District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Ohio Federal Court Prohibits Tax Return Preparer from Engaging in Prohibited ConductRead the Press Release
A federal court in Dayton, Ohio, has entered a permanent injunction against a tax return preparer that requires him to sign tax returns and furnish his Preparer Tax Identification Number (PTIN) on returns he prepares, as well as retain a list or copy of each of the returns that he prepares, the Justice Department announced today.
The court also barred Rodger S. Thomas Sr. from preparing documents that he knows will result in an understatement of his customers’ tax liabilities.
According to the government’s complaint, from 2006 through 2009, Thomas is alleged to have prepared tax returns for customers that claimed false business deductions on their Schedule C (profit and loss from business) and fictitious deductions on their Schedule A (itemized deductions). Also according to the suit, Thomas also allegedly prepared false Forms 1099 in order to inflate customers’ income and maximize their Earned Income Tax Credits. The complaint alleged that Thomas would then report these payments on the Schedule C of his own income tax returns as expenses incurred by his business Ramjet Express. The complaint further alleged that Thomas failed to sign or affix a PTIN to many of the returns that he prepared, negotiated refund checks by filing false Forms 1040 for customers and then, in violation of federal law, deposited the funds into his personal bank account.
In 2012, Thomas pleaded guilty to one count of making a false statement on an income tax return and one count of aiding and assisting in the filing of a false income tax return. He was subsequently sentenced to serve 24 months in prison and was released in March 2014.
The court’s order requires Thomas to contact and notify all persons for whom he has prepared a federal tax return or a claim for refund for since Jan. 1, 2006, of the injunction entered against him.
Return preparer fraud is one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams for 2015. The IRS has some tips on their website for choosing a tax preparer, and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. Information about these cases is available on the Justice Department 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.
Member of Megaupload Conspiracy Pleads Guilty to Copyright Infringement Charges and is Sentenced to One Year in U.S. PrisonRead the Press Release
A computer programmer for the Mega copyright piracy conspiracy, Andrus Nomm, 36, of Estonia, pleaded guilty today in connection with his involvement with Megaupload.com and associated piracy websites. He was sentenced to a year and a day in federal prison for conspiring to commit felony copyright infringement.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement. U.S. District Judge Liam O’Grady of the Eastern District of Virginia accepted the guilty plea and imposed the sentence.
“This conviction is a significant step forward in the largest criminal copyright case in U.S. history,” said Assistant Attorney General Caldwell. “The Mega conspirators are charged with massive worldwide online piracy of movies, music and other copyrighted U.S. works. We intend to see to it that all those responsible are held accountable for illegally enriching themselves by stealing the creative work of U.S. artists and creators.”
“This outcome is the result of years of hard work by our office and our partners from the Criminal Division and the Federal Bureau of Investigation,” said U.S. Attorney Dana J. Boente. “The Mega Conspiracy engaged in massive criminal infringement of copyrighted works on the Internet, and we are confident that this case will be a sign to those who would abuse technology for illegal profit.”
“Today one conspirator who infringed upon the work of countless artists, actors and musicians takes responsibility for his actions,” said Assistant Director in Charge McCabe. “We continue to pursue his co-conspirators until they face justice in the American legal system. This sentence and the remaining charges in this case are the direct result of the hard work of dedicated FBI Special Agents, intelligence analysts and prosecutors who have invested countless hours of effort to bring justice in this case.”
Nomm agreed to waive his extradition hearing in the Netherlands, where he was arrested in January 2012, and plead guilty in the United States. In light of his role in the conspiracy and acceptance of responsibility, prosecutors agreed to recommend the sentence of a year and a day in federal prison.
Nomm was initially charged along with six other individuals and two privately-held corporations by a federal grand jury on Jan. 5, 2012, and a superseding indictment with additional charges was subsequently returned on Feb. 16, 2012. The superseding indictment charged the defendants with three separate conspiracies: conspiracy to commit racketeering, conspiracy to commit copyright infringement and conspiracy to commit money laundering. In addition, the defendants are charged with five counts of criminal copyright infringement and five counts of wire fraud. The indictment alleges that, for more than five years, the Mega Conspiracy operated websites that willfully reproduced and distributed infringing copies of copyrighted works, including works that had not been commercially released. The charges and allegations contained in an indictment are merely accusations and the remaining defendants are presumed innocent unless and until proven guilty.
In court papers, Nomm agreed that the harm caused to copyright holders by the Mega Conspiracy’s criminal conduct exceeded $400 million. He further acknowledged that the group obtained at least $175 million in proceeds through their conduct. Megaupload.com had claimed that, at one time, it accounted for four percent of total Internet traffic, having more than one billion total visits, 150 million registered users and 50 million daily visitors.
In a statement of facts filed with his plea agreement, Nomm admitted that he was a computer programmer who worked for the Mega Conspiracy from 2007 until his arrest in January 2012. Nomm further admitted that, through his work as a computer programmer, he was aware that copyright-infringing content was stored on the websites, including copyright protected motion pictures and television programs, some of which contained the “FBI Anti-Piracy” warning. Nomm also admitted that he personally downloaded copyright-infringing files from the Mega websites. Despite his knowledge in this regard, Nomm continued to participate in the Mega Conspiracy.
An extradition hearing for co-defendants Kim Dotcom, Mathias Ortmann, Bram Van der Kolk and Finn Batato is currently scheduled for June 2015 in Auckland, New Zealand. Co-defendants Julius Bencko and Sven Echternach remain at large.
This case is being investigated by the FBI’s Headquarters and Washington Field Office. The case is being prosecuted by Senior Counsel Ryan K. Dickey and Brian L. Levine of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Jay V. Prabhu of the Eastern District of Virginia. The Criminal Division’s Office of International Affairs also provided significant assistance.
Illinois Physician Pleads Guilty to Taking Kickbacks from Pharmaceutical Company and Agrees to Pay $3.79 Million to Settle Civil False Claims Act CaseRead the Press Release
The Department of Justice announced today that an Illinois physician, Dr. Michael J. Reinstein, pleaded guilty to a federal crime for receiving illegal kickbacks and benefits totaling nearly $600,000 from two pharmaceutical companies in exchange for regularly prescribing an anti-psychotic drug — clozapine — to his patients. Reinstein also agreed to pay the United States and the state of Illinois $3.79 million to settle a parallel civil lawsuit alleging that, by prescribing clozapine in exchange for kickbacks, Reinstein caused the submission of false claims to Medicare and Medicaid for the clozapine he prescribed for thousands of elderly and indigent patients in at least 30 Chicago-area nursing homes and other facilities.
“The Department of Justice is committed to ensuring that physicians who accept payments from pharmaceutical manufacturers to influence prescribing decisions are held accountable,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “Schemes such as this one undermine the health care system and take advantage of elderly patients who are among the most vulnerable health care recipients.”
“Physicians must prescribe medications for their patients solely on the basis of the patients’ best medical interests and not because those decisions were improperly influenced by kickbacks and other financial favors,” said U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.
Both the criminal and civil cases involve the promotion of generic clozapine, a rarely prescribed anti-psychotic drug that has serious potential side effects and is generally considered a drug of last resort, particularly for elderly patients. While clozapine has been shown to be effective for treatment-resistant forms of schizophrenia, it is also known to cause numerous side effects, including a potentially deadly decrease in white blood cells, seizures, inflammation of the heart muscle and increased mortality in elderly patients.
Reinstein pleaded guilty to one count of violating the federal Medicare and Medicaid Anti-Kickback Statute at his arraignment in U.S. District Court after he was charged on Feb. 3.
The civil settlement resolves a civil action filed against Reinstein by the federal government for accepting payments from pharmaceutical manufacturer Teva Pharmaceuticals USA Inc. and a subsidiary, IVAX LLC, to induce the use of generic clozapine. The United States alleged that in exchange for these payments, Reinstein prescribed clozapine for Medicare and Medicaid beneficiaries. The United States also alleged that Reinstein submitted and/or caused to be submitted to both Medicaid and Medicare claims for “pharmacologic management” of those patients for whom he prescribed clozapine. However, Reinstein allegedly did not engage in meaningful pharmacological management, because his prescribing decisions for his clozapine patients were based on the kickbacks he received rather than his independent medical judgment or the individual needs of his patients. In March 2014, Teva Pharmaceuticals USA Inc. and IVAX LLC, paid the United States and the state of Illinois $27.6 million to settle allegations that they violated the state and federal False Claims Acts by making payments to Reinstein in return for him prescribing clozapine to his patients.
As set forth in the plea agreement, the payment scheme involving Reinstein began in August 2003, when Reinstein agreed to switch his patients to generic clozapine if IVAX agreed to pay Reinstein $50,000 under a one-year “consulting agreement” and to provide other benefits to Reinstein, in violation of the federal Medicare and Medicaid Anti-Kickback statute. In addition to direct payments to Reinstein, IVAX allegedly also provided all-expenses paid trips to Miami for Reinstein, his wife and various employees of Reinstein. Reinstein quickly became the largest prescriber of generic clozapine in the country and prescribed the drug to many elderly patients. Allegedly, the payments and other forms of remuneration from IVAX and later Teva Pharmaceuticals continued for many years and resulted in the submission of thousands of false claims to the Medicare Part D and Illinois Medicaid programs.
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient.
The plea agreement and civil settlement illustrate the government’s emphasis on combating health care fraud and mark 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 $23.6 billion through False Claims Act cases, with more than $15.1 billion of that amount recovered in cases involving fraud against federal health care programs.
The U.S. Attorney’s Office for the Northern District of Illinois represented the United States in connection with the plea agreement. The civil settlement with Reinstein was the result of a coordinated effort by the U.S. Attorney’s Office for the Northern District of Illinois, the Civil Division’s Commercial Litigation Branch, the Department of Health and Human Services’ Office of Inspector General, the FBI and the Illinois Attorney General’s Office.
Except to the extent admitted by Reinstein in his guilty plea, the claims resolved by the civil settlement are allegations only, and there has been no determination of liability. The civil case is captioned United States v. Reinstein, Civil Action, No. 12-C-9167 (N.D. Ill.).
Former Klansman Sentenced for Cross BurningRead the Press Release
Timothy Flanagan, 33, was sentenced to nine months and ordered to pay a $5000 fine in federal court in Nashville, Tennessee, for his role in the April 30, 2012, cross burning in front of an interracial family’s home in Minor Hill, Tennessee, the Department of Justice announced. Flanagan previously pleaded guilty to one count of conspiring with others to threaten, intimidate and interfere with an African-American man’s enjoyment of his housing rights, and one count of interfering with those housing rights.
Flanagan—a former member of the Church of the National Knights, a Ku Klux Klan affiliate—admitted during the plea hearing that on the night of April 30, 2012, he and two other individuals devised a plan to burn a cross in the yard of an African American man in Minor Hill, Tennessee. Flanagan’s co-conspirator, Timothy Stafford, constructed a wooden cross in a workshop behind his house. Using Flanagan’s credit card, Stafford and co-conspirator Ivan “Rusty” London then purchased diesel-fuel with which to soak the cross. Flanagan and the other co-conspirators then drove the cross to the victim’s residence and, upon arriving at the residence, Flanagan and London exited the truck. The cross was placed in the driveway leading up to the house and was ignited. The co-conspirators burned the cross with the purpose of intimidating the African-American male who resided at that residence.
Timothy Stafford, 41, of Minor Hill, Tennessee, and Ivan “Rusty” London IV, 21, of Lexington, Kentucky, previously pleaded guilty for their roles in the conspiracy, and will be sentenced on March 3, and March 26, respectively.
“Hate-motivated crimes will not be tolerated in our country,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The Justice Department will vigorously prosecute individuals that violate the rights of others because of race.”
“There can be no tolerance for such acts of intimidation when innocent persons are targeted simply because of their race,” said U.S. Attorney David Rivera of the Middle District of Tennessee. “The U.S. Attorney’s Office and our law enforcement partners will work tirelessly to protect the civil rights of all persons and bring to justice, anyone who would attempt to impede the constitutionally protected right to liberty of any person.”
This case was investigated by the Columbia, Tennessee, Division of the FBI and is being prosecuted by Trial Attorney Jared Fishman of the Civil Rights Division and by Assistant U.S. Attorney Hal McDonough of the Middle District of Tennessee.
Department of Justice Files Statement of Interest in Clanton, Alabama, Bond CaseRead the Press Release
The Department of Justice filed a statement of interest today with the U.S. District Court for the Middle District of Alabama in Varden v. City of Clanton. In this class action litigation, the plaintiff alleges that incarcerating individuals solely because of their inability to pay a cash bond violates the U.S. Constitution.
In her complaint, Varden alleges that she was required to pay a cash “bond” in a fixed dollar amount for each misdemeanor charge she faced or else she would remain incarcerated. In its statement of interest, the department aims to assist the court in evaluating the constitutionality of fixed-money bail practices. The statement asserts that, as courts have long recognized, any bail or bond scheme that mandates payment of pre-fixed amounts for different offenses in order to gain pre-trial release, without any regard for indigence, not only violates the Fourteenth Amendment’s Equal Protection Clause, but also constitutes poor public policy. Instead, courts should make an individualized assessment of each defendant to determine whether the defendant is a threat to public safety or a flight risk. Pretrial detention should be based on an objective evaluation of these factors, not on the defendant’s ability to pay.
“Bail practices that are indifferent to an individual’s ability to pay are incompatible with our Constitution and contrary to our values,” said Attorney General Eric Holder. “By taking action in this case, the Justice Department is sending a clear message: that we will not accept criminal justice procedures that have discriminatory effects. We will not hesitate to fight institutionalized injustice wherever it is found. And we will never waver in our effort to ensure that all Americans – regardless of background or circumstance – receive the equal rights and protections to which they are entitled under the law.”
“The criminal justice system should not work differently for the indigent and the wealthy” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “Bail practices that create a two tiered system of justice by treating the indigent and the wealthy differently undermine fundamental fairness in our nation’s criminal justice system.”
The statement of interest provides the court with a framework to assess the plaintiff’s claim of an unlawful bail scheme. As the department explains in the statement of interest, “Fundamental and long-standing principles of equal protection squarely prohibit bail schemes based solely on the ability to pay. Fixed-sum bail schemes do not meet these mandates. By using a predetermined schedule for bail amounts based solely on the charges a defendant faces, these schemes do not properly account for other important factors, such as the defendant’s potential dangerousness or risk of flight. The federal government recognized as much when it reformed its bail system over fifty years ago.”
Varden v. City of Clanton was filed in January 2015. The plaintiff seeks declaratory, injunctive and compensatory relief. A preliminary injunction hearing will be held on Feb. 24.
Court Approves Consent Order in Alabama Desegregation Case to Improve Faculty Diversity and Ensure Fair and Equitable Student DisciplineRead the Press Release
The U.S. District Court for the Northern District of Alabama approved a consent order yesterday afternoon filed by the Justice Department, together with private plaintiffs and the Calhoun County, Alabama, School District, finding that the district has met its desegregation obligations in certain areas and providing for additional, comprehensive relief in the areas of faculty and staff hiring and recruitment as well as student discipline and school climate.
In approving the consent order, which amends a longstanding federal school desegregation decree, the district court declares that the 9,200-student school district has eliminated the vestiges of prior state-mandated segregation in the areas of student assignment, extracurricular activities, school facilities and transportation, thereby ending the court’s supervision in those areas. The order requires the district to take additional steps to reach full compliance, including adopting measures to promote racial diversity in its faculty and staff, expanding its use of positive behavioral supports and interventions throughout its schools, and revising its student discipline policies and procedures to ensure they are fair, non-discriminatory and limit the use of exclusionary discipline such as suspensions and expulsions.
“We commend the Calhoun County School District for the progress it has made in complying with its desegregation obligations, and for agreeing to take additional steps to reach our mutual goal of ensuring equal educational opportunities for all students,” said Acting Assistant Attorney General Vanita Gupta of the Justice Department’s Civil Rights Division. “We will continue to work closely with the district to implement this agreement and bring this case to a successful conclusion.”
The district may seek full dismissal of the case upon compliance with the terms of the three-year agreement. The Justice Department will monitor and enforce the district’s compliance with the order.
The enforcement of Title IV of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race, among other bases, in public schools is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.
U.S. Citizen Extradited from Costa Rica in Connection with International-Based Business Opportunity Fraud VenturesRead the Press Release
A U.S. citizen charged in connection with the operation of a series of fraudulent business opportunities was extradited from Costa Rica to the United States, the Justice Department announced today.
John White was charged in a Nov. 29, 2011, indictment in the Southern District of Florida with conspiracy to commit mail and wire fraud, five counts of mail fraud and 13 counts of wire fraud. White was arrested on Feb. 9, 2012, in Costa Rica pursuant to the indictment, which charges that White and his co-conspirators sold fraudulent beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses, to victims in the United States. The charges in the indictment form part of the government’s continued nationwide crackdown on business opportunity fraud.
In addition to White, 11 other defendants have been charged in connection with related business opportunity fraud ventures that operated in Costa Rica. Nine of those other defendants have been convicted in the United States with sentences ranging from three to 16 years in prison. Two remaining defendants have yet to be received into the custody of the United States.
“Business opportunity fraud takes a heavy financial toll on victims who believe they are buying a piece of the American dream,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “The Department of Justice will continue its push to prosecute those who defraud consumers whether from here in the United States or abroad.”
