District Not Recorded

A registered sex offender was sentenced today to 35 years in prison for transporting and possessing child pornography, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney John F. Walsh of the District of Colorado and Special Agent in Charge David Thompson of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations’ (HSI) Denver Field Office. 

“Insidious crimes like this steal the innocence and youth of our nation’s children,” said Assistant Attorney General Caldwell.  “The Department of Justice is committed to investigating, prosecuting and incapacitating those who prey upon the most vulnerable members of our society.”

“Defendant Hopson, by his repeated acts of victimization and criminal conduct, has made clear that he poses a real and present danger to children and to society,” said U.S. Attorney Walsh.  “The sentence imposed today will neutralize this dangerous perpetrator for 35 years and is a true victory for the community and for Colorado’s children.”

“Anyone who collects and shares child pornography victimizes the most innocent and most vulnerable members of our society,” said HSI Special Agent in Charge Thompson.  “This lengthy prison sentence recognizes the trauma that predators inflict on helpless children.”

Gregory Lynn Hopson, 44, of Westminster, Colorado was indicted on Oct. 24, 2012, and pleaded guilty to transportation and possession of child pornography on Sept. 29, 2014.  He has been in custody since his arrest on March 5, 2011.  Based on the conduct described below, Hopson is currently serving a state prison sentence of 16 years to life for violating the terms of his state probation in connection with his prior conviction for sexual assault on a child.  In addition to the prison sentence imposed today, Senior U.S. District Court Judge Lewis T. Babcock of the District of Colorado ordered Hopson to pay restitution to the victim of his crime.

According to Hopson’s admissions in his plea agreement, during the execution of a search warrant at his residence on March 5, 2011, ICE agents seized Hopson’s encrypted computer and CD-ROMs, which contained a well-organized collection of thousands of images and videos of child pornography.  The material depicted children, including infants, being sexually abused.  One of the CD-ROMs contained images and videos of Hopson engaged in sexually explicit conduct with a child under the age of 12 with whom Hopson was in a position of trust. 

Hopson further admitted in his plea agreement that he exchanged child pornography with others over the Internet.  In fact, ICE agents recovered approximately 300 emails that Hopson sent or received containing approximately 1,700 images and videos of child pornography. 

At the time of the search warrant, Hopson was already a registered sex offender, having been convicted of sexually abusing two children under the age of 12.  He was on intensive probation and was undergoing sex offender treatment when he committed these offenses.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse.  Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to locate, apprehend and prosecute individuals who sexually exploit children, and to identify and rescue victims.  For more information about Project Safe Childhood, please visit http://www.justice.gov/psc/.  For more information about Internet safety education, please visit http://www.justice.gov/psc/resources.html and click on the resources tab.

This case was investigated by HSI, and prosecuted by Trial Attorney Keith Becker of the Criminal Division’s Child Exploitation and Obscenity Section, and Chief Judith A. Smith and Assistant U.S. Attorney Beth N. Gibson of the District of Colorado’s Special Prosecution Section.

U.S. Attorney Preet Bharara for the Southern District of New York and Deputy Assistant Attorney General David A. Hubbert for the Tax Division of the Department of Justice announced that Wilbur Anthony Huff, a Kentucky businessman, pleaded guilty today in Manhattan federal court to various tax crimes that caused more than $50 million in losses to the Internal Revenue Service (IRS), and a massive fraud that involved the bribery of bank officials, the fraudulent purchase of an insurance company, and the defrauding of insurance regulators.  Huff pleaded guilty this afternoon before U.S. District Judge Naomi Reice Buchwald.

“Today’s guilty plea ensures that Wilbur Huff will be punished for perpetuating a vortex of fraud – complete with bribery, tax crimes that caused $53 million in losses to the IRS, the fraudulent purchase of a company, and the defrauding of insurance regulators,” said U.S. Attorney Bharara.  “Those who might be tempted to follow in Huff’s criminal footsteps should understand that this office and our law enforcement partners will aggressively pursue and root out fraud wherever we find it.”

Huff, 53, of Caneyville and Louisville, Kentucky, pleaded guilty to one count of corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws, which carries a maximum penalty of three years in prison, one count of aiding and assisting with the preparation and presentation of false and fraudulent tax returns, which carries a maximum penalty of three years in prison, one count of failing and causing the failure to pay taxes to the IRS, which carries a maximum penalty of one year in prison, and one count of conspiracy to (a) commit bank bribery, (b) commit fraud on bank regulators and the board and shareholders of a publicly-traded company, and (c) fraudulently purchase an Oklahoma insurance company, which carries a maximum penalty of five years in prison.  He is scheduled to be sentenced by Judge Buchwald on April 8, 2015, at 2:30 p.m. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.  As part of his plea, Huff also agreed to forfeit $10.8 million to the United States and to provide restitution in the following amounts to victims of his crimes: $70,100,000 to the Receiver for Park Avenue Property and Casualty Insurance Company; $4,857,266.62 to the Federal Deposit Insurance Corporation (FDIC); $597,420.29 to Valley National Bank (the successor of Park Avenue Bank); and $53,094,219 to the IRS.

According to the information, plea agreement, and statements made during court proceedings:

Background

Huff was a businessman who controlled numerous entities located throughout the United States (Huff-controlled entities).  Huff controlled the companies and their finances, using them to orchestrate a $53 million fraud on the IRS as well as other illegal schemes.  However, rather than exercise control of these companies openly, Huff concealed his control by installing other individuals to oversee the companies’ day-to-day functions and to serve as the companies’ titular owners, directors or officers.  Huff also maintained a corrupt relationship with Park Avenue Bank and its executives, Charles J. Antonucci Sr., the president and chief executive officer, and Matthew L. Morris, the senior vice president. 

Tax Crimes

From 2008 to 2010, Huff controlled O2HR, a professional employer organization (PEO) located in Tampa, Florida.  Like other PEOs, O2HR was paid to manage the payroll, tax, and workers’ compensation insurance obligations of its client companies.  However, instead of paying $53 million in taxes that O2HR’s clients owed the IRS, and instead of paying $5 million to Providence Property and Casualty Insurance Company (Providence P&C) – an Oklahoma-based insurance company – for workers’ compensation coverage expenses for O2HR clients, HUFF stole the money that his client companies had paid O2HR for those purposes.  Among other things, Huff diverted millions of dollars from O2HR to fund his investments in unrelated business ventures, and to pay his family members’ personal expenses.  The expenses included mortgages on Huff’s homes, rent payments for his children’s apartments, staff and equipment for Huff’s farm, designer clothing, jewelry, and luxury cars.

Conspiracy to Commit Bank Bribery, Defraud Bank Regulators, and Fraudulently Purchase an Oklahoma Insurance Company

From 2007 up to and including 2010, HUFF engaged in a massive multi-faceted conspiracy, in which he schemed to (i) bribe executives of Park Avenue Bank, (ii) defraud bank regulators and the board and shareholders of a publicly-traded company and (iii) fraudulently purchase an Oklahoma insurance company.  As described in more detail below, Huff paid bribes totaling hundreds of thousands of dollars in cash and other items to Morris and Antonucci, in exchange for their favorable treatment at Park Avenue Bank. 

As part of the corrupt relationship between Huff and the bank executives, Huff, Morris, Antonucci, and others conspired to defraud various entities and regulators during the relevant time period.  Specifically, Huff conspired with Morris and Antonucci to falsely bolster Park Avenue Bank’s capital, by orchestrating a series of fraudulent transactions to make it appear that Park Avenue Bank had received an outside infusion of $6.5 million, and engaged in a series of further fraudulent actions to conceal from bank regulators the true source of the funds. 

Huff further conspired with Morris, Antonucci, and others to defraud Oklahoma insurance regulators and others by making material misrepresentations and omissions regarding the source of $37.5 million used to purchase Providence Property and Casualty Insurance Company, an Oklahoma insurance company that provided workers’ compensation insurance for O2HR’s clients, and to whom O2HR owed a significant debt.

Bribery of Park Avenue Bank Executives

From 2007 to 2009, Huff paid Morris and Antonucci at least $400,000 in exchange for which they: (1) provided Huff with fraudulent letters of credit obligating Park Avenue Bank to pay an investor in one of Huff’s businesses $1.75 million if Huff failed to pay the investor back himself; (2) allowed the Huff-controlled entities to accrue $9 million in overdrafts; (3) facilitated intra-bank transfers in furtherance of Huff’s frauds; and (4) fraudulently caused Park Avenue Bank to issue at least $4.5 million in loans to the Huff-controlled entities.  

Fraud on Bank Regulators and a Publicly-Traded Company

From 2008 to 2009, Huff, Morris, and Antonucci engaged in a scheme to prevent Park Avenue Bank from being designated as “undercapitalized” by regulators – a designation that would prohibit the bank from engaging in certain types of banking transactions, and that would subject the bank to a range of potential enforcement actions by regulators.  Specifically, they engaged in a series of deceptive, “round-trip” financial transactions to make it appear that Antonucci had infused the bank with $6.5 million in new capital when, in actuality, the $6.5 million was part of the bank’s pre-existing capital.  Huff, Morris, and Antonucci funneled the $6.5 million from the bank through accounts controlled by Huff to Antonucci.  This was done to make it appear as though Antonucci was helping to stabilize the bank’s capitalization problem, so the bank could continue engaging in certain banking transactions that it would otherwise have been prohibited from doing, and to put the bank in a better posture to receive $11 million from the Troubled Asset Relief Program.  To conceal their unlawful financial maneuvering, Huff created, or directed the creation of, documents falsely suggesting that Antonucci had earned the $6.5 million through a bogus transaction involving another company Antonucci owned.  Huff, Morris, and Antonucci further concealed their scheme by stealing $2.3 million from General Employment Enterprises Inc., a publicly-traded temporary staffing company, in order to pay Park Avenue Bank back for monies used in connection with the $6.5 million transaction.

Fraud on Insurance Regulators and the Investment Firm

From July 2008 to November 2009, Huff, Morris, Antonucci, and Allen Reichman, an executive at an investment bank and financial services company headquartered in New York, New York (the “investment firm”), conspired to (i) defraud Oklahoma insurance regulators into allowing Antonucci to purchase the assets of Providence P&C – the Oklahoma insurance company that was owed $5 million by O2HR and (ii) defraud the investment firm into providing a $30 million loan to finance the purchase.  Specifically, HUFF and Antonucci devised a scheme in which Antonucci would purchase Providence P&C’s assets by obtaining a $30 million loan from the Investment Firm, which used Providence P&C’s own assets as collateral for the loan.  However, because Oklahoma insurance regulators had to approve any sale of Providence P&C, and because Oklahoma law forbade the use of Providence P&C’s assets as collateral for such a loan, Huff, Morris, Antonucci, and Reichman made, and conspired to make, a number of material misstatements and material omissions to the investment firm and Oklahoma insurance regulators concerning the true nature of the financing for Antonucci’s purchase of Providence P&C.  Among other things, Reichman directed Antonucci to sign a letter that provided false information regarding the collateral that would be used for the loan, and Huff, Morris, and Antonucci conspired to falsely represent to Oklahoma insurance regulators that Park Avenue Bank – not the investment firm – was funding the purchase of Providence P&C. 

After deceiving Oklahoma regulators into approving the sale of Providence P&C, Huff took $4 million of the company’s assets, which he used to continue the scheme to defraud O2HR’s clients.  Ultimately, in November 2009, the insurance company became insolvent and was placed in receivership after Huff, Morris, and Antonucci had pilfered its remaining assets.

*                *                *

Charles Antonucci, who was charged separately by complaint on March 15, 2010, pleaded guilty to his role in the crimes described above on Oct. 8, 2010.  Matthew L. Morris and Allen Reichman were charged by Indictment with Huff on Oct. 1, 2012.  Morris pleaded guilty in connection with the case on Oct.17. 

Reichman is currently scheduled to go to trial March 2, 2015 before Judge Buchwald.  The charges against Reichman are allegations and he is presumed innocent unless and until proven guilty beyond a reasonable doubt. 

U.S. Attorney Bharara praised the investigative work of the Special Inspector General for the Troubled Asset Relief Program, the FBI, the IRS, the New York State Department of Financial Services, Immigration and Customs Enforcement (ICE)’s Homeland Security Investigations (HSI), and the Office of Inspector General of the FDIC.  Mr. Bharara also thanked the Department of Justice’s Tax Division and the U.S. Attorney’s Office for the Southern District of Florida for their assistance.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Janis Echenberg and Daniel Tehrani and Special Assistant U.S. Attorney Tino Lisella are in charge of the criminal case.

The Justice Department announced today that it reached a settlement agreement with the County of Erie, New York, to ensure equal access to the facilities and services of the Erie County Holding Center and the Erie County Correctional Facility, collectively referred to as the Erie County Jail.  The Erie County Holding Center, located in Buffalo, New York, is primarily a pretrial detention facility and is the second largest detention facility in New York State.  The Erie County Correctional Facility, located in Alden, New York, holds inmates of various classifications and processes more than 20,000 inmates annually.

The Justice Department initiated a compliance review of the Erie County Jail under the Americans with Disabilities Act (ADA) and the Rehabilitation Act of 1973 after receiving complaints alleging that, because the Erie County Jail did not have a sufficient number of accessible cells and shower facilities, the jail housed inmates with mobility disabilities in its medical unit even though they did not require medical treatment.  The department determined that the jail’s medical unit also did not have accessible features.  In resolution of the department’s findings, the agreement requires the Erie County Jail to:

• Complete specified accessibility modifications to its facilities within four years, including providing accessible cells in various classifications and housing units, providing accessible showers and toilet facilities, and providing accessible features in the medical unit.
• Ensure that a minimum of three percent, but no fewer than one, of the total number of cells in its newly constructed and altered facilities are accessible to inmates with mobility disabilities.
• Ensure that inmates with disabilities are not housed in designated medical areas unless they are receiving medical care or treatment.
• Ensure that wheelchairs and other adaptive equipment used by inmates with disabilities are routinely maintained, repaired, and generally kept in safe, operable condition.
• Provide appropriate devices, such as medical trapezes, hearing aid batteries, or special shoes, as required to meet the needs of inmates with disabilities.
• Ensure that when inmates who are deaf or have hearing loss are handcuffed or restrained, they are handcuffed or restrained in a manner that permits effective communication (e.g., handcuffing detainees in the front so they can sign) unless legitimate security concerns dictate otherwise. 
• Ensure that when inmates who are blind or have low vision are handcuffed or restrained, they are handcuffed or restrained in a manner that permits safe mobility, including the use of a cane or sighted guide. 
• Designate a disabilities coordinator who coordinates ADA access at the Erie County Holding Center and the Erie County Correctional Facility.
• Develop and implement an ADA grievance policy for resolving inmate ADA complaints.
• Develop and implement an effective communication policy for inmates who are deaf, have hearing loss, blind or have low vision.

“The ADA prohibits discrimination by public entities on the basis of disability, including the denial by correctional facilities and jails of equal services to individuals with disabilities,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division.  “With this agreement, the Erie County Jail is taking important steps to ensure that people incarcerated in the jail are not endangered or discriminated against because of their disabilities.” 

To read the settlement agreement or for more information on the ADA, visit the ADA website at www.ada.gov.   Those interested in finding out more about this settlement 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].

The Justice Department today announced the filing of a lawsuit against the Chicago Board of Education, alleging that the board discriminated against pregnant teachers at Scammon Elementary School by subjecting them to adverse personnel actions, including termination in some instances, after they announced their pregnancies.  According to the complaint, these adverse personnel actions were in violation of Title VII of the Civil Rights Act of 1964.  Title VII is a federal statute that prohibits employment discrimination on the basis of sex, race, color, national origin and religion.  The statute explicitly prohibits employers from discriminating against female employees due to pregnancy, childbirth or related medical conditions. 

The suit, filed in the United States District Court for the Northern District of Illinois, alleges that, starting in 2009, the principal at Scammon subjected female teachers to lower performance evaluations, discipline, threatened termination and/or termination because of their pregnancies.  The complaint further alleges that the board approved the firing of six recently pregnant teachers employed at Scammon and forced two other recently pregnant teachers to leave Scammon.  The department’s complaint seeks a court order that would require the board to develop and implement policies that would prevent its employees from being subjected to discrimination due to their pregnancies.  The relief sought also includes monetary damages as compensation for those teachers who were harmed by the alleged discrimination.

Two teachers who had been pregnant while working at Scammon filed charges of sex discrimination with the Chicago District Office of the Equal Employment Opportunity Commission (EEOC).  The EEOC investigated the charges and determined that there was reasonable cause to believe discrimination occurred against the two charging parties as well as against other pregnant teachers.  The EEOC was unsuccessful in its attempts to conciliate the matter before referring it to the Department of Justice.

“No woman should have to make a choice between her job and having a family,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division.  “Federal law requires employers to maintain a workplace free of discrimination on the basis of sex.”

“Despite much progress, we continue to see the persistence of overt pregnancy discrimination, as well as the emergence of more subtle discriminatory practices in the workplace,” said EEOC Chair Jenny R. Yang.

“The EEOC will continue to vigorously enforce Title VII’s prohibition of discrimination against pregnant employees,” said John P. Rowe, former District Director of the EEOC’s Chicago District Office.  Rowe led the EEOC’s administrative investigation of the charges filed by the two teachers.

This lawsuit is 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/).

The continued enforcement of Title VII has been a priority of the Justice Department’s Civil Rights Division.  Additional information on the Civil Rights Division’s work is available on its website at www.justice.gov/crt/.  Pregnancy discrimination, in particular, has been identified by the EEOC as a strategic enforcement priority, and earlier this year, the agency issued updated guidance, which is available at www.eeoc.gov/laws/types/pregnancy_guidance.cfm

UNITED NATIONS, New York – Identifying new mechanisms to assist law enforcement efforts in identifying and seizing criminal assets was the focus of an INTERPOL meeting at the United Nations headquarters.

During the three-day (17 – 19 December) working group meeting some 90 experts from 32 countries and six international organizations, including a number of UN agencies, the International Criminal Court and the World Bank, discussed the creation of operational tools through which INTERPOL could assist in asset tracing and recovery.

Organized by the INTERPOL General Secretariat in cooperation with the US National Central Bureau in Washington DC, the aim of the second session of the Expert Working Group on the Identification, Location and Seizure of Assets was to provide practitioners with new insight and instruments to enhance law enforcement and judicial cooperation.

