fish and Wildlife Service. Liao pleaded guilty on June 30, 2015, to a two-count information, admitting to illegally smuggling rhinoceros horn objects from the United States.
“This prosecution is the result of a vigorous and ongoing investigation into traffickers profiting from endangered and precious wildlife species,” said Assistant Attorney General Cruden. “We must ensure that the market for antiques and alleged antiques does not also contribute to the extinction of these iconic animals, which could disappear in our lifetimes if we do not act now to stop this illegal trade.”
“This defendant flouted the laws established to protect endangered wildlife,” said U.S. Attorney Bharara. “Willfully failing to declare the nature of the shipments or obtain required permits, Liao broke laws that protect rhinoceros and other magnificent species threatened with extinction. He has learned the cost of his illegal conduct.”
“Each of the ceremonial cups that Liao trafficked represents one step closer to extinction for the rhinoceros, which are steadily being wiped out by poachers for the illegal rhino horn market,” said Director Ashe. “The seriousness of this crime and others like it and their consequences for the world’s most imperiled species are what drives our efforts to root out and shut down illegal operators like Mr. Liao. This sentence will serve as a strong warning that we are going to find, arrest and prosecute anyone engaged in this sort of activity and make sure they are no longer able to deprive our children and grandchildren of their wildlife inheritance.”
According to the information, other documents filed in federal court in Manhattan and statements made at various proceedings in this case, including today’s sentencing:
Liao was arrested in February 2015 as part of “Operation Crash,” a nationwide crackdown on illegal trafficking in rhinoceros horns. Liao was a partner in an Asian art and antiques business located in China. Liao’s role was to purchase items, including wildlife items, in the United States and arrange for their export to China. Between in or about March 2012 and May 2013, Liao made online purchases of 16 rhinoceros horn products, more specifically libation cups, from auction houses in the United States, including in Manhattan, which he then smuggled to China without the required declarations and permits. In order to make these purchases, Liao used an address of his family members in New Jersey, the New Jersey location, because he knew that absent a domestic address, the auction houses would not ship him the rhinoceros horn as well as ivory that Liao had acquired. Liao then utilized a Manhattan-based courier service to illegally export the merchandise to China. Liao did not declare the rhinoceros exports to the U.S. Fish and Wildlife Service or obtain the required permits despite his knowledge of the need to do so. Liao closely coordinated his efforts with co-conspirators who sold the items for a profit at their antique business in China. The market value of the rhinoceros libation cups in this case is more than $1 million.
The rhinoceros is an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. All species of rhinoceros are protected under U.S. and international law. Since 1976, trade in rhinoceros horn has been regulated under CITES, a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets. Rhinoceros are also protected under the U.S. Endangered Species Act, which further regulates trade and transport.
In addition to his prison term, Liao was also ordered two years of supervised release, to forfeit $1 million and 304 pieces of carved ivory found during a search of the New Jersey location. Liao was also banned from future involvement in the wildlife trade.
Operation Crash is a continuing investigation by the Department of the Interior’s Fish and Wildlife Service, in coordination with the Department of Justice. A “crash” is the term for a herd of rhinoceros. Operation Crash is an ongoing effort to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns.
Assistant Attorney General Cruden and U.S. Attorney Bharara thanked the U.S. Fish and Wildlife Service for its outstanding work in this investigation. This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Jennifer Gachiri and Senior Litigation Counsel Richard A. Udell with the Environmental Crimes Section of the Department of Justice are in charge of the prosecution.
In addition to his prison term, Liao was also ordered two years of supervised release, to forfeit $1 million and 304 pieces of carved ivory found during a search of the New Jersey location. Liao was also banned from future involvement in the wildlife trade.
Operation Crash is a continuing investigation by the Department of the Interior’s Fish and Wildlife Service, in coordination with the Department of Justice. A “crash” is the term for a herd of rhinoceros. Operation Crash is an ongoing effort to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns.
Assistant Attorney General Cruden and U.S. Attorney Bharara thanked the U.S. Fish and Wildlife Service for its outstanding work in this investigation. This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Jennifer Gachiri and Senior Litigation Counsel Richard A. Udell with the Environmental Crimes Section of the Department of Justice are in charge of the prosecution.
Alstom Sentenced to Pay $772 Million Criminal Fine to Resolve Foreign Bribery ChargesRead the Press Release
Represents Largest-Ever Criminal Foreign Bribery Fine
Alstom S.A., a French power and transportation company, was sentenced today to pay a $772,290,000 fine to resolve criminal charges related to a widespread corruption scheme involving at least $75 million in secret bribes paid to government officials in countries around the world, including Indonesia, Saudi Arabia, Egypt, the Bahamas and Taiwan.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, First Assistant U.S. Attorney Michael J. Gustafson the District of Connecticut and Assistant Director in Charge Paul M. Abbate of the FBI’s Washington Field Office made the announcement.
