District Not Recorded

WASHINGTON, D.C. – El Departamento de Justicia anunció hoy que ha llegado a un acuerdo con Nevada Yellow Cab Corporation, Nevada Checker Cab Corporation, y Nevada Star Cab Corporation – tres empresas de taxi que operan colectivamente bajo la empresa “Yellow Checker Star Transportation Company” (YCS).  El acuerdo resuelve acusaciones de que YCS discriminό a inmigrantes con permiso de trabajar por su ciudadanía.

La investigación del Departamento de Justicia encontró que YCS violό la disposición antidiscriminatoria de la Ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés) cuando les exigiό a inmigrantes, pero no a ciudadanos estadounidenses similarmente situados, a presentar documentos adicionales e innecesarios para comprobar su elegibilidad para trabajar. La disposición antidiscriminatoria de la INA prohíbe que los empleadores impongan cargos adicionales a empleados autorizados a trabajar durante el proceso de contratación y verificación de la autorización de trabajo basado en ciudadanía u origen nacional. 

Según el acuerdo, YCS pagará una multa civil de $445,000 a los Estados Unidos,  colocará anuncios en una publicación comercial mensual por un período de seis meses no consecutivos asesorando a los empleados de la disposición antidiscriminatoria de la INA,  será sujeto al monitoreo por tres años y capacitará a sus empleados acerca de la disposición antidiscriminatoria de la INA.

“Empleadores no pueden impedir las oportunidades de empleo de inmigrantes autorizados a trabajar con requisitos adicionales e innecesarios,” declaró la Principal Subprocuradora General Interina, Vanita Gupta, de la División de Derechos Civiles. “La División de Derechos Civiles elogia a Yellow Checker Star Transportation Company por cooperar con la división en educar a los miembros de la comunidad de Las Vegas sobre sus derechos bajo la disposición antidiscriminatoria de la Ley de Inmigración y Nacionalidad.”

La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC, por sus siglas en inglés), quien está a cargo de esta investigación, es responsable por hacer cumplir con la disposición antidiscriminatoria de la INA. La disposición antidiscriminatoria protege a individuos quienes son autorizados a trabajar contra la discriminación basado en la ciudadanía u origen nacional, incluyendo discriminación en la contratación, el despido, y en el proceso de verificación de elegibilidad de empleo. Los Abogados Litigantes, Linda White Andrews, Pablo A. Godoy, and Kayla Gassmann de la División de Derechos Civiles manejaron este asunto.

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 las 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 las personas con discapacidades auditivas); 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.

Millennium Health, formerly Millennium Laboratories, has agreed to pay $256 million to resolve alleged violations of the False Claims Act for billing Medicare, Medicaid and other federal health care programs for medically unnecessary urine drug and genetic testing and for providing free items to physicians who agreed to refer expensive laboratory testing business to Millennium, the Justice Department announced today.  Millennium, headquartered in San Diego, is one of the largest urine drug testing laboratories in the United States and conducts business nationwide.

“The Department of Justice is committed to ensuring that laboratory tests, including drug and genetic tests, are ordered based on each patient’s medical needs and not just to increase physician and laboratory profits,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will not tolerate practices such as the ordering of excessive, non-patient specific tests and the provision of inducements to physicians that lead to unnecessary costs being imposed upon our nation’s health care programs.”

As part of today’s announced settlements, Millennium has agreed to pay $227 million to resolve False Claims Act allegations, detailed in a complaint filed by the United States, that Millennium systematically billed federal health care programs for excessive and unnecessary urine drug testing from Jan. 1, 2008, through May 20, 2015.  The United States alleged that Millennium caused physicians to order excessive numbers of urine drug tests, in part through the promotion of “custom profiles,” which, instead of being tailored to individual patients, were in effect standing orders that caused physicians to order large number of tests without an individualized assessment of each patient’s needs.  This practice violated federal healthcare program rules limiting payment to services that are reasonable and medically necessary for the treatment and diagnosis of an individual patient’s illness or injury.  The United States also alleged that Millennium’s provision of free point of care urine drug test cups to physicians—expressly conditioned on the physicians’ agreement to return the urine specimens to Millennium for hundreds of dollars’ worth of additional testing—violated the Stark Law and the Anti-Kickback Statute.  The Stark Law and the Anti-Kickback Statute generally prohibit laboratories from giving physicians anything of value in exchange for referrals of tests.

Millennium has also agreed to pay $10 million to resolve False Claims Act allegations that it submitted false claims to federal health care programs from Jan. 1, 2012, through May 20, 2015, for genetic testing that was performed routinely and without an individualized assessment of need. 

“Millennium allegedly promoted indiscriminate and unnecessary testing that increased medical costs without serving patients’ real medical needs,” said U.S. Attorney Carmen M. Ortiz of the District of Massachusetts.  “A laboratory that promotes and knowingly conducts medically unnecessary drug testing operates unlawfully and squanders our precious federal health care resources.”

In connection with the False Claims Act settlements, Millennium has also entered into a corporate integrity agreement (CIA) with the Department of Health and Human Services-Office of Inspector General (HHS-OIG).  In addition, Millennium will pay $19.2 million to the Centers for Medicare and Medicaid Services (CMS) to resolve certain administrative actions related to Millennium’s urine drug test billing practices.

“This company has taken the first step toward demonstrating a commitment to compliance by agreeing to make significant changes to its board of directors,” said Inspector General Daniel R. Levinson of HHS-OIG.  “Most of the board will be comprised of new independent members.  Under the five-year CIA, OIG will monitor the company’s compliance efforts under this new leadership.”

“CMS is committed to exercising quick and effective oversight to protect Medicare beneficiaries and the Medicare Trust Fund,” said Acting Administrator Andy Slavitt for CMS.  “The resolution of this case is the result of the important partnership between CMS and the Department of Justice.”

The False Claims Act allegations resolved were originally brought in lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  Under the act, the United States can elect to intervene in an action filed by a whistleblower, as it did, in part, with respect to several of the qui tam actions regarding urine drug testing allegations.  The whistleblowers will receive $30.35 million from the False Claims Act recovery for the urine drug testing claims and $1.48 million from the False Claims Act recovery for the genetic testing claims. 

The government’s pursuit of the claims resolved by the settlements 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 $25.3 billion through False Claims Act cases, with more than $16.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The investigation was conducted by the Civil Division’s Commercial Litigation branch, the U.S. Attorney’s Office of the District of Massachusetts, HHS-OIG and HHS’ Office of the General Counsel, CMS, the Office of Personnel and Management Office of Inspector General, the U.S. Postal Service Office of Inspector General, the Department of Veterans Affairs and the FBI. 

The cases that will be dismissed as part of the settlements are captioned United States ex rel. McGuire v. Millennium Laboratories, Inc., No. 12-cv-10132 (D. Mass.), United States ex rel. Uehling v. Millennium Laboratories, Inc. et al., No. 12-cv-10631 (D. Mass.), United States ex rel. Omni Healthcare Inc. v. Millennium Laboratories, Inc., No. 13-cv-10825 (D. Mass.), United States, et al., ex rel. Estate of Robert Cunningham v. Millennium Laboratories of California, Inc., No. 09-cv-12209 (D. Mass.); United States, et al., ex rel. Wendy Johnson v. Millennium Laboratories, Inc., No. 12-cv-12387 (D. Mass.), United States ex rel. Allstate Insurance Co. and Lawrence K. Spitz, M.D. v. Millennium Laboratories, Inc., No. 14-cv-14276 (D. Mass.), United States ex rel. Amadeo Pesce, Ph.D. v. Millennium Health, No. 15-cv-10821 (D. Mass.), and United States ex rel. Omni Healthcare Inc. v. Millennium Laboratories, Inc., No. 14-cv-13052 (D. Mass.).

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

A former Drug Enforcement Administration (DEA) agent was sentenced today to 78 months in prison for extortion, money laundering and obstruction of justice, which crimes he committed while working as an undercover agent investigating Silk Road, an online marketplace used to facilitate the sale and purchase of illegal drugs and other contraband.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Brian Stretch of the Northern District of California, Chief Richard Weber of the IRS-Criminal Investigation (IRS-CI), Special Agent in Charge David J. Johnson of  FBI’s San Francisco Division, Special Agent in Charge Michael P. Tompkins of the Department of Justice Office of the Inspector General’s Washington, D.C., Field Office and Special Agent in Charge James E. Ward of the Department of Homeland Security Office of the Inspector General’s Atlanta Field Office made the announcement.

Carl M. Force, 46, of Baltimore, pleaded guilty on July 1, 2015, before U.S. District Court Judge Richard Seeborg of the Northern District of California.  In addition to imposing the prison term, the court ordered Force to pay $340,000 in restitution and serve three years of supervised release following his sentence.

Force was a special agent with the DEA for 15 years.  From 2012 through 2013, he was assigned to the Baltimore Silk Road Task Force, a multi-agency group investigating illegal activity on the Silk Road.  Force served as an undercover agent and was tasked with, among other things, establishing communications with a target of the investigation, Ross Ulbricht, aka “Dread Pirate Roberts.”

In connection with his guilty plea, Force admitted that, while working in an undercover capacity using his DEA-sanctioned persona, “Nob,” in the summer of 2013, Force offered to sell Ulbricht fake drivers’ licenses and “inside” law enforcement information about the Silk Road investigation.  Force admitted that he attempted to conceal his communications with Ulbricht about the payments by directing Ulbricht to use encrypted messaging.  Force admitted that he understood the payments from Ulbricht, which were made in bitcoin, were government property, as they constituted evidence of a crime, and that he falsified official reports and stole the funds, which he deposited into his own personal account.  Force admitted that, as Nob, he received bitcoin payments from Ulbricht worth more than approximately $100,000.

In addition, Force admitted that he devised and participated in a scheme to fraudulently obtain additional funds from Ulbricht through another online persona, “French Maid,” of which his task force colleagues were not aware.  Force admitted that, as French Maid, he solicited and received bitcoin payments from Ulbricht worth approximately $100,000 in exchange for information concerning the government’s investigation into the Silk Road.

Force also admitted that he obstructed justice both by soliciting and accepting bitcoin from Ulbricht and by lying to federal prosecutors and agents who were investigating potential misconduct by Force and others.

In connection with his guilty plea, Force also admitted that, although he did not receive permission from the DEA to do so, he served as the chief compliance officer for CoinMKT, a digital currency exchange company.  In this role, in February 2014, Force was alerted by CoinMKT to what the company initially believed to be suspicious activity in a particular account.  Force admitted that, thereafter, in his capacity as a DEA agent, but without authority or a legal basis to do so, he directed CoinMKT to freeze $337,000 in cash and digital currency from the account.  Force further admitted that he subsequently transferred approximately $300,000 of the digital currency into a personal account that he controlled.

The case is being investigated by the FBI’s San Francisco Division, the IRS-CI’s San Francisco Division, the Department of Justice Office of the Inspector General and the Department of Homeland Security Office of the Inspector General in Washington, D.C.  The case is being prosecuted by Assistant U.S. Attorneys Kathryn Haun and William Frentzen of the Northern District of California and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section.  Assistant U.S. Attorney Arvon Perteet of the Northern District of California handled the asset forfeiture aspects of the case.  

A former civilian employee of the Department of Defense was sentenced to 84 months in prison for engaging in illicit sexual conduct with a minor in a foreign place.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas made the announcement.

William Curry McGrath, 55, of San Antonio, pleaded guilty on April 28, 2015, and has been in custody since his arrest in October 2014.  In addition to imposing the prison term, U.S. District Judge Lee H. Rosenthal of the Southern District of Texas ordered McGrath to register as a sex offender and to serve five years of supervised release following his prison term.

From December 2012 to March 2014, McGrath was the director of the Network Enterprise Center at the Soto Cano Air Base in Comayagua, Honduras.  In connection with his guilty plea, McGrath admitted that, while stationed in Honduras, he began a sexual relationship with a 13-year-old girl.  He further admitted that he gave the girl money, gifts and other items of value in exchange for sexual acts.

The investigation was conducted by the FBI’s Houston Division.  The case is being prosecuted by Trial Attorney Amy E. Larson of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Sherri Zack of the Southern District of Texas.  

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice.  Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.justice.gov/psc.

On October 14, 2015 INTERPOL Washington hosted its third Partner Recognition Ceremony. The ceremony honored Director Shawn Bray, as he prepares for retirement from public service at the end of this month, and the successful partnerships that have made his time as director a success. Representatives from the Department of Homeland Security (DHS) and the Department of Justice (DOJ), INTERPOL Washington’s parent agencies, as well as partners from other federal agencies, embassy liaisons, nonprofit organizations, and the private sector were all in attendance to show their support for INTERPOL Washington and Director Bray.

Jolene Lauria, Deputy Assistant Attorney General and Controller for the Department of Justice spoke about her relationship with the USNCB and Director Bray. She praised the director’s ability to create lasting friendships while still relentlessly accomplishing the agency’s goals.

Lev Kubiak, Assistant Director of Immigration and Customs Enforcement (ICE) also addressed the audience, touching on the close and productive relationship between ICE and the USNCB. He also described fondly the Director’s time at ICE before coming to INTERPOL Washington and the various successes that he had during his long career there.

A surprise video from the INTERPOL General Secretariat (IPSG) was also shown – allowing INTERPOL Secretary General Jürgen Stock to express his gratitude to Director Bray for his years of service and leadership in the international community. His kind message was a reminder of the many strong and effective working relationships that Director Bray has fostered.

Deputy Director Geoffrey Shank was the Master of Ceremonies for the event. Dep. Dir. Shank took the time to highlight how much Director Bray and, by extension, the entire USNCB benefited from the quiet and steadfast support of the Director’s wonderful wife. He also expressed gratitude for the role that Director Bray has played in his professional development, serving as both an example and as a mentor.

A series of unplanned remarks were also made by members of the audience who came to celebrate the agency and to wish the Director well as he closes this chapter of his life. It was during these remarks that the diversity and range of INTERPOL Washington’s partners was truly demonstrated. Law enforcement representatives from an incredible range of U.S. agencies spoke as well as representatives from partner law enforcement agencies from absolutely every corner of the globe.

It was a fitting memorandum to a career that was characterized by lasting friendships being formed through professional excellence.

Written Testimony Submitted for the Record

Mr. Chairman, Senator Leahy, distinguished Members of the Committee – thank you for holding this hearing on Federal sentencing and corrections policy and for allowing the Administration to share our views on this very important topic.  It is an honor to be here to discuss an issue that is important to our country, our system of justice, and about which I personally feel very strongly.

I joined the Department of Justice in 1989 as a line AUSA in the U.S. Attorney’s office in Atlanta, and it has been my privilege to represent the people of the United States for over 27 years now.  My perspective on sentencing policy is informed by my years of experience as an AUSA in the trenches, as a U.S. Attorney responsible for a district of over 6 million people, and now as the Deputy Attorney General.

As a career prosecutor, I have devoted my professional life to enforcing the law and keeping our communities safe. The fundamental responsibility of all prosecutors is not simply to win convictions or send people to prison. Our responsibility is to seek justice.  And I believe that justice now requires that we recalibrate our approach to our sentencing laws.

For three decades, well-intentioned prosecutors have used the tools Congress gave them, including stiff mandatory minimum sentences, to prosecute drug cases.  While the stated congressional purpose of those laws was to focus on the newly emerging South American drug cartels and the leaders of drug organizations who were responsible for large quantities of drugs, as we look back, it has become clear that these harsh sentencing laws cast too broad a net.  This has come with real costs, both in dollars and cents but even more importantly, in the impact on our communities and the public’s confidence in our criminal justice system.

An unprecedented bi-partisan coalition has come together to arrive at a sentencing proposal that adjusts our laws so that the Department of Justice has the tools it needs to protect society from the most serious criminals, while ensuring that our criminal justice system operates in a manner that is fair, effective, and worthy of the public’s trust. This bi-partisan bill recalibrates some of our sentencing laws, invigorates recidivism-reduction programs and provides added protections to juveniles, all designed to make our communities safer and our system more just.  The Department of Justice believes that reform is not only appropriate but necessary, and applauds the broad and impressive bipartisan efforts that went into this bill.

There are many facets to the debate surrounding sentencing reform.  I know that for many of you, and for many Americans, one of the most important questions is whether we can reform sentencing policy without endangering the safety of our communities.  As the official responsible for day-to-day operations of the Department of Justice, keeping America safe is my solemn responsibility.  And I believe that sentencing reform will enhance our ability to keep the American people safe.

To understand why, it is helpful to step back and understand the costs of the current system – the fiscal costs and the human costs.

We have seen an explosion in the Federal prison population since the 1980’s.  While the country’s population has only grown by about a third, our Federal prison population has grown by almost 800 percent, due in large part to the influx of drug defendants. Today, nearly half of all Federal inmates are in Federal prison for drug-related offenses.  Under the current sentencing regime, our mandatory minimum laws do not calibrate a defendant’s sentence to match the threat that he or she poses to our safety.  At its core, one of the basic problems with our mandatory minimum system is that it’s based almost exclusively on one factor – drug quantity. And so, we have a hard time distinguishing the cartel leader who needs to be in prison for a long time from the low level distributor who doesn’t.  As a result, we have some defendants serving far more time in prison than necessary to punish and deter.  This comes with great costs – costs to operate our prisons system, costs to our families and communities, and costs to the public’s confidence in the fairness of their system of justice.

From a dollar and cents standpoint, the Department’s prison and detention costs have increased by almost three billion dollars in the past decade and now account for roughly one third of the Department’s budget. Our mandatory minimum drug laws sweep broadly, and result in many prisoners serving long sentences.  Every dollar that we spend imprisoning a non-violent drug offender for longer than necessary is a dollar that could be spent investigating emerging threats, from hackers to home-grown terrorists or to support State and local law enforcement, victims of crime, and crucial programs for prevention, intervention, and reentry.

