District Not Recorded

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.”

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.”

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.  

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.

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. 

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.gov

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.

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.

The Department of Justice announced today that it has entered into a settlement agreement with the School District of Philadelphia that resolves a religious accommodations lawsuit filed in March 2014.  In its lawsuit, the United States alleged that the school district violated Title VII of the Civil Rights Act of 1964 (Title VII) by failing to accommodate the religious beliefs, observances and/or practices of Siddiq Abu-Bakr, a school police officer who is Muslim, and similarly-situated employees who maintain a beard longer than one-quarter inch for religious purposes.

The department’s complaint, filed in the U.S. District Court for the Eastern District of Pennsylvania, alleged that in October 2010 the school district implemented a new grooming policy that strictly prohibits school police officers from having a beard longer than one-quarter inch.  Abu-Bakr, a 27-year employee of the school district, maintains a beard longer than one-quarter inch in adherence to his Islamic faith.  Consistent with his religious beliefs, Abu-Bakr has maintained a beard longer than one-quarter inch the entire time that he has worked for the school district, with no indication that the beard diminished his performance. 

According to the United States’ complaint, when Abu-Bakr requested an accommodation to the grooming policy, the school district disciplined him for violating the policy and denied his religious accommodation request.  The complaint also alleged that the school district maintains a discriminatory policy under which it routinely denies all accommodation requests to the grooming policy involving beard length.  Abu-Bakr, who is individually represented by the Stanford Law School Religious Liberty Clinic, filed a complaint in intervention, asserting claims similar to those of the United States.  Abu-Bakr dismissed his complaint in intervention after he and the school district entered a private settlement agreement.     

Under the terms of the United States’ settlement agreement, the school district has agreed to develop and distribute a revised school police officer proper attire & appearance policy, which will include a procedure by which school police officers can request a religious accommodation.  The school district agreed to notify current and prospective school police officers that their religious accommodation requests will be considered on an individualized basis and that the school district will engage in an interactive process with the school police officers before denying any religious accommodation requests under the revised school police officer proper attire & appearance policy.  In addition, the school district has agreed to provide mandatory training on religious accommodation to all supervisors, managers, human resources officials and other individuals who may receive inquiries from school police officers regarding the revised school police officer proper attire & appearance policy.  The school district also will pay compensatory damages to two similarly-situated employees and will expunge all discipline related to the policy from their personnel files.

“We are pleased that the school district of Philadelphia has agreed to develop a revised  policy that will allow school police officers to request religious accommodations without posing an undue hardship on the school district,” said Acting Assistant Attorney General Molly Moran for the Civil Rights Division.  “Through our partnership with the EEOC, the Civil Rights Division continues the commitment of the United States Department of Justice to vigorous enforcement of the nation’s employment discrimination laws.”    

“This settlement agreement demonstrates once again that the close working relationship between the EEOC and the Department of Justice allows us to use public resources most efficiently to enforce our civil rights laws,” said U.S. Equal Employment Opportunity Commission (EEOC) District Director Spencer H. Lewis Jr.  “This settlement agreement contains significant equitable policy changes that will enable school district police officers to request and receive religious accommodations absent an undue hardship.”    

This case was litigated by Senior Trial Attorney Raheemah Abdulaleem and Trial Attorney Catherine Sellers of the Civil Rights Division’s Employment Litigation Section.

More information about Title VII and other federal employment laws is available at this website .  The continued enforcement of Title VII is a priority of the Justice Department’s Civil Rights Division.  Additional information about the Civil Rights Division of the Department of Justice is available on its website at www.usdoj.gov/crt.

Related Materials:

US v. School District of Philadelphia Settlement Agreement

The Justice Department today filed a lawsuit against the Kent State University, the Kent State University Board of Trustees and university officials for violating the Fair Housing Act by discriminating against students with disabilities in student housing.

The lawsuit, filed in the U.S. District Court for the Northern District of Ohio, charges that Kent State and its employees engaged in a pattern or practice of violating the Fair Housing Act by refusing to consider reasonable accommodation requests by students with psychological or emotional disabilities seeking to live with assistance animals in university housing.  The suit also charges that Kent State treats students with psychological and emotional disabilities who need to live with assistance animals less favorably than similarly situated students with other types of disabilities such as mobility disabilities or vision impairments .   This lawsuit arose as a result of a complaint filed with the Department of Housing and Urban Development (HUD) by a student enrolled at Kent State who sought to live with a dog following a Kent State psychologist’s recommendation that living with a dog would help alleviate symptoms of the student’s disability. 

“The Fair Housing Act requires housing providers, including universities operating student housing, to grant reasonable accommodations to people with disabilities to ensure equal housing opportunities,” said Acting Assistant Attorney General Molly Moran for the Civil Rights Division.  “Housing providers may not discriminate against individuals based on the type of disability they have. The Justice Department is committed to enforcing fair housing laws that protect the rights of all people, including individuals with psychological or emotional disabilities, to obtain reasonable accommodations when they are needed.”

“Many people with disabilities rely on therapy animals to enhance their quality of life,” said HUD Assistant Secretary Gustavo Velasquez for Fair Housing and Equal Opportunity.  “HUD and the Department of Justice will continue to work together to take action whenever the nation’s fair housing laws are violated.”

The lawsuit seeks a court order prohibiting future discrimination by the defendants, monetary damages for those harmed by the defendants’ actions and a civil penalty.  Any individuals who have information relevant to this case are urged to contact the Housing and Civil Enforcement Section of the Civil Rights Division at 1-800-896-7743, extension 992.  

The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.  More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crtg .  Individuals who believe that they have been victims of housing discrimination can call the Justice Department at 1-800-896-7743, e-mail the Justice Department at [email protected] , or contact HUD at 1-800-669-9777 or through its website, www.hud.gov

The complaint is an allegation of unlawful conduct.  The allegation must still be proven in federal court.

Related Materials:

U.S. v. Kent State

A Corona, California, man was sentenced today to serve six years in prison to be followed by three years of supervised release in connection with a fraudulent advance fee scheme and tax evasion. 

Shannon Johnson, 51, formerly of Laytonsville, Maryland, was sentenced by Chief U.S. District Judge Deborah K. Chasanow, who also entered an order that Johnson forfeit $3.7 million, and as a special condition of his supervised release, cooperate with the Internal Revenue Service (IRS) in determining all taxes owed for tax years 2002 through 2009, and to pay the IRS all additional taxes, interest and penalties.

The sentence was announced by Deputy Assistant Attorney General Ronald Cimino of the U.S. Department of Justice Tax Division; U.S. Attorney Rod J. Rosenstein for the District of Maryland;; Special Agent in Charge Thomas J. Kelly of the IRS - Criminal Investigation, Washington, D.C., Field Office; and Special Agent in Charge Stephen E. Vogt of the FBI.

Johnson admitted that he ran a fraudulent advance fee scheme from 2006 to 2009, wherein Johnson presented himself as a wealthy international investment banker who could provide millions of dollars and euros in financing to businesses and individuals.  In return for substantial advance banking fees, Johnson and his wife, Yvette, promised to provide investors with money which they claimed they held in an overseas bank account.  Shannon Johnson provided these businesses and investors with false documents purporting to be from the overseas bank to authenticate the funds.  The Johnsons developed relationships with pastors, ministers and religious-based organizations to sell themselves as philanthropists on a humanitarian mission.  Shannon Johnson received payments and gifts from pastors and ministers who believed substantial donations would be made to their churches.  Businesses and individuals wired and mailed the advance fees to multiple bank accounts controlled by the Johnsons in different states.  Yvette Johnson opened bank accounts and conducted financial transactions using proceeds obtained from the Johnsons’ business activities.

According to his plea agreement, despite receiving approximately $3.7 million in advance fees from individuals and businesses, Shannon Johnson never provided the promised financing.  Instead, the Johnsons used the money to support their lifestyle, which the indictment alleges included the purchase of Bentley, Mercedes Benz and BMW automobiles, the leasing of a $3.5 million residence in California for $18,000 a month, travel on private jets and the funding of the mortgage on their Laytonsville residence.  Johnson admitted that he obtained $3.7 million by victimizing at least 11 individuals and businesses.

The Johnsons also evaded taxes on millions of dollars in income they earned from the advance fee scheme.  The Johnsons admitted that they filed individual tax returns for tax years 1998 through 2001 using false Forms W-2 to fraudulently generate a total of $66,097 in refund claims; evaded the payment of their 2002 through 2006 corporate and individual taxes totaling $98,220; and evaded the assessment of their 2007 through 2009 taxes.  The Johnsons attempted to conceal their income and assets from the IRS by selling assets in their own names, titling assets in the names of nominees, using multiple bank accounts across three states to disperse and conceal income, using nominees and fraudulent taxpayer identification numbers to open and maintain bank accounts and using multiple business names to conduct business.

Shannon Johnson’s bail was revoked in September 2013 after the court found that there was probable cause to believe that he attempted to commit another fraud while on pre-trial release for the pending charges in this case. 

Yvette Johnson, 52, of Corona, California, previously pleaded guilty to her participation in the fraud scheme and is scheduled to be sentenced on Sept. 29.

This case was investigated by IRS-Criminal Investigation and the FBI, and was prosecuted by Assistant Chief John N. Kane of the Tax Division and Assistant U.S. Attorney Thomas Sullivan for the District of Maryland.

Calling prescription drug addiction an “urgent and growing threat” to our nation’s public health, Attorney General Eric Holder on Monday announced a new Drug Enforcement Administration (DEA) regulation that would allow pharmacies, hospitals, clinics, and other authorized collectors to serve as authorized drop-off sites for unused prescription drugs. Under the new policy, long-term care facilities will also be able to collect controlled substances turned in by residents of those facilities, and prescription drug users everywhere will have permission to directly mail in their unused medications to authorized collectors.

Attorney General Holder said the new changes will help save lives and protect American families from the increased dangers of prescriptions drug misuse. In 2011 alone, more than half of the 41,300 unintentional drug overdose deaths in the United States involved prescription drugs, and hazardous opioid pain relievers led to about 17,000 of those deaths. Young people are especially susceptible to these dangers. The Attorney General noted that nearly four in 10 teens who have misused or abused a prescription drug have obtained it from their parents’ medicine cabinet.

“These shocking statistics illustrate that prescription drug addiction and abuse represent nothing less than a public health crisis,” the Attorney General said in a video message posted on the Justice Department’s website.  “Every day, this crisis touches – and devastates – the lives of Americans from every state, in every region, and from every background and walk of life.”

The new policy announced Monday builds on existing take-back programs launched by the DEA.  A recent take-back event coordinated by the DEA last April resulted in the safe return of 390 tons of prescription drugs at nearly 6,100 sites.  Over the last four years alone, the DEA and other partnering organizations have taken in over 4.1 million pounds—or more than 2,100 tons—of prescription pills.  The DEA’s next take-back event will be on Sept. 27, 2014.

In the video message, the Attorney General described the new policy as evidence of the department’s commitment to ending the national epidemic of prescription drug abuse that has already taken too many lives and hurt too many American families.

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

“Prescription drug misuse and abuse is an urgent—and growing—threat to our nation and its citizens.  According to a 2013 survey, roughly 6.5 million people ages 12 and older are current nonmedical users of prescription drugs.  As recently as 2011, more than half of the 41,300 unintentional drug overdose deaths in the United States involved prescription drugs—and opioid pain relievers were involved in nearly 17,000 of those deaths.  Nearly 110 Americans died every day that year from drug overdoses.

“And as we’ve learned from scientific studies, treatment providers, victims, and investigations, prescription drug abuse can easily lead to the abuse of heroin—an addiction that has become increasingly lethal.  In fact, in the decade from 2002 to 2011, the annual number of drug poisoning deaths involving heroin doubled, making prescription opioids and heroin some of the most lethal substances in common use.

“These shocking statistics illustrate that prescription drug addiction and abuse represent nothing less than a public health crisis.  And every day, this crisis touches – and devastates – the lives of Americans from every state, in every region, and from every background and walk of life.

“The Department of Justice has taken aggressive steps to fight back—by targeting the illegal supply chain; by disrupting so-called “pill mills”; and by expanding public health, education, and law enforcement efforts.  But we also recognize that much of this work must start at home.  Nearly four in 10 teens who have misused or abused a prescription drug have obtained it from their parents’ medicine cabinet.

