District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Federal Court Bars Southern California Man from Preparing Federal Tax ReturnsRead the Press Release
A federal court in Los Angeles has permanently barred a Rancho Cucamonga, California, man from preparing federal tax returns for others, the Justice Department announced today.
The permanent injunction order, to which Robert L. Cardoza consented, was entered by U.S. District Judge Ronald S.W. Lew for the Central District of California.
The complaint alleged that Cardoza prepared returns that fraudulently claimed tax deductions for his customers, including bogus deductions for medical and dental expenses, charitable contributions, unreimbursed employee business expenses, and car and truck expenses. According to the complaint, Cardoza also falsely represented to his customers that he was a certified public accountant and that he had obtained a master’s degree in business administration and a doctoral degree. According to the complaint, since 2008, Cardoza prepared over 5,000 federal tax returns and his fraudulent return preparation resulted in the loss of millions of dollars to the U.S. Treasury.
Return preparer fraud is one of the 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 Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website.
Related Materials:
United States v. Robert L. Cardoza
Final Judgment of Permanent Injunction Against Robert L. CardozaCampaign Manager Charged with Buying Votes in a Donna, Texas, School Board ElectionRead the Press Release
A campaign manager was arrested late yesterday and accused of paying voters to vote in the November 2012 school board election in Donna, Texas.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas made the announcement.
The four-count indictment charges Francisco “Frankie” Garcia, 47, of Donna, with conspiring to buy votes, paying for votes, and aiding and abetting others to buy votes stemming from the vote-buying scheme. Garcia was arrested the evening of Sept. 18, 2014, in Alton, Illinois, and will make his initial appearance in the Southern District of Illinois this afternoon. The indictment was returned under sea Sept. 16, 2014, and unsealed today following his arrest.
According to the indictment, during the November 2012 general election, Garcia worked as a campaign manager for four candidates to the Donna School Board. During that time, he allegedly bought votes and worked with other campaign workers to pay voters and to offer to pay voters in this election to vote for particular candidates. The indictment alleges that Garcia paid voters by giving the voters either cocaine or cash in exchange for their votes.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty in a court of law.
Three campaign workers – Rebecca Gonzalez, 44, and Diana Balderas Castaneda, 48, both of Donna, Texas, and Guadalupe Escamilla, 72, of Weslaco, Texas – previously pleaded guilty to vote-buying charges stemming from this election.
This case is being investigated by the FBI, and is being prosecuted by Trial Attorneys Monique Abrishami and Jennifer Blackwell of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Leo J. Leo of the Southern District of Texas.Three Patient Recruiters Sentenced in $20 Million Miami Health Care Fraud SchemeRead the Press Release
Three patient recruiters were sentenced to prison today for their participation in a $20 million health care fraud scheme involving defunct home health care company Trust Care Health Services Inc. (Trust Care).
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 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 made the announcement. U.S. District Judge Darrin P. Gayles of the Southern District of Florida imposed the sentences.
Estrella Perez, 57, of Coral Gables, Florida, was sentenced to serve 37 months in prison, followed by three years of supervised release, and ordered to pay $1,172,162 in restitution. Solchys Perez, 34, of Miami, was sentenced to serve 30 months in prison, followed by three years of supervised release, and ordered to pay $746,600 in restitution. Abigail Aguila, 40, of Miami, was sentenced to serve 30 months in prison, followed by three years of supervised release, and ordered to pay $491,438 in restitution. On July 10, 2014, Estrella Perez and Solchys Perez pleaded guilty to conspiracy to commit health care fraud, and Aguila pleaded guilty to conspiracy to defraud the United States and receive health care kickbacks.
According to court documents, Estrella Perez, Solchys Perez, and Aguila recruited patients for Trust Care, a Miami home health care agency, in exchange for kickbacks paid in cash or by check to the defendants or their shell companies. In turn, Trust Care billed the Medicare program for home health care and therapy services that were not medically necessary or were not provided.
Estrella Perez and Solchys Perez also paid kickbacks and bribes to co-conspirators in doctors’ offices and clinics in exchange for home health and therapy prescriptions, plans of care and medical certifications for their recruited patients. Co-conspirators at Trust Care then used these documents to fraudulently bill the Medicare program for services.
From March 2007 through January 2010, Trust Care submitted approximately $20 million in false claims for home health services. Medicare paid Trust Care approximately $15 million for these fraudulent claims.
On Sept. 16, 2014, another patient recruiter, Monica Macias, was sentenced to serve 24 months in prison for her participation in the same scheme.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by Trial Attorneys A. Brendan Stewart and Anne P. McNamara 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 and 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.
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Seven Mitsubishi Electric Corp. and Hitachi Automotive Supply Ltd. Executives Indicted for Role in Conspiracy to Fix PricesRead the Press Release
A federal grand jury in Detroit returned two separate indictments against seven executives from two Japanese manufacturers of automotive parts for their participation in a conspiracy to fix prices of certain automotive parts, the Department of Justice announced today.
A three-count indictment was filed today in the U.S. District Court for the Eastern District of Michigan. Count one charges Atsushi Ueda, Minoru Kurisaki, and Hideyuki Saito of Mitsubishi Electric Corp. (MELCO) with conspiring to fix the prices of certain automotive products, including starter motors, alternators and ignition coils, sold to Ford Motor Company, General Motors LLC, Chrysler Group LLC, Fuji Heavy Industries Ltd., Nissan Motor Company Ltd., and Honda Motor Company Ltd. in the United States and elsewhere.
Count two charges Kurisaki and Saito with knowingly conspiring to obstruct justice by destroying documents and corruptly persuading, and attempting to persuade others, to destroy documents.
Count three charges Saito with knowingly and corruptly persuading, and attempting to persuade, executives to destroy documents and delete electronic data that may contain evidence of antitrust crimes in the United States and elsewhere.
Ueda and Kurisaki served as President and General Manager, respectively, in the Automotive Equipment Group. They are no longer employed by MELCO. Saito currently serves as a high-level manager within the Automotive Equipment Group at MELCO.
A one-count indictment, also filed today in the U.S. District Court for the Eastern District of Michigan, charges Takashi Toyokuni, Ken Funasaki, Kazunobu Tsunekawa and Tomiya Itakura of Hitachi Automotive Systems Ltd. with conspiring to fix the prices of various automotive parts, including starter motors, alternators, air flow meters, valve timing control devices, fuel injection systems, electronic throttle bodies, ignition coils and inverters and/or motor generators sold to various automobile manufacturers such as, Ford Motor Co., General Motors LLC, Nissan Motor Co. Ltd., Toyota Motor Corp., and Honda Motor Co. Ltd., in the United States and elsewhere.
Toyokuni, Funasaki, Tsunekawa, and Itakura all served as high-level managers in the Business Planning Department at Hitachi Automotive during the charged conspiracy and currently serve in various senior management positions at the company.
“Protecting American consumers from anticompetitive practices is our top priority,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “The Antitrust Division will continue to pursue the auto parts makers and executives who engaged in this blatant and harmful criminal scheme.”
Both indictments allege that the executives indicted today participated directly in the conspiratorial conduct, and directed, authorized, and consented to their subordinates’ participation. The executives are charged with participating in a conspiracy that existed from at least as early as January 2000 and continued until about February 2010. Among other things, the executives and their subordinates, according to the indictment, participated in meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply and fix the prices of certain automotive parts sold to automobile manufacturers.
MELCO is a corporation headquartered in Tokyo, Japan. MELCO pleaded guilty on Nov. 6, 2013, for its involvement in this conspiracy, and was sentenced to pay a criminal fine of $190 million.
Hitachi Automotive is a corporation headquartered in Tokyo, Japan. Hitachi Automotive pleaded guilty on Nov. 6, 2013, for its involvement in this conspiracy, and was sentenced to pay a criminal fine of $195 million.
Including Toyokuni, Funasaki, Tsunekawa, Itakura, Ueda, Kurisaki and Saito, 43 individuals have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Twenty-six of these individuals have pleaded guilty and have been sentenced to serve prison terms ranging from a year and one day to two years. Additionally, 28 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.4 billion in fines.
The seven defendants are charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. The maximum penalty for obstruction of justice is 20 years in prison and a $250,000 criminal fine for individuals.
Today’s indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charge was brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.
Justice Department Announces National Effort to Build Trust Between Law Enforcement and the Communities They ServeRead the Press Release
Attorney General Eric Holder announced today the launch of the Justice Department’s National Initiative for Building Community Trust and Justice. Funded through a $4.75 million grant, the initiative will create a substantial investment in training, evidence-based strategies, policy development and research to combat distrust and hostility between law enforcement and the communities they serve. Recent protests in Ferguson, Missouri, following an officer-involved shooting have brought national attention to the importance of strong police-community relationships, which has been a priority for the Justice Department under Attorney General Holder.
“The events in Ferguson reminded us that we cannot allow tensions, which are present in so many neighborhoods across America, to go unresolved,” said Attorney General Holder. “As law enforcement leaders, each of us has an essential obligation – and a unique opportunity – to ensure fairness, eliminate bias, and build community engagement. The National Initiative for Building Community Trust and Justice represents a major step forward in resolving long standing tensions in many of America’s communities and it will allow us to build on the pioneering work that the Justice Department and our law enforcement partners across the country are already doing to strengthen some of our nation’s most challenged areas.”
The initiative, which will be an ongoing partnership with the Justice Department, will provide training to law enforcement and communities on bias reduction and procedural fairness and will apply evidence-based strategies in five pilot sites around the country. It will also establish a clearinghouse where information, research, and technical assistance are readily accessible for law enforcement, criminal justice practitioners and community leaders.
The three year grant has been awarded to a consortium of national law enforcement experts led by John Jay College of Criminal Justice. Yale Law School, the Center for Policing Equity at UCLA and the Urban institute make up the rest of the consortium. The initiative will be guided by a board of advisors which will include national leaders from law enforcement, academia and faith-based groups, as well as community stakeholders and civil rights advocates.
In a holistic approach, the initiative will simultaneously address the tenets of procedural justice, reducing implicit bias and facilitating racial reconciliation. The initiative will compliment and be advised by other Justice Department components such as the Office of Justice Programs, the Office of Community Oriented Policing Services, the Civil Rights Division and the Community Relations Service.
This Initiative addresses a recommendation in the My Brother’s Keeper Task Force report released in May. The Task Force recommended the Department of Justice establish a vehicle to build capacity in communities and build the evidence base around enhancing procedural justice, reducing bias and supporting reconciliation in communities where trust has been harmed.
Indiana Manufacturer Pleads Guilty to Clean Air Act False Statement ViolationsRead the Press Release
Calumite Company LLC (Calumite), a manufacturer of an additive used in the production of glass, entered a plea of guilty today in U.S. District Court in Hammond, Indiana, to two Clean Air Act false statement violations. The company has agreed to pay a $325,000 fine, serve a two-year term of probation, and implement an environmental compliance plan that includes an annual environmental compliance training program. Sentencing will be scheduled for a later date.
Calumite, located near the shores of Lake Michigan in Portage, Indiana, manufactures and sells a powdery substance of the same name to various glass manufacturers. The company collects slag, a waste product of the steel industry, dries it in a hot gas oven, crushes it into a fine powder, and then ships it off-site to glass manufacturers, who use it as an additive to lower the temperature at which glass can be produced.
Calumite's Portage facility was subject to a Title V Clean Air Act Operating Permit issued by the Indiana Department of Environmental Management (IDEM). Among other things, the permit required that Calumite operate, maintain, and monitor several “baghouses” on-site that are used to control and minimize emissions of a fine particulate. One of the baghouses, known as the loadout baghouse, was used to collect emissions of particulate that occurred during the loading of product onto tractor trailers and rail cars for shipment to customers.
A differential pressure gauge (DP gauge) attached to each baghouse continuously monitored and measured the efficiency and effectiveness of the baghouses and helped to determine whether they were operating properly. Calumite’s permit required that DP gauges on the baghouses be read daily, while the baghouses were operating, and that the results be recorded on daily maintenance log sheets. The company also was required to submit quarterly reports to IDEM that stated whether the company was in compliance with permit requirements.
From Dec. 5, 2008, through late July 2009, the company did not maintain the loadout baghouse in operating condition and the DP gauge was broken. Nevertheless, during this same time period, employees continued to load tractor trailers and rail cars with product for shipment off-site. Calumite employees knowingly continued to routinely fill out daily logs that falsely reflected DP gauge monitoring readings that were within the range allowed by the permit, and caused false information to be submitted to IDEM in the company’s quarterly reports.
The Clean Air Act makes it a crime to knowing make a material false statement or omit material information from a document that is required to be filed or maintained under the statute. Both the daily maintenance logs and the quarterly reports were required by Calumite’s permit and the Clean Air Act.
The case was investigated by the Northern District of Indiana Environmental Crimes Task Force, including agents from the U.S. Environmental Protection Agency’s Criminal Investigation Division. The case was prosecuted by the U.S. Attorney’s Office for the Northern District of Indiana and the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.
Former President of Omni Facility Pleads Guilty to Fraud and Tax EvasionRead the Press Release
A Plymouth, Michigan, man pleaded guilty today to wire fraud and tax evasion in the U.S. District Court for the Eastern District of Michigan, the Justice Department and the Internal Revenue Service (IRS) announced.
According to court documents, Michael Stover was the president of Omni Facility Services, a janitorial company located in Southfield, Michigan, and as part of his responsibilities Stover approved and paid subcontractors. Stover created a fictitious subcontractor called Envirovac Inc., and from 2004 through 2010, he created fictitious invoices from Envirovac that billed Omni for work that was never performed. Stover then approved payment of those invoices on Omni’s behalf, and over the course of this scheme, Stover embezzled approximately $2,178,423 from Omni. On his tax return for 2007, Stover evaded taxes by not reporting the income he embezzled from Omni.
Stover faces a statutory maximum sentence of 20 years in prison on the wire fraud count and five years in prison on the tax evasion count. He also faces three years of supervised release and a maximum fine of $250,000 for each count. U.S. District Judge Stephen J. Murphy set sentencing for Jan. 23, 2015.
The case was investigated by special agents of IRS-Criminal Investigation. Trial Attorneys Yael T. Epstein and Kenneth C. Vert of the Tax Division prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found on the division website.
Pennsylvania Man Pleads Guilty in Conspiracy to Illegally Export Restricted Laboratory Equipment to SyriaRead the Press Release
U.S. Attorney Peter Smith for the Middle District of Pennsylvania, Special Agent in Charge John Kelleghan for Philadelphia, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and Special Agent in Charge Sidney M. Simon of the New York Field Office, Office of Export Enforcement, U.S. Department of Commerce announced that yesterday Harold Rinko, 72, of Hallstead, Pennsylvania, appeared before Senior District Court Judge Edwin M. Kosik in Scranton and pleaded guilty to conspiracy to illegally export laboratory equipment, including items used to detect chemical warfare agents, from the United States to Syria, in violation of federal law.
During the guilty plea hearing, Rinko admitted that he conspired to export items from the United States through third party countries to customers in Syria, without the required U.S. Commerce Department licenses.
According to a factual stipulation signed by Rinko and made part of the record, the conspirators prepared false invoices that undervalued and mislabeled the goods being purchased and also listed false information as to the identity and geographic location of the purchasers of the goods. The stipulation indicates that the items would be shipped from the United States to Jordan, the United Arab Emirates, and the United Kingdom, and thereafter transshipped to Syria.
“HSI will use all resources at its disposal to prevent sensitive and restricted technology from being exported to Syria though the black market,” said Special Agent in Charge Kelleghan. “No good comes of illegal exports to Syria during this time of gross misgovernment and civil strife, and HSI will do all in its power as the principal enforcer of export controls to ensure that sensitive technology doesn’t fall into the wrong hands in Syria. I applaud our colleagues at the Department of Commerce, along with our law enforcement counterparts in the United Kingdom, who helped us make this complex investigation a success.”