Beginning in May 2005, White and his coconspirators are alleged to have fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc. and The Coffee Man Inc. According to the indictment, the business opportunities the defendant sold cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere, according to the indictment.
The indictment alleges that the defendant, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, White and his co-conspirators operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities, the indictment alleges.
According to the indictment, the companies made numerous false statements to potential purchasers of the business opportunities. Among the misrepresentations alleged in the indictment are: that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. Potential purchasers were also told that the profits of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.
The indictment alleges that the companies employed various types of sales representatives, including fronters, closers and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to close deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities. The companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchaser’s merchandise display racks. The indictment alleges that White, using assumed names, worked as a fronter and a reference.
Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, New Mexico; Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colorado; Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nevada; Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia; and The Coffee Man was registered as a Colorado corporation and rented office space in Denver.
White faces a statutory maximum sentence of 25 years in prison, a possible fine and mandatory restitution on the conspiracy count. He also faces a statutory maximum sentence of 25 years in prison on each of the mail and wire fraud counts, possible fines and mandatory restitution.
“Business opportunity fraud hurts those who are simply trying to fulfill their dream of running their own business.” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida. “We will continue to prosecute those who seek to enrich themselves by committing fraud at the expense of innocent victims.”
“The Postal Inspection Service will continue to aggressively investigate and combat business and investment fraud through the use of the U.S. mail,” said Postal Inspector in Charge Ronald Verrochio of the U.S. Postal Inspection Service Miami Division.
Acting Assistant Attorney General Branda and U.S. Attorney Ferrer commended the investigative efforts of the U.S. Postal Inspection Service. The Justice Department’s Office of International Affairs provided assistance with the extradition. The case is being prosecuted by Trial Attorney Alan Phelps of the Civil Division’s Consumer Protection Branch.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Three Importers to Pay over $3 Million to Settle False Claims Act Suit Alleging Evaded Customs DutiesRead the Press Release
The Department of Justice announced today that California-based C.R. Laurence Co. Inc., Florida-based Southeastern Aluminum Products Inc. and Texas-based Waterfall Group LLC have agreed to pay $2,300,000, $650,000 and $100,000, respectively, to resolve a lawsuit brought by the United States under the False Claims Act alleging that the companies engaged in schemes to evade customs duties on imports of aluminum extrusions from the People’s Republic of China (PRC). The companies sell shower doors and shower enclosures made with the PRC-manufactured aluminum extrusions.
“The nation’s customs laws are designed to protect domestic manufacturers from unfair competition abroad,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “The Department of Justice will pursue those who seek an unfair advantage in U.S. markets by evading the duties owed on goods imported into this country.”
The government’s complaint alleged that C.R. Laurence, Southeastern and Waterfall made false declarations to the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) to avoid paying antidumping and countervailing duties on aluminum extrusions imported from manufacturer Tai Shan Golden Gain Aluminum Products Ltd. in the PRC. The Department of Commerce assesses, and CBP collects, antidumping and countervailing duties to protect U.S. businesses and level the playing field for domestic products. Antidumping duties protect against foreign companies “dumping” products on U.S. markets at prices below cost, while countervailing duties offset foreign government subsidies. C.R. Laurence, Southeastern, and Waterfall allegedly misrepresented that the “country of origin” of the aluminum extrusions was Malaysia, when the goods were manufactured in the PRC and merely shipped through Malaysia – a practice called “transshipping.” Imports of PRC-manufactured aluminum extrusions have been subject to antidumping and countervailing duties since 2010. No such duties are due on imports of such items from Malaysia.
The government’s complaint also alleged that C.R. Laurence, Southeastern and Waterfall purchased PRC-made aluminum extrusions imported by other domestic companies and caused or conspired with those importers to make false declarations to CBP to evade duties.
“Countervailing and antidumping duties are designed to provide a level playing field between companies that purchase products domestically and those that import products from countries which subsidize their production,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida. “Importers who use fraud to avoid paying these duties gain an unfair business advantage over competitors who abide by the rules. This settlement reaffirms our commitment to ensuring that business competition remains fair in our district.”
“Antidumping and countervailing duties are critical to ensure fair competition for U.S. manufacturers,” said Commissioner R. Gil Kerlikowske of CBP. “U.S. Customs and Border Protection works diligently with the Department of Justice, U.S. Immigration and Customs Enforcement, Homeland Security Investigations, and the U.S. Department of Commerce to aggressively pursue duty evasion.”
The allegations resolved by the settlements announced today were originally brought by whistleblower James F. Valenti Jr. in the U.S. District Court for the Middle District of Florida under the qui tam provisions of the False Claims Act. The act permits private parties to sue on behalf of the government those who falsely claim federal funds or, as in this case, avoid paying funds owed to the government. The United States may intervene in and take over the lawsuit, as it did in this case. The act allows the whistleblower to receive a share of any funds recovered through the lawsuit. Valenti will receive $555,100 as his share of these settlements.
The case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Middle District of Florida, CBP, U.S. Immigration and Customs Enforcement and the Department of Commerce’s International Trade Administration.
The lawsuit is captioned United States ex rel. Valenti v. Tai Shan Golden Gain Aluminum Products Ltd., et al., Case No. 11-cv-368 (M.D. Fla.). The claims resolved by the settlements are allegations only; there has been no determination of liability.
Tennessee Resident Sentenced to 15 Years in Prison for Sex Trafficking of A MinorRead the Press Release
A Memphis, Tennessee, man was sentenced today to 15 years in prison for the sex trafficking of a 16-year-old girl, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Edward L. Stanton III of the Western District of Tennessee and Special Agent in Charge Todd McCall of the FBI’s Memphis Division.
Laron Matlock, 33, of Memphis, admitted during his plea hearing that, with the assistance of a co-defendant, he facilitated the travel of a 16-year-old girl from Chicago to Memphis in July 2012 for the purpose of prostitution. Matlock then transported the minor from Memphis to Nashville, Tennessee, where she engaged in prostitution. Matlock admitted that he facilitated the online advertisement of the minor on www.backpage.com by paying the cost associated with the posting. Matlock was arrested on Aug. 1, 2012, after he returned to Memphis with the victim and attempted to take her to a customer’s house for the purpose of prostitution.
U.S. District Judge Jon Phipps McCalla of the Western District of Tennessee imposed the sentence.
This case was investigated by the Civil Rights Human Trafficking Taskforce, the FBI’s Memphis Division and the Shelby County Sheriff’s Department. This case was prosecuted by Assistant U.S. Attorney Brian K. Coleman of the Western District of Tennessee and Trial Attorney Mi Yung Park of the Criminal Division’s Child Exploitation and Obscenity Section.
New Jersey Oyster Harvesters and Dealers Sentenced for Illegally Trafficking in Oysters, Falsifying Food Safety and Oyster Harvest Records, and Obstructing JusticeRead the Press Release
Three oyster harvesters and dealers, an employee and a related business were sentenced yesterday in federal court in Camden, New Jersey. Todd Reeves, Thomas Reeves, Renee Reeves, of Port Norris, New Jersey, and their oyster dealer company, Shellrock LLC, were sentenced for their roles in creating false oyster records, trafficking in illegally possessed oysters, obstructing the U.S. Food and Drug Administration’s (FDA) regulation of public health and safety, and conspiring to commit those crimes. Kenneth Bailey, of Heislerville, New Jersey, was sentenced for creating false oyster records and trafficking in illegal oysters.
Todd Reeves was sentenced to serve 26 months in prison and three years of supervised release, to pay a $7,000 fine, and was ordered to pay New Jersey $140,000 for the restoration of oyster beds in Delaware Bay. Thomas Reeves was sentenced to serve 16 months in prison and three years of supervised release and pay a $7,000 fine, while Renee Reeves was sentenced to serve five years of probation and pay a $2,500 fine. Thomas, Renee and Shellrock were found liable for the restitution amount along with Todd. Todd and Thomas Reeves were additionally ordered to forfeit $144,000 to substitute assets for the vessels that they used to overharvest the oysters. The Reeves’ business, Shellrock, also known as “Reeves Brothers,” was ordered to pay a fine of $70,000 and complete a term of five years of probation.
Kenneth Bailey was sentenced to serve six months incarceration, followed by six months of home confinement and three years of supervised release, as well as to pay a $10,000 fine. Bailey was also ordered to forfeit $75,000 in substitute assets for the vessels that he used to overharvest the oysters.
“The conspiracy to traffic in overharvested, unreported and illegally possessed oysters from the Delaware Bay violated laws that protect public health and ensure the sustainability of resources,” said Assistant Attorney General John C. Cruden of the Department of Justice’s Environment and Natural Resources Division. “The defendants’ actions were harmful to honest fisherman of the Delaware Bay and the long-term viability of a resource that is vital to the local economy and plays an important role in the history of Southern New Jersey. Today’s sentences let the public know that we will not allow protected resources to be exploited, and that those who obstruct law enforcement and deprive honest fisherman of the full measure of their labor will be held accountable.”
In 2012, the defendants were convicted of numerous felony crimes related to their overharvest and sale of over $750,000 worth of oysters from the Delaware Bay. The evidence at trial showed that, for over four years, brothers Todd and Thomas Reeves would overharvest oysters from the Delaware Bay and create false dealer reports and harvester records to hide that overharvest from conservation officers. The Reeves also created false state and FDA health records to ensure that regulators would not detect their overharvest. The Reeves then sold their illegal oysters through their company, Shellrock LLC, to Mark Bryan of Harbor House Seafood, a wholesale and retail seafood operator in Delaware. Bryan and Harbor House are scheduled to be sentenced in Camden on Feb. 27, 2015, for their role in conspiring to create false records to conceal the scheme from authorities.
Kenneth Bailey engaged in similar conduct in 2006 and 2007, overharvesting oysters from the public oyster beds in Delaware Bay. Bailey then created false dealer reports, harvest reports and bills of lading to hide that overharvest from authorities.
“This investigation is a great example of state and federal cooperative enforcement,” said Assistant Director Logan Gregory of the National Oceanic and Atmospheric Administration (NOAA) Fisheries’ Office of Law Enforcement. “The Office of Law Enforcement will continue to support our enforcement partners by providing complex investigation expertise to address wildlife trafficking, seafood fraud and illegal, unregulated and unreported (IUU) fishing. We enjoy a great working relationship with our partners in the state of New Jersey, which is paramount in helping ensure a level playing field and a resilient coastal economy along the Delaware Bay shore.”
The Lacey Act prohibits creating or submitting false records for fish or wildlife moving in interstate commerce and also prohibits trafficking in fish or wildlife known to be illegally taken or possessed. The FDA and state health agencies require that oyster purchasers and sellers maintain accurate records of the amounts and locations of oyster harvest for all oysters they buy and sell in order to protect the public health and minimize the impact of any oyster-borne outbreak of disease.
The case was investigated by the NOAA Office of Law Enforcement and the New Jersey Department of Environmental Protection’s Division of Fish and Wildlife. The case was prosecuted by Assistant Chief Wayne D. Hettenbach and Trial Attorney Patrick M. Duggan of the Environment and Natural Resources Division’s Environmental Crimes Section, with assistance from Assistant U.S. Attorney Matthew T. Smith of the U.S. Attorney’s Office for the District of New Jersey.
Justice Department Settles Sexual Harassment and Retaliation Suit Against the State of Maryland, Queen Anne's County, and the Queen Anne's County SheriffRead the Press Release
The Justice Department announced today that it has entered into a consent decree with the state of Maryland and the Queen Anne’s County Sheriff. If approved by the court, the settlement will resolve Murphy-Taylor v. State of Maryland, et al., a sexual harassment and retaliation lawsuit in which the United States intervened in Feb. 2013. The United States previously entered into a consent decree with Queen Anne’s County in May 2014.
The United States’ complaint in intervention alleged that several supervisors in the Sheriff’s Office, including the Sheriff’s brother, subjected Kristy Murphy-Taylor to severe sexual harassment and that the Sheriff and members of his command staff retaliated against her when she complained in violation of Title VII of the Civil Rights Act of 1964. According to the United States’ complaint, over a number of years, Ms. Murphy-Taylor was subjected to numerous acts of unwanted sexual conduct by multiple supervisors including repeated incidents of unwanted sexual touching by the Sheriff’s brother. Despite Ms. Murphy-Taylor’s complaints about the harassment, the complaint alleges that the defendants failed to take prompt and effective corrective action. Instead, they allegedly subjected her to intolerable working conditions intended to make her quit, and ultimately terminated her for complaining about the sexual harassment by the Sheriff’s brother.
Under the terms of the consent decree with the state of Maryland and the Queen Anne’s County Sheriff, the defendants have agreed to revise the relevant sexual harassment policies and the procedures for handling complaints of sexual harassment and retaliation. In particular, the Maryland State Police will provide oversight for the handling of complaints of sexual harassment and retaliation made by employees of the Sheriff’s Office against sworn officers. Ms. Murphy- Taylor will also receive $250,000 in damages. Under the terms of the consent decree entered into with Queen Anne’s County in May 2014, Ms. Murphy-Taylor received $620,000 in damages including backpay, frontpay, and attorney’s fees, and Queen Anne’s County agreed to provide oversight and investigative functions for the handling of complaints of sexual harassment and retaliation made by employees of the Sheriff’s Office.
“No woman should have to face losing her job in order to be free from sexual harassment and retaliation at work,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “The Department of Justice is committed to eradicating sex discrimination in the workplace. The resolution of this lawsuit ensures that the Queen Anne’s County Sheriff’s Office will comply with federal law requiring employers to take prompt and effective corrective action to complaints of sexual harassment.”
"Workplace harassment should not be tolerated,” said EEOC Chair Jenny R. Yang. “Complaints of workplace harassment are among the most frequent complaints we receive at EEOC, accounting for 30% of the total charges we received last year. The Commission is working to prevent and address harassment through targeted outreach and enforcement.”
“This is another example of how collaboration between EEOC and the Department of Justice leads to effective enforcement of Title VII and ensures that public employees are protected from workplace discrimination and retaliation prohibited by Title VII,” said Director Spencer H. Lewis Jr. of the EEOC’s Philadelphia District Office. The Philadelphia District Office of the EEOC has offices in Philadelphia, Baltimore, Cleveland, and Pittsburgh, and oversees Pennsylvania, Maryland, Delaware, West Virginia and parts of New Jersey and Ohio.
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.
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/).
Jamaican Man First to Be Extradited to Face Fraud Charges in International Lottery SchemeRead the Press Release
A 28-year-old man was extradited from Jamaica based on charges that he committed fraud as part of an international lottery scheme against elderly victims in the United States, the Justice Department announced today.
Damion Bryan Barrett is charged in a 38-count indictment in the Southern District of Florida with conspiracy and 37 counts of wire fraud, and with committing these offenses via telemarketing. According to the indictment, Barrett and his co-conspirators fraudulently induced elderly victims in the United States to send them thousands of dollars to pay purported fees for lottery winnings that victims had not in fact won. Barrett is the first Jamaican citizen to be extradited from Jamaica to the United States based on charges of defrauding Americans in connection with a lottery scheme.
Barrett arrived today in Opa-locka, Florida. He will make his initial appearance on Feb. 13 before Magistrate Judge Alicia O. Valle in Fort Lauderdale, Florida. Barrett was indicted by a federal grand jury in Fort Lauderdale on Aug. 9, 2012, and was arrested last month in Jamaica based on the United States’ request that he be extradited. Barrett’s extradition is the latest step in the United States’ ongoing crackdown on fraudulent lottery schemes based in Jamaica.
According to the indictment, beginning in October 2008, Barrett and his co-conspirators contacted victims in the United States announcing that the victims had won cash and prizes and persuaded the victims to send them thousands of dollars in fees to release the money. The victims never received cash or prizes. The defendant and his co-conspirators allegedly made calls from Jamaica using voice over internet protocol technology that allowed them to use a telephone number with a U.S. area code. According to the indictment, Barrett convinced victims to send money to middlemen in South Florida, who then forwarded the money to Jamaica.
“The Department of Justice will find and prosecute those responsible for fraud against American consumers, no matter where the perpetrator resides,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “Lottery schemes that target elderly victims for fraud cannot, and will not, be tolerated.”
“Persons who commit crimes against American seniors from outside of the United States will be held accountable,” said U.S. Attorney Wifredo Ferrer of the Southern District of Florida. “This case serves as an example that there are no borders when it comes to obtaining justice for the victims of these lottery schemes.”
“Today's extradition signals strong partnership between the Jamaica Constabulary Force and our U.S. law enforcement partners,” said Commissioner of Police Dr. Carl Williams of the Jamaica Constabulary Force. “We use this opportunity to warn other lottery scammers who continue to prey on unsuspecting U.S. citizens, that they too will pay the penalty, whether through conviction in Jamaica or through extradition to the United States. We continue to address this with a high level of attention to contain the scourge.”
If convicted, Barrett faces a statutory maximum sentence of 30 years in prison per count, a possible fine and mandatory restitution. Barrett’s co-defendant, Oneike Barnett, 29, pleaded guilty on Feb. 28, 2014, to conspiracy to commit wire fraud. On April 29, 2014, U.S. District Court Judge William J. Zloch sentenced Barnett to serve 60 months in prison and five years of supervised release, and to pay $94,456 in restitution for his role in this case.
