District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Dallas Physician and His Employee Arrested for Alleged $5.2 Million Medicare Fraud SchemeRead the Press Release
A physician who ran a medical house call service business in Dallas, and an employee of that business were arrested this morning on charges related to their alleged participation in a $5.2 million health care fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney John R. Parker of the Northern District of Texas, Special Agent in Charge Mike Fields of the Department of Health and Human Services’ Office of the Inspector General’s (HHS-OIG) Dallas Regional Office, the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU), Special Agent in Charge Thomas M. Class, Sr. of the FBI’s Dallas Division and Special Agent in Charge Max Eamiguel of the U.S. Postal Service’s Office of the Inspector General’s (USPS-OIG) Southern Area Field Office made the announcement.
Hector Molina, M.D., 51, of Irving, Texas, and Blanca Mata, 46, of Forney, Texas, were charged with one count of conspiracy to commit health care fraud. In addition, Molina was charged with eight counts of health care fraud, and Mata was charged with four counts of health care fraud. Both defendants made their initial appearances before U.S. Magistrate Judge Renée Harris Toliver of the Northern District of Texas earlier today and were released on bond.
According to allegations in the indictment, Molina owned and operated Molina Medical Housecall Services in Dallas, and Mata was an employee of that business. The indictment alleges that from approximately June 2012 through January 2015, Molina and Mata conspired to defraud Medicare by billing for home visits performed by Mata, who was not a physician, as if Molina had performed the home visits. Additionally, the indictment alleges that Molina billed for home visits performed in the Dallas area while he was out of the country.
An indictment is merely an allegation and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
This case is being investigated by HHS-OIG, the Texas Attorney General’s MFCU, the FBI and USPS-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 for the Northern District of Texas. The case is being prosecuted by Trial Attorney Jason Knutson 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.
Three California Men and Minnesota Corporation Indicted in Nationwide Prescription Drug Diversion SchemeRead the Press Release
Three California men and a Minnesota company were charged in an indictment today in the Southern District of Ohio for their roles in a massive prescription drug diversion scheme.
The indictment alleges that David Jess Miller, 50, of Santa Ana, California; Artur Stepanyan, 38, and Mihran Stepanyan, 29, both of Encino, California, and Minnesota Independent Cooperative Inc. (MIC) engaged in a conspiracy to sell prescription drugs from illegal, unlicensed sources to wholesalers and pharmacies throughout the United States. The 12-count indictment charges the defendants with conspiracy to commit mail and wire fraud, multiple counts of mail fraud, and conspiracy to distribute prescription drugs without a license and to make false statements.
Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio, Director George M. Karavetsos of the U.S. Food and Drug Administration (FDA)’s Office of Criminal Investigations and Assistant Inspector in Charge Christopher White of the U.S. Postal Inspection Service (USPIS) announced the charges.
According to the indictment, from 2007 through April 2014, David Miller and his company, MIC, of Eagan, Minnesota, purchased prescription drugs from a network of illegal and unlicensed sources in New York, Florida and California. Artur Stepanyan and Mihran Stepanyan, worked together to sell drugs from illegal sources to Miller and MIC. Artur and Mihran Stepanyan, using a variety of company names, including Panda Capital Group, Red Rock Capital Group, Trans Atlantic Capital Group and GC National Wholesale, were Miller’s largest source of illegal drugs. During the course of the conspiracy, Miller and MIC paid the Stepanyans approximately $160 million for these prescription drugs.
“American consumers should be able to rely on the prescription drug supply chain,” said Principal Deputy Assistant Attorney General Mizer. “Prescription drug diversion schemes like the one charged in this indictment undermine that supply chain and increase the risk that counterfeit, adulterated, misbranded, sub-potent or expired drugs will be sold to patients and consumers.”
To hide the true, illegal sources of their prescription drugs, David Miller and MIC falsified so-called drug pedigree documents. Pedigrees are documents required by law that show the source of drugs. For most of the conspiracy, the fraudulent pedigrees falsely listed B&Y Wholesale, a company located in Puerto Rico and co-owned by co-conspirator Yusef Yassin Gomez (Yassin) as the source of the drugs. The pedigree documents also falsely stated that Yassin’s company was an authorized distributor of the drugs. On Feb. 19, 2014, Yassin pleaded guilty in U.S. District Court for the Southern District of Ohio to conspiracy to engage in the wholesale distribution of prescription drugs without a wholesale license. In connection with his guilty plea, Yassin admitted the he agreed to allow Miller and MIC to use his company’s name on pedigree documents to hide the true drug sources. In exchange, Miller and MIC paid Yassin a commission on all of the drug sales.
“Once a prescription drug is diverted outside of the regulated distribution channels, it becomes difficult, if not impossible, for regulators, law enforcement and end-users to know whether the prescription drug package actually contains the correct drug or the correct dose,” said U.S. Attorney Stewart. “We will aggressively prosecute individuals and companies that ignore the law and sell illegally diverted prescription drugs to pharmacies, and ultimately, to American consumers.
“We are committed to protecting the integrity of the pharmaceutical supply chain, especially as criminals go to more extreme measures to subvert it,” said FDA’s Office of Criminal Investigations Director Karavetsos. “We will continue to pursue these criminals and work to bring them to justice.”
“The Postal Inspection Service is proud to partner with the FDA Office of Criminal Investigations to bring to bear our mail fraud expertise to help the fight against drug diversion,” said USPIS Assistant Inspector in Charge White.
Throughout the course of the conspiracy charged in the indictment, using these fraudulent pedigree documents, Miller and MIC sold approximately $393 million worth of prescription drugs to wholesalers and retail pharmacies throughout the United States, including to multiple customers in the Southern District of Ohio.
In addition to Yassin, two of Miller’s other illegal drug suppliers, Peter Kats and Joseph Dallal, previously pleaded guilty to conspiracy to commit mail and wire fraud for their sales of illegally-diverted prescription drugs to Miller and MIC.
This matter is being investigated by the FDA and USPIS. Assistant U.S. Attorneys Anne L. Porter and Christy Muncy of the Southern District of Ohio and Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch are prosecuting this case.
David Miller, Artur Stepanyan, and Mihran Stepanyan were charged amongst 30 other individuals in the Northern District of California in a separate indictment on charges including federal Racketeer Influenced and Corrupt Organizations (RICO) Act; conspiracy to commit identity theft; conspiracy to commit access device fraud; conspiracy to commit mail, wire, and bank fraud; money laundering conspiracy; and conspiracy to distribute prescription drugs without a wholesale license.
The charges in the indictment are merely allegations, and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Sixteen Hospitals to Pay $15.69 Million to Resolve False Claims Act Allegations Involving Medically Unnecessary Psychotherapy ServicesRead the Press Release
The Justice Department announced today that 16 separate hospitals and their respective corporate parents have agreed to collectively pay $15.69 million to resolve False Claims Act allegations that the providers sought and received reimbursement from Medicare for services that were not medically reasonable or necessary, the U.S. Department of Justice announced today.
“Hospitals that participate in the Medicare program must ensure that the services they provide and bill for are based on the medical needs of patients rather than the desire to maximize profits,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “The Department of Justice is committed to ensuring that those who seek to abuse the Medicare program will be held accountable for their actions.”
This case concerns claims to Medicare for Intensive Outpatient Psychotherapy (IOP) services. IOP services represent a continuation of ambulatory psychiatric services and provide active treatment to individuals with mental disorders using a variety of treatment methods. Medicare will pay for an appropriate course of IOP treatment provided a number of specific requirements are met including, most notably, that the services in question are reasonable and necessary for the diagnosis and treatment of the patient’s condition.
These settlements resolve allegations that, beginning as early as 2005 and in some cases continuing into 2013, the hospitals knowingly submitted claims for IOP services that did not qualify for Medicare reimbursement because: the patient’s condition did not qualify for IOP; the patient’s treatments were not provided pursuant to an individualized treatment plan designed to help the patient address specific mental health needs and reach achievable goals; the patient’s progress was not being adequately tracked or documented; the patient received an inappropriate level of treatment; and/or the therapy provided was primarily recreational or diversional in nature, and not therapeutic. The IOP services in question were typically performed on the providers’ behalf by Allegiance Health Management (Allegiance), a post-acute healthcare management company based in Shreveport, Louisiana, but billed to Medicare by the providers.
The providers who have reached agreements to resolve these allegations with the United States include:
-
Health Management Associates Inc. (HMA), and the following 14 hospitals formerly owned and operated by HMA: Central Mississippi Medical Center in Mississippi, Crossgate River Oaks in Mississippi, Dallas Regional Medical Center in Texas, Davis Regional Medical Center in North Carolina, East Georgia Regional Medical Center in Georgia, Gilmore Regional Medical Center in Mississippi, Lake Norman Regional Medical Center in North Carolina, Lehigh Regional Medical Center in Florida, Medical Center of Southeastern Oklahoma in Oklahoma, Natchez Community Hospital in Mississippi, Northwest Mississippi Regional Medical Center in Mississippi, Santa Rosa Medical Center in Florida, Southwest Regional Medical Center in Arkansas, and Summit Medical Center in Arkansas, which agreed to collectively pay $15 million;
-
Community Health Systems and its subsidiary Wesley Medical Center in Mississippi, which agreed to pay $210,000; and
-
North Texas Medical Center in Texas, which agreed to pay $480,000.
In October 2013, the United States resolved similar allegations with LifePoint Hospitals Inc. and two of its subsidiaries, PHC-Minden L.P., doing business as Minden Medical Center, and PHC-Cleveland Inc., doing business as Bolivar Medical Center, which collectively paid $4,672,469.80.
“This case demonstrates that the U.S. Attorney’s Office for the Eastern District of Arkansas will aggressively pursue civil health care fraud cases, where the integrity of the Medicare system has been undermined,” said U.S. Attorney Christopher R. Thyer of the Eastern District of Arkansas. “Medical care providers who abuse Medicare hurt all taxpayers, and today’s announcement highlights our commitment to protecting our national health care system, as well as the Arkansans who depend on it.”
“Our agency is dedicated to investigating health care fraud schemes such as this, which divert scarce taxpayer funds meant to provide for legitimate patient care, including services for the often underserved mentally ill population,” said Special Agent in Charge Mike Fields of U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG).
The allegations resolved by today’s settlements arose from a lawsuit filed under the False Claims Act. The act allows private individuals known as “relators” to sue on behalf of the United States and to share in the proceeds of any settlement or judgment that may result. The relator in this case will receive $2,667,300.
These settlements were the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Eastern District of Arkansas and HHS’ Office of Audit Statistics and OIG.
These settlements illustrate 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 claims settled by these agreements are allegations only, and there has been no determination of liability.
-
Justice Department Reaches Settlement with Evergreen Bank Group to Resolve Allegations of Discriminatory Motorcycle LendingRead the Press Release
Settlement Compensates Affected Borrowers and Allows Bank to Continue Motorcycle Lending Using Revised Dealer Compensation Policies
Evergreen Bank Group of Oak Brook, Illinois, will eliminate or limit the discretion it gives to motorcycle dealers to increase interest rates as part of a settlement of a federal lawsuit alleging a pattern or practice of national origin and race discrimination in motorcycle lending, the Justice Department announced today. In addition to the elimination of dealer discretion, which is consistent with a policy that Evergreen voluntarily adopted in March 2014, the settlement will provide $395,000 in compensation for victims of Evergreen’s past discrimination.
The settlement, which remains subject to court approval, was filed today with the department’s complaint in the U.S. District Court of the Northern District of Illinois. The complaint alleges that Evergreen violated the Equal Credit Opportunity Act (ECOA), by charging approximately 2,200 Hispanic and African-American borrowers higher interest rates than non-Hispanic white borrowers between January 2011 and March 2014. The complaint alleges that Evergreen’s FreedomRoad Financial motorcycle lending unit charged borrowers higher interest rates because of their national origin or race, and not because of the borrowers’ creditworthiness or other objective criteria related to borrower risk. This discriminatory charge would result in the average victim paying about $200 to $250 extra during the term of the loan.
“The department, in cooperation with our partner agencies, continues to closely examine the motor vehicle lending market for potential discrimination,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “We thank Evergreen for recognizing the risk of discrimination caused by discretionary dealer markups, and adopting new dealer compensation policies that substantially reduce that risk.”
Rather than taking applications directly from consumers, Evergreen makes most of its motorcycle loans through roughly 400 motorcycle dealers nationwide who help their customers pay for their new or used motorcycle by submitting their loan applications to Evergreen.
Until March 2014, Evergreen’s business practice, like many other motor vehicle lenders, allowed motorcycle dealers subjective and unguided discretion to vary a loan’s interest rate from the price Evergreen initially set. The initial price set by Evergreen reflected the borrower’s objective credit-related factors. Dealers received greater payments from Evergreen on loans that included a higher interest rate markup. The department’s December 2013 lawsuit against Ally Financial Inc. and Ally Bank, which resulted in a settlement providing $80 million in borrower compensation, involved a similar compensation system.
In March 2014, Evergreen eliminated motorcycle dealers’ discretion to increase interest rates. Instead, Evergreen adopted a policy of always compensating dealers based on a percentage of the loan principal amount that does not vary based on the loan’s interest rate. No discrimination was observed when the United States analyzed loans made under the new policy. The settlement allows Evergreen to continue using the revised compensation policy it adopted in March 2014.
The lawsuit originated from a March 2013 referral by the Federal Deposit Insurance Corporation (FDIC) to the Justice Department’s Civil Rights Division. Evergreen is regulated by the FDIC.
The Justice Department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Right Division. Since the Fair Lending Unit was established in February 2010, it has filed or resolved 38 lending matters under the Fair Housing Act, the Equal Credit Opportunity Act, and the Servicemembers Civil Relief Act. The settlements in these matters provide over $1.2 billion in monetary relief for impacted communities and individual borrowers. The Attorney General’s annual reports to Congress on ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications.
The Civil Rights Division, the U.S. Attorney’s Office for the Northern District of Illinois, and the FDIC are members of the Financial Fraud Enforcement Task Force. President Obama established this task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
The settlement provides for an independent administrator to locate victims and distribute payments of compensation at no cost to borrowers whom the department identifies as victims of Evergreen’s discrimination. The department will make a public announcement and post information on its website once more details about the compensation process become available. Borrowers who are eligible for compensation from the settlement will be contacted by the administrator, and do not need to contact the department at this time. Individuals who believe that they may have been victims of lending discrimination by Evergreen and have questions about the settlement may contact the department at 202-514-4713.
A copy of the complaint and proposed settlement order, as well as additional information about fair lending enforcement by the United States Department of Justice, can be obtained from the United States Department of Justice website at www.justice.gov/fairhousing.
Justice Department Files Civil Complaint Against Healthcare Commons Inc. for Failure to Re-employ Returning Service MemberRead the Press Release
Alleges Violation of Employment Rights of Sergeant in Army National Guard
The Department of Justice announced today it has filed a civil complaint against a South Jersey company for failing to re-employ a former employee when she returned from a National Guard deployment, a violation of federal law.
The civil lawsuit, filed in Camden federal court, alleges that Healthcare Commons Inc., of Carneys Point, New Jersey, willfully violated the Uniformed Services Employment and Re-employment Rights Act of 1994 (USERRA). USERRA protects the rights of uniformed service members to retain their civilian employment following absences due to military service obligations and provides that they shall not be discriminated against because of their military obligations.
Megan Toliver, 32, of New Castle, Delaware, is a former employee of Healthcare Commons. She joined the U.S. Army National Guard in September 2004 and, most recently, had served as a sergeant, with honorable service as a mental health specialist. According to the complaint, when Toliver returned from her military deployment in May 2014, Healthcare Commons willfully violated USERRA by not re-employing her as a mental health screener or in another comparable position.
“No person should lose their job for serving our country, but according to our complaint that’s exactly what happened to a National Guard member here,” said Acting Associate General Stuart F. Delery. “Today’s filing is one more example of the Department of Justice’s commitment to protecting the men and women who serve in our Armed Forces from discrimination and unlawful actions.”
“The filing of this case reinforces the commitment of the Department of Justice to the vigorously enforce the prohibition of employment discrimination based on military service,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “I want to thank the Department of Labor for referring this case to the Department of Justice. I’m hopeful that through the department’s newly created Servicemembers and Veterans Initiative, we will continue to build on our strong ties with federal partners and continue using every tool at our disposal to protect the rights of the men and women who serve in our Armed Forces.”
“The men and women who serve in our armed forces here and abroad do so at great personal sacrifice,” said U.S. Attorney Paul Fishman of the District of New Jersey. “Because of that sacrifice, federal law guarantees that they have the opportunity to resume their careers when they’ve completed their service. When companies seek to skirt their obligations to re-employ our returning veterans, we will hold them accountable.”
The case was referred by U.S. Department of Labor following an investigation by the department’s Veterans’ Employment and Training Service.
The plaintiff is represented by Special Litigation Counsel Andrew Braniff of the Civil Rights Division and Assistant U.S. Attorney Michael E. Campion of the District of New Jersey.
In March 2015, the Attorney General created the Servicemembers and Veterans Initiative, which is led by three dedicated career Justice Department attorneys with strong ties to the military community. They will further the department’s existing efforts by coordinating and expanding enforcement, outreach, and training efforts on behalf of service members, veterans and their families. The initiative will address the unique challenges that service members face while on active duty, that veterans face upon returning home, and that families face when a loved one is deployed.