Alstom was sentenced by U.S. District Judge Janet Bond Arterton of the District of Connecticut. Alstom pleaded guilty on Dec. 22, 2014, to a two-count criminal information charging the company with violating the Foreign Corrupt Practices Act (FCPA) by falsifying its books and records and failing to implement adequate internal controls.
In addition, Alstom Network Schweiz AG, formerly Alstom Prom AG (Alstom Prom), Alstom’s Swiss subsidiary, which pleaded guilty on Dec. 22, 2014, to a criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA, was also sentenced today pursuant to its plea agreement. Alstom Power Inc. and Alstom Grid Inc., formerly Alstom T&D Inc., two U.S. subsidiaries, both entered into deferred prosecution agreements on Dec. 22, 2014, admitting that they conspired to violate the anti-bribery provisions of the FCPA.
According to the companies’ admissions, Alstom, Alstom Prom, Alstom Power and Alstom T&D, through various executives and employees, paid bribes to government officials and falsified books and records in connection with power, grid and transportation projects for state-owned entities around the world, including in Indonesia, Egypt, Saudi Arabia, the Bahamas and Taiwan. In Indonesia, for example, Alstom, Alstom Prom and Alstom Power paid bribes to government officials—including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara, the state-owned electricity company in Indonesia—in exchange for assistance in securing several contracts to provide power-related services valued at approximately $375 million. In total, Alstom paid more than $75 million to secure more than $4 billion in projects around the world, with a profit to the company of approximately $300 million.
Alstom and its subsidiaries also attempted to conceal the bribery scheme by retaining consultants who purportedly provided consulting services on behalf of the companies, but who actually served as conduits for corrupt payments to the government officials. Internal Alstom documents refer to some of the consultants in code, including “Mr. Geneva,” “Mr. Paris,” “London,” “Quiet Man” and “Old Friend.”
The sentence, which is the largest criminal fine ever imposed in an FCPA case, reflects a number of factors, including: Alstom’s failure to voluntarily disclose the misconduct, even though it was aware of related misconduct at a U.S. subsidiary that previously resolved corruption charges with the department in connection with a power project in Italy; Alstom’s refusal to fully cooperate with the department’s investigation for several years; the breadth of the companies’ misconduct, which spanned many years, occurred in countries around the globe and in several business lines, and involved sophisticated schemes to bribe high-level government officials; Alstom’s lack of an effective compliance and ethics program at the time of the conduct; and Alstom’s prior criminal misconduct, including conduct that led to resolutions with various other governments and the World Bank.
After the department publicly charged several Alstom executives, however, Alstom began providing thorough cooperation, including assisting the department’s prosecution of other companies and individuals.
To date, the department has announced charges against five corporate executives for alleged corrupt conduct involving Alstom. Frederic Pierucci, Alstom’s former vice president of global boiler sales, pleaded guilty on July 29, 2013, to conspiring to violate the FCPA and a charge of violating the FCPA for his role in the Indonesia bribery scheme. David Rothschild, Alstom Power’s former vice president of regional sales, pleaded guilty on Nov. 2, 2012, to conspiracy to violate the FCPA. William Pomponi, Alstom Power’s former vice president of regional sales, pleaded guilty on July 17, 2014, to conspiracy to violate the FCPA. Lawrence Hoskins, Alstom’s former senior vice president for the Asia region, was charged in an indictment in connection with the Indonesia bribery scheme, and is pending trial in the District of Connecticut in April 2016. The charges against Hoskins are merely allegations, and he is presumed innocent unless and until proven guilty. The high-ranking member of Indonesian Parliament was also convicted in Indonesia of accepting bribes from Alstom, and is currently serving a three-year prison term. In addition, Marubeni Corporation, which partnered with Alstom on the Indonesia project, pleaded guilty on March 19, 2014 to a criminal information charging conspiracy to violate the FCPA and seven counts of violating the FCPA, and was sentenced on May 15, 2014, to pay an $88 million criminal fine.
In connection with a corrupt scheme in Egypt, Asem Elgawhary, the general manager of an entity working on behalf of the Egyptian Electricity Holding Company, a state-owned electricity company, was the fifth individual charge and pleaded guilty on Dec. 4, 2014, in the District of Maryland to mail fraud, conspiring to launder money and tax fraud for accepting kickbacks from Alstom and other companies, and was sentenced on March 23, 2015, to serve 42 months in prison and forfeit approximately $5.2 million in proceeds.
