District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Three Charged with Conspiring to Defraud Consumers through Fraudulent Debt Relief Services FirmsRead the Press Release
A grand jury in Santa Ana, California, indicted three individuals for allegedly operating fraudulent debt relief services companies that offered to settle credit card debts but instead took victims’ payments as undisclosed up-front fees, the Justice Department and U.S. Postal Inspection Service announced.
Jeremy Nelson, 29, Elias Ponce, 27, and John Vartanian, 55, all of Orange County, California, were charged with conspiracy, mail fraud, and wire fraud in connection with their roles at companies known as Nelson Gamble & Associates and Jackson Hunter Morris & Knight LLP. According to the indictment, the defendants portrayed the debt relief companies as law firms and attorney-based companies that would negotiate favorable settlements with creditors. Clients made monthly payments expecting the money to go toward settlements. But the defendants instead took at least 15 percent of the total debt as company fees, with the first six months of payments going almost entirely towards undisclosed up-front fees.
If convicted, the defendants face a maximum penalty of 20 years in prison and a $250,000 fine for each count of conspiracy, mail fraud, and wire fraud, or an alternate fine of twice the loss or twice the gain, whichever is greater, along with mandatory restitution.
“Americans facing credit card debts are sometimes desperate to improve their financial situations,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “The Civil Division will vigorously pursue those who take advantage of vulnerable consumers trying to dig themselves out of debt.”
“Lying to victims to get their money is not only wrong, it is criminal,” said Acting Inspector in Charge Troy Raper of the U.S. Postal Inspection Service. “Postal Inspectors aggressively investigate any operations that use the U.S. mail to perpetrate frauds on the American public.”
According to the Indictment, the scheme ran from February 2010 to September 2012. The Indictment alleges that Jeremy Nelson changed the name of the company from Nelson Gamble to Jackson Hunter after a series of complaints and refund requests. Nelson allegedly directed his co-conspirators and employees to tell victims that Nelson Gamble had gone bankrupt, and that Jackson Hunter was an unrelated company that had purchased the right to service some of Nelson Gamble’s files. The defendants and others allegedly blamed past problems on Nelson Gamble and assured victims that Jackson Hunter was a more experienced and better-run company. Some victims who previously demanded refunds accepted the explanation that Nelson Gamble was bankrupt and did not pursue complaints against Jackson Hunter.
Acting Assistant Attorney General Branda commended the Postal Inspection Service team assigned to the Civil Division’s Consumer Protection Branch for their investigative efforts and thanked the U.S. Attorney’s Office for the Central District of California for their contributions to the case. The case is being prosecuted by Trial Attorneys Dan Baeza and Alan Phelps with the Consumer Protection Branch.
The charges in the indictment are only allegations, and the defendants are presumed innocent unless and until proven guilty.
Justice Department and City of Cleveland Agree to Reform Division of Police After Finding a Pattern or Practice of Excessive ForceRead the Press Release
Attorney General Eric Holder announced today that the Justice Department’s civil rights investigation into the use of force by the Cleveland Division of Police has found a pattern or practice of unreasonable and unnecessary use of force. To address these findings the Justice Department and the city of Cleveland have signed a statement of principles committing them to develop a court enforceable consent decree that will include a requirement for an independent monitor who will oversee and ensure necessary reforms.
“Accountability and legitimacy are essential for communities to trust their police departments, and for there to be genuine collaboration between police and the citizens they serve,” said Attorney General Eric Holder. “Although the issues in Cleveland are complex, and the problems longstanding, we have seen in city after city where we have been engaged that meaningful change is possible. There are real, practical and concrete measures that can be taken to ensure not only that police services are delivered in a constitutional manner, but that promote public safety, officer safety, confidence and collaboration, transparency, and legitimacy.”
The investigation, launched in March, 2013, assessed use of force practices of the Cleveland Division of Police following a number of high profile use of force incidents and requests from the community and local government to investigate the division. The investigation concluded that there is reasonable cause to believe that Cleveland police officers engage in a pattern or practice of unreasonable and in some cases unnecessary force in violation of the Fourth Amendment of the Constitution. That pattern or practice includes:
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The unnecessary and excessive use of deadly force, including shootings and head strikes with impact weapons;
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The unnecessary, excessive or retaliatory use of less lethal force including Tasers, chemical spray and fists;
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Excessive force against persons who are mentally ill or in crisis, including in cases where the officers were called exclusively for a welfare check; and
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The employment of poor and dangerous tactics that place officers in situations where avoidable force becomes inevitable.
After determining that a pattern or practice of unconstitutional conduct exists, the investigation assessed the causes for the pattern and developed recommended remedial action. The investigation concluded that Cleveland officers are not provided with adequate training, policy guidance, support, and supervision. Additionally, systems of review that would identify problems and correct institutional weaknesses and provide individual accountability are seriously deficient. The investigation found that division fails to:
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Adequately review and investigate officers’ uses of force;
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Fully and objectively investigate all allegations of misconduct;
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Identify and respond to patterns of at-risk behavior;
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Provide its officers with the support, training, supervision, and equipment needed to allow them to do their jobs safely and effectively;
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Adopt and enforce appropriate policies; and
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Implement effective community policing strategies.
The investigation also found that this pattern of excessive force has eroded public confidence in the police. The trust between the Cleveland Division of Police and many of the communities it serves is broken. As a result, public safety suffers and the job of delivering police services is more difficult and more dangerous. Throughout the investigation, the Department of Justice provided its observations and concerns to the city, and in response, the division has begun to implement a number of remedial measures, however much more work is needed. This afternoon Attorney General Eric Holder, Acting Assistant Attorney General Vanita Gupta and U.S. Attorney Steven Dettelbach will host a joint meeting with community leaders, law enforcement officials and elected officials to discuss how to improve their working relationship and address the problems and challenges identified by the Department of Justice.
“We look forward to working together with the city of Cleveland, members of the Cleveland community and Cleveland police officers to address the deficiencies that have led to this pattern of unnecessary and excessive force,” said Acting Assistant Attorney General Gupta. “Together, we can build confidence in the division that will ensure compliance with the Constitution, improve public safety and make the job of delivering police services safer and more effective.”
“Our independent investigation, conducted at the request of the Mayor and others, revealed troubling patterns of the use of force in the Cleveland Division of Police,” said U.S. Attorney Dettelbach. “We applaud the division and the city for beginning to implement necessary reforms and are pleased that the city has entered into a statement of principles agreeing to negotiate a consent decree with outside monitoring that will guide the development of a sustainable blueprint for reform. It will take a joint effort by all stakeholders to ensure that this critical initiative is a success.”
The investigation was conducted jointly by the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office for the Northern District of Ohio. The investigation involved an in-depth review of thousands of pages of documents, including written policies and procedures, training materials, and internal reports, data, video footage and investigative files. Department of Justice attorneys and investigators also conducted interviews with officers, supervisors and command staff, and city officials; and spoke with hundreds of community members and local advocates. This investigation was separate from any criminal investigation of any specific incident of alleged misconduct.
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Justice Department Settles Lawsuit Against California Employer over Discrimination Against Foreign-Born WorkersRead the Press Release
The Justice Department announced today that it reached a settlement with Life Generations Healthcare LLC, doing business as Generations Healthcare (GHC), a company that runs assisted living facilities throughout California. The settlement follows an administrative court decision finding that GHC engaged in a pattern and practice of discrimination against individuals born abroad, including naturalized U.S. citizens, in violation of the Immigration and Nationality Act.
On Sept. 30, 2011, the Justice Department filed a lawsuit against GHC alleging that the company discriminated against authorized workers born abroad. Specifically, GHC required these immigrants to produce more documents to establish authority to work than it required of citizens born in the United States. After a trial, the Office of the Chief Administrative Hearing Officer -- the administrative court that hears such claims -- ruled in the department’s favor.
Today’s settlement resolves the remedial issues in the case, which the court did not address in its earlier ruling. Under the terms of the settlement agreement, GHC will pay a total of $119,313 in back pay to two victims of discrimination, and $88,687 in civil penalties to the United States. GHC will also be subject to monitoring of its hiring practices for a period of two years.
“Both the court’s ruling and this settlement underscore the importance of complying with the anti-discrimination provision of the Immigration and Nationality Act and the consequences for failing to do so," said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division. “Employers should review their hiring policies and employment eligibility verification practices to ensure that they comply with federal anti-discrimination law.”
The case was litigated and settled by the department’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), which is responsible for enforcing the anti-discrimination provision of the Immigration and Nationality Act. The statute prohibits employers from placing additional documentary burdens on work-authorized applicants or employees during the employment eligibility verification process because of their citizenship status or national origin. The statute also prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee, as well as 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 for a fee, should contact OSC’s worker hotline for assistance.
Justice Department Selects First Ever Indian Country Legal Fellow to Serve in the District of ArizonaRead the Press Release
Attorney General Eric H. Holder Jr., announced today that Charisse Arce, of Bristol Bay, Alaska, has been selected as the first-ever Gaye L. Tenoso Indian Country Legal Fellow, part of the Attorney General’s Honors Program.
Arce was chosen from a large pool of highly-qualified applicants and will be appointed to a three-year term position in the United States Attorney’s Office in the District of Arizona, where she will be assigned to the district’s Indian Country Crime Section. Arce will also serve a portion of her appointment in the Pascua Yaqui tribal prosecutor’s office.
This is the first year of the Gaye L. Tenoso Indian Country Fellowship within the Attorney General’s Honors Program, and it is awarded to an extraordinarily well-qualified new attorney with a deep interest in and enthusiasm for improving public safety in tribal communities.
“This is an investment in the future of the department, named for a beloved and extraordinary member of our DOJ family – and an enrolled member of the Citizen Potawatomi Nation of Indians – who sadly passed away this summer, but devoted her career to advancing the federal government’s relationships with sovereign tribes. This program exemplifies how we are seeking to institutionalize the department’s commitment to justice in Indian country,” said Attorney General Holder. “The Indian Country fellowship will give each candidate an opportunity to gain significant experience and exposure to the work of the Justice Department in Indian country, and in the long term help us build a cadre of legal talent in the department with expertise in federal Indian law.”
“We are excited to welcome Charisse Arce to the District of Arizona as the first Gayle Tenoso Indian Country Fellowship recipient,” said U.S. Attorney for the District of Arizona John S. Leonardo. “The U.S. Attorney’s Office is committed to making this inaugural fellowship a success for all involved and a model for future fellowships in Arizona and in districts around the country. Ms. Arce has demonstrated a strong commitment to American Indian and Alaska Native communities, and we look forward to having her in our Tucson office and working closely with the Pasqua Yaqui Tribe.”
Ms. Arce is currently a fellow at Bristol Bay Native Corporation, one of thirteen Alaska Native Regional Corporations created under federal law. Ms. Arce received her law degree from Seattle University School of Law, where she was a member of the editorial staff for and published an article in the American Indian Law Journal. During law school, Ms. Arce served as an extern for the United States Attorney’s Office for the Western District of Washington, for the Washington State Supreme Court, and for the Department of Interior’s Office of the Solicitor. She also worked as a legal research assistant for a law professor and for a private law firm. Prior to law school, Ms. Arce graduated, cum laude, with a B.A. in Marketing from Seattle University.
The Pascua Yaqui Tribe, located near Tucson, Arizona, is one of three tribes – along with the Tulalip Tribes of Washington, and the Umatilla Tribes of Oregon – participating in a pilot project under the 2013 reauthorization of the Violence Against Women Act (VAWA 2013) to exercise special domestic violence criminal jurisdiction over certain defendants, regardless of their Indian or non-Indian status, who commit acts of domestic violence or dating violence or violate certain protection orders in Indian country. The pilot is authorized by the Department of Justice. This new law generally takes effect on March 7, 2015, but also authorizes the pilot project to allow certain tribes to begin exercising special jurisdiction sooner. Since the pilots began, more than 20 criminal cases have been charged by tribal prosecutors against non-Indian domestic violence offenders, and several have been convicted of domestic violence crimes.
“The Pascua Yaqui Tribe is pleased to have the opportunity to partner with the District of Arizona U.S. Attorney’s Office and the Attorney General’s Honors Program, through the Gaye L. Tenoso Indian Country Fellowship,” said Pascua Yaqui Tribal Chairman Peter Yucupicio. “We welcome the new Department of Justice fellow and look forward to a productive partnership as we fight violent crime, work to keep our community safe, and continue to implement the Violence Against Women Act (VAWA), and Special Domestic Violence Criminal Jurisdiction (SDVCJ).”
The Fellowship is named in honor of Department of Justice attorney, the late Gaye L. Tenoso. Gaye’s distinguished service to the Department and the people it serves spanned 30 years. For the last six years of her life Gaye served as the Deputy Director the Office of Tribal Justice. Gaye’s expertise in Federal Indian law and knowledge of tribes enabled her to be an exceptionally effective advisor on litigation and policy matters. She worked tirelessly to ensure that specific protections for American Indian women were included in VAWA 2013. Gaye also mentored many legal interns during her time at the Office of Tribal Justice, and was an inspiration and guide who left a deep impression on many young attorneys.
Read more about the work of the Department of Justice in Indian Country at www.justice.gov/tribal/accomplishments
Georgia Resident Sentenced in Nebraska for Filing False Liens Against Federal OfficialsRead the Press Release
A Pelham, Georgia, man was sentenced on Dec. 2 in the U.S. District Court for the District of Nebraska to serve 10 years in prison followed by three years of supervised release for filing false retaliatory liens against federal government officials, announced Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division.
On Sept. 4, David Randall Due was convicted by a jury on all seven counts charged in the superseding indictment.
At trial, the evidence showed that David Randall Due and Donna Kozak, a resident of La Vista, Nebraska, and member of the sovereign citizen group “Republic for the united States of America,” conspired and agreed to retaliate against several federal officials in Nebraska by filing false liens claiming false interests in the officials’ property for millions of dollars. Due prepared the false liens in Georgia and Kozak filed them in Nebraska counties. Kozak and Due filed the liens in retaliation for the federal criminal tax prosecution and trial convictions of associates David and Bernita Kleensang. Each targeted federal official had some connection to either a tax prosecution of David and Bernita Kleensang in June 2012 or the subsequent indictment of Kozak for tax offenses.
In September 2012, Kozak and Due filed one $19 million false lien in Boyd County, Nebraska, on property owned by the federal U.S. District Court judge who presided over the Kleensang trial. Kozak was subsequently indicted by a federal grand jury for filing the false lien and for other tax-related charges. While she was on release pending trial, Due provided her with five more false liens, which she filed in Washington County, Nebraska, on properties owned by a second federal U.S. District Court judge, the U.S. Attorney, two Assistant U.S. Attorneys, and an Internal Revenue Service-Criminal Investigation (IRS-CI) special agent.
On Aug. 1, Kozak was tried and convicted by a jury in the U.S. District Court for the District of Nebraska. Her sentencing is scheduled for Jan. 6, 2015.
This case was investigated by special agents of the FBI and IRS-CI, and was prosecuted by trial attorneys from the Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found at the division website.
Four Men Indicted on Charges in 2011 Kidnapping of Mother and Teenage Son in the PhilippinesRead the Press Release
Four Philippine nationals were indicted today on conspiracy, hostage-taking, and weapons charges stemming from the kidnapping in the Philippines of a mother and her then 14-year-old son in July of 2011. The indictment alleges that the group held the mother for approximately 82 days and the son for approximately 151 days, and forced the family to pay ransom for their return. The victims, both U.S. nationals, were in the Philippines on a family trip.
The indictment, returned by a grand jury in the U.S. District Court for the District of Columbia, was announced by John P. Carlin, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; Stephanie Yonekura, Acting U.S. Attorney for the Central District of California, and Bill L. Lewis, Assistant Director in Charge of the FBI’s Los Angeles Field Office.
The four men are identified as John Does, but are also known as Furuji Indama, Radzmil Jannatul, Muadz, and Abu Basim. Each is charged with one count of conspiracy to commit hostage-taking, two counts of hostage-taking, one count of conspiracy to use, carry, brandish and discharge a firearm during a crime of violence and one count of using, carrying, brandishing and discharging a firearm during a crime of violence and aiding and abetting and causing an act to be done. None of the defendants is in custody.
If extradited to the United States and convicted of these charges, each defendant would face a maximum term of life in prison.
“The four men indicted are alleged to have been involved in the hostage-taking of two U.S. citizens vacationing in the Philippines more than three years ago,” said Assistant Attorney General Carlin. “Hostage-takers who target our citizens with captivity and violence anywhere in the world should know that we will pursue them and seek to bring them to justice, however long it takes.”
“While on a family vacation overseas, a Virginia mother and her teenage son were captured, forced into boats at gunpoint, and taken to an island where they were held hostage for ransom,” said U.S. Attorney Machen. “This indictment charges four Philippine men for their alleged roles in taking these Americans hostage and holding them captive for months in terrifying conditions. We remain focused on apprehending and extraditing these men so that they can face these charges in a courtroom in our nation’s capital.”
