District Not Recorded

A Chino, California, businessman was sentenced to serve more than four years in prison yesterday in the U.S. District Court in Las Vegas for his role in a conspiracy to promote and sell fraudulent tax products, including a product called Tax Break 2000, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

Daniel William Porter pleaded guilty to one count of conspiracy to defraud the United States.  U.S. District Judge Miranda Du sentenced Porter to serve 55 months in prison and three years of supervised release following his prison sentence.  As part of his plea agreement, Porter agreed to cooperate with the government and assist with its ongoing investigation into entities and individuals involved in the sale and promotion of Tax Break 2000. 

“Today’s sentence sends a clear and powerful message to those individuals who, like Mr. Porter, seek to evade and help others evade their federal tax obligations, that they will be prosecuted, convicted and sentenced to substantial terms of incarceration,” said Acting Assistant Attorney General Ciraolo.  “No individual is above the law, and the Tax Division, working with its partners at IRS-Criminal Investigation and the Offices of the U.S. Attorneys, will hold accountable those who engage in criminal conduct at the expense of honest taxpayers and the U.S. Treasury.”

According to court documents and court statements, Porter conceived and designed Tax Break 2000, which purported to be an online shopping website.  By at least November 2000 and continuing through at least July 2002, Porter conspired with others to promote and sell Tax Break 2000 to customers throughout the United States.  Customers were falsely and fraudulently told that purchasing Tax Break 2000 would allow them to claim legitimate income credits and deductions under the Americans with Disabilities Act (ADA) by modifying the website each customer was provided to make it accessible to the disabled.  The National Audit Defense Network (NADN) charged $10,475 for the product to maximize the fraudulent income tax credits and deductions that customers would claim on their federal income tax returns.  However, the customers only paid between $2,000 and $2,695 for the product.  The remainder of the cost was covered by a promissory note that customers were not expected to repay.

Porter sold Tax Break 2000 directly through Oryan Management and by contracting with other individuals and entities, including Donald Hicks, a tax return preparer in Gladstone, Missouri, and NADN in Las Vegas.  Through Hicks and NADN, Tax Break 2000 was sold to thousands of customers.  Alan Rodrigues, NADN’s former general manager and executive vice president, Weston Coolidge, the former president of NADN, and Joseph Prokop, the national director of marketing for Oryan Management and a former NFL punter, were convicted at trial in the District of Nevada for their roles in the sale and promotion of Tax Break 2000 in a separate criminal case. 

On March 10, at the sentencing of Rodrigues, Coolidge and Prokop, Judge Du found that the intended tax loss to the Internal Revenue Service (IRS) associated with NADN’s sale of Tax Break 2000 was more than $60 million and that the fraud loss to the customers who purchased Tax Break 2000 was more than $36 million.  Rodrigues was sentenced to serve 72 months in prison, Coolidge was sentenced to serve 70 months in prison, and Prokop was sentenced to serve 18 months in prison to be followed by 30 months home confinement.  All three defendants were ordered to pay restitution of more than $35 million to customers of NADN who purchased the fraudulent tax product.  Donald Hicks, who promoted the fraudulent tax products in Missouri, pleaded guilty in a separate criminal case in the Western District of Missouri.

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and former Trial Attorneys Timothy J. Stockwell, Katherine L. Wong and Mark L. Williams, and Paralegal Larry Garland of the Tax Division, who prosecuted the case.  Ciraolo also thanked the U.S. Attorney’s Office in the District of Nevada in Las Vegas for their substantial assistance. 

A Colorado man was convicted by a federal jury of kidnapping a toddler and producing child pornography, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Benjamin B. Wagner of the Eastern District of California.

Shawn McCormack, 31, of Colorado Springs, Colorado, was found guilty following a four-day trial of four counts of sexual exploitation of a child and two counts of kidnapping.  Senior U.S. District Judge Anthony W. Ishii of the Eastern District of California presided over the trial, and a sentencing hearing was scheduled for July 27, 2015.

According to evidence presented at trial, McCormack, feigning to be a friend, traveled to a couple’s residence in Bakersfield, California, and stayed as an overnight guest on multiple occasions.  During several of the overnight stays, in the middle of the night, McCormack snuck the couple’s toddler out of the house and recorded his sexual abuse of the toddler in a nearby motel, outdoors and in his truck.  McCormack then returned the toddler to the house before the parents awoke.  The evidence demonstrated that McCormack distributed the images and videos of his abuse to others online, including an undercover officer with the Toronto Police Services. 

According to the evidence presented at trial, Homeland Security Investigations agents in Boston found images and recordings distributed by McCormack on a separate defendant’s computer in Massachusetts.  The agents were able to identify the date, time and hotel room where one of the videos had been produced.  When agents visited that hotel, they learned that McCormack had rented that hotel room on the night when the recording was created.  During the investigation, agents uncovered evidence that McCormack had recorded his abuse of both of the couple’s children.

The investigation is being conducted by U.S. Immigration and Customs Enforcement’s Field Offices in Bakersfield, California, Colorado Springs, Colorado, and Boston, Massachusetts, the Bakersfield Police Department, the Colorado Springs Police Department, Toronto Police Services, and the FBI.

The case is being prosecuted by Trial Attorney Maureen C. Cain of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorneys Patrick R. Delahunty and Megan A.S. Richards of the Eastern District of California.  

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.

The Justice Department announced today that Shelbie Brooke Richards, 21, of Pearl, Mississippi, and Sarah Adelia Graves, 22, of Crystal Springs, Mississippi, were sentenced today in U.S. District Court in Jackson for their roles in a federal hate crime conspiracy involving racially motivated assaults, culminating in the death of James Craig Anderson, an African-American man, in the summer of 2011.  Richards had previously pleaded guilty to one count of conspiracy and one count of misprision for her role in the conspiracy and the cover-up.  Graves previously pleaded guilty to one count of conspiracy for her role.  Richards was sentenced to 96 months in prison and Graves was sentenced to 60 months in prison.  A restitution hearing will be set for a later date.

Six other defendants in related cases, Deryl Paul Dedmon, 22, John Aaron Rice, 22, Dylan Wade Butler, 23, Jonathan Kyle Gaskamp, 22, and Joseph Paul Dominick, 23, all of Brandon, Mississippi, and William Kyle Montgomery, 25, of Puckett, Mississippi, were previously sentenced to 600 months, 220 months, 78 months, 48 months, 48 months, and 224 months, respectively, for their roles in the conspiracy.  Two other defendants involved in related cases—John Louis Blalack, 21, and Robert Henry Rice, 24, both of Brandon, Mississippi—are awaiting sentencing.

“The Justice Department will always fight to hold accountable those who commit racially motivated assaults,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “We hope that the prosecution of those responsible for this horrific crime will help provide some measure of closure to the victim’s family and to the larger community affected by this heinous crime.”

“This prosecution sends a clear message that this office, in partnership with the DOJ Civil Rights Division, will prioritize and aggressively prosecute hate crimes and others civil rights violations in the Southern District of Mississippi,” said U.S. Attorney Gregory K. Davis of the Southern District of Mississippi.

“The FBI takes very seriously its responsibility to uphold the civil rights of all citizens,” said Special Agent in Charge Donald Alway of the FBI in Mississippi.  “Together with its law enforcement partners, the FBI will continue its efforts to aggressively pursue and bring to justice all those individuals who conspire to deprive others of their civil rights merely because of the color of their skin."

In prior court hearings, the defendants had admitted that beginning in the spring of 2011, they and others conspired with one another to harass and assault African Americans in and around Jackson.  On numerous occasions, the co-conspirators used dangerous weapons, including beer bottles, sling shots and motor vehicles, to cause, and attempt to cause, bodily injury to African Americans.  They would specifically target African Americans they believed to be homeless or under the influence of alcohol because they believed that such individuals would be less likely to report an assault.  The co-conspirators would often boast about these racially motivated assaults.

Richards and Graves admitted their involvement in two racially motivated assaults, including the beating and killing of James Craig Anderson.  Specifically, they admitted that in the early morning hours of June 26, 2011, they and five other co-conspirators agreed to carry out their plan to find, harass and assault African Americans.  At around 4:15 a.m., Montgomery, John Aaron Rice, Blalack, and Butlers drove to west Jackson in Montgomery’s white Jeep with the understanding that Richards, Graves and Dedmon would join them a short time later.

At approximately 5:00 a.m., the four occupants of the Jeep spotted Anderson in a motel parking lot off Ellis Avenue.  They decided that Anderson would be a good target for an assault because he was African-American and appeared to be intoxicated.  Rice and Blalack got out of the Jeep to distract Anderson while they waited for the Richards, Graves, and Dedmon to arrive.  After Richards, Graves and Dedmon arrived in a Ford F250 truck, Rice and Dedmon physically assaulted Anderson.  After the assault, the four occupants of the Jeep left the motel parking lot in the Jeep.  Dedmon then deliberately used his truck to run over Anderson, causing injuries which resulted in Anderson’s death.  Richards initially falsely told law enforcement officials that she did not know the reason for the assault and did not encourage Dedmon to hit the victim with the truck.  Richards later admitted that she knew that the assault was racially motivated and that she and Graves encouraged Dedmon to commit the fatal assault.  

This case was the result of a cooperative effort among the Justice Department’s Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Mississippi and the Hinds County, Mississippi, District Attorney’s Office.  This case was investigated by the Jackson Division of the FBI and the Jackson Police Department.  It is being prosecuted by Trial Attorney Sheldon L. Beer and Deputy Chief Paige M. Fitzgerald of the Civil Rights Division, and Glenda R. Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi.

United States Sues Two Other Companies and Three Individuals for Similar Violations

Cardiovascular testing disease laboratories Health Diagnostics Laboratory Inc. (HDL), of Richmond, Virginia, and Singulex Inc., of Alameda, California, have agreed to resolve allegations that they violated the False Claims Act by paying remuneration to physicians in exchange for patient referrals and billing federal health care programs for medically unnecessary testing, the Department of Justice announced today.  Under the settlements, which stem from three related whistleblower actions filed under the federal False Claims Act, HDL will pay $47 million and Singulex will pay $1.5 million.  The government also intervened in the lawsuits as to similar allegations against another laboratory, Berkeley HeartLab Inc.; a marketing company, BlueWave Healthcare Consultants Inc., and its owners, Floyd Calhoun Dent and J. Bradley Johnson; and former CEO Latonya Mallory of HDL.

“Health care providers that attempt to profit by providing illegal inducements will be held accountable,” said Acting Assistant Attorney General Benjamin C. Mizer for the Justice Department’s Civil Division.  “We will continue to advocate for the appropriate use of Medicare funds and the proper care of our senior citizens.”

As alleged in the lawsuits, HDL, Singulex and Berkeley induced physicians to refer patients to them for blood tests by paying them processing and handling fees of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles.  In addition, HDL and Singulex allegedly conspired with BlueWave to offer these inducements on behalf of HDL and Singulex.  As a result, physicians allegedly referred patients to HDL, Singulex and Berkeley for medically unnecessary tests, which were then billed to federal health care programs, including Medicare.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federally funded programs.  The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.  

“The District of South Carolina has more than doubled its resources allocated to the pursuit of fraud, including matters brought to our attention by whistleblowers,” said U.S. Attorney Bill Nettles of the District of South Carolina.  “Whistleblower actions are a critical tool for holding health care providers accountable for fraudulent and abusive practices not only in South Carolina but nationwide.”

“When health care companies pursue profits by paying kickbacks to doctors, they undermine a patient’s ability to trust that medical decisions are being made for scientific reasons, not financial ones,” said Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia.  “Those kickbacks also harm the taxpayer because they drive up the cost of federal health care programs with medically unnecessary tests.  This significant settlement shows our determination to work with whistleblowers and our federal partners to defend the integrity of the health care system from illegal agreements that hurt patients and taxpayers.”

As part of the settlements, HDL and Singulex have agreed to enter into separate corporate integrity agreements with the Department of Health and Human Services’ Office of Inspector General (HHS-OIG).  Those agreements provide for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to these settlements.

“Today’s announcement that DOJ has settled in part and intervened in part in these whistleblower actions reflects the commitment by DOJ, our agency and our other law enforcement partners to ferret out alleged improper Medicare billings by health care companies that are looking to increase their profits at the expense of taxpayers,” said Special Agent in Charge Derrick L. Jackson of the HHS-OIG Atlanta Regional Office.

The lawsuits were filed by Dr. Michael Mayes, Scarlett Lutz, Kayla Webster and Chris Reidel under the qui tam, or whistleblower, provisions of the False Claims Act.  Under the act, private citizens can bring suit on behalf of the government for false claims and share in any recovery.  The whistleblowers’ share of the settlements has yet to be determined.  The act also permits the United States to intervene in and take over a whistleblower suit, as it has done in part in the three actions.  The United States advised the court that it would be filing its own complaint against the corporate and individual defendants against whom it has intervened within 120 days.

Two of the lawsuits separately allege that the former CEO Phillipe Goix of Singulex and Quest Diagnostics Inc., parent of Berkeley, are liable for the scheme; the government declined to intervene in the allegations against Goix and Quest. 

The government’s actions illustrate its 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 $23.9 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.

These matters were investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Offices of the District of South Carolina, the District of Columbia and the Middle District of North Carolina, HHS-OIG, the FBI, the U.S. Office of Personnel Management’s Office of Inspector General, and the Department of Defense’s Office of Inspector General Defense Criminal Investigative Service.

The cases are captioned United States ex rel. Mayes v. Berkeley HeartLab Inc., et al., Case No. 9:11-CV-01593-RMG (D.S.C.); United States ex rel. Riedel v. Health Diagnostic Laboratory, Inc., et al., Case No. 1:11-CV-02308 (D.D.C.); and United States, et al. ex rel. Lutz, et al. v. Health Diagnostic Laboratory, Inc., et al., Case No. 9:14-CV-0230-RMG (D.S.C.).  The claims settled by these agreements and asserted against these companies and individuals are allegations only, and there has been no determination of liability.

Three Montgomery, Alabama, men were sentenced to prison today in the U.S. District Court for the Middle District of Alabama for their participation in a stolen identity refund fraud (SIRF) tax scheme, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama.

Cruz Castillo Burnett, 28, Jacorey Giddens, 27, and Rodrickus Howard, 24, were each sentenced to serve 40 months in prison and three years of supervised release.  Burnett was ordered to pay restitution in the amount of $209,041, Giddens was ordered to pay restitution in the amount of $151,260 and Howard was ordered to pay restitution in the amount of $220,136.  Each defendant previously pleaded guilty to one count of conspiracy to defraud the government and one count of aggravated identity theft.          

According to plea documents, Burnett, Giddens and Howard conspired to acquire the names, social security numbers and dates of birth of individuals without their knowledge or consent.  The indictment alleged that from March 2011 to April 2013, the defendants used these stolen identities to file more than 500 false federal income tax returns that claimed refunds from the Internal Revenue Service (IRS).  As part of the scheme, the defendants requested more than $1 million in refunds from the IRS.  The defendants received the refunds in various forms, including U.S. Treasury checks, direct deposits to bank accounts and direct deposits onto prepaid debit cards in the names of identity theft victims.  

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck Jr. commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Gregory P. Bailey and Michael C. Boteler of the Tax Division and Assistant U.S. Attorney Todd Brown of the Middle District of Alabama, who prosecuted the case.         

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

A resident of Commerce Township, Michigan, was sentenced to serve 18 months in prison to be followed by one year of supervised release for criminal contempt, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division. 

In July 2014, Doreen Hendrickson was convicted of criminal contempt following a federal jury trial in Detroit.  Hendrickson violated an injunction involving federal tax obligations issued by U.S. District Judge Nancy Edmunds of the Eastern District of Michigan in May 2007.  Today’s sentence was imposed by U.S. District Judge Victoria Roberts.

According to court filings and evidence presented at trial, Hendrickson and her husband, Peter Hendrickson, filed federal income tax returns for the years 2002 and 2003 on which they falsely claimed they earned zero wages.  Based on these false returns, the Internal Revenue Service (IRS) issued the Hendricksons more than $20,000 in income tax refunds that they were not entitled to receive.  In 2006, the Tax Division sued the Hendricksons to recover these refunds.  As part of that litigation, Judge Edmunds ordered the Hendricksons to file corrected amended tax returns for 2002 and 2003 that reported all of their income, and further ordered them to repay their fraudulently obtained refunds to the IRS.  Judge Edmunds also barred the Hendricksons from filing additional false tax returns.