This case is being investigated by the FBI’s Washington Field Office, with assistance from the FBI’s Meriden, Connecticut, Resident Agency. The department appreciates the significant cooperation provided by its law enforcement colleagues in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Switzerland Office of the Attorney General and the United Kingdom’s Serious Fraud Office, as well as authorities in France, Germany, Italy, Singapore and Taiwan.
The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut, together with Assistant U.S. Attorney Zach Intrater of the District of New Jersey on the investigation of Alstom T&D, and Assistant U.S. Attorney David I. Salem of the District of Maryland on the investigation of Asem Elgawhary. The Criminal Division’s Office of International Affairs also provided substantial assistance.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Seymour Resident Pleads Guilty to Producing Child PornographyRead the Press Release
KNOXVILLE, Tenn. – On Nov. 12, 2015, Naomi Jean Justice, 23, of Seymour, Tenn., pleaded guilty in U.S. District Court for the Eastern District of Tennessee, Knoxville, to using a pre-pubescent minor to produce child pornography. Sentencing has been set for 1:00 p.m., Mar. 31, 2016.
Justice faces a minimum of 15 years in prison and a maximum of up to 30 years prison, as well as supervised release following incarceration, restitution, and fines. She will also be required to register as a sex offender in any state in which she resides, works, or attends school.
In the plea agreement on file with the U.S. District Court Clerk, Justice admitted that in July 2014 she used a pre-pubescent minor to engage in sexually explicit conduct for the purpose of producing a picture of the conduct with her cellular telephone. She then sent the picture to someone in North Carolina.
This investigation was conducted by the Federal Bureau of Investigation. Assistant U.S. Attorney Matthew Morris represented the United States.
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 the Criminal Division's Child Exploitation and Obscenity Section, 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.projectsafechildhood.gov.
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Justice Department Announces Two Banks Reach Resolutions Under Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that Banque Internationale à Luxembourg (Suisse) SA (BIL Switzerland) and Zuger Kantonalbank (ZGKB) have reached resolutions under the department’s Swiss Bank Program. These banks will collectively pay penalties totaling more than $13 million and continue to cooperate with the department.
“The agreements reached today reflect the department’s continued commitment to reaching resolutions with those Swiss banks that satisfy the requirements of the Program, including detailed disclosures of their illegal conduct in connection with U.S.-related accounts,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. “Taxpayers are on notice that attempting to hide their foreign accounts in insurance wrappers and other such vehicles in order to evade their U.S. tax obligations is criminal conduct, and we are vigorously pursuing these cases.”
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
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Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
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Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreements signed today, each bank agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay penalties in return for the department’s agreement not to prosecute these banks for tax-related criminal offenses.
BIL Switzerland is a Swiss private bank with offices in Zurich and Geneva. BIL Switzerland is wholly owned by Banque Internationale à Luxembourg, a Luxembourg bank founded in 1856. In 1996, BIL Switzerland’s ultimate parent underwent a merger to form the Dexia Group, headquartered in Belgium. In connection with this merger, BIL Switzerland was renamed Dexia Privatbank (Schweiz) AG. In 2011, the Dexia Group dissolved, and BIL Switzerland came under new ownership, at which time it reverted to the BIL Switzerland name. BIL Switzerland provided private banking and asset management services principally through private bankers based in Zurich, Geneva and Lugano, Switzerland.
BIL Switzerland opened, maintained, serviced and profited from accounts that were held or beneficially owned by U.S. taxpayer clients. BIL Switzerland opened several accounts for U.S. taxpayers who were leaving other Swiss banks that were being investigated by the department, including UBS and Credit Suisse.
BIL Switzerland offered a variety of traditional Swiss banking services – including hold mail and numbered accounts – that assisted and enabled certain of its U.S. taxpayer clients to conceal their assets and income, file false federal tax returns with the Internal Revenue Service (IRS) and evade their U.S. tax obligations. BIL Switzerland also provided Swiss travel cash cards to U.S. clients, enabling them to access and spend funds from undeclared accounts in the United States.
In the period since Aug. 1, 2008, BIL Switzerland maintained at least 145 accounts, comprising an aggregate value of more than $64 million, that were owned by insurance companies and which held assets relating to insurance products that were issued to U.S. taxpayer clients of the respective insurance companies. Such accounts, known commonly as insurance-wrappers, were titled in the names of insurance companies, but were funded with assets that were transferred to the accounts for the beneficial owners of the insurance products (the policy holders). The assets in these accounts, while titled in the names of insurance companies, were managed by external asset managers for the ultimate benefit of the policy holders, through powers of investment that were given by the insurance companies to the external asset managers.
