District Not Recorded

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.   

The Department of Justice announced today that the following four banks reached a resolution under the department’s Swiss Bank Program:

• Société Générale Private Banking (Lugano-Svizzera)

• MediBank AG

• LBBW (Schweiz) AG

• 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:

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

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

• Cooperate in treaty requests for account information;

• Provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed;

• Agree to close accounts of accountholders who fail to come into compliance with U.S. reporting obligations; and

• Pay appropriate penalties.

Swiss banks meeting all of the above requirements are eligible for a non-prosecution agreement.

According to the terms of the non-prosecution agreements signed today, each bank agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts and pay 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.

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

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, 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.  

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:

• 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.

• 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.

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.

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:

• 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;

• Falsely claiming dependents, including listing Jackson’s relatives, as dependents on a customer’s tax return;

• 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

• 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.

Leon Nathan Davis, 37, of Augusta, Georgia, pleaded guilty earlier today to an information charging him with attempting to provide material support to a designated foreign terrorist organization, specifically the Islamic State of Iraq and the Levant (ISIL).

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Edward J. Tarver of the Southern District of Georgia and Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office made the announcement.  Davis pleaded guilty in federal court before U.S. District Court Judge J. Randal Hall of the Southern District of Georgia.

According to the testimony presented in court during the guilty plea proceeding, for more than a year, an FBI-led team investigated Davis’ attempts to join an overseas designated foreign terrorist organization.  Davis was arrested at the Atlanta Hartfield Airport in October 2014 on a parole violation, after he had purchased a ticket to fly to Turkey and then traveled from Augusta to the Atlanta Airport.  Davis has been in custody since his arrest.

Providing material support to a designated foreign terrorist organization is a crime punishable by up to 15 years in prison, a lifetime of supervised release and a $250,000 fine.  A sentencing hearing will be conducted after the U.S. Probation Office conducts a presentence investigation.

Assistant Attorney General Carlin joined U.S. Attorney Tarver in commending the FBI-led Joint Terrorism Task Force, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Georgia Board of Pardons and Paroles for their work on this case.  Assistant Attorney General Carlin and U.S. Attorney Tarver also expressed their gratitude to the U.S. Customs and Border Protection Service and the Atlanta Police Department for their contributions to the investigation.

The case is being prosecuted by the U.S. Attorney’s Office of the Southern District of Georgia and the Justice Department’s National Security Division.

Ashburn Resident Did Not Report More Than $720,000 Earned from Scheme

An Ashburn, Virginia resident was convicted today by a federal jury on 13 charges related to mortgage fraud, passing fictitious financial instruments, and tax fraud, the Department of Justice announced.

Charise Stone, 46, was indicted on April 15, 2014. According to court records and evidence at trial, Stone targeted distressed homeowners from 2007 to 2010 who owed more on their mortgage loan than the market value of the home with false promises of financial recovery. Stone acquired distressed homeowners’ properties in her own name or under entities she controlled, made false representations to mortgage lenders in order to induce approval of the short sales, and then re-sold the properties – often the same day or the next – to new buyers at a price above the short sale amount, in violation of agreements made with mortgage lenders.

Jose Marinay owned a settlement company that closed every short sale transaction for Stone. Marinay pleaded guilty to wire-fraud conspiracy on May 27, 2014. At his and Stone’s direction, fraudulent HUD-1 settlement statements were prepared to facilitate the transactions. Marinay destroyed some of the incriminating documents after closings. Financial institutions suffered losses of at least $2.2 million from the scheme. Stone profited more than $700,000 from these transactions but failed to file individual income tax returns. She also sent fictitious bonds to the IRS in an attempt to pay off her tax liability, and she sent fake international promissory notes to creditors purporting to satisfy her credit card debt as well as her mortgage loan.

Stone faces a maximum penalty of 20 years in prison for each of the wire fraud and wire-fraud conspiracy charges, 30 years in prison for the charges of false statements to a bank, 25 years in prison for the fictitious obligation charges, three years for the charge of corruptly impeding the internal revenue laws, and one year for each count of willful failure to file a tax return at her Aug. 14 sentencing. 

Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service -Criminal Investigation (IRS-CI) Washington, D.C. Field Office, made the announcement after the verdict was accepted by U.S. District Judge Claude M. Hilton.

This case was investigated by the FBI’s Washington Field Office and IRS-C I. Assistant U.S. Attorney Uzo Asonye and Assistant Chief Todd Ellinwood of the Tax Division are prosecuting the case.

Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 1:14-CR-127.

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

Orbit Medical Inc. and Rehab Medical Inc. will pay $7.5 million to resolve allegations that Orbit submitted false claims to federal health care programs for power wheelchairs and accessories, the Justice Department announced today.  Orbit Medical and Rehab Medical, a partial successor of Orbit, are durable medical equipment suppliers based in Salt Lake City, Utah and Indianapolis, Indiana, respectively.

“Power wheelchair suppliers must bill federal healthcare programs accurately and honestly to ensure that federal dollars are used for individuals who truly need these mobility devices,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The Justice Department is committed to pursuing those who seek to abuse taxpayer-funded programs.”

Medicare pays for power wheelchairs for beneficiaries who cannot perform activities of daily living in their home using other mobility-assistance equipment, such as a cane, walker or power scooter.  To qualify for reimbursement, a physician must conduct a face-to-face examination of the beneficiary and provide the supplier with a written prescription for a power wheelchair within 45 days of such an encounter, along with documentation that supports the medical necessity of the device.  The prescription must be completed by the physician who performed the exam and must include the beneficiary’s name, the exam date, the diagnoses and conditions the wheelchair is expected to accommodate, the length of need and the physician’s signature. 

The settlement with Orbit Medical and Rehab Medical resolves allegations that Orbit sales representatives knowingly altered physician prescriptions and supporting documentation to get Orbit’s power wheelchair and accessory claims paid by Medicare, the Federal Employees Health Benefits Plan and the Defense Health Agency.  In particular, the government alleged that Orbit sales representatives changed or added dates to physician prescriptions and chart notes to falsely document that the prescription was sent to the supplier within 45 days of the face-to-face beneficiary exam; changed the physician prescription to falsely establish medical necessity for the power wheelchair or accessory; created or altered chart notes and other documents to falsely establish the medical necessity of the power wheelchair or accessory; forged physician signatures on prescriptions and chart notes; and added facsimile stamps to supporting documentation to make it appear as though the physician’s office had sent the documents to Orbit. 

“The resolution of this case helps to restore funds taken from the Medicare trust fund through the use of falsified records and billings,” said U.S. Attorney Carlie Christensen of the District of Utah.  “Taxpayers’ dollars paid for power wheelchairs not legitimately prescribed by a physician.  Health care fraud is aggressively prosecuted in Utah and every effort is made to restore government funds taken through such conduct.”

“Wheelchair schemes such as this divert Medicare funds meant to pay for legitimate health care, including providing wheelchairs for patients who have a genuine medical need for such equipment,” said Special Agent in Charge Gerald T. Roy of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “Our agency will continue to investigate those who attempt to cheat federal health care programs.”

The allegations resolved by the settlement with Orbit and Rehab were filed under the False Claims Act by two former Orbit employees, Dustin Clyde and Tyler Jackson.  Under the Act, a private party can sue for false claims on behalf of the government and share in any recovery.  Clyde and Jackson will receive approximately $1.5 million.  The whistleblowers’ suit also named as a defendant Jake Kilgore, the former vice president and sales manager at Orbit Medical for the Western region of the United States.  The United States intervened in that aspect of the suit on April 2, 2014, and today’s settlement does not resolve the pending claims against Kilgore.  Separately, on Oct. 23, 2013, a federal grand jury in Utah indicted Kilgore on three counts of health care fraud, three counts of false statements related to health care and three counts of wire fraud.  

Today’s 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 case was a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the District of Utah, HHS-OIG, the FBI, the Office of Personnel Management and the Defense Health Agency.  The lawsuit is captioned United States ex rel. Clyde et al. v. Orbit Medical et al., No. 2:10-CV-00297 (D. Utah). 

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

A Sandy, Utah, resident was sentenced today in U.S. District Court in Salt Lake City, Utah, to serve two years in prison for tax evasion, filing false claims for federal income tax refunds, and filing fictitious financial obligations with the U.S. government, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. 

Paul Ben Zaccardi was also ordered to pay restitution to the Internal Revenue Service (IRS) and to serve a four-year term of supervised release upon his release from prison.

“Pursuing and prosecuting individuals who refuse to comply with our nation’s tax laws and take affirmative steps to evade their obligations remains a top priority of the Tax Division,” said Acting Assistant Attorney General Ciraolo.  “Today’s sentence reflects what awaits those who engage in such criminal conduct.”

“Today’s sentencing of Paul Zaccardi again emphasizes the Internal Revenue Service and DOJ Tax Division’s aggressive pursuit of those who use fraudulent methods in an attempt to corrupt our nation’s tax system,” said Special Agent in Charge John Collins of the IRS Criminal Investigation’s Las Vegas Field Office.  “Honest taxpayers have been reassured today that no one is above the law–especially when the integrity of the tax administration is at stake.”

On Oct. 29, 2014, Zaccardi pleaded guilty to the offenses charged in the superseding indictment, including one count of tax evasion, five counts of filing false claims for income tax refunds and three counts of filing fictitious obligations.  According to the superseding indictment and court documents, in April 2004, Zaccardi embarked on a scheme to evade the payment of his federal income taxes.  As part of that scheme and to avoid federal tax levies, Zaccardi transferred title to his residence to a nominee entity that he formed called Saved by Grace Christian Fellowship and caused his business receipts to be deposited into his wife’s bank account.

Zaccardi also presented five separate false tax returns to the IRS falsely claiming tax refunds totaling more than $1.5 million.  In addition, from June 2008 to October 2011, Zaccardi presented three separate fictitious financial instruments to the IRS, U.S. Department of the Treasury and the U.S. District Court of the District of Utah for a combined total of $605 million, to purportedly pay his federal income tax liabilities. 

Acting Assistant Attorney General Ciraolo commended the special agents of IRS Criminal Investigation, who investigated the case, and Trial Attorneys Stuart Wexler and Ryan Raybould of the Tax Division, who prosecuted the case.  She also thanked the U.S. Attorney’s Office of the District of Utah for their substantial assistance.

Additional information about the Tax Division’s national Tax Defier Initiative and its enforcements efforts in this area may be found on the division’s website. 

Additional information about tax fraud schemes to watch out for may be found on the IRS Criminal Investigation Web site at http://www.ustreas.gov/irs/ci/.

A criminal complaint has been unsealed in the Southern District of Texas following the arrest of a Spring, Texas, man on allegations he conspired to provide material support to the Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization.  

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Kenneth Magidson of the Southern District of Texas and Special Agent in Charge Perrye K. Turner of the FBI’s Houston Division made the announcement.

Asher Abid Khan, 20, was taken into custody this morning without incident.  He is expected to make his initial appearance before U.S. Magistrate Judge Frances H. Stacy of the Southern District of Texas today.

The criminal complaint alleges that Khan and a friend devised a plan to travel to Turkey and on to Syria for the purpose of joining and waging jihad on behalf of ISIL.  Khan had allegedly asked a Turkish-based foreign terrorist fighter facilitator that “I wana join ISIS can you help?”  He also told someone else that “I wana die as a Shaheed [martyr],” according to the allegations.

Khan’s friend allegedly made it to Syria and ISIL with the assistance of Khan and the foreign terrorist fighter facilitator.  Khan had been living in Australia with a relative and made it to Istanbul, Turkey, where he was to meet up with his friend in their quest to join ISIL, according to the complaint.  However, Khan’s family sent him false information regarding his mother’s health and he was deceived into returning home to Texas.

If convicted, he faces up to 15 years in federal prison.  A conviction also carries a possible $250,000 fine.

A complaint is merely a formal charging document and is not evidence of guilt.  Every defendant is presumed innocent until and unless proven guilty. 

This case was investigated by the FBI’s Joint Terrorism Task Force.  The case is being prosecuted by Assistant U.S. Attorneys Carolyn Ferko and Alamdar Hamdani of the Southern District of Texas, as well as Trial Attorneys Josh Parecki and Keith Parrella of the National Security Division’s Counterterrorism Section.

Khan Criminal Complaint

Defendant Tried to Lure American Solders to a Compound in Afghanistan that Was Rigged with Explosives; Also Facilitated the Entry of an American Citizen into Al-Qaeda

Earlier today, Saddiq al-Abbadi, 40, a Yemeni national, pleaded guilty to conspiring to murder U.S. nationals abroad, providing and conspiring to provide material support to al-Qaeda and using a machine gun in furtherance of those crimes. 

The guilty plea was announced by Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington, D.C., Field Office.  Today’s guilty plea proceeding took place before U.S. District Court Judge Nicholas G. Garaufis of the Eastern District of New York.  At sentencing, al-Abbadi faces a maximum of life imprisonment.

“With the guilty plea entered today, Saddiq al-Abbadi will be held accountable for conspiring to kill Americans overseas and providing material support to al-Qaeda,” said Assistant Attorney General Carlin.  “Seeking to identify, thwart and hold accountable those who target U.S. citizens and interests around the world will remain a top priority of the National Security Division.”

“The defendant was a high-level al-Qaeda operative with ties to the terrorist group’s senior leadership in both Pakistan and Yemen,” said Acting U.S. Attorney Currie.  “He fought in battles against U.S. troops in Iraq and Afghanistan, tried to kill U.S. troops in Afghanistan by luring them to a compound rigged with explosives, and helped an American citizen gain entry to al-Qaeda.  We stand resolute in our commitment to bring to justice those who would try to harm members of our military or who assist al-Qaeda’s efforts to kill Americans at home or abroad.”

“With today’s guilty plea, Al-Abbadi admitted to directly supporting the mission of a designated terrorist organization through planning an operation designed to kill U.S. forces and for engaging in recruitment efforts on behalf of al-Qaeda,” said Assistant Director in Charge McCabe.  “This plea is due in no small part to the many FBI Special Agents, intelligence analysts, and linguists from the Washington and New York Field Offices as well as our interagency and international partners who spent countless hours investigating terrorism actors and al-Abbadi’s actions.  The FBI will not rest until we find and hold accountable those who provide support to terrorist groups and ensure that they are brought to justice.”

According to court filings, al-Abbadi traveled from his home country of Yemen to Iraq where, from approximately late 2005 through early 2007, he fought alongside al-Qaeda affiliated battalions against U.S. troops stationed in Iraq.

In early 2008, al-Abbadi traveled to the Federally Administered Tribal Areas (FATA) of Pakistan in order to fight for al-Qaeda in Pakistan and Afghanistan.  While in the FATA, al-Abbadi – who had longstanding ties to senior members of al-Qaeda’s Yemen-based affiliate known as al-Qaeda in the Arabian Peninsula (AQAP) – engaged directly with senior al-Qaeda leadership in Pakistan, including Sheikh Saeed al-Masri, the then-third ranking member of al-Qaeda.

During the late spring and summer of 2008, Al-Abbadi crossed from Pakistan into Afghanistan for the purpose of fighting and killing members of the U.S. military stationed in Afghanistan.  In June 2008, he planned an operation designed to lure U.S. forces to a compound in Ghazni, Afghanistan, that was rigged with explosives set to detonate upon their entry.  When U.S. forces arrived at the compound, they found rocket-propelled grenades and artillery rounds littered about.  One soldier observed wiring running from the exterior gate to the inside of the compound and recognized the trap.  The military evacuated and subsequently leveled the compound.

