District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
New Exhibit Now Open at Crime Museum Takes on Wildlife TraffickingRead the Press Release
The Crime Museum announces the wildlife trafficking exhibit is now officially open. The exhibit, titled “Ivory, Tortoise Shell & Fur: The Ugly Truth of Wildlife Trafficking,” was unveiled to a large group made up of celebrities, government officials, and journalists who came together to support this important cause and see and learn more about wildlife trafficking. Following the unveiling, the exhibit is now open to the public, who are invited to attend and learn about the horrors of the wildlife trafficking industry that plagues the world.
“We are excited to be bringing this information to the masses,” states Janine Vaccarello, chief operating officer of the Crime Museum. “This is truly a big step in the right direction when it comes to curbing the illegal wildlife trafficking industry. The more the public learns about it, the more empowered they will be to help end it.”
Wildlife trafficking is an issue that President Obama has spoken about, calling it a security issue, as well as celebrities, such as Russell Simmons, who are speaking out about the atrocities that are decimating particular animal populations around the world.
“Interpol and its Environmental Security section are committed to the protection of wildlife, natural resources, and biodiversity around the world,” stated Interpol Washington Director Shawn A. Bray. “Interpol and its law enforcement partners in all 190 member countries, including Interpol Washington, will continue building partnerships and awareness of environmental crime, as seen here tonight with the opening of this exhibit. Together, we will ensure we win the fight against transnational environmental crime.”
Many people are unaware of how critical the situation has become, yet the statistics are alarming. It’s estimated that 97 percent of the world’s tigers have been lost in the last century, 76 percent of elephants have been lost during the last 13 years, and over 1,200 rhinoceros were killed last year alone. These animal populations have been depleted to supply black market demand for jewelry, souvenirs, and natural medicines and status symbols such as shark fin soup.
"The exhibit shows the horrible suffering inflicted on individual animals for illegal and unnecessary trinkets," says Beth Allgood, US Campaigns Director at IFAW. "Raising awareness is a critical step in making the world safer for wildlife."
“It could not have been a better event,” shares Dr. Jennifer Sevin, Ph.D., president of Youth Environmental Programs, Inc. “There were excellent speakers, a great venue, and the opening of an important exhibit on World Environment Day. As many of the speakers at the opening mentioned, the Crime Museum is an excellent venue to bring awareness of wildlife trafficking to the public.”
The Wildlife Trafficking exhibit will be at the Crime Museum from June 2015 through February 2016, giving visitors an opportunity to see if they are contributing to the problem, and how they can help. The Crime Museum also offers a variety of other temporary and traveling exhibits, summer camp programs, walking tours, educational hands-on exhibits, and more. For more information to purchase tickets, visit their site at www.crimemuseum.org. To get involved, use and search for #ProtectOurWildlife and #SavetheElephants, or buy an awareness t-shirt, with proceeds going to the Youth Environmental Programs.
This exhibit is made possible by Freeland Foundation, International Fund for Animal Welfare, INTERPOL, Kashmir World Foundation, U.S. Department of State, U.S. Fish and Wildlife Service, WildAid, Wildlife Trust of India and Youth Environmental Programs.
About the Crime Museum
Crime Museum is located in Washington D.C. The mission is to provide guests of all ages with memorable insight into the issues of crime, crime fighting, and the consequences of committing a crime in America, through an interactive, entertaining, and educational experience. The museum offers walking tours, summer camps, galleries, a crime library, temporary and traveling exhibits, and more. For additional information, visit www.crimemuseum.org or follow the museum on Facebook and Twitter.Former U.S. Army Specialist Pleads Guilty to Taking a Bribe While Deployed in AfghanistanRead the Press Release
A former specialist with the U.S. Army pleaded guilty to accepting a bribe from an Afghan truck driver at Forward Operating Base Gardez, Afghanistan (FOB Gardez), in exchange for allowing the driver to take thousands of gallons of fuel from the base for resale on the black market. Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia made the announcement.
Anthony Don Tran, 28, of Stockton, California, pleaded guilty before U.S. District Court Judge Beth L. Freeman of the Northern District of California to one count of bribery of a public official.
According to admissions made in conjunction with his guilty plea, in exchange for $20,000 in cash, Tran permitted a local Afghan fuel truck to depart FOB Gardez without downloading roughly 12,000 gallons of fuel purchased by the U.S. government and designated for the base. Tran admitted that, on May 21, 2013, after returning from deployment, he purchased a 2010 Dodge Challenger with the cash derived from the bribe.
In addition, Tran admitted to accepting at least $1,000 in cash from two other members of his unit, U.S. Army sergeants James Edward Norris and Seneca Hampton, in exchange for Tran agreeing not to report them for also taking bribes for fuel. Both Norris and Hampton previously pleaded guilty to their roles in the scheme. On May 21, 2015, Norris was sentenced to serve 51 months in prison. Hampton is scheduled to be sentenced on July 28, 2015.
Pursuant to his plea agreement, Tran agreed to forfeit the proceeds he received from the bribery scheme as well as to pay full restitution. Sentencing has been scheduled for Sept. 22, 2015.
The case is being investigated by the U.S. Army Criminal Investigation Command, the Office of the Special Inspector General for Afghanistan Reconstruction, the Defense Criminal Investigative Service and the Defense Contract Audit Agency, Investigative Support Division. The case is being prosecuted by Trial Attorneys John Keller and Sean Mulryne of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Michael Solis and Danial Bennett of the Middle District of Georgia.
Former President of Riverside General Hospital Sentenced to 45 Years in Prison in $158 Million Medicare Fraud SchemeRead the Press Release
Operator of Psychiatric Facility Sentenced to 20 Years in Prison, and Owner of Group Home Sentenced to 12 Years in Prison
The former president of a Houston hospital, his son and a co-conspirator were sentenced today to 45 years, 20 years and 12 years in prison, respectively, for their roles in a $158 million Medicare fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge Lucy R. Cruz of the Internal Revenue Service Criminal Investigation’s (IRS-CI) Houston Field Office, the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU), Special Agent in Charge Mike Fields of the U.S. Department of Health & Human Services-Office of the Inspector General (HHS-OIG) Dallas Regional Office, Special Agent in Charge Joseph J. Del Favero of the Railroad Retirement Board-Office of Inspector General (RRB-OIG) and Inspector General Patrick E. McFarland of the Office of Personnel Management-Office of Inspector General (OPM-OIG) made the announcement.
“The former President of Houston's Riverside hospital, his son and their co-conspirators saw mentally ill, elderly and disabled Medicare beneficiaries as commodities to be turned into profit centers – not as vulnerable individuals in need of health care,” said Assistant Attorney General Caldwell. “Rather than providing needed medical care to a historically underserved community, the defendants ran a longstanding hospital into the ground through their greed and fraud. According to the evidence presented at trial, the defendants had patients sit around the facility watching movies while they received no treatment. Meanwhile, the defendants billed Medicare more than $158 million for care that was never provided. This brazen fraud cannot and will not be tolerated.”
Earnest Gibson III, 70, the former president of Riverside General Hospital, Earnest Gibson IV, 37, the operator of Devotions Care Solutions, a satellite psychiatric facility of Riverside General Hospital, and Regina Askew, 50, the owner of Safe and Sound group home, were sentenced by U.S. District Judge Lee H. Rosenthal of the Southern District of Texas. In addition to the significant terms of imprisonment, Earnest Gibson III was ordered to pay restitution in the amount of $46,753,180, Earnest Gibson IV was ordered to pay restitution in the amount of $7,518,480, and Regina Askew was ordered to pay restitution in the amount of $46,255,893.
Following a five-week jury trial, on Oct. 20, 2014, Earnest Gibson III, Earnest Gibson IV and Regina Askew each were convicted of conspiracy to commit health care fraud, conspiracy to pay and receive kickbacks, as well as related counts of paying or receiving illegal kickbacks. Earnest Gibson III and Earnest Gibson IV also were convicted of conspiracy to commit money laundering. Co-defendant Robert Crane, a patient recruiter, also was convicted of conspiracy to pay and receive kickbacks, and is scheduled to be sentenced on Dec. 9, 2015.
According to evidence presented at trial, from 2005 until June 2012, the defendants and others engaged in a scheme to defraud Medicare by submitting to Medicare, through Riverside and its satellite locations, approximately $158 million in false and fraudulent claims for partial hospitalization program (PHP) services. A PHP is a form of intensive outpatient treatment for severe mental illness.
Specifically, evidence at trial demonstrated that the Medicare beneficiaries for whom the hospital billed Medicare did not qualify for or need PHP services. Moreover, the evidence showed that Medicare beneficiaries rarely saw a psychiatrist and did not receive intensive psychiatric treatment. In fact, some of the beneficiaries were suffering from Alzheimer’s and could not actively participate in the treatment for which Medicare was billed.
Evidence presented at trial also showed that Earnest Gibson III paid kickbacks to patient recruiters and to owners and operators of group care homes, including Regina Askew, in exchange for which those individuals delivered ineligible Medicare beneficiaries to the hospital’s PHPs. Earnest Gibson IV also paid patient recruiters, including Robert Crane and others, to deliver ineligible Medicare beneficiaries to the specific PHP operated by Earnest Gibson IV.
To date, six other individuals either have pleaded guilty based on their involvement in the scheme. Mohammad Khan, an assistant administrator at Riverside, who managed many of the hospital’s PHPs, pleaded guilty to conspiracy to commit health care fraud, conspiracy to defraud the United States and to pay illegal kickbacks, and five counts of paying illegal kickbacks; on May 21, 2015, Mohammad Khan was sentenced by U.S. District Judge Sim Lake of the Southern District of Texas to 40 years in prison for his role in the scheme. William Bullock, an operator of a Riverside satellite location, as well as Leslie Clark, Robert Ferguson, Waddie McDuffie and Sharonda Holmes, who were involved in paying or receiving kickbacks, also have pleaded guilty to participating in the scheme and await sentencing.
The case was investigated by the FBI, IRS-CI, Texas MFCU, HHS-OIG, RRB-OIG and OPM-OIG. The case was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Southern District of Texas. The case is being prosecuted by Assistant Chiefs Laura M.K. Cordova and Jennifer L. Saulino and Trial Attorney Ashlee C. McFarlane 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 nearly 2,100 defendants who collectively have billed the Medicare program for more than $6.5 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 (HEAT), go to: www.stopmedicarefraud.gov.
Oregon Woman Pleads Guilty for Conspiring to File Fraudulent Income Tax Returns Claiming More than $1 Million in RefundsRead the Press Release
A Portland, Oregon, woman pleaded guilty on Friday before U.S. District Court Judge Robert E. Jones in the District of Oregon for conspiring to file fraudulent federal income tax returns that claimed refunds of more than $1 million, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
According to the plea agreement, Jasmine Mason admitted that she conspired with other individuals to prepare and file more than 227 fraudulent income tax returns for calendar year 2009 during the 2010 tax filing season. The false information on the tax returns included fictitious W-2 wage and withholding information and fraudulent refundable tax credits.
As part of the terms of the plea agreement, Mason has agreed to a sentencing recommendation of 32 months in prison for her crimes. She also faces financial penalties of fines and restitution to the Internal Revenue Service (IRS) of more than $330,000 at her Sept. 15 sentencing.
Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation in Portland, who investigated the case, and Trial Attorneys Lori Hendrickson and Ryan Raybould of the Tax Division, who are prosecuting the case. She also thanked the U.S. Attorney’s Office in Portland for their substantial assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Kansas Man Pleads Guilty in Plot to Explode Car Bomb at AirportRead the Press Release
A Wichita, Kansas, man pleaded guilty to attempting to explode a car bomb at the airport in Wichita, announced Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Barry R. Grissom of the District of Kansas.
Terry Lee Loewen, 59, of Wichita, pleaded guilty today to one count of attempting to use a weapon of mass destruction. Loewen was arrested in December 2013 when he tried to enter the grounds of the Wichita Mid-Continent Airport for the purpose of exploding a bomb. (The airport recently was renamed Wichita Dwight D. Eisenhower National Airport).
“Terry Loewen utilized his privileged airport access to attempt a terrorist attack in Wichita,” said Assistant Attorney General Carlin. “Detecting, disrupting and holding accountable those who wish to harm Americans remains our highest priority.”
“Protecting the American people from terrorism is our primary mission,” said U.S. Attorney Grissom. “It is vital that we disrupt attacks against our homeland and bring terrorists to justice.”
In his plea, Loewen admitted he came to the attention of the FBI late in May 2013 when he became a Facebook friend of a person who was posting comments advocating violent jihad. The FBI began communicating with Loewen through an undercover employee. After Loewen expressed his desire to engage in violent jihad, the undercover employee offered to introduce him to someone who could help him do it.
Loewen told the undercover employee he was waiting for what he called “the green light” from Allah to carry out a violent attack on a civilian target. He said he did not expect to live through any of the attacks he had in mind. He also said he was inspired by the teachings of Osama bin Laden and Anwar al-Awlaki, and that he had downloaded thousands of pages of information on jihad.
In September 2013, Loewen sent photos of airplanes on the tarmac at the Wichita airport. He commented that he could have “walked over there, shot both pilots … slapped some C4 on both fuel trucks and set them off before anyone even called TSA.”
In October 2013, Loewen met with a second undercover FBI employee who Loewen believed was a “brother” and would help him blow up a plane. Loewen said he had scouted the airport to determine a time and place for an attack that would be sure to kill as many people as possible.
Loewen assisted the second FBI employee in the final assembly of an improvised explosive device. He was not aware that the explosive materials used in the device were inert. In the early hours of Dec. 13, 2013, the second FBI employee picked up Loewen at a Wichita hotel. They drove to where the bomb was stored and finished wiring the device. When they reached the airport, Loewen twice used his airport badge at a card reader to attempt to get onto the tarmac before he was arrested.
Loewen’s sentencing will be scheduled at a later date. Both parties have agreed to recommend a sentence of 20 years in federal prison.
Assistant Attorney General Carlin and U.S. Attorney Grissom commended the FBI Wichita Joint Terrorism Task Force, which includes members from the FBI, Sedgwick County, Kansas, Sheriff’s Office and Kansas Highway Patrol. Assisting with the investigation were the FBI Kansas City Division, the Transportation Security Administration, the Wichita Airport Authority and the Wichita Police Department. Assistant Attorney General Carlin and U.S. Attorney Grissom also commended the prosecutors on the case, Assistant U.S. Attorneys David Smith and Tony Mattivi of the District of Kansas and Trial Attorney Erin Creegan of the Justice Department’s National Security Division.
Loewen Plea Agreement
Federal Court Prohibits Florida Tax Preparer from Preparing Tax Returns for OthersRead the Press Release
A federal court has barred a Tampa, Florida, man from preparing federal tax returns for others, the Justice Department announced today.
The civil injunction order, to which Octavio Cruz consented, was signed by U.S. District Judge Elizabeth A. Kovachevich of the Middle District of Florida. The order also bars the business Cruz was operating, Advantage Accounting Corp., from continuing to prepare tax returns.
In August 2014, the United States filed a complaint to enjoin Cruz and Advantage Accounting Corp. from preparing returns for others. According to the complaint, Cruz prepared returns that unlawfully understated income tax liabilities and overstated refunds by fabricating or exaggerating deductions and tax credits his customers were not eligible to take. Cruz’s practices included fabricating Schedule C (Profit or Loss From Business) losses for non-existent businesses and falsely claiming child care and residential energy credits for which the customers were not eligible and did not incur. The suit alleges that Cruz also prepared returns that falsely claimed American Opportunity Credits for taxpayers who did not incur qualified education expenses or go to college. Altogether, the government alleged that loss to the U.S. Treasury from Cruz’s activities may be in the millions of dollars.
The injunction requires Cruz to provide the government with a list of all customers for whom he has prepared federal tax returns or claims for refund since Jan. 1, 2012.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2015. The IRS has some tips on its website for choosing a tax preparer, and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on here. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Enbridge Must Restore Environment Injured by 2010 Pipeline Rupture and Oil Spill in Michigan’s Kalamazoo RiverRead the Press Release
The United States filed today a proposed consent decree that will resolve claims of federal, state and tribal resource trustees for natural resource damages (NRD) caused by the 2010 rupture of Enbridge’s Line 6B pipeline in Michigan that resulted in one of the largest inland oil spills in U.S. history. Under the proposed settlement, several Enbridge affiliates will be responsible for completing numerous natural resource restoration projects along the Kalamazoo River and will pay an additional sum of nearly $4 million to fund additional restoration projects, reimburse natural resource damage assessment costs of federal and tribal trustees and support ongoing restoration planning activities of natural resource trustees.
“This settlement will restore natural resources affected by the 2010 spill – one of the largest inland spills in our history – and compensates the public for natural resource losses resulting from the spill,” said Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division. “By requiring restoration and monitoring, along with funding for the federal, state and tribal trustees, this settlement will go a long way toward correcting the injuries to injured natural resources along the Kalamazoo River.”
Trustees reached the NRD settlement in conjunction with a separate settlement that resolves related state law claims of the state of Michigan against Enbridge relating to the July 2010 spill. The state settlement was filed May 12 in the circuit court for Calhoun County, Michigan. The NRD settlement, which was filed in federal court today, provides funding to the federal, state and tribal trustees to conduct natural resource restoration, reimburses assessment costs spent by the federal and tribal trustees and incorporates requirements from the state settlement for Enbridge to conduct restoration and monitoring. More details on the NRD settlement can be found at www.fws.gov/midwest/es/ec/nrda/MichiganEnbridge/.
The state settlement provisions that will also be enforceable under the NRD settlement include commitments by Enbridge to perform work to restore or compensate for injuries to injured natural resources along the Kalamazoo River, at an estimated cost of at least $58 million. Thus, the two settlements combined result in estimated expenditures of at least $62 million to resolve natural resource damages. In addition, the state settlement required Enbridge to implement a number of measures pursuant to state response action authorities and to pay the state for its costs of oversight of cleanup and restoration. The state of Michigan settlement announcement and details can be found at www.michigan.gov/oilspill.
The NRD settlement addresses Enbridge’s liability for natural resource damages under the Oil Pollution Act (OPA) and Michigan’s Natural Resources and Environmental Protection Act. The NRD settlement provides for habitat improvement projects to address injuries to aquatic organisms, fish, reptile, mammals and birds, as well as for enhancements to public access and use of the Kalamazoo River for recreational, educational and cultural purposes. The trustees are proposing to implement the following projects with funding from the NRD settlement:
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Replace undersized culverts, remove existing obstacles to water flow and increase floodplain capacity in two tributaries to the Kalamazoo River;
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Control Eurasian water milfoil and otherinvasive species, within the Fort Custer State Recreation Area to provide improved habitat for warm water fisheries;
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Restore 175 acres of oak savanna uplands in Fort Custer State Recreation Area;
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Track and protect turtle reproduction in the impacted area of the Kalamazoo River;
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Restore wild rice beds in suitable areas along the Kalamazoo River;
- Document the historic use and knowledge of natural resources by members of the Match-E-Be-Nash-She-Wish Band of the Pottawatomi Indians (Gun Lake Tribe) and the Nottawaseppi Huron Band of the Potawatomi to guide restoration and stewardship.