“These criminal telemarking scams heartlessly target the elderly in the United States, at times stealing their life savings,” said Special Agent in Charge Alysa D. Erichs of Homeland Security Investigations (HSI) Miami. “The successful extradition of Damion Bryan Barrett sends a clear message that the cooperation between our countries is focused on bringing these offenders to justice despite borders that separate us. This extradition and hopefully others that may follow suit will have a positive impact on diminishing this crime.”
“Together with our international and domestic law enforcement partners we have proven that justice has no borders,” said U.S. Postal Inspector in Charge Ronald Verrochio of the U.S. Postal Inspection Service’s (USPIS) Miami Division. “We will continue to investigate and prosecute those who defraud American citizens, anywhere in the world.”
“The U.S. Marshals Service, together with our federal partners, will continue to track down and bring to justice those that would pray on our most vulnerable in our country,” said U.S. Marshal Amos Rojas of the Southern District of Florida.
Acting Assistant Attorney General Branda and U.S. Attorney Ferrer commended the investigative efforts of USPIS, U.S. Immigration and Customs Enforcement’s (ICE) HSI Miami and the U.S. Marshals Service. The case is being prosecuted by Trial Attorney Kathryn Drenning of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Bertha Mitrani of the Southern District of Florida.
An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.
Former Tifton Bank President and CEO Indicted for Bank FraudRead the Press Release
A former bank president was charged today for his role in a bank fraud scheme in which he is alleged to have hidden underperforming and at-risk loans from the bank and the Federal Deposit Insurance Corporation (FDIC), among others, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia.
Gary Patton Hall Jr., 49, of Tifton, Georgia, was indicted today by a grand jury in the Middle District of Georgia with six counts of bank fraud and one count of major fraud against the United States.
According to allegations in the indictment, Hall was the president and Chief Executive Officer of Tifton Banking Company (TBC) from August 2005 until June 2010. During that time, Hall was allegedly engaged in a long running scheme to mislead the bank and its loan committee about loans TBC made to local individuals and businesses. As part of the scheme, Hall allegedly hid past due loans from the FDIC and the TBC loan committee, which resulted in the bank continuing to approve and renew delinquent loans and loans for which the collateral was lacking. Several of the borrowers eventually defaulted on the loans, resulting in millions of dollars in losses to TBC and others.
Hall also allegedly hid his personal and business interests in at least two of the transactions over which he exercised approval authority. For example, in one instance, Hall allegedly approved several loans to the buyer of his condominium in Panama City Beach, Florida. In doing so, Hall allegedly made several false representations about the loans to TBC’s loan committee, and failed to disclose his personal interest in the transaction. When the buyer’s loan payments became delinquent, Hall allegedly hid the loans from both the FDIC and state regulators. Hall allegedly received $50,000 from the sale of his condominium in this transaction, which was allegedly funded in full by an unsecured loan to the buyer approved by Hall. The buyer eventually declared bankruptcy resulting in a loss of more than $400,000 to TBC.
TBC was closed by the Georgia Department of Banking and Finance in November 2010 due to its poor financial condition. At that time, TBC had not repaid the $3.8 million it received from the Department of Treasury’s Troubled Asset Relief Program.
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 Department of Treasury’s Special Inspector General for the Troubled Asset Relief Program, the Small Business Administration’s Office of the Inspector General, the Federal Deposit Insurance Corporation’s Office of the Inspector General, the Department of Agriculture’s Office of Inspector General and the Tifton County Sheriff’s Office. The case is being prosecuted by Senior Trial Attorney N. Nathan Dimock of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Robert McCullers of the Middle District of Georgia.
Campaign Manager Pleads Guilty to Coordinated Campaign Contributions and False StatementsRead the Press Release
First Criminal Prosecution in the United States For
Campaign Finance Coordination between Political Committees
A campaign finance manager and political consultant pleaded guilty today in the Eastern District of Virginia for coordinating $325,000 in federal election campaign contributions by a political action committee (PAC) to a Congressional campaign committee. This is the first criminal prosecution in the United States based upon the coordination of campaign contributions between political committees.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement.
“The Department of Justice is fully committed to addressing the threat posed to the integrity of federal primary and general elections by coordinated campaign contributions, and will aggressively pursue coordination offenses at every appropriate opportunity,” said Assistant Attorney General Caldwell.
“Campaign finance laws exist to guard against illegal activity such as coordinated campaign contributions,” U.S. Attorney Boente said. “The citizens of the Commonwealth of Virginia can rely this office enforce federal campaign finance law.”
“Today, Mr. Harber took responsibility for violating federal election campaign laws by illegally coordinating payments between a super pac and a candidate’s campaign committee,” said Assistant Director in Charge McCabe. “The FBI will continue to investigate allegations of campaign finance abuse which are in place to ensure openness and fairness in our elections so the people’s interests are protected.”
Tyler Eugene Harber, 34, of Alexandria, Virginia, pleaded guilty to one count of coordinated federal election contributions and one count of making false statements to the FBI before U.S. District Judge Liam O’Grady of the Eastern District of Virginia. A sentencing hearing is scheduled for June 5, 2015.
According to the plea documents, Harber was the Campaign Manager and General Political Consultant for a candidate for Congress in the November 2012 general election. At the same time, Harber participated in the creation and operation of a PAC, which was legally allowed to raise and spend money in unlimited amounts from otherwise prohibited sources to influence federal elections so long as it did not coordinate expenditures with a federal campaign.
Harber admitted, among other things, that he made and directed coordinated expenditures by the PAC to influence the election with $325,000 of political advertising opposing a rival candidate. The coordination of expenditures made them illegal campaign contributions to the authorized committee of Harber’s candidate, and Harber admitted that he knew this coordination of expenditures was an unlawful means of contributing money to a campaign committee. He further admitted that he used an alias and other means to conceal his action from inquiries by an official of the same political party as Harber’s candidate.
Harber further admitted that he told multiple lies when interviewed by the FBI concerning his activities.
This case was investigated by the FBI’s Washington Field Office, Northern Virginia Resident Agency. The case is being prosecuted by Richard C. Pilger, Director of the Election Crimes Branch of the Criminal Division’s Public Integrity Section, and Chief Mark D. Lytle of the Financial Crimes and Public Corruption Unit of the Eastern District of Virginia.
Two U.S. Army Sergeants Plead Guilty to Taking Bribes While Deployed in AfghanistanRead the Press Release
Two sergeants with the U.S. Army have pleaded guilty for accepting bribes from Afghan truck drivers at Forward Operating Base Gardez, Afghanistan (FOB Gardez), in exchange for allowing the drivers to take thousands of gallons of fuel from the base for resale on the black market, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia.
James Edward Norris, 41, of Fort Irwin, California, and Seneca Darnell Hampton, 31, of Fort Benning, Georgia, each pleaded guilty before Chief U.S. District Judge Clay D. Land in the Middle District of Georgia to one count of conspiracy to commit bribery of a public official and one count of money laundering.
During their guilty pleas, Hampton and Norris admitted to conspiring with other soldiers stationed at FOB Gardez to solicit and accept approximately $2,000 per day from local Afghan truck drivers in exchange for permitting the truck drivers to take thousands of gallons of fuel from the base. Hampton admitted that he concealed the scheme by attributing the increase in fuel usage to colder winter temperatures.
Hampton and Norris admitted that they shipped the bribe money back to the United States in tough boxes. Norris further admitted that on June 7, 2013, after returning from deployment, he purchased a 2008 Cadillac Escalade with $31,000 cash derived from the bribery scheme. Hampton further admitted that on May 20, 2013, after returning from deployment, he purchased a 2013 GMC Sierra with $29,000 cash derived from the bribery scheme.
As part of their plea agreements, Hampton and Norris agreed to forfeit the proceeds they received from the bribery scheme and the vehicles they purchased with those proceeds, as well as to pay full restitution. Sentencing has been scheduled for May 21, 2015.
The case is being investigated by the U.S. Army Criminal Investigation Command, the Office of the Special Inspector General for Afghanistan Reconstruction, the Defense Criminal Investigative Service and the Defense Contract Audit Agency, Investigative Support Division. The case is being prosecuted by Trial Attorney John Keller of the Criminal Division’s Public Integrity Section.
Sisters-in-Law and Former Tax Preparers Plead Guilty to Tax Fraud ConspiracyRead the Press Release
On Feb. 10, two former tax return preparers pleaded guilty in the U.S. District Court for the Middle District of Georgia to conspiring to defraud the United States by filing fraudulent tax returns, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Department of Justice’s Tax Division.
According to court documents, from at least January 2008 through at least March 2010, sisters-in-law Angela Miller and Lee Lynwood operated a tax return preparation business and conspired to inflate their clients’ federal tax refunds by manipulating the tax returns to reflect false business income or loss amounts and to claim deductions and credits, such as the First-Time Homebuyer Credit, that the clients were not entitled to receive.
“The Department of Justice’s Tax Division, working with Internal Revenue Service-Criminal Investigation and the Offices of the U.S. Attorneys, is committed to prosecuting to the fullest extent of the law tax return preparers who willfully assist in the preparation and filing of false and fraudulent returns,” said Principal Deputy Assistant Attorney General Ciraolo.
Miller and Lynwood also took steps to continue their scheme by impeding the Internal Revenue Service’s (IRS) efforts to shut down their ability to electronically file tax returns. In May 2008, the IRS notified Miller and Lynwood that their Electronic Filing Number (EFIN) for filing electronic returns at their tax preparation business, A&L Tax Services, was being revoked. Miller and Lynwood then had an acquaintance apply for another EFIN in her name, which Miller and Lynwood used to continue to file fraudulent tax returns and conceal their preparation from the IRS. Further, Miller and Lynwood changed the name of their business to B&F Tax Services and caused a bank account for the B&F Tax Services to be opened in the acquaintance’s name as a nominee.
Miller and Lynwood filed false tax returns that claimed more than $130,000 in tax refunds during the course of the conspiracy. Miller and Lynwood each face a statutory maximum term of five years in prison, three years of supervised release and a fine of up to $250,000. Sentencing has not yet been scheduled.
Principal Deputy Assistant Attorney General Ciraolo commended the special agents of IRS-Criminal Investigation and the D.C. Office of Tax and Revenue Criminal Investigation Division, who investigated the case, as well as Tax Division Trial Attorneys Hayden M. Brockett and Alex R. Effendi, who are prosecuting the case. Ciraolo also thanked the U.S. Attorney’s Office for the Middle District of Georgia for their assistance.
Additional information about the Tax Division and its enforcement efforts can be found on the division’s website.
Presidential Task Force Releases Implementation Plan for the National Strategy for Combating Wildlife TraffickingRead the Press Release
Recognizing that wildlife trafficking is an urgent conservation and national security threat, the Departments of Justice, State and the Interior today unveiled the implementation plan for the U.S. National Strategy for Combating Wildlife Trafficking. The agencies are co-chairs of the president’s Task Force on Combating Wildlife Trafficking which comprises seventeen federal agencies and offices.
The implementation plan builds upon the Strategy, which was issued by President Obama on Feb. 11, 2014, and reaffirms our nation’s commitment to work in partnership with governments, local communities, nongovernmental organizations and the private sector to stem the illegal trade in wildlife.
“Illegal wildlife trafficking has become one of the most profitable types of transnational organized crime, and its impact has been devastating,” said Assistant Attorney General for the Environment and Natural Resources Division John C. Cruden. “Wildlife trafficking threatens security, undermines the rule of law, fuels corruption, hinders sustainable economic development, and contributes to the spread of disease. This illicit trade is decimating many species worldwide, and some like rhinoceroses, elephants, and tigers face extinction in our lifetimes if we do not reverse this trend. The Justice Department is committed to its role in President Obama’s national strategy to combat wildlife trafficking, both by enforcing our nation’s wildlife laws like the Lacey Act and the Endangered Species Act and by working closely with other federal agencies to assist our foreign partners’ enforcement efforts.”
Incorporating recommendations from the secretary of the Interior’s Advisory Council on Wildlife Trafficking, the framework will guide and direct new and ongoing efforts of the task force in executing the Strategy.
Building upon the Strategy’s three objectives – strengthening enforcement, reducing demand for illegally traded wildlife, and expanding international cooperation – the plan lays out next steps, identifies lead and participating agencies for each objective, and defines how progress will be measured.
Some of those steps included in the implementation plan are:
- Continuing efforts to implement and enforce administrative actions to strengthen controls over trade in elephant ivory in the United States;
- Leveraging partnerships to reduce demand both domestically and abroad; and
- Strengthening enforcement capacity, cooperation, and partnerships with counterparts in other countries.
The Task Force has made significant strides toward meeting the objectives since the National Strategy was announced one year ago. A fact sheet describing these important steps related to law enforcement, demand reduction and international cooperation can be found here.
The United States is also using trade agreements and trade policy to press for groundbreaking commitments on wildlife trafficking and wildlife conservation in the Trans-Pacific Partnership Agreement (TPP) with eleven other countries in the Asia-Pacific region and the Transatlantic Partnership Agreement (T-TIP) with the European Union (EU). These commitments would be fully enforceable, including through recourse to trade sanctions, with far-reaching benefits for species like rhinos, sharks, and pangolins.
Read more about the Justice Department’s work to combat wildlife trafficking.
Northwest Arkansas Man Found Guilty of Federal Tax FraudRead the Press Release
A Springdale, Arkansas, man was convicted by a jury today in the U.S. District Court located in Fayetteville, Arkansas, of tax crimes, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Conner Eldridge of the Western District of Arkansas.
Doyle Smith, 56, was found guilty following a three-day trial before the Honorable U.S. District Judge Timothy L. Brooks of four counts of subscribing and filing a false tax return, one count of corruptly endeavoring to obstruct and impede the administration of the internal revenue laws and one count of presenting a fictitious financial obligation.
According to evidence introduced at trial, in 2008 and 2009, Smith submitted four false individual federal tax returns for tax years 2005 through 2008, which falsely reported a total of more than $1.4 million in fictitious federal tax withholdings. Based on these fictitious withholding amounts, Smith claimed a total of $1,021,457 in income tax refunds to which he was not entitled to receive for those tax years. Smith also submitted false claims and correspondence to both the Internal Revenue Service (IRS) and third-parties in an attempt to cause the IRS and U.S. Treasury to pay his debts to third parties and to obstruct the IRS’ tax administration efforts. For example, in January 2010, Smith mailed to the Department of Arkansas Finance and Administration a fictitious financial instrument titled “U.S. Treasury Trust Account Money Order.” This fictitious document purportedly obligated U.S. Treasury funds in the amount of $129,439 to pay for outstanding sales taxes that Smith owed to the state of Arkansas.
“Today’s jury verdict makes it clear that individuals who steal from the government through the filing of false and fraudulent claims for refunds and fictitious financial instruments will be pursued and prosecuted to the fullest extent of the law,” said Principal Deputy Assistant Attorney General Ciraolo. “The Department of Justice’s Tax Division is committed to working with its federal and state law enforcement partners to identify those who seek to manipulate and abuse our federal tax system, and to hold such individuals accountable.”
“This case involves a scheme in which the defendant attempted to steal taxpayer money from the U.S. Treasury for his own personal gain,” said U.S. Attorney Eldridge. “This type of fraud is a serious crime, and an insult to hard-working, law abiding citizens and taxpayers. Today’s conviction sends a strong message that our office and our law enforcement partners will aggressively pursue fraud wherever we find it.”
“At the IRS, protecting taxpayer money is a matter we take extremely seriously,” said Special Agent in Charge Christopher A. Henry of the IRS-Criminal Investigation. “An integral part of the agency’s mission involves detecting and catching fraudulent tax refund claims. The object of these schemes is to defraud the government and the taxpaying public. Today’s conviction should serve as a warning to those that would attempt to enrich themselves by fraudulent means.”
“It is the Treasury Inspector General for Tax Administration’s (TIGTA) mission to protect the integrity of the Internal Revenue Service and promote the fair administration of our federal tax system,” said Special Agent in Charge Ruben Florez of TIGTA’s Dallas Field Division. “TIGTA and its law-enforcement partners will vigorously investigate individuals that attempt to corruptly interfere with the administration of the internal revenue laws through fraudulent means, and will do everything within its power to ensure that those involved will be prosecuted to the fullest extent of the law.”
In this case, the statutory maximum sentences are three years in prison and a $250,000 fine for each count of filing a false tax return; three years in prison and a $250,000 fine for the count of impeding the internal revenue laws; and 25 years in prison and a $250,000 fine for the count of presenting a fictitious financial obligation.
Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Eldridge commended the special agents of IRS-Criminal Investigation and the TIGTA who investigated the case, as well as Trial Attorneys Robert Kemins and David Zisserson of the Tax Division who are prosecuting the case.
Former Contracting Officer and Contractor Charged with Bribery Scheme in Connection with Awarding of U.S. Postal Service ContractsRead the Press Release
A former U.S. Postal Service contracting officer, along with a mail delivery contractor, were indicted today for engaging in a scheme to defraud the Postal Service through bribery and kickbacks in connection with the awarding of contracts to deliver the mail.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland and Inspector General David C. Williams of the U.S. Postal Service made the announcement.