Additional information about USERRA can be found on the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov, the U.S. Attorney’s Office website at www.justice.gov/usao-nj and the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.
Federal Court Issues Written Judgment Accepting Guilty Plea of Schlumberger Oilfield Holdings Ltd. for Violating U.S. Sanctions by Facilitating Trade with Iran and SudanRead the Press Release
Company Must Pay $232.7 Million Penalty
The U.S. District Court of the District of Columbia entered a formal judgment yesterday memorializing the sentence requiring Schlumberger Oilfield Holdings Ltd. (SOHL), a wholly-owned subsidiary of Schlumberger Ltd, to pay a $232,708,356 penalty to the United States for conspiring to violate the International Emergency Economic Powers Act (IEEPA) by willfully facilitating illegal transactions and engaging in trade with Iran and Sudan.
The judgment was announced by Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia and Under Secretary Eric L. Hirschhorn of the U.S. Commerce Department’s Bureau of Industry and Security (BIS).
At a hearing on April 30, 2015, the District Judge John D. Bates of the District of Columbia accepted the company’s guilty plea and sentenced the company to the proposed sentence articulated in the plea agreement, which called for the fine and other terms of corporate probation. The court recognized the seriousness of SOHL’s criminal conduct, which posed a threat to our national security. In addition, the court noted that the scope of criminal conduct justified the large monetary penalty imposed. Finally, the court concluded that the terms of probation provided adequate deterrence to SOHL as well as other companies. Yesterday, the court entered the written judgment confirming the sentence imposed on April 30, 2015.
“The court’s judgment represents a milestone in the enforcement of U.S. sanctions laws,” said Assistant Attorney General Carlin. “This case marks the first conviction of a corporate entity for facilitating violations of the International Economic Emergency Powers Act and the highest criminal fine ever imposed in a sanctions prosecution. The Court’s imposition of this serious sentence should serve as a strong deterrent for multinational corporations doing any business in countries subject to U.S. economic sanctions.”
“This guilty plea and sentence hold this company accountable for violating trade laws by doing business with sanctioned countries and undermining the interests of the United States,” said Acting U.S. Attorney Cohen. “We hope that other companies tempted to break our export laws take note of the $232.7 million penalty that will be paid in this case.”
The criminal information and plea agreement were filed on March 25, 2015, in federal court in the District of Columbia, charging SOHL with one count of knowingly and willfully conspiring to violate IEEPA. The plea agreement that the court approved also requires SOHL to submit to a three-year period of corporate probation and agree to continue to cooperate with the government and not commit any additional felony violations of U.S. federal law. SOHL’s monetary penalty includes a $77,569,452 criminal forfeiture and an additional $155,138,904 criminal fine. The criminal fine represents the largest criminal fine in connection with an IEEPA prosecution. In addition to SOHL’s commitments, under the plea agreement SOHL’s parent company, Schlumberger Ltd., has also agreed to the following terms during the three-year term of probation, among others: maintaining its cessation of all operations in Iran and Sudan, reporting on the parent company’s compliance with sanctions, responding to requests to disclose information and materials related to the parent company’s compliance with U.S. sanctions laws when requested by U.S. authorities, and hiring an independent consultant to review the parent company’s internal sanctions policies and procedures and the parent company’s internal audits focused on sanctions compliance.
The court agreed that in addition to SOHL continuing its cooperation with U.S. authorities throughout the three-year period of probation and agreeing not to engage in any felony violation of U.S. federal law, SOHL’s parent company, Schlumberger Ltd., will also hire an independent consultant who will review the parent company’s internal sanctions policies, procedures and company-generated sanctions audit reports.
According to court documents, starting on or about early 2004 and continuing through June 2010, Drilling & Measurements (D&M), a United States-based Schlumberger business segment, provided oilfield services to Schlumberger customers in Iran and Sudan through non-U.S. subsidiaries of SOHL. Although SOHL, as a subsidiary of Schlumberger Ltd., had policies and procedures designed to ensure that D&M did not violate U.S. sanctions, SOHL failed to train its employees adequately to ensure that all U.S. persons, including non-U.S. citizens who resided in the United States while employed at D&M, complied with Schlumberger Ltd.’s sanctions policies and compliance procedures. As a result of D&M’s lack of adherence to U.S. sanctions combined with SOHL’s failure to train properly U.S. persons and to enforce fully its policies and procedures, D&M, through the acts of employees residing in the United States, violated U.S. sanctions against Iran and Sudan by: (1) approving and disguising the company’s capital expenditure requests from Iran and Sudan for the manufacture of new oilfield drilling tools and for the spending of money for certain company purchases; (2) making and implementing business decisions specifically concerning Iran and Sudan; and (3) providing certain technical services and expertise in order to troubleshoot mechanical failures and to sustain expensive drilling tools and related equipment in Iran and Sudan.
The investigation that commenced in 2009 was led by the Justice Department’s National Security Division, the U.S. Attorney’s Office of the District of Columbia and the U.S. Department of Commerce BIS’ Dallas Field Office. Assistant Attorney General Carlin is grateful to Special Agent Troy Shaffer from BIS’ Dallas Field Office for his excellent work. Assistant Attorney General Carlin also acknowledged the work of those who handled the case from the National Security Division and the U.S. Attorney’s Office, including former Trial Attorney Ryan Fayhee and former Assistant U.S. Attorneys John Borchert and Ann H. Petalas.
The case was prosecuted by Trial Attorney Casey Arrowood of the National Security Division, Assistant U.S. Attorney Maia L. Miller of the National Security Section and Assistant U.S. Attorney Zia Faruqui of the District of Columbia.
El Departamento de Justicia llega a acuerdo conciliatorio con Evergreen Bank Group para resolver alegatos de discriminación en préstamos para motocicletasRead the Press Release
WASHINGTON – El Departamento de Justicia anunció hoy que Evergreen Bank Group de Oak Brook, Illinois eliminará o limitará la libertad de discreción que les da a los vendedores de motocicletas de incrementar las tasas de interés como parte de un acuerdo conciliatorio de una demanda federal que alega un patrón o una práctica de discriminación por origen nacional y raza en préstamos para motocicletas. Además de la eliminación de la libertad de discreción, lo que coincide con una política que Evergreen adoptó voluntariamente en marzo de 2014, el acuerdo conciliatorio ofrecerá 395,000 dólares en compensación a víctimas de actos de discriminación pasados de Evergreen.
El acuerdo conciliatorio, que sigue estando sujeto a la aprobación del tribunal, fue presentado hoy con la denuncia del departamento en el Tribunal Federal de Distrito del Distrito Norte de Illinois. La denuncia alega que Evergreen violó la Ley de Igualdad de Oportunidades de Crédito [Equal Credit Opportunity Act (ECOA)] al cobrar a alrededor de 2,200 prestatarios hispanos y afroestadounidenses mayores tasas de interés que a prestatarios blancos no hispanos entre enero de 2011 y marzo de 2014. La denuncia alega que la unidad de préstamos para motocicletas FreedomRoad Financial de Evergreen les cobró a los prestatarios mayores tasas de interés debido a su origen nacional o raza y no debido a su solvencia u otros criterios objetivos relacionados con el riesgo crediticio. Este cargo discriminatorio hacía que la víctima promedio pagara de 200 a 250 dólares adicionales aproximadamente durante el término del préstamo.
“El departamento, en cooperación con nuestras dependencias asociadas, sigue examinando detenidamente el mercado de préstamos para vehículos motorizados en busca de actos de discriminación potencial”, dijo la Secretaria de Justicia Auxiliar Adjunta Principal Vanita Gupta de la División de Derechos Civiles. “Agradecemos a Evergreen por reconocer el riesgo de discriminación provocado por sobreprecios discrecionales de los vendedores y por adoptar nuevas políticas de compensación a vendedores que reducen significativamente ese riesgo”.
En vez de recibir las solicitudes directamente de los clientes, Evergreen realiza la mayor parte de sus préstamos para motocicletas a través de aproximadamente 400 vendedores de motocicletas en todo el país que ayudan a sus clientes a pagar su motocicleta nueva o usada presentando sus solicitudes de préstamo a Evergreen.
Hasta marzo de 2014, la práctica comercial de Evergreen, como la de muchos prestamistas para vehículos motorizados, permitía que los vendedores de motocicletas variaran según su propia discreción subjetiva y sin orientación la tasa de interés de un préstamo respecto del precio determinado inicialmente por Evergreen. Los vendedores recibían mayores pagos de Evergreen por préstamos que incluían un mayor margen de ganancias por tasa de interés. La demanda de diciembre de 2013 del departamento contra Ally Financial Inc. y Ally Bank, que generó un acuerdo conciliatorio que establecía una compensación de 80 millones de dólares para los prestatarios, implicó un sistema de compensaciones parecido.
En marzo de 2014, Evergreen eliminó la libertad de discreción de los vendedores de motocicletas para incrementar las tasas de interés. En su lugar, Evergreen adoptó una política por la cual siempre se compensa a los vendedores con base en un porcentaje de la suma principal del préstamo que no varía según la tasa de interés del préstamo. No se observó discriminación cuando los Estados Unidos analizaron préstamos otorgados bajo la nueva política. El acuerdo conciliatorio permite que Evergreen siga utilizando la política revisada de compensación que adoptó en marzo de 2014.
La demanda se originó en una remisión de marzo de 2013 a la División de Derechos Civiles del Departamento de Justicia por parte de la Federal Deposit Insurance Corporation (FDIC). Evergreen está regulada por la FDIC.
La coacción asociada a las leyes de otorgamiento justo de préstamos por parte del Departamento de Justicia es llevada a cabo por la Unidad de Préstamos Justos de la Sección de Vivienda y Cumplimiento de la Ley Civil de la División de Derechos Civiles. Desde que se estableció la Unidad de Préstamos Justos en febrero de 2010, ésta entabló o resolvió 38 casos de préstamos bajo la Ley de Vivienda Justa (FHA), la ECOA y la Ley de Alivio Civil para los Miembros de las Fuerzas Armadas [Servicemembers Civil Relief Act]. Los acuerdos conciliatorios en estos casos proveen más de 1,200 millones de dólares en asistencia monetaria para comunidades impactadas y prestatarios individuales. Los informes anuales del Secretario de Justicia de EE.UU. al Congreso sobre la 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 para el Distrito Norte de Illinois y la FDIC son miembros de la Fuerza de Tarea de Coacción contra el Fraude Financiero. El Presidente Obama fundó esta fuerza de tarea para generar una iniciativa enérgica, coordinada y proactiva para investigar y enjuiciar los delitos financieros. La fuerza de tarea incluye a representantes de una amplia gama de agencias federales, autoridades regulatorias, inspectores generales y fuerzas del orden público estatales y locales quienes, trabajando juntos, implementan un conjunto poderoso de recursos de coacción penal y civil. La fuerza de tarea está trabajando para mejorar las iniciativas en todo el poder ejecutivo federal y, junto con asociados estatales y locales, investigar y enjuiciar delitos financieros importantes, garantizar un castigo justo y eficaz para quienes cometen delitos financieros, combatir la discriminación en los mercados financieros y de préstamos, y recuperar ganancias para las víctimas de delitos financieros. Para obtener más información sobre la fuerza de tarea, visitar www.StopFraud.gov.
El acuerdo conciliatorio estipula la existencia de un administrador independiente que ubique a las víctimas y distribuya los pagos sin costo para los prestatarios identificados por el departamento como víctimas de actos de discriminación de Evergreen. El departamento hará un anuncio público y publicará información en su portal de Internet cuando existan más detalles sobre el proceso de compensación. El administrador del acuerdo se comunicará con los prestatarios que sean elegibles para recibir compensación del acuerdo conciliatorio y no necesitan comunicarse con el departamento en este momento. Las personas que crean haber sido víctimas de actos de discriminación en préstamos por parte de Evergreen y tengan preguntas sobre el acuerdo conciliatorio pueden comunicarse con el departamento llamando al 202-514-4713.
Para obtener una copia de la demanda y de la orden de acuerdo conciliatorio propuesto, así como también información adicional sobre la labor del Departamento de Justicia de los Estados Unidos para hacer valer las leyes de otorgamiento justo de préstamos, visite el portal del Departamento de Justicia de los Estados Unidos en www.justice.gov/fairhousing.
Detroit Residents Sentenced for Defrauding Internal Revenue Service with Identities of Deceased IndividualsRead the Press Release
Two Detroit residents were sentenced after pleading guilty to charges of wire fraud and aiding and abetting in the use of false identification, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan and Special Agent in Charge Jarod Koopman of Internal Revenue Service-Criminal Investigation (IRS-CI) announced today.
McAllen Knight and Renita Adams were each sentenced to serve 18 months in prison by U.S. District Court Judge Avern Cohn of the Eastern District of Michigan. Knight’s mother, sister and stepfather also pleaded guilty to wire fraud and aiding and abetting in the use of false identification. Brenda Knight, Knight’s mother, and Adreann Turnage, Knight’s sister, were sentenced on April 14 to serve 24 and 18 months in prison, respectively. Willie Watkins, Knight’s stepfather, was sentenced on April 29, 2014, to serve 30 months in prison. All five defendants were ordered to pay $410,949 in restitution.
According to court records, Adams and McAllen Knight participated in a scheme with Watkins, Brenda Knight and Adreann Turnage to defraud the United States by using the names and social security numbers of recently deceased individuals to prepare fraudulent tax returns. They filed hundreds of fraudulent 2010 tax returns. The returns sought refunds by making false claims for the Earned Income Credit, Education Credits and the Making Work Pay Credit. The returns were transmitted electronically, utilizing public access Internet connections from local hotels and coffee shops. An Internet account registered to Adams was used to transmit 306 fraudulent returns. The refunds were directed to bank accounts that were established for the sole purpose of receiving the fraudulent refunds. McAllen Knight caused some of these bank accounts to be opened by others to receive the deposits of the false tax refunds. Adams helped distribute the proceeds of the fraudulently obtained tax refunds at the direction of her fellow participants and retained a portion of the proceeds for her own benefit.
The investigation of this case was conducted by special agents of IRS-CI and prosecuted by Assistant U.S. Attorney Ross I. MacKenzie of the Eastern District of Michigan and Trial Attorney Kenneth Vert of the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Cincinnati-Area Man Charged with Attempting to Provide Material Support to ISILRead the Press Release
A federal grand jury has brought an additional charge against Christopher Lee Cornell, 21, of Green Township, Ohio. In a superseding indictment returned in Cincinnati, he is now also charged with attempting to provide material support to a designated foreign terrorist organization.
The charge is in addition to the original Jan. 21, 2015, indictment that charged Cornell with attempting to kill officers and employees of the United States, solicitation to commit a crime of violence and possession of a firearm in furtherance of a crime of violence. Cornell was charged for his alleged participation in a plot to attack the U.S. Capitol Building and kill government officials.
The superseding indictment, which was returned today, was announced by Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Carter M. Stewart of the Southern District of Ohio and Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Field Division.
The four-count superseding indictment alleges that on or about August 2014 through January 2015, Cornell allegedly plotted, planned and attempted to attack the U.S. Capitol.
The defendant is also alleged to have attempted to provide material support and resources to a foreign terrorist organization, specifically the Islamic State of Iraq and the Levant (ISIL), knowing that the organization was a designated foreign terrorist organization and that the organization had engaged in and was continuing to engage in terrorist activity. Material support and resources consisted of personnel in the form of the defendant himself by plotting and attempting to execute an attack on the U.S. Capitol.
Cornell allegedly attempted to kill officers and employees of the United States during their official duties, specifically by attempting to attack the U.S. Capitol Building. During that same time, the defendant allegedly attempted to persuade others to kill officers and employees of the United States. Cornell also allegedly possessed two semi-automatic rifles and approximately 600 rounds of ammunition.
Providing material support to a designated foreign terrorist organization carries a potential maximum sentence of 15 years in prison. Attempted murder of government employees and officials is a crime punishable by up to 20 years in prison. Solicitation to commit an attempted murder is a crime punishable by 20 years in prison. Possession of a firearm in furtherance of an attempted crime of violence is a crime punishable by a mandatory sentence of five years in prison.
Cornell was arrested on Jan. 14, 2015, by the FBI’s Joint Terrorism Task Force (JTTF). The JTTF is made up of officers and agents from the Cincinnati Police Department; Colerain, Ohio, Police Department; Dayton, Ohio, Police Department; Ohio State Highway Patrol; U.S. Immigrations and Customs Enforcement; U.S. Secret Service; and West Chester, Ohio, Police Department.
Assistant Attorney General Carlin and U.S. Attorney Stewart commended the investigation of this case by the JTTF. The case is being prosecuted by Trial Attorney Michael Dittoe of the Justice Department’s National Security Division and Assistant U.S. Attorney Tim Mangan of the Southern District of Ohio.
An indictment merely contains allegations, and the defendant is presumed innocent unless proven guilty in a court of law.
Cornell Superseding Indictment
Arizona Shopping Center Developer Arrested for Fraud and Bankruptcy Crimes in Alleged Scheme to Conceal $17 Million in AssetsRead the Press Release
An Arizona shopping center developer was arrested today on fraud and bankruptcy charges in connection with a scheme to allegedly conceal his control of approximately $17 million in assets.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney John S. Leonardo of the District of Arizona and Inspector in Charge Gary Barksdale of the Criminal Investigations Group of the U.S. Postal Inspection Service made the announcement.