Headed by chairman Ambassador Eugenio María Curia and Joël Sollier, INTERPOL General Counsel, the group recommended the creation of a new INTERPOL notice to locate, identify and obtain information on, seize or freeze criminal assets in compliance with national and international laws and obligations, supported by the establishment of an operational database.

The experts also recommended further consideration of developing mechanisms to simplify and expedite the transmission of mutual legal assistance requests using the secured INTERPOL communications channel (e-MLA). Rapid law enforcement action is particularly important to bridge the gap between lengthy legal assistance procedures and the high speed at which criminals move and hide proceeds.

With studies showing less than 10 percent of all criminal gains are being recovered, one of the key drivers behind the creation of the expert working group is to increase the number of criminal assets being frozen, confiscated for the benefit of society or given back to original owners.

The working group session was addressed by New York City Police Commissioner William Bratton who highlighted the important role of asset recovery in daily police work.

The meeting, attended by three INTERPOL Executive Committee members, Vice President for the Americas, Alan Bersin and Delegates for Europe, Filippo Dispenza and Alexander Prokopchuk, followed the recent briefing to the UN Security Council by INTERPOL Secretary General Jürgen Stock.

In his address to the Security Council, Mr Stock emphasized INTERPOL’s important role in providing assistance for the implementation of UN sanctions, and highlighted the work of the expert working group in supporting the coordination of international law enforcement efforts in asset tracing and freezing.

A former FBI special agent pleaded guilty today to bribery charges, admitting that he provided internal law enforcement documents and other confidential information about a prominent citizen of Bangladesh for use by a political rival in exchange for cash.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara of the Southern District of New York and Justice Department Inspector General Michael E. Horowitz made the announcement.

“Robert Lustyik discarded the FBI’s principles of ‘fidelity, bravery, and integrity,’ and sold his badge to the highest bidder,” said Assistant Attorney General Caldwell.  “Greed has no place in public service or law enforcement.  The Department of Justice will root out corruption wherever it takes hold, and hold accountable those who abuse the public’s trust for personal gain.” 

“Robert Lustyik today admitted to conducting a bribery scheme in which, for his own personal gain, he secretly sold information and documents to which he had access as an FBI agent,” said U.S. Attorney Bharara.  “Lustyik betrayed our system of justice: he breached not only the law, but also his sworn oath, and the great trust and confidence placed in him by citizens and colleagues.  For his criminal conduct he now faces, as he must, serious, commensurate penalties.”

“The Department of Justice Office of the Inspector General is committed to working with our law enforcement partners to identify, investigate, and bring to justice all DOJ employees who engage misconduct,” said Inspector General Horowitz.

Robert Lustyik, 52, of Westchester County, New York, pleaded guilty to all five counts in the indictment against him, including conspiracy to engage in a bribery scheme, soliciting bribes by a public official, conspiracy to defraud the citizens of the United States and the FBI, theft of government property, and unauthorized disclosure of a Suspicious Activity Report.  Lustyik is scheduled to be sentenced by U.S. District Court Judge Vincent L. Briccetti of the Southern District of New York on April 30, 2015.

According to the complaint, indictment, court hearings, and today’s plea proceeding, Lustyik was an FBI special agent who worked on the counterintelligence squad in the White Plains Resident Agency.  Johannes Thaler was Lustyik’s friend, and Rizve Ahmed, aka, “Caesar,” was an acquaintance of Thaler.  From September 2011 through March 2012, Lustyik, Thaler and Ahmed engaged in a bribery scheme.  As part of the scheme, Lustyik and Thaler solicited payments from Ahmed, in exchange for Lustyik’s agreement to provide internal, confidential documents and other confidential information to which Lustyik had access by virtue of his position as an FBI special agent.  The documents and information pertained to a prominent citizen of Bangladesh (Individual 1), who Ahmed perceived as a political rival.  Ahmed sought, among other things, to obtain information about Individual 1, to locate and harm Individual 1 and others associated with Individual 1.

As part of the scheme, Lustyik and Thaler exchanged text messages, including messages about how to pressure Ahmed to pay them additional money in exchange for confidential information.  For example, in text messages, Lustyik told Thaler, “we need to push [Ahmed] for this meeting and get that 40 gs quick . . . . I will talk us into getting the cash . . . . I will work my magic . . . . We r sooooooo close.”  Thaler responded, “I know.  It’s all right there in front of us.  Pretty soon we’ll be having lunch in our oceanfront restaurant . . . .” 

As another example, in late January 2012, Lustyik, upon learning that Ahmed was considering using a different source to obtain confidential information about Individual 1, sent a text message to Thaler stating, “I want to kill C . . . . I hung my ass out the window n we got nothing? . . . . Tell [Ahmed], I’ve got [Individual 1’s] number and I’m pissed. . . . I will put a wire on n get [Ahmed and his associates] to admit they want [a Bangladeshi political figure] offed n we sell it to Individual 1].”  Lustyik further stated, “So bottom line.  I need ten gs asap.  We gotta squeeze C.”

Thaler and Ahmed previously pleaded guilty to bribery and conspiracy to commit fraud, and are scheduled to be sentenced on Jan. 23, 2015. 

The case was investigated by the Department of Justice Office of the Inspector General, and prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Benjamin Allee of the Southern District of New York.

A Brooklyn, New York, tax preparer was indicted by a federal grand jury in the Eastern District of New York and charged with 30 counts of aiding in the preparation of false income tax returns, the Justice Department and Internal Revenue Service (IRS) announced following her Dec. 22 arrest and the unsealing of the indictment.

Awilda Rosario owned and operated a Brooklyn-based tax preparation business called Edujas Multiservices Corporation, according to the indictment.  The indictment charges that Rosario prepared false individual income tax returns for taxpayer-clients for at least six years, spanning tax years 2008 through 2013.  Rosario allegedly attached false schedules that reported business losses the taxpayers did not incur and attached schedules that reported inflated or fictitious deductions.  Rosario also attached forms claiming fictitious education and fuel tax credits that the taxpayers were not entitled to receive.

The indictment further alleges that after the IRS revoked the electronic filing number for Edujas Multiservices Corporation, Rosario obtained at least two different e-file provider numbers and continued to prepare and submit false tax returns for her clients, listing a different paid tax return preparer and tax preparer firm to conceal her involvement.

If convicted, Rosario faces a statutory maximum sentence of three years in prison and a fine of up to $250,000 for each count.

The case was investigated by special agents of IRS-Criminal Investigation.  Assistant Chief Jorge Almonte and Trial Attorney Shawn T. Noud of the Justice Department’s Tax Division are prosecuting the case.

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

The Department of Justice and the U.S. Environmental Protection Agency announced today that XTO Energy Inc. (XTO), a subsidiary of ExxonMobil and the nation’s largest holder of natural gas reserves, will spend an estimated $3 million to restore eight sites damaged by unauthorized discharges of fill material into streams and wetlands in connection with hydraulic fracturing operations.  XTO will also implement a comprehensive plan to comply with federal and state water protection laws at the company’s oil and gas extraction facilities in West Virginia that use horizontal drilling methods.

“The extraction of domestic energy resources is vitally important, and so it is equally important that companies ensure that all such activities comply with the nation’s environmental laws,” said Acting Assistant Attorney General Sam Hirsch for the Justice Department’s Environment and Natural Resources Division.  “This settlement will resolve allegations that XTO’s illegal discharges of fill materials damaged streams and wetlands, by requiring the company to pay a penalty, restore the damaged resources where possible and take other mitigation and compliance measures.”  

The company will pay a civil penalty of $2.3 million for violations of Section 404 of the Clean Water Act and West Virginia law.  Section 404 of the Clean Water Act prohibits the filling or damming of wetlands, rivers, streams, and other waters of the United States without a permit from the U.S. Army Corps of Engineers (Corps).  The Clean Water Act requires a company to obtain a permit prior to discharging dredge or fill material into wetlands, rivers, streams, and other waters of the United States.

The settlement also resolves alleged violations of state law asserted by WVDEP.  The state of West Virginia is a co-plaintiff in the settlement and will receive half of the $2.3 million civil penalty.

“American communities expect EPA and our state partners to make sure energy development is done responsibly,” said Assistant Administrator Cynthia Giles of EPA’s Office of Enforcement and Compliance Assurance.  “This case will help to protect clean water in West Virginia, and support a level playing field for energy developers that play by the rules.”

The federal government and the West Virginia Department of Environmental Protection (WVDEP) allege that the company impacted streams and discharged sand, dirt, rocks and other fill material into streams and wetlands without a federal permit in order to construct well pads, road crossings, freshwater pits, and other facilities related to natural gas extraction.  The alleged violations being resolved by today’s settlement occurred at eight sites located in the West Virginia Counties of Harrison, Marion and Upshur.  The federal government and WVDEP allege that the violations impacted more than 5,300 linear feet of stream, and 3.38 acres of wetlands.

The settlement requires that the company fully restore the wetlands and streams wherever feasible, monitor the restored sites to assure the success of the restoration, and implement a comprehensive compliance program to ensure future compliance with the Clean Water Act and applicable state law.

EPA discovered some of the violations through information provided by the state and through routine joint inspections conducted with the Corps, who actively supported the EPA and the Justice Department in this case.  In addition, the company voluntarily disclosed potential violations at five of the sites following an internal audit.  Beginning in 2011, EPA issued administrative compliance orders for violations at all eight sites.  Since that time, the company has been working with EPA to correct the violations and restore those sites in full compliance with EPA’s orders. 

In July 2013, the United States concluded a settlement with XTO to resolve an alleged violation of the Clean Water Act related to the discharge of wastewater from XTO’s Penn Township, Lycoming County, Pennsylvania, facility used for the storage of wastewater generated by hydraulic fracturing operations.

Filling wetlands illegally and damming streams can result in serious environmental consequences.  Streams, rivers, and wetlands benefit the environment by reducing flood risks, filtering pollutants, recharging groundwater and drinking water supplies, and providing food and habitat for aquatic species.  Any person, firm or agency planning to work in, or discharge dredged or fill material into waters of the U.S., including wetlands, must first obtain a permit from the Corps.  Compliance with the Corps’ permit process and regulations helps to ensure that enforcement actions like this one do not occur.  For more information about the permitting process under Section 404 of the Clean Water Act, contact: [email protected].

XTO engages in the exploration and production of natural gas in the Appalachian Basin.  The company has Marcellus Shale holdings in Pennsylvania, New York, Ohio and West Virginia.

The consent decree, lodged today in the Northern District of West Virginia, is subject to a 30-day public comment period and court approval.  The consent decree is available for review at www.justice.gov/enrd/Consent_Decrees.html.

The United States has filed a civil False Claims Act complaint against Omnicare Inc. alleging that it solicited and received millions of dollars in kickbacks from pharmaceutical manufacturer Abbott Laboratories, the Justice Department announced today.  Omnicare is the nation’s largest provider of pharmaceuticals and pharmacy consulting services to nursing homes.  Federal regulations designed to protect nursing home residents from unnecessary drugs require nursing homes to retain consulting pharmacists such as those provided by Omnicare to ensure that residents’ drug prescriptions are appropriate.

In its complaint, the United States alleges that Omnicare solicited and received kickbacks from Abbott in exchange for purchasing and recommending the prescription drug Depakote for controlling behavioral disturbances exhibited by dementia patients residing in nursing homes serviced by Omnicare.  According to the complaint, Omnicare’s pharmacists reviewed nursing home patients’ charts at least monthly and made recommendations to physicians on what drugs should be prescribed for those patients.  The government alleges that Omnicare touted its influence over physicians in nursing homes in order to secure kickbacks from pharmaceutical companies such as Abbott.

“Elderly nursing home residents suffering from dementia are among our nation’s most vulnerable patient populations, and they depend on the independent judgment of healthcare professionals for their daily care,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “Kickbacks to consulting pharmacists compromise their independence and undermine their role in protecting nursing home residents from the use of unnecessary drugs.”

The United States alleges that Omnicare disguised the kickbacks it received from Abbott in a variety of ways.  Abbott allegedly made payments to Omnicare described as “grants” and “educational funding,” even though their true purpose was to induce Omnicare to recommend Depakote.  For example, according to the complaint, Omnicare solicited substantial contributions from Abbott and other pharmaceutical manufacturers to its “Re*View” program.  Although Omnicare claimed that Re*View was a “health management” and “educational” program, the complaint alleges that it was simply a means by which Omnicare solicited kickbacks from pharmaceutical manufacturers in exchange for increasing the utilization of their drugs on elderly nursing home residents.  In internal documents, Omnicare allegedly referred to Re*View as its “one extra script per patient” program.  The complaint also alleges that Omnicare entered into agreements with Abbott by which Omnicare was entitled to increasing levels of rebates from Abbott based on the number of nursing home residents serviced and the amount of Depakote prescribed per resident.  Finally, the complaint alleges that Abbott funded Omnicare management meetings on Amelia Island, Florida, offered tickets to sporting events to Omnicare management, and made other payments to local Omnicare pharmacies.

“Although the United States Attorney’s Office for the Western District of Virginia is small, we will not waver in our pursuit of the largest corporations, like Omnicare and Abbott, who illegally raid the coffers of Medicaid, Medicare, and other healthcare benefit programs,” said Acting U.S. Attorney Anthony P. Giorno for the Western District of Virginia.

“Kickback allegations place elderly nursing home residents at risk that treatment decisions are influenced by improper financial incentives,” said Special Agent in Charge Nicholas DiGiulio for the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) region including Virginia. “We will continually guard government health programs and taxpayers from companies more intent on their bottom lines than on patient care.”

In May 2012, the United States, numerous individual states, and Abbott entered into a $1.5 billion global civil and criminal resolution that, among other things, resolved Abbott’s civil liability under the False Claims Act for paying kickbacks to nursing home pharmacies.

The United States filed its complaint against Omnicare in two consolidated whistleblower lawsuits filed under the False Claims Act in the Western District of Virginia.  The whistleblower provisions of the False Claims Act authorize private parties to sue for fraud on behalf of the United States and share in any recovery.  The United States is entitled to intervene and take over such lawsuits, as it has done here.

This case 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 $23.2 billion through False Claims Act cases, with more than $14.9 billion of that amount recovered in cases involving fraud against federal health care programs.

This investigation was jointly handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Virginia, HHS-OIG, the Office of the Attorney General for the Commonwealth of Virginia and the National Association of Medicaid Fraud Control Units.

The cases are captioned United States ex rel. Spetter v. Abbott Labs., et al., Case No. 10-cv-00006 (W.D. Va.) and United States ex rel. McCoyd v. Abbott Labs., et al., Case No. 07-cv-00081 (W.D. Va.).  The claims asserted in the government’s complaint are allegations only and there has been no determination of liability.

Twelve former Puerto Rico police officers have been sentenced for using their law enforcement affiliation and equipment to commit robbery and extortion, and to sell illegal narcotics and manipulate court records. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico and Special Agent in Charge Carlos Cases of the FBI’s San Juan Division made the announcement.

The following 12 defendants have been sentenced:

• Osvaldo Vazquez-Ruiz was sentenced to 138 months in prison.Vazquez-Ruiz pleaded guilty on Aug. 21, 2014, to conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO) and carrying a firearm during and in relation to a crime of violence.

• Orlando Sierra-Pereira was sentenced to 157 months in prison.Sierra-Pereira pleaded guilty on Aug. 21, 2014, to conspiracy to violate RICO and carrying a firearm during and in relation to a crime of violence.

• Danny Nieves-Rivera was sentenced to 157 months in prison.Nieves-Rivera pleaded guilty on Aug. 21, 2014, to conspiracy to violate RICO and carrying a firearm during and in relation to a crime of violence.

• Roberto Ortiz-Cintron was sentenced to 154 months in prison.Ortiz-Cintron pleaded guilty on Aug. 21, 2014, to conspiracy to violate RICO and carrying a firearm during and in relation to a crime of violence.

• Yovanny Crespo-Candelaria was sentenced to 70 months in prison.Crespo-Candelaria pleaded guilty on Aug. 21, 2014, to conspiracy to violate RICO.

• Nadab Arroyo-Rosa was sentenced to 78 months in prison.Arroyo-Rosa pleaded guilty on Aug. 21, 2014, to conspiracy to violate RICO.

• Jose Flores-Villalongo was sentenced to 78 months in prison.Flores-Villalongo pleaded guilty on Aug. 21, 2014, to conspiracy to violate RICO.

• Eduardo Montañez-Perez was sentenced to 63 months in prison.Montañez-Perez pleaded guilty on Aug. 15, 2014, to conspiracy to violate RICO.

• Carlos Candelario-Santiago was sentenced to 63 months in prison.Candelario-Santiago pleaded guilty on Aug. 15, 2014, to conspiracy to violate RICO.

• Ruben Casiano-Pietri was sentenced to 78 months in prison.Casiano-Pietri pleaded guilty on Aug. 21, 2014, to attempted Hobbs Act robbery.

• Ricardo Rivera-Rodriguez was sentenced to 33 months in prison.Rivera-Rodriguez pleaded guilty on Aug. 25, 2014, to attempted Hobbs Act extortion under color of official right.

• Christian Valles-Collazo was sentenced to 78 months in prison.Valles-Collazo pleaded guilty on Aug. 21, 2014, to attempted Hobbs Act robbery.

All 12 of the above defendants were sentenced by Senior U.S. District Judge Daniel R. Dominguez of the District of Puerto Rico, and the remaining four defendants convicted in this case are scheduled to be sentenced in January 2015.  At the time of the crimes, Flores-Villalongo and Candelario-Santiago were sergeants with the Police of Puerto Rico; the others were police officers.

The officers convicted of the RICO conspiracy admitted to being members of a criminal organization that sought to enrich its members through a pattern of illegal conduct.  Over the course of the conspiracy, the officers worked together to conduct traffic stops and enter homes or buildings used by persons suspected of being engaged in criminal activity to steal money, property and narcotics.  The officers also planted evidence to make false arrests, and then extorted money in exchange for their victims’ release from custody.  In exchange for bribe payments, the officers gave false testimony, manipulated court records and failed to appear in court when required so that cases would be dismissed.  Additionally, the officers sold and distributed wholesale quantities of narcotics.

As just a few examples of their criminal conduct, in April 2012, Vazquez-Ruiz and Sierra-Pereira conducted a traffic stop in their capacity as police officers and stole approximately $22,000 they believed to be illegal drug proceeds.  Vazquez-Ruiz later attempted to extort approximately $8,000 from an individual he believed to be a drug dealer’s accomplice in exchange for promising to release an alleged prisoner.