“That’s why, today, I am announcing that we are expanding drug take-back efforts – by introducing new ways for people to safely dispose of old or unused prescription drugs.  Through new DEA regulations, patients will be allowed to more easily join the fight against prescription drug abuse by dropping off their leftover medications at pharmacies, hospitals, clinics, and other “authorized collectors.”  Beyond authorizing new drop-off sites, the new DEA rule will allow long-term care facilities to assist in the disposal of prescription controlled substances belonging to current or former residents.  And most importantly, patients or their family members can mail their prescription controlled substances to an authorized collector using pre-paid mail-back packages that can be obtained right from their pharmacy, or from other locations like libraries and community centers.

“Drug take-back programs on a more limited scale have already proven effective.  At a drug take-back event last April, Americans around the country turned in 390 tons of prescription drugs at nearly 6,100 sites coordinated by the DEA—and more than 4,400 state and local law enforcement partners.  Over the last four years alone, the DEA and its allies have taken in over 4.1 million pounds—that's more than 2,100 tons—of prescription pills.  Once collected, these medications are then responsibly destroyed to ensure that they don’t damage our environment by ending up in landfills or in the water supply.  With these new regulations, and with continued take-back events—like the one scheduled in the coming weeks for September 27th—we hope to increase those numbers, and prevent more potentially harmful medications from being misused or abused by young people and others.

“As a lifelong member of America’s law enforcement community—as a former judge and U.S. Attorney—I have seen the devastating consequences of prescription drug abuse firsthand.  And as Attorney General—and as a parent—I am committed to ending the national epidemic that has already stolen too many lives and torn apart too many families.  I thank you for your help and your partnership in ensuring that we can continue to save lives and protect the futures of our young people.”

For more information, please visit the DEA’s website at www.DEA.gov.   The full video of the Attorney General’s message is available at http://www.justice.gov/agwa.php .  

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division today announced that Sung-Hee Suh has been appointed to serve as Deputy Assistant Attorney General overseeing the Appellate, Capital Case and Fraud Sections.

“Sung-Hee Suh is an exceptional attorney with a depth of experience across the spectrum of the department’s practice areas, from white collar to violent crime,” said Assistant Attorney General Caldwell. “The Criminal Division continues to attract extraordinary talent both from within government and from the private sector. I am confident that Sung-Hee will be an excellent addition to the Criminal Division.”

Suh returns to the Department of Justice following 15 years at the law firm of Schulte Roth & Zabel LLP, where she was a partner in the Litigation, Financial Institutions, Securities Enforcement and White Collar Crime, and Regulatory and Compliance practice groups. While in private practice, Suh handled numerous matters involving securities and commodities fraud, public corruption, health care fraud, the Foreign Corrupt Practices Act, the Bank Secrecy Act, and anti-money laundering and economic sanctions violations.

Prior to joining that law firm, Suh served in the United States Attorney’s Office for the Eastern District of New York from 1994 to 1999, including as Deputy Chief of the Organized Crime and Racketeering Section. While at the U.S. Attorney’s Office, Suh investigated and prosecuted a wide range of crimes, including murder, drug trafficking, extortion, money laundering and fraud. She successfully prosecuted the acting boss of the Gambino family and more than 60 other members and associates of organized crime families. She also obtained guilty verdicts against a former managing director of a major securities firm, an attorney and an accountant for operating a Ponzi scheme.  

In recognition of her work at the U.S. Attorney’s Office, among other awards, she received the Director’s Award for Superior Performance as an Assistant United States Attorney from the Executive Office for United States Attorneys. In 2011, Suh received the Women of Power and Influence Award from the New York chapter of the National Organization for Women, and in 2012, Suh was recognized in Benchmark Litigation’s inaugural edition of the Top 250 Women in Litigation.  

Suh joined the U.S. Attorney’s Office after working as an associate at Davis Polk & Wardwell. She served as a law clerk for the Hon. Robert L. Carter in the U.S. District Court for the Southern District of New York. She graduated cum laude from Harvard/Radcliffe College, received a Master of Arts degree from the Harvard Graduate School of Arts and Sciences, and graduated cum laude from Harvard Law School.  

Life Care Services LLC (LCS), a manager of skilled nursing facilities based in Des Moines, Iowa, and CoreCare V LLP, doing business as ParkVista, a skilled nursing facility in Fullerton, California, have agreed to pay a total of $3.75 million to the government for causing the submission of false claims to Medicare for unreasonable or unnecessary rehabilitation therapy purportedly provided by RehabCare Group East Inc., a subsidiary of Kindred Healthcare Inc. 

“The provision of Medicare benefits must be dictated by patient need, not 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 commitment to safeguarding both Medicare beneficiaries and taxpayer dollars by holding accountable all entities involved in billing for unnecessary services.”

LCS has operated and managed skilled nursing facilities across the country, including ParkVista and, until 2013, a facility in Massachusetts.  At the suggestion of LCS, ParkVista and the Massachusetts facility hired RehabCare to provide rehabilitation therapy services at their facilities. 

The settlement resolves allegations that ParkVista submitted and LCS caused both ParkVista and the Massachusetts facility to submit false claims for rehabilitation therapy.  The government alleges that LCS and ParkVista 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 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 LCS and ParkVista 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 skilled nursing facilities and the patients’ families should be able to have confidence that the facilities are not allowing therapy companies to manipulate the amount of therapy being provided based on financial motives,” said U.S. Attorney Carmen M. Ortiz for the District of Massachusetts.  “Settlements like this one show that, when a facility contracts with an outside rehabilitation therapy provider, the facility has a continuing responsibility to ensure that the provider is not engaged in conduct that causes the submission of false claims to Medicare.”

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. 

Child Cyber Safety Night at the Ballpark is the latest effort by the Justice Department and its law enforcement and community partners to encourage parents to speak with their children about online and cell phone safety and provide prevention materials.  As part of the event, the department will receive the Washington Nationals Spirit Award.  Deputy Attorney General James Cole will be recognized in an on-field ceremony at Nationals Park along with Office of Juvenile Justice and Delinquency Prevention (OJJDP) Administrator Robert L. Listenbee, and Special Agent in Charge Tim Gallagher of the FBI Washington Field Office. 

The Spirit Award will be announced during the pre-game show scheduled to begin at 3:00 p.m. Saturday, Sept. 6, 2014, before the 4:05 p.m. Major League Baseball game between the Washington Nationals and the Philadelphia Phillies. 

In a public service announcement to be shown at the game, Attorney General Eric Holder will emphasize the importance of creating an ongoing dialogue with children about safe use of technology.  

“As a parent, I understand the opportunities – and the challenges – that new technologies present for America’s young people,” Attorney General Holder will say in the announcement.  “It’s up to each of us to start a dialogue with our kids about safe Internet and cell phone practices.  Together, we can ensure that our kids are safe and protected – both online and off.”

Child Cyber Safety Night at the Ballpark is a large-scale awareness event being led by INOBTR (I Know Better), a non-profit organization and OJJDP grantee focused on promoting youth safety.  The Federal Bureau of Investigation (FBI) and Internet Crimes Against Children Task Force Program (ICAC) will join INOBTR in sharing resources for parents and children via the Community Clubhouse at the Center Field Plaza.  Materials will be available when the gates open Saturday at 1:30 p.m. through the third inning of the game. 

OJJDP provides national leadership, coordination and resources to prevent and respond to juvenile delinquency and victimization.  For more on Internet and cell phone safety, please visit: www.projectyouthsafety.org/cybersafe.

Press inquiries regarding logistics should be directed to Kelly McMahon at [email protected] or 314-853-1053.

A federal jury in Omaha, Nebraska, found a Pelham, Georgia, man guilty late yesterday of seven counts of conspiracy to file and filing false liens against two U.S. District Court judges, the U.S. Attorney for the District of Nebraska, two Assistant U.S. Attorneys and an Internal Revenue Service (IRS) special agent, the Justice Department announced.

Randall David Due faces a statutory maximum sentence of 10 years in prison for each false lien conviction.  Based on the evidence introduced at trial and court filings, Due and co-conspirator Donna Kozak, of Omaha, engaged in a conspiracy to retaliate against federal officials involved in the criminal investigation and prosecution of David and Bernita Kleensang, associates of Due and Kozak who were convicted of federal tax crimes in 2012.  Kozak was tried separately and convicted on Aug. 1.

Due and Kozak initially retaliated against the federal judge who presided over the Kleensang trial by filing a false lien against her for $19 million with the Boyd County Clerk’s Office in Butte, Nebraska.  After a federal grand jury indicted Kozak for filing the false lien and for committing federal tax crimes, Due and Kozak filed five $18 million false liens with the Washington County Register of Deeds Office in Blair, Nebraska, against the federal officials involved in the investigation and indictment of Kozak and additional federal officials involved in the Kleensang case.

This case was investigated by special agents of the FBI and the department’s Tax Division prosecuted the case.

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

A federal court has permanently barred a Rancho Santa Margarita, California, man 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. 

Kenneth Elliott consented to a permanent injunction order entered by District Judge Josephine L. Staton of the U.S. District Court for the Central District of California.

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 complaint alleged that Elliott falsely informed his customers that the welfare benefit plans he promoted and operated were legal.  But, according to the complaint, Elliott has been promoting and operating plans that illegally permitted his customers to both claim substantial tax deductions for their plan contributions, then later access the full cash value of their plan contributions by taking out loans against the life insurance policies purchased with plan contributions.  The complaint alleged that Elliott’s promotion and operation of these unlawful welfare benefit plans deprived the U.S. Treasury of significant amounts of tax and subjected his customers to audits and Internal Revenue Service (IRS) scrutiny.

The injunction order bars Elliott from selling and operating any purported welfare benefit plans.  The court also ordered Elliott to send a copy of the injunction order to his customers.

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.

Joshua Vandyk, an investment advisor, was sentenced today to serve 30 months in prison for conspiring to launder monetary instruments, the Justice Department and Internal Revenue Service (IRS) announced.

Vandyk, a U.S. citizen, and Eric St-Cyr and Patrick Poulin, Canadian citizens, were indicted by a grand jury in the U.S. District Court for the Eastern District of Virginia on March 6, and the indictment was unsealed March 12 after the defendants were arrested in Miami.  Vandyk, 34, pleaded guilty on June 12, St-Cyr, 50, pleaded guilty on June 27, and Poulin, 41, pleaded guilty on July 11.  St-Cyr and Poulin are scheduled to be sentenced on Oct. 3. 

According to the plea agreements and statements of facts, Vandyk, St-Cyr and Poulin conspired to conceal and disguise the nature, location, source, ownership and control of property believed to be the proceeds of bank fraud, specifically $2 million.  Vandyk, St-Cyr and Poulin assisted undercover law enforcement agents posing as U.S. clients in laundering purported criminal proceeds through an offshore structure designed to conceal the true identity of the proceeds’ owners.  Vandyk and St-Cyr invested the laundered funds on the clients’ behalf and represented that the funds would not be reported to the U.S. government.

According to court documents, Vandyk and St-Cyr lived in the Cayman Islands and worked for an investment firm based there.  St-Cyr was the founder and head of the investment firm, whose clientele included numerous U.S. citizens.  Poulin, an attorney at a law firm based in Turks and Caicos, worked and resided in Canada as well as Turks and Caicos.  His clientele also included numerous U.S. citizens.  Vandyk, St-Cyr and Poulin solicited U.S. citizens to use their services to hide assets from the U.S. government, including the IRS.  Vandyk and St-Cyr directed the undercover agents to create an offshore corporation with the assistance of Poulin and others because they and the investment firm did not want to appear to deal with U.S. clients.  Vandyk, St-Cyr and Poulin used the offshore entity to move money into the Cayman Islands and used Poulin as a nominee intermediary for the transactions.

According to court documents, Poulin established an offshore corporation called Zero Exposure Inc. for the undercover agents and served as a nominal board member in lieu of the clients.  Poulin transferred approximately $200,000 that the defendants believed to be the proceeds of bank fraud from the offshore corporation to the Cayman Islands, where Vandyk and St-Cyr invested those funds outside of the United States in the name of the offshore corporation.  The investment firm represented that it would neither disclose the investments or any investment gains to the U.S. government, nor would it provide monthly statements or other investment statements to the clients.  Clients were able to monitor their investments online through the use of anonymous, numeric passcodes.  Upon request from the U.S. client, Vandyk and St-Cyr liquidated investments and transfered money, through Poulin, back to the United States.  According to Vandyk and St-Cyr, the investment firm would charge clients higher fees to launder criminal proceeds than to assist them in tax evasion.

The case was investigated by special agents of the IRS-Criminal Investigation.  Trial Attorney Todd Ellinwood and Assistant Chief Caryn Finley of the Justice Department’s Tax Division and Assistant U.S. Attorney Kosta Stojilkovic for the Eastern District of Virginia are prosecuting the case.  The Justice Department and the IRS would like to thank the Royal Canadian Mounted Police, the Royal Cayman Islands Police Service and the Royal Turks and Caicos Islands Police Force for their assistance in this investigation.

