District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Texas Oil Company to Pay $1.6 Million Civil Penalty in Settlement of Alleged Oil Spill and Spill Prevention ViolationsRead the Press Release
Superior Crude Gathering Inc. (Superior Crude) has agreed to pay a civil penalty for alleged violations of the Clean Water Act stemming from a 2010 crude oil spill from tanks at Superior’s oil storage facility in Ingleside, Texas, the Department of Justice and the Environmental Protection Agency (EPA) announced today. Under the consent decree lodged today in federal court, Superior will pay $1.61 million to resolve the government’s claims.
The United States’ complaint, which was also filed today in the U.S. District Court for the Southern District of Texas, alleges that Superior discharged at least 2,200 barrels (or 92,400 gallons) of crude oil in violation of Section 311 of the Clean Water Act. The oil discharged from two tanks at the facility on Feb. 9 and 10, 2010, and crude oil flowed into an unnamed lake and wetlands near the Intracoastal Waterway and Redfish Bay. The complaint also includes related violations of the Clean Water Act’s spill prevention, control, and countermeasure regulations and spill response plan regulations.
The $1.61 million penalty is in addition to the costs incurred by Superior Crude to respond to the oil spill and to repair the tanks and containment areas. Superior Crude has ceased operations at the facility, which is located within the former Falcon Refinery.
“Operators have a responsibility to prevent oil spills and protect the public and the environment through vigilance and preparation,” said Acting Assistant Attorney General Sam Hirsch for the Justice Department’s Environment and Natural Resources Division. “This settlement underscores the consequences of failing to meet that responsibility.”
“Water resources are precious, especially in Texas,” said EPA Regional Administrator Ron Curry. “We rely on businesses to be effective partners in protecting these resources, and to take responsibility when their operations harm the environment.”
The Clean Water Act makes it unlawful to discharge oil or hazardous substances into or upon the navigable waters of the United States or adjoining shorelines in quantities that may be harmful to the environment or public health. The penalty paid for this spill will be deposited in the federal Oil Spill Liability Trust Fund managed by the National Pollution Fund Center. The Oil Spill Liability Trust Fund is used to pay for federal response activities and to compensate for damages when there is a discharge or substantial threat of discharge of oil or hazardous substances to waters of the United States or adjoining shorelines.
The proposed consent decree, lodged in the Southern District of Texas, is subject to a 30-day public comment period and court review and approval. A copy of the consent decree is available on the Department of Justice website.
Texas Electronics Business Sentenced for Violating Cash Reporting RequirementRead the Press Release
A Texas electronics business was ordered today to forfeit more than $1.3 million for failing to report that amount in cash transactions to the IRS, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.
D-Tronics, a McAllen, Texas, electronics business, was sentenced today by U.S. District Judge Micaela Alvarez of the Southern District of Texas for failing to file an IRS Form 8300 corresponding to a cash transaction of more than $10,000. In addition, in accordance with its plea agreement, D-Tronics will forfeit more than $1.350 million, which represents the amount of unreported currency. The forfeiture is among the highest against a trade or business for violating the Form 8300 filing requirement. A Form 8300 filing is required to be filed when anyone engaged in trade or business receives more than $10,000 in U.S. currency in one or two or more related sales transactions.
In addition, Pedro Diaz, 45, the owner of D-Tronics, was sentenced to one year of probation for failing to supply information concerning foreign bank accounts in which he had an interest. Both Diaz and D-Tronics entered guilty pleas in July 2014.
The case was investigated by the Internal Revenue Service – Criminal Investigation and prosecuted by Trial Attorney Keith Liddle in the Money Laundering and Bank Integrity Unit of the Criminal Division’s Asset Forfeiture and Money Laundering Section.
North Florida Shipyards to Pay $1 Million to Resolve False Claims AllegationsRead the Press Release
North Florida Shipyards and its president, Matt Self, will pay the United States $1 million to resolve allegations that they violated the False Claims Act by creating a front company, Ind-Mar Services Inc., in order to be awarded Coast Guard contracts that were designated for Service Disabled Veteran Owned Small Businesses (SDVOSBs), the Justice Department announced today. North Florida Shipyards has facilities in Jacksonville, Florida.
“Those who expect to do business with the government must do so fairly and honestly,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “We will not tolerate contractors who seek to profit at the expense of our veterans and taxpayers.”
To qualify as a SDVOSB on Coast Guard ship repair contracts, a company must be operated and managed by service disabled veterans and must perform at least 51 percent of the labor. The government alleged that North Florida created Ind-Mar merely as a contracting vehicle and that North Florida performed all the work and received all the profits. The government further alleged that if the Coast Guard and the Small Business Administration (SBA) had known that Ind-Mar was nothing but a front company, the Coast Guard would not have awarded it contracts to repair five ships.
In December 2013, the SBA suspended North Florida, Matt Self, Ind-Mar and three others from all government contracting. In April 2014, North Florida and Matt Self entered into an administrative agreement with the SBA in which they admitted to having created and operated Ind-Mar in violation of its Coast Guard contracts and SBA statutes and regulations.
“Special programs to assist service disabled veterans are an important part of the SBA’s business development initiative,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida. “False claims such as this undermine the integrity of this vital program and, where found, will be vigorously pursued by our Office.”
“This settlement sends a strong message to those driven by greed to fraudulently obtain access to contracting opportunities set-aside for deserving small businesses owned and operated by service disabled veterans,” said Inspector General Peggy E. Gustafson for the SBA. “We are committed to helping ensure that only eligible service disabled veteran owned small businesses benefit from that SBA program.”
The settlement resolves allegations originally filed in a lawsuit by Robert Hallstein and Earle Yerger under the qui tam, or whistleblower provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The act also allows the government to intervene and take over the action, as it did in this case. Hallstein and Yerger will receive $180,000.
The investigation was a coordinated effort by the Civil Division, the U.S. Attorney’s Office for the Middle District of Florida, the Department of Homeland Security’s-Office of Inspector General and the SBA Office of Inspector General.
The claims resolved by the settlement are allegations only, except to the extent that North Florida and Matt Self have admitted to the conduct in their agreement with the SBA.
The case is captioned United States ex rel. Yerger, et al, v. North Florida Shipyards, et al., Case No. 3:11-cv-464J-32 MCR (M.D. Fla.).
MS-13 Gang Member Sentenced to Life in Prison for Murder and Attempted MurderRead the Press Release
A member of the MS-13 gang has been sentenced to life in prison for his role in a gang-related murder and the attempted murder of two rival gang members in the Atlanta metropolitan area.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia, Special Agent in Charge Brock D. Nicholson of Immigration and Customs Enforcement’s Homeland Security Investigations’ (ICE HSI) Atlanta Office and Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office made the announcement.
Remberto Argueta, aka Pitufo, 27, of Lilburn, Georgia was sentenced to life in prison in the Northern District of Georgia. Argueta was convicted of related charges on Nov. 22, 2013, following a three-week jury trial, of RICO conspiracy, violent crime in aid of racketeering and using a firearm to commit a crime of violence in connection with the murder of a suspected drug dealer and attempted murder of two rival gang members. Twenty-two additional defendants have been convicted of related charges as part of this case.
“Nearly two dozen MS-13 members have been convicted as a part of this investigation, wiping out the leaders and top members of an international street gang that spread violence and fear throughout the Atlanta area,” said Assistant Attorney General Caldwell. “Sentences like the one handed down today help us to put MS-13 out of business in Atlanta and throughout the United States.”
“Argueta helped MS-13 live up to its reputation as a ruthless, violent gang that spread fear throughout the community,” said U.S. Attorney Yates. “He displayed a callous disregard for human life and has fittingly earned his place behind prison walls for the remainder of his life.”
“The world will be a safer place with this defendant behind bars for the rest of his life,” said Special Agent in Charge Nicholson. “HSI is strongly committed to working with our partners at the FBI and local law enforcement agencies to identify and arrest the dangerous transnational gang members victimizing our communities.”
“This sentencing of a hardened MS-13 gang member is one of a series of convictions and sentences of members of this gang known for their violence in the northern metro Atlanta area,” said Special Agent in Charge Johnson. “While these dangerous gang members have now been neutralized, the FBI will continue to dedicate substantial investigative resources in this area to ensure that the void now created will not be filled by additional gang members or other gangs.”
According to evidence presented at trial, MS-13 is an international gang that has operated in the Atlanta area since at least 2005. The gang members claimed Gwinnett and DeKalb Counties as their home territory and used violence to defend their territory. They attacked rival gang members and committed armed robberies in furtherance of the MS-13 gang.
The evidence presented at trial showed that Argueta and other members of MS-13 planned to rob a suspected drug dealer at a hotel in April 2007. During the attempted robbery, Argueta and his fellow MS-13 members killed the suspected drug dealer, who was also armed, in a shootout. Hotel surveillance video showed one of the MS-13 members stopping to pick up the victim’s gun, which he later showed off as a trophy.
Additional evidence showed that in October 2007, Argueta and several other MS-13 members were at an apartment complex in Gwinnett County when Argueta spotted suspected rival gang members. He approached them and asked them who they “claimed” – that is, what gang they belonged to – and two of the rival gang members responded that they were members of the 18th Street gang. Argueta replied, “You’re going to die,” pulled out a handgun and started chasing and shooting at the rival gang members. During the pursuit, he shot one rival in the back and one in the hip and arm. Argueta fired several rounds during the pursuit, some of which went into the apartments of nearby residents. An elderly woman testified that one of Argueta’s bullets hit the headrest of an armchair that she had been sitting in just a few minutes earlier.
This case was investigated by ICE HSI and the FBI with assistance from the DeKalb County Police Department, Gwinnett County Police Department, and Gwinnett County Sheriff’s Office.
The case is being prosecuted by Trial Attorney Joseph K. Wheatley of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Paul R. Jones of the Northern District of Georgia.
Former Ohio State Trooper Pleads Guilty to Violating Civil Rights of Several Female Motorists Through Sexual Activity and Cyber StalkingRead the Press Release
A former Trooper with the Ohio State Highway Patrol pleaded guilty today in Columbus, Ohio, to four counts of violating the civil rights of female motorists and one count of engaging in cyber stalking.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Carter M. Stewart of the Southern District of Ohio, Special Agent in Charge Kevin R. Cornelius of the FBI, Cincinnati Division, Superintendent of the Ohio State Highway Patrol (OSP) Colonel Paul A. Pride and Licking County Prosecutor Kenneth W. Oswalt made the announcement.
"There can be no greater breach of trust or abuse of authority than a police officer exploiting the power of his badge to sexually abuse the very citizens he has sworn to protect,” said Assistant Attorney General Caldwell. “Today’s guilty plea should serve as a reminder that nobody is above the law, especially those who have taken an oath to uphold it.”
“I thank the State Patrol for bringing this matter to our attention and the State Patrol and FBI for conducting an exhaustive investigation,” said U.S. Attorney Stewart. “I extend my sympathies to the victims of this unfortunate case. No one should ever have to fear illegal conduct from those very persons sworn to protect them and uphold the law.
According to court documents, Bryan D. Lee, 30, of Lancaster, Ohio, served as an OSP Trooper from approximately January 2006 until October 2013. In his plea agreement, Lee admitted that he violated the civil rights of four female victims by coercing them to engage in sexual acts, some of which he photographed, in exchange for his agreement not to file criminal charges or issue traffic infractions against the victims or their friends. Some of those acts were performed while the victims were under arrest and restrained in handcuffs. Lee also harassed and threatened some of the victims, including sending threatening electronic messages to one individual who Lee pulled over twice during a one-month period.
The investigation into Lee began when a routine review by OSP of the dash camera recordings in Lee’s cruiser revealed inappropriate conduct with a female driver and passenger whom Lee had stopped for a traffic violation. OSP uncovered multiple instances of administrative and criminal misconduct by Lee and contacted the FBI to assist in their investigation. Lee resigned his position at the outset of the investigation.
Lee’s sentencing hearing will be scheduled by U.S. District Judge Michael H. Watson of the Southern District of Ohio.
This case was investigated by the Columbus office of the FBI’s Cincinnati Field Division and OSP. The case was prosecuted by Assistant U.S. Attorney J. Michael Marous of the Southern District of Ohio and Trial Attorney Edward P. Sullivan of the Criminal Division’s Public Integrity Section. Also assisting in the investigation was Licking County Special Prosecutor Martin Frantz.
Eleven Men Sentenced to Prison in Connection with International Child Exploitation EnterpriseRead the Press Release
Eleven men have been sentenced to federal prison for their roles in an international child pornography network operated online, which was targeted by state and federal investigators and prosecutors participating in Operation Kingdom Conqueror.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Michael W. Cotter of the District of Montana and Special Agent in Charge Mary Rook of the FBI’s Salt Lake City Division made the announcement.
According to court documents, in November 2009, an early participant in the conspiracy designed and created an online bulletin board that allowed members to exchange images, including child pornography. As the conspiracy progressed, additional members contributed to the design and operations of the board. Between Nov. 6, 2009, and March 19, 2012, members of the conspiracy used the online bulletin board to share pictures and videos of children engaged in sexually explicit conduct. During that same time period, the participants agreed to use the online bulletin board to solicit additional images of child pornography, which they would then share and broadcast on the Internet. Thirteen defendants have been charged and convicted for their participation in this child pornography network.
The following defendants pleaded guilty in April 2014 to conspiracy to advertise child pornography and were sentenced by U.S. District Judge Donald W. Molloy of the District of Montana:
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Tony Bronson, 53, of Gary, Indiana, was sentenced to serve 224 months on Oct. 28, 2014.
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Charles Crosby, 43, of Trenton, New Jersey, was sentenced to serve 210 months in prison on Oct. 23, 2014.
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Steve Humiston, 57, of Tacoma, Washington, was sentenced to serve 210 months in prison and ordered to pay a $5,000 fine on Oct. 23, 2014.
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John Johnson, 58, of Locust Grove, Virginia, was sentenced to serve 180 months in prison on Oct. 22, 2014.
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Robert Krise, 66, of Gaithersburg, Maryland, was sentenced to serve 180 months in prison on Oct. 22, 2014.
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Scott Long, 53, of Portland, Oregon, was sentenced to serve 200 months in prison on Oct. 21, 2014.
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Ian Nosek, 42, of Charlottesville, Virginia, was sentenced to serve 216 months in prison on Oct. 23, 2014.
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Phillip Morris, 42, of Jeffersonville, Indiana, was sentenced to serve 216 months in prison on Oct. 22, 2014.
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Joseph Purificato, 23, of Mount Vernon, Missouri, was sentenced to serve 180 months in prison on Oct. 28, 2014.
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Paul Wencewicz, 48, of Polson, Montana, was sentenced to serve 200 months in prison on Oct. 21, 2014.
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Jeffrey Woolley, 53, of Nicholasville, Kentucky, was sentenced to serve 180 months in prison and ordered to pay a $5000 fine on Oct. 28, 2014.
All of the defendants were ordered to forfeit their computers and storage devices. Purificato received a 10-year term of supervised release following his prison sentence. All other defendants received lifetime terms of supervised release. All defendants are required to pay $29,859 restitution.
Two additional defendants, Joshua Peterson, 45, of Prescott, Arizona, and Steven Grovo, 35, of Shirley, Massachusetts, were found guilty of participating in a child exploitation enterprise and a conspiracy to advertise child pornography on Oct. 9, 2014. Both men are scheduled to be sentenced on Jan. 22, 2015, in Missoula, Montana.
The investigation, referred to as Operation Kingdom Conqueror, is an ongoing cooperative effort between the Criminal Division’s Child Exploitation and Obscenity Section, FBI, Montana Department of Criminal Investigations, Helena and Polson Police Departments, Immigration and Customs Enforcement’s Homeland Security Investigations, Montana Internet Crimes Against Children Task Force, and the States of Jersey Police Department, Isle of Jersey.
Trial Attorney Maureen C. Cain of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Cyndee L. Peterson of the District of Montana prosecuted the case.
This case was initiated under the Department of Justice’s Project Safe Childhood initiative which was launched in 2006 to combat the proliferation of technology-facilitated crimes involving the sexual exploitation of children. Through a network of federal, state, and local law enforcement agencies and advocacy organizations, Project Safe Childhood attempts to protect children by investigating and prosecuting offenders involved in child sexual exploitation. It is implemented through partnerships including the Montana Internet Crimes Against Children (ICAC) Task Force. The ICAC Task Force Program was created to assist state and local law enforcement agencies by enhancing their investigative response to technology facilitated crimes against children.
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Detroit-Area Home Health Care Assistant Sentenced for Scheme to Bill Medicare Nearly $15 Million for Services Never ProvidedRead the Press Release
A physical therapist assistant was sentenced today to serve 50 months in prison for his role in a $14.9 million fraud scheme, through which he and others billed Medicare for home health services that they never provided, and provided beneficiaries with prescriptions for unnecessary painkillers and other narcotics to induce them to sign false medical documents to support the fraudulent billings.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Detroit Office made the announcement.
Jigar Patel, 31, a physical therapist assistant from Madison Heights, Michigan, was sentenced by U.S. District Judge Terrence G. Berg in the Eastern District of Michigan. In addition to his prison term, Patel was ordered to pay $1.9 million in restitution.
