District Not Recorded

Attorney General Loretta E. Lynch announced today the appointment of U.S. Attorney Deborah R. Gilg of the District of Nebraska to the Attorney General’s Advisory Committee (AGAC), effective Sept. 4, 2015:

“The Attorney General’s Advisory Committee plays a crucial role in shaping the Justice Department’s approach to some of the most pressing public safety issues facing our country today,” said Attorney General Lynch.  “I am grateful that the U.S. Attorneys who serve on the AGAC are able to lend their wisdom, their expertise and their counsel to advance the committee’s critical work on behalf of the American people.  As a former chair of the AGAC, I know that serving on the committee while leading federal law enforcement efforts within one’s home district is no easy feat.  But I also know that the AGAC’s members are on the committee precisely because of their talent and effectiveness as public service leaders.  That is why I could not be more pleased to welcome Deborah to the committee, where I know she will continue to serve her district and our country with passion, with intelligence and with results.”

U.S. Attorney Gilg will fill the seat vacated by former U.S. Attorney Conner Eldridge for the Western District of Arkansas, who stepped down on Aug. 22, 2015.

U.S. Attorney Gilg was appointed by President Barack Obama on Oct. 1, 2009, as the 32nd U.S. Attorney of the District of Nebraska and the first female U.S. Attorney of the District of Nebraska.  Prior to her appointment, U.S. Attorney Gilg served as an elected county attorney in Western Nebraska for 16 years.  In recognition of her expertise as a prosecutor, she was appointed as a deputy county attorney or special prosecutor in more than 21 counties in Nebraska, in addition to maintaining a private law practice.  U.S. Attorney Gilg currently serves on the Attorney General’s Subcommittees on Native American Issues, Civil Rights Issues, and Terrorism and National Security Issues.

The AGAC was created in 1973 to serve as the voice of the U.S. Attorneys and to advise the Attorney General on policy, management and operational issues impacting the U.S. Attorneys’ Offices.

Company’s Executive Vice President Pleads Guilty to Obstruction of an Agency Investigation

The owner and president of a dietary supplement manufacturing company in Flanders, New Jersey, was sentenced to prison today for the sale of diluted and adulterated dietary ingredients and supplements, the Department of Justice announced. 

Barry Steinlight, 70, of Hackettstown, New Jersey, was sentenced by U.S. District Court Judge Esther Salas of the District of New Jersey to serve 40 months in prison and one year of supervised release.  Steinlight was also ordered to forfeit $1 million in profits from his fraudulent scheme.  Steinlight previously pleaded guilty to a one-count information charging him with conspiring to commit wire fraud. 

“The Justice Department has increased its attention on supplement sellers like Barry Steinlight who sell products that are not what they claim to be,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “We will investigate and prosecute companies and individuals that sell supplements that threaten the health of the American public and drain their bank accounts with misrepresented products.”

Steinlight was the president and owner of Raw Deal Inc., a dietary supplement manufacturer.  In pleading guilty, Steinlight admitted that from at least 2009 through November 2013, he instructed Raw Deal employees to add “fillers,” including maltodextrin, viobin cocoa replacer and rice flours, to the dietary ingredients and supplements sold to customers.  These “fillers” were added without customer consent or knowledge.  Steinlight also directed Raw Deal employees not to list the “fillers” as ingredients on certificates of analysis issued to its customers as proof of the identity of the ingredients contained in the products.  During his plea hearing, Steinlight admitted that Raw Deal Inc.’s gross profits during the scheme were between $7 million and $20 million.

Yesterday, Raw Deal’s executive vice president, Catherine Palmer, 38, of Budd Lake, New Jersey, pleaded guilty to a one-count information charging her with obstructing an agency investigation.  The obstruction charge carries a statutory maximum sentence of five years in prison and a $250,000 fine, or twice the gain or loss caused by the offense.  Her sentencing is scheduled for Dec. 21.

According to court documents, Palmer lied to U.S. Food and Drug Administration (FDA) investigators and ordered a subordinate to falsify a dietary supplement product’s ingredient list before submitting it to the FDA.  In addition, she admitted instructing a Raw Deal employee not to run blenders during the 2012 inspection so that the FDA would not see “fillers” being added to customer orders.  This practice hid from the FDA the fact that Steinlight and Raw Deal diluted the products before sale to unsuspecting customers.

Court documents also revealed that Steinlight directed Raw Deal employees to create certificates of authenticity that falsely claimed that certain Raw Deal products were kosher or organic. 

“Consumers expect labels that accurately describe the products they ingest,” said U.S. Attorney Paul J. Fishman of the District of New Jersey.  “Steinlight deceived his customers as part of a four-year scheme in which he delivered bogus, mislabeled products.  Today he was appropriately punished for his crime.”

“Today’s announcement demonstrates that those who sell adulterated dietary supplements and purposely subvert the regulatory functions of the FDA by providing false and misleading information will be held accountable for their actions,” said Acting Special Agent in Charge Jeffrey J. Ebersole of the FDA Office of Criminal Investigations’ New York Field Office.  “We commend the efforts of the Department of Justice for vigorously pursuing the prosecution of this matter.”

Principal Deputy Assistant Attorney General Mizer and U.S. Attorney Fishman commended the investigative efforts of the FDA’s Office of Criminal Investigations.  The government is represented by Assistant U.S. Attorney Joseph Mack of the District of New Jersey, Deputy Chief of the office’s Health Care and Government Fraud Unit; Special Assistant U.S. Attorney Shannon M. Singleton of the FDA’s Office of Chief Counsel; and Trial Attorneys Patrick Runkle and David Sullivan of the Civil Division’s Consumer Protection Branch.  Paralegal Jeffrey Skonieczny of the District of New Jersey also assisted in the criminal investigation.

The Department of Justice announced today that it will require General Electric Company (GE) to divest Alstom S.A.’s subsidiary Power Systems Mfg. LLC (PSM) in order for GE to proceed with its proposed approximately $13.8 billion acquisition of Alstom.

The Antitrust Division filed a civil antitrust lawsuit in the U.S. District Court of the District of Columbia to block the proposed transaction.  At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the department’s competitive concerns alleged in the lawsuit.

“The acquisition as originally proposed would have eliminated General Electric’s primary competitor in the supply of aftermarket parts and services for GE gas turbines in the United States,” said Principal Deputy Assistant Attorney General Renata B. Hesse of the Antitrust Division.  “We appreciate the close cooperation of the European Commission, which greatly facilitated our investigation and helped formulate remedies that will preserve competition in the United States and internationally.” 

The European Commission announced today that in order to address its competitive concerns with the acquisition, it will require GE to divest a package of Alstom assets relating to the development and manufacture of large gas turbines widely used in Europe, including PSM.  The department’s Antitrust Division and the European Commission cooperated closely throughout the course of their respective investigations, with frequent contact between the agencies. 

According to the department’s complaint, only three competitors, including GE and PSM, develop, manufacture and sell new aftermarket parts to repair and service GE 7FA gas turbines installed in the United States.  PSM’s entry in 1998 into the aftermarket parts and service market led to widespread price decreases, including a drop of 60 to 70 percent in the price of replacement parts for GE 7FA gas turbines.  In addition, PSM’s entry led to the development of many new parts that have improved the performance of GE 7FA gas turbines.  The loss of PSM as an independent competitor would have harmed owners of GE turbines and ultimately U.S. consumers.   

The proposed divestiture will remedy this loss of competition.  Under the terms of the proposed consent decree, GE must divest Alstom’s PSM subsidiary to Ansaldo Energia S.P.A. (Ansaldo) or an alternative, independent buyer approved by the United States.

GE, based in Connecticut, is a global manufacturing, technology and services company.  GE’s subsidiary, GE Power and Water, provides power generation, energy delivery and water process technologies in a number of areas in the energy industry.  In 2014, GE’s revenues from aftermarket parts and service for GE 7FA gas turbines were approximately $730 million.

PSM, headquartered in Florida, is a wholly owned subsidiary of Alstom, a French corporation.  PSM provides aftermarket parts and services for a variety of turbine engines, including the GE 7FA model.  In 2014, PSM’s U.S. revenues for aftermarket parts and service for GE 7FA gas turbines were approximately $90 million.

As required by the Tunney Act, the proposed consent decree, along with the department’s competitive impact statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

GE Alstom Complaint (426.5 KB)

GE Alstom PFJ (1.52 MB)

GE Alstom CIS (1.01 MB)

 

A former employee with International Relief and Development Inc. (IRD) pleaded guilty today to charges of bribery in connection with a federal program and conspiracy to structure financial transactions to avoid currency transaction reporting requirements, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.

George E. Green, 57, of Carrollton Texas, pleaded guilty before U.S. Magistrate Judge Don D.  Bush of the Eastern District of Texas.  Sentencing will be scheduled at a later date before U.S. District Judge Marcia A. Crone of the Eastern District of Texas.  The parties agreed to a stipulated sentence of 46 months in prison and a forfeiture of $51,000.

In connection with a cooperative agreement between the U.S. Agency for International Development (USAID) and IRD to strengthen economic stabilization and promote long-term agricultural development in specific areas in Afghanistan, Green served as IRD’s director of contracts, procurement and grants.  According to admissions made in connection with his guilty plea, in March and April 2012, Green solicited and received a $51,000 bribe from a representative of an Afghan company that provided agriculture-related products and that sought subcontracts from IRD.  Green also admitted that between May and August 2012, after he returned to Texas, he attempted to conceal the bribe proceeds by conspiring with others to make deposits of less than $10,000 each into his bank and credit card accounts to circumvent the financial institutions’ mandatory cash reporting requirements.

The case is being investigated by Special Inspector General for Afghanistan Reconstruction, the FBI and the USAID Office of Inspector General.  This case is being prosecuted by Special Trial Attorney Mark H. Dubester and Trial Attorney Michael T. O’Neill of the Criminal Division’s Fraud Section.

The Department of Justice and the Federal Trade Commission signed an antitrust memorandum of understanding (MOU) with the Korea Fair Trade Commission (KFTC) today to promote increased cooperation and communication among the competition agencies in both countries.  The MOU was signed in Washington, D.C. by Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division, Chairwoman Edith Ramirez of the FTC and Chairman Jeong Jae-chan of the KFTC, and went into effect upon signature.

“This memorandum of understanding recognizes the day-to-day working relationship we already enjoy with the KFTC and expresses our interest in continuing and strengthening that relationship in the years to come,” said Assistant Attorney General Baer.  “Enforcement cooperation – including candid and constructive dialogue – is critical to maintaining competitive markets in the United States, Korea and around the world."

“This MOU marks an important point in our relationship with the KFTC, providing an opportunity to further strengthen our agencies’ interactions and solidify our cooperative efforts throughout Asia,” said Chairwoman Ramirez.  “It will help us to work even more closely to promote convergence around sound competition policy and procedures.”

Highlights of the new agreement include the following:

• mutual acknowledgment of the importance of antitrust cooperation, including an intention to coordinate when pursuing enforcement activities on matters under common review;

• articulating the framework for communications between the U.S. antitrust agencies and the KFTC; and

• committing to maintain the confidentiality of any information provided by the other party and honoring prohibitions on sharing information when not permitted by law.

The U.S. antitrust agencies and the KFTC have developed an increasingly close working relationship since Korea adopted its competition law in 1981, which includes exchanging views on policy and, as appropriate, cooperating on investigations.  Today’s MOU is intended to further promote these relations.

The MOU with the KFTC is the U.S. antitrust agencies’ third antitrust cooperation arrangement in East Asia, following those reached with Japan in 1999 and the Chinese competition agencies in 2011.

The Justice Department announced today that Walter Investment Management Corp. (WIMC) has agreed to pay $29.63 million to resolve allegations that WIMC, through its subsidiaries, Reverse Mortgage Solution Inc. (RMS), REO Management Solutions LLC and RMS Asset Management Solutions LLC, violated the False Claims Act in connection with their participation in the Department of Housing and Urban Development’s (HUD’s) Home Equity Conversion Mortgages (HECM) program, which insures “reverse” mortgage loans.  WIMC, through subsidiaries such as RMS and Green Tree Servicing LLC, provides business support to the residential mortgage industry, including servicing of reverse or forward mortgages on behalf of major financial institutions.

“The Department of Justice is committed to ensuring that those who service HUD-insured reverse mortgages are held accountable for their knowing failure to comply with important HUD requirements,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Schemes such as these undermine an important tool available to older Americans who wish to use a HUD-insured reverse mortgage loan to age in place.”

Reverse mortgage loans allow elderly people to access the equity in their homes.  To encourage reverse mortgage loans, HUD insures such loans through a program administered by HUD’s Federal Housing Administration (FHA).  Under HUD’s program, a loan becomes due and payable when the home is sold or vacant for more than 12 months or upon the death of the homeowner, whichever comes first.  The lender is repaid the amount of the loan, including the costs of servicing the loan and interest that accrues, after a loan becomes due and payable.  HUD will reimburse a lender that is unable to recoup the full amount of the loan.  In order to claim recoupment, the servicer is required to meet a number of regulatory requirements and deadlines.  Failure to meet these requirements and deadlines could result in denial of the insurance claim.

The government alleged that, from August 2009 to March 2015, RMS, with the knowledge and support of its corporate parent, WIMC, submitted false claims for debenture interest from HUD by failing to properly disclose that it had not met certain deadlines and, therefore, was not entitled to such interest payments.  In order to obtain such interest, HUD requires lenders and their servicers to obtain appraisals within 30 days of the loan becoming due and payable.  The significance of the 30-day appraisal requirement is, among other things, to establish a mutual understanding between the lender and HUD as to the market value of the property so that a decision can be made as to whether to proceed with foreclosure, engage in a workout with the lender or deal with estate rights issues.

The government also alleged that from July 2010 to October 2014, WIMC, through its subsidiaries, submitted false claims to HUD for the reimbursement of unlawful referral fees by falsely representing them to be lawful sales commissions.  As part of an insurance claim, HUD will reimburse lenders or their servicers for sales commissions paid to real estate agents as part of the liquidation of foreclosed properties.  HUD will not, however, reimburse lenders or their servicers for fees paid for the referral of liquidation business.  According to the government, RMS often used straw companies to liquidate foreclosed properties.  Upon sale of the foreclosed property, the straw companies split the six-percent sales commissions: the real estate agents shared a five-percent sales commission and the companies kept a one-percent referral fee.  These straw companies, in turn, deducted a small fee from the one-percent referral fee and kicked the remainder back to RMS.  Nonetheless, RMS submitted insurance claims to HUD that included payment for the full six-percent sales commission, when, in fact, the payment included a prohibited referral fee.

“This settlement represents a significant milestone in our office’s long standing campaign against mortgage fraud,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “HUD’s lending programs are vital to the economic well-being of some our district’s most vulnerable residents and we are committed to holding servicers and lenders to the high standards required by these programs.”

“This settlement demonstrates my office’s commitment to holding accountable those who seek to undermine the Department of Housing and Urban Development’s financial programs serving homeowners and, particularly, our elderly citizens, who are often most in need of the benefits of the reverse mortgage loan program,” said HUD Inspector General David A. Montoya.

“Today’s settlement is another example that we are serious about making certain our approved lenders are complying with FHA requirements,” said HUD General Counsel Helen Kanovsky.  “This is a significant settlement concerning FHA’s reverse mortgage program, which is designed to benefit America’s seniors.  We’re pleased that WIMC agreed to accept financial responsibility for these violations.”

The settlement resolves allegations filed in a lawsuit by Matthew McDonald, a former executive of RMS, under the qui tam, or whistleblower, provisions of the False Claims Act.  The act permits private individuals to sue on behalf of the government for false claims and to share in any recovery.  The False Claims Act also permits the government to intervene in such lawsuits, as it did in this case.  Mr. McDonald will receive $5.15 million as his share of the recovery in this case.

The settlement was the result of the coordinated efforts of the Civil Division, the U.S. Attorney’s Office of the Middle District of Florida and HUD’s Office of Inspector General and Office of General Counsel.

The lawsuit is captioned United States ex rel. McDonald v. Walter Investment Management Corp., et al., Case No. 8:13-cv-1705-T-23TGW (M.D. Fla.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

The Department of Justice announced today that Robert Wingfield, of Texas, and Bill Ma, of New Jersey, have agreed to pay $385,000 and $50,000, respectively, to resolve a lawsuit brought by the United States under the False Claims Act alleging that they engaged in a scheme to evade customs duties on imports of aluminum extrusions from the People’s Republic of China (PRC). 

