District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Former Independence, Missouri, Police Officer Indicted on Federal Civil Rights and Obstruction of Justice ChargesRead the Press Release
Acting Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division and U.S. Attorney Tammy Dickinson of the Western District of Missouri announced that a federal grand jury has returned a four-count indictment against former Independence, Missouri, police officer Timothy Runnels for violating the constitutional rights of a minor who was in his custody and obstructing the subsequent investigation into the incident.
According to the indictment, Runnels continuously deployed a Taser against the minor while the minor was on the ground and not posing a threat to Runnels or others. The indictment also charges that Runnels deliberately dropped the minor headfirst onto the ground while the minor was restrained and not posing a threat to Runnels or others. The indictment alleges that the minor sustained bodily injury as a result of Runnels’ actions and, with respect to the first count, that the offense involved the use of a dangerous weapon. The indictment also charges Runnels with two counts of obstruction of justice for filing a false police report concerning the incident and for making a false statement to Independence Police Department investigators regarding the amount of force that he used against the minor.
If convicted, Runnels faces a statutory maximum sentence of 10 years in prison and a fine of $250,000 for each of two charged counts of civil rights violations, and a statutory maximum sentence of 20 years in prison and a fine of $250,000 for one count of obstruction of justice by submitting a false police report and one count of providing misleading information to Independence Police Department investigators.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
This case is being investigated by the FBI’s Kansas City Division and is being prosecuted by Trial Attorney Shan Patel of the Civil Rights Division and First Assistant U.S. Attorney David Ketchmark of the Western District of Missouri.
CEO and Managing Director of US Broker-Dealer Sentenced for International Bribery SchemeRead the Press Release
The former chief executive officer and former managing director of a U.S. broker-dealer (the Broker-Dealer), were sentenced to prison today for their roles in a scheme to pay bribes to a senior official in Venezuela’s state economic development bank, Banco de Desarrollo Económico y Social de Venezuela (Bandes), in return for trading business that generated more than $60 million in commissions.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara of the Southern District of New York made the announcement. The sentences were imposed by U.S. District Judge Denise L. Cote of the Southern District of New York.
Benito Chinea, 48, of Manalapan, New Jersey, and Joseph DeMeneses, 45, of Fairfield, Connecticut, were each sentenced to four years in prison. They were also ordered to pay $3,636,432 and $2,670,612 in forfeiture, respectively, which amounts represent their earnings from the bribery scheme. On Dec. 17, 2014, both defendants pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act.
“These Wall Street executives orchestrated a massive bribery scheme with a corrupt official in Venezuela to illegally secure tens of millions of dollars in business for their firm,” said Assistant Attorney General Caldwell. “The convictions and prison sentences of the CEO and Managing Director of a sophisticated Wall Street broker-dealer demonstrate that the Department of Justice will hold individuals accountable for violations of the FCPA and will pursue executives no matter where they are on the corporate ladder.”
“Benito Chinea and Joseph DeMeneses paid bribes to an officer of a state-run development bank in exchange for lucrative business she steered to their firm,” said U.S. Attorney Bharara. “Chinea and DeMeneses profited for a time from the corrupt arrangement, but that profit has turned into prison and now they must forfeit their millions of dollars in ill-gotten gains as well as their liberty.”
Chinea, the chief executive officer, and DeMeneses, a managing director in the Broker-Dealer, admitted that they worked with others, to arrange bribe payments to the Bandes official, Maria De Los Angeles Gonzalez, in exchange for her directing Bandes’s financial trading business to the Broker-Dealer. Previously, Gonzalez, along with two employees of the Broker-Dealer, Tomas Alberto Clarke Bethancourt (Clarke) and Jose Alejandro Hurtado (Hurtado), pleaded guilty for their involvement in this bribery scheme. A managing director of the Broker-Dealer, Ernesto Lujan, also pleaded guilty for his role in the scheme.
Background on the Broker-Dealer and Bandes
According to court documents, and as admitted by Chinea and DeMeneses at their guilty pleas, the Broker-Dealer, which was headquartered in New York City and had offices in Miami, established a group called the Global Markets Group in 2008, which included DeMeneses, Lujan and Clarke, and which offered fixed income trading services to institutional clients. One of the Broker-Dealer’s clients was Bandes, which operated under the direction of the Venezuelan Ministry of Finance. The Venezuelan government had a majority ownership interest in Bandes and provided it with substantial funding. Gonzalez was an official at Bandes and oversaw the development bank’s overseas trading activity. At her direction, Bandes conducted substantial trading through the Broker-Dealer. Most of the trades executed by the Broker-Dealer on behalf of Bandes involved fixed income investments for which the Broker-Dealer charged Bandes a mark-up on purchases and a mark-down on sales.
The Bribery Scheme
As alleged in court documents, Chinea and DeMeneses, together with three Miami-based Broker-Dealer employees, Lujan, Clarke and Hurtado, participated in a bribery scheme that ran from late 2008 through 2012, in which Gonzalez directed trading business to the Broker-Dealer, and in return, agents and employees of the Broker-Dealer split the revenue the Broker-Dealer generated from this trading business with Gonzalez. During this time period, the Broker-Dealer generated over $60 million in commissions from trades with Bandes.
As further alleged in court documents, in order to conceal the scheme, payments to Gonzalez, frequently in six-figure amounts, were routed through third-parties posing as “foreign finders” and into offshore bank accounts. In several instances, Chinea personally signed checks worth millions of dollars that were made payable to one of these purported “foreign finders” and later deposited in a Swiss bank account. Chinea and DeMeneses admitted that they agreed to use Broker-Dealer funds to reimburse DeMeneses and Clarke for the approximately $1.5 million from their personal funds they used to bribe Gonzalez. To conceal their true nature, Chinea and DeMeneses agreed to hide these reimbursements in the Broker-Dealer’s books as sham loans from the Broker-Dealer to DeMeneses and Clarke.
This case is being investigated by the FBI, and prosecuted by Senior Deputy Chief James Koukios and Trial Attorney Kevin R. Gingras of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Harry A. Chernoff and Jason H. Cowley of the Southern District of New York. Assistant U.S. Attorney Carolina Fornos of the Southern District of New York is responsible for the forfeiture aspects of the case. The U.S. Securities and Exchange Commission also assisted with this investigation.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
US Army National Guard Soldier and his Cousin Arrested for Conspiring to Support Terrorism (ISIL)Read the Press Release
One Man Arrested While Attempting to Travel Abroad; Both Chicago Area Men Spoke of Using Army Uniforms, Military Knowledge and Access to Attack Illinois Military Installation
Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Zachary T. Fardon of the Northern District of Illinois and Special Agent in Charge Robert Holley of the FBI’s Chicago Division announced today that two Aurora, Illinois, men were arrested Wednesday night for allegedly conspiring to provide material support to Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization.
Army National Guard Specialist Hasan Edmonds, 22, a U.S. citizen, was arrested without incident at Chicago Midway International Airport by members of the Chicago FBI’s Joint Terrorism Task Force (JTTF) while attempting to fly to Cairo, Egypt. Jonas Edmonds, 29, a U.S. citizen, was arrested without incident at his home in Aurora. Both defendants were charged in a criminal complaint filed yesterday in U.S. District Court of the Northern District of Illinois with one count of conspiring to provide material support and resources to a foreign terrorist organization. The initial appearances of Hasan Edmonds and Jonas Edmonds are scheduled for today before U.S. Magistrate Judge Sheila Finnegan at 3 p.m. CST.
As alleged in the complaint, in late 2014, Hasan Edmonds came to the attention of the FBI. The investigation subsequently revealed that he and Jonas Edmonds had devised a plan for Hasan Edmonds to travel overseas for the purpose of waging violence on behalf of ISIL. Hasan Edmonds, a current member of the Illinois Army National Guard, planned to use his military training to fight on behalf of ISIL. As part of their plans, Hasan Edmonds booked airline travel to depart yesterday from Chicago and arrive in Cairo today, with layovers in Detroit and Amsterdam.
As alleged in the complaint, both defendants also planned for Jonas Edmonds to carry out an act of terrorism in the United States after Hasan Edmonds departed. In particular, both defendants met with an FBI undercover employee and presented a plan to carry out an armed attack against a U.S. military facility in northern Illinois, an installation where Hasan Edmonds had been training. Jonas Edmonds asked the FBI undercover employee to assist in the attack and explained that they would use Hasan Edmonds’ uniforms and the information he supplied about how to access the installation and target officers for attack.
“According to the charges filed today, the defendants allegedly conspired to provide material support to ISIL and planned to travel overseas to support the terrorist organization,” said Assistant Attorney General Carlin. “In addition, they plotted to attack members of our military within the United States. Disturbingly, one of the defendants currently wears the same uniform of those they allegedly planned to attack. I want to thank the many agents, analysts, and prosecutors who are responsible for disrupting the threat posed by these defendants.”
“We will pursue and prosecute with vigor those who support ISIL and its agenda of ruthless violence,” said U.S. Attorney Fardon. “Anyone who threatens to harm our citizens and allies, whether abroad or here at home, will face the full force of justice.”
“The arrests today are the culmination of a successful investigation that involved a great deal of coordination and communication with our law enforcement and military partners,” said Special Agent in Charge Holley. “Throughout the course of this investigation, the defendants were closely and carefully monitored to ensure the safety of the public and our service men and women.”
Conspiring to provide material support to a foreign terrorist organization carries a maximum penalty of 15 years in prison and a $250,000 fine. If convicted, the court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
The case was investigated by the FBI’s JTTF, which is comprised of special agents of the FBI, officers of the Chicago Police Department and representatives from an additional 20 federal, state and local law enforcement agencies. Assistant Attorney General Carlin joins U.S. Attorney Fardon in extending his appreciation to the JTTF.
U.S. Customs and Border Protection, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI), the Illinois State Police, the Aurora Police Department and the Illinois National Guard also provided significant assistance.
The government is being represented by Assistant U.S. Attorneys Barry Jonas and John Kness of the Northern District of Illinois, and Trial Attorney Lolita Lukose of the National Security Division’s Counterterrorism Section.
The public is reminded that a complaint contains only charges and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
Edmonds Complaint
Texas Man Pleads Guilty to Falsifying a Wildlife Document Related to the Sale of Horns from a Black RhinoRead the Press Release
John A. Brommel, 53, a resident of Austin, Texas, and the owner of a taxidermy business, pleaded guilty today to violating the Lacey Act’s false labeling provision by knowingly selling horns from a black rhinoceros to non-Texas residents and falsifying the bill of sale to conceal the fact that the actual purchasers were not residents of Texas.
The guilty plea was announced by Assistant Attorney General John C. Cruden for the Environment and Natural Resources Division of the Department of Justice, Acting U.S. Attorney Richard L. Durbin, Jr. for the Western District of Texas and Director Dan Ashe of the U.S. Fish and Wildlife Service (USFWS).
Brommel, who has owned and operated a taxidermy shop in Austin, Texas, for more than 25 years, pleaded guilty today before U.S. District Court Judge Walter S. Smith Jr. in Waco, Texas, to a one count information charging him with making a false document in connection with interstate wildlife trafficking in violation of the Lacey Act.
Brommel was identified as part of “Operation Crash” – a nationwide effort led by the USFWS and the Justice Department to investigate and prosecute those involved in the black market trade of rhinoceros horns and other protected species.
In papers filed in federal court, Brommel admitted to selling the horns from the shoulder mount of a black rhinoceros to a group of Irish nationals that included Michael Slattery Jr., who, on Nov. 5, 2013, pleaded guilty to conspiring with others to sell the rhinoceros horns he and his co-conspirators purchased from Brommel. Slattery was sentenced to serve 14 months in prison on Jan. 10, 2014, in federal district court in Brooklyn, New York.
The black rhinoceros is a herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. All species of rhinoceros are protected under U.S. and international law, including the Endangered Species Act. Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets.
The investigation is continuing and is being handled by the USFWS’s Office of Law Enforcement, the U.S. Attorney’s Office for the Western District of Texas and the Justice Department’s Environmental Crimes Section. The government is represented by Assistant U.S. Attorney Greg Gloff and Trial Attorney Gary N. Donner of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.
Fourth Ocean Shipping Executive Pleads Guilty to Price Fixing on Ocean Shipping Services for Cars and TrucksRead the Press Release
An executive of Japan-based Kawasaki Kisen Kaisha Ltd. (K-Line) pleaded guilty today and was sentenced to 18 months in a U.S. prison for his involvement in a conspiracy to fix prices, allocate customers and rig bids of international ocean shipping services for roll-on, roll-off cargo, such as cars and trucks, to and from the United States and elsewhere, the Department of Justice announced today.
According to the one-count felony charge filed in U.S. District Court of the District of Maryland in Baltimore on Jan. 22, 2015, Toru Otoda, who was a general manager in K-Line’s car carrier division, conspired to allocate customers and routes, rig bids and fix prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore. Otoda participated in the conspiracy from at least as early as November 2010 until at least September 2012.
Roll-on, roll-off cargo is non-containerized cargo that can be both rolled onto and off of an ocean-going vessel. Examples of this cargo include new and used cars and trucks and construction and agricultural equipment.
“Today’s sentence reinforces our commitment to hold executives accountable for colluding to fix ocean freight prices,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division. “This investigation will continue as we seek to prosecute the executives who conspired and the companies that employed them.”
“Price fixing and bid rigging are crimes most people don’t see, but they have a direct impact on everyone’s wallet,” said Special Agent in Charge Steve Vogt of the FBI’s Baltimore Field Office. “Our goal in the FBI is to expose the back room deals and secret handshakes, and to stop the culture in some businesses that allows these crimes to take place.”
Pursuant to the plea agreement, which the court accepted today, Otoda was sentenced to serve an 18-month prison term and pay a $20,000 criminal fine for his participation in the conspiracy. In addition, Otoda has agreed to assist the department in its ongoing investigation into the ocean shipping industry.
Otoda was charged with a violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for an individual. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s sentence is the fourth against an individual in the division’s ocean shipping investigation, and the third against an individual from K-Line. Three corporations have agreed to plead guilty and to pay criminal fines totaling more than $136 million, including K-Line, which was sentenced to pay a criminal fine of $67.7 million.
Today’s plea agreement is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the international roll-on, roll-off ocean shipping industry, which is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Baltimore Field Office, along with assistance from the U.S. Customs and Border Protection Office of Internal Affairs, Washington Field Office/Special Investigations Unit. Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal I Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Baltimore Field Office at 410-265-8080.
Cincinnati Man Sentenced for Operating Sex Trafficking Scheme in Ohio and KentuckyRead the Press Release
Defendant Used Violent Assaults and Physical Restraints to Compel Young Women to Engage in Prostitution for the Defendant’s Profit
Senior U.S. District Judge John G. Heyburn II of the Western District of Kentucky sentenced Cincinnati resident, Christopher Hisle, 45, to serve 180 months in prison and 10 years of supervised release, the Justice Department announced today. Restitution will be determined at a future date. Hisle pleaded guilty on Nov. 14, 2014, to sex trafficking by force, fraud and coercion, and to enticing individuals to travel in interstate commerce for prostitution and transporting individuals in interstate commerce for prostitution.
Police arrested Hisle on April 8, 2014, in Louisville, Kentucky, after he drove a young woman from Cincinnati to Louisville to engage in prostitution at a Louisville motel. Subsequent investigation linked Hisle to the prostitution of multiple additional women in Ohio, Kentucky and elsewhere.
According to the evidence presented in court proceedings and documents filed in the case, Hisle physically assaulted several of the young women he exploited for prostitution, including striking one of the victims in the face when she threatened to run away. In furtherance of his sex trafficking scheme, Hisle controlled the women he prostituted by various means, including boards and locks which restricted the women’s ability to exit the dwelling where Hisle housed them when he was not transporting them for prostitution.
“This defendant preyed on vulnerable young victims and cruelly exploited them for his profit,” said Acting Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division. “This sentence sends a clear message that the United States will not tolerate modern-day slavery and will work tirelessly to restore the rights and dignity of the victims of this crime.”
“The horrors of human trafficking cause unimaginable pain, desperation and despair,” said Acting U.S. Attorney John E. Kuhn Jr. of the Western District of Kentucky. “And the fear of violence and other reprisals all too often keep victims from reporting this heinous crime. My office is working hard to train our law enforcement partners so that we can recognize this tragic situation and then bring justice with a solid sentence for the defendants and an order of restitution for victims.”
“Protecting the civil rights of every individual in our community is one the FBI’s top criminal priorities,” said Special Agent in Charge Howard S. Marshall of the FBI’s Louisville Office. “We work closely with community leaders and our law enforcement partners to proactively target predators involved in human trafficking. These women were exploited as a reusable commodity by men that forced them to participate in the sex trafficking industry. Our agents and task force officers work tirelessly to address every civil rights allegation we receive; I am proud of the hard work they do to protect and rescue the victims that are unable to defend themselves.”
This case was investigated by the FBI and was prosecuted by Assistant U.S. Attorney Amanda E. Gregory of the Western District of Kentucky and Trial Attorney William Nolan of the Civil Rights Division’s Human Trafficking Prosecution Unit.
Schlumberger Oilfield Holdings Ltd. Agrees to Plead Guilty and Pay over $232.7 Million for Violating US Sanctions by Facilitating Trade with Iran and SudanRead the Press Release
Parent Company, Schlumberger Ltd., Also Agrees to Continue Cooperation With U.S. Authorities and To Hire an Independent Consultant to Review Its Sanctions Policies, Procedures and Internal Sanctions Audits
Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Ronald C. Machen Jr. of the District of Columbia and Under Secretary Eric L. Hirschhorn of the U.S. Commerce Department’s Bureau of Industry and Security announced today that Schlumberger Oilfield Holdings Ltd. (SOHL), a wholly-owned subsidiary of Schlumberger Ltd., has agreed to enter a guilty plea and 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 plea agreement, which is contingent upon the court’s approval, 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. In addition to SOHL’s commitments, under the plea agreement, SOHL’s parent company, Schlumberger Ltd., has also agreed to the following additional terms during the three-year term of probation, inter alia: (1) maintaining its cessation of all operations in Iran and Sudan, (2) reporting on the parent company’s compliance with sanctions, (3) 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 (4) 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 guilty plea concludes a joint investigation commenced in 2009 and led by the Justice Department’s National Security Division, the U.S. Attorney’s Office for the District of Columbia and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) Dallas Field Office.