Patel, along with co-defendants Srinivas Reddy, 38, an unlicensed doctor from Bloomfield Hills, Michigan, and Shahzad Mirza, 43, a physical therapist from Canton, Michigan, were each convicted by a federal jury on April 30, 2014, of one count of conspiracy to commit health care fraud. In addition, Mirza and Patel were each found guilty of two counts of health care fraud, and Reddy was found guilty of three counts of health care fraud. Patel was also found guilty of one count of money laundering. Reddy and Mirza will be sentenced at a later date.
According to evidence presented at trial, between July 2008 and September 2011, the defendants used four home health care companies – Physicians Choice Home Health Care LLC, Quantum Home Care Inc., First Care Home Health Care LLC, and Moonlite Home Care Inc. – to fraudulently bill Medicare for home health care services that were never provided. Through those companies, the defendants paid kickbacks to recruiters for the referral of Medicare beneficiaries. In turn, the recruiters paid the beneficiaries cash and promised them access to unnecessary prescriptions for painkillers and other narcotics. Through a fifth company, Phoenix Visiting Physicians, the defendants employed unlicensed individuals, including Reddy, to provide the beneficiaries with the promised prescriptions and to obtain the necessary information to complete the referrals for medically unnecessary home health care services.
Evidence presented at trial showed that beneficiaries signed blank medical paperwork that Patel and others then completed with false information purporting to show that care was provided, when it was not. Patel, Mirza and others signed this paperwork, certifying that they had provided the services. In the course of the conspiracy, Patel incorporated his own staffing company, MI Healthcare Staffing, through which he laundered proceeds of the fraud.
As a result of the defendants’ fraudulent conduct, Medicare paid nearly $15 million.
The defendants were charged in a superseding indictment on Feb. 6, 2012. Three other individuals charged in the indictment remain fugitives. The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.
The case is being investigated by HHS-OIG and the FBI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. The case is being prosecuted by Assistant Chief Catherine K. Dick and Trial Attorneys Matthew C. Thuesen and Rohan A. Virginkar of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov.
Biomet Companies to Pay over $6 Million to Resolve False Claims Act Allegations Concerning Bone Growth StimulatorsRead the Press Release
EBI LLC, doing business as Biomet Spine and Bone Healing Technologies and Biomet Inc. have agreed to pay $6.07 million to resolve allegations that EBI violated the False Claims Act by paying kickbacks to induce use of its bone growth stimulators and billing federal health care programs for refurbished stimulators, the Department of Justice announced today. EBI is a medical device company located in Parsippany, New Jersey, that sells bone growth stimulators, which are used to repair fractures that are slow to heal. It is a subsidiary of Biomet, which is based in Warsaw, Indiana.
“Medical device companies must not use improper financial incentives to influence the decision to use their products,” said Acting Deputy Assistant Attorney General August Flentje of the Justice Department’s Civil Division. “This settlement demonstrates the department’s commitment to protect patients, and the taxpayers who fund their care, by ensuring that medical decisions are based on the patients’ medical needs rather than the financial interests of others.”
The United States alleged that, from 2001 to 2008, EBI paid staff at doctors’ offices to influence doctors to order its bone growth stimulators. These payments were allegedly provided pursuant to personal service agreements with staff members. The United States concluded that these payments violated the Anti-Kickback Act and resulted in false billings to various federal health care programs, including Medicare. The settlement also resolves EBI’s disclosure that it received federal reimbursements for bone growth stimulators that had been refurbished.
“This settlement demonstrates our resolve in ensuring that patients receive, and the government pays for, health care that is based on sound medical judgment, and not compromised by kickbacks,” said U.S. Attorney Carmen M. Ortiz of the District of Massachusetts.
“Kickbacks taint medical decision-making, cause overutilization of services, and lead to increased taxpayer and patient costs,” said Special Agent in Charge Phillip Coyne of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “These improper inducements have no place in government health programs relied on by millions of Americans.”
The settlement resolves in part an allegation filed in a lawsuit by Yu Yue, a former product manager for EBI, in federal court in New Jersey. The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. Yu’s share has not yet been determined.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23 billion through False Claims Act cases, with more than $14.8 billion of that amount recovered in cases involving fraud against federal health care programs.
The settlement was the result of a coordinated effort by the Commercial Litigation Branch of the Civil Division; the U.S. Attorney’s Office for the District of Massachusetts; HHS-OIG; the U.S. Postal Service Office of Inspector General; the Defense Criminal Investigative Service; the U.S. Department of Veterans Affairs, Office of Inspector General and the U.S. Food and Drug Administration, Office of Criminal Investigations.
Ms. Yu’s case is captioned United States ex rel. Yu v. Biomet, Inc., Civil Action No. 09-1731 (D.N.J.). The claims resolved by the settlement are allegations only; there has been no determination of liability.
Alabama Bail Bondsman Sentenced for Stealing Identities that Were Used to File Fraudulent Tax ReturnsRead the Press Release
A former bail bondsman in Dothan, Alabama, was sentenced yesterday to serve 51 months in prison for his 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.
Roderick Neal was also ordered to pay $109,480 in restitution and to serve three years of supervised release following his prison sentence.
According to court documents and evidence from the trial of his co-conspirator, Nina Macena, Neal provided stolen identities to Ivory Bolen, also of Dothan, who used the identities to file false tax returns that fraudulently requested refunds from the Internal Revenue Service (IRS). Bolen would attempt to have the refunds deposited onto prepaid debit cards, which would be mailed to addresses controlled by Bolen and Macena. Macena obtained the identities from Neal, who had access to the personal information of individuals who had been detained at the Dothan City Jail. Altogether, Bolen filed tax returns claiming more than $300,000 in refunds using the identities that Neal stole from his employer, but the IRS was able to successfully stop a number of the fraudulent returns.
Bolen was sentenced to serve 48 months in prison and Macena was sentenced to serve 34 months in prison.
This case was investigated by special agents of the IRS-Criminal Investigation. Trial Attorneys Jason Poole, Charles M. Edgar Jr. and Michael Boteler of the Tax Division prosecuted the case with the assistance of 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’s website.
Two Former Police Officers Plead Guilty to Using Excessive Force When Tasing a WomanRead the Press Release
Eric Walters, 39, and Franklin Brown, 35, formerly police officers with the City of Marion Police Department, in South Carolina, pleaded guilty yesterday in federal court to using excessive force against a woman with mental disabilities on April 2, 2013, the Justice Department announced today.
Walters and Brown each pleaded guilty to one count of deprivation of rights under color of law for using unreasonable force for their role in repeatedly tasing the victim when she posed no threat to either officer. Walters and Brown pleaded before U.S. District Court Judge Bryan Harwell in federal court in Florence, South Carolina.
According to the information and facts presented in court, in the course of detaining the victim, Walters tased the victim causing her to fall to the ground and injure her head. Once on the ground, Walters continued to tase the victim multiple times. Brown, subsequently, arrived on scene and proceeded to tase the victim as she was seated on the curb, restrained in handcuffs, and surrounded by law enforcement. In court, Walters and Brown admitted there was no legitimate law enforcement purpose for repeatedly tasing the victim as she did not pose a threat to the officers.
“The defendants abused their authority as law enforcement officers by repeatedly tasing a defenseless, compliant victim,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division. “The Justice Department will continue to vigorously prosecute those who cross the line to engage in acts of criminal misconduct.”
“Law enforcement officers are entrusted with the state’s police powers to maintain and restore order,” said U.S. Attorney Bill Nettles for the District of South Carolina. “In this case, the officers abused that authority, and purposefully hurt the victim who at the time posed no threat to these officers or anyone else. No just society can tolerate this sort of abuse by those who wear the badge. I’d like to thank the Federal Bureau of Investigations, the South Carolina Law Enforcement Division, the Department of Justice Civil Rights Division and the team in my office who worked together to ensure that these officers were held accountable for their misdeeds.”
Sentencing will be scheduled at a later date. Walters and Brown face statutory maximum penalties of 10 year sentences in prison and $250,000 fines.
The case was investigated by the Columbia Division of the FBI and is being prosecuted by Assistant U.S. Attorney John Potterfield of the District of South Carolina and Trial Attorneys Nicholas Murphy and Henry Leventis of the Civil Rights Division.
Texas Woman Allegedly Prepares Tax Returns Claiming False Deductions and CreditsRead the Press Release
A Texas federal court permanently barred Melissa Alvarez, a tax preparer in McAllen, Texas, from preparing returns for others, the Justice Department announced today. Alvarez agreed to the permanent ban, and the court entered an order imposing a permanent injunction against Alvarez on Oct. 27.
The order also requires Alvarez to turn over to the government a list of all customers for whom she prepared federal tax returns or claims for a refund for tax years 2011 through 2013, and to notify her customers for tax year 2013 of the permanent injunction against her. The order authorizes the government to monitor Alvarez’s compliance with the terms of the order.
The complaint alleged that Alvarez prepared returns that contained false, improper or inflated deductions or tax credits, such as the earned income tax credit. The complaint also alleged that these activities caused Alvarez’s customers to file returns which unlawfully understated income and tax liabilities and overstated refunds.
Return-preparer fraud is one of the Internal Revenue Service’s (IRS) 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 fraudulent 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.
North Carolina Businessman Sentenced to Prison for Failing to Report More Than $1 Million in IncomeRead the Press Release
A Wilmington, North Carolina, man was sentenced yesterday to serve 12 months and one day in prison for tax evasion by Chief U.S. District Judge James C. Dever III in Raleigh, North Carolina, the Justice Department and Internal Revenue Service (IRS) announced today.
Jeffrey Wayne Scott, 48, pleaded guilty on May 14 to one count of willfully attempting to evade his personal income tax for tax year 2007.
According to court documents and court proceedings, Scott has owned and operated Greenville Loop Seafood (GLS), a seafood distribution company located in Wilmington, since 1995. For tax years 2006 through 2010, Scott and his wife filed joint individual income tax returns. Scott, under penalty of perjury, reported that his taxable income for these five years ranged between $23,934 and $92,999, and paid only $91,800 in federal income taxes for this time period. However, during these five years, the Scotts spent far in excess of this reported taxable income on personal expenditures.
According to court documents and court proceedings, between 2006 and 2010, the Scotts paid for nearly all of their living expenses with checks from GLS. This included, among other things, utilities, insurance premiums, landscaping, home improvements, school fees and a country club membership. They also purchased five vehicles totaling more than $200,000, a $100,000 boat and a $2.1 million waterfront home. Scott also made a monthly transfer of $10,000 from the GLS business account into a personal brokerage account. After the purchase of their home in June 2009, Scott stopped transferring funds to the brokerage account, but instead used funds from the GLS business account to pay the mortgage and related expenses. The IRS calculated that Scott failed to report in excess of $1,270,000 in taxable income for these five years and owed at least $412,844 in additional federal income taxes.
According to court documents and court proceedings, when first contacted by IRS-Criminal Investigation agents in June 2011, Scott falsely stated that he was letting friends stay in his second home rent free. Furthermore, despite being aware that he was under criminal investigation, in November 2012, Scott filed a false 2011 GLS corporate income tax return claiming work on his personal residence, including painting and repair work by a plumber , and health bills related to his family dog as business expenses.
This case was investigated by special agents of IRS-Criminal Investigation. Assistant U.S. Attorney Susan B. Menzer for the Eastern District of North Carolina and Trial Attorney Todd A. Ellinwood of the Justice Department’s Tax Division are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Man Sentenced in Alabama for His Role in Identity Theft SchemeRead the Press Release
A man was sentenced to serve 70 months in prison for his involvement in a stolen identity tax refund fraud (SIRF) scheme that used prisoner names and a corrupt U.S. Postal Service employee, 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.
Gregory Slaton was also ordered to pay $82,971 in restitution and to three years of supervised release following his prison sentence.
According to the court documents and court proceedings, Gregory Slaton conspired with his wife, Jacqueline Slaton, his brother-in-law, Harvey James, and a U.S. Postal Service employee, Vernon Harrison, to file false tax returns using stolen identities. James and Jacqueline Slaton obtained stolen identities, including identities of inmates, and used those identities to file the false tax returns. Gregory Slaton recruited Harrison into the conspiracy, who then provided Gregory Slaton with mailing addresses on his postal route to which they could mail the fraudulently claimed prepaid debit cards. James and Jacqueline Slaton then directed the tax refunds to be issued on debit cards and checks and to be sent to the specified addresses on Harrison’s mail route.
Harrison was previously sentenced to serve 111 months in prison, James was sentenced to serve 110 months in prison and Jacqueline Slaton was sentenced 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 Poole and Michael 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 on the division’s website.
Man Pleads Guilty in Alabama for Involvement in Identity Theft SchemeRead the Press Release
A man pleaded guilty yesterday to one count of conspiracy to file false claims and one count of aggravated identity theft for his 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.
According to the court documents, between January 2011 and December 2013, Robert Walker and his co-conspirators filed false tax returns using stolen identities. One co-conspirator obtained stolen identities from various sources, including the identities of employees from a Columbus, Georgia, company. In order to file the false tax returns, Walker and his co-conspirators obtained several Electronic Filing Identification Numbers (EFIN) in the names of sham tax businesses. The co-conspirators applied for bank products from various financial institutions, which mailed blank check stock and prepaid debit cards. The anticipated tax refunds were directed to financial institutions, which in turn issued the refunds using checks or prepaid debit cards. Walker and his co-conspirators cashed the fraudulent checks at several businesses located in Alabama. Walker also deposited fraudulent refund checks into a bank account he controlled.
Walker’s sentencing is scheduled for Feb. 5, 2015.
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 Michael Boteler, Charles M. Edgar Jr. and Gregory Bailey of the Tax Division are prosecuting the case with the assistance from 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 on the division’s website.
Federal Jury Convicts Friend of Suspected Boston Marathon BomberRead the Press Release
Following an eight-day trial, the jury convicted a college friend of alleged Boston Marathon bomber, Dzhokhar Tsarnaev, for making false statements to investigators assigned to the FBI’s Joint Terrorism Task Force.
The jury found Robel Phillipos, 21, of Cambridge, Massachusetts, guilty of making false statements during the terrorism investigation of the Boston Marathon bombings on April 20, 2013, and April 25, 2013. U.S. District Judge Douglas P. Woodlock scheduled sentencing for Jan. 29, 2015.
“In the wake of one of the most significant events in this City’s modern history – an event which left two young women and a child dead, and many more injured – thousands of ordinary citizens assisted law enforcement in identifying and locating the perpetrators,” said U.S. Attorney Carmen Ortiz for the District of Massachusetts. “Today, a federal jury concluded that Robel Phillipos did just the opposite. He lied to agents when he could have helped. He concealed when he could have assisted. It is a crime to lie to law enforcement agents, and that is why Robel Phillipos was charged and why the jury found him guilty today. But this case also reminds us that our public safety network relies on every citizen in the Commonwealth. We look to all of our citizens – our neighbors, our friends, our colleagues, even strangers whom we have never met before – to assist law enforcement in detecting, preventing, and solving crimes. Mr. Phillipos made a choice: a choice to lie instead of tell the truth. With its verdict today, the jury got it exactly right.”
In August 2014, Dias Kadyrbayev pleaded guilty to obstruction of justice charges related to the Boston Marathon bombing investigation. Kadyrbayev admitted to removing evidence from Tsarnaev’s dormitory room at University of Massachusetts Dartmouth and discarding Tsarnaev’s backpack with fireworks, some of which appeared to have been emptied of their explosive powder, in a garbage dumpster. In July 2014, Azamat Tazhayakov was found guilty by a federal jury in Boston of obstruction of justice charges for his role in impeding the Boston Marathon bombing investigation. His conduct was related to the same conduct as charged against Kadyrbayev that occurred in Tsarnaev’s dormitory room on the evening of April 18, 2013.
At the Phillipos trial, the government proved that Phillipos lied about his knowledge and activities on the evening of April 18, 2013. Specifically, Phillipos repeatedly lied to investigators when he denied that, on the evening of April 18, 2013, he entered Tsarnaev’s dormitory room and saw Kadyrbayev remove a backpack containing fireworks.
According to evidence presented at trial, at 7:00 p.m. on April 18, 2013, Phillipos saw the images released by the FBI of the two suspected bombers and immediately recognized one of them as Dzhokhar Tsarnaev. At 10:00 p.m., Phillipos went with Tazhayakov to Tsarnaev’s dormitory room where he and Tazhayakov watched, as Kadyrbayev searched through Tsarnaev’s belongings and found a backpack containing fireworks. When Kadyrbayev, Tazhayakov and Phillipos left Tsarnaev’s room at 10:30 p.m., Kadyrbayev removed Tsarnaev’s backpack containing fireworks, a jar of Vaseline, and Tsarnaev’s laptop computer. Later that night while Tazhayakov and Phillipos were monitoring the manhunt for the Tsarnaevs on television, Kadyrbayev discussed getting rid of the backpack containing the fireworks with them. Tazhayakov agreed with Kadyrbayev that they should get rid of it. After this conversation, Kadrybayev placed Dzhokhar Tsarnaev’s backpack in a garbage bag and placed it in a dumpster outside their New Bedford apartment. The FBI recovered the backpack a week later, after 30 agents spent two days searching a landfill in New Bedford.