Further, in November 2012, Sierra-Pereira, Nieves-Rivera, Ortiz-Cintron and Valles-Collazo illegally entered an apartment and stole approximately $30,000, which they believed was illegal lottery proceeds.

The defendants frequently shared the proceeds they illegally obtained and used their power, authority and official positions as police officers to promote and protect their illegal activity.  Among other things, the defendants used their police firearms, badges, patrol cars, tools, uniforms and other equipment to commit the crimes and concealed their illegal activity with fraudulently obtained court documents and falsified police paperwork to make it appear that they were engaged in legitimate police work.

The case was investigated by the FBI’s San Juan Division.  The case is being prosecuted by Trial Attorneys Brian K. Kidd, Emily Rae Woods and Menaka Kalaskar of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Mariana E. Bauzá of the District of Puerto Rico.

A federal court in Memphis, Tennessee, permanently barred three individuals from preparing tax returns for others and owning or operating a tax return preparation business, the Justice Department announced today.

The civil injunction order, to which the defendants Shandon Allen, Tabitha Tunstall, and Shewanda Hamilton agreed, was signed by U.S. District Judge S. Thomas Anderson of the U.S. District Court for the Western District of Tennessee.

The United States brought the civil injunction suit in October 2014, alleging that the defendants and their employees prepare fraudulent tax returns that cause their customers to incorrectly report their federal tax liabilities and underpay their taxes.  According to the complaint, the defendants and their employees prepare federal tax returns on which they falsely claim the Earned Income Tax Credit, improper filing status, and bogus education credits.  Additionally, the defendants and their employees allegedly improperly prepare tax returns using paystubs rather than W-2 forms, fabricate bogus W-2 forms and file tax returns without some customers’ consent while charging deceptive and unconscionable fees, according to the suit.

The complaint alleged that the defendants were former managers of Mo’ Money Taxes, but began doing business as Southern King Taxes in 2012.  The United States previously obtained an injunction permanently barring the owners of Mo’ Money Taxes, Markey Granberry and Derrick Robinson, as well as a former Mo’ Money manager, Eumora Reese, from preparing tax returns for others and owning or operating a tax return preparation business.  The complaint alleged that Allen, Tunstall, and Hamilton continue to prepare tax returns in the same fraudulent manner as alleged in the complaint against the owners of Mo’ Money Taxes.    

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2014.  The IRS has some tips on their website for choosing a tax preparer.  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.

The Justice Department reached an agreement today with Diversified Business Consulting Group Inc., an information technology staffing agency headquartered in Silver Spring, Maryland.  The settlement resolves the department’s claims that Diversified discriminated against work-authorized non-U.S. citizens in violation of the Immigration and Nationality Act (INA).

The department’s investigation concluded that Diversified’s human resources personnel required non-U.S. citizens, but not U.S. citizens, to present specific types of documents during the employment eligibility verification process to establish their work authority.  The INA’s anti-discrimination provision prohibits employers from specifying documents that employees must present during the employment eligibility verification process based on an employee’s citizenship status or national origin. 

Under the settlement agreement, Diversified will pay $7,700 in civil penalties to the United States and undergo department-provided training on the anti-discrimination provision of the INA.  Diversified’s corporate office and its branches will be subject to departmental monitoring and reporting requirements.

“The Civil Rights Division is committed to protecting work-authorized individuals from discriminatory practices in the employment eligibility verification process,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division.  “We commend Diversified for working cooperatively with the division to resolve this matter.”

The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA.  The statute prohibits, among other things, citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; document abuse; retaliation; and intimidation.   

For more information about protections against employment discrimination under immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired); call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired); sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php, email [email protected]; or visit OSC’s website at www.justice.gov/crt/about/osc.  

Applicants or employees who believe they were subjected to: different documentary requirements based on their citizenship status, immigration status, or national origin; or discrimination based on their citizenship status, immigration status or national origin in hiring, firing, or recruitment or referral, should contact OSC’s worker hotline for assistance.

A federal court in Waco, Texas has permanently barred Patricia Foley aka Sissy Foley; Amanda Smith; April Leann Morgan aka April Leann Ercanbrack; Cassandra Egbert and Joshua Stifle, individually and doing business as Accounting System Services and doing business as A Kind Bookkeeping and Tax Service from preparing tax returns for others, the Justice Department announced today.  The five defendants agreed to the stipulated order of permanent injunction, which U.S. District Judge Walter S. Smith Jr. entered on Dec. 19.

The complaint alleges that the defendants prepared income tax returns for their customers that contained false, improper or inflated business expense deductions on Schedule F (Profit or Loss from Farming) on their returns.  These activities led to the defendants’ customers filing tax returns that unlawfully understated income and tax liabilities and overstated refunds, according to the suit.

The injunction requires the defendants to turn over to the United States a list of all persons for whom they prepared federal tax returns or claims for a refund for tax years 2009 through 2014.  The order granting the injunction further authorizes the United States to monitor the defendants’ compliance with the terms of the order.]\

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2014.  The IRS has some tips on their website for choosing a tax preparer.  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.

WASHINGTON – El Departamento de Justicia anuncio hoy que llegó a un acuerdo con Diversified Business Consulting Group, Inc., una agencia de empleo con sede en Silver Spring, Maryland. El acuerdo resuelve la alegación del departamento que Diversified discriminó en contra de individuos que no son ciudadanos estadounidenses pero que sí tienen permiso de trabajar, en contra de la Ley de Inmigración y Nacionalidad (INA por sus siglas en inglés).

La investigación del departamento reveló que Diversified requería que personas que no eran ciudadanos estadounidenses presentaran documentos específicos durante el proceso de verificación de elegibilidad de empleo para establecer su autorización de trabajo, mientras que a los ciudadanos estadounidenses se les permitía presentar los documentos de su elección. La provisión antidiscriminatoria de la INA prohíbe a los empleadores que especifiquen los documentos que los trabajadores deben presentar durante el proceso de verificación de elegibilidad de empleo basado en el estatus de ciudadanía u origen nacional del empleado.

Según el acuerdo, Diversified le pagará $7,700 en multas a Los Estados Unidos y se someterá a un adiestramiento proporcionado por el departamento sobre la provisión antidiscriminatoria de la INA. La oficina corporativa de Diversified y sus ramas estarán sujetas a monitoreo del departamento y a requisitos de informacóin.

"La División de Derechos Civiles está comprometida a proteger a las personas autorizadas a trabajar contra prácticas discriminatorias en el proceso de verificación de elegibilidad de empleo," dijo Vanita Gupta Subprocuradora General Interina para la División de Derechos Civiles. "Felicitamos a Diversified por trabajar cooperativamente con la División para resolver este asunto."

La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a la Inmigración es responsable por hacer cumplir con la provisión antidiscriminatoria de la INA. Entre otras cosas, la ley prohíbe discriminación por estatus de ciudadanía u origen nacional durante la contratación, el despido, el reclutamiento o la referencia por comisión; las prácticas injustas de documentación; represalias e intimidación.

Para más información sobre las protecciónes contra la discriminación en el empleo bajo las leyes de inmigración, llame a la línea directa de la OSC para el trabajador, al 1-800-255-7688 (teléfono de texto 1-800-237-2515, para las personas con discapacidades auditivas), o a la línea directa de la OSC para el empleador, al 1-800-255-8155 (teléfono de texto 1-800-237-2515, para las personas con discapacidades auditivas); suscríbase a un seminario por internet gratis en www.justice.gov/crt/about/osc/webinars.php, envíe un correo electrónico a [email protected]; o visite el sitio del internet de OSC en www.justice.gov/crt/about/osc.

Los solicitantes o empleados que creen que han sido sometidos a: (1) requisitos documentarios diferentes por causa de su estado de ciudadanía, estado de inmigración u origen nacional; o (2) discriminación por causa de su estado de ciudadanía, estado de inmigración u origen nacional, en la contratación, el despido, el reclutamiento o la recomendación por un honorario, deberán comunicarse a la línea directa de la OSC para el trabajador para recibir ayuda.

A major Israeli international bank admitted that it conspired to aid and assist U.S. taxpayers to prepare and present false tax returns to the Internal Revenue Service (IRS) by hiding income and assets in offshore bank accounts in Israel and elsewhere around the world.  A deferred prosecution agreement between the Bank Leumi Group and the Department of Justice was filed today in the Central District of California that defers prosecution on a criminal information charging the bank with conspiracy to aid and assist in the preparation and presentation of false tax returns and other documents to the Internal Revenue Service.  This unprecedented agreement marks the first time an Israeli bank has admitted to such criminal conduct which spanned over a 10 year period and included an array of services and products designed to keep U.S. taxpayer accounts concealed at Bank Leumi Group’s locations in Israel, Switzerland, Luxembourg and the United States.

The Bank Leumi Group’s parent company is Bank Leumi le-Israel, B.M.  Bank Leumi le-Israel is one of Israel’s largest banks, with subsidiaries in seven countries and more than 13,000 employees.  Other subsidiary banks entering into this deferred prosecution agreement include The Bank Leumi le-Israel Trust Company Ltd., the oldest and largest of all bank trust companies in Israel; Leumi Private Bank S.A., a Switzerland-based subsidiary; Bank Leumi (Luxembourg) S.A., a Luxembourg-based subsidiary; and Bank Leumi USA, a FDIC-insured, full-service commercial bank with offices in California, Florida, Illinois and New York.

According to documents filed in the case, to account for their criminal conduct, Bank Leumi Group will pay the United States a total of $270 million. Of this total payment, $157 million represents a penalty for U.S. taxpayer accounts held at Leumi Private Bank in Switzerland.  This $157 million penalty is consistent with the department’s Swiss Bank Program, which permits certain Swiss Banks to avoid prosecution by making a full and complete disclosure of their U.S. taxpayer-held accounts and paying substantial penalties.  The agreement further provides that Bank Leumi Luxembourg and Leumi Private Bank will cease to provide banking and investment services for all accounts held or beneficially owned by U.S. taxpayers.

“The Bank Leumi Group recognized that the writing is on the wall for offshore banking, and cooperating with the government’s investigation was the only way to proceed,” said Deputy Attorney General James M. Cole.  “This deferred prosecution agreement demonstrates both that the Justice Department will hold financial institutions accountable for their crimes, and that we will be fair in recognizing extraordinary cooperation.”

According to the filed statement of facts, from at least 2000 until early 2011, the Bank Leumi Group took affirmative and extensive steps to assist U.S. clients in concealing their assets offshore, including:

• surreptiously sending private bankers from Israel and elsewhere around the world to the United States to meet secretly with U.S. clients at hotels, parks and coffee shops to discuss their offshore account activity;

• assisting U.S. clients in using nominee corporate entities created in Belize and other foreign jurisdictions to hide their undeclared accounts by concealing the U.S. client as the true beneficial owner of the account;

• using the Bank Leumi le-Israel Trust Company as a nominee account holder for U.S. clients with accounts in Israel to conceal the U.S. client as the true beneficial owner of the account;

• maintaining U.S. clients’ undeclared offshore accounts under assumed names or numbered accounts to conceal the U.S. client as the true beneficial owner of the account;

• providing hold mail services so that correspondence and other account information would not go directly to the U.S. client to make it more difficult to connect the client to the secret offshore account;

• extending loans to U.S. clients from Bank Leumi USA that were collateralized by the assets in those clients’ offshore accounts, so that the clients could leverage their offshore assets to obtain and use capital in the United States while keeping their foreign accounts secret and undetected from the U.S. government; and

• after the department’s investigation into UBS and other Swiss banks’ criminal conduct in aiding U.S. taxpayers to evade their taxes became public, the Bank Leumi Group opened and maintained accounts for U.S. taxpayers who left UBS and other Swiss banks due to the investigation in an effort to continue to avoid detection by the U.S. government.

“The Bank Leumi Group’s admission of guilt to knowingly conspiring to assist U.S. taxpayers in filing false income tax returns and other documents with the Internal Revenue Service (IRS) represents the Department of Justice’s next step in its worldwide efforts to hold banks and other financial institutions responsible for their criminal conduct,” said the Tax Division’s Acting Deputy Assistant Attorney General Larry J. Wszalek.  “Those institutions that have engaged, or continue to engage, in conduct similar to that of Bank Leumi Group are well advised that the Tax Division will continue to extend its global reach in enforcing this nation’s criminal tax laws.”

According to documents filed in the case, as part of its agreement with the department, the Bank Leumi Group provided the names of more than 1,500 of its U.S. account holders.  As part of the agreement, the Bank Leumi Group will continue to disclose information to the government regarding its cross-border business and provide testimony and information regarding other investigations. 

“There are many provisions of federal law that can benefit taxpayers, but maintaining secret offshore accounts to conceal assets is not a legal method of lowering one’s tax liability,” said Acting U.S. Attorney Stephanie Yonekura for the Central District of California.  “Any financial institution – no matter where it operates – will be held accountable if it helps U.S. residents dodge their tax responsibilities.  This agreement with Leumi Bank is the latest notice to American taxpayers who might flout the law that we can and will uncover your hidden assets.”

“Today’s deferred prosecution announcement against Leumi Bank is yet another historical event in the international tax arena,” said Commissioner John Koskinen of the IRS.  “IRS will not tolerate the use of offshore accounts to illegally escape paying taxes and we will continue to focus on this priority area.”

“This case shows that banks who promote the use of offshore tax schemes against the United States will be held accountable and face substantial fines and penalties,” said Chief Richard Weber of IRS-Criminal Investigation.  “This investigation involved untangling a complex web of financial transactions where Bank Leumi assisted U.S. taxpayers in concealing undeclared bank accounts.  As the premier financial investigators in the world, and the only law enforcement agency to investigate tax cases, our special agents will continue to investigate banks and individuals who violate the U.S. tax laws no matter where they reside.”

This case was prosecuted by Trial Attorneys Christopher S. Strauss, Ellen M. Quattrucci and Dennis R. Kihm for the Tax Division.  The Tax Division expressed gratitude to Assistant U.S. Attorney Sandra R. Brown and the U.S. Attorney’s Office for the Central District of California for their invaluable assistance in the investigation and prosecution of this case.  The case was investigated by IRS-Criminal Investigation.

WASHINGTON—Attorney General Eric Holder released the following statement Monday in response to President Obama’s announcement of his intent to nominate Sally Yates, the U.S. Attorney for the Northern District of Georgia, to serve as the next Deputy Attorney General, succeeding James M. Cole:

"I congratulate Sally Yates on her forthcoming nomination as Deputy Attorney General -- an important and demanding office in which she will most certainly excel.

"Over the years, I have come to know, admire, and rely on Sally as an essential leader of the U.S. Attorney community.  As a longtime career prosecutor, she has handled a wide range of complex and high-profile cases with remarkable skill and poise.

"Sally's leadership in combating public corruption has rightfully earned the accolades of her colleagues at every level of law enforcement.  Her successful prosecution of Eric Rudolph for the Centennial Olympic Park bombing cemented her sterling reputation as a tough, and extremely talented, attorney.  And her distinguished tenure as U.S. Attorney, and service as vice chair of the Attorney General's Advisory Committee, have been marked by indelible contributions in advancing the Justice Department's Smart on Crime initiative and other important policies.

“As Deputy Attorney General, Sally will play a critical role in leading the Department of Justice, building on our Smart on Crime reforms, and expanding on the record of achievement we have established during the last six years.  I know her tenure will be defined by the same standard of excellence that has guided her throughout her career, and I am proud to join President Obama in congratulating her, once again, on her planned nomination."

Alstom S.A. (Alstom), a French power and transportation company, pleaded guilty today and agreed to pay a $772,290,000 fine to resolve charges related to a widespread scheme involving tens of millions of dollars in bribes in countries around the world, including Indonesia, Saudi Arabia, Egypt and the Bahamas.

Deputy Attorney General James M. Cole, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, First Assistant U.S. Attorney Michael J. Gustafson of the District of Connecticut and FBI Executive Assistant Director Robert Anderson Jr. made the announcement.

“Alstom’s corruption scheme was sustained over more than a decade and across several continents,” said Deputy Attorney General Cole.  “It was astounding in its breadth, its brazenness and its worldwide consequences.  And it is both my expectation – and my intention – that the comprehensive resolution we are announcing today will send an unmistakable message to other companies around the world: that this Department of Justice will be relentless in rooting out and punishing corruption to the fullest extent of the law, no matter how sweeping its scale or how daunting its prosecution.” 

“This case is emblematic of how the Department of Justice will investigate and prosecute FCPA cases – and other corporate crimes,” said Assistant Attorney General Caldwell.  “We encourage companies to maintain robust compliance programs, to voluntarily disclose and eradicate misconduct when it is detected, and to cooperate in the government’s investigation.  But we will not wait for companies to act responsibly.  With cooperation or without it, the department will identify criminal activity at corporations and investigate the conduct ourselves, using all of our resources, employing every law enforcement tool, and considering all possible actions, including charges against both corporations and individuals.”

“Today’s historic resolution is an important reminder that our moral and legal mandate to stamp out corruption does not stop at any border, whether city, state or national,” said First Assistant U.S. Attorney Gustafson.  “A significant part of this illicit work was unfortunately carried out from Alstom Power’s offices in Windsor, Connecticut.  I am hopeful that this resolution, and in particular the deferred prosecution agreement with Alstom Power, will provide the company an opportunity to reshape its culture and restore its place as a respected corporate citizen.”

“This investigation spanned years and crossed continents, as agents from the FBI Washington and New Haven field offices conducted interviews and collected evidence in every corner of the globe,” said FBI Executive Assistant Director Anderson.  “The record dollar amount of the fine is a clear deterrent to companies who would engage in foreign bribery, but an even better deterrent is that we are sending executives who commit these crimes to prison.”

Alstom pleaded guilty to a two-count criminal information filed today in the U.S. District Court for the District of Connecticut, charging the company with violating the Foreign Corrupt Practices Act (FCPA) by falsifying its books and records and failing to implement adequate internal controls.  Alstom admitted its criminal conduct and agreed to pay a criminal penalty of $772,290,000.  U.S. District Judge Janet B. Arterton of the District of Connecticut scheduled a sentencing hearing for June 23, 2015 at 3pm.

In addition, Alstom Network Schweiz AG, formerly Alstom Prom (Alstom Prom), Alstom’s Swiss subsidiary, pleaded guilty to a criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA.  Alstom Power Inc. (Alstom Power) and Alstom Grid Inc. (Alstom Grid), two U.S. subsidiaries, both entered into deferred prosecution agreements, admitting that they conspired to violate the anti-bribery provisions of the FCPA.  Alstom Power is headquartered in Windsor, Connecticut, and Alstom Grid, formerly Alstom T&D, was headquartered in New Jersey. 

