District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Former Silk Road Task Force Agent Pleads Guilty to Extortion, Money Laundering and ObstructionRead the Press Release
Ex-DEA Agent Used Undercover Status to Fraudulently Obtain Digital Currency Worth Over $700,000
A former DEA agent pleaded guilty today to extortion, money laundering and obstruction of justice, which he committed while working as an undercover agent investigating Silk Road, an online marketplace used to facilitate the purchase and sale of illegal drugs and other contraband.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Chief Richard Weber of the IRS-Criminal Investigation (IRS-CI), Special Agent in Charge David J. Johnson of FBI’s San Francisco Division, Special Agent in Charge Michael P. Tompkins of the Department of Justice Office of the Inspector General’s Washington, D.C. Field Office and Special Agent in Charge Lori Hazenstab of the Department of Homeland Security’s Office of the Inspector General in Washington D.C. made the announcement.
“While investigating the Silk Road, former DEA Agent Carl Force crossed the line from enforcing the law to breaking it,” said Assistant Attorney General Caldwell. “Seduced by the perceived anonymity of virtual currency and the dark web, Force used invented online personas and encrypted messaging to fraudulently obtain bitcoin worth hundreds of thousands of dollars from the government and investigative targets alike. This guilty plea should send a strong message: neither the supposed anonymity of the dark web nor the use of virtual currency nor the misuse of a law enforcement badge will serve as a shield from the reach of the law.”
“Mr. Force has admitted using his position of authority to weave a complex veil of deception for personal profit,” said U.S. Attorney Haag. “Mr. Force’s actions put at risk other important investigations and betrayed the trust placed in him by his law enforcement partners and the public. We are grateful for the work done by our federal partners to assist in unraveling this crime.”
“Through following the money in the Silk Road investigation it became clear that the defendant was engaged in wire fraud, money laundering, and other related offenses,” said Chief Weber. “He used his position in the investigation to bring himself significant personal financial gain. This investigation sends a clear message -- no person, especially those entrusted with the public’s trust such as federal law enforcement, is above the law and IRS-CI will use their financial investigative skills to track you down.”
Carl M. Force, 46, of Baltimore, Maryland, pleaded guilty before U.S. District Judge Richard Seeborg of the Northern District of California to an information charging him with money laundering, obstruction of justice and extortion under color of official right. Force’s sentencing hearing is scheduled for Oct. 19, 2015.
Force was a Special Agent with the DEA for 15 years. Between 2012 and 2014, he was assigned to the Baltimore Silk Road Task Force, a multi-agency group investigating illegal activity on the Silk Road. Force was the lead undercover agent in communication with Ross Ulbricht, aka “Dread Pirate Roberts,” who ran the Silk Road.
In connection with his guilty plea, Force admitted that, while working in an undercover capacity using his DEA-sanctioned persona, “Nob,” in the summer of 2013, Force offered to sell Ulbricht fake drivers’ licenses and “inside” law enforcement information about the Silk Road investigation, which information Nob claimed to have accessed through a corrupt government employee. Force admitted that he attempted to conceal his communications with Ulbricht about the payments by directing Ulbricht to use encrypted messaging. Although Force understood these payments, which were made in bitcoin, to be government property, as they constituted evidence of a crime, he admitted that he falsified official reports and stole the funds, depositing the bitcoin into his own personal account and then converting them into dollars. Force admitted that, at the time, the value of the bitcoin he received from Ulbricht was in excess of approximately $100,000.
Force also admitted that he devised and participated in a scheme to fraudulently obtain additional funds from Ulbricht through another online persona, “French Maid,” of which his Task Force colleagues were not aware. Force admitted that, as French Maid, he solicited and received bitcoin payments from Ulbricht worth approximately $100,000 in exchange for information concerning the government’s investigation into the Silk Road.
In connection with his guilty plea, Force also admitted that, in late 2013, in his personal capacity, he invested $110,000 worth of bitcoin in CoinMKT, a digital currency exchange company. Although he did not receive permission from the DEA to do so, he served as CoinMKT’s Chief Compliance Officer. In this role, in February 2014, Force was alerted by CoinMKT to what the company initially believed to be suspicious activity in a particular account. Force admitted that, thereafter, in his capacity as a DEA agent, but without authority or a legal basis to do so, he directed CoinMKT to freeze $337,000 in cash and digital currency from the account and he subsequently transferred the approximately $300,000 of digital currency funds into a personal account that he controlled.
Force also admitted to entering into a $240,000 contract with 20th Century Fox Film Studios related to a film concerning the government’s investigation into the Silk Road. Force admitted that he did not secure the necessary approvals from the DEA to do so.
According to his plea agreement, Force admitted that he had obstructed justice both by soliciting and accepting bitcoin from Ulricht and by lying to federal prosecutors and agents who were investigating potential misconduct by Force and others.
The investigation is ongoing. To date, Force is one of two federal agents charged with crimes in connection to their roles in investigating the Silk Road. Shaun W. Bridges, 32, of Laurel, Maryland, a former Special Agent with the U.S. Secret Service, is charged in a two-count information with money laundering and obstruction of justice related to his diversion of over $800,000 in digital currency that he gained control over as part of the Silk Road investigation. The charges contained in an information are merely accusations, and a defendant is presumed innocent until and unless proven guilty.
The case was investigated by the FBI’s San Francisco Division, the IRS-CI’s San Francisco Division, the Department of Justice Office of the Inspector General and the Department of Homeland Security Office of the Inspector General in Washington, D.C. The following additional components assisted with the investigation: IRS-CI’s New York Field Office, HSI’s Chicago/O’Hare Division, the U.S. Attorney’s Office for the Southern District of New York, the Criminal Division’s Computer Crime and Intellectual Property Section, the Criminal Division’s Office of International Affairs, the U.S. Embassy in Slovenia and the FBI Legal Attaché Office in Tokyo.
The case is being prosecuted by Assistant U.S. Attorneys Kathryn Haun and William Frentzen of the Northern District of California and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section, with assistance from Assistant U.S. Attorney Arvon Perteet.
Force Plea Agreement
District Court Enters Permanent Injunction against New Jersey Drug Manufacturer and its President to Stop Distribution of Unapproved and Misbranded DrugsRead the Press Release
The U.S. District Court for the District of New Jersey entered a consent decree of permanent injunction against Acino Products LLC, of Hamilton, New Jersey, and its president, Ravi Deshpande, to prevent the distribution of unapproved and misbranded drugs, the Department of Justice announced today.
Acino manufactures and distributes hydrocortisone acetate suppositories under the brand names Rectacort-HC and GRx HiCort 25. Deshpande is Acino’s president and is responsible for, and has authority over, all operations at the firm.
The department filed a complaint in the U.S. District Court for the District of New Jersey at the request of the U.S. Food and Drug Administration (FDA), alleging that the company’s suppositories are not approved by the FDA and that they are misbranded because they do not bear adequate directions for use as required by law.
In conjunction with the filing of the complaint, the defendants agreed to settle the litigation and be bound by a consent decree of permanent injunction that prohibits them from committing violations of the federal Food, Drug and Cosmetic Act. The consent decree requires the drug manufacturer to cease all manufacture and distribution of the unapproved and misbranded suppositories, and to destroy any such suppositories already in existence.
“The department will not hesitate to bring enforcement actions against manufacturers who do not follow the necessary procedures to comply with our nation’s drug safety laws,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Department of Justice’s Civil Division.
“Companies that manufacture and distribute drugs must comply with FDA regulations,” said FDA Associate Commissioner Melinda Plaisier of Regulatory Affairs. “Acino repeatedly violated federal law through their actions. We must continue to oversee manufacturers to ensure that patients have access to safe and effective approved drugs.”
The FDA has conducted at least three inspections of the facility between Feb. 6, 2014, and March 5, 2014; Aug. 7, 2014, and 19, 2014; and Jan. 12, 2015, and 25, 2015.
According to the complaint, during the February/March 2014 inspection, FDA investigators documented the company’s manufacturing of hydrocortisone acetate suppositories on behalf of Ascend Laboratories LLC. The complaint alleges that at the conclusion of the inspection, Deshpande indicated that he was aware that the suppositories were being marketed by Ascend as prescription drugs without FDA approval.
In May 2014, the government conducted a seizure of certain unapproved and misbranded drugs that were being distributed by Ascend, including suppositories that Acino had manufactured for Ascend. The government notified Acino and Deshpande of the seizure by a letter dated May 15, 2014. According to the complaint, the letter made clear that the suppositories were unapproved and misbranded drugs, however, Acino and Deshpande continued to manufacture the products.
According to the complaint, at the conclusion of the August 2014 and January 2015 inspections, FDA investigators again discussed the unapproved status of the hydrocortisone acetate 25 mg suppositories with Deshpande, who indicated that he was aware of the need to pursue FDA approval for the drug. As alleged in the complaint, to date, Acino and Deshpande have not filed the necessary application with the FDA to gain approval for the unapproved drug products.
The government is represented by Trial Attorney Heide L. Herrmann of the Civil Division’s Consumer Protection Branch, with the assistance of Associate Chief Counsel Yen Hoang of the Department of Health and Human Services’ Office of General Counsel – Food and Drug Division, and Assistant U.S. Attorney Bernard J. Cooney of the District of New Jersey.
VMWare and Carahsoft Agree to Pay $75.5 Million to Settle Claims that they Concealed Commercial Pricing and Overcharged the GovernmentRead the Press Release
VMware Inc. and Carahsoft Technology Corporation have agreed to pay $75.5 million to resolve allegations that they violated the False Claims Act by misrepresenting their commercial pricing practices and overcharging the government on VMware software products and related services, the Department of Justice announced today. VMware is a Delaware corporation that specializes in computer virtualization software and has its principal place of business in Palo Alto, California. Carahsoft is a privately held Maryland corporation that distributes information technology products to federal, state and local governments and has its principal place of business in Reston, Virginia.
“Today’s settlement demonstrates our continuing vigilance to ensure that those doing business with the government give the taxpayers a fair deal,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Department of Justice’s Civil Division. “Government contractors who seek to profit improperly at the expense of taxpayers face serious consequences.”
“Transparency by contractors in the disclosure of their discounts and prices offered to commercial customers is critical in the award of GSA Multiple Award Schedule contracts and the prices charged to government agency purchasers,” said U.S. Attorney Dana J. Boente of the Eastern District of Virginia.
“We will continue to look into all allegations of false claims in GSA contracts,” said Acting Inspector General Robert C. Erickson of the U.S. General Services Administration (GSA). “I appreciate the hard work of our auditors, our agents and the attorneys on this complex case that has resulted in a large amount of money being returned to the United States.” Under the Multiple Award Schedule (MAS) Program, prospective vendors agree to disclose commercial pricing policies and practices to the GSA in exchange for the opportunity to gain access to the broad federal marketplace and the ease of administration that comes from selling to any government purchaser under one central contract. GSA regulations require that, during contract negotiations with GSA, prospective vendors seeking an MAS contract make “current, accurate and complete” disclosures of the standard and non-standard discounts they offer to commercial customers. The GSA relies on the accuracy of these disclosures in order to negotiate fair pricing for government purchasers. Additionally, after the MAS contract is awarded, regulations require that MAS Program vendors disclose to the GSA changes in their commercial pricing practices, including improved discounts that are offered to commercial customers, after the MAS contract is in place.
The settlement resolves allegations that VMware and Carahsoft made false statements to the government in connection with the sale of VMware products and services under Carahsoft’s MAS contract. These false statements allegedly concealed the companies’ commercial pricing practices and enabled the companies to overcharge the government for VMware’s products and services from 2007 through 2013.
The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. The civil lawsuit was filed in the Eastern District of Virginia by Dane Smith, who is a former vice president of the Americas at VMware Inc. Mr. Smith’s share of the recovery has not 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 Eastern District of Virginia and the GSA’s Office of Inspector General, with assistance from the Defense Criminal Investigative Service Mid-Atlantic Field Office. The case is captioned United States ex rel. Smith v. VMware, Inc., et al., Case No. 10-CV-769 (E.D. Va.). The claims resolved by the settlement are allegations only; there has been no determination of liability.
Second Circuit Affirms Apple's Liability for per Se Unlawful E-Book Price-Fixing ConspiracyRead the Press Release
Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division released the following statement today after the U.S. Court of Appeals for the Second Circuit ruling in United States v. Apple Inc.:
“We are gratified by the court’s decision. The decision confirms that it is unlawful for a company to knowingly participate in a price-fixing conspiracy, whatever its specific role in the conspiracy or reason for joining it. Because Apple and the defendant publishers sought to eliminate price competition in the sale of e-books, consumers were forced to pay higher prices for many e-book titles.
“I am proud of the outstanding work done by the trial team who initially established Apple’s liability and by the lawyers who defended the district court’s decision in this appeal. The Antitrust Division will continue to vigorously protect competition and enforce the antitrust laws in this important business, and in other industries that affect the everyday lives of consumers.”
Background
On April 11, 2012, the department filed a civil antitrust lawsuit in the U.S. District Court for the Southern District of New York against Apple, Hachette Book Group (USA), HarperCollins Publishers L.L.C., Holtzbrinck Publishers LLC (which does business as Macmillan), Penguin Group (USA) Inc. and Simon & Schuster Inc. for conspiring to end e-book retailers’ freedom to compete on price by taking control of pricing from e-book retailers and substantially increasing the prices that consumers paid for e-books.
At the same time that it filed the lawsuit, which was consolidated with suits brought by 33 states and territories, the department reached settlements with three of the publishers – Hachette, HarperCollins and Simon & Schuster. Those settlements were approved by the court in September 2012. The department settled with Penguin on Dec. 18, 2012, and with Macmillan on Feb. 8, 2013. The Penguin settlement was approved by the court in May 2013 and the Macmillan settlement was approved in August 2013. Under the settlements, each publisher was required (a) to terminate agreements that prevented e-book retailers from lowering the prices at which they sell e-books to consumers and (b) to allow for retail price competition in renegotiated e-book distribution agreements.
The department’s trial against Apple, which was overseen by U.S. District Judge Denise L. Cote of the Southern District of New York, began on June 3, 2013. The trial lasted for three weeks, with closing arguments taking place on June 20, 2013. Judge Cote issued her opinion and order on July 10, 2013, finding Apple liable for knowingly participating in and facilitating a conspiracy with the publishers. On Sept. 5, 2013, Judge Cote entered a final judgment prohibiting Apple from immediately reestablishing e-book distribution agreements with the defendant publishers similar to the agreements that were established through the conspiracy and from entering e-book distribution agreements containing most-favored-nations provisions; requiring Apple to adopt a rigorous antitrust compliance program; and imposing an external compliance monitor to evaluate and recommend improvements to Apple’s antitrust compliance and training programs.
Joint Statement by the Department of Justice and the Office of the Director of National Intelligence on the Declassification of the Resumption of Collection Under Section 215 of the USA Patriot Act as Amended by the USA Freedom ActRead the Press Release
Yesterday, the Foreign Intelligence Surveillance Court (FISC) issued an opinion and 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 provides for a 180-day transition period during which the existing National Security Agency (NSA) bulk telephony metadata program may continue. After considering the views of amici, 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.
As background, early last year in a speech at the Department of Justice, President Obama announced a transition that 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 best path forward is 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.
President Obama also noted that legislation would be required to implement this option and he called on Congress to enact this important change. The administration subsequently worked closely with members of 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.
In addition to the release of the court’s opinion, the administration is undertaking a declassification review of this most recent primary order, and when complete, the Office of the Director of National Intelligence will post the document to its website and icontherecord.tumblr.com.
FISC Opinion and Order
Department of Justice Seeks Forfeiture of $34 Million in Bribe Payments to the Republic of Chad’s Former Ambassador to the U.S. and CanadaRead the Press Release
The Department filed a complaint today seeking the civil forfeiture of approximately $34 million, which represents the cash value of shares in a Canadian energy company that the company used to bribe Chad’s former Ambassador to the United States and Canada for the purpose of influencing the award of oil development rights.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Assistant Director Joseph S. Campbell of the FBI’s Criminal Investigative Division made the announcement.
From 2004 to 2012, Mahamoud Adam Bechir, 50, served as Chad’s Ambassador to the United States and Canada. From approximately 2007 to 2015, Youssouf Hamid Takane, 52, was the Deputy Chief of Mission. As alleged in the complaint, in 2009, Bechir and Takane agreed to use their official positions to influence the award of oil development rights in Chad to Griffiths Energy International Inc., a Canadian oil company, in exchange for shares in the company. Thereafter, in or about October 2009, Griffiths Energy issued four million shares to the wives of Bechir and Takane and to another associate.
The complaint further alleges that Griffiths Energy agreed with Bechir and his wife that the company would pay a $2 million “consulting fee” to Bechir’s wife to influence the award of oil development rights in Chad. After securing the desired oil development rights in February 2011, Griffiths Energy allegedly transferred $2 million to an account held by a shell company created by Bechir’s wife. This bribe payment was commingled and laundered through U.S. bank accounts and real property, and eventually was transferred to Bechir’s bank account in South Africa, where he is now serving as Chad’s Ambassador. In 2013, Griffiths Energy pleaded guilty in Canadian court to bribing Bechir.
The $34 million that the United States seeks in forfeiture represents the cash value of the four million shares in Griffiths Energy that were provided to the wives of Bechir and Takane and to their associate. In a separate action filed in 2014, the United States also is seeking the civil forfeiture of over $100,000 in allegedly laundered funds traceable to the $2 million bribe payment. Takane resides in the United States.
The investigation was conducted by the FBI. The case is being handled by Trial Attorney Nalina Sombuntham and Senior Trial Attorney Steven C. Parker of the Criminal Division’s Asset Forfeiture and Money Laundering Section.
This case was brought under the Kleptocracy Asset Recovery Initiative by a team of dedicated prosecutors in the Criminal Division’s Asset Forfeiture and Money Laundering Section, working in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and, where appropriate, return those proceeds to benefit the people harmed by these acts of corruption and abuse of office. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to [email protected].
Griffiths Energy Complaint
Colombian Paramilitary Leader Sentenced to More Than 15 Years in Prison for International Drug TraffickingRead the Press Release
A senior paramilitary leader and one of Colombia’s most notorious drug traffickers was sentenced today to serve 190 months in prison for leading an international drug trafficking conspiracy that imported into the United States ton-quantities of cocaine. Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting Deputy Administrator Jack Riley of the U.S. Drug Enforcement Administration (DEA) made the announcement.