Between April 19, 2013 and April 26, 2013, Phillipos was interviewed five times by investigators conducting the Boston Marathon bombing investigation and during each of those interviews Phillipos lied. At the conclusion of the fifth interview, Phillipos finally admitted that he did go into Tsarnaev’s dormitory room on the evening of April 18, 2013 and that he saw Kadyrbayev remove evidence from Tsarnaev’s room. After he confessed, Phillipos indicated he regretted his decisions. In his signed statement, Phillipos stated: “In retrospect, I should have notified the Police once I knew Jahar was the bomber. Further, I should have turned over the backpack to the authorities.”
The charging statute provides a sentence of no greater than eight years in prison for each of the two false statement counts, three years of supervised release, and a fine of $250,000 for each charge. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
The sentencing hearing for Kadyrbayev is scheduled for Nov. 18, 2014, and Tazhayakov’s sentencing is scheduled for Nov. 19, 2014.
U.S. Attorney Ortiz and Special Agent in Charge Vincent B. Lisi of the Federal Bureau of Investigation’s Boston Field Division made the announcement today. This investigation was conducted by the FBI's Boston Division and member agencies of the Boston Joint Terrorism Task Force (JTTF) which is comprised of more than 30 federal, state and local enforcement agencies. Essex County Sheriff’s Office, U.S. Department of Transportation – Office of Inspector General, Massachusetts State Police, University of Massachusetts Dartmouth Department of Public Safety, New Bedford Police Department, Dartmouth Police Department, U.S. Treasury Inspector General for Tax Administration (TIGTA), Internal Revenue Service, Criminal Investigations, and Homeland Security Investigations in Boston provided assistance to this investigation.
The case is being prosecuted by Assistant U.S. Attorneys B. Stephanie Siegmann and John A. Capin of U.S. Attorney Ortiz’s Anti-Terrorism and National Security Unit.
California Woman Sentenced for Conspiracy to Defraud Internal Revenue Service and Wire FraudRead the Press Release
A Fresno, California, resident was sentenced to serve 18 months in prison and pay $703,537 in restitution for conspiring to defraud the Internal Revenue Service (IRS) by aiding to obtain payment of fraudulent tax refund claims and committing wire fraud, the Justice Department and IRS announced today.
Pursuant to a plea agreement, Kathryn Darlene Coryell pleaded guilty to two counts of a 44-count indictment on June 26. Her co-defendant, Noemi Baez, pleaded guilty on Oct. 31, 2013, to charges of conspiring to defraud the IRS and committing aggravated identity theft.
According to the plea agreement, beginning around Feb. 28, 2008, and continuing through April 16, 2012, Coryell and Baez participated in a scheme to obtain and help others to obtain payment of false claims for tax refunds from the IRS by electronically filing fraudulent federal income tax returns. Using the names and social security numbers of numerous individuals, Coryell and Baez fabricated income information and filed materially false income tax returns claiming tax refunds derived from credits, including the Earned Income Credit, the Additional Child Tax Credit and the Making Work Pay Credit. In the plea agreement, Coryell admitted that, during the conspiracy, she and her co-defendant filed more than 150 false tax returns claiming fraudulent tax refunds totaling more than $400,000.
The case was investigated by special agents of the IRS-Criminal Investigation and was prosecuted by Trial Attorneys Erin S. Mellen, Sonia M. Owens and Charles A. O’Reilly of the Tax Division.
Alabama Tax Preparers Indicted for Stolen Identity Refund FraudRead the Press Release
Two women from Phenix City, Alabama, were indicted yesterday for their involvement in a stolen identity refund fraud scheme (SIRF), 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.
Teresa Floyd and her daughter, Lasondra Davis Miles, were charged with conspiracy to submit false claims, wire fraud and aggravated identity theft. Floyd was also charged with theft of public money.
According to the superseding indictment, Floyd and Davis operated several tax preparation businesses in the Phenix City area, including T & L Tax Service and T & C Used Cars & Tax Service. Floyd and Davis obtained stolen identities and used those identities to file more than 900 federal income tax returns that claimed more than $2.5 million in tax refunds. To obtain the money from the scheme, the defendants applied for bank products from various financial institutions, which provided to the defendants blank check stock. The bank products allow a tax preparer to deduct their fees directly from a tax refund and then print out the remainder of the refund as a check. Floyd and Davis created fictitious identification documents and bills to provide to the financial institutions in an attempt to verify that the returns were filed in the names of legitimate customers. The defendants caused the fraudulent checks to be cashed at several businesses in Alabama and Georgia. Floyd also deposited fraudulent income tax refund checks into her bank account.
If convicted, the defendants face a statutory maximum sentence of 10 years in prison for the conspiracy to file false claims count, a statutory maximum sentence of 20 years in prison for each wire fraud count, a statutory maximum sentence of 10 years in prison for each theft of public money count and a mandatory sentence of two years in prison for the aggravated identity theft counts. The defendants are also subject to fines, forfeiture and mandatory restitution if convicted.
The case was investigated by special agents of the Internal Revenue Service - Criminal Investigation. Trial Attorney Michael Boteler of the Tax Division and Assistant U.S. Attorney Todd Brown for the Middle District of Alabama are prosecuting the case.
An indictment merely alleges that crimes have been committed and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.
Massachusetts Man Sentenced to Four Years in Prison for Computer Hacking Involving Stolen Credit Card Numbers and Altered Academic RecordsRead the Press Release
A Massachusetts man was sentenced to serve four years in prison today for hacking into computer networks around the country – including networks belonging to law enforcement agencies and a local college – to obtain highly sensitive law enforcement data and to alter academic records, as well as for possessing stolen credit and debit card numbers.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz of the District of Massachusetts, Special Agent in Charge Vincent Lisi of the FBI’s Boston Division and Colonel Timothy P. Alben of the Massachusetts State Police made the announcement.
Cameron Lacroix, 25, of New Bedford, Massachusetts, pleaded guilty on June 25, 2014, to two counts of computer intrusion and one count of access device fraud. Lacroix was sentenced today by U.S. District Judge Mark L. Wolf of the District of Massachusetts.
Lacroix admitted that, between May 2011 and May 2013, he obtained and possessed payment card data for more than 14,000 unique account holders. For some of these account holders, Lacroix also obtained other personally identifiable information.
Additionally, from August 2012 through November 2012, Lacroix repeatedly hacked into law enforcement computer servers containing sensitive information including police reports, intelligence reports, arrest warrants, and sex offender information. In one such instance, in September 2012, Lacroix hacked into a computer server operated by a local Massachusetts police department and accessed an e-mail account belonging to the chief of police.
Lacroix, who was a student at Bristol Community College (BCC), also admitted that between September 2012 and November 2013, he repeatedly hacked into BCC’s computer servers and used stolen log-in credentials belonging to three instructors to change grades for himself and two other students.
The case was investigated by the FBI’s Boston Division Cyber Task Force. The case is being prosecuted by Senior Trial Attorney Mona Sedky from the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Adam Bookbinder of the District of Massachusetts.
The U.S. Attorney’s Office for the Northern District of California has also filed hacking charges against Lacroix. That case has been transferred to the District of Massachusetts and is before Chief Judge Saris.
Four Men Sentenced to Federal Prison for Robbery of Jewelry CourierRead the Press Release
Four members of a robbery crew that targeted jewelry couriers were sentenced to federal prison for their roles in conspiracy to commit a Hobbs Act robbery and related offenses.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Sally Quillian Yates of the Northern District of Georgia made the announcement.
Honorio Sanchez-Valenica, 46, of Gwinnett, Georgia, John Rodriguez, 37, of Los Angeles, Ali Alejandro Godoy-Maximo, 25, of Los Angeles, and Michael Alejandro Tovar-Vargas, 37, of Los Angeles, were sentenced to serve 137 months in prison, 63 months in prison, 68 months in prison and 87 months in prison respectively for their involvement in the Jan. 31, 2013, robbery of a jewelry courier at a gas station in Buford, Georgia. In addition to the prison sentences, the defendants were ordered to pay $122,398 in restitution. U.S. District Judge Steve C. Jones of the Northern District of Georgia imposed the sentences. Jose Vicente Ramirez-Rodriguez, 38, of Los Angeles, also pleaded guilty for his role in the robbery and will be sentenced on Dec. 10, 2014.
Court records show that on Jan. 31, 2013, the defendants robbed a jewelry courier while he was putting gas in his car. Two of the defendants approached the victim, one restrained him with a knife, and the other smashed the car’s window and took a briefcase containing over $125,000 in assorted jewelry.
In his plea agreement, Sanchez-Valencia also admitted to his involvement in a similar robbery in Dallas on Aug. 27, 2012. In that robbery, Sanchez-Valencia conducted surveillance of two jewelry couriers at a restaurant. Within minutes after Sanchez-Valencia left, three masked men with a gun came into the restaurant and robbed the jewelry couriers, taking two briefcases containing over $500,000 in jewelry. Some of that jewelry was later recovered by law enforcement during the execution of a search warrant at a storage unit rented by Sanchez-Valencia.
This case was investigated by the FBI, Immigration and Customs Enforcement, and the Gwinnett County Police Department, with assistance from the Dallas Police Department. This case is being prosecuted by Laura Gwinn of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Kim Dammers of the Northern District of Georgia.
Former President and Owner of Rehabilitation Clinic Pleaded Guilty in Health Care Fraud and Money Laundering SchemeRead the Press Release
The former president and owner of a rehabilitation therapy services clinic pleaded guilty in Tampa today to health care fraud and money laundering charges.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney A. Lee Bentley III of the Middle District of Florida, Acting Special Agent in Charge Derrick Jackson of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Miami Regional Office and Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office made the announcement.
Laura Leyva, 45, of Miami Lakes, Florida, pleaded guilty in the U.S. District Court for the Middle District of Florida to conspiracy to commit health care fraud and conspiracy to commit money laundering. Her sentencing date will be set by the court.
According statements made in court, from June 2007 through November 2009, Leyva was the president and owner of American Rehab of Kissimmee Inc., aka American Rehab of South Florida Inc., a comprehensive outpatient rehabilitation facility located in Kissimmee, Florida, and Hialeah, Florida. During that time period, American Rehab submitted approximately $2,543,368 in false and fraudulent claims for reimbursement to Medicare seeking payment for rehabilitation therapy services that were not legitimately prescribed and not provided. Medicare paid approximately $1,074,278 on those claims. Co-conspirators falsified and forged medical records were used to give the appearance that therapy services were rendered to Medicare beneficiaries at American Rehab when, in fact, they were not. Leyva admitted that she destroyed falsified medical records in order to conceal evidence of the health care fraud and money laundering scheme.
This case is being investigated by HHS-OIG and the FBI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida. This case is being prosecuted by Trial Attorney Christopher J. Hunter of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov.
Attorney General Holder Announces Federal Government to Recognize Same-Sex Married Couples in Six Additional StatesRead the Press Release
In the latest development following the Supreme Court’s decision earlier this month to decline to hear any pending cases regarding same-sex marriage, Attorney General Eric Holder announced Saturday that the federal government will now recognize same-sex married couples in six new states: Alaska, Arizona, Idaho, North Carolina, West Virginia, and Wyoming.
Last week, the Attorney General made a similar announcement with respect to seven other states: Colorado, Indiana, Nevada, Oklahoma, Utah, Virginia and Wisconsin. Saturday’s announcement adds to that list and brings the total number of states where same-sex couples are recognized by the federal government to 32, plus the District of Columbia.
The Attorney General’s announcement means couples married in these states will now qualify for a range of federal benefits, including those administered by the Social Security Administration and Department of Veterans Affairs.
“With each new state where same-sex marriages are legally recognized, our nation moves closer to achieving of full equality for all Americans,” the Attorney General said. “We are acting as quickly as possible with agencies throughout the government to ensure that same-sex married couples in these states receive the fullest array of benefits allowable under federal law.”
In addition, the Attorney General also announced that the Department of Justice has determined it can legally recognize marriages performed in Indiana and Wisconsin this past June. These marriages were performed immediately after federal district courts ruled that those states’ bans on same-sex marriage are unconstitutional, but subsequent developments created confusion about the status of those marriages. Based on the Attorney General’s announcement, however, those couples married during that period will now have their unions recognized by the federal government.
United States Files Enforcement Action Against South Dakota Laser Medical Device DistributorRead the Press Release
The United States filed a civil complaint for injunctive relief in the U.S. District Court for the District of South Dakota against 2035 Inc. and its president, Dr. Robert L. Lytle, the Department of Justice announced today. Lytle, who does business as 2035 Private Membership Association and QLasers Private Membership Association, is the owner and operator of 2035 Inc.
According to the complaint, the defendants are responsible for designing, manufacturing, marketing and distributing the QLaser System, a collection of approximately 12 devices that are marketed as low level laser devices for home use. The defendants market their devices throughout the country – through seminars, websites, newspaper ads and other means – for treatment of “over 200 different diseases and disorders,” including cancer, cardiac arrest, HIV/AIDS, diseases and disorders of the eye and ear, venereal disease and diabetes. Although two of the devices are cleared for providing temporary relief of pain associated with osteoarthritis of the hand, none of the devices have been cleared by the U.S. Food and Drug Administration (FDA) or otherwise approved to treat any other medical conditions. Failure to obtain FDA clearance or premarket approval before marketing and distributing a device renders the device adulterated and misbranded and violates the Food, Drug, and Cosmetic Act (FDCA).
“The public should be able to trust that medical devices marketed to them to treat certain conditions are shown to be safe and effective,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “The Department of Justice will take action to ensure that public health is not put at risk.”
According to the complaint, the defendants distribute labeling with the QLaser devices that touts their use for treatment of the serious conditions listed above, as well as their use on eyes and skin. However, the complaint alleges, applying the laser devices to the eyes and skin can be harmful, and use of the devices to treat serious conditions such as cancer, HIV/AIDS and diabetes, among others, is unsupported by any published clinical studies. The complaint further alleges that the medical claims regarding use of the laser devices to treat these conditions are false and misleading and that the devices are unsafe if used in the manner recommended or suggested in defendants’ labeling.
During multiple inspections of the defendants’ operations over the course of approximately 11 years, the FDA informed the defendants – both verbally and in writing – that they were violating the FDCA. Despite these warnings, the complaint alleges that defendants continue their violations. Most recently, in August and September 2014, FDA investigated the defendants’ business operations, including QLasers PMA, and www.qlaserspma.com, a website owned and operated by Lytle through QLasers PMA. According to the complaint, these investigations revealed that the defendants continue to make claims that cause their QLaser devices to be in violation of the law.
The government requests that the court enjoin the defendants from continuing to market their QLaser devices, or any other device, unless or until such devices receive FDA clearance or approval. The complaint further requests the court order the defendants to cease manufacturing, processing, packaging, labeling, holding or distributing any product that is a device unless and until the defendants have come into compliance with the FDCA.
“After several warnings from the FDA, this distributor was well aware he was in violation of the law by continuing to market laser devices for unapproved uses,” said U.S. Attorney Brendan V. Johnson for the District of South Dakota. “Regardless, he continued to put consumers at risk, leading them to believe the product they were buying from his companies could treat certain serious medical conditions. Consumer confidence is critical, and the Department of Justice will work to protect that confidence and keep the public safe.”
The FDA referred this matter to the Department of Justice. Trial Attorneys Cindy Cho and Ross Goldstein of the Consumer Protection Branch in the Civil Division, together with the U.S. Attorney’s Office for the District of South Dakota, brought this case on behalf of the United States.
Member of FARC Terrorist Organization Sentenced to 27 Years in Prison on Hostage-Taking Charges in 2003 Capture of U.S. CitizensRead the Press Release
Alexander Beltran Herrera, 38, a commander of the Fuerzas Armadas Revolucionarias de Colombia (FARC) terrorist organization, was sentenced today to 27 years in prison on federal hostage-taking charges stemming from the 2003 capture of three U.S. citizens in Colombia. All told, members of the FARC held the Americans hostage for 1,967 days.
The sentence was announced by John P. Carlin, Assistant Attorney General for National Security, Ronald C. Machen Jr., U.S. Attorney for the District of Columbia and George L. Piro, Special Agent in Charge of the FBI’s Miami Division.
Beltran Herrera, aka Jhon Alexander Beltrain Herrera, aka Rodrigo Pirinolo, pled guilty on March 18, 2014, in the U.S. District Court for the District of Columbia, to three counts of hostage-taking. He was sentenced by the Honorable Senior Judge Royce C. Lamberth.
“In February 2003, the FARC – a Colombian terrorist organization – kidnapped three American citizens and held them captive for nearly 2,000 days,” said Assistant Attorney General Carlin. With the sentence handed down today, Alexander Beltran Herrera is being held accountable for his role in those offenses. This case underscores our resolve to pursue and bring to justice those who target our citizens with violence anywhere in the world. I want to thank all of the prosecutors, agents, and analysts who made this result possible.”
“This Colombian terrorist will spend the next 27 years in an American prison for his role in holding three U.S. citizens captive overseas,” said U.S. Attorney Machen. “Our fellow citizens were held hostage for more than five years under brutal conditions. This extradition, prosecution, and incarceration should chasten terrorists who doubt our resolve to serve justice on those who harm American citizens on foreign soil.”