In addition to fighting against the U.S. military, al-Abbadi used his connections with al-Qaeda’s leadership to help U.S. citizen Bryant Neal Vinas gain entry into al-Qaeda.  Vinas had traveled to Pakistan from Long Island, New York, in the hopes of joining al-Qaeda and fighting against U.S. military forces in Afghanistan.  As a result of al-Abbadi’s assistance, Vinas was allowed to join al-Qaeda.  After participating in al-Qaeda’s military training program, Vinas developed a plan with senior al-Qaeda external operations leadership to conduct an attack on the Long Island Railroad in New York.  Vinas was arrested before he could carry out this attack.

Assistant Attorney General Carlin extended his grateful appreciation to the FBI.  The government’s case is being prosecuted by Assistant U.S. Attorneys Zainab Ahmad, Michael P. Canty and Douglas M. Pravda of the Eastern District of New York, with assistance provided by Trial Attorney Josh Parecki of the National Security Division’s Counterterrorism Section and by the Office of International Affairs.

The former owner of a Los Angeles-based medical supply company was sentenced today to seven years in prison for his role in a fraud scheme that resulted in $3.3 million in fraudulent claims to Medicare.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles Region and Assistant Director in Charge David L. Bowdich of the FBI’s Los Angeles Field Office made the announcement.

Hakop Gambaryan, 55, of East Hollywood, California, was convicted following a jury trial on March 20, 2015, of four counts of health care fraud.  In addition to the prison sentence, U.S. District Court Judge Otis D. Wright II of the Central District of California ordered Gambaryan to pay $1,740,009 in restitution.

At trial, the evidence showed that Gambaryan, the former owner of a durable medical equipment supply company, fraudulently billed more than $3 million to Medicare for durable medical equipment, such as expensive power wheel chairs, that was not medically necessary.  Medicare paid approximately $1.7 million on those fraudulent claims.

The evidence demonstrated that between March 2006 and December 2012, Gambaryan paid cash kickbacks to medical clinics for fraudulent prescriptions for durable medical equipment, which the patients did not need.  Gambaryan then used these prescriptions to bill Medicare for the unnecessary equipment.

According to evidence presented at trial, Gambaryan personally delivered power wheelchairs to many beneficiaries who were able to walk without assistance.  In one instance, Gambaryan carried a power wheelchair up a flight of stairs for a woman who lived in a second floor apartment with no elevator.  In another instance, the power wheelchair would not fit inside the beneficiary’s home, so Gambaryan put it in the beneficiary’s garage.

The evidence also demonstrated that Gambaryan generated false documentation to support the fraudulent claims, including fake home assessments when no home assessments actually occurred.  In addition, Gambaryan photocopied beneficiaries’ signatures hundreds of times to create the appearance that the beneficiaries consented to ongoing equipment rentals, when they did not.  Indeed, at least two of the beneficiaries had passed away prior to the date they supposedly signed the rental agreements.

The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office of the Central District of California.  The case was prosecuted by Trial Attorneys Fred Medick and Ritesh Srivastava 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 have collectively 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.

The Justice Department today filed a lawsuit against the city of Beaumont, Texas, alleging violations of the Fair Housing Act and the Americans with Disabilities Act.  The lawsuit, filed in U.S. District Court for the Eastern District of Texas, charges that Beaumont discriminated against persons with disabilities based on its treatment of small group homes and companion care homes for persons with intellectual or developmental disabilities by applying overly-restrictive zoning and fire code restrictions that are not imposed on similarly-situated housing for persons who do not have disabilities.    

The suit seeks a court order prohibiting Beaumont from imposing a one-half mile spacing rule that effectively prohibits many small group homes and companion care homes from operating in Beaumont.  The suit further seeks to prohibit Beaumont from imposing unnecessary fire code requirements that exceed those mandated by the state of Texas, which regulates such homes.  The city’s excessive restrictions have prohibited numerous persons with intellectual or developmental disabilities from living in Beaumont and resulted in the institutionalization in a nursing home of a woman who was forced to move out of her home.  The suit also seeks monetary damages to compensate victims, as well as payment of a civil penalty.

This lawsuit arose as a result of complaints filed with the U.S. Department of Housing and Urban Development (HUD) by persons with intellectual or developmental disabilities whose homes were closed and were threatened with closure under Beaumont’s challenged housing restrictions. 

“The Fair Housing Act and the Americans with Disabilities Act seek to ensure that individuals with disabilities can live in communities of their choice without facing discrimination,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “This lawsuit furthers our commitment to community inclusion for persons with disabilities.” 

“Fair housing practices for all Americans and certainly for individuals with disabilities is a keystone civil right and one which today’s legal action underscores,” said U.S. Attorney John Malcolm Bales of the Eastern District of Texas.  “We trust that the city of Beaumont will respond appropriately but the department and the U.S. Attorney’s office is prepared to take the necessary steps to insure that these rights are enforced.”

“Persons with disabilities should not be further limited in their housing options by overly restrictive codes and policies,” said HUD Assistant Secretary Gustavo Velasquez of Fair Housing and Equal Opportunity.  “HUD will continue to work with the Justice Department to support neighborhood-based choices for people with disabilities.”

Fighting illegal housing discrimination is a top priority of the Justice Department.  The Federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.  Title II of the Americans with Disabilities Act prohibits discrimination on the basis of disability by public entities.  Visit www.usdoj.gov/crt for more information about the Civil Rights Division and the laws it enforces.  Additional information about the Fair Housing Act is available at www.HUD.gov.  Additional information about the Americans with Disabilities Act is available at www.ADA.gov.

The United States Department of Justice and the City of Cleveland announced today that they have entered into a court enforceable agreement to address the department’s findings that the Cleveland Division of Police (CDP) engages in a pattern or practice of using excessive force in violation of the Fourth Amendment.  The agreement will create widespread reforms and changes within the CDP.  The changes focus on building community trust, creating a culture of community and problem-oriented policing, officer safety and training, officer accountability and technological upgrades.  Under the agreement, the parties will jointly select an independent monitor to assess and report whether the requirements of the agreement have been implemented for a term of at least five years.

“The Department of Justice is committed to ensuring that every American benefits from a police force that protects and serves all members of the community,” said Attorney General Loretta E. Lynch.  “The agreement we have reached with the city of Cleveland is the result of the hard work and dedication of the entire Cleveland community, and looks to address serious concerns, rebuild trust, and maintain the highest standards of professionalism and integrity.  I am pleased to have the full cooperation of law enforcement and city officials in this effort.  And I look forward to working with the entire community to build a stronger, safer Cleveland for residents and officers alike.”

The comprehensive agreement calls for:

• The creation of Community Police Commission, made up of ten representatives from across the community, and one representative each from the Cleveland Police Patrolmen’s Association, the Fraternal Order of Police and the Black Shield.
• CDP to reform use of force policies, including requirements for the use of de-escalation techniques whenever possible and appropriate, a prohibition on retaliatory force, mandatory reporting and investigation standards following use of force, and medical care for the subjects of force.
• CDP to integrate bias-free policing principles into all levels of the organization, including comprehensive training of officers and supervisors, which is to be developed with community input.
• CDP to create a Mental Health Response Advisory Committee and provide all officers with sufficient training to identify and appropriately respond to situations involving individuals in crisis.  CDP will develop a plan to ensure these specialized officers are always available to respond to calls related to those in mental-health crisis.
• CDP to improve officer training by ensuring that it reflects the needs of officers and that it is effective.
• CDP to improve equipment and resources available to officers following a comprehensive equipment and resource study to assess its current needs and priorities, including providing officers with functioning, up-to-date technology in their zone cars that allows them to access necessary information; safe zone cars; and first aid equipment.
• CDP to develop a recruiting policy and strategic recruitment plan that includes clear goals, objectives and action steps for attracting qualified applicants from a broad cross-section of the community. CDP will consult with the Community Police Commission and other stakeholders on strategies to attract a diverse pool of applicants.

“Today’s agreement reflects a commitment by the city and the Division of Police to work with the Department of Justice and the Cleveland community to transform this police agency into a model of community-oriented policing that will make both police officers and the people they serve safer,” said the head of the Civil Rights Division, Principal Deputy Assistant Attorney General Vanita Gupta.  “Constitutional policing is key to building trust between police departments and the communities they serve.  Today, Cleveland demonstrates to the rest of the country that people can come together across perceived differences to realize a common vision of a safer, more just city."

“For the past days and months the nation has looked toward Cleveland as we have grappled with difficult issues involving police-community relations,” said U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio.  “Today, the nation should look this city for an example of what true partnership and hard work can accomplish – a transformational blueprint for reform that can be a national model for any police department ready to escort a great city to the forefront of the 21st Century.  But the hard work is just beginning, and we will need the committed partnership of this entire community to turn today’s promise into tomorrow’s reality.”

The agreement addresses the conclusions announced in December 2014 of a comprehensive investigation into the CPD started in March 2013 which assessed use of force practices of the CDP.  The investigation concluded that there was reasonable cause to believe that Cleveland police officers engage in a pattern or practice of unreasonable and in some cases unnecessary force in violation of the Fourth Amendment of the Constitution.  That pattern or practice included the unnecessary and excessive use of deadly force, including shootings and head strikes with impact weapons; the unnecessary, excessive or retaliatory use of less lethal force including Tasers, chemical spray and fists; excessive force against persons who are mentally ill or in crisis, including in cases where the officers were called exclusively for a welfare check; and the employment of poor and dangerous tactics that place officers in situations where avoidable force becomes inevitable.

The investigation also found that this pattern of excessive force has eroded public confidence in the police.  As a result, public safety suffers and the job of delivering police services was more difficult and more dangerous.  The investigation was conducted jointly by the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office for the Northern District of Ohio.

A Carmel, Indiana, resident pleaded guilty today to perjury today in the U.S. District Court in Cleveland, Ohio, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, and U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio. 

According to the indictment, court documents and statements made at the court proceeding, Alexander Krivozus committed perjury by testifying falsely during the course of a federal grand jury investigation of Cleveland resident, Edward Gurary, who ultimately pleaded guilty in March 2011 to one count of filing a false income tax return on which he wilfully failed to report his Swiss bank accounts.  As part of the investigation, bank records indicated that Gurary directed UBS AG to wire funds from his undeclared Swiss bank account, which was held in the name of a nominee Bahamian entity, and requested that confirmations of the transfers be sent to a U.S. fax number in the (317) area code.  The investigation established that the fax number was associated with Krivozus.  He was subpoenaed to testify before the federal grand jury and testified falsely. 

Krivolus faces a statutory maximum sentence of five years in prison and a $250,000 fine for the perjury offense.  A sentencing date has not yet been scheduled.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Dettelbach commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorney Richard M. Rolwing of the Tax Division and Assistant U.S. Attorney Robert Patton of the Northern District of Ohio, who are prosecuting the case. 

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website. Additional information about tax fraud schemes to watch out for may be found on the IRS-Criminal Investigation website.

A Colombian national who recently was extradited from Mexico, pleaded guilty today in federal district court in Dallas, to conspiracy to launder monetary instruments, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting Administrator Chuck Rosenberg of the Drug Enforcement Administration.

Tito Miller Parra-Isaza, 45, a Colombian national, entered his guilty plea before U.S. Magistrate Judge Renee H. Toliver of the Northern District of Texas.  He will be sentenced at a later date.

According to a factual stipulation filed with the court, Parra-Isaza’s role in the conspiracy was to coordinate the deposit of bulk cash, which he knew to be the proceeds of drug smuggling, into financial institutions in Mexico and elsewhere.  In furtherance of the conspiracy, this bulk cash was later wire transferred to bank accounts in Dallas.  The funds then were  transported to Panama and elsewhere to distribute to individuals involved in drug smuggling.

Two other defendants charged in this case previously entered guilty pleas.  Of the remaining charged defendants, one is in Mexican custody, two are fugitives and one is deceased.

This case is being investigated by the DEA.  The case is being prosecuted by Trial Attorneys Mark Irish and Nicole Grosnoff of the Criminal Division’s Asset Forfeiture and Money Laundering Section.  The Criminal Division’s Office of International Affairs also has provided substantial assistance. 

Parra-Isaza Plea Agreement

WASHINGTON – El Departamento de Justicia de los Estados Unidos y la Ciudad de Cleveland anunciaron hoy que han realizado un acuerdo exigible judicialmente en resolución de los hallazgo por parte del Departamento de que la División de Policía de Cleveland [Cleveland Division of Police (CDP)] exhibe un patrón o una práctica de uso de fuerza excesiva en violación de la Cuarta Enmienda.   El acuerdo creará reformas y cambios amplios en el ámbito de la CDP.  Los cambios se centran en conquistar la confianza de la comunidad, y crear una cultura de servicio policial, seguridad y la capacitación de los agentes dirigida a los problemas y la comunidad, la responsabilización de los agentes y mejoras en tecnologías.  Según el acuerdo, las partes seleccionarán en conjunto a un monitor independiente que evalúe e informe si se han implementado las exigencias del acuerdo por un período de al menos cinco años.

“El Departamento de Justicia se empeña en asegurar que cada ciudadano de los Estados Unidos disfrute de los beneficios de una fuerza policial que protege y sirve a todos los miembros de la comunidad”, señaló la Secretaria de Justicia Loretta E. Lynch.  “El acuerdo que hemos realizado con la ciudad de Cleveland es el resultado de arduo trabajo y  dedicación de toda la comunidad de Cleveland, y busca resolver inquietudes graves, reconquistar la confianza y mantener los más altos estándares de profesionalismo e integridad.  Me complace contar con la plena colaboración de las fuerzas del orden público y las autoridades municipales en esta iniciativa.  Y me complacerá trabajar con toda la comunidad en crear un Cleveland más fuerte y más seguro tanto para residentes como para agentes”.

El acuerdo integral exige:

• La creación de una Comisión de Policía Comunitaria, compuesta por diez representantes de la comunidad y un representante de la Asociación de Patrulleros Policiales de Cleveland (Cleveland Police Patrolmen’s Association), el sindicato Fraternal de Orden Policial y Black Shield.
• La CDP reformará el uso de políticas del uso de fuerza, lo que incluye exigencias de uso de técnicas de desintensificación, siempre que corresponda y sea posible, la prohibición del uso de fuerza como represalia, la emisión obligatoria de informes y estándares para la investigación de casos de uso de fuerza, y atención médica para las personas objeto de la fuerza.  
• La CDP integrará principios de acción policial libres de parcialidad en todos los niveles de la organización, lo que incluye la capacitación integral de agentes y supervisores a ser desarrollada con opiniones de la comunidad.
• La CDP creará un Comité Asesor de Respuesta a Problemas de Salud Mental y esta proporcionará a los agentes la suficiente capacitación para identificar y responder adecuadamente a situaciones relacionadas con personas en crisis de salud mental.  La CDP desarrollará un plan para asegurarse de que estos agentes especializados estén siempre disponibles para responder a llamadas relacionadas con personas en crisis de salud mental.
• La CDP mejorará la capacitación de los agentes al asegurarse de que refleje las necesidades de los agentes y que esta sea eficaz.
• La CDP mejorará los equipos y recursos disponibles para los agentes después de realizar un estudio integral de equipos y recursos para evaluar sus necesidades y prioridades actuales. Esto incluye el suministro de tecnología actualizada y funcional en sus carros de zona, que les permita acceso a información necesaria; carros de zona seguros y equipos de primeros auxilios.
• La CDP desarrollará una política de reclutamiento y un plan estratégico de reclutamiento que incluya metas, objetivos y pasos de acción claros para atraer a candidatos calificados de un amplio espectro de la comunidad. La CDP consultará a la Comisión de Policía Comunitaria y otras partes interesadas acerca de estrategias para atraer a un grupo diversificados de candidatos.