“The victim family in this case experienced great suffering when a mother and son were violently kidnapped and held by the defendants overseas, while family members in the United States endured for months without knowing the fate of their loved ones,” said Assistant Director Lewis, of the FBI’s Los Angeles Field Office. “It should be noted that, following the mother’s release, her son was held for months before valiantly escaping his captors. The charges in this case are the result of a joint investigation by the FBI and law enforcement partners in the Philippines, one of many countries with whom we work to identify those responsible for victimizing American citizens abroad and build cases for potential prosecution.”
According to the indictment, the defendants and co-conspirators kidnapped the two United States nationals on or about July 12, 2011. The woman, then age 43, and her then 14-year-old son were taken hostage from a beach cottage on Tictabon Island, several miles from the mainland of Zamboanga City in the southern Philippines.
Both hostages were forced into boats at gunpoint, brought to another island, Basilan Island, and forced to march to a camp where they were held until September 2011. The two were then forced to march to another camp, also on Basilan Island.
The indictment alleges that the defendants and their co-conspirators threatened to kill the hostages, and that they used firearms, including handguns, semiautomatic assault weapons, and destructive devices to keep and detain them. The indictment also alleges that the group demanded ransom from a family member of the hostages and did, in fact, cause a family member to make bank transfers as ransom payments.
The group released the mother on or about Oct. 2, 2011, but retained her teenage son as a hostage, and demanded that she pay a large ransom for his release. The son eventually escaped from his captivity on or about Dec. 9, 2011.
An indictment is merely a formal charge that a defendant has committed a violation of criminal laws. Every defendant is presumed innocent until and unless found guilty.
The charges were the result of an investigation led by the FBI’s Los Angeles Field Office. The case is being prosecuted by Assistant U.S. Attorneys Courtney Spivey Urschel and Thomas A. Gillice of the U.S. Attorney’s Office for the District of Columbia, Assistant U.S. Attorney Christopher Grigg of the U.S. Attorney’s Office for the Central District of California, and Trial Attorney T. J. Reardon III of the Counterterrorism Section of the National Security Division of the Department of Justice. Former Assistant U.S. Attorney Anthony Asuncion and Assistant U.S. Attorney George P. Varghese, now with the U. S. Attorney’s Office for the District of Massachusetts, investigated the case prior to indictment.
Former Bechtel Executive Pleads Guilty in Connection with a $5.2 Million Kickback SchemeRead the Press Release
The former Principal Vice President of Bechtel Corporation and General Manager of the Power Generation Engineering and Services Company (PGESCo) pleaded guilty today in connection with a $5.2 million kickback scheme intended to manipulate the competitive bidding process for state-run power contracts in Egypt.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland, Special Agent in Charge Stephen E. Vogt of the FBI’s Baltimore Division and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington D.C. Field Office made the announcement.
“Asem Elgawhary took more than $5 million in kickbacks from companies trying to manipulate a competitive bidding process in their favor,” said Assistant Attorney General Caldwell. “Foreign corruption is an international scourge, and we will pursue those who take bribes, whether they are government officials or high-ranking corporate executives, like Elgawhary. Every corruption conviction is a step towards rooting out and deterring this global problem.”
“Our economy is so global in this day and age that if we allowed corrupt practices overseas such as taking bribes in exchange for special consideration when comparing bids, it would seriously impact our international trade. What Mr. Elgawhary admitted to doing has a dramatic affect on U.S. companies being able to expand and grow their work forces overseas in a fair market place, which in the long run hurts our economy,” said Special Agent in Charge Vogt of the FBI in Maryland and Delaware. “He displayed his blatant disregard for our rule of law when he used a portion of the bribe payment to purchase a house for $1.6 million in cash. This should send a message to others like Mr. Elgawhary, that hiding behind a foreign government won’t protect you from prosecution.”
“Mr. Elgawhary allowed greed to compromise his business practices by taking kickbacks to provide unfair advantages to companies willing pay for power contracts,” stated Special Agent in Charge Kelly of IRS-CI’s Washington D.C. Field Office. “He compounded his criminal activities by failing to report any of the kickback payments as income on his tax returns. It is imperative that honest companies know IRS Criminal Investigation will investigate and bring to prosecution those willing to line their pockets through unethical business practices.”
Asem Elgawhary, 73, of Potomac, Maryland, pleaded guilty today before U.S. District Judge Deborah K. Chasanow of the District of Maryland to mail fraud, conspiracy to commit money laundering, and obstruction and interference with the administration of the tax laws. Sentencing is scheduled for Mar. 23, 2015.
In his plea agreement, Elgawhary admitted that, from 1996 to 2011, he was assigned by Bechtel – a U.S. corporation engaged in engineering, construction and project management – to be the general manager at PGESCo, a joint venture between Bechtel and Egypt’s state-owned and state-controlled electricity company (EEHC). PGESCo assisted EEHC in identifying possible subcontractors, soliciting bids and awarding contracts to perform power projects for EEHC. Elgawhary admitted to accepting a total of $5.2 million from three power companies, which they paid to secure a competitive and unfair advantage in the bidding process. According to court documents, the power companies and their consultants paid more than $5.2 million in kickback payments into various off-shore bank accounts under the control of Elgawhary, including various Swiss bank accounts.
As Elgawhary admitted in his plea agreement, he attempted to conceal the kickback scheme by routing the payments through various off-shore bank accounts, including Swiss bank accounts, under his control. Elgawhary also sent various documents and “Representation Letters” to Bechtel executives and members of the PGESCo Board of Directors in Maryland, falsely certifying that he had no knowledge of any fraud or suspected fraud at PGESCo, and that there were no violations or possible violations of law or regulations that should have been considered for disclosure in PGESCo’s financial statements. Elgawhary also admitted that, in further attempt to conceal the scheme, he made misrepresentations to counsel for Bechtel when he was interviewed in April 2011.
Elgawhary also admitted to conspiring to launder the proceeds of the scheme and to obstructing and impeding the administration of U.S. tax laws by falsely claiming that he maintained only one foreign bank account, denying that he received any income from a foreign bank account, and failing to report any of the kickback payments as income for the tax years 2008 through 2011.
Elgawhary, a dual U.S. and Egyptian citizen, was arrested on a complaint when he flew into the United States on Nov. 26, 2013, and was indicted on Feb. 10, 2014.
The case is being investigated by the FBI’s Baltimore Division and IRS-CI’s Washington D.C. Field Office. Significant assistance was provided by the Criminal Division’s Office of International Affairs, and law enforcement counterparts in Switzerland, Germany, Italy, Saudi Arabia and Cyprus. The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David I. Salem of the District of Maryland.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
El Departamento de Justicia Resuelve un Reclamo Contra un Empleador de California Sobre Discriminación Contra Trabajadores Nacidos al ExtranjeroRead the Press Release
El Departamento de Justicia anunció hoy que llegó a un acuerdo con Life Generations Healthcare LLC, conocido comercialmente como Generations Healthcare (GHC), una compañía que opera asilos de ancianos por todo California. El acuerdo sigue una decisión de un tribunal administrativo que determinó que GHC incurrió en un patrón y práctica discriminatoria contra individuos nacidos al extranjero, incluyendo ciudadanos naturalizados estadounidenses, en violación de de la Ley de Inmigración y Nacionalidad.
El día 30 de septiembre del 2011, el Departamento de Justicia presentó una demanda en contra de GHC en la que alegaba que la compañía discriminó en contra de los trabajadores nacidos al extranjero y que eran autorizados a trabajar. Específicamente, GHC requería que estos inmigrantes proporcionaran más documentos de lo que requería de los ciudadanos nacidos en los Estados Unidos para establecer autorización de trabajar. Después de un juicio, la Oficina del Funcionario Administrativo Principal de Audiencias - el tribunal administrativo que recibe tales demandas - decidió en favor del Departamento.
El acuerdo de hoy resuelve los asuntos correctivas en el caso, que el tribunal no abordό en su decisión anterior. Bajo el acuerdo, GHC pagará un total de $119,313 en pago atrasado a dos víctimas de discriminación, y $88,687 en sanciones civiles a los Estados Unidos. GHC también será sujeto a monitoreo por el departamento de sus prácticas de contratación por un periodo de dos años.
“Tanto la decisión de la corte como este acuerdo destacan la importancia de cumplir con la provisión antidiscriminatoria de la Ley de Inmigración y Nacionalidad, y las consecuencias al no hacerlo,” dijo Vanita Gupta, Sub-Procuradora General Interina para la División de Derechos Civiles. “Empleadores deben revisar sus pólizas de contratación y prácticas de verificación de elegibilidad de empleo para garantizar que cumplen con las leyes federales contra la discriminación.”
El caso fue litigado y resuelto por la Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a la Inmigración (OSC) en el Departamento de Justicia, que también es la oficina responsable por hacer cumplir con la provisión antidiscriminatoria de la INA. La ley prohíbe a los empleadores imponer cargas adicionales de documentos a los solicitantes autorizados a trabajar o empleados durante el proceso de verificación de elegibilidad de empleo a causa de su estado de ciudadanía o nacionalidad. La ley también prohíbe discriminación por estatus de ciudadanía o del origen nacional durante la contratación, el despido, el reclutamiento o la referencia por comisión, represalias, e intimidación.
Para más información sobre las protecciones contra discriminación en el empleo según las leyes migratorias, llame a la línea directa de OSC para trabajadores al 1-800-255-7688 (1-800-237-2515, TTY para personas con discapacidad auditiva), llame a la línea directa de OSC para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con discapacidad auditiva), o para registrarse para un seminario gratis ofrecido a través del internet visite http://www.justice.gov/crt/about/osc/webinars.php, envíe un correo electrónico al [email protected], o visite el sitio de Internet http://www.justice.gov/crt/about/osc.
Los solicitantes o empleados que consideren que fueron sujetos a (1) diferentes requisitos de verificación por su estatus de ciudadanía, estatus migratorio u origen nacional, o (2) discriminación por estatus de ciudadanía, estatus migratorio, u origen nacional con relación a la contratación, el despido y el reclutamiento o la referencia por comisión, deberán comunicarse a la línea de dedicada a trabajadores de OSC para asistencia.District Court Enters Permanent Injunction Against Los Angeles Seafood Company and Senior Officers to Stop Distribution of Adulterated ProductsRead the Press Release
The U.S. District Court for the Central District of California entered a consent decree of permanent injunction on Dec. 1 against Neptune Manufacturing Inc. of Los Angeles and its corporate officers, Alexander Goldring, Peter Oyrekh and Semyon Krutovsky, to prevent the distribution of adulterated seafood products, the Department of Justice announced today.
The department filed a complaint in the U.S. District Court for the Central District of California on Nov. 21 at the request of the U.S. Food and Drug Administration (FDA), alleging the company’s seafood products are produced under conditions that are inadequate to ensure the safety of its products. The complaint alleges that Neptune prepares, processes, packs, holds and distributes ready-to-eat smoked and salt-cured seafood including pickled herring, smoked steelhead trout, smoked halibut, smoked whitefish, smoked salmon and smoked mackerel. The complaint also alleges that defendants Goldring, Oyrekh and Krutovsky are Neptune’s corporate officers with the authority and responsibility for preventing and correcting violations of federal law at the company.
In conjunction with the filing of the complaint, the defendants agreed to settle the litigation and be bound by a consent decree of permanent injunction that prohibits them from committing violations of the federal Food, Drug, and Cosmetic Act. The consent decree requires Neptune to cease all manufacturing operations and requires that, in order for defendants to resume distributing seafood products, the FDA first must determine that Neptune’s manufacturing practices have come into compliance with the law.
“Neptune was repeatedly informed that the sanitation practices at its facility were deficient,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “The failure to actively plan for and control the presence of bacteria and neurotoxins commonly found in seafood processing facilities can pose a serious risk to the public health.”
According to the complaint, since 2006, FDA inspections have documented a pattern of continuing conduct of insanitary conditions resulting in the persistent presence of Listeria monocytogenes (L. mono). These insanitary conditions were the result of deviations from current good manufacturing practices such as not adequately cleaning surfaces and utensils used for cutting fish. Further, according to the complaint, the FDA’s most recent inspection in December 2013 documented the defendants’ failure to have and comply with adequate Hazard Analysis and Critical Control Point (HACCP) plans that control for Clostridium botulinum (C. bot) and L. mono hazards. L. mono is the bacterium that causes listeriosis, a serious and sometimes fatal infection for vulnerable groups such as newborns, the elderly and those with an impaired immune system. Ingestion of the neurotoxin C. bot can cause botulism. Though the incidence of botulism is rare, its effect is severe and the disease can cause paralysis or death if not promptly treated.
According to the complaint, the FDA has performed seven inspections of the defendants’ facility since 2006 and documented seafood HACCP or current good manufacturing practice violations every time. The complaint alleges that these inspections revealed that the company’s products are adulterated within the meaning of the Food, Drug, and Cosmetic Act. As alleged in the complaint, the company was told to take certain precautions while brining fish to control potential C. bot hazards but failed to take appropriate corrective action. Further, according to the complaint, cutting utensils were seen with dried pieces of fish on them, and exposed cracks, pits and crevices on the floor allowed water to pool in them, increasing the risk of L. mono contamination. The complaint alleges that FDA environmental samples taken around the facility tested positive for L. mono in critical areas such as the brining room, smoking/drying room and the walk-in cooler where finished products are stored.
The government is represented by Trial Attorney Dan Baeza of the Civil Division’s Consumer Protection Branch, with the assistance of Assistant U.S. Attorney Deborah Yim for the Central District of California and Assistant Chief Counsel for Enforcement Yen Hoang of the U.S. Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.
Attorney General Holder to Hold Roundtable Meetings in Five More Cities as Part of Justice Department's "Building Community Trust" InitiativeRead the Press Release
On the heels of President Obama’s national call to foster strong, collaborative relationships between local police and the communities they protect and serve, the U.S. Department of Justice announced today the upcoming cities where Attorney General Eric Holder will hold regional roundtable meetings as part of the department’s Building Community Trust initiative. Those cities are: Cleveland, Memphis, Tennessee, Chicago, Philadelphia, and Oakland, California.
The roundtables will serve as an opportunity to bring law enforcement, elected officials and members of the community together to discuss next steps that the administration will take to improve relationships between law enforcement and the community, increase the integrity within our justice system, and share best practices for policing.
The Attorney General hosted the first such Building Community Trust roundtable meeting at Ebenezer Baptist Church in Atlanta on Monday. There, he discussed President Obama’s announcement to create the Task Force on 21st Century Policing, the federal review on the use of military-style equipment for local law enforcement, and the new Community Policing Initiative to fund up to 50,000 additional body-worn cameras for law enforcement agencies. At a community town hall meeting held at the Ebenezer Baptist Church, the Attorney General announced that the department will soon release new guidelines on the use of racial profiling by federal law enforcement agencies.
The next Building Community Trust roundtable meeting will be held in Cleveland on TODAY DECEMBER 4, 2014, at 2 p.m. EST. The meeting will include law enforcement, local officials, community leaders, student leaders and faith leaders. Additional details on the other four upcoming regional roundtables will be released in the coming weeks.
ATTORNEY GENERAL HOLDER HOLDS BUILDING COMMUNITY TRUST MEETING IN CLEVELAND:
WHO: U.S. Attorney General Eric Holder
U.S. Attorney Steven Dettelbach for the Northern District of Ohio
Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division
WHEN: THURSDAY, DECEMBER 4, 2014
2:00 p.m. EST
WHERE: U.S. Attorney’s Office
801 West Superior Avenue
Cleveland, OH 44113
PHOTO SPRAY AT THE BOTTOM (Media Gather Time: 1:45 p.m. EST)
NOTE: All media must present government-issued photo I.D. (such as a driver’s license as well as valid media credentials. Press inquiries regarding logistics should be directed to Kevin Lewis at [email protected] or Sabrina Curtis at [email protected].
Rite Aid Corporation Pays $2.99 Million for Alleged Use of Gift Cards to Induce Medicare and Medicaid BusinessRead the Press Release
Rite Aid Corporation, a Delaware corporation and national retail drugstore chain with its principal place of business in Camp Hill, Pennsylvania, has paid the United States $2.99 million to resolve allegations that it violated the False Claims Act by inappropriately using gift cards as inducements, the Department of Justice announced today.
The settlement resolves allegations that Rite Aid offered illegal inducements to Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies. The government alleged that from 2008 to 2010, Rite Aid had knowingly and improperly influenced the decisions of Medicare and Medicaid beneficiaries to transfer their prescriptions to Rite Aid pharmacies by offering them gift cards in exchange for their business.
“This case demonstrates the government's ongoing commitment to enforcing accountability, transparency and fairness in the retail pharmacy industry,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “The government will continue to advocate for the best interests of Medicare and Medicaid patients, and prevent pharmacies from improperly manipulating their healthcare choices.”