“The nation’s customs laws are designed to protect domestic manufacturers from unfair competition abroad,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “These settlements show that the Department of Justice is committed to pursuing claims against anyone involved in a scheme to seek an unfair advantage in U.S. markets by evading duties on imported goods, including individuals who make such evasion possible by the businesses that import the goods.”

The Department of Commerce assesses, and the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) collects, antidumping and countervailing duties to protect U.S. businesses and level the playing field for domestic products.  Antidumping duties protect against foreign companies “dumping” products on U.S. markets at prices below cost, while countervailing duties offset foreign government subsidies.  Imports of PRC-manufactured aluminum extrusions have been subject to antidumping and countervailing duties since 2010.  Aluminum extrusions are used, among other things, to make shower doors and enclosures.

Wingfield was the U.S. sales representative for Tai Shan Golden Gain Aluminum Products Ltd., the Chinese company that exported the aluminum extrusions in this case.  The complaint alleged that Wingfield conspired with domestic importers to submit false information to the government to evade duties, and that Ma later formed a company, Northeastern Aluminum Corp. (Northeastern), to act as the importer of record for the goods in an attempt to shield the real importers from liability.  As the ostensible importer of record, Northeastern, through Ma, allegedly misrepresented the country of origin of the goods as Malaysia, when the goods were actually manufactured in the PRC and merely shipped through Malaysia, a country without duties on such items.  This practice is called transshipping.

The United States previously settled with four other importers allegedly implicated in the scheme.  Today’s settlements bring the total to more than $4.58 million.  For previous settlement press releases in this case, click here and here.  In addition, Wingfield pleaded guilty to one count of using false statements to import goods into the United States.

“When businesses and individuals fraudulently evade import duties designed to foster fair competition, consumers lose,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “We will hold accountable those involved in illegal schemes that place businesses in our district at an unfair disadvantage.”

“Antidumping and countervailing duties are critical to ensure fair competition for U.S. manufacturers,” said Commissioner R. Gil Kerlikowske of the CBP.  “U.S. Customs and Border Protection works diligently with the Department of Justice, U.S. Immigration and Customs Enforcement, Homeland Security Investigations and the U.S. Department of Commerce to aggressively pursue duty evasion.”

The allegations resolved by the settlements announced today were originally brought by whistleblower James F. Valenti Jr. in the U.S. District Court for the Middle District of Florida under the qui tam provisions of the False Claims Act.  The act permits private parties to sue on behalf of the government those who falsely claim federal funds or, as in this case, those who avoid paying funds owed to the government or cause or conspire in such conduct.  The United States may intervene in and take over the lawsuit, as it did in this case.  The act allows the whistleblower to receive a share of any funds recovered through the lawsuit.  Mr. Valenti will receive approximately $79,000 as his share of today’s settlements.

The case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Middle District of Florida, CBP, U.S. Immigration and Customs Enforcement and the Department of Commerce’s International Trade Administration.

The lawsuit is captioned United States ex rel. Valenti v. Tai Shan Golden Gain Aluminum Products Ltd., et al., Case No. 11-cv-368 (M.D. Fla.).  The claims resolved by these settlements are allegations only; there have been no determinations of liability.

Columbus Regional Healthcare System (Columbus Regional) and Dr. Andrew Pippas have agreed to pay more than $25 million to resolve allegations that they violated the False Claims Act by submitting claims in violation of the Stark Law.  Today’s settlement also resolves allegations that Columbus Regional and Pippas submitted claims for payment to federal health care programs that misrepresented the level of services they provided.  Under the settlement agreement, Columbus Regional has agreed to pay $25 million, plus additional contingent payments not to exceed $10 million, for a maximum settlement amount of $35 million, and Pippas has agreed to pay $425,000.

“Today’s settlement demonstrates our continuing vigilance to ensure that health care referrals are based solely on the medical needs of the patient and that health care providers bill the government only for the care they provide,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Healthcare providers who seek to profit at the expense of taxpayers will face serious consequences.”

“The maximum amount of this settlement, some $35 million, is appropriate given the number of alleged violations involving the False Claims Act and the Stark Act,” said U.S. Attorney Michael Moore of the Middle District of Georgia.  “Access to health care is on everyone’s mind, especially with respect to rural communities.  The type of conduct alleged in this case puts that access at risk.  This settlement reflects on the one hand, the Department of Justice’s commitment to make sure that hospitals and physicians who commit violations of federal law are held to account, and on the other hand, especially with the requirement of the monitoring agreement, makes sure that we continue to have appropriately functioning health care providers accessible to the wide array of communities they serve.”

The Stark Law prohibits physician referrals of certain health services for Medicare and Medicaid patients if the physician has a financial relationship with the entity to which he or she refers the patient.  The United States alleged that between 2003 and 2013, Columbus Regional provided excessive salary and directorship payments to Pippas that violated the Stark Law.

The United States also alleged that from May 2006 through May 2013, Columbus Regional submitted claims to federal health care programs for services at higher levels than supported by the documentation, and between 2010 and 2012, they submitted claims to federal health care programs for radiation therapy at higher levels than the therapy that was provided.

Of the $25.425 million that Columbus Regional and Pippas have agreed to pay to resolve their respective civil claims, they will pay $24,666,040 to the federal government for federal healthcare program losses and $758,960 to the state of Georgia for the state share of its Medicaid losses. 

Also as part of the settlement, Columbus Regional will enter into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services-Office of the Inspector General (HHS-OIG) that requires Columbus Regional to implement measures designed to avoid or promptly detect future conduct similar to that which gave rise to this settlement.

“Increasing referrals by self-dealing and violating the Stark statute – as the government contended in this case – undermines impartial medical judgment at the expense of patients and taxpayers,” said Special Agent in Charge Derrick L. Jackson of HHS-OIG.  “Charging federal health care programs for pricier services than those actually provided will not be tolerated.”

The settlements resolve allegations filed in two lawsuits by Richard Barker, a former Columbus Regional executive, in federal court in Columbus, Georgia.  The lawsuits were filed under the qui tam, or whistleblower, provisions of the federal False Claims Act and the Georgia False Medicaid Claims Act, which permit private individuals to sue on behalf of the federal and state governments, respectively, for false claims and to share in any recovery.  Mr. Barker’s share of the settlement has not yet been determined.

This 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 $24.9 billion through False Claims Act cases, with more than $15.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The civil settlement was handled by the U.S. Attorney’s Office of the Middle District of Georgia and the Civil Division’s Commercial Litigation Branch.  These matters were investigated by HHS-OIG’s Office of Investigations, with assistance from the HHS Office of Counsel to the Inspector General and Office of General Counsel and Center for Medicare and Medicaid Services, and the state of Georgia’s Medicaid Fraud Control Unit.    

The civil lawsuits are captioned United States ex rel. Barker v. Columbus Regional Healthcare System, et al., Case No. 4:12-cv-108 (M.D. Ga.) and United States ex rel. Barker v. Columbus Regional Healthcare System, et al., Case No. 4:14-cv-304 (M.D. Ga.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

The Department of Justice announced today that Schroder & Co. Bank AG has reached a resolution under the department’s Swiss Bank Program.

“As today’s agreement reflects, Swiss banks continue to lift the veil of secrecy surrounding bank accounts opened and maintained for U.S. individuals in the names of sham structures such as trusts, foundations and foreign corporations,” said Acting Deputy Assistant Attorney General Larry J. Wszalek of the Department of Justice’s Tax Division.  “The department’s prosecutors and the IRS are actively following these leads to criminally investigate and prosecute those individuals who willfully evaded or assisted in the evasion of U.S. income 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, Schroder Bank agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay penalties in return for the department’s agreement not to prosecute the bank for tax-related criminal offenses.

Schroder Bank was founded in 1967 and received its Swiss banking license in 1970.  Since 1984, Schroder Bank has had a branch in Geneva.  The bank has two wholly owned subsidiaries, Schroder Trust AG (domiciled in Geneva) and Schroder Cayman Bank & Trust Company Ltd. (domiciled in George Town, Grand Cayman).  Schroder Cayman Bank & Trust Company Ltd. provides services to clients such as the creation and support of trusts, foundations and other corporate bodies.  Both subsidiaries also acted in some cases as an account signatory for entities holding an account with the bank.  Schroder Bank is in the process of closing the operations of Schroder Trust AG and Schroder Cayman Bank & Trust Company Ltd.

Schroder Bank opened accounts for trusts and companies owned by trusts, foundations and other corporate bodies established and incorporated under the laws of the British Virgin Islands, the Cayman Islands, Panama, Liechtenstein and other non-U.S. jurisdictions, where the beneficiary or beneficial owner named on the Form A was a U.S. citizen or resident.  In addition, a small number of accounts were opened for U.S. limited liability companies (LLCs) with U.S. citizens or residents as members, as well as for U.S. LLCs with non-U.S. persons as members.  Schroder Bank communicated directly with the beneficial owners of some accounts of trusts, foundations or corporate bodies, and it arranged for the issuance of credit cards to the beneficial owners of some such accounts that appear in some cases to have been used for personal expenses.

Schroder Bank also processed cash withdrawals in amounts exceeding $100,000 or the Swiss franc equivalent.  For at least three U.S.-related accounts, a series of withdrawals that in aggregate exceeded $1 million were made.  In addition, at least 26 U.S.-related accountholders received cash or checks in amounts exceeding $100,000 on closure of their accounts, including in at least three cases cash or checks in excess of $1 million.

Between 2004 and 2008, four Schroder Bank employees traveled to the U.S. in connection with the bank’s business with respect to U.S.-related accounts.  In 2008, Swiss bank UBS AG publicly announced that it was the target of a criminal investigation by the Internal Revenue Service (IRS) and the department, and that it would be exiting and no longer accepting certain U.S. clients.  In a later deferred prosecution agreement, UBS admitted that its cross-border banking business used Swiss privacy law to aid and assist U.S. clients in opening accounts and maintaining undeclared assets and income from the IRS.  Between Aug. 1, 2008, and June 30, 2009, Schroder Bank opened eight U.S.-related accounts with funds received from UBS, which was then under investigation by the U.S. government.

Since Aug. 1, 2008, Schroder Bank had 243 U.S.-related accounts with approximately $506 million in assets under management.  Schroder Bank will pay a $10.354 million penalty.

In accordance with the terms of the Swiss Bank Program, Schroder Bank mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations.  While U.S. accountholders at Schroder Bank 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 Schroder Bank must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.

“The cumulative penalties the Swiss Bank Program has generated to date are extraordinary,” said Chief Richard Weber of IRS-Criminal Investigation (CI).  “However, a significant element of the program is the highly-detailed account and transactional data that has been provided to IRS specifically for law enforcement purposes.  We will continue to use this information to vigorously pursue U.S. taxpayers who may still be trying to illegally conceal offshore accounts, ensuring we are all playing by the same rules.”

Acting Deputy Assistant Attorney General Wszalek thanked the IRS, and in particular, IRS-CI and the IRS Large Business and International Division for their substantial assistance.  Wszalek also thanked Sean P. Beaty and Gregory S. Seador, 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.

Automotive parts supplier NGK Insulators Ltd. has agreed to plead guilty and to pay a $65.3 million criminal fine for its role in a conspiracy to fix prices and rig bids for ceramic substrates for automotive catalytic converters supplied to automobile manufacturers.  The company will also plead guilty to obstruction of justice.            

According to the two-count felony charge filed today in the Eastern District of Michigan, NGK Insulators, based in Nagoya, Japan, conspired to rig bids for, and to fix, stabilize and maintain the prices of, catalytic converter substrates.  The parts were supplied to automobile manufacturers such as General Motors Company, Toyota Motor Corporation, Nissan Motor Company Ltd and certain of their subsidiaries, affiliates and suppliers in the United States and elsewhere.  NGK Insulators was involved in the conspiracy from at least July 2000 until at least February 2010.  NGK Insulators is also charged with obstructing justice between February 2010 and approximately July 2012, for altering, destroying, mutilating and concealing documents with the intent of impeding the investigation into criminal antitrust violations in the automotive parts industry.  NGK Insulators has agreed to cooperate in the department’s ongoing investigation.  The plea agreement will be subject to court approval.           

“Companies and their executives who commit antitrust crimes will be found out and punished,” said Deputy Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division.  “And if they attempt to obstruct our investigation, they will face even harsher consequences.”   

Ceramic substrates are uncoated ceramic monoliths with a fine honeycomb structure that are used in automotive catalytic converters.  Catalytic converters are critical emissions control devices that convert pollutants in an exhaust gas stream into less harmful gases through catalytic chemical reactions.       

According to the charge, NGK Insulators and representatives of another corporate conspirator had conversations in which they agreed upon anticompetitive bids and price quotations on bids to be submitted to certain automobile manufacturers.  NGK Insulators, which sells a variety of ceramic and metallic products for the automotive industry, power generation, electronics components and other industrial processes, is the second-largest worldwide manufacturer of ceramic substrates for automotive catalytic converters.            

Additionally, after becoming aware of antitrust investigations in the United States and other countries, NGK Insulators and certain of its executives and employees obstructed justice through a series of actions in both the United States and Japan.  NGK Insulators deleted and attempted to delete electronic files, destroyed and concealed paper files, removed and replaced high executives’ office computers, removed and concealed electronic files stored on its U.S. office computer system, attempted to destroy paper files located in the U.S., engaged in misleading actions and withheld information about the offenses under investigation.            

The charges against NGK Insulators are the latest in the department’s ongoing investigation into anticompetitive conduct in the automotive parts industry.  Including NGK Insulators, 36 companies and 30 executives have pleaded guilty or agreed to plead guilty in the ongoing investigation and have agreed to pay more than $2.5 billion in criminal fines.           

NGK Insulators is charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.  NGK Insulators is also charged with obstruction of justice, which carries a maximum penalty of $500,000 per count for corporations. 

Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Division with the assistance of the FBI Headquarters’ International Corruption Unit.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit http://www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.

NGK Insulators Information (209.19 KB)

Increased Privacy Protections and Higher Legal Standards to Be Required

The Justice Department today announced a new policy for its use of cell-site simulators that will enhance transparency and accountability, improve training and supervision, establish a higher and more consistent legal standard and increase privacy protections in relation to law enforcement’s use of this critical technology.

The policy, which goes into effect immediately and applies department-wide, will provide department components with standard guidance for the use of cell-site simulators in the department’s domestic criminal investigations and will establish new management controls for the use of the technology.

“With the issuance of this policy, the Department of Justice reaffirms its commitment to hold itself to the highest standards as it performs its critical work to protect public safety,” said Deputy Attorney General Sally Quillian Yates.  “Cell-site simulator technology has been instrumental in aiding law enforcement in a broad array of investigations, including kidnappings, fugitive investigations and complicated narcotics cases.  This new policy ensures our protocols for this technology are consistent, well-managed and respectful of individuals’ privacy and civil liberties.”

Cell-site simulators are just one tool among many traditional law enforcement techniques and are deployed only in the fraction of cases in which the capability is best suited to achieve specific public safety objectives. 

To enhance privacy protections, the new policy establishes a set of required practices with respect to the treatment of information collected through the use of cell-site simulators.  This includes data handling requirements and an agency-level implementation of an auditing program to ensure that data is deleted consistent with this policy.  For example, when the equipment is used to locate a known cellular device, all data must be deleted as soon as that device is located, and no less than once daily.

Additionally, the policy makes clear that cell-site simulators may not be used to collect the contents of any communication in the course of criminal investigations.  This means data contained on the phone itself, such as emails, texts, contact lists and images, may not be collected using this technology.

While the department has, in the past, obtained appropriate legal authorizations to use cell-site simulators, law enforcement agents must now obtain a search warrant supported by probable cause before using a cell-site simulator.  There are limited exceptions in the policy for exigent circumstances or exceptional circumstances where the law does not require a search warrant and circumstances make obtaining a search warrant impracticable.  Department components will be required to track and report the number of times the technology is deployed under these exceptions.

To ensure that the use of the technology is well managed and consistent across the department, the policy requires appropriate supervision and approval.

Sanofi Subsidiary Admits Unlawful Conduct and Agrees to Enhance its Compliance Program

Genzyme Corporation, a wholly-owned biotechnology subsidiary of French pharmaceutical company Sanofi, agreed today to resolve criminal charges that it violated the federal Food, Drug and Cosmetic Act (FDCA) with regard to the unlawful distribution of Seprafilm, a surgical device it markets and promotes, the Justice Department announced.