The NRD settlement also incorporates certain requirements from the state’s settlement with Enbridge, including requirements to:
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Restore and monitor the 320 acres of wetlands affected by the spill and response activities;
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Permanently restore, create or otherwise protect at least 300 additional acres of wetland habitat in compensation for wetland losses;
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Evaluate stream function within the restored areas of Talmadge Creek and perform additional actions as needed;
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Conduct monitoring and restoration activities related to the removal of large woody debris during the spill response;
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Fund the state of Michigan to monitor fish contamination, fish populations and the health of stream bottom communities along Talmadge Creek and the Kalamazoo River.
Enbridge has already implemented additional projects that relate to losses of natural resources:
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Created the Kalamazoo River Community Recreational Foundation including a $2.5 million endowment to assure perpetual care of these projects
Removed the dam at Ceresco on the Kalamazoo River and restored over 2.5 miles of river channel that was previously impounded.
“Working together, the natural resource trustees are using the settlements in tandem to develop a big-picture, comprehensive plan to restore natural resources,” said Deputy Regional Director Charlie Wooley for the Midwest Region of the U.S. Fish and Wildlife Service. “This cooperative approach will enhance our ability to return to the public the natural resources lost due to the spill.”
The trustees are asking for public comment on a draft Damage Assessment and Restoration Plan/Environmental Assessment (DARP/EA) developed to inform the public about the harm caused by the pipeline rupture and the proposed restoration projects described above to address these injuries and losses. This draft DARP/EA is now available for public review and comment at www.fws.gov/midwest/es/ec/nrda/MichiganEnbridge/, along with the consent decree for the NRD settlement filed in federal court at www.justice.gov/enrd/consent-decrees.
Settlement of the state law claims and the natural resource damages claims do not affect or alter Enbridge’s other liabilities or obligations under OPA or the Clean Water Act (CWA).
Enbridge’s Lakehead Line 6B pipeline ruptured near Marshall, Michigan, on July 25, 2010, discharging oil into the environment. Enbridge discharged significant additional oil from Line 6B during two attempts to restart the ruptured pipeline on July 26, 2010. Oil discharged from Line 6B entered Talmadge Creek and ultimately extended approximately 38 miles down the Kalamazoo River. The oil impacted over 1,560 acres of stream and river habitat as well as floodplain and upland areas, injuring birds, mammals, reptiles and other wildlife. The river was immediately closed to the public and sections remained closed for several years, reducing recreational and tribal uses of the river.
For more information on the cleanup of the 2010 pipeline discharges, visit www.mi.gov/oilspill and www.epa.gov/enbridgespill.
The natural resource trustees in this case include the Michigan Department of Environmental Quality, the Michigan Department of Natural Resources, the Michigan Department of the Attorney General, the U.S. Fish and Wildlife Service, the National Oceanic and Atmospheric Administration, the Nottawaseppi Huron Band of the Potawatomi Tribe and the Match-E-Be-Nash-She-Wish Band of the Pottawatomi Indians (Gun Lake Tribe).
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Construction Service Company Owner Pleads Guilty to Fraud Conspiracy and Tax Violation Involving Contract with the New York Power AuthorityRead the Press Release
The owner of a Bardonia, New York, construction service company pleaded guilty to conspiring to defraud the New York Power Authority (NYPA) and filing a false tax return, the Department of Justice, the IRS and the New York State Inspector General announced today.
According to the two-count felony charge filed in U.S. District Court of the Southern District of New York in White Plains today, Thomas Delaney, owner of Over Rock Construction LLC, participated in a scheme to defraud NYPA. In October 2009, Over Rock was awarded a five-year, $3 million contract to perform landscaping, snow removal and masonry work at NYPA’s administrative facility in White Plains. To generate cash for those involved in the scheme, Delaney, with the assistance of his co-conspirators, submitted fraudulent certified payroll statements and invoices to NYPA for reimbursement for individuals who performed no services (“no show” employees) on behalf of Over Rock at NYPA. Between 2009 and 2012, the false and fraudulent overcharges paid by NYPA to Over Rock totaled more than $400,000. Delaney also pleaded guilty to filing a false and fraudulent tax return which substantially understated his income.
“The defendant cooked the books twice – first so he could defraud the New York Power Authority and then again to avoid paying taxes he owed,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “The division will continue to work with our partners at the FBI, IRS and the New York Inspector General to bring to justice those who corrupt a public bidding process for their own personal gain.”
“Today we see yet another scheme involving fraudulent payroll statements and invoices that were used to pad the pockets of devious individuals,” said Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office. “Along with the announcement of this guilty plea comes a reminder that the FBI will continue to work with our partners in rooting out fraud to both public and private companies.”
“This contractor defrauded the State on multiple occasions, repeatedly billing the New York Power Authority for workers who never showed up and by paying significantly less taxes than he owed,” said New York State Inspector General Catherine Leahy Scott. “Today's guilty plea serves to reinforce my office's ongoing commitment to protect the integrity of the contracting process across all state agencies and authorities. I would like to thank our federal law enforcement partners in this matter and look forward to continuing our work with them to hold accountable any corrupt entities or individuals.”
“IRS Criminal Investigation is committed to ensuring that everyone pays their fair share of taxes,” said Special Agent in Charge Shantelle P. Kitchen of the IRS Criminal Investigation New York Field Office. “To that end, we will investigate individuals who willfully conceal income to reduce or eliminate their own tax obligations, effectively increasing the burden on honest taxpayers.”
Delaney pleaded guilty to a fraud conspiracy charge that carries a maximum penalty of 20 years in prison, three years of supervised release and a $250,000 fine. Delaney also pleaded guilty to subscribing to a false tax return, which carries a maximum penalty of three years in prison and a $100,000 fine. The maximum fines for each of these charges 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.
These charges arose from an investigation initiated by the New York State Inspector General and is part of an ongoing joint federal and state investigation of bid rigging, fraud and tax-related offenses in the award of contracts at NYPA’s facility in White Plains. The investigation is being conducted by the Antitrust Division’s New York Office with the assistance of the FBI, the IRS Criminal Investigation and the New York State Office of the Inspector General. NYPA is cooperating with the investigation. Anyone with information on bid rigging or other anticompetitive conducted related to the award or performance of municipal and state contracts should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258 or visit http://www.justice.gov/atr/contact/newcase.html.
Texas Man Sentenced to 82 Months in Prison for Attempting to Travel to Syria to Join ISILRead the Press Release
Michael Todd Wolfe aka Faruq, 24, of Austin, Texas, was sentenced this afternoon by U.S. District Court Judge Sam Sparks of the Western District of Texas to serve 82 months in federal prison for attempting to provide material support to a designated foreign terrorist organization, announced Assistant Attorney General for National Security John Carlin, Acting U.S. Attorney Richard L. Durbin Jr. for the Western District of Texas and Special Agent in Charge Christopher Combs of the FBI’s San Antonio Division.
In June 2014, Wolfe pleaded guilty to the charge, admitting that from August 2013 to June 17, 2014, he planned to travel to the Middle East to provide material support to the Islamic State of Iraq and the Levant (ISIL). Wolfe previously acknowledged that he applied for and acquired a U.S. passport, participated in physical fitness training, practiced military maneuvers and made efforts to conceal his communications about his plans to travel overseas to engage in violent jihad. Wolfe also purchased airline tickets so that he could travel to Europe to meet an FBI undercover employee, whom the defendant then believed would facilitate travel to Syria through Turkey. In furtherance of his attempt to provide material support to ISIL, Wolfe travelled to Houston and was apprehended on June 17, 2014, on the jet-way, as he attempted to board a flight to Toronto, Canada. His ticketed itinerary had him traveling through Iceland and arriving in Copenhagen, Denmark, on June 18, 2014. He then planned to make his way to Syria to join with ISIL and engage in the armed conflict. Wolfe has remained in federal custody since his arrest.
The case was investigated by the agencies comprising the Central Texas JTTF, which include the FBI; Internal Revenue Service-Criminal Investigation; U.S. Citizenship and Immigration Services; U.S. Army Intelligence; Austin Police Department; Round Rock, Texas, Police Department; Killeen, Texas, Police Department; University of Texas Police Department; Travis County, Texas Sheriff's Office; Texas Department of Public Safety, Office of the Texas Attorney General and the Texas Alcoholic Beverage Commission.
The case was prosecuted by Assistant U.S. Attorneys Gregg N. Sofer and Michael Galdo of the Western District of Texas, and Trial Attorneys Josh Parecki and Michael Dittoe of the National Security Division’s Counterterrorism Section.
New York Business Owner Sentenced to Prison for Failure to Pay Employment TaxesRead the Press Release
A Dix Hills, New York, resident and business owner was sentenced to serve more than one year in prison today in the Eastern District of New York for employment tax fraud, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
“Business owners that use ‘off the books’ payrolls cheat the U.S. Treasury and take unfair advantage of honest competitors who follow the law and pay their taxes,” said Acting Assistant Attorney General Ciraolo. “Today’s sentence sends a clear message that the Justice Department is aggressively pursuing and holding accountable those who willfully fail to collect and pay employee withholdings, social security and other required federal employment taxes.”
Eric Anderson was sentenced to serve 18 months in prison by U.S. District Judge Arthur D. Spatt. In addition to prison time, Anderson was ordered to serve three years of supervised release and to pay $1,080,222 in restitution to the Internal Revenue Service (IRS). Anderson paid $50,000 towards restitution at his sentencing today.
According to court documents, Anderson owned three construction companies located in Dix Hills: Anderson Framing, Anderson Enterprise and Anderson Trim Specialty. From 2006 through 2008, the defendant used a commercial check cashing service to cash more than $10.5 million in checks paid to his construction companies representing gross receipts of the businesses. Anderson used a portion of the cash to pay his employees “under the table” wages. As the owner, Anderson was responsible for his companies’ finances and tax obligations. From 2006 through 2008, Anderson failed to collect or pay over to the IRS the employment taxes that were due quarterly on his employees’ cash wages.
Anderson also used a portion of the cash from his businesses for his own personal use. He concealed much of his income from the IRS by filing false corporate and individual federal income tax returns in certain years and failing to file tax returns in other years. In total, Anderson’s actions caused a tax loss of more than $1 million to the IRS.
On June 9, 2014, Anderson pleaded guilty to willfully failing to collect and pay over to the IRS employment taxes.
Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Mark Kotila and Jeffrey Bender of the Tax Division, who prosecuted the case. She also thanked the U.S. Attorney’s Office of the Eastern District of New York for their assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
ICE, US Marshals arrest 27 international fugitives with InterpolRead the Press Release
WASHINGTON — Twenty-seven criminal foreign fugitives with active Interpol alerts were arrested across the United States this week by U.S. Immigration and Customs Enforcement’s (ICE) Enforcement and Removal Operations (ERO) and the U.S. Marshals Service (USMS).
Those arrested are from 13 different countries and wanted for crimes abroad. Of the 27, five are wanted for homicide, two for kidnapping, one for raping a child and one for human sex trafficking.
“Criminals who create mayhem here in the United States or abroad should understand that law enforcement is a global partnership,” said ICE Director Sarah R. Saldaña. “We will find them, and we will bring them to justice.”
Arrests occurred nationwide in nine states during the three-day sweep, which took place Tuesday through Thursday. Those arrested fell squarely into the agency’s enforcement priorities, which ICE officers prioritize and enforce every day.
“The arrest of these foreign fugitives should send a strong message to anyone attempting to avoid prosecution for their crimes here in the U.S. or abroad,” said USMS Director Stacia Hylton. “Our men and women were relentless in their effort to locate and apprehend these criminals. We hope our effort gives victims a sense of comfort in knowing these individuals are no longer on the streets.”
“Information-sharing 24 hours, seven days a week, 365 days a year among U.S. law enforcement agencies like ERO and the USMS, along with the 189 other Interpol member countries and Interpol Washington, ensures transnational criminals have no place to hide,” stated Interpol Washington Director Shawn A. Bray. “By facilitating the sharing of this information with our law enforcement partners, together, we will continue to enhance safety and security for U.S. citizens and the global community.”
Arrests included:
- On June 2, ERO arrested Nelson Garcia Orellana, 30, and his brother Jorge Garcia Rivera, 23, both natives of El Salvador, in Trenton, New Jersey, and Alexandria, Virginia, respectively. They are wanted by authorities in their home country for kidnapping and are the subjects of Interpol Red Notices.
- On June 2, ERO arrested Gabriel Collado Gonzalez, 40, a native of Nicaragua, in Miami. Gonzalez is wanted by authorities in his home country for embezzlement and criminal conspiracy and is the subject of an Interpol Red Notice.
- On June 2, ERO arrested Raul Ortiz Henriquez, 40, a native of El Salvador, in Santa Fe Springs, California. Henriquez is wanted by authorities in his home country for rape of a minor. In November 2013, Henriquez grabbed his victim by her arms and forced her into a van he was driving while she was leaving school. He drove away, parked, beat her in the chest and raped her. He is the subject of an Interpol Red Notice.
The following individuals are all the subject of Interpol Red Notices and remain at-large:
- Juan Chicas Ramos, 56, a native of El Salvador, is wanted by authorities in his home country on an Interpol Red Notice for homicide
- Lisandro Medina Gamez, 33, a native of El Salvador, is wanted by authorities in his home country on an Interpol Red Notice for fraud
The ICE National Criminal Analysis and Targeting Center (NCATC) provided critical investigative support for this operation, including criminal and intelligence analysis from a variety of sources. The NCATC provides comprehensive analytical support to aid the at-large enforcement efforts of all ICE components.
ICE credits the combined efforts of the U.S. National Central Bureau-Interpol Washington, the U.S. Marshals Service, the U.S. Department of State Diplomatic Security Service, U.S. Citizenship and Immigration Services, and U.S. Customs and Border Protection.
Members of the public who have information about these fugitives are urged to contact ICE by calling the toll-free ICE tip line at 1-866-347-2423 or internationally at 001-1802-872-6199. They can also file a tip online by completing ICE’s online tip form.
Since Oct. 1, 2009, ERO has removed more than 720 foreign fugitives from the United States who were sought in their native countries for serious crimes, including kidnapping, rape and murder. ERO works with HSI’s Office of International Operations, foreign consular offices in the United States, and Interpol to identify foreign fugitives illegally present in the United States.
Georgia Real Estate Investor Pleads Guilty to Bid Rigging and Fraud Conspiracies at Public Foreclosure AuctionsRead the Press Release
A Georgia real estate investor pleaded guilty today for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Georgia, the Department of Justice announced.
Felony charges against David Wedean were filed on April 27, 2015, in the U.S. District Court of the Northern District of Georgia in Atlanta. According to court documents, from at least as early March 2007 and continuing at least until August 2011, in Fulton County, Georgia, and from at least as early as August 2007 and continuing at least until September 2011, in DeKalb County, Georgia, Wedean conspired with others not to bid against one another, but instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Fulton and DeKalb Counties. Wedean was also charged with a conspiracy to use the mail to carry out a scheme to fraudulently acquire title to selected Fulton and DeKalb properties sold at public auctions, to make and receive payoffs and to divert money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.
“The defendant conspired with other real estate investors to profit by defrauding mortgage holders and property owners,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division. “This case, which is the eighth prosecution so far against defendants for rigging public foreclosure auctions in Georgia, demonstrates the Division’s continuing commitment to rooting out corruption and fraud in real estate markets around the country.”
The primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at Fulton and DeKalb County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.
“The FBI, in working with the U.S. Department of Justice’s Antitrust Division, continues to address the unlawful bid rigging seen in Georgia’s real estate foreclosure auctions,” said Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office. “The guilty plea of Mr. Wedean, a Georgia based real estate investor, not only illustrates the problem but also how the federal government will aggressively pursue those engaged in this criminal activity.”
A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act charge may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime if either amount is greater than the statutory maximum fine. A count of conspiracy to commit mail fraud carries a maximum penalty of 20 years in prison and a fine in an amount equal to the greatest of $250,000, twice the gross gain the conspirators derived from the crime or twice the gross loss caused to the victims of the crime by the conspirators.
Including Wedean, eight cases have been filed as a result of the ongoing investigation being conducted by Antitrust Division’s Washington Criminal II Section, the FBI’s Atlanta Division and the U.S. Attorney’s Office of the Northern District of Georgia. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions in Georgia should contact Washington Criminal II Section of the Antitrust Division at 202-598-4000, call the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.htm.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
Federal Court Prohibits Nevada Tax Preparer from Preparing Returns Containing Foreign Earned Income ExclusionRead the Press Release
A federal court has barred a North Las Vegas, Nevada, woman and her business from preparing federal tax returns that contain or involve foreign earned income and from promoting the exclusion of foreign earned income to others, the Justice Department announced today.
The civil injunction order, to which Sheila Bunting consented, was entered by U.S. District Judge James C. Mahan of the District of Nevada. The injunction also bars Bunting’s business, 5 Star Tax LLC, from continuing to prepare tax returns that contain or involve foreign earned income, and from promoting the exclusion of foreign earned income to others.
According to the complaint, Bunting inappropriately attempted to exclude foreign earned income from the calculation of her customers’ federal tax liabilities, which understated her customers’ correct tax liabilities or inflated improper refunds. Typically, U.S. citizens may exempt some foreign earned income from the calculation of gross income if they are present in a foreign country for at least 330 full days out of 12 consecutive months. This period can be waived when the Secretary of the Treasury determines, after consultation with the Secretary of State, that individuals were required to leave a foreign country due to war, civil unrest or other conditions that preclude the normal conduct of business, among other things. In implementing this waiver provision, each year the Secretary of the Treasury publishes a list of countries that have been determined eligible for waiver requests. According to the suit, Bunting disregarded the published list of waiver-eligible countries in filing the exclusion of foreign earned income on behalf of her customers.
The injunction requires Bunting to provide a list of customers that identifies by name, social security number, address, e-mail address, telephone number and tax periods, all persons for whom she has prepared federal tax returns or claims for refund since Jan. 1, 2012, that reference foreign earned income.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2015. The IRS has some tips on its website for choosing a tax preparer, and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on here. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
United States Settles Kickback Allegations with Georgia HospitalRead the Press Release
The Department of Justice announced today that the United States has settled a False Claims Act lawsuit with Health Management Associates (HMA) and Clearview Regional Medical Center for $595,155. The lawsuit filed in the Middle District of Georgia alleged that from 2008 to 2009 the hospital paid kickbacks to an obstetric clinic that served primarily undocumented Hispanic women, in return for referral of those patients for labor and delivery at the hospital. The hospital then billed the Medicaid program in Georgia for the services provided to the referred patients. Clearview, located in Monroe, Georgia, was named Walton Regional Medical Center and was owned by hospital operator HMA during the time period relevant to the lawsuit. Clearview is now owned by Community Health Systems (CHS), which purchased HMA in January 2014.
"This resolution illustrates our commitment to ensuring that health care providers who pay kickbacks in return for patient referrals are held accountable,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “Schemes such as this one corrupt the health care system and take advantage of vulnerable patients.”