Gregory Cooper, 59, of Glenn Dale, Maryland, a former U.S. Postal Service Contracting Officer Representative and Purchasing and Supply Management Specialist, and Barbara Murphy, 51, of Rocky Mount, North Carolina, the owner and operator of MC&G Trucking LLC and ER&R Transportation, were charged today in a ten-count indictment unsealed in the District of Maryland. Both Cooper and Murphy are charged with one count of conspiracy and five counts of honest services wire fraud, and each is separately charged in a single count of bribery. Cooper is also charged with one count of executing a false document and one count of making false statements.
According to the indictment, from January 2011 through July 2012, Cooper allegedly solicited and accepted bribes and kickbacks from Murphy in exchange for helping her win contracts for delivery of the mail. Specifically, the indictment alleges that Cooper accepted, among other things, cash deposits into his checking account, payments against his car loan and cell phone bills and a college tuition payment on behalf of his daughter. In exchange, Cooper allegedly assumed the responsibility for reviewing the contracts on which Murphy bid from his subordinates, recommended that Murphy be awarded nine Postal Service contracts worth $1.5 million, provided Murphy with confidential bid information and assumed direct oversight over Murphy’s contracts from his subordinates. The indictment further alleges that Cooper made false statements to investigators regarding his allegedly corrupt relationship with Murphy and executed a false financial disclosure document failing to disclose the bribes he had accepted from Murphy.
The charges and allegations contained in the indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.
This case was investigated by the U.S. Postal Service Office of the Inspector General. The case is being prosecuted by Trial Attorneys Maria Lerner and Mark Cipolletti of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Arun Rao of the District of Maryland.
AstraZeneca to Pay $7.9 Million to Resolve Kickback AllegationsRead the Press Release
AstraZeneca LP, a pharmaceutical manufacturer based in Delaware, has agreed to pay the government $7.9 million to settle allegations that it engaged in a kickback scheme in violation of the False Claims Act, the Justice Department announced today. AstraZeneca markets and sells pharmaceutical products in the United States, including a drug sold under the trade name Nexium.
“We will continue to pursue pharmaceutical companies that pay kickbacks to pharmacy benefit managers,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “Hidden financial agreements between drug manufacturers and pharmacy benefit managers can improperly influence which drugs are available to patients and the price paid for drugs.”
The settlement resolves allegations that AstraZeneca agreed to provide remuneration to Medco Health Solutions, a pharmacy benefit manager, in exchange for Medco maintaining Nexium’s “sole and exclusive” status on certain Medco formularies and through other marketing activities related to those Medco formularies. The United States alleged that AstraZeneca provided some or all of the remuneration to Medco through price concessions on drugs other than Nexium, namely on Prilosec, Toprol XL and Plendil. The United States contended that this kickback arrangement between AstraZeneca and Medco violated the Federal Anti-Kickback statute, and thereby caused the submission of false or fraudulent claims for Nexium to the Retiree Drug Subsidy Program.
“By this agreement we are making important strides in holding drug manufacturers accountable not only in Delaware but nationwide,” said U.S. Attorney Charles M. Oberly III of the District of Delaware. “I am proud of the tireless work by this office to investigate this case.”
“Pharmaceutical companies that pay kickbacks in order to boost profits will be held accountable for their improper conduct,” said Special Agent in Charge Nick DiGiulio of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We will continue to crack down on kickback arrangements, which can undermine drug choices for patients and corrode the public’s trust in the health care system.”
This civil settlement resolves a lawsuit filed under the qui tam, or whistleblower, provision of the False Claims Act, which allows private citizens with knowledge of false claims to bring civil actions on behalf of the government and to share in any recovery. The lawsuit was filed by former AstraZeneca employees Paul DiMattia and F. Folger Tuggle, who will collectively receive $1,422,000.
The settlement with AstraZeneca was the result of a coordinated effort among the Civil Division, the U.S. Attorney’s Office for the District of Delaware, the HHS-OIG, the U.S. Postal Service’s Office of Inspector General and the FBI Wilmington, Delaware, Resident Agency Office and the FBI’s Major Provider Response Team.
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 $23.6 billion through False Claims Act cases, with more than $15.1 billion of that amount recovered in cases involving fraud against federal health care programs.
The False Claims Act lawsuit was filed in the U.S. District Court for the District of Delaware and is captioned United States ex rel. DiMattia et al. v. AstraZeneca LP et al. No. 10-910 (D. Del.). The claims settled by this agreement are allegations only; there has been no determination of liability.
U.S. Justice Department and North Carolina Attorney General Reach Settlement to Resolve Allegations of Auto Lending Discrimination by "Buy Here, Pay Here" Used-Car DealershipsRead the Press Release
Settlement Requires Substantial Improvements to Dealerships’ Policies and Provides $225,000 in Relief to Affected Customers
The U.S. Department of Justice Civil Rights Division, the U.S. Attorney’s Office for the Western District of North Carolina and the North Carolina Department of Justice today announced a settlement of the federal government’s first-ever discrimination lawsuit involving “buy here, pay here” auto lending. The settlement, which is subject to court approval, was filed today in the U.S. District Court for the Western District of North Carolina.
The settlement resolves a lawsuit, filed in January 2014 by the Department of Justice and the State of North Carolina, alleging that Auto Fare Inc. and Southeastern Auto Corp., two “buy here, pay here” used-car dealerships in Charlotte, North Carolina, and their owner – violated the federal Equal Credit Opportunity Act by engaging in a pattern or practice of “reverse redlining” by intentionally targeting African-American customers for unfair and predatory credit practices in the financing of used car purchases. The state of North Carolina also alleged that the dealerships’ actions violated the state’s Unfair and Deceptive Trade Practices Act. The settlement came after the court denied the dealerships’ motion to dismiss the case and agreed that reverse redlining by an auto lender is illegal discrimination.
“It is not only illegal, but also fundamentally wrong, to target borrowers of color for predatory loans and exploit their need for a car to do essential tasks such as getting to work,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “Combating discrimination in all segments of the auto lending market is, and will remain, a top priority for the Civil Rights Division. I am pleased that these dealerships have agreed to reform problematic lending and servicing practices and adopt policies that promote responsible lending. I hope that other buy here, pay here dealerships will evaluate their practices in light of this settlement.”
The settlement requires the dealerships to implement a number of specific practices to ensure that the terms of their loans and repossession practices are no longer unfair and predatory. The required changes include: limiting projected monthly payments to no more than 25% of a borrower’s income; requiring interest rates to be at least five percentage points below the state’s rate cap; mandating a lower interest rate for borrowers who have specified evidence of lower credit risk; requiring competitive sales prices; prohibiting hidden fees on top of the required down payment; prohibiting repossessions until at least two consecutive missed payments; providing down payment refunds to borrowers who quickly go into default; requiring strict compliance with provisions of state repossession law enacted to protected consumers; providing borrowers improved disclosures at the time of sale (including disclosing the presence of any GPS, or automatic shut off, device); allowing borrowers to obtain an independent inspection of the car before completing the purchase; and providing borrowers improved notices before repossession.
“All consumers deserve to be treated fairly when they buy a car,” said North Carolina Attorney General Roy Cooper. “We hope this case sends a strong message that car dealers cannot use race when targeting buyers with overpriced cars and oppressive loans.”
The settlement also requires defendants to establish a $225,000 settlement fund to compensate victims of their past discriminatory and predatory lending.
“Predatory lending practices that lock consumers into contracts they cannot afford are illegal and can spell financial disaster for borrowers of lower income or challenged credit history,” said U.S. Attorney Anne M. Tompkins of the Western District of North Carolina. “Today’s settlement ensures that all customers of Auto Fare Inc. and Southeastern Auto Corp. will have equal access to credit regardless of their race.”
The lawsuit alleged that the two dealerships’ sales prices, down payments, and interest rates were disproportionately high compared to other subprime used-car dealers. Because the dealerships did not meaningfully assess the customers’ creditworthiness or ability to repay, their rates of default and repossession were disproportionately high. Additionally, the dealerships engaged in repossessions when customers were not in default.
The U.S. Department of Justice’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Right Division. Since the Fair Lending Unit was established in February 2010, it has filed or resolved 36 lending matters under the Fair Housing Act, Housing Equal Credit Opportunity Act (ECOA) and the Servicemembers Civil Relief Act. The settlements in these matters provide for over $1.2 billion in monetary relief for impacted communities and individual borrowers. The Attorney General’s annual reports to Congress on ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications.
The Civil Rights Division and other agencies involved in this matter are members of the Financial Fraud Enforcement Task Force. President Obama established this task force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
The settlement provides for an independent party to contact victims and distribute payments of compensation at no cost to borrowers whom the United States Department of Justice and the North Carolina Department of Justice identify as victims of defendants’ conduct. Former customers who are eligible for compensation from the settlement will be contacted by mail later this year. Individuals who believe that they may have been victims of illegal conduct by Auto Fare or Southeast Auto and have questions about the settlement may contact the United States Department of Justice and the North Carolina Department of Justice by calling 1-800-896-7743, mailbox 92, or emailing [email protected].
A copy of the proposed order and other documents related to this lawsuit, as well as additional information about fair lending enforcement by the United States Department of Justice, can be obtained from the United States Department of Justice website at www.justice.gov/fairhousing.
Three Brandon, Mississippi, Men Sentenced for Their Roles in the Racially Motivated Assault and Murder of an African-American ManRead the Press Release
Victim Died After Being Run Over by Truck
The Justice Department announced today that Deryl Paul Dedmon, 22, John Aaron Rice, 21, and Dylan Wade Butler, 23, all of Brandon, Mississippi, were sentenced today in U.S. District Court in Jackson for their roles in federal hate crime charges in connection with an assault culminating in the death of James Craig Anderson, an African-American man, in the summer of 2011. Dedmon, Rice and Butler each previously pleaded guilty to one count of conspiracy and one count of violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act for their roles in the death-resulting assault of Anderson, 47, of Jackson, Mississippi. Dedmon was sentenced to 600 months; Rice was sentenced to 220 months; and Butler was sentenced to 84 months.
“The defendants targeted African-American people they perceived as vulnerable for heinous and violent assaults – hate crimes, motivated solely by race, that shook an entire community and claimed the life of an innocent man,” said Attorney General Eric Holder. “These sentences bring a fitting end to the case against these three men. Although nothing can erase the grievous harms inflicted, or ease the grief of the victim’s friends and loved ones, this outcome holds those responsible for these horrific crimes fully to account. And it illustrates the Justice Department’s steadfast commitment to combating hate crimes, supporting victims, and seeing that justice is done – in every case and circumstance.”
“This case demonstrates that the Department of Justice will vigorously pursue those who commit racially motivated assaults and will cast a broad net to ensure that all who commit such acts are brought to justice,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “These sentences are just the first three of ten in what we hope will help provide some closure to the victim’s family and to the larger community affected by Mr. Anderson’s death.”
“Hate crimes not only injure the victims and their families, but intimidate entire communities,” said U.S. Attorney Gregory K. Davis of the Southern District of Mississippi. “The sentences imposed today send a clear message to the community that this office, in partnership with department’s Civil Rights Division, will prioritize and aggressively prosecute hate crimes and other civil rights violations in Southern Mississippi.”
“The guilty pleas and resulting sentences handed down today are the result of the tremendous efforts by men and women in law enforcement who worked on this case,” said Special Agent in Charge Donald Alway of the FBI in Mississippi. “The FBI takes very seriously its responsibility to protect the civil rights of all Americans, and remains committed to its pursuit of justice for anyone who is deprived of those rights."
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. The defendants further admitted that on June 25, 2011, they and others attended a birthday party in Puckett, Mississippi, for a mutual friend. During the party, the defendants and others talked about going to Jackson to harass and assault African Americans.
By the early morning hours of June 26, 2011, the defendants and four other co-conspirators agreed to carry out their plan to find, harass and assault African Americans. At around 4:15 a.m., Rice, Butler and two co-conspirators drove to west Jackson in a white Jeep with the understanding that Dedmon and two other co-conspirators would join them a short time later. Rice, Butler and the other two occupants of the Jeep then drove around west Jackson and threw beer bottles from the moving vehicle at African American pedestrians they encountered.
At approximately 5:00 a.m., Rice, Butler and the other two occupants of the Jeep spotted Anderson in a motel parking lot off Ellis Avenue. The occupants of the Jeep decided that Anderson would be a good target for an assault because he was African-American and appeared to be intoxicated. Rice and another co-conspirator decided to get out of the Jeep to distract Anderson while they waited for Dedmon and the other co-conspirators to arrive. After Dedmon and the other two co-conspirators arrived in Dedmon’s Ford F250 truck, Dedmon and Rice physically assaulted Anderson. Rice first punched Anderson in the face with sufficient force to knock Anderson to the ground, and then Dedmon punched Anderson in the face multiple times while he was on the ground. After the assault, Rice, Butler and two co-conspirators left the motel parking lot in the Jeep. As they left, one of the occupants of the Jeep yelled, “White Power!” Prior to getting back into his truck, Dedmon responded by also yelling “White Power!”
Once back in his truck, Dedmon deliberately used his truck to run over Anderson, causing injuries which resulted in Anderson’s death. After Anderson’s death, a number of the co-conspirators including Rice and Butler agreed to, and did, give false statements to law enforcement officials about the nature of their interactions with Anderson.
Seven other defendants involved in related cases, William Kirk Montgomery, 25, of Puckett, Mississippi, Sarah Adelia Graves, 21, of Crystal Springs, Mississippi, Shelby Brooke Richards, 21, of Pearl, Mississippi, John Louis Blalack, 20, Jonathan Kyle Gaskamp, 22, Robert Henry Rice, 24, and Joseph Paul Dominick, 23, all of Brandon, Mississippi, are awaiting sentencing.
This case was the result of a cooperative effort among the Justice Department’s Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Mississippi and the Hinds County, Mississippi, District Attorney’s Office. This case was investigated by the Jackson Division of the FBI and the Jackson Police Department. It is being prosecuted by Trial Attorney Sheldon L. Beer and Deputy Chief Paige M. Fitzgerald of the Civil Rights Division of the Department of Justice, and Glenda R. Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi.
Robertson County Schools Reach Settlement with the Department of Justice to Further School DesegregationRead the Press Release
Today, the Department of Justice reached a settlement agreement with the Robertson County, Tennessee, school district to resolve the department’s determination that the district had yet to fulfill its desegregation obligations in the areas of student assignment and school construction. The department identified a series of district decisions that, over decades, impeded desegregation by building and expanding almost all-white schools while leaving African-American students disproportionately in overcrowded schools with portable classrooms.
As a school system formerly segregated by law, the district has a duty to remedy past discrimination and avoid actions that reestablish segregated schools. The district also has an ongoing obligation under federal civil rights laws to treat all students equitably regardless of race or ethnicity. Under the agreement, all Robertson County students will be assigned to schools, and school facilities will be constructed and maintained, in a desegregated and non-discriminatory manner.
In addition, the agreement ensures that:
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the new elementary school set to open next year will be desegregated,
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overcrowding at predominately minority schools is addressed,
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anticipated changes in student assignment to middle and high schools will further desegregation, and
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cultural sensitivity and competency training is provided to teachers and staff.
“We are pleased that the Robertson County Schools has committed to take steps to provide all students with equitable educational opportunities regardless of race,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “We will work closely with the district as it implements the agreement and develops an effective student assignment plan for its middle and high schools.”
Promoting school desegregation is a priority of the department’s Civil Rights Division. Additional information about the Division is available at www.justice.gov/crt.
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Owner of Miami Home Health Company Pleads Guilty for Role in $6.9 Million Medicare Fraud SchemeRead the Press Release
The owner of a Miami home health care agency pleaded guilty today in connection with a $6.9 million Medicare fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office made the announcement.
Orelvis Olivera, 45, of Miami, pleaded guilty to one count of conspiracy to commit health care fraud before U.S. District Judge Robert N. Scola Jr. of the Southern District of Florida. A sentencing hearing is scheduled for April 21, 2015.
According to his plea documents, Olivera was an owner and operator of Acclaim Home Healthcare Inc. (Acclaim Home Health), a Miami home health care agency that purported to provide home health and therapy services to Medicare beneficiaries. Olivera admitted that he and his co-conspirators operated Acclaim Home Health for the purpose of billing the Medicare program for, among other things, expensive physical therapy and home health care services that were not medically necessary.
Olivera further admitted that he paid kickbacks and bribes to patient recruiters in exchange for patient referrals, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries. Olivera admitted that he and his co-conspirators used these prescriptions, POCs and medical certifications to fraudulently bill the Medicare program for home health care services.
From May 2008 to September 2014, Acclaim Home Health billed Medicare approximately $6.9 million for fraudulent claims, and was paid approximately $5.7 million for the same.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by Trial Attorney Kelly Graves of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Iowa Home Care Company to Pay $5.63 Million to Settle False Claims Act AllegationsRead the Press Release
ResCare Iowa Inc. has agreed to pay $5.63 million to the United States and the state of Iowa to resolve allegations that it violated the False Claims Act by submitting false home healthcare billings to the Medicare and Medicaid programs, the Department of Justice announced today. ResCare Iowa – a subsidiary of Louisville, Kentucky, based ResCare Inc. – provides home healthcare services to patients in the state of Iowa.
