District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Attorney General Holder Urges International Effort to Confront Threat of Syrian Foreign FightersRead the Press Release
In a speech Tuesday, Attorney General Eric Holder called Syria "a cradle of violent extremism" and urged multilateral law enforcement action to confront the security threat posed by radicalized individuals from the United States and Europe traveling there.
An estimated 7,000 foreign fighters, including dozens of Americans, have streamed into Syria to participate in the conflict there. These individuals can link up with violent extremist groups operating in the region and then seek to return to their home countries with training in how to carry out violence on a large scale. Attorney General Holder said the U.S. and its allies have a mutual interest in confronting this trend, observing that the ability of citizens of European nations to travel, visa-free, to the United States--and likewise, U.S. citizens' ability to freely visit Europe--means that "the problem of fighters in Syria returning to any of our countries is a problem for all of our countries."
Holder called for a four-part strategy to counter the threat. The approach includes enacting statutes that allow governments to prosecute planning activities undertaken by radicalized extremists seeking to aid terrorist groups. Holder also pointed to the Federal Bureau of Investigation's undercover operations as a successful method for identifying violent extremists and disrupting their plots. He also called for more information sharing among nations about travelers to Syria, and for expanded outreach to key communities in order to prevent individuals from becoming radicalized in the first place.
"In the face of a threat so grave, we cannot afford to be passive," Holder said. "Rather, we need the benefit of investigative and prosecutorial tools that allow us to be preemptive in our approach to confronting this problem. If we wait for our nations’ citizens to travel to Syria or Iraq, to become radicalized, and to return home, it may be too late to adequately protect our national security."
The Attorney General spoke in Oslo at the U.S. ambassador's residence. The remarks followed one-on-one meetings earlier Tuesday with both the Prime Minister of Norway and the country’s Minister of Justice. In 2013, Norway amended its laws to criminalize preparatory acts to terrorism, including training for terrorism, preparation for terrorism and participation in a terrorist organization. In addition, last month the Norwegian government announced a 30-point "Action Plan Against Radicalism and Violent Extremism" that focuses on civic engagement and detection of threats. Holder praised both steps in his remarks Tuesday and said the United States looked forward to continued cooperation with Norway on these matters.
Later this week, Attorney General Holder travels to London for the Sixth Annual Meeting of the Quintet of Attorney Generals from the United States, United Kingdom, Canada, Australia and New Zealand. The issue of Syrian foreign fighters is expected to be part of those discussions as well.
A copy of the Attorney General's remarks appears below.
Thank you for those kind words – and thank you all for such a warm welcome. Ladies and gentlemen; distinguished guests; leaders and citizens – it is a pleasure to be in Norway. And it’s a great privilege to be in the beautiful city of Oslo today.
I’d like to thank the Norwegian government – and especially Prime Minister [Erna] Solberg and Minister of Justice [Anders] Anundsen, with whom I met earlier today – for their hospitality. I’d also like to recognize our Charge, Julie Furuta-Toy, and the hardworking men and women of the U.S. Embassy for bringing us together – and for all that they do, every day, to advance our shared interests.
It’s an honor to join them – and to stand with all of you – in strengthening the ties that bind our nations together; in discussing some of the most critical challenges the international community must confront; and in reaffirming our mutual commitment to the values we share, and the high ideals – of democracy, liberty, and equal justice under law – that have defined our nations’ friendship over the past two centuries.
That friendship, and those values, have deep roots. Norwegian-Americans have played an important role in the development of our country. And your citizens and values have had an impact around the world. Two hundred years ago, Norway ratified a constitution that asserted certain essential and immutable rights. Through centuries of triumph and challenge, our people and our governments have both been guided by a shared understanding that “all people are born free and equal.”
Today, Norway is a leader in extending worldwide the promise of equality and justice, through its own development work overseas, and through its support of international institutions. And Norway leads global efforts to address urgent threats – most recently in Syria, where Norwegian and American personnel are working side-by-side to rid that country of chemical weapons. Around the world, Norway is recognized as a champion of democracy and human rights. And, for decades, you’ve been leading by example.
After all, as history teaches us – and as you’ve seen here in Norway and we in the United States – progress is not inevitable. And our democratic values, our open societies – and our commitment to tolerance and inclusion – must be continuously protected against agents of intolerance, extremism, and hate.
Particularly when hatred and extremism take expression in acts of violence and terror, we must be resolute in our protection of equal rights, democracy, and the rule of law. And we must be both innovative and aggressive in combating violent extremism in all its forms.
It was just three years ago this month that Norway endured devastating attacks on the government quarter of Oslo and a Workers’ Youth League summer camp – heinous acts that shocked citizens everywhere, and earned swift condemnation and sympathy from around the world – as President Obama stated, our hearts went out to you. Horrific crimes like these are not only terrible tragedies for the individuals and the nations targeted; they test our fortitude and challenge the very foundations of who we are. Yet Norway has not faltered or changed its values – and is an example for the world in this regard as well.
Like Norway, the United States is all too familiar with domestic threats, having suffered deadly attacks on our soil – including against government buildings, places of worship, and sporting events. These attacks, like the attacks you suffered here in Norway, share a common theme: they are attacks on tolerance, in the name of violent extremist ideologies.
Under the Obama Administration, while we have acted to protect our country and our allies, we have also redoubled our commitment to civil rights and to tolerance. This is what violent extremists most fear, for their goal is to undermine open societies. At the same time, we also have joined with our international partners to ensure that there is no impunity for those who seek to commit terrorist attacks. Now, Norway, the United States, and countries around the world face a new threat – the possibility that violent extremists fighting today in Syria, Iraq, or other locations may seek to commit acts of terror tomorrow in our countries as well.
U.S. intelligence officials estimate that nearly 23,000 violent extremists are currently operating in Syria. Among these are over 7,000 foreign fighters – among whom are dozens of Americans, a number that is growing.
We have a mutual and compelling interest in developing shared strategies for confronting the influx of U.S.- and European-born violent extremists into Syria. And because our citizens can freely travel, visa-free, from the U.S. to Norway and other European states – and vice versa – the problem of fighters in Syria returning to any of our countries is a problem for all of our countries.
This is a global crisis in need of a global solution. The Syrian conflict has turned that region into a cradle of violent extremism. But the world cannot simply sit back and let it become a training ground from which our nationals can return and launch attacks. And we will not.
In the face of a threat so grave, we cannot afford to be passive. Rather, we need the benefit of investigative and prosecutorial tools that allow us to be preemptive in our approach to confronting this problem. If we wait for our nations’ citizens to travel to Syria or Iraq, to become radicalized, and to return home, it may be too late to adequately protect our national security.
That’s why we need to adopt a multilateral four-pronged strategy to combat this threat, to counter violent extremism in all its forms, and to keep our citizens safe.
The first element of our united approach must be to ensure that there are laws in our systems that enable governments to properly police that threat. In its Rabat Memorandum, the Global Counterterrorism Forum – a group of 30 countries from around the world, working in partnership with the UN – stated that “Criminalizing preparatory acts, such as conspiracy, terrorist fundraising, terrorist recruitment, planning and training, particularly when a terrorist attack has not yet been carried out, is vital in an effective criminal justice preventive approach to counterterrorism.” In this regard, the U.S. relies on a statute that criminalizes the providing of “material support to terrorist organizations.” Our material-support law, which was originally enacted in 1994 and amended after the attacks in New York on September 11, 2001, bars not only contributions of personnel, cash, weapons and other tangible aid to designated terrorist organizations, but also intangible means of support – such as training, service, and expert advice or assistance. Similarly, in 2013, Norway amended its laws to criminalize preparatory acts to terrorism, including training for terrorism, preparation for terrorism and participation in a terrorist organization Likewise, in 2012, France enacted a new statute that enables prosecutors to charge individuals with “criminal association with the intent to commit terrorist acts.” Earlier this year, French authorities sentenced the nation’s first three defendants under this new law; all three were plotting to travel to Syria. Today, I urge governments around the world to consider similar measures that criminalize the preparatory acts committed by those with terrorist plans.
The second part of our comprehensive strategy looks to ensure that we have in place law enforcement investigative tools and techniques that are both effective and protective of individual rights and the rule of law. In this regard, we have found undercover operations – which the Federal Bureau of Investigation pioneered in fighting transnational organized crime – to be essential in fighting terrorism as well. In the United States, the FBI has already conducted undercover operations that have identified individuals with intentions to travel to Syria. These operations are conducted with extraordinary care and precision, ensuring that law enforcement officials are accountable for the steps they take – and that suspects are neither entrapped nor denied legal protections. Here, too, the Global Counterterrorism Forum’s Rabat Memorandum calls for such techniques to be applied in countries around the world: one of the “good practices” it advocates is that countries “Provide a Legal Framework and Practical Measures for Undercover Investigations of Terrorist Suspects or Organizations.”
Third: in order to further our investigative capabilities, we must strengthen international cooperation, in a variety of respects. As an initial matter, we must prioritize the sharing of traveler information as a potential way to prevent would-be foreign fighters from going to Syria in the first place – and tracking those who come back. The United States is committed to doing its part in this regard. As we speak, through law enforcement agencies such as the FBI, U.S. authorities are working with Interpol to disseminate information on foreign fighters. We encourage other countries to use Interpol – and Interpol notices – to combat the foreign-fighter phenomenon. And we are actively supporting Interpol’s Fusion Cell, which focuses on information-sharing relating to foreign fighters. In fact, the U.S. has provided personnel, including FBI agents, to support this specialized office.
While we are committed to ensuring that we protect the safety of our fellow citizens, we are also committed to protecting their privacy. Alongside policymakers in Brussels, we’re also working to attain an “umbrella” data-sharing agreement between the United States and the European Union, that would strengthen the already strong protections that are presently in existence and that ensure that law enforcement information is shared effectively, and in accordance with data privacy principles. This agreement will guarantee that there will be no diminishment of the key exchanges of law enforcement information, including terrorism information, that is critical to the safety of citizens in Europe, the U.S., and around the world. And as a step to advance this endeavor, last month – in Athens – I announced a United States commitment that the Obama Administration would seek legislation to create the ability – for non-U.S. persons – to seek judicial redress for access and rectification, and for willful or intentional disclosure, of law enforcement information transferred to the United States. This is an historic commitment by the United States to extend privacy protections beyond U.S. persons in this context. It is imperative that we reach an “umbrella” agreement in this regard as soon as possible. The time for posturing has long past. It is time for nations that have long shared fundamental views about privacy to act together.
Countries must also effectively use mutual legal assistance and extradition to counter foreign fighters. Here, too, the Rabat Memorandum of the Global Counterterrorism Forum is instructive: “Because terrorism often transcends national boundaries, timely and effective international cooperation is indispensable to a criminal justice response to terrorism.” Through international mutual legal assistance, the U.S. Department of Justice has provided evidence to countries for use in prosecutions of terrorist organizations – including terrorist groups that were recruiting others to fight in Syria. We continue to assist foreign partners around the globe by acting on mutual legal assistance requests and providing evidence to support those criminal investigations and prosecutions. And we believe it’s critical that countries develop their abilities to effectively engage in mutual legal assistance – including by strengthening their central authorities – so that we can work together to counter this shared threat.
International cooperation also means working together to build the capacity of other nations, as Norway does in so many different contexts. Norwegian and U.S. Department of Justice legal advisors have worked together to build Rule of Law in Georgia and Moldova. And to enhance similar efforts on a global scale, the U.S. Department of Justice is providing capacity-building assistance to help our partners build fair and transparent justice systems that will allow their countries to confront transnational crime and terrorism, including the problem of foreign fighters. Applying the standards of the UN Counterterrorism Treaties, and the best practices of the Rabat Memorandum, our capacity-building work, and that of our foreign partners, has helped advance laws permitting police and prosecutors to more effectively investigate and prosecute suspected foreign fighters, within the Rule of Law – leading to the disruption of foreign fighters and the dismantlement of organizations that recruit would-be fighters to travel to Syria. Through ongoing programs in places such as the Balkans, Africa, and elsewhere, we continue to work with international partners to help them stem the flows of foreign fighters; to use the tools they have to more effectively impede their movements; and to assist in the investigation and prosecution of foreign fighters once captured.
Today, I challenge additional nations to step forward, as Norway has. Commit to robust, and privacy-protective, data-sharing in service of our mutual security. Pledge support for Interpol’s “Transnational Fighter Initiative.” Support mutual legal assistance and capacity building. And urge others to do their part by participating fully in these efforts – which will be effective only to the extent that they are as comprehensive as possible.
The fourth and final element of our strategy is founded on the notion that strong laws, effective investigative tools, and robust information-sharing must be matched with public engagement – and extensive community outreach. We must seek to stop individuals from becoming radicalized in the first place by putting in place strong programs to counter violent extremism in its earliest stages. In my time here in Norway, I have had the chance to learn about – and have been deeply impressed by – Norway’s Action Plan Against Radicalization and Violent Extremism.
Indeed, I have found it critical to engage in international exchanges with my counterparts regarding how we can do better on combating radicalization, and to learn from each other. I will take home with me important lessons from Norway’s experience. These lessons will help us implement our own National Strategy and Strategic Implementation Plan, which is led by the Justice Department, the FBI, the Department of Homeland Security, and the National Counterterrorism Center.
Our approach depends on building mutual trust and respect with members of communities across the country – so that we can understand their needs and concerns and to foster open dialogue with community leaders and citizens. This enables us to work with them to mitigate tensions and identify emerging threats.
At the heart of these engagement efforts in the United States are our United States Attorneys, the chief federal prosecutors in each of the jurisdictions they serve. Since 2012, our U.S. Attorneys have held or attended more than 1,700 engagement-related events. And the resulting relationships have not only served to build trust. They have also produced valuable cooperation, in some cases spurring community members to alert law enforcement about individuals who show an inclination to turn to violence.
Across the United States and in countries around the world, such counter-radicalization programs show significant promise. They serve our broader aim of fostering tolerance, inclusion, and understanding – which are themselves powerful tools against violent extremism. But ultimately, our goal must be not just to fight radicalization or apprehend dangerous individuals. At its core, this work is about forging more just and open societies – and building a more peaceful world.
That’s why it’s especially fitting that we recommit ourselves to these efforts here in Oslo – where so many of mankind’s highest ideals and aspirations have been recognized. For more than a century, this city has welcomed some of the most devoted peacemakers the world has ever known – from the Reverend Dr. Martin Luther King, Jr., who advocated for “a more noble civilization” in the midst of America’s long night of racial injustice; to Nelson Mandela, who insisted that “an injury to one is an injury to all.”
Throughout history, these pioneers of peace have called us to recognize that our capacity for courage has no limit. The struggle for human rights, civil rights, and equal justice knows no borders or boundaries. Yet their stories also remind us that, for all the progress that they have made possible, our journey still stretches beyond the horizon. And our work has no end.
You know as well as anyone that the work ahead will not be easy. None of the challenges we face are simple or straightforward. We will suffer setbacks. But so long as we remain committed to standing together, working together, and striving together – as people of courage, as leaders of conviction, and as nations of high ideals – I cannot help but feel optimistic about where our joint efforts will lead us. I thank you all, once again, for your leadership, your collaboration, and your friendship. And I look forward to everything the United States and the Kingdom of Norway will achieve together in the months and years to come.
Thank you.
Army National Guard Soldier Pleads Guilty in Connection with Bribery and Fraud SchemeRead the Press Release
A soldier of the U.S. Army National Guard pleaded guilty today for his role in a wide-ranging corruption scheme involving fraudulent recruiting bonuses from the Army National Guard Bureau.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Robert Pitman for the Western District of Texas made the announcement.
Sergeant First Class Eduardo Ruesga-Larracilla, 41, of San Antonio, Texas, pleaded guilty today to one count of conspiracy to commit bribery and wire fraud, and one count of bribery of a public official.
The case against Ruesga arises from an investigation that has led to charges against 26 individuals, 24 of whom have pleaded guilty.
According to court documents, in approximately September 2005, the National Guard Bureau entered into a contract with Document and Packaging Broker Inc. (Docupak) to administer the Guard Recruiting Assistance Program (G-RAP). The G-RAP was a recruiting program that offered monetary incentives to soldiers of the Army National Guard who referred others to join the National Guard. Through this program, a participating soldier could receive up to $2,000 in bonus payments for a referral. Based on certain milestones achieved by the referred soldier, a participating soldier would receive payment through direct deposit into the participating soldier’s designated bank account. To participate in the program, soldiers were required to create online recruiting assistant accounts.
Ruesga admitted that between approximately January 2010 and approximately October 2011, he conspired with a recruiter and paid him for the personal information of potential Army National Guard soldiers. Ruesga further admitted that, in order to obtain fraudulent bonuses, he used the personal information for these potential soldiers fraudulently to claim that he was responsible for referring these soldiers for enlistment in the National Guard.
Ruesga is scheduled to be sentenced on Oct. 9, 2014 before U.S. District Judge Orlando L. Garcia in San Antonio, Texas.
This case is being investigated by the San Antonio Fraud Resident Agency of the Army Criminal Investigation Command’s Major Procurement Fraud Unit. The case is being prosecuted by Trial Attorneys Sean F. Mulryne, Heidi Boutros Gesch, and Mark J. Cipolletti of the Criminal Division’s Public Integrity Section.Alabama Hospital Employee Pleads Guilty to Identity TheftRead the Press Release
Kamarian D. Millender, of Dothan, Alabama,pleaded guilty today to one count of aggravated identity theft , 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 announced.
According to court documents, Millenderworkedas a lab technician at a medical facility in Dothan. He and others stole patient medical records, which contained personal identification information. Millender used this information to file false tax returns in an attempt to obtain fraudulent tax refunds from the Internal Revenue Service (IRS). Millender’sactions led to the filing of more than 100 false federal tax returns, which victimized approximately 73 individuals and sought to defraud the IRS out of approximately $536,028. The IRS was successfully able to stop the vast majority of the falsely claimed refunds, however an estimated $18,915 in refunds were issued.
As a result of his plea, Millenderwill be sentenced to serve the statutory mandatory sentence of two years in prison and is subject to a maximum fine in the amount of $250,000.
This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Charles M. Edgar Jr. and Michael Boteler of the Tax Division are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at the division website .
Southern California Man Sentenced to 121 Months in Prison for Medicare Fraud and Identity TheftRead the Press Release
A Southern California man who was convicted at trial of conspiracy to commit health care fraud, six counts of health care fraud and six counts of aggravated identity theft was sentenced to serve 121 months in prison today in federal court in Los Angeles.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, Special Agent in Charge Glenn R. Ferry of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Los Angeles Region and Assistant Director in Charge Bill Lewis of the FBI’s Los Angeles Field Office made the announcement.
