District Not Recorded

WASHINGTON – Attorney General Eric Holder today announced the retirement of H. Marshall Jarrett, Director for the Executive Office for U.S. Attorneys (EOUSA) as well as the appointment of Monty Wilkinson as the new Director for EOUSA. 
 
Prior to his appointment as Director for EOUSA in 2009, Jarrett served as Counsel for the Office of Professional Responsibility, as an Associate Deputy Attorney General, and as Deputy Chief of the Public Integrity Section of the Department of Justice. In addition, he served as Chief of the Criminal Division in the U.S. Attorney’s Office for the District of Columbia and as Criminal Chief and First Assistant U.S. Attorney in the U.S. Attorney’s Office for the Southern District of West Virginia.

“For 39 years, Marshall has distinguished himself in the Department as an exceptional public servant and a principled leader. To me, personally, he has been a trusted mentor and a good friend,” said Attorney General Holder. “In the face of daunting staff and resource constraints, Marshall’s calm and steady leadership was exactly what EOUSA and the U.S. Attorney community needed over these past several years.  His extraordinary contributions have left an indelible mark on the Department and the country will be forever grateful for his service.”

Wilkinson, whose appointment as Director for EOUSA will become effective on March 31, has held many significant executive-level positions in the Department. He most recently served as the Principal Deputy Director and Chief of Staff for EOUSA.  Before arriving at EOUSA, he served as Counselor and Deputy Chief of Staff to the Attorney General and as an Associate Deputy Attorney General.

“Monty is a tremendous asset to the Department, and I am grateful he has agreed to take on this enormous responsibility,” said Attorney General Holder. “I look forward to continuing to work closely with him and the U.S. Attorneys as we continue our critical mission to provide justice for the American people.”

The Department of Justice’s Antitrust Division today announced a new streamlined procedure that will lower the costs and expedite the review process for parties seeking to modify or terminate old antitrust settlements and litigated judgments.

 
The new voluntary procedure, which is effective immediately, updates a 1999 protocol.  The expedited process can be used by parties seeking to modify or terminate perpetual decrees–settlements and litigated judgments–entered prior to 1980.

In 1979, the department determined that entering into perpetual decrees was not in the public interest. Since that time, decrees have included “sunset” provisions that will automatically terminate them after a term of years, not to exceed 10 years.  Most decrees entered into before 1980 do not contain this provision.

“The new streamlined procedure will expedite the review process for legacy decrees and will benefit both the defendants and the department by eliminating costly and time intensive investigations,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The Antitrust Division will continue to look for ways to incorporate procedural efficiencies whenever possible as it is an important part of effective antitrust enforcement.”

 
Pre-1980 perpetual decrees cannot be terminated or modified except by court order.  Since 1980, there have been significant changes in markets and technology and substantial changes in antitrust law.  Going forward, the department will advise courts that pre-1980 “legacy” decrees, except in limited circumstances, are presumptively no longer in the public interest.  Those limited circumstances may include when there is a long-standing reliance by industry participants on the decree.

The updated procedure differs from the present procedure in two important ways.  First, the party seeking termination or modification will no longer be subject to the extensive discovery that was required by the 1999 protocol.  This should result in a substantial reduction in the cost of seeking decree termination.  Second, when responding to a request to terminate or modify qualifying legacy decrees, the department will no longer conduct an in-depth investigation into the relevant markets due to the significant changes that have taken place. The updated procedure can be found in the Division Manual on the Antitrust Division’s website.

Under the protocol, the requesting party will publish, at its own expense, notice of its intent to seek termination or modification and invite interested parties to provide the Antitrust Division with relevant information.  The division will work with the requesting party to determine what form of cost-effective notice is appropriate.  Because the process is expedited, the division believes that a pre-filing public comment period best serves the public interest by allowing interested parties to come forward early in the process so that their concerns may be considered and addressed prior to the filing of a motion to modify or terminate.  The division will take into account issues that are brought to its attention and address them as appropriate.  Other parts of the 1999 protocol will remain in effect. 

Thank you for that kind introduction – and for inviting me here today.  It’s a pleasure to be back at AU, and a privilege to join so many experts, essential partners, and good friends in advancing one of the most important conversations currently facing government and private sector leaders across the country. 

At the Justice Department’s National Security Division, there is little we do that is more important than working on how the government can partner with private companies to protect our nation and its people better – from terrorism, from cyber attacks, and from a range of other malicious activities.

This past December, I attended a ceremony marking the twenty-fifth anniversary of the bombing of Pan Am Flight 103 over Lockerbie, Scotland, which claimed the lives of 259 people on the plane and 11 on the ground. 189 were Americans.  It was the deadliest act of terror against the United States prior to September 11th.

The families and friends of those who were lost came together that winter day at Arlington National Cemetery to recall the event that changed their lives forever.  They spoke movingly of loved ones who had been on board that plane, many of whom were American college students flying home for the holidays.

On December 21, 1988, instead of reuniting with their companions and loved ones, they heard news reports of a catastrophic explosion and wreckage strewn over miles of the Scottish countryside.  Shortly thereafter, they learned, as did the rest of the world, that terrorists were to blame.

There was a call for justice – to find the perpetrators and hold them responsible.  And there was also a call for new security measures designed to stop another attack from happening. 

At the ceremony last winter, former Secretary of Labor Ann McLaughlin Korologos spoke of her experience leading the seven-member Presidential Commission on Aviation Security and Terrorism that was formed a few months after the attack to investigate what went wrong.  Eighteen months after Lockerbie, that Commission issued a report calling for national attention to our aviation security system, and identifying a host of specific proposals intended to harden our nation’s airline security and keep all Americans safe – both at airports and in the skies.

Many of these measures did not become reality.  Interest faded, attention waned – and so did political and social will.  Twelve years later, the horror of 9/11 changed that.  It reinvigorated the focus on aviation security – and the 9/11 Commission called for many of the same security measures called for in the wake of Lockerbie.  This time, almost all of them were implemented.

Today, national leaders in both government and private industry must apply the lessons we learned from unspeakable tragedies like these, and from decades of effective counterterrorism policy, to business action in cyberspace.   It is imperative that we take action promptly, without waiting for a galvanizing tragedy.  We can work together to change norms now -- not in the wake of an immensely damaging terrorist cyber attack.  In doing so, we will have a much better chance of preventing such an attack from ever taking place. 

I grew up in New York City, a place where you can experience the anonymity now enjoyed by so many on the Internet.  And when I was a kid, the NYPD sent an officer to our school who told us how to conduct ourselves on the streets of New York. 

Our version of Officer Friendly told us to look both ways when we crossed the street.  Of course, he told us not to make eye contact with people on the street -- which was pretty standard advice back then. 

As a kid, that seemed to make total sense.  Decades later, New York City is now one of the safest major cities on the planet.  And when we look back at that advice, it seems crazy that there was a consensus of blaming the victim for making eye contact.  These days, on the internet, we tell our kids to beware of chatting with individuals they don’t know, to avoid certain websites or apps. 

When a person’s credit card gets stolen, or their credentials for accessing a social media site or their bank are hacked, we tell them, “You should have known better than to go to that website,” or, “You shouldn’t have used the same 18-character password more than once.” Together, hopefully, we can look back in a few short years and think that that those warnings and the victim-blaming is also strange and that we’ve come a long way with regards to cyber security.