In 2009, Peter Hendrickson was convicted of filing multiple false income tax returns, including the 2002 and 2003 returns that he filed jointly with his wife.  The tax returns at issue were based on the false and frivolous tax theories that Peter Hendrickson promoted in his book, “Cracking the Code,” and on his website, Lost Horizons.  Peter Hendrickson was sentenced to serve 27 months in prison in that case.  

The evidence presented at Doreen Hendrickson’s trial showed that she violated the injunction issued by Judge Edmunds when she failed to file amended 2002 and 2003 tax returns.  Also, in direct violation of Judge Edmunds’s order, Hendrickson filed a false income tax return for 2008 on which she falsely claimed that wages she earned as a movie extra were not taxable.  This tax return was submitted while her husband was under indictment for filing false tax returns.

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Melissa S. Siskind, Jeffrey B. Bender and Jeffrey A. McLellan of the Tax Division, who are prosecuting the case.  Ciraolo also thanked the U.S. Attorney’s Office of the Eastern District of Michigan for their substantial assistance.

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

A member of the identity theft and credit card fraud ring known as “Carder.su” was sentenced today to 150 months in federal prison for selling stolen and counterfeit credit cards over the Internet.  He was further ordered to pay $50.8 million in restitution.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada and Assistant Special Agent in Charge Michael Harris of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (ICE-HSI) Las Vegas Field Office made the announcement.  U.S. District Judge Andrew P. Gordon of the District of Nevada imposed the sentence.

“Criminal cyber organizations like Carder.su threaten not just U.S. citizens but people in every corner of the globe,” said Assistant Attorney General Caldwell.  “Managers in Russia seamlessly ran their criminal enterprise online using, among others, a counterfeit card vendor from New Jersey, with whom they communicated through screen name aliases.  The success in this case was achieved through equally seamless cooperation with our foreign law enforcement partners and effective use of the RICO statute.  As more countries work with us to fight these organizations, we will continue to evolve to meet this growing threat.”

“Mr. Smith’s crimes were very serious and justify a lengthy prison sentence,” said U.S. Attorney Bogden.  “He admitted that he caused a loss of seven to $20 million involving over 250 victims, and that he obstructed justice when he fled to Jamaica while released on bond awaiting trial.  We are working closely with our international, federal, state and local law enforcement partners to make sure that the perpetrators of these sorts of crimes are prosecuted no matter where in the world they commit their crimes or attempt to flee.”

“As this sentence demonstrates, cyber-criminals who purposely harm innocent Americans and compromise our financial system and global commerce will be aggressively pursued, investigated and prosecuted,” said Assistant Special Agent in Charge Harris.  “These criminals may believe they can escape detection by fleeing the country and hiding behind their computer screens, but as this case shows, cyberspace is not a refuge from justice.”

Jermaine Smith, aka “SirCharlie57,” aka “Fairbusinessman,” 34, of East Orange, New Jersey, pleaded guilty in October 2014 to one count of participating in a racketeer influenced corrupt organization.   

During his guilty plea, Smith admitted that in May 2009 he became associated with the Carder.su organization, a criminal enterprise whose members trafficked in compromised credit card account data and counterfeit identifications, and committed money laundering, narcotics trafficking, and various types of computer crime.  Specifically, Smith admitted that he operated as a vendor on the organization’s websites, using the “SirCharlie57” and “Fairbusinessman” nicknames.  While acting as a vendor under those online monikers, Smith sold counterfeit credit cards to an undercover special agent.  Those counterfeit credit cards were successfully processed for fingerprints, identifying Smith as the true user of the online screennames.  In addition to the sale of the counterfeit credit cards, Smith admitted that he possessed over 2,150 stolen credit and debit card account numbers. 

While on pretrial release in this case, Smith removed an electronic monitoring device from his person and fled to Jamaica.  He was arrested four months later and returned to Nevada.

Fifty-six individuals were charged in four separate indictments in Operation Open Market, which targeted the Carder.su organization.  To date, 26 individuals have been convicted and the rest are either fugitives or are pending trial.   

The cases were investigated by ICE-HSI and the U.S. Secret Service, and are being prosecuted by Trial Attorney Jonathan Ophardt of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Kimberly M. Frayn and Andrew W. Duncan of the District of Nevada.

This prosecution is 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 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.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants.  For more information on the task force, please visit www.StopFraud.gov.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney John W. Vaudreuil of the Western District of Wisconsin and Special Agent in Charge Robert J. Shields Jr. of the FBI’s Milwaukee Division announced that Joshua Ray Van Haften, 34, of Madison, Wisconsin, has been charged with attempting to provide material support and resources, namely himself as personnel, to a foreign terrorist organization.  As alleged in the complaint, Van Haften intended to travel into Iraq or Syria to join the Islamic State of Iraq and the Levant (ISIL). 

The complaint alleges that Van Haften left the United States on Aug. 26, 2014, and traveled to Istanbul.  As alleged in the complaint, Turkey shares a land border with Syria and is known to be an entry point into Syria for those who wish to join ISIL. 

“Van Haften traveled overseas for the alleged purpose of joining and attempting to provide material support to ISIL,” said Assistant Attorney General Carlin.  “Stemming the flow of foreign fighters to Iraq and Syria and holding accountable those who attempt to provide material support to designated foreign terrorist organizations remains a top priority for the National Security Division.  I would like to thank all the agents, analysts and prosecutors who are responsible for this case.”

“We will continue to work with our law enforcement partners to investigate, arrest, and vigorously prosecute all extremists who choose to aid ISIL, or any other terrorist organization, and to stop them before they harm the United States or our allies,” said U.S. Attorney Vaudreuil.  “We also remain committed to working with dedicated community members to bring this cycle to an end.”

“This arrest underscores the importance of our JTTF law enforcement partnerships to bring those to justice who provide support and resources to terrorist organizations such as ISIL,” said Special Agent in Charge Shields.  “We hope this arrest will serve as a deterrent for others who may be terrorist sympathizers here in Wisconsin, across the nation or abroad: they will be held accountable for support of terrorism against our citizens and our international partners.”

Van Haften was arrested at O’Hare Airport in Chicago yesterday evening after his arrival in custody on an international flight from Turkey. 

Van Haften will make an initial appearance in U.S. District Court at 9:45 a.m. CDT today before U.S. Magistrate Judge Stephen L. Crocker of the Western District of Wisconsin.   If convicted, the defendant faces a maximum penalty of 15 years in federal prison. 

This case was investigated by the Joint Terrorism Task Force, the members of which include the FBI, the Wisconsin Department of Justice’s Division of Criminal Investigation, the Dane County Sheriff’s Office and the University of Wisconsin Police Department.  Assistance was also provided by the Department of Homeland Security.  The case is being prosecuted by U.S. Attorney Vaudreuil and Assistant U.S. Attorney Jeffrey Anderson of the Western District of Wisconsin, and Trial Attorney Lolita Lukose of the Justice Department’s National Security Division.

The charges contained a complaint are merely accusations, and a defendant is presumed innocent unless and until proven guilty.

Van Haften Complaint

A Las Vegas tax return preparer was indicted yesterday on 66 counts of preparing and causing the filing of false tax returns, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Daniel G. Bogden of the U.S. Attorney’s Office for the District of Nevada announced today.

According to the allegations in the indictment, Rosherral Beverly, of Clark County, Neveda, operated a tax preparation and bookkeeping business named RBTB Inc.  From approximately 2006 through 2011, Beverly was RBTB Inc.’s sole owner and tax return preparer.  Beverly aided and assisted in preparing false and fraudulent tax returns for her clients for the tax years 2008, 2009 and 2010.  The tax returns included various false items, including charitable contributions, gambling losses, tuition deductions, education credits and job, travel and vehicle expenses.

If convicted, Beverly faces a statutory maximum sentence of three years in prison and a $250,000 fine for each count of aiding and assisting in the preparation of false tax returns.

Acting Assistant Attorney General Ciraolo and U.S. Attorney Bogden commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorney Christopher J. Maietta of the Tax Division and Assistant U.S. Attorney Nicholas D. Dickinson of the District of Nevada, who are prosecuting the case. 

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. 

More information about the Tax Division and its enforcement efforts is available on the division’s website.

A former trooper with the Ohio State Highway Patrol was sentenced today in Columbus, Ohio, to 60 months in federal prison for coercing four female victims to engage in sexual acts in exchange for lenient treatment in connection with potential criminal cases and traffic tickets.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio, Special Agent in Charge Angela L. Byers of the FBI’s Cincinnati Division, Superintendent of the Ohio State Highway Patrol (OSP) Colonel Paul A. Pride and Licking County Prosecutor Kenneth W.  Oswalt made the announcement.  U.S. District Judge Michael H. Watson of the Southern District of Ohio imposed the sentence.

Bryan D. Lee, 31, of Lancaster, Ohio, pleaded guilty on Oct. 29, 2014, to four counts of violating the civil rights of female motorists and one count of engaging in cyber stalking.  Lee served as an OSP Trooper from approximately January 2006 until October 2013.  As part of his plea, Lee admitted that he violated the civil rights of four female victims by coercing them in his official capacity to commit sexual acts, some of which he photographed, in exchange for his agreement not to file criminal charges or issue traffic infractions against the victims or their friends.  Lee further admitted that he engaged in sexual contact with certain victims while they were under arrest and restrained in handcuffs.  Lee also harassed and threatened some of the victims, including sending threatening electronic messages to one individual who he pulled over twice during a one-month period.

This case was investigated by the Columbus office of the FBI’s Cincinnati Division and OSP.  The case was prosecuted by Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio.  Also assisting in the investigation was Fairfield County Special Prosecutor Martin Frantz.

Attorney General Eric Holder released the following statement on the departure of U.S. Attorney John Kacavas:

“For nearly six years as United States Attorney for the District of New Hampshire, John Kacavas’ impressive record of public service has reflected his dynamic leadership, his consummate skill and his unshakeable devotion to justice in the face of pressing concerns and daunting challenges.  Through his outstanding efforts, he has safeguarded the people of New Hampshire and left an indelible mark on the nation. 

“As Chairman of the Attorney General’s Advisory Committee’s Forensic Science Working Group, John has been an indispensable advisor to me, guiding the Justice Department’s use of forensic science to ensure that we rely on it knowledgeably, responsibly and effectively.  Through his critical work as part of the Child Exploitation and Obscenity Working Group, John has helped uphold the Department’s promise to protect and defend the most vulnerable members of our society.  In every case and every circumstance, John has demonstrated his unwavering commitment to public service, to professional integrity and to the cause of justice.  I thank John for his exemplary service, I wish him the best of luck and I look forward to all that he will continue to achieve.”

The Department of Justice filed a complaint in the U.S. District Court of the Eastern District of North Carolina today seeking the arrest and extradition of a former colonel in the Salvadoran army to face charges in Spain related to the murder of five Spanish Jesuit priests in El Salvador in 1989.    

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Thomas G. Walker of the Eastern District of North Carolina made the announcement.

Inocente Orlando Montano Morales, 72, formerly of Everett, Massachusetts, and 19 other former Salvadoran military officials have been indicted in Spain for the 1989 murders of five Spanish Jesuit priests during the 10-year Salvadoran civil conflict.  An arrest warrant for Montano was issued by a Spanish magistrate.

According to allegations in the complaint filed in U.S. District Court today, between 1980 and 1991, El Salvador was engulfed in a civil conflict between the military-led government and the Farabundo Martí National Liberation Front (FMLN).  During this conflict, in the early morning hours of Nov. 16, 1989, members of the Salvadoran military allegedly murdered six Jesuit priests, their housekeeper and the housekeeper’s 16-year old daughter at the Universidad Centroamericana.  Five of the Jesuit priests were Spanish nationals, and the remaining victims were from El Salvador.  The Jesuit priests were allegedly advocates for discussions between the FMLN and the military-led government to end the strife. 

At the time, Montano Morales was a colonel in the Salvadoran army, and he also served as Vice Minister of Defense and Public Safety.  The complaint alleges that he shared oversight responsibility over a government radio station that, days before the massacre, issued threats urging the murder of the Jesuit priests.  The day before the murders, Montano Morales also allegedly participated in a series of meetings during which one of his fellow officers gave the order to kill the leader of the Jesuits and leave no witnesses.  The following day, members of the Salvadoran army allegedly executed the six priests, their housekeeper and the housekeeper’s daughter.

Montano Morales is currently serving a 21-month federal prison sentence in the United States for his 2013 conviction in the District of Massachusetts for immigration fraud and perjury in connection with false statements he made to immigration authorities to remain in the United States.  He will be released from that prison sentence on April 16, 2015.   

The allegations contained in the complaint are merely accusations, and any finding of guilt or innocence will be made by Spanish courts upon Montano Morales’s extradition.

The case is being handled by Assistant U.S. Attorney Eric Goulian and Special Assistant U.S. Attorney John Capin of the Eastern District of North Carolina and Trial Attorney Roberto Iraola of the Criminal Division’s Office of International Affairs.

Montano Morales Complaint

The leader of a sex trafficking ring pleaded guilty today to charges stemming from his interstate prostitution enterprise, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney J. Walter Green of the Middle District of Louisiana and Special Agent in Charge Michael J. Anderson of the FBI’s New Orleans Division.

Jeremie J. Tate, 33, of Zachary, Louisiana, pleaded guilty this morning before U.S. District Judge Shelly D. Dick of the Middle District of Louisiana to conspiracy to unlawfully use interstate facilities in aid of racketeering, two counts of use of interstate facilities in aid of racketeering and enticing another to travel interstate for prostitution.  After evading arrest for several days, Tate was apprehended in Houston, Texas, on April 25, 2014, by the U.S. Marshals Service Fugitive Task Force and the FBI’s New Orleans Division.  Tate has remained in federal custody since his arrest.

According to the plea agreement filed in the case, from November 2012 through November 2013, Tate operated a prostitution business based in Baton Rouge involving multiple prostitutes, including a minor.  Tate and others, used telephones and the Internet to arrange online advertising, schedule prostitution sessions and recruit other prostitutes.  Tate admitted that he took most of the proceeds from the prostitution business and distributed controlled substances to his prostitutes and others to manipulate and intimidate them.  In his plea agreement, Tate specifically admitted that he enticed a prostitute to travel from Baton Rouge to Las Vegas in December 2012 to engage in prostitution for him. 

Three other individuals have already pleaded guilty and are awaiting sentencing for their roles in this sex trafficking ring.

The case is being investigated by the FBI’s New Orleans Division, Louisiana Attorney General’s Office, Louisiana State Police and East Baton Rouge, Louisiana, Sheriff’s Office, with assistance from the Baton Rouge, Louisiana, Police Department’s Narcotics Division, U.S. Marshals Service Fugitive Task Force and other law enforcement agencies.  The case is being prosecuted by Trial Attorney Reginald E. Jones of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Jamie A. Flowers Jr. of the Middle District of Louisiana.

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.

Orlando, Florida, based Air Ideal Inc. and its majority owner, Kim Amkraut, have agreed to pay the United States $250,000 to resolve allegations that they made false statements to the Small Business Administration (SBA) to obtain certification as a Historically Underutilized Business Zone (HUBZone) company, the Justice Department announced today.  Under the settlement, the defendants must also pay five percent of Air Ideal’s gross revenues over the next five years.

“When companies falsely claim eligibility for government contracts set aside for HUBZone businesses, they not only misuse taxpayer funds, but they also deprive HUBZone communities of the benefits of the program,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “This settlement shows that there is a stiff price to pay for obtaining government contracts through false statements.”

“The HUBZone program is an important tool in the government’s effort to strengthen our economy by encouraging businesses to grow in underutilized and disadvantaged areas,” said U.S. Attorney A. Lee Bentley III of the Middle District of Florida.  “We will not tolerate contractors who use deception to undermine its objectives and effectiveness.”

The purpose of the HUBZone program is to stimulate job growth in areas that have historically had low business investment.  Under the HUBZone program, companies that maintain their principal office in a designated HUBZone and meet certain other requirements can apply to the SBA for certification as a HUBZone small business company.  HUBZone companies can then use this certification when bidding on government contracts.  In certain cases, government agencies will restrict competition for a contract to HUBZone-certified companies.

The United States’ complaint alleged that Air Ideal and Amkraut originally applied to the HUBZone program in 2010 by claiming that Air Ideal’s principal office was located in a designated HUBZone.  The complaint further alleged that, in fact, this location was a “virtual office” where no Air Ideal employees worked, and that Air Ideal was actually located in a non-HUBZone location.  Allegedly, the defendants not only misrepresented the location of Air Ideal’s principal office to the SBA, but also submitted to the SBA a fabricated lease agreement and other fabricated documents for its purported HUBZone office.  The complaint further alleged that during the government’s investigation of this case, the defendants fabricated another version of its agreement for the virtual office and submitted that false document to the government.