“Home health agencies that bill Medicare and Medicaid must follow the rules,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “This settlement demonstrates the Department’s commitment to safeguarding taxpayer dollars and ensuring that they are used to provide medically necessary services to federal health care beneficiaries.”
The rules of both Medicare and the state of Iowa’s Medicaid program require an independent physician to certify that home healthcare services are medically necessary and to order the specific type and amount of healthcare services to be provided by the home health agency. Additionally, since 2011, Medicare and Iowa Medicaid rules require these independent physicians to perform an in-person “face-to-face” assessment of each patient before the home health agency can bill the government for any home healthcare services. The settlement resolves allegations that between 2009 and 2014, ResCare Iowa billed the government for services provided to Medicare and Medicaid patients in Iowa without documenting compliance with these requirements.
“We commenced this investigation due to concerns that this provider was not complying with the rules and was not submitting accurate claims for payment,” said U.S. Attorney Kevin W. Techau of the Northern District of Iowa. “When the government pays for home-based medical services, we are dedicated to ensuring the money is well spent and medically deserving patients receive the care to which they are entitled.”
“Home health care providers that receive Medicare and Medicaid funds must abide by rules designed to ensure taxpayer funds are spent properly and that patients receive the appropriate care,” said Special Agent in Charge Gerald T. Roy of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We will continue to hold health care providers accountable for submitting improper claims.”
Medicaid is jointly funded by the states and the federal government. The state of Iowa, which paid part of the Medicaid funds at issue, will receive $2.32 million of the settlement amount.
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 $23.6 billion through False Claims Act cases, with more than $15.1 billion of that amount recovered in cases involving fraud against federal health care programs.
This settlement was the result of a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the Northern District of Iowa, HHS-OIG and the Iowa Attorney General’s Office. The claims settled by this agreement are allegations only, and there has been no determination of liability.
Former District of Columbia Technology Executive Pleads Guilty to Failing to Pay Employment TaxesRead the Press Release
The former operator of the wireless technology company Distributive Networks LLC (Distributive Networks) pleaded guilty today in federal court to willfully failing to pay more than $900,000 in employment taxes, Acting Deputy Assistant Attorney General Larry J. Wszalek of the Justice Department’s Tax Division and the Internal Revenue Service (IRS) announced.
Kevin Bertram pleaded guilty to a criminal information filed in the U.S. District Court for the District of Columbia. According to court documents, Bertram operated Distributive Networks from 2004 through 2010. Distributive Networks was a wireless technology company located in the District of Columbia.
According to court documents, Bertram was responsible for Distributive Networks’ federal tax obligations and he failed to account for and pay employment taxes due and owed to the IRS. From late-2007 through mid-2009, Bertram failed to file IRS Forms 941 (Employer’s Quarterly Federal Tax Returns) and failed to pay $927,922 in employment taxes that he had withheld from his employees’ wages. These taxes included federal income, social security and Medicare taxes that the company was required to withhold from its employees’ wages, as well as the company’s portion of social security and Medicare taxes.
As a condition of the plea agreement, Bertram is required to make restitution to the IRS. Bertram also faces a statutory maximum sentence of five years in prison and a maximum fine of $250,000. U.S. District Court Judge Amy Berman Jackson set sentencing for May 5.
The case was investigated by special agents from IRS-Criminal Investigation and prosecuted by Trial Attorneys Melissa S. Siskind and Jeffrey A. McLellan of the Tax Division.
District Court Enters Permanent Injunction Against San Francisco Soy and Tofu Company and Senior Officers to Stop Distribution of Adulterated ProductsRead the Press Release
The U.S. District Court for the Northern District of California entered a consent decree of permanent injunction against Fong Kee Tofu Co. Inc., Yan Hui Fong, the firm’s co-owner and chief executive officer, and Jen Ying Fong and Suny Fong, co-owners and corporate officers, to prevent the distribution of adulterated tofu and other soy food products, the Department of Justice announced today.
The department filed a complaint in the Northern District of California on Jan. 23 at the request of the U.S. Food and Drug Administration (FDA). The complaint alleges that the defendants have a history of processing soy food products under insanitary conditions. As detailed in the complaint, the company receives, prepares, processes, manufactures, labels, packs, holds and distributes soy food products including soy drinks, firm tofu, soft tofu, fried tofu balls (oil bean cake) and soybean cake. The complaint also alleges that Yan Hui Fong, Suny Fong and Jen Yin Fong are Fong Kee Tofu’s corporate officers with the authority and responsibility for preventing and correcting violations of federal law at the company.
In conjunction with the filing of the complaint, the defendants agreed to settle the litigation and to be bound by a permanent injunction that requires Fong Kee Tofu to cease all operations and requires that if the defendants wish to resume manufacturing and distributing food in the future, the FDA first must determine that the firm’s manufacturing practices have come into compliance with the law.
“Fong Kee Tofu was repeatedly informed that the sanitation practices at its facility were deficient,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “The failure to make sure that its facility was operating under sanitary conditions could be a serious risk to the public health and needed to be remedied.”
According to the complaint, FDA inspectors in 2014 observed pigeons on top of plastic-wrapped raw soybean pallets and they observed insects flying around the area used to process firm tofu. The complaint further alleges that employees were observed using utensils that had not been properly sanitized in food production and packing tofu without washing or sanitizing their hands after coming into contact with insanitary objects. In addition, according to the complaint, residue was observed on equipment used in processing tofu even after the equipment had been cleaned. Under federal law, food manufacturers are required to comply with current good manufacturing practices to ensure that all food distributed into interstate commerce is not adulterated.
The government is represented by Counsel Melanie Singh of the Civil Division’s Consumer Protection Branch, with the assistance of Associate Chief Counsel for Enforcement Deeona Gaskin of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.
Attorney General Holder Statement on the Resignation of Tim Purdon as the United States Attorney of the District of North DakotaRead the Press Release
Attorney General Eric Holder released the following statement on the resignation of U.S. Attorney Tim Purdon:
“Tim Purdon has been an outstanding United States Attorney, a fierce advocate for the people of North Dakota and a strong national leader whose efforts to improve public safety in Indian Country have made a profound difference – and touched countless lives,” said Attorney General Eric Holder. “Throughout his tenure, Tim has distinguished himself as a skilled attorney and a consummate public servant, rising to challenges as diverse as human trafficking, violent crime, drug trafficking and fraud. His work to forge close partnerships with tribal leaders – and to develop and implement an Anti-Violence Strategy for Indian Country – have provided a model for success, increased federal prosecutions on North Dakota’s reservations and laid a strong foundation on which future efforts can be built. His exceptional leadership and wise counsel at the national level – advising me and other Justice Department officials as Chair of the Native American Issues Subcommittee – have had an important and enduring impact. And although we are all sorry to see him go, I am proud to join Tim’s dedicated colleagues in thanking him for his exemplary service as United States Attorney, and wishing him all the best as he begins a new chapter in his career.”
Service Members to Receive over $123 Million for Unlawful Foreclosures Under the Servicemembers Civil Relief ActRead the Press Release
The Justice Department announced today that under its settlements with five of the nation’s largest mortgage servicers, 952 service members and their co-borrowers are eligible to receive over $123 million for non-judicial foreclosures that violated the Servicemembers Civil Relief Act (SCRA). The five mortgage servicers are JP Morgan Chase Bank N.A. (JP Morgan Chase); Wells Fargo Bank N.A. and Wells Fargo & Co. (Wells Fargo); Citi Residential Lending Inc., Citibank, NA and CitiMortgage Inc. (Citi); GMAC Mortgage, LLC, Ally Financial Inc. and Residential Capital LLC (GMAC Mortgage); and BAC Home Loans Servicing LP formerly known as Countrywide Home Loans Servicing LP (Bank of America).
In the first round of payments under the SCRA portion of the 2012 settlement known as the National Mortgage Settlement (NMS), 666 service members and their co-borrowers will receive over $88 million from JP Morgan Chase, Wells Fargo, Citi and GMAC Mortgage. The other 286 service members and their co-borrowers are receiving over $35 million from Bank of America through an earlier settlement. The non-judicial foreclosures at issue took place between Jan. 1, 2006, and Apr. 4, 2012.
“These unlawful judicial foreclosures forced hundreds of service members and their families out of their homes,” said Acting Associate Attorney General Stuart F. Delery. “While this compensation will provide a measure of relief, the fact is that service members should never have to worry about losing their home to an illegal foreclosure while they are serving our country. The department will continue to actively protect our service members and their families from such unjust actions.”
“We are very pleased that the men and women of the armed forces who were subjected to unlawful non-judicial foreclosures while they were serving our country are now receiving compensation,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “We look forward, in the coming months, to facilitating the compensation of additional service members who were subjected to unlawful judicial foreclosures or excess interest charges. We appreciate that JP Morgan Chase, Wells Fargo, Citi, GMAC Mortgage and Bank of America have been working cooperatively with the Justice Department to compensate the service members whose rights were violated.”
Section 533 of the SCRA prohibits non-judicial foreclosures against service members who are in military service or within the applicable post-service period, as long as they originated their mortgages before their period of military service began. Even in states that normally allow mortgage foreclosures to proceed non-judicially, the SCRA prohibits servicers from doing so against protected service members during their military service and applicable post-military service coverage period.
Under the NMS, for mortgages serviced by Wells Fargo, Citi and GMAC Mortgage, the identified service members will each receive $125,000, plus any lost equity in the property and interest on that equity. Eligible co-borrowers will also be compensated for their share of any lost equity in the property. To ensure consistency with an earlier private settlement, JP Morgan Chase will provide any identified service member either the property free and clear of any debt or the cash equivalent of the full value of the home at the time of sale, and the opportunity to submit a claim for compensation for any additional harm suffered, which will be determined by a special consultant, retired U.S. District Court Judge Edward N. Cahn. Payment amounts have been reduced for those service members or co-borrowers who have previously received compensation directly from the servicer or through a prior settlement, such as the independent foreclosure review conducted by the Office of the Comptroller of the Currency and the Federal Reserve Board. The Bank of America payments to identified service members with nonjudicial foreclosures were made under a 2011 settlement with the Department of Justice.
The NMS also provides compensation for two categories of service members: (1) those who were foreclosed upon pursuant to a court order where the mortgage servicer failed to file a proper affidavit with the court stating whether or not the service member was in military service; and (2) those service members who gave proper notice to the servicer, but were denied the full benefit of the SCRA’s 6% interest rate cap on pre-service mortgages. The service members entitled to compensation for these alleged violations will be identified later in 2015.
The following chart shows the number of service members who will be compensated by each of the servicers for the non-judicial foreclosures:
Amount of Money to be Distributed
Number of Service Members Eligible for Compensation
Bank of America
$35,369,756
286
Citi
$14,880,578
126
GMAC Mortgage
$13,720,588
113
JP Morgan Chase
$31,068,523
188
Wells Fargo
$28,358,179
239
TOTALS
$123,397,624
952
Borrowers should use the following contact information for questions about SCRA payments under the National Mortgage Settlement:
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Bank of America borrowers should call Rust Consulting, Inc., the settlement administrator, toll-free at 1-855-793-1370 or write to BAC Home Loans Servicing Settlement Administrator, c/o Rust Consulting, Inc., P.O. Box 1948, Faribault, MN 55021-6091.
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Citi borrowers should call Citi toll-free at 1-888-326-1166.
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GMAC Mortgage borrowers should call Rust Consulting Inc., the settlement administrator, toll-free at 1-866-708-0915 or write to P.O. Box 3061, Faribault, Minnesota 55021-2661.
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JPMorgan Chase borrowers should call Chase toll-free at 1-877-469-0110 or write to P.O. Box 183224, OH-7160/DOJ, Columbus, Ohio 43219-6009.
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Wells Fargo borrowers should call the Wells Fargo Home Mortgage Military Customer Service Center toll free at 1-877-839-2359.
Service members and their dependents who believe that their SCRA rights have been violated should contact an Armed Forces Legal Assistance office. To find the closest office, consult the military legal assistance office locator at http://legalassistance.law.af.mil and click on the Legal Services Locator. Additional information about the Justice Department’s enforcement of the SCRA and the other laws protecting service members is available at www.servicemembers.gov.
Today’s settlement was announced 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 including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
Note: The release is corrected to reflect that the other 286 service members and their co-borrowers are receiving over $35 million from Bank of America through an earlier settlement.
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Justice Department Resolves Lawsuit Against Sairam Enterprises Inc. for Discriminating Against Disabled Veteran with Service AnimalRead the Press Release
The Department of Justice reached an agreement today to resolve a lawsuit it brought against Sairam Enterprises Inc. LLC, which owns a hotel in Tulsa, Oklahoma. The proposed consent decree, which must be approved by the court, resolves a 2014 lawsuit that the department filed against Sairam Enterprises over allegations that it violated the Americans with Disabilities Act (ADA) when it denied a room at a Days Inn to a person with a service animal and his family.
The lawsuit alleged that on July 31, 2010, a veteran of the U.S. Air Force and the U.S. Marine Corps who relies on a service animal sought a hotel room at the Days Inn and Conference Center Tulsa which had a no pets policy. The Days Inn is now known as the Tuscany Inn. The veteran wanted a room for himself, his family and his service dog. His service dog is a German shepherd, which performs tasks related to his disabilities.
The complaint alleged that Sairam violated Title III of the ADA when it refused to rent the family a room because of the service dog. The ADA requires that hotels allow guests to stay with their service animals without being subjected to additional fees. Sairam denies the allegations.
Under the terms of the consent decree, Sairam will pay $5,000 to the veteran and his wife and will provide its employees with training regarding the ADA and the protections it provides to guests with service animals. The consent decree also requires Sairam to post signs and other announcements at its hotel stating its willingness to lodge travelers with service animals.
“The Department of Justice is determined to enforce the right of all people with disabilities to have equal access to hotels and other public accommodations,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division. “This settlement vindicates the rights of a veteran and his family and protects the rights of all future travelers with disabilities who pass through Tulsa.”
“The Northern District of Oklahoma is committed to protecting the rights of people with disabilities to ensure equal access to public accommodations,” said U.S. Attorney Danny C. Williams Sr. for the Northern District of Oklahoma. “My office will continue to work to eliminate barriers to the use of public accommodations and to protect every citizen’s rights.”
To read the consent decree and for more information on the ADA, visit the ADA website at www.ada.gov. Those interested in finding out more about this consent decree or the obligations of public entities under the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website. ADA complaints may be filed by email to [email protected].
Former Salem, Virginia, Police Officer Sentenced to 30 Months in Prison for Soliciting Sexual Favors in Exchange for Potential Lenient TreatmentRead the Press Release
A former police officer employed by the City of Salem, Virginia, and assigned to a U.S. Drug Enforcement Administration (DEA) task force, was sentenced today to 30 months in prison for soliciting and receiving sexual favors from a cooperating defendant in exchange for agreeing to recommend a favorable sentence to a federal prosecutor on the defendant’s behalf.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Adam S. Lee of the FBI’s Richmond Division and Special Agent in Charge Michael Tompkins of the Department of Justice, Office of the Inspector General’s Washington Field Office made the announcement after the sentence was imposed by Chief U.S. District Judge Glen E. Conrad of the Western District of Virginia.
Kevin C. Moore, 42, of Roanoke, Virginia, pleaded guilty on Dec. 16, 2014, to one count of bribery.
According to his plea agreement and accompanying statement of facts, between June and September 2014, while Moore was serving as a DEA task force officer, Moore informed a female cooperating defendant that he was in a position to help her with her pending federal methamphetamine trafficking case. In August 2014, for example, in a series of text messages with the cooperating defendant, Moore made clear that he could recommend a favorable sentence to a prosecutor on the cooperating defendant’s behalf in exchange for sexual favors. Moore then convinced the cooperating defendant to go for a ride in his official vehicle where she performed a sexual act with Moore.
As part of his guilty plea, Moore also admitted to engaging in similar conduct with two other female cooperating witnesses in federal drug investigations dating back to 2009. According to the statement of facts, Moore falsely informed these witnesses that he had convinced federal prosecutors not to charge them with federal criminal offenses that would carry significant prison sentences. Moore then solicited and received sexual favors from the witnesses in exchange for his purported assistance.
Moore was arrested on Oct. 10, 2014, without incident, and was suspended from the police department and DEA task force the same day. Moore was terminated from his employment with the City of Salem Police Department after pleading guilty in this case.
This case was investigated by the FBI and the Justice Department’s Office of the Inspector General, and was prosecuted by Trial Attorneys Charles R. Walsh and Robert J. Heberle of the Criminal Division’s Public Integrity Section.
Ambulance Company Manager Sentenced to 78 Months in Prison for $5.5 Million Medicare Fraud SchemeRead the Press Release
The general manager of a Southern California ambulance company was sentenced today to 78 months in federal prison for his role in a $5.5 million scheme to defraud the Medicare program.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG) Los Angeles Region and Assistant Director in Charge Bill Lewis of the FBI’s Los Angeles Field Office made the announcement.
Wesley Harlan Kingsbury, 34, of Bloomington, California, pleaded guilty on Sept. 15, 2014, to one count of conspiracy to commit health care fraud, one count of conspiracy to obstruct a Medicare audit and one count of making materially false statements to federal law enforcement officers. In addition to the prison sentence, U.S. District Judge Dale S. Fischer of the Central District of California ordered Kingsbury to pay $1,338,413 in restitution.
