District Not Recorded

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

All Seven Defendants Charged Have Now Been Convicted

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

Attorney General Eric H. Holder, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office, DEA Administrator Michele M. Leonhart and Bill A. Miller, Director, U.S. State Department’s Diplomatic Security Service made the announcement.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sentencing is scheduled for March 16, 2015.                                    

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

*                *                *

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Final 10 of 36 Convicted and Sentenced

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Specifically, the complaint alleges:

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

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

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

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

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

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

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

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

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

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

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

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

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

• Failure to ensure that inmates are adequately supervised.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

 

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

 

• Sidney Earl Johnson, Jr. – Mobile, AL

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

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

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

 

•  Cathy Lee Jones – Portsmouth, VA

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

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

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

 

•  Rickey Marcell McCall – Birmingham, AL 

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

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

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

 

•  Larry Nailor – Memphis, TN

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

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

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

 

•   Antonio Gromyko Reeves – Kennett, MO

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

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

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

 

•    Jennifer Regenos – Muscatine, IA

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

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

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

 

•   Barbara Lammsies Scrivner – Portland, OR 

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

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

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

 

•  Israel Abel Torres – Dallas, TX

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

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

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

 

 

The President granted pardons to the following twelve individuals:

 

• Roy Norman Auvil – Bartonville, IL

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

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

 

•  Bernard Bryan Bulcourf – McIntosh, FL

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

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

 

•   Steve Charlie Calamars – San Antonio, TX

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

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

 

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

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

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

 

•  Donnie Keith Ellison – London, KY

Offense:  Manufacture of marijuana (Eastern District of Kentucky)

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

 

• John Marshall French – Clovis, CA

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

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

 

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

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

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

 

•   David Raymond Mannix – Lafayette, OR

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

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

 

• David Neil Mercer – Grand Junction, CO

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

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

 

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

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

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

 

• Brian Edward Sledz – Naperville, IL

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

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

 

•  Albert Byron Stork – Delta, CO

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

 

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

   

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

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

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

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

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

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

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

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

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

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

A chief engineer from the M/V Trident Navigator was convicted by a federal jury in New Orleans late yesterday after a week-long trial, of knowingly falsifying the vessel’s oil record book in violation of the Act to Prevent Pollution from Ships (APPS), obstruction of justice and witness tampering, announced the Department of Justice Environment and Natural Resources Division and the U.S. Attorney’s Office for the Eastern District of Louisiana.

Matthaios Fafalios, 64, a resident of Greece, was convicted of knowingly falsifying the vessel’s oil record book, obstruction of justice, and witness tampering related to his service onboard the M/V Trident Navigator and a subsequent U.S. Coast Guard boarding of the vessel in January 2014.  In late December 2013, Fafalios ordered his engineering crew to construct a hose known in the industry as a “magic hose” to discharge the oily waste water that was in the vessel’s bilge holding tank.  Two crewmembers onboard the vessel reported this illegal discharge to the Coast Guard.  When coast guard inspectors boarded the vessel, Fafalios attempted to hide critical documents from the inspectors that indicated the illegal discharge occurred.  Additionally, Fafalios ordered engineers under his command to lie to the Coast Guard about the illegal oily waste water discharge.

Consistent with requirements in the APPS regulations, a vessel like the M/V Trident Navigator, must maintain a record known as an oil record book in which transfer and disposal of all oil-contaminated waste and the discharge overboard and disposal otherwise of such waste, must be fully and accurately recorded by the person in charge of the operations. Oil-contaminated bilge waste can be discharged overboard if it is processed through on-board pollution prevention equipment known as the oily water separator (OWS).

The operator of the vessel, Marine Managers LTD., had previously pleaded guilty to knowingly falsifying the oil record book and obstruction of justice and paid a total criminal penalty of $900,000.00.

The case was investigated by the U.S. Coast Guard Investigative Service.  The case was prosecuted by Kenneth E. Nelson of the Environmental Crimes Section of the Department of Justice and by Emily Greenfield of the U.S. Attorney’s Office for the Eastern District of Louisiana.

Senior Venezuelan Banking Official Received at Least $5 Million in Bribes in Exchange for Directing Business to U.S. Defendants

The former chief executive officer and former managing director of a U.S. broker-dealer (the Broker-Dealer), pleaded guilty to bribery charges arising from their scheme to pay bribes to Maria De Los Angeles Gonzalez De Hernandez, who was a senior official in Venezuela’s state economic development bank, Banco de Desarrollo Económico y Social de Venezuela (Bandes), in return for trading business that generated more than $60 million in commissions. 

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

“Benito Chinea and Joseph DeMeneses are the fifth and sixth defendants to plead guilty in connection with this far-reaching bribery scheme, which ranged from Wall Street to the streets of Caracas,” said Assistant Attorney General Caldwell.  “The guilty pleas and the forfeiture of assets once again demonstrate that the Department is committed to holding corporate executives who engage in foreign bribery individually accountable and to deny them the proceeds of their corruption.”

According to the allegations in the indictment and other documents previously filed in Manhattan federal court:

Benito Chinea, 48, of Manalapan, New Jersey, and Joseph De Meneses, 45, of Fairfield, Connecticut, working with others, arranged the bribe payments to Gonzalez in exchange for her directing Bandes’s financial trading business to the Broker-Dealer.  Previously, Gonzalez, along with two employees of the Broker-Dealer, Tomas Alberto Clarke Bethancourt (“Clarke”) and Jose Alejandro Hurtado (“Hurtado”), pleaded guilty for their involvement in this bribery scheme.  A managing director of the Broker-Dealer, Ernesto Lujan (“Lujan”), also pleaded guilty for his role in the scheme.

Background on the Broker-Dealer and Bandes

At all times relevant to the charges, Chinea was the chief executive officer and De Meneses was a managing director in the Broker-Dealer, which was headquartered in New York, New York, with offices in Miami, Florida.  In 2008, the Broker-Dealer established a group called the Global Markets Group, which included De Meneses, Lujan, and Clarke, and which offered fixed income trading services to institutional clients.  One of the Broker-Dealer’s clients was Bandes, which operated under the direction of the Venezuelan Ministry of Finance.  The Venezuelan government had a majority ownership interest in Bandes and provided it with substantial funding.  Gonzalez was an official at Bandes and oversaw the development bank’s overseas trading activity.  At her direction, Bandes conducted substantial trading through the Broker-Dealer.  Most of the trades executed by the Broker-Dealer on behalf of Bandes involved fixed income investments for which the Broker-Dealer charged Bandes a mark-up on purchases and a mark-down on sales. 