“Today's plea represents the effort of law enforcement agencies working together to make our country safer,” said Simon. “Office of Export Enforcement Special Agents with the U.S. Department of Commerce work tirelessly every day to pursue those who flout our export control laws and attempt to supply anyone with technology that threatens our national security. We will seek and arrest violators wherever located, worldwide, and we will continue to leverage our unique authorities as the only federal law enforcement agency exclusively dedicated to enforcing dual-use export violations.”
A sentence following a finding of guilty is imposed by the Judge after consideration of the applicable federal sentencing statutes and the Federal Sentencing Guidelines. Rinko is facing a potential maximum sentence of five years’ imprisonment, a fine of $250,000, and a three-year term of supervised release.
Under the Federal Sentencing Guidelines, the Judge is also required to consider and weigh a number of factors, including the nature, circumstances and seriousness of the offense; the history and characteristics of the defendant; and the need to punish the defendant, protect the public and provide for the defendant’s educational, vocational and medical needs. For these reasons, the statutory maximum penalty for the offense is not an accurate indicator of the potential sentence for a specific defendant.
The case was investigated by the U.S. Immigration and Customs, Homeland Security Investigations (HSI) in partnership with the U.S. Department of Commerce, Office of Export Enforcement and assigned to Assistant U.S. Attorney Todd K. Hinkley and Trial Attorney Mariclaire Rourke with the Department of Justice, National Security Division, Counterespionage Section.
Hawaii Man Sentenced to 87 Months Improsonment for Communicating Classified National Defense Information to Unauthorized PersonRead the Press Release
WASHINGTON – Assistant Attorney General for National Security John P. Carlin and U.S. Attorney Florence T. Nakakuni for the District of Hawaii announced today that Benjamin Pierce Bishop, 60, a former Honolulu, Hawaii, civilian defense contractor and retired lieutenant colonel in the U.S. Army, was sentenced today by U.S. District Judge Leslie E. Kobayashi to serve 87 months imprisonment and three years’ supervised release for willfully communicating classified national defense information to a person not authorized to receive it and unlawfully retaining classified national defense information at his home.
Bishop pleaded guilty to the two charges on March 13, 2014. In a plea agreement filed with the court and during court proceedings, Bishop admitted that, on March 12, 2012, he e-mailed classified information to a 27-year-old Chinese woman with whom he had a romantic relationship and who was present in the United States as a graduate student on a J1 Visa.
The classified information related to joint training and planning sessions between the United States and the Republic of Korea and was classified at the SECRET level. Bishop also admitted to unlawfully retaining at his residence multiple classified documents that related to the national defense, including the U.S. Armed Forces Defense Planning Guide for years 2014 through 2018, a document entitled Optimizing U.S. Force Posture in the Asia‑Pacific, the U.S. Department of Defense China Strategy, the 2010 Guidance for Employment of Force (GEF) and a classified photograph of a Chinese naval asset that Bishop retrieved from classified sources based on a request from the Chinese woman. The documents had been removed from Bishop’s workplace at U.S. Pacific Command.
“Willfully communicating national defense information to a person not entitled to receive it is a serious threat to our national security,” said Assistant Attorney General Carlin. “In committing this crime, Bishop violated his oath to protect the classified information with which he was entrusted. This conduct is unacceptable and we will continue to investigate and seek to hold accountable those who engage in it.”
“We remain steadfast and resolute in our pursuit of those who violate their sworn security agreements and divulge our nation’s secrets to foreign nationals and others,” said U.S. Attorney Nakakuni. “This is the second major espionage case prosecuted in the District of Hawaii, and is particularly troublesome because it involves the communication of classified information to a citizen of the People’s Republic of China.”
This case was investigated by the FBI and the Naval Criminal Investigative Service. The case was prosecuted by Assistant U.S. Attorney Ken Sorenson of the U.S. Attorney’s Office for the District of Hawaii and Senior Trial Attorney Robert E. Wallace Jr. of the Counterespionage Section of the Justice Department’s National Security Division.
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Florida Home Health Care Company and its Owners Agree to Resolve False Claims Act Allegations for $1.65 MillionRead the Press Release
A Plus Home Health Care Inc. and its owners, Tracy Nemerofsky and her father, Stephen Nemerofsky, have agreed to pay $1.65 million to the United States to settle allegations that A Plus paid spouses of referring physicians for sham marketing positions in order to induce patient referrals, the Justice Department announced today. A Plus is a home health care company located in Fort Lauderdale, Florida.
“Kickback schemes drive up the cost of health care and cause physicians to make decisions based on their own bottom line instead of what is in the best interest of their patients,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “We will hold any health care company, and the individuals that own those companies, responsible for using kickbacks to line their pockets at the expense of taxpayers and federal health care beneficiaries.”
The United States filed a complaint against A Plus and Tracy Nemerofsky alleging that, beginning in 2006, A Plus engaged in a scheme to increase Medicare referrals in the heavily saturated home health care market in southern Florida. The company allegedly hired at least seven physicians’ spouses and one physician’s boyfriend to perform marketing duties, but required the spouses and boyfriend to perform few, if any, actual job duties. Instead, the spouses’ and boyfriend’s salaries allegedly served as an inducement and reward for the physicians’ referrals of Medicare patients to A Plus. According to the complaint, Tracy Nemerofsky fired at least two spouses when their husbands failed to refer a certain number of patients to A Plus. Tracy Nemerofsky allegedly reaped large rewards for the scheme, receiving a salary of $685,000 from A Plus in 2010, when A Plus’ business increased as a result of Medicare referrals generated from the sham marketer scheme.
“Kickback schemes undermine the integrity of our public health care programs,” said U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida. “The settlement announced today holds A Plus accountable for its submission of false claims, including restoring funds paid as a result of the false claims to Medicare. We will not relent in our efforts to combat these kinds of fraudulent schemes.”
“Home health care company owners who engage in such blatant, aggressive kickback schemes to get physicians to refer Medicare patients for the company’s services will instead pay for their improper conduct at the settlement table,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG). “We will continue to crack down on such illegal, wasteful business kickback arrangements, which undermine impartial medical judgment, corrode the public’s trust in the health care system and divert scarce Medicare funding.”
The settlement resolves allegations that were originally brought by William Guthrie, a former director of development at A Plus, under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to sue on behalf of the United States for the submission of false claims and to receive a share of any recovery. The False Claims Act authorizes the United States to intervene in such lawsuits and take over primary responsibility for litigating them, as the United States did here. Guthrie’s share of this settlement has not yet been determined.
The United States previously settled with five couples that allegedly accepted payments from A Plus: Steven and Fortuna Hornreich, Mark and Meredith Rogovin, Sam and Christy Sareh, Gary and Stacy Wolfson, and Keifer Wyble and Nuria Rodriguez.
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 investigation of this matter reflects a coordinated effort among the Commercial Litigation Branch of the Civil Division, the U.S. Attorney’s Office for the Southern District of Florida, HHS-OIG and the FBI.
The lawsuit is captioned U.S. ex rel. Guthrie v. A Plus Home Health Care, Inc., 12 CV 60629 (S.D. Fla.). The claims settled by the lawsuit are allegations only, and there has been no determination of liability.
Court Bars Florida Tax Preparer from Preparing Returns for OthersRead the Press Release
A federal district judge in the U.S. District Court for the Middle District of Florida has permanently barred Jeanne Covington, of Tampa, Florida, and her company, Jeanne’s Tax Preparation and Bookkeeping Inc., from preparing federal income tax returns for others, the Justice Department announced today.
The suit alleges that Covington has prepared returns that unlawfully understate income tax liabilities and overstate refunds through a variety of schemes, including fabricating or inflating business expenses that Covington’s customers never paid or incurred. The complaint also alleges that Covington prepared returns that wrongfully claimed tax credits, including education credits and the residential energy credit. Altogether, the government complaint alleges that Covington’s activities may have caused millions of dollars in loss to the U.S. Treasury.
Return preparer fraud is one of the 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 unscrupulous tax preparers. Information about these cases is available on the Justice Department website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Related Materials:
USA v. Jeanne Covington, et al.
OrderU.S. Settlement with Michigan Utility to Reduce Emissions at Its Coal-Fired Power Plants, Fund Projects to Benefit Environment and CommunitiesRead the Press Release
WASHINGTON – In a settlement with the United States, Consumers Energy, a subsidiary of CMS Energy Corporation, has agreed to install pollution control technology, continue operating existing pollution controls and comply with emission rates to reduce harmful air pollution from the company’s five coal-fired power plants located in West Olive, Essexville, Muskegon and Luna Pier, Michigan, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today. The settlement will resolve claims that the company violated the Clean Air Act by modifying their facilities in a way that caused the release of excess sulfur dioxide and nitrogen oxide.
EPA expects that the actions required by the settlement will reduce harmful emissions by 46,500 tons per year, which includes approximately 38,400 tons per year of sulfur dioxide (SO2) and 8,100 tons per year of nitrogen oxide (NOx). The company estimates that it will spend approximately $1 billion to implement the required measures. The pollution reductions will be achieved through the installation, upgrade, and operation of state-of-the-art pollution control devices designed to reduce emissions and protect public health. Consumers Energy will also take several coal-fired units offline and may repower additional coal-fired units with natural gas.
The settlement also requires that the company pay a civil penalty of $2.75 million to resolve Clean Air Act violations and spend at least $7.7 million on environmental projects to help mitigate the harmful effects of air pollution on the environment and benefit local communities.
“Today’s settlement will bring cleaner air to residents in Michigan by removing tens of thousands of tons of harmful air pollution from the atmosphere,” said Acting Assistant Attorney General Sam Hirsch of the Justice Department’s Environment and Natural Resources Division. “This agreement will render benefits to communities far into the future with pollution-reduction projects that will improve public health and help restore natural resources downwind of the plants."
“The required pollution controls and funding for mitigation projects will reduce harmful pollution in American communities,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “This case demonstrates that energy can be provided to local communities in a responsible way that significantly reduces sulfur dioxide and nitrogen oxide known to contribute to serious health concerns.”
“Michigan’s greatest assets are our natural resources,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan. “This settlement will protect the health of Michigan residents and ensure clean air for future generations.”
The settlement requires that the company install pollution control technology and implement other measures to reduce sulfur dioxide, and particulate matter emissions from its five coal-fired power plants, comprising 12 operating units. Among other requirements, the company must comply with declining system-wide limits for SO2 and NOx and meet emission rates. In addition, the company must retire or refuel two units to natural gas and retire an additional five units.
SO2 and NOx, two predominant pollutants emitted from power plants, have numerous adverse effects on human health and are significant contributors to acid rain, smog and haze. These pollutants are converted in the air to particulate matter that can cause severe respiratory and cardiovascular impacts, and premature death.
The settlement also requires Consumers Energy to spend at least $7.7 million on projects that will benefit the environment and local communities, including paying $500,000 to the National Park Service for the restoration of land, watersheds, vegetation and forests or combating invasive species in the Cuyahoga Valley National Park and the Sleeping Bear Dunes National Lakeshore Park.
The remaining $7.2 million will be spent on a series of mitigation projects. Potential projects include efforts to reduce vehicle emissions, install renewable energy and energy efficiency projects, replace or retrofit wood burning appliances and protect and restore ecologically significant lands in Michigan. Consumers Energy has five years to complete its selected projects.
This settlement is part of EPA’s national enforcement initiative to control harmful emissions from large sources of pollution, which includes coal-fired power plants, under the Clean Air Act’s Prevention of Significant Deterioration requirements. The total combined SO2 and NOx emission reductions secured from all these settlements will exceed 2 million tons each year once all the required pollution controls have been installed and implemented.
Consumers Energy is Michigan’s second-largest electric and natural gas utility, providing electric service to more than 6 million people in the Lower Peninsula of Michigan.
The settlement was lodged with the U.S. District Court for the Eastern District of Michigan and is subject to a 30-day public comment period and final court approval. It can be viewed at www.justice.gov/enrd/Consent_Decrees.html.
More on the settlement: www2.epa.gov/enforcement/consumers-energy-clean-air-act-settlement
More information about EPA’s enforcement initiative: www.epa.gov/compliance/data/planning/initiatives/2011airpollution.html
Rochester Man Indicted on Charges of Attempting to Provide Material Support to ISIS, Attempting to Kill U.S. Soldiers and Possession of Firearms and SilencersRead the Press Release
ROCHESTER, N.Y.— Attorney General Eric Holder, Assistant Attorney General for National Security John Carlin and U.S. Attorney William J. Hochul Jr. for the Western District of New York announced today that a federal grand jury in Rochester has returned a seven-count indictment charging Mufid A. Elfgeeh, 30, of Rochester, with three counts of attempting to provide material support and resources to the Islamic State of Iraq and the Levant (ISIL), aka the Islamic State of Iraq and Syria (ISIS), a designated foreign terrorist organization. In addition, Elfgeeh is also charged with one count of attempted murder of current and former members of the United States military, one count of possessing firearms equipped with silencers in furtherance of a crime of violence, and two counts of receipt and possession of unregistered firearm silencers.
“We will remain aggressive in identifying and disrupting those who seek to provide support to ISIL and other terrorist groups that are bent on inflicting harm upon Americans,” said Attorney General Holder. “As this case shows, our agents and prosecutors are using all the investigative tools at our disposal to break up these plots before individuals can put their plans into action. We are focused on breaking up these activities on the front end, before supporters of ISIL can make good on plans to travel to the region or recruit sympathizers to this cause.”
“Disrupting and holding accountable those who seek to provide material support to foreign terrorist organizations is and shall remain a critical national security priority,” said Assistant Attorney General Carlin. “I want to thank the agents, analysts and prosecutors who are responsible for the arrest and charges in this case.”
“With today's indictment of Mufid Elfgeehr, the government demonstrates that it will use all available tools to disrupt and defeat ISIS,” said U.S. Attorney Hochul. “The case also demonstrates that by working with the community, law enforcement is able to identify those who would harm our country or our returning soldiers.”
The material support charges each carry a maximum sentence of 15 years in prison, the attempted murder charge carries a maximum sentence of 20 years in prison, the firearms possession charge carries a mandatory minimum sentence of 30 years and a maximum of life in prison, and the firearm silencer charges each carry a maximum sentence of 10 years in prison.
According to court records, Elfgeeh attempted to provide material support to ISIS in the form of personnel, namely three individuals, two of whom were cooperating with the FBI. Elfgeeh attempted to assist all three individuals in traveling to Syria to join and fight on behalf of ISIS. Elfgeeh also plotted to shoot and kill members of the United States military who had returned from Iraq. As part of the plan to kill soldiers, Elfgeeh purchased two handguns equipped with firearm silencers and ammunition from a confidential source. The handguns were made inoperable by the FBI before the confidential source gave them to Elfgeeh.
According to court documents, in 2013 and into early 2014, Elfgeeh encouraged the two confidential sources (CS-1 and CS-2) to travel overseas to engage in violent jihad. After CS-1 and CS-2 agreed to travel to Syria to join ISIS, Elfgeeh took several steps to prepare them for the trip. Elfgeeh also sent $600 to an individual in Yemen for the purpose of assisting that individual in traveling from Yemen to Syria for the purpose of joining and fighting on behalf of ISIS.
Court documents also indicate that Elfgeeh first discussed the idea of shooting United States military members in December 2013 when he told CS-2 that he was thinking about getting a gun and ammunition, putting on a bulletproof vest, and “just go[ing] around and start shooting.” In February 2014, Elfgeeh told CS-2 that he needed a handgun and silencer. Elfgeeh later gave CS-2 $1,050 in cash to purchase two handguns equipped with silencers and ammunition. On May 31, 2014, CS-2 delivered the two handguns equipped with silencers and ammunition to Elfgeeh. After Elfgeeh took possession of the items, he was arrested by members of the Rochester Joint Terrorism Task Force. Elfgeeh is currently being held in custody.
The indictment is the result of an investigation on the part of the Rochester Joint Terrorism Task Force of the Federal Bureau of Investigation.
The defendant is being prosecuted by Assistant United States Attorneys Brett A. Harvey and Frank H. Sherman, with the assistance of Trial Attorney Steven P. Ward of the National Security Division’s Counterterrorism Section.
The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent unless and until proven guilty.