“El acuerdo de hoy refleja el compromiso de la ciudad y de la División de Policía de trabajar con el Departamento de Justicia y la comunidad de Cleveland en transformar a esta repartición policial en un modelo de acción policial con orientación comunitaria que permitirá una mayor seguridad tanto de los agentes de la policía como de las personas a las que sirven”, señaló la líder de la División de Derechos Civiles, la Secretaria de Justicia Auxiliar Adjunta Principal Vanita Gupta.  “La acción policial constitucional es clave para la creación de confianza entre las comisarías y las comunidades a las que sirven.  Hoy, Cleveland demuestra al resto del país que las personas pueden unirse en sus diferencias percibidas para realizar una visión común de una ciudad más segura y más justa”.

“En los últimos días y meses, la nación ha observado a Cleveland en nuestra resolución de problemas complejos relacionados con las relaciones entre la policía y la comunidad”, observó el Fiscal Federal Steven M. Dettelbach del Distrito Norte de Ohio.   “Hoy, la nación debe considerar a esta ciudad un ejemplo de lo que el verdadero trabajo arduo conjunto puede lograr: un proyecto transformativo de reforma que puede ser un modelo nacional para cualquier comisaría lista para acompañar a una gran ciudad a la vanguardia del siglo 21.  Sin embargo, el trabajo arduo recién comienza y necesitaremos el compromiso del trabajo conjunto de toda la comunidad para transformar a la promesa de hoy en la realidad de mañana”.

El acuerdo se ocupa de los hallazgos anunciados en diciembre de 2014, de una investigación integral de la CPD iniciada en marzo de 2013, que evaluó el uso de prácticas de uso de fuerza por parte de la CDP.  La investigación concluyó que hubo causas razonables para creer que los agentes policiales de Cleveland ejercían un patrón o una práctica de fuerza irrazonable y, en algunos casos, innecesaria, en violación de la Cuarta Enmienda de la Constitución.  Dicho patrón o práctica incluyó el uso innecesario o excesivo de fuerza letal, que incluyó disparos y golpes en la cabeza con armas de impacto; el uso innecesario, excesivo o en represalia de fuerza menos letal, incluidos Tasers, rosear químicos y fuerza física; fuerza excesiva contra personas con deficiencia mental o en crisis, que incluyó casos en los que se llamó a los agentes exclusivamente para una verificación del bienestar, y el empleo de tácticas ineficientes y peligrosas que colocaron a agentes en situaciones en las que la fuerza evitable se volvió inevitable.

La investigación también encontró que este patrón de fuerza excesiva desgastó la confianza pública en la policía.   Como resultado de esto, afectó la seguridad pública y la tarea de prestar servicios policiales resultó más difícil y peligrosa.  La investigación fue llevada a cabo conjuntamente por la Sección de Litigios Extraordinarios de la División de Derechos Civiles y la Fiscalía Federal para el Distrito Norte de Ohio.

# # #

Download Cleveland Complaint (32.66 KB)
Download Cleveland Joint Motion and Memo for Entry of Consent Decree (26.98 KB)
Download Cleveland Settlement Agreement (21.39 MB)
Download SPL Police Accomplishments 5.26.15 (212.23 KB)
Download Cleveland Division of Police 5.26.15 (180.2 KB)
Resumen del Acuerdo de Conciliación con la Ciudad de Cleveland Hacerca de la División de Policía de Cleveland (103.08 KB)

Statement from Vanita Gupta, head of the Justice Department’s Civil Rights Division, U.S. Attorney Steven M. Dettelbach for the Northern District of Ohio and Special Agent in Charge Stephen D. Anthony for the FBI:

“The U.S. Attorney's Office, the Federal Bureau of Investigation and the Civil Rights Division of the Department of Justice have been monitoring the extensive investigation that has been conducted around the events of Nov. 29, 2012.  We will now review the testimony and evidence presented in the state trial.  We will continue our assessment, review all available legal options and will collaboratively determine what, if any, additional steps are available and appropriate given the requirements and limitations of the applicable laws in the federal judicial system.  This review is separate and distinct from the Civil Rights Division and U.S. Attorney's Office's productive efforts to resolve civil pattern and practice allegations under 42 U.S.C. 14141 with the city of Cleveland.”

Two Mecklenberg County, North Carolina, residents were indicted yesterday in Charlotte, North Carolina, with conspiracy to defraud the United States and filing false, fictitious or fraudulent claims, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and Acting U.S. Attorney Jill W. Rose of the Western District of North Carolina.

Daniel Heggins and Joan Clark were charged with one count of conspiracy to defraud the United States and 16 counts of filing false, fictitious or fraudulent claims for federal income tax refunds.  According to the allegations in the indictment, beginning no later than July 2009 and continuing through May 2011, Heggins and Clark operated Guarantor Manufacturer Inc., which advertised consulting, investing, debt reduction, and foreclosure avoidance services.  Heggins and Clark recruited individuals who owed debts, such as mortgages or car loans, and used their information to file false federal income tax returns with fraudulent claims for tax refunds.

Heggins and Clark prepared false tax returns by attaching false Internal Revenue Service (IRS) Forms 1099-Original Issue Discount (OID) to the returns.  Certain taxpayers file Forms 1099-OID because taxes owed to the IRS on certain bonds must be reported annually and paid as interest accrues.  Heggins and Clark intentionally mischaracterized the debts owed by improperly using Forms 1099-OID to report debts as interest income to the individuals.  As a result, the false tax returns claimed refunds based on fictitious tax withholdings from that purported interest income.  Heggins and Clark filed at least 16 false tax returns that fraudulently claimed more than $4 million in tax refunds.

If convicted, Heggins and Clark each face a statutory maximum sentence of five years in prison and a maximum fine of $250,000 on each count.

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation and the FBI, who investigated the case, and Assistant U.S. Attorney Michael Savage of the Western District of North Carolina and Trial Attorney Todd P. Kostyshak of the Tax Division, who are prosecuting the case.

An indictment is not a finding of guilt.  An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceeding.

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

Daniel Heggins and Joan Clark Indictment

Two California men, one of whom attempted to travel to the Middle East to allegedly join ISIL, have been arrested on charges of conspiring to provide material support to the designated foreign terrorist group the Islamic State of Iraq and the Levant (ISIL), announced Assistant Attorney General for National Security John P. Carlin and Acting U.S. Attorney Stephanie Yonekura of the Central District of California.

Muhanad Badawi, 24, and Nader Elhuzayel, 24, both of Anaheim, California, were arrested late Thursday afternoon by the FBI.  Badawi and Elhuzayel were charged in a criminal complaint filed today in U.S. District Court of the Central District of California, and both men are expected to make their initial court appearance this afternoon.

The affidavit in support of the criminal complaint outlines a scheme in which Badawi and Elhuzayel used social media to discuss ISIL and terrorist attacks, expressed a desire to die as martyrs and made arrangements for Elhuzayel to leave the United States to join ISIL.

According to the affidavit, on May 3, 2015, Elhuzayel saw a tweet from Elton Simpson, one of the two gunmen who were killed trying to attack a conference in Garland, Texas.  In this tweet, Simpson stated that he and his “bro” had pledged allegiance to the leader of ISIL.  In response, Elhuzayel tweeted his support for the attempted attack and praised Simpson as a “martyr.”

In recorded conversations last month, Badawi and Elhuzayel “discussed how it would be a blessing to fight for the cause of Allah, and to die in the battlefield,” and they referred to ISIL as “we.” When Badawi expressed concerns about ISIL struggling due to airstrikes by Coalition forces, Elhuzayel responded that they had to be patient and “can you imagine when al-Qaeda joins with Islamic State”?  According to the affidavit, Badawi responded: “We will be huge.”  The two men also discussed local Muslim leaders and Elhuzayel complained that these leaders were not “legitimate” because they believed in democracy and were not fighting for an Islamic State.

The men discussed where in the Middle East they would rather be, and Elhuzayel said he wanted to fight and did not want to be in the United States, according to the conversations recounted in the affidavit.

On May 7, Badawi allowed Elhuzayel to use his credit card to purchase a one-way airline ticket for travel from Los Angeles to Tel Aviv, Israel, via Istanbul, Turkey, on a Turkish Airlines flight scheduled to depart on May 21.  Badawi indicated that he would be traveling to the Middle East in the future, according to the affidavit.

Elhuzayel was arrested at Los Angeles International Airport.  According to the allegations in the complaint, Elhuzayel admitted after being read Miranda rights that he planned to disembark in Istanbul to join ISIL and did not intend to travel on to Israel.

If convicted of the charge in the criminal complaint, Badawi and Elhuzayel each would face a statutory maximum sentence of 15 years in prison for conspiring to provide material support to ISIL.

A criminal complaint contains allegations that a defendant has committed a crime.  Every defendant is presumed to be innocent until and unless proven guilty in court.

The investigation in this case was conducted by members of the FBI’s Joint Terrorism Task Force in Orange County, California.

Badawi and Elhuzayel Criminal Complaint

A federal jury in Oklahoma City today convicted two Texas men and a California man for their participation in a racketeering conspiracy involving illegal gambling and money laundering, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Sanford C. Coats of the Western District of Oklahoma.

Rodger Bramley, 73, of Plano, Texas, Kelley Diebner, 43, of Houston, Texas, and Leon Moran Jr. 54, of Kingsburg, California, were found guilty of racketeering conspiracy, conducting an illegal gambling business and money laundering conspiracy.  A sentencing hearing has not yet been set.

According to evidence presented at trial, from 2003 to 2013, Bramley, Diebner and Moran conspired with others to operate an international criminal enterprise known as Legendz Sports, which ran internet and telephone gambling services from Panama City, Panama.  Legendz Sports took in more than $1 billon in illegal wagers, almost exclusively from gamblers in the United States betting on American sporting events.  Bramley and Diebner worked as bookies in Texas who illegally solicited and accepted sports wagers as well as settled gambling debts.

Evidence further showed that Moran worked as a runner who delivered and picked up cash to Legendz Sports bookies.  As part of the racketeering conspiracy, bookies and runners for Legendz Sports transported millions of dollars of gambling proceeds in cash and checks from the United States to Panama.  The checks were made out to various shell companies created by Legendz Sports throughout Central America.

The case was investigated by the FBI and Internal Revenue Service-Criminal Investigation, with the assistance of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the U.S. Marshals Service.

The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Susan Dickerson Cox and Travis D. Smith of the Western District of Oklahoma.

A Detroit-area neurosurgeon pleaded guilty today in two separate criminal cases that resulted in serious bodily injury to his patients and more than $11 million in Medicare, Medicaid and private insurance companies.

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 Paul M. Abbate of the FBI’s Detroit Field Office, Assistant Director in Charge David L. Bowdich of the FBI’s Los Angeles Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Service Office of Inspector General (HHS-OIG), Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles Region and Special Agent in Charge Marlon Miller of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (ICE-HSI) Detroit Field Office made the announcement.

“Disregarding his Hippocratic oath to do no harm, Dr. Sabit enriched himself by performing unnecessary, invasive spinal surgeries and implanting costly and unnecessary medical devices, all at the expense of his patients’ health and welfare,” said Assistant Attorney General Caldwell.  “Doctors who sell their medical judgment and ethics for personal profit endanger the lives and safety of vulnerable patients who count on their advice to make life-altering decisions.  The Criminal Division of the Department of Justice will continue to prioritize the prosecution of doctors whose criminal behavior puts patients at risk.”

“This case of health care fraud is particularly egregious because Dr. Sabit caused serious bodily injury to his patients by acting out of his own greed instead of the best interests of his patients,” said U.S. Attorney McQuade.  “Not only did he steal $11 million in insurance proceeds, but he also betrayed his trust to patients by lying to them about the procedures that were medically necessary and that were actually performed.”

Aria O. Sabit, M.D., 39, of Birmingham, Michigan, entered his guilty pleas in both criminal cases at a hearing before U.S. District Judge Paul D. Borman of the Eastern District of Michigan.  Sabit pleaded guilty to four counts of health care fraud, one count of conspiracy to commit health care fraud and one count of unlawful distribution of a controlled substance, resulting in losses to Medicare, Medicaid and various private insurance companies.  A sentencing hearing is scheduled for Sept. 15, 2015.

According to court documents, Sabit was a licensed neurosurgeon who owned and operated the Michigan Brain and Spine Physicians Group with various locations in the Eastern District of Michigan, including Southfield, Michigan, Clinton Township, Michigan, and Dearborn, Michigan, which opened in approximately April 2011.

During his guilty plea today, Sabit admitted that he derived significant profits by convincing patients to undergo spinal fusion surgeries with instrumentation (meaning specific medical devices designed to stabilize and strengthen the spine), which he never rendered, and subsequently billing public and private healthcare benefit programs for those fraudulent services.

Sabit further admitted he operated on patients and dictated in his operative reports—that he knew would later be used to support his fraudulent insurance claims—that he had performed spinal fusion with instrumentation, which he never performed.  This invasive surgery caused serious bodily injury to the patients.  Sabit admitted that his operative reports and treatment records contained false statements about the procedures performed, and the instrumentation used in the procedures.  Sabit also admitted that, on occasion, he would implant cortical bone dowels and falsely dictate in his operative reports that he had implanted instrumentation.  Sabit, then fraudulently billed public and private health care programs for instrumentation, when in fact the implants were tissue.  Sabit admitted he failed to render services in relation to lumbar and thoracic fusion surgeries, including in certain instances, billing for implants that were not provided.

Sabit also admitted that, prior to moving to Michigan, he was a resident of Ventura, California, and a licensed neurosurgeon in California.  He admitted that in approximately February 2010, he became involved with Apex Medical Technologies LLC (Apex) while he was on the staff of a California hospital.

Apex was owned by another neurosurgeon and three non-physicians who operated Apex as a physician-owned distributorship and paid neurosurgeons lucrative illegal kickbacks tied directly to the volume and complexity of the surgeries that the surgeons performed, and the number of Apex spinal implant devices the surgeons used in their spine surgeries.

In exchange for the opportunity to invest in Apex and share in its profits, Sabit admitted that he agreed to convince his hospital to buy spinal implant devices from Apex and use a sufficient number of Apex spinal implant devices in his spine surgeries.  Sabit further admitted that he and Apex’s co-owners used Apex to operate an illegal kickback scheme.  In doing so, they concealed Sabit’s involvement in Apex from outsiders.  Sabit then required the hospitals and surgical centers where he and his fellow neurosurgeon performed surgeries to purchase spinal implant devices from Apex.

Sabit admitted that his involvement in Apex, and the financial incentives provided to him by Apex and his co-conspirators, caused him to compromise his medical judgment and cause serious bodily injury to his patients by performing medically unnecessary spine surgeries on some of the patients in whom he implanted Apex spinal implant devices.  Sabit admitted that on a few occasions, the money he made from using Apex spinal implant devices motivated him either to refer patients in for spine surgery who did not medically need surgery or refer his patients for more complex surgeries, such as multi-level spine fusions, that they did not need.