According to the companies’ admissions, Alstom, Alstom Prom, Alstom Power and Alstom Grid, through various executives and employees, paid bribes to government officials and falsified books and records in connection with power, grid and transportation projects for state-owned entities around the world, including in Indonesia, Egypt, Saudi Arabia, the Bahamas and Taiwan.  In Indonesia, for example, Alstom, Alstom Prom, and Alstom Power paid bribes to government officials – including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara, the state-owned electricity company in Indonesia – in exchange for assistance in securing several contracts to provide power-related services valued at approximately $375 million.  In total, Alstom paid more than $75 million to secure $4 billion in projects around the world, with a profit to the company of approximately $300 million.   

Alstom and its subsidiaries also attempted to conceal the bribery scheme by retaining consultants purportedly to provide consulting services on behalf of the companies, but who actually served as conduits for corrupt payments to the government officials.  Internal Alstom documents refer to some of the consultants in code, including “Mr. Geneva,” “Mr. Paris,” “London,” “Quiet Man” and “Old Friend.”

The plea agreement cites many factors considered by the department in reaching the appropriate resolution, including:  Alstom’s failure to voluntarily disclose the misconduct even though it was aware of related misconduct at a U.S. subsidiary that previously resolved corruption charges with the department in connection with a power project in Italy; Alstom’s refusal to fully cooperate with the department’s investigation for several years; the breadth of the companies’ misconduct, which spanned many years, occurred in countries around the globe and in several business lines, and involved sophisticated schemes to bribe high-level government officials; Alstom’s lack of an effective compliance and ethics program at the time of the conduct; and Alstom’s prior criminal misconduct, including conduct that led to resolutions with various other governments and the World Bank.

After the department publicly charged several Alstom executives, however, Alstom began providing thorough cooperation, including assisting the department’s prosecution of other companies and individuals. 

To date, the department has announced charges against five individuals, including four corporate executives of Alstom and its subsidiaries, for alleged corrupt conduct involving Alstom.  Frederic Pierucci, Alstom’s former vice president of global boiler sales, pleaded guilty on July 29, 2013, to conspiring to violate the FCPA and a charge of violating the FCPA for his role in the Indonesia bribery scheme.  David Rothschild, Alstom Power’s former vice president of regional sales, pleaded guilty on Nov. 2, 2012, to conspiracy to violate the FCPA.  William Pomponi, Alstom Power’s former vice president of regional sales, pleaded guilty on July 17, 2014, to conspiracy to violate the FCPA.  Lawrence Hoskins, Alstom’s former senior vice president for the Asia region, was charged in a second superseding indictment on July 30, 2013, and is pending trial in the District of Connecticut in June 2015.  The charges against Hoskins are merely allegations, and he is presumed innocent unless and until proven guilty.  The high-ranking member of Indonesian Parliament was also convicted in Indonesia of accepting bribes from Alstom, and is currently serving a three-year term of imprisonment. 

In connection with a corrupt scheme in Egypt, Asem Elgawhary, the general manager of an entity working on behalf of the Egyptian Electricity Holding Company, a state-owned electricity company, pleaded guilty on Dec. 4, 2014, in federal court in the District of Maryland to mail fraud, conspiring to launder money, and tax fraud for accepting kickbacks from Alstom and other companies.  In his plea agreement, Elgawhary agreed to serve 42 months in prison and forfeit approximately $5.2 million in proceeds.

This case is being investigated by the FBI’s Washington Field Office, with assistance from the FBI’s Meriden, Connecticut Resident Agency, and the FBI’s Newark and Baltimore Divisions.  The department appreciates the significant cooperation provided by its law enforcement colleagues in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Office of the Attorney General in Switzerland, the Serious Fraud Office in the United Kingdom, as well as authorities in Germany, Italy, Singapore, Saudi Arabia, Cyprus and Taiwan.

The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut, together with Assistant U.S. Attorney Zach Intrater of the District of New Jersey on the investigation of Alstom Grid and Assistant U.S. Attorney David I. Salem of the District of Maryland on the investigation of Asem Elgawhary.  The Criminal Division’s Office of International Affairs also provided substantial assistance.         

Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Attorney General Eric Holder released the following statement Saturday regarding the fatal shootings of two New York City police officers:

“I condemn this afternoon's senseless shooting of two New York City police officers in the strongest possible terms. This was an unspeakable act of barbarism, and I was deeply saddened to hear of the loss of these two brave officers in the line of duty.

“On behalf of all those who serve in the United States Department of Justice, I want to express my heartfelt condolences to the officers' loved ones and colleagues. I will make available all of the resources of the Department to aid the NYPD in investigating this tragedy.

"This cowardly attack underscores the dangers that are routinely faced by those who protect and serve their fellow citizens.  As a nation we must not forget this as we discuss the events of the recent past. These courageous men and women routinely incur tremendous personal risks, and place their lives on the line each and every day, in order to preserve public safety.  We are forever in their debt.

"Our nation must always honor the valor -- and the sacrifices -- of all law enforcement officers with a steadfast commitment to keeping them safe.  This means forging closer bonds between officers and the communities they serve, so that public safety is not a cause that is served by a courageous few, but a promise that's fulfilled by police officials and citizens working side by side."

PacifiCorp Energy, a subsidiary of PacifiCorp, based in Portland, Oregon, pleaded guilty in U.S. District Court in Wyoming today to violating the federal Migratory Bird Treaty Act (MBTA) in connection with the deaths of protected birds, including golden eagles, at two of the company’s wind projects in Wyoming. 

Under a plea agreement with the government, the company was sentenced to pay fines, restitution and community service totaling $2.5 million and was placed on probation for five years, during which it must implement an environmental compliance plan aimed at preventing bird deaths at the company’s four commercial wind projects in the state.  The company is also required to apply for Eagle Take Permits which, if granted, will provide a framework for minimizing and mitigating the deaths of golden eagles at the wind projects.

The charges stem from the discovery of the carcasses of 38 golden eagles and 336 other protected birds, including hawks, blackbirds, larks, wrens and sparrows by the company at its “Seven Mile Hill” and “Glenrock/Rolling Hills” wind projects in Carbon and Converse Counties between 2009 and the present.  The two wind projects are comprised of 237 large wind turbines sited on private and company-owned land. 

“PacifiCorp Energy built two of its Wyoming wind projects in a manner it knew would likely result in the deaths of eagles and other protected birds,” said Sam Hirsch, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.  “PacifiCorp has taken steps to minimize the hazard, and with this plea agreement has committed to a comprehensive plan to continue such efforts in partnership with the U.S. Fish and Wildlife Service, to seek eagle take permits for each project, and to work to prevent future eagle deaths.”

In documents presented in court, the government alleged that PacifiCorp Energy failed to make all reasonable efforts to build the projects in a way that would avoid the risk of avian deaths by collision with turbine blades, despite prior guidance from the U.S. Fish and Wildlife Service (FWS).  However, the company cooperated with the FWS investigation and has already implemented measures aimed at minimizing avian deaths at the sites.

“Improperly sited and operated wind energy facilities can kill significant numbers of federally protected birds and other species,” said U.S. Fish and Wildlife Service Director Dan Ashe, urging developers to follow the Service’s Land-based Wind Energy Guidelines.  “That’s why it’s imperative that wind energy developers work with the Fish and Wildlife Service to minimize these impacts at every stage in the process.”

More than 1,000 species of birds, including bald and golden eagles, are protected under the Migratory Bird Treaty Act (MBTA).  The MBTA, enacted in 1918, implements this country’s commitments under avian protection treaties with Great Britain (for Canada), Mexico, Japan and Russia.  The MBTA provides a misdemeanor criminal sanction for the unpermitted taking of a listed species by any means and in any manner, regardless of fault.  The maximum penalty for an unpermitted corporate taking under the MBTA is $15,000 or twice the gross gain or loss resulting from the offense, and five years’ probation. 

Commercial wind power projects can cause the deaths of federally protected birds in four primary ways: collision with wind turbines, collision with associated meteorological towers, collision with, or electrocution by, associated electrical power facilities, and nest abandonment or behavior avoidance from habitat modification.  Collision and electrocution risks from power lines (collisions and electrocutions) and guyed structures (collision) have been known to the utility and communication industries for decades, and specific methods of minimizing and avoiding the risks have been developed, in conjunction with the FWS.  The FWS issued its first interim guidance about how wind project developers could avoid impacts to wildlife from wind turbines in 2003, and replaced these with a “tiered” approach outlined in the Land-Based Wind Energy Guidelines (2012 LBWEGs), developed with the wind industry starting in 2007 and released in final form by the USFWS on March 23, 2012.  The Service also released Eagle Conservation Plan Guidance in April 2013 and strongly recommends that companies planning or operating wind power facilities in areas where eagles occur work with the agency to implement that guidance completely.

For wind projects, due diligence during the pre-construction stage—as described in the 2003 Interim Guidance and tiers I through III in the 2012 LBWEGs— requires surveying the wildlife present in the proposed project area, consulting with agency professionals, determining whether the risk to wildlife is too high to justify proceeding and, if not, carefully siting turbines so as to avoid and minimize the risk as much as possible.  This is critically important because no post-construction remedies, known as “advanced conservation practices” have been developed that can “render safe” a wind turbine placed in a location of high avian collision risk.  Other experimental measures such as prey reduction, and devices that detect and deter avian proximity to turbines are being tested.  In the western United States, golden eagles may be particularly susceptible to wind turbine blade collision by wind power facilities constructed in areas of high eagle use.

The $400,000 fine imposed in the case will be directed to the federally-administered North American Wetlands Conservation Fund.  The company will also pay $200,000 in restitution to the State of Wyoming, and perform community service by making a $1.9 million payment to the congressionally-chartered National Fish and Wildlife Foundation, designated for projects aimed at preserving golden eagles and increasing the understanding of ways to minimize and monitor interactions between eagles and commercial wind power facilities, as well as enhance eagle rehabilitation and conservation efforts in Wyoming.  The company must implement a migratory bird compliance plan containing specific measures to avoid and minimize golden eagle and other avian wildlife mortalities at the company’s four commercial wind projects in Wyoming. 

According to papers filed with the court, PacifiCorp will spend approximately $600,000 per year implementing the compliance plan.  The company must also apply to the U.S. Fish and Wildlife Service for a Programmatic Eagle Take Permit at each of the four wind projects cited in the case.  

The case was investigated by Special Agents of the U.S. Fish and Wildlife Service and prosecuted by Senior Counsel Robert S. Anderson of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division and Assistant U.S. Attorney Jason Conder of the District of Wyoming.

Today, the FBI would like to provide an update on the status of our investigation into the cyber attack targeting Sony Pictures Entertainment (SPE).  In late November, SPE confirmed that it was the victim of a cyber attack that destroyed systems and stole large quantities of personal and commercial data.  A group calling itself the “Guardians of Peace” claimed responsibility for the attack and subsequently issued threats against SPE, its employees, and theaters that distribute its movies.

The FBI has determined that the intrusion into SPE’s network consisted of the deployment of destructive malware and the theft of proprietary information as well as employees’ personally identifiable information and confidential communications.  The attacks also rendered thousands of SPE’s computers inoperable, forced SPE to take its entire computer network offline, and significantly disrupted the company’s business operations.

After discovering the intrusion into its network, SPE requested the FBI’s assistance.  Since then, the FBI has been working closely with the company throughout the investigation.  Sony has been a great partner in the investigation, and continues to work closely with the FBI. Sony reported this incident within hours, which is what the FBI hopes all companies will do when facing a cyber attack.  Sony’s quick reporting facilitated the investigators’ ability to do their jobs, and ultimately to identify the source of these attacks.

As a result of our investigation, and in close collaboration with other U.S. Government departments and agencies, the FBI now has enough information to conclude that the North Korean government is responsible for these actions.  While the need to protect sensitive sources and methods precludes us from sharing all of this information, our conclusion is based, in part, on the following:

• Technical analysis of the data deletion malware used in this attack revealed links to other malware that the FBI knows North Korean actors previously developed.  For example, there were similarities in specific lines of code, encryption algorithms, data deletion methods, and compromised networks.

• The FBI also observed significant overlap between the infrastructure used in this attack and other malicious cyber activity the U.S. Government has previously linked directly to North Korea.  For example, the FBI discovered that several Internet protocol (IP) addresses associated with known North Korean infrastructure communicated with IP addresses that were hardcoded into the data deletion malware used in this attack. 

• Separately, the tools used in the SPE attack have similarities to a cyber attack in March of last year against South Korean banks and media outlets, which was carried out by North Korea.

We are deeply concerned about the destructive nature of this attack on a private sector entity and the ordinary citizens who worked there.  Further, North Korea’s attack on SPE reaffirms that cyber threats pose one of the gravest national security dangers to the United States.  Though the FBI has seen a wide variety and increasing number of cyber intrusions, the destructive nature of this attack, coupled with its coercive nature, sets it apart.  North Korea’s actions were intended to inflict significant harm on a U.S. business and suppress the right of American citizens to express themselves.  Such acts of intimidation fall outside the bounds of acceptable state behavior.  The FBI takes seriously any attempt – whether through cyber-enabled means, threats of violence, or otherwise – to undermine the economic and social prosperity of our citizens.

The FBI stands ready to assist any U.S. company that is the victim of a destructive cyber attack or breach of confidential business information.  Further, the FBI will continue to work closely with multiple departments and agencies as well as with domestic, foreign, and private sector partners who have played a critical role in our ability to trace this and other cyber threats to their source.  Working together, the FBI will identify, pursue, and impose costs and consequences on individuals, groups, or nation states who use cyber means to threaten the United States or U.S. interests.

All Seven Defendants Charged Have Now Been Convicted

Two Colombian nationals pleaded guilty today to second degree murder and conspiracy to kidnap an internationally protected person for their roles in the kidnapping and murder of Drug Enforcement Administration (DEA) Special Agent James “Terry” Watson in Bogotá, Colombia, on June 20, 2013.

Attorney General Eric H. Holder, 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, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office, DEA Administrator Michele M. Leonhart and Bill A. Miller, Director, U.S. State Department’s Diplomatic Security Service made the announcement.

“The Department of Justice has now obtained pleas for all seven individuals charged with the kidnapping and murder of Special Agent Watson, as well as the attempt to cover up the crime,” said Attorney General Eric Holder.  “Although this marks an important milestone in our effort to achieve justice for a fallen hero, our work is far from over.  The Justice Department will never rest in its commitment to honor the service, and the profound sacrifice, of Special Agent Watson and so many other courageous men and women in federal law enforcement.  And we will never waver in our pursuit of criminals who target or seek to harm Americans anywhere in the world.”

“Special Agent Terry Watson’s kidnapping and murder resulted in a loss that will always be felt by the men and women of DEA,” said DEA Administrator Michele M. Leonhart.  “Today’s admission of guilt brings us closer to ensuring that justice is served in this tragedy.  DEA will never forget Terry’s outstanding career and the work he did with our global partners in the shared fight against international drug traffickers.”

In the statements of facts filed with their plea agreements, Omar Fabián Valdes Gualtero, 28, and Édgar Javier Bello Murillo, 28, both of Bogotá, admitted that they conspired with four other individuals— Edwin Gerardo Figueroa Sepúlveda, Julio Estiven Gracia Ramírez, Héctor Leonardo López, and Andrés Álvaro Oviedo García—to conduct “paseo milionarios” or “millionaire’s rides” in which victims were lured into taxi cabs, kidnapped, and then robbed.  Valdez Gualtero admitted that he was responsible for helping to organize the robbery crew and obtaining disposable cell phones for use during the robberies.  Both defendants admitted that on the evening of June 20, 2013, their robbery crew targeted Special Agent Watson outside of a restaurant in Bogotá.  Gracia Ramírez picked up Special Agent Watson in his taxi, while López drove a second taxi carrying Valdes Gualtero, Bello Murillo and Figueroa Sepúlveda.  After Gracia Ramírez pretended to have mechanical trouble and stopped the taxi, Bello Murillo and Figueroa Sepúlveda entered the back seat with Special Agent Watson.  A struggle ensued and Figueroa Sepúlveda shocked Special Agent Watson with a stun gun while Bello Murillo stabbed him at least four times.  Special Agent Watson was able to escape from the taxi, but he later collapsed and died from his injuries.

In total, seven defendants were arrested and extradited from Colombia to the United States to face charges in connection with Special Agent Watson’s murder and the subsequent attempt to cover up the crime.  Six defendants were charged with murder and conspiracy to kidnap.  A seventh defendant, Wilson Daniel Peralta-Bocachica, was charged with obstruction of justice for his role in cleaning the victim’s blood from the backseat of the taxi.  All of the defendants have pleaded guilty for their roles in this incident.  Gracia Ramírez, López, and Oviedo García were sentenced on Dec. 14, 2014, to 20 years, 25 years, and 27 years, in prison respectively.  Figueroa Sepúlveda and Peralta-Bocachica are scheduled to be sentenced on Feb. 18, 2015.  Valdes Gualtero and Bello Murillo are scheduled to be sentenced on April 10, 2015.

This case was investigated by the FBI, DEA and the Diplomatic Security Service, in close cooperation with Colombian authorities and with assistance from INTERPOL and the Justice Department’s Office of International Affairs.  The case is being prosecuted by Special Counsel Stacey Luck of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Michael P. Ben’Ary of the U.S. Attorney’s Office of the Eastern District of Virginia.

The Department of Justice gratefully acknowledges the Colombian Attorney General’s Office, Colombian National Police, Colombian Directorate of Criminal Investigation and Interpol (DIJIN), DIJIN Special Investigative Unit, Bogotá Metropolitan Police, Bogotá Police Intelligence Body (CIPOL) Unit and Colombian Technical Investigation Team for their extraordinary efforts, support and professionalism in responding to this incident.

A federal jury sitting in Los Angeles today convicted two California tax return preparers of one count of conspiracy to defraud the Internal Revenue Service (IRS) and two counts  of willfully failing to file a Report of Foreign Bank and Financial Accounts (FBAR) announced Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division, Acting U.S. Attorney Stephanie Yonekura for the Central District of California, and  Chief of the IRS-Criminal Investigation Rich Weber. 