Vahe Tahmasian, 36, of Glendale, California, was found guilty by a federal jury on March 21, 2014, for his role in a $1.5 million Medicare fraud and identity theft scheme. In addition to his prison term of 121 months, he was sentenced to serve three years of supervised release and ordered to pay $994,036 in restitution to the Medicare program.
The evidence at trial showed that between April 2009 and February 2011, Tahmasian operated a Medicare fraud scheme at Orthomed Appliance Inc. (Orthomed), a DME supply company in West Hollywood, California. Tahmasian and his co-conspirator, Eric Mkhitarian, purchased Orthomed from the previous owners and put the company in the name of a “straw” owner. The defendant and his co-conspirator then stole the personal identifying information of Medicare beneficiaries and doctors in the company’s patient files, and used that information to submit a large volume of fraudulent claims to Medicare. The evidence showed that during a three-month period in late 2010, Tahmasian submitted more than $1.2 million in fraudulent claims to Medicare for services that were never prescribed by a physician and never provided to the Medicare beneficiaries. Tahmasian and his co-conspirator then took out more than $622,000 in cash from the company over a six-week period in early 2011. The evidence also showed that Tahmasian used a fake California driver’s license to further the fraud scheme. Tahmasian submitted a total of $1,584,640 in claims to Medicare and received approximately $994,036 on those claims.
The case was investigated by the FBI and the Los Angeles Region of HHS-OIG. The case was prosecuted by Assistant Chief Benton Curtis and Trial Attorney Alexander Porter of the Criminal Division’s Fraud Section.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,900 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .Three Defendants Sentenced in the District Court of GuamRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that three more defendants who were witnesses in the U.S. v. Mateo B. Sardoma, Jr. aka “Mat”, Rudy P.H. Sablan, Maria C. Edrosa aka “Cristina”, et al. trial were sentenced this week by Chief Judge Frances Tydingco-Gatewood, as follows:
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Defendant CORY LEE BOND, age 27, was sentenced on July 1, 2014, to a sentence of time served, and followed by three years of supervised release. Defendant BOND pleaded guilty to Conspiracy to Distribute Methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 846. Defendant BOND had assisted co-defendant Brian San Agustin in shipping methamphetamine to Guam for Defendant Mateo B. Sardoma, Jr.
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Defendant BENNY BENAVIDEZ, age 33, was sentenced on July 2, 2014, to time served and five years of supervised release. Defendant BENAVIDEZ pleaded guilty to Conspiracy to Distribute Methamphetamine in relation to the two Express Mail Packages he had received, in violation of 21 U.S.C. §§ 841 and 846.
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Defendant DEBORAH ARBES, age 49, was sentenced on July 3, 2014, to 36 months imprisonment and five years of supervised release. Defendant ARBES pleaded guilty to Conspiracy to Distribute Methamphetamine, in violation of 21 U.S.C. §§ 841 and 846. ARBES testified she was a user and sold methamphetamine on Guam. ARBES also received a shipment of methamphetamine on behalf of Defendant Mateo B. Sardoma, Jr.
U.S. Attorney Limtiaco stated, “Our community is not immune from the poison of methamphetamine. These cases illustrate the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam.” These three defendants were witnesses in the U.S. v. Mateo B. Sardoma, Jr. aka “Mat”, Rudy P.H. Sablan, Maria C. Edrosa aka “Cristina”, et al., which is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF), a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.
The investigations were conducted by Special Agents and Task Force Officers at the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the U.S. Department of Homeland Security-Homeland Security Investigations (DHS-HSI) and the Drug Enforcement Administration (DEA). The cases against Defendants BOND and BENAVIDEZ were prosecuted by Assistant U.S. Attorney Clyde Lemons. The case against Defendant ARBES was prosecuted by Assistant U.S. Attorney Fred Black.
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SunTrust Mortgage Agrees to $320 Million SettlementRead the Press Release
The Department of Justice today announced an agreement with SunTrust Mortgage Inc. that resolves a criminal investigation of SunTrust’s administration of the Home Affordable Modification Program (HAMP).
As detailed in documents filed today, SunTrust misled numerous mortgage servicing customers who sought mortgage relief through HAMP. Specifically, SunTrust made material misrepresentations and omissions to borrowers in HAMP solicitations, and failed to process HAMP applications in a timely fashion. As a result of SunTrust’s mismanagement of HAMP, thousands of homeowners who applied for a HAMP modification with SunTrust suffered serious financial harms.
SunTrust has agreed to pay $320 million to resolve the criminal investigation into SunTrust’s HAMP Program. The money is divided as follows:- Restitution – SunTrust will pay $179 million in restitution to compensate borrowers for damage caused by its mismanagement of HAMP. That money will be distributed to borrowers in eight pre-determined categories of harm. If more than $179 million is needed, the bank will also guarantee an additional $95 million for additional restitution. SunTrust will also pay $10 million in restitution directly to Fannie Mae and Freddie Mac.
- Forfeiture – SunTrust will pay $16 million in forfeiture. This money will be available to law enforcement agencies working on mortgage fraud and other matters related to the misuse of TARP funds.
- Prevention – SunTrust will pay $20 million to establish a fund for distribution to organizations providing counseling and other services to distressed homeowners. Specifically, SunTrust will pay this amount to a grant administrator selected by the government, which funds will in turn be awarded to housing counseling agencies and other non-profits devoted to consumer counseling and advocacy.
In addition to the significant payment, SunTrust has agreed to implement certain remedial measures aimed at preventing future problems like those that led to this investigation. Specifically, it will increase loss mitigation staff, monitor their mortgage modification process, and provide semi-annual reports regarding compliance with the agreement.
This settlement makes clear the Department’s commitment to supplementing its enforcement work with support for prevention programs. The grant fund established by this settlement will help distressed homeowners avoid the harms that befell SunTrust customers. This is real relief for housing agencies, which will compete for grants to increase their counseling and other services to homeowners across the country.
“Instead of helping distressed homeowners, SunTrust’s mismanagement drove up foreclosures, decimated individual credit and increased costs for hardworking men and women across our nation,” said Attorney General Eric Holder. “This resolution will provide much-needed restitution for victims. It will make available substantial funds to help other homeowners avoid foreclosure. And it will result in the kinds of systemic changes needed to ensure that this will not happen again. This outcome demonstrates yet again that the Justice Department will never waver in its ongoing pursuit of those whose reckless and willful actions harm the American people and undermine our financial markets.”
“The $320 million resolution of this long-running investigation requires SunTrust Mortgage to compensate its customers for the harm caused by the company’s false promises in administration of the Home Affordable Modification Program in 2009 and 2010 – conduct thoroughly described in the Statement of Facts that accompanies the settlement documents,” U.S. Attorney Timothy J. Heaphy said today. “Up to $284 million will be paid in restitution directly to the victims of SunTrust’s conduct. SunTrust will also establish a $20 million grant fund which will be distributed to agencies working with distressed homeowners and provide $16 million in asset forfeiture funds that will be used by law enforcement for future mortgage fraud investigations. The company has also agreed to make specific changes in its operations designed to prevent similar problems in the future.
“SunTrust has done the right thing by agreeing to this novel package of restitution, remediation, and prevention, which represents a significant victory not only for SunTrust customers, but also for Americans who will receive counseling and other assistance when faced with financial challenges,” U.S. Attorney Heaphy said. “This settlement demonstrates the commitment of the Department of Justice and the Special Inspector General for the Troubled Asset Relief Program to hold financial institutions accountable and provide restitution to those harmed by their conduct.”
“Today’s agreement with SunTrust underlines the importance of holding accountable those individuals and companies who pledge to ensure that homeowners are protected at all times; especially during times when the homeowner is seeking to save their home through a loan modification. SunTrust has conceded that their HAMP program had numerous deficiencies and has harmed a significant amount of homeowners. This behavior will not be tolerated. We are proud to have worked with our law enforcement partners on this case,” said Michael P. Stephens, Acting Inspector General of the Federal Housing Finance Agency Office of Inspector General.
“HAMP was designed to be a beacon of hope and opportunity for homeowners in dire straits, but TARP recipient SunTrust, rather than assist homeowners in need, financially ruined many through an utter dereliction of its HAMP program,” said Christy Romero, Special Inspector General for TARP (SIGTARP). “This criminal investigation uncovered that SunTrust so bungled its administration of the program, that many homeowners would have been exponentially better off having never applied through the bank in the first place. Unwilling to put resources into HAMP despite holding billions in TARP funds, SunTrust put piles of unopened homeowners’ HAMP applications in a room. SunTrust’s floor actually buckled under the sheer weight of unopened document packages. Documents and paperwork were lost. Homeowners were improperly foreclosed upon. Treasury was lied to. The negligence with which SunTrust administered its HAMP program is appalling, miserable, inexcusable, and repulsive. Real people lost their homes, and many others faced financial ruin. Ending this behavior and, where necessary, forcing institutions to change their culture through law enforcement by SIGTARP and our partners will help begin the process of restoring faith in financial institutions and healing public trust.”
The investigation of the case was conducted by the United States Attorney’s Office for the Western District of Virginia, the Office of the Special Inspector General for the Troubled Asset Relief Program, and the Office of the Inspector General for the Federal Housing Finance Agency (FHFA) and the United States Postal Inspection Service.Member and Associate of Lucchese Organized Crime Family Convicted of Racketeering and Other CrimesRead the Press Release
A member and an associate of the Lucchese organized crime family and two Texas brothers were convicted today of racketeering and other charges after a six-month trial.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney Paul J. Fishman for the District of New Jersey made the announcement.
Nicodemo S. Scarfo, 49, of Galloway, N.J., a member of the Lucchese organized crime family of La Cosa Nostra (LCN) and Salvatore Pelullo, 47, of Philadelphia, an associate of the Lucchese and Philadelphia LCN families, were convicted of all the counts against them, including racketeering conspiracy and related offenses, including securities fraud, wire fraud, mail fraud, bank fraud, extortion, money laundering and obstruction of justice. Two other defendants, William and John Maxwell, were also convicted. Co-defendants David Adler, Gary McCarthy and Donald Manno were acquitted on all counts.
“Nicodemo Scarfo, Salvatore Pellulo and their cohorts used threats of physical and economic harm to take over a publicly-traded financial firm, then callously and systematically looted the company out of millions of dollars to buy luxury items for themselves,” said Assistant Attorney General Caldwell. “As a result of today’s guilty verdict, this mafia member and his conspirators now face substantial prison sentences.”
“Today, four people stand convicted for giving new meaning to ‘corporate takeover’ – looting a publicly traded company to benefit their criminal enterprise,” U.S. AttorneyFishman said. “The defendants stole more than $12 million from shareholders through rampant self-dealing, fraudulent SEC filings and intimidation. The public should not have to worry that the interests of shareholders are being subverted to benefit organized crime or for other corrupt ends.”
The jury deliberated two weeks before delivering its verdicts following a six-month trial before U.S. District Judge Robert B. Kugler in Camden federal court. The defendants were charged in an indictment returned in 2011 by a federal grand jury in Camden. It named Nicodemo D. Scarfo (Scarfo Sr.) – Nicodemo S. Scarfo’s father and the imprisoned former boss of the Philadelphia LCN family – and Vittorio Amuso, the imprisoned boss of the Lucchese family, as conspirators.
Five other defendants – Cory Leshner, Howard Drossner, John Parisi, Todd Stark, and Scarfo’s wife, Lisa Murray-Scarfo – have previously pleaded guilty to various charges related to their roles in the criminal scheme.
According to documents filed in this case and the evidence at trial:
Scarfo is a made member of the Lucchese family, having become a member after an attempt on his life in 1989 following an internal struggle for control of the Philadelphia family. In the mid-1990s, while Scarfo Sr. and Amuso were in federal prison in Atlanta, Ga., Amuso arranged for Scarfo to become a member of the Lucchese family as a favor to Scarfo Sr. As a member of the Lucchese family, Scarfo was required to earn money and participate in the affairs of the Lucchese family.
In April 2007, Scarfo, Pelullo and others devised a scheme to take over FirstPlus Financial Group Inc. (FPFG), a publicly-held company in Texas. Scarfo and Pelullo used threats of economic harm to intimidate and remove the prior management and board of directors of replaced those officers with individuals beholden to Scarfo and Pelullo, including William Maxwell, an attorney from Houston, Texas, and his brother, John Maxwell, of Irving, Texas, who acted as the company’s CEO.
Once the takeover was completed, the figurehead board named William Maxwell as “special counsel” to FPFG, a position that he used to funnel approximately $12 million to himself, Scarfo and Pelullo through fraudulent legal services and consulting agreements. The agreements, as well as FPFG’s fraudulent acquisitions of companies controlled by Scarfo and Pelullo, were designed to mask the true identity and nature of the control exerted over FPFG and to conceal the source of the money fraudulently conveyed to Scarfo and Pelullo.
In a telephone call intercepted by law enforcement, Pelullo called Scarfo to tell him about the sudden death of a former FPFG executive. This former executive had provided information to Pelullo and Maxwell that they used to extort control of FPFG. At the time of his death, he was employed by FPFG as a member of its “compliance team.” During the conversation, Scarfo and Pelullo expressed relief regarding his death. After laughing about how he was “crushed” that “the rat is dead,” Pelullo acknowledged that the executive was “the only connection, the only tie to anything.” Scarfo replied: “Oh boy. Yeah, Sal, you wanna know something though? That’s one that I know you can’t take credit for . . . [laughter] . . . and that’s the natural best thing. You know what I mean? That is so like Enron-ish. You know what I mean? Kenneth Lay, he bailed out and took a heart attack."
Scarfo and Pelullo used their illicit gains to fund extravagant purchases, including an $850,000 yacht for both defendants, a luxury home for Scarfo, a Bentley automobile for Pelullo, and thousands of dollars in jewelry for Scarfo’s wife. As a direct result of the enterprise’s criminal activity, FPFG and its shareholders suffered a loss of at least $12 million.
Sentencing for Scarfo is scheduled for Oct. 22, 2014; for Pelullo, Oct. 21, 2014, and for both Maxwell brothers, Oct. 23, 2014.
This case was investigated by the FBI, Department of Labor Office of Inspector General, Office of Labor Racketeering and Fraud Investigations and the Bureau of Alcohol, Tobacco, Firearms and Explosives. The case was prosecuted by Trial Attorney Adam L. Small of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Steven D’Aguanno and Howard Wiener of the District of New Jersey’s Organized Crime/Gangs Unit.Former U.S. Navy Officer Pleads Guilty in International Bribery ScandalRead the Press Release
A retired Navy official who started a second career working for defense contractor Glenn Defense Marine Asia (GDMA) pleaded guilty in federal court today, admitting that he and others overcharged the Navy by up to $2.5 million for port services to American ships and then used some of the proceeds to treat Navy officials to lavish dinners, cocktails and entertainment.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy for the Southern District of California, Director Andrew L. Traver of Naval Criminal Investigative Service (NCIS) and Acting Deputy Inspector General of Investigations James R. Ives of the Department of Defense (DCIS) made the announcement.
“There is an old Navy saying: ‘Not self, but country.’ Edmond Aruffo instead put self before country when he stole from the U.S. Navy as part of a massive fraud and bribery scheme that cost the U.S. Navy more than $20 million ,” said Assistant Attorney General Caldwell.
“This corruption scandal continues to lead us in new directions, and we continue to marvel at the extent of it,” said U.S. Attorney Laura Duffy. “If there are others who, like Edmond Aruffo, have traded integrity and honesty for greed and profit, we will find them and prosecute them.”
“Retired U.S. Navy Lieutenant Commander Edmond A. Aruffo, who previously held a position of trust and responsibility conferred on him by the Navy, betrayed his former service for personal gain by rigging invoices and deserves to be held accountable for his criminal actions,” said Director Traver. “NCIS will continue to work with DCIS and the Department of Justice in vigorously investigating and prosecuting these crimes of corruption and fraud.”
“The guilty plea of Edward Aruffo is part of an ongoing effort by the DCIS and its law enforcement partners to bring to justice individuals who seek to illegally enrich themselves at the expense of U.S. taxpayers,” said Acting Deputy Inspector General Ives. “While the vast majority of DOD contractors engage in lawful business practices, a few are driven by greed to break the law. Those who do will be caught and punished. American taxpayers will accept nothing less.”
Edmond A. Aruffo, who retired in 2007 at the rank of lieutenant commander after a military career spanning more than 20 years, is the seventh defendant charged – and the fourth to plead guilty – in the expanding corruption scandal involving GDMA’s illicit relationships with Navy officials. GDMA is a Singapore-based contractor that has serviced Navy ships and submarines in the Pacific for decades.
Aruffo, who became manager of GDMA’s Japan operations in 2009, entered his plea before U.S. Magistrate Judge Karen S. Crawford of the Southern District of California to a single count of conspiracy to defraud the United States. Aruffo’s bond was set at $40,000; however, he indicated to the court he not post bond and immediate self-surrender. A sentencing hearing was scheduled for Oct. 3, 2014, at 9 a.m. before U.S. District Judge Janis L. Sammartino of the Southern District of California.
According to court documents, GDMA owner and CEO Leonard Francis enlisted the clandestine assistance of Navy personnel – including Commander Michael Vannak Khem Misiewicz, Commander Jose Luis Sanchez, NCIS Special Agent John Beliveau and Petty Officer First Class Daniel Layug – to provide classified ship schedules and other sensitive information about an ongoing criminal investigation of GDMA. Court documents also allege that Francis and his cousin, GDMA executive Alex Wisidagama, conspired to defraud the United States through a number of overbilling schemes. In total, GDMA allegedly overcharged the Navy under its contracts and submitted bogus invoices for more than $20 million. Wisidagama, Beliveau and Layug have pleaded guilty while the others are awaiting trial.
According to Aruffo’s plea agreement, Aruffo was hired by GDMA’s Francis, who is accused of bribing Navy personnel with cash, luxury travel, expensive meals, consumer electronics and prostitutes in exchange for classified and proprietary information to win contracts and favorable treatment for his company.
According to the plea agreement, Aruffo was serving as the operations officer of the USS Blue Ridge when he met Francis. GDMA was providing “husbanding” services, such as tug boats, harbor pilots, trash removal, line handlers and transportation to that ship and numerous others.
In the plea agreement, Aruffo admitted that he and others defrauded the U.S. Navy in connection with charges for port services provided to nearly every Navy ship that came to port in Japan from July 2009 to September 2010.
As part of its contract with the Navy, GDMA was required to coordinate various vendors to provide port services for the Navy ships. Those vendors were to submit invoices directly to the Navy, rather than through GDMA.
The plea agreement said that Aruffo and others obtained letterhead from the Japanese vendors and used it to prepare bogus invoices which inflated the cost for services by tens of thousands of dollars. Aruffo admitted he arranged kickbacks to GDMA from the vendors, once they were paid by the Navy.