“This settlement holds Rite Aid accountable for exerting undue influence on individuals when they make important healthcare decisions about where and when to fill prescriptions,” said Acting U.S. Attorney Stephanie Yonekura for the Central District of California. “Corporate profit should never steer an individual away from making the right healthcare decision.”
“Pharmacies are not allowed to improperly influence the decision-making of Medicare and Medicaid patients about where to fill prescriptions,” said Special Agent in Charge Glenn R. Ferry for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Pharmacy chains that manipulate patient choices in this way will be held accountable.”
The settlement resolves allegations filed by Jack Chin under the qui tam, or whistleblower provisions of the False Claims Act, which authorizes private parties to sue for fraud on behalf of the United States and share in the recovery. Chin will receive approximately $508,300 of the settlement.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.2 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 case was investigated jointly by the Commercial Litigation Branch of the Civil Division, the U.S. Attorney’s Office for the Central District of California, the National Association of Medicaid Fraud Control Units and HHS-OIG.
The claims settled by today’s agreement are allegations only and there has been no determination of liability.
Owners of Orlando Health Care Clinic Charged with $3 Million Medicare Fraud SchemeRead the Press Release
Charges have been unsealed against husband and wife owners of an Orlando health care clinic for their roles in a fraud scheme that resulted in the submission of more than $3 million in allegedly fraudulent claims to Medicare.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney A. Lee Bentley III of the Middle District of Florida and Special Agent in Charge Derrick Jackson of the U.S. Health and Human Services Office of Inspector General’s (HHS-OIG) Florida region made the announcement after the defendants were taken into custody last night and this morning.
A federal grand jury in the Middle District of Florida returned an indictment on Nov. 19, 2014, against Juan Carlos Delgado, 58, and Nereyda Infante, 48, both of Orlando, Florida, charging them with one count of conspiracy to commit health care fraud, five counts of health care fraud, and one count of conspiracy to commit money laundering. According to the indictment, Delgado and Infante owned and operated Prestige Medical Services and Rehab Center, a health care clinic that purportedly provided medical services to Medicare Part B and Medicare Part C beneficiaries, and three other similarly named clinics that also purportedly provided medical services to Medicare Part C beneficiaries.
Between February 2012 and September 2014, the defendants allegedly submitted claims to Medicare that falsely represented that medical services were provided, medically necessary, and prescribed by a physician, when they were not. The health care fraud counts specifically allege fraudulent claims involving Pentostatin prescriptions, an expensive chemotherapeutic medication, that were not medically necessary, not prescribed by a physician, and not provided. The indictment also alleges that the defendants transferred proceeds obtained as the result of fraudulent claims and diverted them for their personal use. According to the indictment, the defendants obtained more than $1.8 million in proceeds from the alleged fraud.
The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.
The case is being investigated by the HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida. The case is being prosecuted by Trial Attorney Andrew H. Warren of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov.
Justice Department Reaches Settlement with Franciscan St. James Health to Stop Discrimination Against Persons with Hearing DisabilitiesRead the Press Release
The Justice Department announced today a settlement with Franciscan St. James Health (St. James), to ensure that patients and companions who are deaf or hard of hearing receive sign language interpreters and other services necessary to ensure effective communication, in compliance with Title III of the Americans with Disabilities Act (ADA). St. James is a healthcare system providing comprehensive healthcare in Illinois including hospitals in Chicago Heights and Olympia Fields. This settlement is part of the department’s Barrier-Free Health Care Initiative (initiative), a partnership of the Civil Rights Division and U.S. Attorney’s offices across the nation to ensure that people with disabilities, including those who are deaf or hard of hearing, who have HIV, and who have mobility disabilities, have equal access to medical services.
The settlement with St. James is the fourth under the initiative since the start of the new fiscal year on Oct. 1, 2014, joining agreements signed in Edmonds, Washington; Stafford and Lake Ridge, Virginia; and Vero Beach, Florida. Since its launch three years ago, the department has reached 25 agreements under the initiative.
The agreement was reached after the department investigated a complaint that a patient who is deaf was denied a sign language interpreter throughout her four day stay in the hospital. Title III of the ADA requires health care providers to ensure that their communications with people with hearing disabilities are as effective as their communications with people without disabilities.
Under the settlement agreement, St James will ensure that the hospitals:
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Provide auxiliary aids and services, including sign language interpreters, to people who are deaf or hard-of-hearing, within prescribed time frames and free of charge;
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Designate an ADA Administrator;
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Utilize their grievance resolution systems to investigate disputes regarding effective communication with deaf and hard of hearing patients;
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Post notices of their effective communication policy;
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Train hospital personnel on the effective communication requirements of the ADA;
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File compliance reports with the Department of Justice; and
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Pay damages in the amount of $70,000.00 to the complainant in this case.
“Next year as we mark the 25th anniversary of the enactment of the ADA, we will celebrate a quarter century of progress in eliminating the barriers that have historically kept people with disabilities from equal access to and the full enjoyment of services readily available to persons without disabilities,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division. “But we must also acknowledge that even after all this time, there is still much to be done. Effective communication in healthcare is one of those critical areas.”
The department has a number of publications available to assist entities to comply with the ADA, including a Business Brief on Communicating with People Who Are Deaf or Hard of Hearing in Hospital Settings, www.ada.gov/hospcombr.htm, and publications specific to health care providers, HIV discrimination, and effective communication with people with hearing and vision disabilities, as well as publications about tax credits available for providing access.
For more information on the ADA and to access these publications, visit www.ada.gov. For more information on the Barrier Free Health Care Initiative visit www.ada.gov/usao-agreements.htm. Those interested in finding out more about this settlement or the obligations of public accommodations 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 at www.ada.gov. ADA complaints may be filed by email to [email protected].
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Identity Trafficker in Puerto Rico Sentenced to 81 Months in PrisonRead the Press Release
A leader of a Puerto Rican identity trafficking organization was sentenced today to serve 81 months in prison.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rosa E. Rodríguez-Vélez of the District of Puerto Rico, Principal Deputy Assistant Secretary Thomas S. Winkowski of U.S. Immigration and Customs Enforcement (ICE), Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS), Director Bill A. Miller of the U.S. State Department’s Diplomatic Security Service (DSS) and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.
Enrique Rogelio Mendez-Solis aka Rogelio Quero-Mendez, Roberto Marquez-Prada, 40, a Mexican national formerly of Seymour, Indiana, was sentenced today by U.S. District Judge Juan M. Pérez-Giménez in the District of Puerto Rico for his leading role in trafficking the identities and corresponding identity documents of Puerto Rican U.S. citizens. Judge Pérez-Giménez also ordered the defendant to serve three years of supervised release and to forfeit $422,793 in illegal proceeds. Mendez-Solis illegally entered the United States and the government will seek his deportation following the service of his prison sentence. On Dec. 3, 2013, Mendez-Solis pleaded guilty to one count of conspiracy to commit identification fraud, one count of conspiracy to commit human smuggling for financial gain and three counts of aggravated identity theft.
According to court documents, individuals located in the Savarona area of Caguas, Puerto Rico, obtained Puerto Rican identities and corresponding identity documents. Other conspirators located in various cities throughout the United States solicited customers and sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set. The identity brokers in the United States ordered the identity documents from the document suppliers in Savarona on behalf of their customers by making coded telephone calls. The conspirators were charged with using text messages, money transfer services and express priority or regular U.S. mail to complete their illicit transactions.
Court documents allege that some of the conspirators assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation. Their customers generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses. Some customers obtained the documents to commit financial fraud and attempted to obtain a U.S. passport. According to court documents, the organization trafficked at least 1,500 identities.
Various identity brokers were operating in Rockford, DeKalb and Aurora, Illinois; Seymour, Columbus and Indianapolis, Indiana; Hartford, Connecticut; Clewiston, Florida; Lilburn and Norcross, Georgia; Salisbury, Maryland; Columbus and Fairfield, Ohio; Dorchester, Lawrence, Salem and Worcester, Massachusetts; Grand Rapids, Michigan; Nebraska City, Nebraska; Elizabeth, New Jersey; Burlington and Hickory, North Carolina; Hazelton and Philadelphia, Pennsylvania; Houston, Texas; Abingdon and Albertville, Alabama; and Providence, Rhode Island.
To date, 53 individuals have been charged for their roles in the identity trafficking scheme. All 49 arrested defendants have pleaded guilty and 46 defendants have been sentenced, including:
• Jorge Luis “Daniel” Mendez, 38, a Dominican national formerly of Rio Piedras, Puerto Rico, sentenced to 75 months in prison on April 28, 2014, followed by 3 years of supervised release;
• Daniel Aparicio-Lara, 30, a Mexican national formerly of Burlington, North Carolina sentenced to 65 months in prison on Dec. 18, 2012, followed by 3 years of supervised release;
• Rafael Joaquin Beltre-Beltre, 36, a Dominican national formerly of Caguas, Puerto Rico, sentenced to 63 months in prison on Sept. 4, 2012, followed by deportation;
• Wilfredo Blanco-Diaz, 41, a Dominican national formerly of Caguas, Puerto Rico, sentenced to 61 months in prison on March 11, 2014, followed by deportation;
• Jose Sergio Garcia-Ramirez, 39, a Mexican national formerly of Rockford, Illinois, sentenced to 54 months in prison on Nov. 26, 2012, followed by deportation;
• Moises Lara-Ceballos, 37, a Mexican national formerly of Seymour, Indiana, sentenced to 54 months in prison on Jan. 21, 2014, followed by deportation; and
• Wilson Antonio Hernandez-Fernandez, 40, a Dominican national formerly of Caguas, Puerto Rico, sentenced to 48 months in prison on Feb. 4, 2014, followed by 3 years of supervised release.
The charges are the result of Operation Island Express, a nationally coordinated investigation led by the ICE Homeland Security Investigations’ (ICE-HSI) Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office and the DSS Resident Office in Puerto Rico. The Illinois Secretary of State Police; Elgin, Illinois Police Department; Seymour, Indiana Police Department and Indiana State Police provided substantial assistance. The ICE-HSI Assistant Attaché office in the Dominican Republic and International Organized Crime Intelligence and Operations Center (IOC-2) as well as various ICE, USPIS, DSS and IRS-CI offices around the country provided invaluable support.
The case is being prosecuted by Trial Attorneys James S. Yoon, Hope S. Olds, Courtney B. Schaefer, and Christina Giffin of the Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of the Criminal Division’s Asset Forfeiture and Money Laundering Section and the support of the U.S. Attorney’s Office for the District of Puerto Rico. The U.S. Attorney’s Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, District of Massachusetts, District of Nebraska, Middle District of North Carolina, Southern District of Ohio, Middle District of Pennsylvania, District of Rhode Island, Southern District of Texas and Western District of Virginia provided substantial assistance.
Potential victims and the public may obtain information about the case at: www.justice.gov/criminal/vns/caseup/beltrerj.html. Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at www.ice.gov/tipline. Anyone who may have information about particular crimes in this case should also report them to the ICE tip line or website.
Anyone who believes that they have been a victim of identity theft, or wants information about preventing identity theft, may obtain helpful information and complaint forms on various government websites including the Federal Trade Commission ID Theft Website, www.ftc.gov/idtheft. Additional resources regarding identity theft can be found at www.ojp.usdoj.gov/ovc/pubs/ID_theft/idtheft.html; www.ssa.gov/pubs/10064.html; www.fbi.gov/about-us/investigate/cyber/identity_theft; and www.irs.gov/privacy/article/0,,id=186436,00.html.
Former New Jersey Chiropractor Sentenced to Prison for FraudRead the Press Release
A man formerly of Neptune, New Jersey, was sentenced today in the U.S. District Court for the District of New Jersey to serve 54 months in prison to be followed by five years of supervised release, the Justice Department and the Internal Revenue Service (IRS) announced.
In February 2014, a jury convicted David Moleski, a pilot and former chiropractor, of 14 counts of mail fraud, one count of wire fraud, one count of corruptly endeavoring to obstruct and impede Internal Revenue laws and three counts of submitting false claims for tax refunds. Moleski was sentenced by U.S. District Judge Freda L. Wolfson, who also ordered that Moleski pay a $10,000 fine and, as a condition of release, $48,199 in restitution.
According to the evidence presented in court, Moleski submitted three false tax returns in 2009 for tax years 2006 through 2008 that collectively requested more than $1.3 million in income tax refunds to which he was not entitled. Prior to filing these returns, Moleski failed to file tax returns from 1999 through 2005, even though he was legally required to file. When the IRS assessed taxes for those years and began collecting, Moleski obstructed the collection efforts and demanded that a third-party financial institution not comply with an IRS levy. In addition, Moleski attempted to pay credit card bills and other debts with fake financial instruments that claimed to draw on an account at the U.S. Treasury that did not actually exist. For instance, Moleski sent a fake financial instrument for $500,000 in alleged payment of a mortgage debt.
The case was investigated by special agents of IRS-Criminal Investigation. Trial Attorneys Tino M. Lisella and Yael T. Epstein of the Tax Division prosecuted the case, with the assistance of the U.S. Attorney’s Office for the District of New Jersey.
Five Northern California Real Estate Investors Indicted for Bid Rigging and Fraud at Public Foreclosure AuctionsRead the Press Release
A federal grand jury in San Francisco returned a nine-count indictment against five real estate investors for their role in bid rigging and fraud at foreclosure auctions in Northern California, the Department of Justice announced.
The indictment, filed today in U.S. District Court for the Northern District of California in Oakland, California, charges Northern California real estate investors John Michael Galloway, Nicholas Diaz, Glenn Guillory, Thomas Joyce and Charles Rock with participating in a conspiracy to rig bids and a scheme to defraud mortgage holders and others. The indictment alleges that the defendants agreed not to compete at public foreclosure auctions in Contra Costa County, California, and diverted money to themselves and others that should have gone to mortgage holders and other beneficiaries.
To date, 50 individuals have pleaded guilty or agreed to plead guilty to criminal charges as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public foreclosure auctions in Northern California. In addition, 21 real estate investors have been charged in five multi-count indictments for their roles in bid rigging and fraud schemes at foreclosure auctions in Alameda, Contra Costa and San Francisco counties.
“The Antitrust Division will continue to cooperate with its law enforcement partners to bring to justice those who undermine the competitive market for foreclosed properties,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Public auctions are meant for the public, not for an elite group conspiring together for their own profit.”
The indictments allege, among other things, that as early as June 2008 until about January 2011, the defendants conspired to rig bids to obtain numerous properties sold at foreclosure auctions in Contra Costa County, negotiated payoffs for agreeing not to compete, held second, private auctions known as “rounds,” concealed those rounds and payoffs, and, in the process, defrauded mortgage holders and other beneficiaries.
“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “The FBI is committed to work these important cases and remains unwavering in our dedication to bring the members of these illegal conspiracies to justice.”
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of mail fraud carries a maximum sentence of 20 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the mail fraud schemes. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million.
Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
U.S. Trustee Program Announces Successful Conclusion of Settlement with Citigroup Inc. to Protect Consumers’ Personal Information in Bankruptcy CasesRead the Press Release
Independent Auditor Finds Citigroup Properly Redacted
WASHINGTON – The U.S. Trustee Program (USTP) announced today that the independent auditor appointed under a nationwide settlement between the USTP and Citigroup Inc. (Citi) to protect the personal information of nearly 150,000 consumers in 85 jurisdictions has filed his final report, bringing the settlement to a successful conclusion.
Personal Information of Nearly 150,000 ConsumersUnder the settlement, Citi agreed to redact proofs of claim filed in bankruptcy cases nationwide in which the personal information of consumer debtors and third parties, including Social Security numbers and birthdates, had not been properly redacted by Citi as required by the bankruptcy rules. Also under the settlement, Citi agreed to notify all affected consumers and offer them one year of free credit monitoring and to change its internal practices and procedures so the redaction error does not recur. The settlement called for the appointment of a privacy expert to serve as independent auditor to review and certify the accuracy of the remediation process.
“It is important for creditors and other parties who file documents in consumer bankruptcy cases to understand their legal duty to protect certain personal information, and to take corrective action when they have not done so,” stated Executive Office for U.S. Trustees Director Cliff White. “This settlement helps to ensure that a bankruptcy filing does not make a consumer’s privacy protected information vulnerable to misuse by wrongdoers.”
Settlement Resolved U.S. Trustee’s Objection
The settlement resolved the U.S. Trustee’s objection to a motion filed by Citi admitting that personal information that should have been redacted under bankruptcy court rules had not been properly redacted when Citi’s subsidiaries filed bankruptcy proofs of claim seeking payment of amounts allegedly owed by debtors. The U.S. Trustee had objected to Citi’s motion because it did not provide public notice of the nationwide scope of the breach or mandate a verifiable solution to correct the problem and prevent its recurrence. The settlement between the U.S. Trustee and Citi was approved by the U.S. Bankruptcy Court for the Southern District of New York on March 13, 2012.