“The Medicaid program is a vital part of the government’s efforts to make sure that everyone has access to health care,” said U.S. Attorney Georgia Michael J. Moore of the Middle District of Georgia. “Instead of providing health care services to expectant mothers in its area and receiving payment for those services from Medicaid, the hospital participated in a scheme to pay kickbacks in exchange for having pregnant women from outside its market funneled to its facility with the goal of increasing the amount of Medicaid money the hospital could claim.”
The United States’ complaint alleges that HMA’s Walton Regional Medical Center paid kickbacks to Hispanic Medical Management doing business as Clinica de la Mama (Clinica) and related entities, in return for Clinica’s agreement to send pregnant women to Walton Regional for deliveries paid for by Medicaid, in violation of the federal Anti-Kickback Statute. The kickbacks were disguised as payments for a variety of services allegedly provided by Clinica.
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.
“Hospitals that pay kickbacks to clinics for referrals of undocumented pregnant patients are taking advantage of both these vulnerable women and the taxpayer-funded Medicaid program,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Atlanta Regional Office. “Our agency is dedicated to investigating such corrosive kickback schemes, which undermine the public’s trust in medical institutions and the financial health of government health care programs.”
“The FBI is proud of the role it played in bringing forward today’s settlement, said Special Agent in Charge J. Britt Johnson of the FBI Atlanta Field Office. “The FBI will continue to provide significant investigative assets and resources to ensure that the integrity of federally funded health care programs such as Medicaid are protected from providers who would abuse them.”
As part of the settlement, HMA and Clearview will pay the State of Georgia an additional $396,770 to settle Georgia’s claims under the Georgia False Medicaid Claims Act. The Medicaid program is a jointly funded federal-state program that provides health care to the poor and disabled. Although undocumented aliens are not eligible for regular Medicaid coverage, the Medicaid program provides coverage for emergency conditions, including childbirth, for undocumented aliens.
The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act. The Act permits private parties to sue on behalf of the government for false claims for government funds and to receive a share of any recovery. The False Claims Act also permits the government to intervene in such lawsuits, as it did in this case against Walton Regional, as well as several other defendants, including Clinica de la Mama and four hospitals owned by Tenet Healthcare Corporation. The litigation against the non-settling defendants is ongoing. The relator, Ralph D. Williams, the chief financial officer of Walton Regional from April 2009 to October 2009, will receive $119,031 from the United States’ portion of the settlement.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.
This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Offices for the Middle and Northern Districts of Georgia, HHS-OIG, FBI and the Office of the Attorney General for the State of Georgia.
The case is captioned United States ex rel. Williams v. Health Mgmt. Assocs. Inc., et al., No. 3:09-CV-130 (M.D. Ga.).
The claims resolved by this settlement are allegations only and there has been no determination of liability.
Un Extranjero Sentenciado a 5 Años por Delitos de Posesión de Armas de Fuego, Cultivo de Marihuana en el Bosque Nacional de Mendocino y Destrucción de Terrenos y Recursos NacionalesRead the Press Release
SACRAMENTO, Calif. – Ivan Espinoza Villafana, de 25 años de edad y ciudadano de México, fue sentenciado hoy por el Juez del Distrito de los Estados Unidos Troy L. Nunley a cinco años de prisión y una indemnización de $14,000 dólares por la posesión de una arma de fuego por un indocumentado, el cultivo de marihuana y la depredación de terrenos y recursos públicos, anunció el Procurador de los Estados Unidos Benjamín B. Wagner.
Según documentos del tribunal, el 19 de agosto del 2014, agentes de la policía adentraron en un campo de cultivo de marihuana por los alrededores de Ice Springs dentro del Bosque Nacional de Mendocino en el Condado de Glenn donde se estaban cultivando 732 plantas de marihuana. Al ver que se acercaban los agentes Villafana huyó. Fue aprehendido y arrestado en el lugar de los hechos. En el momento de la detención, Villafranca llevaba un revólver Smith & Wesson cargado en la pretina de su pantalón. Los agentes también encontraron un rifle en el área de recreación del lugar. Villafana está bajo custodia desde su arresto.
El cultivo de marihuana en el lugar causó daños significativos a los recursos naturales. Se estaba desviando agua por medio de tubos de riego desde un arroyo cercano hasta las plantas de marihuana que necesitan aproximadamente 6 a 8 galones de agua por planta cada día. Los agentes también observaron que había numerosos sacos de fertilizante y pesticidas que estaban siendo utilizados para cultivar la marihuana. Un hidrólogo del Servicio Forestal de EE. UU. hizo un reconocimiento del lugar y concluyó que el impacto de la fuga del fertilizante y los pesticidas hacia los arroyos perjudicaría la calidad del agua y causaría daños a la fauna ya que los animales del Bosque Nacional ingerirían los pesticidas y fertilizantes. Además, los cultivadores de la marihuana del lugar talaron y despejaron los árboles y la vegetación dentro del Bosque Nacional para hacer sitio para las plantas de marihuana. El reparar y el rehabilitar el daño causado al Bosque Nacional por este cultivo le costará a los Estados Unidos entre $14,400 y $73,500 dólares.
Este caso fue el producto de una investigación llevada a cabo por el Servicio Forestal de los Estados Unidos, la Oficina del Sheriff del Condado de Glenn y del Departamento de Pesca y Vida Silvestre de California. El Procurador Auxiliar de los Estados Unidos Christiaan Highsmith está procesando el caso.
Kentucky Businessman Sentenced in New York Federal Court for $53 Million Tax Scheme and Massive Fraud that Involved Bribery of Bank OfficialsRead the Press Release
Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division and U.S. Attorney Preet Bharara of the Southern District of New York announced that a Kentucky businessman was sentenced today to serve 12 years in prison.
Wilbur Anthony Huff, 53, of Caneyville and Louisville, Kentucky, was also ordered to pay more than $108 million in restitution for committing various tax crimes that caused more than $50 million in losses to the Internal Revenue Service (IRS), and a massive fraud that involved the bribery of bank officials, the fraudulent purchase of an insurance company, and the defrauding of insurance regulators and an investment bank. In December 2014, Huff pleaded guilty before U.S. District Judge Noemi Reice Buchwald of the Southern District of New York, who imposed today’s sentence.
“The department is committed to vigorously pursuing and prosecuting those individuals who violate the employment tax laws of the United States,” said Acting Assistant Attorney General Ciraolo. “Today’s significant prison sentence sends a loud and clear message to those engaged in such criminal conduct, including owners and operators of professional employer organizations like Mr. Huff, who steal employment taxes collected from their business clients to line their own pockets, instead of paying over those funds to the IRS.”
“Anthony Huff and his co-conspirators stole millions of dollars from taxpayers and engaged in extensive frauds, all in the pursuit of additional property, luxury cars and the like,” said U.S. Attorney Bharara. “His crimes have earned him 12 years in prison. I would like to thank our law enforcement partners for their assistance on this case.”
According to the information, plea agreement, sentencing submissions and statements made during court proceedings:
Huff was a businessman who controlled numerous entities located throughout the United States (Huff-Controlled Entities). Huff controlled the companies and their finances, using them to orchestrate a $53 million fraud on the IRS and other schemes that spanned four states, involving tax violations, bank bribery, fraud on bank regulators and the fraudulent purchase of an insurance company. As part of his crimes, Huff concealed his control of the Huff-Controlled Entities by installing other individuals to oversee the companies’ day-to-day functions and to serve as the companies’ titular owners, directors, or officers. Huff also maintained a corrupt relationship with Park Avenue Bank and Charles J. Antonucci Sr., the bank’s president and chief executive officer, and Matthew L. Morris, the bank’s senior vice president.
Tax Crimes
From 2008 to 2010, HUFF controlled O2HR, a professional employer organization (PEO) located in Tampa, Florida. Like other PEOs, O2HR was paid to manage the payroll, tax and workers’ compensation insurance obligations of its client companies. However, instead of paying $53 million in taxes that O2HR’s clients owed the IRS and $5 million to Providence Property and Casualty Insurance Company (Providence P&C) – an insurance company based in Oklahoma – for workers’ compensation coverage expenses for O2HR clients, Huff stole the money that his client companies had paid O2HR for those purposes. Among other things, Huff diverted millions of dollars from O2HR to fund his investments in unrelated business ventures and pay his family members’ personal expenses. The expenses included mortgages on Huff’s homes, rent payments for his children’s apartments, staff and equipment for Huff’s farm, designer clothing, jewelry and luxury cars.
Conspiracy to Commit Bank Bribery, Defraud Bank Regulators and Fraudulently Purchase an Oklahoma Insurance Company
From 2007 through 2010, Huff engaged in a massive multi-faceted conspiracy in which he schemed to bribe executives of Park Avenue Bank, defraud bank regulators and the board and shareholders of a publicly-traded company, and fraudulently purchase an Oklahoma insurance company. As described in more detail below, Huff paid bribes totaling hundreds of thousands of dollars in cash and other items to Morris and Antonucci in exchange for their favorable treatment at Park Avenue Bank.
As part of the corrupt relationship between Huff and the bank executives, Huff, Morris, Antonucci and others conspired to defraud various entities and regulators during the relevant time period. Specifically, Huff conspired with Morris and Antonucci to falsely bolster Park Avenue Bank’s capital by orchestrating a series of fraudulent transactions to make it appear that Park Avenue Bank had received an outside infusion of $6.5 million, and engaged in a series of further fraudulent actions to conceal from bank regulators the true source of the funds.
Huff further conspired with Morris, Antonucci and others to defraud Oklahoma insurance regulators and others by making material misrepresentations and omissions regarding the source of $37.5 million used to purchase Providence Property and Casualty Insurance Company, an insurance company based in Oklahoma that provided workers’ compensation insurance for O2HR’s clients and to whom O2HR owed a significant debt.
Bribery of Park Avenue Bank Executives
From 2007 to 2009, Huff paid Morris and Antonucci at least $400,000 in exchange for which they: provided Huff with fraudulent letters of credit obligating Park Avenue Bank to pay $1.75 million to an investor in one of Huff’s businesses if Huff failed to pay the investor back himself; allowed the Huff-Controlled Entities to accrue $9 million in overdrafts; facilitated intra-bank transfers in furtherance of Huff’s fraud; and fraudulently caused Park Avenue Bank to issue at least $4.5 million in loans to the Huff-Controlled Entities.
Fraud on Bank Regulators and a Publicly-Traded Company
From 2008 to 2009, Huff, Morris and Antonucci engaged in a scheme to prevent Park Avenue Bank from being designated as “undercapitalized” by regulators – a designation that would prohibit the bank from engaging in certain types of banking transactions and that would subject the bank to a range of potential enforcement actions by regulators. Specifically, they engaged in a series of deceptive, “round-trip” financial transactions to make it appear that Antonucci had infused the bank with $6.5 million in new capital when, in actuality, the $6.5 million was part of the bank’s pre-existing capital. Huff, Morris and Antonucci funneled the $6.5 million from the bank through accounts controlled by Huff to Antonucci. This was done to make it appear as though Antonucci was helping to stabilize the bank’s capitalization problem, so that the bank could continue engaging in certain banking transactions that it would otherwise have been prohibited from doing, and to put the bank in a better posture to receive $11 million from the Troubled Asset Relief Program. To conceal their unlawful financial maneuvering, Huff created, or directed the creation of, documents falsely suggesting that Antonucci had earned the $6.5 million through a bogus transaction involving another company Antonucci owned. Huff, Morris and Antonucci further concealed their scheme by stealing $2.3 million from General Employment Enterprises Inc., a publicly-traded temporary staffing company, in order to pay Park Avenue Bank back for monies used in connection with the $6.5 million transaction.
Fraud on Insurance Regulators and the Investment Firm
From July 2008 to November 2009, Huff, Morris, Antonucci and Allen Reichman, an executive at an investment bank and financial services company headquartered in New York City (the Investment Firm), conspired to defraud Oklahoma insurance regulators into allowing Antonucci to purchase the assets of Providence P&C and defraud the Investment Firm into providing a $30 million loan to finance the purchase. Specifically, Huff and Antonucci devised a scheme in which Antonucci would purchase Providence P&C’s assets by obtaining a $30 million loan from the Investment Firm, which used Providence P&C’s own assets as collateral for the loan. However, because Oklahoma insurance regulators had to approve any sale of Providence P&C, and because Oklahoma law forbade the use of Providence P&C’s assets as collateral for such a loan, Huff, Morris, Antonucci and Reichman made and conspired to make a number of material misstatements and material omissions to the Investment Firm and Oklahoma insurance regulators concerning the true nature of the financing for Antonucci’s purchase of Providence P&C. Among other things, Reichman directed Antonucci to sign a letter that provided false information regarding the collateral that would be used for the loan, and Huff, Morris and Antonucci conspired to falsely represent to Oklahoma insurance regulators that Park Avenue Bank – not the Investment Firm – was funding the purchase of Providence P&C.
After deceiving Oklahoma regulators into approving the sale of Providence P&C, Huff took $4 million of the company’s assets, which he used to continue the scheme to defraud O2HR’s clients. Ultimately, in November 2009, the insurance company became insolvent and was placed in receivership after Huff, Morris and Antonucci had pilfered its remaining assets.
* * *
In addition to his prison sentence, Huff was sentenced to three years of supervised release, and ordered to forfeit $10.8 million to the United States and pay a total of more than $108 million in restitution to victims of his crimes, including, among others, the Federal Deposit Insurance Corporation (FDIC) and the IRS.
In imposing today’s sentence, Judge Buchwald said Huff’s crimes were “truly staggering” and “eye popping.” Judge Buchwald described Huff’s conduct, which was preceded by a federal conviction and failure to pay millions in civil judgments, as “a living example” of “chutzpah,” which she defined as “shameless audacity and unmitigated gall.”
Morris and Reichman pleaded guilty for their roles in the above-described offenses on Oct. 17, 2013, and Feb. 20, 2015, respectively. Reichman is scheduled to be sentenced before Judge Buchwald on July 15, and Morris is scheduled to be sentenced before Judge Buchwald on Aug. 19.
Antonucci pleaded guilty to his role in the crimes described above on Oct. 8, 2010, and is scheduled to be sentenced on Aug. 20, also before Judge Buchwald.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Bharara thanked the Special Inspector General for the Troubled Asset Relief Program, the FBI, IRS-Criminal Investigation, the New York State Department of Financial Services, Immigration and Customs Enforcement’s Homeland Security Investigations, and the Office of Inspector General of the FDIC, for their work in the investigation, and the Tax Division and the U.S. Attorney’s Office of the Southern District of Florida, for their assistance in the prosecution.
Today’s announcement is part of efforts underway by 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.
The case is being handled by the U.S. Attorney’s Office of the Southern District of New York Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Janis Echenberg and Daniel Tehrani and Special Assistant U.S. Attorney Tino Lisella of the Tax Division are in charge of the criminal case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Former FBI Special Agent Indicted for Theft of Drug Proceeds and Obstruction of JusticeRead the Press Release
A former special agent of the FBI was indicted yesterday for allegedly stealing over $100,000 of drug proceeds seized during the execution of search warrants and obstructing justice by taking steps to hide his alleged theft.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge Angel D. Gunn of the Justice Department’s Office of the Inspector General’s Los Angeles Field Office made the announcement.
“As alleged, former Agent Bowman put his own greed above the trust placed in him by the FBI and the American public,” said Assistant Attorney General Caldwell. “Corrupt law enforcement agents not only compromise those investigations in which they are involved, but also damage the reputations of fellow law enforcement officers who are dedicated to public service and the protection of all Americans.”
Scott M. Bowman, 44, of Moreno Valley, California, was charged in the Central District of California with three counts of conversion of property by a federal employee, three counts of obstruction of justice, two counts of money laundering, one count of falsification of records and one count of witness tampering.
According to allegations in the indictment, which was unsealed today, Bowman misappropriated over $100,000 of drug proceeds seized in June and August 2014 during the execution of three search warrants. The defendant allegedly misappropriated these funds after they were transferred to his custody in his official capacity as a federal law enforcement officer.
The indictment alleges that Bowman used the stolen money for his own purposes, including spending $43,850 in cash to purchase a 2012 Dodge Challenger coupe, $27,500 in cash to purchase a 2013 Toyota Scion FR-S coupe and approximately $26,612 in cash to outfit these vehicles with new equipment including speakers, rims and tires. According to the allegations in the indictment, the defendant also used approximately $15,000 of the misappropriated cash to pay for cosmetic surgery for his spouse, and opened a checking account into which he deposited approximately $10,665 of the stolen funds, a portion of which he used to pay for a weekend stay at a luxury hotel, casino and resort in Las Vegas, Nevada.
According to the indictment, to conceal his misappropriation of the drug proceeds, Bowman allegedly falsified official FBI reports and other records. Specifically, in connection with one of the seizures, Bowman allegedly endorsed an evidence receipt knowing that it did not accurately reflect the amount of cash seized and altered the same receipt by forging the signature of a police detective next to his own.
The indictment further alleges that Bowman made false representations to his colleagues regarding the disposition of certain seized drug proceeds. In addition, Bowman allegedly sent an email to the detective whose signature Bowman had forged setting forth a detailed cover story that the detective should offer if asked about Bowman’s activities with respect to the seized drug proceeds. According to the indictment, Bowman also allegedly provided the detective with a copy of the forged receipt so that the detective falsely could claim the forged signature as his own, if asked.
The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.
This case was investigated by the Department of Justice Office of the Inspector General and is being prosecuted by Trial Attorneys Robert J. Heberle and Lauren Bell of the Criminal Division’s Public Integrity Section.
Bowman Indictment
Two More Banks Reach Resolutions Under Justice Department's Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that two banks, Rothschild Bank AG and Banca Credinvest SA, have reached resolutions under the department’s Swiss Bank Program.
“The days of safely hiding behind shell corporations and numbered bank accounts are over,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division. “As each additional bank signs up under the Swiss Bank Program, more and more information is flowing to the IRS agents and Justice Department prosecutors going after illegally concealed offshore accounts and the financial professionals who help U.S. taxpayers hide assets abroad.”
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
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Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
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Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreements signed today, each bank agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay penalties in return for the department’s agreement not to prosecute these banks for tax-related criminal offenses.