For example, according to the plea agreement, in February of 2010 the USS Lake Erie visited the port of Sukomo, Japan. Aruffo arranged for a Japanese vendor to provide a variety of husbanding services. The vendor invoiced the Navy $145,229.77 – an amount inflated by about $50,000, which the vendor ultimately gave to GDMA as a kickback.
A few days later, Aruffo arranged for another Japanese vendor to provide such services to the USS Blue Ridge at the port of Otaru, Japan, the plea agreement said. The vendor billed the Navy in the amount of $432,476.14 and then kicked back $204,961.20 to GDMA.
The ongoing investigation is being conducted by NCIS, DCIS and the Defense Contract Audit Agency. The case is being prosecuted by Director of Procurement Fraud Catherine Votaw and Trial Attorneys Brian Young and Wade Weems of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California.
Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline , or call (800) 424-9098.Court Prohibits Mississippi Tax Preparer from Preparing Tax Returns for OthersRead the Press Release
A federal court has permanently barred Kavivah Branson, aka Kavivah Bradley, of Clinton, Mississippi, and her Jackson, Mississippi, business, Branson Tax Service, from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Branson consented, was signed by Judge Tom S. Lee of the U.S. District Court for the Southern District of Mississippi.
According to the complaint, Branson prepared federal income tax returns for customers that understated the tax actually due. The complaint also alleged that Branson claimed improper earned income tax credits and education credits for her customers without performing the required due diligence and despite the absence of any supporting documentation, leading to the understatements. These unsubstantiated credits often resulted in overstated refunds because the credits claimed on the returns were refundable. Consequently, even taxpayers who report no federal tax liability could have received a refund up to the amount of the refundable credit claimed.
According to the complaint, over 99 percent of the 2,401 returns Branson has prepared since Jan. 1, 2009, sought a refund, and 97 percent of the 287 returns the IRS audited to date understated the customer’s tax liability by an average of $5,006. Given the number of returns Branson has prepared since 2009, the harm to the U.S. Treasury caused by her practices could be in the millions of dollars.
Return preparer fraud is one of the IRS’ Dirty Dozen Tax Scams for 2014. The IRS has some tips on their website for choosing a tax preparer. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Related Materials:
United States v. Kavivah Branson, etc.
Order Entering Permanent InjunctionSeven Colombian Nationals Charged in Connection with the Murder of a DEA Agent Extradited to the United StatesRead the Press Release
Seven Colombian nationals were extradited to the United States to face charges relating to the kidnapping and murder of Drug Enforcement Administration (DEA) Special Agent James Terry Watson.
Attorney General Eric H. Holder, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Dana J. Boente for 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.
“With the extradition of these suspects, we are one step closer to ensuring that justice is served for the kidnapping and murder of an American hero,” said Attorney General Holder. “Special Agent Watson gave his life in the service of his country. We owe him, and his family, a debt of gratitude we can never fully repay. The Justice Department will never waver in our commitment to ensure that those who commit acts of violence against our best and bravest can be caught and held accountable.”
“DEA Special Agent James ‘Terry’ Watson was a brave and talented special agent who represented everything good about federal law enforcement and our DEA family,” said DEA Administrator Leonhart. “We will never forget Terry’s sacrifice on behalf of the American people during his 13 years of service, nor will DEA ever forget the outstanding work of the Colombian National Police and our other law enforcement partners. Their efforts quickly led to the arrest and extradition of those accused of committing this heinous act.”
All of the defendants were indicted by a grand jury in the Eastern District of Virginia on July 18, 2013. Gerardo Figueroa Sepulveda, 39; Omar Fabian Valdes Gualtero, 27; Edgar Javier Bello Murillo, 27; Hector Leonardo Lopez, 34; Julio Estiven Gracia Ramirez, 31; and Andrés Alvaro Oviedo-Garcia, 22, were each charged with two counts of second degree murder, one count of kidnapping and one count of conspiracy to kidnap. Oviedo-Garcia was also charged with two counts of assault. Additionally, the grand jury indicted Wilson Daniel Peralta-Bocachica, 31, also a Colombian national, for his alleged efforts to destroy evidence associated with the murder of Special Agent Watson.
The defendants arrived in the United States on July 1, 2014, and made their initial appearance in federal court in Alexandria, Virginia, today before United States Magistrate Judge Thomas Rawles Jones Jr. A detention hearing is scheduled for July 9, 2014, before United States Magistrate Judge Ivan D. Davis.
According to the indictment, Figueroa, Valdes, Bello, Lopez, Gracia and Oviedo-Garcia were part of a kidnapping and robbery conspiracy that utilized taxi cabs in Bogotá, Colombia, to lure victims into a position where they could be attacked and robbed. Once an intended victim entered a taxi cab, the driver of the taxi cab would signal other conspirators to commence the robbery and kidnapping operation.
The indictment alleges that on June 20, 2013, while he was working for the U.S. Mission in Colombia, Special Agent Watson entered a taxi cab operated by one of the defendants. Special Agent Watson was then allegedly attacked by two other defendants – one who stunned Special Agent Watson with a stun gun and another who stabbed Special Agent Watson with a knife, resulting in his death.
On July 1, 2014, the Government of Colombia extradited the defendants to the United States.
This case was investigated by the FBI, DEA and DSS, including the Office of Special Investigations and the Regional Security Office at Embassy Bogatá, 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 Stacy Luck of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Michael P. Ben’Ary from 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.
The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.Louisiana Man Pleads Guilty to Racially-Motivated Assault on Hurricane Relief WorkersRead the Press Release
Josh Jambon, 52, a resident of Grand Isle, Louisiana, pleaded guilty today in front of U.S. District Judge Susie Morgan to two counts of federal civil rights violations, announced Acting Assistant Attorney General Jocelyn Samuels for the Justice Department’s Civil Rights Division and U.S. Attorney Kenneth Allen Polite Jr. for the Eastern District of Louisiana.
In connection with his plea, Jambon admitted that he assaulted two female African-American Hurricane Isaac relief workers because of their race and because of their employment status. On Sept. 18, 2012, in Grand Isle, Jambon approached a work crew tasked with cleaning up debris from Hurricane Isaac. During an interaction with the work crew, Jambon used racial slurs against two female African-American crew members, M.R. and N.S. Jambon then approached N.S. and hit her in the face, because of her race and because of her employment with the work crew, then proceeded to assault M.R. in the same manner. When Jambon saw a third crew member, B.W., filming the incident on her cell phone, Jambon initiated a physical struggle with B.W. in an attempt to take her cell phone so that he could delete the video.
“Hate-fueled violence has no place in a civilized society,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The Justice Department is committed to using all the tools in our law enforcement arsenal to prosecute acts motivated by racial bias.”
“By holding Mr. Jambon accountable for his racially-motivated criminal conduct, our office once again demonstrates its commitment to protecting the civil rights of all residents in Southeast Louisiana,” said U.S. Attorney Kenneth Allen Polite Jr. for the Eastern District of Louisiana.
For each count, Jambon faces a statutory maximum penalty of one year in prison, up to one year of supervised release, a $100,000 fine and a $25 special assessment.
The case is being investigated by special agents of the FBI.
The case is being prosecuted by Trial Attorney Risa Berkower of the Civil Rights Division and Assistant U.S. Attorney Matt Chester for the Eastern District of Louisiana.
Alabama Tax Preparer Indicted for Stolen Identity Refund FraudRead the Press Release
Teresa Floyd, of Phenix City, Alabama, was indicted for her alleged involvement in a stolen identity refund fraud scheme, 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 announced today following the unsealing of the indictment.
Floyd has been charged with several counts of wire fraud and aggravated identity theft. According to the indictment, Floyd owned and operated a tax preparation business called T & L Tax Service that was located in Phenix City. Floyd obtained the means of identification of individuals and used those identities to file fraudulent income tax returns. In order to conceal her scheme, Floyd created fictitious identification documents and bills in the names of those individuals. The indictment also seeks to forfeit $320,397 from Floyd .
An indictment merely alleges that crimes have been committed and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Floyd faces a statutory maximum sentence of 20 years in prison for each wire fraud count and a mandatory two year sentence for the aggravated identity theft counts. Floyd is also subject to fines, forfeiture and restitution if convicted.
The case was investigated by special agents of the Internal Revenue Service - Criminal Investigation. Trial Attorney Michael Boteler of the Tax Division and Assistant U.S. Attorney Todd Brown for the Middle District of Alabama are prosecuting the case.
U.S. Postal Service Employee Pleads Guilty to Tax FraudRead the Press Release
Aaron H. Kelly, a U.S. Postal Service employee, pleaded guilty today in the U.S. District Court for the District of Maryland to aiding and assisting in filing a false tax return with the Internal Revenue Service (IRS), the Justice Department and IRS announced today. Kelly was indicted on Feb. 24, 2014, for allegedly engaging in a scheme to defraud the IRS, the Thrift Saving Plan and the Educational Systems Federal Credit Union by sending fictitious financial instruments to fraudulently extinguish the debts he owed to them, and for aiding in filing false tax returns with the IRS.
According to the plea agreement, in 2008, Kelly submitted a false individual income tax return for tax year 2006 to the IRS. On this tax return, Kelly falsely claimed that he had substantial federal income tax withheld, and fraudulently represented that he was entitled to a refund of $193,653. Sentencing is set for Feb. 2, 2015, where Kelly faces a statutory maximum sentence of three years in prison.
This case was investigated by special agents of the Treasury Inspector General for Tax Administration and IRS - Criminal Investigation. Trial Attorneys Ken Vert and Yael T. Epstein of the department’s Tax Division are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at the division website .
U.S. Files Complaint and Consent Decree Against Mira Health and Senior OfficersRead the Press Release
The United States has filed a complaint and the U.S. District Court for the Eastern District of New York has entered a consent decree against Mira Health Ltd. (Mira), its chief operating officer, Michael S. Ragno Sr., and its quality assurance manager, Michael S. Ragno Jr., all of Farmingdale, New York.
Assistant Attorney General Stuart F. Delery of the Justice Department’s Civil Division and U.S. Attorney Loretta E. Lynch of the Eastern District of New York made the announcement.
The lawsuit alleges that the defendants violated the Federal Food, Drug and Cosmetic Act (FDCA) by manufacturing and distributing dietary supplements that were adulterated. Under the FDCA dietary supplement manufacturers are required have systems in place to ensure that their products meet specifications for identity, purity, strength and composition. The government’s actions resulted from a series of inspections of Mira’s manufacturing facility, which revealed, among other things, that Mira failed to ensure that components, dietary supplements, packaging and labels were not mixed-up, contaminated or deteriorated.
In conjunction with the filing of the complaint, the defendants agreed to settle the litigation and be bound by a consent decree of permanent injunction that prohibits them from committing violations of the FDCA. The consent decree requires the dietary supplement manufacturer to cease all operations and requires that if the defendants wish to resume manufacturing dietary supplements in the future, the FDA first must determine that Mira’s manufacturing practices have come into compliance with the law. The consent decree was entered by the court today.
Mira gained national attention in July 2013 when Purity First Health Ltd, a company that sold dietary supplements manufactured by Mira, became the subject of an FDA recall. Anabolic steroids were found to be present in the Healthy Life Chemistry By Purity B-50 dietary supplement. At the time of the recall, 29 illnesses and one hospitalization had been documented.
The FDA referred this matter to the Department of Justice. The Consumer Protection Branch of the Justice Department’s Civil Division together with the U.S. Attorney’s Office for the Eastern District of New York filed this case on behalf of the United States.Related Materials:
Consent Decree
ComplaintThree Indicted in a Stolen Identity Refund Fraud RingRead the Press Release
Robert Walker, Charnesha Alexander and Ladonna Conley were indicted for their roles in a stolen identity refund fraud conspiracy, 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 announced today following the unsealing of the indictment.
According to the indictment, between January 2011 and December 2013, the defendants ran an identity theft ring. The defendants obtained stolen identities from various sources to be used in filing false tax returns, including the identities of employees from a Columbus, Georgia, company. In order to file the false tax returns, the defendants obtained several electronic filing numbers in the names of tax businesses. On behalf of those tax businesses, the defendants applied for bank products from various financial institutions, which in turn mailed blank check stock and prepaid debit cards to the defendants. The defendants caused tax refunds to be dispersed through checks and prepaid treasury cards, and either cashed the fraudulent checks at several businesses located in Alabama and Georgia or deposited them into their bank accounts.
An indictment merely alleges that crimes have been committed and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, each defendant faces a statutory maximum potential sentence of 10 years in prison for the conspiracy charge, a statutory maximum potential sentence of 20 years in prison for each wire fraud count and a mandatory two year sentence for each aggravated identity theft count. The defendants are also subject to fines, forfeiture and mandatory restitution if convicted.
The case was investigated by special agents of the Internal Revenue Service - Criminal Investigation. Trial Attorneys Michael Boteler and Charles Edgar Jr. of the Tax Division and Assistant U.S. Attorney Todd Brown for the Middle District of Alabama are prosecuting the case.
Physician Pleads Guilty for Role in Detroit-Area Medicare Fraud SchemeRead the Press Release
A Detroit-area physician pleaded guilty today for his role in a $7 million health care fraud scheme.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Special Agent in Charge Paul M. Abbate of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.
Walayat Khan, 66, of Ypsilanti, Michigan pleaded guilty before U.S. District Judge Paul D. Borman in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. Sentencing is scheduled for Oct. 7, 2014.
According to court documents, beginning in January 2009, Dr. Khan and others agreed that he would refer Medicare beneficiaries to Advance Home Health Care Services, Inc. (Advance HHC), Perfect Home Health Care Services, LLP (Perfect HHC), and other Detroit-area home health care agencies for medically unnecessary home health services. Dr. Khan signed medical documents, such as home health care certifications and plans of care for these beneficiaries, falsely certifying that they required home health care and they were under his care. Advance HHC, Perfect HHC, and other home health care agencies then used Dr. Khan’s false documents to support their claims to Medicare for home health services—including physical therapy services—that were never rendered and/or not medically necessary. Dr. Khan knew the medical documents he signed for his co-conspirators would be used to support false claims to Medicare.
Additionally, in exchange for signing the home health care documents, Dr. Khan received and accepted cash kickbacks and other forms of payment from home health agency owners, and Dr. Kahn paid kickbacks to a doctor in exchange for that doctor falsely certifying patients for home health care that would be billed to Medicare.
As further alleged in court documents, Dr. Khan used patient recruiters to recruit Medicare beneficiaries to his practice. Dr. Khan and one recruiter agreed that the recruiter would refer Medicare beneficiaries to Dr. Khan in exchange for Dr. Khan writing controlled substance prescriptions for the beneficiaries and paying cash to the recruiter. Another recruiter transported patients to Dr. Khan’s medical practice so that Dr. Khan would write the patients medically unnecessary prescriptions for controlled substances, bill Medicare for physician services purportedly provided to the patients, and refer the patients for medically unnecessary home health care services at Advance HHC, Perfect HHC, and other home health care agencies.
Dr. Khan billed Medicare and caused Medicare to be billed for medically unnecessary controlled substances, physician services, and home health services. These false and fraudulent claims to Medicare totaled approximately $6,123,044.28 in billings, of which $5,504,733.31 was paid.
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 Special Trial Attorney Katie R. Fink and Trial Attorney Patrick J. Hurford of the Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,900 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with 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 .Justice Department and Howard University to Host Program Celebrating 50th Anniversary of Civil Rights Act of 1964Read the Press Release
The Department of Justice announced today that it will be co-hosting the historic program and celebration, “The 50 th Anniversary of the Civil Rights Act of 1964: Preserving Progress, Charting the Future,” with Howard University on July 15, 2014. Signed into law by President Lyndon B. Johnson on July 2, 1964, the groundbreaking act outlawed discriminatory voting requirements and segregation in schools, employment and places of public accommodation. Attorney General Eric Holder has made protecting civil rights a top priority of his administration of the Department of Justice.
The long road to passage of the Civil Rights Act of 1964 was paved with the footsteps of countless ordinary Americans and well-known civil rights leaders who marched, held sit-ins, staged boycotts and led freedom rides to end segregation and discrimination. The call for comprehensive civil rights legislation gained momentum in 1963, as civil rights activists continued to organize peaceful demonstrations throughout the country. After hundreds of nonviolent protestors were met with police violence and arrest in Birmingham, Alabama, President John F. Kennedy delivered a nationally televised speech voicing his support for comprehensive civil rights legislation. After President Kennedy’s assassination in November 1963, President Lyndon B. Johnson made a commitment to pursue passage of civil rights legislation. And after the longest debate in senate history, the Civil Rights Act was finally passed and signed into law, becoming the first of many legislative victories over the next 50 years that have been critical tools for protecting civil rights.
The speakers and participants at the 50th anniversary program at Howard University will honor the strides that have been made in the journey for equal rights, and look to the work that remains to fully realize that promise. In addition to Howard University Interim President Dr. Wayne A.I. Frederick and the keynote address by Attorney General Holder, the program will include remarks from Secretary of Education Arne Duncan and Secretary of Labor Tom Perez, who lead two of the Department of Justice’s key government partners in enforcing the Civil Rights Act. Ambassador Andrew Young, former leader of the Southern Christian Leadership Conference will also deliver remarks. Charlayne Hunter-Gault will moderate a roundtable discussion titled “The Impact of the Civil Rights Act of 1964,” featuring civil rights movement veterans and scholars including Howard University School of Law Associate Dean for Academic Affairs Lisa A. Crooms-Robinson, Julian Bond, Joan Trumpauer Mulholland, Todd Purdum and Helen Zia. Congresswoman Eleanor Holmes Norton will deliver the event’s closing remarks.
The event will include a temporary display of original pages from the Civil Rights Act of 1964, on loan by the United States Archives. The display will be available for viewing prior to the program beginning at 9 a.m. in the lower level of Cramton Auditorium.
A limited number of tickets for the celebration are available to the public, which will also include performances by the Howard University Choir and the Gay Men’s Chorus of Washington, D.C., as well as readings and videos commemorating the act. Tickets are available, starting today, at the Cramton Auditorium Box Office on the Campus of Howard University on a first come, first served basis. Media registration details will be provided at a later date.
Justice Department Sues Los Angeles Pharmaceutical Company over Feminine Health Drug ProductsRead the Press Release
The Department of Justice today announced the filing of a civil lawsuit against Laclede Inc. and its president, Michael A. Pellico, seeking to stop the distribution of over-the-counter vaginal drug products that the company makes and sells nationwide.
The lawsuit, filed on June 25, 2014, in the United States District Court for the Central District of California, seeks a permanent injunction against the defendants for the sale and distribution of four drugs: Luvena Prebiotic Vaginal Moisturizer and Lubricant; Luvena Prebiotic Enhanced Personal Lubricant; Luvena Prebiotic Feminine Wipes; and Luvena Prebiotic Daily Therapeutic Wash (Luvena Products).