“Through his leadership position in the AUC, Salvatore Mancuso-Gomez directed the manufacture and shipment of over 100,000 kilograms of cocaine into the United States and elsewhere,” said Assistant Attorney General Caldwell. “In addition to enriching himself, Mancuso-Gomez and the AUC used this drug money to raise and arm a paramilitary force of more than 30,000 fighters and cement his control over regions of Colombia. This case is yet another example of our continued commitment to collaborating with our international partners to prosecute criminals and warlords who traffic in illegal narcotics, violence and intimidation.”
“DEA is committed to relentlessly attacking global criminal networks who use drug trafficking as a means to finance their terrorist activities,” said Acting Deputy Administrator Riley. “The arrest and prosecution of Salvatore Mancuso-Gomez clearly illustrates this dedication. As a senior leader in the AUC, Mancuso-Gomez controlled huge amounts of cocaine production in Colombia, and oversaw its movement to the United States and other parts of the world. Proceeds from his drug trafficking enterprise were used to acquire weapons and further the AUC’s violent criminal agenda. DEA is pleased that this significant narco-terror leader has faced justice in a U.S. court of law.”
Salvatore Mancuso-Gomez, aka El Mono and Santander Lozada, formerly of Monteria, Colombia, pleaded guilty in October 2008 to one count of conspiracy to distribute cocaine knowing and intending that it would be imported into the United States. U.S. District Judge Ellen Segal Huvelle of the District of Columbia imposed the sentence.
According to the statement of facts agreed to as part of his guilty plea, Mancuso-Gomez held one of the highest level leadership positions within the Autodefensas Unidas de Colombia (United Self Defense Forces of Colombia or AUC), a terrorist and paramilitary organization in Colombia. In September 2001, the AUC was designated a Foreign Terrorist Organization by the U.S. Department of State. In May 2003, the AUC was placed on the Significant Foreign Narcotics Traffickers list by order of the President, pursuant to the Foreign Narcotics Kingpin Designation Act. In February 2004, Mancuso-Gomez individually was designated as a Tier II Kingpin by the Department of Treasury’s Office of Foreign Assets Control, subjecting him to severe economic sanctions under the Kingpin Act.
The statement of facts also established that the AUC consisted of approximately 30,000 armed soldiers organized into blocs (or regions) with commanders for each bloc. In connection with his guilty plea, Mancuso-Gomez admitted that, from the mid-1990s through 2004, he directed thousands of soldiers in two blocs of the AUC, controlling large areas where cocaine was produced.
Mancuso-Gomez admitted that the AUC produced approximately 2,000 kilograms of cocaine per month during the conspiracy, and that he and members of the organization transported the cocaine to the coastal areas of Colombia where it was loaded onto go-fast boats and other vessels for ultimate transportation to the United States and Europe. Mancuso-Gomez also admitted that he levied taxes on other narcotics traffickers who needed passage through AUC-controlled territories, and that he used proceeds from his drug trafficking activities to purchase weapons and other supplies for AUC activities. Mancuso-Gomez further admitted that he and the AUC maintained tight control of their territories in Colombia through intimidation of corrupt members of the Colombian government, including law enforcement and military personnel and politicians.
Today’s sentence does not account for violations of Colombian human rights-related laws allegedly committed by Mancuso-Gomez, which are being addressed in Colombia through the Justice and Peace process – a legal framework enacted in 2005 to facilitate the demobilization of its paramilitary organizations – and Colombian criminal justice system.
The case was investigated by DEA’s Bogotá and Cartagena, Colombia, Country Offices, and the DEA Special Operations Division. The government of Colombia provided unprecedented assistance through the investigation, prosecution and sentencing phase of this case.
The case was prosecuted by Trial Attorneys Paul W. Laymon and Carmen Colon of the Criminal Division’s Narcotic and Dangerous Drug Section (NDDS). NDDS Judicial Attachés in Bogotá, Colombia; the Criminal Division’s Office of International Affairs; and the Prosecutor General’s Office of the Republic of Colombia (Fiscalia), including the Fiscalia’s Transitional Justice program, provided significant assistance.
New Jersey Man Charged with Conspiracy to Provide Material Support to ISIL and Witness TamperingRead the Press Release
A Hudson County, New Jersey, man was arrested today on charges of conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, and aiding and abetting an attempt to do so, announced Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Paul J. Fishman of the District of New Jersey and Special Agent in Charge Richard M. Frankel of the FBI’s Newark, New Jersey, Division.
Alaa Saadeh, 23, of West New York, New Jersey, was arrested early this morning at his home. He is charged in a complaint with conspiring with other individuals in New Jersey and New York to provide services and personnel to ISIL, aiding and abetting an attempt to provide services and personnel to ISIL and attempting to persuade a witness to lie to the FBI. The defendant is scheduled to make his initial appearance at 2:30 p.m. today before U.S. Magistrate Judge Cathy L. Waldor of the District of New Jersey.
According to documents filed in this case:
The FBI and the Joint Terrorism Task Force (JTTF) have been investigating a group of individuals from New York and New Jersey who have allegedly conspired to provide material support to ISIL. Co-Conspirator 1 (CC-1) is Saadeh’s brother and was a resident of Rutherford, New Jersey, until departing the United States on May 5, 2015, allegedly to join ISIL. Co-Conspirator 2 (CC-2) was a resident of Queens, New York, until he was arrested on June 13, 2015, in New York on terrorism charges. Samuel Rahamin Topaz was a resident of Fort Lee, New Jersey, until he was arrested on June 17, 2015, in New Jersey and charged with conspiring to provide services and personnel to ISIL.
On May 5, 2015, CC-1 attempted to travel from New Jersey to the Middle East, via John F. Kennedy International Airport, allegedly in order to join ISIL. CC-1 was accompanied to JFK by Saadeh and CC-2. On the way to the airport, CC-1 stated that he, Saadeh, CC-2 and Topaz had plans to reunite overseas within a few weeks.
After CC-1’s departure, and despite learning from CC-1’s family that he had been arrested in Jordan on suspicion of supporting ISIL, Saadeh, CC-2 and Topaz continued to discuss their plan to travel overseas to join ISIL. Electronic communications later recovered from Topaz’s phone corroborated their plans. On May 21, 2015, Saadeh and Topaz discussed that they needed to “lay low” and refrain from taking action in furtherance of the conspiracy to provide material support to ISIL that might be detected by law enforcement. Saadeh and Topaz also discussed needing to meet in person to discuss “hijra.” Topaz later told members of the JTTF that he and his conspirators used the term “hijra” (often spelled “hijrah”) to refer to traveling overseas to join ISIL. The next day, Saadeh told another individual that he suspected that CC-2 or Topaz had “snitched” on CC-1 and caused his arrest overseas, and that, if true, Saadeh thought he would have to “kill someone.”
In recorded conversations with an informant, Saadeh revealed his support for ISIL, including the terrorist organization’s use of beheadings and mass killings to impose its violent agenda. Saadeh also stated that he planned to travel overseas with CC-2 “at some point.” Saadeh further stated that he knew CC-1 planned to travel to join ISIL before CC-1 departed the United States, and that he bought CC-1’s airline ticket despite knowing this. The investigation revealed that Saadeh provided CC-1 transportation and removed a SIM card from CC-1’s phone in an apparent effort hide incriminating communications and other data.
In June, after becoming aware that he was under FBI surveillance, Saadeh directed an individual in New Jersey not to tell the FBI about CC-1’s support for ISIL or CC-1’s plans to travel to Syria and Iraq to join ISIL. Saadeh instructed the individual to “play dumb” and be “honest up to a point,” but to be sure not to tell the FBI anything about ISIL.
Each count in the complaint carries a maximum potential penalty of 20 years in prison and a fine of $250,000.
The case is being investigated by the FBI and JTTF. The case is being prosecuted by Assistant U.S. Attorneys L. Judson Welle, Dennis C. Carletta and Francisco J. Navarro of the District of New Jersey, with the assistance of Trial Attorney Robert Sander of the National Security Division’s Counterterrorism Section.
The charge and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Saadeh Criminal Complaint
Former Owner of Medical Equipment Supply Company Sentenced for $3.5 Million Medicare and Medi-Cal Fraud SchemeRead the Press Release
The former owner of Ezcor Medical Supply was sentenced today to serve 97 months in prison for her role in a fraud scheme that resulted in $3.5 million in fraudulent claims to Medicare and Medi-Cal.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Los Angeles Region, Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Division and Special Agent in Charge Joseph Fendrick of the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse made the announcement.
Sylvia Walter-Eze, 48, of Stevenson Ranch, California, was found guilty by a federal jury on March 20, 2015, of conspiracy to commit health care fraud, four counts of health care fraud, and one count of conspiracy to pay illegal health care kickbacks. In addition to imposing the term of imprisonment, U.S District Judge R. Gary Klausner ordered Walter-Eze to pay restitution in the amounts of $1,866,260 to Medicare and $73,268 to Medi-Cal.
The evidence presented at trial showed that Walter-Eze, the former owner of Ezcor, a durable medical equipment (DME) supply company located in Valencia, California, fraudulently billed more than $3.5 million to Medicare and Medi-Cal for DME that was not medically necessary. The trial evidence also demonstrated that Walter-Eze paid illegal kickbacks to patient recruiters in exchange for patient referrals. The evidence further showed that Walter-Eze paid kickbacks to physicians for fraudulent prescriptions for medically unnecessary, and expensive, power wheelchairs, which prescriptions Walter-Eze then used to support her fraudulent claims to Medicare and Medi-Cal. The evidence showed that, between 2007 and 2012, Walter-Eze submitted $3,521,786 in fraudulent claims to Medicare and Medi-Cal, and that she received $1,939,529 in reimbursement for those claims.
The case was investigated by the FBI, HHS-OIG’s Los Angeles Regional Office and the California Department of Justice, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Central District of California. The case was prosecuted by Trial Attorneys Blanca Quintero and Alexander F. Porter of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team, go to: www.stopmedicarefraud.gov.
Former DEA Employee Sentenced to Two Years in Prison for Credit Card Fraud SchemeRead the Press Release
Used Fraudulently Acquired Government Credit Cards to Obtain Over $113,000 in Cash
A former Drug Enforcement Administration (DEA) employee was sentenced today to two years in prison for defrauding JPMorgan Chase & Co. out of more than $113,000 using fraudulently issued government credit cards.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland and Special Agent in Charge Michael P. Tompkins of the the Department of Justice Office of the Inspector General’s (DOJ OIG) Washington, D.C. Field Office made the announcement.
Keenya Meshell Banks, 41, of Upper Marlboro, Maryland, pleaded guilty in April 2015 to one count of wire fraud. In addition to imposing the term of imprisonment, U.S. District Judge Deborah K. Chasanow ordered Banks to pay restitution in the amount of $113,841.
According to her plea agreement, Banks was employed by the DEA as a Program Manager, and was responsible for the approval and issuance of government credit cards to DEA employees. Banks admitted that, while serving in that role, she submitted dozens of fake credit card applications to JPMorgan Chase & Co. for fictitious DEA employees, using names and identifying information of individuals who did not work at the DEA. In at least one instance, however, Banks submitted the identifying information of an actual DEA employee. Through this scheme, Banks admitted that she obtained at least 32 fraudulent credit cards, which she then used to withdraw more than $113,000 from ATMs in Maryland and Northern Virginia. As part of her plea agreement, Banks agreed to forfeit the proceeds she received as a result of the scheme and to pay full restitution.
The case was investigated by the DOJ OIG. The case was prosecuted by Trial Attorneys Richard B. Evans and Justin Weitz of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Thomas P. Windom of the District of Maryland.
Attorney General Loretta E. Lynch Statement on the U.S. Supreme Court Ruling in Arizona State Legislature v. Arizona Independent Redistricting CommissionRead the Press Release
Attorney General Loretta E. Lynch released the following statement today after the Supreme Court ruling in Arizona State Legislature v. Arizona Independent Redistricting Commission:
“I am pleased that the Supreme Court has vindicated the rights of voters who want their electoral districts drawn fairly, independently and without undue emphasis on partisan affiliation or political creed. Arizona’s approach to redistricting is an innovative and effective advance in the effort to reduce gerrymandering and give all Americans an opportunity to make their voices heard. Today’s decision is a victory for the people of Arizona, for the promise of fair and competitive elections and for the principles of democratic self-governance that make our nation exceptional.”
Tennessee Man Pleads Guilty to Hobbs Act Robbery of Former EmployerRead the Press Release
A Tennessee man pleaded guilty to Hobbs Act robbery and use of a handgun in a crime of violence, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David Rivera of the Middle District of Tennessee.
Deonte Graham, 34, of Clarksville Tennessee, pleaded guilty before Chief U.S. District Judge Kevin Sharp of the Middle District of Tennessee.
On Oct. 21, 2011, Singletary Construction in Clarksville, Tennessee, was robbed of $17,000 in cash by two masked men with a gun. Physical evidence recovered in connection with the robbery resulted in the identification of Michael Massey as one of the robbery suspects. In May 2015, Massey pleaded guilty to his role in the robbery.
In connection with today’s guilty plea, Graham admitted that, in October 2011, he had worked for Singletary for more than one year. According to Graham’s admissions, after the owner of the company accused Graham of misrepresenting the hours he worked and docked his pay, Graham and Massey devised a plan to rob Singletary. Graham also admitted that, in December 2012, he bragged to a former Singletary employee about arranging the robbery because Singletary owed him money.
This case was investigated by Clarksville, Tennessee, Police Department and the Drug Enforcement Administration. The case is being prosecuted by Trial Attorney Laura Gwinn of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Lynne T. Ingram of the Middle District of Tennessee.
Deonte Graham Plea Agreement
Swiss Bank Reaches Resolution under Justice Department's Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that Ersparniskasse Schaffhausen AG (EKS) 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:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
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Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
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Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreement signed today, EKS 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 EKS for tax-related criminal offenses.
EKS was founded in 1817 and is wholly owned by a Swiss charitable foundation. It is headquartered in the city and canton of Schaffhausen, Switzerland. EKS opened, maintained and serviced accounts for U.S. persons that it knew or had reason to know were likely not declared to the Internal Revenue Service (IRS) or the U.S. Department of the Treasury as required by U.S. law.
From 2004 through 2011, EKS accepted referrals of U.S. persons as new clients from an external asset manager who, until 2009, resided in the United States and conducted some of his business through a corporation organized under the laws of the United States. The majority of the accounts that came to EKS as a result of these referrals were held in the names of non-U.S. entities that were beneficially owned by U.S. persons.
In May 2008, with the knowledge and approval of EKS management, the external asset manager and an EKS relationship manager visited five U.S. cities to meet with U.S. clients and attorneys who had the potential to refer new clients. Topics discussed during their meetings included the “crisis” involving Swiss bank UBS AG, client satisfaction with EKS, the performance of client accounts at EKS and the “asset protection” benefits of EKS.
Until 2009, EKS opened numbered accounts for U.S. persons, including code-name or pseudonym accounts, upon request. Upon opening this type of account, an EKS employee would enter the accountholder’s name in a physical register rather than in the bank’s electronic records system. This action limited the number of EKS personnel who knew the client’s identity. Holders of these accounts could also provide documents to EKS using only their code names or numbers as their authorized signatures.
EKS provided all of its clients, including U.S. persons, with the option to request that EKS retain all mail related to a client’s financial accounts in exchange for a standard service fee. EKS understood that providing such hold-mail agreements upon request could allow U.S. persons to keep evidence of their EKS accounts outside of the United States and thus assist them in concealing assets and income from the IRS.
EKS also accepted IRS Forms W-8BEN for U.S.-related accounts held in the names of non-U.S. entities, such as foreign corporations, trusts or foundations. Because Swiss law required EKS to identify the true beneficial owners of the entities on a document called a Form A, EKS knew that these accounts were beneficially owned by U.S. persons. Nonetheless, EKS accepted Forms W-8BEN that it knew falsely stated that the entities were the beneficial owners of the accounts.
EKS was aware of the 2009 IRS Offshore Voluntary Disclosure Program for U.S. persons. Despite knowing of that program and knowing or having reason to know that some of its U.S. clients had likely not declared their EKS accounts to the IRS, EKS made no effort to encourage its U.S. clients to disclose their accounts through that program.
During 2009, consultants reported to EKS, among other things, that EKS had increased risks because of its relationship with the external asset manager; that it was only a matter of time until small banks came into contact with U.S. authorities; and that there was a latent risk that previous revenues from EKS’s “U.S. strategy” could be seized or corresponding fines imposed. According to minutes of a 2009 meeting of the EKS board of directors, an EKS executive stated, among other things, that “there is practically no risk if U.S. customers travel to Switzerland and a customer account is handled locally,” and that he had been informed that Swiss bank Wegelin & Co. was going to keep its previous U.S. customers.
In October 2009, the EKS board of directors voted to continue the account relationships with clients of the external asset manager, including his U.S. clients, under certain conditions, including that his business be relocated to Switzerland. The board also voted to “have the option of entering into new cross-border business relationships.”
Since Aug. 1, 2008, EKS provided private banking services for 90 U.S.-related accounts with approximately $65 million in assets. Thirty-seven of these accounts were opened after Aug. 1, 2008. EKS will pay a penalty of $2.066 million.
In accordance with the terms of the Swiss Bank Program, EKS 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 EKS 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 EKS 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, Gregory E. Van Hoey and Michael R. Pahl, 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.
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Northern California Real Estate Investor Indicted for Bid-Rigging and Fraud Conspiracies at Public Foreclosure AuctionsRead the Press Release
A federal grand jury in San Francisco returned an indictment against a Northern California real estate investor for his role in bid-rigging and fraud conspiracies at public foreclosure auctions in Northern California, the Department of Justice announced today.
A two-count indictment has been filed in the U.S. District Court of the Northern District of California in Oakland, charging Ramin Rad “Ray” Yeganeh of San Mateo, California, with participating in conspiracies to rig bids and defraud mortgage holders and others in Alameda County.
“This defendant conspired to rig bids at home mortgage foreclosure auctions in Alameda County,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “Lenders and those who lost their homes to foreclosure are entitled to the proceeds of a competitive auction, and they did not get that here. Whether a conspiracy is local, national or international in scope, the division will investigate and prosecute those who conspire rather than compete.”
To date, 54 individuals have pleaded guilty to criminal charges as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public foreclosure auctions in Northern California. In addition, 21 real estate investors have been charged in six multi-count indictments for their roles in bid-rigging and fraud schemes at foreclosure auctions in Alameda, Contra Costa, San Mateo and San Francisco counties in California.