             The Bribery Scheme

As alleged in court documents, from late 2008 through 2012, Chinea and De Meneses, together with three Miami-based Broker-Dealer employees, Lujan, Clarke and Hurtado, participated in a bribery scheme in which Gonzalez directed trading business she controlled at Bandes to the Broker-Dealer, and in return, agents and employees of the Broker-Dealer split the revenue the Broker-Dealer generated from this trading business with Gonzalez.  During this time period, the Broker-Dealer generated over $60 million in commissions from trades with Bandes. 

In order to conceal their conduct, Chinea, De Meneses and their co-conspirators routed the payments to Gonzalez, frequently in six-figure amounts, through third-parties posing as “foreign finders” and into offshore bank accounts.  In several instances, Chinea personally signed checks worth millions of dollars that were made payable to one of these purported “foreign finders” and later deposited in a Swiss bank account.

As further alleged in court documents, as a result of the bribery scheme, Bandes quickly became the Broker-Dealer’s most profitable customer.  As the relationship continued, however, Gonzalez became increasingly unhappy about the untimeliness of the payments due her from the Broker-Dealer, and she threatened to suspend Bandes’s business.  In response, De Meneses and Clarke agreed to pay Gonzalez approximately $1.5 million from their personal funds.  Chinea and De Meneses agreed to use Broker-Dealer funds to reimburse De Meneses and Clarke for these bribe payments.  To conceal their true nature, Chinea and De Meneses agreed to hide these reimbursements in the Broker-Dealer’s books as sham loans from the Broker-Dealer to corporate entities associated with De Meneses and Clarke.

Chinea and De Meneses each pleaded guilty before U.S. District Judge Denise L. Cote of the Southern District of New York to one count of conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act.  Chinea and De Meneses have also agreed to pay $3,636,432 and $2,670,612 in forfeiture, respectively, which amounts represent their earnings from the bribery scheme.  Sentencing hearings are scheduled for March 27, 2015.

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

This case is being investigated by the FBI, and prosecuted Senior Deputy Chief James Koukios of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Harry A. Chernoff and Jason H. Cowley of the Southern District of New York.  Assistant U.S. Attorney Carolina Fornos of the Southern District of New York is responsible for the forfeiture aspects of the case.  The U.S. Securities and Exchange Commission also assisted with this investigation.

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

Avon Products Inc. and Avon Products (China) Co. Ltd. Will Pay More than $135 Million in Criminal and Regulatory Penalties

Avon Products (China) Co. Ltd. (Avon China), a wholly owned subsidiary of the New York-based cosmetics company, Avon Products Inc. (Avon), pleaded guilty today to conspiring to violate the accounting provisions of the Foreign Corrupt Practices Act (FCPA) to conceal more than $8 million in gifts, cash and non-business meals, travel and entertainment it gave to Chinese government officials in order to obtain and retain business benefits for Avon China.  Avon China and Avon admitted the improper accounting and payments and Avon entered into a deferred prosecution agreement to resolve the investigation.  In a proceeding today before United States District Judge George B. Daniels, the criminal Informations were filed against Avon and Avon China, and Avon China entered its guilty plea and was sentenced.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara of the Southern District of New York and Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office made the announcement.   

“Companies that cook their books to hide improper payments will face criminal penalties, as Avon China's guilty plea demonstrates,” said Assistant Attorney General Caldwell.  “Public companies that discover bribes paid to foreign officials, fail to stop them, and cover them up do so at their own peril.”

“For years in China it was ‘Avon calling,’ as Avon bestowed millions of dollars in gifts and other things on Chinese government officials in return for business benefits,” said U.S. Attorney Bharara.  “Avon China was in the door-to-door influence-peddling business, and for years its corporate parent, rather than putting an end to the practice, conspired to cover it up.  Avon has now agreed to adopt rigorous internal controls and to the appointment of a monitor to ensure that reforms are instituted and maintained.”

“When corporations knowingly engage in bribery in order to obtain and retain contracts, it disrupts the level playing field to which all businesses are entitled,” said FBI Assistant Director in Charge McCabe.  “Companies who attempt to advance their businesses through foreign bribery should be on notice.  The FBI, with our law enforcement partners, is continuing to push this unacceptable practice out of the business playbook by investigating companies who ignore the law.”

Avon China pleaded guilty to a criminal information filed today in the U.S. District Court for the Southern District of New York charging the company with conspiring to violate the books and records provisions of the FCPA.  Avon, the parent company, entered into a deferred prosecution agreement today and admitted its criminal conduct, including its role in the conspiracy and its failure to implement internal controls.  Pursuant to the deferred prosecution agreement, the department filed a criminal information charging Avon with conspiring to violate the books and records provisions of the FCPA and violating the internal controls provisions of the FCPA.  In total, the Avon entities will pay $67,648,000 in criminal penalties.  Avon also agreed to implement rigorous internal controls, cooperate fully with the department and retain a compliance monitor for at least 18 months. 

Avon settled a related FCPA matter with the U.S. Securities and Exchange Commission (SEC) today, and will pay an additional $67,365,013 in disgorgement and prejudgment interest, bringing the total amount of U.S. criminal and regulatory penalties paid by Avon and Avon China to $135,013,013.

According to court documents, from at least 2004 through 2008, Avon and Avon China conspired to falsify Avon’s books and records by falsely describing the nature and purpose of certain Avon China transactions.  Specifically, the companies sought to disguise over $8 million in gifts, cash and non-business travel, meals and entertainment that Avon China executives and employees gave to government officials in China in order to obtain and retain business benefits for Avon China.  Avon China attempted to disguise the payments and benefits through various means, including falsely describing the nature or purpose of, or participants associated with such expenses, and falsely recording payments to a third party intermediary as payments for legitimate consulting services.  

The companies also admitted that in late 2005 Avon learned that Avon China was routinely providing things of value to Chinese government officials and failing to properly document them.  Instead of ensuring the practice was halted, fixing the false books and records, disciplining the culpable individuals, and implementing appropriate controls to address this problem, the companies took steps to conceal the conduct, despite knowing that Avon China’s books and records, and ultimately Avon’s books and records, would continue to be inaccurate. 

Court filings acknowledge Avon’s cooperation with the department, including conducting an extensive internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, translating and organizing voluminous evidence.   

The case is being investigated by the FBI’s Washington Field Office, and prosecuted by Senior Trial Attorney Laura Perkins of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Sarah Paul of the Southern District of New York.  The Justice Department expresses its appreciation for the significant assistance provided by the SEC’s Division of Enforcement in this investigation.

A 131-count criminal indictment was unsealed today in Boston in connection with the 2012 nationwide fungal meningitis outbreak, the Justice Department announced.  Barry J. Cadden, owner and head pharmacist of New England Compounding Center (NECC) and NECC’s supervisory pharmacist Glenn A. Chin were charged with 25 acts of second-degree murder in Florida, Indiana, Maryland, Michigan, North Carolina, Tennessee and Virginia.   

