District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Bloods Gang Member Pleads Guilty <br /> to Racketeering Conspiracy in TennesseeRead the Press Release
Kenneth Gaddie, aka K.G., 24, of Nashville, Tennessee, pleaded guilty to one count of racketeering conspiracy in federal court in Nashville, announced Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney David Rivera for the Middle District of Tennessee and Special Agent in Charge Jeffrey L. Fulton for the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Nashville Field Division.
According to the plea agreement, from 2006 through December 2011, Gaddie was a member and associate of the Bloods gang. He and other known Bloods gang members committed multiple acts of murder, robbery, and narcotics trafficking on behalf of the gang.
Gaddie and numerous Bloods gang members met at various locations in the Nashville area, including Shelby Park, Cedar Hill Park and the Galaxy Star Drug Awareness and Gang Prevention Center, on a regular basis to, among other things, report on gang-related business, collect dues, commit disciplinary actions against fellow gang members, discuss acts of violence against rival gang members and initiate or “jump in” new members by beating them.
Further according to the plea agreement, on June 25, 2008, Gaddie shot and wounded an individual in furtherance of the Bloods gang’s criminal enterprise. Less than one month after this incident, on July 17, 2008, Gaddie and others shot at another individual.
Thirty-seven individuals have pleaded guilty or have been convicted at trial in the Middle District of Tennessee to various crimes related to their involvement in the Bloods gang. Gaddie is the final defendant to be convicted of racketeering offenses in connection with this investigation. He is scheduled to be sentenced on Aug. 21, 2014.
The investigation was a joint operation conducted by the ATF; the Metropolitan Nashville Police Department; U.S. Marshals Service; the LaVergne, Tennessee, Police Department; and the Davidson County, Tennessee Sheriff’s Office. The case was prosecuted by Trial Attorney Kevin L. Rosenberg of the Criminal Division’s Organized Crime and Gang Section, Assistant U.S. Attorney Scarlett S. Nokes of the Middle District of Tennessee, and former Trial Attorney Cody Skipper of the Organized Crime and Gang Section.Alaska Plastic Surgeon Indicted on Tax Evasion Charges for Concealing Bank Accounts in Panama and Costa RicaRead the Press Release
The Justice Department and Internal Revenue Service (IRS) announced today that a federal grand jury in Anchorage, Alaska, returned a superseding indictment yesterday charging Michael D. Brandner, an Anchorage physician specializing in plastic surgery, on three counts of tax evasion. Brandner has also been charged with seven counts of wire fraud in an indictment returned in September 2013.
According to the superseding indictment, Brandner engaged in various activities to evade his taxes for 2008, 2009 and 2010, including making false and misleading statement to IRS special agents and filing false tax returns for each of the three years. In the three false returns, Brandner failed to report the existence of financial accounts in Panama and Costa Rica over which he had signature authority, and also failed to report foreign interest income of more than $9,000 for 2008, more than $150,000 for 2009, and more than $150,000 for 2010. The indictment also alleges that Brandner attempted to evade more than $600,000 in federal income taxes over the three years.
According to court documents, Brandner engaged in a scheme to hide and conceal millions of dollars of assets from the Alaska courts and from his wife of 28 years who was divorcing him. Shortly after the divorce was filed, Brandner left Alaska and drove to Central America after converting assets into five cashier’s checks worth over $3,000,000.
An indictment is merely an allegation and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. If convicted, Brandner faces a statutory maximum sentence of five years in prison for each of the three tax evasion charges and a statutory maximum sentence of 20 years in prison for each of the seven wire fraud charges.
The case was investigated by IRS-Criminal Investigation and by Homeland Security Investigations and is being prosecuted by Trial Attorney Ignacio Perez de la Cruz of the Justice Department’s Tax Division and Assistant U.S. Attorney Bryan Schroder for the District of Alaska.
Tennessee Man Indicted for Cross BurningRead the Press Release
A federal grand jury in Nashville, Tennessee, returned a three count indictment yesterday against Timothy Flanagan, 33, formerly of Giles County, Tennessee, currently residing in Hudson, Florida, charging him with federal offenses for his role in a cross-burning in front of an interracial family’s home in Minor Hill, Tennessee, the Department of Justice and U.S. Attorney’s Office for the Middle District of Tennessee announced.
The indictment charges Flanagan with one count of conspiracy to violate housing rights, one count of criminal interference with the right to fair housing and one count of using fire to commit a federal felony.
The indictment alleges that on April 30, 2012, Flanagan conspired with others to threaten, intimidate and interfere with an interracial couple’s enjoyment of their housing rights in Minor Hill, Tennessee. According to the indictment, Flanagan and two other individuals devised a plan to burn a cross in the yard of an interracial couple who had recently had a baby. The conspirators constructed a wooden cross, purchased diesel fuel and then covered the cross in a diesel-fuel-soaked cloth. The conspirators then drove the cross to the victims’ residence, placed the cross in the driveway and ignited it. Flanagan and his co-conspirators allegedly chose to burn the cross at the victims’ house because of their race, as well as the race of their infant child.
This case was investigated by the Columbia, Tennessee, Resident Agency of the FBI and the Giles County Sheriff’s Office, and is being prosecuted by Assistant U.S. Attorney Blanche Cook of the Middle District of Tennessee and Trial Attorney Jared Fishman of the Justice Department’s Civil Rights Division.
An indictment is merely an accusation and the defendant is presumed innocent unless and until proven guilty.
Sixteen Current and Former Puerto Rico Police Officers<br /> Indicted for Allegedly Running Criminal Organization<br /> out of Police DepartmentRead the Press Release
Sixteen current and former Puerto Rico police officers have been indicted for their alleged participation in a criminal organization, run out of the police department, that used their affiliation with law enforcement to make money through robbery, extortion, manipulating court records and selling illegal narcotics.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico and Special Agent in Charge Carlos Cases of the FBI’s San Juan Division made the announcement.
“ The criminal action today dismantles an entire network of officers who, we allege, used their badges and their guns not to uphold the law, but to break it,” said Acting Assistant Attorney General O’Neil. “The indictment portrays a classic criminal shakedown, an organized crime spree of which the most experienced mafia family would have been proud. But the people wielding the guns and stealing the drugs here weren’t mob goodfellas or mafia soldiers – these were police officers violating their oaths to enforce the law, making a mockery of the police’s sacred responsibility to protect the public. ”
“This is a troubling day for law enforcement in Puerto Rico. Officers who use their badges as an excuse to commit egregious acts of violence and drug trafficking are an affront to the rule of law,” said US Attorney Rosa Emilia Rodríguez-Vélez. “According to these allegations, the law enforcement officers charged today sold their badges by taking payoffs from drug dealers that they should have been arresting, extorting money, planting evidence and stealing from them, to mention a few of their crimes. They not only betrayed the citizens they were sworn to protect, they also betrayed the thousands of honest, hard-working law enforcement officers who risk their lives every day to keep us safe. We will continue to work with our local law enforcement partners to end this cycle of corruption and renew Puerto Rico’s trust in its police officers.”
“Today is a sad day for Puerto Rico, where a group of police officers allegedly disgraced their uniform and are a shame to the Police of Puerto Rico,” said FBI Special Agent in Charge Cases. “They not only let their colleagues and family down, they let the citizens of Puerto Rico down.”
The indictment, returned yesterday by a federal grand jury in the District of Puerto Rico, includes 36 charges against the following individuals: Osvaldo Vazquez-Ruiz, 38; Orlando Sierra-Pereira, 37; Danny Nieves-Rivera, 34; Roberto Ortiz-Cintron, 34; Yovanny Crespo-Candelaria, 33; Jose Sanchez-Santiago, 31; Miguel Perez-Rivera, 34; Nadab Arroyo-Rosa, 33; Jose Flores-Villalongo, 52; Luis Suarez-Sanchez, 36; Eduardo Montañez-Perez, 29; Carlos Laureano-Cruz, 40; Carlos Candelario-Santiago, 46; Ruben Casiano-Pietri, 36; Ricardo Rivera-Rodriguez, 39; and Christian Valles-Collazo, 28. At the time of the crimes charged, Flores-Villalongo and Candelario-Santiago were sergeants with the Police of Puerto Rico (POPR); the others were police officers.
The first 13 defendants listed are charged with conspiring to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act. Other charges against certain defendants include extortion and attempted extortion under color of official right, conspiracy to commit robbery and attempted robbery, illegal use and sale of firearms, narcotics trafficking, civil rights violations, theft of government property, and false statements to federal agents.
According to the indictment, the officers charged with RICO conspiracy were members of a criminal organization who sought to enrich themselves through a pattern of illegal conduct. The officers worked together to conduct traffic stops and enter homes or buildings used by persons suspected of being engaged in criminal activity to steal money, property and narcotics. The officers planted evidence to make false arrests, then extorted money in exchange for their victims’ release from custody. In exchange for bribe payments, the defendants gave false testimony, manipulated court records and failed to appear in court when required so that cases would be dismissed. The officers also sold and distributed wholesale quantities of narcotics.
For example, in April 2012, defendants Vazquez-Ruiz and Sierra-Pereira allegedly conducted a traffic stop in their capacity as police officers and stole approximately $22,000 they believed to be illegal drug proceeds. Vazquez-Ruiz later attempted to extort approximately $8,000 from an individual they believed to be a drug dealer’s accomplice in exchange for promising to release an alleged prisoner.
In another example, the indictment alleges that in November 2012, defendants Sierra-Pereira, Nieves-Rivera, Ortiz-Cintron and Valles-Collazo illegally entered an apartment and stole approximately $30,000, which they believed were illegal lottery proceeds.
The indictment charges that the defendants frequently shared the proceeds they illegally obtained and that they used their power, authority and official positions as police officers to promote and protect their illegal activity. Among other things, the indictment charges that they used POPR firearms, badges, patrol cars, tools, uniforms and other equipment to commit the crimes and concealed their illegal activity with fraudulently obtained court documents and falsified POPR paperwork to make it appear that they were engaged in legitimate police work.
The charges contained in the indictment are merely accusations. The defendants are presumed innocent unless and until proven guilty.
The case is being investigated by the FBI’s San Juan Division. The case is being prosecuted by Trial Attorneys Brian K. Kidd, Emily Rae Woods and Menaka Kalaskar of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Mariana Bauza of the District of Puerto Rico.
Citizens of Puerto Rico with allegations of law enforcement corruption are encouraged to contact the FBI’s San Juan Division at (787) 754-6000.Related Materials:
Indictment
Owner and Recruiter for Louisiana and Texas Mental Health Clinics Convicted as Part of $258 Million Health Care Fraud Scheme in Baton Rouge, LouisianaRead the Press Release
An owner and operator of community mental health centers in Baton Rouge, Louisiana, as well as a patient recruiter for a related facility in Houston, Texas, were convicted on Wednesday, May 21, 2014, for their roles in a $258 million Medicare fraud scheme involving three facilities that filed fraudulent claims for psychiatric services that were unnecessary or never actually provided.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Walt Green for the Middle District of Louisiana, Special Agent in Charge Michael J. Anderson for the FBI’s New Orleans Field Office, Special Agent in Charge Mike Fields for the Dallas Region of the Department of Health and Human Services (HHS) Office of Inspector General and Louisiana State Attorney General James Buddy Caldwell made the announcement.
“These convictions resulted from a massive fraud involving thousands of false billings for mental health services that were either not needed or not given," said Acting Assistant Attorney General O'Neil. "It was a sophisticated scheme involving kickbacks, falsified medical records and false billings. We will use all tools at our disposal – from data to traditional law enforcement techniques – to root out these schemes and bring the appropriate people to justice.”
“These significant convictions are the latest example of our ongoing commitment to rooting out health care fraud throughout our community,” said U.S. Attorney Green. “We will use all of the tools and resources at our disposal to prosecute those who submit false information and false claims to Medicare - especially where, as in this case, those claims cost the United States tens of millions of dollars and were filed using the names and identities of Medicare beneficiaries who are particularly vulnerable. I appreciate the tremendous assistance we received in this case, and in our other anti-health care fraud efforts, from the Department's Criminal Division and our federal and state law enforcement partners.”
“The success of this broad sweeping, complex healthcare fraud investigation could not have been possible without the tremendous collaboration between all agencies involved,” said Special Agent in Charge Anderson. “It clearly demonstrates how law enforcement can make such a significant community impact as a result of such strong partnerships.”
“Whenever Medicare providers are motivated by greed, our most vulnerable citizens, the elderly, are put at risk," said Special Agent in Charge Fields. "Our HHS-OIG agents will continue to work closely with our law enforcement partners to investigate providers who will stop at nothing to loot the Medicare Trust Fund.”
Roslyn F. Dogan, 53, of Baton Rouge, Louisiana, and James R. Hunter, 49, of Houston, Texas, were found guilty after a six-day jury trial before Chief U.S. District Judge Brian A. Jackson of the Middle District of Louisiana. Dogan was convicted of conspiracy to commit health care fraud and two counts of health care fraud. Hunter was convicted of conspiracy to commit health care fraud and conspiracy to pay and receive health care kickbacks.
The investigation into these three community mental health centers - Shifa Community Mental Health Center of Baton Rouge (Shifa Baton Rouge), Serenity Center of Baton Rouge (Serenity Center), and Shifa Community Mental Health Center of Texas (Shifa Texas) - has resulted in the convictions of 17 individuals employed by the facilities, including therapists, marketers, administrators, owners and the medical director. The investigation is ongoing.
According to court documents, the companies billed Medicare more than $258 million over a period of seven years for partial hospitalization program services for the mentally ill that were unnecessary or never provided.
Further according to court documents, Dogan was part owner of Serenity Center as well as the marketer for Serenity Center and Shifa Baton Rouge. As part of the scheme, Dogan would arrange for Medicare-eligible patients to be sent to Shifa Baton Rouge and Serenity Center and admitted to those facilities, regardless of whether the patients needed partial hospitalization program services. In order to increase billings to Medicare, Dogan, along with others in management, instructed administrators and therapists to falsify patient treatment records for services that had not been provided. Dogan also concealed the fraud at Shifa Baton Rouge and Serenity Center by directing that patient billing statements be intercepted from patients’ mail in order to prevent the patients from seeing the services that had been billed in their names, and by stealing incriminating documents seized pursuant to a search warrant from federal custody.
According to court documents, Hunter, a resident of Houston, was paid $1,500 per week in cash to direct patients to attend the partial hospitalization program at Shifa Texas. Hunter, in turn, paid each patient $75 per week to attend the program. In an effort to get patients admitted to Shifa Texas, Hunter instructed patients as to the types of symptoms and diagnoses to describe to physicians in order to be admitted to the program.
The individuals who have pleaded guilty in this case include:· Dr. Zahid Imran - Imran, a Baton Rouge area psychiatrist, served as Shifa’s medical director and co-owner of Serenity Center and Shifa Texas. As part of the scheme, Imran would admit mentally ill patients to the facilities, some of whom were inappropriate for partial hospitalization. Imran would then re-certify these patients’ appropriateness for the program, in an effort to continue to bill Medicare for services. In order to support their fraudulent Medicare billing, Imran and others would falsify patient treatment records to reflect services on dates where no such services were provided.
· Hoor Naz Jafri – Jafri was an owner of all three facilities in Baton Rouge and Houston and a marketer for Shifa Baton Rouge and Serenity Center. Jafri was also part owner of two affiliated residential facilities; patients who lived at these apartments were required to attend the programs at Shifa Baton Rouge and Serenity Center, regardless of whether these patients actually needed or desired the services. As a marketer for Shifa Baton Rouge and Serenity Center, Jafri caused patients to be admitted to the facilities who were inappropriate for the services. As management at all three facilities, Jafri directed administrators and therapists at these facilities to falsify records for treatment that patients did not in fact receive.
· Sedra Signater and Arthur Smith – Signater and Smith were the administrators of Shifa and Serenity Center, respectively. At the direction of management, Signater and Smith fabricated and instructed other therapists at the facilities to fabricate patient treatment records to indicate therapy had been provided to patients, when in fact, no such therapy had been provided. These fabricated records formed the basis of the fraudulent billings to Medicare.
· Erica Williams and Kyeiana Murray – Williams and Murray were office managers of Shifa Texas and Shifa Baton Rouge, respectively. Williams also served as the admissions coordinator of Shifa Texas. As the office managers at these facilities, Murray and Williams facilitated and coordinated the collection of the falsified patient treatment records and submitted these records for billing to Medicare. Williams also directed therapists at Shifa Texas to falsify patient treatment records and coordinated the payment of kickbacks to patient recruiter James Hunter in Houston.
· Robert Booker, Teryl Vincent, Todd Ulmer, June Durio, Nancy Reed, Jason Myer, Anna Ngang and Patrick Wallace – Booker, Vincent, Ulmer, Durio, Reed and Myer, therapists at Shifa Baton Rouge and Serenity Center, and Anna Ngang and Patrick Wallace, therapists at Shifa Texas, were directed by Signater, Smith, and Williams to falsify patient treatment records for group therapy sessions they had not conducted.
The case was investigated by HHS-OIG, the FBI, and the Medicaid Fraud Control Unit of the Louisiana State Attorney General’s Office, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section. This case is being prosecuted by Trial Attorneys Abigail Taylor and Dustin Davis of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Shubhra Shivpuri of the Middle District of Louisiana.
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 almost $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 .
# # #Japanese Automotive Parts Manufacturer Executive Indicted for <br /> Role in Conspiracy to Fix Prices and for Obstruction of JusticeRead the Press Release
A Detroit federal grand jury returned a two-count indictment against an executive of a Japanese manufacturer of automotive parts for his participation in a conspiracy to fix prices of heater control panels and for obstruction of justice for ordering the destruction of evidence related to the conspiracy, the Department of Justice announced today.
The indictment, filed today in the U.S. District Court for the Eastern District of Michigan, charges Hitoshi Hirano with participating in a conspiracy to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids for, and to fix, stabilize and maintain the prices of heater control panels sold to Toyota Motor Corp. and Toyota Motor Engineering & Manufacturing North America Inc. (collectively, Toyota) for installation in vehicles manufactured and sold in the United States and elsewhere. Hirano, who served as an executive managing director at Tokai Rika Co. Ltd., was also charged with knowingly and corruptly persuading, and attempting to persuade, executives of Tokai Rika to destroy documents and delete electronic data that may contain evidence of antitrust crimes in the United States and elsewhere.
“The Antitrust Division will not tolerate executives directing their subordinates to engage in illegal cartels and conspiracies,” said Brent Snyder, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Attempts to then obstruct justice and destroy evidence will give rise to additional charges.”
The indictment alleges, among other things, that from at least as early as October 2003 and continuing until at least February 2010, Hirano and others attended conspiratorial meetings with co-conspirators and reached collusive agreements to rig bids, allocate the supply and fix the prices for heater control panels sold to Toyota. According to the indictment, Hirano participated directly in the conspiratorial conduct, and directed, authorized and consented to his subordinates’ participation. In addition, the indictment charges that in February 2010, after Hirano learned that the FBI had searched Tokai Rika’s U.S. subsidiary, he knowingly and corruptly persuaded employees at Tokai Rika to destroy paper documents and delete electronic data intending to prevent the grand jury from obtaining evidence of antitrust crimes.
Tokai Rika is a manufacturer of automotive parts, including heater control panels, based in Nagoya, Japan. Tokai Rika pleaded guilty on Dec. 12, 2012, for its role in the conspiracy and to obstruction of justice, and was sentenced to pay a $17.7 million criminal fine.