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

Attorney General Eric Holder released the following statement Friday announcing that Stuart Delery, who currently serves as Assistant Attorney General for the Civil Division, will serve as Acting Associate Attorney General, which is the Justice Department’s third-ranking post:

“Stuart Delery is an exceptional public servant, a dedicated colleague, and a superb lawyer who will continue to ably serve the Department of Justice and the American people in his new role as Acting Associate Attorney General. 

“Stuart is a lawyer’s lawyer who, even as he has risen to the leadership of the department, continues to thrive in the court setting and routinely is called on to personally argue the most complex cases.  Over the last year, he and his colleagues have led government-wide implementation of the Supreme Court’s historic decision in United States v. Windsor—a case, again, that he personally argued at the appellate level—to ensure that all Americans are afforded the rights, protections, and benefits that they deserve. 

“Through his outstanding leadership of the Civil Division, Stuart has helped to strengthen our nation's security, to protect public health and safety, and to achieve justice in cases of financial fraud and recover billions of dollars for taxpayers.  I can think of no more dedicated, more capable, or more passionate public servant to continue the duties, and uphold the high standards, that defined Tony West's time in office.  I am certain that Stuart will help lead us to new heights.  I look forward to his continued contributions in the days ahead.”

A New Jersey man pleaded guilty today to orchestrating an eight-year scheme to falsify employment certifications to facilitate the illegal entry of Indian immigrants into the United States and to filing a false tax return.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Paul J. Fishman of the District of New Jersey, Chief Richard Weber of Internal Revenue Service – Criminal Investigation (IRS-CI) and Director Bill A. Miller of the State Department’s Diplomatic Security Service (DSS) made the announcement.

Sandipkumar Patel, 41, of Edison, New Jersey, pleaded guilty before U.S. District Judge William H. Walls of the District of New Jersey to conspiring to defraud the United States and to filing a false federal income tax return. Sentencing is scheduled for Jan. 6, 2015.

According to court documents filed with the plea agreement, from 2001 until 2009, Patel sponsored the visa applications of Indian nationals by falsely claiming to provide employment for them in the United States. Patel falsely certified on the visa applications that he would employ the immigrants in various technical fields at several New Jersey companies, thereby facilitating their illegal entry into the United States. Over the course of the scheme, immigrants paid Patel thousands of dollars for the false certifications to fraudulently secure the visas. To disguise the scheme, Patel issued payroll checks and other payroll forms. Patel required the immigrants to return the money from the checks and also to reimburse him for his payroll tax expenses. Patel used the fraudulent pay stubs and payroll checks to support false applications to extend the visas, and Patel charged the immigrants fees for the visa extensions.

As a result of falsely carrying the immigrant employees on his payrolls, Patel overstated his payroll expenses on his federal income tax returns by more than $1.4 million over four years, under-reporting his tax obligation by over $400,000 for those years.   

This case was investigated by the IRS-CI and DSS. The case is being prosecuted by Senior Trial Attorneys Hope S. Olds and William H. Kenety of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Danielle M. Corcione of the District of New Jersey, with assistance from the Criminal Division’s Asset Forfeiture and Money Laundering Section.

A Canton, Massachusetts, man was arrested today at Boston's Logan International Airport in connection with the ongoing criminal investigation of New England Compounding Center (NECC) by the Justice Department’s Civil Division and U.S. Attorney’s Office for the District of Massachusetts.

Glenn Adam Chin, 46, was attempting to board a plane to Hong Kong when he was arrested by federal authorities on one count of mail fraud.  He is scheduled to appear before Chief Magistrate Judge Jennifer C. Boal in the U.S. District Court for the District of Massachusetts later today.  The maximum sentence under the statute is 20 years in prison, followed by three years of supervised release and a $250,000 fine.

The U.S. Attorney’s Office and the Civil Division’s Consumer Protection Branch have conducted an active ongoing criminal investigation of NECC since the nationwide fungal meningitis outbreak began in the fall of 2012.  Following the outbreak, the Center for Disease Control (CDC) reported that 751 patients across the country were diagnosed with a fungal infection after receiving injections of preservative-free methylprednisolone acetate, or MPA, compounded at NECC.  The CDC reported that of those 751 patients, 64 died.  

Chin was a supervising pharmacist at NECC who was involved in compounding the contaminated MPA that caused the outbreak.  The criminal complaint charges Chin with participating in a scheme to fraudulently cause one lot of MPA to be labeled as injectable, meaning that it was sterile and fit for human use, and shipped to one of NECC’s customers, Michigan Pain Specialists.  As alleged in the affidavit, after receiving the MPA from NECC, doctors at Michigan Pain Specialists injected the drug into their patients believing it to be injectable as labeled.  As a result, 217 of those patients contracted fungal meningitis, and 15 of those patients died.

Although the criminal investigation of Chin and others is ongoing, the U.S. Attorney's Office charged and arrested Chin today after federal authorities learned that he was planning to leave the country on an international flight that was scheduled to depart this morning. 

If you are a victim in the NECC matter you may call the U.S. Attorney's Office victim assistance message line at 888-221-6023 or email [email protected] to obtain case status information or assistance.  You may also find information at:  http://www.justice.gov/usao/ma/news.html .

U.S. Attorney Carmen M. Ortiz; Assistant Attorney General Stuart F. Delery for the Civil Division; Acting Special Agent in Charge James Royal of the Food and Drug Administration, Office of Criminal Investigations; Special Agent in Charge Vincent Lisi of the FBI’s Boston Field Division; Inspector in Charge Kevin Niland of the U.S. Postal Inspection Service; Special Agent in Charge Jeffrey Hughes of the U.S. Department of Veterans Affairs, Office of Inspector General Northeast Field Office and Resident Agent in Charge Patrick J. Hegarty of the Defense Criminal Investigative Service-Office of Inspector General in Boston, made the announcement today.  The case is being prosecuted by George P. Varghese and Amanda P.M. Strachan of U.S. Attorney Ortiz’s Health Care Fraud Unit, and John W.M. Claud of the Civil Division’s Consumer Protection Branch.

The details contained in the complaint are allegations.  The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

A federal jury returned guilty verdicts today against former Virginia Governor Robert F. McDonnell and former First Lady of Virginia Maureen G. McDonnell for participating in a scheme to violate federal public corruption laws.

ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that KENNETH FREDERICK CALVO was sentenced this week in the District Court of Guam by Chief Judge Frances Tydingco-Gatewood, to 108 months incarceration, and three years of supervised release.

Defendant Calvo pled guilty on December 17, 2013 to Attempted Possession of Methamphetamine with Intent to Distribute, in violation of Title 21 U.S.C. Section 841(a)(1). Defendant Calvo received a package which contained 214.9 grams of methamphetamine hydrochloride.  The drug was sent from California and Defendant Calvo intended to distribute the drug on Guam.  The package was detected and intercepted by the United States Postal Service.

United States Attorney Limtiaco thanks the United States Postal Service for their vigilance in the detection of drugs which are mailed to Guam through the United States Postal system.   Credit is also given to Homeland Security Investigations who participated in the investigation.   The case was handled by Assistant U.S. Attorney R. San Nicolas.

Attorney General Eric Holder announced today that the Justice Department has launched two initiatives to address concerns about police services in the city of Ferguson and in St. Louis County, Missouri.  First, in addition to the ongoing criminal civil rights investigation, the Civil Rights Division has opened a civil pattern or practice investigation into allegations of unlawful policing by the City of Ferguson Police Department (FPD).  Second, the Attorney General announced that the Community Oriented Policing Services (COPS) Office has launched a Collaborative Reform Initiative with the St. Louis County Police Department (SLCPD).

“The Department of Justice is working across the nation to ensure that the criminal justice system is fair, constitutional and free of bias,” said Attorney General Holder.  “The interventions in Missouri are an important part of that commitment.  While there is much work left to do, we feel confident that there are solutions to any issues we find and that community trust in law enforcement can be restored and maintained.  Ferguson and St. Louis County are not the first places that we have become engaged to ensure fair and equitable policing and they will not be the last.  The Department of Justice will continue to work tirelessly to ensure that the Constitution has meaning for all communities.”

The pattern or practice investigation will look at whether officers of the Ferguson Police Department have engaged in systemic violations of the Constitution or federal law.  The investigation will focus on the Ferguson Police Department’s use of force, including deadly force; stops, searches and arrests; discriminatory policing; and treatment of detainees inside Ferguson’s city jail by Ferguson police officers.  The department will consider all relevant information, particularly the efforts that FPD has undertaken to ensure compliance with federal law, and the experiences and views of the community. 

Over the past five fiscal years, the Civil Rights Division has opened over 20 pattern or practice investigations into police departments across the country, which is more than twice as many as were opened in the previous five fiscal years.  The division is enforcing 14 agreements to reform law enforcement practices at agencies both large and small.  These agreements have already resulted in tangible changes in these communities by ensuring constitutional policing, enhancing public safety and making the job of delivering police services safer and more effective.

The investigation is being conducted by attorneys and staff from Civil Rights Division.  They will be assisted by experienced law enforcement experts.  The department encourages anyone wishing to provide relevant information to contact the department at 1-855-856-2132, or via email at [email protected] .

The COPS Collaborative Reform Technical Assistance process with the SLCPD is a voluntary process that will include an open, independent and objective assessment of key operational areas of the police department, such as training, use of force, handling mass demonstrations, stops, searches, arrests, and fair and impartial policing. The assessment will include the SLCPD police academy which trains officers for many police departments in the region, including the FPD.  The findings of this assessment, and recommendations to address any deficiencies that it uncovers, will be provided in a public report and shared with the community.  Additionally, SLCPD Chief Jon Belmar has requested that COPS conduct an after action report on the SLCPD’s response to the protests following the shooting of Michael Brown.

The Collaborative Reform process is an initiative in which the COPS Office, in partnership with a designated technical assistance provider and subject matter experts, works with a law enforcement agency to assess an issue that affects police and community relationships.  Grounded in the principles of constitutional policing and procedural justice, it is a means to organizational transformation through an analysis of policies, practices, training, and tactics around a specific issue that can jeopardize an agency’s legitimacy within its community.  It is not a short term solution for a serious deficiency, but a long term strategy that identifies the issues within an agency that affect public trust and offers recommendations on how to improve the issue and enhance the relationship between the police and the community.

The Collaborative Reform process was initially launched in 2011.  The Las Vegas Metropolitan Police Department was the first agency to participate and complete the process, which resulted in the adoption of over 75 recommendations regarding the use of force.  The COPS Office is currently working with the Philadelphia and Spokane police departments with this process.

“Today we are launching a comprehensive review of the Ferguson Police Department to assess whether police practices are constitutional and fair in Ferguson,” said Acting Assistant Attorney General Molly Moran for the Civil Rights Division.  “We are encouraged by the pledge of cooperation from Mayor Knowles and Chief Jackson, and we look forward to working with them as our process moves forward.”

“The recent disturbances in Ferguson have revealed significant mistrust between the community and police agencies throughout the county, including the St. Louis County Police Department,” said COPS Director Davis.  “The county has expressed a strong desire to take steps to create a relationship of trust and to ensure fairness and equity in its policing practices, and I applaud St. Louis County Police Chief Jon Belmar for seeking technical assistance and agreeing to the Collaborative Reform process.  The advancements that will be made through this effort will not only benefit the St. Louis county police department; they will serve as a model for all police agencies in the region and throughout the nation.”

The department is also conducting in a thorough, fair and independent criminal investigation into the circumstances of the fatal shooting of Michael Brown on in Ferguson on Aug. 9, 2014.  Although the department is working cooperatively with the local investigators, the federal investigation supplements, but does not supplant, the St. Louis County Police Department’s investigation into the shooting incident.  The initiatives announced today are also separate from the ongoing current criminal investigations related to the death of Michael Brown.

The Civil Rights Division has an ongoing, separate investigation of the St. Louis County Juvenile Court to determine whether it engages in patterns or practices of violations of young people’s rights.  The section is assessing whether there are violations of due process, equal protection or access to counsel.  Anyone wishing to provide information related to that investigation can email the department at [email protected] or call toll free 855-228-2151.

The Justice Department has taken similar steps involving a variety of state and local law enforcement agencies, both large and small, in jurisdictions throughout the United States using its authority under the Violent Crime Control and Law Enforcement Act of 1994, the Omnibus Crime Control and Safe Streets Act of 1968, and Title VI of the Civil Rights Act of 1964.  Under Attorney General Holder’s leadership, more investigations have resulted in comprehensive, court-overseen agreements to fundamentally change the law enforcement agency’s police practices than in any other five-year period in the department’s history.