According to the second superseding indictment and evidence introduced at trial, David Kalai and Nadav Kalai were principals of United Revenue Service Inc. (URS), a tax preparation business with 12 offices located throughout the United States.  David Kalai worked primarily at URS’s former headquarters in Newport Beach, California, and later at URS’s location in Costa Mesa, California.  Nadav Kalai, who is David Kalai’s son, worked out of URS’s headquarters in Bethesda, Maryland, as well as the URS locations in Newport Beach and Costa Mesa.  David Almog was the branch manager of the New York office of URS and supervised tax return preparers for URS’s East Coast locations. 

U.S. citizens, resident aliens and legal permanent residents have an obligation to report to the IRS on Schedule B of the U.S. Individual Income Tax Return, Form 1040, whether they had a financial interest in, or signature authority over, a financial account in a foreign country in a particular year by checking “yes” or “no” in the appropriate box and identifying the country where the account is maintained.  They further have an obligation to report all income earned from the foreign financial account on the tax returns.  Separately, U.S. citizens, resident aliens and legal permanent residents with a foreign financial interest in, or signatory authority over, a foreign financial account worth more than $10,000 in a particular year must also file an FBAR with the U.S. Treasury disclosing such an account by June 30th of the following year. 

“As the defendants in this case have learned, hiding income and assets offshore is not tax planning; it’s tax fraud,” said Chief Richard Weber IRS-Criminal Investigation.  “There is no secret formula that can eliminate an individual’s tax obligations.  Today’s verdict reinforces our commitment to every American taxpayer that we will identify and prosecute those who implement off-shore tax schemes designed to evade the payment of taxes.”

The second superseding indictment and the evidence introduced at trial established that the co-conspirators prepared false individual income tax returns that did not disclose the clients’ foreign financial accounts nor report the income earned from those accounts.  In order to conceal the clients’ ownership and control of assets and to conceal the clients’ income from the IRS, the co-conspirators incorporated offshore companies in Belize and elsewhere and helped clients open secret bank accounts at the Luxembourg locations of two Israeli banks, Bank A and Bank B.  Bank A is a large financial institution headquartered in Tel -Aviv, Israel, with branches worldwide.  Bank B is a mid-size financial institution, also headquartered in Tel Aviv, with a presence on four continents.                                                                                                                       

As further proven at trial, the co-conspirators incorporated offshore companies in Belize and elsewhere to act as named account holders on the secret accounts at the Israeli banks.  The co-conspirators then facilitated the transfer of client funds to the secret accounts and prepared and filed tax returns that falsely reported the money sent offshore as a false investment loss or a false business expense.  The co-conspirators also failed to disclose the existence of, and the clients’ financial interest in and authority over, the secret accounts and caused the clients to fail to file FBARs with the U.S. Treasury.  

“The Kalais created sham foreign corporate entities and used banks in Luxembourg and Israel as havens for hiding their U.S. clients’ money from the U.S. government,” said Acting Deputy Assistant Attorney General Wszalek.  “Today’s guilty verdict sends a clear message that those professionals who facilitate tax evasion through the use of offshore bank accounts will be held accountable for their criminal conduct.  The Tax Division will continue its vigorous tax enforcement efforts in prosecuting return preparers, bankers, and other facilitators who assist clients in concealing assets offshore.”

The evidence at trial established that David Kalai and Nadav Kalai each failed to file FBARs for calendar years 2008 and 2009 concerning a foreign account held at Bank A in Luxembourg.  The bank account was held in the name of a nominee corporation in Belize and held over $300,000. 

Sentencing is scheduled for March 16, 2015.                                    

This case was prosecuted by Trial Attorneys Christopher S. Strauss and Ellen M. Quattrucci of Tax Division, with the assistance of Assistant U.S. Attorney Sandra R. Brown for the Central District of California, and was investigated with the assistance of the IRS.

A Massapequa, New York, man was sentenced in U.S. District Court in Allentown, Pennsylvania, to serve 24 months in prison on charges related to an odometer tampering scheme, the Department of Justice announced today. 

Edward Capicchioni, 54, was also ordered to pay $412,880 in restitution to victims who purchased vehicles without knowing the odometers were incorrect.  In March 2014, Capicchioni pled guilty to one count of conspiracy to tamper with odometers. 

Doing business under the company name of The General’s Auto Sales, Capicchioni sold more than 50 vehicles with rolled back odometers.  According to the charges, Capicchioni purchased high-mileage cars, sport-utility vehicles and trucks from individual sellers in Maryland, New York, Pennsylvania, Rhode Island,  and other states.  Capicchioni then worked with a co-conspirator to roll back and alter the odometers and resold the vehicles at a wholesale auto auction in Pennsylvania.  Capicchioni also took steps to hide his odometer fraud scheme.  He checked the Carfax public database to see if it included a mileage that was higher than the tampered mileage.  If the Carfax mileage was higher, Capicchioni submitted fraudulent documentation in the name of the vehicle’s prior owner in order to have the higher mileage reading removed from the database. 

“Odometer tampering is a pervasive consumer fraud,” said Acting Assistant Attorney General Joyce R. Branda for the Department of Justice’s Civil Division.  “We will continue to enforce these important consumer protection laws, and we will prosecute people who defraud vehicle purchasers by rolling back odometers on used cars.”

After Carfax discovered Capicchioni’s fraud scheme through an internal investigation, Carfax personnel alerted the National Highway Traffic Safety Administration (NHTSA) Office of Odometer Fraud Investigation.  NHTSA conducted additional investigation into the full scope of Capicchioni’s criminal activities. 

This case was prosecuted by Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch. 

NHTSA estimates that odometer fraud in the U.S. results in consumer losses of more than $1 billion annually and has established a special hotline to handle odometer fraud complaints. Individuals having information relating to odometer tampering should call (800) 424-9393 or (202) 366-4761.

More information on odometer fraud is available on the NHTSA Odometer Fraud website.  Tips on detecting and avoiding odometer fraud are available at this NHTSA page.

Iron Mountain Incorporated and Iron Mountain Information Management LLC (collectively Iron Mountain) has paid $44.5 million to resolve allegations under the False Claims Act that Iron Mountain overcharged federal agencies for record storage services under General Services Administration (GSA) contracts, the Department of Justice announced today.  Iron Mountain is a records storage company headquartered in Boston. 

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

“This settlement illustrates our commitment to protecting the integrity of federal contracting programs,” said U.S. Attorney Benjamin B. Wagner for the Eastern District of California.  “Federal agencies rely on pricing information under the Multiple Award Schedule program in particular, and deserve the full benefit of applicable contract terms.”

This settlement relates to contracts under which Iron Mountain provided record storage services to government entities from 2001 to 2014 through GSA’s Multiple Award Schedule (MAS) program.  The MAS program provides the government with a streamlined process for procurement of commonly used commercial goods and services.  The settlement resolves allegations that Iron Mountain failed to meet its contractual obligations to provide GSA with accurate information about its commercial sales practices during contract negotiations, and failed to comply with the price reduction clause of the GSA contracts by not extending lower prices to government customers during its performance of the contracts.  It also resolves an allegation that Iron Mountain charged the United States for storage meeting National Archives and Records Administration requirements when the storage provided did not meet such requirements. 

“My office will continue working diligently to make sure American taxpayers are getting the best value for every dollar spent,” said Acting Inspector General Robert C. Erickson for GSA.

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The civil lawsuit was filed in the Eastern District of California by Brent Stanley, a former Iron Mountain employee, and Patrick McKillop, who worked in the records management industry.  Collectively, they will receive $8,010,000.

The settlement with Iron Mountain was the result of a coordinated effort among the U.S. Attorney’s Office for the Eastern District of California, the Civil Division’s Commercial Litigation Branch, the GSA’s Office of the Inspector General, the Defense Criminal Investigative Service, the Defense Contract Audit Agency, the NASA Office of Inspector General, the U.S. Department of Veterans Affairs’ Office of Inspector General, the U.S. Department of Agriculture’s Office of Inspector General, U.S. Army Criminal Investigation Command, and the U.S. Department of Housing and Urban Development’s Office of Inspector General.

The lawsuit is captioned United States ex rel. Brent Stanley and Patrick McKillop v. Iron Mountain Incorporated, Civil Action No. 11-3260 (E.D. Cal.).  The claims resolved by this settlement are allegations only, and there has been no determination of liability.

COPS Office Releases 42 Findings and Recommendations to Implement Best Practice at the Spokane Police Department

The U.S. Department of Justice Office of Community Oriented Policing Services (COPS) announced today the completion of a Collaborative Reform Review of the Spokane Police Department’s use of force policies and practices.  The new report, funded by a grant from the COPS Office’s Collaborative Reform Initiative for Technical Assistance, lists 42 findings and recommendations to address use of force practices, improve tactical policing strategies and build stronger collaborative relationships between local police and the communities they protect.  

“The COPS office is confident in the Spokane Police Department’s capability to implement these evidence based recommendations and build on their commitment to building a stronger community,” said Director Ronald Davis of the COPS Office.  “We look forward to strengthening the collaborative relationship between the community and law enforcement to ensure that this process remains expansive, transparent and inclusive.”

The COPS office first announced the beginning of the Collaborative Reform Review in February 2013.  The scope of the work announced today reviewed the use of force over the last five years, including an analysis of policies, training, investigation and community outreach efforts.  Interviews were conducted with 140 area stakeholders, including community members, current and former officers and prosecutors, community organizations and police union officials.  The 11-month assessment concluded that police officers in the Spokane Police Department do not routinely and deliberately engage in excessive use of force or deadly force.  The report also did not find a biased application of use of force.  Other findings and recommendations include the need for improvements in use of force documentation and investigation practices used by the police department.  The review also outlined the need to formalize the roles and responsibilities of the ombudsman and the commission members. 

“I want to thank the COPS Office for engaging in the collaborative reform process,” said Chief Frank G. Straub of the Spokane Police Department.  “I believe the findings and recommendations provide an important road map for us to improve our internal business practices and more importantly better engage with the community we serve.  We are fully committed to implementing all of the recommendations within the 18-month timeframe and continuing to serve all members of the Spokane community with dignity, integrity and respect.”

The report was administered as part of the COPS Office’s Collaborative Reform Initiative for Technical Assistance, designed to provide technical assistance to agencies facing significant law enforcement-related issues.  Using subject matter experts, interviews and direct observations, as well as conducting extensive research and analysis, the COPS Office assists law enforcement agencies with enhancing and improving their policies and procedures, their operating systems and their professional culture.  The COPS Office can issue a series of recommendations and be instrumental in assisting agencies with the implementation of those recommendations. 

The report, The Collaborative Reform Model: A Review of Use of Force Policies, Processes, and Practices in the Spokane Police Department, can be found online here.

###

The COPS Office, headed by Director Davis, is a federal agency responsible for advancing community policing nationwide.  Since 1995, COPS has awarded over $14 billion to advance community policing, including grants awarded to more than 13,000 state, local, and tribal law enforcement agencies to fund the hiring and redeployment of approximately 125,000 officers and provide a variety of knowledge resource products including publications, training and technical assistance.  For additional information about COPS, please visit www.cops.usdoj.gov.

Lockheed Martin Integrated Systems (LMIS) has agreed to pay $27.5 million to resolve allegations that it violated the False Claims Act by knowingly overbilling the government for work performed by LMIS employees who lacked required job qualifications. 

The settlement was announced today by Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division and U.S. Attorney Paul J. Fishman for the District of New Jersey.

“Contractors that knowingly bill the government in violation of contract terms will face serious consequences,” said Acting Assistant Attorney General Branda.  “The department will ensure that those who do business with the government, and seek taxpayer funds, do so fairly and in accordance with the applicable rules.”

“U.S. forces rely on the goods and services provided by defense contractors, so it is imperative the government be able to rely on those contractors to adhere to the rules,” said U.S. Attorney Fishman.  “This settlement should remind all who do business with the government that there is a price to pay for fudging the math.”

LMIS is a subsidiary of Lockheed Martin Inc., which is headquartered in Bethesda, Maryland.  The alleged labor mischarging occurred on the Rapid Response (CR2) contract and the Strategic Services Sourcing (S3) contract, both issued by the U.S. Army Communication and Electronics Command (CECOM).  CECOM is located at Fort Monmouth, New Jersey, and at the Aberdeen Proving Group in Maryland.  The purpose of the CR2 and S3 contracts is to provide rapid access to products and services to be provided to the Army in Iraq and Afghanistan. Individual task orders then are separately negotiated, based on these contracts, to quickly meet the needs of CECOM.  LMIS allegedly violated the terms of the contracts by using under-qualified employees who were billed to the United States at the rates of more qualified employees.  The overbilling allegedly resulted in greater profit for LMIS.

“This settlement demonstrates the commitment of the Defense Criminal Investigative Service (DCIS) and our partners to vigorously pursue alleged violations of the False Claims Act,” said Special Agent in Charge Craig W. Rupert of the DCIS Northeast Field Office.  “All contractors doing business with the federal government are expected to abide by the acquisition rules no matter who they are.  Investigations of such allegations are necessary to protect American taxpayers and our warfighters.”

This settlement was the result of a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the District of New Jersey, the Southern New Jersey Branch of the Defense Contract Audit Agency (DCAA) and the DCAA’s Mid-Atlantic Region's Comprehensive Labor Team and Investigative Support Team, the U.S. Army’s Criminal Investigative Command’s Major Procurement Fraud Unit and the DCIS. 

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

Deputy Assistant Attorney General David Hubbert for the Justice Department’s Tax Division Civil Trial Matters, U.S. Attorney Preet Bharara for the Southern District of New York, Commissioner John Koskinen of the Internal Revenue Service (IRS), and Special Agent in Charge Anthony D. Williams of the Drug Enforcement Administration’s (DEA) Los Angeles Field Division announced that U.S. District Judge Vernon S. Broderick entered an order yesterday authorizing the IRS to issue summonses requiring Federal Express Corporation, doing business as FedEx Express, FedEx Ground Package System Inc., aka FedEx Ground, DHL Express (DHL), United Parcel Service Inc. (UPS), Western Union Financial Services Inc., the Federal Reserve Bank of New York (the FRBNY), Clearing House Payments Company LLC, and HSBC Bank USA National Association (HSBC USA) to produce information about U.S. taxpayers who may be evading or have evaded federal taxes by using the services of Sovereign Management & Legal Ltd. (Sovereign) to establish, maintain or conceal foreign accounts, assets and entities. 

In this action, the court granted the IRS permission to serve what are known as “John Doe” summonses on FedEx Express, FedEx Ground, DHL, UPS, Western Union, the FRBNY, Clearing House and HSBC USA.  The IRS uses John Doe summonses to obtain information about possible tax fraud by individuals whose identities are unknown.  The John Doe summonses direct these eight entities to produce records that will assist the IRS in identifying U.S. taxpayers who, from 2005 through 2013, used Sovereign’s services to establish, maintain, operate or control any foreign financial account or other assets; any foreign corporation, company, trust, foundation or other legal entity; or any foreign or domestic financial account in the name of such foreign entity.  

“This summons action is but the latest step in the Department of Justice’s efforts to identify and hold fully accountable U.S. taxpayers who have sidestepped their tax obligations by hiding money overseas,” said Deputy Assistant Attorney General Hubbert.  “The world is getting smaller for tax cheats, and we will work with our partners at the IRS to vigorously enforce the nation’s tax laws against those who seek to avoid paying their fair share.”

“This action demonstrates our Office’s commitment to pursuing tax evaders who use offshore service providers to avoid their U.S. tax obligations,” said U.S. Attorney Bharara.  “By issuing these John Doe summonses, we continue our joint efforts with the IRS to identify and hold accountable those who conceal their foreign assets in order to dodge their legal responsibility to pay taxes.”

“The IRS remains committed to continuing our priority efforts to stop offshore tax evasion wherever it is found,” said Commissioner Koskinen.  “We have made tremendous progress in this area, working cooperatively with other agencies.  The John Doe summons remains an important tool in our efforts to find international tax evaders and those who help them.”

“The DEA has a longstanding commitment to sharing information with our federal, state, and local partners,” said Special Agent in Charge Anthony D. Williams.  “Issuance of these summonses exemplifies how outstanding investigative results can be derived from a culture of interagency cooperation.”

According to the allegations set forth in the documents filed in support of the petition, and other information in the public record:

Sovereign is a multi-jurisdictional offshore services provider that offers clients, among other things, the formation and administration of anonymous corporations and foundations in Panama as well as offshore entities.  Related services provided by Sovereign include the maintenance and operation of offshore structures, mail forwarding, the availability of virtual offices, re-invoicing, and the provision of professional managers who appoint themselves directors of the client’s entity while the client maintains ultimate control over the assets. 

As a result of a DEA investigation of online narcotics trafficking known as Operation Adam Bomb, the IRS learned that Sovereign was involved in assisting U.S. clients evade their taxes.  During the IRS investigation that led to today’s action, one taxpayer, making a voluntary disclosure of tax non-compliance to avoid prosecution, reported that Sovereign helped the taxpayer form an anonymous corporation in Panama that the taxpayer used to control assets without appearing to own them. 

The IRS investigation also determined that Sovereign uses Federal Express, UPS and DHL to correspond with U.S. clients, and Western Union to transmit funds to and from clients in the United States.  In addition, the IRS learned that the wire services operated by the FRBNY and Clearing House, and the U.S. correspondent bank accounts that HSBC USA holds for Sovereign’s banks in Panama and Hong Kong, are likely to have records of financial transactions between Sovereign and its clients in the United States.  By obtaining information from these entities through John Doe summonses, the IRS expects to be able to identify Sovereign’s U.S. clients who may be avoiding or evading taxes.

Federal law requires U.S. taxpayers to pay taxes on all income earned worldwide.  U.S. taxpayers must also report foreign financial accounts if the total value of the accounts exceeds $10,000 at any time during the calendar year.  Willful failure to report a foreign account can result in a fine of up to 50 percent of the amount in the account at the time of the violation.

*                *                *

This case is being handled by the U.S. Attorney’s Office for the Southern District of New York Tax and Bankruptcy Unit.  Assistant U.S. Attorney Joseph N. Cordaro is in charge of the case.

A federal jury today returned a guilty verdict against a civilian employee of the U.S. Navy posted at the Capodichino Navy Base near Naples, Italy, for obstructing an investigation and making false statements, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Nicholas A. Klinefeldt of the Southern District of Iowa.  

Steven William Ashton, 41, with a last known U.S. residence in Davenport, Iowa, was found guilty after a nine-day jury trial of creating false documents to obstruct the Naval Criminal Investigative Service (NCIS) investigation into Ashton’s private consulting business called BlackGrid Consulting LLC.  The jury also found Ashton guilty of making false statements about his tour of duty in order to obtain federal benefits and access to military bases worldwide.   