“Alexander Beltran Herrera, a former terrorist commander for the Fuerzas Armadas Revolucionarias de Colombia (FARC), will now be held accountable for his role in holding three U.S. citizens hostage in Colombia for 1,967 days,” said Kelly M. Darden, Acting Special Agent in Charge of the FBI’s Miami Division. “Essential to bringing Beltran Herrera to justice was our close cooperation with the Colombian National Police.”
According to the government’s evidence, the FARC is an armed, violent organization in Colombia. Since its inception in 1964, it has engaged in an armed conflict to overthrow the Republic of Colombia, South America’s longest-standing democracy. The FARC has consistently used hostage taking as a primary technique in extorting demands from the Republic of Colombia, and hostage taking has been endorsed and commanded by FARC senior leadership. The FARC has characterized American citizens as “military targets” and has engaged in violent acts against Americans in Colombia, including murders and hostage taking. The FARC was designated as a foreign terrorist organization by the U.S. Secretary of State in 1997 and remains so designated.
Beltran Herrera, a commander in the FARC, was involved in the hostage taking of three United States citizens: Marc D. Gonsalves, Thomas R. Howes, and Keith Stansell. These three, along with Thomas Janis, a United States citizen, and Sergeant Luis Alcides Cruz, a Colombian citizen, were seized on Feb. 13, 2003, by the FARC, after their single-engine aircraft made a crash landing in the Colombian jungle.
Members of the FARC murdered Janis and Cruz near the crash site. Gonsalves, Howes, and Stansell were held by the FARC at gunpoint and were advised by FARC leadership that they would be used as hostages to increase pressure on the government of Colombia to agree to the FARC’s demands. At various times, the FARC marched the hostages from one site to another, placing them in the actual custody of various FARC fronts.
At the conclusion of one 40-day long march, in or about November 2004, the hostages were delivered to members of the FARC’s 27th Front, who imprisoned the hostages for nearly two years. During part of this period, Beltran Herrera was responsible for moving the hostages and keeping them imprisoned. Throughout the captivity of these three hostages, FARC jailors and guards used choke harnesses, chains, padlocks and wires to restrain the hostages, and used force and threats to continue their detention and prevent their escape. In July 2008, the Colombian military conducted a daring operation which resulted in the rescue of the hostages.
Beltran Herrera was indicted in February 2011 and was extradited to the United States from Colombia in March 2012.
This case was investigated by the FBI’s Miami Division. The prosecution was handled by Assistant U.S. Attorneys Anthony Asuncion and Fernando Campoamor-Sanchez from the National Security Section of the U.S. Attorney’s Office for the District of Columbia, and Trial Attorney David Cora, from the Counterterrorism Section of the Justice Department’s National Security Division. The case was indicted by Assistant U.S. Attorney Kenneth Kohl, of the National Security Section of the U.S. Attorney’s Office.
The FBI’s Miami Division partnered in the investigation with the Justice Department’s Office of International Affairs, the Department’s Judicial Attachés in Colombia, and the FBI’s Office of the Legal Attaché in Bogota, Colombia. The Directorate of Intelligence (DIPOL) and the Anti-Kidnapping Unit (GAULA) of the Colombian National Police also provided valuable support during the investigation.
Justice Department Settles Immigration-Related Discrimination Claim Against Hearing Services CompanyRead the Press Release
The Justice Department announced today that it reached an agreement with Serendipity Hearing Inc., doing business as Sonus Hearing Care (Sonus), a hearing services provider headquartered in the Los Angeles, California, metropolitan area. The agreement resolves a claim, filed with the Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), that the company violated the Immigration and Nationality Act (INA) by engaging in discriminatory documentary practices during the employment eligibility verification process.
The department’s investigation found that Sonus required the complainant, a lawful permanent resident it had hired, to produce a new employment eligibility document when her Permanent Resident Card expired, even though the Form I-9 and E-Verify rules prohibit this practice because lawful permanent residents have permanent work authorization in the United States after their Permanent Resident Cards expire. When the complainant failed to present her new Permanent Resident Card, Sonus terminated her. The INA’s anti-discrimination provision prohibits employers from making additional and unauthorized documentary demands based on citizenship status or national origin when verifying or re-verifying an employee’s employment eligibility.
“The Civil Rights Division is committed to identifying and tearing down discriminatory barriers that prevent work-authorized individuals from employment,” said Acting Assistant Attorney General Vanita Gupta for the Civil Rights Division. “The Division commends Sonus for working to resolve this matter expeditiously.”
Under the settlement agreement, Sonus will pay $16,727 in back pay to the charging party and $400 in civil penalties to the United States, undergo training on the anti-discrimination provision of the INA, revise its employment eligibility re-verification policies and be subject to monitoring of its employment eligibility verification practices.
OSC is responsible for enforcing the anti-discrimination provision of the INA. Among other things, the statute prohibits citizenship status and national origin discrimination in hiring, firing, or recruitment or referral for a fee; unfair documentary practices; retaliation and intimidation. This matter was handled by Trial Attorney Luz V. Lopez-Ortiz and Paralegal Specialist Ryan Thompson.
For more information about protections against employment discrimination under immigration laws, call OSC’s worker hotline at 1-800-255-7688 (1-800-237-2515, TTY for hearing impaired), call OSC’s employer hotline at 1-800-255-8155 (1-800-237-2515, TTY for hearing impaired), sign up for a free webinar at www.justice.gov/crt/about/osc/webinars.php, email [email protected] or visit OSC’s website at www.justice.gov/crt/about/osc.
Applicants or employees who believe they were subjected to different documentary requirements based on their citizenship status, immigration status, or national origin, or discrimination based on their citizenship status, immigration status or national origin in hiring, firing, or recruitment or referral for a fee, should contact OSC’s worker hotline for assistance.
Georgia Residents Charged for Their Role in Subjecting Hispanics to Unlawful Traffic StopsRead the Press Release
Today, the Justice Department announced that the Grand Jury for the Middle District of Georgia charged Miguel Angel Reyes and Gloria Gallego with conspiring with former Lowndes County Sheriff’s Deputy Jason Stacks to use Stacks’ law enforcement authority to violate Hispanic motorists’ civil rights, as well as with actually carrying out the scheme. The indictment was unsealed for Reyes yesterday and for Gallego today.
The indictment charges that Reyes and Gallego conspired with Stacks to subject Hispanic motorists to unlawful traffic stops so that the conspirators could demand that the motorists pay money in order to avoid arrest and/or deportation, in violation of the motorists’ right under the Fourth Amendment of the U.S. Constitution to be free from unreasonable seizures of person and property. The indictment also charges Reyes and Gallego with working with Stacks to unlawfully stop motorist T.C., and to use the threat of arrest and/or deportation to take $300 from T.C.
Additionally, the indictment charges Reyes with working with Stacks to detain motorist E.B. without probable cause or reasonable suspicion, in order to facilitate a robbery of E.B.’s home, in violation of E.B.’s rights under the Fourth Amendment of the U.S. Constitution to be free from unreasonable seizures of his person.
The civil rights conspiracy charge against Reyes and Gallego carries a maximum penalty of 10 years imprisonment. The two substantive civil rights charges against Reyes each carry a maximum penalty of one year imprisonment, and the one substantive civil rights charge against Gallego carries a maximum penalty of one year imprisonment.
This case is being investigated by the Federal Bureau of Investigation, with assistance from the Lowndes County Sheriff’s Office. The matter is being prosecuted by Trial Attorney Risa Berkower of the Justice Department’s Civil Rights Division, with support from the U.S. Attorney’s Office for the Middle District of Georgia.
An indictment is a formal accusation of criminal conduct, not evidence of guilt. The defendants are presumed innocent unless and until proven guilty.
Former Mayor of Río Grande, Puerto Rico, Pleads Guilty to Soliciting and Accepting Bribes from ContractorRead the Press Release
The former mayor of the municipality of Río Grande, Puerto Rico, pleaded guilty today to soliciting and receiving approximately $39,000 in cash bribes from a contractor who sought to be awarded three construction inspection contracts with the municipality of Río Grande.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico and Special Agent in Charge Carlos Cases of the FBI’s San Juan Division made the announcement.
According to his plea agreement, Eduard Rivera-Correa, 61, while mayor of Río Grande in early 2010, requested that a contractor make regular kickback payments in exchange for the award of three construction inspection contracts worth a total of $329,000. After the contracts were awarded and while payments were being disbursed by the municipality, the contractor delivered envelopes containing approximately $39,000 in cash to Rivera-Correa’s office and placed them in his drawer.
Rivera-Correa pleaded guilty before U.S. Magistrate Judge Marcos E. López to one count of bribery. Rivera-Correa was arrested on July 10, 2014, after being indicted by a federal grand jury. His sentencing will be scheduled at a later date.
In his plea agreement, Rivera-Correa admitted to obstructing justice by threatening the contractor who paid him bribes. On or about April 16, 2012, in a recorded conversation, Rivera-Correa threatened the contractor in an effort to intimidate him and dissuade him from cooperating with law enforcement.
This case was investigated by the FBI and is being prosecuted by Trial Attorney Charles R. Walsh of the Criminal Division’s Public Integrity Section and Criminal Chief Jose Ruíz of the District of Puerto Rico. The Puerto Rico Office of Government Ethics provided assistance in the investigation.
First RF Corporation Agrees to Pay $10 Million to Resolve False Claims Act AllegationsRead the Press Release
The Justice Department announced today that First RF Corporation (First RF), an antenna and radio system company located in Boulder, Colorado, has agreed to pay $10 million to settle allegations that it violated the False Claims Act by submitting inflated claims for electronic warfare antennas sold to the U.S. Army to combat Improvised Explosive Devices.
“Misrepresentations during contract negotiations undermine the integrity of the government procurement process,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “The Justice Department will take action where contractors make false statements to inflate the price of goods or services sold to the government.”
The settlement announced today resolves the United States’ investigation into First RF’s conduct in connection with a 2005 Army contract for the sale of electronic warfare antennas. Specifically, the United States alleged that First RF knowingly submitted false data to the Army that misrepresented First RF’s cost to manufacture the antennas, and thereby inflated the price for the antennas and the payments First RF received for them.
“When defense contractors supply our armed forces with equipment, those contractors must be absolutely truthful in their price negotiations,” said U.S. Attorney John Walsh for the District of Colorado. “It is no excuse for dishonesty that the military equipment was urgently needed. Defense contractors that fail to act with integrity in such negotiations should know that they will face consequences.”
“The Defense Criminal Investigative Service (DCIS) is committed to ensuring the integrity of the Defense Department’s procurement process,” said Special Agent-in-Charge Janice M. Flores of the DCIS Southwest Field Office located in Arlington, Texas. “Contractors such as FRF are expected to comply with their statutory obligations and act in good faith when dealing with the U.S. government and this settlement demonstrates that companies will be held accountable for their actions.”
“Our men and women in uniform are putting their lives on the line daily around the world, and the U.S. Army relies heavily on the contracting process to bring the very best to our service men and women,” said Frank Robey, director of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit. “Shortchanging our troops or the American taxpayers in any way, shape or form will not be tolerated and we are committed to investigating all allegations of possible fraud or misrepresentation of costs with great interest.”
This settlement was the result of a coordinated effort by the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Colorado and the Defense Criminal Investigative Service.
The claims resolved by this settlement are allegations only, and there has been no determination of liability.
Alabama Woman Sentenced to Prison for Stolen Identity Refund FraudRead the Press Release
A Dothan, Alabama, woman was sentenced to serve 34 months in prison by the Honorable Judge Myron H. Thompson of the U.S. District Court for the Middle District of Alabama in connection with her role in committing stolen identity tax refund fraud, announced Acting Deputy Assistant Attorney General Larry Wszalek of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama.
On July 16, a jury found Nina Macena, 32, guilty of conspiring to defraud the government through the filing of false tax returns, three counts of wire fraud and three counts of aggravated identity theft. U.S. District Court Judge Thompson also ordered Macena to pay restitution in the amount of $109,480.
According to court documents and evidence from the trial, Macena provided stolen identities to Ivory Bolen, also of Dothan, who used the identities to file false tax returns that fraudulently requested refunds from the Internal Revenue Service (IRS). Bolen would attempt to have the refunds deposited onto prepaid debit cards, which would be mailed to addresses controlled by Bolen and Macena. Macena obtained the identities from Roderick Neal, a former bail bondsman in Dothan, who had access to the personal information of individuals who had been detained at the Dothan City Jail. Both Bolen and Neal previously pleaded guilty to their involvement in the scheme. Altogether, Bolen filed tax returns claiming more than $300,000 in refunds using the stolen identities that Macena provided, butthe IRS successfully stopped a number of the fraudulent returns. Macena was ultimately convicted by the jury on all counts in the indictment.
Macena testified in her own defense at trial and admitted that she had obtained information from Neal for Bolen, but claimed that she was unaware of the nature of the information. She also testified that she stored items for Bolen in her storage unit but that she was unaware of what she was storing. At sentencing, the judge found that her testimony was not credible and consequently increased her prison time.
This case was investigated by special agents of the IRS-Criminal Investigation. Trial Attorneys Jason Poole and Charles M. Edgar Jr. of the Tax Division prosecuted the case with the assistance of 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 at the division website.
Two Individuals Charged, Third Pleads Guilty for Roles in Costa Rican Telemarketing Schemes Targeting U.S. ResidentsRead the Press Release
A California woman pleaded guilty today for her role in a half-million-dollar “sweepstakes fraud” scheme that was run from Costa Rica and targeted U.S. residents. A Costa Rican national and an Ohio resident were also indicted for their roles in separate but similar schemes earlier this week.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Anne M. Tompkins of the Western District of North Carolina made the announcement.
Patricia Diane Clark, 56, of Sacramento, California, pleaded guilty today before U.S. Magistrate Judge David S. Cayer of the Western District of North Carolina to conspiracy to commit wire fraud, wire fraud, and conspiracy to commit money laundering, all in connection with a Costa Rican telemarketing fraud scheme that targeted U.S. residents.
According to Clark’s plea agreement, from approximately 2007 through February 2013, her co-conspirators called U.S. residents from Costa Rican call centers, falsely informing them that they had won a substantial cash prize in a “sweepstakes.” The victims, many of whom were elderly, were told that in order to receive the prize, they had to send money for a purported “refundable insurance fee.” Clark admitted that she picked up money from the victims and sent it to her co-conspirators in Costa Rica. Clark also admitted that she managed others who picked up money from the victims in the United States and that she kept a portion of the victims’ payments.
Also according to Clark’s plea agreement, once the victims sent money, Clark’s co-conspirators contacted the individuals again and falsely informed them that the prize amount had increased, either because of a clerical error or because another prize winner was disqualified. The victims then had to send additional money to pay for new purported fees to receive the now larger sweepstakes prize. The attempts to collect additional money from the victims continued until an individual either ran out of money or discovered the fraudulent nature of the scheme.
Clark admitted that, along with her co-conspirators, she was responsible for approximately $640,000 in losses to hundreds of U.S. citizens.
Additionally, earlier this week, Marco Vinicio Fallas Hernandez, 41, a Costa Rican citizen, was charged in a superseding indictment in the Western District of North Carolina with one count of conspiracy to commit wire fraud, ten counts of wire fraud, one count of conspiracy to commit money laundering, and nine counts of international money laundering in connection with a similar telemarketing scheme. According to the indictment, Hernandez and his co-conspirators were responsible for causing approximately $10,000,000 in losses to hundreds of U.S. citizens, many of whom are elderly. Eight individuals, including Hernandez, are charged in the superseding indictment.
Separately, Paul Ronald Toth Jrj., 38, a resident of Bloomingdale, Ohio, was indicted in the Western District of North Carolina this week on one count of conspiracy to commit money laundering and six counts of international money laundering. According to the indictment, between November 2009 and November 2010, Toth and others he supervised received money from victims of a Costa Rican telemarketing scheme. Toth allegedly kept some of the proceeds and wired the remainder to Costa Rica using numerous persons as senders and recipients, all in a manner designed to conceal and disguise the fraudulent source and nature of the transactions. Toth is alleged to have received more than $300,000 of illegal proceeds during the scheme.
The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.
These cases were investigated by the U.S. Postal Inspection Service, FBI, Internal Revenue Service, Federal Trade Commission, and Department of Homeland Security. These cases are being prosecuted by Senior Litigation Counsel Patrick Donley and Trial Attorneys William Bowne and Anna Kaminska of the Criminal Division’s Fraud Section.
Owners of Safari Company Indicted for Illegal Rhino HuntsRead the Press Release
The owners of Out of Africa Adventurous Safaris were charged with conspiracy to sell illegal rhinoceros hunts in South Africa in order to defraud American hunters, money laundering and secretly trafficking in rhino horns, announced Sam Hirsch Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division; George L. Beck, Jr., U.S. Attorney for the Middle District of Alabama; and Dan Ashe, Director of the U.S. Fish & Wildlife Service. The indictment was unsealed today in Montgomery, Alabama following the federal indictment.