Costco Wholesale Corporation, one of the nation’s largest retailers, has agreed to cut its emissions of ozone-depleting and greenhouse gases from leaking refrigeration equipment at more than half of its stores nationwide.

In the settlement announced today by the U.S. Environmental Protection Agency and U.S. Department of Justice, Costco will pay $335,000 in penalties for federal Clean Air Act violations and will fix refrigerant leaks and make other improvements at 274 of its stores, which EPA estimates will cost about $2 million over the next three years.

“Compliance with the nation’s Clean Air Act is key to protecting all Americans from air pollution that damages our atmosphere and changes our climate,” said Sam Hirsch, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Industry needs to lead the way in abandoning harmful chemicals in favor of using and developing greener, environmentally friendly alternatives to protect our health and our climate.”

“Cutting harmful greenhouse gas emissions is a national priority for EPA, and this settlement will lead to significant reductions of an ozone-depleting gas that is 1,700 times more potent than carbon dioxide,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Fixing leaks of refrigerants, improving compliance and reducing emissions will make a real difference in protecting us from the dangers of ozone depletion, while reducing the impact on climate change.”

Costco violated the Clean Air Act by failing to promptly repair refrigeration equipment leaks of the refrigerant R-22, a powerful ozone-depleting hydrochlorofluorocarbon, between 2004 and 2007. Costco also failed to keep adequate records of the servicing of its refrigeration equipment to prevent harmful leaks. Destroying the ozone layer results in dangerous amounts of cancer-causing ultraviolet solar radiation striking the earth, increasing skin cancers and cataracts. R-22 is also a potent greenhouse gas with 1,800 times more global warming potential than carbon dioxide or CO2. 

The settlement requires Costco to retrofit or replace commercial refrigeration equipment at 30 of its stores to reduce ozone-depleting and greenhouse gas emissions. Costco must also implement a refrigerant management system to prevent and repair coolant leaks and reduce its corporate-wide average leak rate at least 20 percent by 2017. In addition, Costco will install and operate environmentally friendly glycol refrigeration systems and centrally monitored refrigerant leak detection systems at all new stores. 

Today’s settlement is part of EPA’s national enforcement initiative to control harmful air pollution from the largest sources of emissions.  The Clean Air Act requires owners or operators of commercial refrigeration equipment that use over 50 pounds of ozone-depleting refrigerants and have an annual leak rate over 35 percent to repair all leaks within 30 days.

Corporate commitments to reduce emissions from refrigeration systems have been increasing in recent years. EPA’s GreenChill Partnership with food retailers reduces refrigerant emissions and decreases their impact on the ozone layer and climate change by transitioning to environmentally friendlier refrigerants, using less refrigerant and eliminating leaks, and adopting green refrigeration technologies.

Costco, headquartered in Issaquah, Washington, operates 466 stores in the U.S. and additional stores worldwide, with revenues of $105.2 billion in 2013. Today’s settlement covers 274 Costco stores with regulated commercial refrigeration equipment, including 67 stores in California, 14 in Arizona, five in Nevada, and four in Hawaii.

The proposed settlement is subject to a 30-day public comment period and final court approval.

Read the proposed settlement at: http://www.usdoj.gov/enrd/Consent_Decrees.html

Under a proposed settlement reached with the United States and the state of Indiana, the Atlantic Richfield Company and E.I. Du Pont de Nemours and Co. (DuPont) will pay for an estimated $26 million cleanup of lead and arsenic contamination in parts of a residential neighborhood in East Chicago, Indiana, announced the U.S. Department of Justice and the U.S. Environmental Protection Agency (EPA).

The yards in this neighborhood are contaminated with lead and arsenic through industrial operations that took place from at least the early 1900s through 1985.  During that time, lead smelting and refining as well as other manufacturing processes that used lead and arsenic were located on and near the area that came to be known as the Calumet neighborhood of East Chicago.  The cleanup will involve digging up contaminated soil, hauling it away for disposal, and restoring the yards with clean soil.

Under the settlement, EPA itself will do the work in the neighborhood.  EPA will identify the yards that need to be remediated, will work with property owners to develop property‑specific drawings showing which soils on each property must be excavated, will do the excavation, and will restore the properties after excavation is complete.  Atlantic Richfield and DuPont will pay for EPA’s work and will also be responsible for transporting the contaminated soil out of the neighborhood and properly disposing of it. 

To manage the cleanup, EPA and the state divided the Calumet neighborhood into three zones.  Today’s settlement covers two of them: a neighborhood that includes the Carrie Gosch Elementary School and residences operated by the East Chicago Housing Authority and a neighborhood located between the Elgin & Joliet Railway Line on the west and Parrish Avenue on the east.  Cleanup of the third area of the Calumet neighborhood is the subject of further discussions.

“Under this settlement, Atlantic Richfield and DuPont will fund the first phase of cleaning up historical lead and arsenic contamination in residential properties in part of East Chicago,” said Sam Hirsch, Acting Assistant Attorney General for the Department of Justice’s Environment and Natural Resources Division.  “This marks the start, not the end, of cleaning up the contamination that has burdened this community for far too long.”

“This settlement ensures that almost 300 residential properties, parks and public spaces in East Chicago will be cleaned up – and that the companies responsible for contaminating those sites will pay 100 percent of the costs for this phase of the cleanup,” said EPA Regional Administrator Susan Hedman.

“My office previously has worked through the federal courts in other cases to improve the quality of life for citizens of East Chicago,” said Indiana Attorney General Greg Zoeller, whose office represented the Indiana Department of Environmental Management.  “Under this appropriate cooperative effort between the state of Indiana and federal EPA, and with the commitments of the settling corporations, East Chicago residents will see progress made toward removing a health hazard and producing long-term benefit for their community.”

“This is great news for the citizens whose homes have been impacted,” said Indiana Department of Environmental Management (IDEM) Commissioner Thomas Easterly.  “Everyone wins when responsible parties come together and agree to do what is best for the community.”

The Calumet neighborhood is part of an EPA Superfund site known as the USS Lead Site.  EPA previously investigated the contamination in this neighborhood and issued a decision calling for its cleanup.

In a complaint filed simultaneously with the settlement, the United States and the state allege that Atlantic Richfield and DuPont are liable under the Superfund law for the cleanup because they or their predecessors either are owners or were owners/operators of plants that released lead and arsenic into the environment.

The terms of the settlement are included in a proposed consent decree filed with the U.S. District Court in Hammond, Indiana.  The consent decree is subject to a 30‑day public comment period and court approval.  The consent decree will be available for viewing at www.justice.gov/enrd/Consent_Decrees.html

Acting Assistant Attorney General Molly Moran for the Civil Rights Division and United States Attorney Bill Nettles announced today that Reginald Wayne Miller, of Marion, South Carolina, has entered a guilty plea in federal court in Florence to fraud in foreign labor contracting.  Additionally, Miller entered a guilty plea to visa fraud and wage and hour violations.  United States District Judge R. Bryan Harwell of Florence accepted the guilty plea and will impose sentence after he has reviewed the presentence report which will be prepared by the U.S. probation office.

Evidence presented at the hearing established that Miller knowingly recruited and enticed foreign students to attend Cathedral Bible College, where he was president.  In doing so, Miller recruited these students outside of the United States for purposes of employment at Cathedral Bible College by means of false representations and promises regarding the employment.  Further, he made material false statements under penalty of perjury on the related immigration documents for these student employees.  Once the students arrived in the United States, Miller violated the Fair Labor Standards Act by failing to pay the student employees the applicable minimum wage.

The maximum penalty for fraud in foreign labor contracting is imprisonment for five years and/or a fine of $250,000.  The maximum penalty for visa fraud is imprisonment for 15 years and/or a fine of $250,000.  The maximum penalty for wage and hour violations is imprisonment for six years and/or a fine of $10,000.

The case was investigated by agents of the U.S. Department of Homeland Security, Immigration and Customs Enforcement.  Justice Department Civil Rights Division Trial Attorney Saeed A. Mody and Assistant U.S. Attorney Carrie Fisher Sherard are prosecuting the case.

A Southfield, Michigan, resident was sentenced today to serve 21 months in prison to be followed by two years of supervised release for his participation in a conspiracy to commit bank fraud, the Justice Department announced.

Peter Allen was charged in a superseding indictment on July 16, 2013, and pleaded guilty to conspiracy to commit bank fraud on April 29. Allen was also ordered to pay $96,400 and $97,900 in restitution, respectively, to National City Bank and Fannie Mae, the financial institutions that he helped defraud.

Court documents state that from approximately January 2006 to December 2008, Allen and his co-defendants conspired to defraud lending institutions by obtaining mortgage loans using fraudulent information. The charging documents allege that Allen and others devised a scheme wherein they purchased property for approximately $5,000 to $40,000 per home, and then recruited straw buyers to submit fraudulent loan applications for home mortgages in exchange for a fee. According court documents, Allen assisted in executing the relevant scheme by meeting with straw buyers and encouraging them to participate in the scheme. The loss resulting from Allen’s criminal activities is approximately $231,000.

This case was investigated by the FBI, Internal Revenue Service – Criminal Investigation and the Drug Enforcement Administration. Senior Litigation Counsel Corey Smith and Trial Attorney Mark McDonald of the Tax Division are prosecuting the case.

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

The Department of Justice has seized approximately $500,000 in assets traceable to corruption proceeds accumulated by Chun Doo Hwan, the former president of the Republic of Korea. This seizure brings the total value of seized corruption proceeds of President Chun to more than $1.2 million.  

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Executive Associate Director Peter T. Edge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI)­­ and Assistant Director Joseph S. Campbell of the FBI’s Criminal Investigative Division made the announcement after the seizure warrant issued by the U.S. District Court for the Eastern District of Pennsylvania was unsealed today.

“Chun Doo Hwan orchestrated a vast campaign of corruption while serving as Korea’s president,” said Assistant Attorney General Caldwell. “President Chun amassed more than $200 million in bribes while in office, and he and his relatives systematically laundered these funds through a complex web of transactions in the United States and Korea. Today’s seizure underscores how the Criminal Division’s Kleptocracy Initiative – working in close collaboration with our law enforcement partners across the globe – will use every available means to deny corrupt foreign officials and their relatives safe haven for their assets in the United States.”

“Our country will not be used by corrupt foreign leaders to conceal the illicit profits of their crimes,” said HSI Executive Associate Director Edge. “We will continue to work with our international law enforcement partners to ensure that such individuals are held accountable and that the assets are returned to their rightful owners.”

“The U.S. will not be a safe repository for assets misappropriated by corrupt foreign leaders,” said FBI Assistant Director Campbell.  “The FBI is committed to working with foreign and domestic partners to identify and return those assets to the legitimate owners, in this case the people of the Republic of Korea.”

The court in the Eastern District of Pennsylvania late yesterday unsealed an application filed on Aug. 22, 2014, by the Justice Department to seize an investment by former President Chun’s daughter-in-law in a Pennsylvania limited partnership worth approximately $500,000. In February 2014, the department obtained a court order from the Central District of California seizing $726,000 in proceeds from the sale of a residence located in Newport Beach, California, that President Chun’s son, Chun Jae Yong, purchased in 2005 with proceeds allegedly traceable to his father’s corruption.    

As alleged in the government’s application for a seizure warrant and supporting affidavit, President Chun was convicted in Korea in 1997 of receiving more than $200 million in bribes from Korean businesses and companies. President Chun and his relatives laundered some of these corruption proceeds through a web of nominees and shell companies in both Korea and the United States.

The United States is working closely with the Republic of Korea’s Supreme Prosecutor’s Office—Anti-Corruption Supervisory Division, the Ministry of Justice’s International Criminal Affairs Division and the Seoul Central District Public Prosecutor’s Foreign Criminal Affairs Department to forfeit these corruption proceeds.  

This case was brought under the Kleptocracy Asset Recovery Initiative by a team of dedicated prosecutors in the Criminal Division’s Asset Forfeiture and Money Laundering Section, working in partnership with federal law enforcement agencies to forfeit the proceeds of foreign official corruption and, where appropriate, return those proceeds to benefit the people harmed by these acts of corruption and abuse of office. Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to [email protected] .