The evidence at trial showed that the NCIS was investigating Ashton for conflicts of interest and using inside government information to advance his business.  When Ashton learned about the investigation, he created fraudulent documentation purporting to show that he had fully disclosed his business to Navy authorities and received approval.  At Ashton’s direction, his defense counsel unwittingly submitted those false documents to the prosecutors and gave other false explanations to the Justice Department.   

According to the evidence presented at trial, from April 2004 to March 2013, Ashton was employed by the Navy as the North Atlantic Treaty Organization and Host Nation Programs Manager for the regions of Europe, Africa and Southwest Asia, responsible for managing contracts and agreements among the Navy and other countries to support the United States’ military efforts.

He was found not guilty on charges of theft of government funds for obtaining housing benefits, called Living Quarters Assistance, to which he was not entitled, and of obstructing that investigation.

This case was investigated by the NCIS and the Air Force Office of Special Investigations.  The case is being prosecuted by Director of Procurement Fraud Litigation Catherine Votaw of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Clifford Cronk of the Southern District of Iowa.

In New Video, Attorney General Hails Finding as ‘Significant Milestone’ That Shows Crime and Incarceration Levels Can Be Reduced at Same Time

Attorney General Eric Holder announced today that the number of persons under the supervision of adult correctional systems in the United States has fallen to its lowest level since 2003.  This finding is highlighted in a study to be released today by the Bureau of Justice Statistics.

According to the study, an estimated 6,899,000 persons were under the supervision of adult correctional systems at year end 2013, down from 6,940,500 at year end 2012. The decrease of 41,500 offenders in 2013 resulted in the number of persons under correctional supervision falling below 6.9 million for the first time since 2003.

The Attorney General called the drop a “significant milestone.”

“While we clearly have much more work to do, it is my hope that we are witnessing the start of an overall trend that will continue – and accelerate – as our reform efforts take full effect,” the Attorney General said. “As I have said many times, we cannot incarcerate our way to becoming a safer nation.  That’s why we need to focus on commonsense sentencing reforms and on proven, evidence-based solutions like diversion programs for those convicted of low-level, nonviolent offenses.”

The complete text of the Attorney General’s video message is below:

“The Department of Justice is dedicated to ensuring that America’s criminal justice system is as fair, as efficient, and as effective as possible.  That’s why, in August of 2013, I launched the “Smart on Crime” Initiative – a targeted effort to enhance the way we charge, sentence, and release individuals in order to end this country’s overreliance on incarceration and to promote efforts that give people the tools they need to return to their communities and lead better and more productive lives. 

“In the six years since President Obama took office, we have made important progress in fighting crime and advancing our long-term criminal justice efforts.  In fact, during this Administration, overall crime has decreased by over 15 percent, while overall incarceration has decreased by nearly 9 percent – the first time these two critical markers have declined together in more than 40 years.  And just two months ago, I was able to report that over the past year, the federal prison population declined by roughly 5,000 inmates – the first decrease we’ve seen in many ‎decades.‎

“Today, I can announce that the number of persons supervised by U.S. adult correctional systems – in prison or jail, or on probation or parole – fell below 6.9 million individuals at the end of 2013.  This drop leaves the United States with the smallest population under the authority of adult correctional supervision in nearly a decade.

“This is a significant milestone.  It is highlighted in a study to be released by the Bureau of Justice Statistics.  And while we clearly have much more work to do, it is my hope that we are witnessing the start of an overall trend that will continue – and accelerate – as our reform efforts take full effect. 

“As I have said many times, we cannot incarcerate our way to becoming a safer nation.  That’s why we need to focus on commonsense sentencing reforms and on proven, evidence-based solutions like diversion programs for those convicted of low-level, nonviolent offenses.  We are seeing this approach take root in states across the country, as more and more governors and legislatures recognize that incarceration must be used to punish, deter, and rehabilitate—not merely to warehouse and forget.  And here in Washington, D.C., I am proud to work with leaders in Congress from both parties to advance this vital conversation and bring about a paradigm shift in the way our nation approaches criminal justice. 

“Of course, I recognize that these are challenging issues, and the changes we seek will not occur overnight.  But I am dedicated – and the Department of Justice is committed – to an ongoing effort that strengthens our criminal justice system; lives up to our founding ideals; and builds the safer, more just society that all Americans deserve.”

The full video of the Attorney General’s message is available at http://www.justice.gov/agwa.php.

Final 10 of 36 Convicted and Sentenced

Ten Aryan Brotherhood of Texas (ABT) gang members and associates were sentenced to prison this week for their roles in the violent ABT enterprise, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.

Today, Michael Richard Lamphere, 56, of Houston, Texas, Glen Ray Millican Jr., 41, of Houston, Texas, and Rebecca Johnson Cropp, 46, of Dallas, Texas, were sentenced to serve respective terms of 240 months, 120 months and 36 months in federal prison by U.S. District Judge Sim Lake in the Southern District of Texas.  Earlier this week, William David Maynard, 44, of Houston, Texas, Sammy Keith Shipman, 32, of Houston, Texas, Chad Ray Folmsbee, 32, of Houston, Texas, David Orlando Roberts, 36, of Houston, Texas, Justin Christopher Northrup, 29, of Houston, Texas, Tammy Melissa Wall, 45, of Otto, North Carolina, and Benjamin Troy Johnson, 43, of Corpus Christi, Texas, were each sentenced to serve respective terms of 262 months, 188 months, 140 months, 135 months, 130 months, 72 months and 36 months in federal prison.

According to information presented in court, the 10 defendants were admitted members and associates of the ABT, a powerful race-based organization that operates inside and outside of state and federal prisons throughout Texas and the United States.  Along with other ABT gang members and associates, they agreed to commit multiple acts of murder, robbery, arson, kidnapping and narcotics trafficking on behalf of the ABT gang.  ABT gang members met on a regular basis at various locations throughout Texas to report on gang-related business, collect dues, commit disciplinary assaults against fellow gang members and discuss acts of violence against rival gang members, among other things.  

The ABT was established in the early 1980s within the Texas prison system.  The gang modeled itself after and adopted many of the precepts and writings of the Aryan Brotherhood, a California-based prison gang that was formed in the California prison system during the 1960s.  Previously, the ABT was primarily concerned with the protection of white inmates and white supremacy/separatism, but over time, the ABT has expanded its criminal enterprise to include illegal activities for profit, according to court records.

In order to be considered for ABT membership, a person must be sponsored by another gang member.  Once sponsored, a prospective member must serve an unspecified term, during which he is referred to as a prospect, while his conduct is observed by the members of the ABT.

Court documents allege that the ABT enforced its rules and promoted discipline among its members, prospects and associates through murder, attempted murder, arson, assault, robbery and threats against those who violated the rules or posed a threat to the enterprise.  Members, and oftentimes associates, were required to follow the orders of higher-ranking members, often referred to as “direct orders.”

The defendants sentenced this week represent the final 10 of 36 defendants convicted of conducting racketeering activity through the ABT criminal enterprise, among other charges.  

This Organized Crime Drug Enforcement Task Force case was investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Administration; FBI; U.S. Marshals Service; Federal Bureau of Prisons; U.S. Immigration and Customs Enforcement, Homeland Security Investigations; Texas Rangers; Texas Department of Public Safety; Montgomery County, Texas, Sheriff’s Office; Houston Police Department-Gang Division; Texas Department of Criminal Justice – Office of Inspector General; Harris County, Texas, Sheriff’s Office; Atascosa County, Texas, Sheriff’s Office; Orange County, Texas, Sheriff’s Office; Waller County, Texas, Sheriff’s Office; Alvin, Texas, Police Department; Carrollton, Texas, Police Department; Mesquite, Texas, Police Department; Montgomery County District Attorney’s Office; and the Atascosa County District Attorney’s Office.

The case was prosecuted by Trial Attorney David Karpel of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Ed Gallagher and Tim Braley of the Southern District of Texas.

A Miami woman charged with running an operation that threatened and defrauded Spanish-speaking consumers was sentenced today in federal district court in Miami, the Department of Justice and U.S. Postal Inspection Service (USPIS) announced. 

Maria Luzula, 52, was sentenced to serve 165 months in federal prison to be followed by three years of supervised release for her operation of Angeluz Florida Corporation and call centers in Peru that lied to and threatened Spanish-speaking victims into paying fraudulent settlements for nonexistent debts.  In addition to her prison sentence, Luzula was ordered to forfeit assets, including her home.

In October, Luzula pleaded guilty to all 27 counts against her midway through trial before U.S. District Court Judge Patricia A. Seitz.  The charges against her included conspiracy, mail fraud, wire fraud and attempted extortion.  Luzula’s son, Juan Alejandro Rodriguez Cuya, 35, was convicted by a jury after less than two hours of deliberation following a two-week trial and will be sentenced on Jan. 22, 2015.

“The defendants targeted and preyed upon the Spanish-speaking community – and the harm that their fraud caused on individual victims is heart-wrenching,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “The Justice Department will be particularly vigilant towards schemes that target specific populations, and we will track down fraudulent actors whether they commit their offenses from the United States or abroad, and whether they commit them in English or another language.”

According to evidence presented at trial, the defendants’ employees in Peru used Internet-based telephone calls to threaten Spanish-speaking victims in the United States.  The Peruvian callers falsely accused the victims of having failed to accept delivery of certain products and claimed that the victims owed thousands of dollars in fines and that lawsuits would be brought against them.  In reality, the victims had never ordered these products and nothing had been delivered.

Additional evidence at trial established that the call center employees claimed that the consumers could resolve the fines if they immediately paid a “settlement fee.”  Consumers who contested these settlement fees were told that failure to pay could lead to arrest, deportation or seizure of property.  Thousands of victims succumbed to these threats and paid fees that they did not owe. 

Victims who testified at trial spoke of how anxious the calls made them.  The victims were so afraid of the threats that they paid fees they simply could not afford.  At sentencing, victims told the judge that they have lost trust in people and that they still become nervous every time the phone rings.  

“Consumer fraud that targets a specific population is shameful,” said U.S. Attorney Wilfredo A. Ferrer for the Southern District of Florida.  “In this case, the defendants targeted Spanish-speaking consumers and falsely threatened them with arrest, deportation, forfeiture of property or harm to their credit scores when the consumers refused to settle claims for products that were not delivered or ordered.  Such tactics are intolerable.  The U.S. Attorney’s Office is committed and stands united with the Department of Justice’s Civil Division Consumer Protection Branch to protect our consumers from fraud.”

“The USPIS will continue to aggressively investigate and go after those who defraud citizens of their hard earned money through the use of threats and other abusive tactics,” said Postal Inspector in Charge Ronald Verrochio of the USPIS Miami Division.

Acting Assistant Attorney General Branda commended the USPIS for its investigative efforts and thanked the U.S. Attorney’s Office for the Southern District of Florida for their contributions to the case.  The case was prosecuted by Trial Attorney Phil Toomajian and Assistant Director Richard Goldberg of the Civil Division’s Consumer Protection Branch.

A Flossmoor, Illinois, man was sentenced to serve 46 months in prison and three years of supervised release by U.S. District Court Judge Michael M. Mihm in the Central District of Illinois for obstruction of justice and filing false retaliatory liens against government officials, the Justice Department’s Tax Division announced today.

Tyree Davis Sr. pleaded guilty on July 18, 2014, to two counts of obstruction of justice and two counts of filing false retaliatory liens.  A federal grand jury in Chicago returned an eight count indictment on July 24, 2013, charging Davis with two counts of obstruction of justice and six counts of filing false retaliatory multi-billion dollar liens against government employees. 

According to court documents, Davis sent correspondence threatening to arrest two federal judges, including the judge who presided over the 2010 criminal tax trial of LaShawn Littrice.  A jury convicted Littrice, who Davis has referred to as his wife, in June 2010, and she was sentenced to serve 42 months in prison.  Court documents also establish that Davis filed false retaliatory liens, titled Notice of Claim of Maritime Lien, against the two federal judges.  Davis also filed false retaliatory liens against the U.S. Attorney and Clerk of Court for the Northern District of Illinois, and the Assistant U.S. Attorney and the special agent from the Internal Revenue Service-Criminal Investigation who investigated and prosecuted Littrice.  Davis filed the liens with the Cook County Recorder’s Office claiming that each individual owed Littrice $100 billion dollars.  Davis re-recorded the liens multiple times in order to add real property descriptions, then notified others, including credit bureaus, that he had filed the multi-billion dollar liens.  

The case was prosecuted by the Senior Litigation Counsel Jen E. Ihlo and Trial Attorney Matthew J. Kluge of the Tax Division and was investigated by the U.S. Treasury Inspector General for Tax Administration and the FBI.

A Houston investment manager was sentenced yesterday to serve 56 months in prison for orchestrating a $72 million investment fraud scheme resulting in approximately $40 million in losses to investors.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Carlie Christensen of the District of Utah, Special Agent in Charge Mary Rook of the FBI’s Salt Lake City Field Office and Special Agent in Charge John Collins of the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Las Vegas Field Office made the announcement.

Robert Andres, 63, of Houston, Texas, pleaded guilty on Aug. 22, 2013, to wire fraud.  In addition to the prison sentence, U.S. District Judge Robert J. Shelby of the District of Utah ordered Andres to pay more than $3.2 million in restitution.

According to admissions made in connection with his guilty plea, between October 2005 and 2011, Andres recruited investors for Winsome Investment Trust, where he served as the sole manager, attorney and trustee, by misrepresenting Winsome’s assets, asset allocation and the manner in which investor funds were invested.  Indeed, between October 2005 and April 2007, Andres raised more than $39 million by disseminating false and misleading balance sheets and representing that he would invest all of the investors’ funds in a trading program or mostly automated trading business.

Also according to Andres’ admissions, he intentionally failed to disclose to potential  investors that their money would actually be used to pay earlier investors.  In addition, Andres used new investor funds to make purported “profit” payments to earlier investors to create the false impression that Winsome was profitable.  During this period, Andres also misappropriated approximately $2.2 million in investor money for personal use, including to pay his hotel bills and living expenses.

This case was investigated by the FBI’s Salt Lake City Field Office and IRS-CI’s Las Vegas Field Office.  The Commodity Futures Trading Commission and the Securities and Exchange Commission also provided assistance in the investigation.  The case is being prosecuted by Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Jason R. Burt and Mark Y. Hirata of the District of Utah.

The Justice Department announced that a federal grand jury in Shreveport, Louisiana, returned an indictment against former Homer Police Department Officer Willie Fred Knowles, 64, charging him with violating the civil rights of multiple individuals during three different incidents, as well as with making false statements to the FBI.   

Knowles was charged with one count of willfully depriving a person of her civil rights when he pushed her down and struck her about her face and body, without justification.  Knowles is also charged with making false statements to the FBI about this incident.  In addition, Knowles is charged with depriving the rights of two other individuals during two separate incidents in which he tased them without justification.   

If convicted, Knowles faces a maximum punishment of 10 years imprisonment on the civil rights charges; and five years in prison for making false statements to the FBI.   

This case was investigated by the FBI.  The case was referred to the FBI by the Louisiana State Police.  The case is being prosecuted by Trial Attorney Christine M. Siscaretti from the Justice Department’s Civil Rights Division and Assistant United States Attorney Mary J. Mudrick of the Western District of Louisiana.

An indictment is a formal accusation of criminal conduct, not evidence of guilt. The defendant is presumed innocent unless and until proven guilty.  

A former special agent with the Department of Health and Human Services-Office of Inspector General (HHS-OIG) pleaded guilty today to theft of government property for stealing thousands of rounds of law enforcement ammunition, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Special Agent in Charge Elton Malone of HHS-OIG’s Special Investigations Branch.

Josef A. Riekers, 44, of Rockwall, Texas, pleaded guilty before Chief U.S. District Judge Jorge A. Solis of the Northern District of Texas, who set a sentencing hearing for April 8, 2015. 

According to admissions in his plea agreement, Riekers, who had served as a federal law enforcement agent for over 15 years, stole ammunition from the armory at HHS-OIG’s Dallas regional office.  Riekers then traded the stolen ammunition on Internet forums for other, non-government-issued ammunition that he used for his own personal benefit.

This case was investigated by HHS-OIG’s Special Investigations Branch, with assistance from the Dallas Police Department’s Criminal Intelligence Unit.  The case is being prosecuted by Trial Attorneys Kevin Driscoll and Justin Weitz of the Public Integrity Section.

Attorney General Eric Holder, Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division and U.S. Attorney Preet Bharara for the Southern District of New York announced today that the United States has taken legal action to ensure that critically important reforms are put in place to address conduct at Rikers Island that has violated the constitutional rights of New York City’s youngest inmates, who are between the ages of 16 and 18 (“young inmates”).  Specifically, the Department of Justice has filed a motion seeking the court’s permission to join and become a plaintiff in a pending class action lawsuit against New York City, Nunez v. City of New York (the “Nunez Action”), which alleges that the Department of Correction (“DOC”) has engaged in a pattern and practice of using unnecessary and excessive force against inmates.  The department has taken this legal step as part of its ongoing effort to ensure that DOC implements all needed institutional reforms promptly, and that these reforms are lasting, verifiable and enforceable through the judicial process.

"With this filing, the Department of Justice is taking an important step to ensure the safety and constitutional rights of young people incarcerated at Rikers Island," said Attorney General Holder.  "We've seen alarming evidence of unnecessary and excessive use of force against juveniles, as well as a systemic failure to protect them from violence and deeply troubling -- and potentially scarring -- use of solitary confinement.  This action allows the Justice Department to seek necessary reforms to remedy these unlawful conditions, to ensure fair treatment, and to provide all incarcerated young people with the protections, and opportunities to build better futures, that they deserve."

“Today we are taking legal action to ensure that critically important reforms are put in place to address the culture of violence and overuse of punitive segregation at Rikers Island that has violated the constitutional rights of New York City’s youngest inmates,” said Acting Assistant Attorney General Gupta.  “We stand ready to work with the city to remedy these deeply disturbing conditions for the safety of confined youth, remedies that will ultimately also promote public safety and the safety of correctional officers.”