“Over a period of years, Schlumberger Oilfield Holdings Ltd. conducted business with Iran and Sudan from the United States and took steps to disguise those business dealings, thereby willfully violating the U.S. economic sanctions against those regimes,” said Assistant Attorney General Carlin. “The International Emergency Economic Powers Act is an essential tool that the United States uses to address foreign threats to national security through the regulation of commerce. Knowingly circumventing sanctions undermines their efficacy and has the potential to harm both U.S. national security and foreign policy objectives. The guilty plea and significant financial penalty in this case underscore that skirting sanctions for financial gain is a risk corporations ought not take.”
“This is a landmark case that puts global corporations on notice that they must respect our trade laws when on American soil,” said U.S. Attorney Machen. “Even if you don’t directly ship goods from the United States to sanctioned countries, you violate our laws when you facilitate trade with those countries from a U.S.-based office building. For years, in a variety of ways, this foreign company facilitated trade with Iran and Sudan from Sugar Land, Texas. Today’s announcement should send a clear message to all global companies with a U.S. presence: whether your employees are from the U.S. or abroad, when they are in the United States, they will abide by our laws or you will be held accountable.”
“Today's criminal guilty plea demonstrates the Commerce Department’s commitment to aggressively prosecute multinational corporations for violations involving embargoed destinations,” said Under Secretary Hirschhorn. “We will continue to pursue violators wherever they are located and whatever their size. I commend the Office of Export Enforcement and the Department of Justice for their outstanding efforts to investigate and prosecute this case.”
A criminal information was filed today in federal court in the District of Columbia charging SOHL with one count of knowingly and willfully conspiring to violate IEEPA. SOHL waived the requirement of being charged by way of federal Indictment, agreed to the filing of the information, and has accepted responsibility for its criminal conduct and that of its employees by entering into a plea agreement with the government. The plea agreement, which is contingent upon the court’s approval, requires that SOHL pay the U.S. government $232,708,356 and enter into a three-year period of corporate probation. 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 agreement to continue its cooperation with U.S. authorities throughout the three-year period of probation and not to engage in any felony violation of U.S. federal law, SOHL’s parent company, Schlumberger Ltd., also has agreed to continue its cooperation with U.S. authorities during the three-year period of probation, and hire an independent consultant who will review the parent company’s internal sanctions policies, procedures and company-generated sanctions audit reports.
Summary of the Criminal Conduct
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 Illegal Schemes
Illegal U.S. Person Approval of Capital Expenditures. According to court documents, one of the important functions of D&M management personnel was the supervision of D&M’s capital expenditure (CAPEX) process. The CAPEX process was a forecasting mechanism enabling oilfield locations to predict what tools and equipment they would need to meet anticipated demand for oilfield services. Oilfield personnel worldwide made requests through an automated system for the manufacture of new tools and for permission to spend money for certain purchases in order to support oilfield operations. Once approved by the D&M Global Asset Manager in the United States, a request for new equipment was transmitted to one of three manufacturing centers for the production of new tools and other assets. The spending of funds for large-scale purchases was authorized once the request was approved by the D&M Global Asset Manager. Under the CAPEX process in place during the relevant time period, approval by the D&M Global Asset Manager, a U.S. person, was required for every CAPEX request, including requests submitted by or for the benefit of D&M oilfields in Iran and Sudan.
Consequently, D&M’s CAPEX process violated sanctions with Iran and Sudan in a number of ways. Although CAPEX approvals were ordinarily sought through an automated computer system, D&M personnel outside the United States frequently sent emails to the D&M Global Asset Manager in the United States justifying particular requests, many of which related to requests submitted by or on behalf of Iran and Sudan. Furthermore, in these email communications, D&M personnel outside the United States referred to Iran as “Northern Gulf” and Sudan as “Southern Egypt” or “South Egypt” in email communications with D&M personnel in the United States.
In addition, D&M personnel outside the United States implemented a process designed to disguise the identities of the embargoed locations in the automated computer system in order to obtain approval from the D&M Global Asset Manager in the United States. Orders entered into the automated computer system were identified by a series of numbers and letters. Typically, the alpha-numeric identifier included a two or three-letter code indicating the country that placed the order. Instead of entering the country code for Iran or Sudan, D&M personnel entered non-embargoed country codes for embargoed location orders. Specifically, the code “BGM,” which identified a bonded-goods warehouse in Jebel Ali, United Arab Emirates, was used in place of the Iran and Sudan country codes in order to disguise the true locations. These efforts were deliberately taken and demonstrate the company’s involvement in contriving ways intended to evade restrictions imposed by U.S. sanctions.
D&M Headquarters Involvement in Iran and Sudan. According to court documents, separate and apart from the illegal CAPEX approval process that violated U.S. sanctions, D&M headquarters personnel made and implemented business decisions involving D&M operations in Iran and Sudan—again, all in violation of U.S. sanctions’ restrictions on the facilitation of trade with Iran and Sudan. D&M’s illegal involvement in the day-to-day operations in Iran and Sudan, through U.S. persons working at D&M headquarters, occurred with D&M’s knowledge and understanding of the applicability of U.S. sanctions laws to the company.
Technical Services. According to court documents, when technical problems arose in oilfield locations related to the operation of drilling tools, D&M personnel would enter relevant information about the technical issue into an automated computer system. D&M’s automated computer system would generally route the query to a technical expert who could assist the oilfield location in addressing the technical issue. If the technical issue was sufficiently complex, the query would ordinarily be routed to the technical experts located at the product center that manufactured the tool. At times, queries entered by, or on behalf of, D&M personnel in Iran and Sudan were addressed by D&M personnel located in the United States. The technical services provided to Iranian and Sudanese operations, by U.S. persons, violated the prohibitions of trade with Iran and Sudan required by U.S. sanctions.
SOHL and Schlumberger’s Remediation Efforts
In 2009, in consultation with the U.S. Department of State, Schlumberger agreed to no longer pursue new oilfield contracts in Iran. In 2011, Schlumberger voluntarily decided to cease providing oilfield services in Iran and the Republic of the Sudan (North Sudan). As of June 30, 2013, Schlumberger ceased providing oilfield services in Iran, and presently, Schlumberger has ceased providing oilfield services in North Sudan as well.
In announcing the plea, Assistant Attorney General Carlin and U.S. Attorney Machen commended the work of Special Agent Troy Shaffer from BIS’s Dallas Field Office. They 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 is being 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 Asset Forfeiture and Money Laundering Section.
Schlumberger Plea Agreement
Schlumberger Statement of Offense
Schlumberger Information
New York City Tax Return Preparer Indicted for Aiding or Assisting in Preparation of False Tax ReturnsRead the Press Release
A federal grand jury in the Eastern District of New York returned an indictment today charging a Brooklyn, New York, tax return preparer with 31 counts of aiding and assisting in the preparation of false federal income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
According to the indictment, between 2008 and 2010, Phillip Baynes operated a tax preparation business called Small Mans Accounting and Tax Service in Brooklyn. During that time, Baynes allegedly prepared false individual income tax returns for taxpayer clients. On the returns, Baynes falsified business expenses and losses, charitable contributions and unreimbursed employee expenses.
If convicted, Baynes faces a statutory maximum sentence of three years in prison and a fine of $250,000 on each count.
Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Mark Kotila and Brittney N. Campbell of the Tax Division, who are prosecuting the case.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceeding.
Minnesota National Guardsman Indicted for Producing Child Pornography While Deployed to AfghanistanRead the Press Release
A Minnesota National Guardsman was indicted last week for inducing a 14 year-old girl to send him nude photos over the Internet while he was deployed to Afghanistan, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Andrew M. Luger of the District of Minnesota.
Andrew Schiller, 28, of Lakeville, Minnesota, is charged with one count of production of child pornography. Schiller was ordered detained pending trial today by U.S. Magistrate Judge Becky R. Thorson of the District of Minnesota.
According to allegations in the indictment and the government’s request for pretrial detention, between Sep. 23, 2013, and Jan. 12, 2014, Schiller contacted a 14 year-old girl from Minnesota via Skype. During repeated communications with the girl, Schiller allegedly requested that she send sexually explicit photos of herself to him. The victim allegedly sent several images in response to Schiller’s requests, including at least one sexually explicit image.
According to additional allegations in the government’s request for pretrial detention, Schiller used various social media platforms to communicate online with dozens of girls between the ages of 13 and 17. Among those platforms were MyLOL (“funinlife”), Skype (“thriller_a_schiller3”), Meet Me (“mnfuntimes”) and Facebook. Schiller also allegedly used KIK, an instant messaging application for mobile devices that allows users to share photographs and other content. After establishing online contact with the girls, Schiller allegedly directed the conversation to sexual topics and attempted to convince the girls to send sexually explicit videos or images of themselves to him. Schiller allegedly shared sexually explicit images of himself to encourage the girls to send photographs and videos of themselves, and he sometimes promised money or alcohol in exchange for sexually explicit images or live video chats.
The charges contained in the indictment and the allegations contained in the government’s request for pretrial detention are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Anyone with additional information about this case can call the FBI Minneapolis Field Office at 763-569-8000. If you know of any child who may have been a victim of exploitation, please call the National Center for Missing or Exploited Children (NCMEC) at 1-800-THE-LOST (1-800-843-5678) or visit NCMEC’s web site at www.missingkids.com.
This case is being investigated by the Army Criminal Investigative Division and the FBI. This case is being prosecuted by Trial Attorney Jeffrey H. Zeeman of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Katherine T. Buzicky of the District of Minnesota.
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.
Schiller Indictment
Schiller Detention Memo
Jury Convicts Makers of OXYwater for Wire Fraud, Money Laundering and Tax CrimesRead the Press Release
Today, a federal jury convicted a man from Lewis Center, Ohio, and his business partner of Powell, Ohio, of defrauding their company’s investors and diverting investors’ funds for their own personal use. Preston Harrison and his wife, Lovena E. Harrison, 42, were also both convicted of conspiracy to defraud the United States and filing a false income tax return, and Lovena Harrison was convicted of structuring financial transactions to evade currency reporting requirements.
Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio, Special Agent in Charge Kathy Enstrom of Internal Revenue Service-Criminal Investigation (IRS-CI) and Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Field Division announced the verdict reached today, which was returned following a trial that began on March 16 before U.S. District Judge Gregory L. Frost.
According to court testimony, Thomas E. Jackson, 40, of Powell, and Preston J. Harrison, 43, of Lewis Center, operated Westerville, Ohio, based Imperial Integrated Health Research and Development LLC and developed a product called OXYwater, a beverage that promoters claimed was an all-natural, vitamin-enhanced sports drink that contained added oxygen for improved physical performance.
The defendants engaged in a scheme to deceive the investors in their company about the structure, composition, finances, sales and profits of OXYwater in order to make the company appear to be a lucrative and profitable financial investment. Jackson and Harrison produced and sent false and fraudulent documents intended to deceive investors, the ultimate purpose of such false statements being for Jackson and Preston Harrison to obtain money invested in the company. They then misappropriated that money for their own personal use and household expenditures including the purchase of jewelry, a Cadillac Escalade, a BMW, weapons, clothing, home improvements and a swimming pool.
“This case was about the millions of dollars that the defendants stole from investors to fuel their lavish lifestyle,” said Assistant U.S. Attorney Jessica Kim in court.
Jackson and Harrison misappropriated approximately $2 million of the investors’ funds between August 2010 and spring 2013. The defendants’ scheme caused investors to suffer substantial losses when the corporation was forced to declare bankruptcy with no assets. As a result of the defendants’ conduct, investors lost approximately $9 million.
Jackson and Preston Harrison were each convicted of one count of conspiracy to commit wire fraud, for which they face a statutory maximum sentence of 20 years in prison, and one count of conspiracy to commit money laundering, for which they face a statutory maximum sentence of 10 years in prison. Jackson was convicted of eight counts of wire fraud, which carries a statutory maximum sentence of 20 years in prison, and 12 counts of money laundering, which carries a statutory maximum sentence of 10 years in prison. Harrison was convicted of 12 counts of money laundering, for which he faces a statutory maximum sentence of 10 years in prison.
Preston and Lovena Harrison were both convicted of conspiracy to defraud the United States and with filing a false tax return. Preston Harrison misappropriated approximately $1.1 million in 2011 from his company, which he and his wife, Lovena Harrison, placed in an account in the name of her daycare business. They used the money for personal expenses and did not report the money as income on their 2011 income tax return. Lovena Harrison was also convicted of one count of structuring financial transactions to evade currency reporting requirements. Conspiracy to defraud the United States and structuring financial transactions to evade currency reporting requirements are each crimes with a statutory maximum sentence of five years in prison, and filing a false tax return carries a statutory maximum sentence of three years in prison.
Preston Harrison and Jackson also face potential forfeiture of $1.1 million, including two vehicles, eight weapons, cash and the contents of a bank account.
The three defendants were indicted by a grand jury on May 20, 2014.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Stewart commended the cooperative investigation by the IRS-CI and FBI, as well as Assistant U.S. Attorney Jessica Kim and Trial Attorneys Andrew Young and Jason Scheff of the Tax Division, who prosecuted the case.
Canadian Antiques Dealer Sentenced to 30 Months in Prison for Smuggling Rhinoceros Horns, Elephant Ivory and CoralRead the Press Release
“Wildlife smuggling is a transnational crime that knows no borders and requires an international response,” said Assistant Attorney General Cruden. “Cooperation between the United States and Canadian law enforcement was crucial to cracking this case. The United States greatly appreciates the assistance of Environment Canada in bringing Guan to justice. International law enforcement collaboration is essential if we are to prevent elephant and rhino species from being extinguished in our own lifetime.”
“Trafficking in rhinoceros horns and elephant ivory poses a literally existential threat to these endangered or vulnerable species, who die a cruel, pointless death due to greed,” said U.S. Attorney Bharara. “These living creatures are not among us as a source of wanton plunder. Without strict enforcement of international agreements and U.S. laws, these extraordinary animals may disappear from the face of the earth. Tony Guan has learned the price of putting profit over the prolonged existence of rhinos and elephants.”
“The illegal trade in rhinoceros horns is the number one threat to many populations of African rhinos, and is driving the species towards extinction,” said U.S. Fish and Wildlife Director Dan Ashe. “The wholesale slaughter of these magnificent animals in the wild is taking place so a few callous individuals can line their own pockets. But global law enforcement cooperation through avenues such as the Fish and Wildlife Service’s Operation Crash is bringing people like Guan to justice, and we thank our Canadian and other international partners for the critical role they play in cases such as this. Together we will end the scourge of rhino horn and other wildlife trafficking.”
“The successful outcome of this investigation, and the ongoing success of Operation Crash, is another example of the strong collaboration that exists between Environment Canada’s Enforcement Branch, the U.S. Fish and Wildlife Service, and our partners in conservation enforcement agencies across Canada and the United States,” said Chief Enforcement Officer Gord Owen of Environment Canada.
Calling it “a very serious offense” Judge Swain said that Guan “helped to feed a hot market for these goods" and further stated that the defendant's conduct “feeds demand for the slaughter of rare and already endangered species.”
According to the indictment, other documents filed in federal court and statements made at various proceedings in this case, including today’s sentencing:
Guan was arrested in March 2014, as part of “Operation Crash,” a nationwide crackdown on the illegal trafficking in rhinoceros horns, for Guan’s role in smuggling and attempting to smuggle rhinoceros horns, as well as items carved from elephant ivory and coral, from auction houses throughout the United States to Canada.
Guan, the president and owner of Bao Antiques in Richmond, British Columbia, was arrested after flying from Vancouver, Canada, to New York City and purchasing two endangered black rhinoceros horns from undercover special agents with the U.S. Fish and Wildlife Service at a storage facility in the Bronx, New York. After purchasing the horns, Guan had the undercover agents drive him and a female accomplice acting as his interpreter to a nearby express mail store where he mailed the horns to an address in Point Roberts, Washington, less than a mile from the Canadian border and 17 miles from his business. Guan falsely labeled the box of black rhinoceros horns as containing “handicrafts.” Guan indicated that he had people who could drive the horns across the border and that he had done so many times before.
At the same time Guan was arrested in the United States, Canadian authorities executed a search warrant at his antique business in Richmond. Canadian law enforcement seized various wildlife objects from the business, nine of which have been positively identified as wildlife objects purchased in the United States via a New York City-based internet auction business. These items, made from elephant ivory and coral, were smuggled out of the Unites States and into Canada without the required declaration or Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) permits. Some were shipped directly to Canada and others were sent, at Guan’s direction, to addresses near the U.S./Canadian border in Point Roberts. Guan also recruited college-age family members and acquaintances to assist him with smuggling the wildlife items. Photos of some of the smuggled wildlife artifacts are enclosed. In addition, during the search of Guan’s business, Canadian law enforcement also discovered illegal narcotics, including approximately 50,000 ecstasy pills.
The rhinoceros is an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. All species of rhinoceros are protected under U.S. and international law. Since 1976, trade in rhinoceros horn has been regulated under CITES, a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets. Rhinoceros are also protected under the U.S. Endangered Species Act which further regulates trade and transport.
Operation Crash is a continuing investigation by the Department of the Interior’s Fish and Wildlife Service, in coordination with the Department of Justice. A “crash” is the term for a herd of rhinoceros. Operation Crash is an ongoing effort to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns.
The case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorney Janis M. Echenberg of the Southern District of New York and Senior Litigation Counsel Richard A. Udell with the Environmental Crimes Section of the Department of Justice are in charge of the prosecution.
Opening Statement of Acting Deputy Attorney General Sally Quillian Yates at US Senate Confirmation HearingRead the Press Release
Acting Deputy Attorney General Sally Quillian Yates released the following statement today at the opening of the U.S. Senate confirmation hearing:
“Chairman Grassley, Ranking Member Leahy and Members of the Committee, it is an honor to appear before you today. I am very grateful for this opportunity and for President Obama’s nomination. I would also like to thank Senator Isakson, Senator Perdue and Congressman Lewis for their kind and generous introductions. They have led remarkable lives of service to Georgia and to our country, and I am humbled by their confidence in me.
“It is particularly meaningful for me to appear before you today surrounded by my family – my husband Comer, my daughter Kelley and my son Quill. I am not only grateful to all of them for their love and support, but I am also incredibly proud of each of them. My husband Comer, a lawyer by training, followed his heart and runs a school for children with learning disabilities and children who are deaf and hard of hearing. My daughter Kelley is in her first year as a special education teacher. My son, Quill, is a sophomore in college where he is studying political science and environmental policy.