Sabit also admitted that the financial incentives provided to him by Apex and his co-conspirators caused him to “over instrument” his patients (meaning Sabit used more spinal implant devices than were medically necessary to treat his patients) in order to generate more sales revenue for Apex, which resulted in serious bodily injury to his patients.

The Michigan case was investigated by the FBI, HHS-OIG and ICE.  The California case—which was subsequently transferred to the Eastern District of Michigan—was investigated by the FBI and HHS-OIG.  The Michigan case is being prosecuted by Assistant U.S. Attorneys Regina R. McCullough and Philip A. Ross of the Eastern District of Michigan.  The California 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 Eastern District of Michigan, and is being prosecuted by Senior Trial Attorney Jonathan T. Baum and Trial Attorneys Dustin Davis and Blanca Quintero of the Criminal Division’s Fraud Section.

Sabit is also a defendant in two civil False Claims Act cases brought by the Department of Justice in the U.S. District Court of the Central District of California.

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 have collectively billed the Medicare program for more than $6.5 billion.  In addition, the HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

The Department of Justice issued agency-wide policy guidance today on the use of Unmanned Aircraft Systems (UAS) that sets standards of use and management controls of UAS by the department and its components.

UAS are used at times by law enforcement agencies as cost-effective, efficient and potentially life-saving tools to support public safety efforts.  The policy highlights protections of privacy, civil rights and liberties and makes clear that UAS use must be consistent with the protections afforded by the U.S. Constitution.  Justice Department components are barred from using UAS solely for the purpose of monitoring activities protected by the First Amendment, and components can only operate UAS on properly authorized investigations and activities.  The collection, retention and dissemination of information collected by UAS is also subject to Privacy Act protections.

To ensure accountability, the department will also require that personnel operating UAS are appropriately trained and supervised, including but not limited to a mandatory training on the department’s policies.  Annual privacy reviews will be conducted to ensure compliance with the department policy, existing laws and regulations and to identify potential privacy risks.

The guidance issued today is a result of various discussions and research – and meetings will continue to be held at least twice a year to ensure that the department strikes the appropriate balance between its law enforcement and national security missions and respect for civil rights and civil liberties.

Justice Department UAS Policy

Last night, the United States District Court for the Western District of Louisiana approved a comprehensive consent order filed by the Justice Department, the Avoyelles Parish School Board, and private plaintiffs in United States v. Avoyelles Parish School Board.  The consent order requires the school district to implement remedies in student assignment and discipline to complete the desegregation of the Avoyelles Parish school system.

The Avoyelles Parish School Board serves 5,400 students and has been operating under a continuing duty to desegregate its schools since 1967. 

The court retained jurisdiction over the case to ensure that the school board fully implements the relief required by the consent order and complies with applicable federal law.  The district may move for dismissal of the case if it successfully complies with the consent order for three years, during which time the school board must:

• Implement a new student assignment and transfer policy, including better address verification measures;

• Adopt a uniform admission process for the school system’s charter school along with a rigorous publicity and outreach program directed toward African-American students;

• Strengthen advertising and marketing of the New Tech magnet program, which is located at a majority African-American high school;  

• Conduct a comprehensive study to determine whether a magnet program can be established at a racially identifiable African-American elementary school, and take proactive steps to encourage white students to transfer to the school;

• Ensure classes within schools are desegregated; 

• Revise discipline policies to reduce racial disparities in the use of exclusionary discipline and expand the school board’s positive behavior interventions and supports program; and

• Hire an experienced consultant to monitor and report annually on the school board’s efforts to comply with the consent order. 

“The Avoyelles Parish School Board’s unanimous vote to approve the consent order reflects our shared goal of securing equal educational opportunities for all students,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “We are confident that this agreement will bring meaningful progress, and we look forward to working closely with the School Board over the next three years to bring this case to a successful close.”

“My office is committed to ensuring that this district’s schools provide all students with equal educational opportunities,” stated U.S. Attorney Stephanie A. Finley of the Western District of Louisiana. “I applaud the Avoyelles Parish School Board for its efforts to eliminate the effects of state-mandated segregation. It is our goal to assist in any way possible so that the Consent Order will work to provide all students in Avoyelles Parish with a quality education, a safe and fruitful learning environment, and academic offerings to help them achieve their dreams.”

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.

A sergeant with the U.S. Army was sentenced today to 51 months in prison for accepting bribes from Afghan truck drivers at Forward Operating Base (FOB) Gardez in Afghanistan, in exchange for allowing the drivers to take thousands of gallons of fuel from the base for resale on the black market, announced 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.

James Edward Norris, 41, of Fort Irwin, California, was sentenced by Chief U.S. District Judge Clay D. Land of the Middle District of Georgia, who also ordered Norris to pay $176,100 in restitution and to forfeit two vehicles he purchased with money from the bribery scheme and $70,000 in cash that he received from the scheme.

In connection with his guilty plea, Norris admitted that he conspired with other soldiers stationed at FOB Gardez to solicit and accept approximately $2,000 per day from local Afghan truck drivers in exchange for permitting the truck drivers to take thousands of gallons of fuel from the base.  Norris admitted that he was personally paid a total of $100,000 over the course of the conspiracy.

Norris and the other soldiers shipped the bribe proceeds back to the United States in tough boxes.  Norris admitted that, after returning from deployment, he purchased a 2008 Cadillac Escalade with $31,000 cash derived from the bribery scheme and a custom built 2014 Hardcore Choppers motorcycle with approximately $30,000 in proceeds from the scheme.

Seneca Hampton, another U.S. Army sergeant, pleaded guilty for his role in the scheme on Feb. 10, 2015, and is scheduled to be sentenced on July 28, 2015.  Anthony Tran, a former U.S. Army specialist, was indicted on March 10, 2015, for his alleged role in the scheme and remains pending trial.  The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.

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’s Investigative Support Division.  The case is being prosecuted by Trial Attorney John Keller of the Criminal Division’s Public Integrity Section. 

A Midvale, Utah, man and a Henderson, Nevada, woman were sentenced yesterday in the U.S. District Court in Salt Lake City for tax crimes, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Carlie Christensen of the District of Utah. 

Gerrit Timmerman III, 73, of Midvale, was sentenced to serve 48 months in prison to be followed by three years of supervised release.  Carol Jean Sing, 75, of Henderson, was sentenced to serve 36 months in prison to be followed by three years of supervised release.  In February 2015, Timmerman and Sing were convicted at trial by a federal jury of conspiracy to defraud the United States related to their promotion of a tax fraud scheme.

“Combatting abusive tax schemes remains one of the Tax Division’s highest priorities, and these sentences are the result of our continued efforts to pursue and prosecute fraudulent promoters to the fullest extent of the law,” said Acting Assistant Attorney General Ciraolo.  “We will continue to work with our law enforcement partners at the IRS and in the U.S. Attorney’s Offices to identify and dismantle these criminal enterprises and in doing so, protect the American public and the U.S. Treasury.”

“Individuals who enrich themselves by promoting tax avoidance schemes and assisting others in evading state and federal taxes are defrauding American taxpayers,” said U.S. Attorney Christensen.  “They should expect to be prosecuted, convicted and sentenced to federal prison for this conduct, as yesterday’s sentences demonstrate.”

According to the evidence introduced at trial, between April 23, 2004, and March 5, 2007, Timmerman and Sing conspired to defraud the United States by marketing “corporations sole” as part of their scheme to evade the assessment and payment of federal income taxes.  Timmerman and Sing falsely told their clients that corporations sole were exempt from United States income tax laws, had no obligation to file tax returns and had no obligation to apply for tax exempt status.  They further claimed that individuals could render their own income non-taxable by assigning it to the corporation sole, could draw a tax-free stipend from their corporation sole, and could render property immune from IRS collection activity by transferring property to the corporation sole.

According to evidence presented at trial, Sing used Trioid International Group Inc. as a resident agent for corporations sole and other business entities for their clients.  Sing and Timmerman also utilized a website to list the tax benefits of corporations sole and to post articles about the supposed tax benefits of corporations sole.  At the same time, Timmerman was actively assisting others in evading their state and federal income tax liabilities and recommended the corporation sole to his clients as another way to impair the IRS.  Both defendants referred customers to one another and paid each other referral fees. 

“Yesterday’s sentencing of Gerrit Timmerman and Carol Sing should send a clear message: schemes to evade the payment of taxes are a violation of the federal tax laws and the consequences of such schemes can and will result in jail time,” said Special Agent in Charge John G. Collins of IRS-Criminal Investigation in Utah.  “The Internal Revenue Service, in partnership with the U.S. Attorney’s Office and the Tax Division, will continue the aggressive pursuit of those who use fraudulent methods in an attempt to corrupt our nation's tax system.  Honest taxpayers have been reassured today that no one is above the law – especially when the integrity of tax administration is at stake.”

A corporation sole is a form of incorporation allowed by some states, primarily for use by religious leaders to hold title to property.  Several states, including Utah and Nevada, have disallowed the creation of new corporations sole.  The IRS has publicized the fact that corporations sole have been abused by promoters in Revenue Ruling 2004-27, and has even included corporations sole on their “dirty dozen” tax scams in prior years.

Assistant Attorney General Ciraolo and U.S. Attorney Christensen commended the special agents of IRS–Criminal Investigation, who investigated this case, as well as Trial Attorneys Dennis R. Kihm and Andrea A. Kafka of the Tax Division, who prosecuted the case.

The heads of the antitrust agencies of the United States, Canada and Mexico met today in Mexico City to discuss their ongoing work to ensure effective antitrust enforcement cooperation in our increasingly interconnected markets.

The meetings were held among Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division, Chairwoman Edith Ramirez of the Federal Trade Commission, Canadian Commissioner of Competition John Pecman and President Alejandra Palacios Prieto of the Mexican Federal Economic Competition Commission.

The discussions covered a wide range of topics, including implementation of Mexico’s new competition law, enforcement cooperation among the three countries’ antitrust agencies, approaches to innovative and disruptive technologies and current enforcement priorities. 

“We value our close relationships with our antitrust partners north and south of the border,” said Assistant Attorney General Baer.  “Our shared enforcement interests and tradition of cooperating when investigating mergers and cartels ensure that North American markets remain competitive.  These annual ‘trilateral’ meetings give us a chance to review and improve our enforcement cooperation and to engage in policy dialogue on emerging topics of common interest.”

“These meetings are an important element in building and maintaining the strong relationships that help us meet enforcement and policy challenges in all three countries,” said Chairwoman Ramirez.  “The need to cooperate across our borders increases every year, and we are working together to meet that challenge.”

The four agency heads also spoke at a public conference organized by the Mexican agency, which included remarks by Assistant Attorney General Baer on the importance of anti-cartel enforcement and the role of criminal sanctions in the United States.

The meetings build on the foundations laid by the 1995 antitrust cooperation agreement between the United States and Canada, the 2000 agreement between the United States and Mexico and the 2001 agreement between Canada and Mexico.  The agreements commit the antitrust agencies to cooperate and coordinate with each other to make their antitrust policies and enforcement as consistent and effective as possible.

Today, the Justice Department’s Civil Rights Division announced that it has completed its investigation of the Hinds County Adult Detention Center and the Jackson City Detention Center and issued a letter of findings that determined that Hinds County, Mississippi, violates prisoners’ constitutional rights at both jail facilities.  The department found that the jail facilities fail to protect prisoners from violence by other prisoners and from improper use of force by staff.  The department also found that the jail facilities detain prisoners beyond court-ordered release dates. 

Systemic deficiencies contribute to serious harm and risk of harm at the jail facilities.  In the past three years, at least three major riots occurred, resulting in one prisoner’s death and the closing of entire housing units.  The department also documented rampant prisoner-on-prisoner violence, including an additional prisoner-on-prisoner homicide and a remarkable volume of contraband.  The department found systemic deficiencies in staffing; policies and training; security and classification procedures; physical plant and maintenance; contraband control; and administrative review and other accountability measures to prevent, detect and investigate improper uses of force. 

The department found that in an effort to address staffing and security concerns, Hinds County has locked down and otherwise improperly housed prisoners—severely limiting or eliminating access to treatment, education, exercise and visitation.  The department noted that juvenile prisoners and prisoners with mental illness are acutely harmed by the lockdowns.  One prisoner, who could neither speak nor hear, had been living in a cramped, dark booking cell with a reeking toilet for nearly three years.

The department also found that inadequate staffing and training, a backlog in record filing, and a lack of centralized information have resulted in prisoners being held beyond court-ordered release dates.  The delays, most of which were between one and ten days, arose in a variety of circumstances, including after judges ordered prisoners released for lack of probable cause, for lack of prosecution, after adjudication of a guilty plea, and after requisite contempt fines had been paid.  The longest period of over-detention—70 days—was for a 13-year-old middle school student, who was held a total of 173 days at the jail facilities without an indictment.  The department also voiced concern that delays in indicting prisoners, obtaining forensic mental health review, and bringing cases to trial may lead to unnecessary and prolonged incarceration, draining much-needed resources from the jail facilities.

“Hinds County Adult Detention Center and the Jackson City Detention Center are facilities in crisis,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Making these facilities safe will require broad systemic reforms and a local commitment to improve staffing and operations.  The jail facilities play an integral part in the county’s criminal justice system, and it will take cooperation between everyone involved to make the changes needed.  The Civil Rights Division looks forward to working with county officials to bring these facilities into compliance with constitutional standards.”

“The Hinds County detention facilities have an obligation to provide conditions of confinement that do not offend the Constitution,” said U.S. Attorney Gregory K. Davis of the Southern District of Mississippi.  “This office will work with the Civil Rights Division of the Department of Justice to address and remedy the violations revealed by the investigation.”

The department’s investigation involved in-depth review and analysis of documents, including policies and procedures, incident reports, grievances, legal complaints and grand jury inspection reports.  The department also interviewed jail administrators, staff, prisoners, county officials and various criminal justice stakeholders. 

The Civil Rights of Institutionalized Persons Act (CRIPA) authorizes the department to seek a remedy for a pattern or practice of conduct that violates the constitutional rights of persons confined in a jail, prison or other correctional facility.  The Attorney General may initiate a lawsuit pursuant to CRIPA forty-nine days after issuance of the findings letter to correct deficiencies identified in the letter if county officials have not satisfactorily addressed the concerns. 

The department commends county officials and jail facilities staff for their cooperation and receptivity to the department’s concerns and looks forward to continuing to work with them in a collaborative manner to resolve the department’s findings expeditiously and under mutually agreeable terms.                             

For more information on the Civil Rights Division, please visit www.justice.gov/crt.

A federal grand jury in San Juan, Puerto Rico, returned an indictment against five individuals for participating in bid rigging and fraud conspiracies at an auction for public school bus transportation contracts in Puerto Rico’s Caguas municipality, the Department of Justice announced today.

A seven-count felony indictment was filed yesterday in U.S. District Court of the District of Puerto Rico in San Juan against five bus transportation company owners: Gavino Rivera-Herrera, Luciano Vega-Martínez, Alfonso Gonzales-Nevarez, José L. Arroyo-Quiñones and René Garay-Rodríguez. 