The complaint alleged that Air Ideal used its fraudulently-procured HUBZone certification to obtain contracts from the U.S. Coast Guard, U.S. Army, U.S. Army Corps of Engineers and the U.S. Department of the Interior.  Each of those contracts had been set aside for qualified HUBZone companies.  The United States’ complaint asserted claims against Air Ideal and Amkraut under the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act of 1989.

“The OIG will aggressively investigate intentional misrepresentations made by individuals who lie in order to claim eligibility for SBA set-aside programs,” said Inspector General Peggy E. Gustafson of the SBA.  “I want to thank the U.S. Department of Justice for its dedication to pursuing justice in this case.”

The settlement resolves allegations brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act by Patricia Hopson, who is employed in the construction industry.  Under the act, a private citizen can sue on behalf of the United States and share in any recovery.  The United States is entitled to intervene in the lawsuit, as it did here.  As part of the resolution, Ms. Hopson will receive $42,500.

This matter was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office of the Middle District of Florida, in conjunction with the SBA’s Office of Inspector General (OIG) and Office of General Counsel, the Department of Homeland Security’s Office of Inspector General, and the Defense Criminal Investigative Service.

The case is U.S. ex rel. Hopson v. Air Ideal, Inc. and Kim Amkraut, No. 6:13-cv-775-Orl-37GJK (M.D. Fla.).

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

On Apr. 7, 2015, a federal grand jury in Knoxville, Tennessee, indicted Marcus Washington, 37, of Farragut, Tenn., charging him with  two counts of sex trafficking by force, threats of force, fraud and coercion; conspiracy to possess with the intent to distribute a controlled substance; and possession with the intent to distribute a controlled substance.

The indictment, on file with the U.S. District Court, charges Washington with separate counts of sex trafficking by force, threats of force, fraud and coercion in relation to two victims.  He is also charged with conspiring with others to possess with the intent to distribute, and the distribution of, oxycodone, a Schedule II controlled substance, and a substance containing a detectable amount of cocaine, also a Schedule II controlled substance.  Lastly, Washington is charged with possessing with the intent to distribute oxycodone.

Washington faces a mandatory minimum of 15 years incarceration if convicted of either trafficking charge.  Both narcotics charges carry a statutory maximum of 20 years in prison.

This case was investigated by the FBI.  The Knox County Sheriff’s Office and the Knox County Attorney General’s Office provided significant support in this investigation.  The case is being prosecuted by Trial Attorney Nicholas Durham of the Civil Rights Division’s Criminal Section and Assistant U.S. Attorney Brooklyn Sawyers of the U.S. Attorney’s Office for the Eastern District of Tennessee. 

Members of the public are reminded that these are only charges and that every person is presumed innocent until their guilt has been proven beyond a reasonable doubt.

Defendant Allegedly is Part of ISIL Foreign Fighter Local Support Network; Travelled to Kennedy Airport on Feb. 25 to Provide Cash to Co-Defendant Shortly Before Co-Defendant Was Arrested Attempting to Board Flight to Turkey 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, Commissioner William J. Bratton of the New York City Police Department and Special Agent in Charge Raymond R. Parmer Jr. of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) New York announced that earlier today, a federal grand jury in Brooklyn, New York, returned a superseding indictment charging Dilkhayot Kasimov, 26, a Brooklyn resident, with attempt and conspiracy to provide material support to the Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization.  The defendant, who is charged along with three other Brooklyn residents whose arrests were first announced on Feb. 25, 2015, is scheduled to be arraigned on Wednesday, April 8, 2015, at 2 p.m., before U.S. District Judge William F. Kuntz II of the Eastern District of New York.

As alleged in the superseding indictment and other court filings, the investigation began last year when Abdurasul Hasanovich Juraboev, one of Kasimov’s co-defendants, came to the attention of law enforcement after posting on an Uzbek-language website that propagates ISIL’s ideology.  The investigation subsequently revealed that Juraboev and another co-defendant, Akhror Saidakhmetov, planned to travel to Turkey and then to Syria for the purpose of waging violent jihad on behalf of ISIL.  Saidakhmetov was arrested on Feb. 25, 2015, at John F. Kennedy International Airport, where he was attempting to board a flight to Istanbul.  Juraboev previously purchased a plane ticket to travel from New York to Istanbul and had been scheduled to leave the United States in March 2015.

Working closely with co-defendant Abror Habibov, Kasimov allegedly helped fund Saidakhmetov’s efforts to join ISIL.  Kasimov and Habibov collected over $1,600 from multiple individuals for Saidakhmetov to use in Syria.  Kasimov thereafter delivered the money to Saidakhmetov at Kennedy Airport shortly before Saidakhmetov was apprehended trying to board his flight in February.  Additional investigation uncovered electronic messages in which Kasimov encouraged others to participate in violent jihad and made clear his role in facilitating the travel of foreign fighters to Syria.

“This defendant is the fourth Brooklyn resident charged as part of the same network of individuals who are alleged to have conspired and attempted to provide material support to ISIL,” said U.S. Attorney Lynch.  “Terrorist support networks like the one this defendant was involved in offer critical funding, travel logistics, and encouragement to persons seeking to join ISIL and other foreign terrorist organizations.  We will remain vigilant in our efforts to stem the flow of foreign fighters to Syria and to disrupt and dismantle the networks, here and abroad, that support them.”  U.S. Attorney Lynch extended her grateful appreciation to the FBI’s Joint Terrorism Task Force, which comprises a large number of federal, state and local agencies from the region.

“Dilkhayot Kasimov allegedly attempted and conspired with others to provide material support to ISIL,” said Assistant Attorney General Carlin.  “The National Security Division remains committed to holding accountable all who seek to provide material support to designated foreign terrorist organizations.  I would like to thank all of the agents, analysts and prosecutors who are responsible for this case.”

“Kasimov served as a money man in support of a co-defendant’s efforts to join ISIL,” said Assistant Director in Charge Rodriguez.  “He provided encouragement and facilitated travel for foreign fighters.  As the recent series of cases indicate, we will pursue every lead and every person who succumbs to this radical agenda.  It is my hope that these cases deter others from sharing Kasimov’s fate: being under arrest and in trouble with the law.”

“Money is the oxygen that fuels terrorism,” said Commissioner Bratton.  “This investigation proves again that we will leave no stone unturned to disrupt the finance, support, or membership in terrorist organizations like ISIL.”

“These arrests are the culmination of an extensive joint law enforcement effort to disrupt the recruitment of alleged terrorist sympathizers,” said Special Agent in Charge Parmer.  “ICE-HSI will continue to use its unique immigration and customs authorities to assist our domestic and international law enforcement partners to stop jihadists from supporting terrorist organizations such as ISIL.”

If convicted, the defendant faces a maximum sentence of 30 years in prison.  The charges in the superseding indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

The government’s case is being handled by Assistant U.S. Attorneys Alexander Solomon, Douglas M. Pravda and Peter W. Baldwin of the Eastern District of New York, with assistance provided by Trial Attorney Danya Atiyeh of the Justice Department’s National Security Division.

Kasimov Superseding Indictment

A former executive of an e-commerce seller of posters, prints and framed art has agreed to plead guilty for conspiring to fix the prices of posters sold online, the Department of Justice announced.

A one-count felony charge was filed today in the U.S. District Court of the Northern District of California in San Francisco against David Topkins.  According to the charge, Topkins and his co-conspirators fixed the prices of certain posters sold online through Amazon Marketplace from as early as September 2013 until in or about January 2014.  Topkins also has agreed to pay a $20,000 criminal fine and cooperate with the department’s ongoing investigation.  The plea agreement is subject to court approval.

“Today’s announcement represents the division’s first criminal prosecution against a conspiracy specifically targeting e-commerce,” said Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division.  “We will not tolerate anticompetitive conduct, whether it occurs in a smoke-filled room or over the Internet using complex pricing algorithms.  American consumers have the right to a free and fair marketplace online, as well as in brick and mortar businesses."

According to the charge, Topkins and his co-conspirators agreed to fix the prices of certain posters sold in the United States through Amazon Marketplace.  To implement their agreements, the defendant and his co-conspirators adopted specific pricing algorithms for the sale of certain posters with the goal of coordinating changes to their respective prices and wrote computer code that instructed algorithm-based software to set prices in conformity with this agreement.  

“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations seeking to victimize online consumers through illegal anticompetitive conduct,” said Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office.  “The FBI is committed to investigating price fixing schemes and remains unwavering in our dedication to bring those responsible for theses illegal conspiracies to justice.”                   

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

This prosecution arose from an ongoing federal antitrust investigation into price fixing in the online wall décor industry, which is being conducted by the Antitrust Division’s San Francisco Office with the assistance of the FBI’s San Francisco Field Office.  Anyone with information on price fixing or other anticompetitive conduct related to other products in the wall décor industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258 or visit www.justice.gov/atr/contact/newcase.html.

Topkins Information

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 J. Holley of the FBI’s Chicago Field Office announced today that two Aurora, Illinois, men were indicted on Thursday for allegedly conspiring to provide material support to the Islamic State of Iraq and the Levant (ISIL), a foreign terrorist organization.         

U.S. Army National Guard Specialist Hasan Edmonds, 22, and his cousin, Jonas Edmonds, 29, were arrested last month by members of the Chicago FBI’s Joint Terrorism Task Force (JTTF) and remain in federal custody.  The defendants were charged in an indictment 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.  Both defendants will be arraigned on April 8, at 10:00 before Magistrate Judge Sheila M. Finnegan.

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 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 an indictment 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.    

Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania announced that Keonna Thomas, also known as Fatayat Al Khilafah and YoungLioness, 30, of Philadelphia, was charged today by criminal complaint with knowingly attempting to provide material support and resources, including herself as personnel, to a designated foreign terrorist organization.  According to the complaint, Thomas attempted to travel overseas in order to join and fight with the Islamic State of Iraq and the Levant (ISIL).

As alleged in the complaint, Thomas posted on Twitter the following statement: “If we truly knew the realities . . . we all would be rushing to join our brothers in the front lines pray ALLAH accept us as shuhada [martyrs].”  The complaint further alleges that Thomas applied for a U.S. passport and advised an associate that she had deactivated her Twitter “till i leave for sham [greater Syria]. . . .  don’t want to draw attention of the kuffar [non-believers].”  Thomas then allegedly engaged in electronic communications with an ISIL fighter in Syria, who asked Thomas if she wanted to be a part of a martyrdom operation.  Thomas responded by stating, “that would be amazing….a girl can only wish.”  Thomas also allegedly conducted online research into various indirect travel routes to Turkey, and allegedly purchased an electronic visa to Turkey.  The complaint alleges that Turkey is known to be the most common and most direct transit point for individuals traveling from locations in Europe who are seeking to enter Syria and join ISIL.   On or about March 26, 2015, Thomas allegedly purchased airline tickets to fly overseas on March 29, 2015. 

If convicted, the defendant faces a maximum possible sentence of 15 years’ incarceration.

The case was investigated by the FBI’s Joint Terrorism Task Force and the Philadelphia Police Department.  It is being prosecuted by Assistant U.S. Attorney Jennifer Arbittier Williams of the Eastern District of Pennsylvania and Trial Attorney Paul Casey of the Justice Department’s National Security Division.

A criminal complaint is an accusation.  A defendant is presumed innocent unless and until proven guilty.

The Justice Department has filed suit in the U.S. District Court for the District of Massachusetts against Michael P. Ferry Inc. and its owner, Michael P. Ferry (Ferry), to block them from violating the Federal Food, Drug and Cosmetic Act (FDCA) in connection with their alleged unlawful use of new animal drugs in cows slaughtered for food.  The Justice Department filed the suit on behalf of the U.S. Food and Drug Administration (FDA). 

The defendants have agreed to settle the litigation and be bound by a consent decree of permanent injunction that enjoins them from committing violations of the FDCA.  The proposed consent decree has been filed with the court and is awaiting judicial approval.

“Failing to maintain appropriate controls in food-producing animals bound for slaughter jeopardizes the public health,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The resolution of this matter ensures that, should it choose to re-enter business, this farm will have the necessary procedures in place to ensure that it delivers safe food to consumers.”

The defendants are primarily in the dairy business, but also sell cows for slaughter as food.  Government inspections as recently as June 2014 revealed that Ferry sold animals for slaughter containing excessive and illegal drug residues in their edible tissues.  The inspections also revealed that the defendants failed to maintain complete records concerning the medication of their animals.  The FDA issued a warning letter to the farm concerning its violations in 2011 and also held a regulatory meeting with the farm in 2013 to discuss unlawful residues found in its cattle.  The complaint states that consumers of edible animal tissues who are susceptible to antibiotics may experience severe allergic reactions as a result of ingesting food containing out-of-tolerance antibiotic levels.  Furthermore, food containing above-tolerance antibiotic levels contributes to the development of antibiotic-resistant strains of bacteria in those who eat or handle food containing residues of such drugs.

Under the consent decree, the defendants have agreed to shutter their business selling animals for slaughter.  To resume selling cows for slaughter, the consent decree requires the defendants to take certain actions and institute measures that must be confirmed by the FDA as compliant.

This matter was handled by Trial Attorney David Sullivan of the Civil Division’s Consumer Protection Branch and Scott Kaplan of the FDA’s Office of the Chief Counsel.

The Department of Justice filed a statement of interest today in the Middle District of Georgia in Diamond v. Owens, et al.  The plaintiff in that case, a transgender prisoner, alleges that the Georgia Department of Corrections failed to provide adequate care for her gender dysphoria.  The statement of interest discusses the unconstitutionality of “freeze-frame” policies, such as the policy allegedly used in the Georgia Department of Corrections.  These policies unconstitutionally prohibit treatment beyond the type of care the prisoner received in the community prior to incarceration.  Through this filing, without taking a position on the merits of the allegations, the United States stated that the Eighth Amendment mandates individualized assessment and care for gender dysphoria.

“By taking action in this case, the Justice Department is reminding departments of corrections that prison officials have the obligation to assess and treat gender dysphoria just as they would any other medical or mental health condition,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Prisoners with gender dysphoria should not be forced to suffer needlessly during their incarceration simply because they were not receiving care, or could not prove they were receiving care, in the community.  Freeze-frame policies can have serious consequences to the health and well-being of transgender prisoners, who are among the most vulnerable populations incarcerated in our nation’s prisons and jails.”

Based on the facts as alleged, Ashley Diamond was first diagnosed with gender dysphoria as a teenager, nearly twenty years ago.  She began taking feminizing hormones, which helped her develop secondary sex characteristics and helped ease the significant physical and emotional discomfort she felt with her biological sex.  Yet, when she entered the Georgia Department of Corrections, she was not identified or referred for continuation of this treatment.  Instead, her hormone therapy was terminated and she was placed in a secure prison for men. 

When Ms. Diamond requested treatment during her incarceration, she was evaluated by Department medical personnel who confirmed Diamond’s gender dysphoria and recommended reinstatement of hormone therapy and other clinically-indicated treatments.  However, department officials continued to deny this treatment, telling Diamond that she was ineligible for treatment pursuant to the department’s policy.  Because the department did not properly identify Diamond’s gender dysphoria at intake and refer her for treatment at that time, she was, and continues to be, denied necessary medical care.  

The facts alleged in this case indicate that the Department of Corrections relied on its freeze-frame policy to deny Diamond the care recommended by the department’s own physicians, in violation of the Eighth Amendment.  As stated by the Justice Department in its filing, “[t]wo things are clear from the record in this case: one, the generally accepted standards for treatment of gender dysphoria require treatment decisions be individualized; and two, Ms. Diamond did not receive individualized care.”

Diamond v. Owens, et al. was filed in February 2015.

Defendants Allegedly Plotted to Construct an Explosive Device for Use in a Terrorist Attack on U.S. Soil

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 (NYPD) announced that earlier today, a criminal complaint was unsealed in federal court in the Eastern District of New York charging Noelle Velentzas and Asia Siddiqui with conspiracy to use weapons of mass destruction against persons or property in the United States.  The defendants’ initial appearances are scheduled for this afternoon before U.S. Magistrate Judge Viktor V. Pohorelsky of the Eastern District of New York.

As alleged in the complaint, the defendants have repeatedly expressed their support for violent jihad.  For instance, in or about 2009, Siddiqui published a poem in a magazine published by al-Qaeda in the Arabian Peninsula that exhorted readers to wage jihad and declared that there is “[n]o excuse to sit back and wait – for the skies rain martyrdom.”  More recently, Velentzas, who has characterized al-Qaeda founder Usama Bin Laden as one of her heroes, declared that she and Siddiqui are “citizens of the Islamic State” – a reference to the foreign terrorist organization that is also known as Islamic State in Iraq and the Levant (ISIL).  Less than two weeks ago, Velentzas, asked whether she had heard the news about the recent arrest of a former U.S. airman who had attempted to travel to Syria to wage jihad and stated that she did not understand why people were traveling overseas to engage in jihad when there were more opportunities of “pleasing Allah” in the United States.