Alex Papakyriakou, aka, Alex Papas, 57, of Phoenix, Arizona, was charged in an indictment in the District of Arizona with eight counts of bank fraud, one count of conspiracy to commit bankruptcy-related offenses, four counts of concealing assets in bankruptcy, one count of making a false oath in bankruptcy and three counts of falsification of records in bankruptcy.
According to allegations in the indictment, Papas and a now deceased business partner organized over 200 limited liability companies from 1997 to 2008 to develop shopping centers and other real estate projects in Arizona and elsewhere, funded by approximately $150 million from investors and $250 million in bank loans. When the companies encountered financial difficulties in 2007 and 2008, Papas allegedly created Cobea Associates, LLC (Cobea), a company nominally owned by his sister in South Africa, but actually operated and controlled by him to shield his valuable family assets from investors and other creditors. Papas then allegedly transferred title of his assets to Cobea, including a luxurious home in Paradise Valley, Arizona, a vacation beach house and a condominium in Laguna Beach, California, and a business entity in Scottsdale, Arizona, which bought and sold expensive vintage collector automobiles.
From June 2008 through approximately June 2013, Papas allegedly deceived various banks regarding the transfer of the assets and his financial condition to both obtain new loans and extend existing loans secured by his assets. Additionally, in 2011, Papas filed for bankruptcy, claiming that he had less than $1 million in assets and over $144 million in liabilities, while allegedly concealing and denying his control of the millions of dollars in assets he transferred to Cobea.
The charges contained in an indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The case is being investigated by the Criminal Investigations Group of the U.S. Postal Inspection Service. The case is being prosecuted by Senior Litigation Counsel Jack Patrick and Trial Attorney Sarah Hall of the Criminal Division’s Fraud Section, with the assistance of Assistant U.S. Attorney Raymond Woo of the District of Arizona.
Office of Justice for Victims of Overseas Terrorism Celebrates 10-Year AnniversaryRead the Press Release
The Justice Department’s Office of Justice for Victims of Overseas Terrorism (OVT) today celebrates its 10-year anniversary of providing specialized assistance to U.S. citizen victims and their families when they are injured or killed in terrorist attacks abroad, announced Assistant Attorney General for National Security John P. Carlin.
OVT was founded on May 6, 2005, by then-Attorney General Alberto Gonzales. It is now part of the Justice Department’s National Security Division, which was created in 2006. OVT’s primary responsibility to Americans who are victims of overseas terrorism is to work to ensure that investigation and prosecution remain a high priority. OVT also updates victims and their families on the progress of any criminal investigation and prosecution, and ensures that the rights of victims and their families are treated with honor and respect by criminal justice systems around the world. The office has worked to provide support to U.S. victims of terrorist attacks in many nations, including Afghanistan, Colombia, Germany, Israel, Iraq, Indonesia, India, Kenya, Pakistan and the Philippines, among others.
“The Office of Justice for Victims of Overseas Terrorism serves as an advocate for our citizens impacted by terrorism as they navigate foreign criminal justice systems in pursuit of accountability,” said Assistant Attorney General Carlin. “I applaud the work they have done over the last decade to aid hundreds of victims and their families, and look forward to continuing to support their office as they provide such critical resources to American victims of terrorism overseas and their families.”
“OVT is truly a groundbreaking office in the Department of Justice,” said Director Heather Cartwright of OVT. “Victims themselves identified the need and called for the creation of an office devoted to advocating for justice for U.S. citizens who suffer terrorist attacks in foreign countries. Ten years after its creation, OVT has developed an advocacy program to support these victims, and looks forward to providing even more comprehensive support and services in the future.”
For more information on the important work done by OVT every day, please visit their website. If you are a U.S. citizen victim of international terrorism or a victim’s family member and you seek information on foreign criminal justice proceedings, OVT can assist you. Please contact OVT at [email protected].
Justice Department Statement on Baltimore Mayor's Request for a Pattern or Practice Investigation into the Baltimore Police DepartmentRead the Press Release
Justice Department spokesperson Dena Iverson released the following statement Wednesday following the request from Baltimore Mayor Stephanie Rawlings-Blake for a pattern or practice investigation into the Baltimore Police Department.
“The Attorney General has received Mayor Rawlings-Blake’s request for a Civil Rights Division 'pattern or practice' investigation into the Baltimore Police Department. The Attorney General is actively considering that option in light of what she heard from law enforcement, city officials, and community, faith and youth leaders in Baltimore yesterday.”
Illinois Couple Indicted for Kidnapping and Transportation of a Minor with Intent to Engage in Sexual ActivityRead the Press Release
A federal grand jury indicted an Illinois couple on charges of kidnapping and transportation with intent to engage in criminal sexual activity with a minor, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney James A. Lewis of the Central District of Illinois and Special Agent in Charge Sean Cox of the FBI’s Springfield Division.
“Parents with adopted children who are struggling are all too frequently targets for those willing to say and do whatever it takes to gain access to those vulnerable children,” said Assistant Attorney General Caldwell. “The Criminal Division is committed to bringing to justice anyone who seeks to exploit children and risk their safety. Every child in America deserves a safe home.”
“Protecting children is a community responsibility,” said U.S. Attorney Lewis. “Law enforcement relies on the assistance of proactive neighbors, school officials and parents to protect our kids.”
“The FBI is dedicated to the protection of children,” said Special Agent in Charge Cox. “We will continue to use our resources to pursue those who would exploit them for their own benefit.”
Nicole Eason, 37, and Calvin Eason, 46, formerly of Danville and Westville, Illinois, were charged in an indictment unsealed today with two counts of kidnapping of a minor and one count of transportation of a minor. They were previously charged by a criminal complaint and arrested on April 3, 2015, in Tucson, Arizona. The couple has remained in custody since their arrest.
According to allegations in the criminal complaint, Nicole and Calvin Eason participated in an online adoption discussion board in 2006 and 2007, and sought to adopt a child through a process sometimes referred to as private “re-homing.” This practice is often associated with “disrupted” or failed adoptions, when an adoptive family places their child in another home because the adoptive family can no longer care for the child.
According to the complaint, the Easons communicated with a minor’s parents and allegedly misrepresented material facts about their background to gain the parents’ trust. The Easons also allegedly lied about having a home study “waiver,” which the parents believed was needed to transfer custody of their child. Based on the Easons’ false misrepresentations, the parents transported their child across state lines in 2007. Both Nicole and Calvin Eason allegedly sexually abused the child while he/she was in their custody.
The indictment further alleges that Nicole and Calvin Eason kidnapped a second minor in the same manner in 2008. The Easons allegedly transported the second minor across state lines.
The allegations and charges contained in the complaint and indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
This case is being investigated by FBI’s Springfield Division. The case is being prosecuted by Trial Attorney Jennifer Toritto Leonardo of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Elly Peirson of the Central District of Illinois.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Houston Doctor and Group Home Owner Indicted for Alleged Roles in $5.2 Million Medicare Fraud SchemeRead the Press Release
A Houston doctor and a group home owner were arrested on charges related to their alleged participation in a $5.2 million Medicare fraud scheme involving false claims for mental health treatment.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office, Special Agent in Charge Lucy R. Cruz of the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Houston Field Office, the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU) and Special Agent in Charge Mike Fields of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Dallas Field Office made the announcement.
Walid H. Hamoudi, M.D., 63, of Houston, and Geraldine J. Caroline, 49, of Houston, were each charged with one count of conspiracy to commit health care fraud, one count of conspiracy to pay and receive kickbacks and five counts of paying and receiving kickbacks. The indictment also charges Hamoudi with one count of money laundering. Both defendants are expected to make their initial appearances in federal court in Houston today.
According to the indictment, Hamoudi and Caroline allegedly participated in a scheme to defraud Medicare beginning in 2010 and continuing until June 2011. The defendants allegedly caused the submission of false and fraudulent claims for partial hospitalization program (PHP) services—a form of intensive outpatient treatment for severe mental illness—to Medicare through a Houston hospital. Hamoudi allegedly paid Caroline kickbacks to send her group home residents to the hospital to receive PHP services even though the patients did not qualify for or receive the services.
The indictment alleges that the defendants and their co-conspirators submitted or caused to be submitted approximately $5.2 million in claims to Medicare and over $380,000 in claims to Medicaid for PHP services purportedly provided by the hospital, when, in fact, the PHP services were medically unnecessary or never provided.
In February 2012, Mohammad Khan, an assistant administrator at the hospital, who managed many of the hospital’s PHPs, pleaded guilty to one count of conspiracy to commit health care fraud, one count of conspiracy to pay illegal kickbacks and five counts of paying illegal kickbacks for his role in the scheme. Khan is scheduled to be sentenced on May 21, 2015.
In October 2014, Earnest Gibson III, the president of the hospital, along with his son Earnest Gibson IV, Regina Askew and Robert Crane, were convicted for their roles in the scheme. William Bullock III, Robert Ferguson, Waddie McDuffie, Sharonda Holmes and Leslie Clark have pleaded guilty for their roles in the scheme. These defendants have not yet been sentenced.
The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.
This case was investigated by the FBI, IRS-CI, HHS-OIG and the MFCU, 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 for the Southern District of Texas. The case is being prosecuted by Trial Attorney Ashlee C. McFarlane of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who 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.
Former Owner of Empire Towers Pleads Guilty for Fraudulent $7 Million Bond Scheme and Filing False Tax ReturnRead the Press Release
Misled More Than 50 Individual Investors Who Bought Bonds
A former Queenstown, Maryland, resident pleaded guilty today to securities fraud and filing a false tax return.
The guilty plea was announced by U.S. Attorney Rod J. Rosenstein of the District of Maryland, Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington, D.C., Field Office and Special Agent in Charge Stephen E. Vogt of the FBI’s Baltimore Division.
In 1999, Wilfred T. Azar III, 53, became the president and majority owner of Empire Corporation and exercised complete control over the operations of Empire. Empire Corporation owned Empire Towers Corporation. Empire Towers Corporation’s primary asset was Empire Towers, a 10-story office building in Glen Burnie, Maryland.
According to Azar’s plea agreement, by January 2006, Empire Corporation could no longer pay its expenses and was effectively insolvent. By 2007, Empire Towers Corporation had exhausted its lines of credit from lending institutions.
From January 2006 to April 2010, Azar caused Empire Corporation to sell bonds to more than 50 individual investors for more than $7 million. While many of the bonds were titled “registered,” the bonds were not registered with either the U.S. Securities and Exchange Commission (SEC) or the state of Maryland. In addition, Azar falsely told investors that Empire Corporation was in good financial health and that the company generated enough revenue to pay the promised 10 percent annual rate of return. Azar falsely represented that the money invested would be used for a specific renovation project or other capital improvement at the Empire Towers office building. Azar failed to inform investors that he used most of the money raised from previous bond sales for his own personal purposes. Although the bonds were issued by Empire Corporation, Azar diverted millions of dollars of proceeds from the bond sales to his own bank account and to the bank accounts of other companies that he controlled.
During the period of the fraud, Azar misappropriated approximately $7,219,362 in investor proceeds raised through the sale of bonds. Azar used the bond proceeds: to purchase a $100,000 Aston Martin luxury automobile; to pay the $3,000 monthly mortgage on his primary residence; to pay $51,000 to an Azar trust; to purchase Baltimore Ravens season tickets for $17,298; and to pay $25,389 in country club dues. In addition, Azar charged more than $420,000 to a credit card paid by Empire Management Services, including daily living expenses, lavish vacations and university tuition for one of his children. Azar also diverted more than $1.07 million in Empire funds to other unrelated businesses he controlled under the guise of “loans” which were never repaid.
During 2009, Azar embezzled approximately $1,959,250 in Empire funds, which he failed to report as income on his tax return. This resulted in a tax loss to the government of $469,936.
Azar faces a statutory maximum sentence of 20 years in prison for securities fraud, and a maximum of three years in prison for filing a false tax return. U.S. District Judge William D. Quarles Jr. has scheduled sentencing for Aug. 12 at 10:00 a.m.
The SEC has also filed a complaint against Azar and another individual in connection with the scheme, and that case is pending.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants, including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.
U.S. Attorney Rosenstein praised the IRS-CI, FBI and SEC for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Gregory Bockin of the District of Maryland and Trial Attorney Kenneth Vert of the Justice Department’s Tax Division, who are prosecuting the case.
City of Caribou, Maine, Agrees to Settle Justice Department Lawsuit Alleging Sex DiscriminationRead the Press Release
The Justice Department announced today that it has agreed to enter into a consent decree with the city of Caribou, Maine, that, if approved by the U.S. District Court for the District of Maine, will resolve allegations that Caribou discriminated against a female employee based upon her sex, in violation of Title VII of the Civil Rights Act of 1964.
The department’s complaint alleges that Caribou discriminated against a female city employee when she was regularly subjected to sexual harassment in the workplace by the city’s former Fire Chief, Roy Woods. According to the complaint, the sexual harassment of the victim included both unwanted touching and comments, culminating in Mr. Woods sexually assaulting the victim. At the time of the assault, the victim was 18 years old and worked for Caribou under Mr. Woods’ supervision. Mr. Woods was 66.
According to the department’s complaint, Caribou did not take reasonable steps to prevent Woods’ unlawful acts. For instance, supervisory employees with Caribou knew that Woods had a history of sexually harassing women in the workplace but Caribou never took any action to stop his harassment. Caribou did not take any corrective action at all until Dec. 27, 2011, after Woods had assaulted the victim. The victim was never provided with Caribou’s sexual harassment policy and was unaware of the process for reporting Woods’ illegal conduct before it escalated to an assault. The department’s complaint was based on a charge of discrimination filed by the victim with the Equal Employment Opportunity Commission (EEOC) and the Maine Human Rights Commission that was forwarded to the department by the EEOC’s Boston Office.
Under the terms of the consent decree, once approved by the district court, Caribou is required to review and revise its sexual harassment policies in order to protect its employees from sexual harassment in the workplace. Caribou must provide training to its employees on its newly revised policies for the prevention of sexual harassment. The consent decree also requires Caribou to pay the victim a monetary award of $85,000.
“All Americans are entitled to a workplace that is free of unlawful harassment based upon sex,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The early resolution of this case, without contested litigation, was in the best interests of all parties concerned.”
The United States is represented in this case by Civil Rights Division attorney Allan Townsend.
The enforcement of Title VII is a priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division is available on its web sites at http://www.justice.gov/crt/ and http://www.justice.gov/crt/emp/.
Readout of Attorney General Lynch's Visit to Baltimore, MarylandRead the Press Release
Attorney General Loretta E. Lynch traveled to Baltimore, Maryland, today for meetings with Mayor Stephanie Rawlings-Blake, Commissioner Anthony Batts and line officers for the Baltimore Police Department, members of Congress, faith, youth and community leaders and the family of Freddie Gray. This was Attorney General Lynch's first trip since being sworn in. She was joined on the trip by staff including Acting Assistant Attorney General Vanita Gupta, head of the Civil Rights Division, Director Ronald Davis of the Office of Community Oriented Policing Services and Director Grande Lum of the Community Relations Service.
During the Attorney General's meeting with faith leaders and members of the Maryland congressional delegation, she emphasized that she came to Baltimore to listen to concerns expressed by all groups and reinforced her commitment to have the Justice Department remain in Baltimore after the cameras leave in order to help the city rebuild and move forward. The Attorney General noted that watching people come together following the unrest last Monday has been personally inspiring.
The Attorney General then met with Baltimore Police Commissioner Batts and line police officers. In her meeting with rank and file officers, the Attorney General thanked them for their work telling them: “You have picked a noble profession, you have picked a hard profession, but you have picked one of the best professions out there today, because you have picked the one that lets you go out there every day and say I’m going to help somebody.” She also discussed the spotlight on Baltimore saying, "We don't always choose moments, sometimes they choose us."
During the Attorney General's meeting with Baltimore United Leaders, she heard from youth leaders who have focused on police reform issues. The Attorney General and her staff heard about the efforts by the young people as well as their concerns. The Attorney General assured youth leaders and community leaders that the independent civil rights investigation was ongoing and would be done as expeditiously as possible.
Following her meetings, the Attorney General spoke to pool reporters and shared that her meetings with city leaders, community leaders and police were positive. The Attorney General said she took away a sense that everyone - community leaders, city officials and police officers - cares about the city and is working hard to overcome the loss of trust between the police and community.
“What I heard was both instructive and constructive,” said Attorney General Lynch
The Attorney General noted that the department has been engaged in a Collaborative Reform Initiative with Baltimore Police Department since October and that the Community Relations Service was on the ground meeting with community leaders. She emphasized that the aim of her trip was to hear firsthand ideas for how the Justice Department could assist the city in addition to the work already being done. Asked specifically to respond to city leaders asking for a “pattern or practice” investigation, she said she would consider the request.
Michael Junior Castro Sentenced to 174 Months ImprisonmentRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that MICHEL JUNIOR CASTRO, age 36, of Tamuning, was sentenced on April 29, 2015, before Senior Judge Alex R. Munson, in the District Court of Guam, to 174 months imprisonment and to three years supervised release.