Count one charges the bus owners with participating in a conspiracy to rig bids and allocate the market for public school bus transportation services in the Caguas municipality.  The second count charges the bus owners with conspiracy to commit mail fraud and counts three through seven charge the bus owners with committing mail fraud.  According to the indictment, the defendants and others defrauded, and conspired to defraud, the Puerto Rico Department of Education and the Caguas municipality, among others, in order to fraudulently obtain contracts for school bus transportation services.

These charges relate to a 2013 Caguas municipality auction, at which four-year contracts for public school bus transportation were awarded.  The indictment alleges that the defendants participated in the charged offenses from around August 2013 until at least May 2015. 

“The defendants are charged with depriving taxpayers, the Municipality of Caguas and the Puerto Rico Department of Education of the benefits of a competitive bidding process for school bus contracts,” said Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division.  “This is unacceptable.  The Division will continue its efforts to protect U.S. citizens across the country and hold accountable those who subvert competition.”

“Today’s case is the latest in our ongoing efforts to investigate and prosecute financial crimes, one of the priorities of the Department of Justice,” said U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico.  “These arrests serve as a reminder that federal law enforcement agencies intend to vigorously prosecute those who manipulate the economic system to enrich themselves at the expense of the government.”

"Price fixing victimizes the consumer which in this case are the honest, hardworking and tax paying citizens living in Puerto Rico,” said Special Agent in Charge Carlos Cases of the FBI’s San Juan Division.  “Let there be no doubt, the FBI, along with law enforcement partners, will continue to investigate, charge and prosecute any individuals involved in these type of acts."

The bus owners are charged with bid rigging and market allocation in violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than $1 million.  Each count of mail fraud, and conspiracy to commit mail fraud, carries a maximum sentence of 20 years in prison and a $250,000 fine.

This is the first case resulting from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in Puerto Rico’s school bus transportation services industry.  This investigation is being conducted by the Antitrust Division’s Washington Criminal I Section, the U.S. Attorney’s Office of the District of Puerto Rico, the FBI’s Puerto Rico Field Office and the U.S. Department of Education Office of Inspector General.  Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal I Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Puerto Rico Field Office at 787-754-6000.

A federal court has barred a Doral, Florida, man and his businesses from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction order, to which Eleuterio Almanzar consented, was entered by U.S. District Court Judge Jose E. Martinez of the Southern District of Florida.  The government’s complaint alleged that Almanzar prepared federal income tax returns for customers that understate the tax that is due or seek refunds larger than are appropriate.  The injunction also bars Almanzar’s businesses, Almanzar Tax Accounting & Consulting Corp. and Almanzar Financial Services Corp., from continuing to prepare tax returns.

According to the complaint, the tax understatements were the result of improper education credits, first time homebuyer tax credits, earned income tax credits, charitable deductions and business expense deductions that Almanzar claimed for his customers without performing the required due diligence and despite the absence of any supporting documentation.  Because some of these credits are refundable credits, the improper claims often resulted in refunds that were larger than appropriate, according to the suit.  The Internal Revenue Service (IRS) interviewed several of Almanzar’s customers, who stated that the improper deductions and credits were not based on information they provided to Almanzar, and that they did not know that the improper deductions and credits had been taken on their tax return until after their return was filed.

The injunction requires Almanzar 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 he has prepared federal tax returns or claims for refund since Jan. 1, 2009.

For the returns Almanzar prepared since 2009, which the IRS examined, the average tax deficiency was $3,249 per return, according to the complaint.  Given the number of returns Almanzar has prepared since 2009, he has potentially caused millions of dollars of harm to the U.S. Treasury.  

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.

Today the Department of Justice proposed legislation that would require states or localities whose territory includes part or all of an Indian reservation, an Alaska Native village, or other tribal lands to locate at least one polling place in a venue selected by the tribal government. 

“The Department of Justice is deeply committed to ensuring that every eligible individual is able to exercise his or her fundamental right to vote,” said Attorney General Loretta E. Lynch.  “That’s why, today, I am calling on Congress to help remove the significant and unnecessary barriers that for too long have confronted American Indians and Alaska Natives attempting to cast their ballots.  The legislation we recommend today will make this nation stronger by extending meaningful voting opportunities to native populations, by encouraging full participation in our democratic institutions, and by bringing us closer to our most cherished ideals.”

“As citizens of a nation founded upon the principles of liberty and equality, Native Americans have faced unacceptable barriers to participating in the franchise, a situation aggravated by a history of discrimination, poverty and — significantly — great distances from polling places,” said Acting Associate Attorney General Stuart Delery.  “In spite of many reforms made possible by the Voting Rights Act and other measures, voting rates among Native Americans remain disproportionately low.  The legislation proposed today would address this unacceptable gap and we look forward to working with Congress to see it enacted.”

American Indians and Alaska Natives have faced significant obstacles that have prevented them from enjoying equal access to polling places and equal opportunities to cast a ballot.  In addition to suffering from a long history of discrimination, the distance many American Indian and Alaska Native citizens must travel to reach a polling place presents a substantial and ongoing barrier to full voter participation.  Following formal consultations with Indian tribes, the Department of Justice believes that there is a pressing need for federal legislation to ensure equal access to voting by Native American voters.

Today, the Department of Justice sent a letter to Congress with a legislative proposal, which would ensure that American Indian and Alaska Natives have access to at least one polling place in their communities to cast their ballots and require a number of additional obligations to ensure parity with other polling places.

This legislative proposal, a stand-alone bill, would:                           

• Enable Native Americans to vote on or near tribal lands, by requiring any state or local election administrator whose territory includes part or all of an Indian reservation, an Alaska Native village, or other tribal lands to locate at least one polling place in a venue selected, and made available for the purpose of conducting elections, by the tribal government.

• Require states to make voting machines, ballots, and other voting materials and equipment available at these tribally located polling places to the same extent that they are available at other polling places in the state.

• Require states to provide compensation and other benefits to election officials and poll workers at these polling places to the same extent as at other polling places in the state.

• Require states to use the same voting procedures at these polling places as at other polling places in the state — potentially including election-day voting, early voting, the hours during which polling places are open, the operation of voting mechanisms or systems, and same-day registration.

• Allow states to meet their obligations by either creating new polling places or relocating existing ones.

• Allow tribes with larger populations or land bases to request more than one polling place.

• Make the states’ obligations contingent on the tribe filing a timely request and certifying that it has arranged for access to, and appropriate staffing for, the polling facility.

• Require the tribe to ensure that the staffers for the polling place are properly trained.

• Require the tribe to ensure that the polling place will be open and accessible to all eligible citizens who reside in the precinct, regardless of whether they are Indians or non-Indians.

The Department of Justice is committed to ensuring equal access to voting for Native American voters.  This proposal would address serious voting obstacles faced by citizens who are members of Indian tribes and Alaska Native villages; provide equal access to polling places for all eligible citizens, including members of tribes and villages; reinforce our nation’s commitment to the fundamental right to vote; and strengthen the government-to-government relationship between the United States and tribal nations.   

In 1975, recognizing the barriers to full participation that Native Americans continued to confront, Congress expressly included American Indians and Alaska Natives as protected groups under the special provisions of the Voting Rights Act.  Sections 4 and 5 of the Voting Rights Act prohibited many jurisdictions with large American Indian or Alaska Native populations from changing their voting laws until they could prove that the change would not create new barriers to effective participation.  A number of jurisdictions with large Native American populations that have limited English proficiency — in six states, including Alaska — are also covered by Section 203 of the Voting Rights Act, which requires bilingual election materials and assistance.

Despite these reforms, participation rates among American Indians and Alaska Natives continue to lag behind turnout rates among non-Native voters.  For example, in Alaska, turnout among Alaska Natives often falls 15 to 20 or more percentage points below the non-Native turnout rate.  The causes of these disparities are complex, but the reality is that political participation by Native Americans consistently trails that of non-Natives and unequal access to polling places is a significant contributing factor.   

Review the legislation at www.justice.gov/tribal/department-justice-proposes-legislation-improve-access-voting-american-indians-and-alaska.

A Detroit federal grand jury returned a one-count indictment against two executives of a Japanese automotive parts manufacturer for their participation in a conspiracy to fix prices and rig bids of automotive parts, the Department of Justice announced today.

The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Norio Teranishi, formerly of NGK Spark Plug Co. Ltd., and Hisashi Nakanishi of NGK Spark Plug, with conspiring to fix the prices of spark plugs, standard oxygen sensors, and air fuel ratio sensors, sold to DaimlerChrysler AG, Ford Motor Company, Fuji Heavy Industries (Subaru), General Motors Company, Honda Motor Company Ltd., Nissan Motor Co. Ltd., Toyota Motor Corporation, and certain of their U.S. subsidiaries.

Teranishi is the former General Manager of Sales and Vice-Head of the Automotive Component Group at NGK Spark Plug.  During the alleged conspiracy, Nakanishi served as the Managing Director of NGK Spark Plug Europe.  

The indictment alleges, among other things, that beginning at least as early as January 2000 and continuing until at least July 2011, Teranishi and Nakanishi, and their co-conspirators participated in, and directed, authorized or consented to the participation of subordinate employees in, meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply, and fix the price of spark plugs, standard oxygen sensors, and air fuel ratio sensors sold to certain automobile manufacturers, in the United States and elsewhere.

“As a result of Antitrust Division’s automotive parts investigation, more than 50 individuals have been held accountable for corrupting the competitive process in this important global market,” said Deputy Assistant Attorney General Brent Snyder of the Antitrust Division’s Criminal Enforcement Program.  “The Antitrust Division will continue to vigorously prosecute those individuals who engaged in criminal antitrust violations in this vital market.”

“The criminal manipulation of the global automotive parts market through price fixing and bid rigging is a serious offense,” stated Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office.  “The FBI, together with the Department of Justice Antitrust Division, will continue to aggressively pursue those who seek to commit criminal antitrust violations in order to gain a competitive advantage through corruption of the global marketplace.”

NGK Spark Plug is a corporation organized and existing under the laws of Japan with its principal place of business in Nagoya, Japan.  On Oct. 8, 2014, NGK Spark Plug pleaded guilty and agreed to pay a $52.1 million criminal fine for its role in the conspiracy.

Including Teranishi and Nakanishi, 55 individuals have been charged in the government’s ongoing investigation into market allocation, price fixing and bid rigging in the automotive parts industry.  Additionally, 35 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.5 billion in criminal fines.

Teranishi and Nakanishi are charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals.  The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.  

Today’s indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit.  Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.

Defendant Also Ordered to Forfeit More Than $1.28 Million

A California man was sentenced to 13 months in prison today for his operation of the myRedBook.com website to facilitate prostitution.  This represents the first federal conviction of a website operator for facilitation of prostitution.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office and Special Agent in Charge José M. Martinez of the Internal Revenue Service-Criminal Investigation (IRS-CI) Oakland Field Office made the announcement.

Eric Omuro, also known as Red, 53, of Mountain View, California, pleaded guilty on Dec. 11, 2014, before U.S. District Judge William H. Orrick of the Northern District of California to using a facility of interstate commerce with the intent to facilitate prostitution.  As part of his plea agreement, Omuro agreed to forfeit more than $1.28 million in cash and property, as well as the sfRedBook.com and myRedBook.com domain names.

In connection with his guilty plea, Omuro admitted that from April 2010 until June 25, 2014, he owned, managed and operated a website known as myRedBook.com, which was previously known as sfredbook.com.  Omuro admitted that the website hosted advertisements posted by prostitutes containing explicit photos, graphic descriptions of sexual services offered and rates for the sexual services.  The advertisements were searchable by geographic location, including cities throughout California, other U.S. states and Canada.

Omuro admitted that members of his website and prostitutes typically used acronyms for sex acts, which were defined in graphic detail in the website’s “Terms and Acronyms” section.  While prostitutes could post advertisements for free, myRedBook.com offered additional options for a fee.  For example, prostitutes could pay a fee to have their advertisement featured more prominently on the website.  Similarly, customers could access myRedBook.com for free.  If a customer purchased a membership, however, the customer obtained early and enhanced access to prostitute reviews, enhanced prostitute review search options and access to additional VIP forums, among other things.

According to an affidavit submitted in connection with the sentencing hearing, the FBI identified more than 50 juveniles who were also advertised on myRedBook for the purpose of prostitution.

This case was investigated by the FBI’s San Francisco Field Office, the IRS-CI and the Oakland, California, Police Department.  The case is being prosecuted by the Criminal Division’s Child Exploitation and Obscenity Section and U.S. Attorney’s Office of the Northern District of California.  The Criminal Division’s Office of International Affairs provided assistance to the prosecution.

The former assistant administrator of Riverside General Hospital was sentenced today to 40 years in prison for his role in a $116 million Medicare fraud scheme.  To date, 10 individuals have pleaded guilty or been convicted for their involvement in the scheme.

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

Mohammad Khan, 65, of Houston, the assistant administrator who oversaw many of the partial hospitalization programs (PHPs) at Riverside General Hospital, pleaded guilty in February 2012 to conspiracy to commit health care fraud, conspiracy to pay and receive kickbacks and paying illegal kickbacks.  He was sentenced by U.S. District Court Judge Sim Lake of the Southern District of Texas.  He was also ordered to pay restitution in the amount of $31,321,200.

According to admissions made in connection with his guilty plea, from January 2008 through February 2012, Khan and others at Riverside General Hospital operated a scheme to defraud Medicare by submitting claims for PHP services that were not medically necessary and, in some cases, never provided.  Prior to Khan’s arrest, Riverside submitted over $116 million in claims to Medicare for PHP services purportedly provided to the recruited beneficiaries, when in fact, the PHP services were medically unnecessary or never provided.  Khan also admitted that he and his co-conspirators paid kickbacks to patient recruiters and to owners and operators of group care homes in exchange for which those individuals delivered ineligible Medicare beneficiaries to the hospital’s PHPs.

Others involved in the fraudulent scheme already have pleaded guilty and are awaiting sentencing.  Earnest Gibson III, the former president of Riverside; his son, Earnest Gibson IV, who operated a Riverside PHP; Regina Askew, a patient file auditor and group home operator; and Robert Crane, a patient recruiter, were all convicted after jury trial in November 2014 and await sentencing.  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 their roles in the scheme.

The case was investigated by the FBI, Internal Revenue Service Criminal Investigation and Texas Attorney General’s Medicaid Fraud Control Unit, with assistance from Health & Human Services’ Office of the Inspector General, Railroad Retirement Board’s Office of Inspector General and Office of Personnel Management’s Office of Inspector General.  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 Chief Laura M.K. Cordova 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’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

The Department of Justice, the Environmental Protection Agency (EPA), the District of Columbia and DC Water today announced an agreement to modify  a 2005 federal consent decree allowing DC Water to incorporate green infrastructure in its long-term strategy for curtailing combined sewer overflows (CSOs).

The modification, filed yesterday in federal district court in Washington, D.C., gives DC Water the go-ahead to pursue an integrated green/gray infrastructure approach to address water quality issues in the Rock Creek and Potomac watersheds resulting from combined sewer overflows.  This integrated approach utilizes green infrastructure in a targeted and sound engineering manner to reduce combined sewer overflows.  Green infrastructure uses vegetation, soils and natural processes that mimic nature, to soak up and store rainwater water where it falls to control wet weather pollution and create healthier urban environments. 