The indictment charges Dawie Groenewald, 46, and his brother, Janneman Groenewald, 44, both South African nationals, and their company Valinor Trading CC (d/b/a Out of Africa Adventurous Safaris) with conspiracy, Lacey Act violations, mail fraud, money laundering and structuring bank deposits to avoid reporting requirements. The Lacey Act, the nation’s oldest criminal statute addressing illegal poaching and wildlife trafficking, makes it a crime to sell animal hunts conducted in violation of state, federal, tribal and foreign law.
According to the 18-count indictment, from 2005 to 2010, the Groenewald brothers traveled throughout the United States to attend hunting conventions and gun shows where they sold outfitting services and accommodations to American hunters to be conducted at their ranch in Mussina, South Africa. During the time period covered by the indictment, Janneman Groenewald lived in Autauga County, Alabama, where Out of Africa maintained bank accounts and is accused of money laundering and structuring deposits to avoid federal reporting requirements. Hunters paid between $3,500 and $15,000 for the illegal rhino hunts.
The defendants are charged with selling illegal rhino hunts by misleading American hunters. The hunters were told the lie that a particular rhino had to be killed because it was a “problem rhino.” Therefore, while no trophy could be legally exported, the hunters could nonetheless shoot the rhino, pose for a picture with the dead animal, and make record book entries, all at a reduced price. Meanwhile, the defendants are alleged to have failed to obtain necessary permits required by South Africa and cut the horns off some of the rhinos with chainsaws and knives.
The indictment alleges that the defendants then sold the rhino horn on the black market. Eleven illegal hunts are detailed in the papers filed in federal court, including one in which the rhino had to be shot and killed after being repeatedly wounded by a bow, and another in which Dawie Groenewald used a chainsaw to remove the horn from a sedated rhino that had been hunted with a tranquilizer gun. The American hunters have not been charged.
“We are literally fighting for the survival of a species today. In that fight, we will do all we can to prosecute those who traffic in rhino horns and sell rhino hunts to Americans in violation of foreign law,” said Sam Hirsch, Acting Assistant Attorney General for the Environment and Natural Resources Division. “This case should send a warning shot to outfitters and hunters that the sale of illegal hunts in the U.S. will be vigorously prosecuted regardless of where the hunt takes place.”
“These defendants tricked, lied and defrauded American citizens in order to profit from these illegal rhinoceros hunts,” stated U.S. Attorney Beck. “Not only did they break South African laws, but they laundered their ill-gotten gains through our banks here in Alabama. We will not allow United States’ citizens to be used as a tool to destroy a species that is virtually harmless to people or other animals.”
“The fact that defendants used American hunters to execute this scheme is appalling - but not as appalling as the brutal tactics they employed to kill eleven critically endangered wild rhinos,” said FWS Director Ashe. “South Africa has worked extraordinarily hard to protect its wild rhino population, using trophy hunts as a key management tool. The illegal ‘hunts’ perpetrated by these criminals undermine that work and the reputation of responsible hunters everywhere.”
Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. Adult rhinoceros have no known natural predators. All species of rhinoceros are protected under United States and international law. Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets. Nevertheless, the demand for rhinoceros horn and black market prices have skyrocketed in recent years due to the value that some cultures have placed on ornamental carvings, good luck charms or alleged medicinal purposes, leading to a decimation of the global rhinoceros population. Like hair or finger nails, rhino horn is actually composed of keratin and has no proven medical efficacy. As a result, rhino populations have declined by more than 90 percent since 1970. South Africa, for example, has witnessed a rapid escalation in poaching of live animals, rising from 13 in 2007 to a record 1004 in 2013. Illegally killed rhinos like the ones charged in this prosecution are not included in the published statistics of poached animals.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
The investigation of Out of Africa is part of Operation Crash (named for the term “crash” which describes a herd of rhinoceros), an ongoing nation-wide effort to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns led by the Special Investigations Unit of the Fish and Wildlife Service Office of Law Enforcement in coordination with the U.S. Department of Justice. Thus far there have been 26 arrests and 18 convictions with prison terms as high as 70 months. (See attached Crash Fact Sheet). Throughout the course of the investigation on the current charges, U.S. authorities received substantial cooperation from South Africa’s National Prosecuting Authority and a specialized endangered species unit within the organized crime unit of the South African Police Service. That unit is known as the Hawks. Additional assistance has been provided in this case by the Bureau of Alcohol, Tobacco and Firearms, in Montgomery, Alabama and the Autauga County, Alabama Sheriff’s Office. The Out of Africa case is being prosecuted in the Middle District of Alabama by Assistant U.S. Attorney Brandon K. Essig and by Richard A. Udell, Senior Litigation Counsel with the Environmental Crimes Section of the U.S. Department of Justice in Washington, D.C. The Out of Africa investigation is continuing.
The Criminal Division’s Office of International Affairs provided assistance.
Rhino Indictment
Opeartion Crash Summary
Owners of Cadillac Ranch Restaurants and Associated Accountant Sentenced for Tax ChargesRead the Press Release
A certified public accountant (CPA) from Dayton, Ohio, was sentenced today to serve 12 months and one day in prison to be followed by one year of supervised release by U.S. District Judge Edmund A. Sargus Jr. in Columbus, Ohio, on tax charges, announced the Justice Department and Internal Revenue Service (IRS).
Larry E. Couchot, 59, who is the president and part owner of a CPA firm in Centerville, Ohio, was also ordered to pay $40,711 in restitution and a $10,000 fine, and to serve four months of community confinement followed by two months of home confinement following his prison term. Couchot’s sentencing today follows the sentencing of three of his tax clients, Jon B. Field, of Dublin, Ohio, Paul A. Butler, also of Dublin, and Eric P. Schilder, of Marion, Ohio, who were all associated with Cadillac Ranch restaurants.
On June 5, 2014, Couchot pleaded guilty to two tax fraud charges and admitted that he assisted in the preparation of false individual income tax returns for his clients Jon B. Field, Butler and Schilder, which caused a tax loss of over $191,000 to the IRS. Jon B. Field, along with his associates Butler and Schilder and his brother Joel Field, owned and operated the Cadillac Ranch restaurant enterprise.
Joel A. Field also pleaded guilty to tax charges earlier this year, but his tax charges were unrelated to Couchot. His sentencing is scheduled to take place in November.
According to the documents filed with the court, during 2006 through 2010, Couchot prepared false federal income tax returns for his clients Jon B. Field, Butler and Schilder. According to the court filing, the three clients used a substantial amount of company funds for personal purposes, which included payments for their personal cars, car insurance, country club dues and their individual income tax liabilities. In addition, the individuals made substantial charges for personal purposes on credit cards that were paid for with company funds. Couchot also admitted that he believed that Jon B. Field used company funds to pay for personal expenditures including lawn services, repairs and maintenance to personal residences, granite counter tops, TV and audio systems, and other expenditures that were personal in nature.
Couchot admitted that he prepared false tax returns for these individuals which failed to report all of the above personal expenditures as income on the individuals’ income tax returns. Couchot pleaded guilty to aiding and assisting in the preparation of a false income tax return for the year 2009 for Jon B. Field, and to preparing a false income tax return for Schilder for the year 2007 which reported only $68,000 of income despite the fact that the business records of the company showed that Shilder earned over $129,000 in that year. Couchot admitted that after the false return was filed with the IRS on behalf of Schilder, he created a false summary which he retained in his records to support the false income of $68,000. The clients were sentenced for their crimes by Judge Sargus earlier this year, and Jon B. Field was sentenced to serve time in jail for his conduct.
These cases were investigated by the IRS-Criminal Investigation and are being prosecuted by Trial Attorney Richard M. Rolwing and Senior Litigation Counsel John E. Sullivan of the Justice Department’s Tax Division. Additional information about the Tax Division and its enforcement efforts may be found on the division website. Additional information about tax fraud schemes to watch out for may be found on the IRS-Criminal Investigation website.
Michigan Pizza Franchise Owners Plead GuiltyRead the Press Release
Today, two West Bloomfield, Michigan, residents pleaded guilty to tax fraud in the U.S. District Court for the Eastern District of Michigan, announced the Justice Department and Internal Revenue Service (IRS).
Maher Bashi, who served as Happy’s Pizza’s corporate chief operating officer, and Tom Yaldo, an owner of numerous Happy’s Pizza franchises, pleaded guilty to conspiracy to defraud the United States. According to the indictment, their conduct included, among other things, creating and maintaining fraudulent accounting records and falsely reporting income taxes and payroll taxes.
A multiple count indictment was unsealed July 16, 2013, alleging that from approximately June 2004 through April 2011, Bashi, Yaldo and others conspired to divert business receipts, underreport wages and understate the true income and expenses of specified Happy’s Pizza franchises. According to the indictment, the scheme resulted in the specified franchises paying more than $2.1 million in unreported wages to employees and shareholders.
Documents filed with the court indicate Bashi, Yaldo and others executed a scheme which systematically underreported the taxable income and payroll taxes of Happy’s Pizza franchises to the IRS and distributed the resulting gain among the conspirators and other Happy’s Pizza franchise partners. Additionally, documents filed with the court indicate Yaldo caused at least three Happy’s Pizza franchises in which he held an ownership interest to file false corporate income tax returns in 2008 and 2009 that underreported a total of more than $1,581,000 in gross receipts. According to the plea agreement, Bashi and Yaldo will pay restitution to the IRS for unpaid income taxes and employment taxes.
Bashi and Yaldo each face a statutory maximum sentence of five years in prison and a fine of up to $250,000.
This case was investigated by IRS – Criminal Investigation, the Drug Enforcement Administration and the FBI. It is being prosecuted by Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald of the Justice Department’s Tax Division.
Louisiana Tax Return Preparer Sentenced to Prison for Filing False Income Tax Returns and Identity TheftRead the Press Release
A Robert, Louisiana, woman was sentenced today to serve 87 months in prison for filing false tax returns, corruptly endeavoring to obstruct or impede the Internal Revenue Service (IRS) and aggravated identity theft, announced the Justice Department and IRS.
Hazel M. McGary, 46, aka Hazel M. Alexander and Hazel M. Kimble, was also ordered to serve two years of supervised release following her prison term and to pay $148,673 in restitution to the IRS.
According to court documents, from 2008 through November 2013, McGary owned and operated a series of tax preparation businesses under different names, including Just for You Services, Just For Taxes and H&H Unlimited Services, in Hammond, Albany, Baton Rouge and Covington, Louisiana. In 2012, McGary’s tax preparation location in Albany operated as a business where clients were permitted to drive their cars to a drive-through window in order to have their tax returns prepared.
As part of her plea agreement, McGary admitted that she prepared and filed false returns that claimed artificially high tax refunds, primarily by abusing the Earned Income Tax Credit. Court documents further show that McGary obtained electronic filing numbers from the IRS using the names and social security numbers of other individuals in an effort to hide her fraudulent activity. McGary falsely listed these other individuals’ names and identification numbers on the returns she filed but did not identify herself as the preparer. McGary further filed at least one false return in her own name on which she failed to include tax preparation fees she received as income.
Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division would like to thank IRS-Criminal Investigation, in partnership with the Louisiana State Police, who investigated the case, and Trial Attorneys Hayden Brockett and Kevin Lombardi of the Tax Division, who prosecuted the case.
Former Campaign Treasurer Pleads Guilty to Charges, Admits Diverting Money from Campaign's Bank AccountRead the Press Release
Hakim J. Sutton, 33, of Washington, D.C., pleaded guilty today to evading income taxes and violating campaign finance laws while working as the treasurer and custodian of records for a District of Columbia political campaign.
The guilty plea, in the U.S. District Court for the District of Columbia, was announced by U.S. Attorney Ronald C. Machen Jr., Acting Deputy Assistant Attorney General Larry J. Wszalek for the Department of Justice’s Tax Division, Chief Cathy L. Lanier of the Metropolitan Police Department (MPD) and Special Agent in Charge Thomas J. Kelly of the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington Field Office.
Sutton pleaded guilty to one count of income tax evasion, a federal offense, and one count of knowingly filing a false and misleading campaign finance report, a violation of District of Columbia law. The Honorable Judge Richard J. Leon scheduled sentencing Feb. 4, 2015. Under the applicable sentencing guidelines, the parties have agreed that Sutton faces a likely range of 10 to 16 months in prison and a fine of up to $30,000 for federal income tax evasion, and a likely range of six to 24 months in prison for knowingly filing a false or misleading campaign finance report. The plea agreement also calls for Sutton to pay full restitution of $18,231 in taxes and interest to the IRS.
According to a statement of offense, signed by the defendant as well as the government, Sutton was the principal owner of the Sutton Group, which performed political consulting services in the District of Columbia and elsewhere. In 2011 and 2012, Sutton served as the treasurer and custodian of records for the campaign of Michael A. Brown, a candidate seeking re-election to an at-large seat on the District of Columbia Council. Brown ultimately lost in the November 2012 election.
Between July 2011 and May 2012, Sutton diverted approximately $115,250 from the campaign bank account to himself by depositing the funds drawn from the campaign bank account into his own personal bank accounts and converting funds drawn from the campaign bank account to cash. All told, Sutton wrote 36 checks payable to himself.
According to the statement of offense, some, but not all, of the money that Sutton diverted was compensation for Sutton’s work on the campaign. However, Sutton failed to file income tax returns for calendar years 2011 and 2012. He owes a total of $17,180 in federal income taxes for those years along with an additional $1,051 in interest.
Sutton also omitted references to the checks that he had written to himself in a series of six reports he filed in 2011 and 2012 with the District of Columbia Office of Campaign Finance.
This case was investigated by the MPD and IRS-CI. It was prosecuted by Assistant U.S. Attorney David A. Last and former Assistant U.S. Attorney Bryan Seeley of the U.S. Attorney’s Office for the District of Columbia and Trial Attorney Kenneth C. Vert of the Tax Division. Assistance was provided by Assistant U.S. Attorney Anthony Saler of the Asset Forfeiture and Money Laundering Section, Legal Assistant Angela Lawrence, Paralegal Specialist Tasha Harris, former Paralegal Specialist Nicole Wattelet and Criminal Investigator John Marsh, all of the U.S. Attorney’s Office for the District of Columbia.
Four Former Blackwater Employees Found Guilty of Charges in Fatal Nisur Square Shooting in IraqRead the Press Release
Four former security guards for Blackwater USA were found guilty today of charges stemming from the Sept. 16, 2007, shooting at Nisur Square in Baghdad, Iraq, that resulted in the killing of 14 unarmed civilians and the wounding of numerous others.
The jury verdicts, in the U.S. District Court for the District of Columbia, were announced by Ronald C. Machen Jr., U.S. Attorney for the District of Columbia, and Andrew G. McCabe, Assistant Director in Charge of the FBI’s Washington Field Office.
The defendants include Nicholas Abram Slatten, 30, of Sparta, Tenn.; Paul Alvin Slough, 35, of Keller, Texas; Evan Shawn Liberty, 32, of Rochester, N.H.; and Dustin Laurent Heard, 33, of Maryville, Tenn. Slatten, who was accused of firing the first shots, was found guilty of one count of first-degree murder. Slough was found guilty of 13 counts of voluntary manslaughter, 17 counts of attempted manslaughter, and one firearms offense. Liberty was found guilty of eight counts of voluntary manslaughter, 12 counts of attempted manslaughter, and one firearms offense. Heard was found guilty of six counts of voluntary manslaughter, 11 counts of attempted manslaughter, and one firearms offense.
“This verdict is a resounding affirmation of the commitment of the American people to the rule of law, even in times of war,” said U.S. Attorney Machen. “Seven years ago, these Blackwater contractors unleashed powerful sniper fire, machine guns, and grenade launchers on innocent men, women, and children. Today they were held accountable for that outrageous attack and its devastating consequences for so many Iraqi families. I pray that this verdict will bring some sense of comfort to the survivors of that massacre. I want to thank the prosecutors and law enforcement agents who have fought for the past seven years to bring justice to the memories of those who were gunned down in Nisur Square.”
“Today’s verdict demonstrates the FBI's dedication to investigating violations of U.S. law no matter where they occur,” said Assistant Director in Charge McCabe. “International investigations such as this one are very complex and frequently dangerous. This case took a tremendous amount of coordination to bring over a large number of foreign witnesses in support of this prosecution. I commend the FBI Special Agents, Task Force Officers, Intelligence Analysts and Language Specialists and our partners at the U.S. Attorney’s Office for working to bring those responsible to justice and conveying some measure of comfort to the victims’ families in Iraq.”
The verdicts came on the 28th day of jury deliberations and followed more than two months of trial. The Honorable Senior Judge Royce C. Lamberth ordered that the four defendants be detained pending sentencing. A sentencing date has not yet been set.
The murder charge against Slatten calls for a mandatory sentence of life in prison. Each of the voluntary manslaughter counts against the other defendants carries a statutory maximum of 15 years in prison. Each of the attempted manslaughter counts carries a statutory maximum of seven years of incarceration. The weapons offense carries a mandatory 30-year prison sentence.
Another Blackwater security guard, Jeremy P. Ridgeway, pled guilty in December 2008 to voluntary manslaughter and attempt to commit manslaughter. Ridgeway, who testified as a government witness in the trial, has not yet been sentenced.
The defendants worked for Blackwater USA, a private security contractor that was paid by the U.S. government to provide protective services to U.S. officials.