According to admissions made in connection with his guilty plea, Kingsbury was the general manager of Alpha Ambulance Inc. (Alpha), which specialized in the provision of non-emergency ambulance transportation services to Medicare beneficiaries, primarily to and from dialysis treatments. Kingsbury admitted that between April 2010 and July 2012, he conspired with the owners of Alpha, Alex Kapri and Aleksey Muratov, and the training supervisor, Danielle Medina, to bill Medicare for ambulance transportation services for individuals that did not need to be transported by ambulance. In addition, as general manager, Kingsbury instructed emergency medical technicians employed by Alpha to conceal the true medical condition of patients they were transporting by altering paperwork and creating false justifications for the transportation services.
In early 2012, Medicare notified Alpha that they would be subject to a Medicare audit. In response, Kingsbury admitted that he and his co-conspirators altered patient documentation to falsely justify the ambulance transportation services. Specifically, Kingsbury admitted that he and others used light tracing tables to trace over original documents and create falsified patient documentation for submission to Medicare. They then shredded the original patient documents.
Kingsbury and his co-conspirators submitted $5,522,079 in fraudulent claims to Medicare, and Medicare paid $1,338,413 on those claims.
Further, according to admissions in connection with Kingsbury’s guilty plea, in April 2012, Kingsbury was approached by law enforcement officers and asked to assist with the investigation into Alpha. Kingsbury disclosed to the owners of Alpha the names of the law enforcement officers who were conducting the investigation and the questions they had asked. On May 1, 2012, Kingsbury falsely denied to the law enforcement agents that he had disclosed that information to the owners of Alpha.
Kapri, Muratov and Medina pleaded guilty to conspiracy to commit health care fraud on Oct. 28, 2013. They were sentenced to 75 months, 108 months, and 30 months in prison, respectively.
The case was investigated by the FBI and the Los Angeles Region of HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The case was prosecuted by Trial Attorneys Blanca Quintero and Alexander F. Porter, and Assistant Chief Ben Curtis of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Unlicensed Detroit Doctor Convicted in $4.69 Million Medicare Fraud SchemeRead the Press Release
A federal jury in Detroit today convicted an unlicensed physician for his participation in a nearly $4.7 million Medicare fraud scheme, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office.
Wilfred Griffith, 64, of Detroit, a graduate of a foreign medical school with no medical license, was found guilty of one count of conspiracy to commit health care fraud and one count of conspiracy to solicit and receive health care kickbacks. A sentencing hearing is scheduled for July 8, 2015, before U.S. District Judge Sean F. Cox of the Eastern District of Michigan.
According to evidence presented at trial, Griffith worked as an unlicensed physician at Phoenix Visiting Physicians in 2010 and 2011. At that clinic, Griffith treated Medicare beneficiaries and used prescription pads pre-signed by Dr. Dwight Smith to prescribe medicine.
The evidence demonstrated that Griffith also referred Medicare beneficiaries to a Detroit-area home health company called Cherish Home Health Services Inc. (Cherish) in exchange for kickbacks. In ordering the home health services, Griffith used the names and signatures of Dr. Smith and two other Detroit-area physicians to certify that the beneficiaries were homebound and needed home health services, when they did not.
Evidence showed that based on the fraudulent referrals from Griffith and others, Cherish submitted false claims to Medicare for home health services that were never provided and were not medically necessary. Medicare beneficiaries pre-signed supporting medical paperwork that was then completed and signed by others at Cherish to falsely show that care was provided.
Between November 2009 and December 2013, Medicare paid Cherish nearly $4.7 million, which included more than $680,000 for home health services purportedly rendered to beneficiaries referred by Griffith using the names of Dr. Smith and the two other physicians.
Two other individuals have pleaded guilty for their roles in this scheme. Zia Hassan, 48, the owner of Cherish, pleaded guilty on Jan. 16, 2015, and Nathan Miller, 53, a patient recruiter who referred beneficiaries to Hassan in exchange for cash kickbacks, pleaded guilty on Aug. 4, 2014. On May 7, 2012, Dr. Smith also pleaded guilty to one count of conspiracy to commit health care fraud, and on June 12, 2014, U.S. District Judge Gerald E. Rosen of the Eastern District of Michigan sentenced Dr. Smith to three years in prison.
The case was investigated by HHS-OIG and the FBI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. The case is being prosecuted by Trial Attorney Katharine A. Wagner and Special Trial Attorney Katie R. Fink of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Patrick J. Hurford of the Eastern District of Michigan.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,100 defendants who have collectively billed the Medicare program for more than $6.5 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
United States Settles False Claims Act Suit Against Good Shepherd Hospice Inc. and Related EntitiesRead the Press Release
Midwest Hospice Chain Allegedly Billed Medicare for Ineligible Patients
Today, Good Shepherd Hospice Inc., Good Shepherd Hospice of Mid America Inc., Good Shepherd Hospice, Wichita, L.L.C., Good Shepherd Hospice, Springfield, L.L.C., and Good Shepherd Hospice – Dallas L.L.C. (collectively Good Shepherd) agreed to pay $4 million to resolve allegations that Good Shepherd submitted false claims for hospice patients who were not terminally ill. Good Shepherd is a for-profit hospice headquartered in Oklahoma City which provides hospice services in Oklahoma, Missouri, Kansas and Texas.
“The Medicare hospice benefit is intended to provide comfort and care to patients nearing the end of life,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “We will continue to aggressively pursue companies that abuse the hospice benefit to improperly inflate their profits.”
The Medicare hospice benefit is available for patients who elect palliative treatment (medical care focused on providing patients with relief from pain, symptoms or stress) for a terminal illness and have a life expectancy of six months or less if their illness runs its normal course. When a Medicare patient receives hospice services, that individual is no longer entitled to Medicare coverage for care designed to cure his or her illness.
The government alleged that Good Shepherd knowingly submitted or caused the submission of false claims for hospice care for patients who were not terminally ill. Specifically, the United States contended that Good Shepherd engaged in certain business practices that contributed to claims being submitted for patients who did not have a terminal prognosis of six months or less, by pressuring staff to meet admissions and census targets and paying bonuses to staff, including hospice marketers, admissions nurses and executive directors, based on the number of patients enrolled. The United States further alleged that Good Shepherd hired medical directors based on their ability to refer patients, focusing particularly on medical directors with ties to nursing homes, which were seen as an easy source of patient referrals. The United States also alleged that Good Shepherd failed to properly train staff on the hospice eligibility criteria.
“Health care fraud puts profits above patients, and steals from taxpayers,” said U.S. Attorney Tammy Dickinson of the Western District of Missouri. “In this case, company whistleblowers alleged that patients received unnecessary hospice care while Good Shepherd engaged in illicit business practices to enrich itself at the public’s expense. Today’s settlement fairly resolves those issues and puts measures in place to prevent similar conduct in the future.”
In addition, as part of the settlement, each Good Shepherd entity agreed to enter into a corporate integrity agreement with the U.S. Department of Health and Human Services-Office of the Inspector General (HHS-OIG), which will provide for procedures and reviews to be put into place to avoid and promptly detect conduct similar to that which gave rise to the settlement.
“Being a hospice provider in the Medicare program is a privilege, not a right,” said Special Agent in Charge Mike Fields of the HHS-OIG Dallas Region. “Hospice providers that seek to boost profits by providing hospice services to Medicare beneficiaries who are not terminally ill compromise both the health of its patients as well as the integrity of Medicare. Our agency will continue to hold such hospice providers accountable for their actions.”
The settlement resolves allegations filed by relators Kathi Cordingley and Tracy Jones, former employees of Good Shepherd, under the qui tam or whistleblower provisions of the False Claims Act, which authorize private parties to sue for fraud on behalf of the United States and share in the recovery. The relators will receive approximately $680,000.
This suit is part of 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 $23.5 billion through False Claims Act cases, with more than $15 billion of that amount recovered in cases involving fraud against federal health care programs.
This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Missouri and HHS-OIG. The claims asserted against defendants are allegations only and there has been no determination of liability.
The lawsuit is captioned United States ex rel. Cordingley and Jones v. Good Shepherd Hospice, Mid America, Inc., No. 4:11-cv-1087 (W.D. Mo.).
Six Defendants Charged with Conspiracy and Providing Material Support to TerroristsRead the Press Release
Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Richard Callahan of the Eastern District of Missouri and Special Agent in Charge William P. Woods of the FBI’s St. Louis Division announced that a federal indictment was unsealed earlier today charging six individuals with terrorist related crimes. Charged in the indictment are: Ramiz Zijad Hodzic, 40, his wife Sedina Unkic Hodzic, 35, and Armin Harcevic, 37, all of St. Louis County, Missouri; Nihad Rosic, 26, of Utica, New York; Mediha Medy Salkicevic, 34 of Schiller Park, Illinois; and Jasminka Ramic, 42, of Rockford, Illinois. All defendants are charged with conspiring to provide material support and resources to terrorists, and with providing material support to terrorists. Ramiz Zijad Hodzic and Nihad Rosic are also charged with conspiring to kill and maim persons in a foreign country.
All six individuals are natives of Bosnia who immigrated to the United States. Three have become naturalized citizens of the United States and the remaining three have either refugee or legal resident status. Five of the defendants are in the United States and have been arrested. A sixth defendant is overseas.
If convicted, the crimes of conspiring to provide material support and providing material support carry penalties ranging up to 15 years imprisonment for each count and/or fines up to $250,000. The crime of conspiring to kill and maim persons in a foreign country carries a penalty of up to life in prison. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.
“Today’s charges and arrests underscore our resolve to identify, thwart, and hold accountable individuals within the United States who seek to provide material support to terrorists and terrorist organizations operating in Syria and Iraq,” said Assistant Attorney General Carlin. “Preventing the provision of supplies, money, and personnel to foreign terrorist organizations like ISIL remains a top priority of the National Security Division and our partners in the law enforcement and intelligence communities. I want to thank the many agents, analysts and prosecutors responsible for this case.”
“The indictment unsealed today epitomizes the FBI's commitment to disrupting and holding accountable those who seek to provide material support to terrorists and terrorist organizations,” said Special Agent in Charge Woods. “This case underscores the clear need for continued vigilance in rooting out those who seek to join or aid terrorist groups that threaten our national security.”
This case was investigated by the St. Louis FBI’s Joint Terrorism Task Force, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), U.S. Postal Inspection Service, St. Louis Metropolitan and St. Louis County Police Departments, with assistance from multiple law enforcement agencies. The case is being prosecuted by Assistant U.S. Attorneys Matthew Drake, Howard Marcus and Kenneth Tihen of the Eastern District of Missouri and Mara Kohn, a Trial Attorney in the Counterterrorism Section of the Department of Justice.
As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.
Indictment
Second Ocean Shipping Executive Pleads Guilty to Price Fixing on Ocean Shipping Services for Cars and TrucksRead the Press Release
A former executive of Japan-based Kawasaki Kisen Kaisha Ltd. (K-Line) pleaded guilty today and was sentenced to 14 months in a U.S. prison for his involvement in a conspiracy to fix prices, allocate customers and rig bids of international ocean shipping services for roll-on, roll-off cargo, such as cars and trucks, to and from the United States and elsewhere, the Department of Justice announced today.
According to the one-count felony charge filed in U.S. District Court for the District of Maryland in Baltimore on Dec. 29, 2014, Takashi Yamaguchi, who was a general manager and executive officer in K-Line’s car carrier division, conspired to allocate customers and routes, rig bids and fix prices for the sale of international ocean shipments of roll-on, roll-off cargo to and from the United States and elsewhere, including the Port of Baltimore. Yamaguchi participated in the conspiracy from at least as early as July 2006 until at least April 2010.
Roll-on, roll-off cargo is non-containerized cargo that can be both rolled onto and off of an ocean-going vessel. Examples of this cargo include new and used cars and trucks and construction and agricultural equipment.
“Today’s sentencing is another step in our efforts to hold executives accountable for raising the cost of shipping cars, trucks and other equipment to and from the United States,” said Bill Baer, Assistant Attorney General for the Antitrust Division. “We will continue to pursue the corporations and executives whose illegal agreements have harmed American consumers.”
Pursuant to the plea agreement, which was accepted by the court today, Yamaguchi was sentenced to serve a 14-month prison term and pay a $20,000 criminal fine for his participation in the conspiracy. In addition, Yamaguchi has agreed to assist the department in its ongoing investigation into the ocean shipping industry.
Yamaguchi was charged with a violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for an individual. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s sentence is the second imposed against an individual in the division’s ocean shipping investigation. Previously, three corporations have agreed to plead guilty and to pay criminal fines totaling more than $136 million, including Yamaguchi’s employer K-Line, which was sentenced to pay a criminal fine of $67.7 million in November 2014. Another K-Line executive was sentenced one week ago by the court in Baltimore.
Today’s plea agreement is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the international roll-on, roll-off ocean shipping industry, which is being conducted by the Antitrust Division’s Washington Criminal I Section and the FBI’s Baltimore Field Office, along with assistance from the U.S. Customs and Border Protection Office of Internal Affairs, Washington Field Office/Special Investigations Unit. Anyone with information in connection with this investigation is urged to call the Antitrust Division’s Washington Criminal I Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Baltimore Field Office at 410-265-8080.
Owners of Tax Preparation Business Convicted on All CountsRead the Press Release
The owners of a tax preparation business that filed fraudulent tax returns on behalf of inmates at various New Jersey prisons were convicted at trial today of conspiracy, mail fraud and making false claims to the United States for payment of fraudulent tax refunds, U.S. Attorney Paul J. Fishman of the District of New Jersey and Principal Deputy Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division announced.
Kamal J. James, aka Bro Messiah Aziz El, of Seaford, Delaware, and Crystal G. Hawkins, aka Sis. Crystal Gabri El, of Laurel, Delaware, had each been charged in a superseding indictment with one count of conspiracy, 16 counts of making false claims for income tax refunds and three counts of mail fraud. They were convicted on all counts following a one-week trial before U.S. District Judge Peter G. Sheridan in federal court in Trenton, New Jersey. The jury deliberated one hour before returning the guilty verdicts.
According to the superseding indictment and the evidence at trial:
Between October 2011 and October 2013, defendants James and Hawkins operated Release Refunds, a purported tax preparation business – previously based in Brick, New Jersey, and in Seaford, Delaware – through which they solicited current and former New Jersey prison inmates as clients and then filed fraudulent tax returns on their behalf.
James and Hawkins sent Release Refunds “promotional” flyers to inmates at various New Jersey prisons and halfway houses offering tax return preparation services. The pair asked inmates interested in Release Refunds’ services to provide basic identification information and to sign income tax returns and other Internal Revenue Service (IRS) documents, but not to include any information about their income or withholdings. James and Hawkins then filled in the missing income information on the return forms, fabricating the inmates’ earnings to trigger fraudulent and inflated refunds.
During the course of the investigation, an undercover IRS-Criminal Investigation agent posing as an inmate in a New Jersey prison submitted a completed Release Refunds form and sent it to James and Hawkins. They then sent the “inmate” blank income tax forms and other IRS documents and instructions to sign the documents. James and Hawkins did not request any financial information from the undercover agent before preparing three fraudulent tax returns – including false income information that James and Hawkins provided – to be filed on behalf of the agent for tax years 2010 through 2012. The fraudulent returns resulted in several thousand dollars in refunds and a $1,485 fee claimed by the defendants.
The conspiracy count carries a statutory maximum sentence of 10 years in prison. The fraudulent claims counts each carry a statutory maximum sentence of five years in prison and the mail fraud counts each carry a statutory maximum sentence of 20 years in prison. The defendants also face a fine of $250,000, or twice the amount of the gain or loss from the offense, for each count of conviction. Sentencing is scheduled for May 11.
U.S. Attorney Fishman and Principal Deputy Assistant Attorney General Ciraolo credited special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Jonathan D. Larsen, with the investigation leading to today’s charges. They also thanked the U.S. Postal Inspection Service, under the direction of Postal Inspector in Charge Maria L. Kelokates, and the New Jersey Department of Corrections, under the direction of Commissioner Gary M. Lanigan, for their roles in the case.
The government is represented by Assistant U.S. Attorney Nicholas P. Grippo of the U.S. Attorney’s Office Criminal Division in Trenton and Trial Attorney Thomas Jaworski of the Tax Division.
Medtronic Inc. to Pay $2.8 Million to Resolve False Claims Act Allegations Related to "SubQ Stimulation" ProceduresRead the Press Release
Medical device manufacturer Medtronic Inc. has agreed to pay the United States $2.8 million to resolve allegations under the False Claims Act that Medtronic caused certain physicians to submit false claims to federal health care programs for a medical procedure known as “SubQ stimulation,” the Justice Department announced today. Medtronic Inc. is a medical technology company based in Minnesota.
“Today’s settlement demonstrates our commitment to ensure that beneficiaries of federal health care plans, including Medicare recipients and military families, receive medical treatments that have been proven safe and effective,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “Targeting chronic pain patients with a medical procedure that lacks evidence of clinical efficacy wastes the country’s health care resources.”