During the verification process mandated by the settlement, Citi discovered additional improperly redacted proofs of claim. Consequently, Citi prepared a plan of corrective action to include the redaction of approximately 50,000 additional bankruptcy filings. The U.S. Trustee also expanded the auditor’s duties to include a review and certification of Citi’s redaction policies and procedures to safeguard consumers and prevent recurrence of the redaction error.In his report filed with the bankruptcy court on December 1, 2014, independent auditor Eric Dieterich of Sunera LLC concluded that Citi satisfied the requirements of the settlement and related corrective action plans. The auditor also concluded that, as required by the settlement, Citi instituted policies and procedures for future filings that are reasonably calculated to prevent recurrence of the redaction error.
The auditor’s final report is filed in In re Matter of Citi Replacement Filings, No. 11-00405 (Bankr. S.D.N.Y.).
The USTP is the component of the Department of Justice that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.
Contact:Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees
(202) 305-7411The Executive Office for Immigration Review Announces New Administrative Law JudgeRead the Press Release
FALLS CHURCH, Va. - The Executive Office for Immigration Review (EOIR) today announced the appointment of Stacy Stiffel Paddack as an administrative law judge (ALJ). ALJs at EOIR hear immigration-related employment cases in the Office of the Chief Administrative Hearing Officer (OCAHO), and do not hear removal cases in the immigration courts.
“We are excited to have Administrative Law Judge Paddack join our team and fill this critical position,” said Chief Administrative Hearing Officer Robin M. Stutman. “Her arrival will increase OCAHO's capacity to adjudicate employer sanctions and anti-discrimination cases, thereby expediting the recovery of worksite enforcement fines and remediation of illegal immigration-related employment discrimination.”
Biographical information follows.
Stacy Stiffel Paddack, Administrative Law Judge
Stacy Stiffel Paddack was appointed as an administrative law judge (ALJ) for the Office of the Chief Administrative Hearing Officer (OCAHO), Executive Office for Immigration Review (EOIR), in December 2014. Judge Paddack received her bachelor of arts degree in 1989 from the University of Texas at Austin, a master of arts degree in 1994 from the School of International Service at American University, and a juris doctorate in 1997 from American University's Washington College of Law. From 2010 to 2014, Judge Paddack served as an ALJ for the Office of Disability Adjudication and Review, Social Security Administration, in Tallahassee, Fla., where she became the acting chief ALJ. From 2003 to 2010, she served as a senior litigation counsel in the Office of Immigration Litigation, Civil Division, Department of Justice. From 1998 to 2003, Judge Paddack served as an attorney advisor for EOIR's Board of Immigration Appeals and OCAHO, entering on duty through the Attorney General's Honors Program. Prior to 2003, Judge Paddack also served as an adjunct instructor in the Legal Rhetoric Program at American University's Washington College of Law. Judge Paddack is a member of the Maryland State Bar.
- EOIR -
The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR’s immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR’s Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.
Principal in $28.3 Million Medicare Fraud Scheme Sentenced to 11 Years in PrisonRead the Press Release
A Florida owner and operator of multiple physical therapy rehabilitation facilities was sentenced in federal court in Tampa today to serve 11 years in prison for his role in organizing a $28.3 million Medicare fraud scheme involving physical and occupational therapy services.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney A. Lee Bentley III of the Middle District of Florida, Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office and Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office made the announcement.
Luis Duluc, 54, of Tampa, pleaded guilty on Feb. 3, 2014, to conspiracy to commit health care fraud as well as making a false statement relating to health care matters. In addition to the prison term, U.S. District Judge Susan C. Bucklew of the Middle District of Florida ordered Duluc to pay $14,424,856 in restitution.
According to Duluc’s admissions in connection with his guilty plea, he and his co-conspirators used various physical therapy clinics and other businesses throughout Florida to submit approximately $28,347,065 in fraudulent reimbursement claims to Medicare between 2005 and 2009. Medicare paid approximately $14,424,865 on those claims.
Duluc was chairman and president of a Delaware holding company known as Ulysses Acquisitions Inc., which was used to purchase comprehensive outpatient rehabilitation facilities and outpatient physical therapy providers, including West Coast Rehab Inc. in Fort Myers, Florida; Rehab Dynamics Inc. in Venice, Florida; Polk Rehabilitation Inc. in Lake Wales, Florida; and Renew Therapy Center of Port St. Lucie LLC in Port St. Lucie, Florida. This gave Duluc and his co-conspirators control of those clinics’ Medicare provider numbers, which allowed them to bill Medicare for services.
Duluc admitted that he and his co-conspirators paid kickbacks to obtain, and stole, the personal identifying information of Medicare beneficiaries, and that he and his co-conspirators also obtained unique identifying information of physicians. They then used this information to create and submit false claims to Medicare through the clinics owned by Ulysses Acquisitions. These claims sought reimbursement for therapy services that were not legitimately prescribed and not actually provided. Duluc admitted that he and his co-conspirators created and used false and forged patient records in an effort to conceal the fact that services had not actually been provided.
Duluc also admitted that he developed and marketed the “80/20 deal.” In these deals, Duluc and his co-conspirators submitted false reimbursement claims to Medicare on behalf of Miami-based therapy clinics, such as Hallandale Rehabilitation Inc., Tropical Physical Therapy Corporation, American Wellness Centers Inc. and West Regional Center Inc. Duluc and co-conspirators retained approximately 20 percent of the money Medicare paid on these claims and paid the other 80 percent to the co-conspirator clinic owners.
When Duluc and his co-conspirators were done using the clinics they acquired through Ulysses Acquisitions, they engaged in sham sales to nominee or straw owners, all of whom were recent immigrants to the United States with no background or experience in the health care industry. Duluc admitted that he did this in an effort to disassociate from the fraudulent operations of the rehabilitation facilities.
This case is being investigated by HHS-OIG and the FBI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and U.S. Attorney’s Office for the Middle District of Florida. This case is being prosecuted by Senior Trial Attorney Christopher J. Hunter and Trial Attorney Andrew H. Warren of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Simon A. Gaugush of the Middle District of Florida.
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, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov.
Northern California Real Estate Investor Agrees to Plead Guilty to Bid Rigging and Fraud at Public Foreclosure AuctionsRead the Press Release
A Northern California real estate investor has agreed to plead guilty for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
Felony charges were filed today in the U.S. District Court for the Northern District of California in Oakland against Garry Wan of Concord, California. To date, 50 individuals have agreed to plead or have pleaded guilty, as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.
According to court documents, beginning as early as May 2008 until January 2011, Wan conspired with others not to bid against one another, and instead designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda County. Wan was also charged with conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected Alameda County properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have otherwise gone to mortgage holders and other beneficiaries by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.
“While there has been a lengthy series of guilty pleas by the participants in this activity, the division’s work is not yet over,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “We will continue to work with our law enforcement partners to investigate and prosecute collusion at real estate foreclosure auctions, which allow the conspirators to profit from illegal payoffs at the expense of financial institutions and distressed homeowners.”
The department said that the primary purpose of the conspiracies was to suppress and eliminate competition and to conceal payoffs in order to obtain selected real estate offered at Alameda County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.
“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “The FBI is committed to work these important cases and remains unwavering in our dedication to bring the members of these illegal conspiracies to justice.”
A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.
Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa, and Alameda counties, California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.
Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
**The fraud charge(s) referenced in this press release were subsequently dismissed on the government’s motion.**
United States Files Suit Against Air Ideal and its Owner for Allegedly Submitting False Claims Under Historically Underutilized Business Zone ProgramRead the Press Release
The United States has filed a complaint against Orlando, Florida, based Air Ideal Inc. and its owner, Kim Amkraut, for allegedly making false statements to the Small Business Administration (SBA) to obtain certification as a Historically Underutilized Business Zone (HUBZone) company, the Justice Department announced today.
“The HUBZone program is intended to create jobs in areas that have historically had trouble attracting business,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “This suit demonstrates that the United States will hold accountable those who knowingly violate the requirements of this vital program.”
“The HUBZone procurement program imposes very clear requirements upon contractors that must be followed,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida. “By intervening in this case, we reaffirm our commitment to maintaining the integrity of vital programs such as these, which undergird our economy.”
Under the HUBZone program, companies that maintain their principal office in a designated HUBZone and meet certain other requirements can apply to the SBA for certification as a HUBZone small business company. HUBZone companies can then use this certification when bidding on government contracts. In certain cases, government agencies will restrict competition for a contract to HUBZone-certified companies.
The complaint alleges that Air Ideal and Kim Amkraut originally applied to the HUBZone program in 2010 by claiming that Air Ideal’s principal office was located in a designated HUBZone. The complaint further alleges that, in fact, this location was a “virtual office” where no Air Ideal employees worked and Air Ideal was actually located in a non-HUBZone location. Allegedly, the defendants not only misrepresented the location of Air Ideal’s principal office to the SBA, but also submitted to the SBA a fabricated lease agreement for its purported HUBZone office.
The complaint alleges that Air Ideal used its fraudulently-procured HUBZone certification to obtain contracts from the U.S. Coast Guard, U.S. Army, U.S. Army Corps of Engineers and the U.S. Department of Interior that were worth millions of dollars. Each of those contracts had been set aside for qualified HUBZone companies. The complaint asserts claims against Air Ideal and Kim Amkraut under the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.
“The HUBZone Program offers significant benefits to eligible small businesses and is an important tool for unlocking the potential of historically underutilized business zones,” said Inspector General Peggy E. Gustafson for the SBA. “Preferences for federal contract awards must not be given to persons who lie in order to claim eligibility. This type of fraud undermines confidence in the HUBZone Program and other small business set-aside contract programs.”
The United States filed its complaint in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act. Under the act, a private citizen can sue on behalf of the United States and share in any recovery. The United States is entitled to intervene in the lawsuit, as it has done here.
This matter was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Middle District of Florida, in conjunction with the SBA’s Office of Inspector General and Office of General Counsel, the U.S. Department of Homeland Security’s Office of Inspector General and the Defense Criminal Investigative Service.
The case is U.S. ex rel. Hopson v. Air Ideal, Inc. and Kim Amkraut, No. 6:13-cv-775-Orl-37GJK (M.D. Fla.).
The claims asserted against Air Ideal and Kim Amkraut are allegations only, and there has been no determination of liability.
T.RAD Executive Agrees to Plead Guilty to Bid Rigging and Price Fixing on Automobile Parts Installed in U.S. CarsRead the Press Release
An executive of Japan-based T.RAD Co. Ltd. has agreed to plead guilty and to serve one year and one day in a U.S. prison for participating in a conspiracy to fix prices of radiators installed in cars sold in the United States and elsewhere, the Department of Justice announced today.
A one-count felony charge was filed today in the U.S. District Court for the Eastern District of Michigan in Detroit against Kosei Tamura, a general manager for T.RAD. According to the charge, Tamura, a Japanese national, conspired from as early as November 2002 until at least February 2010, by agreeing to allocate bids for, and prices of, radiators sold to Honda Motor Co. Ltd. and certain of its subsidiaries in the United States and elsewhere. In addition to the prison sentence, Tamura has agreed to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation. The plea agreement is subject to court approval.
“Companies and their executives should do their part to ensure American consumers are guaranteed a fair marketplace within the automotive industry,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “The Antitrust Division will continue to hold accountable the companies and executives who ignore these laws in order to make this a reality.”
T.RAD is a manufacturer of radiators and was engaged in the sale of radiators in the United States and elsewhere. Radiators are devices located in the engine compartment of a vehicle that cool the engine.
In November 2013, T.RAD pleaded guilty and was sentenced to pay a $13.75 million criminal fine for its role in a conspiracy to fix the prices of radiators and automatic transmission fluid warmers.
Including today’s charges, 48 individuals have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Additionally, 32 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.4 billion in fines.
Tamura is charged with price fixing in violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The current prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal sections and the FBI. This case was brought by the Washington Criminal I Section of the Antitrust Division with the assistance of the Detroit Field Office of the FBI. Anyone with information concerning the focus of this investigation should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the Detroit Field Office of the FBI at 313-965-2323.
Maricopa County Community College District Agrees to Pay $4 Million for Alleged False Claims Related to Award of AmeriCorps Education AwardsRead the Press Release
Maricopa County Community College District (MCCCD) has agreed to pay $4.08 million to resolve allegations under the False Claims Act that it submitted false claims to the Corporation for National and Community Service (CNCS) concerning AmeriCorps state and national grants, the Justice Department announced today. MCCCD is the entity responsible for operating community colleges in Maricopa County, Arizona, and is based in Phoenix.
“Those who receive federal funds must deal with the government openly and honestly,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “The Department of Justice will ensure that financial assistance provided by the Corporation for National and Community Service is received only by eligible individuals who satisfy CNCS’s mission of promoting service and education.”
CNCS is an independent federal agency that administers AmeriCorps, among other national service programs. MCCCD obtained AmeriCorps funding for Project Ayuda, a program that proposed to engage students in national service. In order to receive an AmeriCorps education award, a student had to meet certain service-hour requirements. MCCCD allegedly improperly certified that students had completed the required number of service hours so that they would earn an education award. This resulted in CNCS providing education awards to these students. MCCCD also allegedly improperly received grant funds from CNCS to administer the project.
“Our internal process uncovered MCCCD’s mismanagement, and we worked with the Justice Department to ensure that taxpayer dollars were recovered,” said CNCS’s General Counsel Valerie Green. “This is an example of how interagency collaboration works.”
“Taxpayers are justifiably outraged when a community fails to receive promised services because national service funds were misused,” said CNCS’s Inspector General Deborah J. Jeffrey. “We hope that this settlement will deter other grantees from similar misconduct.”
The allegations resolved by this settlement arose from a whistleblower lawsuit filed under the False Claims Act by Christine Hunt, an MCCCD employee. Under the False Claims Act, private citizens can sue on behalf of the government and share in any recovery. Hunt’s share of the settlement is $775,827.
This case was handled by the Commercial Litigation Branch of the Civil Division and CNCS’s Office of Inspector General and Office of General Counsel.
The lawsuit is captioned United States ex rel. Hunt v. Maricopa County Community College District; Paula and Richard Vaughn, No. 11-cv-2241 (D. Ariz.). The claims resolved by the settlement are allegations only, and there has been no determination of liability.
Government Settles False Claims Act Allegations Against Oxygen and Sleep Therapy CompanyRead the Press Release
North Atlantic Medical Services Inc. (NAMS), doing business as Regional Home Care Inc., has agreed to pay $852,378 to resolve allegations that it violated the False Claims Act by submitting claims to Medicare and Medicaid for respiratory therapy services provided by unlicensed personnel, the Department of Justice announced today. NAMS is a medical device company based in Massachusetts that provides equipment and services for the treatment of respiratory ailments, such as oxygen deficiency and sleep apnea.
“Respiratory care services should be performed by properly licensed personnel,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “We will not tolerate companies prioritizing their own profits and convenience at the expense of patient safeguards.”
Medicare and Medicaid require suppliers of respiratory therapy equipment and services to comply with state licensing standards. In Massachusetts, the Department of Public Health requires respiratory therapists to apply for and obtain a license. Applicants can do so by passing the National Board for Respiratory Care’s “Certification Examination for Entry-Level Respiratory Therapy Practitioners” or obtaining a reciprocal license from a different jurisdiction. This settlement resolves allegations that, from September 2010 to January 2013, NAMS used unlicensed employees to set up sleep apnea masks and oxygen therapy equipment for patients in Massachusetts. The government alleged that, even after the Massachusetts Department of Public Health informed the company that the practice was illegal, NAMS continued to use unlicensed personnel and bill Medicare and Medicaid for these services.
“This respiratory care company flouted important licensure requirements, failed to provide patients the standard of care that they deserve and fraudulently billed the federal government for improperly rendered services,” said U.S. Attorney Carmen M. Ortiz for the District of Massachusetts. “With the important assistance of whistleblowers, our health care fraud team seeks to ensure patient safety and protect the public fisc.”
“To safeguard patient health and ensure that taxpayer money is spent well, Medicare and Medicaid require providers of respiratory care services to follow state licensure rules,” said Special Agent in Charge Phillip M. Coyne for the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Companies seeking to boost profits by using unlicensed personnel will be held accountable for their actions.”
Medicaid is jointly funded by the states and federal government. The Commonwealth of Massachusetts, which paid in part for the Medicaid claims at issue, will receive $229,210 of the settlement amount.
The government’s investigation was initiated by a qui tam, or whistleblower, lawsuit filed under the False Claims Act by former NAMS employees Konstantinos Gakis and Demetri Papageorgiou. The False Claims Act allows private citizens to file suit for false claims on behalf of the government and to share in the government’s recovery. Gakis and Papageorgiou will receive $153,428.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.2 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 settlement was the result of a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the District of Massachusetts, FBI, HHS-OIG, and the Commonwealth of Massachusetts.