The trial began June 17, 2014. Over the next 10 weeks, the government presented testimony from 71 witnesses, including 30 from Iraq. This represented the largest group of foreign witnesses ever to travel to the United States for a criminal trial. The witnesses included 13 people who were wounded in the shootings, as well as relatives of many of those who died. The government’s witnesses also included nine members of “Raven 23,” the Blackwater team that was on the scene on the day of the shootings.
According to the government’s evidence, at approximately noon on Sunday, Sept. 16, 2007, several Blackwater security contractors, including the four defendants, opened fire in and around Nisur Square, a busy traffic circle in the heart of Baghdad. When they stopped shooting, 14 Iraqi civilians were dead. Those killed included 10 men, two women, and two boys, ages 9 and 11. Another 18 victims were injured.
The four defendants and 15 other Blackwater security contractors were assigned to a convoy of four heavily-armed trucks known as a Tactical Support Team, using the call sign “Raven 23.” Shortly before noon, Raven 23 learned that a car bomb had detonated in central Baghdad near a location where a U.S official was being escorted by a Blackwater personal security detail team. Raven 23 team members promptly reported to their convoy vehicles, and the convoy drove to a secured checkpoint between the Green Zone and Red Zone.
Once there, in disregard of an order from Blackwater’s command, the team’s shift leader directed Raven 23 to leave the Green Zone and establish a blockade in Nisur Square, a busy traffic circle that was immediately adjacent to the Green Zone. While occupying the southern part of the traffic circle, seven of the 19 members of Raven 23, including the four defendants and Ridgeway, fired their weapons, resulting in the deaths or injury of the unarmed Iraqi civilians there. While leaving the traffic circle, Slough continued to fire his weapon, resulting in additional deaths and injuries.
Finally, further away, north of the traffic circle, Slough and Ridgeway again fired their weapons, resulting in the injury of three more unarmed Iraqi civilians.
The first to be killed was Ahmed Haithem Ahmed Al Rubia’y, 21, an aspiring doctor, who was driving his mother to an appointment. His mother, Mahassin Mohssen Kadhum Al-Khazali, 44, a medical doctor, also was killed. Others who died included Ali Mohammed Hafedh Abdul Razzaq, 9, who was traveling with his family; Osama Fadhil Abbas, 52, a businessman who sold used cars and who was enroute to a business meeting; Mohamed Abbas Mahmoud, 47, a delivery truck driver, and his 11-year-old son, Qasim Mohamed Abbas Mahmoud; Sa’adi Ali Abbas Alkarkh, 52, a businessman; Mushtaq Karim Abd Al-Razzaq, 18, an Iraqi soldier who was standing at a military checkpoint; Ghaniyah Hassan Ali, 55, who was traveling with her daughter on a public bus, and who was in the area to get documentation for a trip to holy sites; Ibrahim Abid Ayash, 77, a gardener, who was traveling in another bus; Hamoud Sa’eed Abttan, 33, and his cousin, Usday Ismail Ibrahiem, 27, who were out looking for work with the Iraqi Army; Mahdi Sahib Nasir, 26, a taxi driver, and Ali Khalil Abdul Hussein, 54, a motorcyclist who was commuting to work.
The jury considered charges involving injuries to 14 men and three women. Because of travel issues, witnesses to support an 18th charge of attempted manslaughter did not appear at the trial, and the charge related to that victim’s injuries was dismissed by the government.
This case was investigated by the FBI’s Washington Field Office. The Iraqi Ministry of Interior and the Iraqi National Police provided cooperation and assistance in the investigation.
The case was prosecuted by Assistant U.S. Attorneys Anthony Asuncion, John Crabb, Jr., Christopher R. Kavanaugh, T. Patrick Martin, and David Mudd, of the National Security Section of the U.S. Attorney’s Office for the District of Columbia. The case was originally indicted by Assistant U.S. Attorneys Jonathan M. Malis and Kenneth Kohl.
Founder of Detroit-Area Home Health Agencies Pleads Guilty to Health Care Fraud ConspiracyRead the Press Release
The founder of three Detroit-area home health agencies pleaded guilty today in federal court for his role in a $22 million home health care fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office, Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office and Special Agent in Charge Jarod Koopman of the Internal Revenue Service Criminal Investigation (IRS-CI) Detroit Field Office made the announcement.
Tayyab Aziz, 45, of Homer Glen, Illinois, pleaded guilty today before U.S. District Judge Bernard A. Friedman in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. His sentencing is scheduled for March 3, 2015.
According to admissions in his plea agreement, Aziz founded three Detroit-area home health care agencies, Prestige Home Health Services Inc. (Prestige), Royal Home Health Care Inc., and Platinum Home Health Services Inc. (Platinum). Using these companies, Aziz admitted that he orchestrated a conspiracy to defraud Medicare through fraudulent billings for home health care services.
Specifically, Aziz admitted that he and his co-conspirators submitted fraudulent claims to Medicare for services that were medically unnecessary or never performed. They also submitted claims for services purportedly provided to Medicare beneficiaries who were recruited through illegal kickbacks paid to the patients and recruiters. To conceal the fraud, Aziz admitted that he and his co-conspirators created fictitious physical therapy files to document physical therapy and other services that had not actually been provided and were not medically necessary. Aziz also created and submitted falsified records to the Michigan Community Health Accreditation Program (CHAP) in order for Prestige and Platinum to remain accredited Medicare providers.
As a result of Aziz’s fraudulent conduct, Medicare paid approximately $1,915,513. Five of six other defendants in this case have also previously pleaded guilty.
This case was investigated by the FBI, HHS-OIG and IRS-CI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. This case is being prosecuted by Trial Attorneys Niall M. O’Donnell and James P. McDonald of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Federal Court Enters Order and $25 Million Judgment Against Los Angeles Area Work-at-Home SchemeRead the Press Release
An order of permanent injunction against The Zaken Corp. of Thousand Oaks, California, and company president Tiran Zaken, of Calabasas, California, was entered today by U.S. District Court Judge Dean D. Pregerson, finding that they made false and misleading statements in marketing work-at-home business opportunities and promising commissions to consumers, the Justice Department announced. In a written opinion entered Sept. 18, the court found that 110,000 consumers had bought the defendants’ program and “more than 99.8 percent never earned any commission whatsoever.” The court ordered the defendants to pay $25,406,781 as redress for consumer injury.
“This order reflects the Department of Justice’s commitment to protecting consumers from fraud schemes,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division. “Those who take advantage of Americans searching for an honest day’s work, depriving them of their savings, will be held accountable.”
The Zaken Corp. sold consumers a “Wealth Building Home Business Plan” called QuikSell. For an initial investment of $148, consumers became Associates of QuikSell Liquidations and received a manual including instructions on how to locate excess inventory. The defendants represented that once purchasers of the opportunity identified businesses interested in selling excess inventory, The Zaken Corp. would find a buyer for the inventory. If The Zaken Corp. succeeded in negotiating a sale of the inventory, it promised to give the associate a “commission” equal to half the profit on the sale.
The Zaken Corp. and Tiran Zaken lured customers with claims that purchasers of their program could expect that “two to four hours a week working this business will earn participants an average of $3,000 to $6,000.” They further claimed that “the average commission checks associates get … will be approximately $4,280!” In the court’s written decision, Judge Pregerson of the Central District of California found that “fewer than one percent of consumers ever earned any income at all.”
Once consumers purchased the QuikSell program, they were inundated with advertisements to purchase additional business “tools” costing hundreds or thousands of dollars. The court found that consumers were encouraged to spend an additional $2,300 if they were “serious about this business and … really wanted to make the kind of money others have made.” However, after making this additional investment, consumers received only a directory consisting of “largely outdated telephone numbers of companies who were out of business.”
The court found that The Zaken Corp. and Tiran Zaken violated the Federal Trade Commission Act by making false claims regarding the earnings potential of QuikSell. The court also found that The Zaken Corp. and Tiran Zaken violated the Federal Trade Commission (FTC)’s Business Opportunity Rule, which requires sellers of business opportunities to provide specific, truthful information to help consumers evaluate a business opportunity prior to purchase. The FTC promulgated an updated Business Opportunity Rule in 2012, in order to protect consumers from exactly this sort of work-at-home scheme, in which sellers lure victims with false representations of substantial earnings.
Pursuant to the injunction issued by the court, The Zaken Corp. and Tiran Zaken are permanently banned from advertising or selling any work-at-home opportunity or business opportunity.
This case was brought by the Department of Justice as part of “Operation Lost Opportunity,” a sweep of business opportunity fraud cases coordinated by the FTC. Trial Attorneys Ann Entwistle and Lisa Hsiao of the Justice Department’s Consumer Protection Branch litigated this case with support from Dana Barragate of the FTC’s East Central Region, the FTC’s Division of Marketing Practices and Assistant U.S. Attorney Anoiel Korshid in the Central District of California.
EOIR’s Office of Legal Access ProgramsRead the Press Release
The Executive Office for Immigration Review’s (EOIR) Office of Legal Access Programs (OLAP), formerly known as the Legal Orientation and Pro Bono Program, was established in April 2000 to improve access to legal information and counseling and to increase representation rates for foreign-born individuals appearing before the immigration courts and Board of Immigration Appeals (BIA). OLAP is responsible for administering the Legal Orientation Program, the Legal Orientation Program for Custodians of Unaccompanied Alien Children, and the BIA Pro Bono Project. OLAP also coordinates EOIR’s Committee on Pro Bono, the Model Hearing Program, and other initiatives which improve access to legal services for individuals appearing before EOIR’s tribunals.
Legal Orientation Program
Since 2003, EOIR has carried out the LOP to improve judicial efficiency in the immigration courts, and to assist detained individuals and others involved in detained removal proceedings to make timely and informed decisions. Under the LOP, EOIR contracts with non-profit organizations to provide group and individual orientations, self-help workshops, and pro bono referral services for detained individuals in removal proceedings. LOP is operational mainly at detention sites, but it also serves certain sites with non-detained individuals and certain family detention centers.
Independent analysis has shown that the LOP has positive effects on the immigration court process: detained individuals make better informed and more timely decisions and are more likely to obtain representation; and cases are completed faster, resulting in fewer court hearings, less time spent in detention and cost savings.
Legal Orientation Program for Custodians of Unaccompanied Alien Children
The Trafficking Victims Protection Reauthorization Act of 2009 tasked EOIR and the Department of Health and Human Services' Office of Refugee Resettlement to offer legal orientation presentations to the adult custodians of unaccompanied alien children in EOIR removal proceedings. The goals of the legal orientations include seeking to protect children from mistreatment, exploitation and trafficking, as well as increasing the appearance rates of these children in immigration court. In 2010, EOIR launched the LOPC to meet these goals and to help increase pro bono representation rates of unaccompanied alien children in immigration proceedings.
EOIR has contracted with non-profit partners to carry out the LOPC at 14 sites nationwide. The LOPC providers offer services similar to those provided under the LOP: general group orientations, individual orientations, self-help workshops, and assistance with pro bono referrals. Additionally, LOPC providers are able to assist with school enrollment and make referrals to social services to help ensure the well-being of the child. OLAP issues guidance to LOPC providers designed to assist them in identifying victims of mistreatment, exploitation, and trafficking; protecting the victims from further harm; and connecting the victims to needed social services.
In addition, since 2013, the LOPC has operated the LOPC National Call Center to assist in making appointments for custodians at one of the LOPC provider locations, and to provide telephonic assistance to custodians who live outside the geographic areas in which LOPC is currently available. This telephonic assistance includes legal orientations on the immigration court process, as well as guidance in filing basic court forms, such as the change of address and motion to change venue.
BIA Pro Bono Project
In 2001, EOIR and non-profit agencies developed the BIA Pro Bono Project (the "Project"). Individuals in removal proceedings are generally not entitled to publicly-funded legal assistance and, as a result, many appear before the immigration courts and BIA without counsel. Agencies that provide legal services to immigrants can face many obstacles in identifying, locating and communicating with unrepresented individuals in time to write and file an appeal brief. The Project helps overcome such obstacles. Through the Project, OLAP assists in identifying certain cases based upon pre-determined criteria. Once cases are identified and reviewed, their summaries are then distributed by a non-profit agency to pro bono representatives throughout the United States. Volunteers who accept a case under the Project receive a copy of the file, as well as additional time to file the appeal brief.
A ten-year review of the BIA Pro Bono Project, completed in February 2014, demonstrated that the Project found counsel willing to accept the case for 87% of cases screened between 2002 and 2011. Additionally, those who were represented through the Project were more likely to have briefs filed with their appeals than pro se respondents. Most significantly, an analysis of the appeals before the Board between 2002 and 2011 showed those who were represented through the Project were more likely to obtain a favorable outcome in their cases than those who do not receive representation. This was particularly the case for individuals who were detained. Since the beginning of the Project, over 1,000 individuals have been represented by pro bono counsel.
Model Hearing Program
The Model Hearing Program is an educational program developed to improve the quality of advocacy before the court, as well as to increase levels of pro bono representation. Model hearings consist of small-scale "mock" trial training sessions held in immigration court and presented by immigration judges. The training sessions, carried out in cooperation with partnering bar associations and/or pro bono agencies, provide practical and relevant "hands-on" immigration court training to small groups of attorneys/law students with an emphasis on practice, procedure and advocacy skills. Participants receive training materials, may obtain Continuing Legal Education credit from the partnering organization, and commit to a minimal level of pro bono representation. Since June 2001, more than 60 model hearing training sessions have been held in immigration courts nationwide. The Model Hearing Program Training Manual contains detailed information on the content and structure of this program, as well as samples of past training sessions.
Other Initiatives
Drawing on informational pamphlets developed by non-profit partners, throughout the nation's detention facilities, OLAP makes available 11 self-help guides. These guides, posted in English and Spanish, cover the most common forms of relief, as well as information about bond and an overview of immigration proceedings. The guides are generally accessible to detainees in the facility libraries and are available on the OLAP website as well.
Additional resources:
- American Bar Association Know Your Rights video
- LOP Cost Saving Analysis report
- EOIR -
The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR’s immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR’s Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.
EOIR Expands Legal Orientation Program SitesRead the Press Release
FALLS CHURCH, VA – The Executive Office for Immigration Review (EOIR) today announced that, beginning Nov. 1, 2014, it will provide assistance to families detained at the Karnes Family Residential Center, in Karnes City, Texas, through the Legal Orientation Program (LOP). The LOP is a program in which representatives from non-profit organizations provide explanations about immigration court procedures along with other basic legal information to groups of detained individuals. This expansion is possible due to additional funds Congress provided to EOIR for the LOP. The expansion of the program to the Karnes facility marks EOIR's 32nd LOP site, and the third LOP location within a family detention center.
"The Legal Orientation Program is critical to the efficiency of our immigration court proceedings," said EOIR Director Juan P. Osuna. "By attending an LOP, individuals are better able to make timely and informed decisions in their removal proceedings and, with more information about available resources, are more likely to obtain representation."
Since the start of fiscal year 2014, the LOP has expanded to seven additional sites. In addition to the Karnes facility, LOP recently began serving the Artesia Family Residential Center, in Artesia, N.M., and will soon begin to serve the expanded Berks County Family Shelter, in Leesport, Pa. The LOP expansion also includes new detention sites in Woodstock, Ill. and Kenosha, Wis.
Since 2003, EOIR has carried out the LOP to improve judicial efficiency in the immigration courts, and to assist detained individuals and others involved in removal proceedings to make timely and informed decisions. Under the LOP, EOIR contracts with nonprofit organizations to provide group and individual orientations, self-help workshops, and pro bono referral services for individuals in removal proceedings.
Please see EOIR's fact sheet, EOIR's Office of Legal Access Programs, for more information on the LOP and EOIR's additional legal access programs.
- EOIR -
The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR’s immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR’s Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.
Doctor Sentenced to Prison for Tax EvasionRead the Press Release
A doctor was sentenced today to serve 18 months in prison by U.S. District Court Judge Rudolph T. Randa in the Eastern District of Wisconsin for committing tax evasion and making false statements, announced the Justice Department and Internal Revenue Service (IRS).
On May 22, Dr. Michael N. Mangold pleaded guilty to one count of tax evasion and one count of making false statements. According to court documents, Mangold was a medical doctor specializing in emergency medicine and urgent care who, since about 1993, had worked as a physician for various hospitals, emergency rooms and urgent care facilities. At times, he also worked as a physician in state and county correctional facilities. Mangold primarily earned income through a combination of employee wages and independent contractor payments.
In his plea agreement, Mangold admitted that from 1997 through 2007, he willfully concealed his income from the IRS. Mangold further admitted that he made false statements to the IRS. In total, Mangold owed approximately $191,577 in taxes based on his income and wages during the relevant calendar years plus interest.
Mangold also admitted that he made materially false statements during the course of a civil lawsuit concerning his failure to repay federal student loan obligations. Mangold admitted that he submitted a false financial affidavit to government officials which contained false statements about the amount of income he earned as a doctor.
This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Charles M. Edgar Jr. and Rebecca Perlmutter of the Justice Department’s Tax Division are prosecuting the case.