The United States alleged that from 2007 through 2011, Medtronic knowingly caused dozens of physicians located throughout more than 20 states to submit claims to Medicare and TRICARE for investigational medical procedures known as SubQ stimulation that were not reimbursable. In these procedures, Medtronic’s spinal cord stimulation devices were placed just beneath the skin near an area of pain, most often in the lower back, where the devices could provide electrical impulses to create a “tingling” sensation intended to alleviate chronic pain. The United States alleged that even though the safety and efficacy of SubQ stimulation had not been established as required by the Food and Drug Administration (FDA), the company promoted this procedure by, among other strategies, arranging to have physician-customers attend Medtronic-sponsored “on-site training programs” regarding the use of Medtronic spinal cord stimulation devices for SubQ stimulation.
“Patients should be able to trust that their health care providers only use – and bill Medicare for – medical procedures that have been shown to be safe and effective,” said Special Agent in Charge Scott J. Lampert of the Department of Health and Human Services’ Office of Inspector General (HHS–OIG). “Our agency will continue to pursue medical device makers that ignore requirements designed to protect patient health and federal health care programs.”
The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. The lawsuit was filed by Jason Nickell, who formerly worked as a Medtronic sales representative. Nickell will receive $602,000.
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 $23.5 billion through False Claims Act cases, with more than $15 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement with Medtronic was the result of a coordinated effort among the U.S. Attorney’s Office for the Western District of New York, the Civil Division’s Commercial Litigation Branch, HHS–OIG, the Defense Health Agency, the FDA’s Office of Chief Counsel and the FDA’s Office of Criminal Investigations.
The claims resolved by this settlement are allegations only and there has been no determination of liability. The lawsuit is captioned United States ex rel. Nickel v. Medtronic, Inc. Civ. No. 09 - CV - 0203-S (W.D.N.Y.).
International Terrorism Defendant Sentenced in Manhattan to 25 Years in PrisonRead the Press Release
Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Preet Bharara of the Southern District of New York announced that Adel Abdel Bary, aka “Adel Mohammed Abdul Almagid Abdel Bary,” aka “Abbas,” aka “Abu Dia,” aka “Adel” (Bary), was sentenced in Manhattan federal court to 25 years in prison for his conviction on international terrorism charges in connection with Bary’s work on behalf of al Qaeda and the Egyptian Islamic Jihad. Bary was extradited to the United States from the United Kingdom on Oct. 6, 2012. On Sept. 19, 2014, Bary pleaded guilty to a three-count superseding Information charging him with one count of conspiring to make a threat to kill, injure, intimidate, and damage and destroy property by means of an explosive, one count of making such a threat, and one count of conspiring to kill U.S. nationals. Bary pleaded guilty before U.S. District Judge Lewis A. Kaplan, who also imposed today’s sentence.
“Adel Abdel Bary was a member of the London cell of the Egyptian Islamic Jihad and worked closely with al Qaeda leadership both before and after the bombings of the U.S Embassies in Kenya and Tanzania in 1998 to disseminate al Qaeda threats against U.S. citizens and interests around the world,” said Assistant Attorney General Carlin. “This sentence holds him accountable for his key role in facilitating the delivery of al Qaeda’s message to extremists around the world encouraging the commission of violent acts against the United States and its citizens. I commend all of the people who worked on this case over many years in order to reach this result.”
“Adel Abdel Bary occupied important positions in Egyptian Islamic Jihad and al Qaeda,” said U.S. Attorney Bharara. “As he admitted at his plea last September, he facilitated communications by Osama bin Laden and other al Qaeda leaders, including publication of the 1998 al Qaeda fatwah to kill Americans, and al Qaeda’s claims of responsibility for the 1998 bombings of two American embassies in Africa. The sentence imposed today reflects the seriousness of Bary’s crimes, his role, and his acceptance of responsibility for them.”
According to the indictment based on which Bary was extradited, the superseding information to which he pleaded, other documents filed in Manhattan federal court, and statements made at Bary’s guilty plea and at today’s sentencing:
In 1997 and 1998, Bary led the London, England, cell of the Egyptian Islamic Jihad (EIJ) organization. EIJ, which was led for years by co-defendant Ayman al Zawahiri, was dedicated to the forceful overthrow of the Egyptian Government and to violent opposition of the United States, in part, for its support of the Government in Egypt. By February 1998, EIJ had effectively merged with al Qaeda and EIJ joined with al Qaeda in targeting American civilians. To that end, in February 1998, indicted co-defendant Usama Bin Laden and Zawahiri endorsed a purported fatwah under the banner of the “International Islamic Front for Jihad on the Jews and Crusaders.” This fatwah stated that Muslims should kill Americans – including civilians – anywhere in the world where they can be found. Then again, on Aug. 4, 1998, EIJ published a statement threatening to retaliate against America for its claimed involvement in the apprehension of EIJ members. A copy of this statement was found in an office used by Bary and his London-based co-conspirators.
While in London, Bary pledged his commitment to pursue the goals of EIJ and to follow the orders of the leadership of the group. Many of the leading members of EIJ became influential members of al Qaeda, including Zawahiri and indicted co-defendant Muhammad Atef, both of whom later sat on the majlis al shura (or consultation council) of al Qaeda. Zawahiri is now the declared leader of al Qaeda.
On Aug. 7, 1998, three days after EIJ published its threat to retaliate against America, al Qaeda operatives bombed the United States Embassies in Nairobi, Kenya, and Dar es Salaam, Tanzania, killing 224 people. Bary transmitted, via international telephone calls to the media, the contents of al Qaeda’s claims of responsibility for the Aug. 7, 1998, bombings. These claims of responsibility included threats of future terrorist attacks by al Qaeda and its allies, and were sent from London to media organizations in France, Qatar, and the United Arab Emirates on Aug. 8, 1998 – the day after the embassy bombings.
In August 1998, both before and after the bombings, Bary additionally arranged for messages to be transmitted from members of the media to his co-conspirators, including Bin Laden and Zawahiri, and conveyed messages from his co-conspirators, including Bin Laden and Zawahiri, to members of the media. Bary also used an office in London, which he shared with co-conspirators, to store documents, including the claims of responsibility described above, as well as for other conduct related to the conspiracy to murder U.S. nationals.
* * *
In addition to his prison term, Bary, 54, was ordered to pay restitution in the amount of $33,816,561, including $7,516,561 to victims’ family members for loss of income and $26,300,000 to the United States for property loss.
A co-defendant, Khalid al Fawwaz, aka “Khaled Abdul Rahman Hamad al Fawwaz,” aka “Abu Omar,” aka “Hamad” (Fawwaz), is currently on trial before U.S. District Judge Kaplan. The charges against Fawwaz are merely accusations, and Fawwaz is presumed innocent unless and until proven guilty.
Assistant Attorney General Carlin and U.S Attorney Bharara praised the outstanding efforts of the FBI’s New York-based Joint Terrorism Task Force – which principally consists of special agents of the Federal Bureau of Investigation and detectives of the New York City Police Department – as well as the outstanding efforts of the United States Marshals Service, Metropolitan Police Department of London (New Scotland Yard) and the Department of Justice’s Office of International Affairs.
This case is being prosecuted by Assistant U.S. Attorneys Sean S. Buckley, Adam Fee, Nicholas J. Lewin, and Stephen J. Ritchin of the Southern District of New York’s Terrorism and International Narcotics Unit.
Former Ku Klux Klan Officer Sentenced to 10 Months for Committing Perjury During Cross-Burning InvestigationRead the Press Release
Today, U.S. District Court Judge L. Scott Coogler sentenced Pamela Morris, former secretary of a chapter of the Ku Klux Klan (KKK) in Ozark, Alabama, to 10 months in prison and three years of supervised release for committing perjury during a grand jury’s investigation into a racially motivated cross-burning.
Morris, 47, previously admitted during her plea hearing on June 12, 2014, that she lied to a federal grand jury investigating a cross-burning committed by Steven Joshua Dinkle, Morris’s son and the Exalted Cyclops (president) of the local KKK, and Thomas Smith, another KKK member. On May 8, 2009, Dinkle and Smith burned a six-foot tall cross at the entrance to an African American neighborhood in Ozark to threaten and intimidate residents. Several witnesses observed and were frightened by the cross, including a young man returning from choir practice as the defendants set the cross ablaze. In sworn testimony before the grand jury, Morris made several false statements, including denying that she had been the secretary of the Klan or involved with the KKK at all.
In pleading guilty, Morris admitted that she had been an officer of the KKK and that her testimony denying any connection to the organization was false. She further acknowledged that she knew Dinkle had committed the cross-burning. In addition, Morris admitted that she testified falsely to prevent the grand jury from learning about other KKK members who had information relevant to the investigation.
Dinkle is currently serving a 24-month sentence imposed on May 15, 2014, for his conviction on hate-crime and obstruction-of-justice charges related to the cross-burning. Smith, Dinkle’s co-conspirator, was sentenced to five years of probation on Aug. 19, 2014.
“Acts that target individuals and communities for violence based on race have no place in our society,” said Acting Assistant Attorney General Vanita Gupta of the Civil Rights Division. “Nor can we tolerate those who lie under oath to obstruct the pursuit of justice.”
“Ms. Morris blatantly lied to the grand jury in an attempt to protect herself and to protect a cross burner,” said U.S. Attorney George L. Beck Jr. of the Middle District of Alabama. "Ms. Morris lied after she swore to the grand jury that she would tell the truth. For our system of justice to protect the rights of all, those who testify before the grand jury must provide accurate and honest information. If someone fails to tell the truth while under oath, we will prosecute them."
This case was investigated by the Federal Bureau of Investigation, with the assistance of the Dale County Sheriff’s Office and the Ozark Police Department. The case was prosecuted by Assistant U.S. Attorneys Jerusha T. Adams and of the Middle District of Alabama and Trial Attorney Chiraag Bains of the Justice Department’s Civil Rights Division.
Former Army Soldier Sentenced to Life in Prison for Murder of his Five-Year-Old DaughterRead the Press Release
An Army soldier was sentenced to life in prison without the possibility of parole today for murdering his five-year-old daughter, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Florence T. Nakakuni of the District of Hawaii.
Naeem Williams, 34, was sentenced today by U.S. District Judge J. Michael Seabright of the District of Hawaii. On June 27, 2014, a federal jury in Honolulu found Williams guilty of beating his daughter, Talia Williams, to death at the family’s residence on Wheeler Army Airfield in Honolulu.
The jury also convicted Williams of participating, along with his wife, Delilah Williams, in a pattern and practice of assault and torture from December 2004 until July 16, 2005, that resulted in Talia’s death. In addition, Williams was convicted of obstructing justice and making false statements to Army Criminal Investigation Division agents on the night of his arrest in July 2005.
The evidence presented at trial demonstrated that Naeem Williams and his wife beat Talia almost daily. Naeem Williams testified that the abuse was aimed at disciplining his daughter for bathroom accidents and was exacerbated due to frustrations he was experiencing in his marriage. The evidence indicated that the physical abuse included punching Talia repeatedly, commanding her to eat her own feces, depriving her of food, requiring her to do strenuous exercises and then beating her when she was unable to continue, and using duct tape to bind her to a bed post where she was whipped with a belt. In the hours preceding her death, Naeem Williams struck Talia and her head slammed backwards against the floor. Talia then appeared to have a seizure.
Delilah Williams pleaded guilty to first-degree felony murder, agreed to testify against her husband and was sentenced to 20 years in prison.
This case was investigated by the FBI and the Army Criminal Investigation Division, and was prosecuted by Trial Attorney Steven D. Mellin of the Criminal Division’s Capital Case Section and Assistant U.S. Attorney Darren W.K. Ching of the District of Hawaii.
Federal Court Bars Two Managers of Florida Tax Preparation Stores from Owning a Tax Return Preparation Business and Preparing Tax Returns for OthersRead the Press Release
A federal court in Orlando, Florida, has permanently barred two managers of tax preparation stores in Florida from preparing tax returns for others and from owning or operating a tax return preparation business, the Justice Department announced today.
The civil injunction order, to which Jehoakim Victor and Lauri Rodriguez agreed, was signed by Chief Judge Anne C. Conway of the U.S. District Court for the Middle District of Florida.
The United States filed its civil injunction complaint in September 2014 against Kerny Pierre-Louis, Rodriguez and Victor. Rodriguez and Victor managed and supervised employees at LBS Tax Services stores, which were owned by Pierre-Louis. According to the complaint, both Rodriguez and Victor were paid, in part, based on a percentage of the gross tax preparation fees that the locations charged its customers. The government alleged that they, and return preparers they supervised, prepared fraudulent federal tax returns on which they falsely claimed the earned-income credit and bogus education credits, report improper filing statuses, inflated federal income tax withholdings and fabricated business expenses.
The lawsuit against Pierre-Louis, Rodriguez and Victor is one of eight suits filed by the United States in Florida against Walner Gachette, the founder and franchisor of LBS Tax Services, and numerous other LBS franchisees and managers. The other cases, as well as the claims against Pierre-Louis in this case, remain pending.
Return preparer fraud is one of the Internal Revenue Service’s (IRS) Dirty Dozen Tax Scams for 2015. The IRS has some tips on their website for choosing a tax preparer, and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department 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.
District Court Enters Permanent Injunction Against Oregon Company and Executive to Stop Distribution of Unapproved New Drugs and Adulterated ProductsRead the Press Release
The U.S. District Court for the District of Oregon entered a permanent injunction against James G. Cole Inc., of Hood River, Oregon, its president James G. Cole and its former general manager Julie D. Graves to prevent the distribution of unapproved and misbranded drugs and adulterated dietary supplements, the Department of Justice announced today.
The company manufactures various products that have been distributed under the name “Maxam Nutraceutics.” The department filed a complaint in the U.S. District Court for the District of Oregon, at the request of the U.S. Food and Drug Administration (FDA), alleging that the company’s dietary supplements are manufactured under conditions that are inadequate to ensure the quality of its products and that its products are unapproved and misbranded drugs. Pursuant to the permanent injunction entered by the court on Feb. 5, the defendants are prevented from distributing the company’s products until the defendants comply with the requirements set forth in the court’s order.
U.S. District Court Judge Michael H. Simon held that the company’s Maxam products are unapproved new drugs under the federal Food, Drug, and Cosmetic Act (FDCA). The court based its decision in part on the company’s claims that the products could treat autism, Alzheimer’s, HIV and Fibromyalgia, among other diseases.
“The American public needs to have confidence that products promoted for the treatment of disease are safe and effective,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “The failure of manufacturers of dietary supplements to have procedures in place to ensure the quality and identity of all ingredients that go into their products poses a serious risk to public health.”
The court also held that the company’s products were misbranded drugs because the products failed to bear adequate directions for use for the purposes for which the drugs were intended – in the case of the company’s products, to treat diseases such as autism. The court noted that such directions for use, including dosages, warnings and side effects, must be premised on clinical data derived from scientifically controlled investigation, and that the defendants had “conducted no controlled studies and collected no clinical data” regarding their products.
The court also found that the company’s products were adulterated dietary supplements because they were not produced in compliance with federal good manufacturing practice regulations. Under the FDCA, dietary supplement manufacturers are required to have systems in place to ensure that their products meet specifications for identity, purity, strength and composition. A series of inspections of the company’s manufacturing facility, conducted by the FDA beginning in 2012, revealed, among other things, that the defendants did not have specifications for the ingredients in their products and did not conduct appropriate tests on incoming shipments of components used in the manufacture of their products to determine the identity, strength, purity and composition of each component. The court found that the state of the defendants’ manufacturing practices was such that the defendants have “no idea what goes into their products.”
The permanent injunction prohibits the defendants from manufacturing or distributing their products unless and until they take a number of steps to come into compliance with federal law, including obtaining FDA approval of their drug products or working with an expert to remove all claims from their product labels, promotional materials and websites that evidence an intended use for their products as drugs, and coming into full compliance with good manufacturing practice regulations.
“Along with our partners at the FDA, we are committed to protecting our citizens from threats to their health and safety,” said U.S. Attorney Amanda Marshall of the District of Oregon. “Everyone who deals in products that affect people’s health must comply with federal law.”
The government was represented by Trial Attorney Ann Entwistle of the Civil Division’s Consumer Protection Branch, with the assistance of Associate Chief Counsel for Enforcement Sonia Nath and Associate Chief Counsel for Enforcement Son Nguyen of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division. Assistance was also provided by the U.S. Attorney’s Office for the District of Oregon.
Attorney General Holder Statement on the 2015 National Security StrategyRead the Press Release
Attorney General Eric Holder released the following statement today on President Obama’s 2015 National Security Strategy:
“With the 2015 National Security Strategy, President Obama has laid out a credible and timely vision of strong and sustainable American leadership on a global scale. This strategy is predicated on strength, both at home and around the world, and founded on the timeless values the American people have always held sacred. In concert with our global partners – through patience, persistence, and a clear sense of purpose – this strategy will drive our efforts to confront threats, to reduce risks, and to advance our core interests of security, prosperity, and a rules-based international order.”