Between October 1, 2013 and November 12, 2013, CASTRO agreed with others to distribute methamphetamine hydrochloride. Defendant CASTRO picked up a package at a Post Box which law enforcement discovered contained suspected methamphetamine. A forensic chemist later determined the substance was 98% d-methamphetamine hydrochloride and weighed 1331.4 grams. Defendant CASTRO informed law enforcement that he was supposed to receive $5,000.00 in exchange for picking up the box. Law enforcement also discovered a black, “Hi-Point” Model C9 9mm Luger Handgun firearm with an obliterated serial number, which was found during a search of his residence.
U.S. Attorney Alicia A.G. Limtiaco stated, “Our community is not immune from the poison of methamphetamine. This case illustrates the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam.”
This case was investigated by U.S. Postal Inspectors and Drug Enforcement Administration special agents. Credit is also given to the Bureau of Alcohol, Tobacco, Firearms and Explosives for their assistance. The case was prosecuted by Assistant U.S. Attorney Stephen F. Leon Guerrero.
Justice Department Settles Lawsuit Against Bullhead City Fire District in Arizona to Enforce Employment Rights of United States Army Reserves MemberRead the Press Release
The Justice Department’s Civil Rights Division announced today that a settlement has been reached with the Bullhead City Fire District (BCFD) in Arizona, resolving claims that BCFD violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), by discriminating against U.S. Army Reserves Member Brett Guinan and by failing to reemploy him following his military deployment. USERRA protects the rights of uniformed service members to retain their civilian employment following absences due to military service obligations, and provides that service members shall not be discriminated against because of their military obligations.
According to the complaint, filed yesterday in the United States District Court of the District of Arizona, BCFD discriminated against Guinan by terminating his employment on the basis of his military service. The complaint alleges that, between 2008 and 2013, Guinan was deployed three times in the Army Reserves. During his second military deployment, Guinan’s supervisor began making negative statements about Guinan’s military service obligations. In June 2013, while Guinan was serving his third deployment, BCFD eliminated Guinan’s Fire Inspector position and terminated his employment, claiming to have undergone a “reduction in workforce.” Guinan’s Fire Inspector position, however, was the only job position eliminated in 2013. After Guinan’s position was eliminated, BCFD also continued to pay other people to perform Guinan’s Fire Inspector duties and continued to post new job openings on its website. The complaint further alleges that after Guinan returned from his third deployment, he notified BCFD that he was seeking reemployment. Despite Guinan’s efforts to be reemployed, BCFD refused to reemploy him as required by USERRA.
Under the terms of the settlement agreement, filed along with the complaint, BCFD has agreed to pay $75,000 as back pay and front pay damages to Guinan. BCFD also has agreed to adopt a new personnel policy that informs employees of their rights and obligations under USERRA and to provide USERRA training to all supervisory staff in its five fire stations.
“This settlement will provide much needed relief to U.S. Army Reserve Member Brett Guinan, who lost his job simply for serving our country,” said Acting Associate Attorney General Stuart F. Delery. “I want to thank the Department of Labor for referring this case to the Department of Justice. I’m hopeful that through the department’s newly created Servicemembers and Veterans Initiative, we will continue to build on our strong ties with federal partners and continue using every tool at our disposal to protect the rights of the men and women who serve in our Armed Forces.”
“The men and women who wear our nation’s uniform need to know that they will be protected from the types of injustice experienced by Mr. Guinan,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The Department of Justice, through its enforcement of USERRA, strongly supports the right of service members to retain their rightful positions in the workforce both while they serve and after they complete their military service to our country.”
This case stems from a referral by the U.S. Department of Labor (DOL), pursuant to an investigation by the DOL’s Veterans’ Employment and Training Service. The case is being handled by the Employment Litigation Section of the Department of Justice’s Civil Rights Division, which works collaboratively with the DOL to protect the jobs and benefits of Army Reserves service members upon their return to civilian life.
The Justice Department’s Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA. Additional information about USERRA can be found on the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.
Justice Department Seeks to Shut Down Florida Tax Return Preparer and Owner of Tax Preparation BusinessRead the Press Release
The United States filed a civil injunction suit seeking to bar a Tampa, Florida, man from owning, operating or franchising a tax return preparation business and from preparing tax returns for others, the Justice Department announced today. The complaint also requests that the court order the defendant to disgorge the fees that he obtained through alleged fraudulent tax return preparation.
The suit, which was filed in the U.S. District Court for the Middle District of Florida, alleges that Milot Odne owns and operates Rapid Tax 1, a tax return preparation business in the Tampa area. According to the complaint, Odne was previously a franchisee of LBS Tax Services.
The suit alleges that Odne targets primarily low-income customers with deceptive and misleading advertisements, prepares and files fraudulent tax returns to fraudulently increase his customers’ refunds, and profits through unconscionable and exorbitant fees — all at the expense of his customers and the U.S. Treasury.
According to the suit, there is a “culture of greed” at Odne’s tax return preparation stores “that expressly promotes and encourages the preparation of false and fraudulent federal tax returns in order to maximize corporate and individual profits.” The complaint alleges that Odne’s stores engage in fraudulent activity, including:
• Falsely claiming the Earned Income Tax Credit;
• Claiming improper filing status (i.e., head of household);
• Fabricating businesses and related business income and expenses;
• Fabricating itemized deductions on a Schedule A, including for unreimbursed employee business expenses, automobile expenses and charitable contributions;
• Falsely claiming education credits to which customers are not entitled;
• Improperly preparing returns based on paystubs rather than Forms W-2; and
• Failing to provide customers with a copy of a competed tax return, as required.
According to the complaint, the Internal Revenue Service (IRS) estimates that the tax loss resulting from these activities for the 2012, 2013 and 2014 tax years could be up to $35.5 million or more.
This lawsuit is one of several filed against former LBS Tax Services-related individuals, including Walner Gachette, Douglas Mesadieu, Jean Demesmin, Kerny Pierre-Louis, Demetrius Scott, Jason Stinson, Wilfrid Antoine, Tonya Chambers, Jehoakim Victor and Lauri Rodriguez. In February 2015, a court barred Victor and Rodriquez from preparing tax returns for others and from owning or operating a tax return preparation business.
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 this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Justice Department Reaches Settlements with Three Public Entities to Remove Barriers to Employment for People with DisabilitiesRead the Press Release
The Justice Department announced today that it reached settlement agreements with the city of Parowan, Utah; the city of Española, New Mexico; and the village of Ruidoso, New Mexico. The agreements resolve investigations of each public entity under Title I of the Americans with Disabilities Act (ADA). The investigations found that each jurisdiction’s online employment application asked questions about disabilities in violation of the ADA. The ADA does not permit employers to inquire as to whether an applicant is an individual with a disability or as to the nature of such disability before making a conditional offer of employment. Under Section 503 of the Rehabilitation Act of 1973, however, federal contractors subject to affirmative action requirements must invite an applicant voluntarily to self-identify as an individual with a disability, consistent with certain requirements.
Two investigations also found that the public entity’s online employment opportunities website or job applications were not fully accessible to people with disabilities, such as those who are blind or have low vision, are deaf or hard of hearing, or have physical disabilities affecting manual dexterity (such as limited ability to use a mouse). In recent months, the department reached similar settlement agreements with the cities of DeKalb, Illinois; Vero Beach, Florida; Fallon, Nevada; Isle of Palms, South Carolina; Hubbard, Oregon; and Florida State University.
“These agreements ensure that job applicants with disabilities will have an equal chance to compete for jobs in the public sector and won’t face illegal questions,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “We commend each public entity for its cooperation in making the job application process more accessible.”
Under the settlement agreements, each public entity agrees to ensure that its hiring policies and procedures do not discriminate against any applicant on the basis of disability, including by:
-
not conducting a medical examination or making a disability-related inquiry of a job applicant before a conditional offer of employment is made;
-
not requiring a medical examination or making inquiries of an employee as to whether such employee is an individual with a disability or as to the nature or severity of the disability, unless such examination or inquiry is shown to be job-related and consistent with business necessity;
-
maintaining the medical or disability-related information of applicants and employees in separate, confidential medical files; and
-
training employees who make hiring or personnel decisions on the requirements of the ADA, designating an individual to address ADA compliance matters, and reporting on compliance.
Parowan and Ruidoso must also ensure that their online employment opportunities website and job applications conform with the Web Content Accessibility Guidelines 2.0, which are industry guidelines for making web content accessible.
Those interested in finding out more about the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 (TDD 800-514-0383) or visit www.ada.gov.
-
Former District of Columbia Technology Executive Sentenced to Prison for Failing to Pay over Nearly $1 Million in Payroll TaxesRead the Press Release
A Washington, D.C., resident and businessman was sentenced to prison for failing to pay over nearly $1 million in employment taxes, announced Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division.
Kevin Bertram, former CEO of the wireless technology firm Distributive Networks LLC, was sentenced to serve 30 months in prison to be followed by three years of supervised release, and ordered to pay $897,921 in restitution to the Internal Revenue Service (IRS). On Feb. 10, Bertram pleaded guilty in the U.S. District Court for the District of Columbia to willfully failing to pay over more than $900,000 in employment taxes, including federal income taxes, as well as the social security and Medicare taxes of Distributive Networks’ employees.
According to court documents, Bertram operated Distributive Networks from 2004 through 2010. Bertram’s company, which was named one of Washington, D.C.’s “Great Places to Work” by Washingtonian magazine in 2007, created technology that allowed cell phone users to participate in contests, download ringtones and receive content such as trivia and horoscopes.
According to court documents, Distributive Networks provided employee perks, such as free Starbucks coffee and gym memberships, and a 100 percent matching contribution to its employees’ 401(k) plans. However, Bertram willfully failed to comply with Distributive Networks’ employment tax obligations. For the quarterly tax periods in late 2007 through mid-2009, Bertram failed to file Distributive Networks’ required quarterly IRS Forms 941 (Employer’s Quarterly Federal Tax Returns) and failed to pay over $927,921.78 in employment taxes due to the IRS. At the same time that Bertram was failing to pay the IRS income and other taxes withheld from employees’ paychecks, he spent hundreds of thousands of dollars of company funds on sporting event tickets and personal luxury goods.
Acting Deputy Assistant Attorney General Wszalek commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Melissa S. Siskind and Jeffrey A. McLellan of the Tax Division, who are prosecuting the case. Wszalek also thanked the U.S. Attorney’s Office of the District of Columbia for their substantial assistance.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
The Executive Office for Immigration Review Announces I³Read the Press Release
FALLS CHURCH, Va. – The Executive Office for Immigration Review (EOIR) today announced that it has launched eInfo, a web-based application that allows registered attorneys and fully accredited representatives to view their clients’ case information. eInfo provides similar information to that which is currently available by telephone via the Automated Case Information Hotline (also known as the “1-800 phone number”). Users can retrieve information such as future hearing dates, decision information and case appeals.
eInfo brings EOIR’s electronic applications to three, joining eRegistry and eFiling, and creating the new Internet Immigration Information application known as I³. I³ offers electronic access and filing for the immigration courts and the Board of Immigration Appeals.
“EOIR continues to work toward a paperless environment,” said EOIR Director Juan P. Osuna. “eInfo is the latest complement to our long-term plan to provide continuous electronic access to immigration proceedings.”
EOIR has also updated its online Action Center, located on EOIR’s homepage, to provide users easy access to the electronic applications portal. Please see the following link for more details and frequently asked questions: I³ Frequently Asked Questions.
- EOIR -
The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR's immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR's Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.
Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging at Public Foreclosure AuctionsRead the Press Release
A Northern California real estate investor has agreed to plead guilty for his role in conspiracies to rig bids at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
Felony charges were filed today in the U.S. District Court for the Northern District of California in Oakland against Wayne Lippman of Walnut Creek, California. To date, as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California, 55 individuals have agreed to plead or have pleaded guilty.
According to court documents, between August 2008 and January 2011, Lippman conspired with others not to bid against one another and instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda and Contra Costa counties. Lippman made and received payoffs for the agreements not to bid, diverting money that would have otherwise gone to mortgage holders and other beneficiaries.
“This plea is the latest step in the Antitrust Division’s ongoing efforts to hold investors accountable for colluding at foreclosure auctions and denying lenders and homeowners the fair market value of their property,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division. “We will continue to work with our law enforcement partners to investigate and prosecute collusion at real estate foreclosure auctions and to restore confidence in the housing market.”
“The negative impact resulting from bid rigging and fraud at public foreclosure auctions is far-reaching,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office. “The FBI remains committed to identifying such violations and we are grateful for the unwavering dedication to justice shared by all of our law enforcement partners.”
Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Alameda and Contra Costa counties, California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
Lippman Information
U.S. Will Pay $13.2 Million for Cleanup Evaluation of 16 Abandoned Uranium Mines on the Navajo NationRead the Press Release
In a settlement agreement with the Navajo Nation, the U.S. will place $13.2 million into an environmental response trust to pay for the evaluations of 16 priority abandoned uranium mines located across Navajo lands. The investigation of these sites is a necessary step before final cleanup decisions can be made. The work to be conducted is subject to the approval of the Navajo Nation as the lead agency and the Environmental Protection Agency (EPA) as the supporting agency.
“This agreement is part of the Justice Department’s increased focus on environmental and health concerns in Indian country as well as the commitment of the Obama Administration to fairly resolve the historic grievances of American Indian tribes and build a healthier future for their people,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “The site evaluations focus on the mines that pose the most significant hazards and will form a foundation for their final cleanup. In partnership with our sister federal agencies, we will also continue our work to address the legacy of uranium mining on Navajo lands, including ongoing discussions with the Navajo Nation.”
“EPA is proud to help implement this historic settlement,” said Regional Administrator Jared Blumenfeld for EPA for the Pacific Southwest. “It dovetails with our ongoing activities as we work together to make real progress on the environmental legacy of uranium mining on the Navajo Nation.”
The Navajo Nation encompasses more than 27,000 square miles within Utah, New Mexico and Arizona in the Four Corners area. The unique geology of the region makes the Navajo Nation rich in uranium, a radioactive ore in high demand after the development of atomic power and weapons at the close of World War II. Approximately four million tons of uranium ore were extracted during mining operations within the Navajo Nation from 1944 to 1986. The federal government, through the Atomic Energy Commission (AEC), was the sole purchaser of uranium until 1966, when commercial sales of uranium began. The AEC continued to purchase ore until 1970. The last uranium mine on the Navajo Nation shut down in 1986. Many Navajo people worked in and near the mines, often living and raising families in close proximity to the mines and mills.
Since 2008, a number of federal agencies including EPA, the Department of Energy, the Bureau of Indian Affairs, the Department of the Interior, the Nuclear Regulatory Commission and the Indian Health Service have been collaborating to address uranium contamination on the Navajo Nation. The federal government has invested more than $100 million to address abandoned uranium mines on Navajo lands. EPA has remediated 34 homes, provided safe drinking water to 1,825 families, conducted field screening at 521 mines, compiled a list of 46 “priority mines” for cleanup and performed stabilization or cleanup work at nine mines. This settlement agreement resolves the claims of the Navajo Nation pertaining to costs of evaluations at 16 of the 46 priority mines for which no viable responsible private party has been identified.
In April 2014, the Justice Department and EPA announced in a separate matter that approximately $985 million of a multi-billion dollar settlement of litigation against subsidiaries of Anadarko Petroleum Corp. will be paid to EPA to fund the clean-up of approximately 50 abandoned uranium mines in and around the Navajo Nation, where radioactive waste remains from Kerr-McGee mining operations.
Two Miami Area Tax Return Preparers Indicted for Aiding and Assisting in Preparation of False Tax ReturnsRead the Press Release
Two federal indictments were unsealed yesterday in the Southern District of Florida charging two Miami area tax return preparers with aiding and assisting in the preparation of false federal income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
On April 14, Noe Mompoint, of Southwest Ranches, Florida, was charged with 14 counts of aiding and assisting in the preparation of false federal income tax returns. Lucvens Francois, of Aventura, Florida, was charged in a separate indictment with 19 counts of aiding and assisting in the preparation of false federal income tax returns. Both defendants surrendered yesterday and had their initial appearances in court.
According to the allegations in the indictments, Mompoint owned and operated the Tax Resource Center, a tax preparation business located in Miami. Mompoint filed tax returns for clients that reported fraudulent first-time homebuyer credits. Francois owned and operated a branch office of the Tax Resource Center, also located in the Miami area. Francois filed tax returns for clients that reported fraudulent first-time homebuyer credits and returns that claimed a variety of other false items, including false education credits, false business losses and false itemized deductions.
If convicted, Mompoint and Francois each face a statutory maximum sentence of three years in prison and a fine of $250,000 on each count.
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.
Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Charles M. Edgar Jr. and Jason H. Poole of the Tax Division, who are prosecuting the case.
Natural Gas Processor Merit Energy Agrees to Comprehensive Program to Reduce Harmful Air Pollution from Leaking Equipment to Resolve Clean Air Act Violations in MichiganRead the Press Release
Merit Energy Company, a Texas-based oil and natural gas exploration and production company, has agreed to pay an $885,000 civil penalty and to improve leak detection and repair work practices to settle alleged violations of the Clean Air Act at its natural gas processing facility in Kalkaska, Michigan, the Department of Justice and the Environmental Protection Agency (EPA) announced today. Emissions of volatile organic compounds (VOCs) from leaking equipment impact the environment and may cause serious health effects. VOCs are a key component in the formation of smog or ground-level ozone, a pollutant that irritates the lungs, exacerbates diseases such as asthma and can increase susceptibility to respiratory illnesses, such as pneumonia and bronchitis.