The outbreak was caused by contaminated vials of preservative-free methylprednisolone acetate (MPA) manufactured by NECC, located in Framingham, Massachusetts.  The U.S. Centers for Disease Control and Prevention (CDC) reported that 751 patients in 20 states were diagnosed with a fungal infection after receiving injections of NECC’s MPA.  Of those 751 patients, the CDC reported that 64 patients in nine states died. 

Twelve other individuals, all associated with NECC, including six other pharmacists, the director of operations, the national sales director, an unlicensed pharmacy technician, two of NECC’s owners, and one other individual were charged with additional crimes including racketeering, mail fraud, conspiracy, contempt, structuring, and violations of the Food, Drug and Cosmetic Act.

“As alleged in the indictment, these employees knew they were producing their medication in an unsafe manner and in insanitary conditions, and authorized it to be shipped out anyway, with fatal results,” said Attorney General Eric Holder.  “With the indictment and these arrests, the Department of Justice is taking decisive action to hold these individuals accountable for their alleged participation in grievous wrongdoing.  Actions like the ones alleged in this case display not only a reckless disregard for health and safety regulations, but also an extreme and appalling indifference to human life.  American consumers have a right to know that their medications are safe to use, and this case proves that the Department of Justice will always stand resolute to ensure that right, to protect the American people, and to hold wrongdoers accountable to the fullest extent of the law.”

“Every patient receiving treatment deserves the peace of mind and knowledge that the medicine they are receiving is safe,” said Acting Associate Attorney General Stuart Delery.  “When people and companies violate that trust and break the law, the consequences to patients and their families can be catastrophic.  That’s why it remains a priority of the Department to use every tool at our disposal to protect patients’ safety and hold bad actors accountable.”

“Those who produce and sell the drugs that we take have a special responsibility to make sure that they prepare those drugs under suitable conditions, and that what leaves their facilities is safe,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “The indictment charges that the defendants’ conduct in this case was corrupt and carried out with a complete disregard to the public’s health.  The department‘s Consumer Protection Branch along with our law enforcement partners is steadfast in our commitment to use every criminal and civil tool at our disposal to hold accountable those who are willing to put our lives at risk in the reckless pursuit of their profits.”

“Ever since the outbreak occurred, we have been committed to bringing to justice the individuals responsible for the deaths and suffering of so many innocent victims,” said U.S. Attorney Carmen Ortiz for the District of Massachusetts.  “The indictment announced today is the first step in that process which addresses alleged criminal wrongdoing at NECC, a business that prioritized production and profit over safety.  We will make every effort to ensure that licensed pharmacists, and those working with them, are held to a standard of care that protects the public from unsafe and dangerous medications.” 

“Two years after the fungal meningitis outbreak, our hearts continue to go out to the victims of this tragedy and to their families,” said FDA Commissioner Margaret A. Hamburg M.D.  “Our work on behalf of all patients who want and deserve medicines that do not subject them to undue risk is far from done.  The FDA will continue to work aggressively on many fronts with the states, the Department of Justice, and others to protect the American public from unsafe compounded drug products.” 

“Threats to public health, as alleged in today's indictment, are a priority for the FBI,” said Assistant Director Joseph S. Campbell of the FBI’s Criminal Division.  “Together with our law enforcement and regulatory agency partners, we are determined to stop practices that jeopardize patients' health and violate the public trust.  These types of investigations are complex and resource intensive.  We greatly appreciate the efforts of our partners in this case and look forward to working with them to effectively identify criminal activities and combat fraudulent and abusive health practices in the future.”

The 14 individuals charged in the indictment are Barry J. Cadden, 48, of Wrentham, Massachusetts; Glenn A. Chin, 46, of Canton, Massachusetts; Gene Svirskiy, 33, of Ashland, Massachusetts; Christopher M. Leary, 30, of Shrewsbury, Massachusetts; Joseph M. Evanosky, 42, of Westford, Massachusetts; Scott M. Connolly, 42, of East Greenwich, Rhode Island; Sharon P. Carter, 50, of Hopkinton, Massachusetts; Alla V. Stepanets, 34, of Framingham, Massachusetts; Gregory A. Conigliaro, 49 of Southborough, Massachusetts; Robert A. Ronzio, 40, of North Providence, Rhode Island; Kathy Chin, 42, of Canton, Massachusetts; Michelle Thomas, 31 of Cumberland, Rhode Island; Carla Conigliaro, 51, of Dedham, Massachusetts and Douglas A. Conigliaro, 53, of Dedham, Massachusetts.  

The 25 second-degree murders are included in the indictment as predicate racketeering acts under the Racketeer Influenced and Corrupt Organizations Act (RICO).  These charges relate to patients who received NECC MPA and died in Florida, Indiana, Maryland, Michigan, North Carolina, Tennessee and Virginia. As a general matter, and depending on particular state law, second-degree murder does not require the government to prove Cadden and Chin had specific intent to kill the 25 patients, but rather that Cadden and Chin acted with extreme indifference to human life.  According to the indictment, Cadden and Chin knew that NECC was making MPA in a manner and in an environment in which they could not assure that the drug was sterile as it was identified to be.  Despite knowing that they were making the MPA in an unsafe manner and in insanitary conditions, Cadden and Chin nonetheless allegedly directed and authorized the shipping of MPA to NECC customers nationwide.  It is alleged that Cadden and Chin were aware that doctors would inject MPA into their patients’ bodies, and that if the MPA was not in fact sterile, it could kill them. 

The 25 murder racketeering acts comprise only a portion of the broad racketeering scheme charged in the indictment.  The indictment also alleges that NECC’s other pharmacists knowingly made and sold numerous drugs in a similar unsafe manner and in insanitary conditions.  The unsafe manner alleged in the indictment includes, among other things, the pharmacists’ failure to properly sterilize NECC’s drugs, failure to properly test NECC’s drugs for sterility, and failure to wait for test results before sending the drugs to customers.  The insanitary conditions alleged in the indictment include, among other things, NECC’s lack of proper cleaning and NECC’s failure to take any action when its own environmental monitoring repeatedly detected mold and bacteria within NECC’s clean room suite of rooms throughout 2012. 

It is further alleged that NECC repeatedly took steps to shield its operations from regulatory oversight by the FDA by claiming to be a pharmacy dispensing drugs pursuant to valid, patient-specific prescriptions.  In fact, NECC routinely dispensed drugs in bulk without valid prescriptions.  The indictment alleges that NECC even used fictional and celebrity names on fake prescriptions to dispense drugs. 