The indictment alleges, among other things, that as early as September 2008 and continuing until about January 2011, Yeganeh conspired with others not to bid against one another and instead designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County. Yeganeh was also charged with conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected Alameda County properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have otherwise gone to mortgage holders and other beneficiaries by holding second, private auctions open only to members of the conspiracy. Selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.
“This is another example of justice being served in preserving the fairness of public real estate foreclosure auctions as well as the FBI’s commitment in investigating those who take advantage of a competitive marketplace,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office. “The FBI will continue to aggressively investigate real estate-related frauds and other violations of federal law which victimize distressed homeowners and financial institutions through the exploitation of the housing crisis.”
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 the Sherman Act charges 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 $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 20 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from the scheme.
Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300 or call the FBI tip line at 415-553-7400.
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.
Massachusetts Dentist Sentenced to Prison for Tax EvasionRead the Press Release
A Douglas, Massachusetts, dentist was sentenced today to serve 16 months in prison for tax evasion in the U.S. District Court for the District of Massachusetts, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
George Fenzell was indicted in February 2014 by a federal grand jury sitting in Boston on multiple counts of tax evasion and one count of corruptly endeavoring to obstruct the Internal Revenue Service (IRS). In November 2014, he pleaded guilty to one count of tax evasion.
U.S. District Court Judge Timothy S. Hillman also sentenced Fenzell to one year of supervised release and ordered him to pay $157,407 in restitution to the IRS. In sentencing Fenzell, Judge Hillman departed downward from the recommended U.S. Sentencing Guidelines range due, in part, to Fenzell’s cooperation with the government on other matters.
According to court documents, from 1999 through 2012, Fenzell engaged in conduct intended to obstruct the IRS. For the years 1999 through 2007, he failed to file timely federal income tax returns and concealed income that he earned from his dental practice from the IRS. Fenzell operated a dental office located in Shrewsbury, Massachusetts. He concealed his dental business receipts by diverting the funds through nominee entities, including River Valley Dental. He used multiple nominee bank accounts to conceal his ownership of his income and assets. Fenzell also titled and registered a Lincoln Navigator and Ducati motorcycle with another nominee entity, Smiling Trust, and made extensive use of cash in order to conceal his fraud from the IRS.
In response to a Massachusetts Department of Revenue investigation and collection action in 2007, Fenzell filed his delinquent federal tax returns for 2000 through 2005. In filing those returns, Fenzell admitted that he owed federal income taxes totaling $129,841. Fenzell had not made any tax payments to the IRS for those years. Rather than pay the federal income taxes and additional interest and penalties that were due and owing, between 2007 and 2012, Fenzell evaded IRS collection efforts by diverting his business receipts to nominee entities and using nominee bank accounts in Florida and Rhode Island to hide his income and assets. During the same period, he falsified his 2006 and 2007 tax returns that he filed late in 2009, and also failed to file his tax returns for 2008 through 2011.
Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and Assistant Chief John N. Kane Jr. and Trial Attorney Thomas Koelbl of the Tax Division, who are prosecuting the case. Ciraolo also thanked the U.S. Attorney’s Office of the District of Massachusetts for their substantial assistance.
Judge Imposes Death Sentence for Boston Marathon BomberRead the Press Release
A federal judge in Boston formally sentenced Dzhokhar A. Tsarnaev on June 24, for his role in using weapons of mass destruction at the 2013 Boston Marathon. U.S. District Judge George A. O’Toole of the District of Massachusetts imposed a sentence of death and multiple consecutive life sentences.
U.S. Attorney Carmen M. Ortiz of the District of Massachusetts, Assistant Attorney General for National Security John P. Carlin, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Vincent B. Lisi of the FBI’s Boston Division, Commissioner William B. Evans of the Boston Police Department, Colonel Timothy P. Alben of the Massachusetts State Police, Special Agent in Charge Daniel J. Kumor of the Bureau of Alcohol, Tobacco, Firearms and Explosives’s Boston Field Division and Deputy Special Agent in Charge Michael Shea of Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) in Boston made the announcement.
In May 2014, a federal jury in Boston recommended that Tsarnaev be sentenced to death. The counts on which the jury recommended a death sentence all related to the pressure cooker bomb Tsarnaev planted and detonated in front of the Forum restaurant, killing Lingzi Lu and Martin Richard. The same jury convicted Tsarnaev on all 30 counts of the indictment on April 8, 2015.
Tsarnaev, 21, a U.S. citizen formerly residing in Cambridge, Massachusetts, was convicted of use of a weapon of mass destruction resulting in death and conspiracy; bombing of a place of public use resulting in death and conspiracy; malicious destruction of property resulting in death and conspiracy; use of a firearm during and in relation to a crime of violence; use of a firearm during and in relation to a crime of violence causing death; carjacking resulting in serious bodily injury; interference with commerce by threats or violence; and aiding and abetting.
Beginning no later than February 2013, Tsarnaev and his brother, Tamerlan Tsarnaev, conspired to detonate improvised explosive devices (IEDs), bomb places of public use and destroy property. On April 15, 2013, during the 117th running of the Boston Marathon, the brothers placed two pressure cooker bombs filled with shrapnel among the crowds of spectators on Boylston Street and then detonated the bombs seconds apart, killing three people, maiming 17 and injuring hundreds more. The brothers fled the scene in the chaos of the destruction. Three days later, on April 18, Tsarnaev and his brother, armed with five IEDs and a Ruger semiautomatic pistol that Tsarnaev had borrowed from a friend, drove to the Massachusetts Institute of Technology (MIT) campus where they shot and killed MIT Police Officer Sean Collier and attempted to steal his service weapon. Approximately 20 minutes later, they carjacked a Mercedes SUV, kidnapped the driver and forced him to drive to a gas station, and robbed him of $800 along the way. After the driver managed to escape, the brothers drove to Laurel Street and Dexter Avenue in Watertown, Massachusetts, where they exploded additional IEDs and engaged in a firefight with Watertown police officers. During the stand-off, Tsarnaev drove the carjacked vehicle at three officers, attempting to kill them and ran over his brother as he escaped. Tsarnaev hid in a winterized boat in a backyard in Watertown until his apprehension and arrest the following night. His brother died from injuries sustained at the scene.
This investigation was conducted by the FBI’s Boston Division, Boston Police Department, Massachusetts State Police, Department of Justice’s National Security Division and member agencies of the Boston Joint Terrorism Task Force, including the ATF, HSI, U.S. Marshals Service, Massachusetts Bay Transit Authority and others. In addition, the Watertown Police Department; the Cambridge, Massachusetts, Police Department; the MIT Police Department; the Boston Fire Department; the National Guard and police, fire and emergency responders from across Massachusetts and New England played critical roles in the investigation and response.
This case was prosecuted by Assistant U.S. Attorneys William Weinreb, Aloke Chakravarty and Nadine Pellegrini of the District of Massachusetts's Anti-Terrorism and National Security Unit, and Trial Attorney Steve Mellin of the Justice Department’s Capital Case Section. Vital assistance was also provided by attorneys from the National Security Division’s Counterterrorism Section and the Criminal Division’s Capital Case Section.
Indiana Manufacturer Sentenced in Connection with Clean Air Act False Statement ViolationsRead the Press Release
Calumite Company LLC, a manufacturer of an additive used in the production of glass, was sentenced today in U.S. District Court in Hammond, Indiana, in connection with its September 2014 plea of guilty to two Clean Air Act false statement violations. The company was sentenced to pay a $325,000 fine, serve a two year term of probation and implement an environmental compliance plan that includes an annual environmental compliance training program.
Calumite, located near the shores of Lake Michigan in Portage, Indiana, manufactures and sells a powdery substance of the same name to various glass manufacturers. The company collects slag, a waste product of the steel industry, dries it in a hot gas oven, crushes it into a fine powder and then ships it off-site to glass manufacturers, who use it as an additive to lower the temperature at which glass can be produced.
Calumite's Portage facility was subject to a Title V Clean Air Act Operating Permit issued by the Indiana Department of Environmental Management (IDEM). Among other things, the permit required that Calumite operate, maintain and monitor several “baghouses” on site that are used to control and minimize emissions of a fine particulates. One of the baghouses, known as the loadout baghouse, was used to collect emissions of particulate that occurred during the loading of product onto tractor trailers and rail cars for shipment to customers.
A differential pressure gauge (DP gauge) attached to each baghouse continuously monitored and measured the efficiency and effectiveness of the baghouses, to determine whether they were operating properly. Calumite's Clean Air Act permit required that DP gauges on the baghouses be read daily, while the baghouses were operating and that the results be recorded on daily maintenance log sheets. The company also was required to submit quarterly reports to IDEM that stated whether the company was in compliance with permit requirements.
From Dec. 5, 2008, through late July 2009, Calumite did not maintain the loadout baghouse in operating condition and the DP gauge was broken. Nevertheless, during this same time period, employees continued to load tractor trailers and rail cars with product for shipment off-site. Calumite employees also knowingly continued to routinely fill out daily logs that falsely reflected DP gauge monitoring readings that were within the range allowed by the permit and caused false information to be submitted to IDEM in the company’s quarterly reports.
The Clean Air Act makes it a crime to knowing make a material false statement or omit material information from a document that is required to be filed or maintained under the statute. Both the daily maintenance logs and the quarterly reports were required by Calumite’s permit and the Clean Air Act.
The case was investigated by the Northern District of Indiana Environmental Crimes Task Force, including agents from the U.S. Environmental Protection Agency’s Criminal Investigation Division and the Indiana Department of Environmental Management’s Office of Criminal Investigations. The case was prosecuted by the U.S. Attorney’s Office for the Northern District of Indiana and the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
Former UW-Oshkosh Student Sentenced to 40 Months in Prison for Possession of RicinRead the Press Release
Kyle Allen Smith, 21, of Oshkosh, Wisconsin, was sentenced today to 40 months in federal prison for possession of ricin by the Chief District Judge William C. Griesbach of the Eastern District of Wisconsin, announced Assistant Attorney General for National Security John P. Carlin and U.S. Attorney James L. Santelle of the Eastern District of Wisconsin.
Smith was arrested on October 31, 2014, after two professors at the University of Wisconsin at Oshkosh reported to campus authorities that Smith was making unusual inquiries about chemical processes, including extracting of ribosomal inhibiting protein. According to the plea agreement, Smith admitted growing castor bean plants and extracting ricin from the beans. A substance found in Smith’s residence was sent to the Department of Homeland Security’s National Bioforensics Analysis Center at Fort Detrick, Maryland, and tested positive for the toxin ricin. Ricin is a toxin that infects human cells and blocks their ability to synthesize their own protein. Small doses of ricin may be lethal to human beings if ingested, inhaled or injected. Symptoms of ricin poisoning can include difficulty breathing, nausea, vomiting and diarrhea, with possible death occurring within 36 to 72 hours. According to information posted on the website of the Centers for Disease Control and Prevention (CDC), there are no known antidotes for ricin poisoning.
Smith admitted having homicidal thoughts and that these thoughts might have sparked his curiosity about the production of ricin. He stated he would not use or test the ricin on any human because too many people knew what he was doing and would turn him in.
Assistant Attorney General Carlin joined U.S. Attorney Santelle in praising the actions of the professors and the University administration in bringing Smith to the prompt attention of law enforcement authorities. It is a perfect example of “see something, say something,” which guides the required vigilance of our times. Assistant Attorney General Carlin and U.S. Attorney Santelle also thanked the Wisconsin National Guard, 54th Civil Support Team, for the critical assistance they provided in the safe recovery of the ricin.
The case was investigated by the Oshkosh Police Department, the FBI and the University of Wisconsin – Oshkosh Police Department. The case was prosecuted by Assistant U.S. Attorney Paul L. Kanter of the Eastern District of Wisconsin and the Justice Department’s National Security Division.
Former Senior Executive of Qualcomm Sentenced to 18 Months and Fined $500,000 for Insider Trading and Money LaunderingRead the Press Release
The former Executive Vice President and President of Global Business Operations for Qualcomm Inc., was sentenced today to 18 months in prison and fined $500,000 for his role in a three-year insider trading scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Laura E. Duffy of the Southern District of California made the announcement.
“Through his position as a high-ranking executive at Qualcomm, Jing Wang gained unique access to information about the company’s earnings and intended acquisitions and illegally exploited that inside information for personal gain,” said Assistant Attorney General Caldwell. “He then enlisted the services of others – his stock broker and his brother – to cover up the scheme. This prosecution demonstrates the Criminal Division’s commitment to holding accountable corporate executives who would undermine the integrity of the financial marketplace.”
“Jing Wang was a powerful insider at one of the world’s top corporations – but he threw it all away to make a few hundred thousand dollars,” said U.S. Attorney Duffy. “While Wang has lost his power, his position and his freedom, the real losers here are investors who play by the rules, and our nation’s financial system, which is diminished with every one of these schemes.”
Jing Wang, 52, of Del Mar, California, pleaded guilty in July 2014 to insider trading, money laundering and obstruction of justice for orchestrating a multi-year scheme to trade on the confidential information of Qualcomm and cover up his criminal conduct. The sentence was imposed by U.S. District Judge William Q. Hayes of the Southern District of California.
In connection with his plea, Wang admitted that he made three, separate insider trades using a brokerage account in the name of his British Virgin Island (BVI) shell company, Unicorn Global Enterprises. First, in early 2010, prior to Qualcomm’s announcement of a dividend increase and stock repurchase, Wang bought company stock valued at approximately $277,000. He also admitted that, in December 2010, while attending Qualcomm’s Board of Directors meeting in Hong Kong, and hours after the Board approved a non-public offer to purchase Atheros, a developer of semiconductors for wireless communications, Wang purchased stock in Atheros. Wang further admitted that, just a few weeks later, he directed his stockbroker, Gary Yin, to sell the Atheros stock, for approximately $481,000, and purchase Qualcomm stock one day before the company announced record earnings.
Wang also pleaded guilty to money laundering for transferring the illegal proceeds from Unicorn’s account to an account of a new BVI shell company he controlled. He further admitted to obstructing justice by creating a false cover story in which he and co-conspirator Yin would blame Wang’s brother Bing Wang, who resides in rural China, for the insider trading and ownership of the Unicorn Account. Among other acts, Wang collected incriminating evidence and provided it to Yin to take to China, and arranged meetings between Yin and Bing Wang during which the two rehearsed the false account.
Yin pleaded guilty to conspiring to obstruct justice and launder money, and currently is scheduled to be sentenced on July 17, 2015. Bing Wang has been charged in connection with the scheme, and is wanted on an international arrest warrant.
This case was investigated by the FBI’s San Diego Field Office and the Internal Revenue Service-Criminal Investigation’s San Diego Field Division. The SEC’s Los Angeles Regional Office provided substantial assistance. The case is being prosecuted by Trial Attorney James P. McDonald of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Eric J. Beste of the Southern District of California.
Former OtisMed CEO Sentenced for Selling Unapproved Surgical DevicesRead the Press Release
Corporation Previously Paid More Than $80 million to Resolve Criminal and Civil Investigations
The former president and CEO of OtisMed Corporation was sentenced today to serve two years in prison for intentionally distributing a medical device used in knee replacement surgery after its application for marketing clearance had been rejected by the Food and Drug Administration (FDA), the Department of Justice announced.
Charlie Chi, 46, of San Francisco, pleaded guilty in December 2014 to three counts of distributing adulterated medical devices in interstate commerce in violation of the federal Food, Drug, and Cosmetic Act (FDCA) after having been told by the FDA, legal counsel and his own board of directors not to do so. U.S. District Judge Claire C. Cecchi in Newark, New Jersey, delivered Chi’s 24-month sentence today and also ordered him to serve one year of supervised release and to pay a $75,000 fine. In September 2014, Judge Cecchi sentenced OtisMed Corporation, now a subsidiary of Stryker Corporation, to a criminal fine of $34.4 million and ordered the company to pay $5.16 million in criminal forfeiture. Stryker acquired the company after the criminal conduct for which he was sentenced today. In a related civil settlement, OtisMed agreed to pay approximately $41.2 million, including interest, to resolve its civil liability for submitting false claims to the Medicare, TRICARE, Federal Employees Health Benefits and Medicaid programs.
“Today’s sentencing of OtisMed’s CEO ought to send a clear message to others in positions of authority within the medical device and pharmaceutical industries: the Department of Justice will vigorously prosecute not only corporations, but also the individuals at their helm who are responsible for endangering public health and safety in pursuit of profit,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.
“The defendant betrayed the trust of patients whose doctors were using his unapproved surgical device for a serious medical procedure,” said U.S. Attorney Paul J. Fishman of the U.S. Attorney’s Office of the District of New Jersey. “With everything else people have to deal with when they are facing surgery, they shouldn’t have to worry whether their doctor is using equipment that has been approved for use. The punishment meted out to Chi and his company is appropriate.”
According to documents filed in this case and statements made in court:
In August 2005, Chi was among the founders of OtisMed and conceived of the OtisKnee orthopedic cutting guide, its primary product. Chi acted as OtisMed’s president, CEO and chairman of its board of directors until OtisMed was acquired by Stryker in November 2009. The OtisKnee was used by surgeons during total knee arthroplasty (TKA), commonly known as knee replacement surgery. The surgical procedure requires a surgeon to remove the ends of the leg bones and to reshape the remaining bone to accommodate the implantation of an artificial knee prosthesis. The cuts to the bone must be made at precise angles because they are critical to the clinical result; failure to achieve the correct angle in TKA procedures can result in failure of the bones and/or the implanted prosthetic joint.
OtisMed marketed the OtisKnee cutting guide as a tool to assist surgeons in making bone cuts specific to individual patients’ anatomy based on MRIs performed prior to surgery. None of OtisMed’s claims regarding the OtisKnee device were evaluated by the FDA before the company used them in advertisements and promotional material.
Between May 2006 and September 2009, OtisMed sold more than 18,000 OtisKnee devices, generating revenue of approximately $27.1 million.
On Oct. 2, 2008, OtisMed submitted a pre-market notification to the FDA seeking clearance to market the OtisKnee. The company had not previously sought the FDA’s clearance or approval and had been falsely representing to physicians and other potential purchasers that the product was exempt from such pre-market requirements.
On Sept. 2, 2009, the FDA sent OtisMed a notice that its submission had been denied, noting that the company had failed to demonstrate that the OtisKnee was as safe and effective as other legally marketed devices. The letter warned OtisMed that distribution of the OtisKnee prior to approval would be an FDCA violation, and indicated the FDA viewed the product as part of a “significant risk device system,” which is defined as presenting a potential for serious risk to the health, safety or welfare of a subject. Chi and others at OtisMed received advice from legal and regulatory counsel confirming it would be unlawful for OtisMed to continue distributing the OtisKnee.