“My only regret is that my parents, both of whom have passed away, are not here today. They instilled in me a love of the law and a call to public service. I come from a long line of lawyers on both sides of my family – lawyers and Methodist preachers. Even my grandmother was a lawyer; in fact she was one of the earliest women admitted to the Georgia Bar. And even though she was probably the smartest one in the bunch, law firms didn’t hire many women to practice law in those days, so she was a legal secretary instead. My father and his father before him were state appellate court judges, and they demonstrated by example that the law is an instrument for ensuring that right is done in the world. My father died shortly before I graduated from law school, but I vividly recall him counseling me while I was in school to make sure that the work I chose when I graduated was more than just a job or a way to earn a living. Rather, he believed that we have an obligation to use our legal education for a greater good and he encouraged me to find a path where I could make a real difference in the world.
“That path took me to the Department of Justice. I joined the U. S. Attorney’s Office in Atlanta in the fall of 1989, and the Department of Justice has been my home ever since. When I joined the U.S Attorney’s Office, I certainly didn’t expect that I would still be with the Department of Justice 25 years later. But once I experienced the privilege of representing the people of the United States – of doing what I believed was right, and fair and just in every case – anything else would have felt like just a job.
“Bob Barr, then the U.S. Attorney of the Northern District of Georgia, entrusted me with my first position in the department – that of a line prosecutor. I began the way all young prosecutors do – by investigating and trying cases; by working with agents and witnesses and victims to keep my fellow citizens safe and to ensure that those who harmed our community were held accountable. Over time, my cases became more complex and I assumed leadership positions within the office – Chief of the Fraud and Public Corruption Section; First Assistant U.S. Attorney; and eventually the first female United States Attorney for the Northern District of Georgia. Throughout this time, I carried with me the values instilled by my family – that the law can be an instrument for good, but only when it is applied fairly, thoughtfully and objectively. I believe it is a credit to the institution I love that I have held leadership positions through Republican and Democratic administrations, and that I have witnessed career men and women of the department consistently following the facts and the law with great distinction and without regard to politics.
“Over the years, I have seen the department from a variety of vantage points. I personally prosecuted public corruption, regardless of party, and led our team in holding accountable the Olympic bomber, Eric Rudolph. As a supervisor, I have ensured that our office had the expertise, resources and focus to go after worst of the worst, whether they were international gangs, human trafficking rings or cybercriminals. As the U.S. Attorney, I was the vice chair of the Attorney General’s Advisory Committee, and gained additional insight into the unique challenges each U.S. Attorney’s Office across the country faces—challenges that I know you each hear about from your constituents. When the President nominated me, a career prosecutor, to be the Deputy Attorney General, it was the greatest honor that I could imagine.
“I am proud to say that in the brief period during which I have served as the Acting Deputy Attorney General, I have seen on a national scale the same skill, care and dedication in our attorneys that I knew in the Northern District of Georgia. In taking on the day-to-day operations of the department, its $27 billion budget, and its 114,000 employees, I also understand that we face critical national security and public safety challenges. I believe that we can work together on these challenges, and in my role as Chief Operating Officer of the department, I will be committed to ensuring that the resources Congress provides to the department are used as effectively as possible to protect public we all serve.
“I know that several of you have served previously at the department and share my love of this great institution. As you all know, the Department of Justice is unique among cabinet agencies; it is, and must be, independent and non-partisan. We don’t represent an ordinary client, and as representatives of the people, we must always be governed by doing what is just. This has been my life’s work. And if I am fortunate enough to be confirmed, I can promise you that I will spend each and every moment guided solely by the department’s singular mission to seek justice.
“Thank you. I look forward to your questions.”
MTU America Inc., Agrees to $1.2 Million Penalty and Auditing Program to Resolve Clean Air Act ViolationsRead the Press Release
MTU America Inc. (MTU), a subsidiary of Rolls-Royce Power Systems AG, will implement an auditing program to ensure proper emissions testing and compliance with federal emission standards for its heavy-duty diesel non-road engines as part of a settlement to resolve alleged Clean Air Act violations, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today.
The complaint filed with the settlement alleges that MTU violated the Clean Air Act by selling 895 non-road, heavy-duty diesel engines, which are used in mining, marine and power generation vehicles and equipment, without valid certificates of conformity. EPA voided the certificates of conformity purporting to cover the engines based on improper emissions testing by MTU employees. Under the settlement, MTU will pay a $1.2 million penalty and perform annual audits of its engine emission testing and certification activities for three years. The audits will be conducted by an EPA-approved, third-party auditor that will monitor and evaluate compliance with Clean Air Act requirements for testing, certification, record-keeping and reporting. MTU is also required to initiate corrective actions if the audit reveals non-compliance.
“Certificates of conformity are a critical part of EPA’s program to ensure that vehicles and engines meet Clean Air Act emissions standards,” said Assistant Attorney General John C. Cruden of the Department of Justice’s Environment and Natural Resources Division. “Companies that skirt the rules in their certification testing hurt the public and their competitors. Today’s settlement ensures that the company will adequately monitor the activities of employees involved in the certification process to prevent this kind of conduct from recurring.”
“Engines that aren’t properly certified can emit toxic pollution that aggravates asthma and other respiratory illnesses,” said Assistant Administrator Cynthia Giles of EPA’s Office of Enforcement and Compliance Assurance. “This agreement requires that MTU take important steps to comply with the law, protect the public and reduce smog in our air.”
Every engine sold in or imported into the U.S. must be covered by a valid EPA-issued certificate of conformity. When applying for a certificate of conformity, an applicant must certify to EPA that it followed appropriate testing, certification, record-keeping and reporting requirements to ensure its products will meet applicable federal emission standards to control air pollution. Engines operating without proper emissions controls can emit excess carbon monoxide, hydrocarbons and nitrogen oxides, which can cause respiratory illness, aggravate asthma and contribute to the formation of ground-level ozone or smog.
Through information disclosed by the company, EPA discovered that MTU had obtained EPA certificates of conformity without conducting valid testing. EPA learned that MTU had installed a catalytic converter onto its prototype engine during testing to reduce emissions of pollutants. MTU had also performed maintenance during durability testing on the same engine, but had not reported this to EPA, a violation of testing regulations.
Selling or importing engines that are not covered by valid certificates of conformity is a violation of the Clean Air Act. Based on MTU’s disclosures, EPA voided the certificates of conformity covering these engines on Feb. 23, 2015. MTU violated the Clean Air Act by selling and importing the engines, which, because of the voiding, were not covered by a valid certificate of conformity as required by law. MTU has worked with EPA to take steps to prevent these violations from occurring in the future.
This settlement is part of an ongoing effort by EPA to ensure that all vehicles and engines meet federal emission limits for harmful pollution. The Clean Air Act requires that all vehicles have EPA-issued certificates of conformity prior to being imported or sold in the U.S. to demonstrate that they meet federal emission standards.
MTU America Inc. based in Novi, Michigan, and formerly known as Tognum America Inc. is a wholly-owned subsidiary of Rolls-Royce Power Systems AG, a German corporation. MTU manufactures non-road, off-highway engines for the North American market for locomotive, marine, construction and defense uses.
The consent decree, lodged in the U.S. District Court for the District of Columbia, is subject to a 30-day public comment period and approval by the federal court. The consent decree can be viewed at www.justice.gov/enrd/Consent_Decrees.html.
More information on the settlement: http://www2.epa.gov/enforcement/mtu-america-inc-clean-air-act-settlement
For a list of certificates of conformity voided by the EPA: http://epa.gov/otaq/motor-void.htm
Justice Department Settles Lawsuit Alleging Discrimination Against Families with Children at Apartment Complexes in Kansas and MissouriRead the Press Release
The Justice Department announced today that Brisben Chimney Hills Limited Partnership and JRK Residential America LLC, the owners and the former manager of the Reserve apartment complex in Lenexa, Kansas, together with their named partner and agents, have agreed to pay $170,000 to settle a lawsuit alleging violations of the Fair Housing Act (FHA). The lawsuit alleged that defendants instituted policies at the Reserve and at other properties in Kansas and Missouri that discriminated against families with children. The lawsuit also alleged that a family was forced to leave the Reserve after they complained to management about the overly-restrictive policies.
Under the proposed consent decree, which must still be approved by the U.S. District Court of Kansas, the defendants will pay $60,000 to the family that initiated the original complaint filed with the U.S. Department of Housing and Urban Development (HUD), $100,000 into a victim fund to compensate other aggrieved families and $10,000 to the United States as a civil penalty. In addition, the proposed consent decree prohibits the defendants from discriminating in the future against families with children and requires the defendants to receive training on the requirements of the FHA.
“For over twenty-five years, the Fair Housing Act has prohibited housing providers from discriminating against families with children,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “Many parents are already struggling to find affordable housing for their families, and they should not also have to face discrimination because they have children.”
“Kansas families with children deserve the right to live where they choose and to be free from housing discrimination,” said U.S. Attorney Barry R. Grissom of the District of Kansas.
The lawsuit, also filed today, arose from a complaint filed with HUD by a family that was living at the Reserve apartments. The owners and operators of the Reserve instituted a policy that discriminated against families with children because it unreasonably restricted the activities of children, including a policy that required that anyone under the age of 16 be physically accompanied by an adult at all times. After the family complained about the policy, their lease was not renewed and they were forced to leave the Reserve. After HUD investigated the complaint, it issued a charge of discrimination and the matter was referred to the Justice Department. The United States’ complaint alleges that the defendants violated the family’s rights, that the restrictive policies discriminated against other families with children and that the defendants engaged in a pattern or practice of discrimination or denied rights protected by the FHA to a group of persons.
“Overly restrictive housing policies for families with children are illegal, and prevent them from fully enjoying the place they call home,” said HUD Assistant Secretary Gustavo Velasquez of Fair Housing and Equal Opportunity. “HUD will continue to work with the Department of Justice to take action against property owners and landlords whose policies violate the Fair Housing Act.”
Fighting illegal housing discrimination is a top priority of the Justice Department. The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. 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. More information about the Fair Housing Act can also be found at www.usdoj.gov/crt/housing or www.hud.gov/fairhousing.
Following Justice Department's Review, Hawaii State Court Commits to Equal Access for Non-English SpeakersRead the Press Release
The Justice Department announced today that it has closed its review of the Hawaii Judiciary’s Language Access Program following the department’s successful provision of technical assistance to the Hawaii Judiciary. The department’s Federal Coordination and Compliance Section (FCS) of the Civil Rights Division began its work following the receipt of complaints raising concerns about the court system’s provision of language services to limited English proficient (LEP) individuals in state court proceedings and court operations in alleged violation of Title VI of the Civil Rights Act of 1964. Title VI requires recipients of federal financial assistance, such as courts, to provide competent language services free of charge to LEP individuals in court proceedings and operations. Nearly 13 percent of Hawaii’s population is LEP.
The department and the Hawaii Judiciary have worked cooperatively to effectuate a number of improvements to language services. The judiciary’s accomplishments include:
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Issuing a clear policy stating that all LEP individuals would be provided competent court interpretation free of charge in court proceedings, and that language services would also be provided for other court operations.
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Implementing an awareness campaign to increase the public’s knowledge on how to access the court’s language services, including the creation of multilingual outreach materials in hard copy and on the web. It also enhanced its website to make it easier to find information about its language assistance services, and created 14 language-specific webpages that contain all of the language-specific translations in one location.
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Beginning to create a language assistance complaint system.
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Revising its court interpreter assignment system, training interpreters and providing mandatory training for judicial staff on the interpreter assignment process.
- Implementing oversight measures to ensure that the language access program complies with Title VI.
“I commend the Hawaii Judiciary for its proactive efforts to provide all communities with equal access to justice regardless of the language they speak,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The results we are seeing in Hawaii are a testament to what collaboration and cooperation can achieve. Hawaii knows its work is not done, and we welcome the opportunity to continue to provide assistance whenever needed.”
The department has worked with courts across the country to improve the provision of language services to LEP individuals. It also released “Language Access Planning and Technical Assistance Tool for Courts” last year which provides court systems with a series of questions to consider as they develop and implement plans to provide language assistance.
Please click here for further information about FCS. For additional LEP-related resources, please go to the Federal Interagency LEP website.
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Después de la Revisión Realizada por el Departamento de Justicia, el Tribunal Estatal de Hawai Se Compromete a Brindar Acceso Igualitario para Personas que No Hablen InglésRead the Press Release
WASHINGTON – El Departamento de Justicia anunció hoy que ha finalizado su revisión del Programa de Acceso Idiomático del Poder Judicial de Hawai después de haberle brindado asistencia técnica a dicho Poder Judicial. La Sección de Coordinación y Cumplimiento Federal [Federal Coordination and Compliance Section (FCS)] de la Sección de Derechos Civiles del departamento comenzó su trabajo después de haber recibido quejas acerca de la provisión de servicios idiomáticos a personas con conocimientos limitados del idioma inglés [Limited English Proficient (LEP)] por el sistema judicial, en procesos jurídicos estatales y procedimientos del tribunal, en supuesta violación del Título VI de la Ley de Derechos Civiles de 1964. El Título VI exige que los beneficiarios de asistencia financiera federal, tales como los tribunales, brinden sin cargo servicios idiomáticos competentes a personas LEP en procedimientos y acciones judiciales. Casi el 13 por ciento de la población de Hawai es LEP.
El departamento y el Poder Judicial de Hawai trabajaron en conjunto en realizar una serie de mejoras en los servicios idiomáticos. Los logros del Poder Judicial incluyen:
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La emisión de una política clara que indica que se les proporcionará a todas las personas LEP interpretación jurídica sin cargo en procedimientos judiciales, y que también se brindarán servicios idiomáticos para otros trámites judiciales.
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La implementación de una campaña de concientización para mejorar los conocimientos del público acerca de cómo acceder a los servicios idiomáticos del tribunal, lo que incluye la creación de materiales de extensión multilingües, tanto impresos como en Internet. También optimizó su portal de Internet para facilitar la búsqueda de información sobre sus servicios de asistencia idiomática, y creó 14 páginas que contienen todas las traducciones a diferentes idiomas en un solo lugar.
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Comenzar a crear un sistema de quejas acerca de la asistencia idiomática.
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La revisión de su sistema de asignación de intérpretes judiciales, capacitación de intérpretes y la provisión de capacitación obligatoria al personal judicial sobre el proceso de asignación de intérpretes.
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La implementación de medidas de supervisión para garantizar que el programa de acceso idiomático cumpla con el Título VI.
“Felicito al Poder Judicial de Hawai por su labor proactiva de brindarles a todas las comunidades acceso a la justicia, independientemente del idioma que hablen”, señaló la Fiscal General Auxiliar (en funciones) Vanita Gupta de la División de Derechos Civiles. “Los resultados que observamos en Hawai prueban lo que se puede lograr con la colaboración y la cooperación. Hawai sabe que su trabajo no ha terminado, y nos complacerá tener la oportunidad de seguir brindándoles asistencia siempre que la necesiten”.
El departamento viene trabajando con tribunales de todo el país en mejorar el suministro de servicios idiomáticos a personas LEP. El año pasado, lanzó también Herramienta de planificación del acceso idiomático y asistencia técnica para los Tribunales (en inglés) que les provee a los sistemas judiciales una serie de preguntas para tener en cuenta al desarrollar e implementar planes para brindar asistencia idiomática.
Haga clic aquí para más información sobre la FCS. Para más recursos relacionados con las personas LEP, diríjase al portal de Internet de LEP Interagencias Federal.
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Alaskan Man Convicted of Sexually Exploiting Children in CambodiaRead the Press Release
An Anchorage, Alaska, man was convicted yesterday for sexually exploiting children in Cambodia over the course of four years and attempting to arrange a child sex tourism trip for himself and others to Cambodia, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Karen L. Loeffler of the District of Alaska.
Jason Jayavarman, 45, was convicted of sexual exploitation of children and attempted travel with the intent to engage in illicit sexual conduct in a foreign place. A sentencing hearing will take place before U.S. District Court Judge Sharon L. Gleason of the District of Alaska, and will be scheduled at a later date. Jayavarman remains in custody pending sentencing.
The evidence presented at trial established that Jayavarman had produced multiple videos of himself engaging in sexual acts with a child in Cambodia over the course of 12 trips between 2010 and his arrest in 2013. Jayavarman then transported the recordings back to the United States.
The evidence also detailed a trip that Jayavarman had planned for himself and others to Cambodia for the purpose of engaging in sexual activity with children as young as 12 years old. Unbeknownst to Jayavarman, one of the individuals was an undercover FBI agent. According to the evidence presented at trial, Jayavarman explained to the undercover agent how to groom a child for sex, how to avoid law enforcement and how to record high quality “mementos” of the sexual activity.
Jayavarman’s child exploitation activities came to light following a concerned citizen’s anonymous tip.
The case was investigated by the FBI and the Anchorage Police Department. The case was prosecuted by Trial Attorney Ravi Sinha of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Audrey J. Renschen of the District of Alaska.
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.
United States Sues to Block San Diego Man Posing as Attorney and CPA from Promoting Bogus Tax Schemes and Preparing Fraudulent ReturnsRead the Press Release
The United States has sued a former attorney and certified public accountant to bar him from promoting and implementing tax fraud schemes and preparing tax returns for others, the Justice Department announced today.
The lawsuit, filed in the U.S. District Court for the Southern District of California, alleges that Lawrence Preston Siegel, aka Larry Lave, Yehuda Lave and Larry Easy, falsely represented that he is a licensed attorney and CPA in order to solicit business for his tax practice.
According to the civil injunction suit, Siegel pleaded guilty to one count of tax evasion and two counts of subscribing false tax returns in 1994. He subsequently resigned from the California bar in 1994, lost his CPA license in 1997, and never regained either accreditation, according to the suit. The complaint alleges that following his release from federal prison in 2001 for additional convictions, Siegel established a tax practice and stated online that he is an “[i]interesting combination of a Tax Lawyer and CPA who is also a Rabbi trained in Spirituality.” Siegel, the complaint alleges, claimed to others that his “goal as a spiritual Rabbi, Tax Attorney and CPA is to save people money without going to jail … Everybody wants to pay very little tax, I do it legally and morally under the Torah.”
According to the complaint, among his tax fraud schemes, Siegel falsely advised his customers, typically high earners who own profitable businesses, that they can establish companies in Nevada and treat their California home as an out-of-state corporate office. Siegel falsely claimed that doing so would transform a vast array of non-deductible personal expenses into tax deductible business expenses, according to the suit. According to the complaint, Siegel boasted about this tax fraud scheme in e-mails, including one where he falsely claimed that his customers are entitled to free housing as tax-free compensation from their out-of-state companies and that “[t]he housing can [b]e luxurious and cost thousands a [] month” because “[t]here is an assumption that corporations don’t waste money.”