 One of the things that’s changed in New York over the years is its social norms – like making eye contact.  We need to shape social norms in the cyber area, too.  Just as it was in a chaotic urban environment, it’s tricky to cultivate trust in cyberspace.  There were streets in New York where the bad guys and the good guys passed each other shoulder to shoulder.  The same thing is true in cyberspace.  Legitimate businesses and innocent customers use the same Internet that hackers and terrorists use.

As my former boss at the FBI, Bob Mueller, explained, bad actors – specifically terrorists – are using cyberspace for at least three discrete aspects of terrorist activity: (1) to propagandize and recruit; (2) to plot and plan attacks in the physical world; and (3) to launch attacks in the virtual world itself.  It’s hard to cultivate trust online amidst such company and to restore a sense of security. 
But like change in New York, change in cyberspace will be a community effort.  When our Officer Friendly came to visit, he told us about Safe Havens – businesses that opened themselves up just a little bit, to be better members of the community, and to provide a place for people to go if they felt threatened.  Back then, there were little yellow Safe Haven signs on the doors of stores in New York, and he told us, “If you’re feeling uncomfortable or scared, or are being targeted, don’t be afraid to go into one of these stores and seek help.  Your safety should be your first priority.” 

Just as those Safe Havens existed as trusted businesses when I was kid, the government and the corporate community can come together to create safe havens in cyberspace. 

We need to work together to prevent terrorists from using networks – using the very websites and apps we use every day – to plot attacks in the physical world.  And we need to shore up our security so that devastating attacks cannot be launched in the virtual world.  These tasks are not easy, and they are ones we need to undertake with care, to strike a proper balance between security and liberty.

Some businesses, especially those in the communications sectors, may be hesitant to build new partnerships with government – or are drawing back from their current partnerships – because of the national discussion that has taken place over the last year. 
The President has committed to providing greater transparency about the government’s lawful use of data collection authorities.  However, as the President has noted, the nature of some unauthorized disclosures have shed more heat than light.  And that heat has come onto companies as well, often unfairly.  We take their concerns seriously, and we are dedicated to increasing transparency as well as protecting civil liberties.  That is why many layers of checks and balances are built into the systems – without question some of the best protections provided by any country in the world.  Our authorities are rigorously overseen by Congress, and often scrutinized by the courts and independent government watchdogs.  And they are aimed at ensuring the safety of the nation and our allies. 

Of course, the private sector should not be punished for complying with the law.  We are concerned about this issue, and we are dedicated to working with companies to address misconceptions, correct misinformation, and help to rebuild the public’s confidence that our partnerships are conducted under the law.  We are working with industry to help them be more transparent about what kinds of information they are required to share with the government, and how very few of their customers are ever impacted by government actions. 

Yesterday’s announcement by the President of a way forward on the handling of telephony metadata indicates just how committed the Government is to ensuring that the public’s concerns are addressed, without the Government sacrificing certain operational needs.  As you might have heard, the President announced a proposal that will, with the passage of appropriate legislation, allow the government to end bulk collection of telephony metadata records under Section 215, while ensuring that the government has access to the information it needs to meet its national security requirements.

Getting our legal policies right is one thing.  But make no mistake: It will lead to tragedy if the ultimate result of these disclosures is to cause businesses to shy away from working with the government to prevent terrorism.   The undeniable truth is that our collaboration, and the protections we have put in place together, make us safer from those who would attempt to do us harm – from terrorists to hostile nation-states seeking to capitalize on our vulnerabilities. 

One example that comes to mind is the case of Khalid Aldawsari, a college student from Saudi Arabia who took chemistry classes at Texas Tech in Lubbock, Texas.  When he began placing large and unusual orders for chemicals online, the chemical company reported the order to the FBI, as did the shipping company.  Ultimately, he was convicted in federal court and sentenced to life in prison for trying to use those chemicals to make a bomb, potentially to attack a former President.  And heading off that threat all began with two companies taking the right step of alerting the FBI to suspicious activity.

Whenever the public faces a threat, whether from terrorists, computer hackers, or pick-pockets on the Metro, people expect the government to protect them.  But the government can’t do it alone.  And that is particularly true in the context of cyber threats, given just how much of our nation’s most essential information is found online and, in particular, in the hands of private companies.

You know the threats we face.  You’ve seen them firsthand.  Although we often think of the government and our brave men and women serving abroad as a primary focus of terrorist attacks, we must keep in mind that the 9/11 attacks targeted this nation as a whole, and its impact was felt by all of us. 

Since then, terrorism is now increasingly diverse and decentralized, from al Qaeda affiliates overseas to homegrown terrorists – such as the Boston Marathon bombers – who may live in the communities they intend to strike.  But the cyber threat is growing rapidly, and down the road, may rival or even surpass the threat we face today. 

Malicious cyber actors are an increasing risk to our security and prosperity.  Last year, BP’s CEO stated that his company sees approximately 50,000 attempted cyber intrusions each day.   And he is not alone. 

As you know, hackers – in many cases working for foreign states or organized criminal syndicates – break into private businesses’ servers and steal the key intellectual property that gives us a competitive edge in the global marketplace. And malicious cyber actors sometimes target companies’ infrastructure.  In 2012, Saudi Arabia’s state oil company, Aramco, suffered an attack that destroyed 30,000 of its computers – nearly 75% of its workstations, a devastating loss for any company. 

Many of these same hackers exploit vulnerabilities in software, turning home computers or servers into launch pads for malicious denial-of-service attacks against banks, companies, and government agencies – shutting them down and disrupting their ability to do business.  It does not take much imagination to see how these same tools could be used by terrorists, resulting in what has been referred to as a potential “cyber 9/11.”

When these attacks happen, people ask the same two basic questions many asked after the Lockerbie bombing: “What more could have been done to protect me?”  And, “are they going to get these guys?”  To answer these questions, we need the private sector and the government to work together.

Intrusions by nation-states have gone on longer than acknowledged.  Why are so many companies waiting to come to the government for help?  This situation is not unlike the way that organized crime was able to intimidate small businesses into paying for so-called “insurance” .  For each mom and pop store, individually, it made more sense to pay the insurance rather than face retaliation for speaking up or going to the cops.  And as a result, the criminal organizations made big profits.  They only took a small amount from each business, but the money added up over the dozens or hundreds of businesses they intimidated.  It wasn’t until the cost of doing business with the mafia got too high – or someone was brave enough to stand up to the mob – that law enforcement was able to break up these organized crime rings.

The calculus that many businesses make today is similar to the decisions that the mom and pop stores had to make several decades ago: Does the cost of paying out – that is, failing to tell the authorities about cyber attacks – outweigh the costs of potential retaliation?  When faced with the prospect of taking on a nation-state with all of its powers – not to mention the fear of not being able to do business in that’s nation’s marketplace – many companies have made the calculation of remaining silent.
But the cost of that silence is increasing.  As valuable assets, proprietary information, and research and development investments are repeatedly compromised by increasingly relentless attacks, businesses can no longer afford to stay silent victims.  The calculus has changed.  Companies are taking action.