Heater control panels are located in the center console of an automobile and control the temperature of the passenger compartment of a vehicle. Heater control panels differ by function and design for a particular vehicle model. Examples include automatic heater control panels, which maintain the temperature within the vehicle to a designated temperature point, and manual heater control panels, which regulate the temperature through manual controls operated by vehicle occupants.
Including Hirano, 34 individuals have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry, 24 of whom have pleaded guilty or agreed to plead guilty. Of those, 22 have been sentenced to serve prison terms ranging from a year and one day to two years. Additionally, 27 companies have pleaded guilty or agreed to plead guilty and have agreed to pay a total of more than $2.3 billion in fines.
Hirano is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. The maximum penalty for obstruction of justice is 20 years in prison and a $250,000 criminal fine for individuals.
Today’s indictment is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by four of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charges were brought by the Antitrust Division’s Washington Criminal I Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.
Doctor Pleads Guilty to Tax EvasionRead the Press Release
Dr. Michael N. Mangold pleaded guilty to tax evasion and making false statements today in the U.S. District Court for the Eastern District of Wisconsin, announced the Justice Department and Internal Revenue Service (IRS). Mangold was indicted in October 2012.
According to court documents, Mangold was a medical doctor specializing in emergency medicine and urgent care who, since 1993, had worked as a physician for various hospitals, emergency rooms and urgent care facilities. At times, he also worked as a physician in state and county correctional facilities. Mangold primarily earned income through a combination of employee wages and independent contractor payments.
In his plea agreement, Mangold admitted that from 1997 through 2007, he willfully concealed his income by filing false tax returns and making frivolous legal arguments to the IRS with regard to his overall tax liabilities. Mangold further admitted that he made false statements to the civil and criminal-side of the IRS during the investigation. In total, Mangold owed the IRS approximately $191,577 in taxes based on his income and wages during the relevant calendar years, plus interest.
Mangold also admitted that he made materially false statements in the course of a civil lawsuit concerning his failure to repay federal loan obligations by submitting a false financial affidavit to government officials, which contained false statements about the amount of income he earned as a doctor.
As a result of his plea, Mangold faces a maximum sentence of 10 years in prison and a $350,000 fine.
This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Charles M. Edgar Jr. and Rebecca Perlmutter of the Justice Department’s Tax Division are prosecuting the case.
Detroit-Area Home Health Agency Owner Sentenced to 72 Months in Prison for His Role in $13.8 Million <br /> Medicare Fraud SchemeRead the Press Release
The owner of a home health agency involved in a $13.8 million Medicare fraud scheme was sentenced today to serve 72 months in prison.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Special Agent in Charge Paul M. Abbate of the FBI Detroit Field Office and Special Agent in Charge Lamont Pugh III of the Detroit Office of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations made the announcement.
Zahir Yousafzai, 44, was sentenced by U.S. District Judge Gerald E. Rosen in the Eastern District of Michigan. In addition to his prison term, Yousafzai was sentenced to three years of supervised release and was ordered to pay $4,131,135 in restitution, jointly and severally with his co-defendants.
According to court records, in 2009, Yousafzai and his co-conspirators acquired beneficial ownership and control over two home health companies, First Care Home Health Care LLC and Moonlite Home Care Inc. Yousafzai also assisted in the operation of two additional home health care agencies, Physicians Choice Home Health Care LLC and Quantum Home Care Inc., owned by co-conspirators.
Also according to court records, Yousafzai, a physical therapist assistant, paid and directed the payment of various medical professionals, including doctors, nurses, physical therapists and physical therapist assistants, to create fictitious patient files to document purported home health services that were never provided.
In addition, according to court records, Yousafzai paid and directed the payment of kickbacks to recruiters who obtained beneficiaries’ Medicare information that he used to submit claims for home health care that was never provided. The beneficiaries sometimes pre-signed forms that were later falsified to indicate they received home health services, when they did not. In other instances, the beneficiaries’ signatures were forged. Yousafzai signed patient files falsely stating that physical therapy services were provided.
Additionally, according to court records, Yousafzai incorporated a shell company known as A-1 Nursing and Rehab Inc., through which he laundered the proceeds of the health care fraud.
Between July 2008 and September 2011, Medicare paid approximately $13.8 million in fraudulent home health claims submitted by the four home health agencies associated with Yousafzai. Of this amount, Medicare paid more than $4 million to First Care and Moonlite, the companies that Yousafzai owned in whole or in part.
This case was investigated by the FBI and HHS-OIG and was brought by the Medicare Fraud Strike Force, a joint effort of the U.S. Attorney’s Office for the Eastern District of Michigan and the Criminal Division’s Fraud Section. The case was prosecuted by Assistant Chief Catherine K. Dick and Trial Attorney Matthew C. Thuesen 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 almost 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, 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 .Convicted Money Launderers Sentenced to Prison<br /> in Connection with Health Care Fraud SchemeRead the Press Release
Two Florida men were sentenced today in the Middle District of Florida for their roles in a fraud scheme involving the submission of more than $10 million in fraudulent claims to Medicare for physical therapy.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney for the Middle District of Florida A. Lee Bentley III, Acting Special Agent in Charge Brian P. Martens of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Florida region, and Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office made the announcement.
Rafael Roche, 43, and Alain Remy, 36, previously pleaded guilty to an indictment charging them with conspiracy to commit money laundering involving financial proceeds from a health care fraud scheme. Today, they were sentenced to serve 46 months and 37 months respectively in prison to be followed by three years of supervised release. In addition, they will be required to pay $1,847,222 in restitution, jointly and severally with co-conspirators.
According to documents filed in the case, Roche, Remy and others were part of a Medicare fraud conspiracy involving Renew Therapy Center of Port St. Lucie LLC (Renew Therapy), an outpatient rehabilitation facility. From November 2007 through August 2009, Renew Therapy submitted approximately $10,549,361 in fraudulent claims for reimbursement to Medicare for therapy services that were not legitimately prescribed by physicians and not provided to Medicare beneficiaries. As a result, Medicare deposited approximately $6,248,056 into a Renew Therapy bank account. The fraud proceeds in that account were subsequently disbursed to various individuals and entities, including a combined total of $1,847,222 to Ariguanabo Investment Group Inc. and IRE Diagnostic Center Inc., which are shell companies that Roche and Remy controlled, and was then moved to additional shell companies that Roche and Remy established and controlled.
This case was investigated by HHS-OIG and the FBI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida. This case was prosecuted by Trial Attorney Christopher J. Hunter of the Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged nearly 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 .Attorney General Holder Announces Significant Policy Shift <br /> Concerning Electronic Recording of StatementsRead the Press Release
WASHINGTON—Following a collaborative and thorough review, Attorney General Eric Holder on Thursday announced a new policy for the Department of Justice that creates a presumption that statements made by individuals in federal custody, following arrest but prior to their first appearance in court, will be electronically recorded. Attorney General Holder said that the new policy will help to ensure accountability and promote public confidence in the institutions and processes that guide the nation’s law enforcement efforts.
“Creating an electronic record will ensure that we have an objective account of key investigations and interactions with people who are held in federal custody,” Attorney General Holder said. “It will allow us to document that detained individuals are afforded their constitutionally-protected rights. And it will also provide federal law enforcement officials with a backstop, so that they have clear and indisputable records of important statements and confessions made by individuals who have been detained.”The new policy was formally spelled out in a memorandum to U.S. Attorneys signed by Deputy Attorney General James M. Cole.
Beginning on July 11, 2014, the new policy establishes a presumption that the FBI, the Drug Enforcement Administration (DEA), the Bureau of Alcohol, Tobacco, Firearms, and Explosive (ATF), and the United States Marshals Service (USMS) will electronically record interviews occurring in a place of detention with suitable recording equipment.
According to the policy, prosecutors and agents are directed to use video recording to satisfy the presumption whenever possible. If video recording equipment considered suitable under agency policy is not available, audio equipment may be substituted. The policy applies broadly to all statements of persons in federal custody of the FBI, DEA, ATF or USMS after arrest, but prior to initial appearance.
The policy applies to all places of detention where persons are held in connection with federal criminal charges and can be interviewed. Importantly, any electronic recording equipment used for these purposes must capture the entirety of the interview.
The Attorney General, in an effort to expeditiously implement the sweeping new policy, has directed U.S. Attorney’s and field offices across the country to perform district-wide joint training for agents and prosecutors. These trainings will instruct agents and prosecutors on best practices associated with the electronic recording of interviews. Additionally, investigative agencies are expected to utilize recording equipment in sufficient numbers to meet anticipated needs for recording of such interviews.
The complete text of the Attorney General’s video message is below:
“Every day, in big cities and small towns across the country, hardworking prosecutors, agents, and investigators perform exceptional work in order to combat violent crime and other threats to the public. They approach this high-stakes work with the utmost integrity and dedication.
“The professionalism of our personnel gives us the confidence to be as transparent as possible about how we perform our work. We at the Department of Justice are committed to ensuring accountability and promoting public confidence in the institutions and processes that guide our law enforcement efforts. Doing so not only strengthens the rule of law; it also enhances public safety – by building trust and fostering community engagement.
“That’s why we are announcing a new step to raise our already high standards of accountability. The Department of Justice is instituting a sweeping new policy pertaining to interviews of individuals in law enforcement custody. This new policy, which will take effect on July 11th, creates a presumption that statements made by individuals in federal custody, after they have been arrested but before their initial appearance, will be electronically recorded. The policy applies in a place of detention that has suitable recording equipment, and it encourages video recording whenever possible and audio recording when video is unavailable. The policy also encourages agents and prosecutors to consider electronic recording in investigative or other circumstances not covered by the presumption.
“This presumption in favor of recording applies to statements made by individuals in the custody of the FBI, the DEA, the ATF, and the United States Marshals Service. It allows for certain exceptions—such as when the interviewee requests that the recording not occur or when recording is not practicable.
“Creating an electronic record will ensure that we have an objective account of key investigations and interactions with people who are held in federal custody. It will allow us to document that detained individuals are afforded their constitutionally-protected rights. And it will also provide federal law enforcement officials with a backstop, so that they have clear and indisputable records of important statements and confessions made by individuals who have been detained.
“This policy will not – in any way – compromise our ability to hold accountable those who break the law. Nor will it impair our national security efforts. On the contrary: it will reduce uncertainty in even the most sensitive cases, prevent unnecessary disputes, and improve our ability to see that justice can be served.
“Federal agents and prosecutors throughout the nation are firmly committed to due process in their rigorous and evenhanded enforcement of the law. This new recording policy not only reaffirms our steadfast commitment to these ideals – it will provide verifiable evidence that our words are matched by our deeds. And it will help to strengthen the robust and fair system of justice upon which all Americans depend – and which every American deserves.”
The full video message is available at http://www.justice.gov/agwa.php.
Assistant Attorney General John Carlin Delivers Remarks at the Brookings Institute's Emerging National Security Threats ForumRead the Press Release
WASHINGTON - Thanks for that kind introduction. I’m grateful to be here at Brookings today discussing emerging national security threats.
On Monday, the Department of Justice announced charges against five members of the Chinese military for computer hacking, economic espionage, and other offenses directed at six American victims in the U.S. nuclear power, metals, and solar products industries.
Today, I’ll focus on this growing threat: state-sponsored cyber intrusions targeting, for profit, sensitive and proprietary information of U.S. companies.
These charges against uniformed members of the Chinese military were the first of their kind. Some said they could not be brought.
At the Department, we follow the facts and evidence where they lead. Sometimes, the facts and evidence lead us to a lone hacker in a basement in the U.S., or an organized crime syndicate in Russia.
And sometimes, they lead us to a uniformed member of the Chinese military. But, no matter where they lead, there can be no free passes.
We should not stand idly by, tacitly giving permission to anyone to steal from us. We will hold accountable those who steal – no matter who they are, where they are, or whether they steal in person or through the Internet. Because cybercrime has real victims.
While cases like the one brought in Pittsburgh are extremely challenging, this week we proved that they are possible. The criminal justice system must be a critical component of our nation’s cybersecurity strategy. As long as criminals continue stealing from American businesses, we will continue pursuing those criminals.
The charges announced on Monday were groundbreaking. They represent a significant step forward in our cyber approach.
And they were many years in the making.The National Security Division
Within the Justice Department, the National Security Division – or NSD – focuses on cyber threats to the national security – those posed by terrorists and nation states.
Our approach to these threats is deeply rooted in our Division’s history, and our success in the cyber arena builds upon a solid foundation.
NSD was created in response to the grave threat of terrorism. After the devastating attacks of September 11, it became clear that the Justice Department needed to reorganize to tackle terrorism and national security threats more effectively.
We needed a single Division to integrate the work of prosecutors and law enforcement officials with intelligence attorneys and the Intelligence Community.
So, in 2006, Congress created the Department’s first new litigating division in almost half a century: NSD.
NSD works closely with partners throughout the government to ensure we leverage all available tools to combat the terrorism threat. And we’ve proven, in that context, that the criminal justice system is a vital part of our nation’s counterterrorism strategy.
Just this week, Abu Hamza al-Masri was convicted by a jury in New York on eleven counts. He was involved in an attack in Yemen in December 1998 that resulted in the deaths of four hostages and provided material support to terrorists, including al Qaeda and the Taliban.
In March, Sulaiman Abu Ghaith was convicted of conspiring to kill Americans and other terrorism charges. Abu Ghaith was the son-in-law of Usama bin Laden and a senior member of al Qaeda. He was the face and voice of al Qaeda in the days and weeks after the 9/11 attacks.
In both of these cases, it took more than a decade, but as a result of our integrated approach to combating terrorism, these men were brought to justice. These cases are the two most recent in a long line of successful terrorism prosecutions.
Recently, we took the lessons we learned from counterterrorism and applied them to our work on national security cyber threats. In the face of escalating threats, we recognized the need to reorganize. To integrate.
When I was chief of staff for Director Bob Mueller, the FBI undertook a transformation to meet the growing cyber threat. In 2011, NSD did the same.
In late fall of 2011, ten years after 9/11, we established a review group to evaluate NSD’s existing work on national security threats and chart out a plan for the future. Six months later, that team issued recommendations that shaped what NSD’s national security cyber program looks like today.
Most significantly, in 2012, we created and trained the National Security Cyber Specialists’ Network to focus on combating cyber threats to the national security. This Network – known as NSCS – includes prosecutors from every U.S. Attorney’s Office around the country, along with experts from the Department’s Computer Crime and Intellectual Property Section and attorneys from across all parts of NSD.
Adopting the successful counterterrorism model, we now have prosecutors nationwide routinely meeting with the FBI to review intelligence and investigative files.
The creation of the NSCS Network was motivated by a desire to make a tangible impact on U.S. cybersecurity efforts through criminal investigation and prosecution. By December 2012, we made public predictions that with the establishment of the NSCS – by empowering more than a hundred prosecutors in the field working with the FBI on these cases – one would be brought.
The Pittsburgh Case
And this week, we made good on that promise. It is this new, integrated approach that made the Pittsburgh case possible. As part of the creation of the NSCS, we brought prosecutors from around the country – Wisconsin, New York, and Georgia – to help NSD build this case.
We partnered with the Western District of Pennsylvania, where victims were repeatedly hit. And we worked with offices across the FBI – from California, to Oregon, to Oklahoma, and back here in D.C.
Our team thought creatively. They worked collaboratively. They explored all available options for stopping this activity.
That’s how we were able to indict five members of the Third Department of the People’s Liberation Army, or “3PLA,” and its “Unit 61398.” These men stand accused of cyber intrusions targeting a range of U.S. industries.
The indictment alleges, with particularity, specific actions on specific days by specific actors to use their computers to steal information from across our economy.
It alleges that while the men and women of our American businesses spent their business days innovating, creating, and developing strategies to compete in the global marketplace, these members of Unit 61398 spent their business days in Shanghai stealing the fruits of Americans’ labor.
It alleges that they stole information particularly beneficial to Chinese companies, and took communications that would provide competitors with key insight into the strategy and vulnerabilities of the victims.Answering Critics
Now, some question this law enforcement action. Generally speaking, these questions fall into three categories:- First , whether there is a clear line between what these individuals have been accused of, and what the U.S. or other nations do;
- Second, whether charges like these can truly impact cybersecurity, particularly when there may be significant challenges to arresting and ultimately trying these individuals in criminal court;
- And third, whether the government should instead focus on hardening defenses rather than pursuing charges.
Stealing Is Stealing
As to the first question: while some commentators may ask whether this is a new line to draw, in fact we are aware of no nation that publicly states that theft of information for commercial gain is acceptable.
Even in this case, China has not attempted to justify the allegations. Instead, they deny them.
And this has been a consistent response. A little over a year ago, the Chinese Government flatly denied reports that Unit 61398 was hacking U.S. companies. A spokesman for China’s Ministry of National Defense said, “Chinese military forces have never supported any hacking activities.”
China also challenged the United States to present “hard evidence, evidence that could stand up in court,” that cyber attacks against American targets are connected to the Chinese military. Well, we did.
The response? Hours after Monday’s announcement, the Chinese Foreign Ministry called the accusations “purely fictitious, extremely absurd.”
Now, we are confident that we have the evidence to back up these accusations in a court of law. Read the indictment. For the first time, we have exposed the real faces and names behind the keyboards in Shanghai used to steal from American businesses.
This is not conduct that responsible nations within the global economic community should tolerate.
In the United States, we believe that individuals and companies are entitled to the results of our creativity, including our property—and intellectual property. And we believe their work should not simply be taken from them and given to others.
This is not a uniquely American value. Individuals around the world believe that people shouldn’t take what others make.
Responsible nations do conduct intelligence activities. And nations openly acknowledge that they have intelligence services. Like others, our intelligence activities are focused on the national security needs of our country.
That is why the President, earlier this year, reaffirmed in PPD-28 that “[i]t is not an authorized foreign intelligence . . . purpose to collect such information to afford a competitive advantage to U.S. companies and U.S. business sectors commercially.”
U.S. foreign intelligence collection occurs under the framework of the rule of law, involving oversight by all three branches of Government. As the Church Committee Report recognized back in 1976, “the Constitution provides for a system of checks and balances and interdependent power as between the Congress and the executive branch with respect to foreign intelligence activity.”
The very protections built into that legal framework subject that information to rigorous oversight, and prevent sharing it with private companies for their private gain.
But let’s be clear: those same protections do not exist in certain other countries that are targeting, every day, American trade secrets, sensitive business information, and intellectual property in order to steal specific information and pass it along to their domestic companies in order to give them a competitive edge. To pretend otherwise is to promote a narrative of false equivalency.
Even though we know of no nation that stands up publicly to defend corporate theft for the profit of state-owned enterprises, in the shadows, some appear to encourage and support it.
In short, we allege the members of Unit 61398 committed theft, pure and simple.
So although this case is the first of a kind, it is also, in some respects, just business as usual. As they have for decades, prosecutors in the field and at CCIPS use criminal investigation and prosecution to disrupt cyber crime. CCIPS is one of our most important partners in the fight against cyber threats.
Law enforcement has long been used to combat cyber threats and, as recently as this week, has made a tremendous impact on our nation’s cybersecurity.
As you have likely seen, on Monday, the Department of Justice announced charges in connection with Blackshades malicious software. These charges were part of the largest-ever global cyber law enforcement operation, involving more than 90 arrests and other law enforcement actions in 19 countries.
Likewise, in the national security arena, when criminal law enforcement is the most effective tool we have to disrupt a terrorist threat, we employ it no matter how far away or shielded from prosecution the defendants may seem today.
When criminal enterprises steal our intellectual property and personal information, or threaten our security, we investigate and prosecute them.
These are not the first charges that we have lodged against individuals who steal from Americans to benefit state-owned enterprises.