According to the allegations in the complaint, the sale and distribution of the Luvena Products, which are manufactured by the company in its Rancho Dominguez, California, facility, violate various provisions of the federal Food, Drug, and Cosmetic Act.
The Act generally prohibits the distribution into interstate commerce of any drug for which the U.S. Food and Drug Administration (FDA) has not given approval. Moreover, the Act prohibits the distribution of drugs that are misbranded, including drugs that fail to comply with FDA labeling regulations for over the counter drugs.
According to the complaint, since 2010, Laclede has sold one or more of the Luvena Products without the required FDA approval. Furthermore, the complaint charges that the company has made unapproved claims that the products treat or prevent vaginal infections, including claims that have appeared on the company’s web sites, Facebook page, and Twitter feed.
The complaint alleges that since 2010, the FDA has repeatedly warned the defendants ¯ including through letters, emails, inspections and meetings ¯ that they must obtain FDA approval before distributing one or more of the Luvena Products. Nevertheless, according to the complaint, the products were being distributed illegally as recently as March 2014.
The lawsuit was filed by the Justice Department Civil Division’s Consumer Protection Branch, in Washington, D.C., and is being handled by David A. Frank. Assistance for this matter is being provided by Yen Hoang of the FDA’s Office of Chief Counsel in Silver Spring, Maryland.Related Materials:
Complaint
Indiana Man Sentenced for Damaging Property and Equipment at Planned ParenthoodRead the Press Release
Benjamin David Curell, 28, of Ellettsville, Indiana, pleaded guilty in federal court today to one count of violating the Freedom of Access to Clinic Entrances (FACE) Act, which makes it a federal crime to damage the property of a reproductive health services facility because of the services offered there. The plea stems from an incident that occurred during the early morning hours on April 11, 2013, when Curell broke into the Bloomington, Indiana, Planned Parenthood Clinic and caused extensive damage to the clinic building and its equipment.
Curell was sentenced by Magistrate Judge Mark Dinsmore to three years probation. Curell was also ordered to pay more than $22,000 in restitution. Curell’s federal sentence is to run concurrently with a sentence he received in state court on a felony burglary charge stemming from the same incident.
At the time of his arrest, Curell admitted to police that he broke into the clinic and damaged equipment with a hatchet because the clinic performed abortion services, and because Curell wanted to shut down the clinic.
“The Justice Department will not tolerate violent interference with the lawful work of reproductive health clinics,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The Department of Justice remains committed to protecting our communities from such violent acts and will continue to aggressively prosecute these acts.”
The case was investigated by the Bloomington Resident Agency of the FBI and the Bloomington Police Department. The case was prosecuted by Trial Attorney Sanjay Patel of the Civil Rights Division and Assistant U.S. Attorney Sharon Jackson for the Southern District of Indiana.
U.S. Bank to Pay $200 Million to Resolve Alleged FHA Mortgage Lending ViolationsRead the Press Release
U.S. Bank has agreed to pay the United States $200 million to resolve allegations that it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the Federal Housing Administration (FHA) that did not meet applicable requirements, the Justice Department announced today.
“By misusing government programs designed to maintain and expand homeownership, U.S. Bank not only wasted taxpayer funds, but inflicted harm on homeowners and the housing market that lasts to this day,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “As this settlement shows, we will continue to hold accountable financial institutions that violate the law by pursuing their own financial interests at the expense of hardworking Americans.”
“U.S. Bank ignored certain lending requirements causing substantial losses to taxpayers,” said United States Attorney for the Northern District of Ohio Steven M. Dettelbach. “This settlement demonstrates that the Department of Justice will not permit lenders to play fast and loose with the rules and stick the American people with their significant tab.”
“U.S. Bank’s lax mortgage underwriting practices contributed to home foreclosures across the country,” said United States Attorney for the Eastern District of Michigan Barbara L. McQuade. “This settlement recovers funds for taxpayers and demonstrates that lenders will be held accountable for engaging in irresponsible lending practices.”
During the time period covered by the settlement, U.S. Bank participated as a direct endorsement lender (DEL) in the FHA insurance program. A DEL has the authority to originate, underwrite, and certify mortgages for FHA insurance. If a loan certified for FHA insurance later defaults, the holder of the loan may submit an insurance claim to the U.S. Department of Housing and Urban Development (HUD), FHA’s parent agency, for the losses resulting from the defaulted loan. Because FHA does not review a loan before it is endorsed for FHA insurance, FHA requires a DEL to follow program rules designed to ensure that the DEL is properly underwriting and submitting mortgages for FHA insurance.
As part of the settlement, U.S. Bank admitted that, from 2006 through 2011, it repeatedly certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements. U.S. Bank also admitted that its quality control program did not meet FHA requirements, and as a result, it failed to identify deficiencies in many of the loans it had certified for FHA insurance, failed to self-report many deficient loans to HUD, and failed to take the corrective action required under the program. U.S. Bank further acknowledged that its conduct caused FHA to insure thousands of loans that were not eligible for insurance and that the FHA suffered substantial losses when it later paid insurance claims on those loans.
“This substantial recovery on behalf of the Federal Housing Administration should serve as a vivid reminder of the potential consequences of not following HUD program rules, and the diligence with which we will pursue those that violate them, particularly where lenders such as U.S. Bank take actions to compromise the insurance fund,” said David A. Montoya, Inspector General of the Department of Housing and Urban Development.
“We are gratified that U.S. Bank has agreed to put this matter behind it, and we want to thank the Department of Justice and HUD’s Office of Inspector General for all of their efforts in helping us make this settlement a reality,” said Damon Smith, Acting General Counsel for the U.S. Department of Housing and Urban Development. “This settlement underscores our consistent message that following Federal Housing Administration rules for underwriting FHA-insured loans is a requirement, not an option.”
The agreement resolves potential violations of federal law based on U.S. Bank’s deficient origination of FHA insured mortgages. The agreement does not prevent state and federal authorities from pursuing enforcement actions for other origination conduct by U.S. Bank, or for any servicing or foreclosure conduct, including civil enforcement actions against U.S. Bank for violations of the CFPB’s new mortgage servicing rules that took effect on Jan. 10, 2014. U.S. Bank is a banking services company headquartered in Cincinnati, Ohio, and a wholly owned subsidiary of U.S. Bancorp, a bank holding company headquartered in Minneapolis, Minnesota.
The settlement was the result of a joint investigation conducted by HUD, its Office of Inspector General, the Civil Division of the Department of Justice, and the United States Attorney’s Offices for the Northern District of Ohio and the Eastern District of Michigan.
The settlement is part of enforcement efforts by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information about the task force, visit: www.stopfraud.gov .14-684
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Statement of FactsHouston Man Sentenced for Threatening to Bomb SynagogueRead the Press Release
Dante Phearse, 33, was sentenced today by U.S. District Judge Kenneth M. Hoyt to serve 33 months in prison for calling in a bomb threat to Congregation Beth Israel, a synagogue in Houston. The announcement is being made jointly by the Department of Justice’s Civil Rights Division and the U.S. Attorney’s Office for the Southern District of Texas. Phearse was further ordered to pay $13,000 in restitution and will serve three years of supervised release following completion of his prison term.
On April 28, 2014, Phearse pleaded guilty to the civil rights violation of threatening to bomb a synagogue and to making a telephone bomb threat. As part of his plea, Phearse admitted that on April 30, 2013, he willfully obstructed members of Congregation Beth Israel from enjoying the free exercise of their religious beliefs by threat of force with an explosive device. Phearse also admitted to using an instrument of interstate commerce to communicate a threat to kill and injure people and to destroy a building by means of an explosive device.
As a result of Phearse’s threats, the school at Congregation Beth Israel was closed for a day and extra security was hired to guard the synagogue and school, thus obstructing the synagogues’ members in the enjoyment of the free exercise of their religious beliefs.
The FBI investigated the case with the assistance of the Houston Police Department. Trial Attorneys Nicholas Murphy and Saeed Mody of the Civil Rights Division and Assistant U.S. Attorneys Ruben Perez and Joe Magliolo are prosecuting in cooperation with the Harris County District Attorney’s Office.
Denso Corp. Executive Agrees to Plead Guilty to Price Fixing on Automobile Parts Installed in U.S. CarsRead the Press Release
An executive of Japan-based Denso Corp. has agreed to plead guilty and to serve one year and one day in a U.S. prison in connection with the Antitrust Division’s investigation into a conspiracy to fix the prices of instrument panel clusters, also known as meters, installed in cars sold in the United States and elsewhere, the Department of Justice announced today.
A one-count felony charge was filed on June 27, 2014, in the U.S. District Court for the Eastern District of Michigan in Detroit against Satoru Horisaki, a group leader in Denso’s Utsunomiya Branch Office. According to the charge, Horisaki, a Japanese national, participated in the conspiracy from in or about 2009 to in or about February 2010, by agreeing upon bids and prices for, and allocating the supply of, automotive instrument panel clusters sold to Honda of America Manufacturing Co. Inc., in the United States and elsewhere. In addition to the prison sentence, Horisaki has agreed to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation. The plea agreement will be subject to court approval.
“This charge is the latest effort by the Antitrust Division to hold executives accountable for engaging in anticompetitive conspiracies that do real harm to the U.S. economy,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “The conspirators undermined a competitive bidding process by meeting to discuss and agree on price quotations.”
Instrument panel clusters are the mounted array of instruments and gauges housed in front of the driver of an automobile.
In March 2012, Denso pleaded guilty and was sentenced to pay a $78 million criminal fine for its role in conspiracies to fix the prices of heater control panels and electronic control units. Horisaki is the sixth Denso executive to be convicted in the Antitrust Division’s investigation into the automotive parts industry.To date, 36 individuals, including Horisaki, have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Additionally, 27 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of over $2.3 billion in fines.
Horisaki is charged with price fixing in violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The charges announced today arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI. This case was brought by the Washington Criminal I Section and the San Francisco Office of the Antitrust Division, with the assistance of the Detroit Field Office of the FBI. Anyone with information concerning the focus of this investigation should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the Detroit Field Office of the FBI at 313-965-2323.
BNP Paribas Agrees to Plead Guilty and to Pay $8.9 Billion for Illegally Processing Financial Transactions for Countries Subject to U.S. Economic SanctionsRead the Press Release
According to court documents submitted today, BNP Paribas S.A. (BNPP), a global financial institution headquartered in Paris, agreed to enter a guilty plea to conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) by processing billions of dollars of transactions through the U.S. financial system on behalf of Sudanese, Iranian, and Cuban entities subject to U.S. economic sanctions. The agreement by the French bank to plead guilty is the first time a global bank has agreed to plead guilty to large-scale, systematic violations of U.S. economic sanctions.
The announcement was made by Attorney General Eric H. Holder, Deputy Attorney General James M. Cole, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Preet Bharara for the Southern District of New York, FBI Director James B. Comey, Chief Richard Weber of the Internal Revenue Service Criminal Investigation (IRS-CI) and District Attorney Cyrus R. Vance Jr. of New York County.
“BNP Paribas went to elaborate lengths to conceal prohibited transactions, cover its tracks, and deceive U.S. authorities. These actions represent a serious breach of U.S. law,” Attorney General Holder said. “Sanctions are a key tool in protecting U.S. national security interests, but they only work if they are strictly enforced. If sanctions are to have teeth, violations must be punished. Banks thinking about conducting business in violation of U.S. sanctions should think twice because the Justice Department will not look the other way.”
“BNP ignored US sanctions laws and concealed its tracks. And when contacted by law enforcement it chose not to fully cooperate,” Deputy Attorney General Cole said. “This failure to cooperate had a real effect -- it significantly impacted the government’s ability to bring charges against responsible individuals, sanctioned entities and satellite banks. This failure together with BNP’s prolonged misconduct mandated the criminal plea and the nearly $9 billion penalty that we are announcing today.”
“By providing dollar clearing services to individuals and entities associated with Sudan, Iran, and Cuba – in clear violation of U.S. law – BNPP helped them gain illegal access to the U.S. financial system,” said Assistant Attorney General Caldwell. “In doing so, BNPP deliberately disregarded U.S. law of which it was well aware, and placed its financial network at the services of rogue nations, all to improve its bottom line. Remarkably, BNPP continued to engage in this criminal conduct even after being told by its own lawyers that what it was doing was illegal.”
“BNPP banked on never being held to account for its criminal support of countries and entities engaged in acts of terrorism and other atrocities,” said U.S. Attorney Bharara. “But that is exactly what we do today. BNPP, the world's fourth largest bank, has agreed to plead guilty and pay penalties of almost $9 billion for performing the hat trick of sanctions violations, unlawfully opening the doors of the U.S. financial markets to three sanctioned countries, Sudan, Iran, and Cuba. For years, BNPP provided access to billions of dollars to these sanctioned countries, as well as to individuals and groups specifically identified and designated by the U.S. government as being subject to sanctions. The bank did so deliberately and secretly, in ways designed to evade detection by the U.S. authorities. For its years-long and wide-ranging criminal conduct, BNPP will soon plead guilty in a federal courthouse in Manhattan.”
According to documents released publicly today, over the course of eight years, BNPP knowingly and willfully moved more than $8.8 billion through the U.S. financial system on behalf of sanctioned entities, including more than $4.3 billion in transactions involving entities that were specifically designated by the U.S. Government as being cut off from the U.S. financial system. BNPP engaged in this criminal conduct through various sophisticated schemes designed to conceal from U.S. regulators the true nature of the illicit transactions. BNPP routed illegal payments through third party financial institutions to conceal not only the involvement of the sanctioned entities but also BNPP’s role in facilitating the transactions. BNPP instructed other financial institutions not to mention the names of sanctioned entities in payments sent through the United States and removed references to sanctioned entities from payment messages to enable the funds to pass through the U.S. financial system undetected.
“The significant financial penalties imposed on BNP Paribas sends a powerful deterrent message to any company that places its profits ahead of its adherence to the law,” said FBI Director James Comey. “We will continue to work closely with our federal and state partners to ensure compliance with U.S. banking laws to promote integrity across financial institutions and to safeguard our national security.”
“Today’s outcome is a testament to U.S. efforts to stem the exploitation of the American financial system and ensure that if you chose to do business in our country you must abide by our laws,” said IRS-CI Chief Weber. “BNP Paribas will forfeit the historic figure of almost $8.9 Billion representing the proceeds of criminal activity. BNPP had many opportunities to take corrective action and abide by the law, and yet, despite warnings from American regulators and other banks, consciously chose to ignore those warnings and commit literally thousands of flagrant violations. IRS-CI, and our domestic and international law enforcement partners, will continue to pursue these cases and follow the money trail – wherever it may lead.”
“The most important values in the international community – respect for human rights, peaceful coexistence, and a world free of terror – significantly depend upon the effectiveness of international sanctions,” said District Attorney Vance. “Today’s guilty plea marks the seventh major case involving sanctions violations by a large international bank that my Office has pursued and resolved since 2009. These cases are critically important for international public safety and the security of our banking system, which is put at risk when it is used to further criminal activity. The seven investigations have revealed a series of widespread schemes to falsify the business records of financial institutions in Manhattan and have resulted in the forfeiture of approximately $12 billion in total. But, more importantly, they have resulted in a fundamental change in the way all banks conduct their business, have heightened vigilance worldwide with respect to dealing with sanctioned entities, and have increased the integrity of our Manhattan-based financial institutions.”
BNPP will waive indictment and be charged in a one-count felony criminal information, filed in federal court in the Southern District of New York, charging BNPP with knowingly and willfully conspiring to commit violations of IEEPA and TWEA, from 2004 through 2012. BNPP has agreed to plead guilty to the information, has entered into a written plea agreement, and has accepted responsibility for its criminal conduct. BNPP is scheduled to formally enter its guilty plea before United States District Judge Lorna Schofield on July 9, 2014 at 4:30 p.m.
The plea agreement, subject to approval by the court, provides that BNPP will pay total financial penalties of $8.9736 billion, including forfeiture of $8.8336 billion and a fine of $140 million.
In addition to the joint forfeiture judgment, the New York County District Attorney’s Office is also announcing today that BNPP has pleaded guilty in New York State Supreme Court to falsifying business records and conspiring to falsify business records. In addition, the Board of Governors of the Federal Reserve System is announcing that BNPP has agreed to a cease and desist order, to take certain remedial steps to ensure its compliance with U.S. law in its ongoing operations, and to pay a civil monetary penalty of $508 million. The New York State Department of Financial Services (DFS) is announcing BNPP has agreed to, among other things, terminate or separate from the bank 13 employees, including the Group Chief Operating Officer and other senior executives; suspend U.S. dollar clearing operations through its New York Branch and other affiliates for one year for business lines on which the misconduct centered; extend for two years the term of a monitorship put in place in 2013, and pay a monetary penalty to DFS of $2.2434 billion. In satisfying its criminal forfeiture penalty, BNPP will receive credit for payments it is making in connection with its resolution of these related state and regulatory matters. The Treasury Department’s Office of Foreign Assets Control has also levied a fine of $963 million, which will be satisfied by payments made to the Department of Justice.
According to documents released publicly today, including a detailed statement of facts admitted to by BNPP, BNPP has acknowledged that, from at least 2004 through 2012, it knowingly and willfully moved over $8.8 billion through the U.S. financial system on behalf of Sudanese, Iranian and Cuban sanctioned entities, in violation of U.S. economic sanctions. The majority of illegal payments were made on behalf of sanctioned entities in Sudan, which was subject to U.S. embargo based on the Sudanese government’s role in facilitating terrorism and committing human rights abuses. BNPP processed approximately $6.4 billion through the United States on behalf of Sudanese sanctioned entities from July 2006 through June 2007, including approximately $4 billion on behalf of a financial institution owned by the government of Sudan, even as internal emails showed BNPP employees expressing concern about the bank’s assisting the Sudanese government in light of its role in supporting international terrorism and committing human rights abuses during the same time period. Indeed, in March 2007, a senior compliance officer at BNPP wrote to other high-level BNPP compliance and legal employees reminding them that certain Sudanese banks with which BNPP dealt “play a pivotal part in the support of the Sudanese government which . . . has hosted Osama Bin Laden and refuses the United Nations intervention in Darfur.”
One way in which BNPP processed illegal transactions on behalf of Sudanese sanctioned entities was through a sophisticated system of “satellite banks” set up to disguise both BNPP’s and the sanctioned entities’ roles in the payments to and from financial institutions in the United States. As early as August 2005, a senior compliance officer at BNPP warned several legal, business and compliance personnel at BNPP’s subsidiary in Geneva that the satellite bank system was being used to evade U.S. sanctions: “As I understand it, we have a number of Arab Banks (nine identified) on our books that only carry out clearing transactions for Sudanese banks in dollars. . . . This practice effectively means that we are circumventing the US embargo on transactions in USD by Sudan.”