Over the last year, we have seen a tipping point.  As more and more companies come forward, more and more will feel emboldened.  Eventually, these nation-state hackers – just like the mafia – will lose the ability to intimidate victims.
Public-private partnerships are particularly important because of the key role that businesses play in our society.  Unlike some countries, where government maintains control over the telecommunications and energy industries, nearly all critical infrastructure in the United States is owned and managed by private companies.  The fiber-optic cables that our communications transit; the servers that direct our Internet traffic;  the software that allows us to communicate; and the energy we use to power our daily lives – all of these things, and so many more, are created and operated by private companies.

We thrive as a nation because of private innovation, and the creativity that comes with the freedom to innovate.  This has been true throughout our history.  But these unique strengths also create opportunities for attacks.  When attacked, companies are often in the best position to protect themselves and their customers from cyber aggressors.  But they may not always be in the best position to know the precise threats they face, which is where we can help. 

Take, for example, the Department’s work on cyber threats.  On a daily basis, the FBI is working with companies that have been the victims of hacks – many of whom may not even know they have been victimized, or how to protect themselves.  The Washington Post reported earlier this week that federal agents notified more than 2,000 U.S. companies last year that their computer systems were hacked – and, as the article explained, even that considerable figure represents only a fraction of the actual number of cyber intrusions into the private sector.

There are many efforts underway across the government to work with private corporations on strengthening public-private cyber cooperation.   The Department of Homeland Security, the Department of Energy, and other departments and agencies routinely work closely with companies to protect critical infrastructure.

 In driving this work forward, the FBI has long relied on its InfraGard program, which brings together individuals in law enforcement, government, the private sector, and academia to talk about how to protect our critical infrastructure.  InfraGard has more than 85 chapters across the country, with more than 47,000 members. 

These are all positive and important efforts, but we have to do more.

As we speak, the Department of Justice is working hard to be a more accessible partner to companies.  Over the past two years, the National Security Division established a national program to focus on cyber threats to the national security – those posed by terrorist and nation state actors – and we are continuing to grow.  We are still a very new Division, but we are evolving quickly to meet new and emerging threats. 

The story of NSD’s creation is an interesting one.  Although not formally created until 2006, NSD’s story begins, like so many others, with calls for reforms that were first spotted years ago.  We trace our origin all the way back to 1978, with the passage of the Foreign Intelligence Surveillance Act.  FISA was, in part, a response to public and congressional dissatisfaction with a series of intentional abuses of wiretaps and surveillance for political purposes.  The Church Committee’s report set out those problems and made a case for reform.  The report emphasized that the Attorney General, as the nation’s chief legal officer, plays an essential role in maintaining the lawfulness of actions by our country’s intelligence agencies.  NSD was created, and is proud, to execute that mission decades later on his behalf. 

So as we tackle the cyber threat, we build upon our roots.  We were created so that prosecutors and law enforcement officials could work smoothly and effectively with intelligence attorneys and the Intelligence Community, to ensure that we most effectively defend our nation’s security while at the same time protecting our vital civil liberties.  And I would be remiss in describing the vital work of our Division if I neglected to acknowledge this week’s conviction of Sulaiman Abu Ghayth in New York.  Abu Ghayth, described as a senior spokesman for Osama bin Laden and al Qaeda, was convicted by a federal jury on all counts, including conspiring to kill Americans and other terrorism charges.

So, even as we defend our national security through successful counterterrorism prosecutions in federal court, we also defend our security while protecting our civil liberties in cyberspace.  In 2012, we established the National Security Cyber Specialists’ Network, with members from across all of our areas of expertise, federal prosecutors from each and every U.S. Attorney’s Office, and partners from the Department’s Computer Crime and Intellectual Property Section, who have had longstanding and continuing success against organized cyber criminals, hacktivists, criminal fraudsters and other bad actors. 

Since then, we have hosted extensive training for these network members and for every member of the National Security Division, to ensure we have the skills we need to tackle the threat.   Federal prosecutors across the country are reaching out to companies in their districts to let them know about the network and how we can help.

Here in our nation’s capital, we work closely with the FBI’s National Cyber Investigative Joint Task Force to assess cyber issues in real time as they arise.  We’ve launched a 24/7 cyber response capacity.  We are now a one-stop shop and resource for national security cyber matters across the country.

There are criminal cases to be brought against these actors, but that is just one tool.   We are committed to using every tool at our disposal, law enforcement and others, to disrupt adversaries’ activities and prevent damage to U.S. national interests – just as we do in other arenas of counterterrorism, counterespionage, and export control.

We are drawing from our expertise in those areas, and building new capabilities to ensure that we can use all available tools to meet a range of constantly-evolving threats.

 Employing this comprehensive, “all-tools” approach means we need to be prepared not only to prosecute cyber intrusions, economic espionage, and export control violations, but also to work with our partners to enforce other civil and regulatory laws.

We cannot do this alone.  This “all-tools” approach requires trusted collaboration, including with operational and legal experts in the private sector.

It’s often said, there are only two types of companies: those that have been hacked and those that will be.  Now, that’s no longer the case.  Today, there is only one category:  those that have been hacked, and that will be hacked again.

Going forward, we want to work even more closely with our private sector partners to be ready for whatever may happen in the near future.  Of course, private companies will remain our first line of defense, and their legal teams must be prepared to face difficult questions and complex matters, including how to respond to cyber breaches; how to interpret and comply with the cyber Executive Order and the cybersecurity framework recently released by the Administration; and, how to stay on top of the evolving “standard of care” for cyber security.

All of us – including lawyers and operators in the public and private sectors – will need to cooperate closely to address these and associated threats.  We all must act on the premise that success requires reporting from, and close relationships with, victims and potential victims who seek indicators of malicious activity. 

My colleagues and I have already met with a number of private entities and received a positive response, and we will continue these meetings to keep the dialogue going. 

And as we look toward the future, we must continue establishing channels that regularly communicate cyber threat information between the public and private sectors.  Information must move in both directions.  It is an approach that works in other contexts, and it will succeed here as well.

We have come a long way in our collective approach to counterterrorism.  Together, we have improved airline safety, hardened critical infrastructure, developed new technology that can help first responders, and designed a wide range of protective measures.  These measures, of course, don’t eliminate the threat of to our national security, which remains very real and very dangerous.  But we are safer than we used to be, and better prepared to cope with any potential attack.

We need to achieve this same success in the cyber realm. So the critical question is: What will it take? 

We’ve certainly had plenty of attacks that caused real pain, exposed real weaknesses, and suggested real problems for the future.  Yet, despite all of these warnings, we don’t seem to have fully turned the corner in addressing this threat.  And the reasons for that are understandable. 

Confronting cyber threats incurs real economic cost.  We appreciate that.  But doing nothing will cost us all more in the long run, and may, for some businesses, prove devastating.

The writing is on the wall – our adversaries are getting bolder, more aggressive, and more skilled.  They flex their muscle to show us what they can do, but it is only the tip of the iceberg.  Without a concerted, collective effort to make the changes needed to protect ourselves in cyberspace, it is only a matter of time before we are really hit – hard.  Far better to form partnerships and make the required investments before a large-scale attack takes place.