This is not to say that every sentence is longer than necessary, nor that every sentence should be lowered.  But we need an approach that is more carefully tailored, so we that we can focus our resources where they are needed most.  Sentencing reform is critical to ensuring the Department and our State and local law enforcement partners have both strong laws and sufficient resources to combat drug and violent crime.  Reform will enhance public safety.  The reforms being considered in this bill do not reduce statutory maximums, and drug offenders will still receive significant sentences.  Moreover, kingpins, drug organization leaders, violent criminals, as well as those who possess a firearm or dangerous weapon, will still receive enhanced penalties.  But sentencing reform should permit a certain type of defendant – a low- level, non-violent drug defendant – to demonstrate to the sentencing judge that he or she should not be subject to the most onerous sentences.  These modest revisions will help ensure that, in those cases, the punishment more closely matches the crime. In the long run, this should result in a lower Federal prison population, which will allow the Department to reallocate funds to other pressing needs.

But in addition to the fiscal costs, there are human costs to our current system as well.

We all know the toll that illegal drugs have taken on our society. The Justice Department aggressively pursues high-level drug traffickers because we know how these substances harm those with substance use disorders.  We recognize the many lives ruined by the drug trade – from rural villages in Colombia and Mexico to the streets of Oakland and Newark.

But the harms of drug addiction are not necessarily solved by locking up, for as long as possible, everyone who touches the drugs.  Take for example the case of one defendant whose record I recently reviewed. This particular defendant, who only had a 6th grade education, was a veteran of the Army, who was honorably discharged.   He was convicted of selling crack on the street, in a case that may not even be a Federal case today. Although this defendant didn’t possess a gun or have any history of violence, he was sentenced to mandatory life in prison because he had two prior State convictions for selling cocaine, one of which involved just one ounce of cocaine.  Life in prison is simply too high a price to pay for these three small-time drug sales.

Importantly, the costs aren’t just born by defendants. Too many children, over 2.7 million in the United States, have a parent behind bars. Approximately one in nine African- American children has a mother or father in prison. This cuts deeply into our society, and we must not pass this legacy to the next generation.

Similarly, when we impose longer-than-necessary prison sentences under the guise of public safety, we undermine the public’s confidence in the fairness of the criminal justice system.  It’s not enough to have a system of justice that holds wrongdoers accountable. The system must also mete out punishment in a manner that is fair, reasonable, and tailored to the facts and circumstances of the crime.  If it does not, then we risk losing the community’s faith in the institutions we represent.  In the long run, that loss of faith could prove more costly to our nation’s future than any dollars and cents spent on the criminal justice system.

In looking for solutions, I am encouraged by the great innovations occurring at the State level.  As Deputy Attorney General, I have had the opportunity to learn more about a wide variety of exciting programs, from drug courts to recidivism reduction programs. These efforts have been part of a broader shift away from thinking of incarceration as the only answer to crime. Across the country, States as varied as Texas, Ohio, North Carolina, and my home State of Georgia, have confronted exploding prison costs by enacting bold criminal justice reforms. Most importantly, these reforms have demonstrated that sentencing reform is compatible with lower crime rates.  I am encouraged to see that ideas that have worked well on the State level – including expanded reentry programming to reduce prison sentences – have been included in the proposed legislation.

And these new, more focused approaches to combating crime will enhance, not undercut, our ability to enforce the law and protect the public. For example, one of the most common concerns raised is that long sentences for low-level drug defendants is the only way to secure their cooperation against the worst criminals.  Not only is this inconsistent with my personal experience as a prosecutor, it is inconsistent with the data that we have gathered since the Justice Department readjusted its drug charging policy two years ago.  As you most likely know, as part of the Smart on Crime Initiative, the Department directed Federal prosecutors not to charge certain drug offenses triggering mandatory minimum sentences in cases involving lower-level, non-violent drug offenders.  Since that time, the Department’s charging of mandatory minimum drug offenses have decreased by approximately twenty percent.  Although some feared that defendants would stop pleading guilty and stop cooperating, our experience has shown otherwise.  In fact, defendants are pleading guilty at the same rates as they were before we instituted Smart on Crime.  Similarly, the rates of cooperation have remained the same or even ticked up slightly.

But to make lasting changes, it is Congress that must establish a new sense of proportionality to our sentencing laws.  As a society, we must balance our need for deterrence and our desire for retribution with our decency, our humanity, and our sense of fairness. We need an approach that is more carefully tailored, so that we can better distinguish between those who pose a more serious threat to our society and those who do not.

Back when I was a line prosecutor, I faced questions of balance and proportionality on a daily basis.  In every case I prosecuted, there was a time when the AUSA was called upon to make a recommendation to the judge about the sentence to be imposed. Congress has laid out the factors a court is to consider in fashioning the appropriate sentence at Section 3553(a) of Title 18 in the United States Code. These considerations, known as the 3553(a) factors, loom large at every sentencing hearing.  They require reflection on the nature and circumstances of the offense, the history and characteristics of the defendant, the need for specific and general deterrence, and a range of other issues.

But it is the opening sentence of Section 3553(a) that establishes the overarching principle: that the court shall impose a sentence “sufficient, but not greater than necessary,” to comply with the stated purposes of sentencing.  Sufficient, but not greater than necessary.  That phrase should guide us as we consider modification to America’s sentencing laws.  We must punish, but no more so than is necessary to achieve our goals. Anything beyond that is a disservice to the principles of justice and to our system of laws. There is a balance we must strike, and I believe the proposed Sentencing Reform and Corrections Act is a good step to striking that balance.  The country that we love and that we have a duty to defend deserves nothing less.

Thank you again for inviting me to speak here today. With that, I am happy to take your questions.

The United States resolved for $4 million a False Claims Act action against the estate and trusts of the late Layton P. Stuart, former owner and president of One Financial Corporation, and its subsidiary, One Bank & Trust N.A., both based in Little Rock, Arkansas.  One Bank, another victim of Stuart’s frauds that is now under new management, will receive an additional $6.9 million.

The United States’ complaint, filed earlier this year, alleged that Stuart and One Financial violated the False Claims Act by making false statements about the financial condition of One Financial and One Bank to induce the Department of the Treasury to invest Troubled Asset Relief Program (TARP) funds in One Financial.

“Today’s settlement is an important milestone in the recovery of TARP funds that were obtained under false pretenses and used for improper purposes,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will continue to be vigilant in assuring the proper use of taxpayer funds.”

Congress created TARP in response to the financial crisis of 2008 to restore liquidity and stability to the financial systems of the United States.  Under the Capital Purchase Program component of TARP, the Treasury invested capital in financial institutions in exchange for preferred stock or debt securities and other consideration.

In the lawsuit, the United States alleged that in 2009, Stuart, on behalf of One Financial, applied for a TARP investment.  According to the United States, Stuart knowingly made false statements about the financial condition of One Financial and One Bank and about the intended use of the TARP funds.  In particular, Stuart allegedly concealed serial frauds that he and other One Financial directors and One Bank executives had been committing, and intended to continue committing, on One Bank.  The schemes involved Stuart’s diversion of One Bank funds for personal use, including Stuart’s purchase of luxury vehicles for his wife and children.  Within two weeks of receiving the TARP funds, Stuart allegedly diverted $2.185 million into his personal accounts.  Stuart was terminated from One Bank in September 2012.

“TARP’s Capital Purchase Program was designed to provide emergency assistance to banks and other financial institutions to facilitate lending to the American public, not for personal use of the bank holding company’s CEO,” said Christy Goldsmith Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP).  “This settles the government’s claim that as CEO of One Financial Corporation, Layton Stuart applied for TARP using false records or statements causing Treasury to provide TARP funds intended for the benefit of the bank, and then immediately diverted millions for his own personal use.  This is an important False Claims Act case to bring and recover TARP funds on behalf of taxpayers.  SIGTARP will aggressively root out and investigate all fraud related to TARP.”

Stuart’s frauds were discovered through a federal investigation launched in 2013.  The assets of Stuart’s estate and the trusts he had created were subject to a civil forfeiture action in the Eastern District of Arkansas.  The civil forfeiture action was settled and dismissed contemporaneously with the False Claims Act settlement with the Stuart estate and trusts.  Under these settlements, in addition to the $4 million recovered by the United States, $6.9 million will be received by One Bank and $4 million will be returned to the Stuart trusts.

“This resolution is a just and appropriate result,” said U.S. Attorney Christopher R. Thyer of the Eastern District of Arkansas.  “It is due in large part to the parties working toward an end to the forfeiture proceeding that would help the bank and the taxpayers of the United States who loaned money to the bank in 2009.  I am hopeful that our community will benefit immensely from this result.”     

The government’s False Claims Act lawsuit remains pending against One Financial.  Separate criminal actions against several former One Financial and former One Bank executives also remain pending in the Eastern District of Arkansas.

The investigation was conducted by the Internal Revenue Service-Criminal Investigation Division, the Office of SIGTARP, the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the Eastern District of Arkansas.

The case is captioned United States v. Estate of Layton P. Stuart, et al., No. 1:15-cv-01044-RDM (D.D.C.).  The claims asserted by the government are allegations only and there has been no determination of liability.

The Department of Justice announced today that it has resolved a $237 million judgment against Tuomey Healthcare System for illegally billing the Medicare program for services referred by physicians with whom the hospital had improper financial relationships.  Under the terms of the settlement agreement, the United States will receive $72.4 million and Tuomey, based in Sumter, South Carolina, will be sold to Palmetto Health, a multi-hospital healthcare system based in Columbia, South Carolina.

“Secret sweetheart deals between hospitals and physicians, like the ones in this case, undermine patient confidence and drive up healthcare costs for everybody, including the Medicare program and its beneficiaries,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “This case demonstrates the United States’ commitment to ensuring that doctors who refer Medicare beneficiaries to hospitals for procedures, tests and other health services do so only because they believe the service is in the patient’s best interest, and not because the physician stands to gain financially from the referral.  The Department of Justice is determined to prevent the kind of abuses uncovered in this case, and we are willing to take such cases to trial to protect the integrity of the Medicare program.”

The judgment against Tuomey related to violations of the Stark Law, a statute that prohibits hospitals from billing Medicare for certain services (including inpatient and outpatient hospital care) that have been referred by physicians with whom the hospital has an improper financial relationship.  The Stark Law includes exceptions for many common hospital-physician arrangements, but generally requires that any payments that a hospital makes to a referring physician be at fair market value for the physician’s actual services, and not take into account the volume or value of the physician’s referrals to the hospital.

The government argued in this case that Tuomey, fearing that it could lose lucrative outpatient procedure referrals to a new freestanding surgery center, entered into contracts with 19 specialist physicians that required the physicians to refer their outpatient procedures to Tuomey and, in exchange, paid them compensation that far exceeded fair market value and included part of the money Tuomey received from Medicare for the referred procedures.  The government argued that Tuomey ignored and suppressed warnings from one of its attorneys that the physician contracts were “risky” and raised “red flags.”

On May 8, 2013, after a month-long trial, a South Carolina jury determined that the contracts violated the Stark Law.  The jury also concluded that Tuomey had filed more than 21,000 false claims with Medicare.  On Oct. 2, 2013, the trial court entered a judgment under the False Claims Act in favor of the United States for more than $237 million.  The United States Court of Appeals for the Fourth Circuit affirmed the judgment on July 2, 2015. 

“This case reinforces the need for hospitals to abide by the requirements of the Stark Law,” said U.S. Attorney Thomas G. Walker of the Eastern District of North Carolina.

The case arose from a lawsuit filed on Oct. 4, 2005, by Dr. Michael K. Drakeford, an orthopedic surgeon who was offered, but refused to sign, one of the illegal contracts.  The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act allows the government to intervene and take over the action, as it did in this case.  Dr. Drakeford will receive approximately $18.1 million under the settlement.

“The type of abusive compensation arrangements at issue in this case is precisely what the physician self-referral law was designed to prevent,” said Inspector General Dan Levinson of of the Department of Health and Human Services-Office of the Inspector General (HHS-OIG).  “Patients need and deserve to know that the hospital services they receive are the product of sound medical judgment, rather than motivated by the physician’s financial interests.  The extensive litigation and settlement in this case should send a signal to the hospital industry that these tainted financial relationships simply will not be tolerated.”

As part of the settlement announced today, Tuomey will be required to retain an independent review organization to monitor any arrangements it makes with physicians or other sources of referrals for the duration of the five-year Corporate Integrity Agreement.

This case 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 $25.3 billion through False Claims Act cases, with more than $16.1 billion of that amount recovered in cases involving fraud against federal health care programs.  Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, including the conduct described in the opinions of the trial and appellate courts in this case, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477).

The judgment and resolution of the case were the result of a coordinated effort by the Civil Division’s Commercial Litigation branch, the U.S. Attorney’s Office of the Eastern District of North Carolina and HHS-OIG.    

The case is captioned United States ex rel. Drakeford v. Tuomey Healthcare System, Inc., Case No. 3:05-cv-02858 (MBS) (D.S.C.).  

Haroon Aswat, 41, was sentenced today by U.S. District Court Judge Katherine B. Forrest of the Southern District of New York to 20 years in prison for terrorism offenses relating to Aswat’s efforts to establish a terrorist training camp in the United States.  Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Preet Bharara of the Southern District of New York made the announcement.

Aswat was extradited to the United States from the United Kingdom on Oct. 21, 2014.  Aswat pleaded guilty on March 30, 2015, to one count of conspiring to provide material support to al Qaeda and one count of providing material support to al Qaeda.

“Haroon Aswat provided material support to al Qaeda and plotted to establish a terrorist training camp on American soil,” said Assistant Attorney General Carlin.  “Aswat was arrested more than 10 years ago, and his sentence is the result of the tireless and persistent efforts of law enforcement to hold accountable all those who wish to harm the United States, whether at home or abroad, no matter how long it takes.”

“Haroon Aswat, with his co-conspirators, sought to establish a terrorist training camp on American soil, and traveled to Afghanistan to receive training from al Qaeda,” said U.S. Attorney Bharara.  “Arrested abroad in 2005, Aswat fought extradition for nearly 10 years, but faced with overwhelming evidence against him, pled guilty in Manhattan federal court to providing material support to al Qaeda shortly after arriving here.  Aswat’s conviction and the sentence imposed today – along with the other recent terrorism prosecutions by this Office, including of Sulaiman Abu Ghayth, Abu Hamza, and Khaled al Fawwaz – serve as further proof that justice in international terrorism cases continues to be delivered in American civilian courts.”

According to the allegations contained in the indictment, statements made at related court proceedings including today’s sentencing, court fillings and evidence presented at prior trials:

In late 1999, Aswat, along with co-defendants Mustafa Kamel Mustafa aka Abu Hamza, Ouassama Kassir and Earnest James Ujaama, attempted to establish a terrorist training camp in the United States to support al Qaeda, which has been designated by the U.S. Secretary of State as a foreign terrorist organization.  Aswat conspired with Abu Hamza, Kassir and Ujaama to establish the terrorist training camp on a rural parcel of property located in Bly, Oregon.  The purpose of the Bly camp was for Muslims to receive various types of training – including military-style jihad training – in preparation to fight jihad in Afghanistan.  As used by the conspirators in this case, the term “jihad” meant defending Islam against purported enemies through violence and armed aggression, including, if necessary, by using murder to rid Muslim holy lands of non-believers in Islam.

In a letter faxed from Ujaama in the United States to Abu Hamza in the United Kingdom, the property in Bly was described as a place that “looks just like Afghanistan,” and the letter noted that the men at Bly were “stock-piling weapons and ammunition.”  In late 1999, after transmitting the faxed letter, Abu Hamza directed Aswat and Kassir, both of whom resided in London and attended Abu Hamza’s mosque there, to travel to Oregon to assist in establishing the camp.  On Nov. 26, 1999, Aswat and Kassir arrived in New York, and then traveled to Bly.

Aswat and Kassir traveled to Bly for the purpose of training men to fight jihad.  Kassir told witnesses that he supported Usama Bin Laden and al Qaeda, and that he had previously received jihad training in Pakistan.  Kassir also possessed a compact disc that contained instructions on how to make bombs and poisons.  After leaving Bly, Aswat and Kassir traveled to Seattle where they resided at a mosque for approximately two months.  While in Seattle, Kassir, in Aswat’s presence, provided men from the mosque with additional terrorist training lessons – including instructions on different types of weapons, how to construct a homemade silencer for a firearm, how to assemble and disassemble an AK-47 and how an AK-47 could be altered to be fully automatic and to launch a grenade.  On another occasion, with Aswat sitting by his side, Kassir announced to the men in Seattle that he had come to the United States for martyrdom and to destroy, and he informed his audience that some of them could die or get hurt.

Aswat subsequently linked up with al Qaeda and received training at al Qaeda’s al Faruq training camp in Afghanistan, which was al Qaeda’s primary training camp and where recruits were trained in topics that included military tactics, weapons and explosives.  Aswat remained in Afghanistan after the terrorist attacks of Sept. 11, 2001, and after the United States invaded Afghanistan.  A ledger recovered in September 2002 from an al Qaeda safe house in Karachi, Pakistan, listed a number of individuals associated with al Qaeda, including Aswat.  The al Qaeda safe house was used by Khalid Sheikh Mohammed, al Qaeda’s chief operational planner and the alleged planner of the terrorist attacks of Sept. 11, 2001.

At the time of Aswat’s arrest in Zambia in 2005, he had a computer with him that contained, among other things: a book on survival skills in the event of a nuclear, biological and chemical weapon detonation; the “Anarchist Cookbook,” which contained instructions on how to make bombs and hack into computers; a hand-to-hand combat instruction manual, which noted that its purpose was to “teach you how you can kill another person with your own two hands;” the “Close Combat Textbook;” and the “Big Book of Mischief,” which also contained detailed and extensive instructions on how to make explosives. 

*                      *                     *

Aswat was convicted of one count of conspiracy to provide material support to al Qaeda, and one count of providing material support to al Qaeda.  In addition to the term of imprisonment, Judge Forrest sentenced Aswat to 20 years and imposed a $200 special assessment.  Judge Forrest also ordered that Aswat be removed from the United States to the United Kingdom following the completion of his sentence. 