The assets of some insurance-wrapper accounts originated from undeclared accounts at BIL Switzerland. These undeclared accounts were closed, and their assets were transferred to newly-opened accounts at BIL Switzerland in the name of an insurance company and managed by various external asset managers. At account opening, the new accounts held the same assets that the U.S. taxpayer clients had previously held directly at BIL Switzerland. One of the undeclared accounts did not hold U.S. securities, but the recipient insurance-wrapper account acquired U.S. securities at a later date.
In addition to the 145 insurance-wrapped accounts, BIL Switzerland also acted as a custodian to more than 30 U.S.-related accounts, comprising an aggregate value of approximately $83 million, that were maintained by external asset managers for U.S. taxpayers.
BIL Switzerland closed U.S.-related accounts in ways that concealed the U.S. beneficial owners of those accounts. Upon request of the accountholders, BIL Switzerland removed the names of its U.S. taxpayer clients from joint accounts, leaving only non-U.S. persons as accountholders, or moved their assets into new BIL Switzerland accounts that were held in the names of non-U.S. persons, including non-U.S. relatives. BIL Switzerland thereafter treated the recipient accounts as non-U.S.-related accounts, despite some relationship managers continuing to take and execute instructions given directly from the U.S. taxpayers formerly associated with the accounts, or the U.S. taxpayer clients retaining effective beneficial ownership over the transferred funds.
BIL Switzerland maintained three accounts, beneficially owned by two different U.S. taxpayers, that held U.S. securities in the names of three offshore entities. The U.S. taxpayer’s interest in each of these accounts was not reported to the IRS even though BIL Switzerland knew or had reason to know that such offshore entity accounts were operated without strict adherence to corporate formalities. Two of the offshore entities were organized in the British Virgin Islands, and the third was organized in the United Arab Emirates. In effect, these offshore entities were used by the U.S. taxpayer beneficial owners as sham, conduit or nominee entities. BIL Switzerland relationship managers associated with these accounts, while outside the United States:
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Met with or took instructions from the U.S. taxpayer beneficial owners of these offshore entity accounts, instead of the directors or other authorized parties of the account;
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Acted on instructions from an external asset manager, who received them directly from a U.S. taxpayer, without first knowing whether corporate formalities were observed;
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Followed instructions that allowed a U.S. taxpayer to withdraw cash directly from the account, despite such withdrawals being contrary to the corporate purposes of the entity that owned the account; and
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Executed transactions that allowed a U.S. taxpayer to make several significant wire transfers to unaffiliated Swiss banks for the U.S. taxpayer’s personal use or benefit, without first knowing or inquiring whether corporate formalities were satisfied.
BIL Switzerland accepted certifications from the directors of these entities that falsely declared that the entity was the beneficial owner of the assets deposited in the accounts.
From 2001 through February 2010, BIL Switzerland had a wholly-owned subsidiary, Experta AG, a Swiss company. Experta AG provided a number of services, including accounting services, legal and tax advice, as well as the creation and management of entities such as offshore corporations, trusts and foundations. During the time that Expert AG was affiliated with BIL Switzerland, Experta AG provided services that assisted and enabled certain U.S. taxpayers in the concealment of their assets and income and in the evasion of their U.S. tax obligations.
BIL Switzerland has fully cooperated with the department in relation to the Swiss Bank Program. Among other things, BIL Switzerland required its relationship managers to submit declarations setting forth their knowledge concerning the U.S. taxpayer status of each account that they managed. BIL Switzerland also reviewed leaver lists from other banks to identify additional U.S.-related accounts.
Since Aug. 1, 2008, BIL Switzerland maintained 267 U.S.-related accounts having a maximum aggregate dollar value in excess of $182 million. BIL Switzerland will pay a penalty of $9.71 million.
ZGKB was founded in 1892 and is headquartered in Zug, Switzerland. Organized under the laws of the canton of Zug, all of ZGKB’s 14 branches are located within the canton. The canton owns 51 percent of ZGKB and guarantees its deposits.
From at least 2001 to 2012, ZGKB opened and maintained accounts for certain of its U.S. clients while aware of the risk that such clients were not declaring income earned in these accounts or the existence of such accounts. In doing so, ZGKB ignored red flags of wrongful intent on the part of U.S. clients who sought to open such accounts. ZGKB offered a variety of traditional Swiss banking services – including hold mail and numbered accounts – that it knew could assist, and did assist, U.S. taxpayers in concealing their identity from the IRS by minimizing the paper trail associated with their undeclared assets and income. ZGKB also accepted funds from a small number of UBS accountholders who had likely been forced to close their UBS accounts because of a U.S. tax-fraud investigation of UBS.