Finally, the indictment charges Carla Conigliaro, the majority shareholder of NECC, and her husband Douglas Conigliaro with transferring assets following the fungal meningitis outbreak.  Specifically, the indictment charges that after NECC declared bankruptcy, and the bankruptcy court ordered the shareholders not to transfer assets, Carla and Doug Conigliaro transferred approximately $33.3 million to eight different bank accounts opened after the NECC bankruptcy. 

Cadden and Chin face a maximum of up to life in prison if convicted on all counts. 

“Although no VA patients were affected by the fungal meningitis outbreak, VA unknowingly purchased a variety of pharmaceutical products over a three year period from NECC that were intentionally produced in an unsafe manner under insanitary conditions,” said Assistant Inspector General for Investigations James J. O’Neill for the Office of Inspector General, Department of Veterans Affairs.  “We are pleased to have contributed to this outstanding multi-agency criminal investigation.”

“Today's results are part of an ongoing effort by the Defense Criminal Investigative Service and its law enforcement partners to protect the integrity of the Department of Defense's health care program and the quality of care our service members receive,” said Deputy Inspector General for Investigations James B. Burch for the U.S. Department of Defense Office of the Inspector General.  “The Defense Criminal Investigative Service will continue to pursue allegations of health care fraud that put the Warfighter at risk.”

“The U.S. Postal Inspection Service is pleased to join our federal partners in this announcement” said Postal Inspector in Charge Shelly A. Binkowski of the Boston Division.  “What's particularly disturbing about this case is that through their alleged misrepresentation and greed, these defendants put the health and well-being of others at a high level of risk.  This criminal action today demonstrates the commitment and vigilance of postal inspectors and other federal agents to pursue criminals who prey on the public in such an egregious way.”

In announcing the indictment today, Attorney General Holder and U.S. Attorney Ortiz acknowledged the assistance and cooperation of Michigan State Attorney General Bill Schuette.  The state of Michigan had the most deaths during the outbreak.

The investigation was conducted by the FDA Office of Criminal Investigations and the FBI with assistance by the Defense Criminal Investigative Service, U.S. Department of Defense, Office of Inspector General; Department of Veterans Affairs Office of Inspector General and U.S. Postal Inspection Service. The case is being prosecuted by Assistant U.S. Attorneys George P. Varghese and Amanda P.M. Strachan of the Health Care Fraud Unit for the U.S. Attorney’s Office in the District of Massachusetts, and Trial Attorney John W.M. Claud of the Civil Division’s Consumer Protection Branch.

The details contained in the indictment are allegations.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

Victims with questions about today’s charges may call 1-888-221-6023 or email [email protected].

On Dec. 15, 2014, a Casper, Wyoming, man was sentenced to serve one year and one day in prison for tax fraud by U.S. District Court Judge Alan B. Johnson in the District of Wyoming.

Sonny Pilcher pleaded guilty on June 2, 2014, to one count of obstructing the administration of the internal revenue laws.  During his guilty plea hearing, Pilcher admitted that he claimed a false expense of $258,000 for a repaid business loan on his tax return for 2008, and, over several years, he paid his employees in cash to evade employment taxes.

At the sentencing hearing, the government’s evidence showed that Pilcher impeded the Internal Revenue Service (IRS) by destroying income records for his business, CC Cowboys, commingling money between bank accounts of separate businesses, and creating 242 fraudulent invoices totaling $3.9 million.  The evidence showed that in 2007 and 2008, Pilcher received approximately $750,000 from the fraudulent invoices, which was not reported on his income tax returns.  In a previous interview with the IRS special agent investigating the case, Pilcher admitted that he did not have a personal bank account and that he only ever used cash to pay for his living expenses.

Pilcher was also sentenced to one year of supervised release following his prison term and required to pay a $10,000 fine.

This case was investigated by special agents in the Cheyenne, Wyoming, office of IRS-Criminal Investigation and was prosecuted by Trial Attorneys Lori A. Hendrickson and Ignacio Perez de la Cruz of the Justice Department’s Tax Division.

 “I am delighted to welcome John Cruden back to the Department of Justice as Assistant Attorney General for the Environment and Natural Resources Division.

“John has already devoted more than two decades of his life and service to the department – enforcing our nation’s environmental laws; protecting our air, water, land, and wildlife; defending federal agencies; and honoring U.S. treaty rights and obligations to Native Americans.   From Exxon Valdez to Love Canal to the Deepwater Horizon oil spill, John Cruden has consistently demonstrated the tenacity, the leadership, and the strength of character that represents the very best that this Department of Justice has to offer.  He is uniquely qualified to lead this division’s efforts to meet the challenges posed by climate change, illegal wildlife trafficking, pollution, and natural resource management, among many other pressing issues.

“I also want to express my deep gratitude to Sam Hirsch and Bob Dreher, who have led ENRD with great distinction in a time of significant challenges.  Their stewardship has been invaluable to the division’s mission and people.  Their service has helped make the division one of the best places to work in the federal government.  And their outstanding leadership has been vital in advancing our efforts to protect the American people and our environment.”

 

Admits to Soliciting Sexual Favors in Exchange for Potential Lenient Treatment

A police officer employed by the City of Salem, Virginia, and assigned to a U.S. Drug Enforcement Administration (DEA) task force pleaded guilty today for soliciting and receiving sexual favors from a cooperating defendant in exchange for agreeing to recommend a favorable sentence to a federal prosecutor on the defendant’s behalf. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Special Agent in Charge Adam S. Lee of the FBI’s Richmond Division and Special Agent in Charge Michael Tompkins of the  Department of Justice Office of the Inspector General’s Washington Field Office made the announcement. 

“Kevin Moore took a solemn oath to protect and serve the public, but then abused the authority of his badge by sexually exploiting a federal witness,” said Assistant Attorney General Caldwell.  “When Moore crossed the line from enforcing the law to breaking it, his actions cast an unfortunate shadow over the selfless and courageous work of his fellow officers.  Working with our law enforcement partners, the Department of Justice will expose and prosecute all such abuses of authority, in order to restore and maintain the public’s trust.”

“Cases involving corruption of law enforcement officials are among the FBI’s highest priority criminal investigations.  The public should expect integrity from those sworn to uphold the law.  Mr. Moore’s breach of his sworn duty in this case is particularly pernicious as he exploited his victims in the most personal way. The Richmond Division of the FBI continues to have confidence in the City of Salem Police Department.  We value our partnership with the Department and the proud men and women who serve their community with distinction everyday,” said Special Agent in Charge Lee.

“The OIG will aggressively investigate with its law enforcement partners allegations of misconduct among Department employees, contractors, and deputized task force officers to help ensure the Department of Justice performs its critical work with integrity,” said Special Agent in Charge Tompkins.