“This comprehensive compliance program continues our efforts to control fugitive emissions and will require Merit Energy to upgrade its monitoring and maintenance practices to help prevent future violations,” said Assistant Attorney General John C. Cruden for the Department of Justice’s Environment and Natural Resources Division. “Compliance with the clean air laws is essential to maintaining safe, responsible, and reliable sources of domestic energy.”
"People in northwest Michigan will breathe cleaner air as a result of this settlement," said EPA Regional Administrator Susan Hedman. "Merit Energy will be making changes at the company's natural gas processing facility in Kalkaska that will prevent emissions of pollutants that pose risks for people with asthma and other respiratory diseases.”
“My office is pleased with this settlement. Prevention or immediate detection and repair are critical when protecting health and the environment,” said U.S. Attorney Patrick Miles Jr. for the Western District of Michigan. “We and the EPA are vigilantly ensuring compliance with the Clean Air Act and other environmental laws.”
In addition to paying a penalty, Merit Energy will implement a comprehensive leak detection and repair (LDAR) program to reduce emissions of VOCs from leaking equipment such as valves and pumps. These emissions, known as “fugitive” emissions because they are not discharged from a stack but rather leak directly from equipment, are generally controlled through work practices, like monitoring and repairing leaks. The settlement requires Merit Energy to implement enhanced work practices, including more frequent leak monitoring, better repair practices and innovative new efforts designed to prevent leaks. In addition, the enhanced LDAR program requires Merit Energy to replace valves with new “low emissions” valves or valve packing material, designed to significantly reduce the likelihood of future leaks of VOCs. This settlement imposes the first enhanced LDAR program at a natural gas processing facility.
According to the complaint, filed simultaneously with the settlement today in the Western District of Michigan, Merit Energy allegedly violated Clean Air Act requirements to monitor and repair leaking equipment and demonstrate compliance with regulations applicable to onshore natural gas processing plants.
The consent decree is subject to a 30 day comment period and final approval by the court. A copy of the consent decree is available on the Department of Justice web site at www.justice.gov/enrd/Consent_Decrees.html.
Ken Nangauta Sentenced to 12 Months PrisonRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that KEN NANGAUTA, age 51, of Merizo, was sentenced today before Senior Judge Alex R. Munson, in the District Court of Guam, to 37 months imprisonment with credit for time served, three years supervised release and 200 hours community service.
Defendant NANGAUTA pled guilty on June 2, 2014, to Conspiracy to Distribute Methamphetamine. NANGAUTA received two packages containing ice from Las Vegas, Nevada, with the combined weight of 151 grams. He also sent money to Eder Cortez-Zelaya in Las Vegas, Nevada, to pay for the ice on behalf of his co-defendant David Quinata.
U.S. Attorney Limtiaco stated, “Our community is not immune from the poison of methamphetamine. This case illustrates the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam. This conviction resulted from the concerted efforts of law enforcement partners in the OCDETF investigation, a focused multi- agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.”
This OCDETF investigation involved federal agents and local law enforcement officers of the U.S. Postal Inspection Service (USPIS), Drug Enforcement Administration (DEA), U.S. Department of Homeland Security Investigations (HSI), Guam Police Department (GPD), Guam Customs and Quarantine Agency (GCQA), Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), U.S. National Oceanic Atmosphere Administration (NOAA), and U.S. Coast Guard Criminal Investigative Service (CGIS). The case was prosecuted by Assistant U.S. Attorney Clyde Lemons, Jr.
Justice Department Announces $20 Million in Funding to Support Body-Worn Camera Pilot ProgramRead the Press Release
The Department of Justice today announced a $20 million Body-Worn Camera (BWC) Pilot Partnership Program to respond to the immediate needs of local and tribal law enforcement organizations. The investment includes $17 million in competitive grants for the purchase of body-worn cameras, $2 million for training and technical assistance and $1 million for the development of evaluation tools to study best practices. The pilot program is part of President Obama’s proposal to invest $75 million over three years to purchase 50,000 body-worn cameras for law enforcement agencies.
“This body-worn camera pilot program is a vital part of the Justice Department’s comprehensive efforts to equip law enforcement agencies throughout the country with the tools, support, and training they need to tackle the 21st century challenges we face,” said Attorney General Loretta E. Lynch. “Body-worn cameras hold tremendous promise for enhancing transparency, promoting accountability, and advancing public safety for law enforcement officers and the communities they serve.”
Administered by the Bureau of Justice Assistance (BJA) under the Justice Department’s Office of Justice Programs (OJP), the BWC pilot program will provide support to help law enforcement agencies develop, implement and evaluate body-worn camera programs across the United States.
“Body-worn camera technology is a valuable tool for improving police-citizen relationships,” said Director Denise O’Donnell of the Bureau of Justice Assistance. “BJA is committed to helping law enforcement agencies identify the safest and most effective methods for deploying this technology and addressing factors such as privacy, archiving and legal regulations surrounding its use. BJA stands by to guide agencies through what can be a complex process toward more successful adoption of the technology.”
The Justice Department expects to provide 50 awards to law enforcement agencies, with about one-third of the grants directed toward smaller law enforcement agencies. The grants, which require a 50/50 in-kind or cash match, can be used to purchase equipment but applicants must establish a strong plan for implementation of body-worn cameras and a robust training policy before purchasing cameras. The long term costs associated with storing this information will be the financial responsibility of each local agency.
Another $2 million will fund a national BWC Training and Technical Assistance provider through a competitive process, to assist agencies developing and enhancing their BWC programs. This training and technical assistance will provide support to law enforcement agencies to support successful implementation of their body-worn camera programs.
OJP’s Bureau of Justice Statistics (BJS) will receive $1 million of the funds to collect data on body-worn camera usage through surveys of law enforcement agencies. BJS will also design data collection forms that can be used in future surveys of prosecutors and public defenders to measure how body-worn camera footage is being used by the courts in criminal cases.
BJA will launch a BWC Implementation Toolkit in May, designed as an online resource for stakeholders. The toolkit will focus on implementation requirements, retention issues, policy concerns, interests of prosecutors, victim and privacy advocates’ concerns, along with community engagement and funding considerations.
For additional information about the BWC Pilot Implementation Program, visit this website: http://go.usa.gov/3BtMW.
Body-Worn Camera Fact Sheet
Joe Davy Benavente, Jr. Sentenced TodayRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that JOE DAVY BENAVENTE, JR., age 30, of Merizo, was sentenced today before Senior Judge Alex R. Munson, in the District Court of Guam, to six months home confinement with credit for time served, four years supervised release, 200 hours community service and a drug rehabilitation program approved by the U.S. Probation Office.
Defendant BENAVENTE was charged with and pled guilty to conspiracy to distribute more than 5 grams of methamphetamine (ice). BENAVENTE sent money on behalf of co-defendant David Quinata to Eder-Cortez Zelaya in Las Vegas to pay for ice.
U.S. Attorney Limtiaco stated, “Our community is not immune from the poison of methamphetamine. This case illustrates the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam. This conviction resulted from the concerted efforts of law enforcement partners in the OCDETF investigation, a focused multi- agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.”
This OCDETF investigation involved federal agents and local law enforcement officers of the U.S. Postal Inspection Service (USPIS), Drug Enforcement Administration (DEA), U.S. Department of Homeland Security Investigations (HSI), Guam Police Department (GPD), Guam Customs and Quarantine Agency (GCQA), Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), U.S. National Oceanic Atmosphere Administration (NOAA), and U.S. Coast Guard Criminal Investigative Service (CGIS). The case was prosecuted by Assistant U.S. Attorney Clyde Lemons, Jr.
International Competition Network Adopts Guidance on Investigative Process to Enhance Procedural Fairness in Competition Cases and Cooperation in International Merger EnforcementRead the Press Release
At its annual meeting, the International Competition Network (ICN) adopted guidance on investigative process in competition cases and approved new work on international merger enforcement cooperation, legal theories in tying and bundling investigations and interaction with government procurement agencies, the Department of Justice’s Antitrust Division announced today.
The 14th annual ICN conference, hosted by the Australian Competition and Consumer Commission (ACCC), was held from April 28-May 1, 2015, in Sydney, Australia. Over 500 delegates participated, representing more than 70 antitrust agencies from around the world, and included competition experts from international organizations and the legal, business, consumer and academic communities. Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division and Federal Trade Commission Chairwoman Edith Ramirez led the U.S. delegation. The conference showcased the achievements of ICN working groups on cartels, competition agency effectiveness, unilateral conduct, mergers and competition advocacy.
“ICN is an important forum for collaboration with our counterpart agencies around the world,” said Assistant Attorney General Baer. “Cooperation with other jurisdictions makes our own enforcement stronger, particularly in a globalized economy where the number of companies operating in multiple jurisdictions continues to rise and there is a greater risk that anticompetitive transactions or conduct in one jurisdiction will harm consumers in other parts of the world.”
Assistant Attorney General Baer spoke on a panel about international cooperation in cartel enforcement. The Cartel Working Group, co-chaired by the Antitrust Division, showcased new work on cooperation with procurement agencies and how to build constructive relationships to ensure free and fair competition in public bidding procedures.
“The ICN’s guidance on investigative process is an important step as agencies strive to be effective in promoting competition and protecting consumers,” said Chairwoman Ramirez. “Good investigative process leads to better agency decision making, protects the procedural rights of parties and bolsters the legitimacy of competition enforcement.”
The Agency Effectiveness Working Group, co-chaired by the FTC, addresses competition agency strategy, operations and investigative procedures. The working group developed ICN guidance on investigative process to promote fair and informed enforcement across all institutional frameworks and all competition enforcement areas. The guidance is based on a broad consensus among ICN members regarding the importance of transparency, engagement between agencies and parties and the protection of confidential information during investigations. It represents the most comprehensive agency-led effort to articulate guidance on investigative principles and practices that promote procedural fairness and effective enforcement. The working group also presented new on-line training modules on effective interviewing during the course of a competition investigation.
Chairwoman Ramirez participated in the Unilateral Conduct Working Group’s plenary discussion of unilateral conduct in the new economy and optimal enforcement to promote innovation. The working group promotes convergence and sound enforcement of laws governing conduct by firms with substantial market power. This year, it presented a new workbook chapter on tying and bundling as part of a practical guide to the investigation of various types of unilateral conduct.
The Merger Working Group presented a practical guide to international enforcement cooperation. It is intended to promote interagency cooperation, including for parties and third parties that seek to facilitate cooperation. The guide identifies the benefits and basic principles of enforcement cooperation such as consistent outcomes, efficient investigations, flexibility and independent agency decision making. It then highlights cooperation practices on timing alignment, information sharing, analysis and remedies. This initiative furthers the working group’s mission to promote the adoption of best practices in the design and operation of merger review laws.
To promote implementation of the ICN Recommended Practices on Competition Assessment adopted at the 2014 ICN Annual Conference, the Advocacy Working Group presented a framework of examples of the roles that competition agencies play in evaluating the effects on competition of a proposed or existing law or regulation. The working group also presented a report on developing an effective competition culture.
In 2014-2015, the ACCC led a special project devoted to the treatment of on-line vertical restraints under competition law and produced a comparative report, based on responses to a survey from 47 ICN member agencies. The report was presented in a plenary session and discussed at the conference.
The ICN was created in October 2001, when the Department of Justice and the FTC joined antitrust agencies from 13 other jurisdictions to increase understanding of competition policy and promote convergence toward best practices around the world. The ICN now comprises 132 member agencies from 119 jurisdictions.
More resources are available on the ICN website (link is external).
Former Puerto Rico Police Officers Sentenced for Civil Rights and Obstruction of Justice Violations Related to Fatal BeatingRead the Press Release
Former Puerto Rico Police Officers Jimmy Rodriguez Vega and David Colon Martinez were sentenced today for civil rights and obstruction of justice violations related to the fatal beating of Jose Luis Irizarry Perez, 19, announced Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division, U.S. Attorney Rosa Emilia Rodriguez-Velez of the District of Puerto Rico and Special Agent in Charge Carlos Cases of the FBI San Juan Field Office. Rodriguez Vega was sentenced to serve 33 months months in prison for violating Irizarry Perez’s civil rights by striking him with a police baton during the incident, and Colon Martinez was sentenced to serve 24 months for making false statements to a Special Agent of the Federal Bureau of Investigation (FBI) and to the federal grand jury during the federal civil rights investigation.
With the issuance of today’s sentences, all six former Puerto Rico police officers who pled guilty for their roles in the beating and obstruction of the subsequent civil rights investigation have been sentenced. According to documents filed in connection with the underlying guilty pleas, Rodriguez Vega and former Puerto Rico Police Sergeant Erick Rivera Nazario violated the constitutional rights of Irizarry Perez by striking him with their police batons while Colon Martinez physically restrained Irizarry Perez during an election evening celebration at the Las Colinas housing development in Yauco, Puerto Rico, on Nov. 5, 2008. As part of his guilty plea, Rodriguez Vega admitted that after Rivera Nazario struck Irizarry Perez, while he was restrained and not posing a threat to any officer, Rodriguez Vega swung his own police baton as if it were a baseball bat into the victim’s forehead. In conjunction with his guilty plea, Colon Martinez admitted that he falsely told the FBI and the grand jury that he did not see anyone else hit Irizarry Perez, whereas in truth he observed Rodriguez Vega and Rivera Nazario swing their batons into Irizarry Perez’s head and upper body, after which the victim collapsed to the ground.
U.S. District Court Judge Juan M. Perez Gimenez issued the sentence, which will be followed by three years of supervised release. During the three-year term, the defendants will be under federal supervision, and risk additional prison time should they violate any terms of their supervised release.
“The former police officers convicted for their roles in the fatal beating and obstruction of the subsequent investigation violated their sworn oaths to the young victim, his family, and the public at large,” said Principal Deputy Assistant Attorney General Gupta. “Unfortunately, egregious civil rights violations by a few individuals, such as in this case, damage the public’s trust in law enforcement. That’s why the department will steadfastly continue to investigate and prosecute these matters, but also work with law enforcement to rebuild that trust and ensure all individuals’ civil rights are protected under the law.”
“Today’s sentencing brings a measure of justice to the family of Jose Luis Irizarry Perez,” said U.S. Attorney Rodriguez-Vélez. “The U.S. Attorney’s Office reaffirms its commitment to vigorously prosecute those who abuse their power and official positions at the expense of constitutionally guaranteed civil rights.”
This case was investigated by the FBI’s San Juan Division and is being prosecuted by Senior Litigation Counsel Gerard Hogan and Trial Attorneys Shan Patel and Olimpia E. Michel of the Civil Rights Division and Assistant U.S. Attorney Jose A. Contreras of the District of Puerto Rico.
CCTV America Interviews Deputy Director on Foreign Terrorist FightersRead the Press Release
On April 20th, CCTV America correspondent Jessica Stone interviewed Interpol Washington Deputy Director Geoff Shank on the U.S. National Central Bureau's efforts to interdict foreign terrorist fighters through Interpol's Foreign Terrorist Fighter (FTF) program. The program, announced in September 2014, leverages the unique resources Interpol utilizes to combat transnational crime, including its secure, encrypted communications system, its criminal and analytical databases and its system of advisory notices.
Watch the full interview at http://www.cctv-america.com/2015/04/20/international-police-work-to-stop-foreign-fighters for more details and success stories of the program and for an insider's look at the Interpol Washington office.
BNP Paribas Sentenced for Conspiring to Violate the International Emergency Economic Powers Act and the Trading with the Enemy ActRead the Press Release
BNP Paribas S.A. (BNPP), a global financial institution headquartered in Paris, was sentenced today for conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) by processing billions of dollars of transactions through the U.S. financial system on behalf of Sudanese, Iranian and Cuban entities subject to U.S. economic sanctions. BNPP was sentenced to a five-year term of probation, and ordered to forfeit $8,833,600,000 to the United States and to pay a $140,000,000 fine. Today’s sentencing is the first time a financial institution has been convicted and sentenced for violations of U.S. economic sanctions, and the total financial penalty—including the forfeiture and criminal fine—is the largest financial penalty ever imposed in a criminal case.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara of the Southern District of New York, Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement. U.S. District Court Judge Lorna G. Schofield of the Southern District of New York imposed the sentence.
“BNP Paribas flouted U.S. sanctions laws to an unprecedented extreme, concealed its tracks, and then chose not to fully cooperate with U.S. law enforcement, leading to a criminal guilty plea and nearly $9 billion penalty” said Assistant Attorney General Caldwell. “BNPP deliberately disregarded the law and provided rogue nations, and Sudan in particular, with vital access to the global financial system, helping that country’s lawless government to harbor and support terrorists and to persecute its own people. Today’s sentence demonstrates that financial institutions will be punished severely but appropriately for violating sanctions laws and risking our national security interests.”
“BNPP, the world's fourth largest bank, has now been sentenced to pay a record penalty of almost $9 billion for sanctions violations that unlawfully opened the U.S. financial markets to Sudan, Iran, and Cuba,” said U.S. Attorney Bharara. “BNPP provided access to billions of dollars to these sanctioned countries, and did so deliberately and secretly, in ways designed to evade detection by the U.S. authorities. The sentence imposed today is appropriate for BNPP’s years-long and wide-ranging criminal conduct.”