As part of the agreed resolution, the department filed a two-count criminal information in the U.S. District Court for the Middle District of Florida charging that between 2005 and 2010, Genzyme caused a medical device to become adulterated and misbranded while being held for sale.  The conduct occurred prior to Sanofi’s acquisition of Genzyme, based in Cambridge, Massachusetts, in 2011.  To resolve these charges, Genzyme agreed to enter into a deferred prosecution agreement with the government for a term of at least two years.  As part of the agreement, Genzyme agreed to admit to and accept responsibility for the facts underlying the charges and pay a monetary penalty of $32,587,439.  It further agreed to undertake several groundbreaking measures to enhance its internal compliance program.  The agreement also acknowledges the significant level of cooperation Genzyme provided to the government during its investigation as well as the company’s independent remediation efforts.

Along with the information, the government also filed a consent motion with the court, requesting that its case against Genzyme be stayed during the term of the agreement.  If Genzyme fulfills its obligations under the agreement, the government will dismiss the charges it filed today at the end of the agreement’s term.

Today’s agreement is in addition to a separate $22.28 million civil agreement the government reached with Genzyme in December 2013 to resolve allegations under the False Claims Act related to Seprafilm.  After today’s agreement, Genzyme will have paid almost $55 million to resolve government allegations regarding Seprafilm.  If Genzyme fulfills its obligations under the agreement, the government will dismiss the charges it filed today at the end of the agreement’s term.

“Today’s action demonstrates that the Department of Justice will evaluate the facts of each case and choose the most appropriate tool of the several available to it to best address criminal misconduct,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of  the Justice Department’s Civil Division.  “The deferred prosecution agreement with Genzyme is yet another example of the department’s continuing efforts to ensure that pharmaceutical and medical device manufacturers adhere to laws and regulations that have been put in place to protect the health and safety of the American public.”

According to the papers filed in the district court today, Seprafilm is a clear piece of film that can be applied to internal tissues during pelvic and abdominal surgeries to reduce the formation of adhesions—bands of scar tissue that can form between traumatized tissues and organs after surgery, causing them to stick together.  Seprafilm was approved by the U.S. Food and Drug Administration (FDA) for use in patients undergoing open abdominal or pelvic laparotomy, which is a traditional surgical technique that utilizes a relatively large incision to permit the surgeon to open and view the patient’s abdominopelvic contents.  Over time, laparotomy became a less common surgical technique in favor of laparoscopic surgery, which is perceived to have several advantages for the patient.

To respond to the diminishing number of laparotomies performed, some Genzyme sales representatives taught surgeons and other medical staff how to mix the Seprafilm sheets into a liquid “slurry” that could be squirted through the narrow tubes used during laparoscopic surgery, even though Seprafilm was never indicated or FDA-approved for use in laparoscopic procedures.  Genzyme sales representatives’ participation in the preparation of slurry in the operating room caused Seprafilm to become adulterated, according to the criminal charges.

During the course of the government’s investigation regarding Seprafilm slurry, Genzyme voluntarily disclosed to the government that it had distributed promotional material for Seprafilm that implied that Seprafilm had been proven safe and effective for use in gynecologic cancer surgeries, even though Seprafilm’s FDA-approved label cautioned that the device had not been clinically evaluated in the presence of malignancies.  Genzyme based its claim on a study that involved only fourteen patients, which was far too few to support such an assertion.  A separate count in the government’s information charges that Genzyme’s use of this misleading promotional material caused Seprafilm to become misbranded while held for sale.

“Patients rely heavily on the integrity and efficacy of claims made by manufacturers of medical products,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “When manufacturers make misleading statements about using their products in ways that have not been approved by the FDA, patient care, confidence, and safety are put at risk.”

The case has been handled by Trial Attorney Ross S. Goldstein of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Simon Gaugush, Chief of the General Crimes Section at the U.S. Attorney’s Office of the Middle District of Florida, with support from FDA’s Office of Criminal Investigations and Office of Chief Counsel.

Parsons Government Services Inc. has agreed to pay the United States $3.8 million to settle allegations that the company knowingly mischarged the U.S. Department of Energy (DOE) for ineligible or inflated short-term and long-term employee relocation costs in connection with its contract on the DOE Salt Waste Processing Facility Project (SWPF) at the DOE Savannah River Site in Aiken, South Carolina.  Parsons is headquartered in Pasadena, California.  

“Those who expect to do business with the government must do so fairly and honestly,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “Today’s settlement demonstrates that the Department of Justice will pursue contractors that knowingly seek taxpayer funds to which they are not entitled.”

Since Sept. 1, 2002, Parsons has been the primary construction contractor on the DOE’s SWPF project at the Savannah River Site.  Pursuant to the terms of the SWPF contract, Parsons was entitled to be reimbursed for the payments it made to eligible employees for moving, meals, lodging and transportation expenses incurred when the employees were relocated or transferred by Parsons to work on the SWPF project in Aiken.  In order to be entitled to reimbursement by the DOE, however, Parsons was required to take steps to ensure that the employees met certain contractual requirements of eligibility, such as maintaining a permanent residence at the location from which they were transferred.  The United States alleged that Parsons sought and obtained reimbursement for these relocation expenses under the SWPF contract even for employees it knew did not qualify for these payments under the terms of the contract.

“The District of South Carolina continues to devote significant resources to pursuing claims under the False Claims Act and this is yet another example of how this commitment is benefiting the taxpayers by recovering funds for the government,” said U.S. Attorney William N. Nettles of the District of South Carolina.

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the District of South Carolina, the DOE Savannah River Operations Office and the DOE Office of Inspector General.

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

The Justice Department’s Office on Violence Against Women (OVW) today announced the release of a new $2.8 million funding opportunity as part of OVW’s Sexual Assault Justice Initiative (SAJI).  Launched in April 2015, the SAJI is an opportunity to improve how the justice system in general, and prosecution in particular, handles sexual assault cases.  This funding announcement will support approximately eight pilot sites to receive up to $400,000 to implement performance measures that reflect promising practices for prosecuting sexual assault and promote justice for victims.

“Very few victims report their assaults to law enforcement,” said Principal Deputy Director Bea Hanson of the Office on Violence Against Women.  “But among victims who do report, the reality is that many will likely see their cases dropped during the investigation or prosecution stage.  We know that sexual assault cases can be difficult to prosecute and we see the Sexual Assault Justice Initiative as an opportunity for prosecutors to learn about, and implement, effective practices for sexual assault prosecution.  The goal is to look beyond convictions to see what prosecutors can do to hold offenders accountable and provide victims with the justice they deserve.”

The demonstration initiative is designed to strengthen the justice system’s response to sexual violence and enhance collaborations among sexual assault victim services providers, law enforcement agencies, and sexual assault medical forensic services providers.  With funding from the Grants to Encourage Arrest Policies and Enforcement of Protection Orders Program, the Rural Sexual Assault, Domestic Violence, Dating Violence, and Stalking Grant Program and the Tribal Governments Grant Program, SAJI sites will be able to use the funds to strengthen services in their communities that support sexual assault victims.

Each pilot site will receive technical assistance from AEquitas: The Prosecutor’s Resource on Violence Against Women to implement the performance measures and enhance their approach to prosecuting sexual assault. Sites will also participate in the evaluation of the initiative.

Applications for the SAJI demonstration initiative are due on Oct. 13, 2015.  The solicitation is available at www.justice.gov/ovw/open-solicitations and www.grants.gov.  For information on the Office on Violence Against Women and its grant programs, visit www.justice.gov/ovw.

About the Office on Violence Against Women

Created in 1995, the Office on Violence Against Women provides federal leadership in developing the Nation’s capacity to reduce violence against women through the implementation of the Violence Against Women Act (VAWA) and subsequent legislation.  OVW administers financial and technical assistance to communities across the country that are developing programs, policies and practices aimed at ending domestic violence, dating violence, sexual assault and stalking.  To learn more, visit www.justice.gov/ovw.

NEC TOKIN Corp. will plead guilty and pay a $13.8 million criminal fine for conspiring with competitors between 2002 and 2013 to fix prices for electrolytic capacitors sold to customers in the United States and elsewhere. 

Electrolytic capacitors store and regulate electrical current in electronic products, including computers, televisions, car engine and airbag systems, home appliances and office equipment. 

“NEC Tokin and its co-conspirators fixed prices on capacitors, a component used in just about every product that has a battery or a plug,” said Assistant Attorney General Bill Baer.  “In announcing our first guilty plea in this ongoing investigation, we are enforcing the principle that American consumers are entitled to competitive markets.  We will vigorously investigate and prosecute illegal cartels regardless of where the defendants are located or the products they target.”

“For over a decade and through various financial crises, NEC Tokin has exploited American consumers and fixed the price of capacitors, which are critical to our modern way of electronic life,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Division.  “This investigation is ongoing and the FBI and DOJ Antitrust Division are dedicated to holding responsible all of the companies that illegally take advantage of customers.”

The one-count felony charge was filed today in the U.S. District Court of the Northern District of California in San Francisco.  In addition to pleading guilty to that charge and paying a criminal fine, NEC Tokin, based in Tokyo, has agreed to cooperate in the department’s ongoing investigation.  The plea agreement is subject to court approval.

The charge today results from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the capacitor industry conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Field Office.  Anyone with information on price fixing, bid rigging or other anticompetitive conduct related to the capacitors industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI tip line at 415-553-7400.

The Justice Department's Office on Violence Against Women (OVW) today announced 27 awards totaling $8.5 million to enhance victim services and develop programs to prevent, investigate and respond to sexual assault, domestic violence, dating violence and stalking on campus.  The awards are made with funds from the Grants to Reduce Sexual Assault, Domestic Violence, Dating Violence, and Stalking on Campus Program (campus program).

The campus program supports institutions of higher education in developing comprehensive coordinated campus and community-based approaches to prevent and respond to sexual assault, domestic violence, dating violence and stalking.  Recipients are required to conduct mandatory prevention and education programming for all incoming students and to train campus law enforcement and all members of campus disciplinary boards to respond effectively to sexual assault, domestic violence, dating violence and stalking.  Campuses can use funds to develop and adopt policies and protocols that prioritize victim safety and hold offenders accountable.

“We know that victims who receive comprehensive advocacy and services are more likely to achieve their goals of safety, autonomy and healing,” said Principal Deputy Director Bea Hanson of the Office on Violence Against Women.  “Coordination between on-and-off campus victim services organizations and the local criminal justice system is critical to providing holistic support and services that victims need and ensuring that perpetrators are held accountable.”

For more information about the Campus Program, visit www.justice.gov/ovw/responding-campus-sexual-assault.

The Fiscal Year 2015 grant recipients are:

Humboldt State University, Arcata, California; Shasta-Tehama-Trinity Joint Community College, Redding, California; Asnuntuck Community College, Enfield, Conn Florida Agricultural and Mechanical University, Tallahassee, Florida; Daytona State College, Daytona Beach, Florida.; Valencia College, Orlando, Florida.; Indian Hills Community College, Ottumwa, Iowa; Saint Joseph’s College, Rensselaer, Indiana; Washburn University of Topeka, Topeka, Kansas; Salam State University, Salem, Massachusetts; Bates College, Lewiston, Maine; Avila University, Kansas City, Missouri; Mississippi Valley State University, Itta Bena, Mississippi; Salish Kootenai College, Pablo, Montana; Mars Hill University, Mars Hill, North Carolina; University of North Carolina at Chapel Hill, Chapel Hill, North Carolina; Passaic County Community College, Paterson, New Jersey; The College of New Jersey, Ewing, New Jersey.; University of Nevada at Reno, Reno, Neveda; Juniata College, Huntingdon, Pennsylvania.; Cabrini College, Radnor, Pennsylvania.; Messiah College, Mechanicsburg, Pennsylvania.; University of Puerto Rico at Carolina, Carolina, Puerto Rico; Augustana College (recently renamed Augustana University), Sioux Falls, South Dakota; University of Tennessee, Knoxville, Tennessee; University of Texas at El Paso, El Paso, Texas; Edmonds Community College, Lynnwood, Washington.     

About the Office on Violence Against Women

Created in 1995, the Office on Violence Against Women provides federal leadership in developing the Nation’s capacity to reduce violence against women through the implementation of the Violence Against Women Act (VAWA) and subsequent legislation.  OVW administers financial and technical assistance to communities across the country that are developing programs, policies and practices aimed at ending domestic violence, dating violence, sexual assault and stalking.  To learn more, visit www.justice.gov/ovw.

A southern Alabama business man has pleaded guilty for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama.

Michael P. Barbour admitted to conspiring to fraudulently acquire title to foreclosed properties at artificially low prices by agreeing with others not to bid against each other at public foreclosure auctions in southern Alabama.  

“Including this defendant, 11 individuals have been convicted for conspiring to corrupt the public foreclosure auction process in Alabama,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “Together with our partners at the FBI, we will continue to obtain justice for the homeowners and banks victimized by these crimes.”

“When individuals knowingly defraud homeowners and financial institutions, the FBI is committed to holding them accountable in accordance with the law,” said Special Agent in Charge Robert F. Lasky of the FBI’s Mobile Division.  “We will continue working with our law enforcement partners to identify and stop those who line their own pockets at the expense of others."

According to documents filed with the court, from 2003 until 2010, Barbour conspired with other potential bidders for foreclosed properties to designate one person to bid at certain public foreclosure auctions.  Once the designated bidder won the property at the public auction, the conspirators held a secret, second auction open only to members of the conspiracy where they paid each other off.  As a result of these crimes, homeowners and banks received less than competitive prices for the properties. 

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the statutory maximum fine.  A count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine in an amount equal to the greatest of $250,000, twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.

The investigation into fraud and bid rigging in the Alabama real estate foreclosure industry is being conducted by the Washington Criminal II Section of the Antitrust Division and the FBI’s Mobile Field Office, with the assistance of the U.S. Attorney’s Office of the Southern District of Alabama.  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 1-888-647-3258 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’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations.  Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants.  For more information on the task force, please visit www.StopFraud.gov.

After a five-day trial in Minneapolis, a federal jury convicted two Brooklyn Center-based tax return preparers of conspiracy to defraud the United States, tax crimes and aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. 

The jury convicted Ishmael Kosh, a resident of Philadelphia, of one count of conspiracy to defraud the United States and eight counts of aiding and assisting in the preparation of false federal income tax returns.  The jury convicted Amadou Sangaray, a resident of New York City, of one count of conspiracy to defraud the United States, four counts of aggravated identity theft and eight counts of aiding and assisting in the preparation of false federal income tax returns.

The defendants were charged in a second superseding indictment with alleged co-conspirators Chatonda Khofi, David Mwangi and Francis Saygbay for their involvement in Primetime Tax Services Inc., (Primetime) a tax preparation business with three locations in the Minneapolis area.  All five defendants were charged in a conspiracy to defraud the United States by preparing fraudulent individual federal income tax returns for customers of Primetime for tax years 2006, 2007 and 2008.  According to court documents, during these years, the defendants and others filed more than 2,000 federal tax returns through Primetime.

“Today’s verdicts send a clear message that individuals who hold themselves out as tax return preparers, and then prepare and file false returns to steal from the U.S. Treasury, will be prosecuted and will face substantial incarceration and monetary penalties,” stated Acting Assistant Attorney General Ciraolo.  “The department, working with the Internal Revenue Service and its other law enforcement partners, is committed to holding these fraudulent return preparers, and those who participate in their illegal enterprises, accountable for their criminal conduct.”

Evidence introduced at trial established that in late 2006, defendants Kosh, Sangaray and Khofi set up a Primetime storefront in Brooklyn Center, where they prepared false tax returns that reported false dependents using stolen identities, fake business income and losses, inflated deductions, and inflated credits and false filing status, all to inflate customers’ tax refunds.  The defendants directed the Internal Revenue Service (IRS) to send their customers’ refunds to Primetime and then withdrew the return preparation fees from the refund.  When a customer came to the office to retrieve their refund check or debit card, the defendants sometimes escorted that customer to a check-cashing location or an ATM and demanded an additional cash fee. 

After the guilty verdicts, the court determined that Sangaray was a flight risk and he was detained pending sentencing.  The defendants’ sentencings are scheduled for Jan. 5, 2016.  At sentencing, the defendants face a statutory maximum sentence of five years in prison for conspiracy, a statutory maximum sentence three years in prison for each count of aiding and assisting in the preparation of false tax returns, and a mandatory minimum sentence of two years in prison for aiding aggravated identity theft.  They also face substantial financial penalties and restitution.