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Detroit-Area Doctor Admits to Providing Medically Unnecessary Chemotherapy to PatientsRead the Press Release
A Detroit-area hematologist-oncologist pleaded guilty today for his role in a health care fraud scheme, admitting that he administered unnecessary chemotherapy to fraudulently bill the Medicare program and private insurance companies. According to court records, the scheme enabled the doctor to submit approximately $225 million in claims to Medicare over six years.
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 Chief Richard Weber of the Internal Revenue Service – Criminal Investigation (IRS-CI) made the announcement.
Farid Fata, M.D., 49, of Oakland Township, Michigan, pleaded guilty today before U.S. District Judge Paul D. Borman of the Eastern District of Michigan to 13 counts of health care fraud, one count of conspiracy to pay or receive kickbacks and two counts of money laundering. At his sentencing, scheduled for Feb. 23, 2014, Fata faces a statutory maximum of 175 years in prison.
“At a time when they are most vulnerable and fearful, cancer patients put their lives in the hands of doctors and endure risky treatments at their recommendation,” said Assistant Attorney General Caldwell. “Dr. Fata today admitted he put greed before the health and safety of his patients, putting them through unnecessary chemotherapy and other treatments just so that he could collect additional millions from Medicare. The mere thought of what he did is chilling. Thanks to the quick action of our partners, he was arrested and has now admitted his guilt.”
“This defendant not only stole funds from taxpayer funded insurance programs, but he also deliberately administered unnecessary chemotherapy so that he could bill insurers for expensive chemotherapy treatments,” said U.S. Attorney McQuade. “His exploitation of patients for his own profit caused victims to suffer physically and emotionally.”
“A little more than a year ago, the FBI and its law enforcement partners acted swiftly to arrest Dr. Farid Fata and shield his patients from further harm,” said FBI Special Agent in Charge Abbate. “Today’s plea is the culmination of the diligent investigative work jointly conducted by the FBI, IRS, the Department of Health and Human Services, and prosecutors to protect the public and ensure that justice is served. Our hope is that this outcome offers some measure of solace to the victims and reassures the community of our collective resolve to prevent similar violations of patients’ trust.”
“Dr. Fata’s utter disregard for his patients’ welfare was quite simply deplorable,” said HHS-OIG Special Agent in Charge Pugh. “The OIG will ceaselessly work to bring such criminals to the justice they deserve.”
“It’s exceptionally distressing to see this kind of fraud committed by individuals in occupations that profess high ethical standards," said IRS-CI Chief Weber. “When doctors commit fraud through their profession, it is not only a violation of the public trust but also a complete renunciation of their Hippocratic oath. Those who commit Medicare fraud are pick-pocketing from every American taxpayer.”
Fata admitted that he is a licensed medical doctor who owned and operated a cancer treatment clinic, Michigan Hematology Oncology, P.C. (MHO), which had locations in Rochester Hills, Clarkston, Bloomfield Hills, Lapeer, Sterling Heights, Troy and Oak Park, Michigan. He also owned a diagnostic testing facility, United Diagnostics PLLC, located in Rochester Hills, Michigan.
In his guilty plea today, Fata admitted to prescribing and administering aggressive chemotherapy, cancer treatments, intravenous iron and other infusion therapies to patients who did not need them in order to increase his billings to the Medicare program and other insurance companies. Fata then submitted fraudulent claims to Medicare and other insurers for these unnecessary treatments.
Fata submitted approximately $225 million in claims to Medicare between August 2007 and July 2013, of which approximately $109 million was for chemotherapy and other cancer treatments. Medicare paid over $91 million to Fata, of which over $48 million was for chemotherapy and other cancer treatments.
Fata also admitted to soliciting kickbacks from Guardian Angel Hospice and Guardian Angel Home Health Care in exchange for his referral of patients to those facilities.
Fata further admitted to using the proceeds of the health care fraud at his medical practice, MHO, to promote the carrying on of additional health care fraud at United Diagnostics, where he administered unnecessary and expensive PET (positron emission tomography) scans for which he billed a private insurer.
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 Deputy Chief Gejaa T. Gobena, Assistant Chief Catherine K. Dick and Trial Attorney Matthew C. Thuesen of the Fraud Section, and by Health Care Fraud Unit Chief Wayne F. Pratt, Deputy Chief Sarah Resnick Cohen and White Collar Crime Unit Chief John K. Neal of the U.S. Attorney’s Office for the Eastern District of Michigan.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, the HHS Centers for Medicare and 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.
For further information about this case, visit: http://www.justice.gov/usao/mie/news/2013/2013_9_18_2013_dr_fata.html.
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Department of Justice and Federal Trade Commission Sign Cooperation Agreement with Colombian Antitrust AgencyRead the Press Release
Assistant Attorney General Bill Baer of the Department of Justice’s Antitrust Division has signed an antitrust cooperation agreement with the Colombian antitrust agency on behalf of the Department of Justice. The agreement also was signed by Federal Trade Commission Chairwoman Edith Ramirez, and went into effect today with the signature of Pablo Felipe Robledo, Colombia’s Superintendent of Industry and Commerce. The agreement will enable the antitrust agencies in the two countries to further enhance their law enforcement relationship.
The new agreement contains provisions for antitrust enforcement cooperation and coordination, conflict avoidance and consultations with respect to enforcement actions, and technical cooperation. The agreement also contains confidentiality protections.
The U.S. antitrust agencies and Colombia’s Superintendence of Industry and Commerce, the agency that enforces Colombia’s competition law, have built a strong enforcement relationship over the years, both bilaterally and under the terms of the U.S.-Colombia Trade Promotion Agreement.
“The Colombians have a proven antitrust system, and this agreement will allow us to work more closely with our colleagues in Bogotá,” said Assistant Attorney General Baer. “Enforcement cooperation based on sound policies is critical to maintaining competitive markets in the Americas, particularly for economies as linked as ours.”
“Colombia has a well-developed competition regime, and we have a strong working relationship with its competition agency,” said Chairwoman Ramirez. “We look forward to working with the Superintendence to advance our shared goal of promoting convergence around sound competition policy throughout the hemisphere.”
Highlights of the new agreement include:
- Mutual acknowledgment of the importance of antitrust cooperation, including information sharing and possible coordination of enforcement actions with regard to related matters;
- Agreement to take one another’s important interests into account in order to minimize possible conflicts arising out of antitrust enforcement actions; and
- Agreement to maintain the confidentiality of any sensitive information provided by the other party.
The agreement entering into force today does not change existing law in either country. Colombia has had a law dedicated to the preservation of competition since 1959. This cooperation agreement is similar in substance to those previously signed by the U.S. antitrust agencies with other jurisdictions in the Americas, including Brazil, Canada, Chile and Mexico.
According to the Office for the United States Trade Representative, Colombia is currently the United States’ 21st-largest goods trading partner, with $40 billion in total (two way) goods trade during 2013. Goods exports totaled $19 billion, while imports totaled $22 billion.
DOJ MEDIA CONTACT: Emily Pierce, Office of Public Affairs
202-514-2007
FTC MEDIA CONTACT: Peter Kaplan, Office of Public Affairs
202-236-2334
Ambulance Company Manager Pleads Guilty to $5.5 Million Medicare Fraud ConspiracyRead the Press Release
The general manager of a Southern California ambulance company pleaded guilty yesterday in Los Angeles to conspiracy to commit Medicare fraud, conspiracy to obstruct a Medicare audit, and making materially false statements to law enforcement officers.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Acting U.S. Attorney Stephanie Yonekura of the Central District of California, Special Agent in Charge Glenn R. Ferry of the Los Angeles Region of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) and Assistant Director in Charge Bill Lewis of the FBI’s Los Angeles Field Office made the announcement.
Wesley Harlan Kingsbury, 34, of Bloomington, California, pleaded guilty to the charges before U.S. District Judge Dale S. Fischer. Sentencing is scheduled for Feb. 9, 2015.
According to court documents, Kingsbury was the general manager of Alpha Ambulance Inc., which specialized in the provision of non-emergency ambulance transportation services to Medicare beneficiaries, primarily to and from dialysis treatments. Between April 2010 and July 2012, Kingsbury conspired with Alex Kapri and Aleksey (Russ) Muratov, the owners of Alpha Ambulance, as well as the training supervisor Danielle Medina, to bill Medicare for ambulance transportation services for individuals that Kingsbury knew did not need to be transported by ambulance. In addition, as general manager, Kingsbury instructed emergency medical technicians (EMTs) that worked at Alpha Ambulance to conceal the true medical condition of patients they were transporting by altering requisite paperwork and creating false reasons to justify the transportation services.
In early 2012, Medicare notified Alpha Ambulance that the company would be subject to a Medicare audit. In response, Kingsbury and his co-conspirators altered patient documentation to create false justifications for the ambulance transportation services. Kingsbury and others used light tracing tables to trace over original documents and create falsified patient documentation for the purpose of sending those falsified documents to Medicare, and then they used a paper shredder to destroy the original patient documents.
Kingsbury and his co-conspirators submitted $5,522,079 in fraudulent claims to Medicare, and Medicare paid $1,338,413 on those fraudulent claims.
Further according to court documents, in April 2012, Kingsbury was approached by law enforcement officers and was asked to assist with the investigation into Alpha Ambulance. Kingsbury disclosed to the owners of Alpha Ambulance the names of the law enforcement officers who were conducting the investigation and the questions they had asked Kingsbury about the company. On May 1, 2012, Kingsbury falsely denied to the law enforcement agents that he had previously disclosed that information to the owners of Alpha.
Kapri, Muratov and Medina pleaded guilty to conspiracy to commit health care fraud on October 28, 2013. They were sentenced to terms of imprisonment of 75 months, 108 months, and 30 months, respectively.
The case was investigated by the FBI and the Los Angeles Region of HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The case was prosecuted by Trial Attorneys Blanca Quintero and Alexander F. Porter and Assistant Chief Ben Curtis of the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 2,000 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, the HHS Centers for Medicare and 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.
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Owner of Costa Rican Call Center Pleads Guilty <br /> to Defrauding Elderly Through Sweepstakes ScamRead the Press Release
A dual United States-Costa Rican citizen pleaded guilty today for his role in a $1.88 million sweepstakes fraud scheme that defrauded hundreds of elderly Americans.
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.
Geoffrey Alexander Ramer, 34, of Costa Rica, pleaded guilty before U.S. Magistrate Judge David S. Cayer of the Western District of North Carolina to wire fraud and money laundering in connection with the telemarketing fraud scheme. Sentencing will be scheduled at a later date.
“Ramer preyed upon some of the most vulnerable members of our society, callously and repeatedly defrauding elderly Americans by stealing their life savings,” said Assistant Attorney General Caldwell. “We hope that today's guilty plea brings some solace to his victims. This prosecution sends a clear message to the next would-be con-artist: in protecting our citizens, the reach of the Justice Department will not stop at our country's borders.
“Ramer and his fellow con artists swindled their victims and pocketed people’s life savings,” said U.S. Attorney Tompkins. “If conscience is not enough to deter scammers from taking advantage of the elderly and vulnerable, the certainty that justice is coming should.”
According to his plea agreement, from 2008 through December 2013, Ramer owned and operated call centers located in Costa Rica. Ramer and his co-conspirators called U.S. residents, many of whom were elderly, and falsely informed them that they had won a substantial cash prize in a sweepstakes. The victims were told that in order to receive the prize, they had to send money to Costa Rica for a purported refundable insurance fee. After receiving the fee, Ramer and his co-conspirators contacted the victims again, and falsely informed them that the prize amount had increased and, therefore, the victims had to send additional money to pay for new purported fees. These attempts to collect additional money continued until the victims ran out of money or discovered the fraud. To mask that they were calling from Costa Rica, Ramer and his co-conspirators utilized VoIP phones that displayed a (202) area code, giving victims the false impression the calls were coming from Washington, D.C. Ramer often falsely claimed to be calling on behalf of a U.S. federal agency to lure victims into a false sense of security.
Plea documents state that, along with his co-conspirators, Ramer was responsible for causing more than $1.88 million in losses to hundreds of elderly Americans.
The case was investigated by the U.S. Postal Inspection Service, FBI, Internal Revenue Service – Criminal Investigation Division, Federal Trade Commission and the U.S. Department of Health and Human Services. This case is being prosecuted by Senior Litigation Counsel Patrick Donley and Trial Attorney William Bowne of the Criminal Division’s Fraud Section.Federal Court Bars Nevada Corporation from Promoting Alleged Tax SchemeRead the Press Release
A federal court has permanently barred Sea Nine Associates Inc. from promoting and selling an alleged nationwide tax scheme that involved using welfare benefit plans to unlawfully increase and accelerate tax deductions and avoid income taxes, the Justice Department announced today.
On Sept. 12, U.S. District Judge Josephine L. Staton for the Central District of California entered a judgment of permanent injunction against Sea Nine.
According to the complaint, welfare benefit plans permit companies to pool together and make monetary contributions toward the purchase of life insurance for the benefit of each participating company’s employees or principals. Participants in legitimate welfare benefit plans may be able to deduct their plan contributions as a business expense. The government alleged that Sea Nine marketed the unlawful welfare benefit plans to more than 200 entities. The injunction order bars Sea Nine from selling and managing any purported welfare benefit plans.
In the past decade, the department’s Tax Division has obtained more than 500 injunctions to stop tax fraud promoters and tax return preparers. Information about these cases is available on the department’s 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.
Related Materials:
United States v. Kenneth Elliott, etc. et al.
Default Judgment and Permanent Injunction Against Sea Nine Associates, Inc.Episcopal Ministries to the Aging Inc. to Pay $1.3 Million for Allegedly Causing Submission of Claims for Unreasonable or Unnecessary Rehabilitation Therapy at Skilled Nursing FacilityRead the Press Release
Episcopal Ministries to the Aging Inc. (EMA), a Maryland not-for-profit corporation that owns skilled nursing facilities, has agreed to pay $1.3 million to the government for submitting false claims to Medicare for unreasonable or unnecessary rehabilitation therapy purportedly provided by RehabCare Group East Inc., a subsidiary of Kindred Healthcare Inc.
“Patient need must dictate the provision of Medicare benefits rather than the fiscal interests of providers,” said Assistant Attorney General Stuart F. Delery for the Justice Department’s Civil Division. “ Today’s settlement demonstrates the department’s continued commitment to safeguarding both Medicare beneficiaries and taxpayer dollars by holding accountable all entities involved in billing for unnecessary services, including those that did not directly provide the unnecessary services.”
The settlement resolves allegations that EMA submitted false claims for rehabilitation therapy at William Hill Manor, a skilled nursing facility EMA owns in Easton, Maryland. EMA hired RehabCare to provide rehabilitation therapy services to its patients at that facility starting in 2010. The government alleges that EMA failed to prevent RehabCare from providing unreasonable or unnecessary therapy to patients in order to increase Medicare reimbursement to the facilities. The government contended that among other things the reported therapy did not reflect the lower amounts of therapy generally provided to patients over the course of their stay.
The settlement further resolves allegations that EMA failed to prevent other RehabCare practices designed to inflate Medicare reimbursement, including: in lieu of using individualized evaluations to determine the level of care most suitable for each patient’s clinical needs, presumptively placing patients in the highest reimbursement level unless it was shown that the patients could not tolerate that amount of therapy; providing the minimum number of minutes of therapy required to bill at the highest reimbursement level while discouraging the provision of therapy in amounts beyond that minimum threshold, despite the Medicare requirement that the amount of care provided be determined by patients’ clinical needs; arbitrarily shifting the number of minutes of planned therapy between therapy disciplines to ensure targeted reimbursement levels were achieved and reporting estimated or rounded minutes instead of reporting the actual minutes of therapy provided.
“Patients in our nation’s nursing homes should not be left to wonder whether the therapy they receive is based on their own clinical needs, or is instead tied to the financial targets of the companies providing their care,” said U.S. Attorney Carmen M. Ortiz for the District of Massachusetts. “This settlement makes clear that, when a skilled nursing facility contracts with an outside rehabilitation therapy provider, the facility remains responsible for ensuring that its patients are receiving, and Medicare is paying for, reasonable and necessary care.”