Since at least August 2014, the defendants have allegedly plotted to construct an explosive device for use in a terrorist attack on American soil.  In their self-proclaimed effort to “make history,” the defendants researched numerous explosive precursors.  For instance, they researched and acquired some of the components of a car bomb, like the one used in the 1993 World Trade Center bombing; a fertilizer bomb, like the one used in the 1995 bombing of the federal building in Oklahoma City; and a pressure cooker bomb, like the one used in the 2013 Boston Marathon bombing.  The investigation recently revealed that the defendants possessed propane gas tanks together with instructions from an online jihadist publication for transforming propane tanks into explosive devices.

“We are committed to doing everything in our ability to detect, disrupt and deter attacks by homegrown violent extremists,” said U.S. Attorney Lynch.  “As alleged, the defendants in this case carefully studied how to construct an explosive device to launch an attack on the homeland.  We remain firm in our resolve to hold accountable anyone who would seek to terrorize the American people, whether by traveling abroad to commit attacks overseas or by plotting here at home.”  U.S. Attorney Lynch extended her grateful appreciation to the FBI’s Joint Terrorism Task Force, which comprises a large number of federal, state and local agencies from the region, as well as to the NYPD Intelligence Division, for their assistance in the investigation.

“Velentzas and Siddiqui are alleged to have researched how to construct bombs as part of their conspiracy to use a weapon of mass destruction on American soil,” said Assistant Attorney General Carlin.  “Identifying and disrupting such threats to public safety, whether at home or abroad, is the number one priority of the National Security Division and our partners in the law enforcement and intelligence communities.  I want to thank the agents, analysts and prosecutors who are responsible for today’s charges.”

“The defendants allegedly plotted to wreak terror by creating explosive devices and even researching the pressure cooker bombs used during the Boston Marathon bombing,” said Assistant Director in Charge Rodriguez.  “We continue to pursue those who look to commit acts of terror and deter others who think they are beyond the reach of law enforcement.  I’d like to thank Commissioner Bratton and the New York City Police Department for their partnership on this case and so many others.”

“These defendants allegedly engaged in sustained efforts to obtain bomb-making instructions and materials, including using instructions provided by al-Qaeda’s online magazine,” said Commissioner Bratton.  “The work of the NYPD’s Intelligence Bureau, its undercover Detective, and the seamless collaboration with the Special Agents and Detectives of the Joint Terrorism Task Force and United States Attorney for the Eastern District should serve as a model for early detection and prevention of terrorist plotting.”

If convicted, both defendants face a maximum sentence of life imprisonment.  The charges in the complaint are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The government’s case is being prosecuted by Assistant U.S. Attorneys Alexander A. Solomon, Douglas M. Pravda and Jennifer S. Carapiet of the Eastern District of New York, with assistance provided by Trial Attorney Clement McGovern of the Justice Department’s National Security Division.

Velentzas and Siddiqui Complaint

Velentzas Order to Unseal

The Justice Department announced today that Medtronic plc and affiliated Medtronic companies, Medtronic Inc., Medtronic USA Inc., and Medtronic Sofamor Danek USA Inc., have agreed to pay $4.41 million to the United States to resolve allegations that they violated the False Claims Act by making false statements to the U.S. Department of Veterans Affairs (VA) and the U.S. Department of Defense (DoD) regarding the country of origin of certain Medtronic products sold to the United States. 

“Today’s settlement demonstrates our commitment to ensure that our service members and our veterans receive medical products that are manufactured in the United States and other countries that trade fairly with us,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “The Justice Department will take action to hold medical device companies to the terms of their government contracts.”

“Domestic manufacture is a required component of many military and Veterans Administration contracts,” said U.S. Attorney Andrew M. Luger of the District of Minnesota.  “Congress has mandated that the United States use its purchasing power to buy goods made in the United States or in designated countries.  We take that mandate seriously and will not hesitate to take appropriate legal action to ensure compliance.” 

According to the settlement agreement, between 2007 and 2014, Medtronic sold to the VA and DoD products it certified would be made in the United States or other designated countries.  The Trade Agreements Act of 1979 (TAA) generally requires companies selling products to the United States to manufacture them in the United States or in another designated country.  The United States alleged that Medtronic sold to the United States products manufactured in China and Malaysia, which are prohibited countries under the TAA.

The specific Medtronic products at issue included anchoring sleeves sold with cardiac leads and used to secure the leads to patients, certain instruments and devices used in spine surgeries, and a handheld patient assistant used with a wireless cardiac device.  The agreement covers the period from Jan. 1, 2007, to Dec. 31, 2013, and for one device (the handheld patient assistant), the period from Jan. 1, 2014, to Sept. 30, 2014.

The settlement resolves allegations originally brought in a lawsuit filed by three whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and share in any recovery. The relators will receive a total of $749,700 of the recovered funds. 

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 $23.9 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 case was handled by the U.S. Attorney’s Office of the District of Minnesota with assistance from the Civil Division, DoD, Defense Logistics Agency and Defense Criminal Investigative Service and the VA’s Office of General Counsel.

The underlying case is United States of America ex rel. Samuel Adam Cox, III, Meayna Phanthavong, and Sonia Adams v. Medtronic, Inc., Medtronic USA, Inc., and Medtronic Sofamor Danek USA, Inc., Civil No. 12-cv-2562 (PAM/JSM).

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

Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division and U.S. Attorney Carmen M. Ortiz of the District of Massachusetts announced today that the Justice Department has entered into a settlement agreement with edX Inc. (edX), to remedy alleged violations of the Americans with Disabilities Act (ADA).  The agreement resolves the department’s allegations that edX’s website, www.edx.org, and its platform for providing massive open online courses (MOOCs), were not fully accessible to individuals with disabilities, including individuals who are blind or have low vision, individuals who are deaf or hard of hearing and individuals who have physical disabilities affecting manual dexterity, in violation of Title III of the ADA.

edX was created by the Massachusetts Institute of Technology (MIT) and Harvard University in 2012 as a nonprofit platform for select universities to offer MOOCs to the world.  The consortium’s 36 charter members include Berkeley, Georgetown, Dartmouth, Caltech, the Sorbonne and Peking University, in addition to Harvard and MIT.  Today, edX has approximately 60 university and institutional members providing over 450 courses to over 3,000,000 learners.  The courses are offered largely for free in subject matters as varied as business, computer sciences, hard sciences, food and nutrition and social sciences.

Today’s agreement requires edX to make significant modifications to its website, platform and mobile applications to conform to the Web Content Accessibility Guidelines (WCAG) 2.0 AA, which are industry guidelines for making web content accessible to users with disabilities.  Under the agreement edX will also provide guidance and authoring tools to the entities that create and post courses on www.edx.org, many of which are independently covered by the ADA, to assist them in creating accessible course content.  Because edX makes its software code freely available, any modifications to that code under this agreement will enable other MOOC providers to enhance the accessibility of their online offerings.

The four-year agreement requires edX to:

• make the edX website, its mobile applications, and learning management system software, through which online courses are offered, fully accessible within 18 months;
• ensure that its content management system, called Studio, which edX makes available to entities creating online courses, is fully accessible and supports authoring and publishing of accessible content within an additional 18 months;
• provide guidance to course creators at its member universities and other institutions on best practices for making online courses fully accessible;
• appoint a Web Accessibility Coordinator;
• adopt a Web Accessibility Policy;
• solicit feedback from learners on the accessibility of the courses;
• conduct Web Accessibility Training for employees responsible for the website, platform, and mobile applications; and
• retain a consultant to evaluate conformance of the website, platform, and mobile applications.

“Massive open online courses have the potential to increase access to high-quality education for people facing income, distance, and other barriers, but only if they are truly open to everyone,” said Acting Assistant Attorney General Gupta.  “This landmark agreement is far-reaching in ensuring that individuals with disabilities will have an equal opportunity to independently and conveniently access quality higher education online.  edX is to be commended for working with the Justice Department to take such steps.”  

“Critical portions of education are moving online, in tandem with the rest of our social experience,” said U.S. Attorney Ortiz.  “This new, educational online world readily can, and should be, built from the outset in a way that does not discriminate against those with disabilities.”

Title III of the ADA prohibits discrimination on the basis of disability by public accommodations in the full and equal enjoyment of the goods, services, facilities, privileges, advantages and accommodations of places of public accommodations.  Title III of the ADA also requires public accommodations to take necessary steps to ensure individuals with disabilities are not excluded, denied services, segregated or otherwise treated differently because of the absence of auxiliary aids and services, such as accurate captioning of audible materials and labeling of visual materials.  The Justice Department has long considered Title III and its implementing regulation to apply to the online services and communications of public accommodations.

To find out more about federal disability rights laws, call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov.  ADA complaints, including those involving the inaccessibility of www.edx.org, may be filed by email to [email protected].

edX Settlement Agreement

A former trader at ConvergEx Global Markets Limited (CGM Limited) pleaded guilty this morning in federal court in New Jersey for his role in a scheme to falsify the books and records of a registered U.S. broker-dealer. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey, Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office and Inspector in Charge Philip R. Bartlett of the U.S. Postal Inspection Service (USPIS) made the announcement.

Michael Craig Marshall, 47, of Bermuda, pleaded guilty before U.S. District Judge Jose L. Linares of the District of New Jersey, to one count of conspiracy to falsify the books and records of a broker-dealer.

According to court documents, CGM Limited and G-Trade Services, LLC (G-Trade) were both wholly owned subsidiaries of ConvergEx Group LLC (ConvergEx Group).  G-Trade was a registered U.S. broker-dealer.  As part of his plea today, Marshall admitted that clients placed orders to buy or sell securities with G-Trade, and G-Trade then routed the orders to CGM Limited.  Marshall further admitted that traders at CGM Limited regularly added a mark-up (an additional amount paid for the purchase of a security) or mark-down (a reduction of the amount received for the sale of a security) when executing the orders.  Employees of CGM Limited, G-Trade and other ConvergEx Group entities referred to mark-ups and mark-downs as “spread,” “trading profits” or “TP.” 

At his plea hearing today, Marshall admitted that he and the other coconspirators falsified G-Trade’s books and records.  In particular, Marshall admitted that he reviewed falsified transaction reports for two trades executed in August 2009 to verify that the falsified data regarding the quantities, prices and times of the purchases reflected on the report matched actual trades that had been executed on the market on Aug. 7, 2009, by both G-Trade’s client and other market participants.  The reports hid the fact that spread had been taken on the brokerage orders, Marshall admitted.  These reports were later provided to G-Trade’s client.

On Dec. 18, 2013, Jonathan Daspin, the head trader at CGM Limited, Thomas Lekargeren, a sales trader at a different ConvergEx subsidiary, and CGM Limited each pleaded guilty to conspiracy to commit securities and wire fraud.  On the same day, ConvergEx Group entered into a deferred prosecution agreement.  Collectively, the two ConvergEx entities paid $43.8 million in criminal penalties and restitution.

The case is being investigated by the FBI’s Washington Field Office and the USPIS offices in Washington, D.C. and New York.  The case is being prosecuted by Senior Trial Attorneys Jason Linder and Patrick Pericak of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Leslie Schwartz of the District of New Jersey.  Fraud Section Assistant Chief Robert Zink and Trial Attorney Justin Goodyear also assisted with the investigation.  The Department appreciates the substantial assistance of the Securities and Exchange Commission.

Defendant Allegedly Supported a Conspiracy to Kill Americans and Carry Out Attacks Against U.S. Military

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 (NYPD) announced that a complaint and arrest warrant were unsealed today in federal court in the Eastern District of New York charging Muhanad Mahmoud Al Farekh, an American citizen, with conspiracy to provide material support to terrorists.  Farekh’s initial appearance is scheduled today before U.S. Magistrate Judge Viktor V. Pohorelsky of the Eastern District of New York.  Farekh was deported from Pakistan to the United States and arrested pursuant to the pending warrant.

As alleged in the complaint, Farekh conspired with others to provide material support to terrorists and specifically to provide personnel to be used in support of efforts to kill American citizens and members of the U.S. military abroad.  In approximately 2007, Farekh, an individual named Ferid Imam and a third co-conspirator departed Canada for Pakistan with the intention of fighting against American forces.  They did not inform their families of their plan before departing, but called a friend in Canada upon arrival to let him know that he should not expect to hear from them again because they intended to become martyrs.  According to public testimony in previous criminal trials in the Eastern District of New York, in approximately September 2008, Ferid Imam provided weapons and other military-type training at an al-Qaeda training camp in Pakistan to three individuals – Najibullah Zazi, Zarein Ahmedzay and Adis Medunjanin – who intended to return to the United States to conduct a suicide attack on the New York City subway system.  Zazi and Ahmedzay pleaded guilty pursuant to cooperation agreements and have yet to be sentenced; Medunjanin was convicted after trial and sentenced to life imprisonment.  Ferid Imam has also been indicted for his role in the plot. 

“Today’s arrest demonstrates that there is no escape from the long reach of our law for American citizens who seek to do harm to our country on behalf of violent terrorist,” said U.S. Attorney Lynch.  “We will continue to use every tool at our disposal to bring such individuals to justice.”

“Muhanad Mahmoud Al Farekh is alleged to have conspired with others to provide material support to terrorists,” said Assistant Attorney General Carlin.  “Counterterrorism is the highest priority of the National Security Division, and we will continue to be tireless in our pursuit of those who wish to harm the United States or its people.  I would like to thank the many agents, analysts and prosecutors who are responsible for the charges in this case.”           

“Al Farekh allegedly provided material support to terrorists with every intention of becoming a martyr,” said Assistant Director in Charge Rodriguez.  “Today members of our military are safer because of the relentless investigative work by the FBI’s Manhattan-based Joint Terrorism Task Force.”

“The NYPD will continue to work with our law enforcement partners to investigate and arrest individuals who choose to work alongside terrorist organizations and threaten the lives of Americans,” said Commissioner Bratton.  “We applaud the investigators and prosecutors whose efforts led to this arrest.”       

If convicted, the defendant faces a maximum sentence of 15 years’ imprisonment.                

The charges in the complaint 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 Zainab Ahmad and Richard M. Tucker of the Eastern District of New York, with assistance provided by Trial Attorney Bridget Behling of the Justice Department’s National Security Division.

Farekh Complaint

An indictment was unsealed yesterday in the U.S. District Court in the District of Columbia that charges a Washington, D.C., Metropolitan Police Department (MPD) officer with obstructing and impeding the Internal Revenue Service (IRS) and evading his federal income taxes for 2009 and 2010, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

According to the indictment, Jamal A. Adams, also known as Ishmeal Heru-Bey, failed to file federal income tax returns for 2005 through 2012 while he was employed as a MPD officer and earning income.  During this time period, Adams submitted IRS forms falsely claiming to be exempt from federal income tax withholding to the MPD.  In 2010, he filed false documents signed under the penalties of perjury with the U.S. Bankruptcy Court for the District of Columbia in which he failed to report the tax debts that he owed to the IRS.

If convicted, Adams faces a total statutory maximum sentence of 13 years in prison, plus a fine of up to $250,000 per count of conviction.

Acting Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorneys Jeffrey McLellan and Erin Pulice of the Tax Division, who are prosecuting the case.

The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

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

Six individuals were charged today in connection with their involvement in an armed robbery crew that conducted home invasion robberies in Michigan and Texas, principally targeting victims of Indian and Asian ancestry.

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 Division, Acting Special Agent in Charge Katherine J. Greer of U.S. Immigration and Customs Enforcement’s Homeland Security Investigation’s (ICE-HSI) Dallas Field Office, Chief John Seto of the Ann Arbor, Michigan, Police Department, Sheriff Jerry L. Clayton of the Washentaw County, Michigan, Sheriff’s Department and Director Todd L. Mutchler of Canton, Michigan, Public Safety made the announcement.  

“The armed robberies allegedly committed by this organized criminal group were horrific home invasions that spread fear through Asian and Indian communities across multiple states,” said Assistant Attorney General Caldwell.  “This indictment is the first step in holding responsible those accused of carrying out armed robberies that were both life threatening and ethnically targeted.”