“The Internal Revenue Service works very hard to stop these fraudulent refund and identity theft schemes,” said Special Agent in Charge Shea Jones of IRS-Criminal Investigation.  “The fraudulent actions of these tax return preparers have caused undue harm to their clients and to the American taxpayers.”

In November 2014, Mwangi pleaded guilty to conspiracy to defraud the United States and Khofi pleaded guilty to conspiracy and aggravated identity theft.  In 2013, Stephanie Robinson, a defendant in a related case who worked at Primetime, pleaded guilty to filing her own false return and aiding and assisting the preparation of a false return.  Saygbay is set for trial on Nov. 2.

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Dennis R. Kihm, Thomas W. Flynn and Ryan R. Raybould and Paralegal Saundra Burgess of the Tax Division, who are prosecuting the case.  Ciraolo also thanked the U.S. Attorney’s Office of the District of Minnesota for their substantial assistance.

KMART Corp. (Kmart), a discount department store chain that operates approximately 780 in-store pharmacies throughout the United States, Puerto Rico and the U.S. Virgin Islands, has paid the United States $1.4 million to resolve allegations that it violated the False Claims Act by using drug manufacturer coupons and gasoline discounts as improper Medicare beneficiary inducements, the Justice Department announced today. 

“The United States will continue to pursue retail pharmacies that improperly attempt to influence a beneficiary’s choice of pharmacy,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The government will not permit pharmacies to use improper business tactics to solicit business that does nothing to improve the quality of healthcare received by Medicare beneficiaries and increases the costs of the Medicare program.” 

The settlement resolves allegations that Kmart violated the False Claims Act by providing illegal inducements to beneficiaries of the Medicare program.  The government alleged that from June 2011 to June 2014, Kmart knowingly and improperly influenced the decisions of Medicare beneficiaries to bring their prescriptions to Kmart pharmacies by permitting the Medicare beneficiaries to use drug manufacturer coupons to reduce or eliminate prescription co-pays that they otherwise would be obligated to pay.  Federal law prohibits a person from offering beneficiaries of certain federal health programs, such as Medicare, remuneration that is intended to influence the beneficiary’s choice of provider.  The government alleged that Kmart’s conduct caused the Medicare beneficiaries to seek expensive, brand name drugs in lieu of cheaper generic drugs, which caused the government’s costs to increase without any medical benefit to the beneficiary.  The government also alleged that Kmart improperly encouraged Medicare beneficiaries to bring their prescriptions to Kmart pharmacies by offering them varying levels of discounts on the purchase of gasoline at participating gas stations based on the number of prescriptions that they filled at Kmart pharmacies.

The settlement resolves allegations in a lawsuit filed by Joshua Leighr, a former Kmart pharmacist, under the qui tam, or whistleblower provisions of the False Claims Act.  The act authorizes private parties, such as Mr. Leighr, to sue for fraud on behalf of the United States and to share in any recovery.  Mr. Leighr will receive approximately $248,500 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 $24.9 billion through False Claims Act cases, with more than $15.9 billion of that amount recovered in cases involving fraud against federal health care programs.

This case was investigated jointly by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Western District of Missouri, the Department of Health and Human Services’ Office of Inspector General and the U.S. Postal Service’s Office of Inspector General.

The claims settled by today’s agreement are allegations only and there has been no determination of liability.

The case is captioned U.S. ex rel. Leighr v. Kmart Sears Holding Corporation and Kmart Corporation, Case No. 4:13cv00988-DGK (W.D. Missouri).

The United States has asked a federal court to permanently bar a Colorado man and the tax preparation business he operates from preparing federal tax returns for others, the Justice Department announced today.   

According to the government’s civil complaint, Gerardo Herrera and his business, El Lobo Multiservicios Professionales Inc., fraudulently reduced their customers’ tax liabilities by reporting extra dependents and claiming bogus deductions.  For example, the complaint alleges that Herrera and his staff have repeatedly claimed their customers’ extended family members as dependents, even though they do not qualify for dependent status under federal law, and have improperly claimed deductions for personal expenses like cell phones and car insurance.  In addition, according to the complaint, audits have shown that Herrera and his workers exaggerated deductions, reported fraudulent charitable contribution deductions and claimed improper head of household filing status.  The complaint alleges that the Internal Revenue Service (IRS) audited more than 200 returns prepared by Herrera’s business and found misrepresentations on more than 99 percent of them.

Return-preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2015.  The IRS has some tips on their website for choosing a tax preparer.  In the past decade, the Tax Division has obtained injunctions against hundreds of fraudulent tax preparers. Information about these cases is available on the Justice Department website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

WASHINGTON - Estados Unidos le pidió a un tribunal federal que prohíba en forma permanente a un hombre de Colorado y la empresa de declaraciones de impuestos que administra, preparar declaraciones de impuestos federales para terceros, anunció hoy el Departamento de Justicia.   

De acuerdo con la demanda civil entablada por el gobierno, Gerardo Herrera y su empresa, El Lobo Multiservicios Profesionales Inc., redujeron las obligaciones tributarias de sus clientes fraudulentamente al declarar dependientes adicionales y reclamar deducciones de impuestos falsas.   Por ejemplo, la demanda alega que Herrera y su personal han declarado repetidamente a miembros de la familia extendida de sus clientes como dependientes de los mismos, a pesar de que no cumplen los requisitos para dependientes según la ley federal, y solicitaron indebidamente deducciones por gastos personales como teléfonos celulares y seguro de automóvil.  Además, de acuerdo con la demanda, las auditorías realizadas indicaron que Herrera y sus empleados exageraron deducciones, solicitaron deducciones fraudulentas por contribuciones caritativas y declararon indebidamente estado de jefe de familia.  La demanda alega que el Servicio de Impuestos Internos [Internal Revenue Service (IRS)] auditó más de 200 formularios de declaración de impuestos preparados por la empresa de Herrera y encontró declaraciones falsas en más del 99 por ciento de las mismas.

El fraude de preparación de declaracion de impuestos es uno de los Doce ardides tributarios sucios del IRS de 2015.  En su portal en Internet, el IRS incluye algunos consejos para elegir un preparador de declaraciones de impuestos.  En la última década, la División de Impuestos ha obtenido interdictos contra cientos de preparadores de impuestos fraudulentos. Se puede encontrar información sobre estos casos en el portal del Departamento de Justicia.  Se encuentra una lista alfabética de personas prohibidas de preparar declaraciones de impuestos y promover ardides tributarios en esta página.  Si usted cree que una de las personas o empresas bajo prohibición puede estar violando un interdicto, por favor comuníquese con la División de Impuestos para proveer detalles.

Herrera filed Complaint

A Phenix City, Alabama, woman was sentenced to prison today in U.S. District Court for the Middle District of Alabama for her involvement in a stolen identity tax fraud scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department's Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama announced today.

Lasondra Miles Davis, 37, pleaded guilty earlier this year to one count of aggravated identity theft.  Chief U.S. District Judge W. Keith Watkins of the Middle District of Alabama sentenced Davis to serve 24 months in prison to be followed by one year of supervised release and ordered her to pay $1,941 in restitution to the Internal Revenue Service (IRS).  Davis’ mother, Teresa Floyd, pleaded guilty earlier this year to one count of conspiracy to defraud the United States and one count of aggravated identity theft.  Floyd will be sentenced on Oct. 15. 

According to court documents, between March 2011 and May 2014, Davis and Floyd operated several tax preparation businesses in the Phenix City area, including T & L Tax Service.  Davis obtained stolen identities which, according to allegations in the superseding indictment, Floyd then used to file more than 900 false federal income tax returns that claimed more than $2.5 million in tax refunds.  Davis, Floyd 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. 

The Justice Department announced today that it reached a settlement with Louisiana Crane & Construction LLC (Louisiana Crane), a crane and construction company headquartered in Eunice, Louisiana, that provides services to oilfields.  The settlement resolves a lawsuit filed on Aug. 29, 2014, by the Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC).

The lawsuit alleged that from at least Jan. 1, 2013, until at least Sept. 1, 2013, Louisiana Crane required workers who are not U.S. citizens to produce documents issued by the Department of Homeland Security as a condition of employment, but it did not make similar demands of U.S. citizens.  The anti-discrimination provision of the Immigration and Nationality Act (INA) prohibits employers from placing additional documentary burdens on workers during the employment eligibility verification process based on the worker’s citizenship status.

Under the settlement agreement, Louisiana Crane will pay $165,000 in civil penalties to the United States, establish a $50,000 back pay fund to compensate workers who lost wages because of the company’s practices, undergo monitoring for two years and train its employees on the INA’s anti-discrimination provision.

People who were authorized to work in the United States but were denied a job at Louisiana Crane, whose hire date was delayed by Louisiana Crane or were fired by Louisiana Crane between 2011 and 2015 because they could not show the documents the company requested to prove their work authorization, should contact OSC at (202) 305-0144.  Any unclaimed money from the $50,000 back pay fund will be donated to a non-profit organization in Texas or Louisiana.

“We see far too many cases of employers creating discriminatory barriers for immigrants who have permission to work in the United States,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “It is important that all employers examine their employment policies to make sure they are treating all workers fairly.”   

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 Attorneys Liza Zamd and Silvia Dominguez-Reese and Paralegal Isabel Otero of the Civil Rights Division worked on this case.

For more information about protections against employment discrimination under immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php, email [email protected]; or visit OSC’s website at www.justice.gov/crt/about/osc. 

Applicants or employees who believe they were subjected to different documentary requirements based on their citizenship status, immigration status or national origin; or discrimination based on their citizenship status, immigration status or national origin in hiring, firing, or recruitment or referral for a fee should contact OSC’s worker hotline for assistance.

The United States filed a complaint seeking to permanently bar a Durant, Mississippi, woman and the tax preparation business she operates from preparing federal tax returns for others, the Justice Department announced today.

The civil complaint against Teresa Chism and her business, Lady T. Taxes, was filed in the U.S. District Court for the Southern District of Mississippi.  The complaint alleges that Chism prepares income tax returns for customers that fraudulently overstate the refunds due by falsely claiming refundable credits, including the Earned Income Tax Credit (EITC) and credits for education expenses.  The complaint further alleges that Chism frequently prepares a fabricated Internal Revenue Service (IRS) Form W-2, Wage and Tax Statement, to submit with a tax return in order to maximize the amount of EITC a customer claims.

According to the complaint, since 2010, Chism has prepared more than 2,845 tax returns, and audits of 220 returns uncovered a total of more than $1 million in tax credits that Chism’s customers were not entitled to claim.

Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2015.  The IRS has some tips on its website for choosing a tax return preparer, and has launched a free directory of federal tax return preparers.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters.  Information about these cases is available on the Justice Department’s website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

WASHINGTON, D.C. – El Departamento de Justicia anunció hoy que ha llegado a un acuerdo con Louisiana Crane & Construction («Louisiana Crane»), una empresa de grúas y construcción con sede en Eunice, Luisiana que suministra servicios a campos petrolíferos. El acuerdo resolvió la demanda presentada el 29 de agosto del 2014 por parte de la Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC, por sus siglas en inglés).

La demanda acusó que a partir de al menos del primero de enero del 2013 hasta al menos del primero de septiembre de 2013, Louisiana Crane, obligaba a los trabajadores que no eran ciudadanos estadounidenses a presentar documentos emitidos por el Departamento de Seguridad Nacional como condición de su empleo, pero no le exigieron nada parecido a los que sí eran ciudadanos de los EE. UU. La provisión antidiscriminatoria de la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés) prohíbe que los empleadores les pidan documentos adicionales a sus trabajadores durante el proceso de verificación de elegibilidad laboral por motivos del estatus de ciudadanía del trabajador.

Conforme al acuerdo, Louisiana Crane le pagará a los Estados Unidos una multa civil que asciende a $165.000, establecerá un fondo de pagos retroactivos de $50,000 para indemnizar a los trabajadores que no recibieron sus salarios a causa de las prácticas de la empresa, será sujeto al monitoreo durante dos años, y capacitará a sus empleados acerca de la provisión antidiscriminatoria de la INA.

Los individuos que fuesen autorizados para trabajar en los Estados Unidos pero que se les negó un puesto en Louisiana Crane, cuya fecha de contratación fue retrasada por parte de Louisiana Crane, o que fueron despedidos por Louisiana Crane entre el 2011 y el 2015 porque no pudieron enseñar los documentos que la compañía solicitaba para probar que cuentan con autorización para trabajar deberán contactar a la OSC al (202) 305-0144. Cualquier parte del fondo de $50,000 de pagos retroactivos que no se reclame se donará a una organización sin fines de lucro en Tejas o Luisiana.

«Nos encontramos demasiados casos de empleadores que crean obstáculos discriminatorios para inmigrantes que tienen autorización para trabajar en los Estados Unidos», declaró la Subprocuradora General Interina, Vanita Gupta, jefa de la División de Derechos Civiles. «Es fundamental que todos los empleadores examinen sus políticas laborales para asegurarse de que traten a todos sus trabajadores de una manera justa».

La OSC tiene la responsabilidad de aplicar la provisión antidiscriminatoria de la INA. Entre otras cosas, la ley prohíbe la discriminación por motivos de estatus de ciudadanía o país de origen en la contratación, el despido o el reclutamiento o la referencia por comisión, prácticas documentales injustas; las represalias o la intimidación. El caso lo gestionaron las Abogadas Litigantes Liza Zamd y Silvia Dominguez-Reese, juntas con la Asistente Legal Isabel Otero, las tres de la División de Derechos Civiles.

Para más información sobre 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); matricúlese para una conferencia en línea gratuita en www.justice.gov/crt/about/osc/webinars.php; mande un correo electrónico a [email protected] o visite la página web de la OSC en www.justice.gov/crt/about/osc.  

Los postulantes o empleados que creen haber sido víctimas de discriminación por motivos de su ciudadanía, estatus migratorio o país de origen en la contratación, el despido o el reclutamiento o la referencia por comisión deberán llamar a la línea directa para trabajadores mencionada arriba y serán atendidos.

LCC Settlement Agreement (1.94 MB)

On Aug. 27, 2015, the Foreign Intelligence Surveillance Court (FISC) issued a primary order approving the government’s application to renew the Section 215 bulk telephony program.  The USA FREEDOM Act of 2015 banned bulk collection under Section 215 of the USA PATRIOT Act, but provided a new mechanism to allow the government to obtain data held by the providers.  To ensure an orderly transition to this new mechanism, the USA FREEDOM Act provided for a 180-day transition period during which the existing National Security Agency (NSA) bulk telephony metadata program may continue.  After considering an application filed shortly after the passage of the USA FREEDOM Act, on June 29, 2015, the court held that the continuation of the NSA’s bulk telephony metadata program during the transition period remains consistent with both the statute and the Fourth Amendment.  The authority under the court’s June 29 order was set to expire today, Aug. 28, 2015.

The government recently filed an application to renew the authority to collect bulk telephony metadata.  On Aug. 27, 2015, the court authorized the continued collection of telephony metadata through Nov. 28, 2015, the end of the 180-day transition period contemplated by the USA FREEDOM Act.  As of Nov. 29, 2015, both the 180-day transition period and the court’s authorization will have expired and the bulk collection of telephony metadata pursuant to Section 215 will cease.

As previously stated in a July 27, 2015, Joint Statement, the NSA has determined that analytic access to the historical metadata collected under Section 215 (any data collected before Nov. 29, 2015) will also cease on Nov. 29, 2015.  However, solely for data integrity purposes to verify the records produced under the new targeted production mechanism authorized by the USA FREEDOM Act, the NSA, subject to court approval, plans to allow technical personnel to continue to have access to the historical metadata for an additional three months.  Separately, the NSA remains under a continuing legal obligation to preserve its bulk 215 telephony metadata collection until civil litigation regarding the program is resolved, or the relevant courts relieve NSA of such obligations.  The telephony metadata preserved solely because of preservation obligations in pending civil litigation will not be used or accessed for any other purpose, and, as soon as possible, the NSA will destroy the Section 215 bulk telephony metadata upon expiration of its litigation preservation obligations.

As background, in January 2014, early last year in a speech at the Department of Justice, President Obama announced that the intelligence community would end the Section 215 bulk telephony metadata program as it previously existed.  The President directed the intelligence community and the Attorney General to develop options for a new approach to match the capabilities and fill gaps that the Section 215 program was designed to address without the government holding this metadata.  After carefully considering the available options, the President announced in March 2014 that the government should not hold this data in bulk, and that the data should remain at the telephone companies with a legal mechanism in place that would allow the government to obtain data pursuant to individual orders from the FISC approving the use of specific numbers for such queries.