“Sometimes it’s the case that bureaucracy can get in the way of reform-minded thinking and comprehensive cultural change,” said U.S. Attorney Bharara.  “We hope that won’t be the case here.  We welcome the aspirations articulated by Commissioner Ponte but we hope those aspirations will find concrete expression in the form of permanent, enforceable, and verifiable terms in a court-approved settlement agreement.  The devil, as they say, is in the details and we have come to the conclusion that joining the pending case as a formal party is the best and most efficient way to get those details done.  That is why we are now taking the steps necessary to carry out our responsibility under the law.  Given the longstanding sad state of affairs at Rikers Island, our impatience is more than understandable.  As I’ve said before, one way or another, we will get enduring and enforceable reform at Rikers Island.” 

On August 4, 2014, the department issued a report that concluded that “a deep-seated culture of violence is pervasive throughout the adolescent facilities at Rikers, and DOC staff routinely use force not as a last resort, but instead as a means to control the adolescent population and punish disorderly or disrespectful behavior.”  The report urged the city to adopt and implement over 70 specific remedial measures.  Although DOC’s new leadership has taken some positive steps in response to the report with respect to the 16 and 17-year old population, including reducing the inmate-to-staff ratio, developing new programming, and moving towards eliminating the use of punitive segregation, much more needs to be done. 

The department’s proposed 36-page complaint-in-intervention (“complaint”), filed today along with a motion to intervene in the Nunez action, alleges that the city has engaged in a pattern and practice of violating the constitutional rights of young inmates, and that the city’s deliberate indifference to these constitutional rights has caused these inmates serious physical, psychological, and emotional harm.  Like the August 4, 2014, report, the complaint focuses on use of force by staff, inmate-on-inmate violence, and the use of punitive segregation. 

Specifically, the complaint alleges:

• Staff use force against young inmates with alarming frequency.In Fiscal Year 2014, there were 553 reported staff use of force incidents involving young inmates at the Robert D.Davoren Center (“RNDC”) and the Eric M.Taylor Center (“EMTC”), the two facilities that housed most young inmates.These incidents resulted in 1,088 injuries.

• Inmate-on-inmate fights and assaults are pervasive in large part because inmates are inadequately supervised by inexperienced and poorly trained officers.In Fiscal Year 2014, there were 657 reported inmate-on-inmate fights involving young inmates at RNDC and EMTC.

• Staff use of force and inmate-on-inmate fights and assaults have resulted in an alarming number of serious injuries to young inmates, including broken jaws, broken orbital bones, broken noses, long bone fractures, and lacerations requiring stitches.

• Staff frequently punch, strike, or kick young inmates in the head or facial area.

• Force is used as a means to punish young inmates, and staff unnecessarily continue to use force against inmates who already have been restrained.

• Force is used in response to inmate verbal taunts and insults.

• Specialized response teams, including probe and cell extraction teams, use excessive force.

• Staff regularly tell inmates to “stop resisting,” even though the inmate has been completely subdued, to justify the use of force.

• Use of excessive force is common in areas outside video surveillance coverage.DOC recently transferred many 18-year old inmates to housing units that have no video surveillance at all.

The complaint further alleges that, notwithstanding a long and troubled history of pervasive use of force against inmates at Rikers, the city has for years failed to address systemic deficiencies, including:

• Failure to ensure that use of force is accurately reported, and allowing a powerful code of silence to persist.

• Failure to conduct thorough and comprehensive investigations into use of force incidents.

• Failure to appropriately discipline staff for using excessive and unnecessary force.

• Failure to ensure that inmates are adequately supervised.

• Failure to implement an adequate age-appropriate classification system.

• Failure to provide staff with effective training on the proper use of force and how to appropriately manage youth.

In addition, the complaint asserts that the city has engaged in a pattern and practice of placing young inmates in punitive segregation at an alarming rate and for excessive periods of time. 

Since issuing its report in August, the U.S. Attorney’s Office has had several meetings with the city’s Law Department regarding the U.S. Attorney’s Office proposed remedial measures.  Some of these discussions have included attorneys representing the Nunez plaintiffs, who have been engaging in settlement discussions with the city for several months.  However, thus far, although there has been some constructive dialogue, the city has been unwilling to commit to an enforceable agreement including the type of reforms and oversight that are necessary to fully address the long-standing problems at Rikers and safeguard the constitutional rights of inmates.

U.S.  Attorney Bharara thanked the Board of Correction for its continuing assistance in connection with this matter. 

This case is being handled by the Office’s Civil Rights Unit.  Assistant U.S. Attorneys Jeffrey K. Powell and Emily E. Daughtry are in charge of the case.

A California investment manager was sentenced yesterday to serve 225 months in prison for orchestrating a $33 million Ponzi scheme resulting in $15.2 million in losses to investors.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Carlie Christensen of the District of Utah, Special Agent in Charge Mary Rook of the FBI’s Salt Lake City Field Office and Special Agent in Charge John Collins of the Internal Revenue Service-Criminal Investigation’s (IRS-CI) Las Vegas Field Office made the announcement.

Robert L. Holloway, 57, of San Diego, California, was found guilty on Aug. 5, 2014, after a seven-day jury trial, of four counts of wire fraud and one count of making a false income tax return.  In addition to the prison sentence, U.S. District Judge Robert J. Shelby of the District of Utah ordered Holloway to pay $15.2 million in restitution.

Evidence presented at trial established that Holloway served as the chief executive officer and managing partner of US Ventures LC between May 2005 and April 2007.  From October 2005 until at least April 2007, Holloway recruited investors by making false representations, including that US Ventures used proprietary trading software that was consistently profitable, that US Ventures generated returns of 0.8 percent per trading day and that US Ventures would retain a 30 percent share of investors’ profits as a management fee.

The evidence also showed that Holloway generated and distributed reports to investors showing false daily returns on their investments.  Indeed, between October 2005 and April 2007, contrary to the returns shown on the false reports, US Ventures lost more than $10 million in trading, and the “profit” figures on the investor reports were entirely fabricated.  US Ventures raised more than $33 million from investors for its purported trading activities.  

Evidence at trial further demonstrated that Holloway and US Ventures made “profit distributions” to investors from funds solicited from new investors, and that Holloway misappropriated investors’ funds for a variety of personal expenses, including supporting his then-wife’s eBay business, and purchasing hundreds of thousands of dollars of jewelry.  During 2006 alone, Holloway diverted more than $1.2 million in investor funds to a “business” account that he used as a personal account.  During that same year, Holloway falsely claimed a gross income of only $27,500 on his personal tax return.

The case was investigated by the FBI’s Salt Lake City Field Office and the IRS-CI’s Las Vegas Field Office.  The Commodity Futures Trading Commission and the Securities and Exchange Commission also provided assistance in the investigation.  This case was prosecuted by Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jason R. Burt of the District of Utah.

New Memo Applies to All Department of Justice Components and U.S. Attorneys

Attorney General Holder announced today that the Department of Justice will take the position in litigation that the protection of Title VII of the Civil Rights Act of 1964 extends to claims of discrimination based on an individual’s gender identity, including transgender status.  Attorney General Holder informed all Department of Justice component heads and United States Attorneys in a memo that the department will no longer assert that Title VII’s prohibition against discrimination based on sex excludes discrimination based on gender identity per se, including transgender discrimination, reversing a previous Department of Justice position.  Title VII makes it unlawful for employers to discriminate in the employment of an individual “because of such individual’s…sex,” among other protected characteristics. 

“This important shift will ensure that the protections of the Civil Rights Act of 1964 are extended to those who suffer discrimination based on gender identity, including transgender status,” said Attorney General Holder.  “This will help to foster fair and consistent treatment for all claimants.  And it reaffirms the Justice Department’s commitment to protecting the civil rights of all Americans.”

The Attorney General’s memo is designed to foster consistent treatment of claimants throughout the government and reduce confusion.  In addition to applying to the department’s civil obligations in defending federal interests, this memo clarifies the Civil Rights Division’s ability to file Title VII claims against state and local public employers on behalf of transgender individuals.  The Department of Justice does not have authority to file suit against private employers.

An Alabama woman was sentenced today to serve 70 months in prison for her involvement in a stolen identity tax refund fraud (SIRF) scheme, Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department's Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama announced.

Sasha Webb was also ordered to serve three years of supervised release following her prison sentence and to pay $528,823 in restitution.

According to court documents and court proceedings in this and related cases, Webb worked as a medical records clerk at an Alabama Department of Corrections facility in Elmore County, Alabama, where she had access to the means of identification of inmates from databases maintained by the Alabama Department of Corrections.  On several occasions in 2009 and 2010, Webb stole identities from those databases and sold them to Harvey James and his sister, Jacqueline Slaton, for the purpose of filing false tax returns. 

Between 2010 and 2012, James and Slaton used those stolen identities to file false federal and state tax returns.  James and Slaton directed some of the false refunds to be sent to either prepaid debit cards or issued via check.  James’s brother-in-law, Gregory Slaton, recruited Vernon Harrison, a U.S. Postal Service employee, to the scheme.  James directed prepaid debit cards and state tax refund checks to be mailed to addresses that Harrison provided from his postal route.  Harrison collected the debit cards and checks and provided them to Gregory Slaton who in turn gave them to James and Jacqueline Slaton.  In total, James and Slaton filed more than 1,000 federal and state income tax returns that claimed more than $1 million in fraudulent tax refunds.

On Oct. 31, 2013, Harrison was sentenced to serve 111 months in prison. James was sentenced on April 29, 2014, to serve 110 months in prison and Jacqueline Slaton was sentenced on Oct. 23, 2012, to serve 70 months in prison.  Gregory Slaton was sentenced on Oct. 28, 2014, to serve 70 months in prison.

The case was investigated by special agents of the Internal Revenue Service - Criminal Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the U.S. Postal Service’s Office of the Inspector General.  Trial Attorneys Jason H. Poole and Michael C. Boteler of the Tax Division are prosecuting the case with the assistance of Assistant U.S. Attorney Todd Brown for the Middle District of Alabama.

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

A Pike Road, Alabama, man was sentenced to serve 51 months in prison today for committing stolen identity refund fraud (SIRF) crimes, announced Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama.

Charlie Jackson pleaded guilty to wire fraud and aggravated identity theft on May 5, and was also ordered to serve three years of supervised release following his prison term and to pay $98,177 in restitution.  According to court documents, from October 2010 up until April 2013, Jackson was involved in SIRF crimes—the use of stolen identities to steal money from the Internal Revenue Service (IRS)—by filing fraudulent tax returns claiming refunds in the victims’ names.  He admitted to obtaining stolen identities from various sources, including from nursing homes.  Altogether, the false tax returns filed by Jackson fraudulently claimed more than $170,000 in refunds.  Many of the returns were detected as fraudulent by the IRS and were not issued, however, Jackson was successful in defrauding the IRS of more than $90,000 in illegitimate refunds.

This case was investigated by special agents of the IRS-Criminal Investigation.  Trial Attorneys Michael C. Boteler and Charles M. Edgar Jr. of the Tax Division prosecuted the case with the assistance of Assistant U.S. Attorney Todd Brown and the U.S. Attorney’s Office for the Middle District of Alabama.

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

An Alabama man was indicted for stolen identity refund fraud, Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama announced today following the unsealing of the indictment. 

Jerome Marcel Newton was indicted on one count of mail fraud and one count of aggravated identity theft.

According to the indictment, Newton obtained personal identifying information through various means, including by using other individuals to collect identities and by recruiting people to provide their identities.  Newton is alleged to have used the identities he obtained to file fraudulent tax returns, directing the refunds claimed on the returns into bank accounts or onto prepaid debit cards.

An indictment merely alleges that crimes have been committed and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Newton faces a statutory maximum sentence of 20 years in prison for the mail fraud count and a statutory mandatory sentence of two-years in prison for the aggravated identity theft count.  The actual sentence imposed on Newton if convicted, however, will be decided by a federal judge after consulting the sentencing guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.  Newton is also subject to fines and mandatory restitution if convicted.

This case was investigated by special agents of the Internal Revenue Service - Criminal Investigation, with assistance from the Sheriff’s Office for Douglas County, Georgia.  Trial Attorneys Jason Poole and Michael Boteler of the department’s Tax Division are prosecuting the case with the assistance of Assistant U.S. Attorney Todd Brown and the U.S. Attorney’s Office for the Middle District of Alabama. 

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

William J. Lednum, 41, of Tilghman Island, Maryland, was sentenced today in federal court in Baltimore to a year and day in prison, respectively followed by six months of home detention as part of three years of supervised release, for conspiring to violate the Lacey Act and to defraud the United States through their illegal harvesting and sale of 185,925 pounds of striped bass. Lednum was also ordered to pay $498,293.40 in restitution to the State of Maryland for the damage caused to the Striped Bass fishery.  In addition, Judge Bennett ordered Lednum to pay a fine of $40,000. 

According to their plea agreements, Lednum and his co-defendant, Michael D. Hayden, were “captains” on fishing vessels owned by them, William J. Lednum Fisheries, d/b/a, Michael D. Hayden, Jr., and Michael D. Hayden, Jr., Inc.  The defendants also employed numerous “helpers” as part of this scheme, including, co-defendants Kent Sadler and Lawrence Daniel Murphy.

From at least 2007 to 2011, Hayden and Lednum engaged in a scheme to illegally poach tens of thousands of pounds of striped bass from the Chesapeake Bay in violation of Maryland regulations relating to harvest method, amounts, tagging, and reporting. In an effort to conceal their crimes, Hayden and Lednum falsified paperwork related to their harvests and submitted those falsified documents to the state of Maryland.  The state of Maryland in turn submits such paperwork to numerous Federal and interstate agencies responsible for setting harvest levels all along the eastern seaboard.  Hayden and Lednum shipped and sold the striped bass to wholesalers in New York, Pennsylvania, Delaware and Maryland, receiving a total of $498,293.47 for the poached fish. 

The investigation in this case started in February 2011 when the Maryland Department of Natural Resources found tens of thousands of pounds of striped bass snagged in illegal, anchored nets before the season officially reopened.  The conspirators were seen on the water in the vicinity of the illegal nets. The subsequent investigation unveiled a wider criminal enterprise for which Hayden and Lednum were sentenced today. 

Co-defendants Michael D. Hayden, 43, of Tilghman Island, Lawrence “Daniel” Murphy, 37, of St. Michaels, Maryland, and Kent Conley Sadler, 31, of Tilghman Island, previously pleaded guilty to their participation in the conspiracy. Murphy is scheduled to be sentenced on December 19, 2014, Sadler is scheduled to be sentenced on January 7, 2015 and Hayden is scheduled to be sentenced on Feb. 27, 2015.

The investigation into this case was conducted by the Maryland Department of Natural Resources and the U.S. Fish and Wildlife Service.   The prosecution was handled by Todd W. Gleason and Shennie Patel of the Department of Justice’s Environmental Crimes Section, and Assistant U.S. Attorney P. Michael Cunningham.

“The president’s actions today in providing clemency to eight individuals who were sentenced under outdated and unfair laws sustains his commitment to bring fairness to our criminal justice system. While all eight were properly held accountable for their criminal actions, their punishments did not fit their crimes, and sentencing laws and policies have since been updated to ensure more fairness for low-level offenders. All eight of these individuals meet the criteria I laid out under the President’s direction when I announced the Clemency Initiative in April: they are all non-violent, low-level offenders who have no significant criminal history nor ties to gangs or organized crime. All have served at least 10 years in prison with good conduct while incarcerated, and all would have gotten lesser sentences if convicted of the same crimes today."

“As I have said many times, for our criminal justice system to be effective, it needs to not only be fair; but it also must be perceived as being fair. That’s why we created the Clemency Initiative – in the hope of promoting that fundamental American ideal, equal justice under the law. The Justice Department will continue to identify applicants whom we can recommend to the president for commutation.”

 

###

WASHINGTON, D.C. – Today President Barack Obama granted clemency to twenty individuals, consisting of eight commutations and twelve pardons.

 

The President granted commutations of sentence to the following eight individuals:

 

• Sidney Earl Johnson, Jr. – Mobile, AL

Offense:  Conspiracy to distribute and possess with intent to distribute cocaine base; possession with intent to distribute cocaine base; use of a communication facility to commit a felony (Southern District of Alabama)

Sentence:  Life imprisonment; 10 years’ supervised release (Apr. 13, 1994)

Commutation Grant:  Prison sentence commuted to expire on June 12, 2015.

 

•  Cathy Lee Jones – Portsmouth, VA

Offense:  Conspiracy to possess with intent to distribute and distribute heroin and cocaine base (Eastern District of Virginia)

Sentence:  262 months’ imprisonment; five years’ supervised release (Apr. 29, 2003)

Commutation Grant:  Prison sentence commuted to expire on April 15, 2015.

 

•  Rickey Marcell McCall – Birmingham, AL 

Offense:  Possession with intent to distribute in excess of 50 grams of a mixture and substance containing cocaine base; possession of a firearm by a convicted felon (two counts) (Northern District of Alabama)

Sentence:  Life imprisonment; 120 months’ supervised release (Jan. 11, 2001)

Commutation Grant:  Prison sentence commuted to expire on April 15, 2015.

 

•  Larry Nailor – Memphis, TN

Offense:  Possession of a controlled substance with intent to distribute approximately 50 grams of cocaine base (Western District of Tennessee)

Sentence:  Life imprisonment; 10 years’ supervised release (Nov. 7, 1997)

Commutation Grant:  Prison sentence commuted to expire on April 15, 2015.

 

•   Antonio Gromyko Reeves – Kennett, MO

Offense:  Distribution of five grams or more of cocaine base (Eastern District of Missouri)

Sentence:  188 months’ imprisonment; four years’ supervised release (May 21, 2004)

Commutation Grant:  Prison sentence commuted to expire on April 15, 2015.

 

•    Jennifer Regenos – Muscatine, IA

Offense:  Conspiracy to distribute methamphetamine (Southern District of Iowa)

Sentence:  240 months’ imprisonment; 10 years’ supervised release (Mar. 25, 2002)

Commutation Grant:  Prison sentence commuted to expire on April 15, 2015.

 

•   Barbara Lammsies Scrivner – Portland, OR 

Offense:  Conspiracy to manufacture, possess with intent to distribute, and distribute methamphetamine; possession with intent to distribute methamphetamine (District of Oregon)

Sentence:  360 months’ imprisonment; five years’ supervised release (July 3, 1995)

Commutation Grant:  Prison sentence commuted to expire on June 12, 2015.

 

•  Israel Abel Torres – Dallas, TX

Offense:  Conspiracy to possess with intent to distribute controlled substances; possession with intent to distribute cocaine base (Eastern District of Texas)

Sentence:  Life imprisonment; 10 years’ supervised release; $1,000 fine (Dec. 4, 1998)

Commutation Grant:  Prison sentence commuted to expire on April 15, 2015.