The case is captioned United States ex rel. John Does v. Regional Home Care, Inc. d/b/a North Atlantic Medical also d/b/a North Atlantic Medical Tolman Clinical Laboratory and as North Atlantic Medical Services, Docket No. 12-CA-11979 (D. Mass.). The claims resolved by this settlement are allegations only, and there has been no determination of liability.
Former Ohio Deputy Treasurer and Friend Sentenced for Roles in Bribery and Money Laundering SchemeRead the Press Release
Ohio’s former deputy treasurer and a Chicago businessman were sentenced to federal prison today for their roles in a bribery and money laundering scheme involving the Ohio Treasurer’s Office.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, First Assistant U.S. Attorney Mark T. D’Alessandro of the Southern District of Ohio, Acting Special Agent in Charge John A. Barrios of the FBI’s Cincinnati Division and Attorney General Mike DeWine of Ohio made the announcement.
Amer Ahmad, 40, and Joseph Chiavaroli, 34, both of Chicago, were sentenced today by U.S. District Judge Michael H. Watson of the Southern District of Ohio to serve 15 years in prison and 18 months in prison, respectively. Ahmad was ordered to forfeit $3.2 million, and Chiavroli was ordered to forfeit $400,000. Last year, Ahmad pleaded guilty to federal program bribery and conspiracy to commit honest services wire fraud, federal program bribery and money laundering, and Chiavaroli pleaded guilty to money laundering. Following his guilty plea, former Deputy Treasurer Ahmad fled to Pakistan and was sentenced today in absentia. He is currently in Pakistani custody pending an extradition request from the United States government.
According to the defendants’ admissions in connection with their guilty pleas, from January 2009 through January 2011, Ahmad used his position as deputy treasurer to direct official state of Ohio business to securities broker Douglas E. Hampton in return for bribes. Ahmad and Chiavaroli concealed the payments received from Hampton by passing them through the accounts of their landscaping business. Hampton also funneled more than $123,000 to Mohammed Noure Alo, an attorney and lobbyist who was Ahmad’s close personal friend and business associate. Over the course of the scheme, Hampton paid in excess of $500,000 in bribes and received, in exchange, approximately $3.2 million in commissions for 360 securities trades on behalf of the Ohio Treasurer’s Office.
Hampton and Alo were sentenced on Nov. 12, 2014, and Nov. 13, 2014, to 45 months in prison and 48 months in prison, respectively, for their roles in the scheme.
The case was investigated by the FBI’s Central Ohio Public Corruption Task Force, which includes special agents from the FBI and the Ohio Bureau of Criminal Investigation. The case is being prosecuted by Trial Attorneys Eric L. Gibson and Menaka Kalaskar of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Douglas W. Squires of the Southern District of Ohio.
Former Mitsuba Executive Agrees to Plead Guilty to Bid Rigging and Price Fixing on Automobile Parts Installed in U.S. CarsRead the Press Release
A former executive of Japan-based Mitsuba Corporation has agreed to plead guilty and serve 13 months in a U.S. prison for conspiring to fix the prices of products installed in cars sold in the United States and elsewhere, the Department of Justice announced today.
A one-count felony charge was filed today in the U.S. District Court for the Eastern District of Michigan in Detroit against Kazumi Umahashi, a Japanese national and former General Manager of Mitsuba. Umahashi conspired from in or about June 2005 to in or about December 2009 by agreeing upon bids and prices for, and allocating the supply of, windshield wiper systems and starter motors sold to Honda Motor Co. Ltd. and its subsidiaries and affiliates in the United States and elsewhere, according to the charge. Umahashi also has agreed to pay a $20,000 criminal fine and cooperate with the department’s ongoing investigation. The plea agreement is subject to court approval.
“The Antitrust Division has uncovered dozens of conspiracies to fix prices in the automotive industry,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “The impact of these schemes has affected nearly every American. We will continue our efforts to hold culpable companies and individuals accountable for their illegal actions.”
Mitsuba manufactures and sells a variety of automotive parts, including starter motors, which are small electric motors used in internal combustion engines, and windshield wiper systems. On Nov. 6, 2013, Mitsuba pleaded guilty for its involvement in the conspiracy and agreed to pay $135 million in criminal fines.
Umahashi is charged with price fixing and bid rigging in violation of the Sherman Act, which carries a maximum sentence for individuals of 10 years and a fine of $1 million. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Including today’s charges, 48 individuals have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Additionally, 32 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.4 billion in fines.
This prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section with the assistance of the FBI’s Detroit Field Office and the FBI headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html, or call the Detroit Field Office of the FBI at 313-965-2323.
Campaign Manager Pleads Guilty to Conspiracy to Buy Votes in a Donna, Texas, School Board ElectionRead the Press Release
A campaign manager pleaded guilty today in the Southern District of Texas for conspiring with others to pay voters to vote in a Donna, Texas, school board election, 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. Five campaign workers have already pleaded guilty to vote-buying charges in connection with this election.
Francisco “Frankie” Garcia, 47, of Donna, Texas, pleaded guilty to one count of conspiring to buy votes and one count of vote-buying in connection with the November 2012 general election. Garcia’s sentencing hearing is scheduled for Feb. 24, 2015, before Chief Judge Ricardo H. Hinojosa of the U.S. District Court for the Southern District of Texas.
At his plea hearing, Garcia admitted that a general election was held on Nov. 6, 2012, in Donna, Texas, which included candidates for the presidential election, as well as candidates for various state, county and local offices, including members of the Donna School Board. Garcia worked as a campaign manager for four school board candidates, and he and others agreed to pay voters with cash and cocaine to vote for those candidates.
This case was investigated by the FBI and is being prosecuted by Trial Attorneys Monique Abrishami and Maria Lerner of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Leo J. Leo of the Southern District of Texas.
Justice Department Requires Divestiture in Order for Nexstar to Proceed with its Acquisition of Communications Corporation of AmericaRead the Press Release
The Department of Justice announced today that it will require Nexstar Broadcasting Group Inc., Mission Broadcasting Inc., Communications Corporation of America (CCA), and Silver Point Partners L.P. to divest their interests in WEVV‑TV, a CBS and FOX affiliate in Evansville, Indiana, in order for Nexstar to proceed with its acquisition of CCA. Without this divestiture, the department said, Nexstar, with its control of Mission would have gained a dominant position in broadcast television spot advertising in the Evansville, Indiana area, resulting in higher prices to advertisers. The Nexstar-CCA transaction is valued at approximately $270 million.
The Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed acquisition. Concurrent with the filing of the lawsuit, the division filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
“This divestiture maintains the status quo in Evansville, Indiana, and avoids a loss of competition for local broadcast television spot advertising,” said Bill Baer, Assistant Attorney General in charge of the Antitrust Division. “By ensuring that Nexstar does not come to control three of four major network affiliations, consumers will benefit as these stations continue to compete to attract viewers and advertisers.”
The department’s complaint alleges that the proposed acquisition would lessen competition in broadcast television spot advertising in the Evansville, Indiana, Designated Market Area (DMA). In the Evansville DMA, the transaction would result in Nexstar owning or controlling three TV stations and three of the four major broadcast network affiliations in Evansville. Had the transaction been consummated as originally proposed, Nexstar would have owned or controlled WEHT (ABC affiliate), WEVV-TV (CBS & FOX affiliate), and WTVW (CW affiliate). To remedy this likely harm, the proposed settlement requires Nexstar and
CCA to divest CCA’s WEVV-TV to Bayou City Broadcasting Evansville Inc., or an alternative, independent buyer to be approved by the United States.
Nexstar, a Delaware corporation with headquarters in Irving, Texas, owns or operates 72 broadcast television stations located in 41 markets in 18 states. Nexstar reported revenues of $378 million for 2013. Mission, a Delaware corporation with headquarters in Westlake, Ohio, owns broadcast television stations for which Nexstar sells the advertising time. Nexstar receives substantially all of Mission’s available cash and is deemed to have a controlling interest in Mission under generally accepted accounting principles.
CCA, a Delaware corporation with headquarters in Lafayette, Louisiana, owns or operates 25 broadcast television stations in 10 markets throughout Louisiana, Texas and Indiana. CCA had revenues of $98.3 million for 2012. Silver Point Capital Fund L.P., based in Greenwich, Connecticut, controls and is the ultimate parent entity of CCA.
Bayou City Broadcasting Evansville Inc., a Delaware corporation headquartered in Boston, Massachusetts, is a newly formed entity that will be run by individuals with significant experience owning, managing and operating broadcast television stations.
As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60‑day comment period to Scott A. Scheele, Chief, Telecommunications & Media Enforcement Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 7000, Washington, D.C. 20530. At the conclusion of the 60‑day comment period, the U.S. District Court for the District of Columbia may approve the proposed settlement upon finding that it is in the public interest.
Child Pornographer Sentenced to 60 Months IncarcerationRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that on November 26, 2014, RANDY YABUT PALAGANAS was sentenced by Chief Judge Frances Tydingco-Gatewood, Chief Judge of the U.S. District Court of Guam, to 60 months incarceration and five years of supervised release.
This sentence follows Defendant PALAGANAS’s plea of guilty on November 13, 2013, to one count of Receipt of Child Pornography in violation of 18 U.S.C. § 2252A(a)(2). As part of his plea, Defendant PALAGANAS admitted to utilizing a peer-to-peer (P2P) network to receive approximately 73 movies that depicted the sexual abuse of young children. In addition to the sentence of 60 months of incarceration and five years of supervised release, Defendant PALAGANAS was ordered to register with the Sex Offender Registry in any jurisdiction in which he lives, works or attends school. He was also ordered to forfeit his computer.U.S. Attorney Limtiaco states, “Child pornography offenses involve the sexual abuse and exploitation of children. These offenses are extremely serious because they result in perpetual harm to the child victims, and normalize the sexual exploitation of children. When the Internet is utilized to obtain these images of child sexual abuse, the images can travel to offenders domestically and internationally anywhere in the world, to include into the Pacific region. The harm to victims is life-long. The U.S. Attorney’s Office remains committed to aggressively prosecuting defendants who victimize and prey on children through any means, including by computer.”
The U.S. Attorney additionally reminds defendants who have committed sexual abuse of children that, under federal and local law, all sex offenders have a duty to register and keep their registration current with the Sex Offender Registry in their jurisdiction. Sex offenders who travel to Guam and who reside on Guam must inform the Guam Sex Offender Registry where they reside, work, or attend school. They must also periodically update their registration information. The U.S. Attorney notes that the Sex Offender Registry was created in order to protect the public by protecting victims, preventing further victimization and informing the public of the whereabouts of sex offenders. Guam’s Sex Offender Registry can be found online at www.guamcourts.org.U.S. Attorney Limtiaco noted that this prosecution is part of the U.S. Department of Justice’s Project Safe Childhood (PSC) Initiative, a nationwide commitment to aggressively prosecute defendants who engage in the sexual victimization of children and adults, possess or receive child pornography, and sex offenders who fail to register with the jurisdiction’s Sex Offender Registry.
The investigation was conducted by the Federal Bureau of Investigations. The case was handled by Assistant U.S. Attorney R. San Nicolas.United States Files False Claims Act Lawsuit Against Las Vegas Hospice and Related Entities for Billing Medicare and Medicaid for Ineligible PatientsRead the Press Release
The United States has filed suit against Creekside Hospice II LLC, Skilled Healthcare Group Inc. (SKG), its holding company, and Skilled Healthcare LLC (SKH), an administrative services subsidiary of SKG that operates Creekside (collectively the Creekside entities), alleging that these entities knowingly submitted ineligible claims for hospice services and inflated claims for patient visits to government health care programs, the Justice Department announced today.
“The Medicare hospice benefit is intended to provide pain management and other palliative care to patients nearing the end of life, to help make them as comfortable as possible,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “Too often, however, companies abuse this critical service by using aggressive marketing tactics to pressure patients who do not need, and may be ill-served, by these services in order to get higher reimbursements from the government. The department will take swift action to protect taxpayer dollars and make sure that Medicare benefits are available to those who truly need them.”
The Medicare and Medicaid hospice benefits are available for patients who elect palliative treatment (medical care focused on providing patients with relief from pain and stress) for a terminal illness and have a life expectancy of six months or less if their disease runs its normal course. When Medicare or Medicaid patients receive hospice services, they no longer receive services designed to cure their illnesses.
The government’s complaint alleges that the Creekside entities knowingly submitted or caused the submission of false claims for hospice care for patients who were not terminally ill. According to the complaint, the companies allegedly directed staff to enroll patients in the hospice program regardless of the patients’ eligibility for hospice benefits, sometimes by instructing staff to change records after the hospice submitted claims for payment to indicate that all requirements had been met. Management from Creekside, SKG and SKH also allegedly instructed employees to alter medical records to make it appear that doctors at the hospice had conducted personal visits with the patients, when in fact they had not occurred, in order to ensure reimbursement from Medicare and Medicaid. The complaint alleges that Creekside management aggressively discouraged staff from permitting patients or their families to revoke their elections to accept hospice benefits. The complaint also alleges that staff at Creekside were discouraged from documenting known improvements in a patient’s health in the medical record, called “Chart Killers” by the hospice, to ensure that Medicare or Medicaid would pay the hospice’s claim.
Further, the complaint alleges that the Creekside entities knowingly submitted or caused the submission of inflated claims to Medicare for services performed by the medical director. The government alleges that the companies repeatedly used billing codes that resulted in higher payment by Medicare than were justified by the services actually performed. As a result of the conduct alleged in the complaint, the government contends that the Creekside entities misspent tens of millions of taxpayer dollars from the Medicare and Medicaid programs.
“In order to protect the financial integrity of the Medicare and Medicaid programs, upon which so many of our senior American citizens rely, both the Department of Justice (DOJ) and the Department of Health and Human Services (HHS) have made combating healthcare fraud an enforcement priority,” said U.S. Attorney Daniel G. Bogden for the District of Nevada. “This type of fraud will not be tolerated and DOJ and HHS will act swiftly when it does occur to pursue False Claims Act suits against violators.”
The United States filed its complaint in two consolidated lawsuits brought under the whistleblower provisions of the False Claims Act and the Nevada False Claims Act by Joanne Cretney-Tsosie, a clinical manager for Creekside, and Veneta Lepera, a former clinical manager for Creekside. Under these statutes, a private citizen can sue for fraud on behalf of the United States and the state of Nevada, respectively, and share in any recovery. The federal and state governments are entitled to intervene in such a lawsuit, as they have done in this case.
The United States’ suit is part of the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23.1 billion through False Claims Act cases, with more than $14.8 billion of that amount recovered in cases involving fraud against federal health care programs.
This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Nevada, the Nevada Attorney General’s Office and the HHS Office of Inspector General. The claims asserted against Creekside Hospice, SKG and SKH are allegations only and there has been no determination of liability.
The lawsuit is captioned United States and State of Nevada v. Creekside Hospice II, LLC, Skilled HealthCare Group, Inc. and Skilled Healthcare, LLC. (D. Nev.)
Two Minnesotans Charged with Conspiracy to Provide Material Support to the Islamic State of Iraq and the LevantRead the Press Release
18-year-old Somali American Stopped at Minneapolis/Saint Paul Airport before Boarding Flight to Turkey
Assistant Attorney General for National Security John P. Carlin and United States Attorney for the District of Minnesota Andrew M. Luger today announced a criminal complaint charging Abdi Nur, 20, and Abdullahi Yusuf, 18, with conspiracy to provide material support to a designated foreign terrorist organization, namely, the Islamic State of Iraq and the Levant (ISIL). Nur is additionally charged with providing material support to a foreign terrorist organization. Yusuf is expected to make an initial appearance at 2:00 p.m. today before Magistrate Judge Janie S. Mayeron in United States District Court in Minneapolis, Minnesota.
“More than 16,000 recruits from over 90 countries traveled to Syria to become foreign terrorist fighters with alarming consequences,” said Assistant Attorney General Carlin. “This is a global crisis and we will continue our efforts to prevent Americans from joining the fight and to hold accountable those who provide material support to foreign terrorist organizations. With these two defendants, we have now charged more than 15 individuals with offenses related to the foreign fighter threat in Syria.”
“As charged, these two young men conspired to join ISIL and travel from Minnesota to the Middle East to engage in a campaign of terror in support of a violent ideology,” said U.S. Attorney Luger. “Since al-Shabaab began recruiting young adults from the Twin Cities in 2007, our region has lost dozens of disaffected young people to terrorist organizations that would sooner see Somali Minnesotans die on foreign battlefields than prosper in peace and security in the United States. The law-abiding members of Minnesota’s Somali community are great partners in our fight against terror, and I am proud to work closely with community and religious leaders to lift up those Somali youth who remain vulnerable to terrorist recruiters. Unfortunately, Yusuf and Nur were not the first – and may not be the last – to conspire in support of ISIS. As we work with our many partners to improve the lives of Somali Minnesotans, we will continue to investigate and prosecute aggressively criminals who provide support for terror.”