Indeed, perhaps even more than in the terrorism context, the private sector is critical to our success in the cyber context because of just how much vital information is now held “in corporate trust,” so to speak. 

While government holds and protects some of what cyber terrorists want to access, the private sector has much, much more.  So, whether it’s about ensuring that our electric grid is safe from attacks – whether physical or cyber – or making sure you can access your bank account information on your smartphone without getting hacked, we urgently need to form the type of public-private partnerships to keep those vital resources safe.  These are the type of partnerships we’ve created for counterterrorism.  We must build on those partnerships to combat cyber threats – not pull away from each other.

This is the challenge now before us – and this is the cause that everyone in this room, and many beyond it, must come together to confront.  Each of us has a unique role to play, and distinct responsibilities to fulfill. 

Leaders in government can articulate precisely what we have to offer the private sector.  Leaders in the private sector can demonstrate what these partnerships have to offer to their customers.  And leaders in academia can survey the legal authorities we have – and take stock of what legal authorities we don’t have but need – to facilitate cooperative, productive cyber partnerships. We can build these partnerships while respecting civil liberties and do it in a transparent and productive way.

We are committed to meeting regularly with critical partners to get your feedback on how we are doing; to solicit suggestions on how we can do better; and to gain the benefit of your views on how the overall landscape is looking. Please reach out to us so that we can talk more about what NSD does, and how we can work together to keep you safer and our nation safer.

I want to close today by calling upon everyone here to continue the important open dialogue we’re holding here at AU today.  I urge you to serve as connectors – as bridges – to make private-public partnerships a reality. 

We had warnings before 9/11.  But we didn’t act – at least not enough.  The state of security of the Internet today is a rumbling storm in the distance.  We need to be smart and work together, now, before a cyber 9/11 – before there’s an attack or intrusion or exfiltration so big – and so devastating – we are forever changed.  Thank you for participating in this important conversation, and thank you for having me here today.

The Justice Department filed a lawsuit today against Sairam Enterprises Inc. LLC alleging that it discriminated against Jeffrey Crockett and his family on the basis of disability in violation of Title III of the Americans with Disabilities Act (ADA).  Sairam Enterprises owns and operates the Days Inn and Conference Center Tulsa, a hotel in Tulsa, Okla.

The complaint, filed in the U.S. District Court for the Northern District of Oklahoma, alleges that Days Inn Tulsa maintained a “no pet” policy that was enforced against Crockett to prohibit him, his service animal and his family from staying at the hotel on Aug. 31, 2010, while they were traveling through Oklahoma.  Crockett is a veteran of the U.S. Air Force and U.S. Marine Corps who has a degenerative disc disease, a demyelinating disease, post-traumatic stress disorder, depression and panic disorder.  Crockett’s service animal is a German shepherd named Phineas that is trained to perform tasks directly related to his disabilities, and Days Inn Tulsa allegedly made no effort to modify its policy even after Crockett notified the hotel that Phineas is a service animal. 

“The men and women who have given so much to our country through their military service cannot be denied accommodations because they need a service animal,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The Justice Department will continue to enforce the ADA so that they, and others with disabilities, do not need to face such discrimination.”

“It is vital for the Justice Department to protect every citizen’s right to equal treatment and opportunity, especially for our Nation’s veterans,” said U.S. Attorney Danny C. Williams Sr. for the Northern District of Oklahoma.  “Under the American with Disabilities Act, no citizen with the need for a service animal should be discriminated against and denied accommodation.”

In the lawsuit, the United States is seeking a court order declaring that Days Inn Tulsa violated the ADA, prohibiting future discrimination by the hotel, and requiring the hotel to adopt a nondiscrimination policy and to train its staff on nondiscrimination.  The lawsuit also seeks an award of monetary damages to the Crocketts who were allegedly harmed by the discrimination and a civil penalty.

To read the complaint and for more information on the ADA, visit the ADA website.  Those interested in finding out more about this lawsuit or the obligations of private entities to accommodate people with service animals under the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access the ADA website.  ADA complaints may be filed by email.

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

The Department of Justice’s Civil Rights Division and the U.S. Attorney’s Office for the Southern District of Texas announced today that a federal grand jury in Houston returned a six count indictment charging Dante Phearse, 33, with calling in bomb threats to two Houston synagogues, a municipal courthouse and a private business.    

Phearse, of Houston, has been charged with two civil rights violations for threat of force with an explosive device against two synagogues, which allegedly obstructed members of the synagogues from enjoying the free exercise of their religious beliefs.  Phearse is also charged with four counts of using an instrument of interstate commerce to communicate a threat to kill and injure people and destroy a building by means of an explosive device.    

The indictment alleges that on April 30, 2013, Phearse telephoned two different synagogues in Houston, Congregation Beth Israel and Congregation Or Ami, and left voicemails threatening to bomb the buildings and cause other harms to the members.  According to the indictment, on the same day, Phearse also called in and threatened to bomb the City of Houston Municipal Courts building and a private business.       

If convicted, Phearse faces a statutory maximum penalty of 20 years in prison for each civil rights violation, and a statutory maximum penalty of 10 years in prison for each count of making bomb threats over the phone.  Phearse has been in custody since his arrest.  He is expected to make an initial appearance on the indictment in the near future, at which time the U.S. expects to request his continued detention pending trial.   

This case is being investigated by the Houston Division of the FBI in cooperation with the Houston Police Department.  It is being prosecuted by Trial Attorneys Nicholas Murphy and Saeed Mody of the Civil Rights Division and Assistant U.S. Attorneys Ruben Perez and Joe Magliolo of the Southern District of Texas, in cooperation with the Harris County District Attorney’s Office.  

An indictment is merely an accusation and the defendant is presumed innocent unless proven guilty through due process of law.

Five men have been charged in the Eastern District of New York with conspiring to defraud the Newspaper and Mail Deliverers’ Union (NMDU) and Hudson News newsstands to obtain a union card and employment at Hudson News newsstands for the son of the alleged underboss of the Colombo family of La Cosa Nostra.

A criminal complaint was unsealed today charging Benjamin Castellazzo Jr., Rocco Giangregorio, Glenn LaChance, Rocco Miraglia, aka “Irving,” and Anthony Turzio, aka “the Irish Guy,” with mail fraud conspiracy. The five men were arrested earlier today, and their initial appearances are scheduled for this afternoon before United States Magistrate Judge Robert M. Levy at the federal courthouse in Brooklyn.

In addition, a three-count indictment was unsealed today charging Thomas Leonessa, aka “Tommy Stacks,” with wire fraud, wire fraud conspiracy and theft and embezzlement from employee benefit plans in an unrelated scheme. The indictment was returned by a federal grand jury sitting in Brooklyn, N.Y., on March 6, 2014, and relates to Leonessa’s alleged “no show” job as a delivery driver for the New York Post.

The charges were announced by Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, United States Attorney Loretta E. Lynch of the Eastern District of New York Acting Special Agent in Charge Cheryl Garcia of the New York region of the U.S. Department of Labor’s Office of Labor Racketeering and Fraud Investigations and Assistant Director in Charge George C. Venizelos of the FBI’s New York Field Office.