“This innovative plan will significantly reduce sewer overflows into our rivers and capture rainwater in the area’s ecologically important watersheds,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “This plan puts Washington, D.C. among America’s green city innovators, and it reflects the Justice Department’s and EPA’s commitment to work with cities to safeguard public health, adapt to climate change, and improve aging sewer infrastructure using smart and environmentally sound solutions.” 

“This modification represents significant efforts by all the parties to make green infrastructure an integral part of the solution to curtailing sewer overflows and protecting urban waters,” said Regional Administrator Shawn M. Garvin for EPA.  “We expect that the green infrastructure components of this modification will provide a model of sustainability for others to follow.”

The green infrastructure projects in Rock Creek and Potomac watersheds are slated to begin in 2015 and 2016 respectively, providing more immediate pollution reductions, enhancements to community livability and green jobs opportunities.  

Specifically the consent decree modification includes:

• Using green infrastructure to retain the first 1.2 inches of rainwater on 365 acres in the Rock Creek area and 133 acres in the Potomac watershed.
   
• Potentially eliminating the Rock Creek storage tunnel and significantly decreasing the size of the Potomac tunnel depending upon the success demonstrated by green infrastructure.
   
• The district providing the public space necessary for DC Water to construct the proposed green infrastructure  projects and making changes to district regulations, codes, standards, guidelines and policies needed for implementation.
   
• Requiring the district and DC Water to work together to coordinate capital projects and expenditures for implementing green infrastructure, enabling the efficient use of resources and minimizing costs to rate-payers and taxpayers.

As part of the agreement, DC Water will have an additional five years to complete implementation in the Potomac and Rock Creek watersheds beyond those provided for in the original 2005 consent decree, which established a compliance schedule to construct tunnels in the Anacostia, Potomac and Rock Creek watersheds.  The schedule for completing the Anacostia tunnel remains unchanged.

Under this consent decree, DC Water will continue moving forward under this consent decree on the construction of the overall CSO control project which is known as the Clean Rivers Program.  This program involves completion of, in addition to the components described above, control structures and tunnels for the Anacostia watershed, which contributes more than 65 percent of the sewage discharged to District waters annually.  Major portions of this tunnel system are scheduled for completed and in operation in 2018.  When the Anacostia tunnel complex is fully completed in 2025, it will nearly eliminate combined sewer overflows to the Anacostia in an average rainfall year.

In November 2011, DC Water proposed to EPA to incorporate green infrastructure into its overflow control strategies for the Potomac and Rock Creek watersheds.  As part of the request, DC Water submitted analysis demonstrating that modified CSO controls in the Potomac and green infrastructure in Rock Creek could provide equivalent pollution reductions to those in the original plan and were economically feasible. 

In early 2014, after conducting a public participation process, DC Water filed a request to EPA to modify the plan for CSO controls and deadlines set forth in the 2005 consent decree.  During the consent decree modification discussions, DC Water has continued to move forward in a timely fashion to enhance its nutrient reduction treatment systems at the Blue Plains Advanced Wastewater Treatment Plant.  This is an important element of the Chesapeake Bay watershed restoration effort because the Blue Plains facility is the largest point source of nutrient pollution in the Chesapeake Bay drainage area.  

The proposed consent decree modification is subject to a 30-day public comment period once it is published for public notice in the federal register and must be approved by the court. The proposed consent decree modification will be available at: www.justice.gov/enrd/consent-decrees

Christopher Hayes, the President and owner of a Florida auction house was sentenced today in federal court in West Palm Beach, Florida, to 36 months in prison followed by two years of supervised release for his role in the illegal wildlife smuggling conspiracy in which he bought, sold and smuggled rhinoceros horns and objects made from rhino horn, elephant ivory and coral that were smuggled from the United States to China.  Hayes’ corporation, Elite Estate Buyers Inc., located in Boynton Beach, Florida, was ordered to pay a $1.5 million criminal fine to the Lacey Act reward fund.  The court also banned the corporation from trading wildlife during a five year term of probation. 

The sentences were announced today by Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division, U.S. Attorney Wifredo Ferrer for the Southern District of Florida and Director Dan Ashe for the U.S. Fish and Wildlife Service (FWS). 

“Those involved in the auction business have a special responsibility to make sure that their business does not further the illegal trade in wildlife,” said Assistant Attorney General Cruden.  “Each illegally-traded horn or tusk represents not an antique object but a dead animal.  Wildlife trafficking entails poaching, bribery, smuggling and organized crime.”

“Illegal wildlife trade threatens the survival of many endangered species,” said U.S. Attorney Ferrer.  “The Department of Justice has made it a priority to protect our natural resources.  Our enforcement efforts are in place to stop illegal trade practices that endanger the conservation of nature.”

“This case highlights the part seemingly legitimate auction houses and other businesses can play in the illegal trafficking of wildlife and wildlife products – as well as the direct connection U.S. businesses and citizens have to this international crisis,” said Director Ashe.  “This conviction of Elite Estate Buyers – the first of such a company and its president – demonstrates our resolve in going after all those involved in the illegal wildlife trade and should serve as a warning to similar operations, both here in the United States and abroad, that they are on our radar screen and will be brought to justice for their role in the destruction of these animals.”

According to a factual statement filed in court at the time of their guilty plea, Hayes and Elite admitted to being part of a felony conspiracy in which the company helped smugglers traffic in endangered and protected species in interstate and foreign commerce and falsified records and shipping documents related to the wildlife purchases in order to avoid the scrutiny of the FWS and U.S. Customs and Border Protection.  Elite aided foreign buyers by directing them to third-party shipping stores that were willing to send the wildlife out of the country with false paperwork.  Charges were brought after Hayes purchased endangered black rhinoceros horns from an undercover special agent with the U.S. Fish & Wildlife Service. 

According to records filed in court, Hayes and his company sold six endangered black rhino horns.  Two of the horns were sold for $80,500 to Ning Qiu, a Texas resident involved in smuggling the horns to China.  Qiu has pleaded guilty to being part of a broader conspiracy to smuggle rhinoceros horns and items made from rhinoceros horns to Zhifei Li, the owner or an antique business in China and the ringleader of a criminal enterprise that smuggled 30 rhinoceros horns and numerous objects made from rhinoceros horn and elephant ivory worth more than $4.5 million from the United States to China.  Qiu was sentenced to serve 25 months in prison on May 14, 2015, in Frisco, Texas, and Li was sentenced in June 2014 to a prison term of 70 months in New Jersey. 

Elite and Hayes also admitted to selling items made from rhinoceros horn, elephant ivory and coral to the President of an antiques business in Canada, who they then directed to a local shipper that agreed to mail the items in Canada without required permits.  That individual, Xiao Ju Guan, was sentenced to 30 months in prison on March 25, 2015 in New York.

The prosecution of Elite and Hayes is part of Operation Crash, a continuing effort by the Special Investigations Unit for the FWS’ Office of Law Enforcement in coordination with the Department of Justice to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns and elephant ivory.

The investigation is continuing and is being handled by the FWS Office of Law Enforcement, the U.S. Attorney’s Office for the Southern District of Florida and the U.S. Department of Justice’s Environmental Crimes Section.  The prosecution of Hayes and Elite was conducted by Assistant U.S. Attorney Thomas Watts-Fitzgerald for the Southern District of Florida and Trial Attorney Gary N. Donner of the Environmental Crimes Section.

A licensed physician and former owner of a Detroit-area medical practice pleaded guilty today for his role in a $4.2 million health care fraud scheme.

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 Paul M. Abbate of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Chicago Regional Office made the announcement.

Hicham Elhorr, M.D., 47, of Dearborn, Michigan, pleaded guilty before U.S. District Judge Nancy G. Edmunds of the Eastern District of Michigan to one count of conspiracy to commit health care fraud.  A sentencing hearing is scheduled for Oct. 20, 2015.

Elhorr owned House Calls Physicians P.L.L.C., which was located in Allen Park, Michigan.  According to admissions in his plea agreement, from approximately August 2008 to September 2012, Elhorr conspired with others to commit health care fraud by billing Medicare for purported in-home physician services that were not provided by licensed physicians.  Elhorr admitted that he employed unlicensed individuals who held themselves out as licensed physicians and purported to provide physician home visits and other services to Medicare beneficiaries in Michigan.  The unlicensed individuals prepared medical documentation that Elhorr and other licensed physicians signed as if they had performed the visits when, in fact, Elhorr and the other licensed physicians had not treated the beneficiaries.  The visits were then billed as if performed by the licensed physicians.

According to court documents, between approximately March 2008 and September 2012, House Calls Physicians billed Medicare more than $11.5 million for the cost of physician home services.  Of that amount, Elhorr admitted that he caused the submission of approximately $4.2 million in false and fraudulent claims.

This case was investigated by the FBI and HHS-OIG and 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 Eastern District of Michigan.  This case is being prosecuted by Assistant Chief Catherine K. Dick and Trial Attorneys Matthew C. Thuesen and F. Turner Buford 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 have collectively billed the Medicare program for more than $6.5 billion.  In addition, the HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

Medco Health Solutions Inc., a wholly-owned subsidiary of the pharmacy benefit manager Express Scripts Holding Company, of Missouri, has agreed to pay the government $7.9 million to settle allegations that it engaged in a kickback scheme in violation of the False Claims Act, the Justice Department announced today.  Medco provides pharmacy benefit management services to clients who receive subsidies under the Medicare Retiree Drug Subsidy program.

“We will continue to pursue pharmacy benefit managers that enter into kickback arrangements with pharmaceutical manufacturers,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “Hidden financial agreements between drug manufacturers and pharmacy benefit managers can improperly influence which drugs are available to patients and the price paid for drugs.”

The settlement resolves allegations that Medco solicited remuneration from AstraZeneca, a pharmaceutical manufacturer, in exchange for identifying Nexium as the “sole and exclusive” proton pump inhibitor on certain of Medco’s prescription drug lists known as formularies.  The United States alleged that Medco received some or all of the remuneration from AstraZeneca in the form of reduced prices on the following AstraZeneca drugs: Prilosec, Toprol XL and Plendil.  The United States contended that this kickback arrangement between Medco and AstraZeneca violated the Federal Anti-Kickback statute, and thereby caused the submission of false or fraudulent claims for Nexium to the Retiree Drug Subsidy Program.  In January 2015, the United States and AstraZeneca reached a $7.9 million settlement to resolve kickback allegations arising out of the same conduct.

“By this agreement we are making important strides in holding pharmacy benefit managers accountable not only in Delaware but nationwide,” said U.S. Attorney Charles M. Oberly III of the District of Delaware.  “I am proud of the tireless work by this office to investigate this case.”

“Pharmacy benefit managers that seek or accept kickbacks will be held accountable for their improper conduct,” said Special Agent in Charge Nick DiGiulio of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG).  “We will continue to crack down on kickback arrangements, which can undermine drug choices for patients and corrode the public’s trust in the health care system.”

This civil settlement resolves a lawsuit filed under the qui tam, or whistleblower, provision of the False Claims Act, which allows private citizens with knowledge of false claims to bring civil actions on behalf of the government and to share in any recovery.  The lawsuit was filed by former AstraZeneca employees Paul DiMattia and F. Folger Tuggle, whose share of the settlement has not been determined.

The settlement with Medco was the result of a coordinated effort among the Civil Division, the U.S. Attorney’s Office of the District of Delaware and HHS-OIG.

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.

The False Claims Act lawsuit was filed in the U.S. District Court for the District of Delaware and is captioned United States ex rel. DiMattia et al. v. Medco Health Solutions, Inc., No. 13-1285 (D. Del.).  The claims settled by this agreement are allegations only; there has been no determination of liability.

Attorney General Loretta E. Lynch presided over the Justice Department’s Missing Children’s Day ceremony on Wednesday, May 20, 2015, at 2 p.m.  The event honored three law enforcement officers and an assistant principal for their efforts to recover missing children, rescue children from abuse and prosecute sexual predators.

“This Department of Justice will never pause; will never rest; and will never cease in our effort to protect this country’s young people," said Attorney General Lynch.  "We will do everything we can to find children who have gone missing, to reunite them with their loved ones, and to stand beside them and their families as they do the hard work necessary to recover their lives and restore their futures.  And we will continue to expand and advance this work together."

Speakers included Assistant Attorney General for the Office of Justice Programs Karol V. Mason, Office of Juvenile Justice and Delinquency Prevention (OJJDP) Administrator Robert L. Listenbee, and an abduction survivor and child advocate Carlina White.  More than 250 people attended the annual ceremony, including families of missing children, law enforcement officers, advocates, and others who support programs to recover missing and exploited children. 

During the ceremony, the department recognized efforts to protect children and presented the following awards:

The Attorney General’s Special Commendation recognizes an Internet Crimes Against Children (ICAC) task force or affiliate agency for significant investigative contributions.  Recipient:  Special Agent William Thompson, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, for identifying 28 child victims in 10 states who were manipulated into sharing sexually explicit images of themselves.

The Missing Children’s Law Enforcement Award recognizes a law enforcement officer who made a significant investigative contribution to the safety of children.  Recipient: Cpl. Christopher Heid, Child Recovery Unit, Maryland State Police, for investigating 109 missing children cases and recovering 99 children, as well as participating in 227 human trafficking investigations, and developing an anti-trafficking training program that has educated more than 550 law enforcement officers and victim advocates.

The OJJDP Administrator Missing Children’s Citizen Award honors private citizens for their unselfish acts to safely recover missing or abducted children.  Recipient:  Assistant Principal Jenee’ Littrell, Chaparral High School, El Cajon, California, for supporting an investigation by local law enforcement and the U.S. Departments of Justice and Homeland Security that led to the arrest of 22 people who had recruited nearly 100 middle and high school girls for a gang-related prostitution ring.

The Missing Children’s Child Protection Award honors a law enforcement officer who made a significant investigative contribution to protect children from abuse or victimization.  Recipient:  Special Agent Paul Wolpert, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, for uncovering the videotaped sexual abuse of children between one and five years old.  His investigation led five women to plead guilty to producing child pornography, and to the conviction and life sentence of one man on 31 counts, including producing child pornography.

Since 2000, OJJDP has also hosted a national poster contest for fifth-graders to raise greater awareness about missing children.  This year Sydney Kekel from City School in Grand Blanc, Michigan, received the Missing Children’s Day Art Contest Award.

Affirming its long-standing commitment to help find missing children, the U.S. Postal Service® issued a new stamp on May 18, 2015.  Designed by Ethel Kessler, the new Forever® stamp features a photograph by Harald Biebel showing a small bunch of purple forget-me-nots with a lone flower against a white background.  The forget-me-not is the symbol for International Missing Children’s Day, which occurs on the same day as National Missing Children’s Day, May 25.

President Ronald Reagan proclaimed May 25, 1983, the first National Missing Children’s Day to remember Etan Patz, a six-year-old boy who disappeared from a New York City street corner on May 25, 1979.  Missing Children’s Day honors his memory and the memories of children still missing. 

About the Office of Justice Programs (OJP)

OJP, headed by Assistant Attorney General Karol V. Mason, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice and assist victims.  OJP has six components: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking.  More information about OJP can be found at www.ojp.gov.

Dr. Sean Orr of Jacksonville, Florida, has agreed to pay $150,000 to settle allegations that he violated the False Claims Act by providing medically unnecessary services and drugs to federal health care program beneficiaries, the Department of Justice announced today.  Dr. Orr is a neurologist formerly employed by Baptist Neurology Inc. and Baptist Medical Center-Jacksonville. 