ZGKB assisted its U.S. clients in sending money to themselves, relatives, business partners, or other businesses in the United States by issuing checks drawn on a ZGKB account at a bank in New York. In one case, the accountholder requested and received checks in excess of $90,000 on several occasions. ZGKB cashed out the balances of U.S. residents’ accounts in substantial amounts. In one instance, at the request of the U.S. client, ZGKB permitted the client to withdraw the entire account balance of approximately $665,000 in cash. For several U.S. accountholders, ZGKB transferred funds from their accounts in multiple withdrawals – for example, 12 in one month – of amounts just under $10,000. In at least one case, ZGKB was instructed to do so in order to evade a report to the IRS.
Since Aug. 1, 2008, ZGKB maintained and serviced 434 U.S.-related accounts having a maximum aggregate dollar value of $220 million. ZGKB will pay a penalty of $3.798 million.
In accordance with the terms of the Swiss Bank Program, each bank mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations. While U.S. accountholders at these banks who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.
Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts. On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement. With today’s announcement of these non-prosecution agreements, noncompliant U.S. accountholders at these banks must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.
“Today’s resolutions with Banque Internationale á Luxembourg (Suisse) SA and Zuger Kantonalbank under the Swiss Bank Program send a clear message,” said acting Deputy Commissioner International David Horton of the IRS Large Business & International Division. “U.S. taxpayers cannot evade their taxes by setting up undisclosed offshore accounts. In partnership with the Department of Justice, we will continue our successful efforts to track these taxpayers and their hidden accounts down.”
Acting Assistant Attorney General Ciraolo thanked the IRS and in particular, IRS-Criminal Investigation and the IRS Large Business & International Division for their substantial assistance. Ciraolo also thanked Paul G. Galindo and Brian D. Bailey, who served as counsel on these matters, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer, Senior Litigation Counsel Nanette L. Davis and Attorney Kimberle E. Dodd of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
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Executive Office for Immigration Review Announces Six New Assistant Chief Immigration JudgesRead the Press Release
FALLS CHURCH, Va. – The Executive Office for Immigration Review (EOIR) today announced the appointment of six new assistant chief immigration judges (ACIJs). ACIJs are responsible for overseeing the operations of the immigration courts or program portfolio to which they are assigned. Their official assignments will be announced in the coming months.
The new ACIJs will help EOIR focus supervisory functions closer to the immigration courts around the country, which is particularly important given the growth in the immigration judge corps expected over the coming months. “While the immigration courts continue to face incredible strain on their resources under an ever growing backlog of cases, we must take action to fully exercise the abilities of our staff at all levels,” said Acting Chief Immigration Judge Print Maggard. “The placement of each of these dedicated immigration judges into a management role will allow EOIR to increase immigration court efficiencies through organizational change.” In addition to their management responsibilities, the new ACIJs will continue to hear cases.
Biographical information for each ACIJ follows.
Mary Cheng, Assistant Chief Immigration Judge
Mary Cheng was appointed as an assistant chief immigration judge in November 2015. Judge Cheng received a Bachelor of Arts degree in 1993 from New York University and a Juris Doctor in 1997 from New York Law School. From April 2009 to November 2015, she served as an immigration judge at the New York City Immigration Court. From March 2003 to April 2009, Judge Cheng served as an assistant chief counsel for U.S. Department of Homeland Security, Immigration and Customs Enforcement, New York. From June 2002 to March 2003, she worked as an assistant district counsel for the former Immigration and Naturalization Service in New York. From August 2000 to May 2002, Judge Cheng was in private practice in New York. During this time, from June 2001 to June 2002, Judge Cheng served as an administrative law judge for the New York City Department of Finance. From September 1998 to July 2000, she worked as an assistant district counsel for the former Immigration and Naturalization Service in New York. From September 1997 to September 1998, Judge Cheng worked as a judicial law clerk at the New York City Immigration Court entering on duty through the Attorney General’s Honors Program. Judge Cheng is a member of the New York State Bar.Irene C. Feldman, Assistant Chief Immigration Judge