In another scheme, Siegel falsely advises his customers to enter into sham license agreements to purportedly lease their professional skills and expertise to the out-of-state companies Siegel established for them, according to the suit. Under these license agreements, the companies paid royalties to the customers in exchange for use of the customers’ professional skills and expertise, according to the complaint. Siegel allegedly promoted and implemented this scheme to mischaracterize income customers received from their out-of-state companies, which is subject to employment taxes, as royalty payments, which Siegel falsely claimed as exempt from employment taxes.
The complaint alleges that, in conjunction with his tax fraud schemes, Siegel prepared customer tax returns, and in some instances, filed tax returns without obtaining his customers’ permission to file. In preparing returns, Siegel falsely claimed customers’ personal purchases as deductible business expenses, including purchases at Tiffany & Company and Louis Vuitton, and with Royal Caribbean Cruise Lines and Princess Cruise Lines, according to the suit. Siegel attempted to conceal these false deductions from the Internal Revenue Service (IRS) by reporting them as large expenses for “supplies” or “medical records and supplies,” according to the government’s complaint.
According to the complaint, Siegel also attempted to delay and obstruct IRS examinations of his customers. Siegel allegedly provided false corporate documents to the IRS in order to deceive auditors, produced bogus contracts to IRS auditors, and lied to IRS officials during U.S. Tax Court litigation when asked to confirm information on behalf of his customers, according to the suit.
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2015. The IRS has some tips on their website for choosing a tax preparer, 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.
Settlement with Continental Carbon Company to Reduce Air Pollution at Manufacturing Facilities in Alabama, Oklahoma and TexasRead the Press Release
In a settlement with the United States and the states of Alabama and Oklahoma, Continental Carbon Company has agreed to install pollution control technology that will significantly cut emissions of harmful air pollutants at manufacturing facilities in Alabama, Oklahoma and Texas, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today. The settlement will resolve claims that Houston-based Continental violated the Clean Air Act by modifying their facilities in a way that caused the release of excess sulfur dioxide (SO2) and nitrogen oxide (NOx).
The settlement requires Continental to pay a civil penalty of $650,000, which will be shared with Alabama and Oklahoma, co-plaintiffs in the case. Continental must also spend $550,000 on environmental projects to help mitigate the harmful effects of air pollution on the environment and to benefit local communities, including at least $25,000 on energy efficiency projects in the communities near each of the three facilities.
“Today’s agreement is good news for residents living near Continental facilities, many of whom were overburdened by air pollution for far too long and whose children, like all Americans, should be able to breath clean air,” said Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division. “The agreement also reflects our continuing efforts to vigorously enforce the Clean Air Act to protect public health and the environment. The settlement requires Continental to control large sources of air pollution with advanced technology and requires projects that will have a direct and positive impact on Continental’s neighbors.”
“This settlement brings another major carbon black company into compliance with a law that protects clean air for American communities,” said Assistant Administrator Cynthia Giles of EPA’s Office of Enforcement and Compliance Assurance. “By investigating all 15 carbon black manufacturing plants in the U.S., EPA is committed to improving public health and leveling the playing field for companies that follow the law. By installing the latest pollution control technology and funding environmental projects, Continental is taking steps to reduce emissions of air pollutants that can lead to serious health problems.”
Continental manufactures carbon black, a fine carbonaceous powder used in tires, plastics, rubber, inkjet toner and cosmetics, at facilities in Phenix City, Alabama, Ponca City, Oklahoma, and Sunray, Texas. Because the oil used to make carbon black is high in sulfur, its production creates large amounts of nitrogen oxide, sulfur dioxide and particulate matter. This settlement supports EPA’s and the Justice Department's national efforts to advance environmental justice by working to protect communities such as Phenix City and Ponca City that have been disproportionately impacted by pollution.
EPA expects that the actions required by the settlement will reduce harmful emissions by approximately 6,278 tons per year of sulfur dioxide and 1,590 tons per year of nitrogen oxide. Continental estimates that it will spend about $98 million to implement the required measures. The pollution reductions will be achieved through the installation, upgrade and operation of state-of-the-art pollution control devices designed to reduce emissions and protect public health.
SO2 and NOx have numerous adverse effects on human health and are significant contributors to acid rain, smog and haze. These pollutants are converted in the air to particulate matter that can cause severe respiratory and cardiovascular impacts, and premature death.
EPA concluded that the modifications made at Continental’s plants violated the Clean Air Act based on information the company submitted in response to an information request from EPA in 2007. EPA issued notices of violation to Continental for these claims in 2012.
The settlement was filed with the U.S. District Court of the Western District of Oklahoma and is subject to a 30 day public comment period. The company is required to pay the penalty within 30 days after the court approves the settlement.
The consent decree is available for review at http://www.justice.gov/enrd/Consent_Decrees.html.
This settlement is part of EPA’s National Enforcement Initiative to control harmful emissions from large sources of pollution. Through the initiative, EPA investigated all 15 of the carbon black plants in the U.S. for violations of the Clean Air Act’s Prevention of Significant Deterioration requirements. With this settlement, six of the 15 facilities will be covered by consent decrees with EPA. In 2013, EPA announced the first national carbon black settlement with Boston-based Cabot Corporation, the second largest carbon black manufacturer in the United States.
More on the settlement: http://www2.epa.gov/enforcement/continental-carbon-company-clean-air-act-settlement.
Michigan Physician Pleads Guilty for Role in $3.6 Million Medicare Fraud SchemeRead the Press Release
A Detroit-area medical doctor who referred Medicare beneficiaries for home health services in exchange for illegal cash kickbacks as part of a $3.6 million home health care fraud scheme pleaded guilty today for his role in the scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.
Kutub Mesiwala, 64, of Bloomfield Hills, Michigan, pleaded guilty before U.S. District Judge George Caram Steeh of the Eastern District of Michigan to one count of conspiracy to commit health care fraud. A sentencing hearing is set for Oct. 5, 2015.
According to admissions in his plea agreement, Mesiwala referred patients to Detroit-area home health agency Advance Home Health Care Services Inc. (Advance) and other home health care agencies in exchange for cash kickbacks. Advance’s owner, Amer Ehsan, pleaded guilty on July 24, 2014, to fraudulently billing Medicare for $3.6 million in home health services that were not medically necessary or not provided through Advance. Ehsan is awaiting sentencing.
Mesiwala admitted that Medicare paid a total of $770,668.31 to Advance and $118,375.81 to other home health care companies for fraudulent claims based on his referrals.
This case is being 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 Eastern District of Michigan. This case is being prosecuted by Trial Attorney Katharine A. Wagner of the 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 U.K. Rabobank Derivatives Trader Pleads Guilty to LIBOR Interest Rate Manipulation ChargesRead the Press Release
A former senior derivatives trader at the London desk for Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) pleaded guilty today in U.S. federal court for his role in a scheme to manipulate the U.S. Dollar (USD) and Yen London InterBank Offered Rate (LIBOR), a benchmark interest rate.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement.
Lee Stewart, 51, of London appeared in the Southern District of New York before United States District Judge Jed S. Rakoff and pleaded guilty to one count of conspiracy to commit wire and bank fraud. A sentencing hearing is scheduled for June 9, 2017.
At the time relevant to the charges, LIBOR was an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believed they would be charged if borrowing from other banks. It served as the primary benchmark for short-term interest rates globally and was used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products. LIBOR was published by the British Bankers’ Association, a trade association based in London, and was calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year. The published LIBOR “fix” for U.S. Dollar and Yen currency for a specific maturity was the result of a calculation based upon submissions from a panel of 16 banks, including Rabobank.
According to admissions made in connection with his guilty plea, Stewart worked as a senior derivatives trader at Rabobank’s London desk from 1993 to 2009, and entered into derivative contracts involving interest rate swaps linked to the U.S. Dollar LIBOR rate. Stewart admitted that from May 2006 through early 2011, he conspired with others at Rabobank to manipulate the LIBOR benchmark interest rate, which was tied to the profitability of interest rate derivative trades entered into by Rabobank traders.
The investigation is being conducted by special agents, forensic accountants and intelligence analysts in the FBI’s Washington Field Office. The prosecution is being handled by Senior Litigation Counsel Carol L. Sipperly and Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section and Trial Attorney Michael T. Koenig of the Antitrust Division. The Criminal Division’s Office of International Affairs has provided assistance in this matter.
The Justice Department expresses its appreciation for the assistance provided by various enforcement agencies in the United States and abroad. The Commodity Futures Trading Commission’s Division of Enforcement referred this matter to the department and, along with the U.K. Financial Conduct Authority, has played a major role in the investigation. The Securities and Exchange Commission also has played a significant role in the LIBOR series of investigations, and the department expresses its appreciation to the United Kingdom’s Serious Fraud Office for its assistance and ongoing cooperation. The department has worked closely with the Dutch Public Prosecution Service and the Dutch Central Bank in the investigation of conduct at Rabobank. Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the department is grateful for their cooperation and assistance.
Former Bechtel Executive Sentenced to 42 Months in Prison and Ordered to Forfeit $5.2 Million in Connection with Kickback SchemeRead the Press Release
The former principal vice president of Bechtel Corporation and general manager of a joint venture operated by Bechtel and an Egyptian utility company was sentenced today to 42 months in prison for accepting $5.2 million in kickbacks to manipulate the competitive bidding process for state-run power contracts in Egypt.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland, Special Agent in Charge Stephen E. Vogt of the FBI’s Baltimore Division and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington D.C. Field Office made the announcement.
Asem Elgawhary, 73, of Potomac, Maryland, pleaded guilty on Dec. 4, 2014, to mail fraud, conspiracy to commit money laundering, and obstruction and interference with the administration of the tax laws. In imposing sentence today, U.S. District Judge Deborah K. Chasanow of the District of Maryland also ordered Elgawhary to forfeit $5.2 million.
From 1996 to 2011, Elgawhary was assigned by Bechtel—a U.S. corporation engaged in engineering, construction and project management—to be the general manager at Power Generation Engineering and Services Company (PGESCo), a joint venture between Bechtel and Egypt’s state-owned and state-controlled electricity company, known as EEHC. PGESCo assisted EEHC in identifying possible subcontractors, soliciting bids and awarding contracts to perform power projects for EEHC. According to his plea agreement, Elgawhary admitted to accepting a total of $5.2 million from three power companies, which they paid to secure a competitive and unfair advantage in the bidding process. One of the power companies, Alstom S.A., together with a Swiss subsidiary, pleaded guilty on Dec. 22, 2014, to violations of the Foreign Corrupt Practices Act (FCPA) in connection with a scheme to pay bribes to foreign officials, including Elgawhary, in various countries.
As Elgawhary admitted in his plea agreement, he attempted to conceal the kickback scheme by routing the payments through various off-shore bank accounts, including Swiss bank accounts, under his control. Elgawhary also sent various documents and “Representation Letters” to Bechtel executives and members of the PGESCo Board of Directors, falsely certifying that he had no knowledge or suspicion of any fraud at PGESCo, and that there were no possible violations of law or regulations that should have been considered for disclosure in PGESCo’s financial statements. Elgawhary also admitted that, in a further attempt to conceal the scheme, he made misrepresentations to counsel for Bechtel when he was interviewed in April 2011.
Elgawhary further admitted to obstructing and interfering with tax laws by failing to report any of the kickback payments as income for the tax years 2008 through 2011 and providing false information about foreign bank accounts.
Elgawhary, a dual U.S. and Egyptian citizen, was arrested on a criminal complaint when he flew into the United States on Nov. 26, 2013, and was indicted on Feb. 10, 2014.
The case was investigated by the FBI’s Baltimore Division and IRS-CI’s Washington D.C. Field Office. Significant assistance was provided by the Criminal Division’s Office of International Affairs, and law enforcement counterparts in Switzerland, Germany, Italy, Saudi Arabia and Cyprus. The case was prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David I. Salem of the District of Maryland.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
Fireman's Fund Insurance Company to Pay $44 Million to Settle False Claims Act AllegationsRead the Press Release
Fireman’s Fund Insurance Company has agreed to pay $44 million to settle allegations under the False Claims Act that it knowingly issued insurance policies that were ineligible under the U.S. Department of Agriculture’s (USDA) federal crop insurance program and falsified documents, the Justice Department announced today. Fireman’s Fund, an Allianz SE subsidiary headquartered in Novato, California, provides personal and commercial property insurance throughout the United States.
“Federal crop insurance provides vital support for farmers suffering crop losses due to natural disasters,” said Acting Assistant Attorney General Benjamin C. Mizer of the Department’s Civil Division. “The Department of Justice will continue aggressively to pursue those who abuse this important program.”
Between 1999 and 2002, Fireman’s Fund operated a crop insurance business and participated in the federal crop insurance program. Under the program, Fireman’s Fund sold and serviced crop insurance policies that were reinsured by the USDA for a portion of the risks.
The United States alleged that between Jan. 1, 1999, and Dec. 31, 2002, Fireman’s Fund knowingly issued federally reinsured crop insurance policies that were ineligible for federal reinsurance. Specifically, Fireman’s Fund allegedly backdated policies, forged farmers’ signatures, accepted late and altered documents, whited-out dates and signatures, and signed documents after relevant deadlines. The policies were issued by Fireman’s Fund offices in Modesto, California; Lambert, Mississippi; Fargo, North Dakota; Lubbock, Texas; Prosser, Washington; and Overland Park, Kansas.
“Today's announcement shows how working alongside our partners in law enforcement, we will ensure the integrity of the crop insurance program for American taxpayers and producers alike,” said Risk Management Agency Administrator Brandon Willis of the USDA.
The settlement resulted from a coordinated investigation by the Justice Department’s Civil Division, the U.S. Attorney’s Office in the Western District of North Carolina and the USDA’s Office of Inspector General, Office of Investigations, Office of General Counsel, and Risk Management Agency, including its Special Investigations Branch. The claims settled by this agreement are allegations only, and there has been no determination of liability.
Detroit-Area Business Owners Plead Guilty to Filing a False Tax ReturnRead the Press Release
Two West Bloomfield, Michigan, residents and Detroit-area business owners pleaded guilty today in the U.S. District Court for the Eastern District of Michigan in Detroit to one count of filing a false federal income tax return, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
According to the court filings, Todd and Stephen Schlussel each filed a false 2008 tax return that failed to report a significant amount of income. The unreported income was from several Detroit-area businesses that they operated and controlled, including Phoenix Real Estate Company, Phoenix Preferred Properties LLC, Phoenix Office Plaza-II LLC, the Lumber Company and FS Investments LLC.
U.S. District Judge Arthur J. Tarnow scheduled sentencing for Sept. 28. Both face a statutory maximum sentence of three years in prison and a fine of up to $250,000.
Acting Assistant Attorney General Ciraolo commended special agents of IRS–Criminal Investigation, who investigated the case, and Trial Attorneys Mark McDonald and Christopher O’Donnell of the Tax Division, who are prosecuting the case. Ciraolo also thanked the U.S. Attorney’s Office for the Eastern District of Michigan for their assistance on the case.
Department of Justice Releases Report on Philadelphia Police Department's Use of Deadly ForceRead the Press Release
Office of Community Oriented Policing Services Releases 48 Findings and 91 Recommendations to Implement Best Practices at the Philadelphia Police Department
Note: The report, Collaborative Reform Initiative—An Assessment of Deadly Force in the Philadelphia Police Department can be found HERE on the COPS Office website.
The Department of Justice’s Office of Community Oriented Policing Services (COPS Office) today announced the release of its initial report on the Philadelphia Police Department’s use of deadly force policies and practices.
In 2013, in response to an increase in officer-involved shootings, Philadelphia Police Commissioner Charles Ramsey requested technical assistance from the COPS Office. Launched in November 2013, the Collaborative Reform Initiative in Philadelphia focuses on the use of deadly force over a seven-year period.
“I applaud Commissioner Ramsey for stepping forward to take a more critical look at the use of force policies and practices within the Philadelphia Police Department,” said COPS Office Director Ronald Davis. “Through enhanced training, improved transparency of deadly force investigations, and strengthened use of force review processes, I am confident the Philadelphia Police Department will see great improvement to its law enforcement policies. The recommendations presented today benefit not only this department, but can serve as a guide for other police agencies across the country facing similar challenges.”
The COPS Office’s training and technical assistance provider for the assessment, CNA, reviewed hundreds of departmental policies, manuals and training plans; conducted 164 interviews with community members and department civilian and sworn personnel; facilitated focus groups with city and department stakeholders; and directly observed operations, including the use of force review board hearings of 20 officer-involved shooting incidents.
Through its 48 findings, the assessment identifies serious deficiencies in the department’s use of force policies and training, including a failure to maintain a certified field training program; deficient, inconsistent supervision and operational control of officer-involved shooting investigations and crime scenes; and oversight and accountability practices in need of improvement, the most notable being the need for the department to fully cooperate with the Police Advisory Commission.
To address these issues, the report prescribes 91 recommendations to help the department improve with respect to the use of force and implement industry best practices. The COPS Office will work with the Philadelphia Police Department over the next 18 months to help them implement these recommendations and will provide two progress reports during this time.
The report, Collaborative Reform Initiative—An Assessment of Deadly Force in the Philadelphia Police Department can be found on the COPS Office website.
The assessment was administered as part of the COPS Office's Collaborative Reform Initiative for Technical Assistance, designed to provide technical assistance to agencies facing significant law enforcement-related issues. Using subject matter experts, interviews and direct observations, as well as conducting extensive research and analysis, the COPS Office assists law enforcement agencies with enhancing and improving their policies and procedures, their operating systems and their professional culture. The COPS Office can issue a series of recommendations and be instrumental in assisting agencies with the implementation of those recommendations.
The COPS Office, headed by Director Ronald Davis, is a federal agency responsible for advancing community policing nationwide. Since 1995, COPS has awarded more than $14 billion to advance community policing, including grants awarded to more than 13,000 state, local and tribal law enforcement agencies to fund the hiring and redeployment of more than 126,000 officers and provide a variety of knowledge resource products including publications, training and technical assistance. For additional information about COPS, please visit the COPS Office website.
Statement by Attorney General Holder on the Departure of B. Todd Jones as the Director of the Bureau of Alcohol, Tobacco, Firearms and ExplosivesRead the Press Release
Attorney General Eric Holder released the following statement on the departure of Director B. Todd Jones of the Bureau of Alcohol, Tobacco, Firearms and Explosives:
“Throughout his tenure as Director of the Bureau of Alcohol, Tobacco, Firearms and Explosives, Todd Jones has cemented his reputation as an exemplary leader, a consummate professional, and an outstanding public servant. Since 2011, when I asked Todd to serve as Acting Director of ATF, he has made bold changes, advanced forward-looking policies, and taken innovative steps to strengthen ATF’s investigative capabilities—including ballistic imaging technology that recently played a critical role in the investigation of the shooting of two police officers. With his guidance, ATF has implemented its Frontline business model—a data-driven approach designed to ensure the agency can focus its resources to achieve maximum impact. The agency has developed groundbreaking law enforcement initiatives across the country to combat violent crime and bring dangerous criminals to justice. And as a result of Todd’s leadership, ATF has built a proactive, creative, and effective team that is well-prepared to drive the agency into the future.