Abu Hamza and Kassir were previously convicted for their roles in attempting to establish a terrorist training camp in the United States.  On May 12, 2009, after a four-week jury trial in the Southern District of New York, Kassir was found guilty of charges relating to his efforts to establish the terrorist training camp in Bly and his operation of several terrorist websites.  On Sept. 15, 2009, U.S. District Judge John F. Keenan of the Southern District of New York sentenced Kassir to life in prison.

On May 19, 2014, after a four-week jury trial in the Southern District of New York, Abu Hamza was found guilty of charges relating to his role in the conspiracy to establish the terrorist training camp in Bly, as well as his role in a hostage-taking in Yemen in 1998 that resulted in four deaths and his support of violent jihad in Afghanistan in 2000 and 2001.  On Jan. 9, 2015, Judge Forrest sentenced Abu Hamza to life in prison.

Assistant Attorney General Carlin and U.S. Attorney Bharara praised the outstanding efforts of the FBI’s Manhattan-based Joint Terrorism Task Force, the U.S. Marshals Service and the Metropolitan Police Department of London.  The Criminal Division’s Office of International Affairs also provided significant assistance.

The case was prosecuted by Assistant U.S. Attorneys John P. Cronan, Ian McGinley, Shane T. Stansbury and Edward Y. Kim of the Southern District of New York, and Trial Attorney Erin Creegan of the National Security Division’s Counterterrorism Section.

A Waxahachi, Texas, resident and former chief financial officer (CFO) of Arrow Trucking Company was sentenced today to serve 35 months in prison for conspiracy to commit bank fraud and to defraud the United States, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U. S. Attorney Danny C. Williams Sr. of the Northern District of Oklahoma.

Jonathan Leland Moore, 38, pleaded guilty on Dec. 4, 2014, to an information charging him with one count of a dual-object conspiracy to defraud the United States and to commit bank fraud.  Moore conspired with James Douglas Pielsticker, 47, a resident of Dallas, and former CEO and president of Arrow Trucking Company, to defraud the United States by failing to account for and pay federal withholding taxes on behalf of Arrow Trucking Company and by making payments to Pielsticker outside the payroll system.

Moore cooperated with the criminal investigation, including testifying on behalf of the government during Pielsticker’s sentencing hearing last week.  On Oct. 9, Pielsticker was sentenced to serve seven and one-half years in prison and ordered to pay $21,026,682.03 in restitution for his role in the conspiracy and for attempting to evade his individual income taxes.

Chief U.S. District Court Judge Gregory K. Frizzell of the Northern District of Oklahoma also sentenced Moore to serve three years of supervised release following his prison term and ordered him to pay $21,026,682.03 in restitution to the Internal Revenue Service (IRS) and the Transportation Alliance Bank (TAB).

According to the plea agreement and other court records, in 2009, Moore, Pielsticker and others withheld Arrow Trucking Company employees’ federal income tax withholdings, Medicare and social security taxes, but did not report or pay over these taxes to the IRS, despite knowing that they had a duty to do so.  The conspirators paid for Pielsticker’s personal expenses with money from Arrow Trucking Company and submitted fraudulent invoices to TAB to induce the bank to pay funds to Arrow Trucking Company that were not warranted.  In total, the conspiracy caused a loss to the United States totaling more than $9.562 million.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Williams commended the special agents of the IRS-CI and FBI, who investigated this case, and Assistant U.S. Attorneys Jeffrey A. Gallant and Catherine Depew of the Northern District of Oklahoma and Special Assistant U.S. Attorney and Tax Division Trial Attorney Charles A. O’Reilly, who prosecuted the case on behalf of the United States.

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

A federal jury in Los Angeles convicted the former owner and the former operator of a durable medical equipment supply company of health care fraud charges in connection with a $1.5 million Medicare fraud scheme.  

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Special Agent in Charge Chris Schrank of the U.S. Department of Health and Human Services-Office of the Inspector General’s (HHS-OIG) Los Angeles Region, Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Division and Special Agent in Charge David Jett of the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse made the announcement.

Amalya Cherniavsky, 41, and her husband, Vladislav Tcherniavsky, 46, of Long Beach, California, were both convicted late yesterday of one count of conspiracy to commit health care fraud and five counts of health care fraud.  Sentencing is scheduled for Dec. 14, 2015, before U.S. District Judge Terry J. Hatter Jr. of the Central District of California, who presided over the trial.

The evidence at trial demonstrated that Cherniavsky owned JC Medical Supply (JC Medical), a purported durable medical equipment (DME) supply company, and that she co-operated the company with her husband, Tcherniavsky.  According to the trial evidence, the defendants paid illegal kickbacks to patient recruiters in exchange for patient referrals.  The evidence further showed that the defendants paid kickbacks to physicians for fraudulent prescriptions – primarily for expensive, medically unnecessary power wheelchairs – which the defendants then used to support fraudulent bills to Medicare.

According to the evidence presented at trial, between 2006 and 2013, the defendants submitted $1,520,727 in fraudulent claims to Medicare and received $783,756 in reimbursement for those claims. 

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Central District of California.  The case was investigated by the FBI, HHS-OIG’s Los Angeles Regional Office and the California Department of Justice.  The case is being prosecuted by Trial Attorneys Blanca Quintero and Kevin R. Gingras of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 2,300 defendants who have collectively billed the Medicare program for more than $7 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

Bank Will Pay Penalty of More than $10 Million and Continue to Cooperate with Department

The Department of Justice announced today that BBVA Suiza S.A. has reached a resolution under the department’s Swiss Bank Program.

“Swiss banks such as BBVA Suiza S.A. are providing detailed information regarding their efforts to conceal U.S.-related accounts, and are turning over the names of individuals and entities that facilitated this criminal conduct,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.  “With each agreement, we are lifting the veil of secrecy shrouding those that assist accountholders in the evasion of their U.S. tax obligations.”

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:

• Make a complete disclosure of their cross-border activities;
• Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
• Cooperate in treaty requests for account information;
• 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, BBVA Suiza 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.

BBVA Suiza is a Swiss private bank with one office in Zurich, where it provided private banking and asset management services through private bankers.  BBVA Suiza is wholly owned by Banco Bilbao Vizcaya Argentaria S.A. and is part of the BBVA Group.  BBVA, the flagship of the BBVA Group, is a major global financial institution based in Spain.  In 1984, a predecessor of BBVA entered the Swiss market by purchasing a Swiss bank that later became BBVA Suiza.

BBVA Suiza was aware that U.S. taxpayers had a legal duty to report their assets and income to the Internal Revenue Service (IRS) and to pay taxes on the basis of all their income, including income earned from accounts that BBVA Suiza maintained on their behalf.  Despite being aware of this legal duty, BBVA Suiza maintained undeclared accounts for clients that it knew, or should have known, were U.S. taxpayers.

BBVA Suiza offered a variety of traditional Swiss banking services that assisted and enabled certain of its U.S. taxpayer clients to conceal their account assets and income, file false federal tax returns with the IRS and evade their U.S. tax obligations.  These services included opening and maintaining undeclared accounts for U.S. taxpayers, offering the option to hold mail at BBVA Suiza and providing Swiss travel-cash cards, which enabled one U.S. client to access funds from undeclared accounts to spend in the United States.

BBVA Suiza permitted four groups of U.S. taxpayers to maintain six accounts, which held U.S. securities in the name of six offshore structures, specifically Panama corporations and British Virgin Islands companies.  The U.S. taxpayer’s interest in each of these accounts was not reported to the IRS even though BBVA Suiza knew, or had reason to know, that such offshore-structure accounts were operated without strict adherence to corporate formalities and, in effect, were operated by the U.S. taxpayer beneficial owners as sham, conduit or nominee entities.  BBVA Suiza relationship managers associated with these six accounts:

• met with or took instructions from the U.S. taxpayer beneficial owners of these offshore-structure accounts, instead of the directors or other authorized parties of the account;
• acted on instructions to transfer funds to a U.S. beneficial owner, including to accounts located within the United States or to a third-party designated by the U.S. beneficial owner; and/or
• effected transfers from certain of the offshore-structure accounts to pay for personal expenses incurred in connection with the use of credit cards issued in favor of the U.S. beneficial owners of the structures.

BBVA Suiza 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.  In these instances, BBVA Suiza was in violation of the terms of its Qualified Intermediary Agreement with the IRS by failing to obtain IRS Forms W-9 from the U.S. beneficial owners of accounts that held U.S. securities, undertake IRS Form 1099 reporting or impose backup tax withholding when it had knew, or had reason to know, that an offshore structure was acting as a nominee for its U.S. beneficial owners.

BBVA Suiza also transferred the assets of U.S.-related accounts belonging to certain U.S. taxpayer clients in ways that concealed the U.S. nature of those accounts, such as through cash or check withdrawals, wire transfers and sham transfers to non-U.S. relatives or their nominal accountholders.  In addition, BBVA Suiza removed some of its U.S. taxpayer clients’ names as joint-accountholders, leaving only non-U.S. persons as accountholders, or moved their assets into new accounts that were held in the names of non-U.S. persons, including non-U.S. relatives.  BBVA Suiza thereafter treated such 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 of the accounts.  BBVA Suiza followed instructions from U.S. beneficial owners, or their external asset managers, to transfer undeclared assets from U.S.-related accounts to locations throughout the world without knowing or first confirming whether the U.S. beneficial owners were compliant with their U.S. tax obligations.

Since Aug. 1, 2008, BBVA Suiza maintained 138 U.S.-related accounts with a maximum aggregate dollar value of more than $157 million.  BBVA Suiza will pay a penalty of $10.390 million.

While U.S. accountholders at BBVA Suiza 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 BBVA Suiza 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 BBVA Suiza S.A. marks another step forward in DOJ’s Swiss Bank Program,” said Acting Deputy Commissioner International David Horton of the IRS Large Business & International Division (LB&I).  “U.S. taxpayers who hid their money in this and other Swiss banks need to come forward to report their foreign accounts and pay taxes on the income they earned.  Working with DOJ, we continue to uncover both those who hid offshore accounts and those who aided this illegal activity.”

“The multiplier effect that these agreements have on tax compliance cannot be underestimated,” said Chief Richard Weber of IRS-Criminal Investigation (CI).  “The magnitude of the data provided by each of these agreements leads us to more—more banks, more countries and more individuals.  IRS-CI will continue to use all of the information we gather from these agreements to vigorously pursue individual U.S. taxpayers who illegally conceal assets offshore and to develop innovative strategies to combat international tax evasion worldwide.”

Acting Assistant Attorney General Ciraolo thanked the IRS, and in particular, IRS-CI and IRS LB&I for their substantial assistance.  Ciraolo also thanked Paul G. Galindo, 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.

     ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that defendant GILLIAN A. GALLARDO, age 30, from Yigo, was sentenced on October 15, 2015, before Chief Judge Frances Tydingco-Gatewood, to three years of probation and was ordered to pay restitution in the amount of $19,098.50.

     Defendant GALLARDO, an active duty Staff Sergeant in the U.S. Air Force at the time of the offense, knowingly submitted false Overseas Housing Allowance (OHA) documentation to the Defense Finance and Accounting Service that falsely claimed that she paid $2,450 in rent every month for her supposed occupancy of a certain residence in Yigo.  In reality, GALLARDO lived rent-free at an entirely different address in Dededo and pocketed the OHA funds.  She pled guilty on June 3, 2015 to Submitting a Fraudulent Claim against the United States.  

     This case was investigated by the Air Force Office of Special Investigations.  The case was prosecuted by Special Assistant U.S. Attorneys Kurt E. Grunawalt and Brian D. Ralston.

District Judge J. Michael Seabright today sentenced former Honolulu Police Officer Vincent Morre, 38, to 30 months in prison for violating the civil rights of two Honolulu men.  On May 19, 2015, Morre pleaded guilty to two counts of depriving the two men’s right to be free from the use of unreasonable force by a law enforcement officer on Sept. 5, 2014.

According to information presented to the court, Morre, then a 10 year veteran of the Honolulu Police Department, was searching for a fugitive when he entered a game room on Hopaka Street.  Once in the game room, Morre, in an unprovoked attack, kicked J.T. in the head.  Morre then continued to search the game room for the fugitive.  On his way out, Morre reapproached J.T. but first struck F.F. (who was seated next to J.T) in the face twice and then kicked his chest.  Morre then continued the assault on J.T. by kicking J.T. off his chair.  As Morre was leaving the game room, he threw a metal stool which hit J.T. in the head, requiring three stitches.  Five days later, Morre filed a false police report omitting that he had assaulted J.T. or F.F.

“When this defendant violated the trust of the people he was sworn to serve, the Department of Justice stood ready to enforce the law and protect the civil rights of all Americans,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.

“This case represents important steps in vindicating the civil rights of the victims of unreasonable use of force by a law enforcement officer,” said U.S. Attorney Florence T. Nakakuni of the District of Hawaii.

“The FBI would like to thank the Honolulu Police Department for its cooperation, assistance, and transparency during this investigation,” said Special Agent in Charge Paul Delacourt of the FBI’s Honolulu Field Office.

Assistant U.S. Attorney Darren W.K. Ching of the District of Hawaii and Trial Attorney Angie Cha of the Civil Rights Division prosecuted the case.  

The Department of Justice and the Alaska Department of Law announced that they are bringing to a close the federal and state judicial actions against ExxonMobil Corporation and its corporate predecessors regarding the 1989 Exxon Valdez oil spill.  The Prince William Sound, Alaska, harlequin ducks and sea otters thought in 2006 to have been impacted by lingering subsurface oil have recovered to pre-spill population levels.  Scientists have concluded that exposure to the subsurface oil is no longer biologically significant to these species.  Accordingly, the governments have decided to withdraw their 2006 request to Exxon to fund bio-restoration of subsurface lingering oil patches. 

The March 1989 grounding of the tanker vessel Exxon Valdez on Bligh Reef in Prince William Sound spilled nearly 11 million gallons of North Slope crude oil that ultimately contaminated some 1,500 miles of Alaska’s coastline.  It affected three national parks, four national wildlife refuges, a national forest, five state parks, four state critical habitat areas, a state game sanctuary and killed enormous numbers of birds, marine mammals and fish and disrupted the lives and livelihoods of Alaskans who rely on those resources.

On Oct. 8, 1991, U.S. District Court Judge Russel Holland approved both a plea agreement resolving criminal charges against Exxon Corporation and Exxon Shipping (Exxon) under various federal environmental laws and a settlement agreement between Exxon and the United States and the state of Alaska resolving all civil claims between them pertaining to the spill.  Under the plea agreement, the company paid $125 million for a criminal fine and restitution.  The civil settlement required Exxon to pay the governments $900 million over 10 years to reimburse past costs and fund the restoration of injured natural resources.  

Since 1991, the Exxon Valdez Oil Spill Trustee Council, composed of representatives from both governments, has used civil settlement monies for significant restoration efforts in the areas affected by the spill, including: projects designed to restore the environment, manage human uses and reduce marine pollution; habitat protection and acquisition; and monitoring and research.  These restoration efforts have successfully accelerated and documented the recovery of natural resources that were injured by the spill.  Further, due to income earned on the settlement funds, the Trustee Council currently has more than $200 million at its disposal for future restoration work.

One unresolved aspect of the 1991 settlement has been a provision in the consent decree entitled “Reopener for Unknown Injury” that allowed the governments to seek up to an additional $100 million if they later found substantial losses or declines in populations, habitats or species that could not have been anticipated at the time of the settlement.  This provision allowed the governments to obtain additional funding from Exxon to restore injuries shown to be both unforeseeable and “substantial” if several conditions were met.  Those conditions include presenting a detailed plan to Exxon by Sept. 1, 2006, for how to restore the substantial loss or decline of natural resources. 

The governments took preliminary actions in 2006 to preserve a potential Reopener claim, by presenting to Exxon a plan to address patches of oil from the Exxon Valdez spill that recent surveys had found in the subsurface sediments and among rocks of a number of beaches in the spill area.  Although this “lingering oil” occurred on only a small fraction of the originally oiled shoreline, the governments viewed it as a substantial loss of habitat because it appeared to be impeding the recovery of two species, harlequin ducks and sea otters, that were injured by the Exxon Valdez spill and forage in the types of beach sediments where the oil persists, thereby exposing them to the lingering oil.  

When Exxon declined to participate, the governments undertook the first stages of the habitat restoration plan, which consisted of a series of scientific studies to improve understanding of why the oil had not yet degraded and to design specific measures to make it non-toxic.  These studies were funded by the Trustee Council from the original settlement monies and have produced significant public information about the distribution and characteristics of the lingering oil, as well as pilot tests to improve techniques for accelerating the bio-degradation of subsurface oil in various types of beaches.  These studies will inform restoration and resource management decisions both in Prince William Sound and in similar areas across the United States and the world.  During this period, however, continued wildlife monitoring showed that the harlequin ducks and sea otters that had appeared vulnerable to the lingering oil have recovered to pre-spill population levels and are no longer exposed to oil more than populations outside the spill area.  Based on this information, the governments and the trustee agencies – the Departments of Agriculture Forest Service and the Interior, National Oceanic and Atmospheric Administration (NOAA), Alaska Department of Environmental Conservation, Alaska Department of Fish and Game and Alaska Department of Law – have concluded that the legal requirements for pursuing a Reopener claim are no longer met.

“Our decision today highlights the trustees’ commitment to excellent science and the success of their restoration efforts since the spill,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “The Reopener in our settlement with Exxon was unique and set a high bar for recovery of additional damages.  Together with our partners in the Alaska Department of Law, we preserved a potential Reopener claim and investigated it to its logical end. Our action today allows us to celebrate all that has been accomplished in Prince William Sound since the spill.”