Rothschild Bank AG (Rothschild) was founded in 1968 and is headquartered in Zurich, Switzerland. Rothschild offered services that it knew could and did assist U.S. taxpayers in concealing assets and income from the Internal Revenue Service (IRS), including code-named accounts, numbered accounts and hold mail service, where Rothschild would hold all mail correspondence for a particular client at the bank. These services allowed certain U.S. taxpayers to minimize the paper trail associated with the undeclared assets and income they held at Rothschild in Switzerland. For a number of years, including after Swiss bank UBS AG announced in 2008 that it was under criminal investigation, and following instructions from certain U.S. taxpayers, Rothschild serviced certain U.S. customers without disclosing their identities to the IRS. Some of Rothschild’s U.S. clients had accounts that were nominally structured in the names of non-U.S. entities. In some such cases, Rothschild knew that a U.S. client was the true beneficial owner of the account but nonetheless obtained a form or document that falsely declared that the beneficial owner was not a U.S. taxpayer. Since Aug. 1, 2008, Rothschild had 66 U.S.-related accounts held by entities created in Panama, Liechtenstein, the British Virgin Islands, the Cayman Islands or other foreign countries with U.S. beneficial owners. At least 21 of these accounts had false IRS Forms W-8BEN in the file, which are used to identify the beneficial owner of an account. Rothschild knew it was highly probable that such U.S. clients were engaging in this scheme to avoid U.S. taxes but permitted these accounts to trade in U.S. securities without reporting account earnings or transmitting any withholding taxes to the IRS, as Rothschild was required to do. Rothschild also opened accounts for U.S. taxpayers who had left other Swiss banks that the Department of Justice was investigating, including UBS. Since Aug. 1, 2008, Rothschild had 332 U.S.-related accounts with an aggregate maximum balance of approximately $1.5 billion. Of these 332 accounts, 191 accounts had U.S. beneficial owners and an aggregate maximum balance of approximately $836 million. Rothschild will pay a penalty of $11.51 million.
Located in Lugano, Switzerland, Banca Credinvest SA (Credinvest) started operations as a fully licensed bank in 2005. Credinvest offered a variety of services that it knew could assist, and that did assist, U.S. clients in concealing assets and income from the IRS, including hold mail service and numbered accounts. Credinvest did not set up any formalized internal reporting regarding U.S. clients and did not adopt any procedures to ascertain or monitor the compliance of its U.S. clients with their U.S. tax obligations. In late 2008, an external asset manager referred 11 accounts to Credinvest, all of which were for U.S. clients who had left UBS. The bank delegated to that external asset manager the primary management of those accounts and failed to ascertain the compliance of those clients with their U.S. tax obligations. The bank thus aided and assisted those clients in concealing their accounts from U.S. authorities. Since Aug. 1, 2008, Credinvest had 31 U.S.-related accounts with just over $24 million in assets. Credinvest will pay a penalty of $3.022 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.
“These resolutions with Credinvest and Rothschild are further examples of the commitment by the IRS and the Department of Justice to ensure that U.S. taxpayers report foreign bank accounts and pay taxes on all income earned from those accounts,” said Deputy Commissioner Douglas O'Donnell of the IRS Large Business and International Division. “We are encouraged by today’s progress and our ongoing work with the other Swiss banks that have entered the DOJ Swiss Bank Program.”
“The bank agreements announced today continue to change the landscape in the offshore banking world,” said Chief Richard Weber of IRS-Criminal Investigation. “With each additional agreement, the world where criminals can hide their money is becoming smaller and smaller. Those who circumvent offshore disclosure laws have little room to hide.”
Acting Assistant Attorney General Ciraolo thanked the IRS and in particular, IRS-Criminal Investigation and the IRS Large Business and International Division for their substantial assistance, as well as John E. Sullivan, Mark W. Kotila, Sean P. Beaty and Gregory S. Seador, who served as counsel on these matters, 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.
Credinvest executed NPA and SOF.pdf (506.47 KB)
Rothschild excecuted NPA and SOF.pdf (444.58 KB)
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Massachusetts Man Charged with Conspiring to Obstruct National Security InvestigationRead the Press Release
This afternoon a federal conspiracy charge was filed against David Wright, aka Dawud Sharif Wright, aka Dawud Sharif Abdul Khaliq, 24, of Everett, Massachusetts, who has been associated with a plot to kill an unnamed target in another state. Wright was arrested last night by federal authorities and had an initial appearance today in U.S. District Court in Boston. His detention hearing is scheduled for June 19, 2015 at 2:00 p.m.
Wright is charged in a one count complaint which alleges that he conspired with now-deceased Ussamah Abdullah Rahim, 26, to obstruct a federal investigation by destroying electronic evidence on Rahim’s smartphone. Rahim was shot and killed yesterday morning after he attacked Boston Police Officers and FBI agents seeking to question him.
As alleged in the complaint affidavit, Rahim, a private security officer, was planning to engage in a violent attack in the United States, and had purchased three military-style fighting knives and a sharpener in furtherance of this plan. In intercepted calls between Wright and Rahim, the men discussed a knife attack on an unnamed individual, and suggested that the target was to be beheaded and have his/her head placed on his/her chest. According to the complaint, such beheadings are a tactic of some foreign terrorist organizations which use such killings in propaganda videos.
The affidavit also alleges that Wright and Rahim met with a third person on a beach in Rhode Island on May 31, 2015, to discuss the planned beheading.
At approximately 5:00 a.m. on June 2, 2015, law enforcement intercepted a call between Wright and Rahim, in which Rahim insisted that he could no longer wait to take action. Instead of carrying on with his plan to behead the planned out-of-state target, Rahim declared that he was going to, “go after” the “boys in blue,” here in Massachusetts, because, “it’s the easiest target.” Rather than discourage Rahim, Wright supported the plan, telling Rahim to prepare his will and to leave his possessions to a named individual. After discussing Rahim’s plan to attack police officers in Massachusetts, Wright advised Rahim to destroy his phone and all of the evidence it contained to prevent “CSI” at “the scene” from obtaining incriminating information.
According to the complaint affidavit, on June 2, 2015, law enforcement officers met with Wright after Rahim attacked officers in Boston and was shot. Wright told officers of a recent rendezvous with Rahim on a beach in Rhode Island, and of Rahim’s intention to behead a specified individual in another state. Wright indicated he agreed with Rahim’s plan and supported it.
The charging statute provides a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
This investigation is being conducted by the FBI’s Boston Field Division, Boston Police Department, Massachusetts State Police, and member agencies of the Boston Joint Terrorism Task Force, including the Bureau of Alcohol, Tobacco, Firearms and Explosives, Homeland Security Investigations, U.S. Marshals Service and others. In addition, the Everett Police Department played a critical role in the response.
This case is being prosecuted by the U.S. Attorney’s Office of the District of Massachusetts in coordination with the Justice Department’s National Security Division.
David Wright Complaint
Justice Department Settles with School District to Desegregate Elementary School Classrooms in Ruston, LouisianaRead the Press Release
The Justice Department has announced that the United States District Court of the Western District of Louisiana yesterday approved a court-ordered agreement with the Lincoln Parish School Board to desegregate classrooms at four elementary schools serving students in grades K-5 in Ruston, Louisiana. The department and the board jointly filed the consent order, after an investigation by the United States found significant racial isolation in the elementary school classrooms (called homerooms) within the Ruston attendance zone.
Under the consent order, the board will implement the following changes at the four elementary schools in Ruston:
- assign students to homerooms so that the percentage of black and white students in each homeroom reflects the percentage of black and white students in each grade level at each school;
- refrain from grouping students into homerooms based on students’ perceived abilities and ensure that students of all academic levels are assigned to each homeroom;
- ensure that no homeroom class has more than forty percent special education inclusion students; and
- if the board chooses to continue operating the Advanced Learning Academy (“ALA”) program, it will transform the ALA program into a school-wide, racially diverse enrichment program designed to develop the gifts and talents of all students.
The consent order is part of a longstanding desegregation case monitored and enforced by the United States. In reviewing the board’s compliance with previous orders on student assignment, the department concluded that the board was engaged in a variety of practices that contributed to the racial isolation in the elementary school homerooms. These practices include the board’s use of ability grouping and the manner in which the board implemented its special education inclusion and ALA programs.
“We commend the Lincoln Parish School Board’s commitment to resolve this case by addressing the racial isolation in its elementary school homerooms in Ruston,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “This consent order reinforces the Civil Rights Division’s steadfast commitment to ensuring that all students have access to equal educational opportunities, regardless of race or color.”
“This order is a significant step for the Lincoln Parish School Board toward achieving the goals of desegregation and equal access to education for all students,” said U.S. Attorney Stephanie A. Finley of the Western District of Louisiana. “We look forward to continuing to work with the Board to ensure that these changes are successfully implemented.”
Upon full implementation of the consent order, the board may seek court approval to dismiss the desegregation case in the area of student assignment in December 2016.
Promoting school desegregation and enforcing Title IV of the Civil Rights Act of 1964 is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.
INTERPOL issues Red Notices for former FIFA officials and executives wanted by US authoritiesRead the Press Release
LYON, France – At the request of US authorities, INTERPOL Red Notices – or international wanted persons alerts – have been issued for two former FIFA officials and four corporate executives for charges including racketeering, conspiracy and corruption.
The Red Notices have been issued for;
Jack Warner, Trinidad & Tobago national, former FIFA vice president and executive committee member, CONCACAF president, CFU president and Trinidad and Tobago Football Federation (TTFF) special adviser.
Nicolás Leoz, Paraguayan national, former FIFA executive committee member and CONMEBOL president.
Alejandro Burzaco, Argentine national, controlling principal of Torneos y Competencias S.A., a sports marketing business based in Argentina, and its affiliates.
Hugo Jinkis and Mariano Jinkis, Argentine nationals, controlling principals of Full Play Group S.A., a sports marketing business based in Argentina, and its affiliates.
José Margulies (also known as José Lazaro), Brazilian national, controlling principal of Valente Corp. and Somerton Ltd., broadcasting businesses.
Red Notices are one of the ways in which INTERPOL informs its member countries that an arrest warrant has been issued for an individual by a judicial authority and seeks the location and arrest of wanted persons with a view to extradition or similar lawful action.
The individuals concerned are wanted by national jurisdictions and INTERPOL’s role is to assist national police forces in identifying or locating those individuals with a view to their arrest and extradition.
A Red Notice is not an international arrest warrant, and INTERPOL cannot compel any member country to arrest the subject of a Red Notice.
INTERPOL’s General Secretariat does not send officers to arrest individuals who are the subject of a Red Notice. Only the law enforcement authorities of the INTERPOL member country where the individual is located have the legal authority to make an arrest.
Department of Justice Settles Civil Rights Lawsuit Alleging Discriminatory Assistance Animal Policy at Largest Cooperative Development in the United StatesRead the Press Release
Co-op City Agrees to Enhance Accessibility, Pay Civil Penalties and Establish an Aggrieved Persons Fund
The Department of Justice and the Department of Housing and Urban Development (HUD) announced today that the United States has simultaneously filed and settled a civil rights lawsuit against RiverBay Corporation, which manages “Co-op City,” the largest affordable housing cooperative in the United States, alleging that RiverBay failed to provide reasonable accommodations to people who require service or assistance animals. Specifically, the lawsuit alleges that RiverBay maintains and employs an overly burdensome and intrusive policy governing waivers to its no-pets rule, which has deterred and prevented persons with disabilities from obtaining reasonable accommodations, in violation of the federal Fair Housing Act. The consent decree was approved on June 2, 2015, by U.S. District Court Judge Valerie E. Caproni.
“Assistance animals provide vital support and therapeutic benefits for persons with disabilities,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “This significant settlement underscores the department’s commitment to ensuring that housing providers make reasonable accommodations for individuals who rely on assistance animals to use and enjoy their homes.”
“Housing providers must allow for reasonable accommodations to qualified individuals with disabilities, including granting requests to keep assistance or service animals,” said U.S. Attorney Preet Bharara of the Southern District of New York. “Today’s settlement benefits all those who require or may someday require a service or assistance animal, as it ensures that RiverBay will implement a reasonable accommodation policy consistent with the Fair Housing Act and that people who were unlawfully denied full use of their residences will be compensated appropriately. We thank RiverBay for its cooperation in improving housing accessibility for all of its residents and in providing for a more caring and compassionate environment for Bronx residents.”
“Housing providers have a legal obligation to grant people with disabilities the reasonable accommodations they need,” said Assistant Secretary Gustavo Velasquez of HUD. “Thanks to this settlement, RiverBay residents who need assistance animals or other accommodations will now be able to fully enjoy their homes.”
According to the complaint filed in federal court:
RiverBay, located in the Bronx, New York, is the owner and operator of the largest affordable housing cooperative in the United States, with approximately 15,372 residential units and 60,000 residents. RiverBay has used an unlawful policy governing waivers to its no-pets rule to deny accommodation requests of persons with disabilities, and has engaged in a pattern or practice of discrimination toward persons with disabilities who request accommodations to its no-pets rule. Specifically, until December 2011, when RiverBay amended its policy and application governing reasonable accommodations, RiverBay’s application for requesting a reasonable accommodation to its no-pets rule consisted of five forms (including one required to be completed only in blue ink and another required to be typewritten), prohibited certain breeds of dogs, required animals to be neutered or spayed, imposed annual renewal requirements and required the applicant to provide his or her medical records. In December 2011 and again in July 2014, RiverBay amended its reasonable accommodation policy, but left in place many of the provisions in the first policy, including a prohibition against certain breeds of animals, a prohibition which RiverBay could waive based only on an applicant’s “medical need” for that particular breed.
Moreover, between 1995 and 2014, the Secretary of HUD, the New York State Division of Housing and Community Renewal and the New York City Commission on Human Rights received and investigated multiple complaints about RiverBay’s practices concerning reasonable accommodation requests. HUD issued three separate charges of discrimination against RiverBay and participated in two administrative hearings before an administrative law judge (ALJ) concerning RiverBay’s reasonable accommodation policy. In each proceeding, the ALJ determined that RiverBay had violated the FHA. In addition, between January 2005 and November 2011, RiverBay denied 28 out of 42 requests for reasonable accommodations to its no-pets rule; another two individuals did not complete the application process.
Under the consent decree approved today, RiverBay will adopt the reasonable accommodation policy regarding assistance animals that is included in the consent decree.
In addition, RiverBay has agreed to pay a civil penalty of up to $50,000, and to dedicate as much as $600,000 to compensate people who have been harmed by inadequate accessibility at Co-op City.
Under the settlement, a person may be entitled to receive monetary compensation if he or she was a resident of RiverBay, or associated with a resident of RiverBay, and was:
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prevented or discouraged from requesting to keep an assistance animal;
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denied a request to keep an assistance animal; or
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harassed or otherwise interfered with after requesting to keep an assistance animal.
Individuals who wish to make a claim for discrimination concerning Co-op City on the basis of disability, or with any information about persons who may have such a claim, can contact the U.S. Attorney’s Office of the Southern District of New York by phone at (212) 637-2800, by fax at (212) 637-2702, online at www.justice.gov/usao/nys/civilrights or write to:
United States Attorney’s Office, Southern District of New York
Attn: Civil Rights Unit
86 Chambers Street
New York, New York 10007
Individuals with a disability who believe that they are being discriminated against by their housing provider may contact the Fair Housing and Equal Opportunity Office, Department of Housing & Urban Development, 26 Federal Plaza, Room 3532, New York, New York, 10278-0068 and at (800) 496-4294.
This case is being handled by the U.S. Attorney’s Office of the Southern District of New York’s Civil Rights Unit. Assistant U.S. Attorney Ellen Blain of the Southern District of New York is in charge of the case.
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Department of Justice Announces Investigation of the Jefferson County Jail in Birmingham, AlabamaRead the Press Release
The Justice Department announced today that it has opened an investigation of the Jefferson County Jail in Birmingham, Alabama, focusing on the treatment of juveniles. The investigation will assess whether juveniles are detained at the jail in conditions that pose a serious risk of harm to their physical and psychological well-being.
The department has received allegations that juveniles at the jail are regularly housed with adult detainees, have been victims of sexual abuse and have been approached by adult detainees for sexual activity and favors. Additionally, juveniles, including those with diagnosed mental illnesses and intellectual disabilities, allegedly are routinely placed in solitary confinement or lockdown—sometimes for months at a time—with little or no access to the law library, telephone, commissary, educational opportunities and other services.
“Isolation—particularly the prolonged and restrictive lockdown alleged in Jefferson County—can lead to paranoia, anxiety, depression and suicide, and exacerbate pre-existing psychological harms,” said Principal Deputy Assistant Attorney General Vanita Gupta, head of the Civil Rights Division. “Indeed, the 2012 Report of the Attorney General’s National Task Force on Children Exposed to Violence concluded that ‘[n]owhere is the damaging impact of incarceration on vulnerable children more obvious than when it involves solitary confinement.’"
“Our commitment to finding solutions to problems in Alabama’s troubled jails and prisons is ongoing,” said U.S. Attorney Joyce White Vance for the Northern District of Alabama. “Where possible, the best solution is always a collaborative approach that encourages the state and counties to correct conditions that are constitutionally inadequate. However, we have not hesitated to file suit where necessary.”
The department will conduct the investigation using its authority under the Civil Rights of Institutionalized Persons Act (CRIPA) and the Violent Crime Control and Law Enforcement Act. Under CRIPA, the Attorney General has the authority to investigate violations of the constitutional rights of prisoners in “institutions,” including county jails, where such violations are “pursuant to a pattern or practice of resistance to the full enjoyment of such rights.” The Violent Crime Control and Law Enforcement Act authorizes the Attorney General to bring suit against any governmental entity that has engaged in “a pattern or practice” of depriving juveniles of their rights secured by the Constitution or federal statute. The department has conducted similar investigations in other jurisdictions, including of the Leflore County Juvenile Detention Center in Mississippi, the jails on Rikers Island in New York, the Terrebonne Parish Juvenile Detention Center in Louisiana and the Scioto and Marion Juvenile Correctional Facilities in Ohio.
The Special Litigation Section of the Civil Rights Division is conducting this investigation. Individuals with relevant information are encouraged to contact the department via email at [email protected] or by phone at (855) 258-1432.
New Jersey Man Sentenced to 30 Months for Role in Illegal Immigration SchemeRead the Press Release
A New Jersey man was sentenced to 30 months in prison for orchestrating an eight-year scheme to falsify employment certifications to facilitate the illegal entry of Indian nationals into the United States and for filing a false tax return.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey, Chief Richard Weber of the Internal Revenue Service–Criminal Investigation (IRS-CI) and Director Bill A. Miller of the State Department’s Diplomatic Security Service (DSS) made the announcement.
Sandipkumar Patel, 42, of Edison, New Jersey, was sentenced by U.S. District Court Judge William H. Walls of the District of New Jersey. The court also ordered Patel to pay a fine of $50,000, and restitution in the amount of $423,452 to the IRS.
On Sept. 4, 2014, Patel pleaded guilty to a two-count information charging him with conspiring to defraud the United States and subscribing to a false federal income tax return.
According to court documents filed in connection with his plea, from 2001 until 2009, Patel sponsored the visa applications of Indian nationals by falsely claiming that he would provide employment for them in the United States. Patel falsely certified on the visa applications that he would employ the migrants in various technical fields at several New Jersey companies, thereby facilitating their illegal entry into the United States. Over the course of the scheme, migrants paid Patel tens of thousands of dollars for the false certifications. To disguise the scheme, Patel issued payroll checks and other payroll forms. Patel required the migrants to return the proceeds of the payroll checks to him and to further reimburse him for the payroll tax expenses he incurred. Patel used the fraudulent pay stubs and payroll checks to support false applications to extend the visas, and charged the migrants fees for the visa extensions.