“As alleged in the indictment, these defendants used online research to target their victims from a distance, traveled to their homes, and then carried out the robberies while the victims were at home,” said U.S. Attorney McQuade.  “The defendants either broke in or used a female decoy to knock, luring victims to open the door.  Once the door was open, the robbers would charge inside with guns and threats of violence, round up all the adults and children into one room, and bind them with duct tape before ransacking the house and stealing valuables.  We are grateful for the outstanding work of federal, state and local law enforcement in various jurisdictions to connect the dots and put this case together.”

“This multistate investigation serves as an example of the successful collaboration between federal, state and local law enforcement to bring justice to bear upon those who have wreaked havoc upon our neighborhoods and victimized families in their own homes,” said Special Agent in Charge Abbate.  “Combating violent crime is among the highest of priorities for the FBI.  There is nothing more important than protecting our communities and keeping law abiding citizens safe in their own homes.  The FBI, along with our law enforcement partners, will maintain its resolve and continue the fight against violent criminal offenders.”

Chaka LeChar Castro, 40, Juan Olaya, 35, and Octavius Scott, 22, all of Houston,  and Jakeyra Augustus, 21, of La Marque, Texas, are each charged with engaging in a RICO conspiracy, four counts of assault with a dangerous weapon in aid of racketeering, and four counts of use and carrying of a firearm in furtherance of a crime of violence.  Rodney Granger, 19, and Johnisha Williams, 19, both of Houston, are each charged with engaging in a RICO conspiracy.  All of the defendants are currently in custody.

According to the indictment, the defendants committed four armed home invasion robberies in the greater Ann Arbor area over the Thanksgiving weekend in 2014, as well as additional armed robberies in the greater Dallas area in early December 2014.  The crews allegedly utilized a similar modus operandi in each of the robberies.  According to the indictment, they typically used female decoys to knock on the victims’ doors and gain entry, or they merely forced entry themselves.  Once inside, members of the robbery crew—disguised with bandanas and masks—allegedly brandished firearms to gain control of their victims, including children, and then forced them at gunpoint into a single room of the home.  Some members of the crew were allegedly assigned to bind the victims with duct tape, or otherwise maintain control over them.  At the same time, other members of the crew allegedly ransacked the homes in search of cash, jewelry and electronics.

According to allegations in the indictment, Castro was the leader of the enterprise.  In that capacity, she allegedly coordinated with Olaya to generate lists of robbery targets by conducting research on the Internet, among other methods, to identify families of Asian and Indian ancestry.  Castro then assigned crews to carry out the armed robberies of these targeted families.  Olaya allegedly led the robberies themselves, and Scott, Augustus, Granger and Williams were allegedly members of the robbery crew.

The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The case was investigated by a collaboration of local, state and federal law enforcement in Michigan and Texas, including the FBI, ICE-HSI, Washtenaw County Sheriff’s Office, the Ann Arbor Police Department and the Canton Police Department.  The case is being prosecuted by Trial Attorney Kelly Pearson of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Christopher Graveline and Douglas C. Salzenstein of the Eastern District of Michigan.

Castro Indictment

Robert Menendez, a U.S. Senator, and Salomon Melgen, a Florida ophthalmologist, were indicted today in connection with a bribery scheme in which Menendez allegedly accepted gifts from Melgen in exchange for using the power of his Senate office to benefit Melgen’s financial and personal interests, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge Richard M. Frankel of the FBI’s Newark, New Jersey, Division.

“Government corruption – at any level of elected office – corrodes the public trust and weakens our democratic system,” said Assistant Attorney General Caldwell.  “It is the fundamental responsibility of the Department of Justice to hold public officials accountable by conducting thorough investigations and seeking an indictment when the facts and the law support it.”

“The job of an elected official is to serve the people,” said Special Agent in Charge Frankel.  “The citizens of New Jersey have the right to demand honest, unbiased service and representation from their elected officials at all levels of government.  The charges and activity alleged in this indictment are another example of the FBI's commitment to aggressively and tenaciously pursue public corruption in the state of New Jersey.”

Menendez, 61, of Paramus, New Jersey, and Melgen, 60, of Palm Beach, Florida, were indicted in the District of New Jersey for one count of conspiracy, one count of violating the travel act, eight counts of bribery and three counts of honest services fraud.  Menendez was also charged with one count of making false statements.

According to allegations in the indictment, between January 2006 and January 2013, Menendez accepted close to $1 million worth of lavish gifts and campaign contributions from Melgen in exchange for using the power of his Senate office to influence the outcome of ongoing contractual and Medicare billing disputes worth tens of millions of dollars to Melgen and to support the visa applications of several of Melgen’s girlfriends. 

Specifically, the indictment alleges that, among other gifts, Menendez accepted flights on Melgen’s private jet, a first-class commercial flight and a flight on a chartered jet; numerous vacations at Melgen’s Caribbean villa in the Dominican Republic and at a hotel room in Paris; and $40,000 in contributions to his legal defense fund and over $750,000 in campaign contributions.  Menendez never disclosed any of the reportable gifts that he received from Melgen on his financial disclosure forms.   

According to allegations in the indictment, during this same time period, Menendez allegedly engaged in three efforts to use his Senate office and staff to advocate on behalf of Melgen’s personal and financial interests.  First, Menendez allegedly pressured executive agencies in connection with a conflict between Melgen and the government of the Dominican Republic relating to a disputed contract that Melgen purchased to provide exclusive screening of containers coming through Dominican ports.  Second, Menendez allegedly advocated on behalf of Melgen in connection with a Medicare billing dispute worth approximately $8.9 million to Melgen.  Third, Menendez allegedly took active steps to support the tourist and student visa applications of three of Melgen’s girlfriends, as well as the visa application of the younger sister of one of Melgen’s girlfriends.  Throughout these efforts, Menendez allegedly engaged in advocacy for Melgen all the way up to the highest levels of the U.S. government, including meeting with a U.S. cabinet secretary, contacting a U.S. Ambassador, meeting with the heads of executive agencies and other senior executive officials and soliciting other U.S. Senators, all in order to assist Melgen’s personal and pecuniary interests. 

The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty. 

The case is being investigated by the FBI.  The case is being prosecuted by Deputy Chiefs Peter Koski and J.P. Cooney, and Trial Attorney Monique Abrishami of the Criminal Division’s Public Integrity Section. 

Menendez and Melgen Indictment

Justice Department spokeswoman Dena Iverson released the following statement today regarding the latest visit to Ferguson, Missouri, by Justice Department officials: 

“Members of the Civil Rights Division of the Department of Justice have completed three days of meetings in Ferguson, Missouri, with a broad variety of individuals and community groups regarding the department’s findings in the investigation of the Ferguson Police Department and the next steps for institutional reform.  The meetings generated thoughtful and constructive recommendations for changes to address the unconstitutional practices identified by the investigation.  Community members were overwhelmingly committed to assist in the effort to achieve meaningful police and court reform as quickly as possible.  In the coming weeks, department officials will continue to meet with these and other individuals, including Ferguson police officers, to solicit ideas for potential solutions.  

“As department officials with the Civil Rights Division explained to the community groups and individuals with whom they met, the division looks forward to meeting in the coming weeks with Ferguson city leaders to begin to work collaboratively towards sustainable reform in the form of a court enforceable consent decree to achieve the necessary changes.  If the city agrees to this process, the Department of Justice stands ready to meet with the city to begin negotiations.  If the city does not agree to negotiate a consent decree, the Department of Justice retains the option of filing suit to ensure that the unconstitutional practices identified in our findings are remedied.

“During the meetings with community members and organizations, department officials saw a high level of constructive engagement, thoughtfulness and dedication to meaningful improvement of Ferguson’s police and court system.  The department encourages the city to work with these well-intentioned and creative individuals and groups.”

Identities Stolen from the U.S. Army, Various Alabama State Agencies and Georgia Call Center

Alabama and Georgia residents pleaded guilty for their roles in a $20 million stolen identity refund fraud (SIRF) conspiracy, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. of the Middle District of Alabama announced today.

The defendants pleaded guilty on the following dates to the following charges:

• Talarius Paige on March 31, to one count of conspiracy to file false claims and one count of aggravated identity theft;

• Tracy Mitchell on March 30, to one count of conspiracy to file false claims, one count of wire fraud and one count of aggravated identity theft;

• Latasha Mitchell on March 30, to one count of conspiracy to file false claims and one count of aggravated identity theft;

• Demeisha Mitchell on March 26, to one count of conspiracy to file false claims and one count of aggravated identity theft;

• Keisha Lanier on March 5, to one count of wire fraud and one count of aggravated identity theft;

• Sharondra Johnson on Feb. 17, to one count of conspiracy to file false claims;

• Cynthia Johnson on Dec. 17, 2014, to one count of conspiracy to file false claims; and

• Patrice Taylor on July 18, 2014, to one count of conspiracy to file false claims. 

The defendants are scheduled to be sentenced on June 30.  Mequetta Snell-Quick, another co-conspirator, is scheduled to appear in court on April 6.  In a related case, on Oct. 2, 2014, Tamika Floyd pleaded guilty to one count of conspiracy to file false claims and one count of aggravated identity theft and is scheduled to be sentenced on May 19.  The defendants each face a statutory maximum sentence of 10 years in prison for each count of conspiracy to file false claims, a statutory maximum sentence of 20 years in prison for each wire fraud count, and a statutory mandatory minimum sentence of two years in prison for each aggravated identity theft count. 

“The guilty pleas of the nine defendants who participated in this conspiracy send a clear message that the Tax Division, along with its law enforcement partners, will vigorously pursue and prosecute individuals involved at every level of these extensive criminal schemes,” stated Acting Assistant Attorney General Ciraolo.  “The division will seek significant jail time and restitution from offenders who choose to victimize unsuspecting American taxpayers, including the dedicated men and women serving in the U.S. military, and steal from the U.S. Treasury.”

“Stealing a person’s identity is a horrendous crime,” said U.S. Attorney Beck.  “It can take months or years for a victim of identity theft to correct the damage that these criminals reaped upon him or her.  But these defendants stole identities from military men and women who have volunteered to protect our country.  That is inexcusable and will not be tolerated.”

According to court documents, between January 2011 and December 2013, the defendants ran a large-scale identity theft ring in which they filed more than 7,000 false tax returns that included fraudulent claims for refunds in excess of $20 million.  In order to file false returns, the defendants obtained stolen identities from various sources.  Tracy Mitchell worked at a military hospital located at Fort Benning, Georgia, and as a hospital employee, she had access to the identification data of military personnel, including soldiers who were deployed to Afghanistan.  Tracy Mitchell stole soldiers’ personal information and used that information to file false tax returns.

“This case is an excellent example of Army CID working shoulder-to-shoulder with our fellow law enforcement partners to protect the nation’s soldiers,” said Director Daniel Andrews of the U.S. Army Criminal Investigation Command’s (CID) Computer Crime Investigative Unit.  “It demonstrates our vigilance against cybercrime and an unswerving commitment to dismantle criminal operations impacting the U.S. Army.”

Floyd stole personal information from two Alabama state agencies and provided those names to Lanier.  Lanier provided those names to Tracy Mitchell, Latasha Mitchell, Paige and others for use in filing false tax returns.  Lanier also obtained stolen identities from the Alabama Department of Corrections that were then used to file false tax returns.  Also, Paige and Taylor worked in a call center for a Columbus, Georgia, company and stole identities from that company.  Paige, in turn, used those identities to file false tax returns and filed some of the returns from Tracy Mitchell’s residence.

In order to file the false tax returns, Floyd applied for and obtained several Electronic Filing Numbers (EFINs) from the Internal Revenue Service (IRS) in the names of sham tax businesses.  The tax refunds claimed on the false returns were paid via U.S. Treasury checks mailed to addresses under the control of participants in the scheme, prepaid debit cards issued by financial institutions, and deposits to financial institutions connected to the business EFINs so that the defendants could print refund checks. 

The defendants cashed the tax refund checks at several businesses located in Alabama, Georgia and Kentucky.  Sharondra Johnson worked at the Walmart money center in Columbus, Georgia, and as part of her employment, she cashed checks for customers of the money center.  Demeisha Mitchell approached Sharondra Johnson about cashing tax refund checks issued in the names of other individuals.  Sharondra Johnson agreed to cash these refund checks and was paid a fee for her role in the scheme. 

“Taking advantage of innocent citizens, especially service members and their families, is disgraceful,” said Chief Richard Weber of IRS Criminal Investigation (CI).  “IRS Criminal Investigation is committed to stopping those who would prey on others by stealing their identities.  As criminals continue to become more sophisticated, we will continue to work with our law enforcement partners to bring them to justice.”

Acting Assistant Attorney General Ciraolo and U.S. Attorney Beck Jr. commended special agents of IRS - CI and the U.S. Army – CID, who investigated the case, and Trial Attorneys Michael C. Boteler and Gregory P. Bailey of the Tax Division and Assistant U.S. Attorney Todd A. Brown of the Middle District of Alabama, for prosecuting the case.  Ciraolo and Beck Jr. also thanked the U.S. Attorney’s Office of the Middle District of Georgia for their assistance in the case.

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

All Four Members Charged Have Now Pleaded Guilty

A fourth member of an international computer hacking ring has pleaded guilty to conspiring to break into computer networks of prominent technology companies to steal more than $100 million in intellectual property and other proprietary data. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Charles M. Oberly III of the District of Delaware and Special Agent in Charge Stephen E. Vogt of the FBI’s Baltimore Division made the announcement.

Austin Alcala, 19, of McCordsville, Indiana, pleaded guilty to conspiracy to commit computer intrusions and criminal copyright infringement based on his role in the cyber theft of software and data related to the Xbox One gaming console and Xbox Live online gaming system, and popular games such as the “FIFA” online soccer series; “Call of Duty:  Modern Warfare 3;” and “Gears of War 3.”  A sentencing hearing is set before U.S. District Judge Gregory M. Sleet of the District of Delaware on July 29, 2015.

According to the statement of facts filed in connection with his guilty plea, Alcala was part of the hacking conspiracy between the spring of 2012 and April 2014.  During that period, hacking group members located in the United States and abroad gained unauthorized access to computer networks of various companies, including Microsoft Corporation, Epic Games Inc., Valve Corporation and Zombie Studios.  The conspirators accessed and stole unreleased software, software source code, trade secrets, copyrighted and pre-release works and other confidential and proprietary information.  Members of the conspiracy also stole financial and other sensitive information relating to the companies—but not their customers—and certain employees of such companies. 

Specifically, the data theft targeted software development networks containing source code, technical specifications and related information for Microsoft’s then-unreleased Xbox One gaming console, as well as intellectual property and proprietary data related to Xbox Live and games developed for that online gaming system.

Alcala admitted in court that he was personally involved in hacking into and stealing log-in credentials and intellectual property from victim companies including Microsoft and Zombie Studios.  Alcala further admitted that, on one occasion, he transmitted to co-conspirators a database file containing approximately 11,266 log-in credentials stolen from a victim company. 

The value of the intellectual property and other data stolen by the hacking ring, as well as the costs associated with the victims’ responses to the conduct, is estimated to range between $100 million and $200 million.  To date, the United States has seized over $620,000 in cash and other proceeds related to the charged conduct.

Sanadodeh Nesheiwat, 28, of Washington, New Jersey, and David Pokora, 22, of Mississauga, Ontario, Canada, previously pleaded guilty to the same conspiracy charge on Sept. 30, 2014.  They remain in custody pending their sentencing hearings, which are scheduled for April 2015.  Nathan Leroux, 20, of Bowie, Maryland, pleaded guilty to the same conspiracy charge on Jan. 20, 2015, and remains in custody pending his sentencing hearing scheduled for May 2015.

This case is being investigated by the FBI, with assistance from the Criminal Division’s Office of International Affairs, the U.S. Department of Homeland Security’s Homeland Security Investigations and Customs and Border Protection, the U.S. Postal Inspection Service, the Canada Border Services Agency, the Western Australia Police and the Peel Regional Police of Ontario, Canada.  The case is being prosecuted by Deputy Chief for Litigation James Silver of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Edward J. McAndrew of the District of Delaware.

Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Paul J. Fishman of the District of New Jersey announced that the former owner of two New Jersey defense contracting businesses today admitted that she conspired to send sensitive military technical data to India.

Hannah Robert, 49, of North Brunswick, New Jersey, pleaded guilty before U.S. District Judge Anne E. Thompson of the District of New Jersey to count six of a superseding indictment, which charged her with conspiracy to violate the Arms Export Control Act by exporting to India military technical drawings without prior approval from the U.S. Department of State.

“Hannah Robert circumvented the U.S. government and provided defense technical drawings in violation of the Arms Export Control Act,” said Assistant Attorney General Carlin.  “We will continue to pursue and hold accountable those who abuse their access to sensitive defense information.  I would like to thank all of the special agents, prosecutors and other personnel whose work led to the guilty plea in this case.”