Kevin C. Moore, 42, of Roanoke, Virginia, was a Salem Police Department officer and was assigned to the DEA task force in Roanoke, Virginia.  According to his plea agreement and accompanying statement of facts, between June and September 2014,  Moore informed a female cooperating defendant that he was in a position to help her with her pending federal methamphetamine trafficking case.  In August 2014, for example, in a series of text messages with the cooperating defendant, Moore made clear that he could recommend a favorable sentence to the prosecutor on the cooperating defendant’s behalf in exchange for sexual favors.  Moore then convinced the cooperating defendant to go for a ride in his official vehicle where she performed a sexual act with Moore.

As part of his guilty plea, Moore admitted to engaging in similar conduct with two other female cooperating witnesses in federal drug investigations dating back to 2009.  According to the statement of facts, Moore falsely informed these witnesses that he had convinced federal prosecutors not to charge them with federal criminal offenses that would carry significant prison sentences.  Moore then solicited and received sexual favors from the witnesses in exchange for his purported assistance.

Moore pleaded guilty to a one-count information charging him with bribery before Chief U.S. District Judge Glen E. Conrad of the Western District of Virginia.  In cooperation with the City of Salem Police Department and DEA, Moore was arrested on Oct. 10, 2014, without incident, after being charged by complaint, and was suspended from the police department and DEA task force the same day.  His sentencing is scheduled for February 9, 2015.

This case was investigated by the FBI and the  Department of Justice Office of the Inspector General, and is being prosecuted by Trial Attorneys Charles R. Walsh and Robert J. Heberle of the Criminal Division’s Public Integrity Section.

U.S. District Court Judge Susan Richard Nelson sentenced Tieu Tran, 59, of Mankato, Minn., to serve one year and one day in prison followed by 1 year supervised probation upon release, the Justice Department announced today.  Tran pleaded guilty to one count of forced labor trafficking on March 25, 2014.  Tran is the former owner and manager of Nails By Jordan, a nail salon located in Mankato.

According to evidence presented in court proceedings and documents, in 2008, Tran recruited a woman from Vietnam to travel to the United States using false promises of legal immigration status and a high-paying job.  In reality, Tran smuggled the victim and two other Vietnamese nationals across the southern U.S.-Mexico border, imposed a significant debt upon her, and forced her to pay down the smuggling debt by working at Tran’s son’s Vietnamese restaurant, Pho Saigon, in Mankato. 

Tran admitted to compelling the victim to work long hours without paying her as promised, using a scheme, plan and pattern of coercion, including manipulation of debts, isolation, and intimidation that held the victim in fear, knowing that the victim was without legal status and money, did not speak English, feared losing her family home in Vietnam to creditors, and had nowhere else to turn for subsistence.

“This defendant callously preyed on the victim’s vulnerabilities and exploited her labor through intimidation, debts, and isolation,” said Deputy Assistant Attorney General Mark Kappelhoff for the Civil Rights Division.  “Human trafficking is an affront to human rights and to our nation’s core values, and the Justice Department is committed to vindicating the rights of the victims and to bringing human traffickers to justice.”

“Prosecuting human traffickers is a priority of this Office,” said U.S. Attorney Andrew M. Luger for the District of Minnesota.  “Tieu Tran smuggled this victim into the United States who she forced to work long hours in her nail salon by isolating and intimidating her. This kind of abuse simply is unjust.  I am proud to work with the Department of Justice and Federal Bureau of Investigation to end human trafficking in Minnesota.”

“The FBI remains committed to ensuring that innocent persons are not exploited by human traffickers,” said Special Agent in Charge Richard T. Thornton for the FBI Minneapolis Division.  “There will be no safe harbor granted to those who prey upon vulnerable people.  Those who exploit other human beings will continue to be high priority targets for the FBI.”

As part of her plea agreement, Tran agreed to nullify all debts imposed upon the victim, and upon seven other individuals.  The Court further ordered that Tran pay 51,844 in restitution to the victim.

This case was investigated by the FBI and is being prosecuted by Trial Attorney William Nolan of the Civil Rights Division’s Human Trafficking Prosecution Unit and Assistant U.S. Attorney David Steinkamp of the U.S. Attorney’s Office for the District of Minnesota.

City of St. Anthony Village Agrees to Allow Abu Huraira Islamic Center a Permit to Worship in St. Anthony Business Center

Acting Assistant Attorney General for Civil Rights Vanita Gupta and U.S. Attorney for the District of Minnesota Andrew M. Luger today announced a settlement agreement in principle between the Department of Justice and the City of St. Anthony Village, Minnesota, resolving allegations that the city violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA).  In June 2012, the City of St. Anthony Village denied Abu-Huraira Islamic Center’s application for a conditional use permit (CUP) to use the basement of the St. Anthony Business Center for religious assembly.  The agreement, which must still be approved by the Saint Anthony City Council and a federal district judge in Minneapolis, will resolve the lawsuit filed in August, 2014 by the United States against the City of St. Anthony Village.

“The Department of Justice will remain vigilant to ensure that the freedom to worship is a reality for all," said Acting Assistant Attorney General Vanita Gupta.  “We are pleased that the city worked with us to ensure that the rights of this congregation and others will be protected.”

“Four months ago, my office filed a civil rights lawsuit to protect the religious freedoms of the congregants of the Abu-Huraira Islamic Center,” said U.S. Attorney Luger.  “We made it clear then that an injustice had been done to these Somali Minnesotans.  After lengthy negotiations involving attorneys from my office and the Department of Justice, St. Anthony Village, and Abu-Huraira, we have reached a resolution that respects the Constitution and provides the worship space that Abu-Huraira sought.  This agreement would not have been possible without the guiding hand of Magistrate Judge Jeffrey J. Keyes, whose wisdom and hard work brought us to this resolution.  Today we all join together to announce with great pride that the Abu-Huraira Islamic Center has a new home in St. Anthony Village.”

The city has agreed, in principle, to create a Planned Use Development (PUD) at the property in question.  The PUD will allow Abu-Huraira to use the St. Anthony Business Center for religious worship.  The agreed upon language also stipulates that the city of St. Anthony Village will not treat Abu-Huraira or any other religious groups in a discriminatory manner by application of its zoning laws.  The agreement also indicates that elected leaders, managers, and certain city employees will participate in educational training about requirements of RLUIPA.  The city of St. Anthony Village will also make RLUIPA information available to the public through its website and will report periodically to the Justice Department.

On Aug. 27, 2014, the United States filed a lawsuit to enforce Abu-Huraira Islamic Center’s constitutional rights under RLUIPA and require the city of St. Anthony Village to allow Abu-Huraira’s religious assembly.  The United States’ complaint alleged that denial of the permit imposed a substantial burden on Abu-Huraira’s exercise of religious worship.  Moreover, the denial unlawfully disfavored a religious use, because the light industrial district where Abu-Huraira’s building is located allowed other, non-religious assemblies.