As just one example, in March, we successfully obtained a significant conviction for economic espionage.
Walter Liew, an electrical engineer, obtained one of DuPont’s secrets – a process, honed over many decades, for making a multi-purpose white pigment – and passed it to a large Chinese state-owned company.
What Liew stole was something Americans see and use daily. Something that does not have a national security implication. Something that simply brings a profit.
Liew stole the formula for the color white. He was brought to justice in the U.S. criminal justice system.
Like Liew, we allege that the members of Unit 61398 stole to benefit Chinese state-owned enterprises. The thefts are similar. They both took place here. The difference is that Unit 61398 operated remotely, from the previously safe spaces in Shanghai.
We will no longer permit safe havens. Individuals cannot avoid the consequences of their actions simply by capitalizing on 21st century tools and operating from the comfort of their desks half a world away.Meeting the Threat of Cyber Economic Espionage
These crimes are the same as many crimes that we have investigated and prosecuted before. Only the method or means is different.
But the threat we face is increasingly moving out of the physical world and into cyberspace, and thus, prosecutions of those who steal from us remotely must and will become the new normal. We will continue to pursue this option, along with others available to us.
The threat of economic espionage is serious, and the threat of cyber economic espionage is mounting. Some estimate that, every year, the U.S. loses more than $300 billion from theft of our intellectual property. That figure is about equivalent to the current annual level of U.S. exports to Asia.
Losses of that magnitude cost the American economy untold numbers of jobs. They reduce the profit that American firms make from research and development, which in turn reduces the incentives and resources for innovation. As U.S. Attorney David Hickton said on Monday, “When these cyber-intrusions occur, production slows, plants close, workers get laid off and lose their homes.”
Such activity also undermines the trust between countries and companies that is necessary to do business in a globalized economy.
And our companies cannot face it alone. Companies cannot depend solely on their antivirus software to defend against attackers linked to deep state military budgets. It’s not a fair fight.
To defend against those empowered by a government, we need our government on our side. We must support our entrepreneurs by using every tool we have, to prevent, deter, and disrupt this conduct in any way we can.
And likewise, we need you. Just as the local police can’t control crime without victims calling in those crimes, our law enforcement officials, too, need cooperation from victims. It’s our hope that the more cases we bring and the more perpetrators we bring to justice, the higher the level of cooperation we’re likely to receive.
We cannot let this conduct go undeterred. Doing so would threaten our nation’s security.Deterring Cyber-Enabled Economic Espionage
Cases like the Pittsburgh case will have a deterrent effect.
To those critics who raise questions about whether these charges will have any impact in light of the challenges associated with arresting and trying these individuals – the deterrent effect of charges can be significant.
General Keith Alexander, former NSA Director, explained that “the only way to deter cyber attack is to work to catch perpetrators and take strong and public action when we do.”
FBI Director Mueller called for figuring out who is targeting us and going after them, saying: “We must remember that behind every intrusion is a person responsible for that intrusion—a warm body behind the keyboard, whether he or she sits in Tehran or Tucson; Shanghai or Seattle; Bucharest or the Bronx. Our ultimate goal must be to identify and deter the persons behind the keyboards.” The government and private sector alike are increasing the call for prosecuting cyber theft of trade secrets.
We need to prevent attacks. And deterrence helps. Prosecutions can simultaneously punish those who have already committed bad acts and deter those who might otherwise commit bad acts in the future. In other words, by going after these crimes, we can help to stop the next group of criminals.
It is, of course, possible that we will never obtain custody. But even if these five defendants evade arrest, laying bare this criminal activity takes it out of the shadows.Law Enforcement: One Piece of the Puzzle
Law enforcement investigations can also support other valuable tools. Criminal charges can justify economic sanctions from our colleagues in the Treasury Department, sanctions that prevent criminals from engaging in financial transactions with U.S. entities and deny access to the U.S. financial system.
They can facilitate diplomacy by the State Department, as our nation’s diplomats lay out evidence of state-sponsored cyber theft to foreign government officials and force them to answer for those actions, or coordinate with other victimized countries. Furthermore, the investigations themselves can lead other governments to take action, even when the United States doesn’t end up doing so.
So, we will continue to bring these kinds of cases. However, it is not easy. Prosecutions like this present unique challenges.
Cases can take years to investigate, and it can sometimes be tough to attribute the unlawful activity to particular individuals.
They involve difficult decisions regarding how to protect sensitive sources and methods. And even after charging, it can be challenging to obtain custody of the defendants and bring them to justice.
But difficult does not mean impossible, and the status quo simply will not do. As the Attorney General said earlier this week in announcing these charges, “enough is enough.”
We would not stand idly by as people hauled away our wealth in trucks. Likewise, we cannot allow it to be sucked out through the Internet.
The indictment I’ve been discussing is an important first step. But it must be just that – the first. Prosecutions will not do it alone.
We need to build on this success and keep responding—with prosecutions where possible and with all of the other tools in our toolkit.
We need to keep at it, and we appreciate the bipartisan support we’ve received from Congress, including particularly supportive words from Senators King and Whitehouse as well as from the House Intelligence and Homeland Security Committees.
Many of these individuals provided resources and encouragement as we undertook transformation. We must continue until our adversaries realize that the costs of stealing from our companies outweigh the benefits.Cyber Defense – Empowering victims
So far, we talked primarily about criminal prosecution and other tools. But we recognize that stopping attacks before they ever take place is the ultimate goal. We will have succeeded when there are no more criminal charges to bring.
To that end, we also worked hard to improve cyber defenses, both in Government and with the private sector.
The FBI works closely with companies that have been the victims of hackers through, among other things, its InfraGard program. That program, which has more than 25,000 active members, brings together individuals in law enforcement, government, the private sector, and academia to talk about how to protect our critical infrastructure.
Likewise, the Department of Homeland Security, the Department of Energy, and other departments and agencies routinely work closely with companies to protect critical infrastructure.
The Department heard from you and is taking steps to respond to the concerns of the private sector. Just last month, we teamed up with the Federal Trade Commission to issue a policy statement making it clear that antitrust law is not and should not be a bar to legitimate cyber security information sharing.
And earlier this month, the Justice Department offered a white paper clarifying that the Stored Communications Act doesn’t ordinarily restrict network operators from sharing certain data with the Government to guard information. This guidance will help the private sector collaborate more freely to protect itself. All of this is just a start. Going forward, we need legislation to facilitate greater information sharing between the private sector and the government.Educating the Public
The charges announced earlier this week benefit not only victims but also the broader American people, and others worldwide.
Chief Justice Burger once noted that criminal prosecutions, as a general matter, have an “educative effect” on the public.
While we may appreciate, on a theoretical level, that hacking to steal corporate secrets poses a major national security threat, there’s no substitute for the educative effect that an indictment has.
Putting a face at the keyboard, and quantifying the damage done, may help to galvanize all of us to improve our cyber security. It may also make us more vigilant to the economic, military, and geopolitical dangers associated with cyber space. For example, it might lead companies and other entities to examine their connection logs a little bit more closely to see what activities those reveal, and from where.Conclusion
To wrap up, I want to applaud the dedicated investigators and prosecutors whose hard work produced this week’s important indictment. It’s only a first step but it’s a big step, and it’s part of our growing effort to hold accountable those who steal American innovation.
At the same time, we must acknowledge that prosecution alone is, ultimately, just one tool in the broader toolset for addressing the cyber threat. Prosecutions alone will not solve the problem.
Trust in government depends, in part, on our ability to defend, protect, and obtain justice for our citizens. Indictments and prosecutions are one clear and powerful way in which we the people, governed by the rule of law, legitimize and prove our allegations.
And those actions have real consequences for the criminals they target, and deter those who might otherwise become criminals in the future.
We continue to protect Americans from being victimized through cyberspace, and we need your support.
Thank you for your attention. I look forward to questions.# # #
Army Soldier Sentenced for Facilitating <br /> Thefts of Fuel in AfghanistanRead the Press Release
United States Army soldier Albert Kelly III of Fort Knox, Kentucky, was sentenced to serve 18 months in prison for his role in stealing fuel at Forward Operating Base (FOB) Salerno in Afghanistan. In addition to his prison term, Kelly was sentenced to three years of supervised release and ordered to pay $100,000 in restitution.
Acting Assistant Attorney General David O’Neil of the Justice Department’s Criminal Division and U.S. Attorney David J. Hale of the Western District of Kentucky made the announcement after the sentence was imposed by Senior U.S. District Court Judge Charles R. Simpson III in the Western District of Kentucky.
According to court documents, from January 2011 to January 2012, Kelly was assigned to FOB Salerno, and for most of that time he served as a specialist. Kelly’s duties included overseeing the delivery of fuel into FOB Salerno. Typically, the fuel was brought into the base by Afghan trucking companies driven by Afghan nationals. Kelly’s duties included verifying the amounts of the fuel that were delivered at FOB Salerno and preparing and certifying documents that accounted for the fuel that was delivered.
From in or about November 2011 through January 2012, Kelly diverted and permitted the diversion of fuel delivery trucks from FOB Salerno to other locations, where the diverted fuel would then be removed from the trucks and stolen. To conceal this diversion, he falsely certified that the diverted fuel was in fact delivered at FOB Salerno.
Also according to court documents, in exchange for assisting in the theft of fuel as described, Kelly received approximately $57,000 from the Afghan trucking company. He admitted the amount of fuel he permitted to be diverted amounted to approximately 25,000 gallons. The United States Army paid approximately $4.00 per gallon for that fuel, and the loss to the government was approximately $100,000.
The case was investigated by the Special Inspector General for Afghanistan Reconstruction. This case was handled by Special Trial Attorney Mark H. Dubester, on detail from the Special Inspector General for Afghanistan Reconstruction, and Assistant U.S. Attorney Michael Bennett of the Western District of Kentucky.$20 Million Stolen Identity Refund Fraud Ring IndictedRead the Press Release
Tracy Mitchell, Dameisha Mitchell, Latasha Mitchell, Keisha Lanier, Tameka Hoskins, Sharondra Johnson, Cynthia Johnson, Mequetta Snell-Quick, Talarious Paige and Patrice Taylor were indicted for their roles in a $20 million stolen identity refund fraud (SIRF) conspiracy, Assistant Attorney General Kathryn Keneally 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 superseding indictment yesterday.
According to the superseding indictment, between January 2011 and December 2013, the defendants ran a large-scale identity theft ring in which they filed over 7,000 false tax returns that claimed in excess of $20 million in fraudulent claims. The defendants obtained stolen identities from various sources to be used in filing false returns. Tracy Mitchell worked at the hospital on Fort Benning in Columbus, Georgia, where she had access to the identification data of military personnel, including soldiers who were deployed to Afghanistan. Tracy Mitchell and her daughter, Latasha Mitchell, also obtained stolen identities from an Alabama state agency. Keisha Lanier obtained stolen identities from the Alabama Department of Corrections. Talarious Paige and Patrice Taylor worked in a call center for a Columbus company and stole identities.
According to the superseding indictment, in order to file tax returns, the defendants obtained Electronic Filing Numbers in the names of several tax preparation businesses. On behalf of those tax preparation businesses, the defendants applied for bank products from various financial institutions, which mailed blank check stock to the defendants’ homes. The defendants directed anticipated tax refunds to prepaid debit cards, to U.S. Treasury checks and to financial institutions, which in turn issued the refunds via checks or prepaid debit cards. The defendants directed U.S. Treasury checks to be mailed to several addresses in Alabama and then obtained those checks from the mail. The defendants coordinated the cashing of the refund checks by sending various text messages among themselves. The defendants cashed the fraudulent checks at several businesses located in Alabama, Georgia and Kentucky. In addition to the conspiracy charge, the defendants are also charged with mail and wire fraud, access device fraud and aggravated identity theft.
An indictment merely alleges that crimes have been committed and the defendants are 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 and mail fraud count, a statutory maximum potential sentence of 15 years in prison for each access device fraud count, and a mandatory two year sentence in prison 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 and the U.S. Army – Criminal Investigation Division. 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. The U.S. Attorney’s Office for the Middle District of Georgia provided assistance in this matter.
U.S. Marshals, INTERPOL Nab Fugitive from Hungary in FloridaRead the Press Release
USDOJ: INTERPOL Washington: Updates
Department of Justice
INTERPOL Washington FOR IMMEDIATE RELEASE Wednesday, May 21, 2014U.S. Marshals, INTERPOL Nab Fugitive from Hungary in Florida
WASHINGTON - An intensive investigation spearheaded by the U.S. Marshals Service International Investigations Branch and the Fugitive Division of INTERPOL Washington, U.S. National Central Bureau, resulted in the arrest of Maria Luca Zavoczki, one of Hungary's most sought after criminals, in Miami Tuesday afternoon.
In February 2014, Hungary issued an INTERPOL Red Notice indicating that Zavoczki had fled her native Hungary to avoid criminal prosecution related to narcotics distribution. Additionally, authorities there wanted Zavoczki for her role and participation in a European criminal enterprise that specialized in the manufacturing of bogus credit cards and committing bank fraud in Hungary, Austria, and Italy.
A former Hungarian competitive bodybuilder, Zavoczki travelled frequently to the United States for internationally-sanctioned bodybuilding competitions in Florida and California. Between 2003 and 2012, Zavoczki formulated and set in motion an elaborate scheme to change her identity and citizenship to avoid prosecution in Hungary and remain in the United States illegally.
At the request of Hungarian law enforcement, investigators from the Marshals Service and INTERPOL moved to locate Zavoczki as she attempted to evade arrest by moving through California, Colorado, Maryland, Florida and Mexico. She assumed multiple identities and aliases along the way.
The fugitive investigation gained significant momentum when a criminal investigator from the Department of State Diplomatic Security Service assigned to INTERPOL Washington determined that Zavoczki had more than likely obtained a U.S. passport by fraudulent means, while using a stolen identity. Zavoczki allegedly used the passport for international travel and as an official identity document.
Investigators sent information confirming Zavoczki's location to the Marshals Service office in the Southern District of Florida. Tuesday, members of the Marshals Service South Florida Warrant Squad, Department of Homeland Security Homeland Security Investigations, and the Boynton Beach, Florida Police Department took Zavoczki into custody without incident. She is being detained pending removal from the United States on immigration violations, and document and identity fraud. Zavoczki faces a 10-year prison term in Hungary.
“The capture of fugitive Maria Zavoczki, one of Hungary's most wanted, is an excellent example of what can be accomplished when law enforcement officials work together,” said Amos Rojas Jr., U.S. Marshal for the Southern District of Florida.
“Criminals who steal identities and use false passports are a genuine threat to national security,” said Shawn A. Bray, Director of INTERPOL Washington. “Thanks to the outstanding cooperation of multiple law enforcement agencies, Maria Zavoczki poses a threat no more.”
The efforts of U.S. Citizenship and Immigration Services, U.S. Customs and Border Protection, and the U.S. Department of Justice Office of International Affairs contributed to Zavoczki's arrest.
South Florida Man Sentenced to Jail for Tax FraudRead the Press Release
Paul F. Wrubleski, a resident of Weston, Florida, was sentenced to serve 55 months in prison on tax fraud charges, the Justice Department and the Internal Revenue Service (IRS) announced today. Wrubleski was convicted earlier this year of one count of corruptly impeding the due administration of the internal revenue laws and four counts of filing false claims for tax refunds following a jury trial in in the U.S. District Court in the Southern District of Florida.
According to court documents and the evidence presented at trial, Wrubleski had a decade-long pattern of filing false documents with the IRS. Wrubleski impeded the IRS by filing false IRS forms that claimed he was exempt from income tax withholding and by filing false tax returns, including four tax returns that requested over $1.5 million in federal refunds. Wrubleski also sent obstructive letters, tax returns and other false documents to the IRS between 1999 and 2010. In addition, the indictment alleged and the evidence proved that Wrubleski filed for bankruptcy in 2006 in order to impede IRS collection actions.
In addition to the term of imprisonment, Wrubleski was ordered to pay $79,963 in restitution and to serve three years of supervise release following his release from jail.
The case was investigated by special agents of IRS-Criminal Investigation. Trial Attorney Charles M. Edgar Jr. of the Justice Department’s Tax Division and Assistant U.S. Attorney Bertha R. Mitrani for the Southern District of Florida prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found at the division website.
South Florida Man Sentenced to Jail for Tax FraudRead the Press Release
WASHINGTON – Paul F. Wrubleski, a resident of Weston, Florida, was sentenced to serve 55 months in prison on tax fraud charges, the Justice Department and the Internal Revenue Service (IRS) announced today. Wrubleski was convicted earlier this year of one count of corruptly impeding the due administration of the internal revenue laws and four counts of filing false claims for tax refunds following a jury trial in in the U.S. District Court in the Southern District of Florida.
According to court documents and the evidence presented at trial, Wrubleski had a decade-long pattern of filing false documents with the IRS. Wrubleski impeded the IRS by filing false IRS forms that claimed he was exempt from income tax withholding and by filing false tax returns, including four tax returns that requested over $1.5 million in federal refunds. Wrubleski also sent obstructive letters, tax returns and other false documents to the IRS between 1999 and 2010. In addition, the indictment alleged and the evidence proved that Wrubleski filed for bankruptcy in 2006 in order to impede IRS collection actions.
In addition to the term of imprisonment, Wrubleski was ordered to pay $79,963 in restitution and to serve three years of supervise release following his release from jail.
The case was investigated by special agents of IRS-Criminal Investigation. Trial Attorney Charles M. Edgar Jr. of the Justice Department's Tax Division and Assistant U.S. Attorney Bertha R. Mitrani for the Southern District of Florida prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found at the division website.
Justice Department Settles Lawsuit Against State of Ohio to End Unlawful Seclusion of Youth in Juvenile Correctional FacilitiesRead the Press Release
The United States and private plaintiffs announced today that it has reached an agreement with the state of Ohio, under which the State Department of Youth Services (DYS) will dramatically reduce, and eventually eliminate, its use of seclusion on young people in its custody. DYS will also ensure that young people in its juvenile facilities receive individualized mental health treatment to prevent and address the conditions and behaviors that led to seclusion. The order resolves allegations that the state subjects young people with mental health needs in its custody to harmful seclusion and withholds treatment and programming, in violation of their constitutional rights.
“Overreliance on solitary confinement for young people, particularly those with disabilities, is unsafe and counterproductive,” said Attorney General Eric Holder. “This agreement will help ensure that incarceration in Ohio's state facilities is humane and that appropriate treatment is provided for young people with mental illness. The Justice Department will continue to evaluate the use of solitary confinement so that it does not become a new normal for incarcerated juveniles.”
The department first investigated conditions at Ohio juvenile correctional facilities in 2007 and found constitutional deficiencies in the state’s use of physical force, mental health care, grievance investigation and processing and use of seclusion. The department entered into a consent decree with the state in June 2008 to remedy these violations at the Scioto Juvenile Correctional Facility and the since-closed Marion Juvenile Correctional Facility. Simultaneously, private plaintiffs in the case S.H. v. Reed entered into a consent decree with the state regarding similar deficiencies at all of the state’s juvenile correctional facilities. However, between November 2013 and January 2014, data from the monitoring of both consent decrees revealed that Ohio had continued to use unlawful seclusion on youth at Scioto and in the other facilities.
On March 12, 2014, the department moved to supplement its original complaint by including the state’s use of unlawful seclusion at all of its juvenile correctional facilities. The court granted the motion on March 28, 2014, and the department filed the supplemental complaint on March 31, 2014. The department also sought a temporary restraining order requiring immediate measures to curb the state’s excessive seclusion of youth with mental health disorders. The agreed order resolves the United States’ claims in its motion for a temporary restraining order, as well as a motion for specific performance filed by the S.H. plaintiffs.