“The sentencing of BNP Paribas Bank and the $9 Billion monetary penalty should sound the alarm to international financial institutions thinking of perpetrating these crimes,” said Chief Weber. “The ability of IRS-CI and our partners to expose blatant violations of U.S. embargos and sanctions has changed the way financial matters are handled worldwide. We will continue to use our financial expertise to uncover these types of violations, as well as methodical and deliberate actions to conceal prohibited transactions from U.S. regulators and law enforcement.”
In connection with its guilty plea on July 9, 2014, BNPP admitted that from at least 2004 through 2012, it knowingly and willfully moved over $8.8 billion through the U.S. financial system on behalf of Sudanese, Iranian and Cuban sanctioned entities, in violation of U.S. economic sanctions. The majority of illegal payments were made on behalf of sanctioned entities in Sudan, which was subject to U.S. embargo based on the Sudanese government’s role in facilitating terrorism and committing human rights abuses. BNPP processed approximately $6.4 billion through the United States on behalf of Sudanese sanctioned entities from July 2006 through June 2007, including approximately $4 billion on behalf of a financial institution owned by the government of Sudan, even as internal emails showed BNPP employees expressing concern about the bank’s assisting the Sudanese government in light of its role in supporting international terrorism and committing human rights abuses during the same time period. Indeed, in March 2007, a senior compliance officer at BNPP wrote to other high-level BNPP compliance and legal employees reminding them that certain Sudanese banks with which BNPP dealt “play a pivotal part in the support of the Sudanese government which . . . has hosted Osama Bin Laden and refuses the United Nations intervention in Darfur.”
Similarly, from October 2004 through early 2010, BNPP knowingly and willfully processed approximately $1.74 billion on behalf of Cuban sanctioned entities. BNPP admitted that it continued to do U.S. dollar business with Cuba long after it was clear that such business was illegal. BNPP further admitted that its conduct with regard to the Cuban embargo was both “cavalier” and “criminal.”
BNPP also engaged in more than $650 million of transactions involving entities tied to Iran, and this conduct continued into 2012—nearly two years after the bank had commenced an internal investigation into its sanctions compliance and pledged to cooperate with the government. The illicit Iranian transactions included transactions for a petroleum company based in Dubai that was effectively a front for an Iranian petroleum company and an Iranian oil company.
In accepting BNPP’s guilty plea, Judge Schofield stated that BNPP’s actions “not only flouted U.S. foreign policy but also provided support to governments that threaten both our regional and national security and, in the case of Sudan, a government that has committed flagrant human rights abuses and has known links to terrorism.” Judge Schofield further stated that the forfeiture of over $8 billion will “surely have a deterrent effect on others that may be tempted to engage in similar conduct, all of whom should be aware that no financial institution is immune from the rule of law.”
The Justice Department is exploring ways to use the forfeited funds to compensate individuals who may have been harmed by the sanctioned regimes of Sudan, Iran and Cuba. As a preliminary step in this process, the Justice Department is inviting such individuals or their representatives to provide information describing the nature and value of the harm they suffered. Beginning today (May 1, 2015), interested persons can learn more about this process and submit their information at www.usvbnpp.com, or call 888-272-5632 (within North America) or 317-324-0382 (internationally).
In addition to its federal criminal conviction, BNPP pleaded guilty in New York State Supreme Court to falsifying business records and conspiring to falsify business records. BNPP also agreed to a cease and desist order and to pay a civil monetary penalty of $508 million to the Board of Governors of the Federal Reserve System. The New York State Department of Financial Services announced that BNPP agreed to, among other things, terminate or separate from the bank 13 employees, including the Group Chief Operating Officer and other senior executives; suspend U.S. dollar clearing operations through its New York Branch and other affiliates for one year for business lines on which the misconduct centered; extend for two years a monitorship put in place in 2013; and pay a monetary penalty of $2.24 billion. In satisfying its criminal forfeiture penalty, BNPP will receive credit for payments it made in connection with its resolution of these related state and regulatory matters. The Treasury Department’s Office of Foreign Assets Control also levied a fine of $963 million, which will be satisfied by payments made to the Justice Department.
This case was investigated by the IRS-CI’s Washington Field Office and FBI’s New York Field Office. This case was prosecuted by Deputy Chief Craig Timm and Trial Attorney Jennifer E. Ambuehl of the Criminal Division’s Asset Forfeiture and Money Laundering Section and Assistant U.S. Attorneys Andrew D. Goldstein, Martin S. Bell, Christine I. Magdo and Micah W.J. Smith of the Southern District of New York.
The New York County District Attorney’s Office conducted its own investigation alongside the Justice Department in this case. The Justice Department expressed its gratitude to the Board of Governors of the Federal Reserve, the Federal Reserve Bank of New York, the New York State Department of Financial Services and the Treasury Department’s Office of Foreign Assets Control for their assistance with this matter.
Alleged Leader of the Lorenzana Drug Trafficking Organization Extradited to the United StatesRead the Press Release
An alleged leader of an international drug trafficking organization based in Guatemala was extradited to the United States yesterday to face international narcotics trafficking charges in the District of Columbia, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.
Eliu Elixander Lorenzana-Cordon, 43, was arrested in Guatemala on Nov. 8, 2011, after being indicted for conspiracy to import cocaine into the United States, and has been detained since that time pending extradition. He arrived in the United States yesterday and was arraigned today before U.S. Magistrate Judge Alan Kay of the District of Columbia.
According to allegations contained in the indictment, Lorenzana-Cordon is a leader of an international drug trafficking organization that includes his father and several other family members. Between 1996 and 2012, the organization allegedly received and stored multi-ton quantities of cocaine from Colombia for later importation into Mexico and the United States.
These cocaine shipments, worth millions of dollars, were allegedly transported to El Salvador on “go-fast” boats, and then smuggled into Guatemala by land and air. The cocaine was then inventoried and stored for later export to Mexico and eventually the United States.
On April 27, 2010, the Department of Treasury’s Office of Foreign Asset Control designated Lorenzana-Cordon as a Specially Designated Narcotics Trafficker pursuant to the Foreign Narcotics Kingpin Designation Act due to his significant role in international narcotics trafficking and his ties to the Sinaloa Cartel.
The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
Lorenzana-Cordon’s brother, Waldemar Lorenzana-Cordon, was extradited to the United States on Nov. 13, 2014, and is currently awaiting trial. Lorenzana-Cordon’s father, Waldemar Lorenzana-Lima, pleaded guilty on Aug. 18, 2014, to conspiracy to import over 450 kilograms of cocaine into the United States, and is currently awaiting sentencing. All three defendants were charged in the same indictment.
The investigation was led by the DEA’s 959/Bilateral Investigations Unit and Guatemala City Country Office, and was part of the Organized Crime Drug Enforcement Task Force. The case is being prosecuted by the Criminal Division’s Narcotic and Dangerous Drug Section. The Criminal Division’s Office of International Affairs provided significant assistance in the extradition. The department appreciates the assistance provided by the government of Guatemala.
Thirteen Current and Former Law Enforcement Officers and Two Others Indicted for their Alleged Participation in a Drug Trafficking ConspiracyRead the Press Release
Thirteen current and former law enforcement officers and two other individuals have been indicted and arrested for allegedly protecting narcotics shipments and cash proceeds during transit along the east coast for what they believed was a large-scale drug trafficking organization that was actually an undercover operation by the FBI.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Thomas G. Walker of the Eastern District of North Carolina and Special Agent in Charge John A. Strong of the FBI’s Charlotte, North Carolina, Division made the announcement.
“Corruption in local government – especially involving law enforcement – threatens the social compact that binds our communities together,” said Assistant Attorney General Caldwell. “When the officer with a gun and a badge is no different from the trafficker peddling drugs in the street, we all suffer. That is why the Criminal Division of the Department of Justice and our law enforcement partners in North Carolina and throughout the country are determined to root out corruption, wherever and in whatever form it may be found.”
“The actions by these individuals are particularly troubling due to their current and past affiliation with law enforcement,” said U.S. Attorney Walker. “Their alleged conduct was reprehensible and my office will not tolerate this kind of corruption in our district. I am grateful for the outstanding work of the FBI Special Agents who investigated this case.”
“They vowed to protect and serve, but instead these deputies and correctional officers sold their badges and used their law enforcement positions to line their own pockets,” said Special Agent in Charge Strong. “Public corruption at any level is the number one criminal priority of the FBI and we will work aggressively to protect the public trust.”
The following individuals were indicted in the Eastern District of North Carolina and arrested today in a coordinated operation by the FBI:
-
Lann Tjuan Clanton, 36, a correctional officer with the Virginia Department of Corrections;
-
Ikeisha Jacobs, 32, a deputy with the Northampton County Sheriff’s Office;
-
Jason Boone, 29, a deputy with the Northampton County Sheriff’s Office;
-
Wardie Vincent Jr., 35, formerly of the Northampton County Sheriff’s Office;
-
Adrienne Moody, 39, a correctional officer with the North Carolina Department of Public Safety;
-
Cory Jackson, 43, formerly of the Northampton County Sheriff’s Office;
-
Jimmy Pair Jr., 48, a deputy with the Northampton County Sheriff’s Office;
-
Curtis Boone, 31, a deputy with the Northampton County Sheriff’s Office;
-
Antonio Tillmon, 31, a police officer with the Windsor City Police Department;
-
Alaina Kamling, 27, a correctional officer with the North Carolina Department of Public Safety;
-
Kavon Phillips, 25, a correctional officer with the North Carolina Department of Public Safety;
-
Crystal Pierce, 31, of Raleigh, North Carolina;
-
Alphonso Ponton, 42, a correctional officer with the Virginia Department of Corrections;
-
Thomas Jefferson Allen II, 37, a deputy with the Northampton County Sheriff’s Office; and
-
Tosha Dailey, 31, a 911 dispatch operator for Northampton County.
All 15 defendants are charged with conspiring to distribute controlled substances and conspiring to use and carry firearms during and in relation to drug trafficking offenses. Other charges against certain defendants include attempted extortion, attempted possession with intent to distribute controlled substances, money laundering, federal programs bribery and use and carry of firearms during and in relation to crimes of violence and drug trafficking offenses.
The charges contained in the indictment are merely accusations. The defendants are presumed innocent unless and until proven guilty.
The case is being investigated by the FBI’s Charlotte Division, Raleigh Resident Agency and the North Carolina Department of Public Safety, with assistance from the Halifax County Sheriff’s Office. The case is being prosecuted by Trial Attorneys Lauren Bell and Menaka Kalaskar of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Brian S. Meyers of the Eastern District of North Carolina.
-
Statement by Acting Assistant Attorney General Leslie Overton on Court's Remedy to Address American Express's Antitrust ViolationRead the Press Release
Acting Assistant Attorney General Leslie Overton of the Department of Justice’s Antitrust Division provided the following statement today after the U.S. District Court of the Eastern District of New York issued an order regarding a remedy to address American Express’s illegal conduct:
“We are pleased that the court has ordered American Express to eliminate its illegal anti-steering rules. These rules have stifled competition among credit card networks by blocking merchants from encouraging their customers to use particular credit cards. The court’s remedy will benefit merchants, who pay more than $50 billion in credit card ‘swipe fees’ annually, as well as the consumers who ultimately bear these costs. Merchants’ ability to encourage the use of particular credit card networks will incentivize American Express and its competitors to compete to earn a greater share of a merchant’s business. The court’s order reinforces the victory the department has won for consumers.”
The court’s order prohibits American Express from adopting rules or entering contracts that block merchants from encouraging their customers to use a particular credit card. Under the order, merchants must be permitted to: offer discounts for the use of particular cards; express a preference for particular cards; disclose to customers the cost merchants incur when the customer uses particular credit cards; and engage in other conduct to encourage use of favored credit cards. The order also requires American Express to: repeal any rules that block merchant steering; notify merchants of their freedom to engage in steering activities; and adopt compliance measures to ensure that its employees understand that they cannot continue to block steering by merchants that accept American Express cards.
The U.S. Department of Justice and 17 state attorneys general sued American Express, Visa Inc. and MasterCard International Inc., in 2010 to eliminate restrictions that the three credit card networks imposed on merchants. The civil case, brought under Section 1 of the Sherman Antitrust Act, sought to end the violation and to restore competition.
Settlements with Visa and MasterCard were filed at the same time the case against American Express was begun; the settlements, like the court’s order concerning American Express’s conduct, prohibit Visa and MasterCard from continuing their rules and practices that had obstructed competition. The court approved the settlements on July 20, 2011, and they applied immediately to Visa and MasterCard. American Express was not a party to the settlements, and the litigation against American Express continued.
Over the course of a seven week trial during the summer of 2014, the department presented evidence that these restrictions obstruct merchants from using competition to try to keep credit card fees from increasing.
On Feb. 19, 2015, Judge Nicholas G. Garaufis of the Eastern District of New York issued a decision finding that American Express violated Section 1 of the Sherman Act. The court also entered a scheduling order instructing the parties to submit, within 30 days, a joint proposed remedial order. Today’s order follows the parties’ briefing concerning the proposed remedy.
Amex Remedy Opinion
Amex Injunction Order
Six New Members Appointed to Attorney General’s Advisory CommitteeRead the Press Release
Attorney General Loretta E. Lynch announced today the appointment of six new members to the Attorney General’s Advisory Committee. The following appointments became effective April 29, 2015:
-
U.S. Attorney Deirdre Daly for the District of Connecticut;
-
U.S. Attorney Steven Dettelbach for the Northern District of Ohio;
-
U.S. Attorney Conner Eldridge for the Western District of Arkansas;
-
U.S. Attorney Paul Fishman for the District of New Jersey;
-
U.S. Attorney Booth Goodwin II for the Southern District of West Virginia; and
-
U.S. Attorney Kenneth Polite for the Eastern District of Louisiana.
“The distinguished women and men who serve on the Attorney General’s Advisory Committee provide invaluable advice and wise counsel that help shape the Justice Department’s approach to combating crime, violence, and injustice in every community across the country,” said Attorney General Lynch. “They help introduce new ideas, formulate innovative policies, and design fresh strategies. They foster collaboration across our U.S. Attorney’s Offices and with Main Justice. And, in all of their work, they seek to strengthen and improve law enforcement efforts at every level. As a former chair of the AGAC, I am proud to welcome six outstanding new members to the Committee, and I look forward to all that we will achieve, with their help, in the days ahead.”
Attorney General Lynch also thanked U.S. Attorney Ronald Sharpe for the District of the Virgin Islands for serving on the Attorney General’s Advisory Committee for the past two years.
A brief bio on each new appointee is below:
Deirdre Daly was presidentially appointed and sworn in as the U.S. Attorney for the District of Connecticut on May 28, 2014. Daly previously served as the U.S. Attorney in an acting or interim capacity since May 14, 2013. Between July 2010 and May 2013, she was the First Assistant U.S. Attorney during which time she assisted in the oversight of both the Criminal and Civil Divisions. From 1985 to 1997, Daly was an Assistant U.S. Attorney in the Southern District of New York, where she prosecuted a wide range of cases from racketeering and murder to corruption and fraud and later served as the Assistant-In-Charge of White Plains Office for three years. After leaving the Justice Department, Daly was a partner at Daly & Pavlis LLC, a Connecticut law firm with a practice focused on corporate and commercial litigation, white-collar criminal investigations, SEC enforcement actions and corporate internal investigations and monitoring.
Steven Dettelbach was presidentially appointed and sworn in as the U.S. Attorney for the Northern District of Ohio in September 2009. Dettelbach previously served for over 12 years as a career federal prosecutor. During those years, he worked at the Department of Justice, Civil Rights Division, Criminal Section, U.S. Attorneys Offices in Maryland and Washington, D.C. and from 2003 to 2006 in the Northern District of Ohio, as a member of the Organized Crime and Corruption Strike Force. Dettelbach also was detailed to serve as Counsel for the U.S. Senate Committee on the Judiciary from 2001 to 2003. Formerly, Dettelbach was a partner at the law firm of Baker & Hostetler LLP.
Conner Eldridge was presidentially appointed and sworn in as the U.S. Attorney for the Western District of Arkansas on December 21, 2010. Eldridge is the youngest U.S. Attorney in the country. Eldridge serves as co-chair of the Domestic Terrorism Executive Committee, which is composed of twenty law enforcement agencies and Department of Justice components and works to increase collaboration in addressing the threat of Domestic Terrorism. While serving as U.S. Attorney, Eldridge has tried five cases to jury verdict. He previously served as a Deputy Prosecuting Attorney in Arkadelphia (Clark County), Arkansas, as Counsel and, later, Chief Executive Officer of Summit Bank, a community bank then serving central and southwest Arkansas, also in Arkadelphia, as a clerk to federal District Judge G. Thomas Eisele and as a legislative assistant to former U.S. Senator Blanche Lincoln and former U.S. Congressman Marion Berry, both of Arkansas.