“Hannah Robert conspired to send to another country thousands of technical drawings of defense hardware items and sensitive military data,” said U.S. Attorney Fishman.  “She was also charged with manufacturing substandard parts that were not up to spec, in violation of the contracts she signed with the Department of Defense.  Enforcement of the Arms Export Control Act is critical to the defense of our country.” 

According to documents filed in this case and statements made in court:

In June 2010, Robert was the founder, owner and president of One Source USA LLC, a company located at her then-residence in Mount Laurel, New Jersey, that contracted with the U.S. Department of Defense (DoD) to supply defense hardware items and spare parts.  In September 2012, Robert opened another defense company, Caldwell Components Inc., based at the same address.  Along with a resident of India identified only as “P.R.,” Robert owned and operated a third company located in India that manufactured defense hardware items and spare parts.

From June 2010 to December 2012, Robert conspired to export to India defense technical drawings without obtaining the necessary licenses from the U.S. Department of State.  The exported technical drawings include parts used in the torpedo systems for nuclear submarines, military attack helicopters and F-15 fighter aircrafts.

In addition to United States’ sales, Robert and P.R. sold defense hardware items to foreign customers.  Robert transmitted export-controlled technical data to P.R. in India so that Robert and P.R. could submit bids to foreign actors, including those in the United Arab Emirates (UAE), to supply them or their foreign customers with defense hardware items and spare parts.  Neither Robert nor P.R. obtained approval from the U.S. Department of State for this conduct.

On Aug. 23, 2012, P.R. e-mailed Robert requesting the technical drawing for a particular military item.  P.R.’s e-mail forwarded Robert an e-mail from an individual purporting to be “an official contractor of the UAE Ministry of Defence,” and who listed a business address in Abu Dhabi, UAE.  The UAE e-mail requested quotations for a bid for the “blanket assembly” for the CH-47F Chinook military helicopter and listed the “End User” for the hardware item as the UAE Armed Forces.  Later that same day, Robert replied to P.R.’s e-mail, attaching, among other things, the electronic file for an export-controlled technical drawing titled “Installation and Assy Acoustic Blankets, STA 120 CH-47F,” to be used in the Chinook attack helicopter.

In October 2010, Robert transmitted the military drawings for these parts to India by posting the technical data to the password-protected website of a Camden County, New Jersey, church where she was a volunteer web administrator.  This was done without the knowledge of the church staff.  Robert e-mailed P.R. the username and password to the church website so that P.R. could download the files from India.  Through the course of the scheme, Robert uploaded thousands of technical drawings to the church website for P.R. to download in India. 

On June 25, 2012, P.R. e-mailed Robert, stating: “Please send me the church web site username and password.”  The e-mail was in reference to both an invoice to and a quote for a trans-shipper known to Robert as a broker of defense hardware items for an end user in Pakistan.  This individual used a UAE address for shipping purposes.  Later that day, Robert replied to this e-mail, providing a new username and password for the church website so that P.R. could download the particular defense drawings.

On Oct. 5, 2012, Robert e-mailed P.R. with the subject line “Important.”  The e-mail referenced the Pakistan trans-shipper, a separate potential sale to individuals in Indonesia and the church website: “Please quote [the Pakistan trans-shipper] and Indonesia items today[.] [Dr]awings I cannot do now as if the size exceeds then problem, I should be watching what I upload, will do over the weekend[.]  Ask me if you need any drawing . . . . Talk to you tomorrow . . . .”

There were also quality issues with the parts that Robert provided to the DoD.  After the DoD in October 2012 disclosed that certain parts used in the wings of the F-15 fighter aircraft, supplied by one of One Source USA’s U.S. customers failed, Robert and P.R. provided the principal of their customer with false and misleading material certifications and inspection reports for the parts.  These documents, to be transmitted to the DoD, listed only One Source USA’s New Jersey address and not the address of the actual manufacturer in India, One Source India.  As a result of the failed wing pins, the DoD grounded approximately 47 F-15 fighter aircraft for inspection and repair, at a cost estimated to exceed $150,000.

Until November 2012, Robert was an employee of a separate defense contractor in Burlington County, New Jersey, where she worked as a system analyst and had access to thousands of drawings marked with export-control warnings and information on this defense contractor’s bids on DoD contracts.  Robert misrepresented to her employer the nature and extent of her involvement with One Source USA in order to conceal her criminal conduct.

Count six of the superseding indictment – conspiracy to violate the Arms Export Control Act – is punishable by a maximum potential penalty of five years in prison and a fine of $250,000.  As part of her plea agreement, Robert must pay $181,015 to the DoD, which includes the cost of repair for the grounded F-15s.  Robert also consented to a forfeiture money judgment of $77,792, which represents the dollar value of Robert’s fraudulent contracts with DoD. 

The Arms Export Control Act prohibits the export of defense articles and defense services without first obtaining a license from the U.S. Department of State and is one of the principal export control laws in the United States.

The case was investigated by the special agents of the Defense Criminal Investigative Service’s Northeast Field Office and the special agents of the Department of Homeland Security’s Counter Proliferation Investigations.

The government is represented by Assistant U.S. Attorneys Fabiana Pierre-Louis and L. Judson Welle of the District of New Jersey.  The prosecution received invaluable support from attorneys of the U.S. Department of Justice’s National Security Division.

AMA United Group Admits Violation of Arms Export Control Act; Principals Acknowledge Failure to File Shipping Records with U.S. Government Regarding Munitions Destined for Egypt

U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Attorney General for National Security John P. Carlin, Special Agent in Charge Raymond R. Parmer Jr. of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) New York and Special Agent in Charge Craig W. Rupert of the Defense Criminal Investigative Service’s (DCIS) Northeast Field Office announced that earlier today, AMA United Group, Malak Neseem Swares Boulos and Amged Kamel Yonan Tawdraus pleaded guilty at the federal courthouse in Brooklyn, New York, to violating U.S. export regulations in connection with the attempted shipment of munitions samples from New York City to Egypt.  AMA United Group, an Egyptian procurement agent, entered a guilty plea to violating the Arms Export Control Act.  Boulos and Tawdraus, Egyptian citizens and partners in AMA United Group, pleaded guilty to failing to file required export information relating to the international shipment of a landmine and multiple bomb bodies.  According to court filings and facts presented during the plea proceeding, Boulos and Tawdraus were arrested after attempting to close a deal to acquire and export the items, which were included on the U.S. Munitions List and regulated by the U.S. Department of State.

“These defendants failed to comply with the strict regulations that govern the export of dangerous munitions,” said U.S. Attorney Lynch.  “Today’s convictions should help ensure that those who refuse to follow these obligations should expect to face serious consequences, including individual and corporate penalties.”  Ms. Lynch expressed her grateful appreciation to HSI, DCIS and the U.S. Attorney’s Office of the Southern District of New York for its assistance.

“Boulos, Tawdraus and AMA United Group were involved in the illegal export of components vital to explosives in an aerial warhead,” said Assistant Attorney General Carlin.  “By purposefully evading U.S. law, including the Arms Export Control Act, the defendants could have done great harm to our nation’s security.  I would like to thank the many offices involved in securing this plea agreement.”

“Investigating potential violations of the Arms Export Control Act is a top national security priority for HSI as it ensures military technology such as these landmines do not fall into the wrong hands” said Special Agent in Charge Parmer.  “In this instance, our partnership with DCIS and the U.S. Attorney’s office sends a strong message that violating U.S. export laws will not be tolerated.”

“This investigation demonstrates the ongoing commitment that the Defense Criminal Investigative Service has to pursue individuals who are intent on acquiring and illegally exporting military grade munitions,” said Special Agent in Charge Rupert.  “DCIS will continue to work with its law enforcement partners, such as HSI and the U.S. Attorney’s Office, to methodically and successfully investigate these types of allegations and protect America’s Warfighters.”

Beginning in February 2011, the defendants began trying to obtain munitions items on behalf of AMA United Group’s client, a factory in Cairo.  The items the defendants sought included a land mine as well as bomblet bodies and “trumpet liners,” two components that are integral to manufacturing the housings for explosives in an aerial warhead.  In July 2011, the defendants traveled from Cairo to New York City to inspect the items.  On July 1, 2011, the three principals of AMA United Group attempted to ship samples to its client in Egypt.  Boulos and Tawdraus failed to file any export information in connection with the attempted shipment.  The requirement to file accurate information regarding the contents of international shipments is one layer of regulatory oversight pertaining to protecting the U.S. national security and diplomatic interests.

Today’s pleas took place before U.S. District Judge Eric N. Vitaliano of the Eastern District of New York.  When sentenced, defendants Tawdraus and Boulos face up to five years in prison, as well as criminal forfeiture and fines.  Each of the defendants also faces export sanctions, including the denial of export privileges by the U.S. Department of Commerce, the U.S. Department of the Treasury and the U.S. Department of State.

The government’s case is being prosecuted by Assistant U.S. Attorneys Seth DuCharme and David Pitluck of the Eastern District of New York, with assistance from Trial Attorney David Recker of the Justice Department’s National Security Division. 

     ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands (NMI), announced that a Final Judgment on the Pleadings was granted in favor of defendants Dennis Jacobs, U.S. Customs and Border Protection (CBP) Officer, and seven "John Doe" and "Jane Doe" CBP officers in Yu Min Zhao v. Dennis Jacobs, et al. , Civil Case No. 13-00028 (D.N. Mar. I.). The plaintiff filed a Bivens lawsuit against the CBP officers, claiming that the officers violated her right to be free from excessive force and her right to equal protection during the immigration inspection process.

     The U.S. Attorney's  Office, on behalf of Officer Dennis Jacobs, filed a motion arguing that Officer Jacobs was entitled to a judgment in his favor because, even though he was named in the lawsuit, he was not accused of any wrong doing. In fact, he was not present during the timeframe of the allegations in the Complaint. Further, CBP's inquiry into an alien's purpose for entering the NMI and the detention and removal of an inadmissible alien (in this case, for indications of an intention to overstay the visa waiver) are part of CBP's duties under immigration laws. On January 12, 2015, the District Court for the NMI granted the judgment on all grounds.  The court held that Officer Jacobs was protected under the law as a federal employee because none of the allegations tied him to any constitutional violations.  The court also found that the relief requested by the plaintiff- an injunction and a declaratory judgment- is barred under Bivens law. Ultimately, the court found that the true nature of the lawsuit was a challenge to CBP's determination of the plaintiff's inadmissibility to enter the NMI rather than constitutional violations, which is also not permitted under Bivens law.

     The court gave the plaintiff an opportunity to amend her complaint, and she failed to do so. On March 20, 2015, the court entered a final judgment on all grounds in favor of Officer Jacobs and the other unnamed officers.

     U.S. Attorney Alicia A.G. Limtiaco stated, "Bivens law permits federal employees to be sued in their personal capacities for actions taken during the course of their official duties. Protection of federal employees for legitimate actions performed in the course of their official duties is critical to the effectiveness of the federal government. As noted by the Supreme Court in Anderson v. Creighton, 483 U.S. 635 (1987), Bivens lawsuits exact substantial social costs, including 'expenses oflitigation, the diversion of official energy from pressing public issues, and the deterrence of able citizens from acceptance of public office.' In cases such as this where the government demonstrates that legitimate actions were taken in the course of one's official duties and that the complaint against the individuals is without merit, dismissal is the appropriate and just remedy."

     This case was defended by Assistant U.S. Attorneys Jessica F. Cruz and Mikel W. Schwab.

A Swiss citizen and former asset manager at a Swiss asset management firm pleaded guilty to conspiring with U.S. taxpayer-clients and others to help U.S. taxpayers hide millions of dollars in offshore accounts from the Internal Revenue Service (IRS), and to evade U.S. taxes on the income earned in those accounts, the Justice Department announced. 

Peter Amrein, 53, a Swiss citizen, pleaded guilty before U.S. District Judge Sidney H. Stein of the Southern District of New York pursuant to a plea agreement to one count of conspiracy to defraud the IRS, to evade federal income taxes and to file false federal income tax returns.  Amrein faces a maximum sentence of five years in prison at his July 1 sentencing before Judge Stein.

“Peter Amrein’s guilty plea today is another example of individuals being held culpable, in addition to institutions, for their criminal violations of U.S. tax laws,” said U.S. Attorney Preet Bharara of the Southern District of New York.  “Regardless of the elaborate scheme you might employ, we will use all of our investigative powers to ensure that all citizens pay their fair share, and that those who assist them in evading our laws are also held responsible.” 

According to the allegations in the superseding Information and the prior indictment, as well as statements made during the plea proceeding and other documents filed in federal court in Manhattan, New York:

Amrein worked as a client advisor at a Swiss bank (Swiss Bank No. 3) and, later, as an asset manager at a Swiss asset management firm (the Swiss Asset Management Firm).  In those roles, between 1998 and 2012, Amrein helped U.S. taxpayers evade taxes and hide millions of dollars in undeclared accounts at various Swiss banks, including Wegelin & Co., which was charged and pleaded guilty in the Southern District of New York for its conduct in conspiring with U.S. taxpayers to evade taxes.  Amrein, among other things, worked with an attorney based in Zurich, to establish sham foundations, which were organized under the laws of non-U.S. countries such as Liechtenstein, so that the undeclared assets of certain of Amrein’s U.S. taxpayer-clients could be maintained in the names of these foreign foundations rather than in the clients’ own names.  Amrein did so in order to help his clients conceal their ownership of these undeclared accounts from the IRS. 

In 2008, it became publicly known that UBS AG (UBS) was being investigated by U.S. law enforcement for helping U.S. taxpayers maintain undeclared accounts in Switzerland.  Because of the investigation of UBS, one of the Swiss banks where Amrein had opened undeclared accounts for U.S. taxpayers (Swiss Bank No. 4) informed Amrein that it was going to close these undeclared accounts.  In order to assist his clients in continuing to maintain undeclared accounts, Amrein searched for other banks in Switzerland that, despite the public investigation of UBS, were still willing to open undeclared accounts for U.S. taxpayers.  Amrein found such a bank (Swiss Bank No. 1).  Thereafter, Amrein opened undeclared accounts for U.S. taxpayer-clients at Swiss Bank No. 1 in the name of sham foundations, and transferred the clients’ undeclared assets from Swiss Bank No. 4 to these accounts at Swiss Bank No. 1.   

For some of these clients, Amrein, with the assistance of others, helped send funds back to the United States and to other foreign jurisdictions in ways that were designed to ensure that U.S. authorities would not discover the existence of the clients’ undeclared accounts.  For instance, Amrein instructed a client advisor at Swiss Bank No. 1 (the Swiss Bank No. 1 Client Advisor) to empty one of the accounts by sending checks in amounts smaller than $9,900 to the beneficial owner of the account, i.e., the U.S. taxpayer.  On another occasion, Amrein instructed the Swiss Bank No. 1 Client Advisor to transfer the balance of one of the accounts, which was then valued at more than $2.4 million, to another account controlled by the U.S. taxpayer in Belize City, Belize.  Moreover, as late as 2011, Amrein continued to look for other Swiss banks that were still willing to open undeclared accounts for U.S. taxpayers.  For example, in June 2011, Amrein met with a client advisor at a Swiss bank (Swiss Bank No. 2), to discuss opening undeclared accounts for U.S. taxpayer-clients at Swiss Bank No. 2.         

Mr. Bharara praised the outstanding investigative work of the IRS-Criminal Investigations.  He also thanked the Department of Justice’s Tax Division for their significant assistance in the investigation.

This case is being handled by the U.S. Attorney’s Office for the Southern District of New York’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Sarah E. Paul, Jason H. Cowley, and Daniel B. Tehrani are in charge of the prosecution.

Robert Bosch GmbH, the world’s largest independent parts supplier to the automotive industry, based in Gerlingen, Germany, has agreed to plead guilty and to pay a $57.8 million criminal fine for its role in a conspiracy to fix prices and rig bids for spark plugs, oxygen sensors and starter motors sold to automobile and internal combustion engine manufacturers in the United States and elsewhere, the Department of Justice announced today.

According to the one-count felony charge filed today in the U.S. District Court of the Eastern District of Michigan, Bosch conspired to allocate the supply of, rig bids for, and to fix, stabilize and maintain the prices of, spark plugs and oxygen sensors sold to automobile and internal combustion engine manufacturers such as DaimlerChrysler AG, Ford Motor Company, General Motors Company and Andreas Stihl AG & Co., among others, in the United States and elsewhere.  Bosch’s involvement in the conspiracy lasted from at least as early as January 2000 until at least July 2011.  Bosch is also charged with participating in a conspiracy to allocate the supply of, rig bids for, and to fix, stabilize and maintain the prices of, starter motors sold to Volkswagen AG and certain of its subsidiaries in the United States from at least as early as January 2009 until at least June 2010.  Bosch has agreed to cooperate in the department’s ongoing investigation.  The plea agreement will be subject to court approval.