“Although we will not be pursuing Exxon for additional damages, our decision today does not close the book on lingering oil,” said Attorney General Craig Richards for Alaska.   “We are fortunate to have alternatives for dealing with this issue that can be undertaken without the constraints of the Reopener language.  We will be engaging Alaskans through the Trustee Council process to advise us on what steps they would like to see us take. ”

“I expect the Trustee Council will evaluate whether active restoration should be performed at any lingering oil sites using the same standards and process by which it considers other potential restoration projects,” said Trustee Council member and Senior Advisor Michael Johnson for Alaska Affairs to the Secretary of the Interior. 

The Council has directed restoration efforts since the 1991 settlement and has established transparent procedures, with opportunities for public proposals and comment, for spending the restoration funds paid by Exxon.

NOAA scientists, who were instrumental in developing the information that led to the 2006 habitat restoration plan, will continue to monitor lingering oil sites and provide information to the Trustee Council for use in determining whether additional restoration measures will benefit the affected coastline.  

“Naturally, the persistence of oil is of concern to us,” said Lois Schiffer of the NOAA General Counsel.  “Although the lingering oil is largely in subsurface soil or rocks, it does have the potential, if disturbed, to expose intertidal resources to oil, and its presence can be disturbing to people who come across it.  The real question is whether it is better to intervene or to leave it to break down over time.”

On her first official visit to Colombia, Attorney General Loretta E. Lynch traveled to Bogota to head the U.S. delegation to the Organization of American States REMJA X, the 10th Meeting of Ministers of Justice and Attorneys General of the Americas.   While in Colombia, the Attorneys General delivered remarks during the REMJA Head of Delegation Dialogue, and also met with the President of Colombia, and with her counterparts from other countries attending the conference. 

The REMJA—a policy and technical forum at the hemispheric level on matters related to justice and international legal cooperation—is attended by Ministers of Justice, other Ministers or Attorneys General from the 34 Organization of American States (OAS) member states.  Representatives from the member states have responsibilities in the area of public policy regarding matters of justice and international legal cooperation, especially with regard to criminal matters. 

During her remarks, the Attorney General noted that now more than ever has the collaborative work of the OAS member states been necessary.

“As our hemisphere – and our world – grows more interdependent and interconnected than ever before, that kind of collaboration has become increasingly important.  The threats that we face are no longer restrained by borders or oceans, or limited to one country or region.  And the problems impacting one nation can easily affect us all.  From corruption and kleptocracy that causes people to lose confidence in institutions of government, to organized criminal enterprises like human trafficking rings that impact our citizens’ sense of security, we are faced with global challenges that require a truly global response.”

The Attorney General also noted the Justice Department’s establishment of a dedicated kleptocracy force within the FBI as an example of its ongoing efforts to investigate criminals worldwide and “bring down criminal networks that seek to exploit our most vulnerable citizens.”

She also spoke about one of her top priorities – expanding the department’s ability to take on crimes that occur in cyberspace.  One such example is the creation of a cyber unit within the Criminal Division’s Office of International Affairs that is tasked “exclusively on responding to and executing requests for electronic evidence from foreign authorities.” 

Additionally, the Attorney General referenced that through the Budapest Convention, the United States and countries around the world are building a strengthened international network to “fight crimes like computer hacking, fraud, and child pornography, and to combat related criminal activity from organized crime to terrorism.”

More generally, the Attorney General emphasized the department’s intention to reinforce and improve its ability to engage efficiently and effectively with its global counterparts to “expand capacity, enhance cooperation, and provide technical assistance in relation to matters from money laundering to terrorism to human trafficking.”

Lastly, while in Colombia, the Attorney General had individual meetings with the following individuals:

• Juan Manuel Santos Calderon, Colombia’s President

• Eduardo Montealegre Lynett, Colombia’s Attorney General

• Yesid Reyes Alvarado, Colombia’s Minister of Justice

• Arely Gomez, Mexico’s Attorney General

• Representatives from Costa Rica, El Salvador, Honduras and Panama

Mostafa Ahmed Awwad, 36, of Yorktown, Virginia, was sentenced today to 132 months in prison by U.S. District Judge Raymond A. Jackson of the Eastern District of Virginia for attempted espionage relating to his attempt to provide schematics of the nuclear aircraft carrier USS Gerald R. Ford to Egypt while serving as a Navy engineer.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Assistant Director Randall C. Coleman of the FBI’s Counterintelligence Division and Special Agent in Charge Tim Quick of the Naval Criminal Investigative Service (NCIS) Norfolk, Virginia, Field Office made the announcement.

“Awwad took advantage of his position of trust within the Navy to share the schematics of the USS Gerald R. Ford nuclear aircraft carrier with individuals whom he believed were representing a foreign government,” said Assistant Attorney General Carlin.  “The National Security Division will continue to seek justice for those who abuse their access to sensitive defense information.”

“Awwad attempted to steal the valuable plans for the USS Ford and to provide them to a foreign government,” said U.S. Attorney Boente.  “This office is committed to safeguarding our nation’s sensitive defense information, and we will bring to justice those who seek to steal it.  I want to commend our partners at the FBI Norfolk and NCIS Norfolk for their excellent work on this case.”

“The mission of NCIS includes protecting Sailors and secrets,” said Special Agent in Charge Quick.  “Awwad endangered both; for personal gain and to help strengthen another nation's military. It's gratifying that NCIS was a part of bringing him to justice.”  

Awwad pleaded guilty on June 15, 2015.  According to court documents, Awwad began working for the Department of the Navy in February 2014 as a civilian general engineer in the Nuclear Engineering and Planning Department at the Norfolk Naval Shipyard.  Based on a joint investigation, an undercover FBI agent contacted Awwad by telephone on Sept. 18, 2014, and asked to meet him the following day.  Without seeking additional information from the caller, Awwad agreed.  The next day, Awwad met with the undercover FBI agent, who was posing as an Egyptian intelligence officer, in a park in Hampton, Virginia.  During the meeting, Awwad claimed it was his intention to utilize his position with the U.S. Navy to obtain military technology for use by the Egyptian government, including but not limited to the designs of the USS Gerald R. Ford nuclear aircraft carrier, a new Navy “supercarrier.”  Awwad agreed to conduct clandestine communications with the undercover FBI agent, and to conduct “dead drops” in a concealed location in the park.

On Oct. 9, 2014, Awwad and the undercover FBI agent met at a hotel where Awwad described a detailed plan to circumvent U.S. Navy computer security by installing software on his restricted computer system that would enable him to copy documents without causing a security alert.  At this time, Awwad also provided the undercover FBI agent with four Computer Aided Drawings of a U.S. nuclear aircraft carrier downloaded from the Navy Nuclear Propulsion Information system.  During the discussion, Awwad indicated his understanding that the drawings would be sent to and used in Egypt.  Awwad also asked the undercover FBI agent for $1,500 to purchase a pinhole camera that he would wear around the shipyard to photograph restricted material.  At the conclusion of the meeting, Awwad agreed to provide the undercover FBI agent with passport photos which would be used to produce a fraudulent Egyptian passport so that Awwad could travel to Egypt without alerting U.S. government officials.

On Oct. 23, 2014, Awwad traveled to the prearranged dead drop site situated on a secluded hiking trail and utilized a concealed container disguised in a hole in the ground.  He retrieved $3,000 before placing an external hard drive and two passport photos inside.

On Dec. 5, 2014, Awwad and the undercover agent met in the Hampton Roads, Virginia, area.  During this meeting, Awwad stated that he planned to travel to Egypt.  Awwad subsequently said he wanted to meet with “high ranking” Egyptian intelligence and military officials in Cairo.  Awwad also stated during the meeting that he had copied all of the schematics.  During the meeting, Awwad provided the undercover FBI agent a thumb drive that contained more schematics of the USS Gerald R. Ford.  The undercover FBI agent handed Awwad the “escape plan” – in actuality a manila envelope with no real plan inside – along with $1,000 in currency, shortly before Awwad was arrested.

The schematics of the USS Gerald R. Ford that Awwad provided are information related to the national defense of the United States.  The USS Gerald R. Ford, which is currently under construction, is the first in a new class of aircraft carriers.  When completed, the USS Gerald R. Ford will be the most advanced aircraft carrier in the world, with approximately 4,000 sailors on board.  The schematics contain Naval Nuclear Propulsion Information and they are marked with the handling restriction “NOFORN,” which means they are not releasable to foreign persons.

This case was investigated by the FBI’s Norfolk Field Office and NCIS Norfolk, in cooperation with the Department of Navy.  This case was prosecuted by Assistant U.S. Attorneys Benjamin L. Hatch and Joseph E. DePadilla of the Eastern District of Virginia and Senior Trial Attorney Heather M. Schmidt of the Justice Department’s National Security Division.

The Justice Department announced today that it reached an agreement with North American Shipbuilding LLC, a company located in Larose, Louisiana.  The agreement resolves a complaint filed with the Justice Department’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), claiming that the company retaliated against an individual for filing a charge of discrimination with OSC.   

Based on its investigation, the department determined that North American Shipbuilding retaliated against an employee for filing a charge with OSC by, among other things, barring him from the company’s business facilities.  The anti-discrimination provision of the Immigration and Nationality Act (INA) prohibits employers from intimidating, threatening, coercing or retaliating against workers who file a charge under the law.

Under the terms of the settlement agreement, the company has agreed, among other things, to pay a civil penalty and to offer $15,000 in back pay to the injured party.  The company also has agreed to train its employees on the anti-discrimination provision of the INA and to review and revise its employment policies.

“Retaliation against employees for contacting government agencies entrusted to investigate possible violations of the law will not be tolerated,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “Employees should not be afraid to speak up about their treatment in the workplace.”         

OSC is responsible for enforcing the anti-discrimination provision of the INA.  Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; unfair documentary practices; retaliation and intimidation.  Trial Attorney Katherine E. Lamm investigated this matter. 

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.  

Defendant Charged with Providing Material Support to ISIL and Computer Hacking Related to the Theft and Distribution of U.S. Military and Federal Employee Personal Information

Malaysian authorities have detained Kosovo citizen Ardit Ferizi in Malaysia on a U.S. provisional arrest warrant alleging that he provided material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, and committed computer hacking and identity theft violations in conjunction with the theft and release of personally identifiable information (PII) of U.S. service members and federal employees.  The criminal complaint was unsealed today.  The United States is seeking his extradition to the U.S. Attorney’s Office of the Eastern District of Virginia to stand trial.

The charges were announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Assistant Director in Charge Paul Abbate of the FBI’s Washington, D.C.’s Field Office.

As alleged in the criminal complaint, Ferizi, also known by his hacking moniker “Th3Dir3ctorY,” is believed to be the leader of a Kosovar internet hacking group called Kosova Hacker’s Security (KHS).  Ferizi hacked into the computer system of a victim company located in the United States and stole the PII of thousands of individuals.  He then provided the PII of over 1,000 U.S. service members and federal employees to ISIL to be used against those employees.  Between June and August 2015, Ferizi provided unlawfully obtained PII to ISIL member Junaid Hussain, aka Abu Hussain al-Britani.  On Aug. 11, 2015, in the name of the Islamic State Hacking Division (ISHD), Hussain posted a tweet titled “NEW: U.S. Military AND Government HACKED by the Islamic State Hacking Division!” which contained a hyperlink to a 30-page document.  That document stated, in part, that “we are in your emails and computer systems, watching and recording your every move, we have your names and addresses, we are in your emails and social media accounts, we are extracting confidential data and passing on your personal information to the soldiers of the khilafah, who soon with the permission of Allah will strike at your necks in your own lands!”  The next 27 pages of the document contained the names, e-mail addresses, e-mail passwords, locations and phone numbers for approximately 1,351 U.S. military and other government personnel.  This posting was intended to provide ISIL supporters in the United States and elsewhere with the PII belonging to the listed government employees for the purpose of encouraging terrorist attacks against those individuals.

“As alleged, Ardit Ferizi is a terrorist hacker who provided material support to ISIL by stealing the personally identifiable information of U.S. service members and federal employees and providing it to ISIL for use against those employees,” said Assistant Attorney General Carlin.  “This case is a first of its kind and, with these charges, we seek to hold Ferizi accountable for his theft of this information and his role in ISIL’s targeting of U.S. government employees.  This arrest demonstrates our resolve to confront and disrupt ISIL’s efforts to target Americans, in whatever form and wherever they occur.”

“National security is compromised by computer intrusions, and Ferizi is charged with obtaining the personal identifying information of U.S. military and government personnel and providing it to ISIL,” said U.S. Attorney Boente.  “We will investigate and prosecute these cyber-attacks to fullest extent of the law.”

If convicted, the defendant faces up to 35 years.

The charges and allegations in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

The investigation is being conducted by the FBI.  The case is being prosecuted by Trial Attorney Gregory Gonzalez of the National Security Division’s Counterterrorism Section and Assistant U.S. Attorney Lynn Haaland of the Eastern District of Virginia.  The Assistant Attorney General, U.S. Attorney and FBI Assistant Director thanked the Malaysian authorities for their assistance in this matter.

     ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, and JEFFREY GAINES, Resident Agent in Charge, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), announce the distribution of free gun locks and safety information to community residents through Project Childsafe, a national firearm safety education and gun lock program.

     The United States Attorney’s Office (USAO), in partnership with ATF, are committed to providing the Districts of Guam and the Northern Marianas Islands 300 free gun locks for distribution to local residents on a first-come, first-served basis.  The program’s purpose is to promote safe firearms handling and secure storage practices among all firearms owners to prevent firearms accidents, theft and misuse.

     The free gun locks will be distributed on October 18, 2015, at the Red Ribbon Community Outreach Event at the Micronesia Mall Center Court from 10:00 a.m. to 2:00 p.m.

     Another distribution will be made on October 30, 2015, at the Red Ribbon “Say Boo to Drugs” Community Event at the Agana Shopping Center from 4:00 p.m. to 6:00 p.m.

     U.S. Attorney Limtiaco notes that this event supports the goals of the U.S. Department of Justice’s Project Safe Neighborhood (PSN) Initiative, a nationwide commitment to reduce violent crime.

     Sample gun locks will be available for viewing.

The United States has taken comprehensive enforcement action to resolve several years of significant noncompliance by the Rhode Island Department of Transportation (RIDOT) with its obligations under the federal Clean Water Act and the permit that governs day-to-day operations of its stormwater drainage systems, announced Assistant Attorney General John C. Cruden of the Department of Justice’s Environmental and Natural Resources Division, U.S. Attorney Peter F. Neronha for the District of Rhode Island and the Environmental Protection Agency (EPA) Region 1 Administrator H. Curtis Spalding.  The resolution is being carried out through the filing of a civil complaint in federal court in Providence, Rhode Island, and the lodging of a consent decree that requires RIDOT to immediately begin comprehensive efforts to repair, restore and improve its systems to comply with the law.

As detailed in the complaint filed today, it is alleged that RIDOT failed to comply with its obligations under the permit in four major areas: (1) taking appropriate steps to evaluate and address the impact of its systems on impaired waters in the state of Rhode Island, (2) detecting and eliminating illicit connections and discharges of pollutants, including sewage, from illicit connections, (3) inspecting, cleaning and repairing its drainage systems, including catch basins and other components and (4) conducting adequate street sweeping to reduce the flow of contaminants, such as sediment and other physical debris on roadways into waterways. 

As part of its system of roads, bridges and other infrastructure, RIDOT’s roadways are accompanied by storm drains, pipes, catch basins, manholes, outfalls and other drainage system components that carry stormwater runoff to approximately 235 impaired water body segments in Rhode Island: this includes waters that ultimately discharge into Narragansett and Mount Hope Bays.  The RIDOT drainage system includes approximately 25,000 catch basins and 3,800 outfalls that extend over 3,300 lane miles of roadway.

The consent decree filed with the court represents the result of more than 14 months of detailed and comprehensive discussions initiated by the Environment and Natural Resources Division and the U.S. Attorney’s Office with the state of Rhode Island, culminating in a comprehensive agreement that requires RIDOT to address each of its areas of violation. 

“This agreement is good news for communities and the environment of Rhode Island,” said Assistant Attorney General Cruden.  “This judicially enforceable settlement will require RIDOT to implement best management practices, including structural controls, to reduce stormwater pollution from its roads to impaired waters of Rhode Island.  RIDOT will also be required to implement long-overdue repairs to its storm water drainage systems, which will also lead to improved water quality in area waterways, including the historic Narragansett Bay.” 

“For nearly a decade, the Rhode Island Department of Transportation has ignored its obligation to the people of Rhode Island to protect the waterways of this state,” said U.S. Attorney Neronha.  “Instead, through its neglect and indifference - through its failure to inspect and maintain its storm water run-off system – RIDOT has contributed to the pollution of those waters.  Today, with the filing of a complaint against RIDOT in federal court in Providence and the entry of a consent decree between the United States and RIDOT, this will change.  Under the terms of the consent decree, RIDOT’s obligations are clear – it must change the way it does business.  It must do what it has repeatedly failed to do for years.  It must comply with the law – specifically, the Clean Water Act.  It must operate a storm water run-off system that protects, rather than harms, the environment.  This Office, and our partners at EPA and ENRD, will hold RIDOT accountable should it fail to live up to its obligations.”

“EPA is pleased that we have now entered into a comprehensive legal agreement to ensure that RIDOT takes the necessary steps to comply with requirements that ensure a cleaner and healthier environment,” said Regional Administrator Curt Spalding for EPA’s New England office.  “This settlement is designed to produce environmental improvements on a timeline that is aggressive, but not unrealistic for RIDOT.  This is good news for everyone who enjoys the natural beauty and recreational abundance of Rhode Island.”

Under the decree, if approved by the court, RIDOT will pay a civil penalty of $315,000 and will undertake two Supplemental Environmental Projects (SEPs).  These SEPs will result in the preservation, through conservation easements and permanent protection from development, of two parcels of land in Johnston and Lincoln, Rhode Island.  These lands abut current state park or environmental preserves and lie within the watersheds of impaired waterways subject to the consent decree.  Their designation as SEPs will ensure that they remain in their natural state for future generations of Rhode Islanders to enjoy.