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 Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Massachusetts, with assistance from the U.S. Department of Health and Human Services-Office of the Inspector General and the FBI . The claims resolved by the settlements are allegations only, and there has been no determination of liability.
Attorney General Holder Records Message for Cartoon Network’s “I Speak up” Campaign to Combat BullyingRead the Press Release
The Justice Department announced Monday that Attorney General Eric Holder has recorded a video message as part of the Cartoon Network’s “I Speak Up” campaign to combat bullying. The project urges young people to speak up in order to help bring bullying situations to an end.
The goal of the campaign is to collect one million user-generated videos that unite the voices of kids, parents, educators, celebrities and government officials all saying “I Speak Up.” Attorney General Holder joined other notable voices such as Education Secretary Arne Duncan, as well as actors and professional athletes, in recording a message for the campaign.
In his video, the Attorney General delivers the following message: “The violence of bullying has a devastating effect on young people. Help me defend childhood by speaking up for those who – too often – cannot speak for themselves. I’m Attorney General Eric Holder, and I am joining Cartoon Network to challenge one million people to speak up against bullying. Please go to StopBullyingSpeakUp.com to learn more.”
The full video of the Attorney General’s message is available at https://www.youtube.com/watch?v=NMH5Abirdaw.
Attorney General Holder Announces Pilot Program to Counter Violent ExtremistsRead the Press Release
Attorney General Eric Holder announced Monday that the Justice Department will launch a new series of pilot programs in cities across the country to bring together community representatives, public safety officials and religious leaders to counter violent extremism. The new programs will be run in partnership with the White House, the Department of Homeland Security, and the National Counterterrorism Center.
“Today, few threats are more urgent than the threat posed by violent extremism,” Attorney General said in a video message posted on the Justice Department’s website. “And with the emergence of groups like ISIL, and the knowledge that some Americans are attempting to travel to countries like Syria and Iraq to take part in ongoing conflicts, the Justice Department is responding appropriately.”
The complete text of the Attorney General’s video message is below:
“Last week, millions of Americans paused to mark the 13th anniversary of the attacks of September 11, 2001 – the deadliest acts of terror ever carried out on American soil. For my colleagues at every level of our nation’s Department of Justice, and for me, this anniversary was also a solemn reminder of our most important obligation: to ensure America’s national security and protect the American people from a range of evolving threats.
“Today, few threats are more urgent than the threat posed by violent extremism. And with the emergence of groups like ISIL, and the knowledge that some Americans are attempting to travel to countries like Syria and Iraq to take part in ongoing conflicts, the Justice Department is responding appropriately.
“Through law enforcement agencies like the FBI, American authorities are working with our international partners and Interpol to disseminate information on foreign fighters in Syria and Iraq, including individuals who have traveled from the United States. We have established processes for detecting American extremists who attempt to join terror groups abroad. And we have engaged in extensive outreach to communities here in the U.S. – so we can work with them to identify threats before they emerge, to disrupt homegrown terrorists, and to apprehend would-be violent extremists. But we can – and we must – do even more.
“Today, I am announcing that the Department of Justice is partnering with the White House, the Department of Homeland Security, and the National Counterterrorism Center to launch a new series of pilot programs in cities across the nation. These programs will bring together community representatives, public safety officials, religious leaders, and United States Attorneys to improve local engagement; to counter violent extremism; and – ultimately – to build a broad network of community partnerships to keep our nation safe. Under President Obama’s leadership, along with our interagency affiliates, we will work closely with community representatives to develop comprehensive local strategies, to raise awareness about important issues, to share information on best practices, and to expand and improve training in every area of the country.
“Already, since 2012, our U.S. Attorneys have held or attended more than 1,700 engagement-related events or meetings to enhance trust and facilitate communication in their neighborhoods and districts. This innovative new pilot initiative will build on that important work. And the White House will be hosting a Countering Violent Extremism summit in October to highlight these and other domestic and international efforts. Ultimately, the pilot programs will enable us to develop more effective – and more inclusive – ways to help build the more just, secure, and free society that all Americans deserve.
“As we move forward together, our work must continue to be guided by the core democratic values – and the ideals of freedom, openness, and inclusion – that have always set this nation apart on the world stage. We must be both innovative and aggressive in countering violent extremism and combating those who would sow intolerance, division, and hate – not just within our borders, but with our international partners on a global scale. And we must never lose sight of what violent extremists fear the most: the strength of our communities; our unwavering respect for equality, civil rights, and civil liberties; and our enduring commitment to justice, democracy, and the rule of law.”
The full video of the Attorney General’s message is available at http://www.justice.gov/agwa.php.
Wisconsin Pharmacist and Nevada Pharmacologist <br /> Charged with Smuggling Counterfeit Pharmaceuticals<br /> Using a Costa Rican Internet PharmacyRead the Press Release
A Wisconsin pharmacist and a Nevada pharmacologist were arraigned on an indictment today in Federal Court in Central Islip, New York, before United States Magistrate Judge Gary Brown. The defendants are charged with conspiring to supply at least four million misbranded and counterfeit pharmaceuticals to an illegal Internet pharmacy based in Costa Rica that catered to U.S. customers.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division; United States Attorney Loretta E. Lynch of the Eastern District of New York; Assistant Director in Charge George C. Venizelos of the FBI’s New York Field Office; Acting Special Agent in Charge James Royal of the U.S. Food and Drug Administration (FDA), Office of Criminal Investigations’ New York Field Office and Special Agent in Charge James T. Hayes Jr. of Homeland Security Investigations’ (HSI) New York Field Office made the announcement.
The 10-count indictment charges Marla Ahlgrimm, 59, of Madison, Wisconsin, and Balbir Bhogal, 67, of Las Vegas, Nevada, with importing and distributing controlled substances and misbranded drugs, trafficking in counterfeit drugs, mail and wire fraud, smuggling and money laundering.
According to the indictment and information presented at the arraignment, from June 2007 through May 2010, Ahlgrimm and Bhogal, who is a dual U.S. and Indian citizen, allegedly arranged for the manufacture in India of millions of tablets of controlled substances, including alprazolam and phentermine, and prescription drugs, including carisoprodol and counterfeit Viagra. Although they did not hold an importer’s license from the Drug Enforcement Administration, the defendants allegedly arranged for the importation of the same drugs into the United States. Neither the incoming packages nor the tablets themselves were labeled or identified as controlled substances or prescription drugs.
The drugs were allegedly intended to supply an Internet pharmacy based in Costa Rica that catered to customers within the United States, including Brooklyn and Queens, New York. The Internet pharmacy used call centers and websites based outside the United States, but filled the orders from inside the United States using individuals who were not licensed pharmacists to bottle, label and drop-ship the drugs. To facilitate the operation, the defendants allegedly wired money from Costa Rica to the United States and then to India.
An indictment is merely an accusation, and the defendants are presumed innocent unless and until proven guilty.
The case was jointly investigated by the FBI, FDA’s Office of Criminal Investigations, and HSI. The case is being prosecuted by Senior Counsel Evan C. Williams of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney William P. Campos of the Eastern District of New York.United States Seeks Civil Contempt Against Bayer Corporation for Failure to Substantiate Promotional Claims for Phillips’ Colon HealthRead the Press Release
The Department of Justice announced today that it filed a motion to show cause why Bayer Corporation should not be held in civil contempt for violating a court order in the U.S. District Court for the District of New Jersey. The court order, entered in 2007 in United States v. Bayer Corporation, prohibits Bayer from making unsubstantiated claims for any dietary supplement it promotes or sells. The government alleges in today’s motion that Bayer promotes one of its products, Phillips’ Colon Health, using claims about the product’s purported benefits without having evidence to substantiate those claims.
The court order prohibits Bayer from making any claim about the performance or efficacy of any dietary supplement, multivitamin or weight-control product unless, at the time Bayer makes the claim, the company possesses “competent and reliable scientific evidence” to support the claim. In its motion, the United States alleges that Bayer expressly claims Phillips’ Colon Health can “defend against” occasional constipation, diarrhea, and gas and bloating, and impliedly claims that Phillips’ Colon Health prevents, treats and cures constipation, diarrhea, and gas and bloating, even though the company lacks competent and reliable scientific evidence for those claims.
“Bayer is required to abide by a longstanding court order to back up claims it makes about the products it sells,” said Assistant Attorney General Stuart F. Delery for the department’s Civil Division. “The Department of Justice will not tolerate companies that seek to gain an unfair advantage over their competitors by promoting to consumers unsubstantiated claims about the health benefits of their products.”
In its motion, the United States describes Bayer’s multimillion dollar nationwide marketing campaign for Phillips’ Colon Health, which includes print advertisements and television commercials featuring “The Colon Lady,” in addition to claims on the product’s packaging. The motion further alleges that consumers have paid hundreds of millions of dollars for Phillips’ Colon Health, even though Bayer lacks the evidence to support the claims of the purported benefits of this product.
The Consumer Protection Branch of the Civil Division and the U.S. Attorney’s Office for the District of New Jersey filed the motion for contempt with the assistance of the Federal Trade Commission (FTC). The matter is filed as United States v. Bayer Corporation, No. 07-0001, in the District of New Jersey.
In 2007, the United States filed a civil complaint against Bayer alleging that Bayer marketed its One-A-Day WeightSmart multivitamin and dietary supplement with unsubstantiated claims that, among other things, One-A-Day WeightSmart helped prevent some of the weight gain associated with a decline in metabolism in users over the age of 30. The complaint alleged that those unsubstantiated claims violated an order issued in 1991 by the FTC against Bayer’s predecessor, Miles Inc., that required all claims about the benefits of One-A-Day brand vitamins to be substantiated by competent and reliable scientific evidence.
In order to resolve the complaint’s allegations, in 2007, Bayer agreed to pay a $3.2 million civil penalty and agreed that it would not make unsubstantiated representations regarding the benefits, performance, efficacy, safety or side effects of any dietary supplement, multivitamin or weight-control product. In 2007, the U.S. District Court for the District of New Jersey entered an order resolving the complaint’s allegations and prohibiting Bayer from making unsubstantiated claims about its products.
Assistant Attorney General Delery commended the efforts of the FTC to investigate Bayer’s compliance with the 2007 court order and for referring this latest matter for enforcement. This case is being handled by the Civil Division’s Consumer Protection Branch.
This motion contains a set of allegations. If this motion is litigated, the government would need to prove the allegations by clear and convincing evidence.
Two Men, Including Former Car Salesman at Prominent Los Angeles Dealership, Charged with Conspiring to Roll Back Odometers in Large-Scale Scheme That Defrauded Car BuyersRead the Press Release
A former salesman at a prominent Los Angeles car dealership and another Southern California man were charged with odometer tampering, the Justice Department announced today.
Jeffrey Levy, 62, and Shamai Salpeter, 65, both of Woodland Hills, California, were charged in separate criminal informations with conspiracy to commit odometer tampering.
“ Victims of odometer fraud lose thousands of dollars on what can turn out to be unreliable and potentially dangerous vehicles ,” said Assistant Attorney General Stuart F. Delery for the Justice Department’s Civil Division. “To help ensure that Americans can have confidence in the cars they buy, we will continue to prosecute car salesmen and others who violate federal law by tampering with a vehicle’s odometer.”
Levy was a salesman at Galpin Ford in North Hills, California. Levy referred customers and friends to his co-conspirator, Salpeter, who rolled back odometers in the driveway of his Woodland Hills residence. Levy is alleged to have known that some of these people had exceeded the maximum allowed mileage under the terms of their leases and wished to avoid fees and penalties. According to the charges, Levy also knew that other customers wanted to lower the mileage on their odometers to make their vehicles more valuable when they traded in the vehicles. After Salpeter altered the odometers, Levy’s customers returned or traded in their vehicles with falsified lower mileage readings. Levy then accepted the vehicles without alerting Galpin Ford that the odometer readings were false, thus defrauding future owners of the vehicles. Galpin Ford cooperated with the government’s investigation.
Salpeter altered odometers for friends, acquaintances and strangers, including customers referred by Levy. Salpeter charged between $100 and $400 per odometer and used electronic tools to set the odometer to the mileage requested by his customer.
This case was investigated by the National Highway Traffic Safety Administration Office of Odometer Fraud Investigation (NHTSA) and California’s Department of Motor Vehicles. This case is being prosecuted by Trial Attorney John W. Burke of the Civil Division’s Consumer Protection Branch.
NHTSA has established a special hotline to handle odometer fraud complaints. Individuals who have information relating to odometer tampering should call (800) 424-9393 or (202) 366-4761.
An update on the status of the case is available at: http://www.justice.gov/civil/cpb/cpb_currentcases.html#_Odom More information on odometer fraud is available at: http://www.nhtsa.gov/Odometer-Fraud , and tips on detecting and avoiding odometer fraud are available at: www.nhtsa.gov/staticfiles/nvs/pdf/811284.pdf .
Justice Department and CNCS Announce $1.8 Million in Grants to Enhance Immigration Court Proceedings and Provide Legal Assistance to Unaccompanied ChildrenRead the Press Release
The Department of Justice and the Corporation for National and Community Service (CNCS), which administers AmeriCorps national service programs, has awarded $1.8 million in grants to increase the effective and efficient adjudication of immigration proceedings involving certain children who have crossed the U.S. border without a parent or legal guardian. The grants will be disbursed through justice AmeriCorps and will enable legal aid organizations to enroll approximately 100 lawyers and paralegals to represent children in immigration proceedings. The justice AmeriCorps members will also help to identify children who have been victims of human trafficking or abuse and, as appropriate, refer them to support services and authorities responsible for investigating and prosecuting the perpetrators of such crimes.
“The increasing numbers of unaccompanied children appearing in our immigration courts present an urgent challenge: how best to conduct immigration proceedings more efficiently while maintaining our commitment to following the procedures required by law and protecting the rights of these children.” said Attorney General Eric Holder. “We are addressing that challenge by using these funds to facilitate access to legal representation for some of the most vulnerable of these children. By increasing the number of represented children, we will enhance the resources available to both the children and the courts to better serve the administration of justice in all cases.”
“Young immigrant children often enter the U.S. after a long and dangerous journey,” said CNCS CEO Wendy Spencer. “This funding will enable organizations to engage AmeriCorps members in providing critical support for these children, many of whom are escaping abuse, persecution, or violence. As a result of this partnership, AmeriCorps will play a role in improving the effective and efficient adjudication of these very difficult cases.”
The grants were awarded to Equal Justice Works, Casa Cornelia Law Center, Catholic Legal Services of Miami, Legal Services of South Central Michigan, the Massachusetts Immigrant and Refugee Advocacy Coalition, the New York Immigration Coalition, and the University of Nevada Las Vegas. Their programs will serve children in immigration court locations in Atlanta, Baltimore, Boston, Charlotte, Chicago, Cleveland, Dallas, Denver, Detroit, El Paso, Las Vegas, Miami, New York, Phoenix, San Antonio, San Diego and Seattle after justice AmeriCorps members attend a national training program later this year. The training will include immigration laws and regulations applicable to unaccompanied children; immigration proceedings practice and procedure; ethics for professionals working with children and youths; and trauma-informed and culturally-appropriate models of interacting with unaccompanied children.
“After more than a year of planning, we are pleased to see justice AmeriCorps taking flight,” said Associate Attorney General Tony West, who oversaw the development and implementation of the program for the Department of Justice. “The justice AmeriCorps program will address several important goals: enhancing the efficacy and efficiency of our immigration courts; protecting vulnerable populations; and increasing national service.”
“With the awarding of these grants, the Executive Office for Immigration Review (EOIR) will see an increase in the representation of children in immigration court proceedings,” said EOIR Deputy Director Ana M. Kocur. “This public-private partnership is the realization of creative government thinking to increase efficiencies in the immigration courts.”
For more information about the justice AmeriCorps program please visit: http://www.nationalservice.gov/programs/americorps.