The President also noted, however, that legislation would be required to implement this new approach and the administration worked closely with Congress to enact the President’s proposal.  On June 2, 2015, Congress passed and President Obama signed the USA FREEDOM Act of 2015, which reauthorized several important national security authorities; banned bulk collection under Section 215 of the USA PATRIOT Act, under the pen register and trap and trace provisions found in Title IV of FISA, and pursuant to National Security Letters; and adopted the new legal mechanism proposed by the President.

As in past primary orders in effect since February 2014, and consistent with the President’s direction, the court’s new primary order requires that during the transition period, absent a true emergency, telephony metadata can only be queried after a judicial finding that there is a reasonable, articulable suspicion that the selection term is associated with an approved international terrorist organization.  In addition, the query results must be limited to metadata within two hops of the selection term instead of three.

The Office of the Director of National Intelligence will post the new primary order to its website and icontherecord.tumblr.com after it has undergone a classification review.

The new primary order is available here and icontherecord.tumblr.com.

FISC Primary Order

EDF Resource Capital Inc. and its CEO, Frank Dinsmore, have agreed to resolve allegations that they violated the False Claims Act and otherwise failed to remit payments owed to the Small Business Administration (SBA) under the 504 loan program, the Department of Justice announced today.  Under the settlement agreement, EDF and Dinsmore have agreed to make payments and turn over certain assets to the United States for a total settlement of approximately $6 million.

“Today’s settlement demonstrates our commitment to ensure that companies and individuals who elect to participate in federal programs live up to their statutory and contractual commitments, play by the rules, and deal honestly and openly with the federal government,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Department of Justice will continue to work side-by-side with the Small Business Administration to ensure that fraud committed by SBA program participants is thoroughly investigated and, where appropriate, vigorously prosecuted.”

The SBA 504 loan program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings.  Under the program, local lenders like EDF are responsible for arranging, servicing and collecting on these small business loans, which are guaranteed, in part, by the SBA.  In return for the authority to make determinations on 504 loans without prior SBA approval, EDF was required to bear a share of any losses suffered by the SBA on such loans and to maintain a loan loss reserve fund (LLRF) to help ensure payment of its loss-sharing obligations. 

Today’s settlement resolves claims that EDF and Dinsmore violated the False Claims Act in connection with EDF’s failure to maintain adequate reserves in its LLRF.  EDF allegedly was required to fund its LLRF at a level determined by the riskiness of its 504 loan program portfolio yet knowingly concealed from the SBA hundreds of troubled loans to avoid its obligation to fully fund its LLRF.

The settlement also resolves a lawsuit filed by the United States against EDF and a related entity, Redemption Reliance LLC, alleging that EDF failed to remit required payments to the SBA to satisfy its loss-sharing obligations.  The lawsuit also alleges that the SBA agreed to advance funds to EDF in connection with certain defaulted 504 loans but that, after EDF assigned the loan documents for these loans to Redemption Reliance, neither EDF nor Redemption Reliance remitted the monies owed on these loans to the SBA. 

“The 504 Loan Program provides small businesses with access to the capital they need to start, grow and succeed,” said General Counsel Melvin F. Williams Jr. of the SBA.  “SBA has no tolerance for fraud, waste, or abuse by participants in the 504 Loan Program.  Working with the attorneys at the Department of Justice and SBA’s Office of Inspector General, this settlement marks the successful conclusion of a major enforcement action.”        

“The defendants’ misrepresentations to SBA knowingly put the taxpayer’s money at risk,” said Inspector General Peggy E. Gustafson of the SBA.  “As stewards of the taxpayers’ money, the SBA must guard against losses within its loan portfolios.  In this instance, the actions of the defendants did not allow SBA to protect taxpayers from such losses.  I want to thank the Department of Justice and our investigative partners for achieving this settlement.”

The settlements were the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the SBA’s Office of General Counsel and the SBA’s Office of Inspector General Los Angeles Field Office’s Counsel Division and Investigations Division.

The lawsuit is captioned United States v. EDF Resource Capital, Inc., et al., Case No. 13‑cv-389 (E.D. Cal.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability. 

An Alabama resident and U.S. Postal Service (USPS) employee was arrested today after being indicted by a grand jury sitting in Montgomery, Alabama, on one count of conspiracy to defraud the United States, 14 counts of mail fraud, 14 counts of aggravated identity theft and 14 counts of embezzling mail, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.

According to the allegations in the indictment, Elizabeth Grant of Seale, Alabama, was a USPS mail carrier.  In 2013, Grant became involved in a stolen identity tax refund fraud conspiracy.  Grant’s co-conspirators obtained stolen personal identification information from several sources, including from an Alabama state database, and then prepared and filed false federal income tax returns for tax year 2012.  The co-conspirators directed the tax refund checks from the U.S. Treasury to be mailed to addresses located on Grant’s postal route.  Grant would then be paid a fee to provide the checks to her co-conspirators.  The conspirators allegedly filed more than 700 false returns that claimed more than $1.5 million in refunds. 

If convicted, Grant faces a statutory maximum sentence of 10 years in prison for the conspiracy count, 20 years in prison for each count of mail fraud, five years in prison for each count of embezzling mail and a mandatory minimum sentence of two years in prison for aggravated identity theft.  She also faces substantial monetary penalties and restitution. 

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck Jr. commended special agents of IRS-Criminal Investigation and the USPS Office of the Inspector General, who investigated the case, and Trial Attorneys Michael C. Boteler, Gregory Bailey and Robert J. Boudreau of the Tax Division and Assistant U. S. Attorney Jonathan Ross of the Middle District of Alabama, who are prosecuting this case.

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

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

A San Diego tax return preparer was arrested today after being indicted by a federal grand jury sitting in the Southern District of California on 36 counts of aiding and assisting in the preparation of false federal income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

The indictment alleges that Marla Lynn Cunningham owned and operated Cunningham’s Tax Service, a tax preparation business located in El Cajon, California.  According to the charges in the indictment, in 2010, 2011 and 2012, Cunningham prepared false individual income tax returns for others, which included false Schedules C that reported fictitious business losses and false Schedules A that reported inflated or fictitious itemized deductions, such as charitable contributions and medical, dental and unreimbursed employee expenses.  Cunningham also attached forms claiming fictitious education credits that her clients were not entitled to receive.

If convicted, Cunningham faces a statutory maximum sentence of three years in prison and a fine of up to $250,000 for each count.

Acting Assistant Attorney General Ciraolo commended the special agents of the Internal Revenue Service–Criminal Investigation, who investigated the case, and Trial Attorneys Matthew R. Hoffman and Benjamin J. Weir of the Tax Division, who are prosecuting the case.  Ciraolo also thanked the U.S. Attorney’s Office of the Southern District of California for their substantial assistance.

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

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

A resident of Lima, Peru, was indicted by a Miami grand jury on fraud and attempted extortion charges for allegedly operating call centers that lied to and threatened Spanish-speaking victims in the United States, convincing them to pay fraudulent settlements. 

Cesar Luis Kou Reyna, 40, was charged in a 33-count indictment with conspiracy, mail fraud, wire fraud and attempted extortion.

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 U.S. Postal Inspection Service (USPIS) Miami Division. 

“The Department of Justice is committed to addressing the noted increase in fraud schemes targeting specific communities of U.S. residents,” said Principal Deputy Assistant Attorney General Mizer.  “As this case and other recent examples show, we will track down those responsible for defrauding American consumers, no matter where the fraudster resides, what language the fraudster uses 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 U.S. or on American victims,” said Inspector in Charge Verrochio.  “Postal inspectors will track down criminals, anywhere in the world, and bring them to justice.”

According to allegations in the indictment, 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 affiliates in South America 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 sometimes claimed to be government representatives.  Callers claimed that victims had failed to pay for or receive a delivery of products, although the victims had not ordered these products. 

According to the indictment, 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 on July 31 in Houston.  He has remained incarcerated since his arrest.

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

A Brunswick, Maine, businessman was sentenced to prison today for tax crimes in U.S. District Court for the District of Maine, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s  Tax Division and U.S. Attorney Thomas E. Delahanty II of the District of Maine.

F. William Messier, 71, and David E. Robinson, 78, both of Brunswick, were convicted on April 3 after a five-day jury trial of conspiracy to defraud the United States and corruptly endeavoring to impede the lawful administration of the Internal Revenue Code.  U.S. District Judge D. Brock Hornby of the District of Maine sentenced Messier to serve one year and one day in prison and three years of supervised release.  The court also ordered Messier to pay a $15,000 fine and file federal income tax returns dating back to 2005.  Robinson’s sentencing has been scheduled for Oct. 5. 

According to trial testimony, Messier, doing business as Oak Hill Communications, earned income generated on leases from telecommunication towers located on his Brunswick property.  From 1999 through 2014, Messier engaged in conduct that was intended to impede and obstruct the enforcement of the Internal Revenue laws, including the provision of false tax documents to customers, obstruction of IRS collection activities and extensive use of cash.  In 2012, the IRS assessed taxes and interest against Messier totaling $172,094 for tax years 2000 to 2004.  Robinson claimed to be the “Interim Attorney General” of the “Maine Republic Free State” and advocated that people not pay federal and state taxes.  According to witness testimony, after the IRS sent Notices of Levy to Messier’s customers to collect the taxes due and owing, Robinson and Messier presented the IRS with a fake money order for the amount due by Messier and other false documents.  Messier and Robinson also urged customers not to honor the levies or to pay the IRS, directed customers to pay Messier in cash, and sent threatening and misleading correspondence to Oak Hill Communications customers urging them not to cooperate with the IRS.  The defendants also filed civil lawsuits against some of Messier’s customers and employees of the IRS, which were dismissed in separate proceedings.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Delahanty commended the special agents of IRS-Criminal Investigation, who investigated the case, and Assistant U.S. Attorney James W. Chapman Jr. of the District of Maine and Assistant Chief Karen E. Kelly of the Tax Division, who are prosecuting the case.

The Department of Justice announced today that Hypothekarbank Lenzburg AG (HBL) 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, HBL 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 the bank for tax-related criminal offenses.

HBL was founded in 1868 and is headquartered in Lenzburg, Switzerland.  Its principal business, focused on the Canton of Aargau, Switzerland, is issuing mortgages on real property and lending to businesses.

HBL offered a variety of traditional Swiss banking services that it knew could assist, and that did assist, U.S. clients in the concealment of assets and income from the Internal Revenue Service (IRS).  For example, HBL, upon client request, did not send mail associated with some U.S.-related accounts to the United States.  In addition, HBL offered numbered accounts to its clients, a service by which access to information about an account, including the identity of the accountholder, was limited to only certain employees of HBL.  In a handful of instances, the accountholders of U.S.-related accounts who refused to provide a Form W-9 or who admitted that they were not tax compliant withdrew significant amounts of cash or physical assets when HBL forced these accounts to be closed.

In or about 2008, Swiss bank UBS AG publicly announced that it was the target of a criminal investigation by the IRS and the department, and that it would be exiting and no longer accepting certain U.S. clients.  In a later deferred prosecution agreement, UBS admitted that its cross-border banking business used Swiss privacy law to aid and assist U.S. clients in opening accounts and maintaining undeclared assets and income from the IRS.  HBL opened one account for a U.S. person who exited UBS.  For another long-standing holder of a U.S.-related account, HBL received a transfer of funds from an account held at UBS into a pre-existing account at HBL.

Another accountholder who resided in the United States for many years had two accounts, one of which was a numbered account.  In 2012, the accountholder’s relationship manager requested a Form W-9 for the numbered account and the accountholder refused to provide one.  As a result, the relationship manager directed the accountholder to close the numbered account.  Thereafter, the accountholder came to Lenzburg to close the numbered account.  The accountholder withdrew 240,000 Swiss francs and 12,000 euros and purchased precious metals in the amount of 318,000 Swiss francs.

Since Aug. 1, 2008, HBL had 96 U.S.-related accounts with an aggregate value of $69.8 million.  HBL’s average annual revenue attributable to U.S.-related accounts in the form of fees, commissions and earnings on client funds that were loaned out by HBL was $198,000, or a total of $1.2 million since Aug. 1, 2008.  HBL will pay a penalty of $560,000.

In accordance with the terms of the Swiss Bank Program, HBL mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations.  While U.S. accountholders at HBL 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 HBL 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 and International Division for their substantial assistance.  Ciraolo also thanked Brian D. Bailey, 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.

Dean Daniels, 52, Richard Smith, 57, Brenda Daniels, 45 and William Bradley, 58, all of Florida, pleaded guilty and were sentenced today in U.S. district court for charges related to a scheme involving the false production of biodiesel.

Dean Daniels was sentenced to 63 months incarceration, Bradley was sentenced to 51 months incarceration, Smith was sentenced to 41 months incarceration and Brenda Daniels was sentenced to 366 days incarceration. In addition, the court sentenced the defendants to pay $23 million in restitution.

Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division, U.S. Attorney Carter M. Stewart for the Southern District of Ohio, Acting Special Agent in Charge Troy N. Stemen for the Internal Revenue Service Criminal Investigation (IRS) and Acting Special Agent in Charge Jeffrey Martinez of  the Environmental Protection Agency’s (EPA) Criminal Enforcement Program in Ohio and Regional Special Agent in Charge Max D. Smith of the Department of Transportation’s Office of Inspector General announced the sentences handed down today by Senior U.S. District Court Judge James L. Graham.

According to court documents, the defendants profited by unjustly generating and selling biodiesel credits (RINs) and unjustly claiming biodiesel tax credits for the production and blending of fuel that was not actually biodiesel.

“Congress enacted incentives for the production of biofuels to make the United States stronger and more energy independent and to move our energy economy into the 21st century,” said Assistant Attorney General Cruden.  “The fraud perpetrated by the defendants threatens these important public policies.  The Justice Department will vigorously prosecute those seeking to line their pockets using scams like this one.”

The defendants were all employees and officers of New Energy Fuels LLC, a business in Waller, Texas, that claimed to process animal fats and vegetable oils into biodiesel.  The defendants subsequently relocated, operating a similar scheme at Chieftain Biofuels LLC in Logan, Ohio.

The defendants would purchase low-grade feedstock and perform minimal processing to produce a low-grade fuel.  The fuel was not biodiesel, however, the defendants would represent to the EPA that they had produced biodiesel.  They would generate fraudulent biodiesel RINs and sell them to various third parties.  Biodiesel RINs cannot be generated unless the biodiesel produced meets industry standards.  In total, the defendants sold over $15 million worth of fraudulent biodiesel RINs.

The defendants also made false claims to the IRS in order to obtain the biodiesel tax credit that they were not eligible to receive.  Throughout 2009, 2010 and 2011, refundable tax credits were available for renewable fuel producers.  If companies complied with IRS regulations, they could earn one dollar per gallon of biodiesel.  It was illegal to claim this tax credit unless the biodiesel was produced, blended and sold in compliance with rules and regulations.  Among other requirements, the biodiesel had to meet industry standards, which the defendant’s fuel did not.  In total, the defendants claimed over $7 million in false biodiesel tax credits.

In addition, New Energy Fuels’ production process generated substantial hazardous by-products.  Defendant Dean Daniels arranged for an employee of New Energy Fuels to transport the wastes off-site at night.  That employee, Lonnie Perkins, previously pleaded no-contest in Texas to several charges related to the dumping of hazardous waste in and around the city of Houston.

“The Renewable Fuel Standard helps reduce the climate impact of transportation fuel sold in this country,” said Acting Special Agent in Charge Martinez.  “The criminal activity by these defendants has real consequences.  The defendants manipulated and utilized federal governmental programs to line their pockets by fraud.  These guilty pleas demonstrate EPA’s commitment, working closely with our partners at the Department of Justice, to pursue these criminal cases vigorously.  Companies and their managers need to understand there are serious consequences to skirting the rules and undermining the integrity of an EPA program.”

“Today’s sentencings mark the successful end of an investigation that uncovered a complicated fraudulent scheme that generated millions of dollars through false biodiesel tax credits,” said Acting Special Agent in Charge Stemen.  “We want everyone to take advantage of the deductions and credits to which they are entitled by law; however, no one is entitled to defraud the government."      

“The Office of Inspector General is committed to investigating and seeking prosecution of those who choose to endanger the public by illegally transporting, distributing, or disposing of hazardous materials,” said Regional Special Agent in Charge Smith.  “Today’s sentencing should send a clear warning that these fraudulent actions and illegal hazmat violations will not be tolerated.”