As alleged in the complaint, the NMDU is an independent union that represents approximately 1,500 employees involved in the newspaper industry in New York, New Jersey and Connecticut. NMDU members deliver newspapers for The New York Times, The Wall Street Journal, the New York Daily News, the New York Post and El Diario. Hudson News, which also employs members of the NMDU, is a retail chain of newsstands mainly located in major transportation hubs, including airports and train stations.

Between June 2009 and October 2009, Miraglia, who was a foreman at the New York Daily News – as well as an associate of the Colombo organized crime family and the son of a deceased soldier in the Colombo family – conspired with officials of the NMDU and with Turzio, an employee of El Diario, to get an NMDU union card for Castellazzo Jr. and place him in a job at Hudson News. Castellazzo Jr. is the son of Benjamin Castellazzo, the alleged underboss of the Colombo family. Giangregorio and LaChance, who are business agents for the NMDU, also participated on this scheme.

As alleged in the indictment, Leonessa was employed by the New York Post to deliver newspapers by truck from a New York Post warehouse in the Bronx, N.Y., to New Jersey. He was also a member of the NMDU, which maintained offices, including offices for its welfare and pension funds, in Queens, N.Y. From about December 2010 to about September 2011, Leonessa had a “no show job” – a job for which he was paid wages and benefits for services he did not perform – at the New York Post. When Leonessa did not complete his required deliveries, he was nevertheless, based on his fraudulent representations, paid wages by the New York Post and accorded benefits from employee pension and welfare funds managed by the NMDU.

Leonessa is scheduled to be arraigned this afternoon before United States Magistrate Judge Robert M. Levyat the federal courthouse in Brooklyn, N.Y.

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

The case was investigated by the U.S. Department of Labor’s Office of Labor Racketeering and Fraud Investigations and the FBI, with assistance from the New York City Police Department, the New York County District Attorney’s Office and Waterfront Commission of New York Harbor.

The government’s case is being prosecuted by Trial Attorney Joseph Wheatley of the Department of Justice’s Organized Crime and Gangs Section and Assistant U.S. Attorneys Elizabeth A. Geddes and Allon Lifshitz.

WASHINGTON— On Wednesday, a federal jury in Manhattan found Sulaiman Abu Ghayth, the son-in-law of Usama bin Laden and a senior member of al Qaeda, guilty on three counts, including conspiracy to kill Americans.

U.S. Attorney General Eric Holder released the following statement: “This verdict is a major milestone in the government’s unrelenting efforts to pursue justice against those involved with the September 11 attacks. I can imagine no more fitting outcome, and no stronger message to those who would harm our nation and its people: that no amount of distance or time can weaken America’s resolve to pursue, capture, and hold them accountable to the fullest extent of the law.

“I want to especially note that this verdict has proven that proceedings such as these can safely occur in the city I am proud to call home, as in other locations across our great nation. It was appropriate that this defendant, who publicly rejoiced over the attacks on the World Trade Center, faced trial in the shadow of where those buildings once stood.

“We never doubted the ability of our Article III court system to administer justice swiftly in this case, as it has in hundreds of other cases involving terrorism defendants. It would be a good thing for the country if this case has the result of putting that political debate to rest. This outcome vindicates the government’s approach to securing convictions against not only this particular defendant, but also other senior leaders of al Qaeda.

“I want to personally congratulate U.S. Attorney Bharara, his team in the Southern District of New York, and those who assisted in our National Security Division, for successfully prosecuting this case with the utmost integrity and professionalism. I also wish to thank the Federal Bureau of Investigation, U.S. Marshals Service, and Mayor de Blasio and the city of New York. This was truly a team effort.”

Acting Assistant Attorney General for National Security John Carlin released the following statement: “This case highlights our resolve to find and bring to justice those who plot to attack our citizens and our interests around the world.  As the face and voice of al Qaeda in the days and weeks after the 9/11 attacks, Abu Ghayth conspired with Usama Bin Laden and al Qaeda and announced to the world al Qaeda’s deadly intentions to continue to attack America.  Today, he stands convicted and he will face justice for his role in al Qaeda’s lethal plot to kill Americans.  I want to thank all of the agents, analysts, and prosecutors who are responsible for this result.”

Tieu Tran, 59, of Mankato, Minn., pleaded guilty late yesterday to one count of forced labor trafficking in the U.S. District Court for the District of Minnesota, the Justice Department announced today.  Tran is the former owner and manager of Nails By Jordan, a nail salon located in Mankato.

According to evidence presented in court proceedings and documents, in 2008, Tran recruited a woman from Vietnam to travel to the United States using false promises of legal immigration status and a high-paying job.  In reality, Tran smuggled the victim and two other Vietnamese nationals across the southern U.S.-Mexico border, imposed a significant debt upon the victim and forced the victim to pay down the smuggling debt by working at Tran’s son’s Vietnamese restaurant, Pho Saigon, in Mankato. 

During the plea proceedings, Tran admitted to compelling the victim to work long hours without paying her as promised, using a scheme, plan and pattern of non-violent coercion.  This included manipulation of debts, isolation and verbal intimidation to hold the victim in fear, knowing that the victim was without legal status and money, did not have the ability to speak English, feared losing her family home in Vietnam to creditors and had nowhere else to turn for subsistence.

“This defendant preyed on vulnerable victims and exploited them for her profit,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “Traffickers routinely use schemes of non-violent coercion to exploit victims by manipulating the victims’ debts, fears of immigration consequences, linguistic isolation and other vulnerabilities.  The Civil Rights Division is committed to seeking justice on behalf of victims of human trafficking and to holding human traffickers accountable”

“Human trafficking degrades the dignity of humanity and strikes at the heart of individual equality and freedom,” said U.S. Attorney Andy Luger for the District of Minnesota.  “The U.S. Attorney’s Office for the District of Minnesota will aggressively prosecute those who seek to capitalize on human frailty through such conduct.”

“ The FBI, in conjunction with its law enforcement partners, remains steadfast in its commitment to eradicate human trafficking,” said Special Agent in Charge J. Chris Warrener of the FBI’s Minneapolis Field Office.  “Human trafficking is an insidious crime which impacts not only its victims, but society as a whole.  Detecting and bringing to justice those who perpetrate these schemes will always be a top priority for law enforcement. ”  

Tran faces a statutory maximum sentence of 20 years in prison and a $250,000 fine.  As part of her plea agreement, Tran agreed to nullify all debts imposed upon the victim, as well as similar debts imposed upon seven other individuals believed to be under similar circumstances.

This case was investigated by the FBI and is being prosecuted by Trial Attorney William Nolan of the Civil Rights Division’s Human Trafficking Prosecution Unit and Assistant U.S. Attorney David Steinkamp of the U.S. Attorney’s Office for the District of Minnesota.

(HAGATNA, GU) ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that a federal grand jury returned an indictment charging twelve (12) individuals as follows:

• FRANCISCO C. ARIAS, 38,  EDER J. CORTEZ-ZELAYA, 31, DAVID G. QUINATA, 52, BRIAN G. QUINATA, 37, JOSEPH S.N. MANSAPIT, 43, JOHNNY J.S. QUENGA, 36, KEN J. NANGAUTA, 49, CORINNA M. CONCEPCION, 42, LAWRENCE P. CONCEPCION, 49, FLORENTINA P. DEPAMAYLO, 60, JOSHUA E. MOYE, 26, and RICHARD J. BORJA, 42,  were charged with conspiracy to distribute more than 50 grams of methamphetamine.  A conviction for conspiracy to distribute more than 50 grams of methamphetamine carries a mandatory minimum sentence of ten (10) years imprisonment and a maximum sentence of life imprisonment.