The United States specifically alleged that the denial of the conditional use permit substantially burdened members of Abu-Huraira in practicing their faith. Abu-Huraira members’ ability to exercise their religion was limited by their worship site options, including, but not limited to, the fact that  members in the northern Twin Cities were burdened from praying together based on the length of time to travel to worship centers in south Minneapolis.  Moreover, prayer space at locations in south Minneapolis were too small to accommodate members, many of whom often prayed in hallways or entryways, and prayer sessions were held in shifts to accommodate crowds.

After conducting a search for adequate prayer space lasting nearly three years, Abu-Huraira entered into a purchase agreement for the St. Anthony Business Center.  Abu-Huraira chose the property because it is centrally located, has a basement measuring approximately 11,600 square feet and has ample parking for its congregation.  The business center is in St. Anthony’s “light industrial” district, which permitted conditional uses for “assemblies, meeting lodges, and convention halls” at that time.

In February 2012, after consulting St. Anthony Village officials, Abu-Huraira applied for a CUP for assembly.  The permit was denied on June 12, 2012, by a St. Anthony Village City Council vote of 4-1.

Attorneys from the Civil Rights Division of the United States Department of Justice and Assistant United States Attorneys for the District of Minnesota, Bahram Samie, Ana Voss, and Gregory Brooker, represented the United States in this matter.

RLUIPA, enacted in 2000, contains multiple provisions prohibiting religious discrimination and protecting against unjustified burdens on religion exercise.  Persons who believe that they been subjected to religious discrimination in land use or zoning may contact the Housing and Civil Enforcement Section of the Justice Department’s Civil Rights Division at 1-800-896-7743.  More information about RLUIPA, including a report on the first ten years of its enforcement, may be found at http://www.justice.gov/crt/about/hce/rluipaexplain.php.  

An Italian shipping firm based in Genoa, Italy, pleaded guilty to violating the Act to Prevent Pollution from Ships by falsifying required ships’ documents to hide the fact that the ship had illegally discharged oil contaminated waste into the ocean on multiple occasions, announced the Department of Justice Environment and Natural Resources Division, the U.S. Attorney’s Office for the Middle District of Florida, and the U.S. Coast Guard.

Carbofin S.PA. (Carbofin) agreed to plead guilty to three counts of violating the Act to Prevent Pollution from Ships related to the deliberate concealment of vessel pollution from its ship, the M/T Marigola, which called on Tampa on three occasions in 2013 and 2014 with a falsified oil record book.  Under the terms of its plea agreement, Carbofin agreed to pay a $2.75 million criminal penalty, $600,000 of which will be designated as community service and used to support the protection and preservation of natural resources located in and adjacent to the Florida National Keys Marine Sanctuary.

Alessandro Messore, who served as the second engineer aboard the M/T Marigola, pleaded guilty to one count of violating the Act to Prevent Pollution from Ships for his role in the offense.  A second officer, Carmelo Giano, who served as the ship’s chief engineer and was the person responsible for maintaining the ship’s oil record book, is expected to enter a plea to one count of violating the Act to Prevent Pollution from Ships on Friday.

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

Carbofin owns and operates a fleet of commercial liquefied gas vessels, including the M/T Marigola. The investigation began on April 16, 2014, when the vessel called on the Port of Tampa to unload its cargo.  U.S. Coast Guard inspectors boarded the ship to conduct a Port State Control examination.  During that examination, two crewmembers approached the inspectors and provided them with a cell phone video that showed a black hose connected between two points in the engine room.  After reviewing the video and speaking with the crewmembers, the inspectors were able to determine that the hose, known in the maritime industry as a “magic hose,” had been used on multiple occasions to discharge sludge, waste oil, and machinery space bilge water directly into the sea, bypassing the ship’s required pollution prevention equipment.  Crewmembers told the inspectors that Giano has directed them on at least two occasions to discharge sludge, waste oil, and bilge water directly into the sea, while in international waters.  Even though required to be, none of the magic hose discharges were recorded as required in the ship’s official oil record book maintained by Giano, thereby giving the false and misleading impression that all of the ship’s sludge, waste oil and machinery space bilge water were being properly treated and disposed of.  The investigation also revealed that Messore, at the direction of Giano, had on several occasions ordered the ship’s engineering cadet to hook up the magic hose and then personally discharged discharge sludge, waste oil, and machinery space bilge water directly into the sea, under the cover of darkness, while the vessel was in international waters.

On ships like the M/T Marigola oily engine room waste known as sludge, waste oil, and bilge water are generated on a regular basis.  Sludge is the by-product of the purification of the vessel’s lubrication and fuel oils that are used in electrical generation machinery and the main propulsion engine.  Waste oil is the result of oil leakages from various machinery as well as from replacing lubrication oils in the machinery.  Bilge water refers to the accumulation in the bilge, which is the bottom-most portion of the engine room, of oil and water that drips and leaks from the machinery.  Sludge and waste oil can only be legally disposed of in two ways: (1) incineration in the vessel’s onboard incinerator; or (2) disposal to a barge or other shore-based disposal facility.  Bilge water can also be disposed of in only two ways: (1) process through the onboard oil water separator and oil content meter resulting in an overboard discharge of water with no more than 15 parts per million (“ppm”) of oil, or (2) disposal to a barge or other shore-based disposal facility.  Bilge water is transferred to, and stored in, the vessel’s bilge water holding tank.  All disposals and transfers of sludge, waste oil, or bilge water, whether through incineration, use of the oil water separator, or transfer to a shore-based facility, must be recorded by the person or persons in charge of those operations in the vessel’s oil record book.  On the M/T Marigola, chief engineer Giano maintained the oil record book and recorded all entries therein.

The case was investigated by the Coast Guard Investigative Service.  The case was prosecuted by the U.S. Attorney’s Office for the Middle District of Florida and the Environmental Crimes Section of the U.S. Department of Justice.

An Iowa man was sentenced to 20 years in prison today in the District of Massachusetts for enticing a 10-year-old girl to engage in sexually explicit conduct online, which he directed and watched live via a webcam.

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 Inspector in Charge Shelly Binkowski of the U.S. Postal Inspection Service (USPIS) made the announcement after sentencing by U.S. District Court Chief Judge Patti B. Saris of the District of Massachusetts.

Joshua Dunfee, 32, of Oxford Junction, Iowa, pleaded guilty in March 2014 to enticing a child to engage in illicit sexual activity and using a child to produce child pornography. 