Though the board of directors unanimously decided to stop further shipments of the devices, Chi was concerned that inconveniencing surgeons planning to use the OtisKnee in scheduled surgeries would exacerbate the negative impact of the FDA letter on the reputation of OtisMed and the device. Chi directed OtisMed employees to organize a mass shipment of all OtisKnee devices that had been manufactured but had not yet been shipped and suggested ways for the employees to hide the shipments from FDA regulators.
At Chi’s direction, OtisMed shipped approximately 218 OtisKnee guides from California to surgeons throughout the United States, including 16 to surgeons in New Jersey, a week after the FDA expressly denied OtisMed’s request for clearance.
“With more than 600,000 knee replacements performed each year, patients rely on FDA to help ensure that the devices are safe and work as intended,” said Director George M. Karavetsos of the FDA’s Office of Criminal Investigations. “When manufacturers ignore FDA requirements, they risk endangering patients’ health and quality of life. We will continue to protect the public health by bringing to justice those who disregard FDA regulations.”
Chi’s sentence marks the culmination of a long-term investigation conducted jointly by the FDA’s Office of Criminal Investigations, under the direction of Special Agent in Charge Antoinette V. Henry, and the Department of Health and Human Services’ Office of Inspector General (HHS-OIG), under the direction of Special Agent in Charge Scott J. Lampert. Counsel to the HHS-OIG and FDA’s Office of Chief Counsel to the FDA also assisted. The National Association of Medicaid Fraud Control Units, along with the Medicaid Fraud Control Unit of the Massachusetts Attorney General’s Office, assisted in coordinating the settlements with the various states.
The government is represented by Chief Jacob T. Elberg of the U.S. Attorney’s Office of the District of New Jersey Health Care and Government Fraud Unit and Trial Attorney Ross S. Goldstein of the Civil Division’s Consumer Protection Branch.
U.S. Attorney Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $635 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.
First Jamaican Man Extradited to United States in Connection with International Lottery Scheme Sentenced to PrisonRead the Press Release
A Jamaican man was sentenced today in Fort Lauderdale, Florida, after he pleaded guilty to his role in an international lottery scheme against elderly victims in the United States.
Damion Bryan Barrett, 28, was sentenced by U.S. District Court Judge William J. Zloch of the Southern District of Florida to serve 46 months in prison and five years of supervised release. Barrett was also ordered to pay $94,456 in restitution.
Barrett was indicted by a federal grand jury in Fort Lauderdale on Aug. 9, 2012, and was arrested in Jan. 2015 in Jamaica based on the United States’ request that he be extradited to this country. Barrett was extradited to the United States on Feb. 12 and was the first Jamaican to be extradited to the United States based on charges that he committed fraud as part of an international lottery scheme.
On April 10, Barrett pleaded guilty to one count of conspiracy to commit wire fraud. The prosecution is part of the United States’ ongoing crackdown on fraudulent international lottery schemes.
“This sentence sends a very strong message that scammers operating in foreign countries will be held accountable for the laws they break in the United States,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “The Justice Department is committed to bringing these international fraudsters to justice.”
“This case is an excellent example of coordination between domestic and international law enforcement agencies to hold those who facilitate and participate in fraudulent schemes accountable,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “We will continue to foster this cooperation in order to crackdown on international lottery fraud so that members of our community are protected and are not deprived of their hard earned savings.”
As part of his guilty plea, Barrett acknowledged that had the case gone to trial, the United States would have proved beyond a reasonable doubt that from 2008 through 2012, he was a member of a conspiracy in which elderly victims were informed that they had won a large amount of money in a lottery and were induced to pay bogus fees in advance of receiving their purported lottery winnings. Barrett also admitted that the United States would have proved that he knew the claims of lottery winnings were completely fabricated and that he and his co-conspirators kept the victims’ money for their own benefit without paying any lottery winnings. Barrett also admitted that the United States would have proved that in an effort to convince the victims that the lottery winnings were real, the conspirators sent the victims communications discussing their purported lottery winnings, which falsely claimed to be from a genuine sweepstakes company and from federal agencies including the Internal Revenue Service and the Federal Reserve. In fact, these communications were not from a genuine sweepstakes company or from agencies of the United States.
Barrett’s co-defendant, Oneike Barnett, 29, pleaded guilty on Feb. 28, 2014, to conspiracy to commit wire fraud. On April 29, 2014, U.S. District Court Judge Zloch sentenced Barnett to serve 60 months in prison and five years of supervised release, and to pay $94,456 in restitution for his role in this case.
Principal Deputy Assistant Attorney General Mizer and U.S. Attorney Ferrer commended the investigative efforts of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the U.S. Postal Inspection Service and the U.S. Marshals Service. The case was prosecuted by Trial Attorney Kathryn Drenning of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Bertha Mitrani of the Southern District of Florida.
Attorney General Loretta E. Lynch Statement on the U.S. Supreme Court Ruling in Obergefell v. HodgesRead the Press Release
Attorney General Loretta E. Lynch released the following statement today after the Supreme Court ruling in Obergefell v. Hodges:
“Today, the Supreme Court of the United States has recognized the equality, dignity and essential humanity of our gay and lesbian brothers and sisters and reaffirmed this country’s bedrock principle – engraved over the entrance to the Court itself – that all Americans are entitled to equal justice under law. By putting an end to an era of state-sanctioned discrimination, the decision lights the way to a future of acceptance, inclusion and opportunity for gay and lesbian Americans and their families. It encapsulates a nation’s enormous leap of understanding – rooted in compassion, tolerance and empathy – and reflects the countless hearts touched and minds opened along the way. It vindicates an idea whose time has come at last.
Today’s result would not have been possible without the passionate advocacy and innumerable acts of personal bravery of generations of leaders, who have fought for the simple freedom to pursue their own happiness with those whom they love. Their fight, galvanized by the Stonewall riots nearly a half-century ago, was waged in the face of pervasive bigotry and widespread resistance and its progress was never guaranteed. But after too many lifetimes of isolation, humiliation and harassment – and steeled by unimaginable courage and indomitable conviction – gay and lesbian citizens across the country bravely came out into the open and awakened the conscience of a nation. Their courage has led us to this day; to a decision from the nation’s highest court declaring them to have full and equal rights to marry in the country they fought to change; and to a victory that they have justly and finally won.
I have no illusions that Obergefell v. Hodges spells the end of anti-gay prejudice. Difficult legal issues lie ahead and the protections written into law are not all they should be. That’s why this march must go on and why this cause will endure, until all Americans – regardless of sexual orientation – are afforded the equal rights, equal treatment and equal opportunity they deserve. But on a day like today – a day that marks a watershed moment in the progress of this movement, in the story of this community and in the history of this nation – it is proper that we pause and take stock of just how far we have come. The Justice Department is proud to have been a part of this journey, from Attorney General Eric Holder’s unwavering leadership in advancing the cause of equality to the groundbreaking progress we have witnessed today. Going forward, we are committed to standing on the side of equality – and standing with the LGBT community – to keep up the fight for safety, opportunity, dignity and justice for all.”
Albanian National Pleads Guilty to Attempting and Conspiring to Support TerroristsRead the Press Release
District Court Ruled that the Fruits of FISA Surveillance Were Admissible in this Case
Agron Hasbajrami, 31, an Albanian citizen and resident of Brooklyn, New York, pleaded guilty today to attempting and conspiring to provide material support to terrorists before U.S. District Judge John Gleeson of the Eastern District of New York. At sentencing, the defendant faces up to 20 years in prison.
The guilty plea was announced by Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office and Commissioner William J. Bratton of the New York City Police Department.
As part of the plea, Hasbajrami agreed to be deported from the United States at the conclusion of his sentence, and the government agreed to allow the defendant to preserve his right to challenge on appeal the lawfulness of surveillance obtained or derived from the FISA Amendments Act of 2008 (FAA), a question of first impression in the Second Circuit. The U.S. District Court of the Eastern District of New York ruled in February 2015 that the fruits of FISA surveillance in this case were admissible.
“This case, like many others before it, has shown that the application of lawful surveillance can allow the United States government to detect and disrupt a terrorist in the United States,” said Acting U.S. Attorney Currie. “The defendant’s plea today leaves no question as to his role in a very serious terrorism offense, and if he chooses to bring an appeal, we are confident we will prevail in the appellate court as well.”
“Today’s guilty plea is the result of a thorough investigation conducted by the New York FBI’s Joint Terrorism Task Force,” said Assistant Director in Charge Rodriguez. “I want to thank all of the agencies that participate on the FBI JTTF. Together we are able to use our combined legal and investigative tools to quickly identify and disrupt threats to our community.”
“This case is another example that shows that when people in the New York area conspire with, attempt to join, or fund a terrorist organization, even in the Tribal Area of Pakistan, they will be uncovered by the agents and detectives of the JTTF, and they will face the full consequences of the law,” said Commissioner Bratton.
According to court documents and statements made in court today, in September 2011, Hasbajrami attempted to travel to the Federally Administered Tribal Areas of Pakistan (the FATA) for the purpose of joining a radical jihadist insurgent group. In addition, he sent over $1,000 in multiple wire transfers abroad to support terrorist activities in Pakistan and Afghanistan. In pursuing his goal of fighting jihad, the defendant exchanged email messages with an individual in Pakistan who told him that he was a member of an armed group that had murdered American soldiers and kidnapped Westerners. In one email message, Hasbajrami stated that it was difficult to ask for money from fellow Muslims because they became apprehensive “when they hear it is for jihad.” In another email, he stated that he wished to travel abroad to “marry with the girls in paradise,” using jihadist rhetoric to describe a reference to his desire to die as a martyr himself.
On Sept. 5, 2011, Hasbajrami purchased a one-way airline ticket to travel to Turkey the following day. Based on Hasbajrami’s email communications, he intended to travel from Turkey to the FATA to join a jihadist group. On Sept. 6, 2011, the defendant was arrested at John F. Kennedy International Airport. At the time of his arrest, he was carrying a tent, boots and cold weather gear. A search of the defendant’s residence revealed, among other items, a note reading “Do not wait for invasion, the time is martyrdom time.”
Upon receiving notice that evidence in his case had been obtained or derived from surveillance conducted pursuant to the FAA, Hasbajrami was permitted by the District Court to withdraw his prior plea, and he thereafter moved to suppress the fruits of such evidence, arguing that certain provisions of the act were unconstitutional. On Feb. 20, 2015, the District Court denied the defendant’s motion, ruling that the fruits of the FAA surveillance, including the defendant’s post-arrest statements, were admissible. Under the terms of the plea agreement, Hasbajrami preserved his right to appeal the District Court’s decision on his suppression motion to the Second Circuit Court of Appeals.
Assistant Attorney General Carlin joined Acting U.S. Attorney Currie in thanking the federal, state and local law enforcement agencies who participate in the FBI’s Joint Terrorism Task Force in New York.
The government’s case is being prosecuted by Assistant U.S. Attorneys Seth D. DuCharme, Saritha Komatireddy, Peter Baldwin and Matthew Amatruda of the Eastern District of New York, and Trial Attorney Danya Atiyeh of the National Security Division’s Counterterrorism Section.
Parking Heater Company Sentenced to Pay $14.9 Million Criminal Fine for Price Fixing SchemeRead the Press Release
Espar Inc. has been sentenced to pay a $14.9 million criminal fine after pleading guilty to participating in a scheme to fix prices for parking heaters used in commercial vehicles, the Department of Justice announced today.
Espar Inc. pleaded guilty to a one-count felony charge in the U.S. District Court of the Eastern District of New York on March 12. At a hearing held today, the court formally accepted Espar’s plea agreement with the United States and sentenced the company in accordance with that agreement.
“Today’s sentencing drives home the message that the Department of Justice will not tolerate price fixing that thwarts free competition by setting minimum prices and coordinating price increases,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division. “This conspiracy among sellers of parking heaters resulted in many years of higher prices for aftermarket customers. While the Antitrust Division is pleased with this final resolution of the charge against Espar, we will continue our efforts to root out anticompetitive practices in this industry.”
According to the charge, Espar conspired with others to fix prices for parking heaters in the United States and elsewhere in North America from at least as early as Oct. 1, 2007, until Dec. 31, 2012. Parking heaters are devices that heat the interior compartment of a motor vehicle independent of the operation of the vehicle’s engine. Espar and its co-conspirators discussed parking heater prices for commercial vehicles, agreed to set a price floor for parking heater kits for commercial vehicles sold to aftermarket customers and agreed to coordinate the timing and amount of price increases for parking heaters for commercial vehicles sold to aftermarket customers. The conspiring companies carried out the agreement and exchanged information for the purpose of monitoring and enforcing adherence to the agreement.
Espar has pleaded guilty to a charge of price fixing in violation of the Sherman Act, which carries maximum penalties 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.
Today’s sentencing is the result of an ongoing federal antitrust investigation handled by the Antitrust Division’s New York Office with assistance from the FBI’s New York Field Office. Anyone with information concerning price fixing or other anticompetitive conduct in the parking heater industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.html.
Owner of California Payment Processing Company Charged with FraudRead the Press Release
The Justice Department announced today that the owner and operator of a payment processing company that was involved in the unauthorized withdrawal of millions of dollars from consumers’ bank accounts was charged with fraud.
The criminal information, filed in the Eastern District of Pennsylvania, charged Neil Godfrey, 76, of Santa Ana, California, with one count of wire fraud. Godfrey owned and operated Check Site Inc., based in Santa Ana, which from 2006 to 2010 enabled fraudulent merchants to withdraw money from consumers’ bank accounts without the consumers’ knowledge or consent. If convicted, Godfrey faces a statutory maximum sentence of 20 years in prison.
According to the information, Godfrey worked with at least two fraudulent merchants who operated websites that purportedly offered payday loans. The websites were simply a ruse to harvest consumers’ bank account information. Instead of providing consumers with payday loans, the merchants operating the websites used the information provided by the consumers in loan applications to withdraw money from the consumers’ bank accounts. Using Check Site, Godfrey knowingly processed the merchants’ fraudulent withdrawals and provided the merchants access to the banking system
“Neil Godfrey used his understanding of the banking system to help his partners in crime steal money from hard-working, often low-income Americans,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The amounts that were illegally withdrawn generally did not exceed a few hundred dollars per victim, but the scheme was so massive and went on so long that altogether it added up to millions of dollars in fraudulent withdrawals. As this prosecution demonstrates, the Department of Justice will continue to prosecute individuals and corporations involved in this kind of fraud.”
The information alleged that, once the fraudulent merchant had obtained the consumer’s name and bank account information, the merchants involved in the scheme created a demand draft, also known as a remotely controlled check (RCC). Unlike an ordinary check, an RCC is generally honored without the signature of the account holder. Check Site submitted the RCC to the consumer’s bank. When the RCC was processed, Check Site kept a fee and transferred the remainder of the withdrawal to the merchant.
The information alleged that Godfrey was an expert in finding banks that were willing to facilitate these transactions and ignore the red flags raised by these transactions. Such banks included one located in Irvine, California, and one located in Philadelphia. The information also alleged that Godfrey helped the fraudulent merchants stay off the radar of other banks and regulators so that the fraud could continue. For example, Godfrey advised merchants how to change the names of their companies and set up the facade of a legitimate company to defeat banks’ attempts at due diligence.
In an email message quoted in the information, Godfrey advised a fraudulent merchant that “the lesson we have learned is that we must trick the [bank] folk. It means you need to set up some type of web site front. What we need to do is set up a legitimate website selling anything you can think of – that is what you get approved on. It is irrelevant if anything is ever sold there – just so it exists. . . . In the mean time we set up false credit card approval etcetera. It is this we use to run the transactions. Yes, there will be a lot of returns, but what we do is send through transactions over the next few weeks that don’t have high returns. They stop looking and then we can run the regular stuff. . . . [A]fter several months we junk that company and go to another company.”
“The defendant in this case exploited his knowledge of the banking system and exposed hundreds of consumers to fraud,” said U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania. “Those who circumvent our banking laws in order to enrich themselves by preying on unsuspecting consumers need to be investigated and vigorously prosecuted.”
Principal Deputy Assistant Attorney General Mizer thanked the Federal Trade Commission for providing attorney Michelle Chua to serve as a Special Assistant U.S. Attorney on the case and commended the FBI for its thorough investigation. The case is being prosecuted by Assistant U.S. Attorney Patrick J. Murray of the Eastern District of Pennsylvania and Trial Attorney Patrick Jasperse of the Civil Division’s Consumer Protection Branch.
A criminal information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Justice Department Sues Four Michigan Hospital Systems for Unlawfully Agreeing to Limit Marketing for Competing Healthcare ServicesRead the Press Release
The Department of Justice today sued four Michigan hospital systems that for years unlawfully agreed to allocate territories for marketing, depriving consumers and physicians of important information about competing providers and other benefits of unfettered competition. Three of the systems – Hillsdale Community Health Center, Community Health Center of Branch County, Michigan, and ProMedica Health System Inc. – agreed to settle the charges. The department will continue to litigate against a fourth, W.A. Foote Memorial Hospital, doing business as Allegiance Health, to prohibit agreements that unlawfully allocate territories for marketing of competing healthcare services.
“These hospitals conspired to deprive consumers and physicians of important health information and education,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “Instead of putting patients first, these hospitals secretly agreed not to compete. This action will terminate the agreements limiting marketing and make sure the citizens of south-central Michigan will have access to the facts they need to make informed healthcare choices.”
As alleged in the complaint, hospitals compete to attract patients by advertising, direct mailings to patients, outreach to physicians and employers, conducting health fairs and offering free health screenings. Hillsdale, Allegiance, Branch and ProMedica’s Bixby and Herrick Hospitals – the only hospitals in their respective counties – each competed through marketing to attract patients. The complaint alleges that Hillsdale curtailed this competition for years by entering into agreements with Allegiance, Branch and ProMedica to limit the marketing of competing healthcare services. According to the complaint, the defendants’ agreements deprived patients and physicians of information needed to make informed healthcare decisions. Patients in Hillsdale County, Michigan, were also prevented from receiving free medical services – such as health screenings and physician seminars – that they would have received from Allegiance in the absence of its unlawful agreement with Hillsdale.
The Antitrust Division, joined by the Michigan Attorney General’s Office, filed the civil antitrust lawsuit in the U.S. District Court for the Eastern District of Michigan, while simultaneously filing a proposed settlement that, if approved by the court, would resolve the lawsuit with respect to the three settling systems.