• ARIAS, CORTEZ-ZELAYA, QUENGA, CORINNA M. CONCEPCION,  NANGAUTA, DAVID G. QUINATA, BRIAN G. QUINATA, MANSAPIT, and  MOYE were also charged with conspiracy to commit money laundering which carries a maximum sentence of twenty (20) years imprisonment. 

• ARIAS and CORTEZ-ZELAYA were charged with separate counts of unlawful use of the mail to facilitate the conspiracy to distribute methamphetamine which carries a maximum sentence of five (5) years imprisonment. 

Defendants ARIAS and CORTEZ-ZELAYA were arrested in Las Vegas, Nevada.  Other defendants were arrested in Guam.  Initial appearances for the defendants have been held.   

This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF), a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.

This OCDETF investigation involved federal agents and local law enforcement officers of the U.S. Postal Inspection Service (USPIS), Drug Enforcement Administration (DEA), U.S. Department of Homeland Security Investigations (HSI), Guam Police Department (GPD), Guam Customs and Quarantine Agency (GCQA), Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), U.S. National Oceanic Atmosphere Administration (NOAA), and U.S. Coast Guard Criminal Investigative Service (CGIS).  The case is being prosecuted by Assistant U.S. Attorney Clyde Lemons, Jr.

The public is reminded that an indictment contains only allegations and is not evidence of guilt.  The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

(HAGATNA, GU) - ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that on March 24, 2014, in the U.S. District Court of Guam, Chief Judge Frances M. Tydingco-Gatewood sentenced RODNEY D. TAITANO, age 45, to 10 years in prison followed by five years of supervised release based upon his conviction for conspiracy to distribute over 50 grams of methamphetamine.  Chief Judge Tydingco-Gatewood also ordered TAITANO to perform 50 hours of community service.

            The defendant was receiving methamphetamine from California.  The drugs were inside air impact wrenches whose motors had been removed.  On May 4, 2013 Guam Customs Officers intercepted a suspicious package at the Guam Customs Air Cargo Facility and discovered methamphetamine concealed inside of two air impact wrenches which belonged to the defendant.   

            U.S. Attorney for the Districts of Guam and the Northern Mariana Islands, Alicia A.G. Limtiaco, stated, “Our community is not immune from the poison of methamphetamine.  This case illustrates the hard work our partners in law enforcement do every day to stop the distribution of methamphetamine into Guam.”

            The case was investigated by the Drug Enforcement Administration, Guam Customs & Quarantine Agency, Guam Police Department, Superior Court of Guam Probation Office, and United States Postal Inspectors.  The United States was represented by Assistant U.S. Attorneys Karon V. Johnson and Clyde Lemons, Jr.

The Department of Justice’s Antitrust Division today issued the 2014 edition of its annual newsletter on its website.  The newsletter highlights the Antitrust Division’s civil and criminal enforcement actions, international cooperation efforts and competition advocacy over the last year.

The newsletter includes a message from Assistant Attorney General Bill Baer, which focuses on the strong return on investment that antitrust enforcement provides, the division’s continued focus on litigation effectiveness and the division’s commitment to enforcing the antitrust laws and promoting competition in all sectors of the American economy. “We remain steadfast in our efforts to ensure that markets are free of anticompetitive restraints and consumers benefit from robust competition,” Assistant Attorney General Baer stated in his message.

This year’s update highlights the division’s criminal enforcement matters, including criminal fines, which totaled more than $1 billion for the third time since 2009, and incarceration for culpable executives.  The division won trial victories in its ongoing real estate foreclosure auction investigation and its investigation into anticompetitive behavior at Environmental Protection Agency Superfund sites, and secured multiple guilty pleas in its automotive parts, tax liens and ocean shipping investigations.

Other newsletter articles describe the division’s civil enforcement program–including its trial victories against both Apple Inc. and BazaarVoice Inc. in the e-book and online ratings and review software industries, respectively. The division also reached civil settlements to protect consumers and preserve competition in the airline, broadcasting and deepwater oil well chemical industries.

The newsletter also features articles about the division’s use of new document production techniques and mergers that increase bargaining leverage. 

The Department of Justice, the Federal Trade Commission (FTC), and the Competition Bureau Canada today issued a set of “best practices” to make more transparent how they coordinate merger reviews that affect the United States and Canada.

Assistant Attorney General for the Department of Justice’s Antitrust Division Bill Baer, FTC Chairwoman Edith Ramirez and Canadian Commissioner of Competition John Pecman praised the long record of successful cooperation between the two jurisdictions, and noted that cross-border coordination and cooperation in merger matters have steadily increased over the last decades.

The best practices set forth how effective day-to-day cooperation works between the two U.S. agencies and the Competition Bureau, including how the agencies communicate with each other, benefit from the similarity of their respective merger review timetables, cooperate in the analysis of evidence, use waivers of confidentiality provided by the parties and address remedies and settlements. The best practices also seek to promote cooperation and coordination between the U.S. and Canadian agencies in order to enhance the likelihood of consistent outcomes when the same merger is reviewed in both countries. In addition, the best practices acknowledge the contribution that merging parties can make in facilitating cooperation, and provide guidance to firms about how to work with the agencies to coordinate and facilitate the reviews of their proposed transactions.

 
“The strong relationship between the U.S. and Canadian competition agencies has allowed us to cooperate closely and effectively on many merger investigations,” said Assistant Attorney General Baer. “The best practices we are issuing today are a testimony to our agencies’ long-standing and productive working relationship and the importance all of our agencies place on transparency.”

“We have developed a very close working relationship with our Canadian colleagues based on our shared approach to the implementation of our competition laws and policies,” said FTC Chairwoman Ramirez. “These best practices exemplify our commitment to cooperation and convergence, benefiting our agencies, merging parties, and ultimately consumers.”

 
The best practices, which do not modify existing law, build upon the framework of the 1995 antitrust cooperation agreement between the United States and Canada and the experience gained under that framework.

Related Materials:

U.S. and Canada Antitrust Agencies Best Practices

Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division today met with 35 international antitrust enforcement agencies and dozens of private antitrust practitioners in Washington, D.C., to emphasize the need for procedural fairness and transparency for parties in antitrust investigations.

 
At the International Competition Network (ICN) roundtable on investigative process, Baer applauded the progress that already has been made in the international competition community toward shared values of due process and transparency in antitrust investigations and stressed the importance of continuing that effort.

Baer said that process and transparency matter. They help ensure that enforcers’ views are exposed to informed reaction and that parties understand the processes used to reach a particular outcome. Baer also said that when fair and transparent decision-making processes are in place, the legitimacy of the agency’s outcome is enhanced.