Irene C. Feldman was appointed as an assistant chief immigration judge in November 2015. Judge Feldman received a Bachelor of Arts degree in 1983 from Mount Holyoke College, a Juris Doctor degree in 1988 from Benjamin N. Cardozo School of Law, and a Master of Science in Management degree in 1995 from Boston University, Ben Gurion University of the Negev in Israel. From 2008 to 2015, Judge Feldman served as an immigration judge at the Eloy (Arizona) Immigration Court. From 2001 to 2008, Judge Feldman served as an assistant U.S. attorney in Puerto Rico and in Arizona. From 1996 to 2001, Judge Feldman worked as an Assistant District Counsel, Office of the District Counsel, for the former Immigration and Naturalization Service in New Jersey and in New York. From 1989 to 1994, Judge Feldman served as an Assistant Prosecutor, in the Office of the County Prosecutor, Bergen County, New Jersey. Judge Feldman is a member of the State Bar of Arizona and the New Jersey State Bar.Amy C. Hoogasian, Assistant Chief Immigration Judge
Amy C. Hoogasian was appointed as an assistant chief immigration judge in November 2015. Judge Hoogasian received a Bachelor of Arts degree in 1990 from the University of Wisconsin-Madison and a Juris Doctor in 1994 from John Marshall Law School, Chicago. From October 2010 to November 2015, Judge Hoogasian served as an immigration judge at the San Francisco Immigration Court. From 2009 to 2010, she served as chief legal counsel at SAGIN LLC. From 2005 through 2009, Judge Hoogasian served as senior corporation counsel at ULINE, Inc. From 1999 to 2005, she served as an assistant chief counsel, at the U.S. Department of Homeland Security, Immigration and Customs Enforcement in Chicago. From 1995 to 1999, Judge Hoogasian served as attorney to the chairman at the Illinois Pollution Control Board. In 1995, she served as an assistant state’s attorney at the Lake County State’s Attorney’s Office, Waukegan, Ill. Judge Hoogasian is a member of the Illinois State Bar.H. Kevin Mart, Assistant Chief Immigration Judge
H. Kevin Mart was appointed as an assistant chief immigration judge in November 2015. Judge Mart received a Bachelor of Arts degree in 1976 from the University of Dayton (Ohio) and a Juris Doctor in 1982 from Georgetown University Law Center. Since October 2010 Judge Mart has served as an immigration judge at the Miami Immigration Court. From 1995 to October 2010 Judge Mart worked in private practice in Miami and Orlando, Fla., specializing in immigration law. From 1992 to 1995 Judge Mart worked in private practice specializing in litigation in Cincinnati, Ohio, and the Virgin Islands, and in 1991 worked as an assistant attorney general for the U.S. Virgin Islands. From 1982 to 1990, Judge Mart worked in private practice in New York City at Brown &Wood and Fried, Frank, Harris, Shriver & Jacobson specializing in corporate finance. Judge Mart is member of the State Bar of California, the New York and Ohio State Bars, and the Virgin Islands Bar.Sheila McNulty, Assistant Chief Immigration Judge
Sheila McNulty was appointed as an assistant chief immigration judge in November 2015. She received a Bachelor of Arts degree from Miami University of Ohio in 1984. Judge McNulty received a Juris Doctorate in 1991 from New England School of Law. From November of 2010 until November of 2015 she served as an immigration judge at the Chicago Immigration Court. Judge McNulty served as a special assistant U.S. attorney for the Northern District of Illinois, Chicago, from 2000 until 2010. Prior to that, she began working for the U.S. Department of Justice through the Attorney General’s Honors Program, serving as a trial attorney in the Chicago District Counsel’s Office of the former Immigration and Naturalization Service from 1991 to 2000. Judge McNulty worked as a community activist and organizer in Cambridge, Mass., from 1985 until 1991. Judge McNulty is a member of the Illinois State Bar.Clarence M. Wagner Jr., Assistant Chief Immigration Judge
Clarence M. Wagner, Jr. was appointed as an assistant chief immigration judge in December 2015. Judge Wagner received a Bachelor of Arts degree in 1993 from Hampton University, a Juris Doctorate in 1997 from Southern University Law Center and a Master of Law degree in 1999 from Georgetown University Law Center. From October 2010 to November 2015, Judge Wagner served as an immigration judge at the Honolulu Immigration Court. From 2003 to October 2010, he served with the Department of Homeland Security, Immigration and Customs Enforcement, Office of the Principal Legal Advisor, in various capacities, including chief counsel, Honolulu, from 2008 to 2010; deputy chief counsel, New Orleans, from 2006 to 2008; and assistant chief counsel, San Antonio, from 2003 to 2006. From 2002 to 2003 Judge Wagner served as an assistant attorney general for the State of Louisiana Department of Justice in Baton Rouge, La. From February 2002 to June 2002, he served as senior attorney, Legal Affairs Division, Louisiana Department of Environmental Quality. From 1998 to 2001, Judge Wagner served as an officer in the U.S. Army, Office of the Staff Judge Advocate, Honolulu, Hawaii. In that capacity, he was the labor and employment attorney from 1998 to 2000 and the environmental law attorney from 2000 to 2001. He was also appointed as a special assistant U.S. attorney, Department of Justice, U.S. Attorney’s Office, District of Hawaii, from 1998 to 2000. Judge Wagner is a member of the Louisiana State Bar and the State Bar of Texas.- EOIR -
The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR's immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR's Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.