Paul Fishman was presidentially appointed and sworn in as the U.S. Attorney for the District of New Jersey on October 14, 2009. Fishman previously served as a member of the Attorney General's Advisory Committee of U.S. Attorney's (AGAC) from 2009-2013. He served as Vice-Chair of the AGAC from 2009-2011 and Chair from 2011-2012. After graduating from law school, he clerked for the Honorable Edward R. Becker of the U.S. Court of Appeals for the Third Circuit. He was an Assistant U.S. Attorney from 1983 to 1994. From 1994 to 1997, he was a senior adviser to the Attorney General and Deputy Attorney General of the U.S. on a variety of law enforcement, policy, legislative, national security and international matters, as well as on specific investigations and prosecutions. In addition to his public service, from 1998 - 2009 Fishman was a partner in the law firm of Friedman Kaplan Seiler & Adelman.
Booth Goodwin II was presidentially appointed and sworn in as U.S. Attorney for the Southern District of West Virginia on May 27, 2010. From January 2001 until he was sworn in as U.S. Attorney, Goodwin was an Assistant U.S. Attorney for the Southern District of West Virginia. Prior to that, Goodwin practiced for five years with the Charleston law firm of Goodwin & Goodwin, LLP where he engaged in commercial and personal injury litigation, closed multi-million dollar bond transactions, filed reports with the U.S. Securities and Exchange Commission and handled numerous commercial and residential real estate transactions.
Kenneth Polite was presidentially appointed and sworn in as U.S. Attorney for the Eastern District of Louisiana on September 20, 2013. Polite currently serves as a member of the AGAC's Violent and Organized Crime Subcommittee and Smart on Crime Working Group. Prior to becoming U.S. Attorney, Polite was a shareholder at Liskow & Lewis, where he headed the white collar criminal defense group and served as the Firm's hiring partner. From 2007 to 2010, Polite served as an Assistant U.S. Attorney for the Southern District of New York. There, he prosecuted a wide range of federal criminal offenses, including organized crime, public corruption, narcotics and firearms trafficking, money laundering and identity theft. Polite was an associate at Skadden, Arps, Slate, Meagher & Flom LLP, first in the Delaware office's corporate litigation practice from 2000 to 2001, and later, in the New York office's white collar criminal defense group from 2002 to 2006.
The Attorney General’s Advisory Committee will now include the following individuals:
-
U.S. Attorney John F. Walsh for District of Colorado, Chair;
-
U.S. Attorney Richard S. Hartunian for the Northern District of New York, Vice Chair;
-
U.S. Attorney Michael W. Cotter for the District of Montana;
-
U.S. Attorney Deirdre Daly for the District of Connecticut;
-
U.S. Attorney Thomas E. Delahanty, II for the District of Maine;
-
U.S. Attorney Steven M. Dettelbach for the Northern District of Ohio;
-
U.S. Attorney Conner Eldridge for the Western District of Arkansas;
-
U.S. Attorney Zachary T. Fardon for the Northern District of Illinois;
-
U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida;
-
U.S. Attorney Paul J. Fishman for the District of New Jersey;
-
U.S. Attorney R. Booth Goodwin II for the Southern District of West Virginia;
-
U.S. Attorney Barry R. Grissom for the District of Kansas;
-
U.S. Attorney Kerry B. Harvey for the Eastern District of Kentucky;
-
U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan;
-
U.S. Attorney Zane D. Memeger for the Eastern District of Pennsylvania;
-
U.S. Attorney Wendy J. Olson for the District of Idaho;
-
U.S. Attorney Kenneth A. Polite for the Eastern District of Louisiana;
-
U.S. Attorney Vincent Cohen, Jr. for the District of Columbia, ex officio
-
Criminal Chief Thomas Eicher for District of New Jersey, ex officio
-
Appellate Chief Sandra Glover for District of Connecticut, ex officio; and
-
Civil Chief Thomas Walsh for the Northern District of Illinois, ex officio
The AGAC was created in 1973 to serve as the voice of the U.S. Attorneys and to advise the attorney general on policy, management and operational issues impacting the offices of the U.S. Attorneys.
-
Richard Borja Sentenced to 41 Months PrisonRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that RICHARD BORJA, age 33, of Santa Rita, was sentenced on April 29, 2015, before Senior Judge Alex R. Munson, in the District Court of Guam, to 41 months imprisonment, three years supervised release and 200 hours community service.
Defendant BORJA received ice in the mail from his co-defendant Francisco Arias. He pled guilty on June 6, 2014, to Conspiracy to Distribute Methamphetamine.
U.S. Attorney Limtiaco stated, “Our community is not immune from the poison of methamphetamine. This case illustrates the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam.” This conviction resulted from the concerted efforts of law enforcement partners in the OCDETF investigation, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.
This OCDETF investigation involved federal agents and local law enforcement officers of the U.S. Postal Inspection Service (USPIS), Drug Enforcement Administration (DEA), U.S. Department of Homeland Security Investigations (HSI), Guam Police Department (GPD), Guam Customs and Quarantine Agency (GCQA), Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), U.S. National Oceanic Atmosphere Administration (NOAA), and U.S. Coast Guard Criminal Investigative Service (CGIS). The case was prosecuted by Assistant U.S. Attorney Clyde Lemons, Jr.
Mississippi Man Sentenced for His Role in a Conspiracy to Commit Racially Motivated Assaults, Culminating in the Killing of an African-American Man Run over by TruckRead the Press Release
The Justice Department announced today that John Louis Blalack, 21, of Brandon, Mississippi, was sentenced today in U.S. District Court of the Southern District of Mississippi in Jackson for his role in a federal hate crime conspiracy involving racially motivated assaults, culminating in the death of James Craig Anderson, an African-American man, in the summer of 2011. Blalack had previously pleaded guilty to two counts of commission of a hate crime for his role in the conspiracy and the cover-up. Blalack was sentenced to 240 months in prison.
Eight other defendants in related cases, Deryl Paul Dedmon, 22, John Aaron Rice, 22, Dylan Wade Butler, 23, Jonathan Kyle Gaskamp, 22, and Joseph Paul Dominick, 23, all of Brandon, Mississippi; William Kyle Montgomery, 25, of Puckett, Mississippi, Sarah Adelia Graves, 22, of Crystal Springs, Mississippi; and Shelbie Brooke Richards, 21, Pearl, Mississippi, were previously sentenced to 600 months, 220 months, 78 months, 48 months, 48 months, 224 months, 60 months and 96 months, respectively, for their roles in the conspiracy. Robert Henry Rice is awaiting sentencing.
“The Justice Department will always fight to hold accountable those who commit racially motivated assaults,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “We hope that the prosecution of those responsible for this horrific crime will help provide some measure of closure to the victim’s family and to the larger community affected by this heinous crime.”
“This prosecution sends a clear message that this office, in partnership with the DOJ Civil Rights Division, will prioritize and aggressively prosecute hate crimes and other civil rights violations in the Southern District of Mississippi,” said U.S. Attorney Gregory K. Davis of the Southern District of Mississippi.
“The FBI takes very seriously its responsibility to uphold the civil rights of all citizens,” said Special Agent in Charge Donald Alway of the FBI’s Jackson, Mississippi, Division. “Together with its law enforcement partners, the FBI will continue its efforts to aggressively pursue and bring to justice all those individuals who conspire to deprive others of their civil rights merely because of the color of their skin.”
In prior court hearings, the defendant admitted that beginning in the spring of 2011, he and others conspired with one another to harass and assault African Americans in and around Jackson. On numerous occasions, the co-conspirators used dangerous weapons, including beer bottles, sling shots and motor vehicles, to cause, and attempt to cause, bodily injury to African Americans. They would specifically target African Americans they believed to be homeless or under the influence of alcohol because they believed that such individuals would be less likely to report an assault. The co-conspirators would often boast about these racially motivated assaults.
Blalack admitted his involvement in the conspiracy and to his role in the beating and killing of James Craig Anderson. Specifically, he admitted that in the early morning hours of June 26, 2011, he and six other co-conspirators agreed to carry out their plan to find, harass and assault African Americans. At around 4:15 a.m., Blalack, Montgomery, John Aaron Rice and Butler drove to Jackson in Montgomery’s white Jeep with the understanding that Richards, Graves and Dedmon would join them a short time later.
At approximately 5:00 a.m., the four occupants of the Jeep spotted Anderson in a motel parking lot off Ellis Avenue. They decided that Anderson would be a good target for an assault because he was African-American and appeared to be intoxicated. Blalack and J. Rice got out of the Jeep to distract Anderson while they waited for Richards, Graves, and Dedmon to arrive. After Richards, Graves and Dedmon arrived in a Ford F250 truck, Rice and Dedmon physically assaulted Anderson. After the assault, the four occupants of the Jeep left the motel parking lot in the Jeep. Dedmon then deliberately used his truck to run over Anderson, causing injuries which resulted in Anderson’s death. Blalack also admitted that prior to Anderson's death he and his co-conspirators threw beer bottles at African American and also used a sling shot to shoot metal ball bearings at victims in Jackson.
This case was the result of a cooperative effort among the Justice Department’s Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Mississippi and the Hinds County, Mississippi, District Attorney’s Office. This case was investigated by the Jackson Division of the FBI and the Jackson Police Department. It is being prosecuted by Trial Attorney Sheldon L. Beer and Deputy Chief Paige M. Fitzgerald of the Civil Rights Division of the Department of Justice, and Glenda R. Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi.
Military Contractor in Afghanistan Sentenced to Four Years in Prison for Offering Bribes to a US Army OfficialRead the Press Release
An independent contractor for a trucking company in Afghanistan that was responsible for delivering fuel to U.S. Army installations was sentenced to four years in prison today for offering a U.S. Army serviceman $54,000 in bribes to falsify documents confirming the receipt of fuel shipments that were never actually delivered.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Kelly T. Currie of the Eastern District of New York, Special Inspector General for Afghanistan Reconstruction John F. Sopko, Assistant Director in Charge Diego Rodriguez of the FBI’s New York Field Office, Special Agent in Charge Raymond R. Parmer Jr. of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (ICE-HSI) New York Field Office and Director Frank Robey of the U.S. Army’s Criminal Investigation Command (CID) made the announcement.
Akbar Ahmed Sherzai, 50, of Centreville, Virginia, pleaded guilty on Feb. 14, 2014, to one count of conspiracy to commit bribery. In addition to the prison sentence, U.S. District Court Judge Margo K. Brodie of the Eastern District of New York ordered Sherzai to forfeit $54,000.
In connection with his guilty plea and in other court documents, Sherzai acknowledged that he was employed by a local Afghan trucking company contracted to transport fuel between U.S. military bases in Afghanistan. Sherzai acknowledged that, in April 2013, he approached a U.S. military serviceman to discuss instances in which his company failed to deliver the fuel—called “no-show” missions—which resulted in a $75,000 fine to his company for each no-show. Sherzai admitted that he offered the serviceman bribes to falsify documents to confirm deliveries, so that Sherzai’s company and others could recover the fines they had paid for no-shows. On several occasions, Sherzai paid cash bribes to the serviceman, who, unbeknownst to Sherzai, was working with law enforcement. In total, Sherzai acknowledged that he paid the serviceman $54,000 to falsify documents relating to nine deliveries, allowing his company and others to avoid or recover $675,000 in fines.
This matter was investigated by the Special Inspector General for Afghanistan Reconstruction, FBI, ICE-HSI and CID. The case is being prosecuted by Trial Attorney Daniel Butler of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Amir H. Toossi of the Eastern District of New York.
Miami-Area Physician Sentenced to 60 Months in Prison for Role in $5.5 Million Medicare Fraud SchemeRead the Press Release
A Miami-area medical doctor was sentenced today to 60 months in prison for his role in a $5.5 million Medicare fraud scheme involving fraudulent billings by a psychiatric hospital in Hollywood, Florida.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Shimon Richmond of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.
Barry Kaplowitz, 54, of Aventura, Florida, a licensed physician, was convicted of making false statements related to health care matters on Feb. 20, 2015, following a six-week jury trial. In addition to today’s prison sentence, U.S. District Judge Cecilia M. Altonaga of the Southern District of Florida ordered Kaplowitz to pay more than $2.9 million in restitution.
According to evidence presented at trial, Kaplowitz served as the medical director at Hollywood Pavilion (HP), a state-licensed psychiatric hospital, from approximately 2008 to 2011. During that time, Kaplowitz signed false and fraudulent medical records in order to make it appear that HP’s patients qualified for and received intensive outpatient services, even though they did not. The evidence demonstrated that Kaplowitz signed patient files for over 400 patients certifying that he had provided mental health services to each of them, even though he never saw nor provided any treatment to the patients. HP used these falsified medical records to submit over 2,800 false claims to Medicare totaling over $5.5 million. Medicare paid $2.9 million on those false claims.
Five other individuals have previously been convicted and sentenced in this case:
-
Karen Kallen-Zury, of Lighthouse Point, Florida, HP’s former chief executive officer, was sentenced to 25 years in prison;
-
Daisy Miller, of Hollywood, the clinical director of HP’s inpatient facility, was sentenced to 15 years in prison;
-
Michele Petrie, of Fort Lauderdale, Florida, the head of HP’s intensive outpatient program, was sentenced to six years in prison;
-
Christian Coloma, of Miami Beach, Florida, the director of physical therapy for an entity associated with HP, was sentenced to 12 years in prison; and
-
Christopher Gabel, of Davie, Florida, HP’s former chief operating officer, was sentenced to six years in prison.
Kallen-Zury, Miller, Gabel and Petrie were ordered to pay more than $39 million in restitution, and Coloma was ordered to pay more than $20 million in restitution.
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 for the Southern District of Florida. The case is being prosecuted by Trial Attorneys Nicholas E. Surmacz, Andrew H. Warren and L. Rush Atkinson 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 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 Team (HEAT), go to: www.stopmedicarefraud.gov.
-
Leader of an Illegal International Gambling Enterprise Convicted of Conspiracy to Commit Money LaunderingRead the Press Release
A federal jury in Oklahoma City convicted a Texas man today of running an illegal international gambling enterprise and conspiring to commit 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.
Bartice Alan King, aka “Luke,” 44, of Spring, Texas, was found guilty of conducting an illegal gambling business and engaging in a conspiracy to commit money laundering. A sentencing hearing has not yet been set.
According to evidence presented at trial, from 2003 to 2013, King was the owner, CEO and President of Legendz Sports, an Internet and telephone gambling enterprise based in Panama City, Panama. Over the course of a decade, the international gambling enterprise took more than $1 billon in illegal wagers, almost exclusively from gamblers in the United States on American sporting events.
The evidence demonstrated that after founding Legendz Sports, King directed and supervised a network of bookies located all over the United States, who illegally solicited and accepted sports wagers and settled gambling debts. The evidence further demonstrated that 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 to launder gambling proceeds.
The evidence demonstrated that the illegal gambling proceeds were used to further promote the gambling business, including to pay employees, build a new multi-million dollar call center to take bets and build a “bank” of cash to pay future winning bettors. King used the profits to live a lavish lifestyle, including mansions in Florida and Texas.
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 Criminal Division’s Office of International Affairs also assisted with this investigation. 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.
Kolon Industries Inc. Pleads Guilty for Conspiring to Steal DuPont Trade Secrets Involving Kevlar TechnologyRead the Press Release
Kolon Sentenced To Pay $360 Million in Restitution And Fines
Kolon Industries Inc., a South Korean industrial company, pleaded guilty this morning in federal court in Alexandria, Virginia, to conspiracy to steal trade secrets involving E.I. DuPont de Nemours & Co.’s (DuPont) Kevlar technology. The company was sentenced to pay $85 million in criminal fines and $275 million in restitution.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Special Agent in Charge Adam S. Lee of the FBI’s Richmond, Virginia, Division made the announcement.
Kolon Industries Inc., appearing through two successor entities—Kolon Industries Inc. and Kolon Corporation (collectively, Kolon)—pleaded guilty to one count of conspiracy to convert trade secrets before U.S. District Judge Anthony J. Trenga of the Eastern District of Virginia.
“Protecting the trade secrets of American businesses sustains the integrity and competitiveness of the American economy, and encourages the development of new products, including advanced technologies,” said Assistant Attorney General Caldwell. “The Criminal Division is committed to ensuring that foreign companies, like Kolon Industries, cannot escape the reach of the criminal justice system when they have conspired to steal the results of American ingenuity and our companies’ intellectual property.”
“Research and development are pillars of our economy, and we cannot allow anyone to obtain by theft what innovators develop through effort and ingenuity,” said U.S. Attorney Boente. “Today’s outcome confirms that we will aggressively investigate and prosecute intellectual property crimes, regardless of whether the perpetrators are foreign or domestic, corporations or individuals. There are no safe harbors for those who seek to steal trade secrets in the Eastern District of Virginia.”
“Protecting American companies from the theft of their trade secrets is a high priority for the FBI,” said Special Agent in Charge Lee. “Each year, billions of U.S. dollars are lost to foreign competitors who pursue illegal commercial short cuts by stealing valuable advanced technologies. This case demonstrates the FBI’s ability to penetrate these highly sophisticated criminal schemes and bring their perpetrators to justice. Its outcome should send a clear message to foreign commercial actors who seek to illegally exploit American companies and steal our nation’s innovation and technology.”