As a result of falsely carrying the migrant employees on his payrolls, Patel overstated his payroll expenses on his federal income tax returns by more than $1.4 million over four years, and thereby underreported his tax obligation by over $400,000 for those years.
This case was investigated by the IRS-CI and DSS. The case is being prosecuted by Senior Trial Attorney Hope S. Olds of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Michael Robertson of the District of New Jersey, with assistance from the Criminal Division’s Asset Forfeiture and Money Laundering Section.
Littleton woman arrested for oil investment schemeRead the Press Release
DENVER – Jill M. Evans, age 49, of Littleton, Colorado was arrested last week on charges of wire fraud and money laundering, the United States Attorney’s Office, IRS – Criminal Investigation (IRS CI) and the Federal Bureau of Investigation (FBI) announced. Evans was indicted by a federal grand jury on May 21, 2015. The indictment remained under seal until her arrest on May 27, 2015. Evans appeared on that date in federal court where she was advised of her rights as well as the charges pending against her. She was then ordered released on May 29, 2015, by a U.S. Magistrate Judge on a 50 percent secured bond, where she needs to pay 10 percent of the bond (or $5,000).
According to the indictment, in September 2011 and continuing through May 2015, Evans devised a scheme to defraud at least eight individuals whom she solicited to invest in alleged oil transactions. Evans informed or caused others to inform potential investors that she or one of her companies, Paramount Mortgage or Evcom, had rights or agreements related to the purchase and resale of petroleum products, including diesel oil or jet fuel. She claimed that the oil deals could not be completed until certain fees or other expenses related to the deals could be paid.
Evans falsely told investors they would receive a return on their investment ranging from fifty percent to fifty times their original investment within a matter of days or weeks. She told investors that their funds would be held in an escrow account and would be fully refundable if the oil deal did not close. Evans instructed investors to transfer funds to bank accounts. Some investors’ funds were not used as represented and were also sent to personal bank accounts that Evans controlled. Of those funds transferred to personal accounts she controlled, she used those funds for her own personal expenses.
She would tell investors that oil deals were nearing successful completion and that disbursements of profits were imminent. She sent e-mails attaching fabricated court documents regarding the status of civil litigation purporting to award Evans or related parties substantial sums of money. When the oil deals failed to close, she told investors that she would be able to pay investors from these proceeds.
Furthermore, Evans concealed from investors her December 2011 criminal indictment by a State of Colorado grand jury and her subsequent March 2013 criminal conviction for theft and forgery. Evans’s bond conditions prohibited her from entering into any financial transactions in excess of $1,000, and the terms of her subsequent state sentence prohibited her from investing money, entering into any financial contracts or arrangements, and having access to or control of any funds of any individual.
Evans was charged with eight counts of wire fraud and six counts of money laundering. Wire fraud carries a penalty of not more than 20 years in federal prison, and a fine of up to $250,000. Money laundering carries a penalty of not more than 10 years in federal prison, and a fine of up to $250,000. Included in the indictment is a notice of forfeiture for any property traceable to the money laundering charges alleged in the indictment.
This case was investigated by IRS – Criminal Investigation and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Anna K. Edgar.
The charges contained in the indictment are allegations, and the defendant is presumed innocent until proven guilty.
Interpol: Islamic State Group Gains Support in Africa, AsiaRead the Press Release
United Nations (AP) -- A growing number of extremist groups from Africa to southeast Asia are shifting their allegiance to the Islamic State group, leading to greater risks for "cross-pollination" among conflicts beyond Syria and Iraq, the head of Interpol said Friday.
Jurgen Stock cited this shift as an emerging trend at a U.N. Security Council meeting along with changing travel methods being used by foreign fighters seeking to join groups like the Islamic State and al-Qaida.
Stock was a keynote speaker at a meeting attended by half a dozen ministers including U.S. Secretary of Homeland Security Jeh Johnson to assess progress in implementing a U.S.-sponsored resolution adopted last September requiring all countries to prevent the recruitment and transport of would-be foreign fighters preparing to join extremist groups.
Johnson said the United States will be developing a new passenger data-screening and analysis system within the next 12 months which will be made available to the international community at no cost for both commercial and government organizations to use.
In a report obtained by The Associated Press on April 1, the panel of experts monitoring U.N. sanctions against al-Qaida said the number of fighters leaving home to join al-Qaida and the Islamic State group in Iraq, Syria and other countries has spiked to more than 25,000 from over 100 nations. The panel said its analysis indicated the number of "foreign terrorist fighters" worldwide increased by 71 percent between mid-2014 and March 2015.
Secretary-General Ban Ki-moon said most are young men motivated by extremist ideologies but he called for an examination of the reasons why more women and girls are joining the groups as well. He said he plans to present a plan of action to prevent violent extremism to the General Assembly later this year.
Georgia-Based Millard Refrigerated Services to Pay $3 Million Civil Penalty for Ammonia Release That Sickened Workers Responding to Deepwater Horizon Oil SpillRead the Press Release
The Department of Justice and the U.S. Environmental Protection Agency (EPA) today announced a final settlement with Millard Refrigerated Services that resolves alleged violations of the Clean Air Act, Emergency Planning and Community Right-to-Know Act and Comprehensive Environmental Response, Compensation, and Liability Act violations for an airborne release of ammonia from Millard’s Theodore, Alabama, facility in 2010. Millard will pay a $3 million penalty for the violations that sickened 152 people responding to the BP oil spill.
“The release of ammonia from Millard's facility created significant health problems,” said Assistant Attorney General John C. Cruden for the Environment and Natural Resources Division. “This settlement underscores how lapses in environmental management can have serious consequences, and today we are holding Millard accountable for this failure to ensure the safety of its workers and the surrounding community.”
“The Clean Air Act exists to protect all of us from preventable threats to our health and safety, such as what happened in this case,” said Keyon R. Brown, U.S. Attorney for the Southern District of Alabama. “On behalf of the citizens of our district, I commend the hard work of the EPA and the Department of Justice’s Environmental and Natural Resources Division in achieving such a significant settlement that vindicates these interests."
“EPA is serious about holding companies that threaten people’s health and safety accountable,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “It’s imperative that companies that use and store potentially-hazardous materials like ammonia ensure their operations do not pose a health risk to their employees or the public.”
On Aug. 23, 2010, the Millard Refrigerated Service warehouse in Theodore, Alabama, released approximately 32,000 pounds of anhydrous ammonia, to which exposure can be lethal, into the air after refrigeration equipment malfunctioned. The ammonia travelled directly over a site where more than 800 people were working on decontaminating ships responding to the Deepwater Horizon oil spill in the Gulf of Mexico. The Mobile, Alabama, Emergency Management Agency ordered an evacuation of the surrounding area and a one mile shelter in place situation following the ammonia release.
One hundred fifty-two people working at the site and on ships were treated for symptoms of ammonia exposure at hospitals in the Mobile area, four of whom were admitted into intensive care units. One Millard employee sustained injuries after briefly losing consciousness from ammonia inhalation.
During its investigation of the warehouse after the ammonia release, EPA discovered that Millard failed to adequately address a well-known risk for ammonia production systems called hydraulic shock, which can cause catastrophic equipment failures. These failures can lead to hazardous releases of anhydrous ammonia. The company’s failure to address this risk, in addition to other deficiencies in its production and safety systems, amounted to 37 distinct violations of the Clean Air Act’s Risk Management Program and General Duty Clause. These requirements compel companies that store or use potentially-hazardous substances like ammonia to identify the hazards posed by their operation, design and maintain a safe facility and minimize the consequences of any releases that might occur. The company’s failure to immediately report a release of anhydrous ammonia above the reportable quantity to the National Response Center amounted to one CERCLA violation. The company’s failure to immediately report a release of anhydrous ammonia to the local and state emergency planning commissions and to file a follow-up reports for two releases amounted to three EPCRA violations.
EPA also discovered that Millard had two prior smaller ammonia releases caused by hydraulic shock, which should have signaled a need to take steps to prevent a catastrophic release like the one that occurred at the Theodore warehouse. Millard sold the Theodore warehouse facility, which is no longer in operation.
The settlement was entered in the District Court in Mobile, Alabama.
To read the settlement, or for more information about the case, visit: www.justice.gov/enrd/consent-decrees
Denver gang member indicted for being a felon in possession of a firearm and ammunitionRead the Press Release
DENVER – Ronald Odean Bryant, age 22, of Denver, Colorado, has been indicted on May 20, 2015 by a federal grand jury in Denver on charges of being a felon in possession of a firearm and being a felon in possession of ammunition, U.S. Attorney John Walsh and Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Denver Division Special Agent in Charge Luke Franey announced. Prior to the indictment, Bryant was charged by Criminal Complaint on May 15, 2015. On May 29, 2015 the court ordered that both the original Complaint and the formal charging document, the indictment, be unsealed. The defendant is currently in state custody on unrelated charges. No date has yet been set for when Bryant will be brought to federal court for his initial appearance.
According to court documents, including the original affidavit in support of the Criminal Complaint, on May 11, 2015, at approximately 11:30 p.m. uniformed officers in a marked Denver Police Department patrol vehicle noticed a gold in color Range Rover, with severe damage, including a heavily damaged windshield, damage to the headlight/bumper area, with the turn signals not appearing to work. The break light on the driver’s side was not functioning either. The car was pulled over by the Denver Police patrol vehicle near the intersection of East Bruce Randolph and North York Street.
When the officers approached the car they observed a female driver, a male sitting in the front passenger seat, and two females in the back seat. Each individual provided their identification information. When the officers checked the information, they determined that one of the females, and the male, now identified as Bryant, provided false information. As officers approached the vehicle to discuss the false information the car started to move forward as if it was about to flee. The driver stopped the car after being ordered by an officer to stop. Bryant was then observed to have his hands in his lap, concealed by a leather jacket. He was asked to step out of the car. When he complied, he dropped a plastic baggie of what appeared to be narcotics. It was later determined that the baggie contained methamphetamine.
As Bryant was about to be frisked he fled on foot. Officers gave chase, but did not immediately capture him. The Denver Police Department established a perimeter, and summoned a Police K-9 to the scene. Once the K-9 arrived and the area within the perimeter was searched, Bryant was apprehended without incident. When searched subsequent to arrest a round of ammunition was found in Bryant’s pocket. An inventory search of the vehicle Bryant was in revealed a Ruger .22 caliber pistol loaded with 7 rounds of ammunition. This firearm was located under the rear seat. A small revolver was also located, loaded with one round, in a beer box in the vehicle. Additional investigation determined that one of the females in the vehicle had purchased the Ruger pistol for Bryant several days earlier.
On May 14, 2015, agents and officers reviewed Bryant’s criminal history. Anyone with a felony criminal conviction is prohibited by both federal and state law of possessing a firearm or ammunition. Bryant has been identified as a CMG Blood. He has a prior conviction in Denver District Court for possession of a Schedule II Controlled Substance. Bryant is currently on probation in that case.
Bryant has been charged with one count of being a felon in possession of firearm or ammunition, and one count of being a felon in possession of ammunition. If convicted, the defendant faces not more than 10 years in federal prison, and up to a $250,000 fine on each of the two total counts.
“This case is an example of the close partnership between the Department of Justice, the ATF and the Denver Police Department to combat gun violence on our streets,” said U.S. Attorney John Walsh. “Working together with all levels of law enforcement and the community itself, we are making significant progress in those efforts, and will continue to move forward effectively.”
“ATF and our partners will continue to pursue felons who possess firearms and endanger members of the community,” said ATF Denver Division Special Agent in Charge Luke Franey.
Denver Police Chief Robert White said: “The significant arrest of an individual like Ronald Bryant goes a long way toward making our community safer and addressing violent crime. With zero tolerance for violent crime and a collaborative effort between law enforcement and the community, we can make communities safer and Denver a better place to live.”
This case was investigated by Denver Police Department and the ATF, as part of Project Safe Neighborhood, an initiative which includes the Denver, Aurora and Lakewood Police Departments working in concert with the ATF and the U.S. Attorney’s Office.
The defendant is being prosecuted by Assistant U.S. Attorney Peter McNeilly.
The charges contained in the indictment are allegations, and the defendant is presumed innocent until proven guilty.
Two Individuals Plead Guilty to Conspiring to Defraud Consumers through Fraudulent Debt Relief Services FirmsRead the Press Release
Two individuals pleaded guilty today for their roles at fraudulent debt relief services companies that offered to settle credit card debts but instead took victims’ payments as undisclosed up-front fees, the Justice Department and U.S. Postal Inspection Service (USPIS) announced.
Athena Maldonado, 30, and Christopher Harati, 31, both of Orange County, California, pleaded guilty to a one-count information alleging conspiracy in connection with debt relief companies known as Nelson Gamble & Associates (Nelson Gamble) and Jackson Hunter Morris & Knight LLP (Jackson Hunter). According to the information filed in the case, the defendants and their co-conspirators portrayed the debt relief companies as law firms and attorney-based companies that would negotiate favorable settlements with creditors. Clients made monthly payments expecting the money to go toward settlements. The companies instead took an amount equal to at least 15 percent of clients’ total debt as company fees, with the first six months of payments going almost entirely toward undisclosed up-front fees.
“Debt relief service scams prey on vulnerable consumers trying to climb out of tough financial situations,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “The Justice Department will aggressively pursue the criminals who operate these schemes.”
Maldonado admitted that she acted as the “legal department” for both companies, and used multiple aliases when responding to complaints submitted by state attorney general offices, the Better Business Bureau and private attorneys. Maldonado admitted that, after Nelson Gamble changed its name to Jackson Hunter, she responded to consumer complaints by falsely stating, among other things, that the two companies were not related and that Jackson Hunter could not refund money paid to Nelson Gamble.
Harati admitted that he worked as a client relations manager for the companies and handled complaint calls from clients. He admitted he told customers that Nelson Gamble and Jackson Hunter were separate companies, falsely stated that Jackson Hunter was a nationwide law firm with years of experience and made other misrepresentations designed to convince customers to stay with the company.
The defendants each face a statutory maximum sentence of five years in prison and a $250,000 fine, or an alternate fine of twice the loss or twice the gain, whichever is greater, along with mandatory restitution. Their sentencing dates have not been set.
On Dec. 3, 2014, a grand jury in Santa Ana, California, returned a 22-count indictment charging Jeremy Nelson, Elias Ponce and John Vartanian, all of Orange County, for mail fraud, wire fraud, and conspiracy to commit mail and wire fraud in the same fraudulent scheme. The trial in that case is scheduled to begin on Feb. 16, 2016, in Los Angeles.
The Federal Trade Commission (FTC) brought a civil case against Nelson Gamble, Jackson Hunter and other defendants in September 2012, alleging that the defendants falsely claimed they would reduce consumers’ unsecured debt by 50 percent or more, made unauthorized charges to their bank accounts and called phone numbers listed on the National Do Not Call Registry. For more information about debt relief firms, the FTC encourages consumers to review this page on their website.
Principal Deputy Assistant Attorney General Mizer commended the USPIS team assigned to the Civil Division’s Consumer Protection Branch for their investigative efforts, and thanked the U.S. Attorney’s Office of the Central District of California for their contributions to the case. The case is being prosecuted by Trial Attorney Alan Phelps of the Consumer Protection Branch.
New York Tax Return Preparer Pleads Guilty to Preparing False Tax ReturnsRead the Press Release
A Staten Island, New York, tax return preparer and business owner pleaded guilty today in U.S. District Court in the Eastern District of New York to preparing false federal income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
According to court documents and statements, Alabi Gbangbala, 51, was the operator of Broadfield, a tax return preparation business located in Staten Island. For tax years 2008 and 2009, Gbangbala prepared false individual income tax returns for Broadfield clients by, among other things, falsifying self-employment business receipts and losses on Schedules C and inflating or fabricating charitable contributions and unreimbursed employee expenses on Schedule A. Gbangbala was responsible for filing false tax returns on behalf of his clients that resulted in at least a $178,000 tax loss to the U.S. Treasury. Gbangbala also filed false personal individual income tax returns for tax years 2008 through 2010, in which he failed to report his total income for each calendar year.
Gbangbala faces a statutory maximum sentence of three years in prison and a fine of $250,000 for one count of aiding and assisting the preparation of a false return at his Sept. 24 sentencing.
Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Christopher O’Donnell and Mark McDonald of the Tax Division, who are prosecuting the case. Ciraolo also thanked the U.S. Attorney’s Office of the Eastern District of New York for their assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Justice Department Reaches Agreement with Pennington County, South Dakota, to Improve AccessibilityRead the Press Release
The Department of Justice announced an agreement with Pennington County, South Dakota, today to resolve accessibility issues in the county’s services, programs, activities and facilities under Title II of the Americans with Disabilities Act (ADA). This year marks the 25th anniversary of the ADA, which the Civil Rights Division plays a critical role in enforcing. In honor of the anniversary, each month the Department of Justice has been highlighting efforts that are making full participation and equal opportunity for people with disabilities a reality.
Pennington County and the department reached an agreement under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the ADA. One of the hallmarks of the agreement is the requirement that the county hire an independent licensed architect (ILA) who is knowledgeable about the architectural accessibility requirements of the ADA. The ILA will certify that the accessibility modifications done to the county’s facilities comply with the ADA Standards for Accessible Design.
The agreement with the county will allow people with disabilities to participate in and benefit from the services provided in Pennington County’s facilities including its New Administration Building, Courthouse Complex, Jail, Jail Annex, Public Safety Building, Public Health Building, Juvenile Services Center and the Pennington County Fairgrounds. The county will renovate and remediate everything from entrances, service areas, counters, restrooms and parking so that people with disabilities can get into county buildings and use the services and programs offered by the county in each of its buildings. In addition, the agreement calls for implementing a comprehensive plan to improve the accessibility of sidewalks, transportation stops and pedestrian crossings by installing accessible curb ramps throughout the county.
“As we continue to celebrate the ADA’s 25th Anniversary this year, today’s agreement is the sixth PCA agreement the Department of Justice has signed in six months and exemplifies our continuing commitment to ensure that citizens with disabilities enjoy the same services, programs and activities that all others enjoy,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “Equal access to local government is the cornerstone of Project Civic Access in its quest to protect the civil rights of municipalities’ citizens with disabilities.”
For more information about the ADA, today’s agreement, the Project Civic Access initiative, individuals may access the ADA Web page at http://www.ada.gov/civicac.htm or call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY).
Justice Department Asks Federal Court to Permanently Bar South Carolina Tax Return Preparer from Preparing Federal Tax ReturnsRead the Press Release
The United States filed a complaint seeking to bar a Newberry County, South Carolina, woman from preparing federal tax returns for others, the Justice Department announced today.
The civil complaint against Julie E. Hueble, which was filed in the U.S. District Court for the District of South Carolina, alleges that Hueble owned and operated three Liberty Tax Service franchise locations in Greenwood and Clinton, South Carolina. According to the complaint, Hueble and the employees of her tax preparation stores prepared federal income tax returns that improperly understated customers’ tax liabilities or increased customers’ claims for refundable tax credits.