Similarly, BNPP provided Cuban sanctioned entities with access to the U.S. financial system by hiding the Cuban sanctioned entities’ involvement in payment messages. From October 2004 through early 2010, BNPP knowingly and willfully processed approximately $1.747 billion on behalf of Cuban sanctioned entities. In the statement of facts, BNPP admitted that it continued to do U.S. dollar business with Cuba long after it was clear that such business was illegal in order to preserve BNPP’s business relationships with Cuban entities. BNPP further admitted that its conduct with regard to the Cuban embargo was both “cavalier” and “criminal,” as evidenced by the bank’s 2006 decision, after certain Cuban payments were blocked when they reached the United States, to strip the wire messages for those payments of references to Cuban entities and resubmit them as a lump sum in order to conceal from U.S. regulators the bank’s longstanding, and illicit, Cuban business.
Further according to court documents, BNPP engaged in more than $650 million of transactions involving entities tied to Iran, and this conduct continued into 2012 – nearly two years after the bank had commenced an internal investigation into its sanctions compliance and had pledged to cooperate with the Government. The illicit Iranian transactions were done on behalf of BNPP clients, including a petroleum company based in Dubai that was effectively a front for an Iranian petroleum company, and an Iranian oil company.
This case was investigated by the IRS-Criminal Investigation’s Washington Field Division and FBI’s New York Field Office. This case is being prosecuted by the Money Laundering and Bank Integrity Unit of the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS), and the Money Laundering and Asset Forfeiture Unit of the U.S. Attorney’s Office for the Southern District of New York. Trial Attorneys Craig Timm and Jennifer E. Ambuehl of AFMLS and Assistant United States Attorneys Andrew D. Goldstein, Martin S. Bell, Christine I. Magdo and Micah W.J. Smith of the Southern District of New York are in charge of the prosecution.
The New York County District Attorney’s Office also conducted its own investigation alongside with the Department of Justice on this investigation. The Department of Justice expressed its gratitude to the Board of Governors of the Federal Reserve, the Federal Reserve Bank of New York, the New York State Department of Financial Services and the Treasury Department’s Office of Foreign Assets Control for their assistance with this matter.
Documents associated with this press release are available at: http://www.justice.gov/opa/bnp-paribas.htmlAhmed Abu Khatallah Indicted for Terrorist Conspiracy Stemming from September 2012 Attack in Benghazi, LibyaRead the Press Release
Ahmed Abu Khatallah, aka Ahmed Mukatallah, made his first appearance today in the U.S. District Court for the District of Columbia on a federal terrorism offense arising from his alleged participation in the Sept. 11 through 12, 2012, terrorist attacks in Benghazi, Libya, which resulted in the deaths of Ambassador J. Christopher Stevens, Sean Smith, Tyrone Woods and Glen Doherty.
Khatallah was indicted by a federal grand jury on the charge of conspiracy to provide material support and resources to terrorists, knowing and intending that these would be used in preparation for and in carrying out a killing in the course of an attack on a federal facility, and the offense resulted in death.
The investigation is ongoing and the Justice Department can bring additional charges as the case continues.
“Now that Ahmed Abu Khatallah has arrived in the United States, he will face the full weight of our justice system,” said U.S. Attorney General Eric Holder. “We will prove, beyond a reasonable doubt, the defendant’s alleged role in the attack that killed four brave Americans in Benghazi.”
“Capturing Ahmed Abu Khatallah and bringing him to the U.S. to face justice for his role in killing American citizens in Benghazi is a major step forward in our ongoing investigation,” said FBI Director James B. Comey. “Our work, however, is not over. This case remains one of our top priorities and we will continue to pursue all others who participated in this brazen attack on our citizens and our country.”
“Ahmed Abu Khatallah's capture and his appearance in court today were critical steps toward bringing him to justice for his role in the terrorist attacks on our diplomatic facilities in Benghazi,” said Assistant Attorney General for National Security John Carlin. “We will not rest in our pursuit of the others who attacked our facilities and killed the four courageous Americans who perished that day.”
“In a courtroom in our nation's capital, today we took the first step down the road to justice for the four American heroes killed in Benghazi,” said U.S. Attorney Ronald C. Machen Jr. for the District of Columbia. “This prosecution is a reflection of our determination to honor the sacrifice of U.S. citizens who perish on foreign soil in service to our country. We will be steady, deliberate and relentless in seeking to hold accountable all who were responsible for this deadly act of terror.”
“The capture and return to the United States of Ahmed Abu Khatallah should be a warning to all those who want to harm the United States,” said Assistant Director in Charge of the FBI’s New York Field Office George Venizelos. “As alleged in the indictment, Khatallah participated in September 11-12, 2012, terrorist attacks in Benghazi, Libya, which resulted in the deaths of four innocent Americans. Now he is in the United States to stand trial for his actions. The FBI will continue to pursue and bring to justice those who conduct such heinous acts no matter where they are located.”
Khatallah, a Libyan national approximately 43 years of age, was taken into custody earlier this month. He initially was charged in a criminal complaint that was filed under seal on July 15, 2013, and that became public on June 17, 2014. The Justice Department secured the defendant’s initial indictment on June 26, 2014, and the charging document was unsealed today.
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.
The case is being investigated by the FBI New York Office's 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 Columbia and the Counterterrorism Section of the Justice Department’s National Security Division.
Three Foam Manufacturers Plead Guilty in Price Fixing SchemeRead the Press Release
Three manufacturers of polyurethane foam used to create interior components for automobiles pleaded guilty today to participating in a scheme to fix prices to customers, the Department of Justice announced.
Riverside Seat Co., Woodbridge Foam Fabricating Inc. and SW Foam LLC pleaded guilty to a one-count felony charge in the U.S. District Court for the Eastern District of New York in Brooklyn. According to the charge, the companies conspired with others to fix prices for polyurethane flexible slab stock automotive foam in the U.S. and elsewhere from at least as early as June 9, 2008 until at least April 20, 2009. The companies have agreed to pay a total of $6,148,800 in criminal fines and to cooperate with the department’s ongoing investigation.
“Today’s charges demonstrate the Antitrust Division’s commitment to holding companies accountable for conspiracies that affect components used in products that consumers rely on every day,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division will vigorously prosecute companies that engage in price-fixing schemes that subvert normal competitive processes and defraud American consumers and businesses.”Riverside Seat, Woodbridge, and SW Foam manufactured polyurethane flexible slab stock automotive foam – a low-density, slab stock, flexible foam used as a component of automotive interior parts, including seats, headliners, headrests, door panels and armrests. Polyurethane flexible slab stock automotive foam includes only the foam itself and does not include any automotive parts in which such foam may be a component.
According to the charge, the companies and their co-conspirators discussed polyurethane foam prices and agreed to coordinate the timing and amount of price increases to customers. The companies carried out the agreement and exchanged information for the purpose of monitoring and enforcing adherence to the agreement.
The three manufacturers are charged with price fixing in violation of the Sherman Act, which carries maximum penalties of a $100 million criminal fine for corporations. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Today’s pleas are the result of an ongoing federal antitrust investigation being handled by the Antitrust Division’s New York Office, with assistance from the Cleveland Field Office of the FBI and the New York Field Office of the FBI. Anyone with information concerning price fixing or other anticompetitive conduct in the polyurethane foam industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.html.Patient Recruiter Pleads Guilty for Role in $6.5 Million Health Care Fraud Scheme<br />Read the Press Release
A patient recruiter for a Miami home health care agency pleaded guilty today in connection with a health care fraud scheme involving defunct home health care company Nestor’s Health Services Inc. (Nestor HH). The owner and operator of Nestor HH pleaded guilty to charges related to the scheme earlier this month.
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 Ryan Lynch of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office made the announcement.
On June 27, 2014, Euridice Borroto, 45, of Miami, Florida, pleaded guilty before U.S. Magistrate Judge Jonathan Goodman in the Southern District of Florida to one count of conspiracy to solicit and receive health care kickbacks and to defraud the United States. Sentencing is scheduled for Aug. 25, 2014.
According to court documents, Borroto was paid bribes and kickbacks for recruiting patients on behalf of Nestor HH, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries. The owner and operator of Nestor HH operated Nestor HH for the purpose of billing the Medicare Program for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided.
According to court documents, Borroto solicited and received kickbacks and bribes from the owner and operator of Nestor HH in return for recruiting and providing patients to Nestor HH for home health care and therapy services that were medically unnecessary and, in many instances, were not provided. Nestor HH would then fraudulently bill the Medicare program for home health care services on behalf of the recruited patients, in violation of federal criminal laws. Borroto knew that in many instances the patients she recruited for Nestor HH did not qualify for the services billed to Medicare.
From approximately March 2009 through at least January 2014, Nestor HH submitted more than $6.5 million in claims for home health services. Medicare paid Nestor HH more than $6.1 million for these fraudulent claims before the fraud was exposed.
In documents filed with the court, Borroto also acknowledged her involvement in similar fraudulent schemes at other Miami health care agencies.
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 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 Team (HEAT), go to: www.stopmedicarefraud.gov.Former Bail Bondsman Indicted in Stolen Identity Tax Refund Fraud SchemeRead the Press Release
Roderick Neal, of Dothan, Alabama, was indicted for stolen identity refund fraud crimes, 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 announced today following the unsealing of the indictment. Neal was charged with conspiracy, wire fraud and aggravated identity theft.
According to the indictment, Neal worked as a bail bondsman in Dothan, and stole personal identifying information. Neal provided this information to another individual who, in turn, provided the stolen identities to Ivory Bolen, and she used those identities to file fraudulent tax returns with the Internal Revenue Service (IRS) claiming refunds.
An indictment merely alleges that crimes have been committed and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Neal faces a statutory maximum sentence of 10 years in prison for conspiracy, a statutory maximum sentence of 20 years in prison for each wire fraud count and a mandatory sentence of two years in prison for the aggravated identity theft counts.
This case was investigated by special agents of the IRS - Criminal Investigation. Trial Attorneys Charles Edgar and Jason Poole of the Tax Division are prosecuting the case with the assistance of the U.S. Attorney’s Office for the Middle District of Alabama, in particular Assistant U.S. Attorney Todd Brown.
Former Army Soldier Sentenced to Life in Prison for Murder of His Five Year Old DaughterRead the Press Release
Army Soldier Naeem Williams, 34, will receive a life sentence for murdering his five-year-old daughter, Talia Williams, after a federal jury in Honolulu, Hawaii, reported today it was unable to reach a unanimous decision on whether to impose the death penalty.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and United States Attorney Florence T. Nakakuni of the District of Hawaii made the announcement.
The jury previously found Williams guilty of killing his daughter on July 16, 2005, by engaging in child abuse that included beating and punching her at the family’s residence on Wheeler Army Airfield in Honolulu. Williams was also convicted of participating, along with his wife, Delilah Williams, in a pattern and practice of assault and torture from December, 2004, until July 16, 2005, that resulted in Talia’s death. In addition, Williams was convicted of conspiring to engage in a pattern and practice of assault and torture leading to death, obstructing justice, and making false statements to Army Criminal Investigation Division agents on the night of his arrest in July 2005.The evidence presented at trial demonstrated that Naeem Williams and his wife Delilah Williams beat Talia Williams almost daily. Naeem Williams testified that the abuse was aimed at disciplining his daughter as a result of bathroom accidents and was exacerbated due to frustrations he was experiencing in his marriage. The evidence indicated the defendant’s physical abuse included punching Talia repeatedly, commanding her to eat her own feces, and using duct tape to bind her from head to toe to a bed post where she was whipped with a belt. In the hours preceding Talia’s death, Williams struck a frontal blow to Talia and her head slammed backwards against the floor. Talia then appeared to have a seizure.
This case was investigated by the FBI and the Army Criminal Investigation Division. The case was prosecuted by Trial Attorney Steve Mellin from the Capital Case Section of the Justice Department’s Criminal Division and Assistant U.S. Attorney Darren Ching.
Department of Justice and Office of the Director of National Intelligence Announce Declassification of Renewal of Collection Under Section 501 of the Foreign Intelligence Surveillance ActRead the Press Release
WASHINGTON- The Department of Justice and the Office of the Director of National Intelligence (DNI) released the following statement Friday:
“On March 28, 2014, the Director of National Intelligence declassified and disclosed publically that the U.S. government had filed an application with the Foreign Intelligence Surveillance Court (FISC) seeking renewal of the authority to collect telephony metadata in bulk, and that, on March 28, 2014, the FISC renewed that authority. The DNI also announced that the Administration was undertaking a declassification review of the FISC’s March 28th Primary Order.
“On June 20, 2014, the DNI declassified and publically disclosed that the U.S. government had filed an application with the FISC seeking renewal of the authority granted in March to collect telephony metadata in bulk, and that, on June 19, 2014, the FISC renewed that authority. The DNI also announced that the Administration was undertaking a declassification review of the FISC’s June 19th Primary Order and an accompanying Memorandum Opinion.
“Following a declassification review by the Executive Branch, the DNI has released in redacted form the March 28, 2014 Primary Order, signed by Judge Rosemary M. Collyer. Separately, following a declassification review by the Executive Branch, the FISC published in redacted form the June 19, 2014 Primary Order and an accompanying Memorandum Opinion, signed by Judge James B. Zagel, re-authorizing the collection of bulk telephony metadata under Section 215. The most recent authorization expires on September 12, 2014. These Primary Orders and Memorandum Opinion re-affirm that the bulk telephony metadata collection is lawful.
“The June 19, 2014 Primary Order and Memorandum Opinion are available at the FISC’s website, www.uscourts.gov. The March 28, 2014 Primary Order along with the July 19, 2014 Primary Order and accompanying Memorandum Opinion are available at the website of the Department of Justice, www.justice.gov; the website of the Office of the Director of National Intelligence, www.dni.gov; and ODNI’s public website dedicated to fostering greater public visibility into the intelligence activities of the Government, IContheRecord.tumblr.com.”
Defendants Sentenced in the District Court of GuamRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that five defendants who were witnesses in the U.S. v. Mateo B. Sardoma, Jr. aka “Mat”, Rudy P.H. Sablan, Maric C. Edrosa aka “Cristina”, et al. trial were sentenced this week by Chief Judge Frances Tydingco-Gatewood, as follows:
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Defendant JOSEPH MALLO, age 34, was sentenced on June 24, 2014, to 33 months incarceration, followed by three years of supervised release. Defendant MALLO pled guilty to Felon in Possession of Firearms, in violation of 18 U.S.C. § 922(g)(1). MALLO testified he was a user of methamphetamine that he had obtained from Defendant Rudy Sablan.
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Defendant JERRICK UNCHANGCO, age 33, was sentenced on June 24, 1014, to time served of one year, 11 months and 29 days, and to three years supervised release. Defendant UNCHANGCO pled guilty to Felon in Possession of Firearms, in violation of 18 U.S.C. § 922(g)(1). UNCHANGCO testified he was a user of methamphetamine that he had obtained from Defendant Rudy Sablan.
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Defendant ROMMEL WHITING, age 44, was sentenced on June 25, 2014, to time served, followed by three years of supervised release. Defendant WHITING imported methamphetamine in violation of 21 U.S.C. §§ 841 and 846. WHITING testified he was a user of methamphetamine that he had obtained from Defendant Rudy Sablan.
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Defendant ELIZABETH AGUON, age 56, was sentenced on June 25, 2014, to two years imprisonment and five years supervised release. Defendant AGUON pled guilty to conspiracy to distribute methamphetamine, in violation of 21 U.S.C. §§ 841 and 846. AGUON testified she was a user of methamphetamine that she had obtained from Defendant Rudy Sablan.
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Defendant JOSEPH CABALLERO, age 47, was sentenced on June 26, 2014, to two years imprisonment followed by five years of supervised release. Defendant CABELLERO pled guilty to conspiracy to distribute, in violation of 21 U.S.C. §§ 841(a)(1) and 846. CABELLERO testified he performed odd jobs for Defendant Mateo B. Sardoma, Jr., and that he was a user of methamphetamine and distributed less than one gram of methamphetamine.
U.S. Attorney Limtiaco stated, “Our community is not immune from the poison of methamphetamine. These cases illustrate the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam.” These five defendants were witnesses in the U.S. v. Mateo B. Sardoma, Jr. aka “Mat”, Rudy P.H. Sablan, Maric C. Edrosa aka “Cristina”, et al., which is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, (OCDETF) a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.
The investigations were conducted by Special Agents and Task Force Officers at the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the U.S. Department of Homeland Security-Homeland Security Investigations (DHS-HSI) and the Drug Enforcement Administration (DEA). The cases against Defendants UNCHANGCO and WHITING were prosecuted by Assistant U.S. Attorney Rosetta San Nicolas. The cases against Defendants MALLO, AGUON and CABELLERO were prosecuted by Assistant U.S. Attorney Fred Black.
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California Woman Pleads Guilty to Conspiracy to Defraud Internal Revenue Service and Wire FraudRead the Press Release
Kathryn Darlene Coryell, a Fresno, California, resident, pleaded guilty yesterday to conspiracy to defraud the Internal Revenue Service (IRS) and wire fraud, announced Deputy Assistant Attorney General Ronald A. Cimino for the Justice Department’s Tax Division and U.S. Attorney Melinda Haag for the Northern District of California.
According to the plea agreement, beginning around Feb. 28, 2008, and continuing through April 16, 2012, Coryell and her co-conspirator Noemi Baez participated in a scheme to obtain and help others to obtain payment of false claims for refunds from the IRS by electronically filing false federal income tax returns in their own names and in the names of others. Using the names and Social Security numbers of multiple individuals, Coryell and Baez created false income information and filed with the IRS materially false tax returns claiming refunds derived from tax credits, including the Earned Income Credit, the Additional Child Tax Credit and the Making Work Pay Credit. Coryell and Baez filed more than 150 false and fraudulent claims, with false claims totaling more than $400,000. Baez pleaded guilty to conspiracy and aggravated identity theft and was sentenced on Feb. 6, 2014, to serve 30 months in prison.
At time of her sentencing on Oct. 23, 2014, before U.S. District Judge D. Lowell Jensen, Coryell faces a maximum sentence of 30 years in prison, three years of supervised release and a fine of $500,000 or twice the gain or loss resulting from her offense, whichever is greater.
Deputy Assistant Attorney General Cimino and U.S. Attorney Haag commended the efforts of the special agents of IRS – Criminal Investigation, who investigated the case, and Trial Attorneys Charles O’Reilly, Erin S. Mellen and Sonia M. Owens of the Tax Division, who are prosecuting the case.