The justice AmeriCorps program is a strategic partnership between the Department of Justice and the Corporation for National and Community Service to provide legal aid to vulnerable populations. This particular program responds to Congress’ direction to the Executive Office for Immigration Review “to better serve vulnerable populations such as children and improve court efficiency through pilot efforts aimed at improving legal representation.”
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 U.S. 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.
The Corporation for National and Community Service is a federal agency that engages more than five million Americans in service through its AmeriCorps, Senior Corps, Social Innovation Fund and other programs, and leads the president's national call to service initiative United We Serve. For more information, visit: www.nationalservice.gov.
Federal Court Bars Louisiana Woman from Preparing Federal Tax ReturnsRead the Press Release
A federal court in New Orleans has permanently barred a La Place, Louisiana, woman from preparing federal income tax returns for others, the Justice Department announced today.
The injunction, to which Shawanda Nevers, aka Shawanda Bryant, Shawanda Hawkins and Shawanda Johnson, consented, was entered by U.S. District Judge Susie Morgan for the Eastern District of Louisiana. According to the complaint, Nevers had prepared federal income tax returns in Louisiana through a business named 3LJ’s Industrial Service Solutions LLC. The complaint alleged that she prepared returns that unlawfully understated income tax liabilities and overstated refunds through a variety of schemes.
According to the complaint, Nevers prepared returns that claimed losses by fabricating expenses for fictitious businesses or overstating expenses incurred by legitimate enterprises. The deductions for these fictitious or overstated expenses were claimed on a Form Schedule C – Profit or Loss From Business, which Nevers often included in her customers’ returns without their knowledge. The returns Nevers prepared directed the Internal Revenue Service (IRS) to deposit the resulting refunds into her account, from which she would deduct a fee before remitting the balance to her customers.
Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2014. The IRS has tips for choosing a tax preparer on their website. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website.
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Order
Community Oriented Policing Services Outlines Best Practices for Use of Body-Worn Cameras for Police OfficersRead the Press Release
Today the U.S. Department of Justice Office of Community Oriented Policing Services (COPS Office) released Implementing a Body-Worn Camera Program: Recommendations and Lessons Learned. The report analyzes some of the costs and benefits of law enforcement using body-worn video technology.
“Law enforcement agencies across the nation are contemplating how best to use body-worn cameras and these guidelines will help them weight the costs and benefits,” said COPS Office Director Ronald L. Davis. “There are many considerations when implementing a body-worn camera and this report will help chiefs and sheriffs make the best decision for their jurisdiction.”
The publication was developed jointly by the Police Executive Research Forum (PERF) and COPS through a cooperative agreement under the FY 2013 Community Policing Development Program. PERF conducted research on the use of body-worn cameras, identified promising practices and lessons learned from the field, and produced a set of guidelines for agencies interested in implement a body-worn camera program. Included in this effort was a one-day executive session with more than 200 police chiefs, sheriffs, scholars, representatives from federal criminal justice agencies, and other experts present to share experiences and lessons learned about body-worn cameras, to identify promising practices from the field, and to engage in a dialogue about the issues surrounding cameras.
The publication reviews the perceived benefits of body-worn cameras and considerations surrounding body-worn cameras before proposing a set of comprehensive policy recommendations that reflect the promising practices and lessons that emerged from PERF’s conference and its extensive discussions with police executives and other experts following the conference.
The policy recommendations cover all aspects of what a police department should consider when deciding to use body cameras including:
· Basic camera usage, such as who will be assigned to wear the cameras and where on the body the cameras are authorized to be placed;
· Recording protocols, including when to activate the camera, when to turn it off, and the types of circumstances in which recording is required, allowed or prohibited;
· The process for downloading recorded data from the camera, including who is responsible for downloading, when data must be downloaded, where data will be stored, and how to safeguard against data tampering or deletion;
· The length of time recorded data will be retained by the agency in various circumstances;
· The process and policies for accessing and reviewing recorded data, including the persons authorized to access data and the circumstances in which recorded data can be reviewed; and
· Policies for releasing recorded data to the public, including protocols regarding redactions and responding to public disclosure requests.
All COPS Office publications can be downloaded from the Resource Center and many can be ordered at no cost either through the Resource Center or by contacting the U.S. Department of Justice Response Center at 800-421-6770.
Related Materials:
COPS Office Report
Statement by the U.S. Department of Justice and the Office of the Director of National Intelligence on the Declassification of Documents Related to the Protect America Act LitigationRead the Press Release
On January 15, 2009, the U.S. Foreign Intelligence Surveillance Court of Review (FISC-R) published an unclassified version of its opinion in In Re: Directives Pursuant to Section 105B of the Foreign Intelligence Surveillance Act, 551 F.3d 1004 (Foreign Intel. Surv. Ct. Rev. 2008). The classified version of the opinion was issued on August 22, 2008, following a challenge by Yahoo! Inc. (Yahoo!) to directives issued under the Protect America Act of 2007 (PAA). Today, following a renewed declassification review, the Executive Branch is publicly releasing various documents from this litigation, including legal briefs and additional sections of the 2008 FISC-R opinion, with appropriate redactions to protect national security information. These documents are available at the website of the Office of the Director of National Intelligence (ODNI), www.dni.gov; and ODNI’s public website dedicated to fostering greater public visibility into the intelligence activities of the U.S. Government, IContheRecord.tumblr.com. A summary of the underlying litigation follows.
FISC Proceedings
In Re: Directives Pursuant to Section 105B of the Foreign Intelligence Surveillance Act involved a challenge by Yahoo! to directives issued by the Director of National Intelligence (DNI) and the Attorney General under the PAA. The PAA was the predecessor to the Foreign Intelligence Surveillance Act (FISA) Amendments Act of 2008 (FISA Amendments Act of 2008 or FAA). The directives issued to Yahoo! under the PAA required it to assist the U.S. Government in acquiring foreign intelligence information through the surveillance of targets reasonably believed to be located outside the United States. Yahoo! refused to comply with the directives, and the U.S. Government initiated proceedings in the FISC to compel compliance.
Yahoo! opposed the U.S. Government’s motion to compel compliance with the directives primarily on the ground that the directives violated the Fourth Amendment rights of its customers. On April 25, 2008, following extensive briefing by the parties, the FISC held that the directives were lawful and ordered Yahoo! to comply.
- The FISC held that there is a foreign intelligence exception to the warrant requirement, and that the exception applied to surveillance conducted pursuant to the directives, including surveillance targeting U.S. persons located outside the United States.
- The FISC held that the U.S. Government has sufficient procedures in place “to ensure that the Fourth Amendment rights of targeted U.S. persons are adequately protected and that the acquisition of foreign intelligence to be obtained through the directives issued to Yahoo!, as to these individuals, is reasonable under the Fourth Amendment.” It further held, based on prior case law and noting the applicable minimization procedures, that “any incidental acquisition of the communications of non-targeted persons located in the United States and of non-targeted U.S. persons, wherever they may be located, is also reasonable under the Fourth Amendment.”
Yahoo! then appealed to the FISC-R.
FISC-R Proceedings
On August 22, 2008, following briefings and oral argument, the FISC-R issued a classified opinion, affirming the FISC’s decision that the directives were lawful. In its decision, the FISC-R first held that Yahoo! had standing to challenge the directives based on the Fourth Amendment interests of its customers that Yahoo! was alleging. Turning to the merits of the case, the FISC-R rejected Yahoo!’s Fourth Amendment challenge to the directives.
- First, the FISC-R held that a traditional warrant was not required. Basing its opinion on a line of U.S. Supreme Court cases recognizing “special needs” exceptions to the Fourth Amendment’s warrant requirement, the FISC-R held that the U.S. Government’s collection of foreign intelligence information pursuant to the directives addressed a special need that justified an exception to the warrant requirement.
- Second, the FISC-R held that the surveillance at issue met the reasonableness requirement of the Fourth Amendment, in light of the national security interests at issue and the “matrix of safeguards” required by the PAA and implemented by multiple branches of the Government. Those safeguards included:
- Targeting procedures reviewed by the FISC and designed to ensure that the U.S. Government targets someone only if the Government has a valid foreign intelligence purpose and reasonably believes that person is located outside of the United States.
- Minimization procedures designed to limit the retention and dissemination of information about U.S. persons.
- Procedures that require the Attorney General to find, before the U.S. Government conducts surveillance of any U.S. person located outside the United States, that the targeted U.S. person is a foreign power or an agent of a foreign power. These procedures were not required by the PAA. Rather, the U.S. Government included them as a requirement in the certifications for the surveillance of U.S. persons located outside the United States, consistent with its practice since 1981 under Section 2.5 of Executive Order 12333.
No rehearing or further review in the U.S. Supreme Court was sought.
The FISA Amendments Act
The PAA expired in February 2008 and was ultimately replaced with the FISA Amendments Act of 2008, codified as Title VII of FISA. The FISA Amendments Act incorporates many of the provisions and procedures that the FISC-R found important to its holding that the U.S. Government’s surveillance was constitutional. The FISA Amendments Act also builds in additional safeguards that did not exist in the PAA. For example:
- The FISA Amendments Act goes beyond the PAA and imposed, for the first time, the requirement for a judicial finding that a U.S. person located outside the United States targeted for surveillance or search is a foreign power, agent of a foreign power, or officer or employee of a foreign power. This finding is made by the FISC under the FISA Amendments Act; as noted above, under the PAA and prior to the PAA this finding was made exclusively by the Attorney General.
- The FISA Amendments Act requires FISC approval of the targeting and minimization procedures. Under the PAA, the FISC reviewed only the targeting procedures.
The FISA Amendments Act, by requiring those and other safeguards, is even more protective of the Fourth Amendment rights of U.S. persons than the statute upheld by the FISC-R as constitutional.
Owner of Tax Return Preparation Franchise and Health Provider Business Sentenced to Prison for Tax Fraud, Healthcare Fraud and Money LaunderingRead the Press Release
A man formerly of Raleigh, North Carolina, and now of Miami, was sentenced today to serve 135 months in prison for tax fraud, healthcare fraud and money laundering crimes in two separate cases in federal court, announced Deputy Assistant Attorney General Ronald A. Cimino of the Justice Department’s Tax Division and U.S. Attorney Ripley Rand for the Middle District of North Carolina.
Claude Arthur Verbal II was also ordered to serve three years of supervised release following his prison term, to pay restitution of $4,078,584 to the Internal Revenue Service (IRS) and to pay $2,382,378 to the North Carolina Department of Health and Human Services. On April 9, Verbal pleaded guilty to one count of conspiracy to defraud the United States, one count of aiding and assisting the preparation of false tax returns, one count of healthcare fraud and one count of money laundering.
“Mr. Verbal’s sentence sends a clear message to those who operate fraudulent tax return businesses,” said Deputy Assistant Attorney General Ronald A. Cimino of the department’s Tax Division. “The Justice Department will continue to prosecute and seek just punishment against those who prepare fraudulent tax returns.”
The Tax Case
Verbal was the owner of Nothing But Taxes (NBT), a tax return preparation franchise with 10 branches throughout the state of North Carolina that operated from 2005 to at least 2012. Verbal personally prepared false tax returns for clients of NBT and taught and encouraged his employees to do so as well. Verbal and NBT employees frequently offered clients a dramatically larger tax refund if the client agreed to make a cash payment to their tax preparer. These cash payments were over and above the flat return preparation fee that NBT charged every client, whether or not their return was falsified.
From 2005 to 2007, Verbal personally prepared dozens of false tax returns on a computer at NBT’s location on Fayetteville Street in Durham, North Carolina. One such return was a 2006 tax return for an NBT client that falsely reported the client had a Schedule C business and a dependent, which Verbal knowingly prepared and electronically filed with the IRS.
The most common types of falsifications at NBT were false dependents, false Schedule C businesses, false tip income, false Earned Income Tax Credits and false education credits. Verbal falsified returns using these items and taught his managers and line employees how to do so as well. Verbal and many of his employees facilitated the purchase and sale of false dependents at NBT by purchasing the names, dates of birth and social security numbers of individuals from the community for use as false dependents on other clients’ tax returns.
“Mr. Verbal’s fraudulent schemes victimized taxpayers in multiple ways, damaged the Medicaid program and the many patients who rely on it,” said U.S. Attorney Ripley Rand for the Middle District of North Carolina. “We will continue to work with law enforcement and the victimized agencies to shut down these types of fraud schemes, hold the fraudsters accountable, and return the ill-gotten gains to the programs for which they were intended.”
In November 2010, one of Verbal’s employees informed a U.S. probation officer of the fraudulent practices at NBT’s location on Fayetteville Street. The probation officer informed Verbal of this fraud and he falsely denied knowledge of it. Afterward, Verbal took steps to keep the profitable Fayetteville Street location open and to continue operating as usual, but to also further distance himself from the fraudulent practices. In order to do this, Verbal transferred the electronic filing privileges for that NBT branch to a nominee. Verbal and others jointly persuaded a relative of Verbal who allowed Verbal to use their name to apply for new electronic filing privileges for the Fayetteville Street location. In exchange, Verbal and his wife paid the relative $10,000, and the relative had no role in operating NBT, no professional tax experience and no knowledge of the fraud that was occurring at NBT.
Later, in 2012, the IRS shut down electronic filing privileges at all 10 NBT branches due to persistent fraud. Verbal re-applied for electronic filing privileges twice for all NBT locations, first in the name of the relative and, when that attempt failed, in the name of another relative who had no knowledge of NBT’s business.
The Healthcare Fraud Case
According to court documents, Verbal was the owner and operator of Infinite Wellness Concepts (IWC), a Medicaid behavioral health provider with locations in Burlington, Durham and Greensboro, North Carolina. IWC was contracted to provide group therapy, intensive in-home services, and enhanced mental health and substance abuse services. Verbal acquired at least $1 million in fraudulently obtained funds from the Medicaid program. The fraudulent activities included:
· changing diagnosis codes so that codes with higher reimbursement rates could be billed;
· falsely inflating the number of clients treated during group therapy;
· billing for services not rendered and submitting false treatment notes in support of the services not rendered using forged signatures from counselors and therapists;
· unqualified personnel conducting therapy; and
· creating fraudulent clinical assessments and creating clinical assessments prepared and signed by unqualified preparers.
Verbal used the proceeds of the tax and healthcare fraud schemes to make extensive purchases of luxury cars, homes and jewelry. The money laundering charge to which Verbal pleaded guilty relates to the purchase of a $52,000 diamond ring with the proceeds of healthcare fraud.
“It is both despicable and illegal when scammers like Claude Verbal cheat the Medicaid program and its beneficiaries by billing for badly needed services for poor and mentally ill patients – services that were never actually provided or were provided by unqualified staff -- just so that Verbal could build a $700K+ bank account and go on a diamond-encrusted shopping spree with the ill-gotten money,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services-Office of Inspector General (HHS-OIG), Atlanta Regional Office. “Verbal’s audacious, greed-fueled fraud cheated both taxpayers and needy patients; now, thanks to our hard working investigators and our law enforcement partners, Verbal will pay dearly for his reprehensible crimes.”
“Today’s sentence is the strongest type of affirmation that criminals such as Mr. Verbal, who commit tax fraud and engage in other criminal activities, will be forced to bear the consequences of their actions,” said Special Agent in Charge Thomas J. Holloman for IRS-Criminal Investigation. “We, along with our law enforcement partners are committed to working together in bringing individuals such as Mr. Verbal to justice.”
In the course of the healthcare fraud investigation, law enforcement authorities seized $765,917 from bank accounts controlled by Verbal, a 2011 Toyota Camry and four pieces of diamond jewelry, including a 7-carat diamond ring. The United States initiated a civil forfeiture action alleging the properties constituted proceeds traceable to the healthcare fraud and on Sept. 19, 2013, U.S. District Judge Catherine C. Eagles entered an order forfeiting the property to the government.
The tax case against Verbal was investigated by agents of IRS - Criminal Investigation and was prosecuted by Assistant U.S. Attorney Frank Chut for the Middle District of North Carolina and Trial Attorney Jonathan Marx of the Tax Division. The healthcare fraud case against Verbal was investigated by agents of HHS-OIG, the North Carolina State Bureau of Investigations, the North Carolina Department of Justice’s Medicaid Investigations Division and IRS – Criminal Investigation, and was prosecuted by Assistant U.S. Attorney Robert Hamilton for the Middle District of North Carolina.