The investigation was conducted jointly by HSI Philadelphia, HSI Attaché Seoul, the FBI Kleptocracy Program of the International Corruption Unit within the Criminal Investigation Division, and the FBI’s West Covina Resident Agency of the Los Angeles Division. The case is being prosecuted by Trial Attorneys Woo S. Lee and Della Sentilles of the Criminal Division’s Asset Forfeiture and Money Laundering Section, with substantial support from the U.S. Attorney’s Office for the Central District of California, the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Criminal Division’s Office of International Affairs.

A Colombian man extradited to the Eastern District of Virginia pleaded guilty today for his involvement in the kidnapping and murder of Drug Enforcement Administration (DEA) Special Agent James Terry Watson in Bogotá, Colombia, on June 20, 2013.  

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

“Special Agent Watson gave his life in the service of his country, and we will do everything in our power to honor his sacrifice,” said Attorney General Holder.  “This conviction is a critical step forward.  But while this action represents the first measure of justice for his kidnapping and murder, it will not be the last.  The Department of Justice will not rest until all those involved in this senseless act of violence have been held to account for their crimes.  Our nation will never yield in the protection and defense of its citizens.  And we will continue to demonstrate that anyone who seeks to harm an American will be found, will be prosecuted, and will be brought to justice.”

Julio Estiven Gracia Ramirez, 31, pleaded guilty before U.S. District Judge Gerald Bruce Lee of the Eastern District of Virginia to aiding and abetting the murder of an internationally protected person and conspiracy to kidnap an internationally protected person. Sentencing is scheduled for Dec. 5, 2014.

In a statement of facts filed with the plea agreement, Gracia Ramirez admitted that he and his conspirators agreed to conduct a “paseo milionario” or “millionaire’s ride” in which victims who were perceived as wealthy were lured into taxi cabs, kidnapped and then robbed. Gracia Ramirez admitted that he targeted Special Agent Watson and picked him up outside a Bogotá restaurant in his taxi. Soon after, two conspirators entered Gracia Ramirez’s taxi, and one used a stun gun to shock Special Agent Watson and the other stabbed him. Special Agent Watson was able to escape from the taxi, but he later collapsed and died from his injuries.

Six other defendants have been charged in an indictment in the Eastern District of Virginia for their alleged involvement in the murder of Special Agent Watson. Gerardo Figueroa Sepulveda, 39; Omar Fabian Valdes Gualtero, 27; Edgar Javier Bello Murillo, 27; Hector Leonardo Lopez, 34; and Andrés Alvaro Oviedo-Garcia, 22, are each charged with second degree murder, kidnapping and conspiracy to kidnap. Oviedo-Garcia is also charged with assault. Wilson Daniel Peralta-Bocachica, 31, is charged for his alleged efforts to destroy evidence associated with the murder of Special Agent Watson. Trial is set for Jan. 12, 2015.  

The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

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

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

Attorney General Eric Holder released the following statement Wednesday on the departure, effective September 15, of Associate Attorney General Tony West:

“Since returning to the Justice Department in 2009, Tony West has been an indispensable member of the Department’s senior leadership team, an exemplary and dedicated public servant, and a close advisor and good friend. His tenure as Assistant Attorney General for the Civil Division was defined by historic steps forward, including the Administration’s decision not to defend the constitutionality of Section 3 of the Defense of Marriage Act. His service as Associate Attorney General has been marked by significant achievement – from his leadership in securing the landmark reauthorization of the Violence Against Women Act; to his passionate advocacy for the rights of American Indian and Alaska Native peoples; to his tireless work to combat financial fraud, hold corporations accountable, and fight for American consumers.

“Over the years, Tony’s efforts have made a tremendous and lasting difference in the lives of millions of people across the country. I have been honored to count him as a colleague – and privileged to work alongside him. I thank him for his service, and his friendship, over the past five years. And although I wish him the best as he opens an exciting new chapter in his career, I will miss his leadership, his many contributions, and his steadfast commitment to the cause of justice.”

Attorney General Eric Holder released the following statement Wednesday on the resignation of U.S. Attorney Jenny Durkan for the Western District of Washington:

"As United States Attorney for Western Washington, Jenny has served as a tireless advocate for the American people, for the citizens of Washington state, and for the cause of justice.

“Over the years, she has demonstrated remarkable skill in guiding complex litigation, fostering interagency coordination, and combating a wide range of criminal activities. Jenny has been an exceptional leader in the Justice Department’s fight against cyber-crime and our work to protect the civil rights of all Americans. And with a strong focus on education, prevention, treatment, and community outreach, she launched one of the first federal drug courts.

“Jenny Durkan exemplifies the highest standards of personal integrity and professional excellence. For the past five years, I have been grateful for Jenny’s dedicated service and her wise counsel. I am certain that the people of Western Washington will continue to benefit from her service for years to come. And although I wish her the very best as she takes the next step in her career, I will miss her leadership, her contributions, and her friendship.”

The Department of Justice, the U.S. Environmental Protection Agency (EPA) and the West Virginia Department of Environmental Protection (WVDEP) today announced a settlement with Trans Energy Inc., requiring the oil and gas company to restore portions of streams and wetlands at 15 sites in West Virginia that were polluted by the company’s unauthorized discharge of dredge or fill material. Trans Energy will pay a penalty of $3 million to be divided equally between the federal government and the WVDEP. The Clean Water Act requires a company to obtain a permit from EPA and the U.S. Army Corps of Engineers prior to discharging dredge or fill material into wetlands, rivers, streams and other waters of the United States.

“Today’s agreement requires that Trans Energy take important steps to comply with state and federal laws that are critical to protecting our nation’s waters, wetlands and streams,” said Sam Hirsch, Acting Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division.  “We will continue to ensure that the development of our nation’s domestic energy resources, including through the use of hydraulic fracturing techniques, complies with the Clean Water Act and other applicable federal laws.”

“As part of our commitment to safe development of domestic energy supplies, EPA is working to protect wetlands and local water supplies on which communities depend,” said Cynthia Giles, Assistant Administrator of EPA’s Office of Enforcement and Compliance Assurance. “By enforcing environmental laws, we’re helping to ensure a level playing field for responsible businesses."

In addition to the penalty, the company will reconstruct impacted aquatic resources or otherwise address impacts at each of the 15 sites, provide appropriate compensatory mitigation for impacts to streams and wetlands, and implement a comprehensive compliance program to ensure future compliance with Section 404 of the Clean Water Act and applicable state law. Among other requirements, the company will work to ensure that all aquatic resources are identified prior to starting work on any future projects in West Virginia, and that appropriate consideration is given at the design stage to avoid and minimize impacts to aquatic resources. It is estimated that Trans Energy will spend more than $13 million to complete the restoration and mitigation work required by the consent decree.

The federal government and the WVDEP allege that the company impounded streams and discharged sand, dirt, rocks and other materials into streams and wetlands without a federal permit in order to construct well pads, impoundments, road crossings and other facilities related to natural gas extraction. The government alleges that the violations impacted approximately 13,000 linear feet of stream and more than an acre of wetlands.

Filling wetlands illegally and damming streams can result in serious environmental consequences. Streams, rivers and wetlands benefit the environment by reducing flood risks, filtering pollutants, recharging groundwater and drinking water supplies, and providing food and habitat for aquatic species.

EPA discovered the violations in 2011 and 2012 through information provided by WVDEP and the public, and through routine field inspections. In summer 2014, the company conducted an internal audit and ultimately disclosed to EPA alleged violations at eight additional locations, which are also being resolved through this Consent Decree.

The settlement also resolves alleged violations of state law brought by the WVDEP.

The consent decree has been lodged in the Northern District of West Virginia and is subject to a 30-day public comment period and court approval. The settlement can be viewed at www.justice.gov/enrd/Consent_Decrees.html .

Three residents of Montgomery, Alabama, each pleaded guilty during the past week to one count of conspiracy to defraud the government and one count of aggravated identity theft, announced Deputy Assistant Attorney General Ronald A. Cimino of the Justice Department’s Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama. 

Cruz Castillo Burnett, Jacorey Giddens and Rodrickus Howard were indicted on May 1.  According to court documents, the defendants conspired to acquire the means of identification of individuals, including names, Social Security numbers and dates of birth, of other persons without their knowledge or consent.  From March 2011 to April 2013, the defendants used these stolen identities to file more than 500 false tax returns, and each return claimed fraudulent refunds from the Internal Revenue Service (IRS).  The defendants received the fraudulent refunds in various forms, including U.S. Treasury checks, direct deposits to bank accounts and direct deposits onto prepaid debit cards in the names of identity theft victims. 

The three defendants each face a statutory maximum sentence of 10 years in prison for the conspiracy count, followed by up to three years of supervised release.  The defendants will each be required to serve a statutory mandatory sentence of two years in prison for the aggravated identity theft count.

The case was investigated by special agents of the IRS-Criminal Investigation.  The case is being prosecuted by Trial Attorneys Greg Bailey and Michael Boteler of the Tax Division and Assistant U.S. Attorney Todd Brown for the Middle District of Alabama.       

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

A Maryland MS-13 gang member pleaded guilty today to conspiracy to participate in a racketeering enterprise known as the La Mara Salvatrucha, or MS-13, and acknowledged his involvement in attempted murder and extortion in furtherance of MS-13.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rod J. Rosenstein of the District of Maryland, Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement ’s (ICE) Homeland Security Investigations (HSI), Chief Mark A. Magaw of the Prince George’s County Police Department, Prince George’s County State’s Attorney Angela D. Alsobrooks, Chief J. Thomas Manger of the Montgomery County Police Department, Chief Alan Goldberg of the Takoma Park Police Department, and Montgomery County State’s Attorney John McCarthy made the announcement.

Roni Arriola-Palma, 24, of Greenbelt, Maryland, pleaded guilty before U.S. District Judge Roger W. Titus. Sentencing is scheduled for March 9, 2015.

According to the statement of facts filed with Arriola-Palma’s plea agreement, MS-13 is a national and international gang composed primarily of immigrants or descendants from El Salvador.  Branches or “cliques” of MS-13, one of the largest street gangs in the United States, operate throughout Prince George’s County and Montgomery County, Maryland.  MS-13 members are required to commit acts of violence both to maintain membership and discipline within the gang and against rival gangs.

The statement of facts states that from 2009 until at least 2012, Arriola-Palma was a member and leader of the Peajes Locos Salvatrucha clique of MS-13. Arriola Palma and other MS-13 members in the Peajes clique and other MS-13 cliques committed crimes to further the interests of the gang, including murder, assault, robbery, extortion by threat of violence, obstruction of justice, witness tampering and witness retaliation.

Arriola-Palma admitted that from January 2010 through at least May 2011, he attended MS-13 leadership meetings in Maryland as the representative and leader of the Peajes clique.  

According to the plea agreement, on Jan. 13, 2011, Arriola-Palma attended a Peajes clique meeting with other MS-13 members near the Greenbelt Metro Station.  Another MS-13 member spoke at the meeting, criticizing members of the clique for not committing enough violent crimes on behalf of MS-13 and encouraging clique members to find rival gang members and commit acts of violence against them.  

Arriola-Palma admitted that after the meeting ended, he drove other MS-13 members in a minivan. Near the Fort Totten Metro Station, they saw a person who they believed was an associate of a rival gang. MS-13 members attacked the victim and dragged him back into the minivan, where they continued to assault him. After later stopping and departing the minivan, Arriola-Palma and other MS-13 members forcefully stripped the victim of all clothing and stabbed him.  After the assault, two MS-13 members dragged the victim into the woods and one of the gang members strangled the victim with his belt.  When they returned from the woods, they informed the other members that the victim was dead.  Arriola-Palma then drove the group of MS-13 members away from the scene.  The victim, however, survived the attack.

From March to November 2011, members of the Peajes clique threatened to place a “greenlight,” or order to kill, on a former MS-13 associate unless he paid them a weekly or bi-weekly “rent” or “tax,” which gang members collected from the victim.  Arriola-Palma admitted that he accepted payments that he knew were proceeds from the extortion scheme from two other MS-13 members.

This case was investigated by HSI Baltimore, the Prince George’s County and Montgomery County Police Departments, the Prince George’s County State’s Attorney’s Office, the Takoma Park Police Department and the Montgomery County State’s Attorney’s Office, with assistance from the Prince George’s County Sheriff’s Office, HSI Baltimore’s Operation Community Shield Task Force and the Maryland Department of Corrections Intelligence Unit. The case is being prosecuted by Trial Attorney Kevin L. Rosenberg of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney William D. Moomau of the District of Maryland.

The Justice Department announced today that it reached an agreement with Culinaire International, a catering and restaurant management company headquartered in Houston, Texas, resolving a claim that Culinaire engaged in citizenship discrimination during the employment eligibility reverification process in violation of the Immigration and Nationality Act (INA).