The proposed settlement prohibits Hillsdale, Branch and ProMedica from agreeing with other healthcare providers, including hospitals and physicians, to limit marketing or to divide any geographic market or territory. The proposed settlement also prohibits communications among the defendants about their marketing activities, subject to limited exceptions. The settling hospitals will also implement compliance measures tailored to prevent the recurrence of these types of anticompetitive practices in the future.
Hillsdale is a Michigan corporation headquartered in Hillsdale, Michigan, with a general acute-care hospital located in Hillsdale County, Michigan, that has 47 beds and a medical staff of over 90 physicians.
Allegiance is a Michigan corporation headquartered in Jackson, Michigan, with a general acute-care hospital located in Jackson County, Michigan, that has 480 beds and a medical staff of over 400 physicians.
Branch is a Michigan corporation headquartered in Coldwater, Michigan, with a general acute-care hospital located in Branch County, Michigan, that has 87 beds and a medical staff of over 100 physicians.
ProMedica is an Ohio corporation headquartered in Toledo, Ohio, with locations in northwest Ohio and southern Michigan, including Bixby and Herrick Hospitals in Lenawee County, Michigan. Bixby is a general acute-care hospital that has 88 beds and a medical staff of over 120 physicians. Herrick is a general acute-care hospital with 25 beds and a medical staff of over 75 physicians.
The proposed settlement with Hillsdale, Branch and ProMedica, along with the department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Peter J. Mucchetti, Chief, Litigation I Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street N.W., Suite 4100, 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.
Hillsdale Complaint.pdf (121.83 KB)
Hillsdale Stipulation and Order.pdf (228.83 KB)
Hillsdale CIS.pdf (63.91 KB)
Justice Department Settles Immigration-Related Discrimination Claim Against Abercrombie & Fitch Inc.Read the Press Release
The Justice Department announced today that it reached an agreement with Abercrombie & Fitch Inc. (Abercrombie), a clothing retailer headquartered in Columbus, Ohio. The agreement resolves a complaint filed with the Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), claiming that the company discriminated against a non-U.S. citizen in violation of the Immigration and Nationality Act (INA).
The department’s investigation found that Abercrombie required a non-U.S. citizen, but not similarly-situated U.S. citizens, to produce specific documentary proof of her immigration status for the purpose of verifying her employment eligibility. Specifically, the Department found that Abercrombie required the individual to present a green card. The INA’s anti-discrimination provision prohibits employers from making specific documentary demands based on citizenship status or national origin when verifying an employee’s employment eligibility.
Under the settlement agreement, Abercrombie will pay $3,661.14 in back pay to the complainant and a civil penalty to the United States; establish a back pay fund of $153, 932.00 to compensate other individuals who may have been harmed; and be subject to monitoring of its employment eligibility verification practices for two years.
“The division is committed to identifying and tearing down illegal barriers that prevent authorized workers from working,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The Civil Rights Division commends Abercrombie for working with the division to resolve this matter expeditiously.”
OSC is responsible for enforcing the anti-discrimination provision of the INA. Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; unfair documentary practices; retaliation and intimidation. Trial Attorney Luz V. Lopez-Ortiz and Paralegal Ryan Thompson 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.
Former Owner of Ohio Gambling Supplies Store Sentenced to Prison for Running Illegal Gambling Operation, Tax Fraud and Witness TamperingRead the Press Release
The former co-owner of R&J Partnership Ltd., doing business as Reece’s Las Vegas Supply (RLVS), a gambling supplies store located in Dayton, Ohio, was sentenced today to serve two and one-half years in prison, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
Reece Powers II, 76, was sentenced today to serve 30 months in prison following his guilty plea on March 31 to multiple federal offenses, including conspiracy to operate an illegal gambling business, operating an illegal gambling business, conspiracy to defraud the Internal Revenue Service (IRS) and witness tampering. Powers was also sentenced to three years of supervised release following his prison sentence and ordered to pay a $400 special assessment, with restitution to be determined at a later date. The charges were part of an indictment unsealed on Sept. 26, 2014. The other defendants charged in that indictment and in related cases, including Douglas A. Sanders, Jason S. Pulaski, Michael E. Gedeon, Jenifer Williams, Walter F. Dyer, Virgil D. Rockwell and Allen G. Beck, were each sentenced yesterday and today after pleading guilty to illegal gambling, obstruction of justice and tax fraud offenses.
According to court documents and statements made in court, between February 2004 and May 2011, Powers oversaw the recruitment of local non-profit charitable organizations to sponsor poker fundraisers that included casino-like card games, such as Texas Hold’em tournaments. Powers entered into arrangements with the charitable organizations to control all of the funds generated from the poker fundraisers.
These poker fundraisers were exempted from the general prohibition against games of chance under then-existing Ohio laws, subject to the requirement that all the funds received from the games of chance, after deducting only prizes paid out and necessary expenses sanctioned under law, be transferred to the charitable organization for their sole benefit and use. Powers, with the help of his co-conspirators, took a portion of the money generated from the poker fundraisers and used those funds to pay the events’ workers, among other things, in violation of Ohio law and federal gambling laws.
Powers provided false accountings to the charitable organizations of the funds received from the events and skimmed a portion of the money. Powers either supervised or personally distributed illegal cash payments to his co-conspirators and employees who worked as card dealers, cashiers, chip sellers, pit bosses, tournament directors and managers. Powers and his co-conspirators also falsely held themselves out as uncompensated volunteers at the poker fundraisers.
In 2009, Powers and Beck, a former business broker, conspired to defraud the IRS in attempting to sell RLVS. Beck previously pleaded guilty to a conspiracy charge. In Powers’ effort to evade taxes, Powers and Beck arranged the sale to make it appear as if the business and its associated real estate was sold for an amount less than its actual sale price.
In February 2010, Powers also tampered with a witness testifying before a federal grand jury by instructing the witness to testify falsely that the witness and other RLVS staffers did not get paid for working at the poker fundraisers. Pulaski, Gedeon, Williams and Dyer each pleaded guilty to committing obstruction of justice by falsely testifying before a federal grand jury that they were uncompensated volunteers at the poker fundraisers.
In addition to Powers’ sentence, U.S. District Judge Timothy Black of the Southern District of Ohio sentenced the other defendants as follows:
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Sanders was sentenced to serve 12 months and one day in prison and three years of supervised release, and ordered to pay a $200 special assessment;
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Pulaski was sentenced today to serve 12 months and one day in prison and three years of supervised release, and ordered to pay a $200 special assessment;
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Gedeon was sentenced to serve one day in prison and three years of supervised release to include two months of home incarceration, and ordered to pay a $200 special assessment;
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Williams was sentenced to serve one day in prison, three years of supervised release to include six months of home incarceration and 50 hours of community service, and ordered to pay a $200 special assessment;
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Dyer was sentenced to serve one day in prison and three years of supervised release, and ordered to pay a $3,000 fine and a $300 special assessment;
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Rockwell was sentenced to three years of probation, and to pay a $1,000 fine and a $100 special assessment; and
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Beck was sentenced to three years of probation and 100 hours of community service, and ordered to pay a $500 fine and a $100 special assessment.
Acting Assistant Attorney General Ciraolo commended the special agents of the IRS-Criminal Investigation, who investigated the case, and Assistant Chief Jorge Almonte and Trial Attorneys Christopher P. O’Donnell and Austin L. Furman of the Justice Department’s Tax Division, who prosecuted the case. Ciraolo also thanked U.S. Attorney Carter M. Stewart of the Southern District of Ohio for the substantial assistance provided by his office.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found on the division’s website.
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El Departamento de Justicia Resuelve una Queja de Discriminacion Relacionada a Inmigración en Contra de Abercrombie & FitchRead the Press Release
WASHINGTON – El Departamento de Justicia llegó a un acuerdo hoy con Abercrombie & Fitch (Abercrombie), un distribuidor de ropa internacional cuya sede se encuentra en New Albany, Ohio. El acuerdo resuelve una queja presentada a La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a la Inmigración (OSC por sus siglas en inglés), alegando que la compañía discriminó contra una empleada no ciudadana de los Estados Unidos en violación del Acto de Inmigración y Nacionalidad (INA por sus siglas en inglés).
La investigación del Departamento concluyó que Abercrombie le exigió a una empleada no ciudadana de los Estados Unidos, pero no a empleados cuidadanos Estadounidenses que se encontraban en una situación similar, a que presentara pruebas documentarias específicas de su estatus migratorio con el propósito de verificar su eligibilada para trabajar. Específicamente, el Departamento concluyó que Abercrombie exigió que la empleada presentara una mica (tarjeta verde). La provisión anti-discriminatoria del INA prohíbe que los empleadores exigen documentos específicos basado en el estatus de ciudadanía u origen nacional de un empleado mientras verifican la eligibilad para trabajar del empleado.
Bajo el acuerdo, Abercrombie le pagará $3,661.14 en salario atrasado a la empleada y una multa a los Estados Unidos; establecerá un fondo de salario atrasado de $153,932.00 para compensar a otras personas que podían haber sido perjudicados; y será sujeta a monitoreo de sus practicas de verificación de eligibilidad para trabajar por dos años.
“La División esta comprometida a identificar y derrumbar las barreras ilegales que previenen a trabajadores con autorización de trabajo a trabajar,” dijo la Principal Deputada Asistente Procuradora General Vanita Gupta para la División de Derechos Civiles. “La División de Derechos Civiles elogia a Abercrombie por trabajar con la División para resolver este asunto rápidamente.”
OSC es la oficina responsable por hacer cumplir con la provisión anti-discriminatoria de la INA. Entre otras cosas, la ley prohíbe la discriminación por estatus de ciudadanía o de origen nacional durante la contratación, el despido, el reclutamiento o la referencia por comisión; las prácticas injustas de documentación; represalias e intimidación. Este cargo fue investigado por la abogada Luz V. Lopez-Ortiz y Ryan Thompson, ayudante de abogado.
Para más información sobre las protecciones contra discriminación en el empleo según las leyes migratorias, llame a la línea directa de OSC para trabajadores al 1-800-255-7688 (1-800-237-2515, TTY para personas con discapacidad auditiva); llame a la línea directa de OSC para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con discapacidad auditiva); o para registrarse para un seminario gratis ofrecido a través del internet visite www.justice.gov/crt/about/osc/webinars.php, envíe un correo electrónico al [email protected], o visite el sitio de Internet www.justice.gov/crt/about/osc.
Los solicitantes o empleados que consideren que fueron sujetos a diferentes requisitos de verificación por su estatus de ciudadanía, estatus migratorio u origen nacional, o discriminación por estatus de ciudadanía, estatus migratorio, u origen nacional con relación a la contratación, el despido o el reclutamiento, deberán comunicarse a la línea dedicada a los trabajadores anteriormente citada para poderlos ayudar.
Download Abercrombie Settlement Agreement
Departments of Justice, Labor and Homeland Security Announce Phase II of Anti-Trafficking Coordination Team InitiativeRead the Press Release
Phase II Will Build on Momentum of Highly Effective Phase I to Further Enhance Interagency Anti-Trafficking Efforts
The Departments of Justice, Labor (DOL) and Homeland Security (DHS) today announced the launch of Phase II of the Anti-Trafficking Coordination Team (ACTeam) Initiative aimed at streamlining federal criminal investigations and prosecutions of human trafficking offenses.
Phase II ACTeams will be convened in up to six selected districts around the country, following a competitive, nationwide, interagency selection process. The ACTeams, comprised of federal prosecutors and investigators representing multiple federal enforcement agencies, will implement a joint strategic action plan to develop high-impact federal investigations and prosecutions, vindicate the rights of human trafficking victims, bring traffickers to justice and dismantle human trafficking networks.
“Human traffickers prey on some of the most vulnerable members of our society to exploit them for labor, for sex and for servitude of all kinds,” said Attorney General Loretta E. Lynch. “Their crimes, appropriately described as modern-day slavery, have no place in a nation that has overcome the scourge of slavery. That’s why the Department of Justice is committed—and I am personally determined—to hold human traffickers accountable, provide support to trafficking survivors, and stand up for the rights and the dignity that they deserve.”
“Labor trafficking affects workers who are vulnerable to exploitation for a number of reasons, who may not know their workplace rights, and may be afraid to raise their voices,” said Secretary Thomas E. Perez of DOL. “The challenges we face as a nation and a government demand unprecedented levels of interagency collaboration. Through these ACTeams, we’re bringing our respective departments’ collective resources and expertise to bear, building a whole even greater than the sum of our individual parts. DOL will remain a vigorous and unfaltering partner during phase II. Together we can ensure workers receive the wages they’ve earned, restore victims’ basic human rights and bring traffickers to justice.”
“The ACTeam Initiative has been an important tool in our collective ability to combat sex trafficking, forced labor and domestic servitude here in the United States,” said Secretary Jeh Johnson of DHS. “This is not a problem that we can afford to ignore which is why, under a banner of shared responsibility and collaboration, the Departments of Justice, Labor and Homeland Security are recommitting ourselves to the fight against human trafficking by expanding the ACTeam Initiative. Through the unified voice of the Blue Campaign, the Department of Homeland Security will continue to combat human trafficking through the guiding philosophy that we are at our best when we work together.”
These departments collaborated to develop the ACTeam Initiative to streamline rapidly expanding human trafficking enforcement efforts, focusing on forced labor, international sex trafficking and sex trafficking of adults by force, fraud and coercion. Project Safe Childhood and the Innocence Lost National Initiative continue to focus on sex trafficking of minors and sexual exploitation of minors.
Drawing together federal prosecutors and federal agents from multiple investigative agencies, ACTeams streamline coordination on the front lines of federal human trafficking investigations and prosecutions, while also enhancing collaboration between front-line enforcement efforts and national human trafficking subject matter experts in the Justice Department’s Human Trafficking Prosecution Unit, Executive Office of U.S. Attorneys and FBI Civil Rights Unit, DHS’s Immigration and Customs Enforcement-Homeland Security Investigations, DOL’s Wage and Hour Division and the Office of the Inspector General. In 2011, the Attorney General and the Secretaries of DHS and DOL announced Phase I of the ACTeam Initiative and the designation of six Phase I Pilot ACTeam sites in Atlanta; El Paso, Texas; Kansas City, Missouri; Los Angeles; Memphis, Tennessee; and Miami, following a rigorous interagency selection process.
During the ACTeam Phase I period, Fiscal Years 2012-2013, federal human trafficking prosecutions involving forced labor, international sex trafficking and sex trafficking of adults rose by 35 percent nationwide, reflecting strong partnerships among U.S. Attorneys’ Offices, the Civil Rights Division’s Human Trafficking Prosecution Unit, federal, state and local law enforcement agencies, and non-governmental victim assistance organizations and task forces led by U.S. Attorneys’ Offices.
The ACTeams played a significant role in leading these nationwide advances. In ACTeam Districts, prosecutions of forced labor, international sex trafficking and adult sex trafficking rose even more markedly than they did nationally, due to the force-multiplier effect of interagency commitment to implementing coordinated, joint anti-trafficking strategies and due to advanced training, expertise and operational support provided to the Phase I ACTeams. Comparing federal forced labor, international sex trafficking and adult sex trafficking prosecutions during the ACTeam Phase I period of Fiscal Years 2012-2013, to the pre-Phase I period of Fiscal Years 2010-2011:
Cases filed increased by:
- 119 percent in ACTeam Districts,
- 18 percent in non-ACTeam Districts; and
- 35 percent nationwide.
Defendants charged increased by:
- 114 percent in ACTeam Districts,
- 12 percent in non-ACTeam Districts; and
- 28 percent nationwide.
Defendants convicted increased by:
- 86 percent in ACTeam Districts,
- 14 percent in non-ACTeam Districts; and
- 26 percent nationwide.
Attorney General Loretta E. Lynch Statement on the U.S. Supreme Court Ruling in Texas Department of Housing and Community Affairs v. Inclusive Communites Project Inc.Read the Press Release
Attorney General Loretta E. Lynch released the following statement today after the Supreme Court ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project Inc.:
“I am pleased that the Supreme Court has affirmed that the Fair Housing Act encompasses disparate impact claims, which are an essential tool for realizing the Act’s promise of fair and open access to housing opportunities for all Americans. While our nation has made tremendous progress since the Fair Housing Act was passed in 1968, disparate impact claims remain an all-too-necessary mechanism for rooting out discrimination in housing and lending. By recognizing that laws, policies and practices with unjustified discriminatory effects are inconsistent with the Fair Housing Act, today’s decision lends support to hardworking Americans who are attempting to find good housing opportunities for themselves and their families. Bolstered by this important ruling, the Department of Justice will continue to vigorously enforce the Fair Housing Act with every tool at its disposal – including challenges based on unfair and unacceptable discriminatory effects.”
Alabama Woman Sentenced to more than 12 Years in Prison for Leading $4 Million Stolen Identity Refund Fraud RingRead the Press Release
A Phenix City, Alabama, resident was sentenced to serve more than 12 years in prison for leading a multi-million dollar stolen identity theft ring, 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.
“Stolen identity refund fraud is a nationwide epidemic that causes substantial harm to the individuals whose identities are stolen, and a significant loss to the U.S. Treasury,” stated Acting Assistant Attorney General Ciraolo. “Prosecuting those who engage in this criminal conduct is among our highest priorities, and as today’s sentence demonstrates, those who orchestrate these schemes will face lengthy periods of incarceration and steep monetary penalties.”
Tamaica Hoskins, 34, of Phenix City, was sentenced to serve 145 months in prison, three years of supervised release and ordered to forfeit $1,082,842 in proceeds from the scheme by U.S. District Judge Callie V.S. Granade of the Southern District of Alabama.
According to court documents, between September 2011 and June 2014, ringleader Tamaica Hoskins, who was sentenced today, Roberta Pyatt, Lashelia Alexander and others used stolen identities to file more than 1,000 false federal income tax returns that fraudulently claimed more than $4 million in tax refunds. Hoskins obtained stolen identities from various sources, including the identities of employees from a Columbus, Georgia, company. In order to file the false tax returns, Hoskins and Pyatt obtained two Electronic Filing Identification Numbers using sham tax businesses. On behalf of those sham tax businesses, they also applied to various financial institutions for bank products, such as blank check stock. The conspirators directed the Internal Revenue Service (IRS) to mail U.S. Treasury checks to addresses under their control and to send the tax refunds to prepaid debit cards and financial institutions where the conspirators maintained and controlled bank accounts using the sham tax businesses. When the tax refunds were deposited into the conspirators’ accounts at the financial institutions, the conspirators printed the refund checks using the blank check stock. Hoskins and Pyatt each cashed the refund checks at several businesses located in Alabama and Georgia.