As an interim measure prior to the elimination of disciplinary seclusion for youth, the state will dramatically reduce the conditions under which seclusion is allowed and the duration of seclusion. The state will also reduce the potential harms caused by seclusion by increasing access to therapeutic, educational and recreational services while a young person is in seclusion.
The order requires the state to implement quality assurance measures to verify mental health treatment integrity, develop comprehensive assessments of youth, eliminate the use of disciplinary seclusion on youth with mental health needs, except for the most serious offenses, limit the amount and duration of disciplinary seclusion in the limited circumstances when it is permissible, conduct regular checks on youth who are secluded for safety concerns in order to release youth as soon as possible and perform individualized treatment plan reviews and modifications to address violent behaviors. The order includes performance standards to measure compliance with these requirements, which will be jointly overseen by the monitors in the existing United States and S.H. consent decrees.
Because the order also reflects the state’s commitment to eliminate all disciplinary seclusion, the department agreed to withdraw its remaining claims regarding the state’s seclusion of youth who do not have an identified mental health disorder. The department can renew those claims later if the state makes insufficient progress in eliminating all forms of disciplinary seclusion.
“The state of Ohio, the administrators of the Department of Youth Services and their counsel are to be commended for their commitment to reforming Ohio’s juvenile correctional facilities,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “Ohio’s commitments in this agreement will go a long way toward reducing the harm young people are experiencing in the state’s juvenile correctional facilities, especially young people with mental health needs.”
“This agreement will provide significant relief to youth in DYS custody by ensuring they receive appropriate mental health treatment and are not subject to excessive seclusion,” said U.S. Attorney Carter Stewart for the Southern District of Ohio. “Today, the state has taken an important step in rectifying the unconstitutional conditions in its juvenile correctional facilities.”
“We applaud the state for its commitment to rectifying the overuse of seclusion on youth in its custody,” stated U.S. Attorney Steven M. Dettelbach for the Northern District of Ohio. “The agreement we are announcing today – which is the result of the collective efforts of the Justice Department, the private plaintiffs and the state of Ohio – will put in place reforms that will drastically improve outcomes for these youth.”
The Violent Crime Control and Law Enforcement Act of 1994 authorizes the department to seek a remedy for a pattern or practice of conduct that violates the constitutional or federal statutory rights of youth in juvenile justice institutions. Please visit the division website to learn more about this act and other laws enforced by the Civil Rights Division.
This agreement is due to the efforts of the Special Litigation Section of the Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Ohio, and the U.S. Attorney’s Office for the Northern District of Ohio. This agreement is also due to the work of plaintiffs’ counsel in S.H., Alphonse Gerhardstein of Gerhardstein & Branch Co. LPA, and Kim Tandy of the Children’s Law Center Inc., and to the leadership of the Ohio DYS.
19 Arrested in International Round up on Federal Fraud ChargesRead the Press Release
Fifteen individuals were arrested today in South Africa, Canada, California, Wisconsin and Indiana, pursuant to an eight-count federal indictment on fraud charges filed in the Southern District of Mississippi. A total of 19 individuals were arrested across the United States and internationally on charges brought by federal prosecutors in Mississippi, South Carolina and Georgia.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Gregory K. Davis for the Southern District of Mississippi, Raymond Parmer Jr., Special Agent in Charge of Immigration Customs Enforcement (ICE), Homeland Security Investigations (HSI) in New Orleans and Robert Wemyss, U.S. Postal Inspection Service Inspector in Charge made the announcement.
Another individual was arrested today in New York on a related Southern District of Mississippi complaint. Three defendants in South Carolina were arrested in Charleston, pursuant to a nine-count indictment, and the U.S. Attorney’s Office for the Northern District of Georgia has filed related criminal complaints in Atlanta against two additional defendants. All of the indictments and complaints were unsealed yesterday.
The indictments allege the involvement of a West African transnational organized crime enterprise engaged in numerous complex financial fraud schemes over the internet. This mass marketing fraud includes romance scams, re-shipping scams, fraudulent check scams and work-at-home scams, along with bank, financial and credit card account take-overs.
The investigation was initiated in October 2011, by HSI agents in Gulfport, Mississippi, after U.S. law enforcement officers were contacted by a female victim who was the victim of a sweetheart scam. The victim received a package in the mail requesting that she reship the merchandise to an address in Pretoria, South Africa. The investigation later revealed that the merchandise was purchased using stolen personal identity information and fraudulent credit card information of persons in the United States. Investigators have identified hundreds of victims of this scam in the United States, resulting in the loss of millions of U.S. dollars.
Today’s arrests were the result of an investigation led by the HSI Gulfport office in partnership with the U.S. Postal Inspection Service, South African Police Service, Toronto Police, HSI Cyber Crimes Center, Treasury Executive Office of Asset Forfeiture, HSI Ontario, HSI Charleston, Interpol South Africa, HSI Pretoria and HSI Atlanta.
The Department of Justice Office of International Affairs assisted in the provisional arrests of ten defendants in Pretoria, South Africa. Another defendant was arrested in Toronto, Canada, and the remaining defendants were arrested in the United States.
The case in Mississippi will be prosecuted by Assistant U.S. Attorneys Annette Williams and Scott Gilbert, and will be scheduled for trial after extradition of the defendants to Mississippi. The South Carolina prosecution will be handled by Department of Justice Organized Crime and Gang Section trial attorneys Leshia Lee-Dixon and Robert Tully. The Georgia cases will be prosecuted by Assistant U.S. Attorney Shanya J. Dingle of the Northern District of Georgia.
An indictment is a formal charge against a defendant. Under the law, an indictment is merely an accusation and a defendant is presumed innocent until proven guilty.U.S. Navy Petty Officer Based in Japan Pleads Guilty<br /> in International Bribery ScandalRead the Press Release
U.S. Navy Petty Officer First Class Daniel Layug pleaded guilty in the Southern District of California today to accepting more than $10,000 in cash, consumer electronics and travel expenses from a foreign defense contractor in exchange for classified and internal Navy information.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Laura Duffy of the Southern District of California, Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) and Deputy Inspector General for Investigations James B. Burch of the U.S. Department of Defense Office of the Inspector General made the announcement.
Layug, 27, entered his plea before U.S. Magistrate Judge Karen S. Crawford to one count of conspiracy to commit bribery. He is the sixth defendant charged – and the third to plead guilty – in the alleged bribery scheme involving Singapore-based defense contractor Glenn Defense Marine Asia (GDMA), which provided port services to U.S. Navy ships in the Asia Pacific region.
“Today, U.S. Navy Petty Officer First Class Dan Layug admitted that he swapped classified U.S. Navy information for cash, luxury travel perks and electronic gadgets from a defense contractor,” said Acting Assistant Attorney General O’Neil. “In taking these under-the-table bribes, Layug put his own financial interests above those of the Navy and the country he vowed to serve. The Criminal Division, with our law enforcement partners, is committed to holding responsible those who were part of this massive fraud and bribery scheme that cost the U.S. Navy more than $20 million.”
“Every service member is entrusted with the enormous responsibility of protecting this country at all costs,” said U.S. Attorney Duffy. “Because of greed, Daniel Layug fell woefully short of that high calling, and this guilty plea holds him accountable for a painful betrayal.”
“The guilty plea of U.S. Navy Petty Officer First Class Dan Layug is part of an ongoing effort by the Defense Criminal Investigative Service and its law enforcement partners to bring to justice individuals who seek to enrich themselves at the expense of U.S. taxpayers,” said Deputy Inspector General Burch. “While the conduct of the vast majority of service members is beyond reproach, Defense Criminal Investigative Service will vigorously pursue individuals who betray the trust bestowed upon them.”
“Petty Officer Layug sold sensitive Navy information for monetary gain,” said NCIS Director Traver. “In doing so, he compromised the integrity of his position and the safety of his shipmates. NCIS will continue to work with DCIS and the U.S. Attorney's Office in investigating and prosecuting these crimes to the fullest extent possible.”
According to allegations in court documents, GDMA owner and CEO Leonard Glenn Francis and his cousin, GDMA executive Alex Wisidigama, enlisted the clandestine assistance of Navy personnel – including Layug, Commander Michael Vannak Khem Misiewicz, Commander Jose Luis Sanchez, and Naval Criminal Investigative Service Special Agent John Beliveau – to provide classified ship schedules and other sensitive U.S. Navy information in exchange for cash, travel expenses, and consumer electronics. GDMA allegedly overcharged the Navy under its contracts and submitted bogus invoices for more than $20 million in port services.
Court records state that Layug worked secretly on behalf of GDMA, using his position as a logistics specialist at a U.S. Navy facility in Yokosuka, Japan, to gain access to classified U.S. Navy ship schedules and then provided this information to GDMA’s vice president of global operations. Layug admitted he also provided pricing information from one of GDMA’s competitors.
In return, according to the plea agreement, GDMA gave Layug envelopes of cash on a regular basis. Layug admitted that he accepted a $1,000 monthly allowance from GDMA. On May 21, 2012, GDMA’s vice president of global operations instructed a GDMA accountant that “at the end of each month, we will be providing an allowance to Mr. Dan Layug. Total of US $1,000. You may pay him the equivalent in Yen. He will come by the office at the end of each month to see you.” Layug also admitted that he received luxury hotel stays for himself and others in Malaysia, Singapore, Indonesia, Hong Kong and Thailand.
Further according to the plea agreement, Layug asked GDMA for consumer electronics. In an email on March 9, 2012, Layug asked the vice president of global operations, “What are the chances of getting the new iPad 3? Please let me know.” In the plea agreement, Layug admitted that GDMA then provided him with an iPad 3.
In another email exchange on May 28, 2013, Layug asked the vice president of global operations for a “bucket list” of items including a high end camera, an iPhone5 cellular phone, a Samsung S4 cellular phone, and an iPad Mini. Shortly after sending his “bucket list” to the vice president of global operations, Layug stated in an email that “the camera is awesome bro! Thanks a lot! Been a while since I had a new gadget!”
Francis was previously charged with conspiring to bribe U.S. Navy officials. Wisidagama pleaded guilty on March 18, 2014, to defrauding the U.S. Navy.
Two other senior Navy officials – Commander Michael Vannak Khem Misiewicz, 46, and Commander Jose Luis Sanchez, 41 – have been charged separately with bribery conspiracies involving GDMA. On Dec. 17, 2013, NCIS Supervisory Special Agent John Bertrand Beliveau II, 44, pleaded guilty to conspiracy and bribery charges for regularly tipping off Francis to the status of the government’s investigation into GDMA.
The ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service 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 W. 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, the DOD Hotline at www.dodig.mil/hotline , or call (800) 424-9098.Texas Man Pleads Guilty to Conspiring to Smuggle<br /> and Traffic Counterfeit Viagra TabletsRead the Press Release
A Texas man pleaded guilty today to conspiring to smuggle and to traffic in counterfeit and misbranded pharmaceuticals, including Viagra tablets, from China, announced Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.
Nasif Baqla, 26, of Houston, pleaded guilty before U.S. District Judge Nancy F. Atlas in the Southern District of Texas to one count of conspiracy to traffic in counterfeit goods, to introduce misbranded prescription drugs into interstate commerce and to import such goods contrary to U.S. law.
Baqla was indicted on Aug. 22, 2012, as were two other individuals – Jamal Khattab, 49, of Katy, Texas, and Fayez Al-Jabri, 45, of Chicago – in a separate, but related case. Khattab and Al-Jabri each pleaded guilty on Dec. 3, 2013, and March 21, 2014, respectively, to the same conspiracy charge as Baqla, as well as trafficking in counterfeit goods and introducing counterfeit drugs into interstate commerce in violation of the Food, Drug and Cosmetic Act.
According to court documents, in July 2010, a package of counterfeit Viagra tablets was shipped from China to Houston, intended for Baqla and Khattab. The package was intercepted by Customs and Border Protection officers. Baqla claimed the pills were his and that he received them on behalf of a friend. Although the tablets were marked with trademarks substantially indistinguishable from the genuine marking on a legitimate Viagra pill, the drugs in the package were counterfeit and misbranded.
This matter was investigated by Homeland Security Investigations, the Food and Drug Administration - Office of Criminal Investigations, Diplomatic Security Service and police departments in Houston and Chicago. The case is being prosecuted by Assistant Deputy Chief for Litigation John Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Kebharu Smith of the Southern District of Texas.Milwaukee Man Indicted for Sex TraffickingRead the Press Release
Today a federal grand jury in Milwaukee returned a two count indictment charging Paul Carter, aka Pimpin’ Paul, with sex trafficking offenses dating from 2012 through 2013, the Justice Department announced.
Carter, 44, of Milwaukee, is charged with one count of sex trafficking of an adult female by force, threats of force, fraud and coercion. Carter is also charged with one count of sex trafficking of a minor. Carter allegedly used force, threats of force, fraud and coercion to cause the victim to engage in a commercial sex act while knowing that the victim was under the age of 18. If convicted, Carter faces a statutory maximum sentence of life in prison on each charge.
The case was investigated by the Human Trafficking Task Force for the Eastern District of Wisconsin, which includes law enforcement officers from the FBI, Homeland Security Investigations, Wisconsin Division of Criminal Investigation and the Milwaukee Police Department. The case is being prosecuted by Assistant U.S. Attorney Karine Moreno-Taxman of the Eastern District of Wisconsin and Trial Attorney Daniel H. Weiss of the Civil Rights Division's Human Trafficking Prosecution Unit.
An indictment is merely an accusation, and the defendant is presumed innocent until proven guilty.
Law School Admission Council Agrees to Systemic Reforms and $7.73 Million Payment to Settle Justice Department’s Nationwide Disability Discrimination LawsuitRead the Press Release
The Justice Department filed a joint motion today for entry of a landmark consent decree to resolve allegations that the Law School Admission Council (LSAC) engaged in widespread and systemic discrimination in violation of the Americans with Disabilities Act (ADA). Under the proposed consent decree, LSAC will pay $7.73 million in penalties and damages to compensate over 6,000 individuals nationwide who applied for testing accommodations on the Law School Admission Test (LSAT) over the past five years. The decree also requires comprehensive reforms to LSAC’s policies and ends its practice of “flagging,” or annotating, LSAT score reports for test takers with disabilities who receive extended time as an accommodation. These reforms will impact tens of thousands of test takers with disabilities for years to come.
The United States intervened in DFEH v. LSAC Inc., which was originally brought on behalf of California test takers in the U.S. District Court for the Northern District of California. The United States’ intervention expanded the case to ensure comprehensive and nationwide relief under Title III of the ADA for individuals with disabilities who request testing accommodations for the LSAT – a required examination for anyone seeking admission to an American Bar Association approved law school in the United States. The allegations in the complaint detail LSAC’s routine denial of testing accommodation requests, even in cases where applicants have a permanent physical disability or submitted thorough supporting documentation from qualified professionals and demonstrated a history of testing accommodations since childhood. Without the necessary accommodations, test takers with disabilities are denied an equal opportunity to demonstrate their aptitude and achievement level. The lawsuit further alleged that LSAC engages in discrimination prohibited by the ADA through its practice of flagging the LSAT score reports of individuals who received extended time as a testing accommodation, thereby identifying to law schools that the test taker is a person with a disability.
“This landmark agreement compels systemic reforms to LSAC’s treatment of test takers with disabilities and brings an end to LSAC’s stigmatizing practice of flagging the score reports of individuals with disabilities who require certain testing accommodations,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “If entered by the court, this decree will impact tens of thousands of Americans with disabilities, opening doors to higher education that have been unjustly closed to them for far too long. We congratulate LSAC for signing this agreement, which will compensate victims of past discrimination and provide a model for the provision of testing accommodations to test takers with disabilities on standardized examinations.”
“The participation of the U.S. Attorney’s Office in this important litigation sends a strong message that no discrimination of any kind will be tolerated in this district,” said U.S. Attorney Melinda Haag for the Northern District of California. “We are fully committed to ensuring equal access to all opportunities society has to offer, including education.”
Under the consent decree, LSAC has agreed to:
- put a permanent end to the practice of flagging the LSAT score reports of individuals with disabilities who take the LSAT with the common testing accommodation of extended time;
- pay $7.73 million to be allocated for a civil penalty, compensation to individuals named in the United States’ and other plaintiffs’ complaints, and a nationwide victims’ compensation fund;
- streamline its evaluation of requests for testing accommodations by automatically granting most testing accommodations that a candidate can show s/he has previously received for a standardized exam related to post-secondary admissions (such as the SAT, ACT or GED, among others); and
- implement additional best practices for reviewing and evaluating testing accommodation requests as recommended by a panel of experts (to be created by the parties).
Individuals who applied for testing accommodations from LSAC between Jan. 1, 2009, and May 20, 2014, may be eligible to receive a monetary award from a nationwide victims’ compensation fund. The claims administrator for the fund has not yet been determined; this information will be posted on LSAC’s website following entry of the consent decree by the court. Questions about the victims’ compensation fund should be directed to the claims administrator.
For more information or for a copy of the consent decree, please visit the ADA website. Those interested in finding out more about the ADA may also call the Justice Department’s toll-free ADA Information Line at 800-514-0301 or 800-514-0383 (TDD).
Justice Department Requires ConAgra, Cargill, CHS, Horizon Milling <br /> to Divest Four Significant Flour Mills to Go Forward with <br /> Ardent Mills Joint VentureRead the Press Release
The Department of Justice announced today that it will require ConAgra Foods Inc., Cargill Inc., CHS Inc., and Horizon Milling LLC to divest four competitively significant flour mills in order to proceed with the formation of Ardent Mills, a flour milling joint venture. The department said that the divestitures will preserve flour milling competition in four regions of the country encompassing large cities such as Los Angeles, Dallas, Minneapolis and the San Francisco/Oakland Bay Area, resulting in more competitive prices for wheat flour purchasers and ultimately lower prices for consumers who purchase wheat flour-based products, such as bread, cookies and crackers.
Ardent Mills would combine the flour milling assets of ConAgra Mills, a subsidiary of ConAgra Foods, and Horizon Milling, a joint venture between Cargill and CHS.
The department’s Antitrust Division filed a civil antitrust lawsuit today in the U.S. District Court for the District of Columbia to block the proposed joint venture. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit. The department was assisted in its investigation by the California Attorney General’s Office.
“Without the Antitrust Division’s required divestitures, the creation of Ardent Mills would have resulted in less competition in the sale of wheat flour, resulting in customers, such as industrial bakers and food service companies, paying higher prices for wheat flour and ultimately consumers paying more for products they enjoy in their everyday lives, such as bread, cookies and crackers,” said Deputy Assistant Attorney General for the Antitrust Division Renata B. Hesse. “The divestitures will ensure that competition for hard and soft wheat flour sales is preserved in regions surrounding Los Angeles, Dallas, Minneapolis and the Bay Area.”The department said that, without the divestitures, hard wheat flour prices would be higher in Northern and Southern California, as well as Northern Texas and the Upper Midwest. Hard wheat, which has high gluten content, is well suited for baking bread, rolls, bagels, pizza dough and similar hearty baked goods.
The department also said that prices would be higher for soft wheat flour in Southern California and Northern Texas if the deal proceeded unchanged. Soft wheat flour, which has low gluten content, is well suited for baked goods that are lighter and flakier, such as cakes, cookies and crackers. Both types of flour are made and sold by flour millers – including ConAgra Mills and Horizon Milling – to industrial bakers, food processors, food service companies, distributors and retail sellers of flour for home use.