Justice Department and State of Texas Require Martin Marietta to Divest a Quarry and Two Rail Yards to Proceed with Acquisition of Texas Industries<br />Read the Press Release
The Department of Justice announced today that it will require Martin Marietta Materials Inc. to divest one Oklahoma quarry and two Texas rail yards in order to proceed with its proposed $2.7 billion acquisition of Texas Industries Inc. The department said that, without the divestiture, the proposed acquisition likely would result in higher prices for purchasers of aggregate – crushed stone produced at quarries or mines – in parts of the Dallas metropolitan area.
The department's Antitrust Division and the state of Texas filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed transaction. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the department's competitive concerns alleged in the lawsuit.
"Today’s proposed settlement will help ensure that aggregate purchasers in parts of the Dallas metropolitan area will continue to receive the benefits of vigorous competition," said Bill Baer, Assistant Attorney General in charge of the department's Antitrust Division. “Without the divestiture obtained by the Antitrust Division, customers would have likely faced higher prices as a result of this acquisition."
Aggregate is used in a variety of applications, such as road construction, and for the production of ready mix concrete and asphalt.
The department said that the proposed merger would have likely resulted in increased prices for customers handling Texas Department of Transportation projects in parts of the Dallas metropolitan area. The Texas Department of Transportation – like many other state Departments of Transportation – sets specifications for the type of aggregate approved for use in those projects. In Dallas County and parts of the surrounding area, Martin Marietta and Texas Industries are two of the only three suppliers of Texas Department of Transportation-approved aggregate.
Under the terms of the proposed consent decree, Martin Marietta must divest its North Troy aggregate quarry in Mill Creek, Oklahoma, its rail yard in Dallas, and its rail yard in Frisco, Texas. All of these assets predominantly serve parts of the Dallas metropolitan area. Under the proposed settlement, the department's Antitrust Division must approve the buyer of the divested assets.
Martin Marietta Materials Inc. is incorporated in North Carolina with its headquarters in Raleigh, North Carolina. Martin Marietta produces, distributes and/or markets aggregate for the construction industry in 29 states and it produces aggregate in Nova Scotia, Canada, and the Bahamas for distribution and sale at numerous terminals and yards along the East Coast of the United States. In 2013, Martin Marietta had net sales of $2.1 billion.
Texas Industries Inc. is incorporated in Delaware with its headquarters in Dallas. Texas Industries produces, distributes and/or markets aggregate in five states – Texas, Oklahoma, Louisiana, Arkansas and California. Texas Industries also produces asphalt concrete, ready mix concrete and cement. In 2013, Texas Industries had net sales of $800 million.
As required by the Tunney Act, the proposed consent decree, along with the department's competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed decree during a 60-day comment period to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 8700, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.
Alaska Attorney Pleads Guilty to Failing to File Income Tax ReturnsRead the Press Release
Paul D. Stockler pleaded guilty today in the U.S. District Court in Anchorage, Alaska, to three counts of willful failure to file income tax returns, the Justice Department and Internal Revenue Service (IRS) announced.
According to the plea agreement, Stockler is an attorney who operated a law practice in Anchorage. For tax years 2006, 2008 and 2009, he earned gross income in excess of the filing threshold, but failed to file U.S. individual income tax returns reporting this income to the IRS. Stockler faces a statutory maximum sentence of one year in prison, one year of supervised release, and a fine of up to $100,000 for each count of willful failure to file an income tax return.
The case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Kevin F. Sweeney and Katherine Wong of the Justice Department’s Tax Division are prosecuting the case.
Nation’s Largest Nursing Home Pharmacy Company to Pay $124 Million to Settle Allegations Involving False Billings to Federal Health Care ProgramsRead the Press Release
Omnicare Inc., the nation’s largest provider of pharmaceuticals and pharmacy services to nursing homes, has agreed to pay $124.24 million for allegedly offering improper financial incentives to skilled nursing facilities in return for their continued selection of Omnicare to supply drugs to elderly Medicare and Medicaid beneficiaries, the Justice Department announced today . Omnicare is headquartered in Cincinnati, Ohio.
“Health care providers who seek to profit from providing illegal financial benefits will be held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Schemes such as this one undermine the health care system and take advantage of elderly nursing home residents.”
“Omnicare provided improper discounts in return for the opportunity to provide medication to Medicare and Medicaid beneficiaries,” said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio. “Nursing homes should select their pharmacy provider based on the best quality, service and cost to the residents, not based on improper discounts to the nursing facility.”
The settlement resolves allegations that Omnicare submitted false claims by entering into below-cost contracts to supply prescription medication and other pharmaceutical drugs to skilled nursing facilities and their resident patients to induce the facilities to select Omnicare as their pharmacy provider. The facilities were participating providers under agreements with Medicare and Medicaid. In addition to the facilities’ own claims for reimbursement from Medicare for short-term rehabilitation treatment rendered to patients, Omnicare submitted additional claims for reimbursement to Medicare and Medicaid for drugs Omnicare supplied. Of the $124.24 million to be paid by Omnicare, $8.24 million will go to various states which jointly funded the Medicaid programs impacted by Omnicare’s conduct.
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs. The Anti-Kickback Statute is intended to ensure that the selection of health care providers and suppliers is not compromised by improper financial incentives and is instead based on the best interests of the patient.
The settlement resolves allegations brought in two lawsuits filed by whistleblowers under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. The first whistleblower, Donald Gale, a former Omnicare employee, will receive $ 17.24 million.
The settlement with Omnicare was the result of a coordinated effort by the U.S. Attorney’s Office for the Northern District of Ohio, the Commercial Litigation Branch of the Justice Department’s Civil Division, the Department of Health and Human Services Office of Inspector General, and the National Association of Medicaid Fraud Control Units.
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 Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius. 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 $19.5 billion through False Claims Act cases, with more than $13.9 billion of that amount recovered in cases involving fraud against federal health care programs.
The claims resolved by this settlement are allegations only, and there has been no determination of liability.Former Jenkens & Gilchrist Attorney Sentenced to 15 Years in Prison for Orchestrating Multibillion Dollar Criminal Tax Fraud SchemeRead the Press Release
Deputy Assistant Attorney General Ronald A. Cimino for the Tax Division of the Department of Justice and U.S. Attorney Preet Bharara for the Southern District of New York announced that Paul M. Daugerdas, 63, a tax attorney and certified public accountant, was sentenced today in Manhattan federal court to serve 15 years in prison for orchestrating a massive fraudulent tax shelter scheme in which he and his co-conspirators designed, marketed and implemented fraudulent tax shelters used by wealthy individuals to evade over $1.6 billion in taxes owed to the Internal Revenue Service (IRS). The 20-year scheme, which Daugerdas hatched while working at the Arthur Andersen accounting firm and then continued while a partner at two law firms – Altheimer & Gray and then Jenkens & Gilchrist (J&G) – generated over $7 billion in fraudulent tax losses and yielded approximately $95 million in fees to Daugerdas personally. In October 2013, Daugerdas was convicted following a seven-week jury trial, presided over by U.S. District Judge William H. Pauley III, who also imposed today’s sentence.
“Paul Daugerdas used his legal and accounting expertise to cheat the system and unlawfully deprive the government of over $1.6 billion of tax revenue,” said U.S. Attorney Bharara. “With today’s sentence, Daugerdas’s giant tax fraud scheme has reached its just conclusion under the law, with a sentence of 15 years in prison.”
“Dishonest professionals who market tax fraud schemes to their clients need to sit up and take note of today’s sentence,” said Deputy Assistant Attorney General Cimino. “The Justice Department and IRS are committed to holding responsible those who would misuse their skills and expertise to help others to evade their lawful tax obligations.”
According to the evidence at trial and other documents filed in the case:
From 1994 through 2004, Daugerdas, who is a lawyer, a certified public accountant, and the former head of the Chicago office of J&G and its tax practice, participated in a scheme to defraud the IRS by designing, marketing, implementing and defending fraudulent tax shelters.
As part of the scheme, Daugerdas and others plotted to defraud the IRS by, among other things, corruptly endeavoring to prevent the IRS from: detecting their clients’ use of these shelters; understanding how the transactions operated to produce the tax results reported by the clients; learning that, rather than serving as legitimate investment transactions, the tax shelters lacked economic substance in that they were designed and marketed as cookie-cutter products intended exclusively to eliminate or reduce large tax liabilities; learning that the clients were not seeking profit-making investment opportunities, but were instead seeking huge tax benefits; and learning that, from the outset, all of the clients intended to complete a pre-planned series of steps that had been designed to lead to the specific tax benefits they sought. Daugerdas and others created and assisted in creating transactional documents and other materials that falsely and fraudulently described their clients’ motivations for entering into the tax shelters and for taking various steps in order to yield the tax benefits.
As part of the scheme, Daugerdas and his co-conspirators also fraudulently backdated some of the tax shelter transactions. In particular, Daugerdas and his co-defendants learned that certain tax shelter transactions had been implemented incorrectly during the year of the transactions in that they failed to produce the amount or type of tax losses requested by the clients. Rather than reporting those tax shelter results as they occurred – as required by the Internal Revenue Code – Daugerdas and others engaged in corrupt “correcting” transactions after the close of the pertinent tax years, and then backdated the tax shelter documents to make it appear that the amount and type of tax losses sought by the clients had in fact been generated during the pertinent tax years. Daugerdas also authored fraudulent tax opinion letters that falsely described when certain aspects of the transactions had actually occurred. As a result of the fraudulent backdating, Daugerdas and others caused tax shelter clients to file tax returns that falsely and fraudulently claimed tens of millions of dollars of tax losses to which the clients were not entitled.
As a result of the scheme, Daugerdas and his co-conspirators made millions of dollars in fees and bonuses. Daugerdas himself made $95 million in profits but used tax shelters to reduce the taxes he paid to less than $8,000; without the shelters, he would have owed over $32 million in taxes.
Daugerdas, of Wilmette, Illinois, was convicted of conspiring to defraud the IRS, to evade taxes, and to commit mail and wire fraud, and of corruptly endeavoring to obstruct and impede the internal revenue laws. He was also convicted of four counts of tax evasion relating to the use of various tax shelters for specified clients, and of mail fraud.
In addition to the prison term, Judge Pauley ordered Daugerdas to forfeit $164,737,500 in proceeds of the offenses, which included certain assets that had been seized and frozen at the time Daugerdas was indicted. The forfeited proceeds include a lakefront home on Lake Geneva in Wisconsin, and over $20 million in various securities and financial accounts. Judge Pauley also ordered Daugerdas to pay $371,006,397 in restitution to the IRS. At sentencing, Judge Pauley said that Daugerdas “was at the apex of tax shelter racketeers who tapped into the greed of the super wealthy who did not want to pay taxes.”
In connection with this scheme, David Parse, a former broker at Deutsche Bank, was convicted of various tax fraud charges in May 2011 after an 11-week jury trial, and was sentenced in March 2013 to serve 46 months in prison. Donna Guerin, a former lawyer at J&G’s Chicago tax practice, pleaded guilty in September 2012 to various tax fraud charges related to her role in the scheme. She was sentenced in March 2013 to serve eight years in prison.
Former J&G partner Erwin Mayer, former BDO Seidman vice chairman and board member Charles W. Bee Jr., former BDO principal and former member of BDO Seidman’s TSG and Tax Opinion Committee Michael Kerekes, former BDO Seidman vice chairman and TSG member Adrian Dicker, BDO Seidman partner Robert Greisman, and BDO Seidman partner Mark Bloom have all previously been convicted in connection with this scheme.
This case is being prosecuted by the U.S. Attorney’s Office for the Southern District of New York’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Stanley J. Okula Jr. and Niketh Velamoor for the Southern District of New York and Assistant Chief Nanette L. Davis of the Tax Division are in charge of the prosecution.
Criticizing Wisconsin’s Voter Id Statute, Attorney General Holder Pledges Aggressive Enforcement of Remaining Parts of Voting Rights ActRead the Press Release
WASHINGTON—On the one-year anniversary of the Supreme Court decision that struck down a key part of the Voting Rights Act, Attorney General Eric Holder pledged Wednesday that the Justice Department would remain aggressive in using Section 2 of the law—which was left intact by the Court’s decision—to guard against unjust voting restrictions.
Section 2, which prohibits barriers to voting that disadvantage minority groups, provided the basis for the department’s lawsuits last year against voting laws in North Carolina and Texas. It also formed the basis for a recent challenge to a voter ID statue in Wisconsin. In April, a federal district court sided with the plaintiffs in that case, declaring that the Wisconsin law violated both the equal protection clause of the Constitution and Section 2 of the Voting Rights Act.
Holder joined in criticizing the Wisconsin law in his message Wednesday.
“The Wisconsin law erected significant barriers to equal access without serving any legitimate government interest,” Holder said.
“It’s clear that discriminatory voting laws, rules, and regulations are not confined to any particular region. And thanks to Section 2 of the Voting Rights Act, neither are our enforcement efforts,” he added.
A full copy of the Attorney General’s video message appears below.
“One year ago today, in the case of Shelby County, a narrowly split but deeply divided U.S. Supreme Court struck down a key part of the historic Voting Rights Act of 1965.
“This was a deeply flawed decision – and it effectively invalidated a cornerstone of American civil rights law.
“In the nearly five decades leading up to that ruling, a critical provision of the Voting Rights Act known as Section 5 – which enjoyed consistent support from Members of Congress and presidents of both parties – provided the Justice Department with a rigorous tool to fight unjust attempts to abridge voting rights.
“It required certain jurisdictions with histories of discrimination to seek “preclearance,” from the Department or a federal court, before new voting changes could take effect – so these proposals could be subjected to fair and thorough review.
“This empowered the Justice Department to protect the right of every American to cast a ballot – unencumbered by discriminatory rules, regulations, and procedures that, intentionally or not, discourage and disenfranchise.
“Indeed, not long before the Shelby County decision, a federal judge considering the Department’s objection to South Carolina’s voter ID law noted the ‘continuing utility’ of preclearance ‘in deterring problematic, and hence encouraging non-discriminatory, changes in state and local voting laws.’
“When the Shelby decision effectively denied us this tool, the Department’s Civil Rights Division shifted resources to the enforcement of other protections that remain on the books – including Section 2 of the Voting Rights Act, which prohibits barriers to voting that disadvantage minority groups.
“During the past year, we filed Section 2 challenges to specific laws in North Carolina and Texas that could disproportionately restrict access to the ballot box for minority citizens.
“Section 2 also provides a valuable tool to individual voters who seek to protect their voting rights.“In April, a federal district court in Wisconsin ruled that Wisconsin’s unnecessarily restrictive voter-ID law, which disproportionately impacted the state’s African-American and Latino voters, violated both the equal protection clause of the Constitution and Section 2 of the Voting Rights Act.
“The Wisconsin law erected significant barriers to equal access without serving any legitimate government interest – because, as the judge found, and I quote, “The defendants could not point to a single instance of known voter impersonation occurring in Wisconsin at any time in the recent past.”
“By restricting access and decreasing voter participation, laws such as those in Wisconsin would shrink – rather than expand – access to the franchise.
“This is inconsistent not only with our history, but with our ideals as a nation – a nation founded on the principle that all citizens are entitled to equal opportunity, equal representation, and equal rights.
“And that’s why, across this country, the Department of Justice will continue to take aggressive steps to stand against disenfranchisement wherever it exists – and in whatever form.
“It’s clear that discriminatory voting laws, rules, and regulations are not confined to any particular region. And thanks to Section 2 of the Voting Rights Act, neither are our enforcement efforts.
“We will not simply stand by as the voices of many citizens are shut out of the process of self-governance.
“And in the days ahead, we will continue to work with Congressional leaders to fill the void left by the Supreme Court’s ruling – and use every available tool to safeguard the most basic right of American citizenship.”
The video message is viewable online here: http://www.justice.gov/agwa.php
California Operators of Myredbook.com Website Arrested for Facilitating Prostitution and Money LaunderingRead the Press Release
Eric Omuro, of Mountain View, California, a.k.a “Red,” was arrested today following his indictment by a federal grand jury on charges involving the use of the mail and the Internet to facilitate prostitution, and multiple counts of money laundering. Annemarie Lanoce, 40, of Rocklin, California, was also indicted and arrested today for use of the mail and the Internet to facilitate prostitution.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Melinda Haag of the Northern District of California, Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office, and Special Agent in Charge José M. Martinez of the San Francisco Office of the Internal Revenue Service, Criminal Investigation made the announcement.
As part of today’s operation, the FBI seized the domain names sfredbook.com and myRedBook.com, which were allegedly operated by Omuro, with Lanoce’s assistance to facilitate prostitution in the San Francisco Bay Area and throughout the West Coast region of the United States.
According to information available on the publically accessible website as of the date of its seizure by the FBI, myRedbook.com purported to provide “Escort, Massage, and Strip Club Reviews.” Instead, however, the websites were used to host advertisements for prostitutes, complete with explicit photos, lewd physical descriptions, menus of sexual services, hourly and nightly rates, and customer reviews of the prostitutes’ services. The websites used acronyms for numerous sex acts, which were defined in graphic detail in the websites’ “Terms and Acronyms” section. Although the websites could be accessed for free, myRedBook.com advertised fees for premier placement of prostitution advertisements and for “VIP Memberships,” which purportedly allowed customers access to “private forums” and heightened capabilities to search reviews of the prostitution services.
Omuro, 53, who allegedly used numerous aliases, also engaged in money transfers to move myredbook.com revenue into bank accounts which he controlled. According to the Indictment, Omuro engaged in more than twenty monetary transactions to launder the profits derived from the facilitation of prostitution. The Indictment seeks the forfeiture of more than $5 million in property and money derived from the facilitation of prostitution, as well as the Internet domain names myredbook.com and sfredbook.com .
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’s San Francisco Field Office, the IRS, and the Oakland Police Department. The case is being prosecuted by Trial Attorney Keith Becker of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorneys Elise Becker and Patricia Kenney of the Northern District of California. The Criminal Division’s Office of International Affairs provided assistance to the prosecution.Attorney General Holder Pledges Support for Legislation to Provide E.U. Citizens with Judicial Redress in Cases of Wrongful Disclosure of Their Personal Data Transferred to the U.S. for Law Enforcement PurposesRead the Press Release
Attorney General Eric Holder announced today that the Obama administration, as part of successfully concluding negotiations on the E.U.-U.S. Data Protection and Privacy Agreement (DPPA), would seek to work with Congress to enact legislation that would provide E.U. citizens with the right to seek redress in U.S. courts if personal data shared with U.S. authorities by their home countries for law enforcement purposes under the proposed agreement is subsequently intentionally or willfully disclosed, to the same extent that U.S. citizens could seek judicial redress in U.S. courts for such disclosures of their own law enforcement information under the Privacy Act.