“The FBI remains committed to both its community partners and to its law enforcement mandate concerning the detection and disruption of terrorist activity,” said FBI Special Agent in Charge Richard T. Thornton for the Minneapolis Division. “This complaint epitomizes the FBI's commitment to upholding the laws of the United States as they apply to those who would support terrorism.”
According to the criminal complaint and documents filed in court, on April 28, 2014, Abdullahi Yusuf applied for an expedited passport at the Minneapolis Passport Office. He told the passport specialist that he intended to travel to Turkey, but when asked, Yusuf could not specify his travel itinerary, travel companions, hotel location or the name or address of a friend in Turkey who he claimed to have met recently via Facebook. The passport specialist also asked Yusuf about the cost of his trip, which Yusuf reported as, “about $1,500.” However, Yusuf had no known source of income. Yusuf obtained his passport on May 5, 2014, and used it to open a checking account on the same day.
According to the criminal complaint and documents filed in court, on May 23, 2014, Yusuf deposited $1,500 in cash into his Wells Fargo checking account in four separate ATM deposits spread throughout the day. On May 24, 2014, Yusuf used a debit card associated with the same account to purchase a $1,417.05 airline ticket from Minneapolis/Saint Paul to Istanbul, Turkey. The ticket was for a flight scheduled to depart Minneapolis/Saint Paul on May 28, 2014. His parents did not know that Yusuf had obtained a passport and planned to travel to Turkey, nor did they know that he had acquired $1,500 and purchased an airline ticket.
Yusuf is associated with H.M., a former Minnesota resident now believed to be fighting in Syria, and who traveled from Minnesota to Turkey on March 9, 2014. The same debit card was used to purchase H.M.’s airline ticket as was used to purchase an airline ticket for a third man from Minnesota who later traveled to Syria to fight with ISIL. Yusuf exchanged several telephone calls and text messages with H.M. in the days before YUSUF attempted to depart for Turkey.
On the morning of May 28, 2014, Yusuf’s father drove him to school. Approximately one hour after arriving at school, Yusuf walked to a mosque near his school. Yusuf left the mosque and was driven to a light rail station from which Yusuf departed for the airport. At the airport, Yusuf was advised by agents from the Federal Bureau of Investigation (FBI) that he would not be permitted to travel to Turkey as he had planned.
According to the criminal complaint and documents filed in court, Abdi Nur departed from the Minneapolis/Saint Paul airport for Istanbul, Turkey on May 29, 2014. Prior to his departure, on April 24, 2014, Nur obtained an expedited U.S. passport. On May 24, 2014, Nur made an ATM deposit of $1,540 in cash to his checking account. On May 27, 2014, Nur purchased an airline ticket for $1,619.30, using a debit card associated with the same checking account. Like Yusuf, Nur was unemployed when he purchased his airline ticket. Nur successfully boarded a flight for Turkey on May 29, 2014. He was scheduled to return to the United States on June 16, 2014, but did not.
According to the criminal complaint and documents filed in court, Nur had become “much more religious,” in the two months preceding his departure, including talking about how his family needed to pray more and wear more traditional clothing. Nur began to talk about jihad during this time period.
According to the criminal complaint and documents filed in court, Nur has communicated via Facebook with an individual in the United States after his departure for Turkey. During those communications, Nur stated that he has gone “to the brothers,” and that we “will see each other in the afterlife inshallah,” and “im not coming back” (sic). Nur has also communicated with a separately charged defendant, Mohamed Abdullahi Hassan, aka “Miski.”
According to the criminal complaint and documents filed in court, after asking Nur if he knew “Duale” (a U.S. citizen known to have traveled to Syria), Miski advised Nur “…Being connected in Jihad make you stronger and you can all help each other by fulfilling the duties that Allah swt (sic) put over you…Like us in Somalia the brothers from mpls are well connected so try to do the same….It is something we have learned after 6 years in Jihad.”
This case is the result of an investigation conducted by the FBI. The charges contained in the complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
Statement by Attorney General Holder on the Ongoing Situation in Ferguson, MissouriRead the Press Release
Attorney General Eric Holder made the following statement today on the ongoing situation in Ferguson, Missouri.
“Good afternoon. I have been briefed by members of the Justice Department and I wanted to provide a brief update of the Justice Department’s ongoing efforts arising from the events in Ferguson, Missouri. I’ve been briefed today by the COPS director, Ron Davis, Principal Deputy Associate Attorney General Molly Moran, Deputy Assistant Attorney General Mark Kappelhoff and members of my staff, all of whom are here with me now.
“They are overseeing the federal investigations into the shooting of Michael Brown as well as the investigation that we are doing of the Ferguson Police Department. I want to emphasize that we have two investigations that are ongoing. As I’ve said many times before and reiterated in my statement last night, the department's investigations will continue to be thorough, they will continue to be independent and they remain ongoing. They will be conducted rigorously and in a timely manner so we can move forward as expeditiously as we can to restore trust, to rebuild understanding and to foster cooperation between law enforcement and community members.
“Last night and throughout the day, I have been briefed on events in and around Ferguson. I was disappointed that some members of the community resorted to violence rather than respecting what I thought were the really heartfelt words of Michael Brown Sr. and the wishes he expressed about how he wanted his son's memory to be honored with nonviolence. It is clear that acts of violence threaten to drown out those that have legitimate voices, legitimate demonstrators and those acts of violence cannot and will not be condoned.
“By contrast, I’m very encouraged that some of the more peaceful demonstrations last night as well as today have occurred and have been in keeping with Mr. Brown's request. I would remind demonstrators of our history that those, the way in which we have made progress in this country is when we have seen peaceful, nonviolent demonstrations that has led to the change that has been the most long lasting and the most pervasive.
“I’ve asked the COPS director, Ron Davis, to continue to confer with local law enforcement and to conduct an after action review so we can develop strategies for identifying and isolating the criminal elements from peaceful protesters. Additionally, I have instructed department officials to continue to make contact with leaders of the peaceful protesters and to seek their assistance in isolating those individuals who are inclined towards violence. We’ve had a good ongoing dialogue with peaceful demonstrators in Ferguson. I’ve been very heartened to hear about the good work that our community relations service has done as well as people under Mark in particular. And I’ve instructed them to maintain those levels of communications and keep those avenues of communications open.
“I really embrace those who have been proactively intervening to stop acts of violence within their midst and I encourage them to continue to exercise this important leadership. I know that that is not an easy thing to do but it was very heartening to hear about people last night trying to stop those other people who were trying to loot and trying to destroy businesses and burn things. Those people who took it upon themselves to try to stop those kinds of things are in fact heroes in my mind.
“Michael Brown's tragic death has revealed a deep distrust between some in the Ferguson community and its police force. It also developed a need to develop and widely disseminate law enforcement best practices for responding to public demonstrations. The Department of Justice has begun this work and will continue to work with communities around the country in this regard. The reality is that what we see in Ferguson is not restricted to Ferguson. There are other communities around this country that have these same issues that have to be dealt with and we at the Justice Department are determined to do all that we can to bridge those divides. We launched in September our Building Communities of Trust initiative to provide training to law enforcement and communities on bias reduction and procedural fairness and we plan to apply evidence-based strategies in the five pilot sites around the country. This is all designed to bridge those divides, bridge those gaps between law enforcement and the communities that they serve. These gaps, these divides exist in other parts of the country beyond Ferguson and our focus will be nationally in its scope to try to deal ultimately with these issues. We will continue to advance this work, as I said, around the country in the coming weeks and months by bringing together elected officials, law enforcement officials and community leaders both to ensure dialogue but also action. This isn't just about talking. We want to ensure that concrete steps are taken to address these underlying barriers to trust.
“I briefed the president today in the Oval Office about the situation in Ferguson, shared with him the perspectives of people in law enforcement and Justice Department officials who are there on the ground. We talked about programmatic issues that we want to announce relatively soon and also about the need to bring our people together. This is a difficult time for people in Ferguson. It’s a difficult time for people in our country. It’s an opportunity for us to find those things that bind us as a nation, to be honest with one another about those things that continue to divide us and come up with ways in which we make this union even more perfect. So that’s what I talked about with the president. He is committed to this effort as are the men and women of the United States Department of Justice. Thanks very much.”
Mateo B. Sardoma, Jr. and Rudy P.H. Sablan Sentenced to 11 Years Imprisonment on Federal Firearms & Narcotic ChargesRead the Press Release
(Hagatna, Guam), ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that Mateo B. Sardoma, Jr. and Rudy P.H. Sablan, defendants in the Organized Crime Drug Enforcement Task Force (OCDETF) case United States v. Sardoma, et al., Criminal Case No. 12-000010 (D. Guam), were sentenced today by the Honorable Frances
Tydingco-Gatewood, Chief Judge, District Court of Guam. The Defendants were sentenced to serve eleven years of incarceration followed by three years of supervised release.In considering the evidence presented at trial, both Sablan and Sardoma were sentenced to ten years of prison for being felons in possession of a firearm, in violation of Title 18, United States Code, Section
Both defendants were jointly and severally ordered to pay $18,000 to the victim of an assault in the case.
922(g)(1) and to an additional year to run consecutively for possession of methamphetamine in violation of Title 21, United States Code, Section 844(a).Sardoma was also ordered to forfeit $51,136, which will be applied toward a $200,000 money judgment issued against him. He was also ordered to forfeit a 2008 Toyota Pick Up and a 2003 Toyota Highlander.
U.S. Attorney Limtiaco stated, “Our community is not immune from the poison of methamphetamine. These cases illustrate 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.
Man Pleads Guilty for Selling "StealthGenie" Spyware App and Ordered to Pay $500,000 FineRead the Press Release
A Danish citizen today pleaded guilty in the Eastern District of Virginia and was ordered to pay a fine of $500,000 for advertising and selling StealthGenie, a spyware application (app) that could remotely monitor calls, texts, videos and other communications on mobile phones without detection. This marks the first-ever criminal conviction concerning the advertisement and sale of a mobile device spyware app.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement after a hearing before U.S. District Judge Leonie M. Brinkema in the Eastern District of Virginia.
“Spyware is an electronic eavesdropping tool that secretly and illegally invades individual privacy,” said Assistant Attorney General Caldwell. “Make no mistake: selling spyware is a federal crime, and the Criminal Division will make a federal case out if it. Today’s guilty plea by a creator of the StealthGenie spyware is another demonstration of our commitment to prosecuting those who would invade personal privacy.”
“The defendant advertised and sold a spyware app that could be secretly installed on smart phones without the knowledge of the phones owner,” said U.S. Attorney Boente. “This spyware app allowed individuals to intercept phone calls, electronic mail, text messages, voicemails and photographs of others. The product allowed for the wholesale invasion of privacy by other individuals, and this office in coordination with our law enforcement partners will prosecute not just users of apps like this, but the makers and marketers of such tools as well.”
“Mr. Akbar is the first-ever person to admit criminal activity in advertising and selling spyware that invades an unwitting victim’s confidential communications,” said FBI Assistant Director in Charge McCabe. “This illegal spyware provides individuals with an option to track a person’s every move without their knowledge. As technology evolves, the FBI will continue to evolve to protect consumers from those who sell illegal spyware.”
According to the statement of facts accompanying the plea agreement in the case, Hammad Akbar, 31, is the chief executive officer of InvoCode Pvt. Limited and Cubitium Limited, the companies that advertised and sold StealthGenie online. StealthGenie could be installed on a variety of different brands of mobile phones, including Apple’s iPhone, Google’s Android, and Blackberry Limited’s Blackberry. Once installed, it could intercept all conversations and text messages sent using the phone. The app was undetectable by most users and was advertised as being untraceable.
Akbar was arrested on Sept. 27, 2014, in Los Angeles and pleaded guilty today to sale of an interception device and advertisement of a known interception device. After accepting the guilty plea, the court immediately sentenced Akbar to time served and ordered him to pay a $500,000 fine. He was also ordered to forfeit the source code for StealthGenie to the government.
On Sept. 26, 2014, the court issued a temporary restraining order authorizing the FBI to temporarily disable the website hosting StealthGenie, which was hosted from a data center in Ashburn, Virginia. The court later converted the order into a temporary injunction, and the website remains offline.
According to Akbar’s admissions, StealthGenie had numerous functions that permitted it to intercept both outgoing and incoming telephone calls, electronic mail, text messages, voicemail, and photographs from the smartphone on which it was installed. The app could also turn on the phone’s microphone when it was not in use and record sounds and conversations that occurred near the phone. All of these functions could be enabled without the knowledge of the user of the phone.
In order to install the app, the purchaser needed at least temporary possession of the target phone. During the installation process on an Android smartphone, for example, the person installing the app was required to grant a series of permissions that allowed the app to access privileged information on the device. Once the app was activated, it was started as a “background” (i.e., hidden) service and set up to launch automatically when the phone was powered on. The only time that the app interacted with the screen was during activation, and the icon for the app was removed from the phone’s menu. Akbar admitted that because of these characteristics, a typical smartphone user would not know that StealthGenie had been installed on his or her smartphone.
Akbar also admitted to distributing an advertisement for StealthGenie through his website on Nov. 5, 2011, and to selling the app to an undercover agent of the FBI on Dec. 14, 2012.
This case was investigated by the FBI’s Washington Field Office, and was prosecuted by Senior Trial Attorney William A. Hall Jr. of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Jay V. Prabhu and Alexander Nguyen of the Eastern District of Virginia.
The FBI’s Internet Crime Complaint Center (IC3) has published an advisory for consumers related to the app located at: http://www.ic3.gov/media/2014/140930.aspx.
Justice Department Settles Lawsuit Against California Bakery over Discrimination Against Foreign-Born WorkerRead the Press Release
The Justice Department announced today that it reached a settlement with La Farine Bakery, a bakery with two stores in the San Francisco Bay Area. The settlement resolves allegations that the bakery violated the Immigration and Nationality Act (INA) by engaging in discriminatory documentary practices. Specifically, the Justice Department’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) found that La Farine improperly rejected a worker’s valid work authorization documents because of the worker’s citizenship status.
Under the settlement agreement, La Farine Bakery will pay $26,000 in back pay and other compensation to an individual who was allegedly harmed by the discriminatory. The bakery also agreed to change its hiring policies and be subject to monitoring of its hiring practices for two years.
“Employers should not make assumptions about the validity of their workers’ employment documents based on sterotypes or unfounded assumptions,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division. “The department encourages employers to use the Civil Rights Division’s resources, including OSC’s hotline, if they have questions about accepting Form I-9 documentation in a non-discriminatory manner.”
OSC is responsible for enforcing the anti-discrimination provision of the Immigration and Nationality Act. The statute prohibits employers from placing additional documentary burdens on work-authorized applicants or employees during the employment eligibility verification process because of their citizenship status or national origin. The statute also prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee, as well as 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 for a fee, should contact OSC’s worker hotline for assistance.
El Departamento de Justicia Resuelve un Reclamo contra una Panadería en California sobre Discriminación contra un Trabajador Nacido al ExtranjeroRead the Press Release
WASHINGTON -- El Departamento de Justicia anunció hoy que llegó a un acuerdo con La Farine Bakery, una panadería con dos tiendas en el área de la Bahía de San Francisco. El acuerdo resuelve alegaciones que la panadería violó la Ley de Inmigración y Nacionalidad (INA, por sus siglas en inglés) por incurrir en prácticas discriminatorias documentales. Específicamente, La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración (OSC por sus siglas en inglés), del Departamento de Justicia, encontró que La Farine indebidamente rechazó documentos de autorización de trabajo válidos de un trabajador por su estatus de ciudadanía.
Bajo el acuerdo, La Farine Bakery le pagará $26,000 en pago atrasado y otra compensación al individuo que presuntamente fue perjudicado por las prácticas discriminatorias. La panadería también acordó cambiar sus pólizas de contratación y ser sujeta a un período de monitoreo de sus prácticas de contratación por dos años.
“Los empleadores no deben hacer suposiciones acerca la validez de los documentos de sus trabajadores basadas en estereotipos o suposiciones sin base,” dijo Vanita Gupta Subprocuradora General Interina para la División de Derechos Civiles. “El Departamento sugiere que los empleadores utilicen los recursos de la División de Derechos Civiles, incluyendo la línea directa de OSC, si tienen preguntas sobre aceptando documentación para el Formulario I-9 en una manera sin discriminación.”
La Oficina del Consejero Especial para Prácticas Injustas en el Empleo Relacionadas a Inmigración es la oficina responsable por hacer cumplir con la provisión anti-discriminación de la INA. La ley prohíbe, entre otras cosas, discriminación basada en estatus de ciudadanía o en origen nacional en la contratación, el despido, o el reclutamiento o la referencia por comisión, las prácticas injustas de documentación, y represalia e intimidación.