Co-conspirator Alexander worked for a Walmart check cashing center in Columbus. In January 2014, Alexander was approached by several co-conspirators about cashing fraudulent tax refund checks issued in the names of third parties and in return, Alexander would receive a portion of the refunds. Hoskins and Pyatt electronically filed fraudulent federal income tax returns for 2013 using the personal identifying information of numerous identity theft victims. Alexander cashed more than $100,000 in fraudulently obtained third-party refund checks containing forged endorsements.
At sentencing, prosecutors read impact statements from several victims whose identities were stolen and false tax returns were filed in their names. One victim described the consequences of the fraud on her and her family, stating:
What your intentional theft did to me was so much more than just stealing money. As a law student, a part-time employee and a full time mom[,] you stole time from me, time I will never get back, time spen[t] crying because of the avalanche effect of not receiving my income tax check back which I depended on and budgeted for, time checking my mailbox daily, time worrying about whether it was ever going to come, time explaining to my children how there are horrible people in the world who steal because they feel like the world owes them something. Time spen[t] explaining to our youngest that she won’t be getting her braces this year to fix her extremely crooked teeth. Time explaining that Christmas may have to be put on hold this year. Luckily, we are fortunate to have family and friends who love and care enough about us that in our time of need[,] they stepped up to the plate without batting an eye. We had to borrow money to buy law school books because the tax return was not coming. Financially it was a serious hardship because when you do not have money for necessities[,] it puts an emotional strain on every part of your life.
Roberta Pyatt pleaded guilty to conspiracy to commit wire fraud and is scheduled to be sentenced in the Middle District of Alabama for her role in the conspiracy on July 16.
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 Gregory P. Bailey of the Tax Division and Assistant U.S. Attorney Todd Brown of the Middle District of Alabama, who are prosecuting the case.
Owners of Orlando Health Care Clinic Plead Guilty to Engaging in $2.5 Million Medicare Fraud SchemeRead the Press Release
Husband and wife owners of an Orlando health care clinic pleaded guilty today to engaging in a $2.5 million health care fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney A. Lee Bentley III of the Middle District of Florida and Special Agent in Charge Shimon R. Richmond of the Florida Region of U.S. Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.
Juan Carlos Delgado, 58, and Nereyda Infante, 48, both of Orlando, Florida, each pleaded guilty to conspiracy to commit health care fraud before U.S. District Judge Paul G. Byron of the Middle District of Florida. Sentencing hearings are scheduled for Sept. 29, 2015.
Delgado and Infante owned and operated several health care clinics in Orlando, Florida, under variations of the name Prestige Medical. According to admissions made in connection with their guilty pleas, between February 2012 and September 2014, the defendants fraudulently billed Medicare approximately $2.5 million on behalf of the Prestige clinics for services that never were administered. Specifically, Delgado and Infante admitted to billing Medicare over $1.2 million for pentostatin, an expensive anticancer chemotherapeutic medication used to treat Leukemia despite never administering any pentostatin.
The case is being investigated by 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 Middle District of Florida. The case is being prosecuted by Trial Attorney Andrew H. Warren of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged over 2,300 defendants who collectively have billed the Medicare program for over $7 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team, go to: www.stopmedicarefraud.gov.
Juan Carlos Delgado Plea Agreement
Nereyda Infante Plea Agreement
For-Profit Education Company to Pay $13 Million to Resolve Several Cases Alleging Submission of False Claims for Federal Student AidRead the Press Release
Settlement Resolves Allegations and Administrative Claims Involving Schools in Five States
Education Affiliates (EA), a for-profit education company based in White Marsh, Maryland, has agreed to pay $13 million to the United States to resolve allegations that it violated the False Claims Act by submitting false claims to the Department of Education for federal student aid for students enrolled in its programs. EA operates 50 campuses in the United States under various trade names, including All State Career, Fortis Institute, Fortis College, Tri-State Business Institute Inc., Technical Career Institute Inc., Capps College Inc., Driveco CDL Learning Center, Denver School of Nursing and Saint Paul’s School of Nursing, which provide post-secondary education training programs in several professions in the states of Alabama, Florida, Maryland, Ohio and Texas.
“Today’s settlement is an excellent example of cooperation among multiple offices of the federal government to achieve a result that protects federal student aid funding and the interests of individual students,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Schools have an obligation to live up to their commitment to the government and their students when they accept federal student aid funds.”
The government alleged that employees at EA’s All State Career campus in Baltimore altered admissions test results so as to admit unqualified students, created false or fraudulent high school diplomas and falsified students’ federal aid applications, and that multiple EA schools referred prospective students to “diploma mills” to obtain invalid online high school diplomas. These allegations also led to criminal convictions of two All State Careers admission representatives, Barry Sugarman and Jesse Moore, and a test proctor, Jacqueline Caldwell.
“Students who apply for federal financial aid to attend trade and professional schools are required to show that they have the necessary skills to complete the educational program and work in the field,” said U.S. Attorney Rod J. Rosenstein of the District of Maryland. “This settlement resolves the government's allegations that Education Affiliates defrauded the government by changing students' test scores and enrolling students with invalid diploma mill high school ‘diplomas’ ordered online.”
“The various cases that were settled here include numerous allegations of predatory conduct that victimized students and bilked taxpayers,” said Under Secretary Ted Mitchell of the U.S. Department of Education. “In particular, the settlement provides for repayment of $1.9 million in liabilities ordered by Secretary of Education Arne Duncan that resulted from EA awarding federal financial aid to students at its Fortis-Miami campus based on invalid high school credentials issued by a diploma mill. Secretary Duncan made clear that such abusive behavior would not be tolerated, and we will continue to work with the Justice Department and other federal agencies to ensure that postsecondary institutions face consequences when they violate the law.”
The settlement agreement also resolves allegations related to EA schools in Birmingham, Alabama, Houston and Cincinnati, including violations of the ban on incentive compensation for enrollment personnel, misrepresentations of graduation and job placement rates, alteration of attendance records and enrollment of unqualified students.
“Using fake high school diplomas is a particularly insidious abuse of the federal student aid system,” said Inspector General Kathleen Tighe of the U.S. Department of Education’s Office of Inspector General (OIG). “Students received only a worthless piece of paper.” Tighe commended the efforts of OIG staff and Department of Justice attorneys, whose outstanding investigative work led to this significant settlement.
The settlement resolves five lawsuits filed under the whistleblower provisions of the False Claims Act, which permit private citizens to sue on behalf of the United States and share in the recovery. As part of this resolution, the five whistleblowers will receive payments totaling approximately $1.8 million.
The settlements were the result of a coordinated effort by the U.S. Attorneys’ Offices of the District of Maryland, the Southern District of Texas, the Northern District of Alabama, Southern District of Ohio and the Middle District of Tennessee, as well as the Civil Division’s Commercial Litigation Branch, and the Department of Education and its OIG.
The cases are captioned United States ex rel. Roman v. All State Career, Inc. and Education Affiliates, Inc., Civil Case No. JKB-10-1730 (D.Md.); United States ex rel. Thomas v. Education Affiliates, Inc., Civil Case No. JKB-14-332 (D.Md.); United States ex rel. Andrews v. Education Affiliates, Inc., et al., Civil Case No. H-13-2366 (S.D. Tex.); United States ex rel. Atkins, et al. v. Fortis Institute and Education Affiliates, LLC, Civil Case No. CV-14-1107-S (N.D. Ala.); and United States ex rel. McArthur, Gruff & Associates LLC v. Education Affiliates, Inc., Civil Case No. 1:14-CV-977 (S.D. Oh.). The False Claims Act claims resolved by the settlement are allegations only, and there has been no determination of liability.
Department of Justice Statement on U.S. Citizens Taken Hostage AbroadRead the Press Release
The Department of Justice released the following statement regarding U.S. citizens who are taken hostage abroad:
When a U.S. citizen is taken hostage, the Department of Justice’s top priority is the safe return of the hostage. The families who have been affected by hostage-takings have endured extraordinarily difficult circumstances. In light of recent hostage-takings perpetrated by terrorist groups, some families have expressed concerns that their efforts to retrieve their loved one could lead to potential prosecutions under the statute prohibiting the provision of material support to designated foreign terrorist organizations. In the face of their loved ones being held captive indefinitely by terrorist groups, families have understandably explored every option to secure their loved ones’ safe recovery.
In these cases, the department has focused on helping the families, consistent with the government’s no-concessions policy, and will continue to focus on exploring all appropriate options. The department does not intend to add to families’ pain in such cases by suggesting that they could face criminal prosecution. Perhaps the best indication of how the department will exercise its prosecutorial discretion in enforcing the material support statute is the department’s past record of prosecuting cases under the statute. The department has never used the material support statute to prosecute a hostage’s family or friends for paying a ransom for the safe return of their loved one.
DaVita to Pay $450 Million to Resolve Allegations That it Sought Reimbursement for Unnecessary Drug WastageRead the Press Release
DaVita Healthcare Partners, Inc., the largest provider of dialysis services in the United States, has agreed to pay $450 million to resolve claims that it violated the False Claims Act by knowingly creating unnecessary waste in administering the drugs Zemplar and Venofer to dialysis patients, and then billing the federal government for such avoidable waste. Davita is headquartered in Denver, Colorado, and has dialysis clinics in 46 states and the District of Columbia.
“This settlement is an example of what can be accomplished as a result of the successful cooperation between the government and whistleblowers in protecting our vital federal health care programs,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.
This civil settlement resolves allegations brought in a whistleblower action that DaVita devised and employed dosing grids and/or protocols specifically designed to create unnecessary waste of the drugs Venofer and Zemplar. These drugs are packaged in single-use vials, which are intended for one-time use. Sometimes, the amount of the drug in the vials does not match the dosage specified by the physician, resulting in the remainder of the drug in the vial being discarded.
At the time of the alleged scheme, Medicare would reimburse a dialysis provider for certain waste if the dialysis provider – acting in good faith – discarded the remainder of the drug contained in a single-use vial after administering the requisite dose and/or quantity of the drug to a Medicare patient.
The whistleblowers’ complaint alleged that, to create unnecessary Zemplar waste, DaVita required its employees to provide Zemplar to dialysis patients pursuant to mandatory and wasteful “dosing grids.” Zemplar, a Vitamin D supplement usually administered at every dialysis session, is packaged in single-use vial sizes of 2 mcg, 5 mcg, and 10 mcg. Davita allegedly created unnecessary waste by requiring its employees to provide Zemplar to dialysis patients pursuant to mandatory “dosing grids,” which were designed to maximize the amount of Zemplar administered to patients. DaVita then allegedly billed the government not only for the amount of Zemplar administered to patients, but also for the amount “wasted.”
With regard to Venofer, an iron supplement packaged only in a single-use vial size of 100 mg during the relevant time period, DaVita allegedly enacted protocols that required nurses to administer this drug in small amounts, and at frequent intervals, to maximize wastage. For instance, in certain instances, DaVita’s protocol called for a patient to receive 25 mg of Venofer per week, which resulted in 300 mg of waste per month that was billed to the Government. In contrast, if the order had been filled by giving the patient the entirety of a single 100 mg vial, once per month, no waste would have resulted.
In 2011, the Centers for Medicare and Medicaid Services changed the manner by which it reimbursed dialysis providers for such drugs. As a consequence, wastage derived from single-use vials was no longer profitable, and, as a result, DaVita allegedly changed its practices and reduced its drug wastage dramatically.
“Through personal sacrifice and courage, two whistleblowers exposed knowingly wasteful dosing practices designed simply to increase profits and improperly drain the government’s resources,” said Acting U.S. Attorney John Horn of the Northern District of Georgia. “This settlement returns hundreds of millions of dollars to the treasury that had been improperly obtained by DaVita through these wasteful practices.”
The allegations resolved today arose from a lawsuit filed and ultimately litigated to this succesful resolution by two whistleblowers, Dr. Alon Vanier and nurse Daniel Barbir, under the qui tam provisions of the False Claims Act. Under the Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. The United States may intervene in the action or, as in this case, the whistleblower may pursue the matter.
This case was monitored by the U.S. Attorney’s Office of the Northern District of Georgia and the Civil Division’s Commercial Litigation Branch.
The lawsuit is captioned United States ex rel. Alon J. Vainer, M.D., F.A.C.P. and Daniel D. Barbir, R.N., Plaintiffs v. DaVita, Inc. and Gambro Healthcare, Inc., and their respective subsidiaries and affiliated companies, Defendants, No. 1:07-cv-2509-CAP (N.D. Ga.). The claims settled by this agreement are allegations only; there has been no determination of liability.
Two Louisiana Residents Plead Guilty in Stolen Identity Tax Fraud SchemeRead the Press Release
Two residents of Tangipahoa Parish, Louisiana, pleaded guilty today to one count of conspiracy to defraud the United States and to commit theft of public money and mail fraud, with one defendant also pleading guilty to aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Kenneth Allen Polite Jr. of the Eastern District of Louisiana.
According to court documents, Corey Lewis, also known as Coco, 37, and Craig Lewis, 40, conspired with each other and others to file false federal income tax returns using stolen identities including false claims for tax refunds. The defendants and others used individuals’ names and social security numbers in order to prepare false tax returns. They directed the Internal Revenue Service (IRS) to mail refund checks to addresses in Louisiana, including to post office boxes that were opened by co-conspirators. Corey Lewis and others falsely endorsed and deposited the refund checks into bank accounts under their control. The proceeds of the refund checks would then be divided amongst the co-conspirators.
The defendants are scheduled to be sentenced in U.S. District Court in the Eastern District of Louisiana on Sept. 22 and each face a statutory maximum sentence of five years in prison and a fine of $250,000 for the conspiracy count. Corey Lewis also faces a mandatory minimum sentence of two years in prison for aggravated identity theft. The defendants also face potential fines, forfeiture and restitution. Brad Lewis, also known as Bird, 32, and Cedrick Mitchell, also known as Skeet, 39, previously pleaded guilty to the same conspiracy charge and await their sentencing hearings on Aug. 25 and Sept. 15, respectively.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Polite commended special agents of IRS-Criminal Investigation and the U.S. Postal Inspection Service, who investigated the case, and Trial Attorneys Hayden Brockett and Lauren Castaldi of the Tax Division and Assistant U.S. Attorney Dall Kammer of the Eastern District of Louisiana, who are prosecuting the case.
Three MS-13 Leaders Sentenced for Racketeering and Related Charges for Multiple Murders and AttacksRead the Press Release
Twelve Others Have Pleaded Guilty in the Case
Three leaders of MS-13 in Washington, D.C., were sentenced today to federal prison for conspiring to participate in racketeering activity and other charges stemming from their roles in murders, extortion and other violent crimes.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia, Special Agent in Charge Clark E. Settles of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (ICE-HSI) Washington D.C. Field Office and Chief Cathy L. Lanier of the Metropolitan Police Department (MPD) made the announcement.
Noe Machado-Erazo aka Gallo, 32, of Wheaton, Maryland, was sentenced to life in prison plus 10 years in prison. Jose Martinez-Amaya, aka Crimen, 28, of Brentwood, Maryland, was sentenced to life in prison plus 10 years in prison. Yester Ayala, aka Freeway or Daddy Yankee, 24, of Washington, D.C., was sentenced to 30 years in prison. Senior U.S. District Court Judge Royce C. Lamberth of the District of Columbia imposed the sentences.
“MS-13 is a brutally violent gang that has plagued communities in many parts of this country, including Washington, D.C.,” said Assistant Attorney General Caldwell. “The lengthy sentences imposed on the MS-13 leaders convicted in this case reflect the vicious and calculated nature of the murders they committed and the gang they led.”
“This prosecution shows our commitment to purging MS-13’s bloody brand of violence from the District of Columbia,” said Acting U.S. Attorney Cohen. “These killers brought lawless vengeance to our community and left a 14-year-old boy dead. These gang members will now have decades in prison to reflect on their heinous crimes.”
“HSI continuously targets transnational gangs that wreak havoc on our American communities,” said Special Agent in Charge Settles. “Today’s sentences are testament to the strong investigative work of our HSI special agents and the Metropolitan Police Department.”
“The action by the courts today further exemplifies our message to persons engaging in criminal gang activity: you will find no place for your activities here in Washington, D.C.,” said Chief Lanier. “We will work as long as necessary to ensure this city, and the capital area, are free from the violence and harm gang activity brings into our communities. The agents, officers, and attorneys have done a tremendous job bringing this case to a successful end.”
In August 2013, following a month-long trial, Machado-Erazo and Martinez-Amaya were found guilty of conspiracy to participate in racketeering activity, murder in aid of racketeering and possession of a firearm during a crime of violence. Ayala was found guilty of conspiracy to participate in racketeering activity, two counts of murder in aid of racketeering, first-degree premeditated murder and second-degree murder.
MS-13 is a large gang that operates in the United States and Central America. Members engage in racketeering activity including murder, narcotics distribution, extortion, robberies, obstruction of justice and other crimes.
According to evidence presented at trial, a number of small MS-13 groups, or cliques, operate in the Washington, D.C., area. The evidence showed that the cliques have frequent contact with MS-13 leadership in El Salvador, and that they act in accordance with the MS-13’s international strictures, including the requirement that members remain unfailingly loyal to the gang.
The evidence presented at trial showed that both Machado-Erazo and Martinez-Amaya were members of the Normandie clique, and that Martinez-Amaya held a leadership position in the group; and that Ayala was a leader of the Sailors, another clique. The evidence also showed that Machado-Erazo coordinated the activities of local MS-13 cliques.
At trial, the government presented evidence that Ayala helped carry out orders to murder Louis Alberto Membreno-Zelaya, a fellow MS-13 member who had removed his gang tattoos. Membreno-Zelaya’s body was found on Nov. 6, 2008, in Northwest Washington, D.C. He had been stabbed at least 20 times.
According to evidence presented at trial, Ayala also participated in the Dec. 12, 2008, murder of 14-year-old Giovanni Sanchez near the Columbia Heights Metro station in Washington D.C. Giovanni was stabbed 11 times.
The evidence at trial also demonstrated that Machado-Erazo and Martinez-Amaya took part in the killing of Felipe Enriquez, an MS-13 member whose body was found on March 31, 2010, in Montgomery County, Maryland. The government presented evidence that Enriquez was lured to a remote park where he was fatally shot by Martinez-Amaya. Evidence presented during the trial showed that Machado-Erazo provided the gun used in the shooting.