The department’s complaint alleges that, in the relevant markets, the proposed joint venture would eliminate head-to-head competition between ConAgra Mills and Horizon Milling, increase the likelihood that flour milling capacity would be closed, and increase the likelihood of anticompetitive coordination among flour millers, which would raise flour prices for customers in the relevant markets. The proposed settlement requires the companies to divest to Miller Milling Company LLC, four mills: ConAgra Mills’ Oakland, California; Saginaw, Texas; and New Prague, Minnesota mills; and Horizon Milling’s Los Angeles mill. Miller Milling has only a minimal presence in the regions of concern; its acquisition of the divestiture mills will create a substantial, independent and economically viable competitor in each relevant market. The proposed settlement also prohibits the companies from exchanging information related to wheat purchases or use by customers to which the companies have sold wheat.
ConAgra Foods is a Delaware corporation with its principal place of business in Omaha, Nebraska. ConAgra Mills is one of the three largest flour millers in the country, operating 21 mills in the United States. In 2012, ConAgra reported revenues of $13.3 billion; ConAgra Mills reported revenues of $1.8 billion.
Horizon Milling is a joint venture that is 76 percent owned by Cargill and 24 percent owned by CHS. It is headquartered in Wayzata, Minnesota, and is one of the three largest flour millers in the country, operating 20 wheat flour mills in the United States. In 2012, Horizon reported revenues of approximately $2.5 billion.
Cargill is a privately held company incorporated in Delaware, with its headquarters in Wayzata. Cargill produces agricultural products and food ingredients; it also markets wheat to flour mills. Horizon Milling currently operates 15 former Cargill wheat flour mills, which Cargill contributed to Horizon when it was formed in 2002. In 2012, Cargill reported revenues of $133.8 billion.
CHS is a Delaware corporation headquartered in Inver Grove Heights, Minnesota. Its lines of business include the sale of grains and grain marketing services, animal feed, and food and food ingredients; it also markets wheat to flour mills. CHS owns five wheat flour mills in the United States, which it leases to the Horizon Milling joint venture. In 2012, CHS reported revenues of $40.1 billion.
Miller Milling Company LLC, which is headquartered in Minneapolis, is a subsidiary of Nisshin Seifun Group Inc., which is headquartered in Tokyo.
As required by the Tunney Act, the proposed settlement, along with a competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning this proposed settlement 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 U.S. District Court for the District of Columbia may enter the proposed settlement upon a finding that it is in the public interest.
Jordanian Shipping Company Pleads Guilty to Illegally Discharging Oily WasteRead the Press Release
Jordan-based Arab Ship Management Ltd. pleaded guilty today in federal court in Wilmington, Delaware, to one count of violating the Act to Prevent Pollution from Ships, the Justice Department and the U.S. Coast Guard announced.
In accordance with the terms of the plea agreement, Arab Ship Management Ltd. was sentenced to pay a criminal penalty totaling $500,000 and be placed on probation for two years, during which time ships operated by the company will be banned from calling on ports of the United States.
“The defendant violated environmental laws that protect our marine environment from harmful pollution,” said U.S. Attorney for the District of Delaware Charles M. Oberly III. “This conviction ensures that the defendant is held accountable with a criminal fine and a contribution to conservation efforts in coastal Delaware, as well as a two-year ban from United States ports. The message to the shipping industry is clear: environmental crimes at sea will not be tolerated.”
“This case demonstrates one way the Coast Guard acts to protect the environment,” said Captain Kathy Moore, U.S. Coast Guard Commander of Sector Delaware Bay. “Marine Inspectors detected serious problems with the ship’s operations. They dove into the details and worked with the Department of Justice and the Coast Guard Investigative Service to bring this case to an appropriate resolution.”
According to court documents and statements made in court, Arab Ship Management Ltd. operated the M/V Neameh, a 6,398 gross ton ocean-going livestock carrier. On March 28, 2013, the U.S. Coast Guard boarded the vessel in the Delaware Bay Big Stone Anchorage to conduct an inspection. The inspection and subsequent criminal investigation revealed heavy oil sludge inside the piping on the discharge side of the pollution prevention equipment leading directly overboard, where no oil sludge should be if the pollution prevention equipment is operated properly. Inspectors also discovered that the vessel’s piping arrangement had been modified in a prohibited manner so as to allow oil sludge to be pumped directly overboard. This prohibited piping arrangement was removed prior to the vessel’s arrival in Delaware. Also during the inspection, Coast Guard officers were presented with two oil record books which are required by law to be accurately maintained onboard the vessel. These two oil record books contained different and contradictory entries for the time period of Nov. 30, 2011, through Jan. 2, 2012, as well as fake oily waste disposal receipts.
This case was investigated by the U.S. Coast Guard Sector Delaware Bay, Coast Guard Marine Safety Detachment Lewes and the Coast Guard Investigative Service. The case is being prosecuted by Trial Attorney Stephen Da Ponte in the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice and Assistant U.S. Attorney Edmond Falgowski from the U.S. Attorney’s Office for the District of Delaware.U.S. Charges Five Chinese Military Hackers for Cyber Espionage Against U.S. Corporations and a Labor Organization for Commercial AdvantageRead the Press Release
A grand jury in the Western District of Pennsylvania (WDPA) indicted five Chinese military hackers for computer hacking, economic espionage and other offenses directed at six American victims in the U.S. nuclear power, metals and solar products industries.
The indictment alleges that the defendants conspired to hack into American entities, to maintain unauthorized access to their computers and to steal information from those entities that would be useful to their competitors in China, including state-owned enterprises (SOEs). In some cases, it alleges, the conspirators stole trade secrets that would have been particularly beneficial to Chinese companies at the time they were stolen. In other cases, it alleges, the conspirators also stole sensitive, internal communications that would provide a competitor, or an adversary in litigation, with insight into the strategy and vulnerabilities of the American entity.
“This is a case alleging economic espionage by members of the Chinese military and represents the first ever charges against a state actor for this type of hacking,” U.S. Attorney General Eric Holder said. “The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response. Success in the global market place should be based solely on a company’s ability to innovate and compete, not on a sponsor government’s ability to spy and steal business secrets. This Administration will not tolerate actions by any nation that seeks to illegally sabotage American companies and undermine the integrity of fair competition in the operation of the free market.”
“For too long, the Chinese government has blatantly sought to use cyber espionage to obtain economic advantage for its state-owned industries,” said FBI Director James B. Comey. “The indictment announced today is an important step. But there are many more victims, and there is much more to be done. With our unique criminal and national security authorities, we will continue to use all legal tools at our disposal to counter cyber espionage from all sources.”
“State actors engaged in cyber espionage for economic advantage are not immune from the law just because they hack under the shadow of their country’s flag,” said John Carlin, Assistant Attorney General for National Security. “Cyber theft is real theft and we will hold state sponsored cyber thieves accountable as we would any other transnational criminal organization that steals our goods and breaks our laws.”
“This 21st century burglary has to stop,” said David Hickton, U.S. Attorney for the Western District of Pennsylvania. “This prosecution vindicates hard working men and women in Western Pennsylvania and around the world who play by the rules and deserve a fair shot and a level playing field.”
Summary of the Indictment
Defendants : Wang Dong, Sun Kailiang, Wen Xinyu, Huang Zhenyu, and Gu Chunhui, who were officers in Unit 61398 of the Third Department of the Chinese People’s Liberation Army (PLA). The indictment alleges that Wang, Sun, and Wen, among others known and unknown to the grand jury, hacked or attempted to hack into U.S. entities named in the indictment, while Huang and Gu supported their conspiracy by, among other things, managing infrastructure (e.g., domain accounts) used for hacking.
Victims : Westinghouse Electric Co. (Westinghouse), U.S. subsidiaries of SolarWorld AG (SolarWorld), United States Steel Corp. (U.S. Steel), Allegheny Technologies Inc. (ATI), the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (USW) and Alcoa Inc.
Time period : 2006-2014.
Crimes : Thirty-one counts as follows (all defendants are charged in all counts).
Count(s)
Charge
Statute
Maximum Penalty
1
Conspiring to commit computer fraud and abuse
18 U.S.C. § 1030(b).
10 years.
2-9
Accessing (or attempting to access) a protected computer without authorization to obtain information for the purpose of commercial advantage and private financial gain.
18 U.S.C. §§ 1030(a)(2)(C), 1030(c)(2)(B)(i)-(iii), and 2.
5 years (each count).
10-23
Transmitting a program, information, code, or command with the intent to cause damage to protected computers.
18 U.S.C. §§ 1030(a)(5)(A), 1030(c)(4)(B), and 2.
10 years (each count).
24-29
Aggravated identity theft.
18 U.S.C. §§ 1028A(a)(1), (b), (c)(4), and 2
2 years (mandatory consecutive).
30
Economic espionage.
18 U.S.C. §§ 1831(a)(2), (a)(4), and 2.
15 years.
31
Trade secret theft.
18 U.S.C. §§ 1832(a)(2), (a)(4), and 2.
10 years.
Summary of Defendants’ Conduct Alleged in the Indictment
Defendant
Victim
Criminal Conduct
Sun
Westinghouse
In 2010, while Westinghouse was building four AP1000 power plants in China and negotiating other terms of the construction with a Chinese SOE (SOE-1), including technology transfers, Sun stole confidential and proprietary technical and design specifications for pipes, pipe supports, and pipe routing within the AP1000 plant buildings.
Additionally, in 2010 and 2011, while Westinghouse was exploring other business ventures with SOE-1, Sun stole sensitive, non-public, and deliberative e-mails belonging to senior decision-makers responsible for Westinghouse’s business relationship with SOE-1.
Wen
SolarWorld
In 2012, at about the same time the Commerce Department found that Chinese solar product manufacturers had “dumped” products into U.S. markets at prices below fair value, Wen and at least one other, unidentified co-conspirator stole thousands of files including information about SolarWorld’s cash flow, manufacturing metrics, production line information, costs, and privileged attorney-client communications relating to ongoing trade litigation, among other things. Such information would have enabled a Chinese competitor to target SolarWorld’s business operations aggressively from a variety of angles.
Wang and Sun
U.S. Steel
In 2010, U.S. Steel was participating in trade cases with Chinese steel companies, including one particular state-owned enterprise (SOE-2). Shortly before the scheduled release of a preliminary determination in one such litigation, Sun sent spearphishing e-mails to U.S. Steel employees, some of whom were in a division associated with the litigation. Some of these e-mails resulted in the installation of malware on U.S. Steel computers. Three days later, Wang stole hostnames and descriptions of U.S. Steel computers (including those that controlled physical access to company facilities and mobile device access to company networks). Wang thereafter took steps to identify and exploit vulnerable servers on that list.
Wen
ATI
In 2012, ATI was engaged in a joint venture with SOE-2, competed with SOE-2, and was involved in a trade dispute with SOE-2. In April of that year, Wen gained access to ATI’s network and stole network credentials for virtually every ATI employee.
Wen
USW
In 2012, USW was involved in public disputes over Chinese trade practices in at least two industries. At or about the time USW issued public statements regarding those trade disputes and related legislative proposals, Wen stole e-mails from senior USW employees containing sensitive, non-public, and deliberative information about USW strategies, including strategies related to pending trade disputes. USW’s computers continued to beacon to the conspiracy’s infrastructure until at least early 2013.
Sun
Alcoa
About three weeks after Alcoa announced a partnership with a Chinese state-owned enterprise (SOE-3) in February 2008, Sun sent a spearphishing e-mail to Alcoa. Thereafter, in or about June 2008, unidentified individuals stole thousands of e-mail messages and attachments from Alcoa’s computers, including internal discussions concerning that transaction.
Huang
Huang facilitated hacking activities by registering and managing domain accounts that his co-conspirators used to hack into U.S. entities. Additionally, between 2006 and at least 2009, Unit 61398 assigned Huang to perform programming work for SOE-2, including the creation of a “secret” database designed to hold corporate “intelligence” about the iron and steel industries, including information about American companies.
Gu
Gu managed domain accounts used to facilitate hacking activities against American entities and also tested spearphishing e-mails in furtherance of the conspiracy.
An indictment is merely an accusation and a defendant is presumed innocent unless proven guilty in a court of law.
The FBI conducted the investigation that led to the charges in the indictment. This case is being prosecuted by the U.S. Department of Justice’s National Security Division Counterespionage Section and the U.S. Attorney’s Office for the Western District of Pennsylvania.
Related Materials:
Indictment
Statement by Attorney General Eric Holder <br /> on the Conviction of Abu Hamza al-MasriRead the Press Release
Attorney General Eric Holder issued the following statement today in response to a federal jury in Manhattan unanimously reaching a guilty verdict against Abu Hamza al-Masri:
“In both word and deed, Abu Hamza supported the cause of violent extremism. His conviction is as just as it was swift. This case is all the more noteworthy since it continues a trend of successful prosecutions of top terrorism suspects in our federal court system. With each efficiently delivered guilty verdict against a top al Qaeda-linked figure, the debate over how to best seek justice in these cases is quietly being put to rest.”
Remarks as Prepared for Delivery by Deputy Attorney General James M. Cole Announcing Guilty Plea in Credit Suisse Offshore Tax Evasion Case Washington, D.c.Read the Press Release
After an exhaustive, multi-year investigation into the use of illegal offshore bank accounts at Credit Suisse, today we have announced an historic guilty plea by the bank and the largest monetary penalty of any criminal tax case ever.
Today's guilty plea is an appropriate resolution, given the duration and breadth of Credit Suisse's conduct. Credit Suisse engaged in serious wrongdoing, first, when it aided and abetted U.S. tax evasion, and then when it failed to take immediate steps to remedy this conduct and cooperate in our investigation. Today Credit Suisse has admitted that conduct and faces significant consequences for it. Its agreement to pay fines and restitution in excess of 2 and a half billion dollars reflects both the significance of the problem at the bank and the bank's acceptance of responsibility for it.
Credit Suisse is taking the appropriate steps to put its criminal conduct behind it and move toward a new era of compliance. Through this guilty plea and Credit Suisse's civil resolutions with the Securities and Exchange Commission, the Federal Reserve, and the New York Department of Financial Services, Credit Suisse has committed to working with U.S. law enforcement and banking regulators in order to ensure that its wrongdoing remains in the past. We acknowledge Credit Suisse's efforts in this regard, and I expect that as the Bank moves forward, it will continue on its new path of compliance with U.S. tax laws.
In coming to today's resolution, we are mindful that guilty pleas by a bank can have impacts far beyond the parties to the plea. This plea demonstrates that the Department of Justice and bank regulators are prepared hold banks and their relevant employees accountable while being mindful of the impacts on depositors and the American public. The coordination required for this result can take considerable time, as in this case, but it is work that we deem important.
In several public statements, I have promised additional public developments with respect to the Department's investigations into the use of secret offshore bank accounts in Switzerland and elsewhere, and one of those developments has come to pass with today's plea. But there have been many other notable actions in the past few months in our ongoing efforts to combat the use of foreign bank accounts to evade U.S. taxes. Eight individuals affiliated with Credit Suisse have been indicted by the United States Attorney's office for the Eastern District of Virginia for their role in conspiring to assist U.S. clients in concealing their income and assets from the IRS. Two of them have pleaded guilty in recent weeks. In January 2013, Wegelin Bank, another Swiss bank, pled guilty to conspiracy to evade taxes. We have targeted 13 other Swiss banks for similar conduct. Just recently, a Swiss asset management firm, Swisspartners Group, entered into a multi-million-dollar settlement with the U.S. Attorney's Office for the Southern District of New York, and produced account files of its clients. We have also had over 100 Swiss banks come forward as part of a program we put in place with the support of the Swiss government. Under this program, these banks, which were not under investigation, will pay penalties for the violations of US law that were committed at their institutions, and provide us with information that will lead to the identification of their US clients who evaded paying their taxes. We also have had over 43,000 US taxpayers enter into the IRS voluntary disclosure program and pay over $6 billion in back taxes and penalties to the United States Treasury.
The Department is committed to robust enforcement in the offshore area, not just in Switzerland, but wherever in the world it is found. We have taken public actions in India, Israel, Luxembourg, the Cayman Islands and several other Caribbean countries. And we are engaged in law enforcement actions around the world that are not yet public. The Department's approach to investigating and prosecuting these cases is multi-faceted, and we are committed to using the many law enforcement tools at our disposal - from grand jury subpoenas to John Doe summonses, to whistleblowers and cooperating witnesses - to gather information and evidence to identify wrongdoers and hold them to account.
While today's action is a significant milestone in our law enforcement efforts, our work in the offshore area is far from done, and we expect additional public actions in this area in the coming months.
Today I commend the efforts of the Tax Division led by Assistant Attorney General Kathryn Keneally, and the U.S. Attorney's Office for the Eastern District of Virginia, led by U.S. Attorney Dana Boente. I also applaud the work and support of the Internal Revenue Service, especially intensive investigative efforts of the Criminal Investigation Division, led by Chief Richard Weber. We also appreciate the efforts of the Swiss government and banking regulators in reaching a just result and bringing the Credit Suisse matter to a close.
I would now like to turn things over to Assistant Attorney General of the Tax Division, Kathryn Keneally, who will provide additional comments on today's action and our law enforcement efforts in the offshore area.
Remarks as Prepared for Delivery by Attorney General Eric Holder Announcing Guilty Plea in Credit Suisse Offshore Tax Evasion Case Washington, D.c.Read the Press Release
Good afternoon – and thank you all for being here. I am joined today by Deputy Attorney General Jim Cole; Assistant Attorney General for the Tax Division Kathryn Keneally; U.S. Attorney Dana Boente, from the Eastern District of Virginia; and Commissioner John Koskinen of the Internal Revenue Service. We are here to announce a major step forward in our ongoing effort to protect the American people from financial misconduct – and to hold accountable any individual, bank, or other institution that violates our laws and abuses the public trust.
Today, the Department of Justice filed a criminal information against Credit Suisse AG –a bank that is one of the largest wealth managers in the world. In the course of our painstaking, years-long investigation, the Department discovered that Credit Suisse and its subsidiaries engaged in an extensive and wide-ranging conspiracy to help U.S. taxpayers evade taxes. The bank actively helped its account holders to deceive the IRS by concealing assets and income in illegal, undeclared bank accounts. These secret offshore accounts were held in the names of sham entities and foundations. This conspiracy spanned decades. In the case of at least one wholly-owned subsidiary, the practice of using sham entities to conceal funds began more than a century ago. Credit Suisse not only knew about this illegal, cross-border banking activity; they willfully aided and abetted it. Hundreds of Credit Suisse employees, including at the manager level, conspired to help tax cheats dodge U.S. taxes.
In the course of these activities, Credit Suisse deceived the IRS, the Federal Reserve, the Securities and Exchange Commission, and the Department of Justice. The bank went to elaborate lengths to shield itself, its employees, and the tax cheats it served from accountability for their criminal actions. They subverted disclosure requirements, destroyed bank records, and concealed transactions involving undeclared accounts by limiting withdrawal amounts and using offshore credit and debit cards to repatriate funds. They failed to take even the most basic steps to ensure compliance with tax laws. And when the bank finally began to feel pressure to correct illegal practices and comply with the law – as a result of the Justice Department's investigation, of which they were notified in 2010 – Credit Suisse failed to retain key documents, allowed evidence to be lost or destroyed, and conducted a shamefully inadequate internal inquiry.
Today, I can announce that Credit Suisse has agreed to plead guilty to criminal charges related to this pervasive illegal activity. This is the largest bank to plead guilty in 20 years. The bank will pay a total of $1.8 billion in the form of a fine of over $1.13 billion and nearly $670 million in restitution to the IRS. They have admitted criminal wrongdoing in a detailed Statement of Facts filed alongside the information in this case. And they have stopped these activities, fundamentally changed their business operations, and agreed to provide critical information that will aid in our enforcement efforts - so the bank can move forward in full compliance with the law.