Para obtener más información acerca de la protección contra la discriminación en el empleo según las leyes de inmigración, o para registrarse para un seminario sin costo ofrecido a través del Internet, llame a la línea directa de la OSC para trabajadores al 1-800-255-7688 1-800-237-2515, TTY (para personas con problemas de audición); llame a la línea directa de la OSC para empleadores al 1-800-255-8155 (1-800-237-2515, TTY para personas con problemas de audición); o visite el sitio web de la OSC en www.justice.gov/crt/about/osc.
Solicitantes o trabajadores que creen que fueron sometidos a: (1) requisitos diferentes de documentación o discriminación por causa de su estatus de ciudadanía, estatus migratorio o su origen nacional; o (2) discriminación por causa de su estatus de ciudadanía, estatus migratorio o el origen nacional en la contratación, el despido o el reclutamiento o referencia por comisión, deben comunicarse a la línea del trabajador de la OSC para obtener ayuda.
City of Ocean Springs, Mississippi, Agrees to Reforms and $437,500 Payment to Resolve Disability Discrimination LawsuitRead the Press Release
The Justice Department today announced a settlement resolving a federal civil rights lawsuit against the City of Ocean Springs, Mississippi, for alleged violations of the Americans with Disabilities Act (ADA). Under the proposed consent decree, the city will pay $437,500 in damages to an outpatient psychiatric treatment facility that was discriminated against by the city based on unsupported myths and stereotypes about prospective patients at the facility. The decree requires the city to reform its land use and zoning practices to eliminate discriminatory barriers for providers of mental health services to people with disabilities and combat the stigma of mental illness.
The documents filed in federal court today allege that the city discriminated against Psycamore LLC when it denied a certificate of occupancy and a use permit because Psycamore treats patients with mental illness. Psycamore sought to operate in an area allowing medical clinics and should have been allowed to operate by the city. But the city would not allow it to open. At public hearings called by the city a flier that depicted Psycamore as the psychiatric ward in the film One Flew Over the Cuckoo’s Nest was circulated to city officials.
The department found that the city based its decision on discriminatory beliefs, myths and stereotypes about Psycamore’s patients and their mental disabilities. As a result, the city perpetuated the stigma surrounding mental illness, interfered with Psycamore’s ability to treat individuals with mental disabilities in Ocean Springs and forced Psycamore to delay opening its clinic and to move it to Biloxi, Mississippi. Psycamore also suffered economic losses, including lost profits and out of pocket expenses.
“The Americans with Disabilities Act protects people with mental illness from discrimination and mental health facilities are protected from discrimination based on the disabilities of the people they serve. ” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division. “The Civil Rights Division is committed to combating the stigma of mental illness, promoting greater community awareness and protecting the rights of persons living with mental illness as well as the persons and entities who serve them.”
“The participation of the U.S. Attorney’s Office in this important litigation sends a strong message that we will not tolerate discrimination of any kind in this district,” said U.S. Attorney Gregory K. Davis for the Southern District of Mississippi. “Discrimination based upon myths, fears and stereotypes is never appropriate. We are fully committed to ensuring that individuals with disabilities and those who provide services to them have a full and equal opportunity to participate in all facets of their communities.”
Under the consent decree, the city will adopt and implement policies to ensure nondiscriminatory zoning practices that will not limit access to needed services and treatment for people with mental disabilities. City officials involved in zoning decisions will be trained on the ADA. The city will also report to the Justice Department on future land use decisions involving individuals with disabilities and hire an ADA coordinator to oversee the city’s compliance with the ADA and the consent decree. In addition to paying damages to Psycamore, the consent decree requires the city to grant Psycamore a certificate of occupancy and use permit, if necessary, to return to Ocean Springs in the future in the same or similar zone where it previously sought to locate.
The ADA protects individuals with disabilities from discrimination in all activities of state and local government entities, including zoning and land use decisions. Those interested in finding out more about this case or the obligations of state and local government 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 at www.ada.gov. ADA complaints may be filed by email to [email protected].
Canadian Antiques Dealer Pleads Guilty in Manhattan Federal Court to Attempted Wildlife SmugglingRead the Press Release
Xiao Ju Guan, aka Tony Guan, a Canadian antiques dealer, pleaded guilty today in Manhattan federal court to attempting to smuggle rhinoceros horns from New York to Canada, announced Sam Hirsch, the Acting Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice, and Preet Bharara, the U.S. Attorney for the Southern District of New York. Guan was arrested in March 2014 as part of “Operation Crash,” a nation-wide crackdown in the illegal trafficking in rhinoceros horns, for his role in smuggling and attempting to smuggle rhinoceros horns as well as items carved from elephant ivory and coral, from auction houses throughout the United States to Canada. He pleaded guilty today before U.S. District Judge Laura Taylor Swain.
“The United States will aggressively prosecute anyone who illegally traffics in endangered wildlife species, in whatever form,” said Acting Assistant Attorney General Hirsch. “Rhinos and elephants are not antiques, as the president of an antique company engaged in international trade should know. These are iconic animals of pre-historic origin, fighting for their very survival as a species. The illegal trade in rhino horn and elephant ivory and the escalation of black-market prices are directly related to horrific poaching on living animals. Guan has admitted to smuggling rhino horn and elephant ivory across international borders. The United States is grateful for the Canadian authorities’ coordination and assistance in bringing this wildlife trafficker to justice.”
“Because all species of rhinos are endangered, and elephant populations are either vulnerable or endangered, the trade in rhinoceros horns and elephant ivory is stringently limited,” said U.S. Attorney Bharara. “The survival of these magnificent animals depends in large part on enforcement of laws and international treaties governing such trade. Tony Guan’s admitted conduct increased the existential threat to these creatures, and now he awaits the penalty for that conduct.”
According to the information, plea agreement, and statements made during court proceedings:
Guan, the president and owner of an antiques business in Richmond, British Columbia, was arrested on March 29, 2014, after flying from Vancouver to New York and purchasing two endangered black rhinoceros horns from undercover special agents with the U.S. Fish and Wildlife Service at a storage facility in the Bronx. After purchasing the horns, Guan had the undercover agents drive him and a female accomplice acting as his interpreter to a nearby express mail store where he mailed the horns to an address in Point Roberts, Washington, less than a mile from the Canadian border and 17 miles from his business. Guan falsely labeled the box of black rhino horns as containing “handicrafts.” Guan indicated that he had people who could drive the horns across the border and that he had done so many times before.
As part of his plea, Guan admitted that he, and others acting at his direction, smuggled more than $400,000 of rhino horns and sculptures made from elephant ivory and coral from various U.S. auction houses to Canada by the same method, or by having packages mailed directly to Canada with false paperwork and without the required declaration or permits.
Guan, 39, of Richmond, British Columbia, Canada, pled guilty to one count of attempted smuggling, which carries a maximum penalty of ten years in prison. He is scheduled to be sentenced by Judge Swain on March 13 2015. 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, Guan agreed to forfeit items recovered from a search of his antiques business in Canada, and also agreed that he will not participate in any further trade, purchase, or sale of wildlife in the United States.
Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. All species of rhinoceros are protected under U.S. and international law. Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife, and plants that are or may become imperiled due to the demands of international markets.
Operation Crash is a continuing investigation by the Department of the Interior’s Fish and Wildlife Service, in coordination with the Department of Justice. A “crash” is the term for a herd of rhinoceros. Operation Crash is an ongoing effort to detect, deter, and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns.
The case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant United States Attorney Janis M. Echenberg and Senior Litigation Counsel Richard A. Udell with the Environmental Crimes Section of the Department of Justice are in charge of the prosecution.
Two Northern California Real Estate Investors Agree to Plead Guilty to Bid Rigging and Fraud at Public Foreclosure AuctionsRead the Press Release
Two Northern California real estate investors have agreed to plead guilty for their role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.
Felony charges were filed today in the U.S. District Court for the Northern District of California in Oakland against Su Chu Chou “Terry” Cheng and Chung Li “George” Cheng of Walnut Creek, California.
To date, as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California, 49 individuals have agreed to plead or have pleaded guilty.
Between May 2008 and January 2011, according to the court documents, George and Terry Cheng conspired with others not to bid against one another, and instead designated a winning bidder to obtain selected properties at public real estate foreclosure auctions in Alameda and Contra Costa counties. George and Terry Cheng were also charged with conspiring to use the mail to carry out a scheme to fraudulently acquire title to selected Alameda and Contra Costa County properties sold at public auctions, to make and receive payoffs, and to divert money to co-conspirators that would have otherwise gone to mortgage holders and other beneficiaries by holding second, private auctions open only to members of the conspiracy. The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions. The private auctions often took place at or near the courthouse steps where the public auctions were held.
“The Antitrust Division continues to vigorously pursue and prosecute those who rig bids and commit fraud at real estate foreclosure auctions,” said Brent Snyder, Deputy Assistant Attorney for the Antitrust Division’s criminal enforcement program. “The division is committed to working closely with its law enforcement partners to ensure that these real estate auctions are fair and open so that consumers will benefit from competition.”
The department said that the primary purpose of the conspiracies was to suppress and eliminate competition and to conceal payoffs in order to obtain selected real estate offered at Alameda and Contra Costa County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner. These conspirators paid and received money, according to the court documents, that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties, and, in some cases, the defaulting homeowner.
“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “The FBI is committed to work these important cases and remains unwavering in our dedication to bring the members of these illegal conspiracies to justice.”
A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million. A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.
Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa, and Alameda counties, California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.
Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.
**The fraud charge(s) referenced in this press release were
subsequently dismissed on the government’s motion.**George Cheng Information
Terry Cheng Information
The Executive Office for Immigration Review Swears in Two Immigration JudgesRead the Press Release
FALLS CHURCH, Va. – The Executive Office for Immigration Review (EOIR) today announced the investiture of two immigration judges. Chief Immigration Judge Brian M. O’Leary presided over the investiture during a ceremony held at EOIR’s headquarters on Nov. 21, 2014.
After a thorough application process, Attorney General Eric Holder appointed Glen R. Baker and Myrna Amelia Mesa to their new positions. “We are excited to welcome Immigration Judges Baker and Mesa to serve in our immigration courts in Salt Lake City and New Orleans, respectively,” said O’Leary. “These two positions are a first step in bolstering our immigration judge corps.”
Biographical information follows.
Glen R. Baker, Immigration Judge, Salt Lake City Immigration Court
Attorney General Eric H. Holder Jr. appointed Judge Baker in November 2014. Judge Baker received a bachelor of arts degree in 1982 from James Madison University and a juris doctorate in 1994 from Thomas M. Cooley Law School. From 1995 to 2014, he served as an attorney advisor for the Board of Immigration Appeals, Executive Office for Immigration Review (EOIR), U.S. Department of Justice. During this time, from 2010 to 2011, he served as an associate general counsel for EOIR. From 1994 to 1995, Judge Baker worked as a judicial law clerk for the Harlingen Immigration Court, entering on duty through the Attorney General’s Honors Program. From 1993 to 1994, he was the managing editor for the Thomas M. Cooley Law Review. Judge Baker is a member of the North Carolina State Bar.
Myrna A. Mesa, Immigration Judge, New Orleans Immigration Court
Attorney General Eric H. Holder Jr. appointed Judge Mesa in 2014. Judge Mesa received a bachelor of arts degree in 1986 from Loyola University Chicago, a juris doctorate in 1990 from the University of Michigan Law School, and a master of fine arts degree in 2008 from Old Dominion University. From 2007 to 2014, she served as an assistant chief counsel for the U.S. Department of Homeland Security, Immigration and Customs Enforcement (ICE), in Orlando, Fla. During this time, from 2010 to 2014, Judge Mesa served as a special assistant U.S. attorney for the Department of Justice, U.S. Attorney’s Office, Middle District of Florida. From 1999 to 2007, Judge Mesa served as an attorney advisor, U.S. Department of the Army, in Fort Monroe, Va. From 1991 to 1999, she served in the U.S. Army, Judge Advocate General Corps, where she worked primarily as a criminal litigation attorney in various capacities, including senior defense counsel and chief trial counsel. She is currently an active U.S. Army reservist. Judge Mesa is a member of the Illinois and Virginia State Bars.
- EOIR -
The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR’s immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR’s Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.
Massachusetts Businessman Involved in Adult Entertainment Industry Pleads Guilty to Tax EvasionRead the Press Release
A Massachusetts businessman pleaded guilty to tax evasion for using nominee entities to hide ownership and control over his businesses and assets from the Internal Revenue Service (IRS), announced Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division and U.S. Attorney Carmen M. Ortiz for the District of Massachusetts.
According to the indictment, Richard L. Furnelli, a former resident of Holyoke and South Hadley, Massachusetts, evaded payment of his federal income taxes for 2006 through 2009, among other years, and also failed to file his federal individual income tax returns for those years.
The indictment alleges that from 2006 through 2009, Furnelli earned more than $2 million in income. Furnelli operated or held substantial interest in Solid Gold Inc. and Gold Club-SF LLC, which owned and operated the Gold Club, an adult entertainment venue in San Francisco. These corporations allegedly earned annual gross receipts ranging from $2.5 million to more than $10 million dollars. During that time period, the indictment also alleges that Furnelli directed the payment of his income to a nominee entity, RLF Ventures LLC, and utilized a bank account held in a nominee name.
According to the plea documents, Furnelli has agreed to pay his outstanding federal income taxes owed to the IRS for the years 1998 through 2009.
Furnelli faces a statutory maximum sentence of five years in prison and a $250,000 fine for tax evasion at his April 29, 2015, sentencing before U.S. District Judge Michael A. Ponsor for the District of Massachusetts.
The case was investigated by special agents of IRS–Criminal Investigation of the Springfield, Massachusetts, Field Office. Trial Attorneys Mark S. McDonald and Thomas G. Voracek of the Tax Division are prosecuting the case.
Continental Automotive Electronics and Continental Automotive Korea Agree to Plead Guilty to Bid Rigging on Instrument Panel ClustersRead the Press Release
Continental Automotive Electronics LLC and Continental Automotive Korea Ltd. both have agreed to plead guilty and to pay a single criminal fine of $4 million for their roles in a conspiracy to rig bids of instrument panel clusters installed in vehicles manufactured and sold in the United States, the Department of Justice announced today.
According to a one-count felony charge filed today in U.S. District Court for the Northern District of Georgia, Newnan Division, Continental Automotive Electronics LLC, based in Cheongwon, South Korea, and Continental Automotive Korea Ltd., based in Seongnam-si, South Korea, conspired to rig bids for instrument panel clusters sold to Hyundai Motor Co., Kia Motors Corp. and Kia Motors Manufacturing Georgia in the United States and elsewhere. In addition to the criminal fine, the companies have agreed to cooperate in the department’s ongoing investigation. The plea agreement is subject to court approval.
“As the Antitrust Division’s prosecution of auto parts matters like this one demonstrates, we will prosecute those who participate in international cartels targeting U.S. businesses and consumers,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “The Antitrust Division is working closely with competition enforcers around the world to ensure that companies and executives that engage in international cartel crimes find no refuge.”
The charged companies have acknowledged that they and their co-conspirators held meetings and conversations to discuss and agree upon allocation of sales of instrument panel clusters, and the bids and price quotations each would submit. The charged companies’ involvement in the conspiracy began as early as March 2004 and continued until May 2012.
Instrument panel clusters are a set of instruments located on the dashboard of a vehicle that contain gauges such as a speedometer, tachometer, odometer, and fuel gauge, as well as warning indicators for gearshift position, seat belt, parking-brake engagement, engine malfunction, low fuel, low oil pressure and low tire pressure.
Including Continental Automotive Electronics LLC and Continental Automotive Korea Ltd., 32 companies and 46 executives have been charged in the Justice Department’s ongoing investigation into the automotive parts industry. Each of the charged companies have either pleaded guilty or have agreed to plead guilty and have agreed to pay more than $2.4 billion in criminal fines. Of the 46 individuals, 26 have been sentenced to serve time in U.S. prisons.
Continental Automotive Electronics LLC and Continental Automotive Korea Ltd. are charged with bid rigging in violation of the Sherman Act, which carries maximum penalties of a $100 million criminal fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The charges are the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charges were brought by the Antitrust Division’s Chicago Office and the FBI’s Montgomery, Alabama Field Office, with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1–888–647–3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Montgomery, Alabama Field Office at 334-263-1691.
Continental Information
Attorney General Holder Statement on the Conclusion of the Grand Jury Proceeding in the Shooting of Michael BrownRead the Press Release
Attorney General Eric Holder released the following statement Monday regarding the conclusion of the St. Louis County grand jury proceeding in the shooting of Michael Brown:
“While the grand jury proceeding in St. Louis County has concluded, the Justice Department’s investigation into the shooting of Michael Brown remains ongoing. Though we have shared information with local prosecutors during the course of our investigation, the federal inquiry has been independent of the local one from the start, and remains so now. Even at this mature stage of the investigation, we have avoided prejudging any of the evidence. And although federal civil rights law imposes a high legal bar in these types of cases, we have resisted forming premature conclusions.