Hewlett-Packard Russia Pleads Guilty to and <br /> Sentenced for Bribery of Russian Government OfficialsRead the Press Release
ZAO Hewlett-Packard A.O. (HP Russia), an international subsidiary of the California technology company Hewlett-Packard Company (HP Co.), pleaded guilty today to felony violations of the Foreign Corrupt Practices Act (FCPA) and was then sentenced for bribing Russian government officials to secure a large technology contract with the Office of the Prosecutor General of the Russian Federation.
Principal Deputy Assistant Attorney General Marshall L. Miller of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Assistant Director in Charge Andrew G. McCabe of the FBI’s Washington Field Office and Chief Richard Weber of the Internal Revenue Service – Criminal Investigation (IRS-CI) made the announcement.
HP Russia pleaded guilty this morning before U.S. District Judge D. Lowell Jensen of the Northern District of California to conspiracy and substantive violations of the anti-bribery and accounting provisions of the FCPA. According to the plea agreement, HP Russia executives created a multimillion dollar secret slush fund, at least part of which was used to bribe Russian government officials who awarded the company a contract valued at more than € 35 million.
At the conclusion of the plea proceeding, the court sentenced HP Russia to pay a $58,772,250 fine.
“In a brazen violation of the FCPA, Hewlett Packard’s Russia subsidiary used millions of dollars in bribes from a secret slush fund to secure a lucrative government contract,” said Principal Deputy Assistant Attorney General Miller. “Even more troubling was that the government contract up for sale was with Russia’s top prosecutor’s office. Tech companies, like all companies, must compete on a level playing field, not resort to secret books and sham transactions to hide millions of dollars in bribes. The Criminal Division has been at the forefront of this fight because when corruption takes hold overseas, American companies and the rule of law are harmed. Today’s conviction and sentencing are important steps in our ongoing efforts to hold accountable those who corrupt the international marketplace.”
“Today’s conviction and sentence of HP Russia demonstrates that the United States Attorney’s Office is dedicated to aggressively prosecuting all forms of corporate fraud that touch our district, wherever they may occur,” said U.S. Attorney Haag. “HP’s cooperation during the investigation is what we expect of major corporate leaders facing the challenges of doing business around the world.”
“For more than a decade HP Russia business executives participated in an elaborate scheme that involved paying bribes to government officials in exchange for large contracts,” said FBI Assistant Director in Charge McCabe. “There is no place for bribery in any business model or corporate culture. Along with the Department of Justice, the IRS and international law enforcement partners, the FBI is committed to investigating corrupt backroom deals that threaten our global commerce.”“HP Russia thought that they could play by a different set of rules than the rest of the international business community,” said IRS-CI Chief Weber. “Unfortunately, they are not alone. For other companies out there conducting business in this way, let the message be very clear—we will relentlessly follow the money trail. IRS-CI is a trusted leader in the pursuit of corporations and executives who circumvent the law. CI is committed to maintaining fair competition, free of corrupt. practices, through a potent synthesis of global teamwork and our dynamic financial investigative talents.”
According to the statement of facts filed with the plea agreement, HP Russia created excess profit margins to finance the slush fund through an elaborate buy-back deal scheme. HP subsidiaries first sold the computer hardware and other technology products called for under the contract to a Russian channel partner, then bought the same products back from an intermediary at a nearly €8 million mark-up and an additional €4.2 million in purported services, then sold the same products to the Office of the Prosecutor General of the Russian Federation at the increased price. The payments to the intermediary were then largely transferred through multiple layers of shell companies, some of which were directly associated with government officials. Proceeds from the slush fund were spent on travel services, luxury automobiles, expensive jewelry, clothing, furniture and various other items.
To keep track of and conceal these corrupt payments, the conspirators inside HP Russia kept two sets of books: secret spreadsheets that detailed the categories of bribe recipients, and sanitized versions that hid the bribes from others outside of HP Russia. They also entered into off-the-books side agreements to further mask the bribes. As one example, an HP Russia executive executed a letter agreement to pay €2.8 million in purported “commission” fees to a U.K.-registered shell company, which was linked to a director of the Russian government agency responsible for managing the Office of the Prosecutor General of the Russian Federation project. HP Russia never disclosed the existence of the agreement to internal or external auditors or management outside of HP Russia.
On April 9, 2014, the government also announced criminal resolutions with HP subsidiaries in Poland and Mexico which violated the FCPA in connection with contracts with Poland’s national police agency and Mexico’s state-owned petroleum company, respectively. Pursuant to a deferred prosecution agreement, the department filed a criminal information charging Hewlett-Packard Polska, Sp. Z o.o. with violating the accounting provisions of the FCPA. Hewlett-Packard Mexico, S. de R.L. de C.V. entered into a non-prosecution agreement with the government pursuant to which it has agreed to forfeit proceeds and has admitted and accepted responsibility for its misconduct. In total, the three HP entities will pay $76,760,224 in criminal penalties and forfeiture.
In a related FCPA matter, the U.S. Securities and Exchange Commission (SEC) filed a proposed final judgment in April 2014 to which HP Co. consented. Under the terms of the proposed final judgment, HP Co. has paid $31,472,250 in disgorgement, prejudgment interest and civil penalties, bringing the total amount of U.S. criminal and regulatory penalties against HP Co. and its subsidiaries to more than $108 million.
Court filings acknowledge HP Co.’s extensive cooperation with the department, including conducting a robust internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, and organizing voluminous evidence for the department. Court filings also acknowledge the extensive anti-corruption remedial efforts undertaken by HP Co., including taking appropriate disciplinary action against culpable employees, and enhancing HP Co.’s internal accounting, reporting, and compliance functions.
The case is being investigated by the FBI’s Washington Field Office with assistance from the FBI’s New York Field Office and FBI Legal Attaché offices in Mexico City, Moscow, Berlin and Warsaw, and the IRS-CI’s Oakland Field Office. The case is being prosecuted by Trial Attorneys Ryan Rohlfsen and Jason Linder of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Adam A. Reeves of the Northern District of California. The Criminal Division’s Office of International Affairs also provided significant assistance in this matter.
The Justice Department expresses its deep appreciation for the significant assistance provided by the SEC’s Division of Enforcement, the Polish Anti-Corruption Bureau, the Polish Appellate Prosecutor’s Office, the Public Prosecutor’s Office in Dresden, Germany, and our law enforcement partners in Mexico, the United Kingdom, Lithuania, Latvia, Italy, Spain and Hungary.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa .Former Defense Contractor Sentenced to Prison for Theft of Employee Payroll Taxes and Pension Plan ContributionsRead the Press Release
The former head of a Virginia-based defense contracting company was sentenced today to serve 18 months in prison for failing to collect and pay more than $2.2 million in employee payroll taxes and engaging in theft of more than $186,000 from an employee pension plan.
Deputy Assistant Attorney General Ronald Cimino for the Justice Department’s Tax Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia, Special Agent in Charge Thomas J. Kelly for the Internal Revenue Service-Criminal Investigation (IRS-CI) Washington, D.C., Field Office and Assistant Secretary Phyllis C. Borzi of the U.S. Department of Labor-Employee Benefits Security Administration made the announcement after sentencing.
William P. Danielczyk Jr., 53, formerly of Oakton, Virginia, was additionally ordered to serve three years of supervised release after his prison sentence and to pay more than $1.6 million in restitution to the IRS. U.S. District Judge James C. Cacheris delivered the sentence and it will be served consecutively to the 28 months in prison the defendant is already serving for committing campaign finance violations during the 2008 presidential primary and a 2006 U.S. Senate campaign.
Danielczyk pleaded guilty on June 10. According to court documents, from March 2009 until December 2011, Danielczyk was the executive chairman of Innolog Holdings Corporation, which acquired Innovative Logistics Technology Inc. in March 2009. Innovative operated in the government services industry and provided technology-supported logistics services to the U.S. military and various defense organizations. The principal offices for Innovative and Innolog were located in McLean, and later in Fairfax, Virginia.
From mid-2009 through the end of 2011, Danielczyk was responsible for collecting, accounting for and paying appropriate payroll tax amounts to the IRS. Although payroll taxes were withheld from the wages of Innovative’s employees, Danielczyk failed to pay both the employee withholdings amounts and the employer’s matching portions to the IRS. The total tax loss during this time period was $2,232,781.
According to court documents, Innovative’s employees were allowed to contribute money from their bi-weekly paychecks to a qualified pension plan that was administered by an asset custodian (initially Prudential Bank & Trust and later Fidelity Investments). Under the 401(k) plan, Innovative withheld its employees’ elected contribution amounts from their regular paychecks, and the employee withholdings were to be sent to Prudential or Fidelity. Danielczyk, however, was the person responsible for authorizing payments to the asset custodian, and he failed to send these payments over the course of three years. From 2009 through 2011, this conduct led to a total loss of $186,263.
According to court records, instead of paying Innovative’s employment taxes and pension plan contributions, Danielczyk made a variety of purchases from company accounts. Those purchases included $505,871 for the use of an executive suite in the FedEx Field football stadium in Landover, Maryland, along with $40,000 to sponsor the Virginia Gold Cup, a series of Steeple Chase horse races held in northern Virginia.
Danielczyk was sentenced in Alexandria, Virginia, federal court on May 31, 2013, to serve 28 months in prison for engaging in a campaign finance scheme in which he conspired to illegally reimburse more than $186,000 in contributions to the senate and presidential campaign committees of a candidate for federal office, engaged in obstruction of justice, and caused the candidate’s campaign committee to unwittingly file Federal Election Commission reports that contained false information. Court records show that Danielczyk continued to fail to pay Innovative’s employee taxes and pension plan contributions even after he was indicted in the campaign finance case in February 2011.
The tax and pension fraud case was investigated by IRS-CI and the U.S. Department of Labor-Employee Benefits Security Administration’s Philadelphia Regional Office. Assistant U.S. Attorney Mark D. Lytle for the Eastern District of Virginia and Trial Attorney Tracy L. Gostyla of the Tax Division prosecuted the case. Additional information about the Tax Division and its enforcement efforts may be found at the division website.
East Side Bloods Gang Member Sentenced <br /> to 30 Years in Prison for Racketeering Conspiracy, <br /> Attempted Murder and Firearms ChargesRead the Press Release
An East Side Bloods (ESB) gang member from Scottsdale, Arizona, was sentenced late yesterday to serve 30 years in prison for his role in the violent street gang, which operated on the Salt River Pima-Maricopa Indian Community reservation.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney John S. Leonardo of the District of Arizona made the announcement after the sentence was imposed by U.S. District Court Judge David G. Campbell of the District of Arizona.
Denicio Elrayno Francisco, 28, a long-time member of East Side Bloods, was convicted by a jury on Oct. 31, 2013, of conspiracy to participate in a pattern of racketeering activity, attempted murder in aid of racketeering and use of a firearm in furtherance of a crime of violence.
According to evidence presented at trial, from August 2004 through January 2013, the ESB was a criminal street gang, which perpetuated itself and enriched its members through activities such as murder, robbery, aggravated assault, fraudulent “straw” purchases of firearms and the distribution of drugs, including marijuana and cocaine. The gang preserved and protected its power on the reservation and adjoining communities through the use of intimidation, violence, assault, drive-by shootings and murder. The gang also retaliated with violence and threats of violence against victims who contacted law enforcement to report the gang-related crimes.
Evidence at trial demonstrated that Francisco arranged a meeting with a member of the Salt River Pima-Maricopa Indian Community, ostensibly to discuss some gang-related conflicts on the reservation. On Nov. 23, 2012, Francisco arrived at the meeting with two other armed ESB members wearing gang colors. He stepped out of his car, yelled a gang slogan and opened fire with an AK-47 assault rifle toward the intended victim. Those present with the intended victim included a five-month-old baby, the wheelchair-bound homeowner, and seven other adults. The intended victim was struck by a bullet in the left forearm, resulting in permanent injury. Testimony at trial also showed that Francisco committed the attempted murder to maintain his position and increase his status within the ESB.
In addition to the prison term imposed, Francisco was also sentenced to serve five years of supervised release.
The defendant’s brother, Martinez Francisco Jr., 31, was also convicted at the same trial and was sentenced on Feb. 10, 2014, to serve 30 years in prison for participating in a racketeering conspiracy and illegal firearms trafficking. Eight additional gang members who entered guilty pleas in the case were previously sentenced to terms ranging from 27 to 156 months in federal prison.
The case was investigated by the Arizona Department of Public Safety’s Gang and Immigration Intelligence Team Enforcement Mission (GIITEM), the Mesa Police Department, the Salt River Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives. Substantial assistance was provided by the FBI, Scottsdale Police Department and Tempe Police Department.
The case was prosecuted by Hans Miller of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Keith E. Vercauteren of the District of Arizona.County Deputy Auditor in Indiana <br /> Charged with Embezzlement and Tax FraudRead the Press Release
A former LaPorte County deputy auditor has been indicted by a federal grand jury in the Northern District of Indiana for embezzling over $150,000 from the LaPorte County government and committing tax fraud.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana made the announcement.
The indictment returned on Sept. 10, 2014, charges Mary Ray, 66, of La Porte, Indiana, with two counts each of theft of government monies and of making false statements on a tax return.
According to the indictment, from September 2011 through December 2012 and while she was working as an auditor, Ray embezzled more than $5,000 from LaPorte County, which had received more than $10,000 in federal benefits in both 2011 and 2012.
The indictment also alleges that Ray underreported her income on her U.S. Individual Tax Returns in 2011 and 2012 by failing to report the embezzled funds.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty.This case was investigated by the FBI and IRS-Criminal Investigation, with assistance from the Indiana State Police, the LaPorte County Sheriff’s Department and the Indiana State Board of Accounts. The case is being prosecuted by Trial Attorney Peter Halpern of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Donald J. Schmid of the Northern District of Indiana.
Chief Technology Officer of Liberty Reserve Pleads GuiltyRead the Press Release
The former chief technology officer of Liberty Reserve, a company that operated one of the world’s most widely used digital currency services and allegedly laundered billions in suspected criminal proceeds, pleaded guilty today in the Southern District of New York in connection with his role in designing and maintaining the technological infrastructure for Liberty Reserve.
Assistant Attorney General Leslie R. Caldwell for the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara of the Southern District of New York made the announcement.
Mark Marmilev, 35, of Brooklyn, New York, pleaded guilty today before U.S. District Judge Denise L. Cote to conspiring to operate an illegal unlicensed money transmitting business that he knew involved the transmission of funds derived from criminal activity. Sentencing is scheduled for Dec. 12, 2014.
“Marmilev designed and maintained a massive criminal infrastructure in cyberspace for one of the world’s most widely used digital currency systems, which laundered billions in criminal proceeds,” said Assistant Attorney General Caldwell. “This is the third conviction in the largest international money laundering case ever brought by the department, and we will continue to ensure that virtual currencies are not misused to facilitate criminals hiding from the U.S. justice system.”
“As the chief technology officer of Liberty Reserve, Mark Marmilev was responsible for the infrastructure of a global payment processor and money transfer system that catered largely to criminals,” said U.S. Attorney Bharara. “With his guilty plea today, we are one step closer to holding to account everyone integrally involved in this sprawling Internet enterprise that served as a central financial institution for cyber criminals and illegal transactions of numerous kinds.”
According to allegations contained in the indictment and statements made in related court proceedings, Liberty Reserve was incorporated in Costa Rica in 2006 and billed itself as the Internet’s “largest payment processor and money transfer system.” Liberty Reserve was created, structured and operated to help users conduct illegal transactions anonymously and launder the proceeds of their crimes, and it emerged as one of the principal money transfer agents used by cybercriminals around the world to distribute, store, and launder the proceeds of their illegal activity. Liberty Reserve was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cybercriminals around the world to conduct anonymous and untraceable financial transactions.