“The participants in this conspiracy were not located in just one country or region of the world,” said Deputy Assistant Attorney General Brent Snyder of the Antitrust Division’s Criminal Enforcement Program.  “Collusion related to automotive parts was global in nature as are our efforts to hold responsible companies and individuals accountable for the resulting harm to U.S. consumers and businesses.”

According to the charge, Bosch and others participating in the scheme conspired through meetings and conversations in which they discussed and agreed upon bids and price quotations on bids to be submitted to certain automobile and internal combustion engine manufacturers and to allocate the supply of the products to those manufacturers.  Bosch, which manufactures and sells numerous automotive and internal combustion engine parts, sold spark plugs, oxygen sensors and starter motors at non-competitive prices to customers in the United States and elsewhere in furtherance of the agreement.

A spark plug is an internal combustion engine component for delivering high electric voltage from the ignition system to the combustion chamber.  Oxygen sensors are located in the exhaust system and measure the amount of oxygen in the exhaust.  Starter motors are small electric motors used in starting internal combustion engines. 

The charge against Bosch is the latest in the department’s on-going investigation into anticompetitive conduct in the automotive parts industry.  Bosch is the third European-based company charged in this investigation. 

Including Bosch, 34 companies and 29 executives have pleaded guilty or agreed to plead guilty in the division’s ongoing investigation into price fixing and bid rigging in the auto parts industry and have agreed to pay a total of nearly $2.5 billion in criminal fines.

Bosch is charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI.  Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office with the assistance of the FBI Headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit http://www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.

Bosch Information

Robinson Health System Inc. has agreed to pay $10 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute by engaging in improper financial relationships with referring physicians, the Justice Department announced today.  Robinson is a nonprofit corporation based in Ohio that operates a number of health care facilities in Portage County, Ohio, including Robinson Memorial Hospital. 

“The Department of Justice has longstanding concerns about improper financial relationships between health care providers and their referral sources, because such relationships can alter a physician’s judgment about the patient’s true health care needs and drive up health care costs for everybody,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division.  “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.” 

The settlement announced today involved Robinson’s financial relationships with a number of referring physicians that allegedly violated the Anti-Kickback Statute and the Stark Statute, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them.  These relationships included management agreements that Robinson had with two physicians groups.  These physicians allegedly failed to provide sufficient bona fide management services to have justified the payments that they received.  Robinson disclosed these issues to the government.

“Referrals should be made to the best qualified physicians, and must be based on what’s best for the patient,” said U.S. Attorney Steven M. Dettelbach of the Northern District of Ohio.  “Improper financial relationships between hospitals and referring doctors can lead to clouded judgments, which is why the Department of Justice will continue to police such matters vigorously.”

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, which prohibits false claims for federal funds, including claims submitted in violation of the Anti-Kickback Statute and the Stark Statute.  Since January 2009, the Justice Department has recovered a total of more than $23.9 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 case was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Ohio, and the Department of Health and Human Services’ Office of Inspector General.  The claims settled by this agreement are allegations only, and there has been no determination of liability.

A federal grand jury in the Eastern District of New York returned an indictment yesterday against a Staten Island, New York, tax return preparer and business owner, charging him with 31 counts of aiding and assisting in the preparation of false federal income tax returns and three counts of filing false personal federal income tax returns, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.  

According to the allegations in the indictment, Alabi Gbangbala was the operator of Broadfield, a tax return preparation business located in Staten Island.  For tax years 2008 and 2009, Gbangbala allegedly prepared false individual income tax returns for Broadfield clients by, among other things, failing to report accurate exemptions, falsifying business receipts and losses on Schedules C and inflating or fabricating charitable contributions and unreimbursed employee expenses.  Gbangbala also filed false individual income tax returns on behalf of himself for tax years 2008 through 2010, in which he failed to disclose his total income for each calendar year.

If convicted, Gbangbala 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 Christopher O’Donnell and Mark McDonald 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 assistance. 

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. 

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

Gbangbala Indictment

The United States filed a complaint seeking to permanently bar a Detroit-area woman, her daughter, and the tax preparation businesses they operate from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction complaint against Denise Pope and Janise Jones, which was filed in the U.S. District Court of the Eastern District of Michigan, alleges that Pope and Jones prepare federal income tax returns for customers that understate their correct tax liabilities.

Denise Pope, also known as Denise Miller, operates CDP Tax Services Inc., CDP Accounting Service, PC, dba CDP Tax and Uneek Business Solutions — each of which was named as a defendant, according to the suit. 

The government’s suit alleges that the understatements are the result of improper earned income tax credits, education credits, charitable deductions, unreimbursed employee business expense deductions and Schedule C (Profit or Loss From Business) expenses and income, which the defendants claim for their customers despite any supporting documentation.  Because some of these credits are refundable, the improper claims often result in larger than appropriate tax refunds, according to the suit.  The complaint alleges that the Internal Revenue Service (IRS) interviewed several of the defendants’ customers, who stated that the improper deductions, credits and Schedule C business expenses and income were not based on information they provided to the defendants. 

According to the complaint, the IRS estimates that the defendants, using these business entities, have prepared more than 3,000 tax returns since 2011.  The complaint alleges that the IRS has completed examinations of 87 of those returns, and the total tax deficiency for those returns alone exceeds $460,000.  Based on the number of returns these defendants prepared, the complaint alleges that the harm to the U.S. Treasury far exceeds $460,000.

Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2015.  The IRS has some tips on its website for choosing a tax preparer, and has launched a free directory of federal tax preparers.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters.  Information about these cases is available on the Justice Department’s website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.

Pope Complaint

The former co-owner of R&J Partnership Ltd. doing business as Reece’s Las Vegas Supply (RLVS), a gambling supplies store located in Dayton, Ohio, has pleaded guilty to conspiracy to operate an illegal gambling business and operating an illegal gambling business, conspiracy to defraud the United States and witness tampering.  The charges were part of an indictment unsealed on Sept. 26, 2014, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

The other defendants charged in the indictment, including Douglas A. Sanders, Jason S. Pulaski, Michael E. Gedeon, Jennifer Williams and Walter F. Dyer, previously pleaded guilty to illegal gambling and obstruction of justice offenses. 

According to the indictment and the statement of facts as part of the plea agreement, between February 2004 and May 2011, Reece Powers II oversaw the recruitment of local 501(c)(3) non-profit charitable organizations to sponsor poker fundraisers that included casino-like card games.  Powers entered into arrangements with the charitable organizations to control all of the funds generated from the poker fundraisers.

These poker fundraisers were exempted from the general prohibition against games of chance under then-existing Ohio laws, subject to the requirement that all the funds received from the games of chance, after deducting only prizes paid out and necessary expenses sanctioned under law, be transferred to the charitable organization for their sole benefit and use.  Powers, with the help of his co-conspirators, took a portion of the money generated from the poker fundraisers and used those funds to pay the events’ workers, among other things, in violation of Ohio law and federal gambling laws.

Powers provided false accountings to the charitable organizations of the funds received from the events and skimmed a portion of the money.  Powers either supervised or personally distributed illegal cash payments to his co-conspirators and employees who worked as card dealers, cashiers, chip sellers, pit bosses, tournament directors and managers.  Powers and his co-conspirators also falsely held themselves out as uncompensated volunteers at the poker fundraisers.

In 2009, Powers and Allen Beck, a former business broker, conspired to defraud the Internal Revenue Service (IRS) in attempting to sell RLVS.  Beck previously pleaded guilty to a conspiracy charge.  In an effort by Powers to evade taxes, Powers and Beck arranged the sale to make it appear as if the business and its associated real estate was sold for an amount less than its actual sale price.

In February 2010, Powers also tampered with a witness testifying before a federal grand jury by instructing the witness to testify falsely that the witness and other RLVS staffers did not get paid for working at the poker fundraisers.  Previously, Pulaski, Gedeon, Williams and Dyer each pleaded guilty to committing obstruction of justice by falsely testifying before a federal grand jury that they were uncompensated volunteers at the poker fundraisers. 

U.S. District Judge Timothy Black of the Southern District of Ohio did not schedule a sentencing date.  Powers faces a statutory maximum sentence of 35 years in prison and a fine of $1,000,000.

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case, and Assistant Chief Jorge Almonte and Trial Attorneys Christopher P. O’Donnell and Austin F. Furman of the Tax Division, who are prosecuting the case.  Ciraolo also thanked the U.S. Attorney’s Office of the Southern District of Ohio for their substantial assistance.

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.

The Justice Department announced today that it has opened an investigation of Dallas County, Texas’s Truancy Court and Juvenile District Courts.  The investigation will focus on whether the courts provide constitutionally required due process to all children charged with the criminal offense of failure to attend school, including whether those protections apply to children whom the county charges with contempt.  The investigation will also focus on whether the courts provide meaningful access to the judicial process for children with disabilities. 

“Failure to attend school” is a criminal charge under Texas law that is the equivalent of the juvenile status offense of “truancy.”  Based on the department’s preliminary review, it believes that the county prosecuted approximately 20,000 failure to attend school cases in 2014.

“The Constitution’s guarantee of due process applies to every individual, regardless of age or disability,” said Attorney General Eric Holder.  “This investigation continues the Justice Department’s focus on identifying and eliminating entryways to the school-to-prison pipeline, and illustrates the potential of federal civil rights law to protect the rights of vulnerable children facing life-altering circumstances.  As the investigation moves forward, the Department of Justice will work to ensure that actions of Dallas County’s courts are appropriate; that our constitutional protections are respected; and that the children of Dallas County can receive the meaningful access to justice that all Americans deserve.”

“Ensuring that children’s rights under the Constitution and federal law are protected during the court process is a key step to dismantling the school-to-prison pipeline,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “We hope to work cooperatively with the county in determining whether it has taken steps to ensure that its juvenile and criminal courts fully respect the rights of the children who come before them.”

“Ensuring that the children of Dallas County appearing before these courts are afforded the full protections afforded them under our constitution is essential to increasing the public’s confidence in the juvenile justice system,” said Acting U.S. Attorney John Parker of the Northern District of Texas. 

This investigation will include a comprehensive review of policies, procedures, court documents and statistical data, as well as interviews of individuals knowledgeable about the courts’ processes. 

The department will conduct the investigation using its authority under Section 14141 of the Violent Crime Control and Law Enforcement Act of 1994 and Title II of the Americans with Disabilities Act.  Section 14141 prohibits a pattern or practice of deprivation of civil rights for juveniles in the administration of juvenile justice.  Title II of the Americans with Disabilities Act prohibits discrimination against a qualified individual with a disability in many contexts, including the administration of justice.  The department has conducted similar investigations in other jurisdictions, and in 2012 obtained important reforms following its investigation of the Juvenile Court of Memphis and Shelby County, Tennessee.

The Special Litigation Section of the Civil Rights Division is conducting this investigation.  Individuals with relevant information are encouraged to contact the department via email at [email protected] or by phone at 1-855-258-1433.

New Policy Limits Seizing Cash Deposited in a Way to Avoid Triggering Bank Reports to Most Serious Cases

As part of the Department of Justice’s comprehensive, ongoing review of the asset forfeiture program, Attorney General Eric Holder today issued a policy focusing the use of asset forfeiture authorities on the most serious illegal banking transactions, restricting civil or criminal forfeiture seizures for structuring until after a defendant has been criminally charged or has been found to have engaged in additional criminal activity, in most cases.

“With this new policy, the Department of Justice is taking action to ensure that we are allocating our resources to address the most serious offenses,” said Attorney General Holder.  “Appropriate use of asset forfeiture law allows the Justice Department to safeguard the integrity, security and stability of our nation’s financial system while protecting the civil liberties of all Americans.  And as we continue our comprehensive review of the Asset Forfeiture Program, we will stay focused on deterring criminal activity, assisting victims of wrongdoing and defending the rights of our citizens.”

Structuring generally occurs when, instead of conducting a single transaction in currency in an amount that would require a report to be filed or record made by a domestic financial institution, the violator conducts a series of currency transactions, willfully keeping each individual transaction at an amount below applicable thresholds to evade reporting or recording.  In addition to being a stand-alone offense, structuring is a crime that often occurs in connection with other criminal activity.

Under the new policy, in the absence of criminal charges, judicially authorized warrants to seize bank accounts involved in structuring can only be obtained if the prosecutor first develops probable cause of additional federal criminal activity and that determination is approved by a supervisor.  Otherwise, a prosecutor may ask a judge to issue a seizure warrant only if either the U.S. Attorney or the Chief of the Criminal Division’s Asset Forfeiture and Money Laundering Section personally determines that seizure would serve a compelling law enforcement interest.

In addition, the new policy imposes important protections after a seizure has taken place.  The policy requires a prosecutor to promptly direct a seizing agency to return funds if the prosecutor determines that there is insufficient admissible evidence to prevail in a criminal or civil trial.  The policy also imposes a 150-day deadline to file a criminal indictment or civil complaint against the seized funds, or otherwise directs a return of the full amount of the seized funds.  Finally, the policy requires a formal, written settlement agreement vetted by a federal prosecutor for settlements of structuring offenses.

This new policy is the most recent result of the department’s ongoing review of the Asset Forfeiture Program to ensure that asset forfeiture – a critical law enforcement tool – can continue to be used to appropriately take the profits out of crime and return assets to victims, all while safeguarding civil liberties. 

The policy was developed by the Asset Forfeiture and Money Laundering Section of the Criminal Division and the Attorney General’s Advisory Committee of U.S. Attorneys.  The policy applies to all Department of Justice attorneys.

Attorney General's Memorandum and the Structuring Policy Directive 

Attorney General Eric Holder announced today the appointment of U.S. Attorney Michael Cotter for the District of Montana and U.S. Attorney Damon P. Martinez for the District of New Mexico as the chair and vice-chair, respectively, of the Native American Issues Subcommittee (NAIS) of the Attorney General’s Advisory Committee of U.S. Attorneys (AGAC).  

“Throughout my tenure as Attorney General, the Native American Issues Subcommittee has been a critical source of expertise, guidance, and inspiration in addressing the department’s goals of reducing crime and strengthening communities across Indian country,” said Attorney General Holder.  “As public servants from districts with significant responsibilities related to tribal nations, Mike Cotter and Damon Martinez possess a wealth of knowledge and expertise that will serve to promote the mission of the NAIS and benefit Indian country as a whole.  I am confident that, with their dedication, their vision, and their leadership, we will continue to deliver on this department’s important work and to fulfil this nation’s historic relationship of trust and cooperation with Native American and Alaska Native people.”

U.S. Attorney Cotter was appointed to the NAIS in 2009.  He replaces U.S. Attorney Timothy Q. Purdon of the District of North Dakota.  The District of Montana has served as a successful example of the Attorney General’s 2010 Indian Country Initiative.  Prosecutors are assigned to individual reservations and travel monthly for meetings with tribal and federal partners.  The strategy includes utilizing tribal Special Assistant U.S. Attorneys, tribal prosecutors who focus on domestic violence matters.  Prosecutors also participate in bi-monthly case meetings with tribal prosecutors and law enforcement, as well as develop cross-disciplinary trainings, such as presentations to first responders on the new federal strangulation statutes in Indian Country. 

As part of ongoing Initiative efforts, Assistant U.S. Attorneys facilitated the creation of and continuing work by the Sexual Assault Response Teams (SARTs), which are comprised of prosecutors, law enforcement, as well as medical and social service providers.  The SARTs represent a collaborative, multi-disciplinary approach to responding to sex crimes that occur on reservations. 

U.S. Attorney Martinez, who was appointed to the NAIS in May 2014, has continued and expanded the implementation of the Attorney General’s 2010 Indian Country Initiative and other federal initiatives in New Mexico which is home to 22 Indian pueblos and tribes.  Through the Tribal Special Assistant U.S. Attorney (Tribal SAUSA) Pilot Project, sponsored by the Justice Department’s Office on Violence Against Women, federal prosecutors train tribal prosecutors and officers in federal law, procedure and investigative techniques so that every viable sexual and violent offense against Native women is prosecuted in either federal court or tribal court, or both.  Working with the White House Office of National Drug Control Policy and the BIA’s Office of Justice Services, New Mexico has established one of the first HIDTA drug task forces in Indian Country.  It also supports two Indian Country Project Safe Neighborhood programs that focus on reducing gun violence in tribal communities.  Under the Attorney General’s Smart on Crime Initiative, the District of New Mexico has been working with an interdisciplinary team to develop one of the nation’s Indian Country reentry programs which will be launched in May of this year.  Prosecutors also partner with BIA to train tribal, local and state officers so that they may be commissioned as special federal officers of the BIA and enhance public safety in the District’s tribal communities by enforcing federal law. 