To correct the identified deficiencies and meet its obligations under the Clean Water Act, RIDOT is required to develop stormwater control plans for groups of impaired water bodies (generally speaking, water bodies with high levels of pollution) that are near each other.  These plans will identify the extent to which RIDOT’s roads and structures contribute to runoff to those water bodies, assess best practices to reduce pollution and then implement measures (in some cases including structural controls such as infiltration trenches, basins, ponds, grass swales, and others) to meet pollution reduction targets, taking into account various specified formulas that assess the impact of RIDOT’s roads and paved areas on the amount of discharge to waterways.  Once created, the plans will be subject to EPA review and approval and must then be implemented by RIDOT.

Additionally, RIDOT will undertake a comprehensive program of sampling at locations where its systems drain into the environment to look for situations where third parties may have illicit connections to RIDOT storm sewers, potentially draining sewage or other non-stormwater pollutants through the system.  When these tests identify designated pollutants, including high levels of bacteria accompanied by certain chemicals or biological indicators, RIDOT must investigate, determine the source of the connection, and take appropriate steps to eliminate it.

In addition, many elements of RIDOT’s physical systems, including catch basins, culverts and other components of its stormwater drainage network, are in poor repair and have not been adequately maintained.  In some cases, this prevents the system from working as it should to control pollutant discharge.  Under the decree, RIDOT will submit an inventory of its physical systems by March of next year.  It will then have to implement a comprehensive inspection, cleaning and repair program, followed by continuing periodic inspection and maintenance.

Finally, RIDOT must undertake an inventory of its roads and parking lots and will then implement a street sweeping and tracking system to ensure that its network is fully and regularly swept.

RIDOT is required to file annual reports with EPA regarding its progress with all of the requirements of the decree and the decree provides for stipulated penalties for future instances of noncompliance.

The investigation and resolution of this matter are the result of a coordinated enforcement effort among the U.S. Attorney’s Office for the District of Rhode Island, the Department of Justice’s Environment and Natural Resources Division and EPA.

The case is being handled by Assistant U.S. Attorneys Zachary A. Cunha and Richard B. Myrus, Senior Counsel Elizabeth Yu of the Environment and Natural Resources Division of the Department of Justice and Enforcement Counsel Kevin Pechulis, of the EPA.

For a copy of the consent decree, visit www.justice.gov/enrd/consent-decrees.

A Phenix City, Alabama, woman was sentenced to serve five years in prison today in U.S. District Court for the Middle District of Alabama for her involvement in a stolen identity tax fraud (SIRF) scheme, 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.

Teresa Floyd, 53, was sentenced by Chief U.S. District Judge W. Keith Watkins of the Middle District of Alabama to serve 50 months in prison to be followed by three years of supervised release and was ordered to pay $734,565 in restitution to the Internal Revenue Service (IRS).

Floyd pleaded guilty earlier this year to one count of conspiracy to defraud the United States with respect to claims and one count of aggravated identity theft.  Floyd’s daughter, Lasondra Miles Davis, 37, pleaded guilty earlier this year to one count of aggravated identity theft.  On Sept. 1, Davis was sentenced to serve two years in prison to be followed by one year of supervised release and was ordered to pay $1,941 in restitution to the IRS. 

According to court documents, between March 2011 and May 2014, Floyd and Davis operated several tax preparation businesses in the Phenix City area, including T & L Tax Service.  Floyd obtained stolen identities which, according to allegations in the superseding indictment, she and her co-conspirators then used to file more than 900 false federal income tax returns that claimed more than $2.5 million in tax refunds.  Floyd, Davis and others caused the fraudulently obtained refund checks to be cashed at several businesses in Alabama and Georgia.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck Jr. commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Michael C. Boteler and Michael P. Hatzimichalis of the Tax Division and Assistant U.S. Attorney Jonathan Ross of the Middle District of Alabama, who are prosecuting the case.

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

FRESNO, California – Hoy un gran jurado federal dictó un auto de procesamiento de 13 cargos contra 14 individuos acusados de conspirar para distribuir metanfetamina, cocaína y heroína, anunció el Procurador de los Estados Unidos Benjamín B. Wagner.

Imputados en el auto de procesamiento figuran Olegario Trujillo, 29, de Fresno; Arnoldo Martínez Valencia, 39, de Woodlake; Edgar Valencia-Farías, de Tulare; Caesar Alejandro Gómez, 33, de Fresno; Gladys Ramos, 30, de Woodlake; Carlos Tafoya-Ramos, 22, de Woodlake; Marcos Díaz, 23, de Madera; Ramiro Salas Muñoz, 37, de Lindsay; Arthur Allen Walker, 32, de Poplar; Francisca Torres-Guisar, 51, de Visalia; Pedro Delgado-Montenegro, 36, de Porterville; José Roberto Arreola-Serrato, 31, de Tulare, Gary Passmore, 65, del estado de Washington y Jorge Martínez Jr., 23, de Tulare.   

Según documentos del tribunal, Olegario Trujillo fue el jefe de una organización traficante de droga a gran escala y responsable de distribuir metanfetamina, cocaína y heroína en California y Washington. Pedro Delgado-Montenegro y José Arreola-Serrato le suministraban la metanfetamina. Trujillo dirigía a varios de los otros individuos imputados en la entrega de las drogas y les daba instrucciones sobre la disposición de las ganancias. Arnoldo Martínez Valencia trabajaba con Trujillo en la administración de la distribución de la droga a Shelton, Washington. Como resultado de la investigación, agentes de la policía incautaron una gran cantidad de sustancias controladas incluyendo 14 kilos de metanfetamina, dos kilos de cocaína y un kilo de heroína.

Este caso fue el producto de una investigación para las Áreas de Tráfico de Droga de Alta Intensidad del Valle Central (Central Valley High Intensity Drug Trafficking Area o HIDTA) gestionada por el Equipo de Investigación de la Marihuana del Valle Central (Central Valley Marihuana Investigation Team o CVMIT). El CVMIT está compuesto por las Investigaciones de la Seguridad de la Patria (Homeland Security Investigations o HSI) de las Aplicaciones de Ley de Aduanas e Inmigración de los Estados Unidos (U.S. Immigration and Customs Enforcement o ICE), la Oficina de Investigación del Departamento de Justicia de California, Pesca y Vida Silvestre de California, la Oficina del Sheriff del Condado de Tulare, la Oficina del Sheriff del Condado de Kings y la Oficina del Sheriff del Condado de Fresno. La Procuradora Auxiliar de los Estados Unidos Kathleen Servatius está procesando el caso.

Si es condenado, Trujillo se enfrenta a una pena máxima establecida por la ley de condena perpetua y una multa de $10 millones. El resto de los demandados se enfrentan a penas máximas establecidas por la ley de 20 años en prisión y multas de $1 millón. El tribunal, no obstante, se reserva la decisión sobre cualquier sentencia y al ser considerado cualquier factor aplicable establecido por la ley y las Directrices Federales para Dictar Sentencia, las cuales toman en cuenta un número determinado de variables. Las imputaciones sólo son alegaciones; los demandados son presuntos inocentes hasta y a menos que sean comprobados culpables más allá de toda duda razonable.

The Department of Justice announced that a California man and a New Jersey man pleaded guilty today in U.S. District Court in Cincinnati in connection with the prosecution of a nationwide prescription drug diversion scheme. 

Fernando Galan, 50, of Simi Valley, California, pleaded guilty before U.S. District Court Judge Timothy S. Black to one count of conspiracy to distribute prescription drugs without a wholesale license.  The department also unsealed the case against David Konigsberg, 58, of East Hanover, New Jersey, who pleaded guilty on June 22 to one count of conspiracy to commit mail and wire fraud for his participation in the drug diversion scheme.

Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio, Special Agent in Charge Antoinette V. Henry of the U.S. Food and Drug Administration’s Office of Criminal Investigations (FDA-OCI) Metro Washington, D.C., Field Office and Assistant Inspector in Charge Christopher White of the U.S. Postal Inspection Service’s (USPIS) Cincinnati Field Office announced the two guilty pleas.

“Prescription drug diversion compromises the integrity of America’s drug supply chain,” said Principal Deputy Assistant Attorney General Mizer.  “This extensive investigation demonstrates that the Department of Justice will protect American consumers by prosecuting those who violate federal law by selling diverted drugs.”

“The sale of illegally diverted prescription drugs creates unacceptable public health risks,” said U.S. Attorney Stewart.  “Patients purchased what they believed were FDA-approved prescription drugs that had remained in regulated distribution channels intended to protect against misbranded, adulterated, sub-potent, improperly handled, counterfeit and stolen products.  Instead, these customers received drugs of unknown quality and origin.”

Galan and Konigsberg participated in the sale of illegally diverted prescription drugs to David Miller and his company, Minnesota Independent Cooperative (MIC).  On May 6, David Miller and MIC, along with Artur Stepanyan and Mihran Stepanyan, were indicted in the Southern District of Ohio and charged with one count of conspiracy to commit mail and wire fraud, 10 counts of mail fraud and one count of conspiracy to make false statements and to distribute prescription drugs without a wholesale license.  Those charges are still pending.  Galan and Konigsberg are the sixth and seventh co-conspirators to plead guilty for their participation in the drug diversion scheme involving Miller and MIC. 

Miller and MIC sold the prescription drugs obtained through Galan and Konigsberg – along with multiple other illegal sources – to wholesale and retail customers throughout the United States, including in the Southern District of Ohio.  Miller and MIC are alleged to have created fraudulent pedigree documents falsely stating that they had purchased the drugs from B&Y Wholesale, a company in Puerto Rico.  These false pedigrees covered up the illegitimate sources of the drugs – various illicit suppliers, including Konigsberg and Ricardo Jurado, a Miami supplier – and falsely stated that B&Y was an authorized distributor of the prescription drugs.

Galan

According to court documents, from July 2007 through October 2012, Galan facilitated the sale of millions of dollars of illegally diverted prescription drugs.  Galan, who owned a restaurant in Rosemead, California, acted as a middleman in the sale of diverted prescription drugs from Ricardo Jurado, a drug supplier in Miami, to Miller and MIC.  Neither Jurado nor Galan was licensed to engage in the wholesale distribution of prescription drugs.  Jurado has also been charged for his role in this conspiracy. 

In connection with facilitating the sale of the diverted drugs, Galan forwarded wiring instructions from Jurado directing Miller to send payments to at least 13 different bank accounts at banks in Mexico, Nicaragua, Canada, Florida and other locations.  During the course of the conspiracy, Miller and MIC wired more than $30 million to the bank accounts specified by Galan.  From June 2009 through July 2012, Galan received between $550,000 and $1 million in commission payments on the drug sales.  

Konigsberg

According to court documents, from 2008 through February 2104, Konigsberg sold illegally diverted prescription drugs to Miller and MIC.  Doing business as Preferred Inc., Konigsberg received prescription drugs from another supplier, who obtained the drugs from illicit street sources in New York and New Jersey at substantial discounts off of the wholesale price.  Konigsberg then offered the drugs to Miller and MIC for a profit.  

At Miller’s direction, Konigsberg included false notations on the invoices he provided to Miller indicating that Konigsberg had purchased the drugs from a large wholesale distributor.  As Konigberg and Miller both knew, Konigsberg had obtained the drugs from illegal sources, not from the large distributor.

***

This matter is being investigated by FDA-OCI and the USPIS.  Assistant U.S. Attorneys Anne L. Porter and Christy Muncy of the Southern District of Ohio and Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch are representing the United States in these cases. 

A resident of Lima, Peru, who was charged with operating call centers that lied to and threatened Spanish-speaking victims in the United States, pleaded guilty today to conspiracy to commit mail fraud, the Department of Justice and U.S. Postal Inspection Service (USPIS) announced.

Cesar Luis Kou Reyna, 40, pleaded guilty in U.S. District Court for the Southern District of Florida in Miami to charges that he controlled call centers in Peru that falsely told Spanish-speaking victims across the United States that they owed debts and threatened legal consequences for failure to pay the alleged debts. 

The announcement was made by Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida and Inspector in Charge Ronald J. Verrochio of the USPIS Miami Division. 

“The threats made by the defendant’s call centers harassed and intimidated Spanish-speaking victims across the United States,” said Principal Deputy Assistant Attorney General Mizer.  “As this case and other recent examples show, we will track down those responsible for defrauding and threatening American consumers, no matter where the fraudster resides, what language the fraudster speaks or which population he or she targets.”

“The U.S. Postal Inspection Service’s investigations have no borders when it comes to investigating crimes committed in the United States or on American victims,” said U.S. Postal Inspector in Charge Verrochio.  “Postal Inspectors will track down criminals, anywhere in the world, and bring them to justice.”

Kou Reyna owned and controlled a corporation, Fonomundo FC, which operated call centers in Peru and payment and fulfilment operations in Miami.  Fonomundo FC and its affiliated call centers used Internet-based telephone calling services to place cold calls to Spanish-speaking residents in the United States.  The callers falsely claimed to be attorneys and said that victims had failed to pay for or receive a delivery of products, although the victims had not ordered these products. 

The callers claimed that victims would be sued and that the companies would obtain large monetary judgements against them.  Some victims were also threatened with negative marks on their credit reports, imprisonment or deportation.  The callers said these threatened consequences could be avoided if the victims immediately paid “settlement fees.”  Many victims made monetary payments based on these threats. 

Kou Reyna was originally charged by criminal complaint and was arrested by USPIS at a Houston airport on July 30 while he was traveling in the United States.  He has remained incarcerated since his arrest and was indicted on Aug. 27. 

Principal Deputy Assistant Attorney General Mizer commended USPIS for its investigative efforts and thanked the U.S. Attorney’s Office of the Southern District of Florida for its contributions to the case.  The case is being prosecuted by Trial Attorneys Phil Toomajian and Stephen T. Descano of the Civil Division’s Consumer Protection Branch.

The Justice Department announced today that it has reached an agreement with Postal Express Inc., a delivery and logistics company with locations in Oregon, Washington and Idaho.  The agreement resolves a charge filed with the Justice Department’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), claiming that the company discriminated against a non-U.S. citizen in violation of the Immigration and Nationality Act (INA).   

The department’s investigation found that Postal Express required a Lawful Permanent Resident, who is permanently work authorized by virtue of that status, to produce a particular immigration document to re-verify his employment eligibility even though the employee had already provided sufficient documentation to prove his authorization to work in the United States.  Specifically, the department found that Postal Express improperly required him to present a new Permanent Resident Card (also known as a Green Card) and suspended him when he failed to do so.  The INA’s anti-discrimination provision prohibits employers from making specific documentary demands or requesting unnecessary work-authorization documents based on citizenship status or national origin when verifying or re-verifying an employee’s employment eligibility. 

Under the terms of the settlement agreement, the company has agreed to pay a civil penalty.  The company also has agreed, among other terms, to train employees on the anti-discrimination provision of the INA and to revise company policies to avoid discrimination in the employment eligibility verification (Form I-9) process.  The company reinstated the suspended employee and paid him lost wages at the start of OSC’s investigation.

“The department is committed to eliminating discriminatory barriers to employment for authorized workers,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “The Civil Rights Division commends Postal Express for working with the division to resolve this matter.  We will continue to work with employers to help implement best practices in the employment eligibility verification process.” 

OSC is responsible for enforcing the anti-discrimination provision of the INA.  Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; unfair documentary practices; retaliation and intimidation.  Trial Attorney Katherine E. Lamm investigated this matter. 

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.  

SACRAMENTO, California – Federico Sandoval Aguilar, 43, y residente de Biggs, fue sentenciado hoy por la Juez del Distrito de los Estados Unidos Kimberly J. Mueller a 17 años y medio de prisión por conspirar a distribuir metanfetamina, anuncio el Procurador de los Estados Unidos Benjamín B. Wagner.

Según documentos del tribunal, Aguilar era el jefe de una organización que traficaba con droga y que era responsable de la distribución semanal de metanfetamina en cantidades de una libra por el Condado de Butte. En el 2013, y en un periodo de cuatro meses, la organización de Aguilar distribuyó más de 49 libras de metanfetamina. Aguilar fue arrestado en su residencia en agosto del 2013 en donde agentes de la policía encontraron 15 teléfonos celulares, cinco armas de fuego y 50,000 dólares en efectivo ocultos en el conducto del aire dentro de un cuarto de baño.

Este caso es el producto de una investigación llevada a cabo por la Agencia Antidrogas de Estados Unidos (Drug Enforcement Administration) o DEA, el Destacamento Especial de Narcóticos Interinstitucional de Butte (Butte Interagency Narcotics Task Force ) o BINTF, la Oficina del Sheriff del Condado de Butte, el Departamento de Libertad Condicional del Condado de Butte, la Fiscalía del Distrito del Condado de Butte, la Patrulla de Carreteras de California, la Oficina de Control de Juegos y Apuestas del Departamento de Justicia de California, el Departamento de Policía de Chico y el Servicio de Mariscal de los Estados Unidos. El Procurador Auxiliar de los Estados Unidos Justin Lee procesó el caso.

Este caso fue parte de un Destacamento Especial de Lucha Contra las Drogas y el Crimen Organizado (Organized Crime Drug Enforcement Task Force) u OCDETF. El programa del OCDETF fue establecido en 1982 para gestionar ataques detallados a varios niveles a las principales organizaciones que se dedican al narcotráfico y al lavado de dinero. La misión fundamental del programa del OCDETF es identificar, interrumpir y desmantelar las más graves organizaciones dedicadas al narcotráfico y al lavado de dinero y ante todo a aquellas personas responsables del suministro de la droga en la nación.

SACRAMENTO, California – Federico Sandoval Aguilar, 43, y residente de Biggs, fue sentenciado hoy por la Juez del Distrito de los Estados Unidos Kimberly J. Mueller a 17 años y medio de prisión por conspirar a distribuir metanfetamina, anuncio el Procurador de los Estados Unidos Benjamín B. Wagner.