According to court records, before being shut down by the government in May 2013, Liberty Reserve had more than one million users worldwide, including more than 200,000 users in the United States, who conducted approximately 55 million transactions through its system totaling more than $6 billion in funds. These funds encompassed suspected proceeds of credit card fraud, identity theft, investment fraud, computer hacking, child pornography, narcotics trafficking and other crimes. Marmilev was an associate of Liberty Reserve founder Arthur Budovsky and served as Liberty Reserve’s chief technology officer. In that role, Marmilev was principally responsible for designing and maintaining Liberty Reserve’s technological infrastructure.
Marmilev and Budovsky were among seven individuals charged in the indictment, which was unsealed on May 28, 2013, and two co-defendants – Vladimir Kats and Azzeddine el Amine – previously pleaded guilty and await sentencing. The indictment also charged Liberty Reserve with conspiracy to commit money laundering and operation of an unlicensed money transmitting business, and the charges remain pending.
This case is being investigated by the U.S. Secret Service, the Internal Revenue Service-Criminal Investigation, and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, with assistance from the Secret Service’s New York Electronic Crimes Task Force. The Judicial Investigation Organization in Costa Rica, the National High Tech Crime Unit in the Netherlands, the Financial and Economic Crime Unit of the Spanish National Police, the Cyber Crime Unit at the Swedish National Bureau of Investigation and the Swiss Federal Prosecutor’s Office also provided assistance.
This case is being prosecuted jointly by the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) and the U.S. Attorney’s Office’s Complex Frauds Unit and Asset Forfeiture Unit in the Southern District of New York, with assistance from the Criminal Division’s Office of International Affairs and Computer Crime and Intellectual Property Section.
Trial Attorney Kevin Mosley of AFMLS and Assistant U.S. Attorneys Serrin Turner, Andrew Goldstein and Christine Magdo of the Southern District of New York are in charge of the prosecution, and Assistant U.S. Attorney Christine Magdo is in charge of the forfeiture aspects of the case.
The charges contained in the indictment against certain of Marvilev’s co-defendants remain pending and are merely accusations. Those defendants are presumed innocent unless and until proven guilty.Black P-Stones Gang Member Sentenced to over 20 Years in Prison for Racketeering Conspiracy and Firearm ChargesRead the Press Release
A 26-year-old man from Newport News, Virginia, was sentenced today to serve 255 months in prison, followed by five years of supervised release, for engaging in numerous gang-related crimes as a member of the Black P-Stones, including the shooting of a rival gang member, marijuana dealing and lying to a federal grand jury.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente of the Eastern District of Virginia and Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement after sentence was imposed by U.S. District Judge Arenda Wright Allen.
According to a statement of facts filed with his plea agreement, Enrique Omar Hinton, aka “Rico,” admitted that he was a “foot soldier” in a violent street gang called the Black P-Stones, also referred to as the P-Stone Bloods and Cobra Stones. The Black P-Stones operated primarily in the Beechmont, Courthouse Green, and Woodview neighborhoods in the Denbigh area of Newport News, and its members engaged in various criminal activities including murders, robberies, drug trafficking, and obstruction of justice.
According to the statement of facts, Hinton joined the gang in 2005, and as a foot soldier, he sold marijuana for the gang, carried firearms, attended gang meetings and planned and participated in the gang’s criminal activities. Additionally, on Dec. 10, 2008, Hinton and others retaliated against a rival gang member who exhibited disrespect toward the girlfriend of a Black P-Stones member. Approximately seven to eight bullets were fired at the rival gang member’s home, with bullets entering the living room and front door while two people were inside.
Hinton also admitted that on July 13, 2009, he testified falsely before a federal grand jury to obstruct the investigation of the Black P-Stones and the Dec. 10, 2008, shooting.
Hinton was charged in a superseding indictment on Dec. 9, 2013, and pleaded guilty on Mar. 28, 2014, to one count of racketeering conspiracy and one count of discharging a firearm in furtherance of a crime of violence.The investigation was led by the FBI’s Safe Streets Peninsula Task Force, with the assistance of the Newport News Police Department, James City County Police Department and the Virginia State Police. This case is being prosecuted by Trial Attorney Marianne Shelvey of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Eric M. Hurt of the Eastern District of Virginia .
Attorney General Holder Announces Joyce Branda to Serve as Acting Assistant Attorney General for the Civil DivisionRead the Press Release
Attorney General Eric Holder released the following statement Thursday announcing Joyce Branda as Acting Assistant Attorney General for the Civil Division:
“I am pleased that Joyce Branda, a dedicated public servant whom I’ve known for years, will serve as Acting Assistant Attorney General for the Civil Division.
“Joyce's nearly 35 years of service to the American people has been defined by her unwavering commitment to public service and distinguished by her dogged pursuit of financial and health care fraud. She has helped protect and advance the public interest by recovering billions of taxpayer dollars and holding accountable those who have defrauded the treasury.
"Over the last three years, Joyce has led the Civil Division's Commercial Litigation Branch to some of the largest settlements in its history – a track record of exemplary enforcement that I'm certain she will build upon in her new role.
"And, as Stuart Delery moves into his new role as Acting Associate Attorney General, I am confident that Joyce will lead the Civil Division with the same professionalism and exceptional skill that have been her hallmark."
Alabama Man Pleads Guilty to Threatening African-American Man and a Restaurant ManagerRead the Press Release
Jeremy Heath Higgins, 28, a resident of Quinton, Alabama, pleaded guilty today before U.S. District Judge Madeline Haikala to two counts of federal civil rights violations, announced the Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Northern District of Alabama.
As part of the plea proceedings, Higgins admitted that on June 14, 2013, he approached and threatened an African-American man at the Alabama Rose Steakhouse, a restaurant in Quinton, Alabama, because the man was present at the restaurant with a white woman. Soon after, the couple left the bar. A manager at the Alabama Rose Steakhouse confronted Higgins because of his behavior toward the African-American man and ordered Higgins to leave the restaurant. As Higgins was being escorted from the bar, he used racial slurs, shouted a racial slur at the restaurant manager, and threatened to burn down the Alabama Rose Steakhouse. Later that evening, Higgins returned to the restaurant and threatened the restaurant manager by painting graffiti on the restaurant’s front exterior and fence.
Sentencing in this case is set for January 9, 2015.
“Threatening an individual over their race or a business for its acceptance of others has no place in a civilized society,” said Acting Assistant Attorney General Molly Moran for the Civil Rights Division. “The Department of Justice will vigorously prosecute those who seek to intimidate others with these types of hateful threats.”“Access to public places, like restaurants, has been at the core of the civil rights struggle,” said U.S. Attorney Joyce White Vance for the Northern District of Alabama. “Unlike the lunch counters of the 1960s, the restaurant in this case welcomed and sought to protect the rights of its African American customer. In prosecuting this case, we make clear our commitment to enforcing the civil rights of individuals and the businesses who seek to serve all, without regard to the color of their skin.”
This case is being investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant U.S. Attorney Robin B. Mark of the Northern District of Alabama and Trial Attorney David Reese of the Justice Department’s Civil Rights Division.
The Executive Office for Immigration Review to Host Stakeholder Teleconference and Webinar on Recognition and Accreditation ProgramRead the Press Release
SUMMARY - The Executive Office for Immigration Review (EOIR) invites interested parties to participate in a teleconference and Webinar providing a general overview of EOIR's recognition and accreditation program. This event is intended to educate interested parties about the process for obtaining recognition for an organization and accreditation for individuals.
DATE: Friday, September 26, 2014, at 2 p.m.
RSVP: To RSVP for the meeting, please contact Lauren Alder Reid, Counsel for Legislative and Public Affairs, 703-305-0289, [email protected], by noon on Wednesday, September 24, 2014. Please note that there will be no in-person attendance for this event. EOIR will send call-in and Web access information on Wednesday, September 24th, to those who RSVP. To attend the meeting via conference call and Web, please RSVP with the name(s) of the attendee(s), the attendee's organization, and an email address where instructions may be sent for accessing the conference call and Web meeting.
- 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.
Justice Department Sues to Shut Down Mississippi Tax Return PreparerRead the Press Release
The United States has requested that the U.S. District Court for the Northern District of Mississippi permanently bar a Greenville, Mississippi, man from preparing federal income tax returns for others, the Justice Department announced today.
According to the complaint, Nathaniel Kimble has prepared tax returns under the business name Kimble Tax Services in Greenville from 2010 through the present. The complaint alleges that Kimble learned how to prepare tax returns by working with Alice Mobley. Mobley, who was sentenced to serve 75 months in prison after pleading guilty to three charges related to her tax return practices in Alabama, admitted in her criminal case that she conspired with employees of Kimble Tax Services to file tax returns she knew were fraudulent. In this regard, the complaint alleges that Kimble knowingly prepared federal income tax returns for customers that understated the customers’ tax liability and overstated the refunds they claimed by inflating or fabricating Earned Income Tax Credits that his customers were not eligible to take.
In the past decade, the department’s Tax Division has obtained more than 500 injunctions to stop tax fraud promoters and tax return 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.
Related Materials:
United States v. Nathaniel Kimble, etc. et al
ComplaintEOIR Announces Change to Immigration Judges Hearing Cases Out of ArtesiaRead the Press Release
FALLS CHURCH, Va. – The Executive Office for Immigration Review (EOIR) today announced that, effective September 29, 2014, it will assign immigration cases originating at the Artesia, N.M., hearing location to immigration judges at the Denver Immigration Court in Denver rather than immigration judges at the Headquarters Immigration Court in Arlington, Va.
As the Headquarters Immigration Court immigration judges do, the Denver immigration judges assigned to Artesia cases will hear those cases via video-teleconference (VTC). Denver immigration judges will hear all Artesia removal cases except those few in which a Headquarters immigration judge has already begun to hear evidence on contested issues. Denver immigration judges will also conduct credible fear reviews in cases that the Department of Homeland Security referred to EOIR on or after September 29, 2014. Credible fear reviews referred before September 29, 2014, and all cases in which a Headquarters immigration judge has begun to hear evidence on contested issues will remain before the Headquarters immigration judge. All parties will receive appropriate notice prior to their hearings. Please note that filings for Artesia cases should be submitted to the Denver immigration court location unless the Headquarters immigration judge retains the case.
With this realignment, most cases originating in Artesia will be heard by judges sitting in the same time zone and Federal judicial circuit as the respondents.
- 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.
Arvada Woman Pleads Guilty to Conspiracy to Provide Material Support to a Designated Foreign Terrorist OrganizationRead the Press Release
Shannon Conley, age 19, of Arvada, Colorado, pleaded guilty this morning before U.S. District Court Judge Raymond P. Moore to one count of conspiracy to provide material support to a designated foreign terrorist organization, U.S. Attorney John Walsh for the District of Colorado and Special Agent in Charge Thomas Ravenelle of the FBI Denver Division announced. Conley is scheduled to be sentenced by Judge Moore on January 23, 2015. The defendant appeared at the change of plea hearing in custody, and was remanded at its conclusion.
According to court documents, including the stipulated facts in the plea agreement, from about February 2014 and continuing through April 8, 2014, Conley and a co-conspirator unlawfully worked together and with other individuals known and unknown to commit an offense against the United States, and specifically to provide and attempt to provide material support and resources to a designated foreign terrorist organization, specifically Al-Qaeda (AQ) and its affiliates, including Al-Qaeda in Iraq (AQI), aka the Islamic State of Iraq (ISI), aka the Islamic State of Iraq and Al Sham (ISIS), aka the Islamic State of Iraq and the Levant (ISIL).
The conspiracy occurred, in part, when Conley met the co-conspirator on the Internet. During their communications, they shared their view of Islam as requiring participation in violent jihad. The co-conspirator communicated to Conley that he was an active member of an Al-Qaeda (AQ) affiliate fighting in Syria known as the Islamic State of Iraq and Al Sham (ISIS). The two then decided to become engaged, and together, they worked to have Conley travel to Syria to join her new fiancé. Before traveling to Syria, Conley refined and obtained additional training and skills in order to provide support and assistance to any AQ and/or ISIS fighter. Conley also intended to fight if it became necessary to do so.
In furtherance of the conspiracy, Conley joined the U.S. Army Explorers (USAE) to be trained in U.S. military tactics and in firearms. She traveled to Texas and attended the USAE training. She also obtained first aid/nursing certification and National Rifle Association certification. Conley knew that ISIS was a designated foreign terrorist organization. In fact, on numerous occasions, Special Agents with the FBI met with her in attempts to persuade her not to carry out her plans to travel overseas to provide support to a foreign terrorist organization and to engage in violent jihad. On March 29, 2014, the co-conspirator, together with others, arranged for an airline ticket to be purchased for Conley to travel to Turkey, departing from Denver on April 8, 2014. On April 8, 2014, Conley traveled to Denver International Airport and attempted to board the flight to Turkey. She was then arrested by FBI agents.
A subsequent search of Conley’s home revealed DVDs of Anwar Al-Awlaki lectures and a number of books and articles about Al-Qaeda, its affiliate groups, and jihad. Agents also recovered shooting targets labeled with the number of rounds fired and distances.
Conley faces up to five years in federal prison and a fine up to $250,000 for conspiracy to provide material support to a designated foreign terrorist organization.
This case was investigated by the FBI and the Arvada Police Department.
The defendant is being prosecuted by Assistant U.S. Attorney Greg Holloway, with the assistance of Jennifer Levy of the National Security Division’s Counterterrorism Section.
Related Materials:
Shannon Conley Plea Agreement
Utah Resident Sentenced to Prison for Filing False Claims for Tax RefundsRead the Press Release
A Spanish Fork, Utah, man was sentenced today to serve 33 months in prison for filing false claims for income tax refunds, the Justice Department and Internal Revenue Service (IRS) announced.
U.S. District Judge Dee Benson also ordered Stanley J. Wardle to pay $29,527 in restitution to the IRS and to serve three years of supervised released upon his release from prison.
On Dec. 9, 2013, immediately before his trial was to begin, Wardle pleaded guilty to nine counts of filing false claims for a tax refund. According to the indictment, in January 2009, Wardle filed a false individual income tax return which sought a refund of $32,115. Additionally, between December 2008 and May 2009, Wardle prepared eight false tax returns on behalf of others, seeking more than $600,000 in refunds.
This case was investigated by the IRS-Criminal Investigation and prosecuted by Trial Attorneys Michael Romano and Stuart Wexler of the Tax Division.
Readout of Attorney General Holder’s Meeting with Counterparts from Mexico, El Salvador, Guatemala and HondurasRead the Press Release
The following statement is attributable to Justice Department spokesman Brian Fallon regarding Attorney General Eric Holder’s visit to Mexico City today to meet with his fellow attorneys general from across Central America to discuss the situation involving migrant children:
“Attorney General Holder attended a joint meeting in Mexico City today with his counterparts from Mexico, El Salvador, Guatemala and Honduras. The group discussed ways to improve public safety across Central America in order to address the underlying factors that have contributed to the flow of unaccompanied minors across the Southwest border of the United States. Specifically, the group considered strategies about how to best confront the smugglers of these unaccompanied children, the violent gangs who victimize them in their home countries, and the cartels who tax or exploit them in their passage.
“Going forward, the Attorneys General agreed to create a high-level working group with representatives of each Attorney General's office in order to develop an integrated strategy to deal efficiently with this issue. The working group will hold its first meeting within the coming weeks to develop a coordinated plan of action that will be presented at a subsequent meeting of the attorneys general.”
Jose Padilla Re-Sentenced to 21 Years in Prison for Conspiracy to Murder Individuals Overseas, Providing Material Support to TerroristsRead the Press Release
John P. Carlin, Assistant Attorney General for National Security and Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, announced today that U.S. District Judge Marcia Cooke re-sentenced Jose Padilla to serve 21 years in prison for his 2007 conviction for conspiracy to murder, kidnap and maim individuals in a foreign country; conspiracy to provide material support to terrorists; and providing material support to terrorists.
The U.S. Eleventh Circuit Court of Appeals had remanded the case after upholding the convictions but vacating the original sentence of 17 and-a-half years as too lenient. Padilla faced a sentence under the U.S. Sentencing Guidelines of 360 months to life in prison.