The three defendants sentenced today are among numerous individuals charged in a 2010 indictment alleging criminal acts committed between 2008 and 2010 in the District of Columbia, Maryland, Virginia and other states, as well as in El Salvador. Twelve defendants have pleaded guilty to charges in the case.
The case was investigated by ICE-HSI and the MPD. Assistance was provided by the Montgomery County, Prince George’s County and Riverdale Park, Maryland, Police Departments; the Fairfax County, Virginia, Police Department; the State’s Attorney’s Office of Montgomery County; the U.S. Attorney’s Office of the District of Maryland and the U.S. Attorney’s Office of the Eastern District of Virginia. Assistance also was provided by the Organized Crime Drug Enforcement Task Force.
This case was prosecuted by Trial Attorney Laura Gwinn of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Nihar Mohanty of the District of Columbia.
Member of the Imperial Gangsters Sentenced to 25 Years in Prison for Murder and Racketeering ConspiracyRead the Press Release
A member of the Imperial Gangsters street gang was sentenced to 25 years in prison for murder and conspiracy to participate in racketeering activity, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David A. Capp of the Northern District of Indiana.
Julian Guillermo Serna, aka Big Ju, 25, of Munster, Indiana, pleaded guilty to the charges on Dec. 27, 2013. Chief U.S. District Court Judge Philip P. Simon of the Northern District of Indiana imposed the sentence.
According to evidence presented at the sentencing hearing, Serna shot and killed Mario Soriano, a member of a renegade clique of the 139th Street Imperial Gangsters, with whom he had engaged in shootouts previously. Specifically, while riding in a car, Serna saw Soriano riding in another car. When Soriano began to lower his window, Serna shot repeatedly into the car, killing Soriano.
Of the 24 Imperial Gangsters who were indicted in this case, all have pleaded guilty or been convicted at trial.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the FBI; and the East Chicago Police Department. The Gary Police Department, the Hammond Police Department and the Lake County, Indiana, High Intensity Drug Trafficking Area Program provided assistance. This case is being prosecuted by Trial Attorney Bruce R. Hegyi of the Criminal Division’s Capital Case Section and Assistant U.S. Attorney David J. Nozick of the Northern District of Indiana.
Former New Hampshire Construction Company Owner Pleads Guilty to Tax EvasionRead the Press Release
A Hill, New Hampshire, man pleaded guilty today to three counts of tax evasion in the U.S. District Court in the District of New Hampshire, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney Donald Feith of the District of New Hampshire.
Ronald Martin formerly owned and operated Martin Construction in Northfield, New Hampshire, and employed between three to eight individuals at various times. In 2008, 2009 and 2010, Martin’s business earned a total of approximately $1.2 million in gross revenue, but Martin did not file any federal corporate or individual income tax returns for Martin Construction or for himself and did not pay any federal income tax in any of those years. Martin took steps to conceal the business revenue by directing that payments and invoices for selling scrap metal be made in the name of his nephew. He also only deposited a small fraction of the income earned from Martin Construction into the business’ bank account. Instead, he diverted a significant portion of the business income for personal expenditures. In addition to failing to file tax returns and to pay individual and business income taxes, Martin also failed to file any federal employment tax returns or pay over to the Internal Revenue Service (IRS) any federal employment taxes for any of his employees.
A federal grand jury in the District of New Hampshire indicted Martin on three counts of tax evasion in July 2014. Martin faces a statutory maximum sentence of five years in prison and a fine of $250,000 on each tax evasion count. Martin’s sentencing hearing is scheduled for Oct. 20. Martin currently is detained on unrelated pending state criminal charges.
Acting Assistant Attorney General Ciraolo and Acting U.S. Attorney Feith commended the special agents of IRS–Criminal Investigation, who investigated the case, and Assistant U.S. Attorney Mark S. Zuckerman of the District of New Hampshire and Senior Litigation Counsel Corey J. Smith of the Tax Division, who are prosecuting the case.
Former Des Moines, Iowa, Police Officer Sentenced for Excessive ForceRead the Press Release
Former Des Moines, Iowa, Police Department Officer Colin J. Boone, 39, of Sioux Falls, South Dakota, was sentenced yesterday by U.S. District Court Judge Robert W. Pratt of the Southern District of Iowa to serve 63 months in federal prison for using unreasonable force during a 2013 arrest, announced Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division and U. S. Attorney Nicholas A. Klinefeldt of the Southern District of Iowa.
This case arose from Boone's use of excessive force against Orville Hill during Hill’s arrest on Feb. 19, 2013. During the incident, Boone arrived at a scene where three fellow Des Moines police officers were holding Hill on the ground and a fourth officer was standing over the group. Boone ran up to the group and kicked Hill in the face, knocking out two of Hill’s teeth and breaking his nose. Other officers reported Boone’s conduct to supervisors after learning that Boone had submitted a written report in which he failed to account truthfully for his actions. On March 13, 2015, a jury found Boone guilty of violating Hill’s civil rights by using unreasonable force.
“As this sentences makes clear, there are serious consequences when law enforcement officers betray the trust of their community by violating the rights of individuals,” said Principal Deputy Assistant Attorney General Gupta. “The Department of Justice stands ready to hold accountable those who violate the civil rights laws.”
This investigation was conducted by the FBI, and was prosecuted by Deputy Chief Bobbi Bernstein of the Civil Rights Division and Assistant U.S. Attorney Kelly Mahoney of the Southern District of Iowa.
Department of Justice Filed Charges on more than 2,700 Human Smugglers in Fiscal Year 2014Read the Press Release
Between 2009 and 2014, More Than 18,000 Individuals Charged With Human Smuggling by Federal Prosecutors
The Justice Department is committed to using its resources to bring to justice those that are breaking the law by smuggling migrants into the United States. In Fiscal Year 2014 (FY14, Oct. 1, 2013, up to Sept. 30, 2014), the Justice Department filed criminal charges against 2,762 individuals for human smuggling or harboring immigrants. Nearly 90 percent of the criminal charges filed in FY14 for smuggling took place in Texas (1,515), California (511), Arizona (394), Florida (75) and New York (31). The announcement of these actions is just one part of ongoing, collaborative efforts to tackle unlawful migration. These efforts also helped to address last year’s influx of Central American migrants, including unaccompanied children and families crossing into the Rio Grande Valley, and demonstrate a continued commitment to dismantling human smuggling operations that put so many lives at risk.
Individuals that facilitate smuggling acts need to be aware that they face criminal prosecution and fines. They also need to be aware of the dangers faced by the individuals that are being smuggled and also that the Department of Justice will seek forfeiture of funds transferred to others in connection with a smuggling crime. In addition, individuals trying to bring a family member to the United States by transferring funds to a coyote should be aware that those acts are against the law and their funds can be seized by the federal government.
The penalty for human smuggling if done for commercial benefit is up to 10 years in prison and an accompanying fine. For example, in January, Ruth Fernandez Morales-Lopez pleaded guilty before U.S. District Judge Hilda G. Tagle of the Southern District of Texas to bringing in and harboring aliens and money laundering. Morales-Lopez admitted that she was the person who decided, based on whether they paid their smuggling fees, which individuals could stay at the “stash house,” located in San Benito, Texas. She further admitted that more than $1 million in her bank account was comprised of smuggling fees and that she structured her withdrawals from that account to circumvent the Bank Secrecy Act. Morales-Lopez faces up to 10 years in federal prison for the smuggling charge and up to 20 years for money laundering. The remaining five defendants in the case, all of whom pleaded guilty, each face up to 10 years of federal imprisonment.
Many of the stories revealed in court cases outline the severe examples of exploitation and violence against migrants. For example, in April 2014, a federal jury in Del Rio, Texas, convicted Eduardo Rocha Sr., 44, for his role in a human smuggling ring operation in Carrizo Springs, Texas, known for torturing its victims and exploiting their families. The evidence presented during the trial showed that Rocha Sr. extorted additional money from family members of migrants that already lived in the United States. In some instances, he ordered his accomplices to subject migrants to brutal violence and mutilation while their family members were forced to listen over the phone.
The Justice Department has a long history of working with the Department of Homeland Security and other federal partners to investigate and prosecute human smugglers. These collaborative efforts lead to prosecutions of those responsible for the illegal entry of individuals, including unaccompanied minors. The string of human smuggling convictions on the southwest border emphasizes the federal law enforcement resources being brought to bear to dismantle and disrupt these dangerous, criminal operations. Human smuggling acts can also lead to extremely dangerous circumstances that pose a public safety threat and significant humanitarian concerns. Many of the cases prosecuted by U.S. Attorney’s Offices throughout the country involve migrants who have been kidnapped, taken hostage, beaten, sexually assaulted, threatened or who have actually died as a result of living under some of the most perilous conditions.
Tragic stories have become all too familiar along the southwest border. In October 2014, for example, Carlos Hernandez-Palma and Fernando Armenta-Romero were apprehended and sentenced for their role in the death of an undocumented immigrant woman that they abandoned in the wilderness of Otay Mountain near the San Diego border. Court records revealed that the woman’s husband pleaded with the smugglers, to no avail, to call for assistance for his pregnant wife after she became gravely ill during the venture. It would be several days before the U.S. Border Patrol found his wife’s body. Her cause of death was attributed to hyperglycemia from being diabetic and hypothermia from environmental exposure.
In addition, the Justice Department is working with countries like Honduras, Guatemala, El Salvador and Mexico to identify and prosecute smugglers who are aiding unaccompanied children crossing the U.S. border. The coordinated efforts also target facilitators operating in foreign countries.
These ongoing enforcement efforts started before last year’s surge of unaccompanied minors and the Justice Department will continue to be vigilant in bringing smugglers to justice. In the years 2009 to 2014, the Justice Department charged more than 18,000 defendants with smuggling or harboring immigrants.
Office of Juvenile Justice and Delinquency Prevention’s Internet Crimes Against Children Task Forces Arrest More Than 1,000 Child Predators in Operation Broken HeartRead the Press Release
Internet Crimes Against Children (ICAC) Task Forces arrested 1,140 child predators from 41 states during a two-month, nationwide operation, the Office of Juvenile Justice and Delinquency Prevention (OJJDP) announced today.
The 61 ICAC Task Forces, funded through an OJJDP grant program, conducted Operation Broken Heart, a coordinated investigative operation to intensify efforts to identify and arrest child sexual predators during the months of April and May 2015.
“Predators use technology in sinister and inventive ways to reach their child victims across state and national boundaries,” said Administrator Robert L. Listenbee of the OJJDP. “Through collaborative efforts such as Operation Broken Heart, ICAC Task Forces and their law enforcement partners are countering these attacks by pooling resources and investigative expertise, increasing their ability to identify and arrest sexual predators and protect children.”
More than 3,000 federal, state and local law enforcement agencies participated in the operation, which targeted offenders who: possess, manufacture and distribute child pornography; engage in online enticement of children for sexual purposes; engage in the commercial sexual exploitation or prostitution of children; and engage in child sex tourism – traveling abroad for the purpose of sexually abusing children in other countries. ICAC Task Forces first conducted Operation Broken Heart in 2014. The task forces also delivered more than 2,200 presentations on Internet safety to more than 186,000 youth and adults during these two months.
“By arresting and prosecuting child predators across the country, our task forces are sending a clear message that we are working together better than ever before to bring these perpetrators to justice,” said Lt. Andrea Grossman of the Los Angeles Police Department, Commander of the Los Angeles Regional ICAC Task Force and chair of the ICAC Public Awareness and Outreach Committee. “The ICAC Task Forces’ dedicated efforts and professionalism help fulfill the ultimate goal of keeping children safe.”
In 1998, OJJDP launched the ICAC Task Force Program to help federal, state and local law enforcement agencies enhance their investigative responses to offenders who use the Internet, online communication systems or computer technology to exploit children. To date, the ICAC Task Forces have reviewed more than 516,000 complaints of child exploitation, which resulted in the arrest of more than 54,000 individuals. In addition, since the ICAC program's inception, more than 465,000 law enforcement officers, prosecutors and other professionals have been trained on techniques to investigate and prosecute ICAC related cases.
For more information on local cases, the list of ICAC Task Force Commanders is available at: www.icactaskforce.org.
OJP, headed by Assistant Attorney General Karol V. Mason, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice and assist victims. OJP has six components: the Bureau of Justice Assistance, the Bureau of Justice Statistics, the National Institute of Justice, OJJDP, the Office for Victims of Crime, and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking. More information about OJP can be found at www.ojp.gov.
North Carolina Man Charged with Attempting to Provide Material Support to ISIL and Weapon OffensesRead the Press Release
A Burke County, North Carolina, man has been charged with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization, announced Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Jill Westmoreland Rose of the Western District of North Carolina and Special Agent in Charge John A. Strong of the FBI’s Charlotte, North Carolina, Division.
The criminal complaint was filed today in federal court, charging Justin Nojan Sullivan, 19, of Morganton, North Carolina, with one count of attempting to provide material support to ISIL, one count of transporting and receiving a silencer in interstate commerce with intent to commit a felony, and one count of receipt and possession of an unregistered silencer, unidentified by a serial number. Sullivan was arrested in his home on Friday, June 19, 2015, without incident.
“As alleged in the complaint, the defendant was planning assassinations and violent attacks in the United States and is charged with attempting to provide material support to ISIL and federal firearms violations,” said Assistant Attorney General Carlin. “The National Security Division’s highest priority is counterterrorism and we will continue to pursue justice against those who seek to provide material support to designated foreign terrorist organizations.”
“Sullivan is charged with attempting to provide material support to ISIL, a designated terrorist organization that poses a serious threat to our country’s security,” said Acting U.S. Attorney Rose. “My highest priority is to detect and prosecute violent extremists and protect innocent Americans from terrorist attacks.”
“Justin Sullivan intended to commit violent acts against innocent people in the U.S. to support the terrorist organization, ISIL,” said Special Agent in Charge Strong. “As demonstrated in this case federal, state, and local law enforcement will work tirelessly to protect our communities from those who plot to carry out terrorist activities of any kind.”
The criminal complaint alleges that the FBI became aware of Sullivan’s plans to obtain a semi-automatic AR-15 rifle at the Hickory Gun Show in Hickory, North Carolina, on June 20, 2015, which he planned to use to kill a large number of U.S. citizens on behalf of ISIL. According to the criminal complaint, an FBI undercover employee (UC) made contact with Sullivan beginning on or about June 6, 2015, during which time Sullivan described himself as “a mujahid,” and as a Muslim convert living in the eastern United States. Sullivan also told the UC that “the war is here,” and gave the UC the opportunity to join what he called the Islamic State of North America, whose “doctrine is Guerilla Warfare in and out,” the complaint alleges. The criminal complaint further alleges that over the next few days and during various conversations, Sullivan discussed with the UC, among other things, his various terrorist attack concepts and instructed the UC on how to obtain weapons, specifically “an AR-15 .223 with split ammo” at a gun show.
According to the complaint, on or about June 9, 2015, Sullivan discussed with the UC the possibility of making homemade silencers and asked the UC whether he would be able to make one. When the UC said that he thought he could, Sullivan told the UC “Ill need to have one built by next week.” The complaint alleges that Sullivan also told the UC “Yeah ill let u mail me…I plan on using it this mont[h],” and that Sullivan planned on doing “minor assassinations before the big attack for training.” He also told that UC that “we are going to send a video to IS.” According to the complaint, during a follow-up conversation, Sullivan told the UC again that he would need the suppressor “before the end of next week,” apparently referring to June 19, 2015.
On June 19, 2015, the FBI, with the support of the Hickory, North Carolina, Police Department, the Burke County, North Carolina, Sheriff’s Office and the North Carolina State Highway Patrol, arrested Sullivan at his home and located the silencer at his residence, which Sullivan had received earlier that day. No one was harmed during the arrest.
Sullivan is currently in federal custody. Sullivan is expected to make his initial appearance in federal court today.
The charge of conspiracy to provide material support to a designated foreign organization carries a maximum potential penalty of 20 years in prison and a $250,000 fine. The charge of transporting and receiving a silencer in interstate commerce with intent to commit a felony carries a maximum potential penalty of 10 years in prison and a fine of $250,000. The charge of receipt and possession of an unregistered silencer, unidentified by a serial number, carries a maximum potential penalty of 10 years in prison and a fine of $10,000.
The charges contained in the complaint are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
The case was investigated by the FBI. The case is being prosecuted by Assistant U.S. Attorney and Senior Litigation Counsel Michael E. Savage of the Western District of North Carolina and Trial Attorney Gregory Gonzalez of the National Security Division’s Counterterrorism section.
Sullivan Complaint
Manhattan U.S. Attorney Announces Return to Brazil of Two Masterpieces Linked to Bank FraudRead the Press Release
Preet Bharara, the United States Attorney for the Southern District of New York, and Deputy Special Agent in Charge Michael Shea of U.S. Immigration and Customs Enforcement’s ("ICE") Homeland Security Investigations New England, announced today that a painting by Jean-Michel Basquiat called "Hannibal" (the "Basquiat"), as well as a Roman Togatus statue, were returned to Brazil at a repatriation ceremony at the United States Attorney’s Office in Manhattan, New York. The painting and the statue were smuggled into the United States in violation of customs law and were forfeited to the government as a result of civil forfeiture action brought by the United States.
Manhattan U.S. Attorney Preet Bharara stated: "Art and antiquities have special value and meaning that cannot readily be quantified. As a result, they have long been the subject of theft and deception, as well as a means to launder illicit proceeds. Art should serve to inspire the mind and nourish the soul, and not be allowed to become a conduit for crime."
HSI Deputy Special Agent in Charge Michael Shea stated: "It is always a pleasure to return cultural artifacts to the people of another nation. I would like to thank our special agents and partners at INTERPOL for their diligence in this investigation. ICE will do everything in its power to help preserve and safeguard a nation's history by identifying, locating, and recovering stolen antiquities."
In related repatriation ceremonies held on September 21, 2010, and May 9, 2014, the U.S. Attorney’s Office for the Southern District of New York returned to Brazil three paintings – "Modern Painting with Yellow Interweave" by Roy Lichtenstein (the "Lichtenstein"), "Figures dans une structure" by Joaquin Torres-Garcia (the "Torres-Garcia"), and "Composition abstraite" by Serge Poliakoff (the "Poliakoff") – that were smuggled into the United States.