The complaint alleges that Hueble and her employees prepared returns for customers that, among other things, falsely reported on Schedule Cs (Profit or Loss From Business) non-existent businesses and/or inflated income or deductions. The suit further alleges that Hueble and her employees fabricated other deductions, claimed improper filing statuses and falsely claimed dependents, all of which resulted in fraudulently maximizing refunds and/or refundable credits.
In one example detailed in the complaint, Hueble falsely increased a customer’s taxable income by reporting a fabricated “childcare” business, even though the customer did not own a child care business and gave Hueble no documentation showing that she did. The increased income enabled the customer to receive an inflated Earned Income Tax Credit.
The complaint states that Hueble’s tax-preparation stores prepared 2,165 federal income tax returns between 2012 and 2014, and Hueble prepared 904 returns during this period. An analysis of returns filed between 2012 and 2014 revealed that the harm to the U.S. Treasury caused by Hueble’s conduct could be more than $1 million, according to the suit.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2015. The IRS has some tips on its website for choosing a tax preparer, and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on here. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
First Tennessee Bank N.A. Agrees to Pay $212.5 Million to Resolve False Claims Act Liability Arising from FHA-Insured Mortgage LendingRead the Press Release
First Tennessee Bank N.A. has agreed to pay the United States $212.5 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today. First Tennessee is headquartered in Memphis, Tennessee.
“First Tennessee’s reckless underwriting has resulted in significant losses of federal funds and was precisely the type of conduct that caused the financial crisis and housing market downturn,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “We will continue to hold accountable lenders who put profits before both their legal obligations and their customers, and restore wrongfully claimed funds to FHA and the treasury.”
Between January 2006 and October 2008, First Tennessee, through its subsidiary First Horizon Home Loans Corporation (First Horizon), participated in the FHA insurance program as a Direct Endorsement Lender (DEL). As a DEL, First Tennessee had the authority to originate, underwrite and endorse mortgages for FHA insurance. If a DEL such as First Tennessee approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD, FHA’s parent agency, for the losses resulting from the defaulted loan. Under the DEL program, neither the FHA nor HUD reviews a loan before it is endorsed for FHA insurance. DELs such as First Tennessee are therefore required to follow program rules designed to ensure that they are properly underwriting and certifying mortgages for FHA insurance, to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices and to self-report any deficient loans identified by their quality control program. In August 2008, First Tennessee sold First Horizon to MetLife Bank N.A. (MetLife), a wholly-owned subsidiary of MetLife Inc., which thereafter originated FHA-insured mortgages under the MetLife name. In February 2015, MetLife agreed to pay $123.5 million to resolve its False Claims Act liability arising from its FHA originations after it acquired First Horizon from First Tennessee.
“First Tennessee admitted failings that resulted in poor quality FHA loans,” said Acting U.S. Attorney John A. Horn of the Northern District of Georgia. “While First Tennessee profited from these loans, taxpayers incurred substantial losses when the loans defaulted. The settlement, as well as the investigation that preceded it, illustrates that the Department of Justice will closely scrutinize entities that cause financial injury to the government, and, in turn, the American taxpayer.”
The settlement announced today resolves allegations that First Tennessee failed to comply with FHA origination, underwriting and quality control requirements. As part of the settlement, First Tennessee admitted to the following facts: From January 2006 through October 2008, it repeatedly certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements. Beginning in late 2007, First Tennessee significantly increased its FHA originations. The quality of First Tennessee’s FHA underwriting significantly decreased during 2008 as its FHA lending increased. Beginning no later than early 2008, First Tennessee became aware that a substantial percentage of its FHA loans were not eligible for FHA mortgage insurance due to its own quality control findings. These findings were routinely shared with First Tennessee’s senior managers. Despite internally acknowledging that hundreds of its FHA mortgages had material deficiencies, and despite its obligation to self-report findings of material violations of FHA requirements, First Tennessee failed to report even a single deficient mortgage to FHA. First Tennessee’s conduct caused FHA to insure hundreds of loans that were not eligible for insurance and, as a result, FHA suffered substantial losses when it later paid insurance claims on those loans.
“Our investigation found that First Tennessee caused FHA to pay claims on loans that the bank never should have approved and insured in the first place,” said HUD Inspector General David A. Montoya. “This settlement reinforces my commitment to combat fraud in the origination of single family mortgages insured by the FHA and makes certain that only qualified, creditworthy borrowers who can repay their mortgages are approved under the FHA program.”
“We are pleased that First Tennessee has acknowledged facts that demonstrate its failure to comply with HUD’s requirements and has agreed to settle with the government,” said HUD General Counsel Helen Kanovsky. “We thank the Department of Justice and HUD’s Office of Inspector General for all of their efforts in helping us to make this settlement a reality. We hope this agreement sends a message to those lenders with whom we do business that HUD takes compliance very seriously and so should they.”
The investigation of the allegations in the government’s complaint was a coordinated effort between the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Northern District of Georgia, HUD and HUD’s Office of Inspector General.
Alabama Woman Pleads Guilty for Involvement in Stolen Identity Refund Fraud RingRead the Press Release
A Phenix City, Alabama, resident pleaded guilty today in the Middle District of Alabama for her role in a stolen identity refund fraud (SIRF) scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department's Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.
According to court documents, between March 2011 and May 2014, Teresa Floyd conspired with her daughter, Lasondra Miles Davis, and others to defraud the United States by filing false federal income tax returns using stolen identities. Miles Davis obtained the means of identification of individuals without their authorization and provided the stolen identities to Floyd. Floyd and her co-conspirators obtained Electronic Filing Identification Numbers (EFINs) from the Internal Revenue Service (IRS) in the names of tax preparation businesses, which Floyd then used to file false tax returns with the stolen identities. All of the false returns included fraudulent claims for tax refunds. Floyd, Miles Davis and others cashed the refund checks at several companies in Alabama and Georgia, and Floyd deposited refund checks into her bank account.
Floyd faces a mandatory statutory sentence of two years in prison for the aggravated identity theft count and an additional statutory maximum sentence of 10 years in prison for the conspiracy count. Both counts include a statutory maximum fine of $250,000. Miles Davis pleaded guilty on April 10 to one count of aggravated identity theft and is scheduled to be sentenced on Aug. 12.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Michael C. Boteler and Michael P. Hatzimichalis of the Tax Division and Assistant U.S. Attorney Jonathan Ross of the Middle District of Alabama, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Two Wyoming Residents and One Arizona Resident Convicted of Tax Fraud and Obstruction of JusticeRead the Press Release
On May 28, a jury in the District of Wyoming convicted two Cheyenne, Wyoming, residents and a Sedona, Arizona, resident on charges of conspiracy to defraud the United States and obstructing a grand jury investigation. The announcement was made by Acting Assistant Attorney General Caroline D. Ciraolo for the Justice Department’s Tax Division, U.S. Attorney Christopher A. Crofts for the District of Wyoming and Special Agent in Charge Gilbert R. Garza for the Internal Revenue Service (IRS) Criminal Investigations.
Joseph Ruben Hill aka Joe Hill, 56, and Lucille Kathleen Hill aka Kathy Hill, 58, both of Cheyenne, Wyoming, and Gloria Jean Reeder, 68, of Sedona, Arizona, were convicted on charges of conspiracy to defraud the United States and obstructing a grand jury investigation following a three-week trial. In July 2014, Joe Hill, Kathy Hill and Reeder were indicted for conspiring to defraud the United States by promoting and using a sham trust scheme. Joe Hill and Reeder were also indicted for conspiring to obstruct the grand jury investigation in the District of Wyoming by causing individuals to withhold records required to be produced by federal grand jury subpoenas. Joe Hill was indicted on four substantive counts of obstruction with respect to four individuals that he corruptly persuaded to withhold documents from the grand jury. The jury convicted Joe Hill, Kathy Hill and Reeder of all charges alleged in the indictment.
“Yesterday’s verdicts demonstrate that the Tax Division is committed to identifying abusive tax schemes and pursuing and prosecuting the promoters to the fullest extent of the law,” said Acting Assistant Attorney General Ciraolo.
The evidence at trial established that Joe Hill and Kathy Hill last filed a federal individual income tax return in 1994, while Reeder had not filed since 1985. None of the defendants paid any income taxes from those years to the present. Joe Hill and Kathy Hill operated the business Creative Consulting Group (CCG), which sold sham trusts that they claimed would reduce or eliminate an individual’s federal income tax liability. Essentially, the scheme involved assigning income to the trust by using a bank account in the trust’s name that was opened with a false federal tax identification number. The Hills, Reeder, and many other CCG clients who testified during the trial used the CCG trusts to conceal income and assets from the IRS. Kathy Hill and Reeder both had prior IRS assessments of income tax in the 1990s, which they never paid. To prevent the IRS from seizing their homes, they both used false liens to conceal the properties’ equity.
During 2007 through 2012, Joe Hill and Kathy Hill earned almost $500,000 in income through selling the CCG trusts, while Reeder earned more than $400,000 in income from insurance commissions and a travel business. Three trial witnesses who used the CCG trusts --Lawrence Paille, Amanda Campbell and Stephanie Maciel -- previously pleaded guilty to conspiracy to defraud the United States. The unreported income related to the scheme exceeded $2.7 million.
Chief U.S. District Judge Nancy D. Freudenthal set sentencing on Aug 6. The maximum penalty faced by each of the three defendants for conspiracy to defraud the United States is five years in prison and a $250,000 fine. For their convictions for conspiracy to obstruct an official proceeding, Joe Hill and Reeder each face a maximum sentence of 20 years in prison and a $250,000 fine.
“This verdict should send a clear message, promoting or participating in a fraudulent tax scheme is unacceptable; there is no secret formula that can eliminate a person's tax obligations,” said Special Agent in Charge Garza. “We owe it to every American taxpayer to investigate and prosecute individuals who participate in these fraudulent tax schemes.”
The case was investigated by special agents from the Cheyenne, Wyoming, and Denver, Colorado, offices of IRS Criminal Investigation and prosecuted by Assistant U.S. Attorneys Todd I. Shugart and Eric J. Heimann of the U.S. Attorney’s Office for the District of Wyoming and Trial Attorney Lori A. Hendrickson of the Tax Division.
Two Tennessee Men Plead Guilty to Killing During Home Invasion RobberyRead the Press Release
Two Tennessee men pleaded guilty to using a firearm to kill during a home invasion robbery they conducted on May 7, 2011, 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.
Demario Winston, 27, of Clarksville, Tennessee, and Michael Massey, 26, of Lexington, Tennessee, pleaded guilty before Chief District Court Judge Kevin H. Sharp of the Middle District of Tennessee to conspiracy to commit Hobbs Act Robbery and use of a firearm in a crime of violence resulting in death. Massey also pleaded guilty to attempted Hobbs Act Robbery. A sentencing hearing for Massey is scheduled for Sept. 18, 2015, and a sentencing hearing for Winston will be scheduled at a later date.
According admissions reflected in the plea agreements, on May 7, 2011, Winston, Massey and others attempted to rob a home in Clarksville, and Massey used a sledge hammer to gain entry. The conspirators previously had been advised that a large amount of cocaine and cash was stored inside a safe in the basement of the home.
The defendants further admitted that, while inside the home, Winston, who was armed with a 9mm pistol, engaged in a gun fight with the homeowner on the first floor as other conspirators attempted to force one of the occupants of the home, Raul Triana, to open the safe in the basement, and pistol-whipped him in the face in the process. Evidence introduced in the plea hearing indicated that in response to the shooting on the first floor, some of the conspirators fled the home, and Massey, who was armed with an assault rifle, fled through the basement where he encountered Triana and shot and killed him.
In addition, according to the statement of facts in support of Massey’s plea, on Oct. 21, 2011, he and a co-defendant robbed the owner of a Clarksville-based construction company at gunpoint.
This case was investigated by the Clarksville Police Department and the DEA. The case is being prosecuted by 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.
New Jersey Developer to Pay Civil Penalty for Stormwater Violations and Preserve WetlandsRead the Press Release
The Department of Justice and the Environmental Protection Agency (EPA) today announced that it have reached an agreement with Garden Homes and its affiliated companies to settle their alleged failure to control stormwater discharges. These failures potentially resulted in pollutant discharges to the Passaic, Hackensack, Rahway, Raritan, Saddle and Delaware River watersheds. The agreement requires Garden Homes to pay a $225,000 penalty and implement measures to improve the company’s stormwater practices. In addition, the company has agreed to provide 108 acres of land for preservation within the Highlands Preservation Area in Morris County, New Jersey, protecting it from possible future development. This land contains approximately 23 acres of wetlands adjacent to the Berkshire Valley Wildlife Management Area and in the Highlands Preservation Area—a critical drinking water protection area for the state of New Jersey.
“Today’s settlement will help protect New Jersey waterways from the harmful pollutants contained in stormwater runoff from Garden Homes’ construction sites and also preserve valuable wetlands and wildlife habitat,” said Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division. “One of the important parts of the settlement is the requirement that Garden Homes develop a corporate-wide stormwater management program which may stimulate better management practices throughout the construction business.”
“Stormwater often carries pollution and sediment into local waterways that can damage water quality,” said Regional Administrator Judith A. Enck for EPA. “Large quantities of stormwater can run off of construction sites and it is critically important that stormwater be controlled. The EPA takes these violations seriously and this legal settlement not only holds the company accountable, but also includes measures to preserve 108 acres of land that contains vital wetlands near a wildlife area.”
Under the federal Clean Water Act, developers and contractors responsible for operations at construction sites one acre or larger are required to implement stormwater pollution prevention plans to keep soil and contaminants from running off into nearby waterways. These plans can include measures such as the establishment of sediment barriers, the implementation of controls to hinder stormwater flowing onto the construction site and the protection of slopes. Water carries soil and contaminants off of construction sites at a rate typically 10 to 20 times greater than that from agricultural lands and 1,000 to 2,000 times greater than that from forested lands.
Under the settlement, Garden Homes will undertake a corporate-wide evaluation of its existing stormwater practices and develop a corporate-wide stormwater management program. In addition, Garden Homes will designate one of its employees as its company stormwater manager, who will be responsible for preparing all stormwater pollution prevention plans, developing and overseeing stormwater compliance training and conducting unannounced site inspections, among other responsibilities. The company will also designate individual site stormwater managers for its various sites. EPA estimates the value of these measures to be $539,000 for the first year and approximately $380,057 annually thereafter.
The complaint alleged that Garden Homes violated numerous stormwater requirements at ten of the company’s sites in New Jersey by failing to conduct and document weekly inspections; failing to install perimeter silt fencing along the perimeter of construction sites; failing to maintain a spill kit on-site; and allowing fuel to spill on the ground uphill from an unprotected catch basin, among other allegations. The violations at issue in this case were found at multiple construction sites owned and/or operated by Garden Homes through their affiliates. These repetitive violations continued to persist despite two administrative penalty actions taken by Region 2 against affiliates of Garden Homes.
Under the terms of the proposed settlement, Garden Homes will donate land within the Highlands Preservation Area as a supplemental environmental project. This donation of land will further aid in the recovery of threatened and endangered species, particularly the Indiana Bat and bog turtle, which have a known presence in the vicinity.
The proposed consent decree has been lodged in the U.S. District Court for the state of New Jersey and is subject to a 30-day public comment period and final court approval. A copy is available on the Department of Justice website at: http://justice.gov/enrd/Consent_Decrees.html
For more information about requirements of the Clean Water Act and how EPA protects the nation’s water, visit http://water.epa.gov/
Follow EPA Region 2 on Twitter at http://twitter.com/eparegion2 and Facebook at http://facebook.com/eparegion2
Federal Officials Close the Investigation into the Death of Otis James ByrdRead the Press Release
The Department of Justice announced today that following its investigation into the death of Otis James Byrd that there is no evidence to pursue federal criminal civil rights charges in the death of Byrd.
Officials from the Justice Department=s Civil Rights Division, the U.S. Attorney=s Office for the Southern District of Mississippi and the Federal Bureau of Investigation (FBI) met today with Byrd’s family to inform them of the decision. Byrd, a 54-year old African-American man, was discovered hanging from a tree in Port Gibson, Mississippi, on March 19, 2015.
Justice Department investigators, working alongside state and local officials, conducted a comprehensive investigation into the circumstances surrounding Byrd’s death to determine whether his death was a homicide, and therefore within the scope of the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act of 2009.
Under the applicable federal criminal civil rights statute, prosecutors must establish, beyond a reasonable doubt, that an individual willfully caused bodily injury because of the victim’s actual or perceived race, color, religion, national origin, gender, gender identity or disability.
After a careful and thorough review, a team of experienced federal prosecutors and FBI agents determined that there was no evidence to prove that Byrd’s death was a homicide. Accordingly, the investigation into this incident has been closed.
The Justice Department is committed to investigations of allegations of hate crimes and will continue to devote the resources required to ensure that all allegations of serious civil rights violations are fully and completely investigated.
Seller of “Miracle Mineral Solution” Convicted for Marketing Toxic Chemical as a Miracle CureRead the Press Release
A federal jury in the Eastern District of Washington returned a guilty verdict yesterday against a Spokane, Washington, man for selling industrial bleach as a miracle cure for numerous diseases and illnesses, including cancer, AIDS, malaria, hepatitis, lyme disease, asthma and the common cold, the Department of Justice announced.
Louis Daniel Smith, 45, was convicted following a seven-day trial of conspiracy, smuggling, selling misbranded drugs and defrauding the United States. Evidence at trial showed that Smith operated a business called “Project GreenLife” (PGL) from 2007 to 2011. PGL sold a product called “Miracle Mineral Supplement,” or MMS, over the Internet. MMS is a mixture of sodium chlorite and water. Sodium chlorite is an industrial chemical used as a pesticide and for hydraulic fracking and wastewater treatment. Sodium chlorite cannot be sold for human consumption and suppliers of the chemical include a warning sheet stating that it can cause potentially fatal side effects if swallowed.
“This verdict demonstrates that the Department of Justice will prosecute those who sell dangerous chemicals as miracle cures to sick people and their desperate loved ones,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “Consumers have the right to expect that the medicines that they purchase are safe and effective.” Mizer thanked the jury for its service and its careful consideration of the evidence.
The government presented evidence that Smith instructed consumers to combine MMS with citric acid to create chlorine dioxide, add water and drink the resulting mixture to cure numerous illnesses. Chlorine dioxide is a potent agent used to bleach textiles, among other industrial applications. Chlorine dioxide is a severe respiratory and eye irritant that can cause nausea, diarrhea and dehydration. According to the instructions for use that Smith provided with his product, nausea, diarrhea and vomiting were all signs that the miracle cure was working. The instructions also stated that despite a risk of possible brain damage, the product might still be appropriate for pregnant women or infants who were seriously ill.
According to the evidence presented at trial, Smith created phony “water purification” and “wastewater treatment” businesses in order to obtain sodium chlorite and ship his MMS without being detected by the U.S. Food and Drug Administration (FDA) or U.S. Customs and Border Protection. The government also presented evidence that Smith hid evidence from FDA inspectors and destroyed evidence while law enforcement agents were executing search warrants on his residence and business.