Baer encouraged newer antitrust enforcement agencies to adopt practices that would provide greater transparency and procedural fairness to parties in antitrust investigations. Some of the practices recommended include providing parties under investigation with information about the timing of antitrust agency’s decision-making, allowing parties to submit white papers and meet with investigating staff and decision-makers to present their views, and providing parties in investigations with regularly updated information about the agency’s concerns.

The ICN roundtable was co-hosted by the Department of Justice and the Federal Trade Commission. FTC Chairwoman Edith Ramirez also presented remarks.

Williesteina Jacobs was indicted in the Eastern District of New York on March 21, 2014, and charged with 27 counts of aiding in the preparation of false returns, the Justice Department and Internal Revenue Service (IRS) announced today following her arrest.

According to the indictment, Jacobs owned and operated a tax preparation business called International Professional Business Services, which was located in South Richmond Hill, N.Y., and Jamaica, N.Y.  The indictment charges that Jacobs prepared false personal income tax returns for clients for tax years 2007 through 2009.  Jacobs allegedly attached false schedules that reported business losses the taxpayers did not incur and attached schedules that reported inflated or fictitious deductions.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Jacobs faces a statutory maximum sentence of three years in prison and a fine of up to $250,000 on each count.

The case was investigated by special agents of IRS – Criminal Investigation.  Trial Attorneys Jennifer Laraia and Stephen Descano of the Justice Department’s Tax Division are prosecuting the case . 

A Long Island, N.Y., doctor was arrested today on charges that he submitted millions of dollars in false billings to Medicare.

The charges were announced by Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Assistant Director in Charge George Venizelos of the FBI’s New York Field Office and Special Agent in Charge Thomas O’Donnell of the Department of Health and Human Services Office of Inspector General (HHS-OIG).

Dr. Syed Imran Ahmed, 49, was charged with one count of health care fraud by a criminal complaint unsealed this morning in federal court in Brooklyn, N.Y. A seizure warrant seeking millions of dollars of Ahmed’s alleged ill-gotten gains, including the contents of seven bank accounts, was also unsealed. In addition, a civil forfeiture complaint was also filed today against Ahmed’s residence located in Muttontown, N.Y., valued at approximately $4 million. Further, search warrants were executed earlier today at six locations in New York, Michigan and Nevada. Ahmed’s initial appearance is scheduled this afternoon before U.S. Magistrate Judge Marilyn Go.

“The Medicare system entrusts doctors to provide patients with the care and services they need,” said Acting Assistant Attorney General O’Neil.  “The charges unsealed today allege that Dr. Ahmed billed millions of dollars to Medicare for surgical procedures that he did not actually perform.  These charges are yet another example of the Department of Justice’s determination to hold accountable those who abuse the trust placed in them and steal from the system for personal gain.”

“As alleged, Ahmed created phantom medical procedures to steal very real taxpayer money. The defendant sought to enrich himself and fund his lifestyle through billing Medicare for services he never performed,” stated United States Attorney Lynch.  “We are committed to protecting these taxpayer-funded programs and prosecuting those who steal from them.”

“Fraudulently billing the government defrauds every American taxpayer,” said FBI Assistant Director in Charge Venizelos. “We will investigate cases of graft and greed to protect important programs for those who need them.”

“For a single physician, the alleged conduct in this case is among the most serious I've seen in my law enforcement career," said HHS-OIG SAC O’Donnell.  “Being a Medicare provider is a privilege, not a right.  When Dr. Ahmed allegedly billed Medicare for procedures he never performed, he violated the basic trust that taxpayers extend to healthcare providers.”

As alleged in the complaint, Ahmed engaged in a scheme to submit claims to Medicare for surgical procedures that were not in fact performed. The complaint alleges multiple instances in which either patients told law enforcement officers that they never had the procedures that were billed, or hospital medical records did not contain any evidence that the procedures were actually performed. From January 2011 through mid-December 2013, Medicare was billed at least $85 million for surgical procedures purportedly performed by Ahmed.

The investigation has been conducted by the FBI and HHS-OIG and brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York. The case is being prosecuted by Trial Attorney Turner Buford of the Fraud Section and Assistant U.S. Attorneys William Campos and Erin Argo of the U.S. Attorney’s Office for the Eastern District of New York.

The charges in the complaint are merely allegations, and the defendant is presumed innocent unless and until proven guilty.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 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 .

Detrick and Natashia Tucker, a husband and wife who owned and operated a tax preparation business named T&T Express Tax located in Pine Mountain, Ga., were sentenced to serve 12 months and one day and 46 months in prison, respectively, for crimes relating to the preparation of false tax returns, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.  Detrick Tucker previously pleaded guilty to aiding and assisting in the preparation of false tax returns and Natashia Tucker pleaded guilty to conspiring to defraud the United States by filing false tax returns.  Natashia Tucker was ordered to pay $1,483,025 in restitution and Detrick Tucker was ordered to pay restitution in the amount of $66,235.

According to court documents, the Tuckers conspired to fraudulently inflate refunds on their clients’ tax returns in order to increase the popularity of T&T Express Tax and secure more business.  Detrick Tucker contributed to the conspiracy by registering T&T Express Tax with the Internal Revenue Service (IRS) so that the false returns could be electronically filed and by performing managerial duties.  He also knowingly allowed Natashia Tucker to use his IRS registration numbers to file her own false tax returns.  As the main tax return preparer at T&T Express Tax, Natashia Tucker prepared the majority of the false returns at the business.  She primarily obtained the artificially high refunds by abusing the Earned Income Tax Credit and by creating false business information for her clients.  During its three years of operation, T&T Express Tax filed at least 268 fraudulent federal tax returns that claimed over $1,000,000 in false refunds. 

The case was investigated by special agents of the IRS-Criminal Investigation and the Georgia Department of Revenue.  Trial Attorneys Alexander Effendi and Charles Edgar Jr. of the Tax Division prosecuted the case.

A former soldier of the U.S. Army National Guard has pleaded guilty for his role in a bribery and fraud scheme that caused approximately $70,000 in losses to the U.S. Army National Guard Bureau, 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.

Former Sergeant First Class Michael Rambaran, 51, of Pearland, Texas, pleaded guilty today to one count of conspiracy, one count of bribery and one count of aggravated identity theft. Sentencing is scheduled for June 24, 2014 before U.S. District Judge Lee H. Rosenthal in Houston.

The case arises from an investigation involving allegations that former and current military recruiters and U.S. soldiers in the San Antonio and Houston areas engaged in a wide-ranging corruption scheme to illegally obtain fraudulent recruiting bonuses. To date, the investigation has led to charges against 25 individuals, 22 of whom have pleaded guilty.

According to court documents, in approximately September 2005, the National Guard Bureau entered into a contract with Document and Packaging Broker Inc. (Docupak) to administer the Guard Recruiting Assistance Program (G-RAP). The G-RAP was a recruiting program that offered monetary incentives to Army National Guard soldiers who referred others to join the Army National Guard. Through this program, a participating soldier could receive bonus payments for referring another individual to join the Army National Guard. Based on certain milestones achieved by the referred soldier, a participating soldier would receive payment through direct deposit into the participating soldier’s designated bank account. To participate in the program, soldiers were required to create online recruiting assistant accounts.