DaVita to Pay $350 Million to Resolve Allegations of Illegal KickbacksRead the Press Release
DaVita Healthcare Partners, Inc., one of the leading providers of dialysis services in the United States, has agreed to pay $350 million to resolve claims that it violated the False Claims Act by paying kickbacks to induce the referral of patients to its dialysis clinics, the Justice Department announced today. DaVita is headquartered in Denver, Colorado and has dialysis clinics in 46 states and the District of Columbia.
The settlement today resolves allegations that, between March 1, 2005 and February 1, 2014, DaVita identified physicians or physician groups that had significant patient populations suffering renal disease and offered them lucrative opportunities to partner with DaVita by acquiring and/or selling an interest in dialysis clinics to which their patients would be referred for dialysis treatment. DaVita further ensured referrals of these patients to the clinics through a series of secondary agreements with the physicians, including entering into agreements in which the physician agreed not to compete with the DaVita clinic and non-disparagement agreements that would have prevented the physicians from referring their patients to other dialysis providers.
“Health care providers should generate business by offering their patients superior quality services or more convenient options, not by entering into contractual agreements designed to induce physicians to provide referrals,” said Deputy Assistant Attorney General for the Justice Department’s Civil Division Jonathan F. Olin. “The Justice Department is committed to protecting the integrity of our healthcare system and ensuring that financial arrangements in the healthcare marketplace comply with the law.”
The government alleged that DaVita used a three part joint venture business model to induce patient referrals. First, using information gathered from numerous sources, DaVita identified physicians or physician groups that had significant patient populations suffering renal disease within a specific geographic area. DaVita would then gather specific information about the physicians or physician group to determine if they would be a “winning practice.” In one transaction, a physician’s group was considered a “winning practice” because the physicians were “young and in debt.” Based on this careful vetting process, DaVita knew and expected that many, if not most, of the physicians’ patients would be referred to the joint venture dialysis clinics.
Next, DaVita would offer the targeted physician or physician group a lucrative opportunity to enter into a joint venture involving DaVita’s acquisition of an interest in dialysis clinics owned by the physicians, and/or DaVita’s sale of an interest in its dialysis clinics to the physicians. To make the transaction financially attractive to potential physician partners, DaVita would manipulate the financial models used to value the transaction. For example, to decrease the apparent value of clinics it was selling, DaVita would employ an assumption it referred to as the “HIPPER compression,” which was based on a speculative and arbitrary projection that future payments for dialysis treatments by commercial insurance companies would be cut by as much as half in future years. These manipulations resulted in physicians paying less for their interest in the joint ventures and realizing returns on investment which were extraordinarily high, with pre-tax annual returns exceeding 100 percent in some instances.
Last, DaVita ensured future patient referrals through a series of secondary agreements with their physician partners. These included paying the physicians to serve as medical directors of the joint venture clinics, and entering into agreements in which the physicians agreed not to compete with the clinic. The non-compete agreements were structured so that they bound all physicians in a practice group, even if some of the physicians were not part of the joint venture arrangements. These agreements also included provisions prohibiting the physician partners from inducing or advising a patient to seek treatment at a competing dialysis clinic. These agreements were of such importance to DaVita that it would not conclude a joint venture transaction without them.
The Government’s complaint identifies a joint venture with a physicians’ group in central Florida as one of several examples illustrating DaVita’s scheme to improperly induce patient referrals. The group had previously been in a joint venture arrangement involving dialysis clinics with Gambro, Inc., a dialysis company acquired by DaVita in 2005. Prior to the acquisition, Gambro had entered into a settlement with the United States to resolve alleged kickback allegations that, among other things, required Gambro to unwind its joint venture agreements. As a consequence, Gambro purchased the group’s interest in the joint venture clinics and agreed to a “carve-out” of the associated non-competition agreement which allowed the group to open its own dialysis clinic nearby, which it did. After acquiring Gambro, DaVita bought a majority position in the group’s newly established dialysis clinic, and sold a minority position in three DaVita-owned clinics. Despite the fact that each of the clinics involved were roughly comparable in terms of size and profits, DaVita agreed to pay $5,975,000 to acquire a 60 percent interest in the group’s clinic, while selling a 40 percent interest in the three clinics it owned for a total of $3,075,000. As part of this joint venture, the group agreed to enter into new non-compete agreements.
“This case involved a sophisticated scheme to compensate doctors illegally for referring patients to DaVita’s dialysis centers. Federal law protects patients by making buying and selling patient referrals illegal, so as to ensure that the interest of the patient is the exclusive factor in the referral decision,” said U.S. Attorney John Walsh. “When a company pays doctors and/or their practice groups for patient referrals, the company’s focus is not on the patient, but on the profit to be extracted from providing services to the patient.”
In conjunction with today’s announcement, the U.S. Attorney’s Office noted that after extensive review, it is closing its criminal investigation of two specific joint ventures.
As part of the settlement announced today, DaVita has also agreed to a Civil Forfeiture in the amount of $39 million based upon conduct related to two specific joint venture transactions entered into in Denver, Colorado. Additionally, DaVita has entered into a Corporate Integrity Agreement with the Office of Counsel to the Inspector General of the Department of Health and Human Services which requires it to unwind some of its business arrangements and restructure others, and includes the appointment of an Independent Monitor to prospectively review DaVita’s arrangements with nephrologists and other health care providers for compliance with the Anti-Kickback Statute.
“Companies seeking to boost profits by paying physician kickbacks for patient referrals – as the government contended in this case – undermine impartial medical judgment at the expense of patients and taxpayers,” said Daniel R. Levinson, Inspector General for the U.S. Department of Health and Human Services. “Expect significant settlements and our continued investigation of such wasteful business arrangements.”
The settlement resolves allegations originally brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. The suit was filed by David Barbetta, who was previously employed by DaVita as a Senior Financial Analyst in DaVita’s Mergers and Acquisitions Department. Mr. Barbetta’s share of the recovery has yet to be determined.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $22.4 billion through False Claims Act cases, with more than $14.2 billion of that amount recovered in cases involving fraud against federal health care programs.
The case was handled by the United States Attorney’s Office for the District of Colorado, the Civil Division of the United States Department of Justice, and the U.S. Department of Health and Human Services, Office of Inspector General.
The lawsuit is captioned United States ex rel. David Barbetta v. DaVita, Inc. et al., No. 09-cv-02175-WJM-KMT (D. Colo.). The claims settled by this agreement are allegations only; there has been no determination of liability.
Brooklyn Fish Dealer Sentenced to Four Months for Wire FraudRead the Press Release
WASHINGTON – Alan Dresner, a federally-licensed fish dealer from Brooklyn, New York, was sentenced today in federal court in Central Islip, New York, for violations stemming from his role in systematically underreporting fluke (summer flounder) that was being harvested as part of the federal Research Set-Aside (RSA) Program, the Justice Department’s Environment and Natural Resources Division announced.
On April 23, 2014, Alan Dresner pleaded guilty to one count of wire fraud. The scheme involved his personal falsification and internet submission of at least 120 fisheries dealer reports from July 2009 to December 2011, as part of a scheme to defraud the United States of 246,376 pounds of overharvested and underreported fluke valued at $510,000.
As part of his sentence, Dresner will serve four months in prison followed by three years of supervised release. The defendant was fined $6000 and ordered to make a $15,000 community service payment to the Cornell Cooperative Extension of Suffolk County in order
to pay for the enhancement of fluke habitat in the waters of Long Island through the C.C.E.’s Marine Meadows Program. Dresner was ordered to pay $510,000 in restitution to the Marine Resources Account of the New York State Conservation Fund. Dresner was also ordered to surrender his federal dealer license and was banned from accessing the National Oceanic and Atmospheric Administration’s (NOAA) SAFIS computer system.“Today, Dresner was held accountable for his role in defrauding a federal research program, a program whose purpose is to help ensure the long-term sustainability of Long Island’s fisheries,” said Acting Assistant Attorney General Sam Hirsch for the Justice Department’s Environment and Natural Resources Division. “We are committed to protecting the natural resources that the American people depend on today and for future generations as well.”
“This scheme to land tremendous amounts of overages for profit was not only detrimental to the RSA program, but also to the law abiding fishermen who will not be able to participate in this program in 2015,” said NOAA Special Agent Logan Gregory. “The Office of Law Enforcement will continue to focus on ensuring a level playing field by investigating these types of environmental crimes.”
Alan Dresner is “Fish Dealer X” as that person is identified in the related case of U.S. v. Anthony Joseph. As a federal fish dealer, Dresner had a NOAA permit to purchase fish directly from commercial fishing vessels without having to go through an intermediary. In July 2009, Dresner learned that Anthony Joseph, captain of the F/V Stirs One, was consistently overharvesting fluke through Joseph’s abuse of the RSA Program. By July 2009, Dresner was making regular purchases of illegal fluke from Joseph at the Point Lookout, New York, waterfront.
In order to cover-up his illegal fishing, Joseph would mail falsified fishing logs, known as FVTRs, to NOAA. However, falsified FVTRs were just one side of the coin. This is because fish dealers are required to report their purchases to NOAA on an electronic form known as a dealer report. The dealer reports include information such as date of landing, port of landing, catch vessel, corresponding FVTR numbers, commercial grade, species, price, and weight. NOAA utilizes the data in the dealer reports to set quotas and implement other management measures designed to ensure a sustainable fisheries. The dealer reports also serve as a check on the information that is submitted in FVTRs. In other words, for their scheme to work, the false data on the FVTRs had to match the false data on the dealer reports. A mismatch would have indicated a serious error or fraud, and would have been a red flag for fisheries managers. Accordingly, during July 2009 to December 2011, the defendant schemed with Anthony Joseph to file at least 120 false dealer reports with NOAA, representing a loss of 246,376 pounds of fluke valued at $510,000.
Theft of domestic marine resources has far-reaching consequences beyond illicit financial gain. Fisheries managers operate on the basic assumption that fishers and dealers make accurate and honest reports to NOAA. When harvested fish is misreported or unreported, the integrity of fisheries statistics and associated mathematical models are jeopardized. Recently, based in large part on the recently quantified illegal fluke harvesting revealed by the guilty pleas in the Jones Inlet Seafood, Charles Wertz Jr., Anthony Joseph, and Dresner cases, on Aug. 12, 2014, the Mid-Atlantic Fisheries Management Council voted to suspend the RSA Program for 2015 in order analyze the effect illegal fishing has had on the soundness of the RSA Program.
Anthony Joseph pleaded guilty to wire fraud, mail fraud, and falsification of federal records on April 11, 2014, for his fisheries fraud crimes related to Alan Dresner and Jones Inlet Seafood. He is scheduled to be sentenced on May 20, 2015.
The case was investigated by agents of NOAA’s National Marine Fisheries Service, with assistance from the New York State Department of Environmental Conservation Police. The case is being prosecuted by Christopher L. Hale of the Justice Department’s Environmental Crimes Section, Environment and Natural Resources Division.
Science Applications International Corporation Agrees to Pay $1.5 Million to Resolve Alleged False Claims Act Violations for Undisclosed Organizational Conflicts of InterestRead the Press Release
The Justice Department announced today that Science Applications International Corporation (SAIC), now known as Leidos Holdings Inc., has agreed to pay $1.5 million to resolve a False Claims Act lawsuit alleging that it knowingly engaged in prohibited conflicts of interest as a contractor for the U.S. Nuclear Regulatory Commission (NRC) between 1992 and 2000. SAIC provides scientific, engineering and other technical services for government and commercial customers and is headquartered in Reston, Virginia.
“Organizational conflicts of interest undermine the integrity of the federal procurement process,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “Even more importantly, where the conflicts relate to a government program aimed at protecting the public health, work biased by conflicts of interest can put the public’s health at risk. This resolution, reached after a long and difficult litigation, demonstrates that the Justice Department will ensure that contractors who put their financial interests above the good of the American public will be held accountable.”
Between 1992 and 2000, SAIC held two contracts with the NRC to provide scientific and technical services, including assisting the NRC in its consideration of a rule that could have permitted the release or recycling of certain types and quantities of material with very low levels of radioactivity below regulatory safety limits. The NRC decided in 2005 not to proceed with such a rule. The United States alleged that, under these contracts, SAIC was required to avoid conflicting business relationships that could bias SAIC’s work for the NRC. The United States alleged that SAIC repeatedly and falsely certified that it had no such conflicting business relationships, when SAIC actually engaged in multiple business relationships with entities that had a financial interest in the outcome of the NRC’s rulemaking effort.
“The NRC’s unique status as an independent agency dedicated to the protection of public health, safety, and the environment means that decision-making must be free from even the potential for bias,” said Mark A. Satorius, Executive Director for Operations at the NRC. “This resolution shows that the NRC and Justice Department will work together to ensure that contractors who undermine the NRC’s commitment to decision-making that is free from bias will be held accountable.”
In July 2008, after a five-week jury trial, the jury returned a verdict in favor of the United States that SAIC violated the False Claims Act and breached its contract with the NRC by engaging in undisclosed conflicts of interest. On appeal, in December 2010, the U.S. Court of Appeals for the District of Columbia Circuit affirmed judgment for the United States on the breach of contract claim, but partially reversed the judgment on the False Claims Act claims based on two instructions given to the jury and remanded the case for a new trial on those claims.
This matter was handled by the Civil Division in cooperation with the NRC. The False Claims Act claims resolved by this settlement are allegations only, and there has been no determination of liability with respect to those claims.
The case is captioned U.S. v. SAIC, 04-cv-1543 (D.D.C.).
National Security Division Announces New Senior Leadership Hires and Restructuring of Counterespionage EffortsRead the Press Release
Moves Allow NSD to Continue Focus on Today’s Threats while Positioning for Tomorrow’s Challenges
John P. Carlin, the Assistant Attorney General for National Security, announced strategic changes within the Justice Department’s National Security Division (NSD) designed to put additional focus on the protection of national assets from the threat of state-sponsored economic espionage and proliferation, including through cyberspace. The announcement included new appointments within the NSD’s senior leadership, the creation of a new Deputy Assistant Attorney General Position focusing on protecting national assets and the re-designation of the Anti-Terrorism and Advisory Council (ATAC) Coordinator program as the National Security Coordinator/ATAC program, to better reflect its ongoing work on the full range of national security threats, and to empower United States Attorneys as they conduct outreach on these issues nationwide.
“The threat landscape we face is ever-changing and evolving, and while our top priority will always be combatting terrorism, we must also sharpen our focus and increase our attention on the emerging threats of economic espionage and proliferation,” said Assistant Attorney General Carlin. “We have assembled a talented, dedicated and experienced team of seasoned professionals to launch this new phase for the National Security Division. These changes will help us continue confronting today’s threats while readying the NSD workforce to engage what we see as the key emerging threats to our national security.”
The changes announced included the appointment of a new Principal Deputy Assistant Attorney General and a new Chief of Staff and Counselor, as well as the creation of a new Deputy Assistant Attorney General position to oversee NSD’s efforts to protect national assets, including its efforts to combat economic espionage, proliferation, and cyber-based national security threats, and its work on the Committee on Foreign Investment in the United States. This position will oversee the work of the National Security Cyber Specialists (NSCS) Network, consisting of prosecutors in each of the U.S. Attorney’s Offices who focus on cyber threats to the national security.
The new NSD leadership team members include Mary B. McCord to serve as the Principal Deputy Assistant Attorney General; Anita M. Singh as Chief of Staff and Counselor; and Luke Dembosky as the newest Deputy Assistant Attorney General.
Mary B. McCord, Principal Deputy Assistant Attorney General: McCord joined NSD from the U.S. Attorney’s Office for the District of Columbia, where she served for nearly 20 years, most recently as the Criminal Division Chief. In that capacity, McCord supervised the prosecution of all criminal matters in federal district court, and is highly regarded for her expertise in this area. McCord also served for more than five years as a Deputy Chief in the Appellate Division, where she supervised and argued hundreds of cases in the U.S. and District of Columbia Courts of Appeals. McCord graduated from Georgetown University Law School, and clerked for Judge Thomas Hogan of the U.S. District Court for the District of Columbia.
Anita M. Singh, Chief of Staff and Counselor: Singh was appointed Chief of Staff and Counselor after serving as the NSD Acting Chief of Staff for nearly a year and a half. Singh joined NSD as Deputy Chief of Staff in 2011 after serving as Director for Intelligence Programs and Reform at the White House on the National Security Council staff, where she focused on cyber-related issues. As NSD’s Chief of Staff, Singh focuses on strategic management issues, including the design of structural changes to support work in emerging threat areas. Singh began her legal career through the DOJ’s Honors Program, serving in the Criminal Division’s Computer Crime and Intellectual Property Section, and later as a Counsel, focused on cybersecurity, to several Assistant Attorneys General. Prior to entering government service, Singh was a management strategy consultant with the Boston Consulting Group. She graduated with her J.D. and A.M. from the University of Pennsylvania Law School.