The Justice Department’s investigation found that Culinaire required lawful permanent resident employees to produce a new Permanent Resident Card when their prior card expired, even though the Form I-9 and E-Verify rules prohibit this practice. Lawful permanent residents have permanent work authorization in the United States, even after their permanent resident cards expire. The INA’s anti-discrimination provision prohibits employers from placing additional documentary burdens on work-authorized employees during the employment eligibility verification process based on their citizenship status.

“Employers cannot discriminate against workers by requiring them to produce more documents than necessary in the employment eligibility verification and reverification processes,” said Acting Assistant Attorney General Molly Moran for the Civil Rights Division. “The department applauds Culinaire’s willingness to resolve this matter expeditiously and its commitment to changing its past documentary practices.”

Under the settlement agreement, Culinaire will pay $20,460 in civil penalties to the United States; undergo training on the anti-discrimination provision of the INA; establish a $40,000 back pay fund to compensate potential economic victims; revise its employment eligibility reverification policies; and be subject to monitoring of its employment eligibility verification practices for 20 months.

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

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

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

Omni Surgical L.P., doing business as Spine 360, a manufacturer of devices used in spinal surgery, and Dr. Jamie Gottlieb, an Indiana spinal surgeon, have agreed to pay $2.6 million to the United States to settle allegations that Spine 360 paid illegal kickbacks to Gottlieb to induce him to use the company’s products.  Spine 360 is based in Austin, Texas.

“The Department of Justice has longstanding concerns about improper financial relationships between health care providers and their referral sources, because such relationships can alter a physician’s judgment about the patient's true health care needs and drive up health care costs for everybody,” said Assistant Attorney General Stuart F. Delery for the Justice Department’s Civil Division.   “In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable.”

The Anti-Kickback Statute restricts the financial relationships that medical device manufacturers may have with doctors who use or prescribe their products.  It is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based upon the best interests of the patient.

The settlement announced today involved payments that Spine 360 made between 2007 and 2009 to an entity controlled by Gottlieb.  Although the payments were purportedly made pursuant to a series of intellectual property agreements, the United States contended that those agreements were shams, and that the payments were intended to compensate Gottlieb for using Spine 360 products in his surgeries.

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 Commercial Litigation Branch of the department’s Civil Division , the U.S. Attorney’s Office for the Northern District of Indiana and the U.S. Department of Health and Human Services-Office of Inspector General.  The claims settled by this agreement are allegations only, and there has been no determination of liability.

The Justice Department announced today the filing of a lawsuit with the Executive Office for Immigration Review against Louisiana Crane Company LLC (Louisiana Crane), which is headquartered in Eunice, Louisiana. 

The complaint alleges that Louisiana Crane violated the Immigration and Nationality Act’s (INA) anti-discrimination provision by creating hurdles for immigrants during the employment eligibility verification process because of their citizenship status. Specifically, the complaint states that, from at least January 2013 until at least September 2013, Louisiana Crane required employees who it believed to be non-U.S. citizens to present specific documentation for the Form I-9 and/or E-Verify, but allowed believed to be U.S. citizens the flexibility to present a variety of documents. The INA’s anti-discrimination provision prohibits employers from discriminating against people with permission to work in the United States because of their citizenship status.

“The law protects people who have permission to work from facing discriminatory obstacles during employment eligibility verification,” said Molly Moran, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division. “It is important that all people who have permission to work in the United States face an equal playing field when proving their work authorization.”

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

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

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

The former chief executive officer (CEO) of ArthroCare Corporation was sentenced to serve 20 years in prison, and the former chief financial officer (CFO) was sentenced to serve 10 years in prison today for their leading roles in a $750 million securities fraud scheme. Two other former senior vice presidents of ArthroCare were also sentenced to prison terms for their roles in the scheme.  

Principal Deputy Assistant Attorney General Marshall L. Miller of the Department of Justice’s Criminal Division and Special Agent in Charge Christopher H. Combs of the FBI’s San Antonio Field Office made the announcement. U.S. District Judge Sam Sparks in the Western District of Texas imposed the sentences.

“Earlier today, in federal court in Austin, Texas, we witnessed the culmination of an epic tale of greed,” said Principal Deputy Assistant Attorney General Miller. “The CEO, CFO and two vice presidents of ArthroCare sentenced today ran a successful business, but they wanted more. Their greed led to fraud, and their fraud caused investors to lose hundreds of millions of dollars.   At the Criminal Division of the Department of Justice, we are committed to prosecuting individuals who commit crimes to make money, whether they do so on street corners or in corner offices.  The aggressive pursuit of corporate executives  who commit fraud is at the core of our mission to  pursue justice and protect the American public.”  

“This scheme of betrayal and deceit was carried out by the defendants without regard to the deep-reaching and irreparable harm their actions caused to thousands of victims, here in Texas, and throughout the United States,” said FBI Special Agent in Charge Combs. “While it is important to recognize the financial losses sustained by all victims, which includes individual investors and institutional investment firms, many of the victims will never recover from the financial ruin caused by the defendants’ greed.  Many of the victims worked hard their entire lives, saving money for retirement or their children’s’ college funds.  Some were already living on fixed incomes and are now struggling to make ends meet.  The FBI will continue to aggressively work to uncover these fraud schemes in an effort to prevent future victimization and to protect the integrity of the securities and commodities market.”

On June 2, 2014, former ArthroCare’s CEO Michael Baker, 55, and former CFO Michael Gluk, 56, were convicted by a jury of wire fraud, securities fraud, and conspiracy to commit wire and securities fraud; Baker was also convicted of making false statements. On June 24, 2013, John Raffle, 46, the former Vice President of Strategic Business Units, pleaded guilty to conspiracy to commit securities, mail and wire fraud, and two false statements charges. On May 9, 2013, David Applegate, 55, the former Senior Vice President of the Spine Division, pleaded guilty to conspiracy to commit securities, mail and wire fraud, and a false statements charge. At sentencing, the court found that investors lost approximately $756 million as a result of the defendants’ scheme to artificially inflate the share price of ArthroCare stock through sham transactions.

According to court documents, between 2005 and 2009, Baker, Gluk, Raffle and Applegate executed a scheme to artificially inflate sales and revenue through a series of end-of-quarter transactions involving several of ArthroCare’s distributors. Products were shipped to distributors at quarter end based on ArthroCare’s need to meet Wall Street analyst forecasts, rather than distributors’ actual orders. ArthroCare then fraudulently reported these shipments as sales in its quarterly and annual filings at the time of the shipment, enabling the company to appear to meet or exceed internal and external earnings forecasts. ArthroCare’s distributors agreed to accept these shipments of millions of dollars of excess inventory in exchange for lucrative concessions from ArthroCare, such as upfront cash commissions, extended payment terms, and the ability to return products. In some cases, like that of ArthroCare’s largest distributor, DiscoCare, the defendants agreed ArthroCare would acquire the distributor and the inventory so that the distributor would not have to pay ArthroCare for the products at all.   

Between December 2005 and February 2009, ArthroCare’s shareholders held more than 25 million shares of ArthroCare stock. On July 21, 2008, after ArthroCare announced publicly that it would be restating its previously reported financial results to reflect the results of an internal investigation and account for the defendants’ fraud, the price of ArthroCare shares dropped from $40.03 to $23.21 per share. On Dec.19, 2008, ArthroCare again announced publicly that it had identified more accounting errors and possible irregularities related to the defendants’ fraud. That day, the price of ArthroCare shares dropped from approximately $16.23 to approximately $5.92 per share.

In addition to the underlying conduct, Baker was convicted of lying to the U.S. Securities and Exchange Commission during its investigation of the conduct. The court further found, as part of sentencing, that Baker and Gluk each lied under oath during their trial testimony, in which they attempted to escape responsibility for their actions.

In addition to their prison terms, Baker and Gluk were sentenced to serve five years of supervised release. In addition, the court ordered Gluk and Baker to forfeit $22,165,030, the amount of their profits from the scheme.

John Raffle was sentenced to serve 80 months in prison followed by three years of supervised release. David Applegate was sentenced to serve 60 months in prison followed by three years of supervised release.

The case was investigated by the FBI’s San Antonio Field Office. The case was prosecuted by Deputy Chief Benjamin D. Singer and Trial Attorneys Henry P. Van Dyck and William S.W. Chang of the Criminal Division’s Fraud Section. The Department recognizes the substantial assistance of the Criminal Division’s Asset Forfeiture and Money Laundering Section and the U.S. Securities and Exchange Commission, as well as the critical role of the U.S. Attorney’s Office for the Western District of Texas, which provided invaluable support to the prosecution team during all phases of the litigation.

A leader of a street gang that operated on the east side of Detroit was found guilty today by a federal jury of aiding and abetting an armed robbery.

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 and Special Agent in Charge Steven Bogdalek of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) in Detroit made the announcement.

Christopher LaJuan Tibbs, 39, was convicted after a three-day jury trial before U.S. District Judge Bernard A. Friedman.

The evidence at trial established that Tibbs, also known as Chief Fatah, was the leader of the Michigan branch of the Mafia Insane Vice Lords – a violent street gang that operated primarily on the east side of Detroit. The Mafia Insane Vice Lords was a local faction of the national Vice Lord gang that originated in Chicago. Tibbs helped plan an armed robbery of a Little Caesars restaurant in Redford, Michigan, in September 2013. Tibbs sent subordinate members of the gang to commit the crime and took a majority of the proceeds from the robbery.

The case was investigated by ATF, with assistance from the Redford, Michigan, Police Department, the Detroit Police Department, and the Chicago Police Department. The case was prosecuted by Trial Attorney Joseph Wheatley of the Criminal Division’s Organized Crime and Gang Section and Assistant United States Attorney Louis Gabel of the Eastern District of Michigan.

Today, the United States won court approval of a settlement agreement to reform the ways in which the Portland Oregon Police Bureau (“PPB”) interacts with individuals with actual or perceived mental illness. The agreement was entered jointly by the United States and the city of Portland, Oregon, with the approval of the Albina Ministerial Alliance Coalition for Justice and Police Reform (“AMA Coalition”) and Portland Police Association (“PPA”). The agreement addresses constitutional claims in a civil action filed by the United States pursuant to the Violent Crime Control and Law Enforcement Act of 1994. In today’s order, the court approved the agreement with the requirement that the parties appear for periodic hearings to provide the court progress on implementation of the agreement.

The agreement requires changes—many of which PPB has already begun to implement—in PPB’s policy, training, supervisory oversight, community-based mental health services, crisis intervention, employee information systems, officer accountability and community engagement and oversight. The agreement also calls for innovative new mechanisms for ongoing community involvement in the implementation of reforms. In addition, the agreement establishes an independent compliance officer and community liaison (“COCL”), who will be responsible for synthesizing data related to PPB’s use of force, reporting to the city council, the Justice Department and the public and gathering input from the public related to PPB’s compliance with the agreement. Finally, the agreement lays the framework for a community oversight advisory board (“COAB”), which will be a crucial mechanism for civil engagement in the reform process.

“We are committed to continuing to work with our partners in the community throughout the reform process to ensure full implementation of the settlement agreement,” said Acting Assistant Attorney General Molly Moran for the Civil Rights Division. “We applaud the city’s efforts to implement portions of the settlement agreement during the pendency of the litigation. We are pleased to provide the court information about reforms through ongoing periodic hearings. We are also appreciative of the continued collaboration with the AMA Coalition and the participation of the PPA to resolve these issues to enable the entry of the settlement agreement. We look forward to the positive changes that these civil rights reforms will bring about for the people of Portland.”

“Today’s decision is the culmination of significant work on the part of all parties to reach such a groundbreaking resolution for the citizens of Portland ,” said U.S. Attorney Amanda Marshall for the District of Oregon. “We are very grateful to the court for entering this order, and look forward to continued collaboration with the city of Portland, the Portland Police Bureau, the Portland Police Association, the Albina Ministerial Alliance Coalition for Justice and Police Reform , and all citizens of Portland to ensure the letter and the spirit of this agreement are upheld.”

The United States’ complaint followed an investigation, launched on June 8, 2011, and conducted by the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office for the District of Oregon. The investigation focused on whether PPB engages in unconstitutional or unlawful policing through the use of excessive force, with a specific focus on the use of force against people with actual or perceived mental illness or in mental health crisis.