According to admissions in connection with his guilty plea, Dunfee posed as “John” from “Hunt Photography” on Facebook and communicated with a Massachusetts mother who was seeking employment as a model.  In October 2011, Dunfee contacted the mother and told her that Hunt Photography had a client willing to pay $20,000 for a mother-daughter bikini modeling contract.  Dunfee told the mother that in order to apply she would need to audition her daughter for him immediately, and persuaded the mother to take her 10 year-old daughter out of school. 

Dunfee further admitted that he directed the mother to “audition” her daughter via webcam in a 48-minute video call.  Knowing that she was a minor, Dunfee directed that the 10 year-old girl be posed in a bra and underwear and then completely naked. 

On Nov. 3, 2011, federal agents executed a search warrant at Dunfee’s residence, where law enforcement had traced the illicit conduct via IP address records.  A forensic examination of Dunfee’s computers revealed his use of Facebook, Skype and Windows Live Messenger Chat to communicate online while posing as Hunt Photography. 

The case was investigated by the USPIS, the Jones County Iowa Sheriff’s Office, the Massachusetts State Police, the Attleboro Police Department and the Justice Department’s High Technology Investigative Unit.  Substantial assistance was provided by the U.S. Attorney’s Office for the District of Iowa. 

The case is being prosecuted by Trial Attorney Herbrina Sanders of the Justice Department’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Stacy Dawson Belf of the District of Massachusetts.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice.  Led by U.S. Attorneys’ offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

A former employee of a U.S. contractor was indicted today in the Eastern District of Texas for allegedly soliciting and accepting bribes in exchange for his influence in awarding U.S. government-funded contracts in Afghanistan, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney John Malcolm Bales of the Eastern District of Texas.

George E. Green, 57, of Carrollton, Texas, was charged with conspiracy to structure financial transactions to avoid currency transaction reporting requirements, wire fraud and receipt of bribes in connection with a program receiving federal funds.

According to the indictment, Green was the former director of contracts, procurement and grants for International Relief and Development Inc. (IRD), and was part of a cooperative agreement between IRD and the U.S. Agency for International Development (USAID) that sought to promote long-term agricultural development in specific areas in Afghanistan. 

The indictment alleges that while working for IRD in Afghanistan, Green solicited and received bribes totaling $66,000 from a representative of an Afghan firm that contracted with IRD.  Some of those bribe payments were allegedly wired directly to an Italian automobile dealer for Green’s benefit.  After returning to Texas, Green allegedly attempted to conceal the bribe proceeds by engaging in a conspiracy to structure cash deposits into his bank and credit card accounts to avoid mandatory cash reporting requirements.  Additionally, even after leaving IRD, Green allegedly continued to solicit bribes from the Afghan firm by falsely claiming that he still had the ability to influence the contracting process. 

The charges and allegations contained in the indictment are merely accusations and the defendant is presumed innocent unless and until proven guilty.

This case is being investigated by the Office of Special Inspector General for Afghanistan Reconstruction (SIGAR), FBI and USAID Office of Inspector General.  The case is being prosecuted by Trial Attorney Mark H. Dubester on detail to the Criminal Division’s Fraud Section from SIGAR and Assistant U.S. Attorney Kevin McClendon of the Eastern District of Texas. 

An Eritrean national, who is also a citizen of the United Kingdom, was sentenced today to three years in prison for smuggling up to 99 undocumented migrants from Eritrea and Ethiopia into the United States.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Ronald C. Machen Jr. of the District of Columbia, and Special Agent in Charge Clark E. Settles of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations’ (ICE-HSI) Washington, D.C., Field Office made the announcement.  U.S. District Judge Reggie B. Walton of the District of Columbia imposed the sentence.

Habtom Merhay, 47, of the United Kingdom, pleaded guilty to human smuggling charges on Sept. 24, 2014.  He was originally arrested by Moroccan authorities in August 2013 and extradited to the United States on April 25, 2014.  He has been in custody since his arrest.

In his plea agreement, Merhay admitted that from May 2009 to September 2010, he operated a human smuggling scheme from his residence in Dubai.  In exchange for fees of up to $14,000, he smuggled undocumented African migrants into the United States by purchasing airline tickets for their travel to South and Central America, and then coordinating with a global network of smugglers to facilitate the migrants’ travel into the United States.

The investigation was pursued under the Extraterritorial Criminal Travel Strike Force (ECT) program, a joint partnership between the Justice Department’s Criminal Division and HSI.  The ECT program focuses on human smuggling networks that may present particular national security or public safety risks or present grave humanitarian concerns.  ECT has dedicated investigative, intelligence and prosecutorial resources.  ECT coordinates with and receives assistance from other U.S. government agencies and foreign law enforcement authorities.

The investigation was led by HSI’s Washington, D.C., Field Office with the support of the Human Smuggling Trafficking Center and the U.S. Customs and Border Protection’s National Targeting Center.  The case was prosecuted by Trial Attorney Jay Bauer of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Frederick Yette of the District of Columbia.  The extradition was handled by Trial Attorney Dan E. Stigall of the Criminal Division’s Office of International Affairs.

The Department of Justice and HSI expressed their appreciation for the significant assistance provided by the Moroccan Ministry of Justice.

            ALICIA A.G. LIMTIACO, U.S. Attorney for the Districts of Guam and the Northern Mariana Islands (NMI) was invited to speak on December 6, 2014. at the University of Guam’s LW390 Class Production regarding Human Trafficking.  The LW390 class is the Human Trafficking Conference course that is taken alongside PA390, which is the Special Topics:  Human Trafficking class.  The conference class is meant give students an experience in presenting in a formal conference setting, as well as to display what they have learned in class.  The PA390 course teaches students about Human Trafficking.  There were approximately 100 students, professors, and government officers and officials in attendance at the forum.

            U.S. Attorney Limtiaco spoke on the topic of “Human Trafficking Red Flags” and  “Preventing Human Trafficking in the Pacific Region,” and shared information on the Pacific Regional Response to Combat Human Trafficking Initiative (the “Initiative”), which is a collaborative effort among the U.S. Attorney’s Office for the Districts of Guam and the NMI, the National District Attorneys Association, the Department of State, the Department of the Interior, the Guam Human Trafficking Task Force, the NMI Human Trafficking Intervention Coalition, and other community partners. U.S. Attorney Limtiaco also discussed the intersection and relationship between human trafficking, sexual assault, child abuse and domestic and family violence, and prevention and enforcement efforts in the Pacific region.