Según documentos del tribunal, Aguilar era el jefe de una organización que traficaba con droga y que era responsable de la distribución semanal de metanfetamina en cantidades de una libra por el Condado de Butte. En el 2013, y en un periodo de cuatro meses, la organización de Aguilar distribuyó más de 49 libras de metanfetamina. Aguilar fue arrestado en su residencia en agosto del 2013 en donde agentes de la policía encontraron 15 teléfonos celulares, cinco armas de fuego y 50,000 dólares en efectivo ocultos en el conducto del aire dentro de un cuarto de baño.  

Este caso es el producto de una investigación llevada a cabo por la Agencia Antidrogas de Estados Unidos (Drug Enforcement Administration) o DEA, el Destacamento Especial de Narcóticos Interinstitucional de Butte (Butte Interagency Narcotics Task Force ) o BINTF, la Oficina del Sheriff del Condado de Butte, el Departamento de Libertad Condicional del Condado de Butte, la Fiscalía del Distrito del Condado de Butte, la Patrulla de Carreteras de California, la Oficina de Control de Juegos y Apuestas del Departamento de Justicia de California, el Departamento de Policía de Chico y el Servicio de Mariscal de los Estados Unidos. El Procurador Auxiliar de los Estados Unidos Justin Lee procesó el caso.

Este caso fue parte de un Destacamento Especial de Lucha Contra las Drogas y el Crimen Organizado (Organized Crime Drug Enforcement Task Force) u OCDETF. El programa del OCDETF fue establecido en 1982 para gestionar ataques detallados a varios niveles a las principales organizaciones que se dedican al narcotráfico y al lavado de dinero. La misión fundamental del programa del OCDETF es identificar, interrumpir y desmantelar las más graves organizaciones dedicadas al narcotráfico y al lavado de dinero y ante todo a aquellas personas responsables del suministro de la droga en la nación.

     ALICIA A.G. LIMTIACO, United States Attorney for Guam and the Northern Mariana Islands, announced that VERNON SABURO DULEI, was sentenced today, in the District Court of Guam by Chief Judge Frances Tydingco-Gatewood, to sixteen months incarceration, and five years of supervised release.

     Defendant DULEI pled guilty on October 30, 2014 to one count of Failure to Register or Update Registration as a Sex Offender in violation of Title 18 U.S.C. Section 2250(a). Defendant DULEI, a Guam resident with a prior Criminal Sexual Conduct offense omitted to register or update his information with the Guam Sex Offender Registry for approximately seven months.

     U.S. Attorney Limtiaco states, “Under federal and local law, all sex offenders have a duty to register and keep their registration current with the Sex Offender Registry in their jurisdiction. Sex offenders who travel to Guam or who reside on Guam must inform the Guam Sex Offender Registry where they reside, work, or attend school -- they must also periodically update the registration information.   The sex offender registry was created in order to protect the public by protecting victims, preventing further victimization and informing the public of the whereabouts of sex offenders.  Guam’s Sex Offender Registry can be found online at www.guamcourts.org.” U.S. Attorney Limtiaco noted that this prosecution is part of the U.S. Department of Justice’s Project Safe Childhood (PSC) Initiative, a nationwide commitment to aggressively prosecute defendants who engage in the sexual victimization of children and adults, possess or receive child pornography, and sex offenders who fail to register with the jurisdiction’s Sex Offender Registry.

     The investigation was conducted by the United States Marshals Service.  The case was handled by Assistant U.S. Attorney R. San Nicolas.

The Boeing Company has paid the United States $18 million to settle allegations that the company submitted false claims for labor charges on maintenance contracts with the U.S. Air Force for the C-17 Globemaster aircraft, the Justice Department announced today.  Boeing, an aerospace and defense industry giant, is headquartered in Chicago.

“Defense contractors are required to obey the rules when billing for work performed on government contracts,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Today’s settlement demonstrates that the Justice Department will ensure that government contractors meet their obligations and charge the government appropriately.”

The government alleged that Boeing improperly charged labor costs under contracts with the Air Force for the maintenance and repair of C-17 Globemaster aircraft at Boeing’s Long Beach Depot Center in Long Beach, California.  The C-17 Globemaster aircraft, which is both manufactured and maintained by Boeing, is one of the military’s major systems for transporting troops and cargo throughout the world.  The government alleged that the company knowingly charged the United States for time its mechanics spent on extended breaks and lunch hours, and not on maintenance and repair work properly chargeable to the contracts.

The allegations resolved by the settlement announced today were originally brought by former Boeing employee James Thomas Webb under the qui tam, or whistleblower, provisions of the False Claims Act.  The act permits private individuals to sue on behalf of the government those who falsely claim federal funds, and to share in the recovery.  Mr. Webb’s share of the settlement has not yet been determined. 

The case was handled by the Civil Division’s Commercial Litigation Branch, the Defense Criminal Investigative Service, the Air Force Office of Special Investigations, the Defense Contract Audit Agency and the Defense Contract Management Agency.

The False Claims Act lawsuit is captioned United States ex rel. Webb v. The Boeing Company, CV13-000694 (C.D. Cal.).  The claims resolved by today’s civil settlement are allegations only; there has been no determination of liability.

BAKERSFIELD, California — Justin Whittington de 24 años y vecino de la localidad de Bakersfield fue detenido hoy por interferir con los derechos de vivienda de un persona por motivos de raza, color de piel, o origen nativo empleando el uso de la fuerza o amenaza de fuerza, el uso de armas de fuego durante un crimen violento, la posesión ilícita de un arma de fuego prohibida, y por hacer una declaración falsa dolosa a un agente especial de la Oficina Federal de Investigación (FBI), según comunicó el Teniente Jefe Auxiliar de la Procuraduría General Vanita Gupta, que encabeza la Sección para los Derechos Humanos del Departamento de Justicia, y el Fiscal de Los Estados Unidos Benjamín B. Wagner.

El 24 de septiembre del 2015, un gran jurado en los tribunales de la jurisdicción federal dictó el auto de procesamiento con cuatro acusaciones en el pliego de cargos que permanecía precintado después de la detención de Whittington. Según la acusación formal del 19 de diciembre del 2012, Whittington increpó a base de calumnias racistas y disparó a un hombre Latino con una escopeta recortada mientras que el hombre y su familia permanecían en el exterior del hogar familiar en Oildale. El auto de procesamiento alega que Whittington tomó acción en un intento de amenazar e interferir con la ocupación de vivienda de la victima por motivos de raza, color de piel u origen nativo.

Además, el auto declara que Whittington hizo declaraciones falsas a un agente del FBI cuando afirmó falsamente que en la tarde del incidente, había sido pagado por alguien para guardar la escopeta recortada en el maletero de su coche.

“El uso de violencia motivada por el racismo y las amenazas de violencia para intimidar a las personas en vinculación con sus preferencias de vivienda es un acto criminal,” dijo el Fiscal de los Estados Unidos Wagner. “El investigar y el procesar a aquellos que vulneran los derechos civiles de los demás continuarán siendo el núcleo de la misión de esta oficina.”

Este caso es el producto de una investigación de la Oficina Federal de Investigación (FBI) y de la Oficina del Sheriff del Condado de Kern. El Fiscal Auxiliar de los Estados Unidos Brian K. Delaney está procesando el caso con la asistencia del Abogado Litigante Samantha Trepel de la Sección de Derechos Civiles del Departamento de Justicia.

Si es declarado culpable, Whittington se enfrenta a una pena máxima establecida por la ley de cadena perpetua y una multa de $250,000. Aunque cualquier sentencia sería establecida a discreción por parte del tribunal después de considerar cualquier factor estatutario aplicable y consultar las Pautas Federales para Dictar Sentencia. Las acusaciones son solo alegaciones; el demandado es considerado inocente hasta y a menos que sea comprobado culpable sin caber duda razonable.

The Department of Justice announced today that Pitney Bowes Presort Services Inc. (Pitney Bowes) has agreed to pay the United States $9.4 million to resolve allegations that it underpaid postage for mail processed at its Reading, Pennsylvania, facility by claiming discounts to which it was not entitled.  Pitney Bowes, which is based in Omaha, Nebraska, helps prepare mailings for large mailers by, among other things, gathering, sorting and presenting the mail to the U.S. Postal Service. 

“Those who obtain government benefits are expected to comply with the terms of those benefits,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “This settlement demonstrates that there will be consequences for those who do not live up to their obligations.”

The settlement announced today resolves allegations that Pitney Bowes claimed discounted postage rates for mail that failed to comply with the Move Update standard, which requires that mail be updated with change-of-address information provided by the Postal Service.  Pitney Bowes was obligated to ensure that mail it submitted on behalf of its customers at discounted postage rates complied with Move Update, by either updating addresses on the mail directly or having its customers perform the updates.  The Postal Service offered lower postage rates to Pitney Bowes for complying with Move Update and other requirements.

“When mailers don’t adhere to Move Update standards it negatively affects the entire mailing community,” said Inspector in Charge David W. Bosch of the U.S. Postal Inspection Service’s (USPIS) Philadelphia Division.  “The U.S. Postal Inspection Service will continue to investigate mailers who fail to comply with postal regulations.”

This matter was jointly investigated by USPIS and the Civil Division’s Commercial Litigation Branch.  The claims settled in this case are allegations only, and there has been no determination of liability.

Two residents of Hammond, Louisiana, were sentenced for their involvement in a stolen identity tax fraud scheme, 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 announced today.

Angela Chaney, 43, was sentenced by U.S District Judge Jay C. Zainey of the Eastern District of Louisiana to serve 36 months in prison to be followed by three years of supervised release.  Craig Lewis, 40, was sentenced by Judge Zainey to serve three years of probation.  Chaney and Lewis each pleaded guilty to one count of a multi-object conspiracy to defraud the United States and to commit theft of public money and mail fraud on July 2 and June 23, respectively.  Chaney additionally pleaded guilty to one count of aggravated identity theft.  Their restitution to the Internal Revenue Service (IRS) will be determined at a later date.

According to court documents, Chaney, Lewis and their co-defendants conspired to prepare and file false income tax returns using stolen identities, including the victims’ names and social security numbers, to claim large tax refunds.  The refund checks were mailed to addresses in Louisiana, including post office boxes that were opened by the co-conspirators.  Once the checks were received, Chaney, Lewis and their co-conspirators brought checks to others who falsely endorsed and deposited the refund checks into bank accounts under their control.  The co-conspirators then divided the proceeds of the refund checks amongst themselves.

The indictment also charged Cedrick Mitchell, aka Skeet, 40; Corey Lewis, 37; Thaddeus Richardson, 49; and others with conspiracy to defraud the United States, conspiracy to commit money laundering, conspiracy to commit mail fraud and conspiracy to commit theft of public money.  Corey Lewis was also charged with three counts of theft of public money and three counts of aggravated identity theft.  Mitchell was sentenced to serve 33 months in prison on Sept. 15, Corey Lewis was sentenced to serve 75 months in prison on Sept. 29 and Richardson was sentenced to serve 51 months in prison on Oct. 6.  All of the remaining defendants in this case have pleaded guilty to various charges and are awaiting sentencing.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Polite commended special agents of IRS-Criminal Investigation and the U.S. Postal Inspection Service, who investigated the case, and Assistant U.S. Attorneys Hayden Brockett and Dall Kammer of the Eastern District of Louisiana and Trial Attorney Lauren Castaldi of the Tax Division, who are prosecuting the case.

The Justice Department announced today the filing of a lawsuit against Nebraska Beef Ltd., which is headquartered in Omaha, Nebraska, for failing to comply with the terms of a settlement agreement that the parties entered to resolve a civil rights investigation.

The complaint alleges that Nebraska Beef entered into a settlement agreement with the Justice Department on Aug. 24, 2015, to resolve the department’s investigation into whether Nebraska Beef was discriminating against work-authorized non-citizens.  The agreement requires Nebraska Beef to pay $200,000 as a civil penalty, and also to compensate affected workers who present valid claims for backpay, among other terms.  Although Nebraska Beef’s civil penalty payment was due ten business days after the agreement was signed by both parties, the company has failed to make any payments.  Nebraska Beef has stated that it will not comply with almost all of the terms of the agreement because it feels that the department’s press release announcing the agreement should have been worded differently.  The parties’ agreement, however, does not contain any terms or provisions restricting the language in the department’s press release. 

“The Department of Justice will take swift action not only when an employer discriminates against its employees, but also when an employer fails to live up to its end of an agreement,” said Principal Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “It is important that employers understand and abide by their duties not to engage in discriminatory practices, and honor their commitments under a settlement.”          

The Justice Department’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the Immigration and Nationality Act (INA), which was the subject of the department’s investigation of Nebraska Beef.  Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing or recruitment or referral for a fee; unfair documentary practices; retaliation; and intimidation.  The INA’s anti-discrimination provision prohibits employers from discriminating against people with permission to work in the United States because of their citizenship status, including by asking non-citizens to present more or different documents than necessary to prove their authorization to work in the United States.     

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.   

Defendant Cashed Fraudulent Tax Refund Checks Totaling More than $1.3 Million

A Columbus, Georgia, resident pleaded guilty to one count of operating an unlicensed money transmitting business, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia announced today.

According to court documents, between February 2013 and March 2014, Sawan Shah, aka Sunny, 43, owned, operated and managed several money transmitting companies in the Columbus area.  Shah offered check-cashing services to the public, including cashing checks that exceeded $1,000.  Shah knew that he and his companies were required to be registered with Financial Crimes Enforcement Network (FinCEN) and with the state of Georgia.  Neither Shah nor any of the businesses he controlled were registered with FinCEN or the state of Georgia as a money transmitting business or as a check cashier.

Several individuals approached Shah about cashing tax refund checks that were issued in the names of other individuals.  Shah agreed to do so and did not require proof of identification for the individuals listed on the checks.  Shah charged fees between 10 and 30 percent of the check’s worth, due to his knowledge that the checks were involved in tax fraud.  In 2013 and 2014, Shah cashed approximately 567 federal tax refund checks that totaled $1,357,476.18.  Those refund checks were the result of fraudulent claims for refund submitted in the names of stolen identities. 

A sentencing hearing has been scheduled for Jan. 26, 2016.  Shah faces a statutory maximum sentence of five years in prison.  Shah agreed to a forfeiture order in the amount of $1,357,476.18.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Moore commended special agents of Internal Revenue Service-Criminal Investigation and the U.S. Secret Service, who investigated the case, and Trial Attorney Michael C. Boteler of the Tax Division and Assistant U.S. Attorney Crawford L. Seals of the Middle District of Georgia, who are prosecuting the case. 

Additional information about the Tax Division and its enforcement efforts against stolen identity tax refund fraud may be found on the division’s website. 

El Departamento de Justicia anunció hoy la presentación de una demanda contra Nebraska Beef, Ltd., con sede en Omaha, Nebraska, por no cumplir con los términos de un acuerdo que las partes firmaron para resolver una investigación de violaciones de derechos civiles.

La demanda alega que Nebraska Beef firmó un acuerdo con el Departamento de Justicia el 24 de agosto del 2015 para resolver la investigación del Departamento sobre si Nebraska Beef estaba discriminando a inmigrantes no ciudadanos con autorización para trabajar. El acuerdo exige que Nebraska Beef pague $200,000 en sanciones civiles y que indemnice a los trabajadores afectados que presenten reclamaciones válidas para pagos retroactivos, entre otros términos. Aunque las sanciones civiles de Nebraska Beef vencieron diez días después de que ambas partes firmaran el acuerdo, la compañía se negó a hacer el pago. Nebraska Beef ha declarado que no va a cumplir con casi ninguno de los términos del acuerdo porque sienten su opinión, el comunicado de prensa del Departamento que anunció el acuerdo debería haber sido redactado de otra manera. No obstante, el acuerdo entre las partes no contiene ningún término o disposición que restrinja el lenguaje del comunicado de prensa del Departamento. 

"El Departamento de Justicia actuará con rapidez, no sólo cuando un empleador discrimina a sus empleados, sino también cuando un empleador no cumple con su parte de un acuerdo," dijo Vanita Gupta, Subprocuradora Prinicpal General y Directora de la División de Derechos Civiles del Departamento de Justicia. "Es importante que los empleadores entiendan y cumplan con sus obligaciones de no incurrir en prácticas discriminatorias y que honren sus compromisos en virtud de un acuerdo."    

La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC, por sus siglas en inglés) del Departamento de Justicia es responsable de hacer cumplir la disposición antidiscriminatoria de la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés), que fue objeto de investigación del Departamento de Nebraska Beef. Entre otras cosas, la ley prohíbe la discriminación por motivos del estatus de ciudadanía u origen nacional en la contratación, el despido, o el reclutamiento o la referencia por comisión; prácticas documentales injustas; las represalias o la intimidación. La disposición antidiscriminatoria de la INA prohíbe que los empleadores discriminen a las personas con permiso para trabajar en los Estados Unidos debido a su estatus de ciudadanía, lo que incluye pedir a los no ciudadanos que presenten documentos adicionales o diferentes a los que sean necesarios para probar su autorización para trabajar en los Estados Unidos.

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

A Washington, D.C., Metropolitan Police Department Officer was convicted today in the U.S. District Court for the District of Columbia 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.

Ishmeal Heru-Bey, formerly known as Jamal Adams, of Glenarden, Maryland, was convicted by a federal jury after a five-day trial. 

According to the evidence presented at trial, Heru-Bey failed to file individual income tax returns on a timely basis for the years 2005 through 2012.  To prevent the Metropolitan Police Department from withholding federal income taxes from his wages and paying them over to the IRS, Heru-Bey submitted three false IRS Forms W-4 (Employee’s Withholding Allowance Certificates) on which he falsely claimed he was exempt from income tax withholding.  After Heru-Bey was indicted on tax charges in March 2015, he filed false U.S. Individual Income Tax Returns for tax years 2011 and 2014 on which he fraudulently claimed deductions relating to unreimbursed employee expenses, including expenses for uniforms, dry cleaning, vehicle mileage and meals.  The government introduced evidence at trial that proved Heru-Bey was not entitled to claim these expenses because he was on paid administrative leave from the Metropolitan Police Department during those years and therefore had no police powers.  The government presented evidence that the resulting tax loss for the years 2005 through 2011 and for 2014 exceeded $90,000. 