“Michael Brown’s death was a tragedy. This incident has sparked a national conversation about the need to ensure confidence between law enforcement and the communities they protect and serve. While constructive efforts are underway in Ferguson and communities nationwide, far more must be done to create enduring trust. The Department will continue to work with law enforcement, civil rights, faith and community leaders across the country to foster effective relationships between law enforcement and the communities they serve and to improve fairness in the criminal justice system overall. In addition, the Department continues to investigate allegations of unconstitutional policing patterns or practices by the Ferguson Police Department.
“Though there will be disagreement with the grand jury's decision not to indict, this feeling should not lead to violence. Those who decide to participate in demonstrations should remember the wishes of Michael Brown's parents, who have asked that remembrances of their son be conducted peacefully. It does not honor his memory to engage in violence or looting. In the coming days, it will likewise be important for local law enforcement authorities to respect the rights of demonstrators, and deescalate tensions by avoiding excessive displays—and uses—of force.”
Attorney General Holder Statement on Tim Heaphy Stepping Down as U.S. Attorney for Western District of VirginiaRead the Press Release
Attorney General Eric Holder released the following statement Monday on the resignation of U.S. Attorney Tim Heaphy for the Western District of Virginia:
“Over the past five years, Tim Heaphy has been an outstanding United States Attorney for the Western District of Virginia and a key national leader on a host of pressing criminal justice issues.
“Throughout his distinguished career -- from our days together in the U.S. Attorney’s Office for the District of Columbia, to his current post -- I have known Tim as a dedicated public servant and a champion of the cause of justice. He has been a fierce advocate for groundbreaking community outreach initiatives within and far beyond his district. And he has worked tirelessly to promote data-driven prevention, intervention, and reentry programs to improve public safety at the national level.
“As a talented attorney, a dedicated prosecutor, and a leader of both patriotism and principle, Tim Heaphy has been an indispensable member of the U.S. Department of Justice. From the prosecutions he has led to the policies he has championed, Tim's work has touched countless lives across Virginia and throughout the nation. I have been proud to count him as a friend. On behalf of our colleagues and the American people, I thank him for his service and wish him all the best in every future endeavor.”
United States Files Enforcement Action Against Michigan Sandwich Company and Co-Owner to Stop Distribution of Adulterated ProductsRead the Press Release
A civil complaint was filed in federal court in Michigan against Scotty’s Incorporated of Detroit and its co-owner and manager, Sandra Jackson, to prevent the distribution of adulterated sandwiches, the Department of Justice announced today.
According to the complaint, Scotty’s Incorporated, which does business as Bruce Enterprises and Bruce’s Fresh Products, prepares and distributes ready-to-eat (RTE) sandwiches, including RTE tuna sandwiches. The complaint alleges that the company’s sandwiches are manufactured in insanitary conditions, and that the company’s procedures are inadequate to ensure the safety of its products. Moreover, the company has failed to implement a written Hazard Analysis and Critical Control Point (HACCP) plan for handling seafood and minimizing the potential for harmful contamination in the company’s RTE tuna sandwiches. The Justice Department filed the injunction action in the Eastern District of Michigan at the request of the U.S. Food and Drug Administration (FDA).
“Seafood poses well-known risks when it is transported from ship to shore, but these risks can be effectively mitigated if companies handling seafood take proper precautions,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “The Department of Justice will take all appropriate measures to protect the safety of the seafood consumers eat.”
According to the complaint, the FDA has performed five inspections of the defendants’ facility since 2006 and documented insanitary practices and/or seafood HACCP violations every time. These inspections revealed that the company’s RTE sandwiches are adulterated within the meaning of the Food, Drug, and Cosmetic Act because they are prepared, packed or held under insanitary conditions in which they may have become contaminated with filth or rendered injurious to health. The complaint alleges, for example, that since 2006, the company was repeatedly told to develop a written HACCP plan recognizing the inherent risks of toxin formation in tuna and enumerating plans to take corrective action when tuna is not properly handled.
Tuna that is not chilled rapidly or stored at sufficiently lower temperatures is at increased risk for the formation of scombrotoxin. The toxin can be adequately controlled when tuna is chilled after death and maintained at a cold temperature throughout storage and distribution. In the event that the tuna is not properly maintained, scombrotoxin readily forms and cannot be removed or destroyed through subsequent washing, freezing or cooking of the tuna. Consumption of fish containing high levels of scombrotoxin may cause scombrotoxin poisoning, the symptoms of which may include burning sensations in the mouth or throat, dizziness, nausea, vomiting, headaches, diarrhea, rashes, hives, a drop in blood pressure, constriction of the air passage, heart palpitations and respiratory distress.
According to the complaint, the FDA’s most recent inspection was conducted between January 14 and February 6. At the inspection, according to the complaint, the FDA found that the defendants failed to have and implement an HACCP plan for food safety hazards reasonably likely to occur. There were also no sanitation control records documenting the safety of, among other things, water used at the facility; the cleanliness of surfaces, utensils and equipment coming into contact with food; maintenance of hand-sanitizing machines and bathrooms; exclusion of pests from the facility; and control of employee health conditions such as the wearing of jewelry, hair nets or beard covers.
The government is represented by Trial Attorney Dan Baeza of the Civil Division’s Consumer Protection Branch and Assistant U.S. Attorney Peter Caplan of the Eastern District of Michigan, with the assistance of Assistant Chief Counsel for Enforcement Christopher Fanelli of the Department of Health and Human Services’ Office of General Counsel’s Food and Drug Division.
A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.
Two Members of MS-13 Sentenced to Lengthy Prison Terms for Violent OffensesRead the Press Release
Two members of the Mara Salvatrucha 13, or MS-13, street gang were sentenced today for their participation in violent crimes committed on behalf of the gang.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia, Special Agent in Charge Brock D. Nicholson of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) in Atlanta and Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office made the announcement.
U.S. District Judge Richard W. Story of the Northern District of Georgia sentenced the following defendants today:
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Emmanual Hidalgo, aka “Scooby,” 25, of Chamblee, Georgia, pleaded guilty to engaging in a RICO conspiracy and use of a firearm in relation to a crime of violence on Aug. 2, 2013, and was sentenced to 25 years in prison to be followed by five years of supervised release; and
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Edwin Menjivar, aka “Vago,” and “Chilly Willy,” 33, of Norcross, Georgia, pleaded guilty to engaging in a RICO conspiracy and committing a violent crime in aid of racketeering on June 7, 2013, and was sentenced to 11 years in prison to be followed by three years of supervised release.
According to information presented in court and admitted to by the defendants, MS-13 is a violent international gang that originated in Central America. By 2005, MS-13 had established a presence in the Atlanta-area, staking out strongholds in Gwinnett and DeKalb Counties, which they defended with violence. Members of MS-13 attacked suspected rival gang members, and robbed civilians and area businesses. The defendants sentenced today admitted involvement in the following crimes:
- Hidalgo, along with other gang members, planned to rob a suspected drug dealer at a hotel in DeKalb County in April 2007. During the attempted robbery, Hidalgo and his fellow MS-13 members killed the suspected drug dealer, who was also armed, in a shootout. Hotel surveillance video showed one of the MS-13 members stopping to pick up the victim’s gun, which he later showed off as a trophy.
- Menjivar was the driver in an October 2007 drive-by shooting. Menjivar and a fellow MS-13 gang member drove to an apartment complex in Gwinnett County where many members of the rival “SUR-13” gang lived. As Menjivar drove, the other MS-13 gang member fired from the car, hitting one man in the neck as he was standing outside his apartment patio. The police later recovered the firearm used in the shooting from underneath Menjivar’s bedroom mattress.
This case is being investigated by ICE HSI and the FBI, with assistance from the Gwinnett County Police Department and DeKalb County Police Department. This case was prosecuted by Trial Attorney Joseph K. Wheatley of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Paul R. Jones and Kim S. Dammers of the Northern District of Georgia.
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Three Real Estate Developers Convicted in $20 Million Mortgage Fraud SchemeRead the Press Release
A federal jury convicted three Miami real estate developers today for their roles in a $20 million mortgage fraud scheme involving the sale of condominium units in the Miami area.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge Nadine Gurley of the Department of Housing and Urban Development’s Office of the Inspector General (HUD-OIG) in Miami and Inspector General Laura S. Wertheimer of the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG) made the announcement. U.S. District Judge Patricia A. Seitz presided over the trial in the Southern District of Florida.
Stavroula Mendez, 68, Lazaro Mendez, 42, and Marie Mendez, 49, were each convicted of one count of conspiracy to commit bank fraud and wire fraud. Additionally, Stavroula Mendez was convicted of 10 counts of bank fraud and three counts of wire fraud; Lazaro Mendez was convicted of 10 counts of bank fraud, and one count of wire fraud; and Marie Mendez was convicted of three counts of bank fraud and one count of wire fraud.
According to evidence presented at trial, Stavroula Mendez, Lazaro Mendez, and Marie Mendez controlled and managed various condominiums in the Miami area. As part of their fraud scheme, the defendants paid straw buyers to apply for mortgages to purchase units in their projects. The defendants then accepted the mortgage proceeds for the purchase of the units, but continued to control the units after the sales.
The evidence showed that Lazaro Mendez recruited family members and others to be straw buyers of units he controlled, and that he facilitated false loan applications for them. In addition, Lazaro Mendez enlisted mortgage brokers and another individual to recruit straw buyers and assist them in obtaining fraudulent loans. He accepted kickbacks out of loan proceeds for each buyer the brokers referred.
Evidence at trial further demonstrated that after units were sold at a development Stavroula Mendez controlled with her husband, Luis Mendez, Stavroula Mendez funneled money from the loan proceeds to shell companies controlled by others to pay for the straw buyers’ closing cash obligations and mortgage payments. In 2008 and 2009, Stavroula Mendez used various shell companies to funnel more than $2 million of the fraudulent proceeds to off-shore accounts located in Switzerland and Liechtenstein.
The evidence also showed that Marie Mendez assisted in the transfer of rental money received by the conspirators to make mortgage payments, and funneled cash to another individual to make mortgage payments on behalf of straw buyers. She also submitted fraudulent loan applications for three condominium units that were purchased in her name.
Eventually, the conspirators were unable to make mortgage payments, causing many of the condominium units to go into foreclosure and leading to $20 million in losses to the lenders.
Following their convictions, each of the defendants was remanded into custody. Sentencing is scheduled for Feb. 3, 2015. Eleven other defendants associated with the scheme were previously convicted of fraud charges.
The case is being investigated by HUD-OIG and FHFA-OIG. The case is being prosecuted by Senior Trial Attorney Brian Young and Trial Attorneys Gary A. Winters and Kyle Maurer of the Criminal Division’s Fraud Section.
Massachusetts Dentist Pleads Guilty to Tax EvasionRead the Press Release
A Douglas, Massachusetts, dentist pleaded guilty to tax evasion in the U.S. District Court for the District of Massachusetts, announced the Department of Justice.
George Fenzell was indicted in February 2014 by a federal grand jury in Boston on multiple counts of tax evasion and one count of corruptly endeavoring to obstruct the Internal Revenue Service (IRS). He pleaded Friday before U.S. District Judge Timothy S. Hillman and faces a statutory maximum sentence of five years in prison and a $250,000 fine for tax evasion at his Feb. 18 sentencing.
According to the indictment, from 1999 through 2012, Fenzell engaged in conduct intended to obstruct the IRS from computing, assessing and collecting his income taxes. He failed to file timely tax returns with the IRS and tried to conceal income he earned from his dental practice. Fenzell’s dental offices are located in Shrewsbury, Massachusetts, and Brookline, New Hampshire. The indictment alleges that Fenzell used nominee entities, including River Valley Dental and Brookline Dental Associates Trust, to divert and conceal his dental business receipts and assets. He also allegedly used multiple bank accounts in three separate states, including commingled bank accounts maintained by third parties, to conceal his ownership of his income and assets. It is further alleged that Fenzell used nominee trustees to make it appear as if other individuals owned and controlled his assets and income. Fenzell titled and registered a Lincoln Navigator and Ducati motorcycle with a nominee entity, Smiling Trust. According to the indictment, Fenzell falsified his 2006 and 2007 tax returns that were filed late in 2009, and made extensive use of cash in order to conceal his fraud from the IRS.
The indictment further alleges that in 2007, in response to a Massachusetts Department of Revenue investigation and collection action, Fenzell filed his delinquent federal tax returns for 2000 through 2005. In those returns, Fenzell admitted that he owed federal income taxes for these years in the amount of approximately $129,841, which he failed to pay. Rather than pay these taxes and additional IRS interest and penalties, between 2007 and 2012, Fenzell allegedly sought to evade IRS collection efforts by making his business receipts payable to nominee entities and used nominee bank accounts in Florida and Rhode Island to divert and hide his income and assets. During the same period, Fenzell also failed to file his tax returns for 2008 through 2011.
This case was investigated by special agents of the IRS-Criminal Investigation. It is being prosecuted by Assistant Chief John N. Kane Jr. and Trial Attorney Thomas Koelbl of the Justice Department’s Tax Division.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website. Additional information about tax fraud schemes to watch out for may be found on the IRS-Criminal Investigation website.
Former Subway Franchise Owner Sentenced to 18 Months in Prison for Gift Card Hacking Scheme at Subway RestaurantsRead the Press Release
A California man was sentenced to serve 18 months in prison with two years supervised release, and ordered to pay $34,712 in restitution, today for remotely hacking into the computerized cash registers of Subway restaurants and fraudulently obtaining more than $40,000 in gift cards.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz of the District of Massachusetts and Resident Agent in Charge Holly Fraumeni of the U.S. Secret Service in Manchester, New Hampshire, made the announcement. U.S. District Judge Richard G. Stearns of the District of Massachusetts imposed the sentence.
Shahin Abdollahi, aka Sean Holdt, 46, of Lake Elsinore, California, pleaded guilty on May 14, 2014, to one count of conspiracy to commit computer intrusion and wire fraud and one count of wire fraud.
In connection with his guilty plea, Abdollahi admitted that he owned Subway franchises in Southern California, and later operated a California company called “POS Doctor,” which sold and installed point-of-sale (POS) computer systems to Subway franchises around the country. POS systems are a type of computerized checkout register that allow merchants to manage customer purchases made by credit, debit and gift cards.
Abdollahi further acknowledged that, beginning in 2011, he and Jeffrey Wilkinson conspired to remotely hack into the POS systems he installed in Subway franchises around the country. Members of the conspiracy hacked into at least 13 Subway POS systems and fraudulently added at least $40,000 to Subway gift cards. Abdollahi acknowledged that he and Wilkinson used the fraudulent gift cards to make purchases at Subway, and Wilkinson also sold fraudulent gift cards on eBay and Craigslist.
Wilkinson, 37, of Rialto, California, also pleaded guilty for his role in the scheme, and was sentenced to six months in prison on May 28, 2014.
This case was investigated by the U.S. Secret Service, and is being prosecuted by Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Adam J. Bookbinder of the District of Massachusetts.
Former Executive Director of Virgin Islands Legislature Convicted of Bribery and ExtortionRead the Press Release
After a three-day trial, a federal jury found the former executive director of the Legislature of the Virgin Islands guilty of accepting bribes and extortion in the awarding of contracts with the Legislature.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Ronald W. Sharpe of the District of the Virgin Islands, and Special Agent in Charge Carlos Cases of the FBI’s San Juan Field Office made the announcement.
Louis “Lolo” Willis, 56, of St. Thomas, Virgin Islands, was convicted of two counts of federal programs bribery and two counts of extortion under color of official right. U.S. District Judge Curtis V. Gomez of the District of the Virgin Islands set the sentencing hearing for Feb. 13, 2015.
According to evidence presented at trial, Willis was the executive director of the Legislature between 2009 and 2012. His responsibilities included oversight of the major renovation of the Legislature building and awarding and entering into government contracts in connection with the project. Willis was also responsible for authorizing payment to the contractors for their work. Evidence presented at trial demonstrated that Willis accepted bribes, including $13,000 in cash and checks, from contractors in exchange for using his official position to secure more than $350,000 in contracting work for the contractors and to ensure they received payment upon completion.
This case was investigated by the FBI-San Juan Field Office’s St. Thomas Resident Agency, the Internal Revenue Service, Criminal Investigation, and the Office of the Virgin Islands Inspector General. The case is being prosecuted by Trial Attorneys Peter Mason and Justin Weitz of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Delia Smith of the District of the Virgin Islands. Former Trial Attorneys Tracee Plowell and Jennifer Blackwell and former Assistant U.S. Attorney Kim Lindquist assisted in the investigation of the case.