“As a former officer in the United States Marine Corps, a highly talented prosecutor, and a proven leader who has been named a U.S. Attorney by two different presidents, Todd Jones has never hesitated to answer the call to serve his community and his country with exceptional integrity and uncommon distinction. As the first ever Senate-confirmed Director of ATF, his indelible legacy will serve as an inspiring example for all those who follow him. On behalf of the Department of Justice, I thank him for his extraordinary service and wish him all the best as he takes the next steps in his already remarkable career.”
Owner of Medical Equipment Supply Company Convicted for $3.5 Million Medicare and Medi-Cal Fraud SchemeRead the Press Release
A jury in federal court in Los Angeles convicted the former owner of a durable medical equipment supply company of health care fraud charges in connection with a $3.5 million Medicare and Medi-Cal fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Los Angeles Region, Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Field Office, and Special Agent in Charge Joseph Fendrick of the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse made the announcement.
Sylvia Walter-Eze, 48, of Stevenson Ranch, California, was convicted of one count of conspiracy to commit health care fraud, four counts of health care fraud, and one count of conspiracy to pay and receive illegal kickbacks. Sentencing is scheduled for June 15, 2015, before U.S. District Judge R. Gary Klausner of the Central District of California.
The evidence at trial demonstrated that Walter-Eze, the then-owner of Ezcor Medical Supply, paid illegal kickbacks to patient recruiters in exchange for patient referrals. The evidence further showed that Walter-Eze paid kickbacks to physicians for fraudulent prescriptions, primarily for medically unnecessary—but expensive—power wheelchairs, that she then used to support her fraudulent bills to Medicare and Medi-Cal.
Between 2007 and 2012, Walter-Eze submitted $3,521,786 in claims to Medicare and Medi-Cal, and received $1,939,529 in reimbursement for those claims.
The case was investigated by the FBI, HHS-OIG’s Los Angeles Regional Office and the California Department of Justice, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The case was prosecuted by Trial Attorneys Blanca Quintero and Alexander F. Porter of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Owner of Los Angeles Medical Supply Company Convicted in $3.3 Million Medicare Fraud SchemeRead the Press Release
A federal jury in Los Angeles found the owner of a medical supply company guilty of four counts of health care fraud today in connection with a $3.3 million Medicare fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles Region and Assistant Director in Charge David L. Bowdich of the FBI’s Los Angeles Field Office made the announcement.
Hakop Gambaryan, 55, of East Hollywood, the owner of Colonial Medical Supply, was convicted of four counts of health care fraud. A sentencing hearing will take place before U.S. District Judge Otis D. Wright II of the Central District of California, and will be scheduled at a later date.
According to evidence presented at trial, between March 2006 and December 2012, Gambaryan paid cash kickbacks to medical clinics for fraudulent prescriptions for durable medical equipment, such as expensive power wheelchairs, which the patients did not need. Gambaryan then used these prescriptions to bill Medicare for the unnecessary power wheelchairs and other equipment.
At trial, the evidence established that Gambaryan personally delivered power wheelchairs to many beneficiaries who were able to walk without assistance. In one instance, Gambaryan carried a power wheelchair up a flight of stairs for a woman who lived in a second floor apartment with no elevator. In another instance, the power wheelchair would not fit inside the beneficiary’s home so Gambaryan put it in the beneficiary’s garage.
The evidence also demonstrated that Gambaryan generated false documentation to support the fraudulent claims, including fake home assessments that made it appear home assessments had occurred when they had not. In addition, Gambaryan photocopied beneficiary signatures hundreds of times to create the appearance that the beneficiaries consented to ongoing durable medical equipment rentals, when in reality, at least two of the beneficiaries had passed away prior to the date they supposedly signed the rental agreements.
The evidence showed that Gambaryan submitted approximately $3.3 million in false and fraudulent claims to Medicare, and received more than $1.7 million on those claims.
The case was investigated by the FBI and HHS-OIG. The case is being prosecuted by Trial Attorneys Fred Medick and Ritesh Srivastava of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov.
North Carolina Real Estate Investor Indicted for Conspiracy to Commit Mail FraudRead the Press Release
A federal grand jury in Raleigh, North Carolina, returned a one-count indictment against a real estate investor, charging him with conspiracy to commit mail fraud as part of a scheme related to public real estate foreclosure auctions, the Department of Justice announced today.
The indictment, filed in U.S. District Court of the Eastern District of North Carolina on March 18, 2015, charges real estate investor Rodney S. Daw, of Raleigh, with conspiracy to commit mail fraud affecting a financial institution. The department alleged that the scheme defrauded homeowners, financial institutions and others with a legal interest in selected foreclosure properties, for the unlawful purpose of obtaining money and property through fraudulent pretenses, representations or promises.
The indictment charges Daw with conspiring with others to, among other things, make and receive payoffs from co-conspirators in exchange for agreements not to compete in public auctions, and to divert money away from homeowners, financial institutions and others with a legal interest in selected properties. Several financial institutions suffered actual monetary losses as a result of the conspiracy. According to the indictment, Daw participated in the mail fraud conspiracy beginning at least as early as December 2002 and continuing until at least April 2005.
“This action marks the fourth state in which a defendant has been indicted in our ongoing investigation into illegal conduct at public real estate foreclosure auctions,” said Assistant Attorney General Bill Baer of the Antitrust Division. “We will continue to vigorously pursue those individuals who sought to capitalize on this nation’s financial crisis by seeking personal gain at the expense of homeowners and financial institutions.”
“This federal indictment illustrates the FBI’s commitment toward assisting the U.S. Department of Justice’s Antitrust Division in ensuring that those who engage in real estate investments and transactions do so on a level playing field,” said Special Agency in Charge J. Britt Johnson of the FBI’s Atlanta Field Office. “The FBI asks that anyone with information regarding such activities as alleged in this indictment contact their nearest FBI field office.”
To date, two individuals have pleaded guilty in connection with the department’s ongoing investigation into bid rigging and fraudulent schemes in the North Carolina real estate foreclosure auction industry.
The charge of conspiracy to commit mail fraud affecting a financial institution carries a maximum penalty of 30 years in prison and a $1 million fine.
This charge stems from an ongoing investigation being conducted by the Antitrust Division’s Washington Criminal II Section and the FBI’s Atlanta Field Office, with the assistance of the U.S. Attorney’s Office of the Eastern District of North Carolina. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions in North Carolina should contact the Washington Criminal II Section of the Antitrust Division at 202-598-2507, or visit www.justice.gov/atr/contact/newcase.htm.
These 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.
Greenbrier Village Settles Lawsuit Alleging Unlawful Discrimination Against Families with Children in Violation of Fair Housing ActRead the Press Release
The Department of Justice today announced a settlement agreement between the United States, the Greenbrier Village Homeowner’s Association Inc. (Greenbrier), Gassen Company Inc. (Gassen) and an individual Gassen employee to resolve a lawsuit filed on Nov. 25, 2013. The lawsuit alleged that Greenbrier and Gassen unlawfully discriminated against residents with children by issuing and enforcing rules regarding the use of common areas at the Condominiums of Greenbrier Village. The settlement includes a commitment from Greenbrier to establish a new non-discrimination policy in accordance with the Fair Housing Act, pay a $10,000 penalty to the United States and pay $100,000 to six families that suffered as a result of the discrimination.
“The Fair Housing Act prohibits housing providers from discriminating against families with children,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “This means more than just allowing those families to live at the property. It means giving these families fair access to the common areas and amenities.”
“Housing discrimination has no place in Minnesota,” said U.S. Attorney Andrew M. Luger of the District of Minnesota. “This case reaffirms the long-held principle of our civil rights laws that families come in all shapes and sizes. Arbitrary rules that restrict the rights of children to enjoy the places where they live are not acceptable.”
“Families with children have the right to live in condos that don’t meet federal requirements to qualify as housing for older persons,” said HUD Assistant Secretary Gustavo Velasquez for Fair Housing and Equal Opportunity. “HUD is sending a clear message to homeowners associations and management companies that they must comply with the Fair Housing Act.”
According to the settlement agreement and documents filed in court, Greenbrier and Gassen allegedly engaged in a pattern of discrimination by creating and enforcing rules in a manner that prevented children from equal enjoyment of common areas and making statements that indicated a preference against families with children. The United States alleged that the defendants required children to be supervised at all times when in a common area, prohibited or unreasonably restricted children from using the common areas and selectively enforced the common area rules by issuing warnings and violation notices to residents with children, but not to adult residents engaging in the same activities.
According to the settlement agreement, at least six families suffered as a result of Greenbrier and Gassen’s alleged discrimination. Greenbrier agreed to a financial settlement with each of the families, totaling $100,000. Greenbrier will also adopt and implement a new anti-discrimination policy, its board members and staff will undergo training on the Fair Housing Act, with a specific emphasis on discrimination on the basis of familial status, and Greenbrier will pay a civil penalty to the United States.
Attorneys from the Civil Rights Division and Assistant U.S. Attorneys Bahram Samie and Ana Voss of the District of Minnesota handled this matter for the United States.
U.S. Attorney Luger thanked HUD’s Office of Fair Housing and Equal Opportunity for assisting in the investigation.
Former U.K. Rabobank Trader Appears in U.S. Court to Face LIBOR Interest Rate Manipulation ChargesRead the Press Release
The former global head of liquidity and finance for Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) has waived extradition and appeared in U.S. federal court today for an arraignment on charges related to his alleged role in a scheme to manipulate the U.S. Dollar (USD) and Yen London InterBank Offered Rate (LIBOR), a benchmark interest rate.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement.
Anthony Allen, 43, of Hertsfordshire, England, appeared in the Southern District of New York and pleaded not guilty to a superseding indictment charging him with conspiracy to commit wire and bank fraud and substantive counts of wire fraud. The court released Allen on a $500,000 bond and set a trial date for Oct. 5, 2015.
According to the superseding indictment, at the time relevant to the charges, LIBOR was an average interest rate, calculated based on submissions from leading banks around the world, reflecting the rates those banks believed they would be charged if borrowing from other banks. It serves as the primary benchmark for short-term interest rates globally and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products. LIBOR was published by the British Bankers’ Association (BBA), a trade association based in London. LIBOR was calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year. The published LIBOR “fix” for U.S. Dollar and Yen currency for a specific maturity was the result of a calculation based upon submissions from a panel of 16 banks, including Rabobank.
According to allegations in the superseding indictment, Allen, who was Rabobank’s Global Head of Liquidity & Finance and the manager of the company’s money market desk in London, put in place a system in which Rabobank employees who traded in derivative products linked to USD and Yen LIBOR regularly communicated their trading positions to Rabobank’s LIBOR submitters, who submitted Rabobank’s LIBOR contributions to the BBA. Rabobank traders entered into derivative contracts containing USD or Yen LIBOR as a price component and they allegedly asked others at Rabobank to submit LIBOR contributions consistent with the traders’ or the bank’s financial interests, to benefit the traders’ or the banks’ trading positions.
The charges in the superseding indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
The investigation is being conducted by special agents, forensic accountants and intelligence analysts in the FBI’s Washington Field Office. The prosecution is being handled by the Criminal Division’s Fraud Section and the Antitrust Division. The Criminal Division’s Office of International Affairs has provided assistance in this matter.
The Justice Department expresses its appreciation for the assistance provided by various enforcement agencies in the United States and abroad. The Commodity Futures Trading Commission’s Division of Enforcement referred this matter to the department and, along with the U.K. Financial Conduct Authority, has played a major role in the investigation. The Securities and Exchange Commission also has played a significant role in the LIBOR series of investigations, and the department expresses its appreciation to the United Kingdom’s Serious Fraud Office for its assistance and ongoing cooperation. The department has worked closely with the Dutch Public Prosecution Service and the Dutch Central Bank in the investigation of conduct at Rabobank. Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the department is grateful for their cooperation and assistance.
Utah-Based Washakie Renewable Energy LLC Settles Renewable Fuel Standard ViolationsRead the Press Release
The Department of Justice today filed a stipulation of settlement resolving civil claims against Washakie Renewable Energy LLC (Washakie) for violations of the Renewable Fuel Program under the Clean Air Act. The stipulation of settlement was filed in the U.S. District Court of the District of Columbia. A complaint stating the government’s claims was filed at the same time, announced Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division and Assistant Administrator Cynthia Giles for the Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance.
From January to October of 2010, Washakie generated more than 7.2 million renewable identification numbers (RINs) based upon its production of biodiesel at its Plymouth, Utah, facility. During that time period, however, Washakie did not produce any biodiesel - at the Plymouth facility or anywhere else. The biodiesel associated with the 7.2 million RINs would have accounted for a reduction of emissions equivalent to more than 30,000 metric tons of carbon dioxide.
The stipulation of settlement requires Washakie to pay a civil penalty of $3 million. In addition to the penalty, Washakie has already retired more than 7.2 million RINs by purchasing RINs from other parties. By doing this, Washakie tried to correct the problem it created by putting invalid RINs on the market. In order to protect the program's integrity and maintain a level playing field for regulated companies, EPA is pursuing enforcement actions against renewable fuel producers and importers that generated invalid RINs.
“The defendant made quite a profit by failing to adhere to the requirements of the Renewable Fuel Program regulations,” said Assistant Attorney General Cruden. “The penalty here sends the message that renewable fuel producers will be held accountable for meeting all legal requirements. The Department of Justice remains committed to taking the profit out of illegal activity.”
“This case is another example of the EPA’s commitment to maintain the integrity of the Renewable Fuel Standard program,” said Assistant Administrator Giles. “Making sure producers are supporting their claims with production of actual renewable fuels is critical to reducing greenhouse gas emissions that are fueling climate change.”
The Energy Independence and Security Act of 2007 expanded and strengthened the Renewable Fuel Program to encourage the blending of renewable fuels into the motor vehicle fuel supply of the U.S. and thereby reduce the nation’s dependence on foreign oil, help grow the renewable energy industry in the United States, and achieve significant greenhouse gas reductions. Authorized renewable fuels producers and importers could generate and attach credits – known as “renewable identification numbers” or “RINs” – to renewable fuels, such as biodiesel, that they produced or imported. Fossil fuel refiners and importers are obligated to obtain RINs each year according to the volume of fossil fuels that they put on the market. These “obligated parties” must purchase RINs or produce them themselves and they are responsible for the acquisition of valid RINs to meet their renewable fuel quotas. If transferred RINs are invalid, the transferees are liable for failing to satisfy their obligations. Because certain companies need RINs to comply with regulatory obligations, RINs have market value. A RIN is invalid if it incorrectly identifies, among other things, the production facility, or the type of fuel produced, or the volume of fuel produced and the regulations prohibit the transfer of invalid RINs.
Washakie registered with the EPA as a renewable fuel producer under the Renewable Fuel Regulations and identified its facility in Plymouth as a renewable fuel production facility. EPA initially discovered these violations during an inspection of Washakie’s Plymouth facility in 2010. EPA uncovered additional information concerning the violations in Washakie’s response to information requests and further investigation. There is no evidence that Washakie produced any biodiesel anywhere during the period covered by the complaint.
To read the settlement, or for more information about the case, visit: http://www2.epa.gov/enforcement/washakie-renewable-energy-llc-clean-air-act-settlement
For more information on the Renewable Fuel Standards, visit: http://www2.epa.gov/enforcement/civil-enforcement-renewable-fuel-standard-program
Justice Department Highlights Ongoing Efforts to Protect the Public and the Fisc from Fraudulent Tax Return Preparers and Tax Scheme PromotersRead the Press Release
During this tax-filing season, the Justice Department announced today the results of its ongoing efforts to combat fraudulent tax return preparers and promoters of tax fraud schemes. The department’s Tax Division has an active program to stop fraudulent return preparers and promoters from violating federal tax laws, particularly where the fraudulent activity can harm individual customers or drain the U.S. Treasury.
According to available Internal Revenue Service (IRS) statistics, taxpayers filed approximately 145 million individual income tax returns in 2014, with more than 84 million individuals using a paid tax return preparer. The division’s civil enforcement efforts have been directed against both large-scale return preparation franchises and smaller, independent return preparers and promoters. Last year, the Tax Division obtained permanent injunctions against more than 40 preparers, promoters and businesses operating all over the United States.
“In 2014, the Tax Division continued its pursuit of tax return preparers and promoters who violate the tax laws through abusive schemes and scams, and take advantage of their customers,” said Acting Assistant Attorney General Caroline D. Ciraolo of the Tax Division. “The division’s attorneys and staff, along with our colleagues in the IRS, are committed to identifying, enjoining, and where appropriate, prosecuting those individuals who engage in such conduct.”
Preparers
As in past years, the IRS has again designated return preparer fraud as one of the “Dirty Dozen” tax scams to avoid during return filing season. The Tax Division took action in 2014 against preparers to curb some of the most common types of return preparation fraud:
Your refund should never be deposited directly into a preparer’s bank account.
In United States v. Nevers (E.D. La), the court barred a return preparer from preparing returns after she deposited refunds into her own account and took a cut before remitting the balance to customers, among other things.
Do not use a preparer who is willing to electronically file your return using your last pay stub instead of your W-2.
In United States v. Instant Tax Service, et al. (S.D. Ohio) the Court of Appeals for the Sixth Circuit affirmed the favorable district court judgment that shut down ITS Financial LLC, because of its pay stub filing and other predatory and fraudulent practices. Before being shut down, the Instant Tax Service franchise claimed it was the fourth largest tax-return-preparer franchisor in the United States. In affirming the district court’s relief, the Sixth Circuit noted “that Congress provided a broad grant of authority” to stop predatory and other harmful tax preparation practices.
Do not use a preparer who fabricates business expenses or deductions, or who claims bogus credits you may not be entitled to claim (i.e. Earned Income Tax Credit (EITC), child care, education credits).
The Tax Division secured injunctions in many cases, including United States v. Almanza (E.D. Pa.) in which the preparer claimed bogus additional child tax credit on returns and United States v. Branson (S.D. Miss.) in which the preparer claimed false EITCs and education credits. In Branson, more than 99 percent of the 2,400 returns prepared sought a refund, and 97 percent of the returns audited understated the customer’s tax liability by an average of $5,000.