The Basquiat and the Togatus once belonged to Brazilian banker Edemar Cid Ferreira. Ferreira, the founder and former president of Banco Santos, S.A. ("Banco Santos"), was convicted in Brazil of crimes against the national financial system and money laundering. In December 2006, Ferreira was sentenced in Brazil to 21 years in prison.
As part of the case, a Sao Paulo Court judge also ordered the search, seizure, and confiscation of assets that Ferreira, his associates, and members of his family had acquired with unlawfully obtained funds from Banco Santos. Those assets included the Basquiat, the Togatus, the Lichtenstein, the Torres-Garcia, the Poliakoff, and other artwork valued at $20 million to $30 million. The artwork was kept in several locations, including Ferreira’s home in the Morumbi neighborhood of Sao Paulo, the main offices of Banco Santos, and at a holding facility. When Brazilian authorities searched these locations, they found that several of the most valuable works of art were missing, including the Basquiat and the Togatus.
The Sao Paulo Court sought INTERPOL’s assistance after searching museums and institutions in Brazil for the missing artwork. In October and November 2007, INTERPOL and the Government of Brazil sought the assistance of the United States to locate and seize the missing works on behalf of the Brazilian government. The ensuing Southern District of New York and HSI investigation revealed that the Basquiat and the Togatus were shipped from the Netherlands to a secure storage facility in New York on August 21, 2007, and September 11, 2007, respectively. The invoices, however, failed to comply with U.S. customs laws in a number of respects. For example, the shipping invoices did not identify the pieces and falsely claimed that their value was $100 each. In fact, the Basquiat alone was recently appraised at $8 million.
HSI special agents based in New Haven, Connecticut, located and seized the Basquiat in November 2007, and the U.S. Attorney’s Office for the Southern District of New York filed a civil forfeiture Complaint alleging that the Basquiat had been brought into the United States illegally. Since the filing of the original Complaint in February 2008, the United States seized additional works of art and filed two amended Complaints seeking the forfeiture of the Lichtenstein, the Torres-Garcia, the Poliakoff, and the Togatus.
After extensive litigation, United States District Court Judge Richard J. Sullivan granted the government’s motion for summary judgment and entered an order forfeiting the Basquiat and the Togatus on May 10, 2013. The Second Circuit Court of Appeals affirmed Judge Sullivan’s order on September 9, 2014.
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Mr. Bharara praised the investigative work of HSI in helping to locate and seize the painting. He was grateful for the assistance of the Department of Justice’s Office of International Affairs. Mr. Bharara thanked Brazilian authorities for their assistance in the case. He also acknowledged the assistance of the U.S. Department of State and the U.S. Embassy in Brazil for its assistance in the investigation.
The case is being handled by the Money Laundering and Asset Forfeiture Unit of the U.S. Attorney’s Office. Assistant U.S. Attorney Alexander Wilson is in charge of the litigation.
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California Man Pleads Guilty in Prescription Drug Diversion SchemeRead the Press Release
A Corona, California, man pleaded guilty today in U.S. District Court in Cincinnati to one count of conspiracy to commit mail and wire fraud for his participation in a large-scale, nationwide prescription drug diversion scheme.
Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio, Special Agent In Charge Antoinette V. Henry of the U.S. Food and Drug Administration’s Office of Criminal Investigations (FDA-OCI) Metro Washington Field Office and Assistant Inspector in Charge Christopher White of the U.S. Postal Inspection Service (USPIS) Cincinnati Field Office announced the guilty plea, entered today by U.S. District Judge Timothy S. Black.
According to court documents, from May 2010 through December 2012, Vin Nguyen, 45, and others conspired to distribute illegally-diverted prescription drugs while concealing the true, illicit sources of the drugs. Nguyen purchased prescription drugs, including HIV medications, anti-psychotic medications and other brand name drugs, from various unlicensed and illegal sources in California and Florida. Working with co-conspirators, Nguyen then sold the drugs to other drug diverters without the statutorily required pedigree documents stating the origin of the drugs. Nguyen and his co-conspirators sold more than $6.5 million worth of diverted drugs.
“Illegal prescription drug diversion threatens the security of America’s drug supply chain,” said Principal Deputy Assistant Attorney General Mizer. “The Department of Justice will continue to protect American consumers by prosecuting those who engage in prescription drug diversion.”
From December 2011 through December 2012, Nguyen and others sold diverted prescription drugs to David Miller and his company, Minnesota Independent Cooperative (MIC). On May 6, David Miller and MIC were indicted in the Southern District of Ohio and charged with one count of conspiracy to commit mail and wire fraud, 10 counts of mail fraud and one count of conspiracy to make false statements and to distribute prescription drugs without a wholesale license. Those charges remain pending.
Nguyen and his co-conspirators used the company name “Modern Medical” when selling drugs to Miller and MIC. Modern Medical is a real California company that had no involvement in the drug sales. Nguyen and his co-conspirators simply hijacked the name to conceal their involvement and the true, illicit drug sources.
Miller and MIC, in turn, sold the prescription drugs obtained from Nguyen – and multiple other illegal sources – to wholesale and retail customers throughout the United States, including in the Southern District of Ohio. Miller and MIC are alleged to have created fraudulent pedigree documents falsely stating that they had purchased the drugs from B&Y Wholesale, a company in Puerto Rico. These false pedigrees covered up the illegitimate sources of the drugs – various illicit, unlicensed suppliers, including Nguyen – and falsely stated that B&Y Wholesale was an authorized distributor of the prescription drugs.
On Feb. 19, Yusef Yassin Gomez, the owner of B&Y Wholesale in Puerto Rico, pleaded guilty to one count of conspiracy to distribute prescription drugs without a wholesale license for his role in the conspiracy.
This matter is being investigated by FDA-OCI and the USPIS. Assistant U.S. Attorneys Anne L. Porter and Christy Muncy of the Southern District of Ohio and Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch are representing the United States in this case.
Arkansas Chiropractor Pleads Guilty to Federal Tax CrimeRead the Press Release
An Arkansas chiropractor pleaded guilty today in the U.S. District Court in the Western District of Arkansas to corruptly endeavoring to obstruct and impede the Internal Revenue Service (IRS), announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Conner Eldridge of the Western District of Arkansas. He was previously convicted of federal tax crimes and sentenced to prison.
According to court documents, Philip Roberts, 60, of Fort Smith, Arkansas, filed a series of false and fraudulent documents with the IRS in an effort to obstruct or impede the due administration of the internal revenue laws, including filing false financial instruments that claimed millions of dollars of transactions with both the Secretary of the Treasury and the IRS Commissioner, and filing IRS forms that falsely reported payments. In 2000, after a jury trial, Roberts was convicted of two counts of willfully failing to file federal income tax returns and sentenced to serve 16 months in federal prison.
Roberts’ sentencing hearing has not been scheduled yet before the Honorable U.S. District Judge Timothy L. Brooks of the Western District of Arkansas. Roberts faces a statutory maximum sentence of three years in prison, one year of supervised release and a $250,000 fine for obstructing and impeding the IRS.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Eldridge commended special agents of the IRS and the Treasury Inspector General for Tax Administration, who investigated the case, as well as Trial Attorneys Robert Kemins and David Zisserson of the Tax Division and Assistant U.S. Attorney Kimberly Davis of the Western District of Arkansas, who are prosecuting the case.
United States Files Suit against Texas Subsidiary of BAE Systems Alleging False Claims under Army Contract for TrucksRead the Press Release
The United States has filed a complaint against BAE Systems Tactical Vehicle Systems LP (BAE) for knowingly overcharging the Army for materials under a military truck contract, the Justice Department announced today. BAE is a subsidiary of BAE Systems Inc., headquartered in Arlington, Virginia, which is owned by BAE Systems plc, a global defense, security and aerospace company headquartered in London. BAE is located in Sealy, Texas.
“Those who do business with the United States must act in good faith,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division. “We will ensure that contractors do not abuse the military’s procurement process at the expense of our troops abroad and the taxpayers at home.”
In 2008, the Army Tactical Command Life Cycle Management Command, in Warren, Michigan, awarded BAE a contract to build more than 20,000 trucks for the military, known as Family of Medium Tactical Vehicles (FMTVs). Government procurement law requires contractors negotiating government contracts above a threshold price, to disclose cost or pricing data relevant to the negotiations. The purpose of requiring a contractor to disclose this information is to put the government on equal footing with the contractor and ensure a fair and reasonable price. The government alleges that BAE knowingly inflated the price of the FMTV contract by concealing cost and pricing data on numerous parts and materials during contract negotiations, despite having certified that the data it had disclosed was accurate, complete and current.
“We expect government contractors to act with integrity when they fulfill their contractual obligations to the government,” said U.S. Attorney Kenneth Magidson of the Southern District of Texas. “Breach of that trust results in being held accountable in court.”
“Private companies are entitled to earn an honest profit from procurement contracts with the U.S. government, but they may not knowingly overcharge the military for supplies and materials,” said U.S. Attorney Barbara McQuade of the Eastern District of Michigan. “The conduct alleged in this complaint is akin to charging $600 for a hammer.”
The government’s complaint alleges claims under the Truth-in-Negotiations Act, which requires the truthful disclosure of cost or pricing data, and the False Claims Act, which prohibits knowingly submitting false claims for federal funds.
The lawsuit is being handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Southern District of Texas and the U.S. Attorney’s Office of the Eastern District of Michigan. Investigative support is being provided by the Defense Contract Audit Agency, the Defense Criminal Investigative Service and the Army Criminal Investigation Command.
The case is captioned United States v. BAE Systems Tactical Vehicle Systems, LP (E.D. Mich.). The claims asserted in this case are allegations only; there has been no determination of liability.
U.S. Citizen Arrested for Attempting to Provide Material Support to ISIL and Other Federal OffensesRead the Press Release
Amir Said Abdul Rahman Al-Ghazi, 38, a U.S. Citizen, was arrested this morning in North Olmstead, Ohio, on charges that he attempted to provide material support to the Islamic State of Iraq and the Levant (ISIL), possessed a firearm as a convicted felon and trafficked marijuana.
Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Steven D. Dettelbach of the Northern District of Ohio and Special Agent in Charge Stephen D. Anthony of the FBI’s Cleveland Division made the announcement.
“According to the allegations in the complaint, Al-Ghazi attempted to provide material support to ISIL and committed other federal weapon and drug offenses,” said Assistant Attorney General Carlin. “Counterterrorism is the National Security Division’s highest priority and we will continue to pursue justice against those who seek to provide material support to designated foreign terrorist organizations.”
“Today’s charges are a stark reminder that the radical and dangerous philosophies espoused by groups such as ISIL can be spread in our community through computers and social media,” said U.S. Attorney Dettelbach. “Law enforcement will remain vigilant in combating violent extremism in all its forms.”
“This arrest demonstrates law enforcement’s number one priority – to keep our communities and our nation safe,” said Special Agent in Charge Anthony. “It is clear that no area is immune from the influence of ISIL and its recruitment machine. We hope this arrest will serve as a strong message to others who may consider providing support to terrorists. The FBI and our Joint Terrorism Task Force partners are committed to identifying and stopping these individuals.”
According to the complaint, Al-Ghazi, who changed his name from Robert McCollum earlier this year, is alleged to have pledged his support to ISIL and Abu Bakr Al-Baghdadi via social media in 2014. From July 2014 to June 2015, Al-Ghazi made multiple statements trying to persuade others to join ISIL. He also expressed his own desire to perpetrate an attack on the United States and had attempted to purchase an AK-47 assault rifle. Al-Ghazi has communicated with individuals he believed to be members of ISIL in the Middle East and took steps to create propaganda videos for ISIL.
Al-Ghazi was also charged with distributing a schedule 1 controlled substance – marijuana. From the period of February 2014 through June 2015, Al-Ghazi sold almost two kilograms of marijuana to a confidential informant. He was also charged with possessing a firearm even though he had multiple prior felony convictions. On multiple occasions Al-Ghazi expressed his interest in purchasing an AK-47, eventually purchasing one from an FBI undercover employee on June 19, 2015.
This case is being investigated by the FBI’s Cleveland Division’s Joint Terrorism Task Force. This case is being prosecuted by the U.S. Attorney’s Office of the Northern District of Ohio and the National Security Division’s Counterterrorism Section.
The charge and allegations contained in the complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Al-Ghazi Complaint
Two More Banks Reach Resolutions Under Justice Department's Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that two banks, Bank Linth LLB AG (Bank Linth) and Bank Sparhafen Zurich AG (BSZ), have reached resolutions under the department’s Swiss Bank Program.
“With each agreement signed under the Swiss Bank Program, we are learning more and more about the schemes individuals are employing to hide their assets overseas,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division. “At this point, the message should be clear. Those who use foreign jurisdictions to evade their U.S. tax obligations will be held fully accountable and pay a heavy price for their conduct.”
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
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Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
- 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 Linth, one of the largest regional banks in Eastern Switzerland, was founded in 1848. It is headquartered in Uznach, Switzerland, which is approximately 35 miles southeast of Zurich. Bank Linth provided private banking and asset management services to U.S. taxpayers through private bankers based in Switzerland. It opened, serviced and profited from accounts for U.S. clients with the knowledge that many were likely not complying with their tax obligations.
Bank Linth’s cross-border banking business aided and assisted U.S. clients in opening and maintaining undeclared accounts in Switzerland and concealing the assets and income they held in these accounts. Bank Linth provided this assistance to U.S. clients in a variety of ways, including the following:
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Opening and maintaining accounts in the names of sham entities;
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Providing U.S. taxpayers with numbered accounts that hid the taxpayers’ identities;
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Facilitating U.S. taxpayers’ withdrawal of cash from undeclared accounts; and
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Agreeing to hold bank statements and other mail relating to accounts rather than sending them to U.S. taxpayers in the United States.
On several occasions, Bank Linth opened accounts for U.S. taxpayers through an external asset manager, and one of these accounts was opened in the name of a sham foundation. In that instance, Bank Linth knowingly accepted and included in account records forms provided by the directors of the sham foundation that falsely represented the ownership of the assets in the account for U.S. federal income tax purposes.
In accordance with the terms of the Swiss Bank Program, Bank Linth described in detail the structure of its banking business, including its management and supervisory structure, and provided the names of management and legal and compliance officials. Bank Linth further provided detailed and specific information related to its illegal U.S. cross-border business, including the bank’s misconduct, policies that contributed to that misconduct and the names of the relationship managers overseeing the bank’s U.S.-related business. Bank Linth also obtained affidavits from bank employees regarding the bank’s conduct and related matters.
Since Aug. 1, 2008, Bank Linth held 126 U.S.-related accounts, with over $102 million in assets. Bank Linth will pay a penalty of $4.15 million.
BSZ was founded in 1850 and has its sole office in Zurich. BSZ knew that U.S. persons had a duty under U.S. law to report their income to the Internal Revenue Service (IRS) and to pay taxes on that income, including all income earned in accounts that BSZ maintained in Switzerland. Despite this knowledge, BSZ opened, maintained and serviced accounts for U.S. persons that it knew or had reason to know were likely not declared to the IRS or the U.S. Treasury, as required by U.S. law.
After Aug. 1, 2008, U.S. persons opened 32 U.S.-related accounts at BSZ, and only one of them provided a Form W-9 to BSZ upon opening an account. In most cases, the U.S. persons who opened accounts at BSZ during this period had been required to close their accounts at other Swiss banks, and BSZ knew or had reason to know that most of these accounts were likely not declared to the IRS. Moreover, 22 of the U.S.-related accounts opened during this period were funded by transfers from banks that were or are the targets of Justice Department criminal investigation.
Two relationship managers at BSZ were responsible for managing most of its U.S.-related accounts in the period since Aug. 1, 2008, and one of those managers directly reported to BSZ’s chief executive officer. BSZ relationship managers assisted U.S. persons in executing waiver forms that directed the bank not to acquire U.S. securities in their accounts. BSZ knew that the purpose and effect of these forms was to avoid disclosing the identities of the U.S. persons to the IRS.
Until 2012, BSZ provided its U.S. clients with an option for hold-mail agreements, even though it understood that providing these agreements upon request could allow U.S. persons to keep evidence of their accounts outside of the United States in order to conceal assets and income from the IRS. One U.S. client told his BSZ relationship manager by email that the hold-mail fee was “cheap insurance against having my dealings with you come to the attention of the government revenue authorities.”
BSZ also offered travel cash cards to its clients, including U.S. persons. A client could instruct BSZ to load up to 10,000 Swiss francs, U.S. dollars or euros from his or her BSZ bank account onto a travel cash card. The client could then use the card for purchases or remit unused balances back to the BSZ account. U.S. persons’ use of these cards facilitated access to or use of undeclared funds on deposit at BSZ. One BSZ relationship manager sent a brochure about travel cash cards to a U.S. client who did not wish to transfer money to the United States because of “surveillance” concerns.
In accordance with the terms of the Swiss Bank Program, BSZ described in detail the structure, operation and supervision of its U.S. cross-border business, including the names of relevant individuals and entities. It also encouraged existing and prior holders of U.S.-related accounts to disclose their accounts to the IRS through the Offshore Voluntary Disclosure Program.
Since Aug. 1, 2008, BSZ held 91 U.S.-related accounts, with over $25 million in assets. BSZ will pay a penalty of $1.81 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.
“With two more non-prosecution agreements with Bank Linth and Bank Sparhafen Zurich, the Swiss Bank Program continues to bring into compliance those U.S. taxpayers that hid behind bank secrecy laws or held undeclared offshore accounts,” said Deputy Commissioner Douglas O’Donnell of the IRS Large Business and International Division. “The program provides Swiss banks a path to resolution. These additional agreements demonstrate that efforts by the IRS and DOJ are both effective and successful.”
“The success of the Swiss Bank Program and the assistance IRS-Criminal Investigation provides is clear,” said Chief Richard Weber of IRS-Criminal Investigation (CI). “The Swiss Bank Program is proving to be tremendously successful not only for the number of participating banks but for the multiplier effect. With the vast amount of information these banks are providing and the investigative skills of IRS-CI special agents, we now have clear roadmaps identifying accountholders and facilitators as well as the ability to track the movement of money to other accounts in other countries. For those who may still be trying to hide cash or assets offshore, your time is up.”
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, as well as Dara B. Oliphant, Gregory E. Van Hoey, and Michael R. Pahl, who served as counsel on these matters, Senior Litigation Counsel Nanette L. Davis, and Senior Counsel for International Tax Matters and Coordinator of the Swiss Bank Program Thomas J. Sawyer of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Bank Linth (566.31 KB)
Bank Sparhafen Zurich (439.96 KB)
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