The Attorney General has been co-chairing the E.U./U.S. Justice and Home Affairs Ministerial in Athens, Greece. The agenda of the Ministerial is to advance E.U.-U.S cooperation against transnational crime and terrorism, with particular emphasis on foreign fighters traveling to and from Syria.
As part of that law enforcement cooperation, the Ministerial also discussed the ongoing negotiation of an "umbrella" DPAA, which would cover the exchange of law enforcement information between the E.U. and the U.S. The DPPA is an outgrowth of an initiative begun during the Bush Administration, and carried forward during the Obama Administration, to establish an enhanced commitment to share information transatlantically to fight crime and terrorism, while also protecting privacy.
In order to advance the DPPA negotiations, Attorney General Holder stated at the Ministerial that the Obama Administration is committed to seeking legislation that would ensure that, with regard to personal information transferred within the scope of the proposed DPPA, E.U. citizens would have the same right to seek judicial redress for intentional or willful disclosures of protected information, and for refusal to grant access or to rectify any errors in that information, as would a U.S. citizen under the Privacy Act.
“In a world of globalized crime and terrorism, we can protect our citizens only if we work together internationally, including through sharing law enforcement information with and by E.U. Member States and other close allies,” Attorney General Holder said. “At the same time, we must ensure that we continue our long tradition of protecting privacy in the law enforcement context. The step we are announcing today will help advance both goals.”
A copy of Holder’s full statement, as delivered in Athens, appears below:
“At the outset, I would like to thank our Greek hosts -- Minister Athanassiou and Minister Kikilias -- for their superb hospitality. And I would like to congratulate them on the highly successful Greek Presidency of the EU.
“Today, we have had the opportunity to discuss the wide range of justice and home affairs issues that bind together the EU, its Member States and the United States, in a common effort to protect all of our citizens. We have talked today about how we can increase our cooperation on countering violent extremism, and on responding to the critical issue of "Foreign Fighters" -- citizens from our countries, and other countries around the world, who are traveling to Syria to join terrorist groups, and who may return as trained and hardened terrorists. We discussed joint strategies for countering transnational crime, including trafficking in firearms and wildlife; and we talked about protecting victims of crime, as well as persons with disabilities. We dealt with the ever-increasing threat of cybercrime -- and announced that the United States would carry forward the important initiative begun by Commissioner Malmstrom, the Global Alliance Against Child Sexual Abuse Online.
“One consistent theme ran through all our discussions: in a world of globalized crime and terrorism, we can protect our citizens only if we work together, including through sharing law enforcement information. At the same time, we must ensure that we continue our long tradition of protecting privacy in the law enforcement context. We already have many mechanisms in place to do this, and we have -- on both sides of the Atlantic – an outstanding record of protecting the privacy of law enforcement information. But we can always do more, and for that reason, the EU and the United States have undertaken to negotiate an "umbrella" Data Protection and Privacy Agreement Regarding Police and Judicial Cooperation -- the DPPA.
“Vice President Reding and her Directorate have been our key partners in this endeavor. While I am sorry that other commitments made it impossible for Vice President Reding to be present today, I did want to state publicly my agreement with her view that we are close to concluding the Data Protection and Privacy Agreement.
“Indeed, I believe we should be able to finish this negotiation soon, since the remaining issues -- those regarding the legal framework for the transfer and use of information -- have already been addressed in our existing agreements, including our EU/U.S. Mutual Legal Assistance agreement and our bilateral treaties with all of the Member States thereunder. These prior agreements have been proven, through actual experience, to provide a high level of protection both for the safety of all our citizens and for their privacy, and we should incorporate their principles into the DPPA.
“Moreover, we should move forward quickly here to conclude our negotiations, since our DPPA negotiators have already reached agreement on additional, and comprehensive, administrative privacy protections that will come into effect when the DPPA enters into force. And today, I am happy to announce that, in support of our desire to bring the DPPA negotiations to conclusion, the Obama Administration is committed to seeking legislation that would ensure that, with regard to personal information transferred within the scope of our proposed DPPA Regarding Police and Judicial Cooperation, EU citizens would have the same right to seek judicial redress for intentional or willful disclosures of protected information, and for refusal to grant access or to rectify any errors in that information, as would a U.S. citizen under the Privacy Act.
“This commitment -- which has long been sought by the EU -- reflects our resolve to move forward not only on the DPPA itself, but on strengthening transatlantic ties.
“The work we do together is vital. Thank you again to our Greek hosts, to the Commission, and to the incoming Italian Presidency.”
Texas Man Pleads Guilty to Rhino and Ivory Smuggling ConspiracyRead the Press Release
Ning Qiu, a resident of Frisco, Texas, and an appraiser of Asian art, pleaded guilty today in federal court to participating in an illegal wildlife smuggling conspiracy in which rhinoceros horns and objects made from rhino horn and elephant ivory worth nearly $1 million were smuggled from the United States to China.
The guilty plea was announced by Sam Hirsch, the Acting Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice, John Malcolm Bales, U.S. Attorney for the Eastern District of Texas, and Dan Ashe, Director of the U.S. Fish and Wildlife Service (USFWS).
Qiu, 43, who has worked as an Asian antique appraiser for seven years, pleaded guilty today before U.S. Magistrate Judge Don D. Bush in Plano, Texas, to a one count information charging him with conspiracy to smuggle and violate the Lacey Act.
Qiu was identified as part of “Operation Crash” – a nationwide effort led by the USFWS and the Justice Department to investigate and prosecute those involved in the black market trade of rhinoceros horns and other protected species.
According to documents filed in federal court, Qiu admitted to acting as one of the three antique dealers in the United States paid by Zhifei Li, the admitted “boss” of the conspiracy, to help obtain wildlife items and smuggle them to Li via Hong Kong. Li was sentenced on May 27, 2014, in federal district court in Newark, New Jersey, to serve 70 months in prison for his leadership role in the smuggling conspiracy. Li arranged financing, negotiated the price and paid for rhino horn and elephant ivory. He also gave instructions on how to smuggle the items out of the United States and obtained the assistance of additional collaborators in Hong Kong to receive the smuggled goods and then smuggle them to him in mainland China.
“This is yet another step toward dismantling a sophisticated and global network of criminals whose greed is driving endangered animals to extinction,” said Acting Assistant Attorney General Hirsch. “We will continue to investigate and bring to justice those involved in the illicit trade of the world’s wildlife and will work with our international partners to battle the poaching, corruption, and transnational crime that goes along with it.”
“I am pleased that the Eastern District of Texas could be a part of the ‘Operation Crash’ investigation as well as the guilty plea today, and I congratulate the investigative team for a job well done,” said U.S. Attorney Bales. “The criminal activity undertaken by the defendant in this case is a stark reminder that this matter is not about serving Asian cultural and medicinal practices; it’s about greed, organized crime and the depletion of a species that – without our focused efforts to fight this trade – may not be around for our children to see.”
“This guilty plea by another participant in one of the largest criminal trafficking rings we’ve ever investigated – as well as the unprecedented jail time given to the rings’ leader last month – serves notice to other poachers and smugglers that we are clamping down hard on those who break international wildlife laws,” said U.S. Fish and Wildlife Service Director Ashe. “Working with the Department of Justice and other federal and international law enforcement agencies, we will continue to relentlessly pursue criminals whose greed and indifference to life are fueling the continued slaughter of rhinos and other vulnerable species in the wild.”
The rhinoceros is an herbivorous species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. All species of rhinoceros are protected under U.S. and international law. Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by more than 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets.
In pleading guilty, Qiu admitted that he worked at an auction house in Dallas as an appraiser of Asian artwork and antiques, specializing in carvings made from rhinoceros horn and elephant ivory. Qiu admitted to meeting Li in 2009 through his work at the auction house, and then entering into a conspiracy with Li whereby Qiu traveled throughout the U.S. to purchase raw and carved rhinoceros horns and elephant ivory for Li, often receiving specific instructions from Li on which items to buy and how much to pay. Upon purchasing the items, Li transferred funds directly into Qiu’s bank accounts in the U.S. and China. After acquiring the items for Li, Qiu arranged for them to be smuggled to a location in Hong Kong, which was provided by Li.
As part of his plea, Li admitted that he sold raw rhinoceros horns worth approximately $3 million – approximately $17,500 per pound – to factories in China where the horns are carved into fake antiques known as zuo jiu (which means “to make it as old” in Mandarin). In China, there is a centuries-old tradition of drinking from intricately carved “libation cups” made from rhinoceros horn. Owning or drinking from such a cup is believed by some to bring good health, and true antiques are highly prized by collectors. The escalating value of such items has resulted in an increased demand for rhinoceros horn that has helped fuel a thriving black market, including recently carved fake antiques. The leftover pieces from the carving process were sold for alleged “medicinal” purposes even though rhino horn is made of compressed keratin, the same material in human hair and nails and has no proven medical value.
Between 2009 and 2013, Qiu purchased and smuggled to Hong Kong at least five raw rhinoceros horns weighing at least 20 pounds. Qiu smuggled the raw rhino horns by first wrapping them in duct tape, hiding them in porcelain vases and falsely describing them on customs and shipping documents, including by labeling them as porcelain vases or handicrafts.
As part of the plea agreement, having considered Qiu’s cooperation and assistance in securing a conviction for Li, the government agrees to recommend to the sentencing judge that Qiu serve a 25-month prison sentence and pay a $150,000 fine. Sentencing will be before District Court Judge Richard Schell on a date to be determined by the court.
The investigation is continuing and is being handled by the U.S. Fish & Wildlife Service’s Office of Law Enforcement, the U.S. Attorney’s Office for the Eastern District of Texas and the Justice Department’s Environmental Crimes Section. The government is represented by Assistant U.S. Attorney James Noble of the Eastern District of Texas and Trial Attorney Gary N. Donner of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.New Jersey School District to Adopt Service Animal Policies and Pay Fine to Resolve Justice Department InvestigationRead the Press Release
The Justice Department announced today that it reached a settlement with the Delran Township School District in New Jersey under Title II of the Americans with Disabilities Act (ADA). The agreement resolves allegations that the school district violated the ADA by refusing to allow a student with autism and encephalopathy to have his service dog in school or at school-related activities. The service dog alerts to the student’s seizures, provides mobility and body support and mitigates the symptoms of his autism.
The department found that the student’s mother spent six months responding to burdensome requests for information and documentation, and still the school district refused to allow the student to be accompanied by his service dog. Despite her efforts, the student was even prevented from bringing his service dog with him on the bus for his school’s end of the year field trip. Instead, his mother followed the school bus with the service dog in her car.
Title II of the ADA prohibits discrimination on the basis of disability in public schools. Under the ADA, public schools must generally modify policies, practices or procedures to permit the use of a service dog by a student with a disability at school and school-related activities. Because service dogs must be under the control of a handler, students often act as the handler of their own service dog; when that is not possible, the family may provide an independent handler, as the family offered to do here.
The school district worked cooperatively with the department throughout the investigation. Under the agreement, the school district will pay $10,000 to the family to compensate them for the harm they endured as a result of the school district’s actions. In addition, the school district will adopt an ADA-compliant service animal policy and provide training to designated staff on the school district’s obligations under Title II of the ADA, including requirements related to service dogs.
“ The old view of service animals working only as guide dogs for individuals who are blind has given way to a new generation of service animals trained to perform tasks that further autonomy and independence for individuals with a myriad of disabilities , ” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The Civil Rights Division will vigorously enforce the ADA to ensure that students who use service animals have a full and equal opportunity to participate in all school activities with their peers.”
Enforcing the ADA is a top priority of the Civil Rights Division. Those interested in finding out more about this settlement or the obligations of public entities schools under the ADA may call the department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access the ADA website . ADA complaints may be filed by email to [email protected] .
The Civil Rights Division would like to thank the U.S. Attorney’s Office for the District of New Jersey for their assistance in this matter.
Former Louisiana State Corrections Official Pleads Guilty to Civil Rights ViolationsRead the Press Release
Acting Assistant Attorney General Jocelyn Samuels for the Justice Department’s Civil Rights Division and U.S. Attorney Walt Green for the Middle District of Louisiana announced today that a third former state corrections official has pleaded guilty to civil rights violations related to the beating of an inmate at the Louisiana State Penitentiary in Angola, Louisiana.
Mark Sharp, 33, of Amite, Louisiana, pleaded guilty today to one count of deprivation of rights under color of law and one count of making a false statement to the FBI.
Sharp’s charges were based on his conduct while employed as a captain at the Louisiana State Penitentiary. According to the factual basis filed in court in connection with his guilty plea, on Jan. 24, 2010, Sharp joined in a search to apprehend an inmate who had escaped from his assigned location. After the inmate was captured, Sharp and two other officers – Kevin Groom and C.B. – were ordered to escort the inmate, who was handcuffed behind his back, to the prison’s medical unit. The three officers got into the bed of a truck with the inmate. Sharp admitted that, during the drive to the medical unit, he repeatedly struck the inmate with a police baton. Sharp also saw C.B. kick the inmate in his head and shoulder area. Sharp then lied to the FBI during the federal civil rights investigation of the beating.
Two other former state corrections officials have been charged and convicted in connection with the attack on the inmate. Kevin Groom and Jason Giroir have both been charged and pleaded guilty to falsifying records in a federal investigation and making false statements to the FBI. Groom and Giroir await sentencing.
Sharp faces a statutory maximum sentence of 15 years in prison, a fine up to $500,000 and up to three years of supervised release following his prison term.
This matter is being handled by the the Civil Rights Division, the U.S. Attorney’s Office for the Middle District of Louisiana and the FBI. It is being prosecuted by Trial Attorney AeJean (Angie) Cha of the Civil Rights Division and Assistant U.S. Attorney Robert W. Piedrahita for the Middle District of Louisiana.
Former Chesapeake, Virginia Subcontractor Sentenced for Conspiracy to Commit BriberyRead the Press Release
Roderic J. Smith, 50, the co-founder and former president of a government contracting company, was sentenced yesterday to 48 months in prison, followed by one year of supervised release, for conspiracy to bribe public officials. Smith was ordered to forfeit $175,000.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Dana J. Boente, for the Eastern District of Virginia, Special Agent in Charge Robert Craig of the Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office, Acting Executive Assistant Director Charles T. May, Jr., of the Naval Criminal Investigative Service (NCIS) Atlantic Operations, and Special Agent in Charge Royce E. Curtin of the FBI’s Norfolk Field Office made the announcement today after sentencing by United States District Judge Henry Coke Morgan, Jr. of the Eastern District of Virginia.
On March 5, 2014, Smith pleaded guilty to a criminal information. According to court documents, Smith was the co-founder and president of a contracting company located in Chesapeake, Virginia, that sought contracting business from the United States Navy Military Sealift Command. In approximately November 2004, Smith joined an extensive bribery conspiracy that spanned four years, involved multiple co-conspirators, including two different companies, and resulted in the payment of more than $265,000 in cash bribes, among other things of value, to two public officials performing work for the Military Sealift Command, Kenny E. Toy and Scott B. Miserendino, Sr. In exchange for the bribe payments, Smith’s business, referred to as Company A in court documents, received lucrative business from the Military Sealift Command that amounted to approximately $3 million in task orders during the time period of the conspiracy.
As part of his guilty plea, Smith also admitted to engaging in a scheme to conceal his criminal activity. According to the plea agreement, Smith admitted to paying more than $85,000 to his business partner, Dwayne A. Hardman, in an attempt to prevent Hardman from reporting the bribery scheme to law enforcement authorities.
Earlier this year, four other individuals pleaded guilty in connection with the bribery scheme. On Feb. 12, 2014, Kenny Toy, the former Afloat Programs Manager for the Military Sealift Command’s N6 Command, Control, Communication, and Computer Systems Directorate, pleaded guilty to accepting bribes from Smith and others. On Feb. 18, 2014, Smith’s business partner, Dwayne A. Hardman, pleaded guilty to bribery. On Feb. 19, 2014 and April 4, 2014, respectively, Smith’s associate, Michael P. McPhail, and another Smith associate, Adam C. White, pleaded guilty to conspiracy to commit bribery.
On May 23, 2014, a grand jury in the Eastern District of Virginia indicted two individuals in connection with the bribery scheme, Scott B. Miserendino, Sr., a former government contractor who performed work for the Military Sealift Command, and Timothy S. Miller, a businessman whose company sought contracting business from the Military Sealift Command. The indictment charges Miserendino with one count of conspiracy to commit bribery, one count of bribery, one count of conspiracy to obstruct a criminal investigation and to tamper with a witness, and one count of obstruction of a criminal investigation. The indictment charges Miller with one count of conspiracy to commit bribery and two counts of bribery. The trial on these charges is scheduled to begin on Sept. 30, 2014, before Chief Judge Rebecca Beach Smith. The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case was investigated by the FBI, NCIS and DCIS. The case was prosecuted by Trial Attorney Emily Rae Woods of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Stephen W. Haynie of the U.S. Attorney’s Office for the Eastern District of Virginia.Three Former Georgia Correctional Officers Convicted for Offenses Related to Beating of Inmate and Ensuing Cover-UpRead the Press Release
The Justice Department announced that Christopher Hall, a former sergeant for the Correctional Emergency Response Team (CERT) at Macon State Prison (MSP) in Oglethorpe, Georgia, and two former CERT officers, Ronald Lach and Delton Rushin, were convicted on Friday night by a federal jury on federal offenses related to the beating of an MSP inmate in 2010 and the cover-up that followed. Three other defendants, James Hinton, Derrick Wimbush and Tyler Griffin, were acquitted of related charges.
Ronald Lach was one of several MSP officers who participated in a retaliatory beating against an inmate as their form of punishment for the inmate’s prior misconduct. Lach was convicted of violating the inmate’s rights, conspiring to obstruct justice after the assault and obstruction of justice. Hall and Rushin were convicted of conspiring to obstruct justice and obstruction of justice.
In related cases, five former MSP officers have pleaded guilty to various charges in connection with a series of beatings of inmates in 2010 at Macon State Prison, and the cover-up that followed.
“Eight former corrections officials from Macon State Prison now stand convicted for their involvement in beating inmates and in the coordinated cover-ups that followed each assault,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “These officers betrayed the public trust by using their official positions to commit violent civil rights abuses and then tried to cover up their crimes. The Department of Justice will continue to prosecute vigorously corrections officers who use their power to violate federal law.”
These cases were investigated by the Macon Resident Agency of the FBI, with the support of the Georgia Bureau of Investigation. The cases were prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Tona Boyd for the Civil Rights Division, with the assistance of the U.S. Attorney’s Office in Macon.
Owner of Home Health Company Pleads Guilty to Role in $6.5 Million Health Care Fraud SchemeRead the Press Release
The owner and operator of Nestor’s Health Services, Inc. (Nestor HH), a now-defunct Miami home health care agency, pleaded guilty today in connection with a $6.5 million health care fraud scheme.