Some other fraudulent schemes and practices that have been stopped through injunction orders entered by federal courts throughout the country include:
• preparing phony tax-return forms with fabricated businesses and income;
• claiming false education and homebuyer credits;
• claiming false and inflated deductions;
• claiming false filing status and false dependents;
• filing tax returns without customer consent or authorization;
• preparing bogus W-2 Forms based on information from employee paystubs;
• falsifying return information to claim inflated EITCs;
• preparing tax returns but failing to sign them as required; and
• defrauding customers by charging exorbitant fees.
Federal courts across the country — in Florida; Pittsburgh; Philadelphia; Memphis, Tennessee; Fresno, California; Waco and San Antonio, Texas; Montgomery, Alabama; New Orleans; Mississippi, and Georgia — have similarly stopped abusive tax return preparers from continuing their harmful conduct.
In September 2014, the division filed eight injunction suits in Florida to bar Walner G. Gachette, the founder of Orlando-based tax preparation company LBS Tax Services, seven LBS Tax Services franchisees and three LBS Tax Services managers from owning, operating or franchising a tax return preparation business and preparing tax returns for others. These cases also seek disgorgement from the defendants of the tax-preparation fees they charged their customers. According to the complaints, in 2013, LBS Tax Services operated at least 239 stores (192 owned by the named defendants) in Alabama, Georgia, Florida, Mississippi, North Carolina, South Carolina, Tennessee and Texas. In February 2015, a federal court in Orlando permanently barred two managers from preparing tax returns for others and from owning or operating a tax return preparation business.
Promoters
In addition to combating fraudulent return preparation, the division also filed suits in 2014 to enjoin promoters of fraudulent tax schemes, including Kenneth Elliott and Sea Nine Associates Inc., who promoted a purportedly legal welfare benefit plan. According to the division’s complaint, Elliott promoted plans that illegally permitted customers to claim substantial tax deductions for their plan contributions, then later access the full cash value of their plan contributions by taking out loans against the life insurance policies purchased with plan contributions, costing the U.S. Treasury in the process. The division obtained injunctions against Elliott and Sea Nine from promoting and selling the welfare benefit scheme.
In July 2014, the division filed suit in Chicago against Victor Crown and his various business entities to enjoin them from promoting false withholding and net-operating-loss tax schemes. According to the complaint, Crown prepares federal income tax returns and other documents that claim false amounts of income tax withheld from his customers’ earnings, and that they are entitled to claim bogus net-operating-losses because his customers sought, but did not receive, full award amounts for a separate class-action suit. Crown’s claims lack merit, according to the suit, because an employee is not entitled to claim an income tax withholding credit for more than the amount of income taxes actually withheld from their wages, and because nothing in the Internal Revenue Code permits a taxpayer to deduct the amount of a denied claim as a net operating loss.
In the past decade, the Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the division’s website.
As noted, in addition to the civil enforcement through injunctions that stop their illegal actions, many return preparers and promoters also face prosecution. Examples of those investigations can be found for fiscal years 2014 and 2015.
The IRS advises taxpayers who may select a tax professional to prepare their return to be careful in their selection. The IRS offers some basic tips and guidelines to assist taxpayers in choosing a reputable tax professional and is also offering taxpayers a number of instructional YouTube videos to help them prepare their own taxes for the upcoming filing season. Several options, including free assistance with preparation and electronic filing for the elderly and individuals making $50,000 or less, are available to help taxpayers prepare for the current tax season and receive their refunds as easily as possible.
Illinois Woman Appears in Court on Charges of Providing Material Support to TerroristsRead the Press Release
St. Louis, MO – JASMINKA RAMIC of Rockford, Illinois, was arrested in Germany and extradited to the United States to face charges. She appeared in federal court earlier today in St. Louis for an initial appearance. She is set for an arraignment/detention hearing Monday, March 23, 2015.
The United States Attorney’s Office for the Eastern District of Missouri announced the indictment February 6 upon the arrests of the other five defendants on terrorist related crimes. Charged in the indictment are: Ramic, Ramiz Zijad Hodzic, his wife Sedina Unkic Hodzic, and Armin Harcevic, all of St. Louis County, Missouri; Nihad Rosic of Utica, New York; and Mediha Medy Salkicevic of Schiller Park, Illinois. All defendants are charged with conspiring to provide material support and resources to terrorists, and with providing material support to terrorists. Ramiz Zijad Hodzic and Nihad Rosic are also charged with conspiring to kill and maim persons in a foreign country.
If convicted, the crimes of conspiring to provide material support carry penalties ranging up to 15 years imprisonment for each count and/or fines up to $250,000. The crime of conspiring to kill and maim persons in a foreign country carries a penalty of up to life in prison. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
This case was investigated by the St. Louis FBI’s Joint Terrorism Task Force, U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI), U.S. Postal Inspection Service, St. Louis Metropolitan and St. Louis County Police Departments, with assistance from multiple law enforcement agencies. The case is being prosecuted by Assistant U.S. Attorneys Matthew Drake, Howard Marcus and Kenneth Tihen of the Eastern District of Missouri and Mara Kohn, a Trial Attorney in the Counterterrorism Section of the Department of Justice.As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Former Head of Operations at New York Brokerage Firm Pleads Guilty to Tax Evasion and Filing False Tax ReturnRead the Press Release
A former resident of North Bellmore, New York, pleaded guilty today in the U.S. District Court for the Eastern District of New York in Long Island to one count of tax evasion and one count of filing a false federal income tax return, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
According to the indictment, Dominick Pannitti, 38, was head of operations at a securities brokerage firm located in Syosset, New York. The brokerage firm used an automated system designed to adjust customers’ trading accounts for amounts less than $1,000. During 2005 and 2006, Pannitti used the automated system to credit his own trading accounts–set up in the name of a corporation that he owned–more than 850 times in increments of less than $1,000. Pannitti was not entitled to most of these credits, which totaled more than $570,000. Pannitti failed to report the income on his 2005 and 2006 federal income tax returns.
Pannitti faces a statutory maximum sentence of five years in prison and up to a $250,000 fine for the tax evasion count and a statutory maximum sentence of three years in prison and up to a $250,000 fine for the false return count at his sentencing before U.S. District Judge Arthur D. Spatt.
Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation and the FBI, who investigated the case, and Trial Attorneys Mark Kotila and Jeffrey Bender of the Tax Division, who are prosecuting the case. Ciraolo also thanked the U.S. Attorney’s Office for the Eastern District of New York for their substantial assistance.
Departments of Justice and Health and Human Services Announce over $27.8 Billion in Returns from Joint Efforts to Combat Health Care FraudRead the Press Release
Administration Recovers $7.70 for Every Dollar Spent on Health Care-Related Fraud and Abuse
More than $27.8 billion has been returned to the Medicare Trust Fund over the life of the Health Care Fraud and Abuse Control (HCFAC) Program, Attorney General Eric Holder and Department of Health and Human Services (HHS) Secretary Sylvia M. Burwell announced today. The government’s health care fraud prevention and enforcement efforts recovered $3.3 billion in taxpayer dollars in Fiscal Year (FY) 2014 from individuals and companies who attempted to defraud federal health programs, including programs serving seniors, persons with disabilities or those with low incomes. For every dollar spent on health care-related fraud and abuse investigations in the last three years, the administration recovered $7.70. This is about $2 higher than the average return on investment in the HCFAC program since it was created in 1997. It is also the third highest return on investment in the life of the program.
“As the innovative and collaborative work of the Health Care Fraud and Abuse Control Program proceeds, more taxpayer money is being recovered, more criminals are facing justice, and more fraud is being punished, prevented and deterred,” said Attorney General Eric Holder. “The extraordinary return on investment we've obtained speaks to the skill, the tenacity, and the inspiring success of the hardworking men and women fighting on behalf of the American people. And with these outstanding results, we are sending the unmistakable message that we will not waver in our mission to pursue fraud, to protect vulnerable communities, and to preserve the public trust.”
“Eliminating fraud, waste and abuse is a top priority for the Department of Health and Human Services,” said HHS Secretary Sylvia Burwell. “These impressive recoveries for the American taxpayer demonstrate our continued commitment to this goal and highlight our efforts to prosecute the most egregious instances of health care fraud and prevent future fraud and abuse. New enrollment screening techniques and computer analytics are preventing fraud before money ever goes out the door. And together with the continued support of Congress and our partners at the Department of Justice, we’ve cracked down on tens of thousands health care providers suspected of Medicare fraud – all of which are helping to extend the life of the Medicare Trust Fund.”
The recoveries announced today reflect a two-pronged strategy to combat fraud and abuse. Under new authorities granted by the Affordable Care Act, the administration continues to implement programs that move away from “pay and chase” to preventing health care fraud and abuse in the first place. In addition, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), run jointly by the HHS Office of the Inspector General and the Justice Department, is changing how the federal government fights certain types of health care fraud. These cases are being investigated through "real-time" data analysis in lieu of a prolonged subpoena and account analyses, resulting in significantly shorter periods of time between fraud identification, arrest and prosecution.
Increased funding from the administration and Congress has allowed HHS and the Justice Department to build on early successes of the Medicare Strike Force by expanding into nine geographic territories – Miami, Los Angeles, Detroit, Houston, Brooklyn, New York, Southern Louisiana, Tampa, Florida, Chicago and Dallas. Since its inception, Strike Force prosecutors filed more than 963 cases charging more than 2,097 defendants who collectively billed the Medicare program more than $6.5 billion; 1,443 defendants pleaded guilty and 191 others were convicted in jury trials; and 1,197 defendants were sentenced to imprisonment for an average term of approximately 47 months. Through the Strike Force and other efforts, in FY 2014 alone, the Justice Department opened 924 new criminal health care fraud investigations. Federal prosecutors filed criminal charges in 496 cases involving 805 defendants. A total of 734 defendants were convicted of health care fraud‑related crimes during the year.
Another powerful tool in the effort to combat health care fraud is the federal False Claims Act. In 2014, the Justice Department’s Civil Division and the U.S. Attorneys’ Offices obtained $2.3 billion in settlements and judgments from civil cases involving fraud and false claims against federal health care programs such as Medicare and Medicaid. Since January 2009, the Justice Department has recovered more than $15.2 billion in cases involving health care fraud. These amounts reflect federal losses only. In many of these cases, the department was instrumental in recovering additional billions of dollars for state health care programs. In FY 2014, the department continued its enforcement of the civil False Claims Act and the Federal Food, Drug and Cosmetic Act, and opened 782 new civil health care fraud investigations.
The Centers for Medicare & Medicaid Services (CMS) is also adopting a number of preventive measures to combat fraud and abuse. Provider enrollment is the gateway to billing the Medicare program, and CMS has put critical safeguards in place to make sure that only legitimate providers are enrolling in the program. The Affordable Care Act required a CMS revalidation of all existing 1.5 million Medicare suppliers and providers under new screening requirements. CMS will have requested revalidations by March 2015. As a result of this and other proactive initiatives, CMS has deactivated 450,000 enrollments and revoked nearly 27,000 enrollments to prevent certain providers from re-enrolling and billing the Medicare program. Both of these actions immediately stop billing. A provider with deactivated billing privileges can reactivate at any time, and a revoked provider is barred from re-entry into Medicare for a period ranging from one to three years. CMS has also issued a regulation requiring prescribers of Part D drugs to enroll in Medicare and undergo screening.
CMS also continued the fiscal 2014 temporary moratoria on the enrollment of new home health or ambulance service providers in six fraud hot spots: Miami, Chicago, Dallas, Houston, Detroit and Philadelphia (which includes some counties in New Jersey). This extension will allow CMS to continue its actions to suspend payments or remove providers from the program before allowing new providers into potentially over-supplied markets.
Similar to the technology used by credit card companies, CMS is using its Fraud Prevention System to apply advanced analytics to all Medicare fee-for-service claims on a streaming, national basis. The Fraud Prevention System identifies aberrant and suspicious billing patterns which in turn trigger actions that can be implemented swiftly to prevent payment of fraudulent claims. In the second year, the system saved $210.7 million, almost double the amount identified during the first year of the program.
The HCFAC annual report is available at www.oig.hhs.gov/publications/hcfac.asp.
For more information on the joint Justice Department-HHS Strike Force activities, visit: www.StopMedicareFraud.gov/.
For more information on the fraud prevention accomplishments under the Affordable Care Act visit: www.healthcare.gov/news/factsheets/2012/02/medicare-fraud02142012a.html.
Cardiac Monitoring Company to Pay $6.4 Million for Alleged Overbilling of Government Health Care ProgramsRead the Press Release
BioTelemetry Inc., a heart monitoring company headquartered in Malvern, Pennsylvania, has agreed to pay $6.4 million to resolve allegations made under the False Claims Act (FCA) that its subsidiary, CardioNet, overbilled Medicare and other federal health programs for Mobile Cardiac Outpatient Telemetry (MCOT) services when those services were not reasonable or medically necessary, the Justice Department announced today.
“Billing for a higher-level service that is not necessary to treat a patient’s condition to receive higher reimbursement from federal health care programs will not be tolerated,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “Such conduct wastes critical federal health care program funds and drives up the costs of health care for all of us.”
“Today’s settlement is another example of how we will act to stop abusive billing practices and hold companies accountable for conduct that raises everyone’s healthcare costs,” said Acting U.S. Attorney Annette L. Hayes for the Western District of Washington. “This settlement should send a message to all providers: do not misuse federal billing systems to improperly gouge the healthcare system upon which so many Americans rely.”
An MCOT monitor provides real-time, outpatient cardiac monitoring. MCOT monitors are worn by patients for a period of time during which the device continuously records the activities of the patient’s heart, including any irregular rhythms or other cardiac event, and transmits data to CardioNet’s diagnostic center using cell phone technology. Traditional, less expensive event monitors only download patient data periodically over a landline.
The government alleges that CardioNet was aware that MCOT services were not eligible for Medicare reimbursement when provided to patients who had experienced only mild or moderate heart palpitations, since less expensive monitors could effectively collect data about those patients’ conditions. Nonetheless, CardioNet allegedly submitted claims to Medicare for those patients containing the billing code for the more expensive MCOT services along with an inaccurate diagnostic code that misrepresented the true condition of the patients and their need for MCOT services.
“Sticking taxpayers with a hefty bill for unneeded medical care will never be tolerated,” said Special Agent in Charge Ivan Negroni of the U.S. Health and Human Services, Office of Inspector General (HHS-OIG), Regional Office including Washington. “Working in close coordination with our law enforcement partners we will tirelessly pursue these suspected violators.”
“Federal employees deserve health care providers, including remote monitoring companies, that meet the highest standards of ethical and professional behavior,” said Inspector General Patrick E. McFarland of the U.S. Office of Personnel Management. “Today's settlement reminds all providers that they must observe those standards, and reflects the commitment of federal law enforcement organizations to pursue improper and illegal billings that increase the cost of medical care.”
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.8 billion through False Claims Act cases, with more than $15.2 billion of that amount recovered in cases involving fraud against federal health care programs.
This investigation was jointly handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Washington and HHS-OIG.
The claims resolved by this agreement are allegations only and there has been no determination of liability.
Adventist Health System to Pay $5.4 Million to Resolve False Claims Act AllegationsRead the Press Release
Adventist Health System Sunbelt Healthcare Corporation (Adventist) has agreed to pay $5,412,502 to resolve claims that it violated the False Claims Act by providing radiation oncology services to Medicare and TRICARE beneficiaries that were not directly supervised by radiation oncologists or similarly qualified persons, the Department of Justice announced today. Adventist is a non-profit healthcare organization operating a large network of hospitals in the South and the Midwest, and doing business in Florida as Florida Hospital.
“Today’s settlement demonstrates our continued vigilance to ensure that federal health care beneficiaries receive the highest quality of patient care,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “It is critical that health care providers adequately supervise the services they provide to their patients.”
Radiation oncology services provided to patients served by Medicare and TRICARE, the Department of Defense’s health care program, must be directly supervised by a radiation oncologist or similarly qualified personnel. The United States alleged that, from Jan. 1, 2010, through Dec. 31, 2013, Adventist violated this supervision requirement for radiation oncology services provided to federal health care program beneficiaries at several Florida locations, including in Altamonte Springs, Daytona Beach, Deland, Kissimmee, Orange City, Orlando, Palm Coast and Winter Park. These services included radiation simulation, dosimetry, radiation treatment delivery and devices, and intensity-modulated radiation therapy.
“Medicare and TRICARE patients deserve high quality health care,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida. “We will not tolerate providers recklessly cutting corners, particularly when furnishing such critical medical services as radiation oncology.”
The settlement partially resolves allegations made in a qui tam lawsuit under the False Claims Act filed in Tampa, Florida, by Dr. Michael Montejo, a radiation oncologist and former employee of Florida Oncology Network P.A., a radiation oncology group. The act permits private individuals to sue on behalf of the government for false claims and to share in any recovery. Dr. Montejo will receive $1,082,500 as his share of the recovery.
“Providing proper supervision of radiation oncology services is an important requirement in federal health care programs such as Medicare,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services Office of Inspector General. “Our agency will continue to hold health care providers accountable for meeting the requirements in these taxpayer-funded programs.”
This settlement illustrates the government’s emphasis on combating healthcare 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 on efforts to reduce and prevent Medicare and Medicaid 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 $23.8 billion through False Claims Act cases, with more than $15.2 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement was the result of a coordinated investigation between the U.S. Attorney’s Office for the Middle District of Florida, the Civil Division’s Commercial Litigation Branch and the U.S. Department of Health and Human Services’ Office of Inspector General.
The case is captioned United States ex rel. Montejo v. Adventist Health System Sunbelt Healthcare Corp., Case No. 8:13-CV-206-T-23AEP (M.D. Fla.). The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Owner of Medical Clinic and Accountant Plead Guilty for Roles in $50 Million Medicare Fraud SchemeRead the Press Release
The owner and operator of a New Orleans-based medical clinic and an accountant pleaded guilty today in federal court in New Orleans for their roles in a $50 million Medicare fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth A. Polite Jr. of the Eastern District of Louisiana, Special Agent in Charge Michael J. Anderson of the FBI’s New Orleans Field Office, Special Agent in Charge Mike Fields of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Dallas Regional Office and Louisiana Attorney General James D. “Buddy” Caldwell made the announcement.
Paige Okpalobi, 58, of Slidell, Louisiana, and Christopher White, 48, of Destrehan, Louisiana, pleaded guilty before Chief U.S. District Judge Sarah S. Vance of the Eastern District of Louisiana to one count of conspiracy to commit health care fraud and one count of conspiracy to falsify records in a federal investigation. Sentencing hearings for each are scheduled for July 1, 2015.