Una Pareja De Roseville Se Declara Culpable De Un Fraude De Modificacion De Prestamo Y Rescate De Ejecucion Hipotecario Dirigido A La Comunidad De Habla HispanaRead the Press Release
40 acusados de delitos federales por armas de fuego en los condados de Fresno, Tulare y Madera en el 2013; sentenciados a prisión federal en el 2013
SACRAMENTO, Calif. —Martin Wayne Flanders, 50, anteriormente de Roseville, y Ligia Sandoval Spafford, 48, de Roseville, se declararon culpables hoy de fraude por correo por su participación en un esquema de fraude dirigido a propietarios en dificultades, anunció Benjamín Wagner, procurador federal del Distrito Oriental de California.
De acuerdo con documentos del tribunal, entre 2008 y 2010, Flanders facturó a clientes tarifas adelantadas a cambio de un número de servicios financieros, incluyendo modificaciones de préstamo, auditorías de préstamo de hipoteca, reparación de créditos, alivio de deudas, solicitud de bancarrota, y un programa para vender casas a “inversores” con una opción de alquiler con derecho a compra. Flanders y Sandoval comercializaron estos servicios a propietarios en dificultades económicas con particular énfasis a aquellos de habla hispana. Durante un programa de radio transmitido dos veces a la semana por Radio Luz, una estación de radio cristiana de habla hispana en la Bay Area, Sandoval promocionó los servicios que ella y Flanders ofrecían. Flanders también se anunció en una estación de televisión de habla hispana, Univision, y en revistas hispanas. Aproximadamente un 98% de los clientes de los demandados eran de origen hispano, algunos de los cuales hablaban muy poco o nada de inglés. Sandoval habla español; Flanders no lo habla.
Flanders y Sandoval hicieron numerosas declaraciones falsas a inversores sobre el éxito de los programas que ofrecían o reembolsos que estarían disponibles si los programas no tenían éxito. “Ofertas fantasma” – ej., ofertas ficticias de comprar la propiedad de la víctima a través de ventas ràpidas – y “quiebras esqueleto” – ej., simulaciones de peticiones de bancarrota que fueron desechadas ràpidamente por el tribunal de bancarrotas – también fueron usadas por Flanders o Sandoval para tratar de retrasar el proceso de ejecución hipotecaria. Al menos de 25 a 30 personas pagaron por los servicios y no los recibieron o no recibieron los reembolsos cuando los programas fallaron en entregar los reembolsos prometidos. El total de pérdidas para las víctimas es al menos de $120,000. Algunos propietarios que no fueron capaces de obtener ayuda fueron embargados por sus prestamistas.
“Flanders y Sandoval se aprovecharon de las víctimas con escasos conocimientos de inglés, cuando esas víctimas eran màs vulnerables financieramente,” dijo Benjamín Wagner, procurador federal del Distrito Oriental de California. “Esquemas de este tipo de fraude predador han sido y continuaràn siendo uno de los focos principales de nuestros esfuerzos en procesar fraudes con hipotecas.”
Este caso es el producto de una investigación por la Oficina Federal de Investigación. El procurador federal asistente Todd A. Pickles està procesando el caso.
Flanders ha estado detenido desde su arresto en octubre de 2012. Sandoval està actualmente libre de custodia.
Flanders y Sandoval estàn programados para ser sentenciados por el Juez de Distrito de los Estados Unidos Troy L. Nunley el 11 de junio de 2015. Flanders y Sandoval se enfrentan a una pena màxima reglamentaria de 20 años en prisión y una multa de $250,000. La sentencia actual, sin embargo, serà determinada a discreción del tribunal después de considerar cualquier factor reglamentario aplicable y las Directrices Federales de Sentencia, que toman en consideración un número de variables.
Two Former Japanese Automobile Parts Manufacturer Executives Indicted for Roles in Conspiracy to Fix Prices and for Obstruction of JusticeRead the Press Release
A Detroit federal grand jury returned a two-count indictment against two former executives of a Japanese automotive parts manufacturer for their participation in a conspiracy to fix prices and rig bids of automotive parts and for obstruction of justice for ordering the destruction of evidence related to the conspiracy, the Department of Justice announced today.
The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Hiroyuki Komiya and Hirofumi Nakayama, former executives of Mitsuba Corporation, with conspiring to fix the prices of various automotive parts, including windshield wiper systems and components, sold to Honda Motor Company Ltd., Nissan Motor Co. Ltd., Toyota Motor Corp., Chrysler Group, LLC, Fuji Heavy Industries Ltd. – more commonly known by its brand name, Subaru – and certain of their subsidiaries in the United States and elsewhere.
Komiya and Nakayama are also charged with knowingly and corruptly persuading, and attempting to persuade, employees of Mitsuba to destroy documents and delete electronic data that may contain evidence of antitrust crimes in the United States and elsewhere.
“These charges demonstrate the Antitrust Division’s continued commitment to prosecuting individuals who commit criminal antitrust violations,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s Criminal Enforcement Program. “Because these same individuals committed the additional crime of obstructing the investigation, they also serve as cautionary tale for those who are tempted to try to thwart the Antitrust Division’s investigative activities by destroying evidence.”
Komiya participated in the conspiracy as Mitsuba Director of Automotive Sales. In 2007, he was promoted to Executive Managing Officer and Vice President of Sales. Nakayama was the Office Manager of Mitsuba’s Nagoya sales office. In 2005, he was promoted to Sales Operating Officer.
The indictment alleges, among other things, that beginning at least as early as April 2000 and continuing until at least February 2010, Komiya, Nakayama and co-conspirators participated in and directed, authorized or consented to the participation of subordinate employees in, meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply and fix the price to be submitted to automobile manufacturers. Upon learning of the existence of this investigation, Komiya and Nakayama also urged their subordinates to delete and destroy documents related to this collusion.
Mitsuba is a corporation organized and existing under the laws of Japan with its principal place of business in Gunma, Japan. On Nov. 6, 2013, Mitsuba pleaded guilty and agreed to pay a $135 million criminal fine for its role in the conspiracy as well as obstruction of justice.
Including Komiya and Nakayama, 52 individuals have been charged in the government’s ongoing investigation into market allocation, price fixing, and bid rigging in the auto parts industry. Additionally, 33 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.4 billion in fines.
Komiya and Nakayama are charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. The maximum penalty for obstruction of justice is 20 years in prison and a $250,000 criminal fine for individuals.
Today’s indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.
Komiya et al Indictment
Somali Citizen Sentenced to 15 Years in Federal Prison for Conspiring to Provide Material Support to Al-ShabaabRead the Press Release
Assistant Attorney General for National Security John P. Carlin, Acting U.S. Attorney Richard L. Durbin Jr. of the Western District of Texas, FBI Special Agent in Charge Christopher Combs and Chief Patrol Agent Rudolfo Karisch of the U.S. Border Patrol’s Del Rio Sector announced today that Abdinassir Mohamud Ibrahim was sentenced to 15 years in federal prison for conspiring to provide material support to Al-Shabaab, a designated foreign terrorist organization, and for making a false statement in an immigration matter.
Ibrahim, 43, a citizen of Somalia, was charged in a two-count superseding information, returned on July 31, 2014 and unsealed today in San Antonio, and pleaded guilty to both counts of the information on July 31, 2014. Ibrahim admitted that from about May 18, 2010, to about Jan. 31, 2014, he knowingly conspired to provide material support and resources, specifically sending emails enlisting support for al-Shabaab and making a cash payment to a known member of al-Shabaab for the benefit of the organization. Ibrahim knew at the time that al-Shabaab was designated by the United States as a foreign terrorist organization.
Ibrahim also pleaded guilty to making a false statement in an immigration matter. According to the information, Ibrahim knowingly lied in his application for naturalization as he had previously lied on his request for refugee status, falsely claiming that he was of a member of the minority Awer clan in Somalia and subject to persecution by the majority Hawiye clan. However, Ibrahim was actually a member of the Hawiye clan and not subject to persecution. Ibrahim also admitted he had lied on his naturalization application by having previously lied on his refugee application by falsely claiming that he had not provided material support to a terrorist group, when he had in fact provided material support in the form of cash to an al-Shabaab member.
The case was investigated by the FBI and the Border Patrol together as part of the San Antonio Joint Terrorism Task Force. The case was prosecuted by Assistant U.S. Attorneys Mark Roomberg and Christina Playton for the Western District of Texas.
Rodney M. Kidd Charged with Military Housing Allowance FraudRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that Rodney M. Kidd, age 29, stationed on board Andersen Air Force Base, Guam, has been indicted by a federal grand jury on February 4, 2015, with two counts of theft of government money (18 U.S.C. § 641), one count of fraudulent claim against the United States (18 U.S.C. § 287), and one count of false statement to a federal government agency (18 U.S.C. § 1001). For each count of theft of government money, the maximum sentence under the statute is 10 years in prison and a $250,000 fine. For each count of fraudulent claim against the United States and each count of false statement to a federal government agency, the maximum sentence under the statute is 5 years in prison and a $250,000 fine. A summons was issued for Kidd to appear in federal court on February 18, 2015, for his arraignment.
The indictment alleges that from October 1, 2012 through April 30, 2013, Kidd, an active duty Staff Sergeant in the U.S. Air Force, knowingly stole about $19,645.15 in Overseas Housing Allowance funds from the Defense Finance and Accounting Service (DFAS), a Department of Defense agency that pays military service members.
Military members who are active duty or activated reservists or activated National Guardsmen are eligible to receive a tax-free housing allowance known as Overseas Housing Allowance (OHA). The amount of OHA compensation that an active duty military member can receive is determined by the actual amount of money the individual is paying for housing costs, up to a maximum amount determined by the individual’s rank and whether or not the individual has dependents. If a military member is sharing his residence with another military member, then the amount of OHA distributed to that person would be cut in half.
According to the indictment, from October 1, 2012 through April 30, 2013, Kidd secretly shared his residence with another Air Force Staff Sergeant. According to forms he signed and briefs he heard, Kidd knew that he was only entitled to be reimbursed for $1,100 of his $2,200 monthly rent, yet he kept the additional amounts. Kidd received tax-free reimbursement for his fraudulent rental payments as well as tax-free reimbursements for utility expenses, which totaled approximately $19,645.15.
The indictment further alleges that on May 13, 2013, Kidd knowingly submitted false OHA documentation to DFAS that falsely claimed that Kidd and another active duty Air Force Staff Sergeant paid a total of $4,400 in rent every month for their occupancy of their residence in Dededo. Relying on the OHA documentation Kidd submitted, DFAS paid tax-free OHA reimbursement for the $2,200 he supposedly paid for his share of the rent every month. In reality, Kidd and the other Staff Sergeant had a secret arrangement with their landlord to pay a significantly reduced amount of rent each month so that they could each pocket the remaining OHA payments.
The indictment further alleges that from May 1, 2013 through May 31, 2014, Kidd received tax-free reimbursement for his fraudulent rental payments as well as tax-free reimbursements for utility expenses, which totaled approximately $35,136.60. To corroborate this OHA claim, Kidd presented a false lease agreement to DFAS that falsely stated that Kidd paid $2,200.00 every month in rent for his occupancy of this Dededo residence. The total amount of OHA payments Kidd fraudulently received was $54,781.75.
This case is the result of an investigation conducted by the Air Force Office of Special Investigations. The prosecution is being handled by Special Assistant U.S. Attorney Kurt Grunawalt.
The charges in the Indictment are only allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Minnesota-Based ev3 to Pay United States $1.25 Million to Settle False Claims Act AllegationsRead the Press Release
Medical device manufacturer ev3 Inc., formerly known as Fox Hollow Technologies Inc., has agreed to pay the United States $1.25 million to resolve allegations under the False Claims Act that Fox Hollow caused certain hospitals to submit false claims to Medicare for unnecessary inpatient admissions related to minimally-invasive atherectomy procedures, the Justice Department announced today.
“Today’s settlement demonstrates our commitment to ensure that the Medicare Trust Fund is used to pay for only necessary medical care,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “Charging the government for higher-cost inpatient services that patients do not need wastes the country’s precious health care resources.”
“It should come as no surprise to anyone that proper health care of a patient includes more than just competence of a provider, it requires accuracy and honesty in billing Medicare for the patient’s treatment,” said U.S. Attorney William J. Hochul Jr. of the Western District of New York. “In this case, a medical device manufacturer allegedly induced hospitals to admit patients as inpatients for minimally-invasive procedures involving its device, even though many of those patients should have been treated as outpatients at significantly less cost. This was done in order to collect higher Medicare reimbursements which ultimately drive up costs for all taxpayers and beneficiaries of government health programs.”
The United States alleged that Fox Hollow, which was acquired by ev3 Inc. in late 2007, knowingly caused 12 hospitals located throughout nine states to submit claims to Medicare for medically unnecessary inpatient stays for certain Medicare beneficiaries undergoing elective atherectomy procedures. Atherectomy is a minimally-invasive surgical procedure that uses a small cutting device to remove atherosclerosis, or hardening of the arteries, from large blood vessels within the body, and it is intended to open up narrowed coronary arteries to increase blood flow and circulation. One such device used in atherectomy procedures is the Silver Hawk Plaque Excision System sold by Fox Hollow. The United States alleged that throughout 2006 and 2007, to increase hospital purchases of the Silver Hawk device, Fox Hollow advised hospitals that they should bill Silver Hawk atherectomy procedures as more expensive inpatient claims, as opposed to less costly outpatient claims. As a result, certain hospitals allegedly claimed greater reimbursement than they were entitled to for treating Medicare beneficiaries who underwent Silver Hawk atherectomy procedures.
“Medical device makers that try to boost their profits by causing patients to be admitted for unnecessary and expensive inpatient hospital stays will be held accountable,” said Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “Both patients and taxpayers deserve to have medical decisions made based on what is medically appropriate.”
The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery. The lawsuit was filed by Amanda Cashi, who formerly worked as a Fox Hollow sales representative. Cashi will receive $250,000.
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 $23.5 billion through False Claims Act cases, with more than $15 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement with ev3 was the result of a coordinated effort among the U.S. Attorney’s Office for the Western District of New York, the Civil Division’s Commercial Litigation Branch, and HHS-OIG.
The claims resolved by this settlement are allegations only and there has been no determination of liability.
The civil lawsuit is captioned United States ex rel. Cashi v. Fox Hollow Technologies, Inc., et al. Civ. No. 09-CV-01066-S (W.D.N.Y.).
Gillian A. Gallardo Charged with Military Housing Allowance FraudRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that Gillian A. Gallardo, age 29, stationed on board Andersen Air Force Base, Guam, has been indicted by a federal grand jury on February 4, 2015, with two counts of theft of government money (18 U.S.C. § 641), two counts of fraudulent claim against the United States (18 U.S.C. § 287), and two counts of false statement to a federal government agency (18 U.S.C. § 1001). For each count of theft of government money, the maximum sentence under the statute is 10 years in prison and a $250,000 fine. For each count of fraudulent claim against the United States and each count of false statement to a federal government agency, the maximum sentence under the statute is 5 years in prison and a $250,000 fine. A summons was issued for Gallardo to appear in federal court on February 18, 2015, for her arraignment.
The indictment alleges that on November 27, 2012, Gallardo, an active duty Staff Sergeant in the U.S. Air Force, knowingly submitted false Overseas Housing Allowance documentation to the Defense Finance and Accounting Service (DFAS) that falsely claimed that Gallardo paid $2,450 in rent every month for her supposed occupancy of a certain residence in Yigo. In reality, Gallardo lived rent-free at an entirely different address in Dededo and pocketed the OHA funds.
Military members who are active duty or activated reservists or activated National Guardsmen are eligible to receive a tax-free housing allowance known as Overseas Housing Allowance (OHA). The amount of OHA compensation that an active duty military member can receive is determined by the actual amount of money the individual is paying for housing costs, up to a maximum amount determined by the individual’s rank and whether or not the individual has dependents. In Gallardo’s case, the maximum rental amount for which she could be compensated was $2,450.
The indictment further alleges that from October 1, 2012 through April 30, 2013, Gallardo received tax-free reimbursement for her fraudulent rental payments as well as tax-free reimbursements for utility expenses, which totaled approximately $21,501.90. To corroborate her OHA claim, Gallardo presented a false lease agreement to DFAS that falsely stated that Gallardo paid $2,450.00 every month in rent for her occupancy of this Yigo residence.
The indictment further alleges that on May 13, 2013, Gallardo again knowingly submitted false OHA documentation to DFAS that falsely claimed that Gallardo and another active duty Air Force Staff Sergeant paid a total of $4,400 in rent every month for their occupancy of their residence in Dededo. Relying on the OHA documentation Gallardo submitted, DFAS paid tax-free OHA reimbursement for the $2,200 she supposedly paid for her share of the rent every month. In reality, Gallardo and the other Staff Sergeant had a secret arrangement with their landlord to pay a significantly reduced amount of rent each month so that they could each pocket the remaining OHA payments.
From May 1, 2013 through March 31, 2014, Gallardo received tax-free reimbursement for her fraudulent rental payments as well as tax-free reimbursements for utility expenses, which totaled approximately $29,231.20. To corroborate this OHA claim, Gallardo again presented a false lease agreement to DFAS that falsely stated that Gallardo paid $2,200.00 every month in rent for her occupancy of this Dededo residence. The total amount of OHA payments Gallardo fraudulently received was $50,733.10.
This case is the result of an investigation conducted by the Air Force Office of Special Investigations. The prosecution is being handled by Special Assistant U.S. Attorney Kurt Grunawalt.
The charges in the Indictment are only allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.