U.S. Attorney Ferrer commended the investigative efforts of the Federal Bureau of Investigation, with assistance from the Bureau of Alcohol, Tobacco, Firearms and Explosives and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations section. The re-sentencing of this case was handled by Assistant U.S. Attorneys Brian Frazier and Ricardo Del Toro of the Southern District of Florida and Department of Justice National Security Division Trial Attorney Bridget Behling.”
Former TierOne Bank Executive Pleads Guilty for His Role <br /> in Scheme to Defraud Bank’s Shareholders and RegulatorsRead the Press Release
A former senior vice president and chief credit officer of TierOne Bank, a publicly traded commercial bank formerly headquartered in Lincoln, Nebraska, pleaded guilty today for his role in a scheme to defraud TierOne’s shareholders and regulators.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Deborah R. Gilg of the District of Nebraska, Special Agent in Charge Thomas R. Metz of the FBI’s Omaha Division and Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Christy Romero made the announcement.
“When the real estate market crashed, Don Langford, the chief credit officer and a senior vice president of TierOne Bank, worked with others to cook the bank’s books and cover up mounting losses,” said Assistant Attorney General Caldwell. “This conviction is another example of the Criminal Division’s pursuit of corporate executives who commit fraud, no matter what their title or stature.”
“The vast investigation led by the Omaha FBI Division, in conjunction with SIGTARP, ascertained and exposed a criminal enterprise maneuvering complex fraudulent transactions,” said FBI Special Agent in Charge Metz. “This case reflects the FBI’s nonstop commitment to protect our communities by aggressively investigating and bringing to justice individuals exploiting their influence or position for personal gain.”
“Langford, former TierOne senior executive and chief credit officer, conspired with others to hide losses at the bank by cooking the bank’s books and reporting falsified information to stakeholders, regulators, external auditors, and the investing public,” said SIGTARP Romero. “Langford and others engaged in fraud in order to keep regulators at bay and from closing the bank, to maintain and increase the bank’s stock price, and to enrich themselves. The bank even made an unsuccessful attempt to get taxpayer TARP funds in November 2008. SIGTARP and our law enforcement officers will bring to justice perpetrators of fraud related to TARP and hold them accountable for their crimes.”
According to a criminal information filed with his plea agreement, from at least 2009 to April 2010, Don A. Langford, 63, of Gibsonia, Pennsylvania, and others falsely inflated the value of TierOne’s loan and real estate portfolio in its required reports to the U.S. Securities and Exchange Commission (SEC) and the Office of Thrift Supervision (OTS). In January 2009, TierOne had executed a supervisory agreement with OTS that required TierOne to report information about its performance and financial condition and to maintain a minimum capital position in relation to its loan portfolio and other assets. Langford and others intentionally used outdated appraisals on properties, and rejected new appraisals that would have adversely impacted TierOne’s reportable assets, revenue and earnings. In addition, Langford and others delayed seeking new appraisals to conceal the current value of collateral and restructured loan terms to disguise the borrower’s inability to make timely interest and principal payments. As a result, Langford and others were able to hide millions of dollars in losses from regulators and investors.
In 2008, TierOne submitted an application to the OTS seeking Troubled Asset Relief Program (TARP) funding. Ultimately, TierOne withdrew its application and did not receive TARP funds. TierOne filed for bankruptcy shortly after the bank was shut down by OTS in June 2010.
Langford pleaded guilty before U.S. Magistrate Judge Cheryl R. Zwart of the District of Nebraska to conspiring to commit securities fraud, wire fraud and making false entries in a bank’s books and records, as well as one count of making false statements. Sentencing is scheduled for Dec. 5, 2014.
The case was investigated by the FBI’s Omaha Division and by SIGTARP. The department recognizes the substantial assistance of the SEC.
The case is being prosecuted by Trial Attorneys Henry P. Van Dyck and L. Rush Atkinson and Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section.Former Alabama Sheriff’s Investigator Sentenced to 36 Months for Assaulting Handcuffed Man at Macon County JailRead the Press Release
J. Keith McCray, previously a criminal investigator with the Macon County, Alabama, Sheriff’s Office, was sentenced today by Judge Myron H. Thompson to serve 36 months in prison and two years of supervised release for assaulting a handcuffed man at the county jail, announced the Justice Department and the U.S. Attorney’s Office for the Middle District of Alabama.
On April 4, 2014, McCray pleaded guilty to one felony count of deprivation of rights under color of law. At the plea hearing, McCray admitted that he arrested a salesman who was selling alarm systems in McCray’s neighborhood and transported him to the Macon County Jail. There, McCray struck the victim four times in the face and head while the victim was handcuffed and posed no threat.
“In attacking a defenseless innocent civilian, this officer chose to abuse his power rather than uphold his oath to protect the public,” said Acting Assistant Attorney General Molly Moran 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.”
“While we look to law enforcement to maintain the safety and security of our citizens, their position of authority does not give them the right to act outside the bounds of the law,” said U.S. Attorney George L. Beck, Jr. for the Middle District of Alabama. “Most members of law enforcement serve honorably and professionally. McCray breached his pledge to protect and serve and he must be held responsible for his actions. Failure to do so would discredit the noble service of every other officer, and weaken the public’s trust in those who are sworn to protect them.”
This case was investigated by the FBI and the Alabama Bureau of Investigation. The case was being prosecuted by Assistant U.S. Attorneys Jerusha T. Adams and Jonathan Ross of the Middle District of Alabama and Trial Attorney Chiraag Bains of the Civil Rights Division.
United States Pursues Claims Against Neurosurgeon, Spinal Implant Company, Physician-Owned Distributorships and Their Non-Physician Owners for Alleged Kickbacks and Medically Unnecessary SurgeriesRead the Press Release
The United States has filed two complaints under the False Claims Act against Michigan neurosurgeon Dr. Aria Sabit, spinal implant company Reliance Medical Systems, two Reliance distributorships—Apex Medical Technologies and Kronos Spinal Technologies—and the companies’ owners, Brett Berry, John Hoffman and Adam Pike, the Justice Department announced today. The complaints allege that Apex Medical and Kronos Spinal paid physicians, including Sabit, to induce them to use Reliance spinal implants in the surgeries they performed.
“Improper payments to physicians can alter a physician’s judgment about patients’ true health care needs and drive up health care costs for everyone,” said Assistant Attorney General Stuart F. Delery for the Justice Department’s Civil Division. “The Justice Department is committed to enforcing the laws that prohibit such payments.”
Berry and Pike founded Reliance in 2006, and subsequently created more than 12 physician-owned distributorships that sold Reliance devices. Each of Reliance’s distributorships sold spinal implants ordered by their physician-owners for use in procedures the physician-owners performed on their own patients. The complaints allege that Reliance used one of its distributorships, Apex Medical, to funnel improper payments to Sabit for using Reliance spinal implants in his surgeries. According to the complaints, Sabit began using Reliance implants on his patients only after he acquired an ownership interest in Apex and started receiving payments from the sale of Reliance’s spinal implants. Apex allegedly paid Sabit $438,570 between May 2010 and July 2012, during which time Sabit used Reliance implants in approximately 90 percent of his spinal fusion surgeries. The government also alleges that these payments caused Sabit to perform medically unnecessary or excessive surgeries on certain patients who did not need the spinal implants.
The government further alleges that Reliance operated a second distributor, Kronos, in southern California, which made improper payments to two other physicians, Drs. Ali Mesiwala and Gowriharan Thaiyananthan. Allegedly, Reliance’s owners were recorded telling a potential Kronos investor that Reliance was formed as part of a plan to “get around” the federal Anti-Kickback Statute, which prohibits such improper payments, and that Reliance pays its physician-investors enough in the first month or two to “put their kids through college.”
The allegations that Sabit performed medically unnecessary or excessive surgeries were raised in a separate lawsuit filed by Dr. Cary Savitch and Dr. Gary Proffett under the qui tam, or whistleblower, provisions of the False Claims Act. The act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery. The act also permits the government to intervene in the whistleblowers’ lawsuit. In this case, the government has both intervened in the whistleblowers’ medical necessity claims and filed a separate lawsuit containing kickback claims against both Sabit and the Reliance defendants.
These lawsuits illustrate 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.
This investigation was a coordinated effort among the Commercial Litigation Branch of the department’s Civil Division and the U.S. Department of Health and Human Services-Office of the Inspector General. The lawsuits were filed in the Central District of California (Los Angeles), and are captioned United States ex rel. Carey Savitch, M.D., and Gary Proffett, M.D. v. Aria Sabit, M.D., Moustapha Abou-Samra, M.D., and Community Memorial Health System, Case No. 13-3363, and United States v. Reliance Medical Systems, Apex Medical Technologies, Kronos Spinal Technologies, Bret Berry, John Hoffman, Adam Pike, and Aria Sabit, M.D.
The claims asserted by the government are allegations only, and there has been no determination of liability.
Owner of Home Heath Care Company Sentenced to 75 Monthsin Prison for $6.5 Million Medicare Fraud SchemeRead the Press Release
The owner and operator of a Miami home health care company was sentenced to 75 months in prison today for her participation in a $6.5 million Medicare fraud scheme involving the now defunct home health care company, Nestor’s Health Services Inc. (Nestor Home Health).
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 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, made the announcement. U.S. District Judge Robert N. Scola Jr. of the Southern District of Florida imposed the sentence.
Cruz Sonia Collado,64, of Homestead, Florida, was an owner and operator of Nestor Home Health, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries. On June 23, 2014, Collado pleaded guilty to one count of conspiracy to offer and pay health care kickbacks and to defraud the United States, and one count of offering and paying health care kickbacks. In addition to her prison term, Collado was sentenced to serve three years of supervised release and ordered to pay $6,536,657 in restitution.
According to court documents, Collado paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Nestor Home Health for home health care and therapy services that were medically unnecessary and, in many instances, not provided. Collado then fraudulently billed the Medicare program for home health care services on behalf of the recruited patients.
From March 2009 through at least January 2014, Nestor Home Health submitted more than $6.5 million in false claims for home health services. Medicare paid Nestor Home Health more than $6.1 million for these fraudulent claims.
The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by Trial Attorneys Anne P. McNamara and A. Brendan Stewart 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 and 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.govNew York Property Owner and Manager Sentenced to 21 Months in Federal Prison for Conspiring to Violate the Clean Air ActRead the Press Release
John Francis Mills, 64, the owner of more than a dozen properties in Malone, New York, and Terrance Allen, 57, the maintenance manager of Mills’ properties, were sentenced today by U.S. District Judge Thomas J. McAvoy to serve 21 months each in prison for conspiring to violate the Clean Air Act standards for the safe removal of asbestos during renovations of three of Mills’ properties, for releasing asbestos into the environment and failing to notify the authorities, all in violation of the Clean Air Act’s asbestos work practice standards, and the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).
Mills’ and Allen’s prison sentences will be followed by two years of supervised release. In addition, Mills must also pay a $25,000 fine and a $300 crime victim special assessment fee.
On Jan. 21, 2014, Mills and Allen, both of Malone, New York, pleaded guilty to one count of conspiracy to violate CERCLA. Mills also pleaded guilty to two counts of knowingly violating CERCLA for failing to immediately report the release of more than a pound of asbestos from properties owned by Mills. In addition to the conspiracy, Allen pleaded guilty to one count of knowingly violating CERCLA. Mills owned the buildings from which more than 260 linear feet of pipe wrap containing asbestos had been removed by one of Mills’ employees. Mills and Allen directed that employee to remove the asbestos pipe wrap from 458 East Main Street, 144 Elm Street, and 100 Elm Street, all properties owned by Mills, and managed by Allen, who oversaw the asbestos removal work.
As part of the plea, Mills and Allen admitted that that they knowingly failed to report to the National Response Center the release of asbestos, in the form of thermal system insulation, or “pipe wrap,” that had been removed from the basement of buildings owned and operated by John Mills, as soon as they knew of the release. They also admitted to illegally removing and disposing of more than 260 linear feet of pipe wrap containing asbestos. Mills and Allen directed an employee to remove the pipe wrap containing asbestos without warning him or giving him adequate personal protective equipment. They transported and caused others to transport that pipe wrap, which was in open bags, in the open bed of a pickup truck. They further admitted that they conspired together to violate CERCLA. The asbestos pipe wrap was deposited by the defendants in a UHaul-style box truck owned by Mills and a shed maintained by the Malone Department of Public Works in an effort to conceal the material from authorities.
The Clean Air Act requires that owners of public buildings that contain asbestos follow federally established work practice standards to ensure the safe removal of the asbestos. The required standards include providing notice to the U.S. Environmental Protection Agency (EPA) before starting asbestos removal, adequately wetting the asbestos during the removal and before disposal, and properly disposing of the asbestos at an EPA-approved disposal site.
The investigation was conducted by the Environmental Protection Agency Criminal Investigation Division and the New York State Department of Labor Asbestos Control Bureau with assistance from the New York State Department of Environmental Conservation, the Malone Police Department and the Malone Department of Public Works. The case was prosecuted by Trial Attorneys Lana N. Pettus and Gary N. Donner, paralegal Puja Moozhikkattu and litigation support specialist Elga Ozols of the Environmental Crimes Section of the U.S. Department of Justice’s Environment and Natural Resources Division.
Justice Officials Meet with Key Stakeholders on Launch of Elder Justice WebsiteRead the Press Release
Earlier today, Associate Attorney General Tony West, Assistant Attorney General Stuart F. Delery for the Civil Division and members of the Department’s Elder Justice Initiative met with stakeholders in the field of elder abuse and financial exploitation to launch the Elder Justice website in an effort to further prevent and combat elder abuse and financial exploitation.
Associate Attorney General West and Assistant Attorney General Delery delivered remarks at the outreach event to federal, state and local law enforcement, as well as to other partners who combat elder abuse. The remarks focused on the significant contributions that the Elder Justice website can make to the field and on the Department’s commitment to protecting seniors from abuse and exploitation. The Elder Justice website will serve as a resource for elder abuse prosecutors, researchers and practitioners, and most importantly, for victims of elder abuse and their families. This website will also serve as a forum for law enforcement and elder justice policy communities to share information and enhance public awareness about elder abuse.
“The launch of the Elder Justice website today marks another milestone in reaching our shared goal of keeping older Americans safe from abuse and neglect,” said Associate Attorney General West. “The more we embrace our elders with respect and care, the stronger our society will be. This tool helps move us closer to that goal.”
Protecting older Americans is one of the Department's top priorities, as evidence shows that nearly one in 10 people over the age of 60 suffer abuse and neglect. Elder abuse includes physical, sexual and emotional abuse, neglect and financial exploitation. Elder abuse depletes the resources of individuals, families, businesses and public programs, including Medicare and Medicaid, by billions of dollars each year, which in turn places enormous burdens on our health care, financial and judicial systems.
Older Americans are also targeted by consumer scams, health care fraud and financial exploitation, and protecting this group from financial exploitation is also a priority of the department. It is estimated that older adults in the United States lose more than $2.9 billion annually from financial exploitation. Financial loss may result in loss of independence, decreased health and psychological distress, all of which culminate in a diminished quality of life for older adults. Over the years, the department has successfully prosecuted a number of criminals who targeted the elderly through reverse mortgage fraud scams and lottery scams. In addition, the department's healthcare fraud enforcement and prevention and consumer protection efforts protect older Americans from financial exploitation.
“The website provides resources and a means for improved communication among prosecutors, supports victims and families, and establishes a mechanism for collaboration for researchers and practitioners,” said Assistant Attorney General Delery. “ While there are many other victim support websites available, we believed that the department could add significant value in this domain by consolidating information nationwide and making it more user-friendly. The Civil Division will continue to strengthen its efforts to protect the elderly.”
Partners in attendance included the Federal Trade Commission; the American Bar Association; the U.S. Department of Health and Human Services-Office of the Inspector General; the National Association for Medicaid Fraud Control Units; the Office of the U.S. Attorney General for the District of Columbia; the Consumer Financial Protection Bureau; and the Social Security Administration.