 

 

The President granted pardons to the following twelve individuals:

 

• Roy Norman Auvil – Bartonville, IL

Offense:  Possession of an unregistered distilling apparatus; working a distillery on which the required sign is not placed (District of South Carolina)

Sentence:  Five years’ probation (Nov. 16, 1964)

 

•  Bernard Bryan Bulcourf – McIntosh, FL

Offense:  Counterfeiting Federal Reserve notes (Southern District of Florida)

Sentence:  90 days’ confinement in a community treatment center, followed by three years’ probation (Nov. 18, 1988)

 

•   Steve Charlie Calamars – San Antonio, TX

Offense:  Possession of phenyl-2-propanone with intent to manufacture a quantity of methamphetamine (Western District of Texas)

Sentence:  57 months’ imprisonment; three years’ supervised release (May 31, 1989; as amended Apr. 8, 1994)

 

• Diane Mary DeBarri, fka Diane Mary Wilhelm – Fairless Hills, PA

Offense:  Conspiracy to manufacture and distribute methamphetamine; distribution of methamphetamine (Eastern District of Pennsylvania)

Sentence:  90 days’ imprisonment; five years’ probation conditioned on performance of community service as directed by the court (June 15, 1984)

 

•  Donnie Keith Ellison – London, KY

Offense:  Manufacture of marijuana (Eastern District of Kentucky)

Sentence:  Five months’ imprisonment; three years’ supervised release (Sept. 1, 1995)

 

• John Marshall French – Clovis, CA

Offense:  Conspiracy to transport a stolen motor vehicle in interstate commerce (District of South Carolina)

Sentence:  Three years’ probation conditioned on performance of 100 hours of community service and payment of $2,337 restitution (Mar. 2, 1993)

 

•  Ricardo Marcial Lomedico, Sr. – Point Roberts, WA

Offense:  Misappropriation of bank funds by an employee (Western District of Washington)

Sentence:  Five years’ imprisonment (Nov. 21, 1969)

 

•   David Raymond Mannix – Lafayette, OR

Offense:  Conspiracy to commit larceny; theft of military property (U.S. Marine Corps general court-martial convened at Camp Pendleton, CA)

Sentence:  75 days’ confinement; forfeiture of $350 pay per month for three months; reduction to Private First Class, pay grade E-2 (Oct. 18, 1989, as approved Mar. 2, 1990)

 

• David Neil Mercer – Grand Junction, CO

Offense:  Archaeological Resources Protection Act violation (District of Utah)

Sentence:  36 months’ probation; $2,500 fine; $1,437.72 joint and several restitution (Apr. 9, 1997)

 

• Claire Holbrook Mulford, fka Claire Audrey Holbrook – Flint, TX

Offense:  Using a residence to distribute methamphetamine; carrying a firearm during a drug-trafficking crime (Eastern District of Texas)

Sentence:  70 months’ imprisonment; two years’ supervised release (Dec. 3, 1993)

 

• Brian Edward Sledz – Naperville, IL

Offense:  Wire fraud; violation of the Commodity Exchange Act (Northern District of Illinois)

Sentence:  One year of probation conditioned on payment of $1,318 costs of supervision and $8,297.91 restitution (Apr. 29, 1993)

 

•  Albert Byron Stork – Delta, CO

Offense:  Filing a false tax return (District of Colorado)

Sentence:  Six months’ confinement in a jail-type or treatment institution; three years’ probation (May 8, 1987)

 

###

The owner and president of a dietary supplement manufacturing company in Flanders, New Jersey, pleaded guilty today to conspiracy to commit wire fraud in relation to a scheme in which he directed the sale of diluted and adulterated dietary ingredients and supplements sold by his company, U.S. Attorney Paul J. Fishman announced. 

Barry Steinlight, 69, of Hackettstown, New Jersey, pleaded guilty to a one-count information charging him with conspiring to commit wire fraud.  As part of his plea agreement, Steinlight admitted that Raw Deal’s gross sales during the scheme were between $7 million and $20 million.  Steinlight has agreed to forfeit more than $1 million in profits from the scheme.

“Barry Steinlight diluted his products, cheated his customers and lied to the Food and Drug Administration when they came to inspect his company,” said U.S. Attorney Fishman.  “This scheme went on for four years and essentially became the business model at his company.  People who sell and use dietary supplements have the right to expect that the ingredients are listed and they get what they paid for.”

“This dietary supplement company owner ignored his basic obligations in his pursuit for profit,” said Acting Assistant Attorney General Joyce R. Branda for the Department of Justice’s Civil Division.  “American consumers have a right to know that the dietary supplements they purchase are safe to consume and that the ingredients listed on the label are actually in the bottle.  This case demonstrates the Department of Justice’s commitment to ensuring that those who deal products affecting the health and safety of consumers are law abiding and that wrongdoers will be held accountable.”

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

Steinlight was the president and owner of Raw Deal Inc., a dietary supplement manufacturing facility.  From at least 2009 through November 2013, Steinlight instructed Raw Deal employees to add “fillers,” including maltodextrin, viobin cocoa replacer and rice flours to the dietary ingredients and supplements packaged for, and sold to, Raw Deal’s customers.  These “fillers” were added without customer consent or knowledge.  Steinlight also directed Raw Deal employees not to list the “fillers” as ingredients on the certificates of analysis (COAs) issued to its customers as proof of the identity of the ingredients contained in the products. 

In addition to directing the dilution and adulteration of Raw Deal’s products, Steinlight also directed Raw Deal employees to create COAs that falsely certified that certain of Raw Deal’s products were kosher or organic.  Further during an U.S. Food and Drug Administration (FDA) inspection of Raw Deal in February 2012, Steinlight instructed Raw Deal employees to alter a document before providing it to the FDA.

U.S. Attorney Fishman credited special agents of the FDA’s Office of Criminal Investigations, under the direction of Acting Special Agent in Charge James J. Royal, who investigated the case.

“When a company distributes adulterated and misbranded dietary supplements, they put consumers at risk,” said Acting Special Agent in Charge Royal.  “Today’s plea agreement should serve as a reminder that FDA’s Office of Criminal Investigations will continue working with the Department of Justice to protect consumers from public health risks and fraud.”

The conspiracy charge carries a statutory maximum sentence of five years in prison and a maximum $250,000 fine, or twice the gain or loss caused by the offense.  Sentencing is scheduled for March 30, 2015.

The government is represented by Assistant U.S. Attorney Joseph Mack, Deputy Chief of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit, Special Assistant U.S. Attorney Shannon M. Singleton from the FDA’s Office of Chief Counsel, and Trial Attorneys Patrick Runkle and David Sullivan of the Civil Division’s Consumer Protection Branch.  Paralegal Jeffrey Skonieczny of the U.S. Attorney’s Office also assisted in the criminal investigation.

U.S. Attorney Fishman reorganized the health care fraud practice at the U.S. Attorney’s Office for the District of New Jersey shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses.  Since 2010, the office has recovered more than $620 million in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug, and Cosmetic Act and other statutes.

The organizer of a $56 million Medicare fraud conspiracy and an accomplice physician pleaded guilty today in federal court in Louisiana to health care fraud charges. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Kenneth A. Polite of the Eastern District of Louisiana, Special Agent in Charge Michael Anderson of the FBI’s New Orleans Field Office, Special Agent in Charge Mike Fields of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Dallas Regional Office and Louisiana Attorney General James D. “Buddy” Caldwell made the announcement.

Mark Morad, 51, of Slidell, Louisiana, and Dr. Divini Luccioni, 53, of Kenner, Louisiana, each pleaded guilty before Chief U.S. District Judge Sarah S. Vance of the Eastern District of Louisiana today.  Morad pleaded guilty to conspiracy to commit health care fraud and conspiracy to falsify records in a federal investigation.  Dr. Luccioni pleaded guilty to conspiracy to commit health care fraud.  Sentencing hearings for each are scheduled for April 1, 2015. 

According to court documents, Morad directed a Medicare fraud scheme through multiple New Orleans-area companies he owned, including Interlink Health Care Services Inc., Memorial Home Health Inc., Lakeland Health Care Services Inc., Lexmark Health Care LLC, and Med Rite Pharmacy Inc.  Morad controlled all aspects of these companies, from hiring to deciding what services would be billed.  The companies claimed to provide home health services and durable medical equipment (DME) to thousands of Medicare beneficiaries living in and around New Orleans. 

Morad paid kickbacks to recruiters who canvassed New Orleans neighborhoods for Medicare beneficiary numbers, which Morad then used to bill Medicare for services that were not medically necessary or not provided.  Dr. Luccioni admitted that he signed home health referrals and wrote DME prescriptions that were used to support these fraudulent billings.  Specifically, court documents show that Dr. Luccioni falsely certified that beneficiaries were homebound and qualified for home health services, and that he wrote prescriptions for power scooters and other DME that he knew the purported beneficiaries did not need. 

When a federal grand jury subpoenaed records from another company Morad owned, he and others fabricated tax and employment records to conceal the companies’ illegal activities and mislead the grand jury.

Medicare billing records showed that between 2007 and 2014, Morad’s companies submitted more than $56 million in claims to Medicare, a vast majority of which were fraudulent.  Medicare paid approximately $50.7 million on these claims.

This case was investigated by the FBI, HHS-OIG and the Louisiana Attorney General’s Medicaid Fraud Control Unit, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Louisiana.  This case was prosecuted by William G. Kanellis of the Fraud Section. 

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 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.

 

ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced the sentencing of defendant MARIA C. EDROSA by the Honorable Frances Tydingco-Gatewood, Chief Judge, District Court of Guam. EDROSA was one of the defendants in the Organized Crime Drug Enforcement Task Force (OCDETF) case, United States v. Sardoma, et al. Defendant EDROSA received a 78-month sentence of imprisonment and three years of supervised release to follow, for disposal of a firearm to a felon, defendant Mateo Sardoma, in violation of 18 U.S.C. § 922(d)(1) and 18 U.S.C. § 924 (a)(2). The Court took into account the participation of defendant EDROSA in a Conspiracy to Distribute Methamphetamine run by her boyfriend, Mateo Sardoma.

The drug conspiracy involved a scheme to bring methamphetamine to Guam from the Philippines and California. This methamphetamine was traded for firearms, stolen items and for cash. Large amounts of cash were mailed to California including $35,000 on March 24, 2011 and $59,900 sent again on April 18, 2011 in exchange for multiple pound quantities of methamphetamine. Sardoma and EDROSA made improvements to their Dededo residence between April and June of 2011 in cash payments to the contractor of approx. $53,340. Defendant EDROSA assisted in the distribution of these narcotics, the shipment of cash through the mails and she purchased airline tickets to further the scheme. She also furnished a firearm to defendant Sardoma for use in the narcotics conspiracy. The firearm furnished by EDROSA was used by Sardoma to maintain control of the methamphetamine organization, and in the kidnapping, torture and brutal assault of one victim on October 24, 2011.

U.S. Attorney Limtiaco stated, "Our community is not immune from the poison of methamphetamine. This case illustrates the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam." This conviction resulted from the concerted efforts of law enforcement partners in the OCDETF investigation, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.

The investigating agencies include the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Drug Enforcement Administration (DEA), Department of Homeland Security/U.S. Immigration and Customs Enforcement (ICE) - Homeland Security Investigations (HSI), U.S. Coast Guard Investigative Service (USCGIS), U.S. Postal Inspection Service (USPIS), Guam Police Department (GPD) and Guam Customs & Quarantine Agency (GC&QA). The case was prosecuted by Assistant United States Attorneys Frederick Black and Stephen Leon Guerrero.

U.S. Attorney Booth Goodwin today announced that Freedom Industries Inc. (Freedom) and six former Freedom officials have been charged with various federal crimes related to the January 2014 Elk River chemical spill in Charleston.

“Just a mile upstream from Charleston’s primary source of drinking water, the conditions at the Freedom Industries facility were not only grievously unacceptable, but unlawful,” said Attorney General Eric Holder.  “They put an entire population needlessly at risk.  As these actions make clear, such conduct cannot, and will not, be tolerated.  These law enforcement actions send an unambiguous message: that compliance with environmental safety standards is an obligation, not a choice.  The Department of Justice is committed to vigorously enforcing the Clean Water Act and other natural resource protections.  And we will never rest in our efforts to protect the American people – and our environment – from harm.”

“It’s hard to overstate the disruption that results when 300,000 people suddenly lose clean water,” said Goodwin. “This is exactly the kind of scenario that the Clean Water Act is designed to prevent. This spill, which was completely preventable, happened to take place in this district, but it could have happened anywhere. If we don’t want it to happen again, we need to make it crystal clear that those who engage in the kind of criminal behavior that led to this crisis will be held accountable.”

Former Freedom President Gary L. Southern, 53, currently of Marco Island, Florida, along with former Freedom owners and officers Dennis P. Farrell, 58, of Charleston, William E. Tis, 60, of Verona, Pennsylvania, and Charles E. Herzing, 63, of McMurray, Pennsylvania, were indicted by a grand jury sitting at Beckley, West Virginia.  Freedom environmental consultant Robert J. Reynolds, 63, of Apex, North Carolina, and tank farm plant manager Michael E. Burdette, 60, of Dunbar, West Virginia, were charged by U.S. Attorney Goodwin in charging documents known as “informations.”  Freedom Industries Inc., was also charged in an information.

Southern is charged with the negligent discharge of a pollutant in violation of the Clean Water Act, negligent discharge of refuse matter in violation of the Refuse Act, and violating an environmental permit. Southern is also charged with bankruptcy fraud, mail fraud and wire fraud.  If Southern is convicted of all the charges contained in the indictment, he is exposed to a statutory maximum of 68 years in prison.

Farrell, Tis and Herzing are charged with the negligent discharge of a pollutant in violation of the Clean Water Act, negligent discharge of refuse matter in violation of the Refuse Act, and violating an environmental permit.  If Farrell, Tis and Herzing are convicted of all the charges with which they are charged in the indictment, they are each exposed to a statutory maximum of three years in prison.

The misconduct alleged in the indictment includes, but is not limited to:

 

• Failure to properly maintain the containment area surrounding the tanks at Freedom’s Elk River facility, and to make necessary repairs to ensure the containment area would contain a chemical spill;

• failure to properly inspect a tank containing the chemical MCHM;

• failure to develop and implement a spill prevention, control and countermeasures plan;

• failure to develop and implement a stormwater pollution prevention plan and groundwater protection plan, both requirements of a National Pollutant Discharge Elimination System Permit.

   

During the time they were responsible corporate officers for Freedom, Farrell, Tis, Herzing and Southern allegedly approved funding only for those projects that would result in increased business revenue for Freedom, or that were immediately necessary for required equipment maintenance.  They allegedly failed to take action to fund other repair and upkeep projects for equipment and systems necessary for environmental compliance at the Elk River facility, including repairing defects in a containment wall, addressing drainage problems in the containment area, and developing and implementing proper protection plans.

Information charges were also filed against Freedom itself, as well as Robert J. Reynolds and Michael E. Burdette. Freedom is charged with the negligent discharge of a pollutant in violation of the Clean Water Act, negligent discharge of refuse matter in violation of the Refuse Act, and violating an environmental permit. Michael Burdette, the former plant manager for the Freedom facility on the Elk River, and Robert Reynolds, also one of the individuals responsible for environmental compliance at Freedom, have each been charged with violating the Clean Water Act.

Charges contained in indictments and informations are merely accusations, and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Follow us on Twitter: SDWVNews  

A Coral Gables, Florida, resident and former employee of the General Services Administration (GSA) of Miami-Dade County was sentenced to serve 51 months in prison for tax evasion to be followed by three years of supervised release, and ordered to pay $556,254 in restitution to the U.S. Treasury, the Justice Department and Internal Revenue Service (IRS) announced today.

On Oct. 15, 2014, Jesus Pons pleaded guilty to one count of tax evasion in the U.S. District Court for the Southern District of Florida.  According to the court documents, Pons was a computer services manager at the GSA of Miami-Dade County.  He was responsible for managing and allocating resources to information technology projects for the county.  Court filings also establish that he was responsible for supervising and managing tasks performed by county vendors.  From 2007 to 2011, Pons received money in the form of illegal kickback payments from two county vendors, Data Industries and Paradyne Consulting Services.  In exchange for these illegal kickbacks, Pons approved payments from Miami-Dade County to the vendors for consulting work that was never performed.  According to the plea agreement, Pons did not report the illegal kickbacks on his tax returns.  From 2007 through 2011, Pons earned $1,666,998 in income from the scheme that he did not report to the IRS, causing $556,254 in tax loss.

This case was investigated by special agents of IRS-Criminal Investigation.  The case was prosecuted by Trial Attorneys Jeffrey A. McLellan and Erin Pulice of the Justice Department’s Tax Division.

Assistant Attorney General for National Security John P. Carlin, U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and the members of the South Florida Joint Terrorism Task Force (JTTF), announce that Gufran Ahmed Kauser Mohammed, 31, a naturalized United States citizen and resident of Dammam, Saudi Arabia, was sentenced to 15 years in prison by U.S. District Judge Ursula Ungaro, for conspiring to provide material support to three separately designated Foreign Terrorist Organizations, al-Qa’ida, al-Qa’ida in Iraq/al-Nusrah Front (“AQI/al-Nusrah Front”), and al-Shabaab.

On July 11, 2014, Mohammed pled guilty to Count 1 of an Indictment charging him with conspiracy to provide money and recruits to al-Qa’ida, AQI/al-Nusrah Front in Syria, and al-Shabaab in Somalia.  The charges allege that Mohammed sent a series of wire transfers to coconspirator Mohamed Hussein Said for the purpose of supporting al-Shabaab, and to an individual whom he believed was a terrorist fundraiser, recruiter, and supplier for the purpose of supporting al-Qa’ida and AQI/al-Nusrah Front.  In addition, Mohammed agreed to support al-Qa’ida and AQI/al-Nusrah Front by recruiting individuals to fight in the conflict in Syria.  Mohammed earmarked certain of his financial contributions for the purpose of buying weapons and funding attacks on United States citizens or the United Nations.

Mr. Ferrer commended the investigative efforts of the FBI and the South Florida Joint Terrorism Task Force.  The case was prosecuted by Trial Attorney Jolie F. Zimmerman from the Counterterrorism Section of the Justice Department’s National Security Division and Assistant U.S. Attorneys Brian K. Frazier and Ricardo A. Del Toro.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls.  Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.