This plea agreement caps a years-long investigation that has already led to law enforcement actions with respect to several individual employees Credit Suisse. Since 2011, the Department has indicted eight employees at the bank, including some at the manager level; two of these have so far pleaded guilty.
This announcement should send a firm and unequivocal message to anyone who would engage in dishonest or illegal financial activity that the Justice Department does not, and we will not, tolerate such activities. When a bank engages in misconduct this brazen, it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as has happened here.
This case shows that no financial institution, no matter its size or global reach, is above the law. When the Department of Justice conducts investigations, we will always follow the law and the facts wherever they lead. We will never hesitate to criminally sanction any company or individual that breaks the law. A company's profitability or market share can never and will never be used as a shield from prosecution or penalty. And this action should put that misguided notion definitively to rest.
This resolution, and today's announcement, were conducted in close coordination with the bank's financial regulators - in this case, the Board of Governors of the Federal Reserve, which today announced a $100 million penalty; the New York State Department of Financial Services, which announced a resolution totaling $715 million; and the SEC, to which Credit Suisse paid $196 million this past February.
Because criminal charges involving a financial institution have the potential to trigger serious follow-on actions by regulatory agencies, this coordination was imperative. As the regulators have conveyed this afternoon, notwithstanding this plea agreement, the bank will move forward. And although I cannot comment on, or specify the targets of, other ongoing investigations, I am confident that this robust cooperation will serve us well in the weeks and months ahead.
I'd like to thank everyone who made today's announcement possible – particularly Assistant Attorney General Keneally, her colleagues in the Tax Division, and U.S. Attorney Boente and his colleagues in the Eastern District of Virginia. Thank you for your tireless work on this important matter. At this time it's my privilege to introduce Deputy Attorney General James Cole, who will provide additional details on today's announcement.
Remarks as Prepared for Delivery by Assistant Attorney General for the Tax Division Kathryn Keneally Announcing Guilty Plea in Credit Suisse Offshore Tax Evasion Case Washington, D.c.Read the Press Release
The central mission of the Tax Division is to enforce our nation's tax laws fairly and consistently. This is a responsibility that we owe to every honest taxpayer who pays his or her fair share.
As part of this mission, we are committed to using all enforcement tools against those who seek to avoid their legal obligations, and their responsibilities to their fellow citizens and taxpayers, by hiding their assets in foreign bank accounts. We are also committed to investigating and holding responsible financial institutions, bankers, and other professionals who facilitate this conduct.
Credit Suisse has now acknowledged that it acted in both the United States and Switzerland to aid and abet the use of secret Swiss bank accounts for the evasion of U.S. taxes. As set out in the statement of facts, Credit Suisse assisted its clients in using sham entities, soliciting IRS forms that falsely stated that those sham entities were the beneficial owners of assets in accounts with the bank, and facilitating access to the funds in those accounts in a manner designed to keep the accounts secret. It also failed to preserve documents that would have aided in our investigation. The plea agreement that has been announced today imposes serious consequences on Credit Suisse for this conduct.
We appreciate that Credit Suisse has taken this significant step to accept the consequences of these acts. We also recognize that Credit Suisse has ceased this conduct, and has changed its business operations to ensure that U.S. taxpayers will no longer be able to hide their assets at Credit Suisse. Also, through the information that Credit Suisse has agreed to provide, the Internal Revenue Service and the Department of Justice will be able to make treaty requests to Switzerland for account records. For those account holders who closed their accounts knowing that our investigations were focusing on Credit Suisse, we are obtaining information that is enabling us to follow the funds to other Swiss banks or to banks in other tax haven and bank secrecy countries. By its plea today, Credit Suisse has addressed its past conduct, and is in a position to move beyond these criminal activities.
We also appreciate that Switzerland has taken important steps to ensure that its banking community will no longer be a haven for U.S. tax evasion. Switzerland's ratification, in September 2009, of the Protocol amending U.S.-Swiss tax treaty, and its inter-govermental agreement with the United States concerning FATCA implementation, were significant steps toward this goal. We are also grateful for the support of the Swiss Financial Market Supervisory Authority, FINMA, and the Swiss government for the Swiss Bank Program that the Department announced in August 2013. Through this program, Swiss banks are cooperating to provide valuable information that will further our global investigations, and those Swiss banks in turn have a path to resolution for past activities.
I also take this opportunity to thank the Attorney General and the Deputy Attorney General for the support and assistance that the Tax Division received throughout this investigation and in all our our enforcement activities, to recognize and thank United States Attorney Dana Boente for the excellent work by his office in the Eastern District of Virginia, to recognize and thank the IRS Commissioner John Koskinen and the IRS Criminal Investigation Division for the important work of the IRS in this law enforcement priority, and to recognize and thank all of the prosecutors and investigative agents who have done excellent work throughout this investigation, and in particular to recognize Mark Lytle, Assistant United States Attorney for the Eastern District of Virginia, Mark Daly, Senior Litigation Counsel, and Nanette Davis, Assistant Chief, with the Tax Division, and IRS Special Agent James O'Leary.
I would like now to turn to IRS Commissioner John Koskinen for additional comments.
Mississippi Man Pleads Guilty in Ricin Letter InvestigationRead the Press Release
James Everett Dutschke, 41, of Tupelo, Mississippi., was sentenced today by United States District Judge Sharion Aycock, in Aberdeen, Mississippi., to a 300 month prison sentence for developing and possessing the biological agent ricin and subsequently mailing ricin-laced, threatening letters including one that threatened bodily harm to the President of the United States. Dutschke was also sentenced to serve a term of 5 years supervised release.
The sentence was announced by John Carlin, Assistant Attorney General for the Justice Department’s National Security Division, Felicia Adams, U.S. Attorney for the Northern District of Mississippi, Daniel McMullen, Special Agent in Charge of the FBI’s Jackson Field Office, and Craig Caldwell, Special Agent in Charge of the Secret Service’s Birmingham, AL, District Field Office.
Following an investigation, Dutschke was arrested on April 27, 2013, and indicted by a federal grand jury on June 3, 2013. A superseding indictment was filed on Nov. 20, 2013. Dutschke pled guilty on Jan. 17, 2014 to one count of developing and possessing ricin, and three subsequent counts of mailing threatening letters laced with the substance to the President of the United States, U.S. Senator Roger Wicker, and Lee County, Mississippi, Justice Court Judge Sadie Holland. According to the plea agreement between Dutschke and the U.S. Attorney’s Office that was filed in U.S. District Court in Oxford, Dutschke had agreed to serve a 300 month prison sentence and had waived his right to appeal.
The investigation was conducted by the FBI’s Jackson and Memphis Joint Terrorism Task Forces, the U.S. Secret Service, the U. S. Postal Inspection Service, the U. S. Capitol Police and was assisted by the following state and local agencies: Mississippi National Guard 47th Civil Support, Mississippi Office of Homeland Security, Lee County Sheriff’s Office, Prentiss County Sheriff’s Office, Corinth Police Department, Tupelo Police Department and Booneville Police Department. The case is being prosecuted by Assistant U.S. Attorneys Chad Lamar, Clay Joyner and Clyde McGee of the Northern District of Mississippi, and Andrew Sigler of the Department of Justice, National Security Division.Former Wellcare Chief Executive <br /> Sentenced for Health Care FraudRead the Press Release
Former WellCare Chief Executive Officer Todd S. Farha, 45, of Tampa, Florida, was sentenced today in the Middle District of Florida to serve 36 months in prison for defrauding the Florida Medicaid program.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division and United States Attorney A. Lee Bentley III of the Middle District of Florida made the announcement after Farha was sentenced by U.S. District Judge James S. Moody Jr.
Farha was convicted by a federal jury in the Middle District of Florida on June 10, 2013, of two counts of health care fraud.
According to court records and evidence at trial, Farha and others orchestrated a scheme to defraud the Florida Medicaid program from the summer of 2003 through the fall of 2007 by making fraudulent statements relating to expenditures for behavioral health care services.
WellCare operates health maintenance organizations (HMOs) in several states providing services through government-sponsored health care benefit programs like Medicaid. Two WellCare HMOs operating in Florida, StayWell and Healthease, contracted with the Agency for Health Care Administration (AHCA), the Florida agency that administers the Medicaid program, to provide Florida Medicaid program recipients with an array of services, including behavioral health services.
In 2002, Florida enacted a statute that required Florida Medicaid HMOs to expend 80 percent of the Medicaid premium paid for certain behavioral health services upon the provision of those services. In the event that the HMO expended less than 80 percent of the premium, the difference was required to be returned to AHCA. As part of the scheme, Farha and others fraudulently submitted inflated expenditure information in the company’s annual reports to AHCA to reduce the WellCare HMOs’ contractual repayment obligations for behavioral health care services.
On May 5, 2009 the government filed related charges in an information and a deferred prosecution agreement (DPA) against WellCare. Pursuant to that DPA, WellCare was required to pay $40 million in restitution, forfeit another $40 million to the United States and cooperate with the government’s criminal investigation. The company complied with all of the requirements of the DPA. As a result, the information was later dismissed by the court following a government motion. In a related civil qui tam case, Wellcare agreed to pay $137.5 million in civil fines and penalties.
This case was investigated by the U.S. Department of Health and Human Services Office of Inspector General, the FBI, and the Florida Attorney General's Medicaid Fraud Control Unit. The case was prosecuted by Senior Trial Attorney John Michelich of the Criminal Division’s Fraud Section and Assistant United States Attorneys Jay Trezevant and Cherie Krigsman and Special Assistant United States Attorney John Bowers of the Middle District of Florida.Former Minnesota Attorney Pleads Guilty to Tax FraudRead the Press Release
Barry V. Voss of St. Paul, Minnesota, pleaded guilty today to failure to pay over employment taxes , announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division Justice, U.S. Attorney Andrew M. Luger for the District of Minnesota and Special Agent in Charge Kelly R. Jackson of the St. Paul Field Office of the Internal Revenue Service (IRS)- Criminal Investigation. Voss pleaded guilty to one count of failure to pay over employment taxes for the fourth quarter of 2008.
According to the plea agreement, Voss filed quarterly employment tax returns with the IRS from July 2007 through December 2010 which reflected taxes withheld from the salaries of the employees of his law firm, Barry V. Voss P.A., including Voss’ own salary. However, Voss failed to timely pay over to the IRS the full amount of the taxes due and owing. Voss admitted that he intentionally failed to pay these taxes to the IRS, which totaled approximately $160,000.
Voss faces a statutory maximum prison term of five years in prison, a fine of $250,000 and payment of back taxes owed to the IRS. A sentencing hearing has not yet been scheduled.
This case was investigated by special agents of IRS-Criminal Investigation. It is being prosecuted by Trial Attorneys Lori A. Hendrickson and Adam R. Smart of the Tax Division and Assistant U.S. Attorney Karen Schommer of the District of Minnesota.
EOIR System UpdateRead the Press Release
At midnight on April 12, 2014, the Executive Office for Immigration Review experienced a catastrophic hardware failure that rendered inaccessible many of its applications. Immediately after identifying the problem, our staff began around-the-clock efforts to recover the hardware. We soon began working with data recovery service experts to preserve our data and restore our applications. Included in the inaccessible information were our backup systems.
We are happy to announce that the data recovery team was able to recover the data and create new drives for those which had failed. To date, we have not lost any data, and we are continuing to finalize restoration of those applications most critical to our internal and external stakeholders. As of 9:00 a.m. on May 19, 2014, our electronic databases are again functional. Although the case information hotline (800-898-7180) is also functional, the hotline is limited to providing information recorded in the electronic database, which our staff will continue to update until all case information is current. We are continuing recovery efforts on other applications, including eRegistration.
We appreciate the patience of our stakeholders through this frustrating time. Please know that our information technology staff has worked very hard to make sure that our system has been rebuilt, but we have also worked smart. Our system was reconstructed in a way that provides more and better redundancies and monitoring that will result in a greater assurance such issues will not again present.
Credit Suisse Pleads Guilty to Conspiracy to Aid and Assist U.S. Taxpayers in Filing False ReturnsRead the Press Release
Credit Suisse AG pleaded guilty today to conspiracy to aid and assist U.S. taxpayers in filing false income tax returns and other documents with the Internal Revenue Service (IRS). The guilty plea by the Swiss corporation is the result of a years-long investigation by U.S. law enforcement authorities that has also produced indictments of eight Credit Suisse executives since 2011; two of those individuals have pleaded guilty so far.
The plea agreement, along with agreements made with state and federal partners, provides that Credit Suisse will pay a total of $2.6 billion - $1.8 billion to the Department of Justice for the U.S. Treasury, $100 million to the Federal Reserve, and $715 million to the New York State Department of Financial Services. The plea agreement was filed in the Eastern District of Virginia today. Earlier this year, Credit Suisse paid approximately $196 million in disgorgement, interest and penalties to the Securities and Exchange Commission (SEC) for violating the federal securities laws by providing cross-border brokerage and investment advisory services to U.S. clients without first registering with the SEC. That settlement with the SEC is also reflected in today’s plea agreement. Together, these actions by U.S. law enforcement and state and federal partners appropriately punish Credit Suisse for its past behavior in these matters.
The announcement was made by Attorney General Eric H. Holder, Deputy Attorney General James M. Cole, Assistant Attorney General Kathryn Keneally for the Justice Department’s Tax Division, U.S. Attorney Dana J. Boente for the Eastern District of Virginia, and Commissioner John Koskinen of the IRS.
“This case shows that no financial institution, no matter its size or global reach, is above the law,” said Attorney General Holder. “Credit Suisse conspired to help U.S. citizens hide assets in offshore accounts in order to evade paying taxes. When a bank engages in misconduct this brazen, it should expect that the Justice Department will pursue criminal prosecution to the fullest extent possible, as has happened here.”
As part of the plea agreement, Credit Suisse acknowledged that, for decades prior to and through 2009, it operated an illegal cross-border banking business that knowingly and willfully aided and assisted thousands of U.S. clients in opening and maintaining undeclared accounts and concealing their offshore assets and income from the IRS.
“Credit Suisse’s guilty plea is just the latest effort by the department to slam the door shut on undeclared bank accounts, phony trusts and other foreign schemes used by U.S. taxpayers to evade taxes,” said Deputy Attorney General Cole. “We will continue to hold to account the bankers, the brokers and other professionals in Switzerland and around the world as well as the institutions that trained and directed them to use bank secrecy laws to protect U.S. tax cheats.”
According to the statement of facts filed with the plea agreement, Credit Suisse employed a variety of means to assist U.S. clients in concealing their undeclared accounts, including by:
• assisting clients in using sham entities to hide undeclared accounts;
• soliciting IRS forms that falsely stated, under penalties of perjury, that the sham entities were the beneficial owners of the assets in the accounts;
• failing to maintain in the United States records related to the accounts;
• destroying account records sent to the United States for client review;
• using Credit Suisse managers and employees as unregistered investment advisors on undeclared accounts;
• facilitating withdrawals of funds from the undeclared accounts by either providing hand-delivered cash in the United States or using Credit Suisse’s correspondent bank accounts in the United States;
• structuring transfers of funds to evade currency transaction reporting requirements; and
• providing offshore credit and debit cards to repatriate funds in the undeclared accounts.
As part of the plea agreement, Credit Suisse further agreed to make a complete disclosure of its cross-border activities, cooperate in treaty requests for account information, provide detailed information as to other banks that transferred funds into secret accounts or that accepted funds when secret accounts were closed, and to close accounts of account holders who fail to come into compliance with U.S. reporting obligations. Credit Suisse has also agreed to implement programs to ensure its compliance with U.S. laws, including its reporting obligations under the Foreign Account Tax Compliance Act and relevant tax treaties, in all its current and future dealings with U.S. customers.
“Today’s plea by Credit Suisse is a significant step in our global enforcement against those who would avoid their tax obligations by hiding their assets in foreign bank accounts, and those financial institutions, bankers, and other professionals who facilitate this conduct,” said Assistant Attorney General Keneally for the Tax Division. “Credit Suisse has also changed its business operations to ensure that U.S. taxpayers will no longer be able to hide their assets at Credit Suisse, and provided the government with valuable information that will further our investigations.”
“This prosecution and plea should serve notice that secret accounts and assisting the evasion of income taxes has a high cost,” said U.S. Attorney Boente. “Concealing financial accounts from the U.S. government is not a legitimate part of wealth management or private banking services.”
“Pursuing international tax evasion is a priority area for IRS Criminal Investigation, and we will continue to follow the money here in the United States and around the world” said IRS Commissioner Koskinen. “I want to commend the special agents in IRS-Criminal Investigation for all of their hard work in this area and the close cooperation with the Department of Justice. Today's guilty plea is another important milestone in ongoing law enforcement efforts to investigate the use of offshore accounts to evade taxes. People should no longer feel comfortable hiding their assets and income from the IRS.”
The Board of Governors of the Federal Reserve System is also announcing today that it has reached a resolution with Credit Suisse, by which Credit Suisse has agreed to a cease and desist order, certain remedial steps to ensure its compliance with U.S. law in its ongoing operations, and a civil monetary penalty of $100 million. Additionally, the New York State Department of Financial Services is announcing a similar resolution by which Credit Suisse has agreed to a cease and desist order and a monetary penalty of $715 million.
On Feb. 23, 2011, a grand jury in the Eastern District of Virginia returned an indictment charging four Credit Suisse employees - Marco Parenti Adami, a former Credit Suisse manager; Emanuel Agustino, a former Credit Suisse banker; Michele Bergantino. a former Credit Suisse banker; and Roger Schaerer, Credit Suisse’s former Representative Officer in its Representative Office in New York - with conspiring with other Swiss bankers and U.S. taxpayers to defraud the United States. On July 21, 2011, the grand jury returned a superseding indictment adding four additional defendants charged with the conspiracy to defraud the United States. The four new defendants were: Markus Walder, the former head of North America Offshore Banking at Credit Suisse; Süsanne D. Rüegg Meier, a former Credit Suisse manager; Andreas Bachmann, a former banker at Credit Suisse Fides, a subsidiary of Credit Suisse; and Josef Dörig, a former Credit Suisse Fides employee and owner/operator of a trust company. On March 12, 2014, Bachmann pleaded guilty to the superseding indictment in connection with his work as a banker at Credit Suisse Fides. On April 30, 2014, Dörig pleaded guilty to conspiring to defraud the IRS in connection with his role managing offshore entities used by U.S. taxpayers to conceal their accounts at Credit Suisse. Those pleas were accepted by U.S. District Judge Gerald Bruce Lee. Bachmann and Dörig each face maximum penalties of five years in prison when they are sentenced on Aug. 8, 2014.
This case was prosecuted by Assistant U.S. Attorney Mark D. Lytle and Trial Attorneys Mark F. Daly and Nanette L. Davis of the Tax Division. The case was investigated by IRS-Criminal Investigation.
The Department of Justice expressed gratitude to the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of New York, the U.S. Securities and Exchange Commission, and the New York State Department of Financial Services for their significant and valuable assistance.
Related Materials:
Plea Agreement
Statement of Facts
Waiver of Indictment
Criminal InformationAttorney General Holder, Deputy Attorney General Cole and IRS Officials to Hold Press Conference Announcing Major Law Enforcement ActionRead the Press Release
Attorney General Eric Holder, Deputy Attorney General James Cole, Assistant Attorney General for the Tax Division Kathryn Keneally and IRS Commissioner John Koskinen will hold a press conference TODAY, MONDAY, MAY 19, 2014 at 6:00 p.m. to announce a major law enforcement action.