The AGAC was created in 1973 to serve as the voice of the U.S. Attorneys and to advise the Attorney General on policy, management, and operational issues impacting the offices of the U.S. Attorneys.  The NAIS is made up of U.S. Attorneys from across the U.S. whose Districts contain Indian Country or one or more federally recognized tribes.  The NAIS focuses exclusively on Indian Country issues, both criminal and civil and is responsible for making policy recommendations to the Attorney General of the U.S. regarding public safety and legal issues that impact tribal communities.

A Raleigh, North Carolina, man pleaded guilty today in the U.S. District Court in Raleigh to conspiring to file false claims for tax refunds, 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. 

According to court documents and statements in court, from 2010 through at least February 2014, Rodney Wright and others conspired to prepare and file false income tax returns with the Internal Revenue Service (IRS).  Wright obtained the personal identification information of taxpayers and used this information to file false federal income tax returns, which included fictitious information in order to generate false and fraudulent claims for tax refunds.  Wright and others directed the IRS to deposit tax refunds into bank accounts of the taxpayers listed on the tax returns or into accounts controlled by Wright and others involved in the conspiracy. 

Wright faces a statutory maximum sentence of 10 years in prison and a $250,000 fine for the conspiracy charge.  He is scheduled to be sentenced on June 29. 

Acting Assistant Attorney General Ciraolo and U.S. Attorney Walker commended special agents of IRS-Criminal Investigation, who investigated the case, and Assistant U.S. Attorney Susan Menzer of the Eastern District of North Carolina and Trial Attorneys Lauren Castaldi and Rebecca Perlmutter of the Tax Division, who are prosecuting the case.

The Justice Department announced today the filing of a lawsuit against Southeastern Oklahoma State University (Southeastern) and the Regional University System of Oklahoma (RUSO) for violating Title VII of the Civil Rights Act of 1964 by discriminating against a transgender employee on the basis of her sex and retaliating against her when she complained about the discrimination.  Attorney General Eric Holder announced in December 2014 that the Department of Justice takes the position that Title VII’s prohibition against sex discrimination is best read to extend the statute’s protection to claims based on an individual’s gender identity, including transgender status. 

According to the United States’ complaint, filed in federal district court in Oklahoma City today, Rachel Tudor began working for Southeastern as an Assistant Professor in 2004.  At the time of her hire, Tudor presented as a man.  In 2007, Tudor, consistent with her gender identity, began to present as a woman at work.  Throughout her employment, Tudor performed her job well, and in 2009, she applied for a promotion to the tenured position of Associate Professor.  Southeastern’s administration denied her application, overruling the recommendations of her department chair and other tenured faculty from her department.  The United States’ complaint alleges that Southeastern discriminated against Tudor when it denied her application because of her gender identity, gender transition and non-conformance with gender stereotypes. 

“By standing beside Dr. Tudor, the Department of Justice sends a clear message that we are committed to eliminating discrimination on the basis of sex and gender identity,” said Attorney General Eric Holder.  “We will not allow unfair biases and unjust prejudices to prevent transgender Americans from reaching their full potential as workers and as citizens.  And we will continue to work tirelessly, using every legal tool available, to ensure that transgender individuals are guaranteed the rights and protections that all Americans deserve.”

In 2010, Tudor filed complaints regarding the denial of her application for promotion and tenure.  Shortly after it learned of her complaints, Southeastern refused to let Tudor re-apply for promotion and tenure despite Southeastern’s own policies permitting re-application.  At the end of the 2010-11 academic year, Southeastern and RUSO terminated Tudor’s employment because she had not obtained tenure. 

Tudor filed a charge of discrimination with the Oklahoma City Area Office of the U.S. Equal Employment Opportunity Commission, alleging that Southeastern’s decisions were unlawful.  The EEOC investigated the charge and determined that there was reasonable cause to believe discrimination occurred.  The EEOC’s attempts at conciliation were unsuccessful, and it referred the matter to the Department of Justice.

This lawsuit was brought by the Department of Justice as a result of a joint effort to enhance collaboration between the EEOC and the Justice Department’s Civil Rights Division for vigorous enforcement of Title VII.

“The Department of Justice is committed to protecting the civil rights of all Americans, including transgender Americans,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division.  “Discrimination against employees because of their gender identity, gender transition, or because they do not conform to stereotypical notions about how men and women should act or appear violates Title VII.  Retaliating against an employee for complaining about unlawful discrimination, as happened in this case, is also unacceptable under Title VII.”  

“This is a tremendous example of how collaboration between EEOC and the Department of Justice leads to strong and coordinated enforcement of Title VII,” said EEOC Chair Jenny R. Yang.  “This case furthers the EEOC’s Strategic Enforcement Plan, which includes coverage of lesbian, gay, bisexual and transgender individuals under Title VII's sex discrimination provisions as a national enforcement priority.”

“The American workplace must be a level playing field free from discrimination – a place where employees compete based on their merit,” said Director Holly Waldron Cole of the EEOC’s Oklahoma City Area Office.  “Here, the decisions about Dr. Tudor’s employment should have been based on her qualifications, not on impermissible bias and stereotype.”

As alleged in the complaint, Title VII’s prohibition on sex discrimination includes discrimination because of gender identity or because an employee has completed a gender transition or is undertaking a gender transition.  Title VII also prohibits an employer from discriminating against an employee because her behavior or appearance does not conform to traditional gender stereotypes.  In addition, Title VII prohibits employers from retaliating against employees, like Tudor, who lodge complaints about discriminatory treatment.  Through its lawsuit, the United States seeks both monetary and injunctive relief.

Attorney General Eric Holder announced in December 2014 that the Department of Justice takes the position that Title VII’s prohibition against sex discrimination is best read to extend the statute’s protection to claims based on an individual’s gender identity, including transgender status. 

More information about Title VII and other federal employment laws is available on the website of the Employment Litigation Section of the Civil Rights Division (www.justice.gov/crt/about/emp/).

The continued enforcement of Title VII has been a priority of the Justice Department’s Civil Rights Division.  Additional information on the Civil Rights Division’s work is available on its website at www.justice.gov/crt/. 

Attached is a brief for the federal government filed in the United States Court of Appeals for the Fifth Circuit in State of Texas, et al. v. United States of America, et al.

Immigration CA5 - US PI Brief

Assistant Attorney General for National Security John Carlin and U.S. Attorney Preet Bharara of the Southern District of New York announced that Haroon Aswat pleaded guilty in the Southern District of New York to terrorism charges related to Aswat’s efforts to establish a terrorist training camp in the United States.  Aswat was arrested in Zambia in July 2005, and in August 2005, Aswat was deported from Zambia to the United Kingdom, where he was arrested pursuant to a provisional arrest warrant that was issued in response to a request by the U.S. government in connection with this case.  Aswat was extradited to the United States from the United Kingdom on Oct. 21, 2014.  Aswat pleaded guilty today to one count of conspiring to provide material support to al Qaeda, and one count of providing material support to al Qaeda.

“With this guilty plea, Haroon Aswat is being held accountable for his provision of material support to al Qaeda and his role in a plot to establish a terrorist training camp on American soil,” said Assistant Attorney General Carlin.  “Aswat was arrested almost 10 years ago, and his guilty plea is a testament to our determination to bring to justice all those who wish to harm the United States, whether at home or abroad, no matter how long it takes.  I would like to extend my gratitude to all of the many agents, analysts and prosecutors whose dedication and persistence made possible the guilty plea in this case.”

“Haroon Aswat fought his extradition to the United States for almost 10 years,” said U.S. Attorney Bharara.  “He then pled guilty to material support charges within just six months of arriving here, showing again our legal system’s capacity for swift justice.  For providing support to al Qaeda, Aswat now comes face-to-face with justice and faces up to 20 years in prison, and after the completion of his term he will be deported.”

According to the allegations contained in the indictment, statements made at related court proceedings including today’s guilty plea, and evidence presented at prior trials:

In late 1999, Aswat, along with co-defendants Mustafa Kamel Mustafa, aka Abu Hamza, Ouassama Kassir and Earnest James Ujaama, attempted to create a terrorist training camp in the United States to support al Qaeda, which has been designated by the U.S. Department of State as a foreign terrorist organization.  Aswat conspired with Abu Hamza, Kassir and Ujaama to establish the terrorist training camp on a rural parcel of property located in Bly, Oregon.  The purpose of the Bly camp was for Muslims to receive various types of training – including military-style jihad training – in preparation to fight jihad in Afghanistan.  As used by the conspirators in this case, the term “jihad” meant defending Islam against purported enemies through violence and armed aggression, including, by using murder to rid Muslim holy lands of non-believers in Islam.

In a letter faxed from Ujaama, who was in the United States, to Abu Hamza in the United Kingdom, the property in Bly was described as a place that “looks just like Afghanistan,” and the letter noted that the men at Bly were “stock-piling weapons and ammunition.”  In late 1999, after transmission of the faxed letter, Abu Hamza directed Aswat and Kassir, both of whom resided in London and attended Abu Hamza’s mosque there, to travel to Oregon to assist in establishing the camp.  On Nov. 26, 1999, Aswat and Kassir arrived in New York, and then traveled to Bly.

Aswat and Kassir traveled to Bly for the purpose of training men to fight jihad.  Kassir told witnesses that he supported Usama Bin Laden and al Qaeda, and that he had previously received jihad training in Pakistan.  Kassir also possessed a compact disc that contained instructions on how to make bombs and poisons.  After leaving Bly, Aswat and Kassir traveled to Seattle, where they resided at a mosque for approximately two months.  While in Seattle, Kassir, in Aswat’s presence, provided men from the mosque with additional terrorist training lessons – including instructions on different types of weapons, how to construct a homemade silencer for a firearm, how to assemble and disassemble an AK-47 and how an AK-47 could be altered to be fully automatic and to launch a grenade.  On another occasion, with Aswat sitting by his side, Kassir announced to the men in Seattle that he had come to the United States for martyrdom and to destroy, and he informed his audience that some of them could die or get hurt.

A ledger recovered in September 2002 from an al Qaeda safe house in Karachi, Pakistan, listed a number of individuals associated with al Qaeda, including ASWAT.  The al Qaeda safe house was used by Khalid Sheikh Mohammed, al Qaeda’s chief operational planner and the alleged planner of the terrorist attacks of Sept. 11, 2001.

*                              *                             *

Aswat pleaded guilty to one count of conspiracy to provide material support to a foreign terrorist organization and one count of providing material support to a foreign terrorist organization, each of which carries a maximum term of 10 years in prison.  The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Abu Hamza and Kassir were previously convicted for their roles in attempting to establish a terrorist training camp in the United States.  On May 12, 2009, after a four-week jury trial in the Southern District of New York, Kassir was found guilty of charges relating to his efforts to establish the terrorist training camp in Bly and his operation of several terrorist websites.  On Sept. 15, 2009, U.S. District Judge John F. Keenan of the Southern District of New York sentenced Kassir to life in prison.

On May 19, 2014, after a four-week jury trial in the Southern District of New York, Abu Hamza was found guilty of charges relating to his role in the conspiracy to establish the terrorist training camp in Bly, as well as his role in a hostage-taking in Yemen in 1998 that resulted in four deaths and his support of violent jihad in Afghanistan in 2000 and 2001.  On Jan. 9, 2015, U.S. District Judge Katherine B. Forrest of the Southern District of New York sentenced Abu Hamza to life in prison.

Assistant Attorney General Carlin joins U.S. Attorney Bharara in praising the outstanding efforts of the FBI’s Manhattan-based Joint Terrorism Task Force, which principally consists of agents of the FBI and detectives of the New York City Police Department, the U.S. Marshals Service and the Metropolitan Police Department of London.  Assistant Attorney General Carlin and U.S. Attorney Bharara also thanked the U.S. Department of Justice’s Office of International Affairs for their ongoing assistance.

This case is being prosecuted by Assistant U.S. Attorneys John P. Cronan, Ian McGinley and Shane T. Stansbury of the Southern District of New York, and Trial Attorney Erin Creegan of the Justice Department’s National Security Division.  This prosecution began with the investigation,  arrest and prosecution of James Ujaama in the Western District of Washington.  The FBI-led Joint Terrorism Task Force (JTTF) in Seattle  and the U.S. Attorney’s Office for the Western District of Washington provided substantial assistance with these prosecutions.

A federal grand jury in Oxford, Mississippi, returned a one-count indictment charging former Tate County Sheriff’s Deputy Randy T. Doss, 62, with unlawfully assaulting J.W., a pre-trial detainee at the Tate County Jail, with a dangerous weapon on Jan. 27, 2011.  The indictment charges that Doss’s actions resulted in bodily injury to the victim, J.W.

Doss is charged with violating J.W.’s right not to be deprived of liberty without due process of law.  The indictment alleges that Doss unlawfully assaulted J.W. by deploying a Taser electronic control device into J.W.’s back while he was in the custody of the Tate County Sheriff’s Office. 

If convicted, Doss faces a maximum punishment of 10 years imprisonment.  An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.

This case is being investigated by the Jackson Division of the Federal Bureau Investigation.  It is being prosecuted by Assistant U.S. Attorney Robert Coleman of the Northern District of Mississippi and Trial Attorney Dana Mulhauser of the Civil Rights Division of the Department of Justice.   

Agents Were Part of Baltimore’s Silk Road Task Force

Two former federal agents have been charged with wire fraud, money laundering and related offenses for stealing digital currency during their investigation of the Silk Road, an underground black market that allowed users to conduct illegal transactions over the Internet.  The charges are contained in a federal criminal complaint issued on March 25, 2015, in the Northern District of California and unsealed today.

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

Carl M. Force, 46, of Baltimore, was a Special Agent with the Drug Enforcement Administration (DEA), and Shaun W. Bridges, 32, of Laurel, Maryland, was a Special Agent with the U.S. Secret Service (USSS).  Both were assigned to the Baltimore Silk Road Task Force, which investigated illegal activity in the Silk Road marketplace.  Force served as an undercover agent and was tasked with establishing communications with a target of the investigation, Ross Ulbricht, aka “Dread Pirate Roberts.”  Force is charged with wire fraud, theft of government property, money laundering and conflict of interest.  Bridges is charged with wire fraud and money laundering. 

According to the complaint, Force was a DEA agent assigned to investigate the Silk Road marketplace.  During the investigation, Force engaged in certain authorized undercover  operations by, among other things, communicating online with “Dread Pirate Roberts” (Ulbricht), the target of his investigation.  The complaint alleges, however, that Force then, without authority, developed additional online personas and engaged in a broad range of illegal activities calculated to bring him personal financial gain.  In doing so, the complaint alleges, Force used fake online personas, and engaged in complex Bitcoin transactions to steal from the government and the targets of the investigation.  Specifically, Force allegedly solicited and received digital currency as part of the investigation, but failed to report his receipt of the funds, and instead transferred the currency to his personal account.  In one such transaction, Force allegedly sold information about the government’s investigation to the target of the investigation.  The complaint also alleges that Force invested in and worked for a digital currency exchange company while still working for the DEA, and that he directed the company to freeze a customer’s account with no legal basis to do so, then transferred the customer’s funds to his personal account.  Further, Force allegedly sent an unauthorized Justice Department subpoena to an online payment service directing that it unfreeze his personal account. 

Bridges allegedly diverted to his personal account over $800,000 in digital currency that he gained control of during the Silk Road investigation.  The complaint alleges that Bridges placed the assets into an account at Mt. Gox, the now-defunct digital currency exchange in Japan.  He then allegedly wired funds into one of his personal investment accounts in the United States mere days before he sought a $2.1 million seizure warrant for Mt. Gox’s accounts.     

Bridges self-surrendered today and will appear before Magistrate Judge Maria-Elena James of the Northern District of California at 9:30 a.m. PST this morning.  Force was arrested on Friday, March 27, 2015, in Baltimore and will appear before Magistrate Judge Timothy J. Sullivan of the District of Maryland at 2:30 p.m. EST today. 

The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The case was investigated by the FBI’s San Francisco Division, the IRS-CI’s San Francisco Division, the Department of Justice Office of the Inspector General and the Department of Homeland Security Office of the Inspector General in Washington D.C.  The Treasury Department’s Financial Crimes Enforcement Network also provided assistance with the investigation of this case.  The case is being prosecuted by Assistant U.S. Attorneys Kathryn Haun and William Frentzen of the Northern District of California and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section.

Criminal Complaint