Luke Dembosky, Deputy Assistant Attorney General: Dembosky joins NSD from DOJ’s Computer Crime and Intellectual Property Section where he served as Deputy Chief for Litigation. Dembosky previously served as the DOJ representative at the U.S. Embassy in Moscow, Russia, where he represented DOJ to Russia on matters of transnational crime, including cybercrime and IP crimes, and worked with Russian law enforcement and other government officials to build cooperation between the two countries. Prior to working in Moscow, Dembosky was based in Pittsburgh as a member of DOJ’s Computer Hacking and Intellectual Property (CHIP) network of federal prosecutors. He has been involved in some of the largest and most groundbreaking cybercrime prosecutions and disruptions in U.S. history, including the recent GameOver Zeus botnet disruption, coordination of the Silk Road takedown, and U.S. v. Max Ray Butler. Prior to entering government service, Dembosky worked in civil practice at a Philadelphia law firm. He graduated from the University of Pittsburgh School of Law and clerked for Judge Richard L. Nygaard of the U.S. Court of Appeals for the Third Circuit. Dembosky will manage NSD’s newly created portfolio covering protection of national assets, including efforts to combat economic espionage, proliferation, and cyber-based national security threats, and its work on the Committee on Foreign Investment in the United States. He will also oversee NSD’s Office for Justice for Victims of Overseas Terrorism.
Re-designation: The Anti-Terrorism and Advisory Council (ATAC) Coordinator program will be re-designated as the National Security Coordinator/ATAC program, to better reflect its ongoing work on the full range of national security threats, including combating economic espionage and counterproliferation.
Miami-Area Physician Assistant Sentenced to 15 Years in Prison for $200 Million Medicare Fraud SchemeRead the Press Release
A Miami licensed physician assistant was sentenced today to serve 15 years in prison for participating in a Medicare fraud scheme involving approximately $200 million in fraudulent billings by American Therapeutic Corporation (ATC), a mental health company that was headquartered in Miami.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Special Agent in Charge Derrick Jackson of the Health and Human Services Office of Inspector General’s (HHS-OIG) Florida region made the announcement.
Roger Bergman, 65, of Miami, was sentenced by U.S. District Judge Jose E. Martinez in the Southern District of Florida. In addition to the prison sentence, Bergman was ordered to pay more than $85.3 million in restitution, both jointly and severally with his co-conspirators.
After a six-day trial, on July 18, 2014, a federal jury in the Southern District of Florida found Bergman guilty of one count of conspiracy to commit health care fraud and wire fraud, and one count of conspiracy to make false statements relating to health care matters.
Evidence at trial demonstrated that Bergman and his co-conspirators submitted false and fraudulent claims to Medicare through ATC, which operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness.
Evidence at trial also demonstrated that Bergman and other medical professionals at ATC fabricated and signed fraudulent medical documentation and patient files in order to justify ATC’s fraudulent billings to Medicare. Included in these false submissions to Medicare were claims for patients who were ineligible for PHP treatment because they were in neuro-vegetative states, in the late stages of diseases causing permanent cognitive memory loss, or had substance abuse issues and were living in halfway houses. Many of these patients were forced by assisted living facility owners and halfway house owners to attend ATC, and they did not receive treatment for their actual medical conditions.
ATC, an associated management company, and more than 20 individuals, including ATC’s owners, have all previously pleaded guilty or been convicted at trial. Bergman has been in federal custody since his conviction.
The case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. The case is being prosecuted by Assistant Chief Robert A. Zink and Trial Attorneys Nicholas E. Surmacz and Kelly Graves of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 1,900 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Team (HEAT), go to: www.stopmedicarefraud.gov.
Las Vegas Man Sentenced to Prison for Conspiring to Submit False Federal Income Tax ReturnsRead the Press Release
A Las Vegas man was sentenced to serve 15 months in prison to be followed by three years of supervised release and ordered to pay $192,632 in restitution to the Internal Revenue Service (IRS), announced Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department’s Tax Division and U.S. Attorney Daniel G. Bogden for the District of Nevada.
Damon Boswell pleaded guilty to conspiracy to submit false claims for federal income tax refunds on May 29. He was sentenced yesterday by U.S. District Court Judge Jennifer A. Dorsey.
According to the plea agreement, between April 2009 and May 2009, Boswell, along with others, conspired to defraud the United States by assisting in the filing of federal tax returns falsely claiming refunds based on the First-Time Home Buyers Credit.
Boswell obtained personal identifying information from individuals by falsely telling them that if they had not filed their 2008 federal income tax returns and did not owe back taxes, they were entitled to receive “Obama Stimulus” money. The personal information, including names, dates of birth and social security numbers, was then used to file federal income tax returns claiming refunds to which the individuals were not entitled. The individuals did not authorize Boswell or anyone else to file or cause the filing of tax returns in their names. Boswell’s co-conspirator, Cheryl Ramos, pleaded guilty on Jan. 24 and has been sentenced.
The case was investigated by IRS-Criminal Investigation and prosecuted by Assistant U.S. Attorney Christina Brown and Trial Attorney Sonia M. Owens of the Tax Division.
Kentucky Cardiologists Agree to Pay $380,000 to Settle False Claims Act Allegations Based on Illegal ReferralsRead the Press Release
The Department of Justice announced today that two cardiologists based in London, Kentucky, have agreed to pay $380,000 to resolve allegations that they violated the False Claims Act by entering into sham management agreements with Saint Joseph Hospital, also based in London, Kentucky, in exchange for the referral of cardiology procedures and other healthcare services to Saint Joseph.
“Physicians who place their financial interests above the well-being of their patients will be held accountable,” said Acting Assistant Attorney General Joyce R. Branda for the Civil Division. “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public healthcare programs.”
Satyabrata Chatterjee and Ashwini Anand jointly owned Cumberland Clinic, a physician group that provided cardiology services. The government alleged that St. Joseph Hospital entered into sham agreements with Chatterjee and Anand, under which the physicians were paid to provide management services but did not in fact do so. The government further alleged that, in exchange for the sham agreements, Chatterjee and Anand agreed to enter into an exclusive agreement with St. Joseph to refer Cumberland Clinic patients to the hospital for cardiology and other services in violation of the Stark Law and the Anti-Kickback Statute. The Stark Law forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the entity. The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by federal health care programs, including Medicare.
“Financial relationships between healthcare providers that put profits over patients are a threat to the programs upon which millions of Americans depend,” said U.S. Attorney Kerry Harvey for the Eastern District of Kentucky. “We will continue to use all the tools available to us to safeguard our federally funded healthcare programs from those who seek to profit from them through illegal means.”
In addition to payment of the settlement amount, which was based on Chatterjee and Anand’s financial ability to pay, Chatterjee and Anand have agreed to enter into integrity agreements with the Department of Health and Human Services-Office of Inspector General (HHS-OIG), which obligate them to undertake substantial internal compliance reforms and to commit to a third-party review of their claims to federal health care programs for the next three years.
“Physicians who accept kickbacks in exchange for referrals undermine the integrity of the medical profession," said Special Agent in Charge Derrick L. Jackson of the HHS-OIG Atlanta region. “OIG will continue to protect both patients and taxpayers by holding physicians and hospitals accountable for improper claims."
The government previously entered into a $16.5 million settlement with Saint Joseph Hospital for the allegedly sham management contracts the hospital executed with Chatterjee and Anand, as well as for allegedly billing for unnecessary and excessive cardiology procedures by other members of Chatterjee and Anand’s cardiology practice.
The settlement announced today stems from a complaint filed by three Lexington, Kentucky, cardiologists pursuant to the whistleblower provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the United States. The act permits the United States to intervene in the lawsuit and take over the allegations, as the government did in this case. The three whistleblowers, Drs. Michael Jones, Paula Hollingsworth and Michael Rukavina, will collectively receive $68,400.
This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $22.5 billion through False Claims Act cases, with more than $14.3 billion of that amount recovered in cases involving fraud against federal health care programs.
The investigation was conducted by the FBI, HHS-OIG, the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Eastern District of Kentucky. The claims settled by this agreement are allegations only and there has been no determination of liability.
The lawsuit is captioned United States ex rel. Jones, Hollingsworth, and Rukavina v. St. Joseph Health System et al., no. 11-cv-81-GFVT (E.D.Ky.)
Javier Pleads Guilty to Theft and Forgery of Social Security BenefitsRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that FRANCISCO A. JAVIER, age 50, of Waianae (Honolulu County), Hawaii, pled guilty on October 17, 2014, in the U.S. District Court, District of Hawaii, to one count of Theft of Government Money and one count of Forging Endorsements on Treasury Checks. For each count, the maximum sentence under the statute is 10 years in prison and a $250,000 fine. JAVIER had been previously charged on April 30, 2014 by a federal grand jury in the District of Guam with multiple counts of the above referenced offenses. JAVIER self-surrendered May 2, 2014 at the Federal Bureau of Investigation (“FBI”) Honolulu Division field office. Sentencing for JAVIER in the District of Hawaii is scheduled for February 12, 2015.
According to court documents, JAVIER’s mother died in April 2002, but JAVIER, from June 2002 to May 2010, received Social Security retirement insurance and other related benefits intended for his mother. The Social Security Administration, an agency of the United States, was unaware of the beneficiary’s death and continued to mail U.S. Treasury checks to the beneficiary at a post office box address in Guam. JAVIER forged his mother’s signature and fraudulently endorsed the checks, cashed them and received payments totaling $80,343.
Alicia A.G. Limtiaco stated “the United States Attorney’s Office is committed to working with its law enforcement partners to help maintain the integrity of the Social Security Program for seniors and other beneficiaries who have rightfully earned these benefits.” This case is the result of an investigation conducted by the Social Security Administration, Office of the Inspector General and the FBI Guam Resident Agency. The prosecution was handled by Assistant U.S. Attorney Marivic David.Haroon Aswat Extradited from the United Kingdom to the Southern District of New York to Face Terrorism ChargesRead the Press Release
Assistant Attorney General for National Security John Carlin, United States Attorney Preet Bharara for the Southern District of New York, Assistant Director-in-Charge George Venizelos of the New York Field Office of the Federal Bureau of Investigation (FBI), and Commissioner William J. Bratton of the New York City Police Department (NYPD), announced the extradition of Haroon Aswat from the United Kingdom to face charges of conspiring to provide and providing material support to al Qaeda and terrorists for attempting to establish a terrorist training camp in the United States.
Aswat was arrested in Zambia in July 2005, and in August 2005, Aswat was deported from Zambia to the United Kingdom, where he was arrested pursuant to a provisional warrant that was issued in response to a request by the U.S. government in connection with this case. On Sept. 4, 2014, the United Kingdom ordered Aswat extradited to the United States on the charges described below. In coordination with British authorities, Aswat was extradited from the United Kingdom to the Southern District of New York on Oct. 21, 2014. Aswat will make his first court appearance later today before U.S. District Judge Katherine B. Forrest.
According to the allegations contained in the Indictment, statements made at related court proceedings, and evidence presented at prior trials:
In late 1999, Aswat, along with co-defendants Mustafa Kamel Mustafa, aka Abu Hamza (Abu Hamza), Ouassama Kassir, and Earnest James Ujaama, attempted to create a terrorist training camp in the United States to support al Qaeda, which has been designated by the United States Secretary of State as a foreign terrorist organization. Aswat conspired with Abu Hamza, Kassir and Ujaama to establish the terrorist training camp on a rural parcel of property located in Bly, Oregon. The purpose of the Bly, Oregon, camp was for Muslims to receive various types of training – including military-style jihad training – in preparation to fight jihad in Afghanistan. As used by the conspirators in this case, the term “jihad” meant defending Islam against purported enemies through violence and armed aggression, including, if necessary, by using murder to expel non-believers from Muslim holy lands.
In a letter faxed from Ujaama, in the United States, to Abu Hamza, in the United Kingdom, the property in Bly was described as a place that “looks just like Afghanistan,” and the letter noted that the men at Bly were “stock-piling weapons and ammunition.” In late 1999, after transmission of the faxed letter, Abu Hamza directed Aswat and Kassir, both of whom resided in London, England, and attended Abu Hamza’s mosque there, to travel to Oregon to assist in establishing the camp. On Nov. 26, 1999, Aswat and Kassir arrived in New York, and then traveled to Bly.
Aswat and Kassir traveled to Bly for the purpose of training men to fight jihad. Kassir told witnesses that he supported Usama Bin Laden and al Qaeda, and that he had previously received jihad training in Pakistan. Kassir also possessed a compact disc that contained instructions on how to make bombs and poisons. After leaving Bly, Aswat and Kassir traveled to Seattle, Washington, where they resided at a mosque for approximately two months. While in Seattle, Kassir, in Aswat’s presence, provided men from the mosque with additional terrorist training lessons – including instructions on different types of weapons, how to construct a homemade silencer for a firearm, how to assemble and disassemble an AK-47, and how an AK-47 could be altered to be fully automatic and to launch a grenade. On another occasion, with Aswat sitting by his side, Kassir announced to the men in Seattle that he had come to the United States for martyrdom and to destroy, and he informed his audience that some of them could die or get hurt.
In September 2002, special agents from the FBI recovered a ledger, among other items, from an al Qaeda safe house in Karachi, Pakistan. The ledger listed a number of individuals associated with al Qaeda, including Aswat. The al Qaeda safe house was used by Khalid Sheikh Mohammed, al Qaeda’s chief operational planner and the alleged planner of the terrorist attacks of Sept. 11, 2001.
* * *
The indictment charges Aswat, 40, a British citizen, with four offenses that carry the following maximum penalties:
Charge
Statutory Violation
Maximum Prison Term
Conspiracy to provide material support to terrorists
18 U.S.C. § 371
Five years
Providing material support to terrorists
18 U.S.C. §§ 2339A, 2
10 years
Conspiracy to provide material support to a foreign terrorist organization (al Qaeda)
18 U.S.C. §2339B
10 years
Providing material support to a foreign terrorist organization (al Qaeda)
18 U.S.C. §§ 2339B, 2
10 years
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
On May 12, 2009, after a four-week jury trial in the Southern District of New York, Kassir was found guilty of charges relating to his efforts to establish the terrorist training camp in Bly, and his operation of several terrorist websites. On Sept. 15, 2009, U.S. District Judge John F. Keenan sentenced Kassir to life in prison.
On May 19, 2014, after a four-week jury trial in the Southern District of New York, Abu Hamza was found guilty of charges relating to his role in the conspiracy to establish the terrorist training camp in Bly, as well as his role in a hostage-taking in Yemen in 1998 that resulted in four deaths, and his support of violent jihad in Afghanistan in 2000 and 2001. Abu Hamza is scheduled to be sentenced on Jan. 9, 2015, before U.S. District Judge Katherine B. Forrest.
U.S. Attorney Bharara praised the outstanding efforts of the FBI’s Manhattan-based Joint Terrorism Task Force, which principally consists of agents and detectives of the FBI and the NYPD, the United States Marshals Service, and the Metropolitan Police Department of London, England. U.S. Attorney Bharara also thanked the U.S. Department of Justice’s National Security Division and Office of International Affairs, and the United States Department of State for their ongoing assistance.
This case is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys John P. Cronan and Ian McGinley are in charge of the prosecution.
The allegations contained in the Indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.
Five Northern California Real Estate Investors Indicted for Bid Rigging and Fraud at Public Foreclosure AuctionsRead the Press Release
A federal grand jury in San Francisco returned an eight-count indictment against five real estate investors for their role in bid rigging and fraud schemes at foreclosure auctions in Northern California, the Department of Justice announced.
The indictment, filed today in U.S. District Court for the Northern District of California in San Francisco, California, charges Northern California real estate investors Joseph Giraudo, Raymond Grinsell, Kevin Cullinane, James Appenrodt and Abraham Farag with participating in conspiracies to rig bids and schemes to defraud mortgage holders and others. The indictment alleges that the defendants agreed to stop bidding or to refrain from bidding for properties at public foreclosure auctions in San Mateo County, California, in return for payoffs and concealing the fact that monies were diverted from mortgage holders, homeowners and others to co-schemers. Additionally, Giraudo, Grinsell and Appenrodt were charged with bid rigging and fraud in San Francisco County, California. To date, 47 individuals have agreed to plead or have pleaded guilty, as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.
“These defendants corrupted the public foreclosure auctions in San Mateo and San Francisco counties, and they did so to line their pockets with money that rightfully belonged to mortgage holders and others,” said Brent Snyder, Deputy Assistant Attorney for the Antitrust Division’s criminal enforcement program. “As these charges demonstrate, the Antitrust Division will continue to pursue bidders at foreclosure auctions who violated the Sherman Act and defrauded mortgage holders and others.”
The indictment alleges, among other things, that beginning no later than August 2008 and continuing until January 2011, the defendants conspired to rig bids to obtain numerous properties sold at foreclosure auctions in San Mateo and San Francisco counties, paid others not to bid, accepted payoffs not to bid and, in the process, defrauded mortgage holders, other holders of debt secured by the auctioned properties and, in some cases, the defaulting homeowners.
“These charges demonstrate our continued commitment to investigate and prosecute individuals and organizations responsible for the corruption of the public foreclosure auction process,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “The FBI is committed to work these important cases and remains unwavering in our dedication to bring the members of these illegal conspiracies to justice.”
Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of mail fraud carries a maximum sentence of 20 years in prison and a $1 million fine. The government can also seek to forfeit the proceeds earned from participating in the mail fraud schemes. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than $1 million.
Today’s charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa, and Alameda counties, California. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, or call the FBI tip line at 415-553-7400.
Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 93 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.