Charlotte Business Owner Involved in Foreclosure Assistance Scheme Pleads Guilty to Conspiracy to Defraud the United StatesRead the Press Release
A resident of Charlotte, North Carolina, pleaded guilty on Tuesday in the U.S. District Court of the Western District of North Carolina to conspiracy to defraud the United States, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina.
According to court documents and statements in court, Daniel Heggins and his co-conspirator Joan Clark of Charlotte conspired to defraud the United States by filing false tax returns. Heggins recruited individuals with debts, such as home mortgages or car loans and created false Forms 1099-OID falsely characterizing the amount of the debts as income. Heggins and Clark then prepared and filed false Forms 1040 that requested refunds from the Internal Revenue Service (IRS) based on the false Forms 1099-OID. Heggins and Clark caused the returns to be filed at the IRS office in Charlotte. Sixteen false tax returns claiming more than $4 million in fraudulent refunds were filed with the IRS as part of the scheme. According to court documents, Clark and another individual, Marlowe Williams, filed three false tax returns, requesting $900,000 in fraudulent refunds from the IRS and received $601,780.
Heggins faces a statutory maximum sentence of five years in prison and a $250,000 fine. On Nov. 5, Clark, also pleaded guilty to two counts of conspiracy to defraud the United States. She faces a statutory maximum sentence of five years in prison and a $250,000 fine for each conspiracy count. On Nov. 9, Williams of New London, North Carolina, pleaded guilty to conspiring with Clark to defraud the United States. He faces a statutory maximum sentence of five years in prison and a $250,000 fine. On Sept. 24, Cheryl Jones of Chicago, Illinois, pleaded guilty to presenting a materially false document to the IRS. Jones submitted false tax returns to the IRS at the direction of Heggins and Clark. She faces a statutory maximum sentence of one year in prison and a $10,000 fine.
The court has not yet set sentencing dates for any of the defendants.
Acting Assistant Attorney General Ciraolo 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 P. Kostyshak of the Justice Department’s Tax Division, who prosecuted the case.
Alabama Resident and U.S. Postal Worker Pleads Guilty for Involvement in Stolen Identity Tax Refund Fraud RingRead the Press Release
Stole Identities of Individuals on Her Mail Route for Use in Filing False Tax Returns
An Alabama resident and U.S. Postal Service (USPS) employee pleaded guilty today in the U.S. District Court for the Middle District of Alabama to conspiring to defraud the United States with respect to false claims, aggravated identity theft and embezzling mail, 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 announced.
According to court documents, between June 2012 and December 2013, Elizabeth Grant, 42, of Seale, Alabama, conspired with others to obtain fraudulent tax refunds by filing false federal income tax returns using stolen identities. For a fee, Grant provided co-conspirators with addresses along her mail delivery route to use in filing false tax returns. Grant then retrieved the fraudulent tax refund checks from the mail and delivered the checks to her co-conspirators. The scheme resulted in the filing of more than 700 false returns claiming more than $1.5 million in refunds.
Several co-conspirators, including Tracy Mitchell and Keshia Lanier, have already pleaded guilty and were sentenced for their roles in this scheme. On August 7, Mitchell was sentenced to 159 months in prison. On September 25, Lanier was sentenced to 180 months in prison.
Grant faces a statutory maximum sentence of 10 years in prison and a $250,000 fine for the conspiracy count and five years in prison and a $250,000 fine for the count of embezzling mail. Grant also faces a mandatory minimum sentence of two years in prison for aggravated identity theft, which is in addition to the sentence she receives for the other counts, as well as a potential $125,000 fine.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck Jr. commended special agents of IRS-Criminal Investigation and the USPS Office of the Inspector General, who investigated the case and Trial Attorneys Michael C. Boteler, Gregory Bailey 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.