WHO: Attorney General Eric Holder
Deputy Attorney General James Cole
Assistant Attorney General for the Tax Division Kathryn Keneally
IRS Commissioner John Koskinen
U.S. Attorney for the Eastern District of Virginia Dana Boente
IRS Criminal Investigation Chief Richard Weber
WHAT: Press conference to announce law enforcement action
WHEN: TODAY, 6:00 p.m. EDT, MAY 19, 2014
WHERE: Department of Justice
7th Floor Conference Room
950 Pennsylvania Ave., N.W.
Washington, D.C.
OPEN PRESS
NOTE: All media must present government-issued photo I.D. (such as driver’s license) as well as valid media credentials. Media must enter the department at the visitor’s entrance on Constitution Avenue between 9th and 10th Streets. Media may begin arriving at 5:00 p.m. EDT and cameras must be pre-set by 5:45 p.m. EDT. Press inquiries regarding logistics should be directed to the Office of Public Affairs at 202-514-2007.
Assistant Attorney General for National Security John Carlin Speaks at the Press Conference Announcing U.S. Charges Against Five Chinese Military Hackers for Cyber EspionageRead the Press Release
WASHINGTON - The National Security Division’s mission is to protect our nation’s security by using every legal tool available to confront and defeat threats to our country.Today, that tool is an indictment backed by the independence and credibility of our criminal justice system.
The threat is from members of unit 61398 of the Chinese military, who have targeted the U.S. private sector for commercial advantage.
We allege that members of unit 61398 conspired to hack into computers of six U.S. victims to steal information that would provide an economic advantage to the victims’ competitors, including Chinese state-owned enterprises.
In the past, when we brought concerns such as these to Chinese government officials, they responded by publicly challenging us to provide hard evidence of their hacking that could stand up in court.
Well today, we are.
For the first time, we are exposing the faces and names behind the keyboards in Shanghai used to steal from American businesses.
This indictment describes, with particularity, specific actions on specific days by specific actors to use their computers to steal information from across our economy.
It describes how they targeted information in industries ranging from nuclear, to steel, to renewable energy.
It shows that – while the men and women of our American businesses spent their business days innovating, creating, and developing strategies to compete in the global marketplace – these members of unit 61398 spent their business days in Shanghai stealing the fruits of our labor.
And it shows that the business information these individuals stole, including trade secrets, would have been particularly beneficial to Chinese companies.
Let me give you some examples of allegations from the indictment:
Right about the time SolarWorld was rapidly losing its market share to Chinese competitors that were pricing exports well below costs, these hackers were stealing cost, pricing, and strategy information from SolarWorld’s computers.
And while Westinghouse was negotiating with a Chinese state-owned enterprise over the construction of nuclear power plants, the hackers stole trade secret designs for components of those plants.
To be clear, this conduct is criminal.
And it is not conduct that most responsible nations within the global economic community would tolerate.
At the Department of Justice, we have repeatedly pledged that we would do more to hold accountable those that engage in these actions.
Today, we begin to fulfill that pledge.
And we will continue using all of the tools at our disposal to pursue those who steal our intellectual property, no matter who they are or where they reside.
Now I’d like to turn it over to David Hickton, the U.S. Attorney for the Western District of Pennsylvania, whose office has been a crucial partner in this investigation. David?
Six Miami-Area Residents Plead Guilty to Mortgage Fraud Scheme Involving Four Condominium DevelopmentsRead the Press Release
Six Miami-area residents, including three former loan officers, pleaded guilty in the Southern District of Florida this week to participating in a fraudulent scheme designed to enrich real estate developers by selling condominium units to straw buyers.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Special Agent in Charge Phyllis Robinson of the Department of Housing and Urban Development’s Office of the Inspector General (HUD-OIG) in Miami and Acting Inspector General Michael P. Stephens of the Federal Housing Finance Agency (FHFA) made the announcement.
Today, Leidy Masvidal, 42, of Miami, pleaded guilty before U.S. District Court Judge Marcia G. Cooke to conspiring to commit bank fraud. Sentencing is scheduled for Sept. 24, 2014. Alfredo Jesus Chacon, 48, of Orange Park, Florida, and Francisco Martos, 63, and Dorian Wong Magarino, 49, both of Miami, also pleaded guilty today to conspiring to commit wire fraud and mail fraud before U.S. District Court Judge Ursula Ungaro. Sentencing is scheduled for Aug. 1, 2014.
On May 14, 2014, Tania Masvidal, 49, and Douglas Ponce, 40, both of Miami, each pleaded guilty before Judge Cooke to conspiring to commit bank fraud. Sentencing is scheduled for July 30, 2014.
According to the defendants’ plea agreements and other court documents, the defendants participated in a scheme to pay straw buyers to submit false loan applications to lending institutions to purchase condominiums owned by co-conspirators. Leidy Masvidal and Tania Masvidal used a mortgage brokerage they owned, EZY Mortgage Inc., to arrange financing for the purchases. Because the straw buyers were not credit-worthy, the Masvidals secured loans in their names by submitting to lending institutions loan applications and other fraudulent documents containing false statements about the buyers’ income, employment and assets, and falsely stating that the buyers intended to reside in the properties. Additionally, the Masvidals enabled their co-conspirators to secretly fund the buyers’ obligations to pay money at closing (known as “cash to close” obligations) by establishing shell corporations, which the co-conspirators used to funnel cash from conspirators to the escrow account used at closing, as well as paying the straw buyers. The co-conspirators compensated the Masvidals for their role in the scheme by sending kickback payments taken from the loan proceeds to the Masvidals’ shell corporations for every straw buyer identified.
According to admissions in court records, Martos was a former loan officer at a mortgage company known as State Lending who helped secure financing for straw buyers in exchange for kickbacks by procuring false employment documents and by including false information in buyers’ loan applications. Chacon and Ponce recruited straw buyers to purchase properties owned by co-conspirators in exchange for kickbacks paid from the sales proceeds. Chacon also allowed a company that he controlled to be used as a false employer for the straw buyers. Magarino accepted payments to act as one of Chacon’s straw buyers and recruited other straw buyers into the scheme. For the properties in which Margarino acted as the straw buyer, he represented to the lender that he personally met his cash-to-close obligations when in fact he knowingly paid these costs with funds supplied by conspirators.
Many of the straw buyers defaulted on their loans after the conspirators stopped making their mortgage payments on their behalf, causing millions of dollars in losses to lenders.
On March 31, 2014, Luis Mendez, Stavroula Mendez, Luis Michael Mendez, Lazaro Mendez, Marie Mendez, Wilkie Perez and Enrique Angulo were indicted in the Southern District of Florida for their alleged participation in this scheme. They have pleaded not guilty and trial is currently set for Sept. 8, 2014. The charges in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
The case is being investigated by HUD-OIG and FHFA-OIG. The case is being prosecuted by Trial Attorneys Gary A. Winters and Brian Young of the Criminal Division’s Fraud Section.Member of Organization That Operated Online Marketplace for Stolen Personal Information Sentenced to 20 Years in PrisonRead the Press Release
A Phoenix man convicted after a jury trial last December of conspiracy and racketeering offenses for his involvement in a sophisticated cybercrime organization was sentenced today to serve 20 years in prison.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada and Special Agent in Charge Claude Arnold of Homeland Security Investigations (HSI) in Los Angeles made the announcement.
David Ray Camez, 22, also known as “Bad Man” and “doctorsex,” was sentenced by U.S. District Judge Andrew P. Gordon. Camez was convicted on Dec. 6, 2013, of one count of participating in a racketeer influenced corrupt organization and one count of conspiracy to participate in a racketeer influenced corrupt organization. In addition to his prison term, he was also sentenced to serve three years of supervised release and ordered to pay $20 million in restitution.
“Camez was a member of a vast criminal organization that facilitated rampant cyber fraud throughout the world,” said Acting Assistant Attorney General O’Neil. “This organization is the new face of organized crime – a highly structured cyber network operated like a business to commit fraud on a global scale. Members, like Camez, paid to tap into the network and gain control of highly sensitive information, like compromised credit card numbers and stolen identities. Thanks to sophisticated law enforcement efforts, Camez will now pay for his crimes with decades in prison.”
“As shown in this case, cybercrime has grown into an industry and is rapidly overtaking traditional crime such as bank robbery,” said U.S. Attorney Bogden. “Cybercrime was once viewed as the crime wave of the future but in reality, that threat is here now. We will continue working with our international law enforcement partners on cases such as this to track and prosecute this new wave of thieves.”
“As this sentence demonstrates, cyber-criminals who purposely harm innocent Americans and compromise the world’s economic stability will be aggressively pursued, investigated and prosecuted – and ultimately receive the justice they deserve,” said HSI Special Agent in Charge Arnold. “This case is a stellar example of how interagency law enforcement cooperation and teamwork can successfully bring down an entire organized criminal conspiracy.”
Camez was one of 39 charged in an indictment returned in January 2012. Seven others have pleaded guilty, two are scheduled for trial in June, and the rest are fugitives. Sixteen other defendants were also charged in the scheme in three separate indictments, and 14 have pleaded guilty to date.
The target of the investigation was an organization that called itself “Carder.su.” Investigation of the Carder.su organization began in March 2007, after the United States Secret Service, operating in conjunction with Homeland Security Investigations (HSI) and other federal, state and local law enforcement agencies who participate in the Southwestern Identity Theft and Fraud Task Force (SWIFT), began investigating a pattern of credit and debit card fraud. A special agent initiated an undercover investigation called Open Market and assumed the identity as a member of the organization when it was in its infancy.
The investigation determined that members of the Carder.su organization, known as “carders,” were involved in large scale trafficking of compromised credit card account data and counterfeit identifications and credit cards, as well as money laundering, narcotics trafficking and various types of computer crime. The organization operated an Internet web portal called a forum, where members could purchase the illicitly obtained data and share knowledge of various fraud schemes. A second forum was also created to vet incoming new members. The forums were generally hosted within the former Soviet Union and the upper echelon of the organization resides within the former Soviet Union. In July 2011, the organization had an estimated 5,500 members.
Members of the organization had different roles, including moderators who directed other members in carrying out activities; reviewers who examined and tested products, services and contraband; vendors who advertised and sold products, services and contraband; and members. Members were required to successfully complete a number of security features designed to protect the organization from infiltration by law enforcement or members of rival criminal organizations. Camez became a member of the organization under the name “Bad Man” on June 22, 2008. Camez also used the name “doctorsex.” During 2009 and 2010, the undercover special agent had multiple contacts with Camez in which Camez purchased counterfeit Nevada and Arizona driver’s licenses. Investigators also intercepted and seized a package shipped to Camez from Pakistan which contained counterfeit credit and gift cards. During a search of Camez’ home in Phoenix in May 2010, agents recovered counterfeit credit cards, equipment used to manufacture counterfeit credit cards, counterfeit U.S. currency and counterfeit identification documents. A search of Camez’ computer revealed software used to encode counterfeit credit cards and stolen identity information.
In addition to the U.S. Secret Service, HSI and members of the SWIFT Task Force in Las Vegas, NASA’s Jet Propulsion Laboratory’s Computer Crimes Division also provided assistance in the investigation. The case was prosecuted by Trial Attorney Jonathan Ophardt of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Kimberly M. Frayn and Andrew W. Duncan of the District of Nevada.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorney’s offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Since the inception of FFETF in November 2009, the Justice Department has filed more than 12,841 financial fraud cases against nearly 18,737 defendants including nearly 3,500 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov .# # #
Marubeni Corporation Sentenced<br /> for Foreign Bribery ViolationsRead the Press Release
Marubeni Corporation, a Japanese trading company involved in the handling of products and provision of services in a broad range of sectors around the world, including power generation, was sentenced today for its participation in a scheme to pay bribes to high-ranking government officials in Indonesia to secure a lucrative power project.
Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, Acting U.S. Attorney Michael J. Gustafson of the District of Connecticut and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.
Marubeni was sentenced by U.S. District Judge Janet B. Arterton in the District of Connecticut. Marubeni pleaded guilty on March 19, 2014, to one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and seven counts of violating the FCPA. The company signed a plea agreement in which it admitted its criminal conduct, agreed to maintain and implement an enhanced global anti-corruption compliance program and to cooperate with the department’s ongoing investigation, and agreed to pay an $88 million fine, which the court accepted in imposing the sentence. The plea agreement cites Marubeni’s refusal to cooperate with the department’s investigation when given the opportunity to do so, its lack of an effective compliance and ethics program at the time of the offense, and its failure to timely remediate as several of the factors considered by the department in determining the resolution.
According to the court filings, Marubeni and its employees, together with others, paid bribes to officials in Indonesia – including a high-ranking member of the Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia – in exchange for assistance in securing a $118 million contract, known as the Tarahan project, for the company and its consortium partner to provide power-related services for the citizens of Indonesia. To conceal the bribes, Marubeni and its consortium partner retained two consultants purportedly to provide legitimate consulting services on behalf of the power company and its subsidiaries in connection with the Tarahan project. The primary purpose for hiring the consultants, however, was to use the consultants to pay bribes to Indonesian officials.
Also according to court filings, the first consultant retained by Marubeni and its co-conspirators received hundreds of thousands of dollars in his U.S. bank account to be used to bribe the member of Parliament. The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official. E-mails between the co-conspirators discuss in detail the use of the first consultant to funnel bribes to the member of Parliament and the influence that the member of Parliament could exert over the Tarahan project.
As admitted in court documents, in the fall of 2003, Marubeni and its co-conspirators determined that the first consultant was not effectively bribing key officials at PLN. As a result, Marubeni and its consortium partner decided to reduce the first consultant’s commission from three percent of the total contract value to one percent, and pay the remaining two percent to a second consultant who could more effectively bribe officials at PLN. In an e-mail between two employees of Marubeni’s consortium partner, they discussed a meeting between Marubeni, an executive from the consortium partner, and the first consultant, stating that the consultant “committed to convince [the member of Parliament] that ‘one’ [percent] is enough.” Marubeni and its co-conspirators were successful in securing the Tarahan project and subsequently made payments to the consultants for the purpose of bribing the Indonesian officials.
Frederic Pierucci, a current executive at Marubeni’s consortium partner, pleaded guilty on July 29, 2013, to one count of conspiring to violate the FCPA and one count of violating the FCPA. David Rothschild, a former vice president of regional sales at the consortium partner, pleaded guilty on Nov. 2, 2012 to one count of conspiracy to violate the FCPA. Lawrence Hoskins, a former senior vice president for the Asia region for the consortium partner, and William Pomponi, a former vice president of regional sales at the consortium partner, were charged in a second superseding indictment on July 30, 2013.
This case is being investigated by FBI agents who are part of the Washington Field Office’s dedicated FCPA squad, with assistance from the Meriden, Connecticut, Resident Agency of the FBI. Significant assistance was provided by the Criminal Division’s Office of International Affairs. In addition, the department greatly appreciates the significant cooperation provided by its law enforcement counterparts in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission), the Office of the Attorney General in Switzerland and the Serious Fraud Office in the United Kingdom.
The case is being prosecuted by Assistant Chief Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa .Justice Department Sues to Shut Down Montgomery, Alabama, Tax Return PreparerRead the Press Release
The United States filed a complaint today to bar Laquanda O. Gilmore (aka Laquanda Garrott) and her company, L&g Associates LLC, from preparing federal tax returns for others, the Justice Department announced. The complaint alleges that Gilmore has prepared returns that falsely claim fuel-tax and earned income tax credits.
According to the complaint, Gilmore has repeatedly and intentionally claimed bogus fuel-tax credits for her customers. The fuel-tax credit is available only to taxpayers who operate farm equipment or off-highway business vehicles. It is not available for vehicles driven on highways , nor is it available for fuel used for commuting to and from work. The complaint alleges that Gilmore prepared returns that claimed absurdly large fuel-tax credits for taxpayers who worked at national retail businesses.
The complaint also alleges that Gilmore repeatedly prepared tax returns that improperly claimed the earned income tax credit (EITC). To claim the EITC, a taxpayer must have “earned income.” According to the complaint, Gilmore repeatedly claimed that her customers earned income from wages or salaries, even though Gilmore did not attach any Forms W-2, which provide information about an employee’s income and tax withholdings, to those customers’ returns. According to the complaint, Internal Revenue Service (IRS) records indicate that no Forms W-2 were issued to those customers in the years at issue.
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 fraudulent tax preparers. Information about these cases is available on the Justice Department website . An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page . If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Justice Department Sues to Shut Down Montgomery, Alabama, Tax Return PreparerRead the Press Release
WASHINGTON – The United States filed a complaint today to bar Laquanda O. Gilmore (aka Laquanda Garrott) and her company, L&g Associates LLC, from preparing federal tax returns for others, the Justice Department announced. The complaint alleges that Gilmore has prepared returns that falsely claim fuel-tax and earned income tax credits.
According to the complaint, Gilmore has repeatedly and intentionally claimed bogus fuel-tax credits for her customers. The fuel-tax credit is available only to taxpayers who operate farm equipment or off-highway business vehicles. It is not available for vehicles driven on highways, nor is it available for fuel used for commuting to and from work. The complaint alleges that Gilmore prepared returns that claimed absurdly large fuel-tax credits for taxpayers who worked at national retail businesses.
The complaint also alleges that Gilmore repeatedly prepared tax returns that improperly claimed the earned income tax credit (EITC). To claim the EITC, a taxpayer must have "earned income." According to the complaint, Gilmore repeatedly claimed that her customers earned income from wages or salaries, even though Gilmore did not attach any Forms W-2, which provide information about an employee's income and tax withholdings, to those customers' returns. According to the complaint, Internal Revenue Service (IRS) records indicate that no Forms W-2 were issued to those customers in the years at issue.
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 fraudulent tax preparers. Information about these cases is available on the Justice Department website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Related Documents:
United States v. Laquanda O. Gilmore, etc., et al.
Complaint for Permanent Injunction and Other Relief
(PDF documents)Portable Document Format (PDF) files may be viewed with a free copy of Adobe Acrobat Reader
Accessibility InformationFour Ohio Businessmen Associated with Cadillac Ranch Restaurants Plead Guilty to Tax ChargesRead the Press Release
Four businessmen involved in the development, operation and ownership of restaurants, including Cadillac Ranch restaurants, in Ohio and elsewhere in the United States, pleaded guilty today to tax charges, the Justice Department and Internal Revenue Service (IRS) announced.
Joel Field from Marion, Ohio, Jon Field from Dublin, Ohio, Eric Schilder, of Marion, and Paul Butler, of Dublin, all pleaded guilty before Judge Edmund A. Sargus Jr. in U.S. District Court for the Southern District of Ohio today.
Joel Field, 58, pleaded guilty to tax evasion, in which he admitted that he had an unpaid tax liability that exceeded $130,000 from tax years 1997 through 2001. Joel Field was an owner and operator of Cadillac Ranch restaurants and bars. From March 2004 through May 2009, when the IRS attempted to collect the outstanding amount of taxes owed by Joel Field, he provided false information to the IRS by failing to report assets and income. Further, according to publicly filed documents, Joel Field transferred his rental properties, car and business into the names of his relatives in an effort to conceal his ownership from the IRS and to prevent the IRS from seizing assets. Despite transferring these assets to nominees, Joel Field continued to control them and the income they generated.