Each of the defendants pleaded guilty to conspiracy to commit wire fraud and to defraud the United States.  Dean Daniels also pleaded guilty to offering a hazardous material for transport without providing or affixing proper placards.

Assistant Attorney General Cruden and U.S. Attorney Stewart commended the cooperative investigation by law enforcement, including the Houston Police Department, as well as Department of Justice Trial Attorney Adam Cullman and Assistant U.S. Attorney J. Michael Marous, who represented the United States in this case. 

Two Ohio residents were arrested today after being indicted on Aug. 25 by a federal grand jury sitting in Dayton, Ohio, for conspiracy and tax-related crimes, announced Acting Deputy Assistant Attorney General Bruce M. Salad of the Justice Department’s Tax Division. 

According to the 23-count indictment, Fesum Ogbazion, of Beavercreek, Ohio, and Kyle Wade, formerly of West Chester, Ohio, were indicted on one count of impeding the administration of the Internal Revenue Code, one count of conspiracy to commit wire fraud and five counts of wire fraud.  Ogbazion is also charged with six counts of money laundering, one count of evasion of payment of employment taxes, eight counts of failure to collect and pay over employment taxes and one count of bank fraud. 

According to the allegations in the indictment, Ogbazion owned and controlled ITS Financial LLC, which was the national franchisor of Instant Tax Service (ITS), a tax preparation business Ogbazion founded that claimed to have more than 1,100 franchise locations throughout the United States in 2009.  Wade was the vice president of financing for ITS and owned multiple ITS franchises.

From about January 2004 through November 2012, Ogbazion and Wade executed a scheme to obstruct the Internal Revenue Service (IRS), wherein numerous ITS franchises filed false federal income tax returns without valid Forms W-2 and without the permission of their taxpayer clients.  The false returns included false and inflated sole proprietorship Schedule C income in an attempt to increase the Earned Income Tax Credit.  Over the course of several years, Ogbazion also instructed an ITS employee to electronically file large volumes of unsigned tax returns on the first day of the “tax filing season,” then falsely backdated customer filing authorizations.  In an attempt to obstruct IRS civil compliance audits, ITS maintained and filed false documents with the IRS, including fabricated Forms W-2 created by ITS employees using tax preparation software, and forged client signatures on various false IRS forms.

From about December 2009 through November 2012, Ogbazion and Wade also conspired to generate loan and tax return preparation fees for ITS and its franchises by luring low-income and unsophisticated taxpayers into ITS franchises through a nationwide advertising campaign that offered customers tax refund anticipation loans.  Despite the fact that ITS did not have an independent lender that could fund the promised loans, ITS collected loan application and tax preparation fees from its customers.  For the 2011 tax filing season, Ogbazion and Wade represented to ITS staff, franchises and customers that refund anticipation loans were obtained through an independent lender, even though Ogbazion owned the purported lender, which had limited lending capabilities.  Ogbazion knew that the overwhelming majority of loan applications would be denied.  In total, the indictment alleges that ITS generated more than $12.5 million in fees in 2010, and more than $3.1 million in fees in 2011 from this loan scheme.

The indictment also alleges that Ogbazion was responsible for ITS’ and TaxMate LLC’s federal employment payroll taxes.  He failed to pay over approximately $1.26 million in payroll taxes due from these businesses during four tax quarters in 2009 and 2010.  Ogbazion also evaded the IRS’ attempts to collect ITS and TaxMate federal payroll taxes by directing business revenue to nominee accounts, placing assets in the names of nominee entities and making false statements to an IRS revenue officer during the course of collection activity, among other acts of concealment.

If convicted of impeding the administration of the Internal Revenue Code, the defendants face a statutory maximum sentence of three years in prison and a fine of up to $250,000.  If convicted of conspiracy to commit wire fraud and wire fraud, the defendants face a statutory maximum sentence of 30 years in prison and a fine of up to $1 million for each count.  If Ogbazion is convicted of money laundering, he faces a statutory maximum sentence of 20 years in prison and a fine of up to $500,000.  If convicted of tax evasion and failure to pay over employment taxes, Ogbazion faces a statutory maximum sentence of five years in prison and up to a $250,000 fine for each count.  Finally, Ogbazion faces a statutory maximum sentence of 30 years in prison and up to a $1 million fine if he is convicted of bank fraud.

The Tax Division commended the special agents of IRS-Criminal Investigation, who investigated the case, and Senior Litigation Counsel Corey Smith and Trial Attorney Mark S. McDonald of the Tax Division and Assistant U.S. Attorney Jessica Knight of the Southern District of Ohio, who are prosecuting the case. 

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

Attorney General Loretta E. Lynch released the following statement today on the passing of civil rights leader Amelia Boynton Robinson:

“With the passing of Amelia Boynton Robinson, America has lost a spirited advocate, a passionate activist and a trailblazing champion in the fight for civil rights and social justice.  Driven by her faith and her moral convictions, Ms. Boynton Robinson stood on the front lines of the Civil Rights Movement in Selma and beyond, inspiring countless men, women and children to stand up to injustice, to speak out for equality and to demand their opportunity to shape the future of this nation.  Her legacy continues to be felt today – at the Department of Justice and across the country – in the expanded voting rights she helped to win; in the ongoing work of equality she helped to advance; and in the desire for a more just society that will always drive us forward.  While Ms. Boynton Robinson’s journey on this earth has come to an end, the principles to which she dedicated her life – and the spirit of determination she brought to her mission – will forever march on.  My thoughts and prayers are with her family, her friends and all who loved her.”

A leader of a human trafficking ring pleaded guilty yesterday in federal court to charges that he lured Guatemalan minors and adults into the United States on false pretenses, then used threats of physical harm to compel their labor at egg farms in Ohio.  The guilty plea was announced by Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division, and U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio.

Aroldo Castillo-Serrano, 33, of Guatemala, pleaded guilty to a labor trafficking conspiracy, one count of labor trafficking, one count of witness tampering and a related immigration offense.  His co-conspirator, Conrado Salgado Soto, 52, of Mexico, pleaded guilty on Aug. 5 to participating in the same labor-trafficking conspiracy, as well as an immigration offense, the Justice Department also announced today.  The guilty pleas are pending approval from a federal court judge and are not final until that approval is granted.

According to the indictment, which was unsealed on July 2, the defendants and their associates recruited workers from Guatemala, some as young as 14 or 15 years old, falsely promising them good jobs and a chance to attend school in the United States.  The defendants then smuggled and transported the workers to a trailer park in Marion, Ohio, where they ordered them to live in dilapidated trailers and to work at physically demanding jobs at Trillium Farms for up to 12 hours a day for minimal amounts of money.  The work included cleaning chicken coops, loading and unloading crates of chickens, de-beaking chickens and vaccinating chickens.

The defendants threatened workers with physical harm and withheld their paychecks in order to compel them to work.  Castillo-Serrano also pleaded guilty to convincing a witness to lie to the FBI about the scheme.  Eight minors, as young as 14, and two adults were identified in the indictment as victims of the forced labor scheme.

“These defendants exploited children who were poor, vulnerable and entirely at their mercy,” said Principal Deputy Assistant Attorney General Gupta.  “We will pursue and prosecute such behavior with all of the tools at our disposal.”

“Our laws and a sense of common decency require that people not be treated like commodities,” said U.S. Attorney Dettelbach.  “This defendant treated workers as if they were less important than the eggs that they would help produce.  Now he is going to learn the hard way that in this nation, there is a big difference."

“The defendants forced adults and children to work and live in deplorable conditions in exchange for false promises,” said Special Agent in Charge Stephen D. Anthony of the FBI Cleveland Division.  “These reprehensible actions are unacceptable and the FBI will continue to work with our partners to bring to justice those that engage in human trafficking.”

Charges are still pending against a third co-conspirator, Ana Angelica Pedro Juan, 21, of Guatemala.  Pedro Juan is charged with labor trafficking and conspiracy to commit labor trafficking, as well as witness tampering and making false statements to law enforcement.  Two other defendants, Conrado Salgado-Borbon and Bartolo Dominguez, have pleaded guilty to immigration offenses in connection with this case.

The forced labor counts and the witness tampering count each carry a statutory maximum sentence of 20 years in prison.  The charges involving immigration violations and false statements carry statutory maximum sentences of five years in prison.

The investigation is ongoing.  The case is being investigated by the FBI Cleveland Office’s Mansfield Resident Agency, the Department of Homeland Security, the Marion Police Department and the Marion County Sherriff’s Office.  The case is being jointly prosecuted by Trial Attorney Dana Mulhauser of the Civil Rights Division and Assistant U.S. Attorney Chelsea Rice of the Northern District of Ohio.

A federal jury in Miami late yesterday convicted the former medical director of, and three therapists employed by, a now-defunct health care provider of conspiracy to commit health care fraud and related charges for their roles in a scheme to fraudulently bill Medicare and Florida Medicaid more than $63 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.

Roger Rousseau, 73, of Miami; Doris Crabtree, 62, of Miami; Angela Salafia, 68, of Miami Beach, Florida; and Liliana Marks, 48, of Homestead, Florida, were found guilty of conspiracy to commit health care fraud.  In addition, Rousseau was convicted of two counts of health care fraud.  Sentencing is scheduled for Nov. 6, 2015, before U.S. District Judge Robert N. Scola Jr. of the Southern District of Florida.

Rousseau was the former medical director of Health Care Solutions Network Inc. (HCSN), a now-defunct partial hospitalization program (PHP) that purported to provide intensive treatment for mental illness.  Crabtree, Salafia and Marks were therapists who worked for HCSN.

According to the evidence presented at trial, from approximately 2004 through 2011, HCSN billed Medicare and Medicaid for mental health services that were not medically necessary or never provided, and that HCSN paid kickbacks to assisted living facility owners and operators in Miami who, in exchange, referred beneficiaries to HCSN.

The trial evidence showed that Rousseau routinely signed what he knew to be fabricated and altered medical records without reviewing the substance of the records and, in most instances, without ever meeting with the patients.  The evidence at trial also demonstrated that Crabtree, Salafia and Marks fabricated medical records to support HCSN’s false and fraudulent claims for reimbursement for PHP services.

In total, HCSN submitted approximately $63.7 million in false and fraudulent claims to Medicare and Medicaid.  Medicare and Medicaid paid approximately $28 million on those claims.

In November 2014, following a jury trial, co-defendants Blanca Ruiz and Alina Fonts were convicted of conspiracy to commit health care fraud, and Fonts also was convicted of health care fraud.  In February 2015, both Ruiz and Fonts were sentenced to serve six years in prison.

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 Attorneys Allan J. Medina, Lisa H. Miller and Bryan D. Fields 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, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with 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. 

A husband and wife residing in Lewis Center, Ohio, were sentenced to prison in U.S. District Court today for their roles in a fraud scheme related to the company Imperial Integrative Health Research and Development LLC (Imperial) and its product, OXYwater, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Carter M. Stewart of the Southern District of Ohio.

Preston J. Harrison, 43, and Lovena Harrison, 42, were sentenced by U.S. District Judge Gregory L. Frost of the Southern District of Ohio.  Preston Harrison was sentenced to serve 83 months in prison and three years of supervised release, and ordered to pay $375,985.15 in restitution to the Internal Revenue Service (IRS) and $8,840,706 to victims of the fraud, and to forfeit $1.1 million, including two vehicles, eight weapons, cash and the contents of a bank account.  Lovena Harrison, Preston Harrison’s wife, was sentenced to serve one year and one day in prison and three years of supervised release, and ordered to pay $375,985.15 in restitution to the IRS. 

“The sentences imposed today reflect the department’s commitment to investigating and vigorously prosecuting individuals who defraud investors, misappropriate funds to finance lavish lifestyles and file false tax returns to conceal their ill-gotten gains,” said Acting Assistant Attorney General Ciraolo.  “Like the Harrisons, those who engage in such conduct will pay a heavy price.”

The couple went to trial in March and were convicted of multiple crimes.  Preston Harrison’s business partner, Thomas E. Jackson, 40, of Powell, Ohio, was also convicted at trial for his role in the scheme and is scheduled to be sentenced on Oct. 1.  Preston Harrison was convicted of conspiracy to defraud the United States and filing a false income tax return, conspiracy to commit wire fraud, conspiracy to commit money laundering and 12 counts of money laundering.  Lovena Harrison was convicted of conspiracy to defraud the United States and filing a false income tax return, and structuring financial transactions to evade currency reporting requirements.  Jackson was convicted of conspiracy to commit wire fraud, conspiracy to commit money laundering, eight counts of wire fraud and 12 counts of money laundering. 

“Preston Harrison and his co-conspirators made OXYwater appear to be a lucrative and profitable financial investment, touting investments and endorsements from athletes, a musician and others,” said U.S. Attorney Stewart.  “After they convinced folks to invest, they misappropriated that money to fuel their own lavish lifestyle, buying items like jewelry, luxury vehicles, weapons and swimming pools.”

“Today’s sentencings mark the successful end of an investigation that uncovered an investment fraud scheme laced with a web of financial lies that generated millions of dollars through false promises and deceit,” said Acting Special Agent in Charge Troy N. Stemen of the IRS-Criminal Investigation (CI) Cincinnati Field Office.  “Investment fraud schemes are often described as a house of cards.  The underlying structure can fall apart at any time and expose the individuals responsible.”

“The Harrisons and their business partner took advantage of unsuspecting investors to line their own pockets,” said Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Division.  “Hopefully they will now understand that their irresponsible actions have real consequences.”

According to court testimony, Jackson and Preston Harrison operated Imperial, based in Westerville, Ohio, and developed OXYwater, a beverage that promoters claimed was an all-natural, vitamin-enhanced sports drink that contained added oxygen for improved physical performance.

The defendants engaged in a scheme to deceive the investors in Imperial about Imperial and OXYwater’s structure, composition, finances, sales and profits in order to make the company appear to be a lucrative and profitable financial investment.  Jackson and Preston Harrison produced and sent false and fraudulent documents intended to deceive investors in order to obtain additional investments in Imperial.  They then misappropriated that money for their own personal use, including the purchase of jewelry, a Cadillac Escalade, a BMW vehicle, weapons, clothing, home improvements and a swimming pool.

Between August 2010 and spring 2013, Jackson and Preston Harrison misappropriated approximately $2 million of the investors’ funds.  The defendants’ scheme caused investors to suffer substantial losses when the corporation was forced to declare bankruptcy with no assets.  As a result of the defendants’ conduct, investors lost approximately $9 million.

In 2011, Preston Harrison misappropriated approximately $1.1 million from Imperial, which he and Lovena Harrison diverted into an account in the name of a daycare business and used for personal expenses.  The Harrisons did not report the money as income on their 2011 income tax return.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Stewart commended special agents of IRS-CI and FBI, who investigated the case, as well as Assistant U.S. Attorney Jessica Kim of the Southern District of Ohio and Trial Attorney Jason Scheff of the Tax Division, who prosecuted the case.

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

An indictment was unsealed yesterday charging an Alabama man with multiple tax-related crimes, including one count of conspiracy to defraud the United States, three counts of wire fraud, four counts of stealing U.S. Treasury funds and four counts of aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.

According to the allegations in the indictment, returned by a federal grand jury sitting in Montgomery, Alabama, Tavarious Jackson, of Montgomery County, Alabama, along with several co-conspirators, used stolen personal identification information to prepare and file false federal income tax returns.  From about February 2011 through April 2013, the conspirators filed more than 500 false returns that fraudulently claimed more than $1 million in tax refunds. 

If convicted, Jackson faces a statutory maximum sentence of 10 years in prison for conspiracy, 20 years in prison for each count of wire fraud, 10 years in prison for each count of stealing government funds and a mandatory minimum sentence of two years in prison for aggravated identity theft.  Jackson also faces substantial monetary penalties and restitution.

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 Gregory Bailey and Robert Boudreau of the Tax Division and Assistant U. S. Attorney Jonathan Ross of the Middle District of Alabama, who are prosecuting this case.

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

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

The Justice Department announced today that it reached a settlement with Nebraska Beef Ltd., a meat packing company headquartered in Omaha, Nebraska.  The settlement resolves an investigation by the Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) into whether the company was engaging in employment discrimination in violation of the Immigration and Nationality Act (INA).  In particular, OSC investigated whether the company was requiring non-U.S. citizen employees, because of their citizenship status, to present proof of their immigration status for the employment eligibility verification process.

The department’s investigation found that the company required non-U.S. citizens, but not similarly-situated U.S. citizens, to present specific documentary proof of their immigration status to verify their employment eligibility.  The INA’s anti-discrimination provision prohibits employers from making documentary demands based on citizenship or national origin when verifying an employee’s authorization to work.