Sentencing is scheduled on Jan. 7, 2016, before U.S. District Judge James E. Boasberg of the District of Columbia, who presided over the trial of the case.  The count of conviction carries a statutory maximum sentence of three years in prison and a $250,000 fine.

Acting Assistant Attorney General Ciraolo thanked the special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Thomas Jankowski, who investigated the case, and Trial Attorneys Jeffrey A. McLellan and Melissa S. Siskind of the Tax Division, who prosecuted the case.

     ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that defendant CORINNA CONCEPCION, who was convicted at the trial of  U.S. v. Francisco Arias, Eder Cortez-Zelaya and Corinna Concepcion in the District Court of Guam, was sentenced today.

     CORINNA CONCEPCION,  age 44, from Agat, was sentenced by Chief Judge Frances Tydingco-Gatewood, to 169 months imprisomnent for conspiracy to distribute methamphetan1ine (ice) and 169 months imprisonment for money laundering.  Both sentences are to be served concurrently.

     CORINNA CONCEPCION organized her husband Lawrence Concepcion, her son-in­ law A.J. Santos, her nephew-in-law, Joshua Moye, and her friend Florentina Depamaylo to receive packages containing methamphetamine.  The packages were sent from Las Vegas, Nevada to Guam by her co-defendants  Francisco Arias and Eder Cortez-Zelaya.   All of her co­ defendants except for Arias and Cortez-Zelaya have been sentenced.  Aria and Cortez-Zelaya will be sentenced on November 2, 2015 in the U.S. District Court of Guam.

     U.S. Attorney Limtiaco stated, "Our community is not immune from the poison of methamphetamine.  This case illustrates the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam.  This conviction resulted from the concerted efforts of law enforcement pa1tners in the Organized Crime Drug Enforcement Task Force (OCDETF) investigation, 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."

     This OCDETF investigation involved federal agents and local law enforcement officers of the U.S. Postal Inspection Service (USPIS), Drug Enforcement Administration (DEA), U.S. Department of Homeland Security Investigations (HSI), Guam Police Department (GPD), Guam Customs and Quarantine Agency (GCQA), Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), U .S. National Oceanic Atmosphere Administration (NOAA), and U.S. Coast Guard Criminal Investigative Service (CGIS).

The United States filed a complaint against a Western New York contracting company, and its owners and an employee, alleging that they submitted false claims for federal contracts intended for service-disabled, veteran-owned small businesses, the Department of Justice announced.

The lawsuit was filed in U.S. District Court in Buffalo, New York, against Strock Contracting, Inc., Lee Strock, Kenneth Carter and Cynthia Ann Golde, who are alleged to have defrauded the government by falsely claiming eligibility for millions of dollars in contracts being awarded by the Air Force, Army, and Department of Veterans Affairs intended for service-disabled, veteran-owned (SDVO) small businesses. Strock largely owns and manages Strock Contracting, Inc., and Strock and Carter were officers and partial owners of Veteran Enterprises Company, Inc. (VECO), which was awarded the contracts. Golde was a former employee of VECO.

“Congress established the Service-Disabled, Veteran-Owned contracting programs to provide economic opportunities for veterans with service-connected disabilities and to help them participate in federal contracting and compete in the American economy,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.“The Justice Department is committed to making sure that only eligible companies participate in these types of federal contracting programs.”

“This country long ago developed policies designed to ensure that our wounded warriors have the ability to participate in government-funded programs, and to have their transition into the civilian economy eased to the extent possible,” said U.S. Attorney William J. Hochul Jr. of the Western District of New York.  “This lawsuit – the first of its kind in this District – sends a strong message that this office will vigorously protect programs designed to aid those who have already given so much in the honorable service of their country.”

Between 2008 and 2013, VECO obtained millions of dollars in federal contracts offered by the government to legitimate SDVO small businesses. The defendants won these contracts after claiming that VECO met all the requirements to be an SDVO small business. The government’s complaint alleges that VECO did not meet the requirements and was not entitled to such contracts.   In particular, the government alleges that VECO was a sham business whose day to day operations were controlled by Strock Contracting and the individual defendants.  For example, the government’s complaint alleges that the purported owner of VECO did not even have a key to VECO’s offices, which were located in the same building as Strock Consulting. 

The civil complaint is the result of an investigation by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of New York, the Veteran’s Administration, Office of Inspector General, Northeast Regional Office; the U.S. Army Criminal Investigation Division Command, Major Procurement Fraud Unit (MPFU); the FBI; the Small Business Administration’s Office of Inspector General and Office of General Counsel and the Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service.

The case is captioned United States v. Lee Strock, et al, No. 15-CV-887-G (W.D. New York).   The claims made in the complaint are allegations only, and there has been no determination of liability.

Cincinnati-based West Chester Hospital and its parent company, UC Health, have agreed to pay $4.1 million to settle allegations that West Chester Hospital violated the False Claims Act by billing federal health care programs for costs associated with medically unnecessary spine surgeries, the Justice Department announced today.       

“Hospitals have a responsibility to ensure that services provided at their facilities are medically necessary and appropriate before they bill federal health care programs for those services,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “When providers charge for medically unnecessary services, we will aggressively seek remedies under the False Claims Act.”

This settlement resolves allegations that West Chester Hospital knowingly submitted claims to Medicare and Medicaid for hospital charges related to medically unnecessary spine surgeries performed between 2009 and 2013 by Dr. Abubakar Atiq Durrani, a surgeon from Mason, Ohio, who had admitting privileges at West Chester Hospital.  Durrani was arrested in July 2013 and charged with health care fraud violations relating to allegations that he performed medically unnecessary spine surgeries on patients residing in Ohio and Kentucky.  Following his arraignment, Durrani allegedly fled the United States and remains a fugitive.  

Medicaid is funded jointly by the states and the federal government.  The state of Ohio and commonwealth of Kentucky paid for some of the Medicaid claims at issue and will receive approximately $72,000 of the settlement amount.       

“Federal health care programs cover only those procedures that are medically necessary,” said U.S. Attorney Carter M. Stewart of the Southern District of Ohio.  “The U.S. Attorney’s Office is committed to pursuing providers that seek payment for unnecessary medical procedures.”

“Any time greed replaces medical necessity as the primary factor in performing invasive procedures and surgeries on Medicare and Medicaid patients, our most vulnerable citizens – the elderly, disabled, and economically disadvantaged – are imperiled,” said Special Agent in Charge Lamont Pugh of the Health and Human Services Office of Inspector General (HHS-OIG).  “Medical businesses and physicians who unnecessarily place patients at risk to boost profits will be held accountable for their actions.”

The civil settlement resolves a lawsuit filed under the whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The civil lawsuit was filed in the Southern District of Ohio by former patients of Durrani and is captioned United States ex rel. Scott, et al. v. Durrani, et al.  As part of today’s resolution, the whistleblowers will receive approximately $800,000 from the federal share of the settlement.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $25.2 billion through False Claims Act cases, with more than $16.1 billion of that amount recovered in cases involving fraud against federal health care programs.

This matter was investigated by the U.S. Attorney’s Office of the Southern District of Ohio and the Civil Division’s Commercial Litigation Branch, with assistance provided by HHS-OIG.  The claims resolved by this settlement are allegations only and there has been no determination of liability.

A Dallas resident and former chief executive officer and president of Arrow Trucking Company was sentenced today to serve seven and one-half years in prison for conspiracy to defraud the United States, bank fraud and tax evasion, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U. S. Attorney Danny C. Williams Sr. of the Northern District of Oklahoma.

“Corporate officers who willfully fail to report and pay over employment taxes and use that money for their own benefit are violating their obligations to their employees and the United States, stealing from the U.S. Treasury, and giving their companies an unfair advantage over competitors that comply with the law,”  said Acting Assistant Attorney General Ciraolo.  “Today’s sentence is a warning to those individuals who refuse to carry out their fiduciary duties that the United States will investigate them, prosecute them, and seek lengthy prison sentences for their crimes.”

“Today’s sentencing reflects the Northern District’s strong commitment to ensuring that justice is served,” said U.S. Attorney Williams. “Along with our law enforcement partners we will aggressively pursue financial crimes. Mr. Pielsticker conspired to defraud millions of dollars in part for his personal benefit including a wedding and Bentley and Maserati automobiles.”

James Douglas Pielsticker, 47, formerly of Tulsa, Oklahoma, pleaded guilty earlier this year to a two‑count superseding information charging him with one count of a dual-object conspiracy to defraud the United States and to commit bank fraud and one count of willfully attempting to evade his individual income taxes for the year 2009.  Chief U.S. District Court Judge Gregory K. Frizzell of the Northern District of Oklahoma also sentenced Pielsticker to serve three years of supervised release following his 90 month prison term and ordered him to pay $21,026,682.03 in restitution to the Internal Revenue Service (IRS) and the Transportation Alliance Bank (TAB).

According to the plea agreement and other court records, in 2009, Pielsticker and others conspired to defraud the United States by failing to account for and pay federal withholding taxes on behalf of Arrow Trucking Company and by making payments to Pielsticker outside the payroll system.  Pielsticker and others withheld Arrow Trucking Company employees’ federal income tax withholdings, Medicare and social security taxes, but did not report or pay over these taxes to the IRS, despite knowing they had a duty to do so. 

The conspirators paid for Pielsticker’s personal expenses with money from Arrow Trucking Company and submitted fraudulent invoices to TAB to induce the bank to pay funds to Arrow Trucking Company that were not warranted.  In total, the conspiracy caused a loss to the United States totaling more than $9.562 million.

Pielsticker also tried to evade his and his wife’s 2009 income taxes by causing Arrow Trucking Company to pay personal expenses on his behalf, causing his employer to underreport his wages and other compensation on his W-2 form, and by preparing a fraudulent draft joint 2009 U.S. Individual Income Tax Return.

“Today’s sentencing sends a strong message to corporate executives, officers, and business owners, that employment tax violations are a serious matter and will be vigorously pursued,” said Chief Richard Weber of IRS Criminal Investigation (CI).  “Mr. Pielsticker and his co-conspirators had a duty to pay more than $9 million in taxes withheld from Arrow Trucking employees yet they intentionally failed to do so.  IRS CI will aggressively pursue employment tax cases as these crimes not only hurt the government and local economy, they also hurt the employees and can have adverse effects on future social security or Medicare benefits.”

“Mr. Pielsticker abdicated his responsibility as the CEO of Arrow Trucking, and concocted a fraudulent scheme to mask his illegal activities,” said Special Agent in Charge Scott Cruse of the FBI. “In doing so Pielsticker chose his own personal extravagances over the needs of his employees, which ultimately led to Arrow Trucking closing its doors during the Christmas holidays, a time when all of us count on our paychecks the most. Today’s sentencing and monetary judgment is a reminder the FBI will pursue all criminals to the fullest extent of the law.”

Acting Assistant Attorney General Ciraolo and U.S. Attorney Williams commended the special agents of the IRS-CI and FBI, who investigated this case, and Assistant U.S. Attorneys Jeffrey A. Gallant and Catherine Depew of the Northern District of Oklahoma and Special Assistant U.S. Attorney and Trial Attorney of the Tax Division Charles A. O’Reilly, who prosecuted the case on behalf of the United States.

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

A California man was indicted today for his role in a mass mailing scam targeting holders of U.S. trademarks.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Inspector in Charge Robert Wemyss of the United States Postal Inspection Service (USPIS) Los Angeles Division, Inspector in Charge David G. Bowers of the USPIS Washington Division and Special Agent in Charge Erick Martinez of the Internal Revenue Service Criminal Investigation (IRS-CI) Los Angeles Field Office made the announcement.

Artashes Darbinyan, 35, of Glendale, California, was charged in the Central District of California with 12 counts of mail fraud and four counts of aggravated identity theft.  His arraignment is scheduled for Oct. 19, 2015.

According to the indictment, from September 2013 through September 2015, Darbinyan operated and controlled the Trademark Compliance Center (TCC) (aka Trademark Compliance Office (TCO)), which purported to offer trademark registration and monitoring services.  The indictment alleges that, through TCC and TCO, Darbinyan sent mass solicitations to holders of trademarks recently registered with the U.S. Patent and Trademark Office offering, for a fee, to register the holders’ trademarks with U.S. Customs and Border Protection, which uses an Intellectual Property Rights (IPR) recordation database to screen and block imports of infringing products, and to send users of its service regular reports of potentially confusing or infringing marks.  According to the indictment, Darbinyan did not intend to, and did not, provide the promised services.

The indictment alleges that, to perpetuate the scheme and to avoid detection Darbinyan used the names of other persons to open accounts for TCC and TCO at “virtual office centers” (i.e., businesses that offered call answering and mail forwarding services) in the Washington, D.C., and Los Angeles areas, and directed employees of the Washington, D.C.-area virtual office centers to forward to the virtual office centers in the Los Angeles area mail addressed to TCC and TCO.  According to the allegations in the indictment, these forwarded envelopes contained payments from trademark holders for the aforementioned trademark registration and monitoring services, which Darbinyan retrieved and deposited into bank accounts that he controlled.

The charges and allegations in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty. 

The case was investigated by the USPIS and IRS-CI.  The case is being prosecuted by Trial Attorney William E. Johnston of the Criminal Division’s Fraud Section.

Darbinyan Indictment

A federal grand jury in Covington, Kentucky, returned an indictment against one former and two current Japanese automotive executives for their alleged participation in a conspiracy to fix prices and rig bids for the sale of automotive body sealing products sold in the United States.

The indictment, filed today in the U.S. District Court of the Eastern District of Kentucky, charges Keiji Kyomoto, Mikio Katsumaru and Yuji Kuroda – all Japanese nationals – with conspiring to rig bids for and fix the prices of body sealing products sold to Honda Motor Company Ltd., Toyota Motor Corp. and certain of their subsidiaries and affiliates for installation in vehicles manufactured and sold in the United States and elsewhere.  Automotive body sealing products consist of body-side opening seals, door-side weather-stripping, glass-run channels, trunk lids and other smaller seals, which are installed in automobiles to keep the interior dry from rain and free from wind and exterior noises. 

“These executives conspired for years with their competitors to fix the prices of body sealing products sold to Honda and Toyota and installed in U.S. cars,” said Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division.  “Today’s indictment is another reminder that antitrust violations are not just corporate offenses but also crimes by individuals.  The Antitrust Division will continue to vigorously prosecute executives who orchestrate their companies’ efforts to break the law.”

“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.”

The indictment alleges that Kyomoto, Katsumaru and Kuroda participated in the conspiracy from at least as early as September 2003 until at least October 2011.  For most of this period, Kyomoto resided in the United States and served as President of an unnamed joint venture with offices in Indiana and Michigan, which manufactured and sold automotive body sealing products. 

Katsumaru, who resided in Japan, served in multiple managerial positions during the conspiracy period, including Manager of the Sales and Marketing Division, for an unnamed company based in Hiroshima, Japan, that partially owned the joint venture and also manufactured and sold automotive body sealing products.  Kuroda, who resided in Japan, served as a sales branch manager at the same Hiroshima-based company for the entirety of the charged period.

According to the indictment, Kyomoto, Katsumaru and Kuroda each instructed subordinates at their respective companies to communicate with co-conspirators at other companies in order to allocate sales of, rig bids for and fix the prices of automotive body sealing products; were aware that employees under their supervision were engaging in such communications; and condoned such communications.  The indictment further alleges that Kyomoto attended meetings in the United States with co-conspirators during which Kyomoto and the co-conspirators reached agreements regarding sales of automotive body sealing products to Honda and Toyota.  The indictment also alleges that Katsumaru and Kuroda instructed and encouraged certain employees at their company to destroy evidence of the conspiracy.  Each individual faces a maximum penalty to 10 years in prison and a $1 million criminal fine if convicted. 

Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  A total of 58 individuals and 37 companies have been charged and have agreed to pay more than $2.6 billion in criminal fines.  This indictment was brought by the Antitrust Division’s Chicago Office and the FBI’s Louisville Field Office, Covington Resident Agency, with the assistance of the FBI’s International Corruption Unit and the U.S. Attorney’s Office of the Eastern District of Kentucky.  Anyone with information about anticompetitive conduct in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Louisville Field Office at 502-263-6000.

A Miami-area pharmacy owner was sentenced today to 46 months in prison for his role in the submission of more than $1.8 million in fraudulent claims to Medicare.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.

Evelio Fernandez Penaranda, 47, of Miami, pleaded guilty to one count of health care fraud on July 23, 2015.  In addition to today’s prison sentence, Chief U.S. District Court Judge K. Michael Moore of the Southern District of Florida ordered Penaranda to pay $1,876,241 in restitution. 

Penaranda owned Naranja Pharmacy Inc.  According to admissions made in connection with Penaranda’s guilty plea, between May 2013 and March 2014, Naranja Pharmacy submitted fraudulent claims to Medicare for prescription drugs that were not prescribed by physicians, not medically necessary and not provided to Medicare beneficiaries.  In connection with his guilty plea, Penaranda admitted that Naranja Pharmacy submitted these false claims by obtaining and using the unique identifying information of Medicare beneficiaries and doctors without their consent.

Penaranda also admitted that he controlled Naranja Pharmacy’s bank accounts, and that he transferred the payments received from Medicare to himself and his accomplices.  According to admissions made in connection with Penaranda’s plea, during the course of the scheme, Naranja Pharmacy submitted over $1.8 million in false claims for prescription drugs to the Medicare program.

The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida.  The case was prosecuted by Trial Attorney Nicholas E. Surmacz of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Team, go to: www.stopmedicarefraud.gov.

The Department of Justice announced today that Schaffhauser Kantonalbank (SHKB) has 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:

• Make a complete disclosure of their cross-border activities;

• Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;

• Cooperate in treaty requests for account information;

• 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, SHKB 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.

SHKB is a regional Swiss bank that was founded in 1883 and operates out of its headquarters in Schaffhausen, Switzerland. All seven of SHKB’s locations are within the Canton of Schaffhausen, and all branches are within a radius of 10 miles of its headquarters. As a cantonal bank, SHKB is obliged to service primarily the residents of the Canton of Schaffhausen and the surrounding areas.