In a September 2012 findings letter detailing the outcome of the 14-month investigation, the Justice Department found that most uses of force by PPB officers were lawful and reasonable, but it also found reasonable cause to believe that PPB engages in a pattern or practice of excessive force, in violation of the Fourth Amendment of the U.S. Constitution and the Violent Crime Control and Law Enforcement Act of 1994, in certain contexts. Following the release of the findings letter, the United States and the city engaged in settlement negotiations resulting in the settlement agreement, which the city council voted to approve. The city fully cooperated with the United States throughout its investigation and was eager to address problems identified in the United States’ findings letter regarding Portland Police Bureau’s policies, practices, training and supervision through entry of the settlement agreement.

On Dec. 17, 2012, the United States initiated a lawsuit against the city and, with the city’s cooperation, concurrently filed a joint motion asking the court to approve the negotiated settlement agreement and conditionally dismiss the case. Specifically, the United States’ complaint alleged that PPB engages in a pattern or practice of using excessive force on individuals with actual or perceived mental illness by: (1) too frequently using a higher level of force than necessary; (2) using electronic control weapons (“ECWs”), commonly referred to as “Tasers,” in circumstances when such force is not justified, or deploying ECWs more times than necessary on an individual; and (3) using a higher degree of force than justified for low-level offenses.

Both PPA and the AMA Coalition subsequently moved to intervene in the suit, seeking to join the case as parties and objecting to the proposed settlement agreement. The court partially granted PPA’s motion to intervene and granted the AMA Coalition enhanced amicus status, allowing the AMA Coalition to participate in the litigation. The court then ordered all parties to mediation to attempt to resolve PPA’s and the AMA Coalition’s objections to the settlement agreement. Such mediation efforts have resulted in a memorandum of understanding with PPA and a separate agreement previously reached with the AMA Coalition.

Following a fairness hearing on the settlement agreement, the court previously found that the settlement agreement is substantively fair, reasonable and adequate. The court found, however, that it needed a procedure to receive information on the city’s implementation of reforms on at least an annual basis. In today’s ruling, the court required the parties and COCL to file quarterly reports with the court and required the parties to appear for periodic hearings to describe to the court the progress being made toward achieving substantial compliance with all provisions of the settlement agreement and any obstacles or impediments toward that end, and to respond to the court’s questions on these issues.

The assigned attorneys in the United States Attorney’s Office in Portland were Bill Williams, Adrian Brown and David Knight. From the Civil Rights Division of the Department of Justice in Washington, D.C., the assigned attorneys were Laura Coon, Jonas Geissler and Michelle Jones.

For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt . If you have any comments or concerns specific to this matter, please feel free to contact us at [email protected] or 1-877-218-5228.

The United States has partially intervened against defendants in two whistleblower lawsuits in the Federal District Court for the District of Colorado alleging Evercare Hospice and Palliative Care (Evercare) submitted false claims for the Medicare hospice benefit.  Evercare is now known as Optum Palliative and Hospice Care, which provides hospice services across the United States.  One of the suits names Evercare’s parent companies, including UnitedHealth Group Inc.

“The hospice benefit is designed for patients who are terminally ill and need end-of-life care,” said Assistant Attorney General Stuart F. Delery for the Department of Justice’s Civil Division.  “We will continue to protect the ability of Medicare recipients to receive appropriate treatment by ensuring that entities providing hospice care are only treating, and billing for, qualified patients.”

The Medicare hospice benefit is available for patients who elect palliative care (medical care focused on providing patients with relief from pain, symptoms or stress) for a terminal illness, and have a life expectancy of six months or less if their illness runs its normal course.  When a Medicare patient is admitted to hospice, that individual is no longer entitled to Medicare coverage for care designed to cure his or her illness.

The lawsuits, filed by former employees of Evercare, allege that defendants violated the False Claims Act by knowingly submitting false claims for hospice benefits for patients who did not have a life expectancy of six months or less.  The complaints include allegations that management pressured employees and physicians to admit and retain patients who were not terminally ill and challenged or disregarded physicians’ decisions that patients should be discharged.  

“Hospice care plays a critical role in our healthcare system, providing for end-of-life care as opposed to curative life care,” said U.S. Attorney John Walsh for the District of Colorado.  “When companies systematically overbill Medicare by keeping people in hospice when they don’t need to be there, it jeopardizes this important benefit for others under the program.  We will not tolerate such conduct.  The District of Colorado and the Civil Fraud Section of the Department of Justice deserve substantial credit for pursuing that mission in these Evercare Hospice cases.” 

“The decision to provide hospice services should be prompted by a patient’s terminally ill medical condition and desire for palliative care, not a hospice provider’s desire to boost its profits,” said Special Agent in Charge Gerald T. Roy of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “Our agency is dedicated to safeguarding both the Medicare program and Medicare patients.”

The lawsuits were filed 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 to the government.  The private plaintiffs are entitled to receive a share of any funds recovered through the lawsuit.  The False Claims Act authorizes the United States to intervene in a whistleblower lawsuit and take over primary responsibility for litigating it as the United States has done here, and permits the government to recover three times its damages plus civil penalties.  The United States has notified the court that it intends to file its own complaint. 

The government’s intervention in these actions is part of the government’s emphasis on combating health care fraud and another step 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 matter was investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Colorado, and the Department of Health and Human Services’ Office of Inspector General.  The claims asserted against defendants are allegations only, and there has been no determination of liability.

The lawsuits are consolidated and captioned United States ex rel. Fowler and Towl v. Evercare Hospice, Inc., et al., No. 11-cv-00642 (D. Colo.); United States ex rel. Rice v. Evercare Hospice, Inc., No. 14-cv-01647 (D. Colo.).

The owner of a Florida mortgage company, seven employees of the company and two real estate developers were indicted in the Southern District of Florida in connection with an alleged $50 million mortgage fraud scheme.

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 and David A. Montoya, Inspector General for the Department of Housing and Urban Development (HUD) made the announcement.

Hector Hernandez, 56, of Miami, Florida, the owner and operator of Great Country Mortgage Bankers (Great Country), a mortgage lender in Miami, was charged with one count of conspiracy to commit wire fraud affecting a financial institution and 25 counts of wire fraud affecting a financial institution. Great Country loan officers Durand Deeb, 43, of Miami, Frank Carino, 48, of Apollo Beach, Florida, and Fabian Perez, 39, of Miami; Great Country loan processors Juliette Del Rio, 37, of Miami, and Julissa Saavedra, 43, of Miami,; Great Country underwriters Olga Hernandez, 58, of Lake Mary, Florida, and Olga Rodriguez, 53, of Miami; and real estate developers Armando Bravo, 42, of Coral Gables, Florida, and Aleida Fontao, 61, of Miami, were also indicted for conspiracy to commit wire fraud affecting a financial institution and varying counts of wire fraud affecting a financial institution.

According to the indictment, beginning in January 2006 and continuing through September 2008, Hernandez and others allegedly obtained mortgage loans insured by the Federal Housing Administration (FHA), a division of HUD, for unqualified borrowers by exaggerating the borrowers’ income and otherwise misrepresenting their financial condition.

Specifically, Hernandez and others allegedly created false documents on behalf of borrowers who could not otherwise qualify for FHA-insured loans due to insufficient income, high levels of debt, and outstanding collections. These documents included bogus earnings statements that inflated the borrowers’ income and false verification of employment forms that overstated their work histories.

In addition to creating these false documents, Hernandez and others allegedly offered the unqualified borrowers cash back after closing as an incentive to purchase condominiums. These secret payments were not disclosed in the loan applications and were omitted from loan closing documents so that HUD and the financial institutions that subsequently purchased the loans would not know of their existence.

By later selling the fraudulent loans to financial institutions, Great Country transferred the risk of loss to those institutions The vast majority of the unqualified borrowers failed to meet their monthly mortgage obligations and defaulted on their loans. When the loans went into foreclosure, HUD, which insured the loans, was required to pay the outstanding balances to the financial institutions, resulting in losses in excess of $50 million to the agency.

The charges contained in an indictment are merely accusations, and a defendant is presumed innocent unless and until proven guilty.

This case is being investigated by HUD’s Office of Inspector General with assistance from the U.S. Marshals Service, Miami-Dade Police Department Warrants Bureau and Miami-Dade State Attorney’s Office – Public Corruption Task Force. This is being prosecuted by Senior Litigation Counsel David A. Bybee and Trial Attorney Michael T. O’Neill of the Criminal Division’s Fraud Section.

Today, the Justice Department asked a federal court to dismiss the injunction to address civil rights violations at Saint Elizabeths Hospital in Washington, D.C., because the District of Columbia and the Department of Behavioral Health have significantly improved the care and treatment of persons confined to Saint Elizabeths Hospital. Saint Elizabeths is the district’s facility for treating individuals with mental health conditions. The reforms, which were implemented following requirements under a court order, have ensured that persons at Saint Elizabeths Hospital are discharged to the community with adequate supports to live in integrated settings. Further, the reforms resulted in important improvements in integrated treatment planning, psychological and psychiatric services, nursing care and protection from assault.

In 2006, the department notified the district that conditions at Saint Elizabeths Hospital violated the constitutional and federal statutory rights of individuals at the hospital. In 2007, the department and the district entered into a court enforceable settlement agreement to implement the necessary reforms. Since entering the settlement agreement, the department, with the help of a team of experts, has monitored the implementation of the reforms and provided technical assistance to facility officials.

Under the settlement agreement, district officials have made steady progress toward improving the care and treatment at Saint Elizabeths Hospital. By June 2014, the district had achieved and maintained substantial compliance with all required remedial measures by replacing a dangerous facility through the construction of a new hospital and increased clinical staff as well as reforming the discharge planning and community placement process. Further, the district lowered the population at Saint Elizabeths Hospital by nearly 50 percent. The district will continue its partnership with the local protection and advocacy group, University Legal Services, after dismissal of the lawsuit. The parties have filed a notice with the court detailing the ongoing monitoring that will be conducted by University Legal Services.

“We commend the district and the Department of Behavioral Health for their commitment to reform the clinical practices at Saint Elizabeths Hospital,” said Molly Moran, Acting Assistant Attorney General for Civil Rights. “The leadership of the Department of Behavioral Health and of Saint Elizabeths Hospital have made significant and often difficult decisions to change the clinical culture at Saint Elizabeths Hospital and ensure that persons confined to hospital were appropriately discharged and integrated into the community with adequate supports. They strongly supported the required changes and provided the time, energy and resources necessary to achieve reform.”

The department initiated the investigation of Saint Elizabeths Hospital under the Civil Rights of Institutionalized Persons Act and the Americans with Disabilities Act. These statutes give the Department of Justice authority to protect the constitutional and federal statutory rights of individuals with mental health conditions confined to mental health hospitals. Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt

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The former Secretary-Treasurer of Security Police Fire Professionals of America Local 287 pleaded guilty today to theft from a labor organization in violation of his fiduciary responsibilities as a union officer.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and District Director Mark Wheeler of the Department of Labor, Office of Labor-Management Standards, Washington District Office made the announcement.

Milton Hilliard, 47, of Fort Washington, Maryland, was the Secretary-Treasurer of Local 287, which represents security guards employed by Coastal International Security at various locations in Washington, D.C. At the plea hearing, he acknowledged that, between September 2008 and December 2010, he made dozens of unauthorized personal purchases using union funds. Specifically, he used the Local 287 debit card to purchase $11,303.92 in personal items at places such as Bed Bath & Beyond, Best Buy, Maryland Speedy Tag & Title, DARCARS Toyota, H&R Block, Golden Corral, Five Below and others. During the same period, Hilliard made 29 unauthorized cash withdrawals, totaling $23,308.50, from the Local 287 treasury.

Hillard pleaded guilty before U.S. District Judge Tanya S. Chutkan in the District of Columbia. Sentencing is set for Nov. 18, 2014.

The investigation was conducted by the Department of Labor, Office of Labor-Management Standards, Washington District Office. The case is being prosecuted by Trial Attorney Vincent J. Falvo Jr. of the Criminal Division’s Organized Crime and Gang Section.

A former disc jockey for high school parties was sentenced to serve 40 years in prison today in the District of Puerto Rico for sexually exploiting minors.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico and Special Agent in Charge Angel M. Melendez of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) in San Juan made the announcement .

According to court records, Eduardo Santiago-Rivera, 45, was a disc jockey who met his victims at area high school parties and on various social networking sites. Santiago-Rivera admitted that in June and July 2012, he caused at least three minors, who ranged in age from 12 to 15, to engage in sexual activity for the purpose of creating videos. Santiago-Rivera used “ooVoo,” an Internet-based video chat program, to direct and coerce the minors to undress and to engage in various sexual acts. Santiago-Rivera also recorded himself engaging in sexual acts with one of the minors.