“The public relies on doctors to treat their patients with integrity and not waste taxpayer dollars,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The Justice Department will continue to hold accountable physicians who make false diagnoses or otherwise provide medically unnecessary treatment.”   

This settlement resolves allegations that, from September 2009 to April 2012, Orr knowingly misdiagnosed certain patients with various neurological disorders, such as multiple sclerosis (MS), which caused federal health care programs to be billed for medically unnecessary services and drugs.  The alleged misconduct affected beneficiaries in the Medicare, TRICARE and the Federal Employees Health Benefits programs.  The settlement is based on Orr’s ability to pay.   

“Our office will relentlessly pursue physicians who misdiagnose and harm patients to satisfy their financial greed,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “We expect physicians to act honestly, with integrity, and in accordance with the approved standards of medical care.  When they do not, we all suffer.”

“Physicians who knowingly misdiagnose serious illnesses and provide unnecessary services in order to bill federal healthcare programs violate the trust their patients and the taxpayers have in the medical profession,” said Special Agent in Charge Shimon R. Richmond of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG).  “Our agency will continue to thoroughly investigate health care professionals involved in such duplicity and waste.”   

In 2014, the government settled related allegations against Baptist Health System Inc. – Orr’s former employer and the parent company for Baptist Neurology Inc. and Baptist Medical Center-Jacksonville – for $2.5 million. 

“Dr. Orr violated the trust placed in him by his patients,” said Inspector General Patrick E. McFarland of the U.S. Office of Personnel Management (OPM).  “Federal employees deserve health care providers who meet the highest standards of ethical and professional behavior.  Today’s settlement reminds all providers that they must observe those standards, and reflects the commitment of federal law enforcement organizations to pursue improper and illegal conduct that puts the health and wellbeing of their patients at risk.” 

The government’s investigation was initiated by a qui tam, or whistleblower, lawsuit filed under the False Claims Act by Verchetta Wells, a former Baptist Neurology Inc. employee.  The act allows private citizens to file suit for false claims on behalf of the government and to share in the government’s recovery.  Wells will receive $26,250 from the settlement with Orr. 

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 settlement is the result of a coordinated effort among the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office of the Middle District of Florida, HHS-OIG, the Defense Health Agency’s Program Integrity Office, and OPM’s Office of Inspector General.

The claims resolved by this settlement are allegations only, and there has been no determination of liability.  The lawsuit against Orr was filed in the U.S. District Court for the Middle District of Florida and is captioned United States ex rel. Wells v. Sean Orr, M.D. et al.

Citicorp, JPMorgan Chase & Co., Barclays PLC, The Royal Bank of Scotland plc Agree to Plead Guilty In Connection With The Foreign Exchange Market and Agree to Pay More Than $2.5 Billion In Criminal Fines

Five major banks – Citicorp, JPMorgan Chase & Co., Barclays PLC, The Royal Bank of Scotland plc and UBS AG – have agreed to plead guilty to felony charges.   Citicorp, JPMorgan Chase & Co., Barclays PLC, and The Royal Bank of Scotland plc have agreed to plead guilty to conspiring to manipulate the price of U.S. dollars and euros exchanged in the foreign currency exchange (FX) spot market and the banks have agreed to pay criminal fines totaling more than $2.5 billion.  A fifth bank, UBS AG, has agreed to plead guilty to manipulating the London Interbank Offered Rate (LIBOR) and other benchmark interest rates and pay a $203 million criminal penalty, after breaching its December 2012 non-prosecution agreement resolving the LIBOR investigation.

Attorney General Loretta E. Lynch, Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office and Director Aitan Goelman of the Commodity Futures Trading Commission’s Division made the announcement. 

“Today’s historic resolutions are the latest in our ongoing efforts to investigate and prosecute financial crimes, and they serve as a stark reminder that this Department of Justice intends to vigorously prosecute all those who tilt the economic system in their favor; who subvert our marketplaces; and who enrich themselves at the expense of American consumers,” said Attorney General Lynch.  “The penalty these banks will now pay is fitting considering the long-running and egregious nature of their anticompetitive conduct.  It is commensurate with the pervasive harm done.  And it should deter competitors in the future from chasing profits without regard to fairness, to the law, or to the public welfare.”

“The charged conspiracy fixed the U.S. dollar – euro exchange rate, affecting currencies that are at the heart of international commerce and undermining the integrity and the competitiveness of foreign currency exchange markets which account for hundreds of billions of dollars worth of transactions every day,” said Assistant Attorney General Baer.  “The seriousness of the crime warrants the parent-level guilty pleas by Citicorp, Barclays, JPMorgan and RBS.”

“The five parent-level guilty pleas that the department is announcing today communicate loud and clear that we will hold financial institutions accountable for criminal misconduct,” said Assistant Attorney General Caldwell.  “And we will enforce the agreements that we enter into with corporations.  If appropriate and proportional to the misconduct and the company’s track record, we will tear up an NPA or a DPA and prosecute the offending company.”

“These resolutions make clear that the U.S. Government will not tolerate criminal behavior in any sector of the financial markets,” said Assistant Director in Charge McCabe.  “This investigation represents another step in the FBI’s ongoing efforts to find and stop those responsible for complex financial schemes for their own personal benefit.  I commend the special agents, forensic accountants, and analysts, as well as the prosecutors for the significant time and resources they committed to investigating this case.”

According to plea agreements to be filed in the District of Connecticut, between December 2007 and January 2013, euro-dollar traders at Citicorp, JPMorgan, Barclays and RBS – self-described members of “The Cartel” – used an exclusive electronic chat room and coded language to manipulate benchmark exchange rates.  Those rates are set through, among other ways, two major daily “fixes,” the 1:15 p.m. European Central Bank fix and the 4:00 p.m. World Markets/Reuters fix.  Third parties collect trading data at these times to calculate and publish a daily “fix rate,” which in turn is used to price orders for many large customers.  “The Cartel” traders coordinated their trading of U.S. dollars and euros to manipulate the benchmark rates set at the 1:15 p.m. and 4:00 p.m. fixes in an effort to increase their profits. 

As detailed in the plea agreements, these traders also used their exclusive electronic chats to manipulate the euro-dollar exchange rate in other ways.  Members of “The Cartel” manipulated the euro-dollar exchange rate by agreeing to withhold bids or offers for euros or dollars to avoid moving the exchange rate in a direction adverse to open positions held by co-conspirators.  By agreeing not to buy or sell at certain times, the traders protected each other’s trading positions by withholding supply of or demand for currency and suppressing competition in the FX market.

Citicorp, Barclays, JPMorgan and RBS each have agreed to plead guilty to a one-count felony charge of conspiring to fix prices and rig bids for U.S. dollars and euros exchanged in the FX spot market in the United States and elsewhere.  Each bank has agreed to pay a criminal fine proportional to its involvement in the conspiracy: 

• Citicorp, which was involved from as early as December 2007 until at least January 2013,has agreed to pay a fine of $925 million;

• Barclays, which was involved from as early as December 2007 until July 2011, and then from December 2011 until August 2012, has agreed to pay a fine of $650 million;

• JPMorgan, which was involved from at least as early as July 2010 until January 2013, has agreed to pay a fine of $550 million; and

• RBS, which was involved from at least as early as December 2007 until at least April 2010, has agreed to pay a fine of $395 million.

Barclays has further agreed that its FX trading and sales practices and its FX collusive conduct constitute federal crimes that violated a principal term of its June 2012 non-prosecution agreement resolving the department’s investigation of the manipulation of LIBOR and other benchmark interests rates.  Barclays has agreed to pay an additional $60 million criminal penalty based on its violation of the non-prosecution agreement.  

In addition, according to court documents to be filed, the Justice Department has determined that UBS’s deceptive currency trading and sales practices in conducting certain FX market transactions, as well as its collusive conduct in certain FX markets, violated its December 2012 non-prosecution agreement resolving the LIBOR investigation.  The department has declared UBS in breach of the agreement, and UBS has agreed to plead guilty to a one-count felony charge of wire fraud in connection with a scheme to manipulate LIBOR and other benchmark interest rates.  UBS has also agreed to pay a criminal penalty of $203 million.

According to the factual statement of breach attached to UBS’s plea agreement, UBS engaged in deceptive FX trading and sales practices after it signed the LIBOR non-prosecution agreement, including undisclosed markups added to certain FX transactions of customers.  UBS traders and sales staff misrepresented to customers on certain transactions that markups were not being added, when in fact they were.  On other occasions, UBS traders and sales staff used hand signals to conceal those markups from customers.  On still other occasions, certain UBS traders also tracked and executed limit orders at a level different from the customer’s specified level in order to add undisclosed markups.  In addition, according to court documents, a UBS FX trader conspired with other banks acting as dealers in the FX spot market by agreeing to restrain competition in the purchase and sale of dollars and euros.  UBS participated in this collusive conduct from October 2011 to at least January 2013.

In declaring UBS in breach of its non-prosecution agreement, the Justice Department considered UBS’s conduct described above in light of UBS’s obligation under the non-prosecution agreement to commit no further crimes.  The department also considered UBS’s three recent prior criminal resolutions and multiple civil and regulatory resolutions.  Further, the department also considered that UBS’s post-LIBOR compliance and remediation efforts failed to detect the illegal conduct until an article was published pointing to potential misconduct in the FX markets. 

Citicorp, Barclays, JPMorgan, RBS and UBS have each agreed to a three-year period of corporate probation, which, if approved by the court, will be overseen by the court and require regular reporting to authorities as well as cessation of all criminal activity.  All five banks will continue cooperating with the government’s ongoing criminal investigations, and no plea agreement prevents the department from prosecuting culpable individuals for related misconduct.  Citicorp, Barclays, JPMorgan and RBS have agreed to send disclosure notices to all of their customers and counter-parties that may have been affected by the sales and trading practices described in the plea agreements.

Today, in connection with its FX investigation, the Federal Reserve also announced that it was imposing on the five banks fines of over $1.6 billion; and Barclays settled related claims with the New York State Department of Financial Services (DFS), the Commodity Futures Trading Commission (CFTC) and the United Kingdom’s Financial Conduct Authority (FCA) for an additional combined penalty of approximately $1.3 billion.  In conjunction with previously announced settlements with regulatory agencies in the United States and abroad, including the Office of the Comptroller of the Currency (OCC) and the Swiss Financial Market Supervisory Authority (FINMA), today’s resolutions bring the total fines and penalties paid by these five banks for their conduct in the FX spot market to nearly $9 billion. 

This investigation is being conducted by the FBI’s Washington Field Office.This prosecution is being handled by the Antitrust Division’s New York Office and other criminal enforcement sections and the Criminal Division’s Fraud Section.The Justice Department appreciates the substantial assistance provided by the CFTC, OCC, FINMA, FCA, DFS, Securities and Exchange Commission, Federal Reserve Board, and the U.K. Serious Fraud Office.  The Criminal Division’s Office of International Affairs and the U.S. Attorney’s Office in the District of Connecticut have also provided assistance in this matter.

A federal court in Sacramento, California, has permanently barred a former Ripon, California, man from preparing tax returns for others, the Justice Department announced today.

The civil injunction order, to which Sarad Chand consented, was entered by U.S. District Judge Garland E. Burrell Jr. of the Eastern District of California.  According to stipulation, the defendant admitted to repeatedly preparing federal tax returns that understated his customers’ federal tax liabilities.

The complaint alleged that Chand, and others working with him under the business name S. Chand Tax & Accounting Services, prepared tax returns that falsely claimed inflated or fabricated tax credits or deductions.  The suit noted that Chand most frequently prepared returns that falsely inflated unreimbursed employee business expenses.  Chand also created Schedule Cs (Profit or Loss From Business) with false income, while for other clients he created false losses or inflated expenses, according to the suit.  According to the complaint, these fabrications served to improperly reduce the customers’ taxable income and resulted in reduced tax liability or inappropriate tax refunds.  Moreover, according to the complaint, Chand also led his customers to believe that he was a former Internal Revenue Service (IRS) employee, when he was not.

The suit also noted that on May 15, 2014, Chand pleaded guilty to aiding and assisting in the preparation and presentation of a false and fraudulent tax return.  As part of his plea agreement, Chand agreed to the entry of a permanent civil injunction. 

The suit alleged that the IRS had completed examinations of 919 of the approximately 8,155 tax returns Chand prepared from 2008 to 2012, and that nearly all of  the examined returns resulted in a finding of deficiency or denial of a refund claim.  The 886 returns found to be inaccurate had a total tax understatement of more than $2.7 million.

The injunction requires Chand to provide a list of 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.

ConAgra Grocery Products LLC, a subsidiary of ConAgra Foods Inc., today agreed to plead guilty and pay $11.2 million in connection with the shipment of contaminated peanut butter linked to a 2006 through 2007 nationwide outbreak of salmonellosis, or salmonella poisoning, the Department of Justice announced today.  ConAgra Grocery Products LLC is based in Omaha, Nebraska, with a manufacturing facility in Sylvester, Georgia.

Acting Associate Attorney General Stuart F. Delery, Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia announced the filing of a criminal information against ConAgra Grocery Products alleging a misdemeanor violation of the federal Food, Drug and Cosmetic Act.  The company signed a plea agreement admitting that it introduced Peter Pan and private label peanut butter contaminated with salmonella into interstate commerce during the 2006 through 2007 outbreak.  The plea agreement provides that ConAgra Grocery Products will pay a criminal fine of $8 million and forfeit assets of $3.2 million.  The criminal fine is the largest ever paid in a food safety case. 

“As parents, we can make sure that our kids look both ways before they cross the street and wear a helmet when they ride their bikes,” said Acting Associate Attorney General Delery.  “But we have to rely on the companies that make their food to make sure it is safe.  That’s why the Department of Justice is dedicated to using all the tools we have to ensure the processors and handlers of our food live up to their legal obligations to keep the public’s safety in mind.”

“The safety of the nation’s food supply is a top concern, and every company, large and small, must take appropriate measures to ensure that their products don’t make customers sick,” said Principal Deputy Assistant Attorney General Mizer.  “No company can let down its guard when it comes to these kinds of microbiological contaminants.  Salmonellosis is a serious condition, and a food like peanut butter can deliver it straight to children and other vulnerable populations.”

In February 2007, the U.S. Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC) announced that an ongoing outbreak of salmonellosis cases in the United States could be traced to Peter Pan and private label peanut butter produced and shipped from the company’s Sylvester peanut butter plant.  The company voluntarily terminated production at the plant on Feb. 14, 2007, and recalled all peanut butter manufactured there since January 2004.  The CDC eventually identified more than 700 cases of salmonellosis linked to the outbreak with illness onset dates beginning in August 2006.  The CDC estimated that thousands of additional related cases went unreported.  The CDC did not identify any deaths related to the outbreak. 

The criminal information, filed in the Middle District of Georgia, specifically alleges that on or about Dec. 7, 2006, the company shipped from Georgia to Texas peanut butter that was adulterated, in that it contained salmonella and had been prepared under conditions whereby it may have become contaminated with salmonella.  The company admitted in the plea agreement that samples obtained after the recall showed that peanut butter made at the Sylvester plant on nine different dates between Aug. 4, 2006, and Jan. 29, 2007, was contaminated with salmonella.  Environmental testing conducted after the recall identified the same strain of salmonella in at least nine locations throughout the Sylvester plant. 