Before trial, three of Smith’s alleged co-conspirators, Chris Olson, Tammy Olson and Karis DeLong, Smith’s wife, pleaded guilty to introducing misbranded drugs into interstate commerce. Chris Olson, along with alleged co-conspirators Matthew Darjanny and Joseph Lachnit, testified at trial that Smith was the leader of PGL.
In all, the jury convicted Smith of one count of conspiracy to commit multiple crimes, three counts of introducing misbranded drugs into interstate commerce with intent to defraud or mislead and one count of fraudulently smuggling merchandise into the United States. The jury found Smith not guilty on one out of four of the misbranded drug counts. He faces a statutory maximum of 34 years in prison at his Sept. 9 sentencing.
The case was investigated by agents of the FDA’s Office of Criminal Investigations and the U.S. Postal Inspection Service. The case was prosecuted by Christopher E. Parisi and Timothy T. Finley of the Civil Division’s Consumer Protection Branch in Washington, D.C.
New Orleans Man Charged with Conspiracy to Commit Wire Fraud and Conspiracy to Commit Trademark Counterfeiting Using the “Silk Road” Online MarketplaceRead the Press Release
A Louisiana man was charged in a two-count information with conspiracy to commit wire fraud and conspiracy to commit trademark counterfeiting using the “Silk Road” online marketplace, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Polite Jr. of the Eastern District of Louisiana.
“Anonymous online marketplaces have provided criminals with the ability to conduct illegal operations worldwide while seemingly insulating them from apprehension and prosecution,” said Assistant Attorney General Caldwell. “The Criminal Division is determined to peel back the veil of anonymity and prosecute criminals of all stripes who attempt to use the ‘dark web’ to cloak their illegal conduct.”
According to allegations in the information, Beau Wattigney, 30, of New Orleans, Louisiana, created counterfeit coupons and used Silk Road to sell them. Silk Road was a worldwide Internet forum used to anonymously sell illegal drugs, goods and services. Wattigney allegedly used Silk Road 1.0 until it was dismantled by federal officials in October 2013, and Silk Road 2.0 until it was dismantled in November 2014.
According to the information, Wattigney designed the coupons to look like print-at-home manufacturers’ coupons. The coupons included counterfeit trademarks for many prominent coupon distribution services, including Hopster, Coupons.com, SmartSource and RedPlum. Wattigney allegedly sold a selection of counterfeit coupons entitled “The Original S.R. Exclusive Coupon Collection” for approximately $50.00. Additionally, one counterfeit coupon Wattigney allegedly created and sold allowed users to purchase $50.00 Visa Gift Cards for $.01 each. The coupons Wattigney allegedly sold on Silk Road 1.0 and 2.0 affected more than 50 manufacturers, retailers and online coupon distributors. If redeemed, the counterfeit coupons could have resulted in a loss of more than $1,000,000 to the affected businesses.
The charges contained in the information are merely accusations, and a defendant is presumed innocent unless and until proven guilty.
The case is being investigated by the FBI’s Philadelphia Division, with assistance from the FBI’s New Orleans Division. The case is being prosecuted by Senior Counsel Marie-Flore Johnson, Gavin Corn and Robert Wallace of the Criminal Division’s Computer Crime and Intellectual Property Section, and Assistant U.S. Attorney Jordan Ginsberg of the Eastern District of Louisiana.
Wattigney Information
Nearly 78,000 Service Members to Begin Receiving $60 Million Under Department of Justice Settlement with Navient for Overcharging on Student LoansRead the Press Release
The Department of Justice announced today that this June, 77,795 service members will begin receiving $60 million in compensation for having been charged excess interest on their student loans by Navient Corp., the student loan servicer formerly part of Sallie Mae. The payments are required by a settlement that the department reached with Navient last year to resolve the federal government’s first ever lawsuit filed against owners and servicers of student loans for violating the rights of service members eligible for benefits and protections under the Servicemembers Civil Relief Act (SCRA). The United States’ complaint in that lawsuit alleged that three defendants (collectively Navient) engaged in a nationwide pattern or practice, dating as far back as 2005, of violating the SCRA by failing to provide members of the military the 6 percent interest rate cap to which they were entitled for loans that were incurred before the military service began. The three defendants are Navient Solutions Inc. (formerly known as Sallie Mae, Inc.), Navient DE Corporation (formerly known as SLM DE Corporation), and Sallie Mae Bank.
The settlement covers the entire portfolio of student loans serviced by, or on behalf of, Navient. This includes private student loans, Direct Department of Education Loans, and student loans that originated under the Federal Family Education Loan (FFEL) Program. Approximately 74 percent of the $60 million that is about to be distributed is attributable to private loans, 21 percent to loans guaranteed by the Department of Education and five percent to loans owned by the Department of Education.
The checks, which are scheduled to be mailed on June 12, 2015, will range from $10 to over $100,000, with an average of about $771. Check amounts will depend on how long the interest rate exceeded 6 percent and by how much, and on the types of military documentation the service member provided.
In addition to the $60 million in compensation, the settlement contains several other key provisions. It required Navient to pay the United States a civil penalty of $55,000. Navient must also request that all three major credit bureaus delete negative credit history entries caused by the interest rate overcharges and improper default judgments.
The settlement also required Navient to streamline the process by which service members may notify Navient of their eligibility for SCRA benefits. The revised process includes an SCRA online intake form for service members, and the availability of customer service representatives specially trained on the rights of those in military service.
“This compensation will provide much deserved financial relief to the nearly 78,000 men and women who were forced to pay more for their student loans than is required under the Servicemembers Civil Relief Act,” said Acting Associate Attorney General Stuart F. Delery. “The Department of Justice will continue using every tool at our disposal to protect the men and women who serve in the Armed Forces from unjust actions and illegal burdens.”
“We are pleased about how quickly we will be able to get this money back into the hands of the service members who were overcharged on their student loans while they were in military service,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The department will continue to actively protect our service members and their families from such unjust actions.”
The department’s investigation of Navient was the result of a referral of service member complaints from the Consumer Financial Protection Bureau’s Office of Servicemember Affairs, headed by Holly Petraeus. The Department of Justice worked closely with the department of Education during the investigation to ensure that aggrieved service members with federally owned and federally guaranteed student loans would be fully compensated, and be able to receive the SCRA benefit of a reduced 6 percent interest rate through a streamlined process going forward. The Department of Education is now using a U.S. Department of Defense database to proactively identify borrowers who may be eligible for the lower interest rate under the SCRA, rather than requiring service members to apply for the benefit.
Beginning on June 12, service members with questions about their eligibility for monetary relief under the settlement should call (855) 382-6421. Other service members and their dependents who believe that their SCRA rights have been violated should contact an Armed Forces Legal Assistance office. To find the closest office, consult the military legal assistance office locator at http://legalassistance.law.af.mil and click on the Legal Services Locator. Additional information about the Justice Department’s enforcement of the SCRA and the other laws protecting service members is available at www.servicemembers.gov.
Justice Department and Consumer Financial Protection Bureau Reach Settlement with Provident Funding Associates to Resolve Allegations of Mortgage Lending DiscriminationRead the Press Release
Settlement Provides $9 Million in Compensation to African-American and Hispanic Borrowers
The Justice Department and Consumer Financial Protection Bureau (Bureau) filed a consent order today to resolve allegations that Provident Funding Associates (Provident) engaged in a pattern or practice of discrimination that increased loan prices for African-American and Hispanic borrowers who obtained residential mortgages between 2006 and 2011 from Provident’s nationwide network of mortgage brokers.
The settlement, which is subject to court approval, was filed in conjunction with the agencies’ complaint in the U.S. District Court for the Northern District of California. The complaint alleges that Provident violated the Fair Housing Act and Equal Credit Opportunity Act (ECOA) by charging thousands of African-American and Hispanic borrowers higher fees on mortgage loans not based on borrower risk, but because of their race or national origin. Provident cooperated fully with the agencies’ investigation into its lending practices and agreed to settle this matter without contested litigation.
“The Civil Rights Division is committed to ensuring that all types of lending institutions, including wholesale mortgage lenders, comply with the fair lending laws,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “We look forward to further collaboration with the Consumer Financial Protection Bureau in protecting consumers from illegal and discriminatory lending practices.”
“The settlement demonstrates this U.S. Attorney’s office will devote the resources necessary to root out and address unfair lending practices that affect citizens of this district,” said U.S. Attorney Melinda Haag of the Northern District of California. “The law is clear: access to mortgage loans may not be made more difficult because of an applicant’s race or national origin. We are glad that Provident has agreed to put an end to this practice without engaging in protracted litigation.”
“Consumers should never be charged higher fees because of their race or national origin,” said Consumer Financial Protection Bureau Director Richard Cordray. “We will continue to root out illegal and discriminatory lending practices in the marketplace. I look forward to working closely with our partners at the Department of Justice to ensure consumers are treated fairly.”
The lawsuit originated from a 2011 referral by the Federal Trade Commission (FTC) to the Justice Department’s Civil Rights Division. In 2012, the Bureau joined the Justice Department’s investigation.
Under the terms of the proposed settlement, Provident will pay $9 million into a fund for the benefit of victims of its alleged mortgage lending discrimination. The proposed settlement provides for an independent administrator to contact and disburse payments to borrowers whom the agencies identify as victims of Provident’s discrimination, at no cost to the borrowers. Provident will pay all costs and expenses of the administrator. Borrowers who are eligible for compensation will be contacted by the administrator. The department will make a public announcement and post contact information on its website once the administrator begins contacting victims.
The Justice Department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Rights Division. Since the Fair Lending Unit was established in February 2010, it has filed or resolved 39 lending matters under the Fair Housing Act, ECOA, and the Servicemembers Civil Relief Act. The settlements in these matters provide over $1.2 billion in monetary relief for impacted communities and individual borrowers. The Attorney General’s annual reports to Congress on ECOA enforcement highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications/.
The Civil Rights Division, the U.S. Attorney’s Office for the Northern District of California, the Consumer Financial Protection Bureau, and the FTC are members of the Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
A copy of the complaint, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department’s website at http://www.justice.gov/fairhousing.
Justice Department Reaches Landmark Settlement with Alabama to Protect Prisoners at Julia Tutwiler Prison for Women from Harm Due to Staff Sexual Abuse and Sexual HarassmentRead the Press Release
The Department of Justice today filed a complaint and settlement agreement in the district court of the Middle District of Alabama to protect prisoners at the Julia Tutwiler Prison for Women in Wetumpka, Alabama, from sexual victimization by correctional officers. The agreement filed is designed to resolve the Justice Department’s findings of sexual abuse and sexual harassment at Tutwiler.
In January 2014, the Justice Department issued a findings letter concluding that Tutwiler subjects its women prisoners to a pattern and practice of sexual abuse in violation the Eighth Amendment of the U.S. Constitution. The findings identified several systemic failures that led to the pattern of abuse, including ineffective reporting and investigations and no grievance policy. Tutwiler also failed to hold culpable staff accountable for abuses.
“Prisoners are entitled to be safe from sexual predation by staff, and to live in an environment free from sexual assault, sexual harassment and the constant fear of these abuses,” said the head of the Civil Rights Division, Principal Deputy Assistant Attorney General Vanita Gupta. “Our agreement uses gender-responsive and trauma-informed principles designed to address and eliminate the culture of abuse that Tutwiler’s women prisoners have suffered from and endured for years.”
Alabama has already begun to put in place important reforms to address the department’s findings including the Governor’s creation of an agency-level position of Deputy Commissioner of Women’s Services. Wendy Williams, Ed.D., has been appointed to the position, and is charged with implementing gender-responsive practices at Tutwiler and with leading long overdue culture change. The department looks forward to continuing to work with the Warden, the Commissioner and the dedicated Tutwiler staff who will be part of the solution going forward.
Alabama’s willingness to engage in this cooperative resolution also eliminates the expense of a protracted lawsuit and offers women immediate protections. “We very much appreciate the state’s cooperation and willingness to work to bring about meaningful and sustainable change on these important issues,” said U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.
The agreement comprehensively addresses the causes of the abuses uncovered by the department’s investigation. It draws upon gender-responsive, trauma-informed principles to build on the Prison Rape Elimination Act National Standards, which are designed to prevent, detect and respond to custodial sexual abuse and sexual harassment throughout our nation’s prisons and jails. The agreement tailors the more generalized national standards to target the specific problems revealed at Tutwiler and to meaningfully address the harm to Tutwiler’s women prisoners.
The agreement requires Tutwiler to protect women from sexual abuse and sexual harassment by ensuring sufficient staff to safely operate Tutwiler and supervise prisoners, supplemented by a state-of-the-art camera system. The agreement also provides safeguards to prevent staff from unnecessarily viewing prisoners who are naked or performing bodily functions.
Tutwiler must ensure that each prisoner knows of her right to be free from sexual abuse and harassment, and that each prisoner is aware of the several internal and external methods to report abuse, including a new grievance process. Tutwiler will protect prisoners from the threat of retaliation by monitoring the housing, programming and disciplinary status of any prisoner who reports or alleges abuse. Further, women who allege sexual abuse are entitled to unimpeded access to medical treatment and crisis intervention services.
The agreement also has provisions directed toward staff including the requirement to thoroughly train all staff on their duties to prevent, detect and respond to sexual abuse at Tutwiler. Staff will also be trained on how to manage, interact and communicate appropriately with women prisoners and with their lesbian, gay, bisexual, transgender and gender nonconforming prisoners.
The agreement requires that all sexual abuse and sexual harassment allegations are promptly, thoroughly and objectively investigated and appropriately referred for prosecutorial review, and that alleged victims are advised of the outcome of their allegations. Tutwiler must also take appropriate disciplinary action against staff found to have engaged in sexual abuse or sexual harassment or to have violated Tutwiler’s sexual abuse and sexual harassment policies and procedures.
Tutwiler will put in place a quality assurance program to track and analyze data to ensure that sexual abuse and harassment is being adequately prevented, detected and responded to. Significantly, an independent monitor will evaluate Tutwiler’s progress towards meaningful reform and assist Tutwiler’s compliance efforts. The agreement requires the monitor to provide compliance reports to the court every six months.
Tutwiler’s prisoners have already seen some changes implemented following the department’s investigation. One current prisoner recently wrote to the Civil Rights Division to say, “[W]e thank [DOJ] for all you are doing and are looking forward to all the miraculous things to come.”
The investigation was conducted by the Civil Rights Division’s Special Litigation Section, with assistance from the U.S. Attorney’s Office of the Middle District of Alabama. Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.
Four Banks Reach Resolutions Under Department of Justice Swiss Bank ProgramRead the Press Release
The Department of Justice announced today that the following four banks reached a resolution under the department’s Swiss Bank Program:
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Société Générale Private Banking (Lugano-Svizzera)
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MediBank AG
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LBBW (Schweiz) AG
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Scobag Privatbank AG
“Today’s agreements reflect the Tax Division’s continued progress towards reaching appropriate resolutions with the banks that self-reported and voluntarily entered the Swiss Bank Program,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division. “The department is currently investigating accountholders, bank employees, and other facilitators and institutions based on information supplied by various sources, including the banks participating in this Program. Our message is clear – there is no safe haven.”
The Swiss Bank Program, which was announced on Aug. 29, 2013, provides a path for Swiss banks to resolve potential criminal liabilities in the United States. Swiss banks eligible to enter the program were required to advise the department by Dec. 31, 2013, that they had reason to believe that they had committed tax-related criminal offenses in connection with undeclared U.S.-related accounts. Banks already under criminal investigation related to their Swiss-banking activities and all individuals were expressly excluded from the program.
Under the program, banks are required to:
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Make a complete disclosure of their cross-border activities;
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Provide detailed information on an account-by-account basis for accounts in which U.S. taxpayers have a direct or indirect interest;
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Cooperate in treaty requests for account information;
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Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;
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Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and
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Pay appropriate penalties.
Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.
According to the terms of the non-prosecution agreements signed today, each bank agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay the penalties in return for the department’s agreement not to prosecute these banks for tax-related criminal offenses.
Société Générale Private Banking (Lugano-Svizzera) SA (SGPB-Lugano) was established in 1974 and is headquartered in Lugano, Switzerland. Through referrals and pre-existing relationships, SGPB-Lugano accepted, opened and maintained accounts for U.S. taxpayers, and knew that it was likely that certain U.S. taxpayers who maintained accounts there were not complying with their U.S. reporting obligations. Since Aug. 1, 2008, SGPB-Lugano held and managed approximately 109 U.S.-related accounts, with a peak of assets under management of approximately $139.6 million, and offered a variety of services that it knew assisted U.S. clients in the concealment of assets and income from the Internal Revenue Service (IRS), including “hold mail” services and numbered accounts. Some U.S. taxpayers expressly instructed SGPB-Lugano not to disclose their names to the IRS, to sell their U.S. securities and to not invest in U.S. securities, which would have required disclosure and withholding. In addition, certain relationship managers actively assisted or otherwise facilitated U.S. taxpayers in establishing and maintaining undeclared accounts in a manner designed to conceal the true ownership or beneficial interest in the accounts, including concealing undeclared accounts by opening and maintaining accounts in the name of non-U.S. entities, including sham entities, having an officer of SGPB-Lugano act as an officer of the sham entities, processing cash withdrawals from accounts being closed and then maintaining the funds in a safe deposit box at the bank and making “transitory” accounts available, thereby allowing multiple accountholders to transfer funds in such a way as to shield the identity and account number of the accountholder. SGPB-Lugano will pay a penalty of $1.363 million.
Created in 1979 and headquartered in Zug, Switzerland, MediBank AG (MediBank) provided private banking services to U.S. taxpayers and assisted in the evasion of U.S. tax obligations by opening and maintaining undeclared accounts. In furtherance of a scheme to help U.S. taxpayers hide assets from the IRS and evade taxes, MediBank failed to comply with its withholding and reporting obligations, providing “hold mail” services and offering numbered accounts, thus reducing the ability of U.S. authorities to learn the identity of the taxpayers. After it became public that the Department of Justice was investigating UBS, MediBank hired a relationship manager from UBS and permitted some of that person’s U.S. clients to open accounts at MediBank. Since Aug. 1, 2008, MediBank had 14 U.S. related accounts with assets under management of $8,620,675. MediBank opened, serviced and profited from accounts for U.S. clients with the knowledge that many likely were not complying with their U.S. tax obligations. MediBank will pay a penalty of $826,000.
LBBW (Schweiz) AG (LBBW-Schweiz) was established in Zurich in 1995. Since August 2008, LBBW-Schweiz held 35 U.S. related accounts with $128,664,130 in assets under management. After it became public that the department was investigating UBS, LBBW-Schweiz opened accounts from former clients at UBS and Credit Suisse. Despite its knowledge that U.S. taxpayers had a legal duty to report and pay tax on income earned on their accounts, LLB permitted undeclared accounts to be opened and maintained, and offered a variety of services that would and did assist U.S. clients in the concealment of assets and income from the IRS. These services included following U.S. accountholders instructions not to invest in U.S. securities and not reporting the accounts to the IRS and agreeing to hold statements and other mail, causing documents regarding the accounts to remain outside the United States. LBBW-Schweiz will pay a penalty of $34,000.