Una Pareja Sentenciada a Prisión por Fraude HipotecarioRead the Press Release
FRESNO, California – Dos residentes de Bakersfield fueron sentenciados el martes por el Juez Superior del Distrito de los Estados Unidos Anthony W. Ishii por sus implicaciones en una trama de fraude hipotecario en Bakersfield, anunció el Procurador de los Estados Unidos Benjamín B. Wagner.
Lucía Yolanda Chávez, de 37 años de edad, fue sentenciada a cuatro años de prisión por conspiración a cometer fraude bancario, fraude por correo y fraude por cable además de ser ordenada a pagar 1.8 millones de dólares en restitución. Joseph Chávez, de 41 años de edad, fue sentenciado a tres años de prisión por conspiración a cometer fraude bancario, fraude por correo y fraude por cable y fue ordenado a pagar 1.44 millones de dólares en restitución. Lucía Chávez también fue ordenada a desposeerse de los intereses de aproximadamente 110,000 de dólares incautados de una cuenta bancaria y a pagar una cantidad de dinero personal establecida por decisión judicial de 1.6 millones dólares de lo embargado. Joseph Chávez fue ordenado a pagar lo establecido por decisión judicial en 3 millones de dólares de dinero personal de lo embargado.
Según documentos del tribunal, los demandados conspiraron junto con otros colaboradores también demandados para usar ¨compradores de paja¨ para comprar propiedades residenciales en Bakersfield construidas por la empresa constructora Pershing Partners LLC (Pershing Partners) perteneciente a Lucía Chávez y por la empresa constructora Jara Brothers Investments (JBI) perteneciente a los co-demandados Eliseo Jara y Sergio Jara. Los conspiradores pagaban a los compradores de paja para comprar las propiedades de Pershing Partners y JBI y financiaban las compras con préstamos que obtenían de entidades de crédito para los compradores de paja basándose en solicitudes de préstamo falsas y fraudulentas. Para llevar a cabo la conspiración, los conspiradores usaron la empresa Paragon Home Mortgage para obtener y gestionar los préstamos. Lucía Chávez también había sido empleada por Paragon Home Mortgage desde aproximadamente agosto del 2006, y adquirió titularidad de Paragon Home Mortgage de los co-demandados Eliseo Jara Jr. y Sergio Jara en el 2007. Joseph Chávez fue empleado por Paragon Home Mortgage aproximadamente desde junio del 2006 a octubre del 2007 donde trabajaba como agente de préstamos y gerente de la oficina. Joseph Chávez y Lucía Chávez se declararon culpables el 10 de abril del 2015.
Las solicitudes de préstamo en las que figuran los nombres de los compradores de paja contenían declaraciones falsas por parte de estos mismos en relación a sus empleos, sus ingresos, sus bienes, sus intenciones de habitar las propiedades como residencias personales y el origen de los recursos de la cuota inicial para la compra de las propiedades. Los conspiradores ocultaban a las entidades de crédito que las mismas empresas constructoras proporcionaban los fondos para algunas de las cuotas iniciales de los compradores de paja. Los conspiradores también sometían documentación falsa a las entidades de crédito tales como los estados de cuentas falsas y alteradas que pretendían mostrar que los compradores de paja tenían saldos altos en las cuentas de banco, comprobaciones falsas de los fondos bancarios de los compradores de paja, comprobaciones falsas de alquileres que pretendían proceder de los dueños de las viviendas que alquilaban, comprobantes de pago falsos y comprobaciones de empleo falsas.
El caso es el producto de una investigación llevada a cabo por el Servicio de Recaudación de Impuestos - Investigaciones Criminales (IRS-CI) y la Oficina Federal de Investigación (FBI). Los Procuradores Auxiliares de los Estados Unidos Kirk E. Sherriff y Henry Z. Carbajal III procesaron el caso.
El 13 de octubre del 2015 los co-demandados Eliseo Jara y Sergio Jara fueron condenados a seis años y medio a la prisión cada uno y la co-demandada Melissa Jara fue condenada a cinco años de Libertad bajo Supervisión. El co-demandado Antonio Pérez-Marcial fue condenado el 12 de mayo del 2014 a tres años y 10 meses a la prisión y la co-demandada Arlene Jeanette Mojardín fue condenada el 18 de mayo del 2015 a dos años y medio a la prisión por sus implicaciones en la conspiración. La co-demandada Candace Gonzales se declaró culpable, con antelación, de la conspiración para cometer fraude bancario, fraude por correo y fraude por cable y la fecha de su audiencia para dictar la condena queda fijada para el 26 de octubre del 2015. El co-demandado Ricardo Salinas se declaró culpable, con antelación, de fraude bancario y su audiencia también queda fijada para el 26 de octubre del 2015.