            The Initiative employs a multidisciplinary model, including participation, coordination, and collaboration among law enforcement, prosecution, victim service providers, social services, medical, mental and public health professionals, faith based organizations, educational institutions, Consulates, and other community stakeholders.  The Initiative calls for the establishment and provision of victim services, investigation and prosecution of human trafficking, training opportunities, community outreach/ public awareness and prevention programs, and creation of human trafficking task forces and coalitions in the Pacific region island communities.  The Initiatives also provides fundamental training in human trafficking, including victimization, investigation and prosecution, prevention efforts, and other related topics to law enforcement, prosecution, victim service providers, social services, medical, mental and public health professionals, faith based organizations, educational institutions, Consulates, and other community stakeholders in our Pacific region island communities, which is critical to effective prevention and enforcement efforts in the region.

 

Front Row: Dr. John Rivera, Dean Annette Santos, Lt. Gov. Ray Tenorio, U.S. Attorney Limtiaco, Shirley Chu, Diana Reyes, Marlene Leon Guerrero, Natasha Taitague, and James Chin.  Back row:  Dr. Terry Donaldson, Dr. Ron McNinch, Dr. Ansito Walter and FBI SSRA Bill Corbett

 

   
U.S. Attorney Alicia Limtiaco addressing UOG Students and other attendees.

 

U.S. Attorney Alicia Limtiaco addressing UOG Students and other attendees.
 

 

 

 

The Justice Department’s Civil Rights Division issued non-discrimination principles today to guide federal, state and local governments’ response to the Ebola virus.  The division also issued guidance for protecting civil rights while responding to the Ebola virus and a reference guide on what legal protections may apply.

As the global response to the Ebola virus continues, it is important to remain vigilant in ensuring that the civil rights of all people are respected.  Both science and the law must lead our efforts to ensure that unfounded fear and/or prejudice do not limit access to housing, education, benefits, services, and employment on account of race, color, national origin, citizenship status, disability or any other protected status.  In addition, access to accurate health information is critical to providing all people with the ability to make informed decisions about whether or how the virus might affect them, their families and the community at large.

The non-discrimination principles are:

1. Ensure that there is no bullying, harassment or other unlawful discrimination directed at people who are or are perceived to be from an African country, of African descent or against people who have the Ebola virus or are perceived as having the virus.  As in all emergencies, the Ebola virus may affect people of different races, ethnicities, nationalities, immigration statuses and disability statuses.  Harassment and other forms of unlawful discrimination are not only illegal, but may discourage affected persons from coming forward to seek treatment or information.  In considering whether there is any significant risk of a person being infected with Ebola, it is essential to determine whether the individual has been in direct contact with the bodily fluids of someone who has exhibited Ebola symptoms within the past 21 days.  Policies that are overbroad or that are motivated by fear rather than facts may lead to unlawful discrimination.  The United States will vigorously enforce laws prohibiting discrimination and unlawful harassment.

2. Provide information in languages other than English.  Timely and accurate dissemination of public information is crucial for a successful response to any threat to public health.  Large numbers of people do not read or understand English.  Yet it is important for all members of the community to have access to pertinent public information, including information on how Ebola is contracted and the symptoms of Ebola.  Messages directed at the residents in states and localities should be provided in the languages spoken by people with limited English proficiency in those areas, and should be written as clearly as possible.  More information about ensuring language access can be found at www.lep.gov.  Multi-lingual brochures on language access rights can be found at http://www.lep.gov/dojbrochures.html.

3. Provide access to information and services to people with disabilities.  Many traditional notification methods are not accessible to or usable by people with disabilities.  For instance, individuals who are deaf or hard of hearing cannot hear radio, sirens or other aural alerts.  Individuals who are blind or have impaired vision cannot read standard printed materials.  Individuals with cognitive disabilities may not understand complex language.  Health care providers and other involved entities must reach out to individuals with disabilities in formats that are accessible to them.  For more information on access for individuals with disabilities, please see www.ADA.gov.

The Civil Rights Division of the U.S. Department of Justice, together with other agencies throughout the federal government, will continue to monitor all civil rights issues related to Ebola.  The division will continue to work with our federal agencies to ensure that civil rights protections are integrated into emergency planning and response efforts.

A Southern California physician was sentenced to 22 months in federal prison today for his role in a conspiracy to commit Medicare fraud.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Los Angeles Region and Assistant Director in Charge Bill Lewis of the FBI’s Los Angeles Field Office made the announcement.

Dr. Jason C. Ling, 43, of Spring Valley, California, pleaded guilty in June 2014, to conspiracy to commit health care fraud.  According to his plea agreement, between March and November 2010, Dr. Ling conspired with others to defraud the Medicare program by writing medically unnecessary prescriptions for expensive power wheelchairs and other durable medical equipment (DME).  Dr. Ling obtained patients for his Spring Valley medical clinic from a street-level recruiter, or “marketer,” who referred Medicare beneficiaries for medically unnecessary DME prescriptions.  Dr. Ling’s prescriptions were provided to owners of DME companies, including Eucharia Okeke, who used the fraudulent prescriptions to submit approximately $496,794 in false claims to Medicare. 

In addition to the prison term, U.S. District Judge George H. Wu of the Central District of California ordered Dr. Ling to pay $311,145 in restitution to the Medicare program.

Eucharia Okeke, pleaded guilty for her role in the conspiracy on Aug. 25, 2014.  Her sentencing hearing is scheduled for Feb. 26, 2015.

The case was investigated by the FBI and the Los Angeles Region of HHS-OIG.  The case was prosecuted by Trial Attorney Alexander F. Porter of the Criminal Division’s Fraud Section. 

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 2,000 defendants who have collectively billed the Medicare program for more than $6 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

Tax Return Preparers Allegedly Claimed False Deductions and Credits on Tax Returns

The Justice Department announced today that it has asked a federal court in California to permanently bar Vida Farley and AJV Bookkeeping Inc. from preparing tax returns for others. 

According to the complaint, the government alleges that, for the past several years, the defendants engaged in a pattern of claiming false education credits and false or grossly inflated Schedule A deductions for charitable contributions, unreimbursed employee business expenses and other expenses on behalf of their customers.

According to the suit, which was filed in the U.S. District Court for the Eastern District of California, Farley has been a tax return preparer for more than 20 years and since 2008, has operated a tax return preparation business through AJV Bookkeeping Inc.  The defendants’ practices of claiming false deductions and education credits have resulted in significant lost tax revenues as they understate tax liabilities and claim improper refunds, according to the suit.

Specifically, the suit alleges that the Internal Revenue Service (IRS) examined more than 200 returns the defendants prepared between 2010 and 2014, and that more than 96 percent of these returns have resulted in adjustments to tax, with the proposed deficiencies averaging roughly $4,000 per return.  The complaint alleges that the defendants prepared more than 17,000 returns between 2010 and 2014.

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2014.  The IRS has some tips on their website for choosing a tax preparer.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department website.  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.