According to her plea agreement, Okpalobi owned and operated a New Orleans-based medical clinic that employed doctors to certify that Medicare beneficiaries were qualified to receive home health care. Okpalobi admitted that doctors employed at her clinic falsely certified that certain of their clients—specifically, Medicare beneficiaries—were homebound and in need of home health care services. Okpalobi further admitted that she and other co-conspirators then used the false certifications to bill Medicare for fraudulent home health care services through home health care companies she jointly operated with another co-conspirator.
According to his plea agreement, White managed financial and accounting services at Okpalobi’s companies and other companies. White admitted that he coordinated the payment of patient recruiters who illegally sold Medicare beneficiary information to Okpalobi and her co-conspirators. This information was used by home health companies operated by Okpalobi and others to bill Medicare for home health care services that were not medically necessary and often not delivered at all.
Okpalobi and White each also admitted that they fabricated tax and employment records in response to a federal grand jury subpoena to conceal the illegal kickbacks paid and mislead the grand jury.
Okpalobi admitted that between 2007 and 2014, she caused the submission of $49,989,323 in claims to Medicare for home health services that were not medically necessary or not provided.
Thirteen individuals have been indicted in connection with this Medicare fraud scheme, and eight have now pleaded guilty, including two doctors employed at Okpalobi’s medical clinic.
This case was investigated by the FBI, HHS-OIG and the Louisiana Attorney General’s Medicaid Fraud Control Unit (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 Eastern District of Louisiana. This case is being prosecuted by Trial Attorneys William Kanellis and Antonio Pozos and Assistant Chief Benton Curtis of the 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.
Las Vegas Attorney and Three Others Convicted for Their Roles in a Fraudulent Scheme to Take over Homeowners’ AssociationsRead the Press Release
Following a 14-day trial, a federal jury in Las Vegas returned guilty verdicts yesterday in a case against a Las Vegas attorney and three others for their roles in a scheme to fraudulently take control of homeowners’ associations (HOAs) for the purpose of directing the HOAs’ construction defect litigation and repair work to a law firm and construction company owned by other co-conspirators.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Laura A. Bucheit of the FBI’s Las Vegas Field Office, Special Agent in Charge John Collins of Internal Revenue Service Criminal Investigation’s (IRS-CI) Las Vegas Field Office and Sheriff Joseph Lombardo of the Las Vegas Metropolitan Police Department made the announcement.
Keith Gregory, 61, of Las Vegas, Salvatore Ruvolo, 86, of Henderson, Nevada, David Ball, 47, of Las Vegas, and Edith Gillespie, 54, of Las Vegas, were found guilty yesterday of conspiracy to commit wire and mail fraud. Gregory and Ball were also convicted of two counts of wire fraud each, Ruvolo was convicted of three counts of wire fraud, and Gillespie was convicted of one count of wire fraud. Ruvolo was found not guilty of one count of mail fraud. Sentencing hearings are scheduled for June 17, 2015, before U.S. District Judge James C. Mahan of the District of Nevada.
According to the evidence presented at trial, from approximately August 2003 through February 2009, the defendants engaged in a complex scheme to direct construction defect litigation and construction repairs at more than 10 condominium complexes in the Las Vegas area to a law firm operated by a co-conspirator and a construction company, Silver Lining Construction, owned by Leon Benzer. In order to accomplish the scheme, the defendants and their co-conspirators identified HOAs for condominium complexes that had potential construction issues that could result in construction defect litigation and require repair. They then sought to take controlling interests on the identified HOAs’ boards by purchasing units in the condominium complexes and running for election to the boards.
Specifically, the evidence at trial demonstrated that Benzer and others, including Gillespie, enlisted “straw purchasers” to use their names and credit to purchase condominiums in the identified complexes. Ruvolo, Ball and Gillespie, among others, acted as straw purchasers, and the evidence demonstrated that Gillespie provided false information on her loan application in connection with the purchase of a condominium in furtherance of the scheme.
According to the evidence, Ruvolo and Ball then sought to be elected to HOA boards in the complexes where they had purchased condominiums. Other straw purchasers were directed to transfer a partial interest in their condominiums to other co-conspirators to make them look like homeowners who could stand for election to the HOA boards. To ensure that conspirators won the HOA elections, the defendants employed deceitful tactics, such as submitting fake and forged ballots, and hiring complicit attorneys to run the elections as “special election masters,” who presided over the elections and supervised the counting of ballots.
The evidence demonstrated that, once elected, the conspiring board members, including Ruvolo and Ball, met with Benzer and other co-conspirators in order to manipulate the selection of property managers, contractors, general counsel and construction defect attorneys to represent the HOAs. Gregory, an attorney licensed in Nevada, agreed to become the general counsel for two HOAs and to take direction from Benzer.
At trial, the evidence showed that 33 of the 37 condominium units purchased as part of the scheme went into foreclosure. Over the course of the scheme, more than $7 million in construction contracts were awarded to Benzer’s company from a single HOA. Several million dollars in legal fees were also directed to another co-conspirator. Benzer compensated each of the defendants for their participation in the fraud scheme. For example, the evidence demonstrated that Ruvolo received monthly payments of approximately $2,000, and Ball received $5,000 per year, for acting as straw purchasers and board members. Benzer also directed approximately $90,000 in HOA-related legal work to Gregory and paid him approximately $12,000 in kickbacks.
On Jan. 23, 2015, Benzer pleaded guilty to one count of conspiracy to commit mail and wire fraud, fourteen counts of wire fraud, two counts of mail fraud, and two counts of tax evasion. He is awaiting sentencing.
The case was investigated by the FBI, IRS-CI and the Las Vegas Metropolitan Police Department, Criminal Intelligence Section. The case is being prosecuted by Deputy Chief Charles La Bella and Trial Attorneys Thomas B.W. Hall and Alison L. Anderson of the Criminal Division’s Fraud Section.
This prosecution 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 is 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 Justice 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.
Gilbane Building Company to Pay $1.1 Million to Resolve False Claims AllegationsRead the Press Release
Gilbane Building Company will pay the United States $1.1 million to resolve allegations that W.G. Mills Incorporated – a company with which Gilbane merged in November 2010 – violated the False Claims Act by creating a front company, Veterans Constructors Incorporated (VCI), in order to be awarded a Coast Guard contract that was designated for Service Disabled Veteran Owned Small Businesses (SDVOSBs), the Justice Department announced today. The Justice Department also announced that VCI has agreed to pay the United States $50,000 plus five annual contingency payments equal to one percent of VCI’s total annual revenues to resolve these same allegations.
“Those who seek to do business with the government must do so fairly and honestly,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “We will not tolerate contractors who seek to profit at the expense of our veterans and taxpayers.”
“Those who apply for federal contracts must be honest and forthright in their dealings, especially when seeking contracts set aside for service-disabled veterans,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida. “Working jointly with DOJ and our agency partners has allowed us to make substantial recoveries in these types of cases in recent months. Our office remains committed to pursuing these matters vigorously.”
To qualify as a SDVOSB, a company must be operated and managed by service-disabled veterans and must not be affiliated with a large company. The government alleged that W.G. Mills created VCI merely as a contracting vehicle and that VCI’s affiliation with W.G. Mills rendered it ineligible to be awarded set-aside contracts for SDVOSBs. The government further alleged that W.G. Mills performed the work that VCI was required to perform under the Coast Guard contract, and alleged that if the Coast Guard and the Small Business Administration (SBA) had known that VCI was nothing but a front company, the Coast Guard would not have awarded it the contract.
“Providing the government false information to gain access to set-aside contracts is unacceptable,” said Inspector General Peggy E. Gustafson of the SBA. “The OIG will aggressively investigate such misrepresentations to ensure only eligible businesses are awarded these contracts. I want to thank the U.S. Department of Justice for its dedication to pursuing justice in this case.”
“SBA’s contracting programs, including the Service-Disabled Veteran-Owned Small Business Program, provide eligible small businesses with the opportunity to grow and create jobs,” said General Counsel Melvin F. Williams Jr of the SBA. “SBA has no tolerance for fraud or abuse in any government contracting program and is committed to working with our federal partners to ensure the benefits of these programs flow only to the intended recipients.”
The settlement resolves allegations originally filed in a lawsuit by Michael Jeske and Samuel McIntosh. The investigation was a coordinated effort among the Civil Division, the U.S. Attorney’s Office for the Middle District of Florida, and the SBA’s Office of Inspector General (OIG). The lawsuit was filed in the Middle District of Florida and is captioned United States ex rel. Michael Jeske and Samuel McIntosh v. Gilbane Building Company, W.G. Mills, Inc., and Veterans Constructors Inc., Case No. 8:11-cv-1205 (M.D. Fla.).
The claims resolved by the settlement are allegations only; there has been no determination of liability.
Four Former Georgia Correctional Officers Sentenced for Offenses Related to Assaults of Inmates and Ensuing Cover-UpRead the Press Release
The Justice Department announced that Darren Douglass-Griffin, Kerry Bolden, Emmett McKenzie and Kadarius Thomas—four former members of the Correctional Emergency Response Team (CERT) at Macon State Prison (MSP) in Oglethorpe, Georgia—were sentenced today for federal offenses related to the beating of MSP inmates in 2010 and the cover-up that followed.
U.S. District Judge Marc T. Treadwell sentenced Douglass-Griffin to serve 12 months in prison for conspiracy against rights and for writing a false report. Bolden was sentenced to serve nine months in prison for conspiracy against rights and conspiracy to obstruct justice. McKenzie received a sentence of six months in prison for conspiracy against rights. Thomas was sentenced to serve six months in prison for writing a false report regarding the beating of an inmate.
In June 2014, a federal jury trial in United States v. Hinton, et al., resulted in the conviction of former CERT Sergeant Christopher Hall and senior CERT officers Ronald Lach and Delton Rushin. Evidence introduced at trial and in court documents filed in connection with the guilty pleas of Douglass-Griffin, Bolden, McKenzie and Thomas showed that CERT officers conspired to assault handcuffed inmates as punishment for past misconduct. CERT officers beat multiple inmates, two of whom suffered serious injuries. One inmate, Terrance Dean, suffered a traumatic brain injury during an assault by CERT officers. Evidence also showed that CERT officers conspired to cover up their unlawful practice, and that officers turned in false reports and provided misleading statements to investigators.
On Dec. 4, 2014, U.S. District Judge Marc T. Treadwell sentenced the defendants who were convicted at trial to the following terms of incarceration: Lach, 90 months; Hall, 72 months; and Rushin, 60 months.
Former CERT member Willie Redden is the last defendant to be sentenced in connection with these cases. A sentencing date has not yet been set for Redden.
“Eight former corrections officials from Macon State Prison now have been sentenced for criminal conduct that ranged from beating inmates to obstructing our investigation,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The Department of Justice will continue to vigorously prosecute corrections officers who betray the public trust, assault people in their custody, and otherwise use their power to violate federal law.”
“While our corrections officials have a difficult yet important job, we must insist that they follow the law and not use the authority that comes with a prison guard’s uniform to assault the very people they are charged with supervising,” said U.S. Attorney Michael J. Moore of the Middle District of Georgia. “In this case, it wasn’t just inmates who were victims, it was also the public who had entrusted these officials with maintaining order while respecting and following the law.”
These cases were investigated by the Macon Resident Agency of the FBI, with the support of the Georgia Bureau of Investigation. The cases were prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Tona Boyd for the Civil Rights Division, with the assistance of the U.S. Attorney’s Office in Macon.
US Air Force Veteran Charged with Attempting to Provide Material Support to ISILRead the Press Release
Defendant, a Former Avionics Specialist, Travelled from Egypt to Turkey in an Attempt to Cross the Border to Syria to Join ISIL
U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Attorney General for National Security John P. Carlin, Assistant Director in Charge Diego G. Rodriguez of the FBI’s New York Field Office and Commissioner William J. Bratton of the New York City Police Department announced that yesterday, a federal grand jury in New York City returned a two-count indictment charging Tairod Nathan Webster Pugh, an American citizen and veteran of the U.S. Air Force, with attempting to provide material support to the Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization, and obstruction and attempted obstruction of justice. The defendant will be arraigned on the indictment tomorrow, March 18, at 11 a.m. before U.S. District Judge Nicholas G. Garaufis of the Eastern District of New York.
“Born and raised in the United States, Pugh allegedly turned his back on his country and attempted to travel to Syria in order to join a terrorist organization,” said U.S. Attorney Lynch. “We will continue to vigorously prosecute extremists, whether based here or abroad, to stop them before they are able to threaten the United States and its allies.” U.S. Attorney Lynch extended her grateful appreciation to the FBI’s Joint Terrorism Task Force (JTTF), which comprises a large number of federal, state, and local agencies from the region. U.S. Lynch also thanked U.S. Customs and Border Protection, the U.S. Attorney’s Office of the District of New Jersey, the Asbury Park, New Jersey Police Department and the Neptune, New Jersey, Police Department for their assistance.
“Pugh, an American citizen and former member of our military, allegedly abandoned his allegiance to the United States and sought to provide material support to ISIL,” said Assistant Attorney General Carlin. “Identifying and bringing to justice individuals who provide or attempt to provide material support to terrorists is a key priority of the National Security Division.”
“As alleged, Pugh, an American citizen, was willing to travel overseas and fight jihad alongside terrorists seeking to do us harm,” said Assistant Director in Charge Rodriguez. “U.S. citizens who offer support to terrorist organizations pose a grave threat to our national security and will face serious consequences for their actions. We will continue to work with our partners, both here and abroad, to prevent acts of terrorism. This investigation demonstrates the importance of law enforcement coordination and collaboration here and around the world.”
“We thank the members of the NYPD Joint Terrorism Task Force and our Federal law enforcement partners for their work in this case and for their tireless efforts to identify threats of terrorism here and abroad,” said Commissioner Bratton. “It is this type of collaboration that results in swift investigative work to stop individuals such as this from making any further contribution to terrorist organizations such as ISIL.”
As alleged in the complaint, indictment and other court filings, the defendant served in the Air Force as an avionics instrument system specialist and received training in the installation and maintenance of aircraft engine, navigation and weapons systems. After leaving the Air Force, the defendant worked for a number of companies in the United States and Middle East as an avionics specialist and airplane mechanic. The defendant lived abroad for over a year before his arrest in this case.
Earlier this year, weeks after being fired from his last job as an airplane mechanic based in the Middle East, the defendant attempted to join ISIL. On Jan. 10, 2015, the defendant traveled from Egypt to Turkey in an effort to cross the border into Syria to join ISIL and fight violent jihad. Turkish authorities denied the defendant entry, however, and sent him on a return flight to Egypt. Upon his arrival in Egypt, the defendant was carrying multiple electronic devices, including four USB thumb drives that had been stripped of their plastic casings and an iPod that had been wiped clean of data. The defendant also had a cellular telephone that contained, among other things, a photograph of a machinegun. The defendant was soon thereafter deported to the United States.
On Jan. 14, 2015, JTTF agents obtained a search warrant for the defendant’s electronic devices, including his laptop computer. Subsequent exploitation of the laptop revealed, among other things, the following:
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recent internet searches for “borders controlled by Islamic state”,
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recent internet searches for “who controls kobani,” “kobani border crossing,” and “jarablus border crossing,” all references to Syrian cities under ISIL’s control near the Turkish border,
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a chart of crossing points between Turkey and Syria indicating the areas on the Syrian side of the border controlled by ISIL and other groups, and
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internet searches for “Flames of War,” an ISIL propaganda video, as well as downloaded videos, including one showing ISIL members executing prisoners.
The defendant was arrested pursuant to a federal complaint on Jan. 16, 2015, in Asbury Park, New Jersey, and he has been in custody ever since. After the defendant’s arrest, JTTF agents seized and later obtained warrants to search two backpacks that the defendant had when he was overseas. Agents recovered from the backpacks, among other things: two compasses, a solar-powered flashlight, a solar-powered power source, shards of broken USB thumb drives, a fatigue jacket and camping clothes.
If convicted, the defendant faces a maximum sentence of 35 years in prison. The charges in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.
The government’s case is being prosecuted by Assistant U.S. Attorneys Samuel P. Nitze and Tiana A. Demas, with assistance provided by Trial Attorneys Larry Schneider and Andrew Sigler of the National Security Division.
Pugh Indictment
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Saipan Sex Trafficker Sentenced to over 19 Years in PrisonRead the Press Release
SAIPAN, CNMI – ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that on Tuesday, March 17, 2015, U.S. District Chief Judge Ramona V. Manglona sentenced Wei Lin, age 32, of the People’s Republic of China, to 235 months in prison followed by five years of supervised release for conspiracy to commit sex trafficking. Judge Manglona also ordered Lin to pay $7,172.39 in restitution to each of the three victims.
Lin pleaded guilty to the offense on June 8, 2012. At today’s sentencing hearing, Judge Manglona found the United States had also proven by clear and convincing evidence that Lin was the leader of the sex trafficking organization.
United States Attorney for the Districts of Guam and the Northern Mariana Islands, Alicia A.G. Limtiaco, stated, “Those who traffic women will find no refuge from law enforcement. We will aggressively prosecute anyone who tries to profit off the sexual exploitation of women. Human trafficking is a modern form of slavery, and today’s sentence reflects the seriousness of this heinous crime. It also sends a clear message that trafficking in persons will not be tolerated in the C.N.M.I.”
The case was investigated by the Federal Bureau of Investigation, with assistance of the Department of Homeland Security/Homeland Security Investigations, and prosecuted by Assistant U.S. Attorney Garth R. Backe.
Justice Department Releases Critical Response Report of San Diego Police Department's Misconduct Policies and PracticesRead the Press Release
COPS Office Releases 40 Recommendations to Implement Best Practices at San Diego Police Department
The U.S. Department of Justice’s Office of Community Oriented Policing Services today announced the completion of an assessment of the San Diego Police Department’s policies and practices for preventing, detecting and investigating misconduct. The San Diego Police Department volunteered to undergo the review by the COPS Office following a series of misconduct incidents over the course of five years.
“Our goal with this report began with identifying deficiencies in policies, practices, or organizational culture that allowed misconduct to occur and to go undetected for years in San Diego,” said COPS Office Director Ronald Davis. “We see this report as a blueprint for reforms, and for building on the reform efforts already undertaken by former Chief William Lansdowne and Chief Shelley Zimmerman.”