Acting 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 Brian Martens of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office made the announcement.
Cruz Sonia Collado64, of Homestead, Florida, pleaded guiltybefore U.S. District Judge Robert N. Scola in the Southern District of Florida to one count of conspiracy to offer and pay health care kickbacks and to defraud the United States, and to one count of offering and paying health care kickbacks.
Collado was an owner and operator of Nestor HH, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.
According to court documents, Collado and her co-conspirators operated Nestor HH for the purpose of billing Medicare for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided. As the owner and operator of Nestor HH, Collado paid kickbacks and bribes to patient recruiters, in return for those recruiters providing patients to Nestor HH for home health care and therapy services that were not medically necessary, and in many instances, were not provided. Collado would then fraudulently bill the Medicare program for home health care services on behalf of these recruited patients, which Collado knew was in violation of federal criminal laws.
From approximately March 2009 through at least January 2014, Nestor HH submitted more than $6.5 million in claims for home health services, and fraudulently obtained more than $6.1 million before the fraud was exposed.
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 1,900 defendants who have collectively billed the Medicare program for more than $6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, has removed over 17,000 providers from the Medicare program since 2011.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .
Massachusetts Man Pleads Guilty to Computer Hacking and Credit Card TheftRead the Press Release
A Massachusetts man pleaded guilty today to hacking into computer networks around the country – including networks belonging to law enforcement agencies, a local police department and a local college – to obtain highly sensitive law enforcement data and alter academic records. He also pleaded guilty to obtaining stolen credit, debit and payment card numbers.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Carmen M. Ortiz of the District of Massachusetts, Special Agent in Charge Vincent Lisi of the FBI’s Boston Division and Colonel Timothy P. Alben of the Massachusetts State Police made the announcement.
On June 2, 2014, Cameron Lacroix, 25, of New Bedford, Massachusetts, was charged by a criminal information with two counts of computer intrusion and one count of access device fraud. Lacroix entered his guilty plea today before U.S. District Court Judge Mark Wolf of the District of Massachusetts. He pleaded guilty to both counts in the information and agreed to serve a four-year prison sentence.
According to the plea agreement, b etween May 2011 and May 2013, Lacroix obtained and possessed payment card data for more than 14,000 unique account holders. For some of these account holders, Lacroix also obtained other personally identifiable information, including the account holders’ full names, addresses, dates of birth, social security numbers, email addresses, bank account and routing numbers and lists of merchandise the account holders had ordered.
Lacroix also admitted to hacking into a computer server operated by a local Massachusetts police department in September 2012, and then accessing an e-mail account belonging to its chief of police. Additionally, Lacroix admitted to repeatedly hacking into law enforcement computer servers containing sensitive information including police reports, arrest warrants, and sex offender information, between August 2012 and November 2012. Lacroix also admitted to using stolen credentials to access and change information in the servers of Bristol Community College on multiple occasions between September 2012 and December 2013.
Judge Wolf set Lacroix’s sentencing for Oct. 27, 2014.
The case was investigated by the FBI Boston Division Cyber Task Force. The case is being prosecuted by Senior Trial Attorney Mona Sedky from the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Adam Bookbinder of the District of Massachusetts. The Department of Justice and the U.S. Attorney’s Office would like to thank Bristol Community College for its cooperation during this investigation.Former Union Official Pleads Guilty to Embezzling More Than $190,000 in FundsRead the Press Release
JC Stamps, a former union official, pleaded guilty today to embezzling more than $190,000 from two labor organizations he founded and an employee benefit plan.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Ronald C. Machen Jr. for the District of Columbia andSpecial Agent in Charge Bill Jones of the U.S. Department of Labor’s Office of Inspector General - Office of Labor Racketeering and Fraud Investigations Washington Region made the announcement.
Stamps, 67, of Upper Marlboro, Maryland, pleaded guilty to one count of theft from an employee benefit plan. The Honorable Chief Judge Richard W. Roberts of the District Court for the District of Columbia scheduled sentencing for Sept. 17, 2014. Stamps has also agreed to pay $194,611 in restitution and is subject to a forfeiture money judgment in the amount of $84,745.
Stamps, a retired detective from the Metropolitan Police Department (MPD), founded two labor organizations based in Washington, D.C.: the National Union of Protective Services Associations, which represented private security guards, and the National Union of Law Enforcement Associations, which represented police officers. In addition, he founded a security guard firm, Stamps Associates, which also was based in Washington, D.C.
According to court documents, between 2004 and 2008, Stamps devised a scheme to defraud and embezzle money in several ways from the unions and the National Union of Protective Services and Employers Health and Welfare Fund (Health and Welfare Fund), an employee benefit plan for which Stamps was a trustee.
In 2007 and 2008, for example, Stamps used money from the Health and Welfare Fund’s bank account to pay American Express for a total of $48,541 in credit card charges for personal purchases and union expenses. None of these charges were related to the administration and operation of the Health and Welfare Fund. Instead, they paid for personal expenses, such as hotel stays, furniture, men’s fragrances, clothing, other retail purchases and online services, and for union expenses, including hotel rental charges (for a holiday party) and automobile rentals.
Also, according to court documents, from 2006 to 2008, Stamps caused the withdrawal of $36,203 from the Health and Welfare Fund’s bank account to pay an attorney for legal expenses incurred by the unions – and not for the fund’s intended purpose.
In addition to the theft and embezzlement from the Health and Welfare Fund, Stamps stole and embezzled at least $109,866 from the unions from 2004 to 2008. According to court documents, more than half of this money was used to cover debts of Stamps Associates, Stamps’ security guard company. Other money was used for personal expenses and fraudulent salary payments for Stamps’ close personal friend, who is identified as “Person A” in court documents. “Person A” was nominally the sole owner of Stamps Associates, although Stamps controlled the company.
The case was investigated by the Department of Labor’s Office of Inspector General and Office of Labor Management Standards and Employee Benefits Security Administration. The case was prosecuted by Trial Attorney Kelly Pearson of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Ellen Chubin Epstein of the U.S. Attorney’s Office for the District of Columbia.District Court Enters Permanent Injunction Against California-Based Firm and Individuals to Prevent Distribution of Adulterated Dietary SupplementsRead the Press Release
The Justice Department announced today that U.S. District Court Judge Otis D. Wright II of the Central District of California entered a consent decree of permanent injunction against GM Manufacturing Inc. (GMM) and Mao L. Yang, Mary Chen and David Yang on Friday, June 20, 2014, to prevent the distribution of adulterated dietary supplements.
“Adulterated dietary supplements may pose a significant risk to the public health,” said Stuart F. Delery, Assistant Attorney General for the Department of Justice’s Civil Division. “The Department of Justice is committed to protecting the public from dietary supplements that are not manufactured in conformity with current good manufacturing practices as required by law.”
According to the complaint filed by the United States on June 2, 2014, GMM manufactured, labeled, prepared, packed, held and distributed dietary supplements from its facility in Gardena, California. As alleged in the complaint, in spections by the Food and Drug Administration (FDA) established that the dietary supplements manufactured and distributed by the defendants were adulterated, in that they were prepared, packed and held under conditions that do not comply with the current good manufacturing practice regulations for dietary supplements. For example, during an inspection in 2013, FDA observed that defendants failed to maintain, clean and sanitize, as necessary, equipment, utensils and other contact surfaces used to manufacture, package, label or hold components or dietary supplements.
As part of the permanent injunction, the defendants agreed to stop manufacturing, preparing and distributing dietary supplements. The defendants agreed to provide 90 days’ notice to FDA before seeking to resume operations. If the defendants seek to resume dietary supplement operations, they are required to comply with a series of remedial measures, including retaining an expert to inspect the company’s facility and provide a certification that all manufacturing deficiencies have been corrected. Also, the defendants must report to FDA all actions they have taken to correct the deviations. The defendants are not allowed to resume operations until FDA has re-inspected their facility and operations, and provided written notice to them.
According to the complaint, the defendants’ facility was inspected by FDA in 2012 and 2013. During the 2013 inspection, the FDA observed significant violations of the Federal Food, Drug, and Cosmetics Act and implementing regulations, including violations that were the same or similar to those observed during the 2012 inspection. Following the 2012 inspection, FDA issued a warning letter to Mao Yang informing him that the significant deviations documented by FDA during the 2012 inspection rendered defendants’ dietary supplements adulterated under the law. The warning letter from FDA cautioned that failure to promptly correct the deviations, and prevent future ones, could lead to additional regulatory action, including an injunction.
Despite the inspections and warning letter from FDA, the defendants continued to manufacture and distribute adulterated dietary supplements in violation of the law.
The permanent injunction entered by the district court requires the defendants to recall all dietary supplements that the defendants manufactured, prepared, processed, packed, labeled, held, and/or distributed at any time since Feb. 13, 2012. Defendants are then required to destroy all dietary supplements in their possession, custody and/or control.
Assistant Attorney General Delery thanked the FDA for referring this matter to the Department of Justice. Trial Attorney Lauren Fascett of the Civil Division’s Consumer Protection Branch, in conjunction with Assistant U.S. Attorney Brian Villarreal in the Central District of California and Associate Chief Counsel Leslie Cohen of the Office of General Counsel, Enforcement of the Food and Drug Division, Department of Health and Human Services, brought this case on behalf of the United States.Attorney General Holder Vows Justice Department Will Continue to Look at Banks That Help Payment Processors Carry out Consumer Scams, Says More Cases to Be Resolved SoonRead the Press Release
Attorney General Eric Holder on Monday said that the Justice Department will continue to investigate financial institutions that knowingly facilitate consumer scams, or that willfully look the other way in processing such fraudulent transactions. He acknowledged that multiple investigations were ongoing in this area, and said he expected several of those cases to be resolved in the coming months.
The department resolved the first such case in April, when Four Oaks of Bank of North Carolina agreed to pay penalties and a forfeiture for knowingly processing fraudulent transactions on behalf of a pyramid scheme. The Attorney General said the department is conducting a series of similar investigations involving allegations of banks enabling third-party payment processors to “siphon billions of dollars from consumers’ bank accounts in exchange for significant fees.”
“In the months ahead, we expect to resolve other investigations involving financial institutions that chose to process transactions even though they knew the transactions were fraudulent, or willfully ignored clear evidence of fraud,” Holder added.
A transcript of the Attorney General’s video message appears below:
“The Justice Department has made it a priority to fight consumer fraud of all kinds, from lottery scams to fake business opportunities to telemarketing fraud targeting Spanish-speaking customers. All too often, scammers and fraudulent vendors attempt to prey on vulnerable consumers by using sophisticated systems to commit crimes. But these fraudsters often can’t act alone. In many cases, they need access to the banking system to pilfer money from their victims. They frequently use third-party payment processers as intermediaries to route payments through financial institutions. And in some cases, these financial institutions – rather than working diligently to protect customers’ hard-earned savings – have knowingly facilitated fraud against their customers or consciously chosen to look the other way.
“We at the Justice Department are determined to stop these illegal and unacceptable practices. While we will not target businesses operating within the bounds of the law, and we have no interest in pursuing or discouraging lawful conduct, our Consumer Protection Branch in the Civil Division is leading a range of investigations into banks that illegally enable businesses to siphon billions of dollars from consumers’ bank accounts in exchange for significant fees.
“In April, for example, the Department of Justice reached a settlement with Four Oaks Bank of North Carolina. This institution permitted a third-party payment processor, which the bank knew was processing transactions reported as fraudulent, to originate $2.4 billion in debit transactions in exchange for over $850,000 in fees paid to the bank. As a result of our investigation, a federal court has entered an order requiring Four Oaks to pay penalties and forfeiture totaling more than a million dollars and to implement reforms that will prevent this kind of rampant fraud in the future.
“In North Carolina and elsewhere, the Justice Department’s efforts are sending a clear message that such activities are irresponsible. And they will not be tolerated. In the months ahead, we expect to resolve other investigations involving financial institutions that chose to process transactions even though they knew the transactions were fraudulent, or willfully ignored clear evidence of fraud.
“The goal of these investigations is quite simple: to protect consumers from scam artists and collaborating institutions – in every circumstance and industry. In the days ahead, the Justice Department will keep moving forward – guided by the facts and the law – to eliminate fraud targeting consumers while mitigating any impact on institutions not under investigation. We must enforce the law against both the fraudsters who prey on consumers and the financial institutions who choose to allow these crimes to occur. When we uncover evidence that financial institutions are knowingly assisting fraudsters, deliberately ignoring evidence of fraud, or intentionally disregarding obligations under federal law – we will not hesitate to act. We will hold them accountable. And we will never waver in our determination to protect honest, hardworking Americans from those who put their financial security in peril.”
The Attorney General’s video message can be viewed here: http://www.justice.gov/agwa.php.
Air Force NCO Sentenced to 120 years in Prison for Sexually Exploiting Toddlers and Children to Produce Child PornographyRead the Press Release
Earlier today, William S. Gazafi, age 44, of Lusby, Maryland, was sentenced to 120 years in prison, for six counts of sexually exploiting a minor to produce child pornography.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Rod J. Rosenstein of the District of Maryland, Special Agent in Charge Stephen E. Vogt of the FBI and Brigadier General Kevin J. Jacobsen, Commander of Air Force Office of Special Investigations. The sentence was imposed by U.S. District Judge Roger W. Titus of the District of Maryland.
According to the indictment, court documents and statements made at his plea hearing, on August 15, 2013, Gazafi engaged in a chat with an undercover officer on a website dedicated to incest discussions. During the chat, Gazafi discussed his sexual interest in children and advised that he had been drugging and molesting several children, including an infant. During the chat, Gazafi sent seven images to the undercover officer, three of which were child pornography Gazafi stated he produced after drugging the child. Gazafi was subsequently identified and arrested.
At the time of his arrest, Gazafi was carrying multiple digital media items. A forensic examination of those items, and others seized from his residence, revealed videos and images that Gazafi produced of children engaged in sexually explicit conduct, including one child as young as five months old. The images also depict children bound and handcuffed while sleeping. In addition to producing hundreds of images of five children, ranging in age from five months to seven years, Gazafi distributed the images he produced to others on the Internet. Gazafi was communicating with other child pornography producers, some of whom sent him images of children they were abusing. Thus far, three children have been identified as a result. Gazafi possessed over 15,000 images and videos of children being sexually abused, many of toddler and infant age. At the time of his arrest, Gazafi was a non-commissioned officer in the U.S. Air Force working at Andrews Air Force Base.
This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc . For more information about internet safety education, please visit www.justice.gov/psc and click on the “resources” tab on the left of the page.
The case was investigated by the FBI, Air Force Office of Special Investigations and the Calvert County State’s Attorney’s Office. The case was prosecuted by Trial Attorney LisaMarie Freitas of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Thomas Sullivan of the District of Maryland.168 Juveniles Recovered in Nationwide Operation Targeting Commercial Child Sex TraffickingRead the Press Release
During the past week, the FBI, its local, state, and federal law enforcement partners, and the National Center for Missing and Exploited Children (NCMEC) conducted Operation Cross Country VIII, a week-long enforcement action to address commercial child sex trafficking throughout the United States. This operation included enforcement actions in 106 cities across 54 FBI field divisions nationwide and resulted in 168 recoveries of children who were being victimized through prostitution. Additionally, 281 pimps were arrested on state and federal charges.
“Child sex traffickers create a living nightmare for their adolescent victims,” said Leslie R. Caldwell, Assistant Attorney General for the Criminal Division of the Department of Justice. “They use fear and force and treat children as commodities of sex to be sold again and again. This operation puts traffickers behind bars and rescues kids from their nightmare so they can start reclaiming their childhood.”
“Targeting and harming America’s children through commercial sex trafficking is a heinous crime, with serious consequences.” said FBI Director James B. Comey. “Every child deserves to be safe and sound. Through targeted measures like Operation Cross Country, we can end the cycle of victimization.”
Operation Cross Country is part of the Innocence Lost National Initiative that was established in 2003 by the FBI’s Criminal Investigative Division, in partnership with the Department of Justice and NCMEC, to address the growing problem of child prostitution.
“Operation Cross Country reveals that children are being targeted and sold for sex in America every day,” said John Ryan, President and CEO of NCMEC. “We’re proud to partner with the FBI and provide support to both law enforcement and victim specialists in the field as they help survivors take that first step toward freedom.”
To date, the FBI and its task force partners have recovered nearly 3,600 children from the streets. The investigations and subsequent 1,450 convictions have resulted in lengthy sentences, including 14 life terms and the seizure of more than $3.1 million in assets.
Task force operations usually begin as local enforcement actions that target truck stops, casinos, street “tracks,” and websites that advertise dating or escort services, based on intelligence gathered by officers working in their respective jurisdictions. Initial arrests are often violations of local and state laws relating to prostitution or solicitation. Information gleaned from those arrested frequently uncovers organized efforts to prostitute women and children across many states. FBI agents further develop this evidence in partnership with U.S. Attorney’s Offices and the U.S. Department of Justice’s Child Exploitation and Obscenity Section so that prosecutors can help bring federal charges in those cities where child prostitution occurs.
The Innocence Lost National Initiative partners with NCMEC to provide training for state and federal law enforcement agencies, prosecutors and social service providers from across the country.
The FBI thanks its local, state, and federal law enforcement partners representing 392 separate agencies for their ongoing enforcement efforts, and participation in Operation Cross Country VIII.
The following list denotes FBI divisions, not necessarily actual cities, where juveniles were recovered and pimps were arrested.FBI Division
Juveniles Recovered
Pimps Arrested
Albany
0
0
Albuquerque
0
0
Anchorage
0
3
Atlanta
11
15
Baltimore
2
5
Birmingham
1
3
Boston
0
0
Buffalo
2
0
Charlotte
0
3
Chicago
13
4
Cincinnati
0
1
Cleveland
16
12
Columbia
1
2
Dallas
2
2
Denver
18
11
Detroit
5
6
El Paso
0
1
Houston
4
4
Indianapolis
4
3
Jackson
2
19
Jacksonville
0
1
Kansas City
2
7
Knoxville
0
1
Las Vegas
7
2
Little Rock
2
5
Los Angeles
10
12
Louisville
0
4
Memphis
2
5
Miami
3
4
Milwaukee
6
12
Minneapolis
1
9
Mobile
0
0
Newark
1
8
New Haven
1
1
New Orleans
3
17
New York
3
3
Norfolk
0
1
Oklahoma City
2
14
Omaha
1
2
Philadelphia
0
2
Phoenix
5
21
Pittsburgh
0
3
Portland
1
2
Richmond
0
2
Sacramento
9
7
Salt Lake City
0
0
San Antonio
6
3
San Diego
2
6
San Francisco
6
13
Seattle
4
13
Springfield
2
1
St. Louis
0
1
Tampa
8
3
WFO
0
2
Total
168
281