“We, as consumers, take for granted that the food we feed our families is safe,” said U.S. Attorney Moore.  “We count on the companies who prepare and package the things we eat to be just as concerned with the product we put in our mouths as they are with the profit they put in their pockets.  The proposed criminal fine and sentence in this case should sound the alarm to food companies across the country – we are watching, and we are expecting you to hold yourselves to a standard reflective of the trust that your consumers have placed in you.  No more excuses.  A lot of people got very sick because of the conduct in this case and we are committed to doing all we can to make sure that does not happen again.”

As part of the plea agreement, the company admitted that it had previously been aware of some risk of salmonella contamination in peanut butter.  On two dates in October 2004, routine testing at the Sylvester plant revealed what later was confirmed to be salmonella in samples of finished peanut butter.  Company employees attempting to locate the cause of the contamination identified several potential contributing factors, including an old peanut roaster that was not uniformly heating raw peanuts, a storm-damaged sugar silo, and a leaky roof that allowed moisture into the plant and airflow that could allow potential contaminants to move around the plant.  As stated in the plea agreement, while efforts to address some of these issues had occurred or were underway, the company did not fully correct these conditions until after the 2006 through 2007 outbreak.  In public statements after the 2007 recall, company officials hypothesized that moisture entered the production process and enabled the growth of salmonella present in the raw peanuts or peanut dust.

The company also admitted in the plea agreement that between October 2004 and February 2007, employees charged with analyzing finished product tests at the Sylvester plant failed to detect salmonella in the peanut butter, and that the company was unaware some of the employees did not know how to properly interpret the results of the tests.

“U.S. consumers expect and deserve the highest standards of food safety and integrity,” said Acting Commissioner Dr. Stephen Ostroff of the FDA.  “Today’s plea agreement reflects the FDA’s commitment to ensuring the safety of the nation’s food supply and demonstrates that those who risk the health of Americans will be held accountable.”

Following the outbreak and shutdown, the company made significant upgrades to the Sylvester plant to address conditions the company identified after the 2004 incident as potential factors that could contribute to salmonella contamination.  The company also instituted new and enhanced safety protocols and procedures regarding manufacturing, testing and sanitation, which it affirmed in the plea agreement it would continue to follow.

Information about the case and any upcoming court hearings can be found on the Justice Department’s website in the “Food and Dietary Supplements” section.  The case is being prosecuted by the U.S. Attorney’s Office of the Middle District of Georgia and the Civil Division’s Consumer Protection Branch.  This matter was investigated by the FDA’s Office of Criminal Investigations.

The proposed plea agreement and recommended sentence is not final until accepted by the U.S. District Court.

Under a settlement agreement with the United States and the state of Michigan, AK Steel Corporation will pay a civil penalty of $1.35 million for past violations of the Clean Air Act at its Dearborn, Michigan facility, implement a variety of procedures to reduce future violations and install dynamic air filtration systems at the Salina Elementary and Salina Intermediate Schools across Ferney Street from the plant, announced the Department of Justice, the Environmental Protection Agency (EPA) and the Michigan Department of Environmental Quality (MDEQ).                                                      

The settlement will resolve 42 violation notices issued by MDEQ and two notices of violation issued by EPA alleging violations resulting from a wide variety of air emission sources issued against Severstal, the previous owner of the Dearborn facility.  AK Steel purchased the facility in September 2014 and has taken responsibility for past violations and improving its compliance with environmental regulations.

“This settlement will result in better management and monitoring practices at the AK Steel facility and measures that will help prevent and reduce dust and hazardous air pollution in neighboring communities,” said Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division.  “In agreeing to this judicially enforceable settlement, AK Steel is committed to prevent the violations of its predecessor from recurring, inform the public about its future environmental compliance and provide cleaner air for local school children.”

“People living in Dearborn and southwest Detroit have long been concerned about air pollution from this steel mill,” said Regional Administrator Susan Hedman for EPA.  “The consent decree will result in improved air quality in these communities and help prevent future violations of the Clean Air Act.”

The consent decree will require AK Steel to develop an environmental management system for the facility with third-party auditing every six months, annually inspect and continuously monitor the performance of the pollution control equipment at the facility’s basic oxygen furnace and implement a fugitive dust control policy to prevent large particulate emissions into the adjacent neighborhoods.  Upon full implementation of the consent decree requirements, particulate matter emissions, including metal hazardous air pollutants, from AK Steel should be reduced by approximately 100 tons per year.

“Manufacturing facilities that are located near neighborhoods and schools have a responsibility to protect the clean air that residents breathe,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan.  “This settlement will directly improve air quality for our community in Dearborn and Southwest Detroit.”   

“This is welcome news for residents who live near the steel mill,” said Director Dan Wyant of MDEQ.  “We are pleased to finally have the past environmental violations addressed and resolved and we look forward to a strong working relationship with new plant owners AK Steel.”

“We have an obligation to protect our air, lands and waterways across the state of Michigan,” said Attorney General Bill Schuette for the state of Michigan.  “This is a step forward for cleaner air for the residents of Dearborn.”

The settlement was lodged with the U.S. District Court for the Eastern District of Michigan and is subject to a 30-day public comment period and final court approval.  It can be viewed at www.justice.gov/enrd/Consent_Decrees.html

United Parcel Service Inc. (UPS) has agreed to pay $25 million to resolve allegations that it submitted false claims to the federal government in connection with its delivery of Next Day Air overnight packages, the Justice Department announced today.  UPS is a package delivery company based in Atlanta.

“Protecting the federal procurement process from false claims is central to the mission of the Department of Justice,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “We will continue to ensure that when federal monies are used to purchase commercial services the government receives the prices and services to which it is entitled.”

“This conduct affected numerous federal agencies,” said U.S. Attorney Dana J. Boente of the Eastern District of Virginia.  “We place high importance on the integrity of companies that provide services to the government.  Combating all manners of fraud on the government is a high priority in the Eastern District of Virginia.”  

UPS provides delivery services to hundreds of federal agencies through contracts with the U.S. General Services Administration (GSA) and U.S. Transportation Command, which provides support to Department of Defense agencies.  Under these contracts, UPS guaranteed delivery of packages by certain specified times the following day.  The settlement announced today resolves allegations that from 2004 to 2014, UPS engaged in practices that concealed its failure to comply with its delivery guarantees, thereby depriving federal customers of the ability to request refunds for the late delivery of packages.  In particular, the government alleged that UPS knowingly recorded inaccurate delivery times on packages to make it appear that the packages were delivered on time, applied inapplicable “exception codes” to excuse late delivery  (such as “security delay,” “customer not in,” or “business closed”), and provided inaccurate “on-time” performance data under the federal contracts.  

“The United States should get what it pays for, nothing less,” said Acting Inspector General Robert C. Erickson of the GSA.

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The civil lawsuit was filed in the Eastern District of Virginia by Robert K. Fulk, a former employee of UPS, who will receive $3.75 million.

The resolution in this matter was the result of a coordinated effort between the U.S. Attorney’s Office of the Eastern District of Virginia, the GSA Office of Inspector General (OIG), the Federal Deposit Insurance Corporation OIG, the Defense Criminal Investigative Service, and the Treasury Inspector General for Tax Administration and the Department of Treasury OIG, with assistance from the Department of Veterans Affairs OIG.

The lawsuit is captioned United States ex rel. Fulk v. United Parcel Service, Inc., et al., No. 1:11cv890 (E.D. Va.).  The claims resolved by this settlement are allegations only, and there has been no determination of liability. 

The Department of Justice and the Environmental Protection Agency (EPA) announced a settlement with Marathon Petroleum Corporation today that resolves various alleged Clean Air Act violations at ten Marathon facilities and requires Marathon to take steps to reduce harmful air pollution emissions at facilities in three states.  The Department of Justice and EPA allege that Marathon failed to comply with certain Clean Air Act fuel quality emissions standards and recordkeeping, sampling and testing requirements. These violations may have resulted in excess emissions of air pollutants from motor vehicles, which can pose threats to public health and the environment.  Marathon self-reported many of these issues to EPA.

Under a consent decree lodged in U.S. District Court for the Northern District of Ohio, Marathon will spend over $2.8 million on pollution controls to reduce emissions of volatile organic compounds on 14 fuel storage tanks at its distribution terminals in Indiana, Kentucky and Ohio.

Marathon will also pay a $2.9 million civil penalty and retire 5.5 billion sulfur credits, which have a current market value of $200,000.  Sulfur credits are generated when a refiner produces gasoline that contains less sulfur than the federal sulfur standard.  These credits can be sold to other refiners that may be unable to meet the standard.

“The changes required by this settlement will positively impact air quality in communities across the Midwest,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division.  “All Americans deserve to enjoy the benefits of clean air, land, and water.  These benefits spring from our nation’s bedrock environmental laws and we will use them vigorously in the pursuit of environmental justice.”

“Fuel standards established under the Clean Air Act play a major role in controlling harmful air pollution from vehicles and engines,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance.  “If unchecked, these pollutants can seriously impair the air we breathe, especially during summer months when they can reach higher levels.  This settlement incorporates innovative pollution control solutions to reduce air pollution in overburdened communities.

“This agreement will help reduce air pollution emissions in Ohio and elsewhere,” said U.S. Attorney Steven M. Dettelbach for the Northern District of Ohio.  “We’re pleased this settlement will protect the air we breathe while promoting the use of next-generation technology.”

In their complaint, The Justice Department and EPA allege that Marathon:

• Produced about 356 million gallons of reformulated gasoline at its Texas City, Texas, refinery during 2007 that did not meet Clean Air Act standards for reducing volatile organic compounds. Volatile organic compounds are one of the primary constituents of smog and react in sunlight to form ground-level ozone. Breathing ozone can trigger a variety of health problems including chest pain, coughing, throat irritation and congestion and can worsen bronchitis, emphysema and asthma. Children, the elderly and people who have lung diseases such as asthma are particularly prone to these problems.

• Produced more than 40 million gallons of gasoline at the Texas City, Texas, refinery in 2009 that exceeded standards for sulfur levels. The goal of the Clean Air Act program that regulates sulfur in gasoline is to minimize emissions from vehicles and to ensure emissions control systems function effectively.

• Sold about 12 million gallons of gasoline that contained elevated levels of ethanol.

• Sold about 1 million gallons of gasoline at its Tampa, Florida, terminal in 2013 that exceeded standards for volatility, known as the Reid Vapor Pressure, that help control ground level ozone during summer months. Gasoline with higher volatility results in increased emissions of volatile organic compounds, which contribute to the formation of ground level ozone.

• Failed to comply with numerous sampling, testing, recordkeeping and reporting requirements for fuel production. EPA discovered these violations during inspections of Marathon refineries and laboratories in 2008 and 2009. The sampling, testing, recordkeeping and reporting requirements of the fuels program provide the foundation for EPA’s compliance program.

Marathon will also install geodesic domes, fixed roofs, or secondary rim seals and deck fittings on 14 fuel storage tanks at several of its fuel distribution terminals in order to reduce emissions of volatile organic compounds.  Marathon is also required to use innovative pollutant detection technology during the implementation of the environmental mitigation projects.  Marathon will use an infrared gas-imaging camera to inspect the fuel storage tanks in order to identify potential defects that may cause excessive emissions.  If defects are found, Marathon will conduct up-close inspections and perform repairs where necessary.

EPA’s Next Generation Compliance Strategy promotes advanced emissions and pollutant detection technology so that regulated entities, the government and the public can more easily see pollutant discharges, environmental conditions and noncompliance.  Many of the facilities where the pollution controls will be installed are located in areas that may present environmental justice concerns.

More information about EPA’s Next Generation Compliance Strategy is available at: http://www2.epa.gov/compliance/next-generation-compliance.

The proposed consent decree is subject to a 30 day public comment period and is available on EPA’s website at http://www.justice.gov/enrd/consent-decrees.

 Attorney General Loretta E. Lynch traveled to Cincinnati, Ohio, today for the first stop in her national Community Policing Tour to highlight collaborative programs and policing practices designed to advance public safety, strengthen police-community relations and foster mutual trust and respect.  The Attorney General also announced that she will visit Birmingham, Alabama; Pittsburgh, Pennsylvania; East Haven, Connecticut; Seattle, Washington; and Richmond, California.

The Attorney General was joined by U.S. Attorney Carter M. Stewart for the Southern District of Ohio, Director Ron Davis for the Community Oriented Policing Services (COPS) Office, Mayor John Cranley for the city Cincinnati, and Cincinnati Police Chief Jeffrey Blackwell.

While in Cincinnati, the Attorney General met with youth and law enforcement at Chase Elementary School to witness firsthand the city’s Right to Read Program in which Cincinnati police officers work with University of Cincinnati students to mentor and tutor children.  At Chase Elementary, the Attorney General played “Jeopardy” with the elementary school students.  She, the Attorney General, was gratified to hear how the young students described police as peace keepers and protectors of the community.  In her remarks to the students and local officers, the Attorney General said, “It’s tremendous what you’ve been doing,” to show how integral law enforcement can be in the lives of our communities.  She also described the innovative approach in Cincinnati as a model for other departments to follow.

After visiting the school, the Attorney General spoke briefly to reporters and took a few questions about her interactions with the children and the importance of community policing.

“What I saw were children being engaged, children learning, children finding that learning can be fun, children learning about senses – about the world around them –  at an age where, I think educators will tell you, it is really crucial that we not lose our children and they not fall out of the educational system and that they develop that love for learning,” Attorney General Lynch told reporters.  “But I also saw children who were aware of the larger community around them and had a very good sense of what law enforcement does – law enforcement at its best because they are seeing law enforcement at best. So in their interactions in the future they will have that context into which to put them as well as law enforcement will have those interactions into which to put them.”

The Attorney General also visited the Cincinnati Police Department for a meet and greet with police officers.  She commended the department’s efforts to reach out to the community, saying, “It's very easy for the cameras to show up when something's on fire, but we also want them to see the work that you're doing day in and day out.”  She also thanked the officers on behalf of the Justice Department for the “hard work” they do every day and spoke to officers that were hired with COPS Office hiring grants.  The Justice Department through its COPS Office yesterday announced five separate grant funding opportunities of up to $163 million for law enforcement agencies to help implement the recommendations made by the President’s Task Force on 21st Century Policing.

Following her meeting with police officers, the Attorney General ate lunch with U.S. Attorney Stewart, COPS Director Davis, and Cincinnati Police Chief Blackwell at local restaurant Skyline Chili.

Following a tour led by the curator of the National Underground Railroad Freedom Center, the Attorney General convened a meeting with city officials, law enforcement, local and faith leaders, young people and other members of the community to discuss ways in which the success Cincinnati has seen in building trust between law enforcement and the community can be replicated in cities across the nation.

“Every city deserves an outstanding, world-class police force that works alongside local residents to protect public safety,” said Attorney General Lynch. “And every officer deserves the tools, training, and support they need to do their jobs as safely and effectively as possible.”  Her full remarks can be found here.

The Attorney General also visited with Department of Justice employees at the office of the U.S. Attorney for the Southern District of Ohio.  Following that meeting, the Attorney General met with the family of John Crawford III, a 22-year African-American man, was shot and killed by a Beavercreek, Ohio police officer inside a Wal-Mart store while Crawford held a BB gun.