“The department is committed to ensuring that individuals who are authorized to work in the United States can support their families and contribute to our country’s economic growth without facing unnecessary and discriminatory barriers to employment,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division.  “We will vigorously enforce the law to remove such barriers where we find them, and ensure that affected individuals have a means of seeking relief.”  

Under the settlement agreement, Nebraska Beef Ltd. will pay a $200,000 civil penalty to the United States and will establish an uncapped back pay fund to compensate individuals who lost wages because of the company’s practices.  The settlement also requires the company to undergo compliance monitoring for two years, train its employees on the anti-discrimination provision of the INA, and to review and revise its office policies.  For more information on the back pay fund or to make a claim for lost wages, please call 202-616-2603 or email [email protected]. 

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 Attorneys Katherine E. Lamm and Silvia Dominguez-Reese of the Civil Rights Division 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.  

Applicants or employees who believe they were subjected to different documentary requirements based on their citizenship status, immigration status or national origin; or discrimination based on their citizenship status, immigration status or national origin in hiring, firing, or recruitment or referral for a fee should contact OSC’s worker hotline for assistance.

Nebraska Beef Settlement Agreement (720.79 KB)

Jason A. Halek, 41, of Southlake, Texas, was indicted in federal court in Bismarck, North Dakota, on 13 felony charges stemming from the operation of a saltwater disposal well near Dickinson, in Stark County, North Dakota, the Justice Department announced.

Halek was charged with one count of conspiracy to violate the Safe Drinking Water Act and defraud the United States.  He was also charged with four counts of violating the Safe Drinking Water Act, four counts of making false statements and four counts of obstructing grand jury proceedings.

The well, named the Halek 5-22, received “produced water” constituting “brine and other wastes” commonly and generically referred to as “saltwater.”  “Saltwater” in this context covers a wide array of drilling waste fluids, including hydraulic fracturing fluid, which is water combined with chemical additives such as biocides, polymers and “weak acids.”  The Environmental Protection Agency (EPA) has stressed that this water is often saltier than seawater and can “contain toxic metals and radioactive substances.”

Previously, on Sept. 26, 2014, Nathan Garber pleaded guilty to multiple felony counts relating to the well.

“Our nation’s energy independence and security is enhanced by the safe, responsible, and lawful extraction of domestic energy, but it is undermined when laws are abused in a race to profit,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “The American people expect nothing less than legal behavior from those involved in oil and gas development and the Justice Department will vigorously prosecute those who do not honor this obligation.”

“Oil and gas production must be safe and legal every step of the way, including the treatment and disposal of drilling byproducts,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance.  “People who deliberately violate rules that protect drinking water from contamination put communities at risk.  These charges show that EPA takes this very seriously and will hold violators accountable.”

According to the indictment, Halek conspired with others, including Garber, in a number of coordinated and illegal acts, including injecting saltwater into the well without first having the state of North Dakota witness a test of the well’s integrity and continuing to inject saltwater after failing a Feb. 2, 2012 pressure test.  Halek is also charged under the Safe Drinking Water Act with injecting fluids down the “annulus” or “backside” of the well in violation of the well’s permit which required that fluids be injected through the tubing.  

Further, Halek is charged with telling Garber to move a device called a “packer” up the wellbore in violation of the well’s permit, without first getting approval from the state.  Then, Garber allegedly gave false information to a state inspector regarding the depth of the packer. 

Halek is charged with making multiple false statements to the state of North Dakota, including false statements about the depth of the packer.  In addition, Halek is charged with obstructing and impeding a grand jury investigation into the matter, by withholding responsive documents and making false statements.

The case was investigated by EPA’s Criminal Investigation Division.  Significant cooperation was provided by the North Dakota Industrial Commission.  The case is being prosecuted by the U.S. Attorney’s Office for the District of North Dakota and the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.

An indictment is merely a formal charge that a defendant has committed a violation of criminal laws and every defendant is presumed innocent until and unless proven guilty.

El Departamento de Justicia anunció hoy que ha llegado a un acuerdo con Nebraska Beef Ltd, una empresa de embalaje de carne con sede en Omaha, Nebraska. El acuerdo resolvió la investigación liderada por la Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC, por sus siglas en inglés) para determinar si la compañía tenía prácticas laborales discriminatorias, en violación de la ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés). En concreto, la OSC investigó si la empresa requería que sus empleados no ciudadanos estadounidenses, debido a sus estatus de ciudadanía, presentaran pruebas de su estatus migratorio para el proceso de verificación de su autorización para trabajar.

La investigación del departamento encontró que la empresa requirió únicamente a los que no eran ciudadanos estadounidenses –y no a sus homólogos que sí lo eran– que presentaran pruebas documentales específicas de sus estatus migratorio para verificar su autorización para trabajar. La disposición antidiscriminatoria de la INA prohíbe que los empleadores pidan documentos por motivos de ciudadanía o país de origen al verificar si un empleado cuenta con autorización para trabajar.

“El departamento se compromete a asegurar que los individuos que están autorizados para trabajar en los Estados Unidos puedan apoyar a sus familias y contribuir al crecimiento económico de nuestro país sin tener que enfrentarse a barreras innecesarias y discriminatorias al empleo,” declaró la Subprocuradora General Interina, Vanita Gupta, la cabeza de la División de Derechos Civiles. “Aplicaremos la Ley activamente para derrumbar tales barreras donde las hallemos y garantizar que los individuos afectados tengan una vía para buscar la rectificación de estas conductas.”

Conforme al acuerdo, Nebraska Beef Ltd, pagará una multa civil a los Estados Unidos que asciende a 200.000 $ y establecerá un fondo ilimitado de pagos retroactivos para indemnizar a los individuos en cuestión por concepto de los salarios que no percibieron debido a las prácticas de la empresa. Asimismo, el acuerdo requiere que la compañía se someta al control de conformidad durante dos años, capacite a sus empleados acerca de la disposición antidiscriminatoria de la INA y repase y revise sus políticas de oficina. Para más información sobre el fondo de pagos retroactivos o para presentar una reclamación por sueldos no percibidos, favor de llamar al 202-616-2603 o mandar un correo electrónico al [email protected]. 

La OSC tiene la responsabilidad de aplicar la disposición antidiscriminatoria de la INA. Entre otras cosas, la ley prohíbe la discriminación por motivos de estatus de ciudadanía o país de origen en la contratación, el despido o el reclutamiento o la referencia por comisión prácticas documentales injustas; las represalias o la intimidación. El caso lo investigaron las Abogadas Litigantes de la OSC de la División de Derechos Civiles, Katherine E. Lamm y Silvia Dominguez-Reese.

Para más información sobre 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); matricúlese para una conferencia en línea gratuita en www.justice.gov/crt/about/osc/webinars.php; mande un correo electrónico a [email protected] o visite la página web de la OSC en www.justice.gov/crt/about/osc.  

Los postulantes o empleados que creen haber sido víctimas de discriminación por motivos de su ciudadanía, estatus migratorio o país de origen en la contratación, el despido o el reclutamiento o la referencia por comisión deberán llamar a la línea directa para trabajadores mencionada arriba y serán atendidos.

Nebraska Beef Settlement Agreement (720.79 KB)

The Justice Department’s Antitrust Division, at the request of the Federal Trade Commission (FTC), filed a civil antitrust lawsuit today in U.S. District Court of the District of Columbia against Third Point LLC and three Third Point funds.  At the same time, the department filed a proposed settlement that, if approved by the court, will settle the charges.  Further details about this matter are described in the FTC’s press release issued today, and in the attached complaint and Competitive Impact Statement.

As required by the Tunney Act, the proposed settlement, along with the Competitive Impact Statement, will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60-day comment period to Daniel P. Ducore, Special Attorney, United States, c/o Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, DC 20580.  At the conclusion of the 60-day comment period, the U.S. District Court of the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.

 

The Justice Department announced today that Sandia Corporation has agreed to pay $4,790,042 to resolve allegations that Sandia violated the Byrd Amendment and the False Claims Act by using federal funds for activities related to lobbying Congress and federal agencies to obtain a renewal of its Management and Operating (M&O) Contract with the Department of Energy’s (DOE’s) National Nuclear Security Administration (NNSA) to operate the Sandia National Laboratories (SNL).  Sandia is headquartered in Albuquerque, New Mexico, and is a wholly-owned subsidiary of Lockheed Martin Corporation (LMC).

“The money allocated by Congress for the Sandia National Laboratories is designed to fund the important mission carried out by our national laboratories, not to lobby Congress for more funding,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “This resolution demonstrates that the Justice Department will work to ensure that public funds are used for the important purposes for which they are intended.”

Between 1993 and the present, NNSA contracted with Sandia to manage and operate the SNL, a government-owned, contractor-operated laboratory that is part of the NNSA’s nuclear weapons complex, with its main facilities located in Albuquerque and Livermore, California.  Between 2008 and 2012, Sandia allegedly used federal funds to support activities to lobby Congress and other federal officials to receive a non-competitive extension of the M&O Contract in violation of a federal law known as the Byrd Amendment, which prohibits the use of federal funds for lobbying.

“Using public funds to lobby for a non-competitive extension of a contract is simply unacceptable,” said Inspector General Gregory H. Friedman of the DOE.  “I salute the work of the Department of Justice in pursuing this matter and the work of the Office of Inspector General professionals who were responsible for gathering the facts that served as the basis for the settlement.”

This case was handled by the Civil Division’s Commercial Litigation Branch with investigative assistance provided by the DOE’s Office of Inspector General.

The claims resolved by this settlement are allegations only; there has been no admission of liability.

Lumsden W. Quan, 47, an art dealer from San Francisco, California, pleaded guilty today to conspiracy to violate the Lacey and Endangered Species Act and to a violation of the Lacey Act for knowingly selling black rhinoceros horns to an undercover agent from the U.S. Fish and Wildlife Service (USFWS).  His co-defendant, Edward N. Levine, charged in the indictment remains scheduled for trial on Oct. 19, 2015, in Las Vegas, Nevada.

The guilty plea was announced by Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division, U.S. Attorney Daniel G. Bogden for the District of Nevada and Director Dan Ashe for USFWS.

Quan pleaded guilty before the Honorable Chief Judge Gloria M. Navarro in U.S. District Court in Las Vegas, Nevada, to all charges in the indictment. He is scheduled to be sentenced on Dec. 3, 2015. Quan was identified as part of “Operation Crash,” a nationwide effort led by the USFWS and the Justice Department to investigate and prosecute those involved in the black market trade of rhinoceros horns and other protected species.

Quan admitted in federal court to conspiring with co-defendant Levine to sell two black rhinoceros horns to an undercover agent posing as a Colorado wildlife collector.  Quan stated that he and Levine arranged to have the horns transported to Las Vegas, where on March 19, 2014, Quan sold them to the agent for $55,000.  Quan faces a maximum sentence of five-years imprisonment.

The black rhinoceros is an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth.  They have no known predators other than humans.  All species of rhinoceros are protected under U.S. and international law, including the Endangered Species Act.  Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets.

The investigation is continuing and is being handled by the USFWS’s Office of Law Enforcement, the U.S. Attorney’s Office for the District of Nevada and the Justice Department’s Environmental Crimes Section.  The government is represented by Trial Attorneys Jennifer Blackwell and Ryan Connors, Assistant U.S. Attorney Kathryn Newman, and paralegal Amanda Backer.

The Department of Justice announced today that bank zweiplus ag (Bank Zweiplus) and Banca dello Stato del Cantone Ticino (Banca Stato) have reached resolutions under the department’s Swiss Bank Program.  

“Swiss banks continue to accept responsibility for their involvement in the concealment of foreign assets and the evasion of tax by U.S. accountholders,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.  “The banks are paying penalties, making necessary reforms and providing information and cooperation that are enabling the department to hold accountable those individuals that facilitated this misconduct.”

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 agreements signed today, each bank agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay penalties in return for the department’s agreement not to prosecute these banks for tax-related criminal offenses.

Bank Zweiplus was founded in July 2008 as a retail bank based in Zurich.  Offices located in Geneva and Basel, Switzerland, were closed in 2008 and 2012, respectively.  Since Aug. 1, 2008, Bank Zweiplus maintained and serviced 44 U.S.-related accounts with an aggregate value of approximately $12.1 million. 

Bank Zweiplus was aware that U.S. taxpayers have a legal duty to report to the Internal Revenue Service (IRS) their ownership of bank accounts outside the United States and to pay taxes on income earned in such accounts.  Nevertheless, in disregard of U.S. laws, the bank provided a variety of traditional Swiss banking services that assisted some U.S. taxpayers in concealing their undeclared accounts.  For example, Bank Zweiplus maintained numbered accounts and accounts held in the name of structures which were effectively owned or controlled by U.S. persons, including structures in the British Virgin Islands and the Bahamas.

Bank Zweiplus cooperated with the department during its participation in the Swiss Bank Program and encouraged its U.S. clients to enter the IRS Offshore Voluntary Disclosure Program.  Bank Zweiplus will pay a penalty of $1.089 million.

Banca Stato was established in 1915 and is headquartered in Bellinzona, Switzerland.  Banca Stato was aware that U.S. taxpayers had a legal duty to report to the IRS and pay taxes on the basis of all of their income, including income earned in accounts that the U.S. taxpayers maintained at the bank.  Despite this, the bank opened and serviced accounts for U.S. clients who the bank knew or had reason to know were not complying with their U.S. income tax obligations. 

In 2001, Banca Stato entered into a Qualified Intermediary Agreement with the IRS.  In 2001, the bank issued an internal directive prohibiting U.S. persons without a Form W-9 on file with the bank from buying U.S. securities.  However, prior to 2011, Banca Stato’s relationship managers were not instructed to, and did not, evaluate or screen incoming U.S. clients for U.S. tax compliance status.  At that time, more than 70 percent of the assets under management were related to U.S. accountholders who had not provided a Form W-9 to the bank.

In 2011, Banca Stato implemented a project that it called “Colombo” to change the manner in which it handled U.S. clients.  The bank recognized both risks and rewards of handling U.S. clients.  As to the former, the bank recognized that “[w]e can no longer have clients who are U.S. Persons who have not signed the W-9 form.”  But the bank also recognized an opportunity to attract new U.S. clients because many Swiss banks declined to service U.S. persons from Ticino, Switzerland, and the bank perceived “a huge demand from fully tax-compliant U.S. Persons . . . attracted by the brand BancaStato (especially because we have no branches in the US).”

Banca Stato entered into a relationship with a Lugano-based U.S. Securities and Exchange-registered investment advisory firm to partner in attracting U.S. persons living and working in the Ticino region who could not open or maintain accounts at other institutions.  The bank paid the firm a one-time finder’s fee of 0.5 percent on the incoming funds.  Despite the bank’s decision to refuse to open new accounts of U.S. persons without a Form W-9, it did not always adhere to this policy.

Banca Stato offered a variety of traditional Swiss banking services that it knew would and in certain instances did assist U.S. clients in concealing assets and income from the IRS, including hold mail and code name or numbered accounts.  In addition, the bank employed a variety of other means or conduct that it knew or should have known would assist U.S. taxpayers in concealing their Banca Stato accounts, including opening accounts for U.S. taxpayers who left other banks being investigated by the department and allowing U.S. clients to direct repeated wire transfers between $9,000 and $9,900 in an effort to conceal their Swiss bank accounts from U.S. authorities.

During the applicable period, Banca Stato maintained and serviced 187 U.S.-related accounts with an aggregate maximum balance of approximately $137 million.  Banca Stato will pay a penalty of $3.393 million.

In accordance with the terms of the Swiss Bank Program, each bank mitigated its penalty by encouraging U.S. accountholders to come into compliance with their U.S. tax and disclosure obligations.  While U.S. accountholders at these banks who have not yet declared their accounts to the IRS may still be eligible to participate in the IRS Offshore Voluntary Disclosure Program, the price of such disclosure has increased.

Most U.S. taxpayers who enter the IRS Offshore Voluntary Disclosure Program to resolve undeclared offshore accounts will pay a penalty equal to 27.5 percent of the high value of the accounts.  On Aug. 4, 2014, the IRS increased the penalty to 50 percent if, at the time the taxpayer initiated their disclosure, either a foreign financial institution at which the taxpayer had an account or a facilitator who helped the taxpayer establish or maintain an offshore arrangement had been publicly identified as being under investigation, the recipient of a John Doe summons or cooperating with a government investigation, including the execution of a deferred prosecution agreement or non-prosecution agreement.  With today’s announcement of these non-prosecution agreements, noncompliant U.S. accountholders at these banks must now pay that 50 percent penalty to the IRS if they wish to enter the IRS Offshore Voluntary Disclosure Program.