According to documents filed with the court, in 2008, the government initiated foreclosure proceedings against Joel Field’s personal residence in an effort to collect the approximately $319,000 he then owed the IRS. After the government initiated foreclosure proceedings, Joel Field submitted more false information to the IRS, including the filing of false tax returns for tax years 2006 through 2009. Furthermore, Joel Field caused his son to file false income tax returns for two years by causing his son to report income that actually belonged to Field in order to conceal his own income from the IRS. Finally, Joel Field caused his attorney to send correspondence to the government wherein representations were made that falsely underreported the value of Joel Field’s restaurant. In 2009, based on the false information provided, the government agreed to settle its foreclosure lawsuit against Joel Field’s home for $149,000 less than the amount he then owed the IRS in taxes, penalties and interest. As part of the plea agreement, Joel Field agreed to pay $349,777 in restitution to the IRS.
According to documents filed with the court, Jon Field, 58, pleaded guilty to a conspiracy to file false income tax returns for the years 2006 through 2010. According to court documents, in 2003, Jon Field created JHF Property Holdings LLC, which was purportedly owned by his son, but which Jon Field used to operate the Cadillac Ranch and other restaurants. For the years 2006 through 2010, Jon Field agreed with others to prepare and file false income tax returns with the IRS for Jon Field which falsely underreported the amount of income that he earned from his business ventures. His tax returns for these five years failed to report at least $220,000 in income earned through JHF Property Holdings funds and other companies. According to publicly filed documents, Jon Field diverted business funds for personal expenditures, including to make payments on his vehicles, to pay his taxes, to pay personal charges on credit cards and for cash withdrawals. Jon Field’s false filings resulted in a tax loss of $174,458, and he agreed to pay restitution to the IRS according to his plea agreement.
Eric Schilder, 52, pleaded guilty to filing a false income tax return for 2008. According to publicly filed documents, Schilder participated in the design, construction and, ultimately, the marketing and management of several Cadillac Ranch restaurants and bars. Schilder’s conduct caused a tax loss to the IRS of approximately $95,000.
Paul Butler, 46, pleaded guilty to a conspiracy to defraud the United States. Butler participated in the design, development, building and operation of Cadillac Ranch restaurants and bars. According to public filings, Butler admitted that he amassed over $150,000 in unpaid taxes for the years 1996 through 2001. When the IRS attempted to collect the funds in 2005, Butler admitted that, among other things, he and others created and provided to a false promissory note to the IRS. Butler engaged in conduct, and caused others to engage in conduct, intended to obstruct the IRS from collecting the outstanding taxes that Butler owed.
Joel Field faces a maximum sentence of five years in prison, a $250,000 fine and three years of supervised release for his tax evasion charge. Jon Field also faces a maximum sentence of five years in prison, a $250,000 fine and three years of supervised release for his conspiracy charge. Paul Butler also faces a maximum sentence of five years in prison, a $250,000 fine and three years of supervised release for his conspiracy charge. Eric Schilder faces a maximum sentence of three years in prison, a $250,000 fine and one year of supervised release for filing a false income tax return.
The case was investigated by the IRS-Criminal Investigation Division and is being handled by Trial attorney Richard M. Rolwing for the Justice Department’s Tax Division. Additional information about the Tax Division and its enforcement efforts may be found at the division website . Additional information about tax fraud schemes to watch out for may be found on the IRS Criminal Investigation website .
Former Owner of Airline Fuel Supply Company Sentenced to Prison for Role <br /> in Scheme to Defraud Illinois-Based Ryan International AirlinesRead the Press Release
A former owner and operator of a Florida-based airline fuel supply service company was sentenced today to serve 50 months in prison for participating in a scheme to defraud Illinois-based Ryan International Airlines, the Department of Justice announced.Sean E. Wagner, the former owner and operator of Aviation Fuel International Inc. (AFI), was sentenced in the U.S. District Court for the Southern District of Florida in West Palm Beach to serve 50 months in prison and to pay $202,856 in restitution. On Aug. 13, 2013, a grand jury returned an indictment against Wagner and AFI, charging them for their roles in a conspiracy to defraud Ryan. On March 6, 2014, Wagner pleaded guilty to one count of conspiracy to commit honest services wire fraud. According to court documents, from at least as early as December 2005 through at least August 2009, Wagner and others at AFI made kickback payments to Wayne Kepple, a former vice president of ground operations for Ryan, totaling more than $200,000 in the form of checks, wire transfers, cash and gift cards in exchange for awarding business to AFI. The charges against AFI were dismissed on Feb. 21, 2014.
Ryan provided air passenger and cargo services for corporations, private individuals and the U.S. government – including the U.S. Department of Defense and the U.S. Department of Homeland Security.
“Awarding government contracts in exchange for payoffs is a crime the Antitrust Division takes seriously,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Today’s sentence reaffirms the division’s commitment to vigorously prosecute individuals who engage in this behavior.”“This sentencing highlights the continuing commitment of the DCIS to thoroughly investigate and bring to justice any companies or individuals who engage in fraudulent and corrupt practices that undermine the integrity of Department of Defense procurement programs,” said John F. Khin, Special Agent in Charge of the Defense Criminal Investigative Service Southeast Field Office.
As a result of the ongoing investigation, five individuals, including Wagner, have pleaded guilty and have been ordered to serve sentences ranging from 16 to 87 months in prison and to pay more than $780,000 in restitution. An additional individual has pleaded guilty to obstructing the investigation and is currently awaiting sentencing.
The investigation is being conducted by the Antitrust Division’s Washington Criminal I office and the U.S. Department of Defense’s Office of Inspector General’s Defense Criminal Investigative Service, with assistance from the U.S. Attorney’s Office for the Southern District of Florida. Anyone with information concerning anticompetitive conduct in the airline charter services industry is urged to call the Antitrust Division’s Washington Criminal I office at 202-307-6694 or visit www.justice.gov/atr/contact/newcase.htm.Former Officer Is 12th Sentenced in Connection with Series of Assaults on Inmate at Roxbury Correctional InstitutionRead the Press Release
U.S. District Judge James K. Bredar sentenced Reginald Martin, formerly an officer at Roxbury Correctional Institution (RCI) in Hagerstown, Maryland, to serve 12 months and one day in prison for his role in the assault of inmate Kenneth Davis. RCI officers from three different shifts assaulted Davis in March 2008, in retaliation for a prior incident in which Davis struck an officer.
Martin pleaded guilty on Jan. 9, 2014, to a deprivation of rights under color of law. According to court documents filed in connection with his guilty plea, Martin acknowledged that he witnessed other RCI officers unlawfully assaulting Davis and that he failed to intervene and stop the assault. Martin also admitted that this assault on March 9, 2008, was consistent with practices at RCI, where officers would use force to punish inmates who had engaged in misconduct. Finally, Martin admitted that he and other officers tried to cover up their involvement in the assault of Davis.
“Every person in America has the right to be free from cruel and unusual punishment,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “The Justice Department will continue to protect this right by prosecuting correctional officers who violate the rights of inmates.”
To date, 16 current or former officers at RCI have been convicted in connection with the series of assaults that Davis suffered on March 8-9, 2008. Lanny Harris, Philip Mayo, Jeremy McCusker, Walter Steele, Robert Harvey, Keith Morris, Dustin Norris, Ryan Lohr, Tyson Hinckle, Michael Morgan and Josh Hummerhave already been sentenced by U.S. District Judge Bredar.
The case was investigated by the Frederick Resident Agency of the FBI, and prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Sanjay Patel of the Civil Rights Division, with the assistance of Assistant U.S. Attorney Michael Cunningham of the U.S. Attorney’s Office for the District of Maryland.
Former Alabama KKK Leader Sentenced to Prison for Cross Burning and Obstruction of JusticeRead the Press Release
Steven Joshua Dinkle, 28, former Exalted Cyclops of the Ozark, Alabama, chapter of the International Keystone Knights of the Ku Klux Klan (KKK), was sentenced today by Chief U.S. District Judge W. Keith Watkins to serve 24 months in prison to be followed by three years of supervised release for his role in a cross burning in 2009, announced the Justice Department and the U.S. Attorney’s Office for the Middle District of Alabama.
On Feb. 3, 2014, Dinkle pleaded guilty to hate crime and obstruction of justice charges related to the cross burning. Specifically, he pleaded guilty to one count of conspiracy to violate housing rights, one count of criminal interference with the right to fair housing and two counts of obstruction of justice.
According to documents filed with the court, Dinkle and one of his KKK recruits, Thomas Windell Smith, met at Dinkle’s home on May 8, 2009, and decided to burn a cross in a local African-American neighborhood. Dinkle constructed a wooden cross about six feet tall, wrapped jeans and a towel around it to make it more flammable and loaded it into Smith’s truck. Around 8:00 p.m., Dinkle and Smith drove to the African-American neighborhood in Ozark. Dinkle unloaded the cross at the entrance to the community and dug a hole in the ground. He poured fuel on the cross, stood it up in the hole in view of several houses and set it on fire. Dinkle and Smith then drove away.
During sentencing, Chief U.S. District Judge Watkins said that it was clear that the purpose of Dinkle’s conduct was “to terrorize people in the community” and that his “message was one of intimidation and violence.”
When questioned by local investigators, Dinkle falsely denied his involvement in the incident and said that he had resigned his office and withdrawn from the KKK months before the cross burning. When approached by the FBI, Dinkle again lied and told a special agent that he had been at home with his girlfriend when the cross burning occurred. He further claimed that he did not know a person who was, in fact, one of his superiors in the KKK at the time of the cross burning.
During the plea hearing, Dinkle admitted that in burning the cross, he intended to scare and intimidate residents of the African-American community by threatening the use of force against them. He further admitted that he burned the cross because of the victims’ race and color and because they were occupying homes in that area.
“Defendant Dinkle chose to burn the cross at the very entrance to an African-American neighborhood so that anyone coming or going would see the fiery cross,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division. “He intended to intimidate the community’s residents in their own homes and neighborhood. There is no place for such conduct in our society and the department will continue to prosecute these violent acts of hate.”
“It is sad that, in this day and age, people are still filled with such hate,” said U.S. Attorney George L. Beck Jr. for the Middle District of Alabama. “To act on such hate and burn a cross turns that hate into a crime which should not, and will not, be tolerated. Prosecuting these type crimes will continue to be a priority of my office.”
Dinkle’s co-conspirator, Smith, pleaded guilty to one count of conspiracy to violate housing rights in December 2013, and he is scheduled to be sentenced on Aug. 19, 2014. Dinkle’s mother, Pamela Morris, is charged with two counts of perjury arising out of the investigation into the cross burning. Her trial is scheduled to begin Aug. 4, 2014.
This case was investigated by the FBI with the assistance of the Dale County Sheriff’s Office and the Ozark Police Department. The case is being prosecuted by Assistant U.S. Attorney Jerusha T. Adams of the Middle District of Alabama and Trial Attorney Chiraag Bains of the Civil Rights Division.
Defendant Michael San Nicolas Santos Sentenced Today for Making Bomb ThreatsRead the Press Release
ALICIA A.G. LIMTIACO, United States Attorney for Guam and the Northern Mariana Islands, announced that MICHAEL SAN NICOLAS SANTOS, aged 54, was sentenced today in the District Court of Guam, to serve 18 months in federal prison followed by three years of supervised release for transmitting bomb threats in interstate commerce. Defendant was also ordered to pay a $100 special assessment fee and total restitution of $2,389.48 for distribution in part to Pho Saigon Restaurant, the Judiciary of Guam and the Guam Police Department.
Defendant pled guilty on November 14, 2013, to the offense of Maliciously Conveying False Information by Telephone in violation of 18 U.S.C. § 844(e). On the mornings of September 26, 2013, October 10, 2013, and October 29, 2013, the defendant called the Guam Emergency 911 Center and stated to the effect that there was a bomb going to explode in the Dededo Mall. On the last phone call, the defendant threatened and stated, “There is a bomb going down in Dededo Mall right now. It is going to be going off. Get those people out of the building. In Dededo Mall right now.”
On the morning of each of the calls, the defendant purchased a new prepaid cellular phone and/or SIM card in the Mobil gas stations in Ysengsong Road, Dededo, and Route 16. The defendant made the September 26, 2013 and October 10, 2013 bomb threats from a park across the street from the Dededo Mall. On the morning of October 29, 2013, federal law enforcement agents surveilled the defendant when he left his Yigo residence. He was observed buying a prepaid cellular phone in the Mobil gas station in Route 16 in the vicinity of the Guam Revenue & Taxation building, driving around the park directly across the street from the Dededo Mall, and driving up Carnation Road and Villagomez Road where he made the third bomb threat. Special Agents from the Federal Bureau of Investigation (“FBI”) arrested the defendant later that morning when he returned to the Dededo Mall. The defendant told them, among other things,
that he called in the bomb threats on those days to avoid attending a small claims court hearing in the Small Claims Division, Superior Court of Guam, Northern Court Satellite which is located in the Dededo Mall.The Dededo Mall also accommodates one restaurant, several food concession stands and retail businesses.
U.S. Attorney Limtiaco states, “All bomb threats are taken seriously. To ensure the public's safety and security, law enforcement agencies will use their resources to determine the validity of each bomb threat. Offenders will be held accountable and prosecuted.”
The investigation was conducted by the FBI Joint Terrorism Task Force-Pacific (comprised of the FBI, Guam Police Department, U.S. Coast Guard Investigative Service), Guam Police Department, Guam Fire Department, Judiciary Courts of Guam Marshals Office, Guam Homeland Security/Office of Civil Defense, U.S. Navy Explosive Ordnance Disposal Mobile Unit 5, Detachment Marianas and the Department of Defense Joint Region Marianas. The case was handled by Assistant U.S. Attorney Marivic David.
Defendant Antonette Elatico Parr 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 ANTONETTE ELATICO PARR (“PARR”) was sentenced on Monday, May 12, 2014, by Chief Judge Frances Tydingco-Gatewood, in the District Court of Guam, to 21months incarceration, and three years of supervised release.
Co-defendants David Taimanglo Quichocho, Jr. and Dominica Bato Quichocho both pled guilty in December, 2012 to Conspiracy to Distribute Methamphetamine Hydrochloride in violation of Title 21 U.S.C. Section 841(a)(1). Defendant David Taimanglo Quichocho, Jr. ordered over five grams of methamphetamine hydrochloride from his sister, PARR, a California resident. PARR concealed small amounts of methamphetamine hydrochloride in letters sent via First Class mail to Guam. The letters containing the drug were picked up by David Taimanglo Quichocho, Jr. or his spouse, Dominica Bato Quichocho. Notably, the letters, each containing approximately 1.88 grams of the drug were detected and intercepted by the United States Postal Investigative Service.
U.S. Attorney Limtiaco thanks the United States Postal Investigative Service for their thoroughness and vigilance in detecting drugs which are being mailed to Guam through the United States Postal System.
The investigation was conducted by the United States Postal Investigative Service. The case was handled by Assistant U.S. Attorney Rosetta San Nicolas.Two Idaho Men Indicted for Hate CrimeRead the Press Release
Jonathan Lynn Henery, 28, and Beau Edward Hansen, 30, both of Boise, Idaho, were indicted May 13, 2014, on federal hate crime charges for their racially motivated assault of an African-American man, the Justice Department’s Civil Rights Division and U.S. Attorney Wendy J. Olson for the District of Idaho announced. An initial appearance date has not been set.
The indictment alleges that on or about Oct. 20, 2013, both men willfully caused bodily injury to an African American man based on the victim’s actual and perceived race and color.
The charge of hate crime based on race is a violation of the Matthew Shepard and James Byrd Jr. Hate Crime Prevention Act signed into law by President Barack Obama in 2009. A violation of that statute is punishable by up to 10 years in prison, a maximum fine of $250,000 and up to three years of supervised release.
The case was investigated by the FBI and the Boise City Police Department. The case is being jointly prosecuted by the U.S. Attorney’s Office for the District of Idaho and the Justice Department’s Civil Rights Division.
An indictment is a means of charging a person with criminal activity. The person is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Texas Man Indicted for Federal Hate Crime and Kidnapping Charges for Assault Based on Victim’s Sexual OrientationRead the Press Release
A federal grand jury returned a two count indictment against Brice Johnson, 19, of Springtown, Texas, charging him with willfully causing bodily injury to a person because of the actual or perceived sexual orientation of that person and with kidnapping, the Justice Department’s Civil Rights Division, the U.S. Attorney’s Office of the Northern District of Texas and the FBI Dallas Division announced today.
On Feb. 19, 2014, a federal criminal complaint was unsealed charging Johnson with a hate crime. The indictment charges Johnson with the same hate crime offense and further charges that Johnson’s actions included kidnapping.
According to the affidavit filed with the criminal complaint, in the early morning hours of Sept. 2, 2013, the adult male victim, identified as A.K., connected with Johnson through the cell phone application for MeetMe.com. A.K.’s MeetMe.com page indicated he was a gay man, while Johnson’s page indicated he was not gay. During their chat communications, Johnson said that he was interested in engaging in sexual activity with A.K. and he invited A.K. to his home. Johnson gave A.K. his cell phone number and address and they exchanged text messages planning their sexual activity.
After A.K. showed up at the house, Johnson severely beat him, then put him into the trunk of A.K.’s car and drove him to a friend’s house. Based on ligature marks on A.K.’s wrists, it appears that he was bound while he was in the trunk of the car. Individuals at the home told Johnson to take A.K. to the hospital or they would call the police, and Johnson eventually drove A.K. to an Emergency Medical Services station in Springtown.
A.K. was hospitalized for 10 days in Fort Worth, and he was diagnosed and treated for multiple skull and facial fractures. The investigation revealed that on the night of the incident, Johnson saved A.K.’s cell phone number using a gay slur as a contact name and Johnson later stated that he was playing a prank on A.K. because of A.K.’s sexual orientation, again using a gay slur when referring to A.K. According to the affidavit, A.K. said that he had no physical contact with Johnson prior to the attack.
An indictment merely establishes probable cause and Johnson is presumed innocent unless proven guilty. Each count carries a maximum statutory sentence of life in prison and a $250,000 fine.
The investigation is being conducted by the FBI, the Springtown Police Department and the Parker County Sheriff’s Office. The case is being prosecuted by Assistant U.S. Attorney Cara Foos Pierce and Trial Attorney Saeed Mody of the Civil Rights Division.
Tennessee Salvage Company Owner and Operator Pleads Guilty to Conspiring to Violate the Clean Air ActRead the Press Release
The owner and operator of a Tennessee salvage and demolition company, A&E Salvage Inc., pleaded guilty today in federal court in Greeneville, Tennessee, for conspiring to violate the Clean Air Act.
Mark Sawyer pleaded guilty before U.S. District Court Judge Greer for the Eastern District of Tennessee to one criminal felony count for conspiring to violate the Clean Air Act’s “work practice standards” salient to the proper wetting, stripping, bagging and disposal of asbestos. According to the charges, Sawyer, along with other co-conspirators, engaged in a multi-year scheme in which substantial amounts of regulated asbestos containing materials were improperly removed from components of the former Liberty Fibers Plant or were illegally left in place during demolition.
Sawyer faces up to five years in prison and a fine of up to $250,000 or twice the gross gain or loss to the victims. Sawyer is the last of five charged co-defendants to plead guilty. Sawyer, Eric Gruenberg, Nick Smith, Armida DiSanti and Milto DiSanti are due to be sentenced on Nov. 19, 2014.
Asbestos has been determined to cause lung cancer, asbestosis and mesothelioma, an invariably fatal disease. The Environmental Protection Agency has determined that there is no safe level of exposure to asbestos.
This case was investigated by Special Agents of the Environmental Protection Agency’s Criminal Investigation Division. The case is being prosecuted by Assistant U.S. Attorney Matthew T. Morris of the U.S. Attorney’s Office for the Eastern District of Tennessee and Senior Trial Attorney Todd W. Gleason of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.