Through its managers, employees and others, SHKB knew or had reason to know that some U.S. taxpayers who had opened and maintained accounts at SHKB were not complying with their U.S. income tax and reporting obligations. SHKB offered a variety of traditional Swiss banking services that it knew could assist, and that did in fact assist, U.S. clients in the concealment of assets and income from the Internal Revenue Service (IRS).  One such service was hold mail, through which SHKB would hold all mail correspondence for a particular client at SHKB. It also offered code name or numbered account services, where SHKB would allow the accountholder to replace his or her identity with a code name or number on bank statements and other documentation sent to the client. These services helped U.S. clients to eliminate the paper trail associated with the undeclared assets and income they held at SHKB in Switzerland. By accepting and maintaining such accounts, SHKB assisted some U.S. taxpayers in evading their U.S. tax obligations.

SHKB opened and maintained accounts for U.S. taxpayers who had left other banks being investigated by the department without ensuring that each such account was compliant with U.S. tax law from the account’s inception at SHKB. SHKB also arranged for the issuance of credit, debit or travel cards to the beneficial owners of some U.S.-related accounts, and offered travel cash cards, on which a client could load up to 10,000 Swiss francs, U.S. dollars or euros from his or her SHKB bank account by instructing SHKB by telephone, mail or e-mail.  The client could then use the card for purchases or remit unused balances back to the SHKB account. Use of these cards by U.S. persons facilitated their access to or use of undeclared funds on deposit at SHKB.

SHKB issued checks, including series of checks, in amounts of less than $10,000 that were drawn on accounts of U.S. taxpayers, even though SHKB knew, or had reason to know, that the withdrawals were made to avoid triggering scrutiny under the U.S. currency transaction reporting requirements.  Furthermore, since Aug. 1, 2008, SHKB processed significant cash withdrawals for at least 15 U.S. taxpayers at or around the time the clients’ accounts were closed, even though SHKB knew, or had reason to know, the accounts contained undeclared assets. For example, in November 2009, SHKB processed a U.S. taxpayer’s cash withdrawal of more than 400,000 euros when SHKB closed the account.

In the period since Aug. 1, 2008, SHKB held one structured account that was a U.S.-related account with maximum assets under management of approximately $11.5 million. The nominal accountholder was a foundation in Liechtenstein, but the true owner was a U.S. person, which aided and abetted the client’s ability to conceal an undeclared account from the IRS.

In 2001, SHKB entered into a Qualified Intermediary Agreement (QI Agreement) with the IRS.  The QI Agreement was designed to help ensure that, with respect to U.S. securities held in an account at SHKB, non-U.S. persons were subject to the proper U.S. withholding tax rates and that U.S. persons holding U.S. securities were properly paying U.S. tax. In general, if an accountholder wanted to trade in U.S. securities and avoid mandatory U.S. tax withholding, the QI Agreement required SHKB to obtain the consent of the accountholder to disclose the client’s identity to the IRS. The QI Agreement required SHKB to obtain IRS Forms W-9 and to undertake IRS Form 1099 reporting for new and existing U.S. clients engaged in U.S. securities transactions.

In 2002, SHKB forbade the purchasing or holding of U.S. securities for U.S. persons, and it also required all U.S.-domiciled persons to provide a hold-mail instruction to SHKB. As a practical matter, this policy allowed SHKB to avoid having to disclose the identities of U.S. clients to the IRS under its QI Agreement. SHKB chose to continue to service U.S. clients without disclosing their identities to the IRS and without considering the impact of U.S. criminal law on that decision. Until May 2012, SHKB did not require all of its U.S. clients to provide a signed IRS Form W-9 and to confirm whether their accounts were disclosed to the IRS.

Through the Swiss Bank Program, SHKB has cooperated with the department and provided information to the U.S. government about its cross-border business with U.S.-related accounts. Following SHKB’s efforts, approximately 24 of its U.S.-related accounts have thus far entered into an IRS Voluntary Disclosure Program or Initiative. Moreover, SHKB has obtained waivers of Swiss bank secrecy for approximately 87 percent of its U.S.-related accounts and has provided customer names for those accounts to the U.S. government.

Since Aug. 1, 2008, SHKB held a total of 182 U.S.-related accounts with approximately $84.5 million in assets under management.  SHKB will pay a penalty of $1.613 million.

While U.S. accountholders at SHKB 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 SHKB 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 Kimberle E. Dodd, 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 and Senior Litigation Counsel Nanette L. Davis of the Tax Division.

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

SHKB Executed NPA and SOF (897.82 KB)

A Georgia real estate investor pleaded guilty today for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Fulton and DeKalb counties, Georgia.

Morris Podber admitted that he conspired with others not to bid against one another at public real estate foreclosure auctions on selected properties.  After the public foreclosure auctions, Podber admitted that he and his co-conspirators would divvy up the targeted properties in private side auctions, open only to the conspirators.  Podber admitted to conspiring to use the mail to carry out their fraud, which included making and receiving payoffs and diverting money to co-conspirators that should have gone to the mortgage holders and others.

“This is the ninth real estate investor held accountable for bid rigging at public foreclosure auctions in Georgia,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “We will continue to root out anticompetitive conduct at foreclosure auctions and obtain justice for homeowners and lenders.”

According to documents filed with the court, the purpose of the conspiracies was to suppress and restrain competition and divert money to the conspirators that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.  Podber admitted to participating in a conspiracy in Fulton County from July 2005 until August 2010; and to participating in a conspiracy in DeKalb County from October 2006 to August 2011. 

“Incidents of bid rigging at public real estate auctions continue to be an issue in Georgia and elsewhere in the United States, and the FBI would like to remind the public that such matters are violations of federal law,” said Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office.  “The FBI will continue to work with the U.S. Department of Justice’s Antitrust Division in identifying, investigating and prosecuting those individuals engaged in such activities.”

The ongoing investigation is being conducted by the Antitrust Division’s Washington Criminal II Section, the FBI’s Atlanta Division and the U.S. Attorney’s Office of the Northern District of Georgia.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 888-647-3258 or visit www.justice.gov/atr/contact/newcase.htm.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ Offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information about the task force, please visit www.StopFraud.gov.

The nation’s second-largest nursing home pharmacy, PharMerica Corp., has agreed to pay $9.25 million to resolve allegations that it solicited and received kickbacks from pharmaceutical manufacturer Abbott Laboratories in exchange for promoting the prescription drug Depakote for nursing home patients.  PharMerica is headquartered in Louisville, Kentucky.

“Elderly nursing home residents suffering from dementia have little control over the medications they receive and depend on the unbiased judgment of healthcare professionals for their daily care,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Kickbacks to entities making drug recommendations compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.”

Nursing homes rely on consultant pharmacists, such as those employed by PharMerica, to review their residents’ medical charts at least monthly and make recommendations to their physicians about what drugs should be prescribed for those residents.  The settlement announced today resolves allegations that in exchange for recommending that physicians prescribe Depakote, an anti-epileptic drug manufactured by Abbott, to nursing home residents, PharMerica solicited and received kickbacks from Abbott.  The government alleges that the kickbacks were disguised as rebates, educational grants and other financial support.

In May 2012, the United States, numerous individual states and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s liability under the False Claims Act for alleged kickbacks to nursing home pharmacies, including PharMerica.  The settlement announced today resolves PharMerica’s role in that alleged kickback scheme.

“The settlement announced  today should serve as a stark reminder to pharmaceutical companies and those with whom they do business that the Department of Justice and its investigative agencies will continue to monitor their activities,” said U.S. Attorney Anthony P. Giorno of the Western District of Virginia.  “When those activities involve improprieties such as the payment of kickbacks, we will not hesitate to hold them accountable.  We owe nothing less in fulfilling our duty to ensure that nursing home residents are provided with the appropriate drugs based upon their needs rather than the business interests of the companies providing the drugs.”

Approximately $6.75 million of the settlement will go to the United States, while $2.5 million has been allocated to cover Medicaid program claims by states that elect to participate in the settlement.  The Medicaid program is jointly funded by the federal and state governments.

“Nursing home pharmacies accepting kickbacks from drug makers in exchange for prescribing certain prescription drugs puts vulnerable residents at risk for receiving unnecessary medications, corrupts medical decision making, and inflates health care costs,” said Special Agent in Charge Nick DiGiulio of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG).  “Our agency will continue to root out such corrosive practices from our health care system.”

The settlement partially resolves allegations in two lawsuits filed in federal court in the Western District of Virginia by Richard Spetter and Meredith McCoyd, former Abbott employees.  The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The act also allows the government to intervene and take over the action, as it did in part in this case.  As part of today’s resolution, Ms. McCoyd will receive $1 million from the federal share of the settlement amount.

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 $25.2 billion through False Claims Act cases, with more than $16.1 billion of that amount recovered in cases involving fraud against federal health care programs.

This matter was jointly handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Western District of Virginia, HHS-OIG, the commonwealth of Virginia’s Office of Attorney General and the National Association of Medicaid Fraud Control Units.

The cases are captioned United States ex rel. Spetter v. Abbott Labs., et al., Case No. 10-cv-00006 (W.D. Va.) and United States ex rel. McCoyd v. Abbott Labs., et al., Case No. 07-cv-00081 (W.D. Va.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

A Miami physician was charged in an indictment unsealed today with participating in a Medicare fraud scheme that caused losses of more than $20 million. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Shimon Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.

Henry Lora, M.D., 51, of Miami, was charged with one count of conspiracy to commit health care fraud and wire fraud; and one count of conspiracy to defraud the United States, receive health care kickbacks and make false statements relating to health care matters.

According to allegations in the indictment, Lora and Isabel Medina owned and operated Merfi Corporation (Merfi), a Miami-area clinic that employed physicians, physician assistants and other medical professionals.  The indictment alleges that, in exchange for kickbacks and bribes, Lora and his co-conspirators wrote prescriptions for home health care and other services for Medicare beneficiaries that were not medically necessary or not provided.  Lora and his co-conspirators allegedly falsified patient records to make it appear as if the beneficiaries qualified for the services for which Medicare was billed.

According to the indictment, the alleged actions of Lora and his co-conspirators prompted multiple Miami-Dade home health care agencies and other providers to bill Medicare for services that were not medically necessary or not provided.  Medicare made payments on these fraudulent claims.

Medina pleaded guilty to conspiracy to commit health care fraud and was sentenced in March 2014 to nine years in prison.  Medina admitted that her activities and those of her co-conspirators at Merfi caused losses to the Medicare program exceeding $20 million.

The charges and allegations contained in an indictment are merely accusations.  The defendant is presumed innocent unless and until proven guilty. 

The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Florida.  This case is being prosecuted by Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section. 

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

Lora Indictment

Late yesterday, a federal judge in South Dakota issued a permanent injunction against Robert “Larry” Lytle of Rapid City, South Dakota and his medical device businesses, the Justice Department announced.  Lytle marketed laser devices to treat a variety of medical conditions and diseases through several entities, including QLasers PMA and 2035 PMA, and is the owner and operator of 2035 Inc.

In October 2014, the Justice Department brought a civil action to enforce provisions of the federal Food, Drug and Cosmetic Act (FDCA).  As the court found, Lytle and his businesses violated the FDCA by marketing and distributing the QLaser devices nationwide for the treatment of more than 200 different diseases and medical disorders without clearance or approval from the U.S. Food and Drug Administration (FDA). 

“We brought this lawsuit because Mr. Lytle had been putting consumers at risk, while attempting to evade the FDCA – a law Congress enacted to protect public health and safety,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “It is especially noteworthy and gratifying that the Department was able to obtain some recompense for the innocent consumers whom Lytle victimized.”

According to the complaint and evidence adduced at a trial, Lytle has been distributing the QLaser devices with false and misleading labeling claims, touting their use for treating such serious conditions as cancer, HIV/AIDS and diabetes.  Although two of the devices are cleared for providing temporary relief of pain associated with osteoarthritis of the hand, none of the devices have been cleared by the FDA or otherwise approved to treat any other medical conditions.  Moreover, using the QLaser devices can be harmful in certain situations, and its use to treat other serious conditions, is unsupported by any published clinical studies.

The permanent injunction issued yesterday by U.S. District Court Chief Judge Jeffrey L. Viken follows a trial held in March 2015, in which the government established that the QLaser’s labeling was false and misleading and that, in fact, using the lasers according to their directions could be dangerous to health.  Yesterday’s court order requires that Lytle and his businesses cease directly or indirectly manufacturing, packing, labeling and/or distributing any medical device unless and until they comply with certain terms of the injunction.

The court also ordered Lytle to refund the full amount consumers paid for their QLaser devices, whether the devices were purchased directly from Lytle’s businesses or through one of his several distributors.  Depending on the specific package purchased, each consumer typically paid between $4,295 and $12,600, according to the evidence before the court.  Lytle has admitted that he has sold at least 20,000 devices since 1998.

Lytle is required to pay the United States $10,000 per day for any violation of the permanent injunction, and is subject to other sanctions, including fines and imprisonment, for failing to comply.

“This ruling will help restore consumer confidence and send a strong message that a company cannot exercise blatant disregard of the law, especially when consumers’ health is at risk,” said U.S. Attorney Randolph J. Seiler of the District of South Dakota.  “Justice has been served with this permanent injunction, and it will prohibit Mr. Lytle from continuing to thumb his nose at federal regulations that protect public health and safety.”

“Robert Lytle and his businesses ignored previous FDA warnings and continued to produce and distribute these devices in violation of federal law,” said Acting Director Jan Welch of the Office of Compliance in the FDA’s Center for Devices and Radiological Health.  “The FDA will remain vigilant in protecting the health of the American public by ensuring that medical devices are shown to be safe and effective before being used by patients.”

The government’s case is being handled by Trial Attorney Ross S. Goldstein of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Camela C. Theeler of the District of South Dakota.  Sonia Nath, with the FDA’s Office of Chief Counsel, is assisting with this case.

QLasers PMA and Robert Lytle Order of Permanent Injunction (399.06 KB)

A resident of Capitol Heights, Maryland, was sentenced today to serve 46 months in prison for his involvement in a far-reaching identity theft and tax fraud scheme in which he and others working with him filed fraudulent federal income tax returns seeking more than $2.5 million in refunds, the Justice Department announced.

Alvalonzo Graham, 30, is among approximately 12 people who have pleaded guilty to charges in the U.S. District Court for the District of Columbia.  According to court documents, the overall case involves the filing of at least 12,000 fraudulent federal income tax returns using stolen identifying information that sought refunds of at least $40 million from the U.S. Treasury.

The sentencing was announced by Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia, Special Agent in Charge Thomas Jankowski of the Internal Revenue Service-Criminal Investigation (IRS-CI), Inspector in Charge David G. Bowers of the U.S. Postal Inspection Service’s (USPIS) Washington, D.C., Division and Assistant Inspector General for Investigations John L. Phillips of the U.S. Department of the Treasury.

On March 18, 2014, Graham pleaded guilty to conspiracy to defraud the United States through the filing of false income tax returns.  He was sentenced by U.S. District Judge Ellen S. Huvelle of the District of Columbia.  Upon completion of his prison term, he will be placed on three years of supervised release.  In addition, as part of his plea agreement, Graham must pay $424,017.35 in restitution to the IRS.

“Today’s sentence is a warning to those who think they can profit from stealing identities and filing false claims for refund,” said Acting Assistant Attorney General Ciraolo.  “The department has made it a priority to work with the IRS and other federal and state law enforcement agencies to fully investigate and prosecute stolen identity refund fraud and see that these offenders pay for their crimes with significant jail terms.”

“The theft of identities and taxpayer dollars has become a nationwide epidemic, and this case shows the lengths that criminals will go in pursuit of cashing in,” said Acting U.S. Attorney Cohen.  “Unfortunately for Alvalonzo Graham and his co-conspirators, this case also shows the lengths that law enforcement will go to protect taxpayers’ dollars and to prosecute those who try to scam the system.”

“Perpetrators of identity theft schemes are motivated by greed, acting as if they are above the law and with total disregard for the consequences to the victims,” said Special Agent in Charge Jankowski.  “The actions of criminals such as Mr. Graham, create distressing hardships for many innocent taxpayers and have a devastating impact on the entire community.”

“This case serves as yet another example of the significant results that can be achieved when law enforcement agencies partner, share information, and collaborate,” said Inspector in Charge Bowers.  “Identity theft is an increasing problem. Today’s sentence shows that this type of criminal conduct, especially when it involves the U.S. mail, will not be ignored or go unpunished.”

“Today’s sentencing reflects the Treasury Office of Inspector General and our law enforcement partners continuing focus and efforts to protect both the Treasury and the hard-working American taxpayers from offenders who fraudulently conspire to obtain improper payments from the Treasury,” said Assistant Inspector General for Investigations Phillips.

According to the government’s evidence, Graham participated in a massive and sophisticated identity theft and false tax refund scheme that involved an extensive network of more than 130 people, many of whom were receiving public assistance.  The refunds were sought for tax years 2005 through 2012, often in the names of people whose identities had been stolen, including the elderly, people in assisted living facilities, drug addicts and incarcerated prisoners.  In other cases, the refunds were sent to people who were willing participants in the scheme.  The refunds listed more than 400 “taxpayer” addresses located in the District of Columbia, Maryland and Virginia.

According to documents filed with the court, from January 2011 through July 2012, Graham prepared and mailed fraudulent federal income tax returns, deposited the fraudulently-obtained tax refund checks into his own bank account and recruited, coordinated, directed and compensated others in the execution of the scheme, including a bank teller.  Graham’s actions and those of the people he directed and paid resulted in the filing of approximately 492 fraudulent income tax returns claiming $2,552,740 in refunds.  He maintained a bank account into which he deposited approximately 97 fraudulently obtained U.S. Treasury checks that totaled approximately $424,017.  Graham kept portions of these fraudulently obtained refunds.

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