“The vigorous pursuit of unreported income in hidden offshore accounts is one of our top priorities,” said Chief Richard Weber of IRS-Criminal Investigation (CI).  “Through our coordinated efforts with the Department of Justice, we now have significantly more information about the institutions and individuals involved in offshore tax evasion.  The public should be on notice that we will continue to use all tools at our disposal to stop this abuse and protect the American taxpayer.”

Acting Assistant Attorney General Ciraolo thanked the IRS, and in particular, IRS-CI and the IRS Large Business and International Division for their substantial assistance.  Ciraolo also thanked John E. Sullivan, Thomas G. Voracek and Mark Kotila, who served as counsel on these matters, as well as Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer 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.

Contractor Allegedly Failed to Perform Required Quality Control Reviews on Contracts for Background Investigations with the U.S. Office of Personnel Management

The Justice Department announced today that U.S. Investigations Services Inc. (USIS) and its parent company, Altegrity, have agreed to settle allegations that USIS violated the False Claims Act (FCA) for conduct involving a contract for background investigations that USIS held with the U.S. Office of Personnel Management (OPM).  The companies have agreed to forgo their right to collect payments that they claim were owed by OPM, valued at least at $30 million, in exchange for a release of liability under the FCA.  USIS and Altegrity are headquartered in Northern Virginia.   

From its privatization in 1996 until September 2014, USIS provided background investigations services for OPM under various fieldwork contracts.  The government alleged that beginning in at least March 2008 and continuing through at least September 2012, USIS deliberately circumvented contractually required quality reviews of completed background investigations in order to increase the company’s revenues and profits.  Specifically, USIS allegedly devised a practice referred to internally as “dumping” or “flushing,” which involved releasing cases to OPM and representing them as complete when, in fact, not all the reports of investigations comprising those cases had received a contractually-required quality review.  The government contended that, relying upon USIS’ false representations, OPM issued payments and contract incentives to USIS that it would not otherwise have issued had OPM been aware that the background investigations had not gone through the quality review process required by the contracts.

“Shortcuts taken by any company that we have entrusted to conduct background investigations of future and current federal employees are unacceptable,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “The Justice Department will ensure that those who do business with the government provide all of the services for which we bargained.”   

“Contractors who do business for the federal government have a responsibility to provide the goods and services that they promise,” said Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia.  “This particular company failed to meet its obligations of comprehensively reviewing the backgrounds of current and prospective federal employees.  This settlement demonstrates our commitment to holding government contractors accountable.”

“This case demonstrates my office’s dedication to protecting tax payers’ money,” said U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.  “We will continue to vigorously pursue all fraud against the government in order to restore and safeguard funds paid by our citizens.”

In February 2015, Altegrity, USIS and their affiliates filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code in Delaware.  The settlement of USIS’ FCA liability is part of a broader settlement that also resolves other matters between the United States and USIS/Altegrity that were part of the bankruptcy proceeding.

The FCA lawsuit against USIS was originally filed under the whistleblower provisions of the act by Blake Percival, a former executive at USIS.  The FCA prohibits the submission of false claims for government money or property and, under the act’s whistleblower provisions, a private party may file suit on behalf of the United States and share in any recovery.  The United States may elect to intervene and take over the case, as it did here.  Mr. Percival’s share of the settlement has not yet been determined. 

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the District of Columbia, the U.S. Attorney’s Office of the Middle District of Alabama, OPM and OPM’s Office of Inspector General. 

The claims resolved by the settlement agreement are allegations only and there has been no determination of liability.  The case is United States of America, ex rel., Blake Percival, v. U.S. Investigations Services, LLC, No. 14-cv-00726-RMC (D.D.C.).

Mississippi Phosphates Corp. (MPC), a Mississippi corporation which owned and operated a fertilizer manufacturing facility located on Bayou Casotte in Pascagoula, Mississippi, pleaded guilty today to a felony information charging the company with a criminal violation of the Clean Water Act, announced Principal Deputy Assistant Attorney General Sam Hirsch of the Justice Department’s Environment and Natural Resources Division and U.S. Attorney Gregory K. Davis for the Southern District of Mississippi. 

As part of the guilty plea, MPC admitted discharging more than 38 million gallons of acidic wastewater in August 2013.  The discharge contained pollutants in amounts greatly exceeding MPC’s permit limits, resulting in the death of more than 47,000 fish and the closing of Bayou Casotte.  MPC also admitted that, in February 2014, MPC discharged oily wastewater from an open gate on a storm water culvert into Bayou Casotte, creating an oily sheen that extended approximately one mile down the bayou from MPC.

MPC entered its guilty plea before Chief Judge Louis Guirola Jr. of the U.S. District Court for the Southern District of Mississippi.  Because MPC is in bankruptcy and is obligated to assist in funding the estimated $120 million cleanup of its site, the court accepted the parties’ agreement for MPCto transfer 320 acres of property near to its Pascagoula plant to become a part of the Grand Bay National Estuarine Research Reserve, which is managed by the Mississippi Department of Marine Resources as part of the National Oceanic and Atmospheric Administration’s National Estuarine Research Reserve System. 

“With this plea, Mississippi Phosphates has accepted responsibility for having discharged millions of gallons of industrial pollutants that killed tens of thousands of fish, damaged marine habitats and polluted recreational waterways,” said Principal Deputy Assistant Attorney General Hirsch.  “Mississippi Phosphates has acknowledged its misconduct and has been sentenced to transfer property it owns that is adjacent to the Grand Bay National Estuary, thus protecting and potentially rehabilitating a vital marine resource that this company’s pollutant discharges had severely damaged.”

“When operators break the law, they can harm natural resources and communities such as those around Bayou Casotte and neighboring waterways,” Acting Special Agent in Charge said Andy Castro of EPA’s criminal enforcement program in Mississippi.  “Over the years, state, local and federal governments have spent billions of dollars restoring the delicate Gulf Coast ecosystem.  Illegally discharged wastewater compromises that hard work.  EPA will continue to work with its law enforcement partners to hold companies fully accountable for their conduct, and to ensure they comply with laws that protect the public and from harm.”

As the felony information describes, when it was in full production, MPC manufactured diammonium phosphate fertilizers from phosphate rock which it received by ship and rail and from sulphur which was piped to its facility from a neighboring oil refinery.  In its production of fertilizer, MPC generated a variety of pollutants and hazardous wastes.  MPC has been regulated under a number of environmental statutes that govern the production, storage and release of a variety of air and water pollutants as well as hazardous wastes.  In the manufacturing process, strong acids and ammonia were produced.  If improperly discharged, acids and ammonia can be highly toxic to fish and to other forms of marine life.  MPC was obligated to comply with permits issued by the Mississippi Department of Environmental Quality (MDEQ) under the authority of the Environmental Protection Agency (EPA) as prescribed by the Clean Water Act.  These permits regulated the storage and discharge of MPC’s stormwater and wastewater, prescribing the circumstances under which they could be discharged into Bayou Casotte and limiting the concentration and quantity of the pollutants they could contain.

As detailed in the felony information, since January 2000, MPC has been cited by MDEQ in numerous notices for hundreds of violations of its Clean Water Act permit for discharging wastewater exceeding its pollutant limits.  MPC was also cited for its failure to maintain adequate wastewater storage capacity, its discharge of untreated wastewater from its sulfuric acid plant directly through MPC’s main outfall, its combined release of untreated and undertreated stormwater and process wastewater from other outfalls, and its failure to implement required remedial measures to prevent the pollutant discharges and environmental harm it has caused for decades.  An April 2005 discharge resulted in the release of more than 17 million gallons of highly acidic wastewater into waterways adjacent to its facility, including Bayou Casotte, Tillman Creek and Bangs Lake of the Grand Bay National Estuarine Research Reserve.  These waters are some of the most productive nurseries for aquatic species on the Gulf Coast.  MPC’s massive discharge of pollutants resulted in the death of thousands of fish and other forms of marine life as well as the destruction of marsh grass, trees and shrubs.  In the years following this environmental catastrophe, in spite of MDEQ’s orders and MPC’s remedial proposals, MPC never implemented the measures necessary to prevent the release of pollutants from its facility and the discharge of an even larger torrent of wastewater destroying even more marine life.

U.S. Attorney Davis praised the efforts of EPA’s Criminal Investigation Division, for its diligent work in the investigation of this matter.  Senior Trial Attorney Jeremy F. Korzenik of the Department of Justice’s Environmental Crimes Section and Assistant U.S. Attorney Gaines Cleveland are the prosecutors in charge of the case.

A New Jersey man was convicted in federal court today of illegally trafficking in paddlefish caviar after being caught in stemming from an undercover operation in the Warsaw, Missouri, area, announced the Department of Justice’s Environment and Natural Resources Division and the U.S. Attorney’s Office for the Western District of Missouri.

In support of Missouri’s paddlefish conservation efforts, the U.S. Fish and Wildlife Service and the Missouri Department of Conservation conducted an undercover investigation known as “Operation Roadhouse,” centered on an area known as the Roadhouse in Warsaw.  As part of the operation, state and federal officers operated a paddlefish snagging business during the 2011 and 2012 paddlefish seasons.  

Petr Babenko, 45, of Vineland, New Jersey, was found guilty of participating in a conspiracy to illegally buy and sell paddlefish and one count of illegally trafficking in paddlefish in violation of the Lacey Act.  Babenko owned European International Foods, a specialty grocery business in Vineland.

Codefendant Bogdan Nahapetyan, 37, an Armenian citizen residing in Lake Ozark, Missouri, pleaded guilty on Nov. 12, 2013, to illegally trafficking in paddlefish.

Neither Babenko nor Nahapetyan had a valid roe fish dealer permit.  Evidence introduced during the trial indicated that they possessed paddlefish and paddlefish eggs in excess of the Missouri possession limits and transported the paddlefish and paddlefish eggs across state lines.

For example, on April 24, 2012, Babenko and Nahapetyan negotiated with the undercover investigators to purchase 80 pounds of paddlefish eggs and five female paddlefish for $4,625.  While loading the purchased caviar and female paddlefish into their van, they placed an additional order with the undercover investigators for more fish and caviar.

Following the presentation of evidence, the jury in the U.S. District Court in Jefferson City, Missouri, deliberated for about 35 minutes before returning the guilty verdict to U.S. District Judge Stephen R. Bough, ending a trial that began Aug. 17, 2015.

In separate cases that arose from the undercover investigation, five additional defendants have pleaded guilty to trafficking in paddlefish and paddlefish eggs in violation of the Lacey Act: Fedor Pakhnyuk, 41, of Hinsdale, Illinois, Felix Baravik, 50, and Arkadiy Lvovskiy, 54, both of Aurora, Colorado, Dmitri Elitchev, 49, of Centennial, Colorado, and Artour Magdessian, 48, of Lone Tree, Colorado.

Under federal statutes, Babenko is subject to a sentence of up to ten years in federal prison without parole, plus a fine up to $500,000.  Babenko must forfeit to the government a 2011 Mercedes Benz cargo van that was used to commit the offense.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

The Lacey Act is a federal statute which makes it unlawful for any person to import, export, transport, sell, receive, acquire or purchase fish that were taken, possessed, transported or sold in violation of any law or regulation of any state, or to attempt to do so.  Such conduct constitutes a felony crime if the defendant knowingly engaged in conduct involving the purchase or sale, offer to purchase or sell, or intent to purchase or sell, fish with a market value in excess of $350, knowing that the fish were taken, possessed, transported or sold in violation of, or in a manner unlawful under, a law or regulation of any state.

The American paddlefish (Polydon spathula), also called the Mississippi paddlefish or the “spoonbill,” is a freshwater fish that is primarily found in the Mississippi River drainage system.  Paddlefish eggs are marketed as caviar.  The retail value of the caviar is estimated to be between $30,000 and $50,000. Paddlefish were once common in waters throughout the Midwest.  However, the global decline in other caviar sources, such as sturgeon, has led to an increased demand for paddlefish caviar. This increased demand has led to over-fishing of paddlefish and consequent decline of the paddlefish population.

Missouri law prohibits the transportation of paddlefish eggs which have been removed or extracted from a paddlefish carcass.  Missouri law also prohibits the sale or purchase, or offer of sale or purchase, of paddlefish eggs.  There are also several restrictions on the purchase and possession of whole paddlefish in Missouri.

This case is being prosecuted by Senior Trial Attorney James B. Nelson of the Department of Justice’s Environmental Crimes Section and Assistant U.S. Attorney Lawrence E. Miller of the U.S. Attorney’s Office for the Western District of Missouri.  It was investigated by the U.S. Fish and Wildlife Service and the Missouri Department of Conservation, with assistance by the Oklahoma Department of Wildlife Conservation.

A former locally-employed staff member of the U.S. Embassy in London was charged with engaging in a hacking and cyberstalking scheme in which, using stolen passwords, he obtained sexually explicit photographs and other personal information from victims’ email and social media accounts, and threatened to share the photographs and personal information unless the victims ceded to certain demands.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney John A. Horn of the Northern District of Georgia, Director Bill A. Miller of the U.S. Department of State’s Diplomatic Security Service and Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Division made the announcement. 

Michael C. Ford, 36, was charged by indictment on Aug. 18, 2015, with nine counts of cyberstalking, seven counts of computer hacking to extort and one count of wire fraud.

“According to the indictment, Ford hacked into email accounts and extorted sexually explicit images from scores of victims,” said Assistant Attorney General Caldwell.  “As these allegations highlight, predators use the Internet to target innocent victims.  With the help of victims and our law enforcement partners, we will find those predators and hold them accountable.”

“Ford is alleged to have hacked into hundreds of email accounts and tormented women across the country, by threatening to humiliate them unless they provided him with sexually explicit photos and videos,” said U.S. Attorney John Horn.  “This sadistic conduct is all the more disturbing as Ford is alleged to have used the U.S. Embassy in London as a base for his cyberstalking campaign.”

“The Diplomatic Security Service is firmly committed to working with the Department of Justice and our other law enforcement partners to investigate allegations of crime and to bring those who commit these crimes to justice,” said Director Miller.  “When a public servant in a position of trust is alleged to have committed a federal felony such as cybercrime, we vigorously investigate such claims.”

“While the allegations in this case are disturbing, it does illustrate the willingness and commitment of the FBI and its federal partners to aggressively follow those allegations wherever they take us,” said Special Agent in Charge Johnson.  “The FBI will continue to provide significant resources and assets as we address complex cyber based investigations as seen here.”

According to allegations in the indictment, from January 2013 through May 2015, Ford, using various aliases that included “David Anderson” and “John Parsons,” engaged in a computer hacking and “sextortion” campaign to force numerous women to provide him with personal information and sexually explicit photographs and videos.  To do so, Ford allegedly posed as a member of the fictitious “account deletion team” for a well-known email service provider and sent notices to thousands of potential victims, including members of college sororities, warning them that their accounts would be deleted if they did not provide their passwords. 

Using the passwords collected from this phishing scheme, Ford allegedly hacked into hundreds of email and social media accounts, stole sexually explicit photographs and personal identifying information (PII), and saved both the photographs and PII to his personal repository.

Ford then allegedly emailed the victims and threatened to release the photographs, which were attached to the emails, unless they obtained videos of “sexy girls” undressing in changing rooms at pools, gyms and clothing stores, and then sent the videos to him.

The indictment alleges that, when the victims either refused to comply or begged Ford to leave them alone, Ford responded with additional threats, including by reminding the victims that he knew where they lived.  On several occasions, Ford allegedly followed through with his threats by sending sexually explicit photographs to victims’ family members and friends. 

During the pendency of the alleged scheme, Ford was a civilian employee at the U.S. Embassy in London, England.  He allegedly used his government-issued computer at the U.S. Embassy to conduct the phishing, hacking and cyberstalking activities. 

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

The case is being investigated by the U.S. Department of State’s Diplomatic Security Service and the FBI.  The Criminal Division’s Office of International Affairs and the U.S. Embassy in London provided assistance.  The case is being prosecuted by Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section, Trial Attorney Jamie Perry of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Kamal Ghali of the Northern District of Georgia. 

Anyone who believes that they are the victim of hacking, cyberstalking, or “sextortion” should contact law enforcement.  Resources regarding hacking and other cybercrimes can be found at: https://www.fbi.gov/about-us/investigate/cyber. 

Ford Indictment