Headquartered in Basel, Switzerland, Scobag Privatbank AG (Scobag) was founded in 1968 to provide financial and other services to its founders, and obtained its banking license in 1986. Since August 2008, Scobag had 13 U.S. related accounts, the maximum dollar value of which was $6,945,700. Scobag offered a variety of services that it knew could assist, and that did assist, U.S. clients in the concealment of assets and income from the IRS, including “hold mail” services and numbered accounts. Scobag will pay a penalty of $9,090.
In accordance with the terms of the 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.
“These four additional bank agreements signal a change in terrain for offshore banking,” said Chief Richard Weber for the IRS-Criminal Investigation (CI). “No longer is it safe to hide money offshore and expect that it will not be discovered. IRS CI Special Agents will continue to follow the money to find those who circumvent the offshore disclosure laws and hold them accountable.”
Acting Assistant Attorney General Ciraolo thanked the IRS and in particular, IRS-CI and IRS’s Large Business and International Division for their substantial assistance, as well as Karen M. Quesnel, Sean P. Beaty, Gregory S. Seador, W. Damon Dennis and Brian D. Bailey, who served as counsel on these matters, 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.
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Former Senate Staffer Charged with Wire FraudRead the Press Release
A former staff member of the U.S. Senate Committee on Commerce, Science and Transportation was charged by indictment in the Eastern District of Virginia with defrauding at least three women of approximately $500,000, announced Assistant Attorney General Leslie Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Dana J. Boente of the Eastern District of Virginia.
The indictment charges Robert Lee Foster, 65, of De Pere, Wisconsin, with nine counts of wire fraud.
According to the indictment, from 2008 through May 2015, Foster devised a scheme to fraudulently obtain money and property from at least three women, whom Foster targeted because of their age, health, marital or family status, or other personal circumstances. The indictment alleges that Foster used his affiliation with the U.S. Senate to gain the victims’ trust and confidence, and that he made various false and fraudulent representations to the victims, which prompted them to send Foster money, which funds he then used for his own personal benefit.
An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.
This case was investigated by the FBI. The case is being prosecuted by Trial Attorneys Kevin Driscoll and Peter Halpern of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Jamar Walker of the Eastern District of Virginia.
Foster Indictment
El Departamento de Justicia y la Oficina para la Protección Financiera del Consumidor Realizan un Acuerdo con Provident Funding Associates en Resolución de Alegatos de Discriminación en el Otorgamiento de HipotecasRead the Press Release
WASHINGTON – El Departamento de Justicia y la Oficina Para la Protección Financiera del Consumidor (CFPB, por sus siglas en inglés) (CFPB) presentaron hoy una orden por consentimiento en resolución de alegatos de que Provident Funding Associates (Provident) exhibió un patrón o práctica de discriminación que aumentó los precios de los préstamos para prestatarios afroamericanos e hispanos que obtuvieron hipotecas residenciales entre el 2006 y el 2011 de la red nacional de corredores hipotecarios de Provident.
El acuerdo, que está sujeto a aprobación del tribunal, fue presentado junto con la demanda de las agencias en el Tribunal Federal de Distrito para el Distrito Norte de California. La demanda alega que Provident violó la Ley de Vivienda Justa (FHA, por sus siglas en inglés) y la Ley de Igualdad de Oportunidades de Crédito (ECOA, por sus siglas en inglés) al cobrarles a miles de prestatarios afroamericanos e hispanos cargos más altos en préstamos hipotecarios, no basados en el riesgo que presentaba el prestatario, sino en su raza u origen nacional. Provident cooperó plenamente con la investigación de las agencias sobre sus prácticas de otorgamiento de préstamos y aceptó realizar este acuerdo sin litigio contencioso.
“La División de Derechos Civiles está comprometida a asegurar que todos los tipos de instituciones de préstamo, incluidos los prestatarios mayoristas de hipotecas, cumplan con las leyes de otorgamiento justo de préstamos”, dijo la Secretaria de Justicia Auxiliar Adjunta Principal Vanita Gupta de la División de Derechos Civiles. “Nos complacerá seguir colaborando en el futuro con la Oficina Para la Protección Financiera del Consumidor para proteger a los consumidores contra prácticas de otorgamiento de préstamos ilegales y discriminatorias".
“El acuerdo demuestra que esta Fiscalía Federal dedicará los recursos necesarios para acabar con las prácticas de otorgamiento injusto de préstamos que afectan a los ciudadanos de este distrito”, dijo la Fiscal Federal Melinda Haag del Distrito Norte de California. “La ley es clara: el acceso a los préstamos hipotecarios no debe ser más difícil debido a la raza o el origen nacional del solicitante. Nos complace que Provident haya aceptado poner fin a esta práctica sin la necesidad de un prolongado litigio.
“Nunca se les debe cobrar cargos más altos a los consumidores debido a su raza u origen nacional”, señaló el Director de la Oficina Para la Protección Financiera del Consumidor Richard Cordray. “Seguiremos erradicando las prácticas ilegales y discriminatorias en el otorgamiento de préstamos en el mercado. Me complacerá trabajar estrechamente con nuestros asociados del Departamento de Justicia para asegurar que los consumidores reciban tratamiento justo”.
La demanda se originó de un referido en el 2011 por parte de la Comisión Federal de Comercio (FTC) a la División de Derechos Civiles del Departamento de Justicia. En el 2012, CFPB se unió a la investigación realizada por el Departamento de Justicia.
Bajo los términos del acuerdo propuesto, Provident pagará 9 millones de dólares a un fondo en beneficio de las víctimas de la discriminación hipotecaria supuestamente cometida por Provident. El acuerdo propuesto dispone que un administrador independiente contacte y realice los pagos a prestatarios identificados por las agencias como víctimas de discriminación por parte de Provident, sin ningún costo para los prestatarios. Provident pagará todos los costos y gastos del administrador. Los prestatarios que reúnan los requisitos para la compensación serán contactados por el administrador. El Departamento realizará un anuncio público y publicará información de contacto en su portal de Internet una vez que el administrador comience a comunicarse con las víctimas.
La aplicación de las leyes de otorgamiento de préstamos justos del Departamento de Justicia es conducida por la Unidad de Préstamos Justos de la Sección de Vivienda y Cumplimiento de la Ley Civil de la División de Derechos Civiles. Desde su fundación en febrero del 2010, la Unidad de Préstamos Justos ha entablado o resuelto 39 casos de préstamos bajo la Ley de Vivienda Justa, ECOA y la Ley de Alivio Civil para los Miembros de las Fuerzas Armadas (SCRA, por sus siglas en inglés) . Los acuerdos en estos casos consistieron en más de 1.2 billones de dólares en compensación monetaria para comunidades afectadas y prestatarios individuales. Los reportes anuales del Secretario de Justicia de los Estados Unidos al Congreso sobre la aplicación de ECOA destacan los logros del Departamento en el otorgamiento de préstamos justos y están disponibles en www.justice.gov/crt/publications/.
La División de Derechos Civiles, la Fiscalía Federal del Distrito para el Distrito Norte de California, la Oficina Para la Protección Financiera del Consumidor y la FTC son miembros de la Fuerza de Tarea de Coacción contra el Fraude Financiero. El Presidente Obama estableció la Fuerza de Tarea Interagencial de Coacción contra el Fraude Financiero para llevar a cabo una iniciativa enérgica, coordinada y proactiva para investigar y enjuiciar los delitos financieros. Esta fuerza incluye a representantes de una amplia gama de agencias federales, autoridades reguladoras, inspectores generales y miembros de las fuerzas del orden público estatales y locales, quienes, trabajando juntos, aprovechan un poderoso espectro de recursos de coacción penal y civil. La fuerza de tarea está trabajando para mejorar la labor en todo el poder ejecutivo federal, y con asociados estatales y locales, para investigar y enjuiciar los delitos financieros importantes, asegurar un castigo justo y eficaz para quienes cometan delitos financieros, combatir la discriminación en los mercados de préstamos y financieros, y recuperar fondos para las víctimas de delitos financieros. Para obtener más información sobre la fuerza de tarea, visite www.StopFraud.gov.
Para obtener una copia de la demanda, así como información adicional sobre la labor del Departamento de Justicia para hacer valer las leyes de otorgamiento justo de préstamos, visite el portal del Departamento de Justicia en http://www.justice.gov/fairhousing.
Three Detroit Residents Plead Guilty to Participating in a Home Mortgage Fraud SchemeRead the Press Release
Three Detroit, Michigan, area residents pleaded guilty today in U.S. District Court for the Eastern District of Michigan to conspiracy to commit bank fraud, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
According to court documents and statements, from approximately January 2006 to December 2008, Jason Najor, Jeffrey Najor, Joey Murad and others conspired to defraud financial lending institutions by providing fraudulent information on residential mortgage loan applications. The defendants devised a scheme to purchase single-family homes for approximately $5,000 to $40,000 each, and then recruited straw buyers to submit fraudulent loan applications for home mortgages substantially above the original purchase price. The applications falsified the straw buyers’ assets, income and down payment, among other things. The straw buyers were paid fees for their participation, which were sometimes falsely disguised as “landscaping” or “construction” fees. The conspirators made a substantial profit and paid themselves commissions on the sales. Every home purchased and sold as part of the scheme went into foreclosure.
In addition to the seven individuals indicted in the case, three of which pleaded guilty today, two others connected to the scheme have pleaded guilty. One individual is a straw buyer of multiple properties who received substantial fees as part of the scheme. The other individual is a mortgage broker who assisted in the preparation of the false mortgage loan applications. Co-conspirator Wasseem Shamoun also pleaded guilty on Jan. 23 and was sentenced to 15 months in prison and ordered to pay $394,000 in restitution for his role in selling properties to straw buyers.
The three defendants face a maximum statutory penalty of thirty years in prison and a fine of $1 million for conspiracy to commit bank fraud. Sentencing for Joey Murad and Jeffrey Najor is on Sept. 19 and Jason Najor is scheduled to be sentenced on Nov. 17.
Acting Assistant Attorney General Ciraolo commended the special agents of the FBI and IRS Criminal Investigation and the DEA, who investigated the case, and Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald of the Tax Division, who are prosecuting the case. Ciraolo also thanked the U.S. Attorney’s Office of the Eastern District of Michigan for their substantial assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Members of Phantom Outlaw Motorcycle Club Convicted of Violent Racketeering-Related CrimesRead the Press Release
Today, a federal jury in Detroit convicted two members of the violent Phantom Outlaw Motorcycle Club, one of whom also was a member of the Vice Lords street gang, on separate crimes of conspiracy to commit murder in aid of racketeering, and assault with a dangerous weapon in aid of racketeering and a firearms offense.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Robin Shoemaker of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ (ATF) Detroit Field Division and Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Division made the announcement.
“The dismantling of the Phantom Outlaw Motorcycle Club demonstrates how law enforcement authorities and community members can work hand-in-hand to combat gang violence across the nation,” said Assistant Attorney General Caldwell. “In this case, law enforcement unquestionably saved lives by making a wave of arrests to prevent a planned nationwide campaign of violence against a rival motorcycle gang. The verdict in this case holds violent gang members accountable for the destruction they inflicted and the havoc they intended to wreak.”
“The Detroit One initiative targets criminal gang members like these defendants, who are responsible for gun violence in neighborhoods,” said U.S. Attorney McQuade. “We hope that removing dangerous trigger pullers will give our communities the peaceful quality of life we all deserve.”
“ATF works every day with our partners to take the most violent offenders off our streets and put them behind bars,” said Special Agent in Charge S. Robin Shoemaker. “Without partnership, without standing up against the violence, no public safety issues can be solved. ATF is committed to this fight, and committed to working together to keep our citizen safe and our communities livable.”
“The defendants in this case were active members of violent criminal groups, one of which was based in Detroit and operated across numerous, and sometimes distant, states,” said Special Agent in Charge Abbate. “These convictions reflect our continuing resolve through interstate cooperation between federal, state and local law enforcement authorities to prevent violent crime regardless of how far its reach may extend.”
The jury convicted the defendants of the following offenses:
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Christopher Odum (aka Murder), 29, of Detroit, a member of the Detroit chapters of both the Phantoms and the Vice Lords, was convicted of conspiracy to commit murder in aid of racketeering.
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William Frazier (aka Daytona), 37, of Auburn Hills, the Vice President of the Pontiac, Michigan, chapter of the Phantoms, was convicted of two counts of assault with a dangerous weapon in aid of racketeering, and one count of using and carrying firearms during and in relation to a crime of violence.
The evidence showed that the Phantom Outlaw Motorcycle Club and its members were involved in a range of criminal activity including conspiracy to commit murder, shootings, robberies, extortion and the possession and sale of stolen vehicles and motorcycles. The evidence also showed overlap between the leadership of the Phantoms and membership in the Vice Lords street gang, which assisted the Phantoms in various criminal endeavors, including searching for and violently attacking rivals of the Phantoms.
Specifically, the evidence at trial demonstrated that, on Oct. 27, 2012, at the Columbus, Ohio clubhouse of the Toros Motorcycle Club, a fight took place between the Phantoms and the Zulus Motorcycle Club, a rival gang. During the fight, William Frazier, a Phantom member, shot two men.
The evidence at trial also showed that, on Sept. 8, 2013, Antonio Johnson, who was both the National President of the Phantoms and the “Three-Star General” over the Vice Lords in Michigan, ordered numerous Phantoms, including Christopher Odum, to rob the Satan Sidekicks Motorcycle Club, a rival motorcycle club. During the attempted robbery, a Phantom member, Bryan Sorrell (aka PC) shot a Satan Sidekick member in the face. A few days later, Odum and another Phantom violently assaulted a prospective member of the Satan Sidekicks during another attempted robbery at a gas station.
Additionally, according to the evidence presented at trial, Johnson blamed the Hell Lovers Outlaw Motorcycle Club for a September 2013 murder of a Phantoms member, and ordered retaliatory murders that were to be carried out in three phases. In the first phase, the Phantoms were to murder at least three members of the Hell Lovers in Detroit in order to lure additional Hell Lovers to Michigan for the funeral. In the second phase, the Phantoms were to murder all members of the Hell Lovers who would be at the Hell Lovers’ Detroit clubhouse following the funeral. In the third phase, the Phantoms were to kill Hell Lovers in other cities throughout the country where the Phantoms had chapters. In October 2013, ATF and FBI agents disrupted the mass murder plot. At trial, the government presented evidence that, at the time that investigators disrupted the murder plot, the Phantoms were preparing for the first phase, including stockpiling firearms, conducting research and surveillance of their intended victims, and assigning Phantom members and Vice Lords members to stalk and murder the intended victims. Odum participated in the murder plot.
This was the second of two recent trials in the prosecution of the Phantoms. On March 16, 2015, a jury convicted six leaders and members of the Phantoms, many of whom also were leaders and members of the Vice Lords, for various crimes, including the September – October 2013 murder plot against the Hell Lovers and the September 2013 shooting of the Satan Sidekicks member. Among those six convicted defendants were Johnson and Marvin Nicholson, who was both the National Enforcer of the Phantoms and a member of the Vice Lords. The charges included RICO conspiracy involving murder, conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, firearms offenses, and assault on federal officers. In addition, four defendants previously have pleaded guilty to charges, including RICO conspiracy and assault with a dangerous weapon in aid of racketeering, and await sentencing.
The arrests in this case were made as part of the Detroit One Initiative, a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit, and through the lead efforts of the Comprehensive Violence Reduction Partnership Task Force, which consists of representatives of the ATF, Detroit Police Department, Michigan State Police, Michigan Department of Corrections and the FBI. By working collaboratively, local, state and federal law enforcement are striving to maximize their ability to identify and arrest the persons and groups initiating the violence in Detroit. These convictions are a tangible and significant result of this joint effort.
The case is being prosecuted by Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Christopher Graveline and Louis Gabel of the Eastern District of Michigan.
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Justice Department Settles Immigration-Related Claim Against Luis Esparza Services, Inc.Read the Press Release
The Justice Department reached an agreement today with Luis Esparza Services, Inc. (LES), a farm labor contractor company based in Bakersfield, California, resolving claims that the company discriminated against individuals because of citizenship status in violation of the Immigration and Nationality Act (INA). This agreement contains the largest civil penalty the Justice Department has ever secured to resolve a discrimination claim under the INA.
The Justice Department’s investigation found that LES required work-authorized non-U.S. citizens to produce documents issued by the Department of Homeland Security as a condition of employment, but did not require the same of U.S. citizen workers. The anti-discrimination provision of the INA prohibits employers from placing additional documentary burdens on workers during the employment eligibility verification process based on their citizenship status.
Under the settlement agreement, LES will pay $320,000 in civil penalties; compensate a worker who lost wages due to LES’s employment eligibility verification practices; undergo training on the anti-discrimination provision of the INA; revise its employment eligibility verification policies; and be subject to monitoring of its employment eligibility verification practices for three years.
“Creating unlawful discriminatory barriers that prevent work-authorized immigrants from working is unacceptable,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The Justice Department is committed to removing these barriers and ensuring equal employment opportunities.”
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (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. The case was handled by OSC Trial Attorney Adriana Vieco.
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, immigration status, or national origin; or discrimination based on their citizenship, immigration status, or national origin in hiring, firing, or recruitment or referral, should contact the worker hotline above for assistance.
Justice Department Files Lawsuit to Permanently Bar Kentucky Man from Preparing Tax ReturnsRead the Press Release
The United States filed a complaint to permanently bar a Louisville, Kentucky, man and his business, NJ Mobile Tax Service, LLC, from preparing federal income tax returns for others, the Justice Department announced today.
According to the complaint, which was filed in the U.S. District Court of the Western District of Kentucky, Napoleon L. Jackson has prepared federal income tax returns that improperly understated his customers’ income tax liabilities. According to the suit, in a flyer for NJ Mobile, Jackson, offers to travel to his customers’ homes and prepare their tax returns. The flyer invites potential customers to “Let me do the numbers & I’ll even come to you,” and boasts that “[Jackson] can increase your chances for a higher return.”
The complaint alleges that Jackson understated his customers’ federal tax liabilities by, among other things:
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Falsely claiming deductions related to home ownership for taxpayers that did not own homes, including cases where Jackson prepared and filed returns from customers’ rental homes;
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Falsely claiming dependents, including listing Jackson’s relatives, as dependents on a customer’s tax return;
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Fabricating charitable contributions, and offering to falsify letters from a church that indicated the customers contributed $5,500 in cash to the church that the customers had not in fact donated; and
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Falsely claiming education credits for taxpayers who were not entitled to them.
The Internal Revenue Service (IRS) audited 31 tax returns that Jackson prepared on behalf of 20 customers for tax years 2010 and 2011. An examination of these 31 returns resulted in an increase in taxes owed for every return, according to the suit. The complaint further alleges that Jackson prepared at least 162 returns from 2010 to 2011, and continues to prepare returns today. Overall, the suit alleges that Jackson’s conduct may have cost the U.S. Treasury more than $800,000.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2015. The IRS has some tips on its website for choosing a tax preparer, and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on here. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
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