At the sentencing hearing before U.S. District Judge Jay A. Garcia-Gregory of the District of Puerto Rico, Santiago-Rivera was additionally ordered to serve a 15-year term of supervised release following his release from prison, during which his access to computers, the Internet and minors will be restricted, and he will be obligated to register as a sex offender. Judge Garcia-Gregory will issue an order for restitution to be paid by Santiago-Garcia to the families of the victims in 60 days. Santiago-Rivera pleaded guilty on Jan. 13, 2014, before U.S. Magistrate Judge Camille L. Vélez Rivé in the District of Puerto Rico to nine counts of sexual exploitation of children and one count of possession of child pornography. He was charged by superseding indictment on May 13, 2013.

The investigation was conducted by ICE HSI. The case was prosecuted by Criminal Division Trial Attorneys Amy E. Larson of the Child Exploitation and Obscenity Section and Mark Angehr of the Public Integrity Section, and Assistant U.S. Attorney Marshal Morgan of the District of Puerto Rico.

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

A Detroit -area man was indicted today for obstruction of justice in connection with his alleged attempts to conceal evidence relevant to his upcoming trial for an alleged health care fraud scheme with estimated losses exceeding $30 million.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.

Zafar Mehmood, 48, of Ypsilanti, Michigan, is currently awaiting trial for his alleged role in a health care fraud scheme involving, among other allegations, the submission of fraudulent claims to Medicare for services that were medically unnecessary or never provided. Mehmood allegedly used at least four home health agencies in the Detroit area, including Access Care Home Care Inc., Patient Care Home Care Inc., Hands On Healing Home Care Inc. and All State Home Care Inc., to perpetrate his fraud.

According to today’s indictment, on July 25, 2014, and again on July 28, 2014, Mehmood attempted to alter and conceal records and documents, which included several patient files, with the intent to impair their integrity and availability for use in his upcoming trial.

An indictment is merely an allegation, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. This case is being prosecuted by Trial Attorneys Nathan Dimock, Niall O’Donnell, 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 1,900 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

Ahmad Ibrahim Al-Ahmad made his initial appearance today in federal court in Phoenix, Arizona, on federal terrorism offenses, announced John P. Carlin, Assistant Attorney General for National Security, John S. Leonardo, U.S. Attorney for the District of Arizona and Douglas G. Price, Special Agent in Charge, FBI Phoenix Division. The charges stem from Al-Ahmad’s alleged participation in a conspiracy to use improvised explosive devices (IEDs) to attack U.S. military personnel in Iraq from approximately 2005 to 2010.

Al-Ahmad was originally charged under seal with terrorism-related offenses in May 2011. He was subsequently arrested in Turkey on May 17, 2011, based upon those charges and an Interpol Red Notice, and was detained there pending completion of extradition proceedings. Al-Ahmad was extradited from Turkey yesterday and arrived in Arizona on the same day.

Following his appearance, Al-Ahmad was placed in custody of the U.S. Marshals Service, pending a status conference on the issue of detention on Sept. 8, 2014.  A trial date is set for Oct. 7, 2014.

On Aug. 12, 2014, a federal grand jury in the District of Arizona returned a superseding indictment charging Ahmad Ibrahim Al-Ahmad, a Syrian national, with multiple charges related to Al-Ahmad’s alleged participation in a conspiracy, from approximately 2005 to 2010, to supply component parts to the 1920 Revolution Brigades – an Iraqi insurgent group – for use in IEDs that were employed against U.S. military personnel in Iraq during that time period. The charges include conspiracy to use a weapon of mass destruction (IEDs); conspiracy to maliciously damage or destroy U.S. government property by means of an explosive; possession of a destructive device during a crime of violence and aiding and abetting; conspiracy to commit extraterritorial murder of a U.S. national, and providing material support to terrorists.

If convicted of the offenses alleged in the indictment, Al-Ahmad would face a statutory maximum sentence of life in prison.

An indictment is merely a formal allegation that a defendant has committed a violation of criminal laws and every defendant is presumed innocent until and unless proven guilty.

This case is being investigated by the FBI Phoenix Division Joint Terrorism Task Force with substantial assistance from various other government agencies. The case is being prosecuted by the U. S. Attorney’s Office for the District of Arizona and the Counterterrorism Section of the Justice Department’s National Security Division. The Justice Department’s Office of International Affairs also provided significant assistance in this matter.

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The Department of Justice and U.S. Environmental Protection Agency (EPA) announced today a settlement with E.I. du Pont de Nemours and Company (DuPont) at its Belle, W. Va. facility for eight alleged releases of harmful levels of hazardous substances between May 2006 and January 2010. Several of the releases posed significant risk to people or the Kanawha River. One DuPont worker died after exposure to phosgene, a toxic gas released due to DuPont’s failure to comply with industry accident prevention procedures.

DuPont will pay a $1.275 million penalty and will take corrective actions to prevent future releases to resolve the alleged violations of the general duty clause and risk management provisions of the Clean Air Act, and the emergency response provisions of Section 103 of the Comprehensive Environmental Response, Compensation and Liability Act, and Section 304 of the Emergency Planning and Community Right-to-Know Act.

“Failing to follow laws meant to prevent accidents can have fatal consequences – as was tragically the case here,” said Sam Hirsch, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Today’s settlement holds DuPont accountable for its failure to prevent hazardous releases and requires improvements to its risk management operations and emergency response systems that could prevent future tragedies and damage to the environment.”

“Producing toxic and hazardous substances can be dangerous, and requires complying with environmental and safety laws,” said Cynthia Giles, Assistant Administrator for Enforcement and Compliance Assurance at EPA. “Today's settlement with DuPont will ensure that the proper practices are in place to protect communities and nearby water bodies.”

Through this settlement, DuPont will implement enhanced risk management operating procedures to improve its process of responding to alarms triggered by releases of hazardous substances. DuPont will also develop an enhanced operating procedure to improve its management of change process, which is a best practice used to ensure that safety, health and environmental risks are controlled when a company makes changes to their processes. In addition, DuPont will improve procedures so federal, state, and local responders are notified of emergency releases, and will conduct training exercises to prepare employees to make such notifications. DuPont estimates that it will spend approximately $2,276,000 to complete the required improvements to its safety and emergency response processes.

Previously, on March 18, 2010, the U.S. EPA issued an administrative order to DuPont to undertake corrective measures related to the releases. DuPont estimates that it has spent approximately $6,828,750 to comply with the administrative order.

On Jan. 22, 2010, at DuPont’s chemical manufacturing plant in Belle, West Virginia operators discovered that more than 2,000 pounds of methyl chloride had leaked into the atmosphere and employees failed to respond to alarms triggered by the release. On the morning of January 23, workers discovered a leak in a pipe containing the toxic gas oleum. Later that day, a hose containing phosgene, a highly toxic gas, ruptured resulting in the fatality of a worker exposed to phosgene.

The alleged risk management violations on January 22 and 23 include failing to:

• identify hazards that may result from accidental releases;
• design and maintain a safe facility;
• minimize consequences of accidental releases that do occur;
• follow recognized industry safety practices;
• train employees on how to respond to potential risks;
• frequently inspect and test equipment consistent with good engineering practices and manufacturer recommendations; and
• follow the company’s own procedures for responding to alarms indicating potential problems and implementing safety protocol for the phosgene process.

In addition, there were five incidents identified through EPA inspections and extensive review of DuPont’s records that do not comply with the Comprehensive Environmental Response, Compensation, and Liability Act and t he Emergency Planning and Community Right-to-Know Act.

In these incidents, EPA alleged the company released harmful quantities of hazardous substances and then did not report the releases to the National Response Center, State Emergency Response Commission and Local Emergency Planning Committee in a timely manner. The largest of these was the release of 80 tons of methanol into the Kanawha River on Sept. 21, 2010.

For more information about the Clean Air Act’s Risk Management Program requirements, see http://www.epa.gov/compliance/monitoring/programs/caa/112r.html and http://www.epa.gov/oem/content/rmp/

For information about RMP*eSubmit or to view a Checklist for Submitting Your Risk Management Plan (RMP) for Chemical Accident Prevention and the RMP*eSubmit Users’ Manual, visit http://www.epa.gov/emergencies/rmp ).

The consent decree, lodged in the U.S. District Court for the Southern District of West Virginia, is subject to a 30-day public comment period and approval by the federal court.

Two New York residents pleaded guilty today in connection with importing more than 100,000 counterfeit and hazardous children’s toys from China for sale in the United States.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Special Agent in Charge James T. Hayes Jr. of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) New York, Director Robert E. Perez of Customs and Border Protection (CBP) New York Field Operations, Chairman Elliot F. Kaye of the Consumer Product Safety Commission (CPSC) and Commissioner William J. Bratton of the New York City Police Department (NYPD) made the announcement.

“In a criminal twist on a toy story, the defendants made millions importing dangerous, knock-off toys that put children in harm’s way,” said Assistant Attorney General Caldwell. “The defendants used a continuously shifting series of corporate entities in an effort to stay one step ahead of law enforcement. But their game has now come to an end. The Department of Justice is committed to stopping those who would smuggle hazardous, counterfeit goods into the United States.”

“For eight years, the defendants lined their pockets while putting at risk the health of our children by smuggling dangerous and copyright-infringing toys into the United States,” said U.S. Attorney Lynch. “Today’s guilty pleas signify the end of this dangerous pipeline from China. We will continue to be vigilant and prosecute those who would smuggle dangerous and unlawful items into our country and neighborhoods.”

“The United States has some of the strongest toy standards and lowest lead limits in the world, specifically to keep children safe,” said CPSC Chairman Kaye. “We have no more important mission than protecting children. For that reason, the CPSC will continue to work with our federal partners to enforce toy safety requirements at the ports and in the marketplace.”

“The defendants in this case endangered thousands of American children by manufacturing for sale counterfeit toys made with unsafe amounts of lead and other hazardous chemicals,” said Special Agent in Charge Hayes Jr. “HSI focuses its efforts to protect intellectual property, first and foremost, on those counterfeit goods that present health and safety hazards to consumers.”

Chenglan Hu, 52, and Hua Fei Zhang, 53, of Bayside, New York, pleaded guilty in connection with importing children’s toys with copyright-infringing images and counterfeit trademarks of popular children’s characters, as well as unsafe lead levels, small parts that presented risks of choking or ingestion, easily-accessible battery compartments, and other potential hazards. Hu and Zhang were the last of nine defendants to plead guilty in this investigation; Guan Jun Zhang, Jun Wu Zhang, and five corporations – Family Product USA Inc., H.M. Import USA Corp., ZCY Trading Corp., Zone Import Corp. and ZY Wholesale Inc. – previously pleaded guilty to Consumer Product Safety Act (CPSA) and trademark counterfeiting charges. In pleading guilty to trafficking in hazardous consumer goods in violation of CPSA, Hu and Zhang also agreed to forfeit $700,000 and more than 120,000 unsafe children’s toys. The government previously seized three luxury vehicles and six bank accounts, and filed lis pendens against two real properties owned by Zhang in Queens, New York.

According to court filings and facts presented at the plea hearings, from July 2005 through January 2013, Hu, Zhang, and the other individual defendants used the companies they owned to import and sell toys from China from a storefront and warehouse in Ridgewood, New York, and other locations in Brooklyn, New York and Queens, New York. According to the indictment, CBP seized toys imported by the defendants from shipping containers entering the United States from China on 33 separate occasions. Seventeen of the 33 seizures contained toys prohibited from import into the United States because of excessive lead content, excessive phthalate levels, small parts that presented risks of choking, aspiration or ingestion, and easily-accessible battery compartments. Sixteen of the 33 seizures contained toys bearing copyright-infringing images and counterfeit trademarks, including a wide variety of popular children’s characters, such as Winnie the Pooh, Dora the Explorer, SpongeBob SquarePants, Betty Boop, Teenage Mutant Ninja Turtles, Power Rangers, Spiderman, Tweety, Mickey Mouse, and Pokémon, as well as those from movies such as “Cars,” “Toy Story” and “High School Musical.”

Hu, Zhang, and the other individual defendants changed their use of the companies, sometimes even forming new companies, and alternated their formal titles in order to conceal their continued importation and distribution of the hazardous and counterfeit toys.

Hu and Zhang pleaded guilty before U.S. Magistrate Judge James Orenstein of the Eastern District of New York. Sentencing will be announced at a later date.

The case was jointly investigated by the HSI Intellectual Property Rights Group and the NYPD, through its participation in the New York Border Enforcement Security Task Force, with the assistance of CBP and CPSC. The case was prosecuted by Senior Counsel Evan Williams of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys William Campos and Claire Kedeshian of the Eastern District of New York.