According to the statement of facts filed with the plea agreement, from June 2006 to February 2009, Kolon conspired with former DuPont employees and others to steal DuPont’s trade secrets for making Kevlar, a high-strength, para-aramid synthetic fiber. Kevlar, a trademarked name, is one of DuPont's most well-known products and is used is a wide range of commercial applications such as body armor, fiber optic cables, and automotive and industrial products. Kolon admitted that it was attempting to improve the quality of its own para-aramid fiber known as Heracron.
Kolon personnel met repeatedly with former DuPont employees, including Edward Schulz, 72, of Brownstown, Pennsylvania, and Michael Mitchell, 58, of Chesterfield, Virginia, to obtain confidential and proprietary DuPont information about Kevlar. Schulz pleaded guilty to conspiracy to steal trade secrets in September 2014 and is scheduled to be sentenced on June 26, 2015. Mitchell pleaded guilty to theft of trade secrets and obstruction of justice in December 2009 and was sentenced to 18 months in prison.
Kolon admitted that it obtained technical and business documents regarding Kevlar, including instructional materials that described DuPont’s “New Fiber Technology,” documents on polymerization, and a detailed breakdown of DuPont’s capabilities and costs for the full line of its Kevlar products and DuPont’s Kevlar customers.
According to the statement of facts and Mitchell’s admissions at his guilty plea, Mitchell exchanged numerous telephone calls and emails with Kolon personnel. On more than one occasion, Mitchell advised Kolon personnel that some of the information they sought was proprietary and that DuPont considered such information to be trade secrets. Mitchell also coordinated a meeting at a hotel in Richmond, at which Kolon personnel were introduced to a cooperating witness who pretended to be a disgruntled scientist from DuPont. During the Richmond meeting, Kolon personnel indicated that they would only be comfortable communicating with the cooperating witness in a manner that was confidential and that would not leave an evidentiary trail.
In February 2009, DuPont filed a civil lawsuit against Kolon in the Eastern District of Virginia, alleging theft of trade secrets. Thereafter, certain Kolon personnel attempted to delete files and emails related to Mitchell, Schulz and outside consultants hired to improve Kolon’s para-aramid fiber, and urged other Kolon personnel to search for such materials and mark them for deletion.
Kolon also admitted that certain employees approached a former employee of an American subsidiary of Teijin Ltd. – a Japanese company that makes the para-aramid fiber called Twaron—in an unsuccessful effort to obtain information about Twaron.
This case represents the first time that foreign corporations with no direct presence in the United States were found to be successfully served with U.S. criminal process, over their objections, based on service pursuant to an international treaty. In December 2014, the district court found that both of the successor companies were properly served, and ordered them to appear for arraignment. In February 2015, the Fourth Circuit Court of Appeals denied Kolon’s petition for extraordinary relief seeking reversal of the district court’s order.
Five former Kolon executives and employees, all of South Korea, were charged in an August 2012 indictment filed in the Eastern District of Virginia: Jong-Hyun Choi, 58, a senior executive who oversaw the Heracron Business Team; In-Sik Han, 52, who managed Kolon’s research and development related to Heracron; Kyeong-Hwan Rho, 49, the head of the Heracron Technical Team; Young-Soo Seo, 51, the general manager for the Heracron Business Team; and Ju-Wan Kim, 42, a manager on the Heracron Business Team.
None of these individuals has appeared in the United States to face the charges. The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.
The case was investigated by the FBI’s Richmond Division. The case is being prosecuted by Assistant U.S. Attorneys Kosta S. Stojilkovic and Matthew Burke of the Eastern District of Virginia, Trial Attorney John W. Borchert of the Criminal Division’s Fraud Section and Senior Counsel Rodolfo Orjales of the Criminal Division’s Computer Crime and Intellectual Property Section. The Criminal Division’s Office of International Affairs has provided valuable assistance.
Justice Department Wins Its Suit Seeking Religious Diets for Florida PrisonersRead the Press Release
The U.S. District Court for the Southern District of Florida today granted the Justice Department’s motion for summary judgment in United States v. Florida Department of Corrections, holding that the Department of Corrections’ failure to provide a kosher diet violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA). Consuming a kosher diet is central to the religious observance of hundreds of Florida prisoners. For years, the Department of Corrections’ policy had forced these prisoners to violate their core beliefs on a daily basis by eating non-kosher meals.
“Religious freedom is a cornerstone of our pluralistic society,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Civil Rights Division. “State and local correctional facilities incarcerate individuals from a wide variety of faith groups and religious backgrounds. Accommodating these prisoners’ religious exercise is a core tenet of effective prison management. It reduces tension and disciplinary incidents, fosters learning and self-reflection and ultimately eases prisoners’ transition back into mainstream society.”
Congress enacted RLUIPA unanimously, recognizing that religion plays an indispensable role in the management of correctional facilities and the rehabilitation of prisoners. To achieve Congress’ goal of protecting prisoners’ religious liberty, RLUIPA prohibits policies that substantially burden prisoners’ religious exercise unless those policies are the least restrictive means of furthering a compelling government interest. The act allows the Justice Department to remedy violations through civil litigation. The Justice Department has previously used RLUIPA to secure prisoners’ access religious texts, wear religiously significant clothing, consume religious diets and observe their faith by maintaining beards or long hair.
The Special Litigation Section of the Justice Department’s Civil Rights Division in Washington, D.C. filed suit against the Florida Department of Corrections in 2012 after a 15-month investigation found that the failure to offer a kosher diet violated RLUIPA. The case number is 2012-cv-22958 (S.D. Fla).
Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.
Justice Department Settles Housing Discrimination Lawsuit Involving North Attleboro, Massachusetts, Apartment ComplexRead the Press Release
The Justice Department today announced an agreement with J & R Associates, the owner and operator of the Royal Park Apartments in North Attleboro, Massachusetts, to resolve allegations of discrimination against families with children in violation of the Fair Housing Act.
The lawsuit, filed today in U.S. District Court of the District of Massachusetts, alleges that J & R Associates discriminated against families with children seeking to rent units at Royal Park Apartments by maintaining and enforcing policies that segregate families with children in certain buildings and restrict them to certain floors and units within the 224-unit complex. The allegations are based on evidence generated by the department’s Fair Housing Testing Program, in which individuals pose as renters to gather information about possible discriminatory practices.
Under the terms of the agreement, which is in the form of a consent order and still must be approved by the court, J & R Associates will establish a settlement fund in the amount of $135,000 to compensate victims of their discriminatory practices. The defendant also will pay $7,500 in civil penalties to the United States. The agreement requires J & R Associates to take steps to ensure that families with children no longer are restricted from renting units anywhere at Royal Park Apartments.
“Discrimination against families because they have children limits their ability to find suitable housing and will not be tolerated,” said Principal Deputy Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division. “We appreciate the defendant’s cooperation with our investigation and willingness to resolve the claims.”
“Families should be able to rent and live where they choose, without being discriminated against because they have children,” said U.S. Attorney Carmen M. Ortiz of the District of Massachusetts. “My office remains committed to enforcing federal civil rights laws to ensure equality for the residents in this district.”
The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt. Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected] or contact HUD at 1-800-669-9777.
Huntsville, Alabama, Police Officer Charges with Excessive Use of Force and Obstruction of JusticeRead the Press Release
The Justice Department announced that Huntsville, Alabama, Police Department Officer Brett Russell, 48, has been charged with deprivation of rights under color of law for allegedly assaulting and injuring G.H., a detainee, on Dec. 23, 2011. Russell also has been charged with obstruction of justice for allegedly filing a false police report regarding this incident.
The indictment identifies the subject of the arrest by the initials, “G.H.” According to the indictment, Russell falsely stated in his incident report that G.H. kicked at officers, attempted to head-butt officers while they transported him to Russell's vehicle, that he was told to stop resisting several times but would not comply and that he was transported to the Huntsville metro jail “without incident.” Russell omitted from his report that he "had struck G.H. with his fist and kneed G.H. in the body," as the indictment says.
Russell faces a maximum sentence of 10 years in prison for the civil rights charge and 20 years for the obstruction charge. An indictment is merely an allegation, and the defendant is presumed innocent until proven guilty.
The investigation by the Florence Resident Agency of the FBI is ongoing. The case is being prosecuted by Trial Attorney Carroll McCabe of the Civil Rights Division and Assistant U.S. Attorney Xavier O. Carter Sr. of the Northern District of Alabama.
Albert Portusuch Mendiola, Jr. Sentenced to 46 Months PrisonRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that ALBERT PORTUSACH MENDIOLA, JR., age 32, of Tamuning, was sentenced on April 28, 2015, before Senior Judge Alex R. Munson, in the District Court of Guam, to 46 months imprisonment, three years supervised release and 50 hours community service.
Defendant pled guilty to Possession with Intent to Distribute Methamphetamine. MENDIOLA was arrested on December 5, 2012 with 9.7 grams of methamphetamine. He also had an electronic scale, several cut straws and plastic baggies in his possession.
This investigation involved federal agents of the Drug Enforcement Administration (DEA) and the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), and officers from the Guam Police Department (GPD). The case was prosecuted by Assistant U.S. Attorney Clyde Lemons, Jr.
U.S. Citizen Pleads Guilty in Connection with Internationally Based Business Opportunity Fraud VenturesRead the Press Release
A U.S. citizen charged in connection with the operation of a series of fraudulent business opportunities based in Costa Rica pleaded guilty today in Miami, the Justice Department announced.
John White was charged in a Nov. 29, 2011, indictment in the Southern District of Florida with conspiracy to commit mail and wire fraud as well as mail fraud and wire fraud counts. White was arrested on Feb. 9, 2012, in Costa Rica pursuant to the indictment, and extradited to the United States on Feb. 11. As part of his guilty plea to the conspiracy charge, White, also known as Gregory Garrett, admitted that he and his co-conspirators fraudulently sold beverage and greeting card business opportunities to victims in the United States.
The case against White is part of the government’s continued nationwide crackdown on business opportunity fraud. In addition to White, 11 other defendants have been charged in connection with related business opportunity fraud ventures that operated in Costa Rica. Nine of those other defendants have been convicted in the United States with sentences ranging from three to 16 years in prison. Two remaining defendants are not yet in the custody of the United States.
“Business opportunity schemes target innocent victims who simply want to work for the American dream,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “We will continue to prosecute those who commit fraud and take advantage of those seeking to start a new business.”
As part of his guilty plea, White admitted that from 2005 to 2008, he and his co-conspirators fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc. and The Coffee Man Inc. White and his co-conspirators claimed that these opportunities would allow purchasers to sell coffee and greeting cards from display racks located at other retail establishments. The business opportunities cost thousands of dollars each and most purchasers paid at least $10,000. Each company operated for several months and after one company closed, the next opened.
White admitted that the conspiracy used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. The companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere. In reality, White and his co-conspirators operated out of call centers in Costa Rica.
White admitted that he and his co-conspirators made numerous false statements to potential purchasers of the business opportunities, including that purchasers likely would earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. Potential purchasers also were falsely told that the profits of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.
As alleged in the indictment against White and others, the companies employed various types of sales representatives, including fronters, closers and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to close deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities. The companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchaser’s merchandise display racks. White admitted that he worked as a fronter and reference using assumed names.
White faces a statutory maximum sentence of 25 years in prison, a fine and mandatory restitution on the conspiracy count. U.S. District Court Judge Patricia A. Seitz set a sentencing hearing for Aug. 5 at 10 a.m., at the federal courthouse in Miami.
“This international and domestic investigation shows the Postal Inspection Service’s resolve to protect Americans from business opportunity scams,” said Postal Inspector in Charge Ronald J. Verrochio of the U.S. Postal Inspection Service (USPIS) Miami Division.
Principal Deputy Assistant Attorney General Mizer commended the investigative efforts of USPIS. The case is being prosecuted by Trial Attorney Alan Phelps of the Civil Division’s Consumer Protection Branch.
Three Brothers Plead Guilty to $145 Million Biofuels Fraud Scheme in IndianaRead the Press Release
Chad Ducey, 39, of Fishers, Indiana, pleaded guilty yesterday for his role in a multi-state scheme to defraud biodiesel buyers and U.S. taxpayers by fraudulently selling biodiesel incentives. His two brothers, Chris Ducey, 48, of North Webster, Indiana, and Craig Ducey, 44, of Fishers, pleaded guilty last week for their roles in the same scheme. The Ducey brothers operated E-biofuels LLC, from a facility in Middletown, Indiana. As part of the scheme, they sold over 35 million gallons of biodiesel to customers for more than $145 million by falsely claiming that the fuel was eligible for federal renewable energy incentives, when they knew it was not. In addition, Craig Ducey pleaded guilty to a related $58.9 million securities fraud, which victimized over 625 investors and shareholders of Imperial Petroleum, a publicly-traded company and the parent company of E-biofuels, announced Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division and U.S. Attorney Josh J. Minkler of the Southern District of Indiana.
“This wide ranging criminal conspiracy sought to undermine the biofuels program and its positive benefits to our nation’s economy and environment,” said Assistant Attorney General Cruden. “This case should send a strong message that we are watching this market very closely and we won’t allow lawbreakers to pursue profits at the expense of our nation’s interests.”
“There are opportunities in Indiana for innovators in agriculture and biofuels,” said U.S. Attorney Minkler. “The Duceys and their co-conspirators in New Jersey undercut those opportunities by exchanging greed and fraud for innovation. These criminal prosecutions send the message that a prison sentence waits at the end of that exchange.”
“This kind of criminal activity has real consequences, including undermining a law that reduces our impact on climate change,” said Assistant Administrator Cynthia Giles for Enforcement and Compliance Assurance for the Environmental Protection Agency (EPA). “Today’s guilty plea demonstrates EPA’s commitment, working closely with our partners at the Department of Justice, to pursue criminal cases vigorously and protect companies that play by the rules.”
From 2007 through 2012, E‑biofuels had a biodiesel manufacturing plant in Middletown. Biodiesel is a fuel that can be used in diesel engines and that is made from renewable resources, including soybean oil and waste grease from restaurants. Under the Energy Independence and Security Act, properly manufactured biodiesel was eligible for a one dollar per gallon tax credit as well as another valuable credit called a Renewable Identification Number (RIN) that petroleum refiners and importers must comply with to satisfy their federal renewable fuel obligations.
The Ducey brothers admitted that they knew that E-biofuels was fraudulently reselling biodiesel that they obtained from co-conspirators in New Jersey, which had already been used to claim biodiesel incentives. By falsely claiming to have made it themselves in Middletown, the Ducey brothers and their co-conspirators created a second set of invalid incentives, which they passed on to their customers. They realized huge per gallon profits through this scheme, sometimes in excess of $12,000 per truckload. Over the course of approximately two years, the co-conspirators fraudulently sold more than 35 million gallons of fuel for a total cost of over $145 million. The co-conspirators and their companies realized more than $55 million in gross profits, at the expense of their customers and U.S. taxpayers.
The Ducey brothers pleaded guilty to conspiracy, false claims against the Internal Revenue Service (IRS), wire fraud and lying to the EPA and the IRS. In particular, Chad Ducey, an engineer by training, caused a third-party engineer to submit false reports to justify the production at E-biofuels. Those reports claimed that E-biofuels was using the chemical process of transesterification to produce biodiesel, when in fact, the company simply re-sold biodiesel that had been made by others and had already been used to claim biodiesel incentives.
“The object of this interstate scheme created by the Ducey brothers and their co-conspirators was to defraud the government and the taxpaying public,” said Special Agent in Charge Stephen Boyd of IRS Criminal Investigation. IRS Criminal Investigation is vigilant in our investigations of this scheme and other schemes that defraud honest, hardworking, Americans. We will continue to work with the United States Attorney’s Office to prosecute all those involved.
“This investigation resulted in the disruption of one of the largest tax and securities fraud schemes in Indiana history,” said Special Agent in Charge W. Jay Abbott for FBI’s Indianapolis division. “The FBI, with federal partners, identified and investigated a group who manipulated and utilized federal governmental programs to line their pockets by fraud. They deceived customers, shareholders, and the American public. This type of fraudulent activity is not a victimless crime – it harms the American people and the economy.”
The Ducey brothers face up to 20 years of imprisonment on some of the charges, as well as large fines and the requirement that they provide full restitution to the victims of this crime, which include U.S. taxpayers, truck stop companies, fuel traders and others. Craig Ducey will also have to pay restitution to the victims of the securities fraud. The co-conspirators will also have to forfeit $7.5 million in seized funds, jewelry, artwork, cars and homes they purchased with the funds obtained through the scheme.
The New Jersey co-conspirators, Joseph Furando and Katirina Pattison, have already pleaded guilty for their involvement in the scheme, along with the companies they operated, CIMA Green and Caravan Trading Company, both previously located in Park Ridge, New Jersey.
The case is being prosecuted by Senior Litigation Counsel Steven D. DeBrota and of the U.S. Attorney’s Office of the Southern District of Indiana, Assistant Chief Thomas T. Ballantine of the Environmental Crimes Section of the Department of Justice’s Environment and Natural Resources Division and Special Assistant U.S. Attorney Jake Schmidt of the Southern District of Indiana and Senior Attorney for the Securities and Exchange Commission.
The collaborative investigation that brought this case to fruition is the result of work by EPA’s Criminal Investigation Division, IRS- Criminal Investigation, the FBI and the Securities and Exchange Commission, with assistance during the investigation by the U.S. Secret Service and the U.S. Department of Agriculture’s Office of Inspector General-Investigations.