The COPS Office first announced the beginning of the Critical Response Technical Assistance review in March 2014. The report focuses on 17 cases of misconduct over five years and includes a review of how the cases were handled, and of the department’s policies and accountability system. During the assessment, the COPS Office’s training and technical assistance provider for the assessment, the Police Executive Research Forum, conducted focus groups and interviews with city and department stakeholders, community outreach and observed operations.
The report identifies a number of deficiencies in recruiting practices, supervision and training of officers, accountability systems, and mechanisms for reviewing citizen complaints and leadership. The assessment recommends a comprehensive approach to all aspects of policing that can help prevent misconduct. This includes the training and supervision of officers, the recruitment and selection of new officers, accountability mechanisms, internal investigations and disciplinary practices.
“We requested and welcomed this assessment from the Department of Justice COPS Office," said San Diego Police Chief Shelley Zimmerman. “The numerous recommendations they have made will only help us improve our department and the proud service we provide to our community.”
The report, Critical Response Technical Assistance Review—Police Accountability: Findings and National Implications of an Assessment of the San Diego Police Department can be found here: https://cops.usdoj.gov/RIC/ric.php?page=detail&id=COPS-W0756.
The assessment was administered as part of the COPS Office’s Critical Response Technical Assistance initiative, designed to provide technical assistance to agencies facing significant law enforcement-related issues. Using subject matter experts, interviews and direct observations, as well as conducting extensive research and analysis, the COPS Office assists law enforcement agencies with enhancing and improving their policies and procedures, operating systems and professional culture.
The COPS Office, headed by Director Ronald Davis, is a federal agency responsible for advancing community policing nationwide. Since 1995, COPS has awarded over $14 billion to advance community policing, including grants awarded to more than 13,000 state, local, and tribal law enforcement agencies to fund the hiring and redeployment of more than 126,000 officers and provide a variety of knowledge resource products including publications, training, and technical assistance. For additional information about COPS, please visit www.cops.usdoj.gov.
Justice Department Asks Federal Court to Shut Down Indiana Tax Return PreparerRead the Press Release
The United States filed a complaint seeking to permanently bar an Indianapolis woman from preparing federal tax returns for others, the Justice Department announced today.
The civil injunction complaint against Jennifer Carolina Gonzalez, doing business as Jenny’s Tax Services, which was filed in the U.S. District Court for the Southern District of Indiana, alleges that Gonzales fraudulently adjusted customers’ income claimed on Schedule C (Profit or Loss From Business) to either increase an Earned Income Tax Credit the customer was not entitled to, or to reduce the customer’s tax liability. Gonzalez, according to the suit, also frequently prepared returns claiming head of household filing status for customers who were ineligible. The complaint alleges that Gonzalez frequently prepared returns claiming child tax credits for customers’ relatives who lived in Mexico and had never lived in the United States, even though Gonzalez knew that children living in Mexico cannot be used to support child tax credits and additional child tax credits.
Tax return preparers must provide their Preparer Tax Identification Number (PTIN) on returns they prepare. As alleged in the complaint, as part of a pattern of non-compliance, Gonzalez failed to provide her own PTIN on returns she prepared until January 2013. Instead, the complaint alleges that Gonzalez used a PTIN assigned to a person living in New Jersey, who has no connection to Gonzalez and has never authorized Gonzalez or anyone else to use the PTIN.
The complaint further alleges that, in 2012, Gonzalez sold the use of the third-party PTIN she had appropriated, her own Electronic Filing Identification Number (EFIN) and Jenny’s Tax Services’ Employer Identification Number (EIN) to another tax preparation business, which agreed to pay Gonzalez $20 per return filed containing Gonzalez’s identification numbers. Despite selling the use of the identification numbers, Gonzalez continued to use the identification numbers when preparing returns for the 2011 tax year, as did the purchaser.
According to the complaint, the Internal Revenue Service (IRS) estimates that Gonzalez, through Jenny’s Tax Service, has prepared more than 2,000 tax returns since 2011. The suit alleges that the false information she included on her customers’ tax returns generated larger refunds or reduced tax liabilities for Gonzalez’s customers, and that the losses to the U.S. Treasury could exceed $3.9 million.
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2015. The IRS has some tips on their website for choosing a tax preparer, 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.
Taiwan Businessman Sentenced to 24 Months for Conspiring to Violate U.S. Laws Preventing Proliferation of Weapons of Mass DestructionRead the Press Release
Assistant Attorney General for National Security John P. Carlin; U.S. Attorney Zachary T. Fardon of the Northern District of Illinois; Special Agent in Charge Robert J. Holley of the FBI’s Chicago Office; Special Agent in Charge Gary Hartwig of U.S. Immigration and Customs Enforcement, Homeland Security Investigations (ICE-HSI) in Chicago; and Acting Special Agent in Charge David Nardella of the U.S. Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement of the Chicago Field Office announced today that a former resident of Taiwan, who the United States has linked to the supply of weapons manufacturing machinery to North Korea, was sentenced today to serve 24 months in federal prison by U.S. District Court Judge Charles R. Norgle of the Northern District of Illinois.
The defendant, Hsien Tai Tsai, 69, pleaded guilty in October 2014, admitting that he conspired with others to interfere with and obstruct U.S. regulations that seek to disrupt the proliferation of weapons of mass destruction. When imposing sentence, Judge Norgle credited Tsai for the substantial assistance he provided, and would continue to provide, to the government in its investigation of weapons of mass destruction proliferators. Tsai, also known as Alex Tsai, was arrested in May 2013 in Tallinn, Estonia, and was later extradited to the United States, where he remains in federal custody.
“Hsien Tai Tsai violated a critical sanctions regime and undermined and interfered with U.S. efforts to disrupt North Korea's weapons of mass destruction and advanced weapons programs,” said Assistant Attorney General Carlin. “These sanctions are meant to raise the cost for WMD proliferators to do business and deter others from proliferating by denying them access to our financial and commercial systems. This prosecution makes clear that we will use all of our tools to identify and arrest WMD proliferators and to disrupt their efforts to undermine our country's security. I’d like to thank all who helped with this investigation and prosecution.”
“Aggressive enforcement of U.S. laws targeting those who supply goods, services or other support to proliferators of weapons of mass destruction is vital to ensuring global safety,” said U.S. Attorney Fardon. “As this case demonstrates, companies and individuals who seek to evade these laws will confront an international law enforcement community working cooperatively and effectively to stem these threats.”
According to court documents, Tsai was associated with at least three companies based in Taiwan – Global Interface Company Inc., Trans Merits Co. Ltd., and Trans Multi Mechanics Co. Ltd. – that purchased and then exported, and attempted to purchase and then export, from the United States and other countries machinery used to fabricate metals and other materials with a high degree of precision.
In January 2009, under Executive Order 13382, which sanctions proliferators of weapons of mass destruction and their supporters, the Treasury Department’s Office of Foreign Assets Control (OFAC) designated Tsai, Global Interface and Trans Merits as proliferators of weapons of mass destruction, isolating them from the U.S. financial and commercial systems and prohibiting any person or company in the United States from knowingly engaging in any transaction or dealing with them. At that time, the Treasury Department said that Tsai was designated because he provided, or attempted to provide, financial, technological, or other support for, or goods or services in support of, the Korea Mining Development Trading Corporation, which the Treasury Department has stated is North Korea’s premier arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons. Additionally, Tsai he had been involved in shipping items to North Korea that could be used to support North Korea’s advanced weapons program. After the OFAC designations, Tsai and others continued to conduct business together, but attempted to hide Tsai’s and Trans Merit’s involvement in those transactions by conducting business under different company names, including Trans Multi Mechanics. Later, in 2013, Trans Multi Mechanics was also designated by OFAC.
In pleading guilty, Tsai admitted that he was involved in multiple commercial and financial transactions to undermine the sanctions against WMD proliferations, including the purchase of a Bryant center hole grinder from a U.S. company based in suburban Chicago, and exported it to Taiwan in 2009 using the company Trans Multi Mechanics. A Bryant center hole grinder is a machine tool used to grind a center hole, with precisely smooth sides, through the length of a material. Tsai also admitted having a role in Trans Merits’ transactions involving LED road lights and an oil pump, and using third parties to wire transfer funds to the United States.
The case was investigated by the FBI, ICE-HSI and the U.S. Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement, with assistance provided by the Justice Department’s Office of International Affairs. Assistant Attorney General Carlin would like to give special thanks to the Estonian Internal Security Service and the Estonian Prosecutor’s Office who cooperated with the United States. The case is being prosecuted by Assistant U.S. Attorney Brian Hayes of the Northern District of Illinois and Trial Attorney Brandon L. Van Grack of the Justice Department’s National Security Division.
Statement by Attorney General Holder on the Departure of Ronald C. Machen Jr. as the US Attorney of the District of ColumbiaRead the Press Release
Attorney General Eric Holder released the following statement on the departure of U.S. Attorney Ronald C. Machen Jr. of the District of Columbia:
“During more than five years as U.S. Attorney of the District of Columbia, Ron Machen Jr. has distinguished himself as a skilled leader, a devoted public servant and a forceful champion of justice on behalf of the American people. Throughout his remarkable tenure, Ron has applied his boundless talent and consummate judgment to protect the safety and security of all Americans in cases involving violent crime, national security threats and public corruption. As one of Ron’s predecessors as U.S. Attorney in Washington, I know firsthand the unique demands of leading the nation’s largest U.S. Attorney’s Office. But Ron has never been deterred by a difficult challenge, nor slowed in his pursuit of a safer, stronger Washington. I was fortunate to be able to hire Ron as an Assistant U.S. Attorney in the Office in 1997, and I see in him now the exceptional qualities that I saw in him then: unassailable integrity, relentless determination and a passion for law and justice. I congratulate him on the outstanding results he has achieved as U.S. Attorney of the District of Columbia. I thank him for his inspiring service. And I look forward to all that he will accomplish in the next stage of his already extraordinary career.”
Six Leaders and Members of Phantom Outlaw Motorcycle Club and Vice Lords Street Gang Convicted of Violent Racketeering-Related CrimesRead the Press Release
Today, a federal jury in Detroit convicted six leaders and members of the violent Phantom Outlaw Motorcycle Club, many of whom were also leaders and members of the Vice Lords street gang, of conspiracy to commit murder and other violent racketeering-related offenses.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Steve Bogdalek of the Bureau of Alcohol, Tobacco, Firearms and Explosives’s (ATF) Detroit Field Division and Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Division made the announcement.
“The Phantom Motorcycle Club used violence and plotted murder in an effort to prevail in a gang war against rival motorcycle clubs in Michigan and throughout the country, and its leaders and members attempted to kill anyone who stood in their way,” said Assistant Attorney General Caldwell. “The trial convictions of the gang’s National President, National Enforcer and four other members bring to a close this dangerous organization’s violent reign. I am thankful for the courageous and diligent efforts of our prosecutors and law enforcement partners who successfully brought this criminal enterprise to justice.”
“The Detroit One partnership has focused on dismantling violent street gangs like this one because they cause intolerable harm to public safety in our neighborhoods,” said U.S. Attorney McQuade. “We will continue to target and disrupt violent gangs in hopes of restoring peace for residents in our community.”
“The amount of pain, suffering and fear that violent gangs bring to our communities is immeasurable,” said Special Agent in Charge Bogdalek. “Our goal was to disable the group by targeting its leadership, the convictions today of leaders and members of these illegal motorcycle gangs is an excellent example of success that comes from effective law enforcement cooperation.”
“As part of the Detroit One Initiative, this joint investigation effectively targeted and neutralized violent criminal offenders of the Phantom Outlaw Motorcycle Club,” said Special Agent in Charge Abbate. “Our efforts to combat violent crime continue to be waged each and every day in cooperation with our local, state, and federal law enforcement partners. Protecting our communities from offenders such as these is among our highest priorities, and we will continue this fight on behalf of the citizens we serve and protect.”
The jury convicted the defendants of the following offenses:
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Antonio Johnson, aka, “Mister Tony,” “MT,” and “Big Bro,” 40, of Detroit, the National President of the Phantoms and the “Three-Star General” over the Vice Lords street gang in Michigan, was convicted of engaging in a RICO conspiracy, conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to assault with a dangerous weapon in aid of racketeering, using and carrying firearms during and in relation to a crime of violence and being a felon in possession of firearms.
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Marvin Nicholson, aka, “Chosen One,” 46, of Detroit, the National Enforcer of the Phantoms and a Vice Lords member, was convicted of engaging in a RICO conspiracy, conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to assault with a dangerous weapon in aid of racketeering, assault on federal officers, using and carrying firearms during and in relation to a crime of violence and being a felon in possession of firearms.
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Brian Sorrell, 28, aka, “PC,” of Detroit, a member of the Detroit Chapter of the Phantoms and the Vice Lords, was convicted of engaging in a RICO conspiracy, conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to assault with a dangerous weapon in aid of racketeering and using and carrying firearms during and in relation to a crime of violence.
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Sherman Brown, aka, “Tank,” 43, of Detroit, the Sergeant-at-Arms of the Detroit Chapter of the Phantoms and a Vice Lords member, was convicted of conspiracy to commit murder in aid of racketeering.
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Brian Jackson, aka, “Wood,” 48, of Detroit, the Master Sergeant of the Inkster, Michigan Chapter of the Phantoms, was convicted of conspiracy to commit murder in aid of racketeering.
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Matthew Schamante, aka, “Arsenal,” 32, of Waterford, Michigan, the President of the Pontiac, Michigan Chapter of the Phantoms, was convicted of engaging in a RICO conspiracy and possessing an unregistered short-barrel shotgun.
At trial, evidence showed that the Phantom Outlaw Motorcycle Club is headquartered in northwest Detroit and has chapters throughout Michigan, Ohio, Kentucky, Illinois, New York, New Jersey, Texas, Georgia, Missouri and Tennessee, as well as a chapter of “Nomads” that travel at will. The evidence showed that the club and its members were involved in a range of criminal activity including conspiracy to commit murder, shootings, robbery, extortion and the possession and sale of stolen vehicles and motorcycles.
Evidence also showed that the leadership of the Phantoms was heavily involved in the Vice Lords street gang, including Johnson, who was both the National President of the Phantoms and the “Three-Star General” over the Vice Lords street gang in Michigan. The Vice Lords is a well-known street gang originating from Chicago. Specifically, the evidence showed that Johnson used the Vice Lords to assist the Phantoms in various criminal endeavors, including to search for and violently attack rivals of the Phantoms.
The evidence specifically demonstrated that, on Sept. 8, 2013, Johnson ordered numerous Phantoms, including Nicholson and Sorrell, to take the vests or “rags” of the Satan Sidekicks Motorcycle Club, a rival motorcycle club. During the attempted robbery, Sorrell shot the victim in the face.
Additionally, according to the evidence, Johnson blamed the Hell Lovers Outlaw Motorcycle Club for the murder of a Phantoms member in late September 2013, and ordered a three-phase murder plot against the Hell Lovers in retaliation. In the first phase, the Phantoms were to murder at least three members of the Hell Lovers in Detroit in order to lure additional Hell Lovers to Michigan for the funeral. In the second phase, the Phantoms were to murder all members of the Hell Lovers who would be at the Hell Lovers’ Detroit, Michigan clubhouse following the funeral of the three members murdered in the first phase. In the third phase, the Phantoms were to kill Hell Lovers in other cities throughout the country where the Phantoms had chapters. The mass murder plot was interrupted before it came to fruition by search warrants executed by the ATF and FBI in October 2013. At trial, evidence showed that the Phantoms were preparing for the first phase of the murder plot at the time of the search warrants, including stockpiling firearms, hiring a thief to steal a van to be used in the murders, conducting research and surveillance of their intended victims, and assigning Phantom members and Vice Lords members to stalk and murder the intended victims. Johnson, Nicholson, Sorrell, Brown and Jackson were all convicted of the murder plot.
Finally, the evidence demonstrated that, on Oct. 4, 2013, while the ATF and FBI attempted to execute a search warrant at his residence in Detroit, Nicholson shot at ATF agents four times as they attempted to enter his residence. A wall prevented the bullets from hitting the agents. The firearm that Nicholson used to shoot at the ATF agents was registered to Schamante.
Sentencing hearings will be scheduled at a later date before U.S. District Judge Paul D. Borman of the Eastern District of Michigan. Five defendants have previously pleaded guilty in the case to charges including RICO conspiracy and assault with a dangerous weapon in aid of racketeering, and await sentencing.
The arrests in this case were made as part of the Detroit One Initiative, a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit, and through the lead efforts of the Comprehensive Violence Reduction Partnership Task Force, which consists of representatives of the ATF, Detroit Police Department, Michigan State Police, Michigan Department of Corrections and the FBI. By working collaboratively, local, state and federal law enforcement are striving to maximize their ability to identify and arrest the persons and groups initiating the violence in Detroit. These convictions are a tangible and significant result of this joint effort.
The case is being prosecuted by Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section, and Assistant U.S. Attorneys Christopher Graveline and Louis Gabel of the Eastern District of Michigan.
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North Carolina Man Indicted for Filing False Claims for Tax Refunds and Identity TheftRead the Press Release
A federal grand jury in the Eastern District of North Carolina has returned an indictment against a Raleigh, North Carolina, resident for one count of conspiracy to defraud the United States, 17 counts of presenting false claims to the Internal Revenue Service (IRS), three counts of wire fraud and two counts of aggravated identity theft, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Thomas G. Walker of the Eastern District of North Carolina.
Christian Rhodes, of Raleigh, was arrested earlier today on the indictment, which alleges that Rhodes and others solicited individuals in order to prepare their federal tax returns that used false information to claim tax refunds that the individuals were not entitled to receive. The tax returns that Rhodes prepared and filed contained false wages, tax withholdings and deductions. Rhodes directed the IRS to deposit refunds electronically into bank accounts in his own name and in the names of third-party taxpayers. Rhodes also used stolen identities in order to file false claims for tax refunds.
If convicted, Rhodes faces a statutory maximum sentence of 10 years in prison for the conspiracy count, five years in prison for each false claims count, 20 years in prison for each wire fraud count, and a maximum fine of $250,000 for each count. Rhodes also faces a statutory mandatory minimum sentence of two years in prison for the aggravated identity theft count.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Walker commended the special agents of IRS-Criminal Investigation, who investigated the case, and Assistant U.S. Attorney Susan Menzer of the U.S. Attorney’s Office for the Eastern District of North Carolina, and Trial Attorneys Lauren Castaldi and Rebecca Perlmutter of the Tax Division, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website. Additional information about tax fraud schemes to watch out for may be found on the IRS-Criminal Investigation website.
An indictment is merely a formal charge by the grand jury. The defendant is presumed innocent unless and until proven guilty in a U.S. District Court.