Rambaran admitted that between approximately February 2008 and August 2011, while he was a recruiter for the National Guard, he obtained the names and Social Security numbers of potential soldiers and provided them to recruiting assistants so that they could use the information to obtain fraudulent recruiting referral bonuses by falsely claiming that they were responsible for referring those potential soldiers to join the Army National Guard, when in fact they were not. In exchange for the information, Rambaran admitted that he personally received a total of approximately $29,000 in payments from the recruiting assistants.

Co-conspirators Edia Antoine, Ernest A. Millien III and Melanie Moraida pleaded guilty to conspiracy and bribery in connection to this scheme. Antoine and Millien are each scheduled to be sentenced on Aug. 24, 2014. Moraida is scheduled to be sentenced on Aug. 26, 2014. All of these sentencing hearings are set before U.S. District Judge Rosenthal in Houston.

Another alleged co-conspirator, Christopher Renfro, who was indicted on Aug. 7, 2013, remains charged with two counts of wire fraud and two counts of aggravated identity theft. Trial is currently scheduled for June 16, 2014, before U.S. District Judge Rosenthal in Houston. An indictment is only an accusation, and a defendant is presumed innocent unless and until proven guilty.

The cases are being investigated by special agents from the San Antonio Fraud Resident Agency of Army CID’s Major Procurement Fraud Unit. This case is being prosecuted by Trial Attorneys Sean F. Mulryne, Heidi Boutros Gesch and Mark J. Cipolletti of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney John Pearson of the Southern District of Texas.

Billy James Hammett, 30, of Marysville, Calif., was sentenced today by U.S. District Judge John A. Mendez to serve 87 months in prison for violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act in a 2011 racially motivated attack against a white man and an African-American woman in Marysville.  The court also ordered Hammett to pay restitution in the amount of $175 and to serve three years of supervised release following his prison sentence.  Hammett pleaded guilty on Dec. 17, 2013, and his co-defendants, Perry Sylvester Jackson, 28, and Anthony Merrell Tyler, 33, have also pleaded guilty and are awaiting sentencing.

According to documents filed with the court, around 10:45 p.m. on April 18, 2011, a white man and an African-American woman parked their car at a convenience store in Marysville.  Shortly afterward, the three defendants, each of whom has white supremacist tattoos, attacked the man and woman based on race.  After calling the male victim a “[racial slur]-lover,” Jackson punched him twice in the head through the open passenger window.  At the same time, Hammett kicked the woman in the chest.  A few seconds later, Tyler smashed the car’s windshield with a crowbar.   As the attack continued, the woman managed to take refuge inside the convenience store.  All three assailants then descended upon the male victim and began attacking him in the parking lot.  He sustained abrasions on his right forearm and knees, while the woman suffered bruising to her chest.  At the end of the incident, Tyler used a racial slur to refer to an African-American witness.

In sentencing the defendant, Judge Mendez said he found surveillance video footage of the assault “disturbing.”  He noted that Hammett’s attack on the victims was “unprovoked and unwarranted,” and that the victims continue to suffer.

During the sentencing hearing, Judge Mendez also specifically considered Hammett’s background and criminal history, which includes a conviction in 2006 for assaulting a 72-year-old black man, also in Marysville.  According to court records, Hammett made racial comments immediately before the unprovoked attack.  In addition, Hammett has been affiliated with a number of white supremacist gangs, including Supreme White Power.  He has tattoos of the words “white power” across his abdomen, a large swastika on the right side of his torso and the word “skinhead” written across the top of his back.  Judge Mendez stated during the sentencing hearing that Hammett poses “a serious threat to the public.”

“The defendant and his associates accosted the victims in public and assaulted them because of their race,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The department is committed to stamping out racial violence and will continue to prosecute hate crimes vigorously.”

“Racially-motivated violence has no place in civilized society,” said U.S. Attorney Benjamin B. Wagner for the Eastern District of California.  “This office has a history of prosecuting those who perpetrate crimes of hate, and as long as these crimes continue, we will be there to enforce the law and uphold this nation’s constitutional values.”

Jackson is scheduled to be sentenced on April 22, 2014, and Tyler is scheduled to be sentenced on July 8, 2014.  Each defendant faces a statutory maximum sentence of 10 years in prison and a fine of $250,000. 

This case was investigated by the FBI with the assistance of the Yuba County Sheriff's Office and the Yuba County District Attorney's Office. The case is being prosecuted by U.S. Attorney Wagner and Trial Attorney Chiraag Bains of the Justice Department's Civil Rights Division.

Joshua Vandyk, a U.S. citizen, and Eric St-Cyr and Patrick Poulin, Canadian citizens, were indicted for conspiracy to launder monetary instruments, the Department of Justice and Internal Revenue Service (IRS) announced today.  The indictment alleges that Vandyk, St-Cyr and Poulin conspired to conceal and disguise the nature, location, source, ownership and control of property believed to be the proceeds of bank fraud.  The Caribbean-based defendants allegedly assisted undercover law enforcement agents, posing as U.S. clients, in laundering purported criminal proceeds through an offshore structure designed to conceal the true identity of the proceeds’ owners.  Vandyk and St-Cyr invested the laundered funds on the clients’ behalf and represented the funds would not be reported to the U.S. government. 

The indictment was returned in the Eastern District of Virginia on March 6, 2014, and unsealed on March 12, 2014, when all three defendants were arrested in Miami, Fla.  In addition to the conspiracy charge, Vandyk, St-Cyr and Poulin were each charged with two counts of money laundering. 

“These charges result from an extensive investigation and are the latest demonstration of the Department’s resolve to find and prosecute those who aid money laundering and tax fraud globally," said Deputy Attorney General James M. Cole. 

According to the indictment, Vandyk and St-Cyr lived in the Cayman Islands and worked for an investment firm based in the Cayman Islands.  St-Cyr was the founder and head of the investment firm, whose clientele included numerous U.S. citizens.  Poulin, an attorney at a law firm based in Turks and Caicos, worked and resided in Canada and in the Turks and Caicos.  His clientele also included numerous U.S. citizens.  

According to the indictment, Vandyk, St-Cyr and Poulin solicited U.S. citizens to use their services to hide assets from the U.S. government.  Vandyk and St-Cyr directed the undercover agents posing as U.S. clients to create offshore foundations with the assistance of Poulin and others because they and the investment firm did not want to appear to deal with U.S. clients.  Vandyk and St-Cyr used the offshore entities to move money into the Cayman Islands and used foreign attorneys as intermediaries for such transactions. 

According to the indictment, Poulin established an offshore foundation for the undercover agents posing as U.S. clients and served as a nominal board member in lieu of the clients.  Poulin transferred wire payments from the offshore foundations to the Cayman Islands, where Vandyk and St-Cyr invested those funds outside the United States in the name of the offshore foundation.  The investment firm represented that it would neither disclose the investments or any investment gains to the U.S. government, nor would it provide monthly statements or other investment statements to the clients.  Clients were able to monitor their investments online through the use of anonymous, numeric passcodes.  Upon request from the U.S. client, Vandyk and St-Cyr would liquidate investments and transfer money, through Poulin, back to the United States.  According to Vandyk and St-Cyr, the investment firm would charge clients higher fees to launder criminal proceeds than to assist them in tax evasion. 

“I commend IRS Criminal Investigation and the Division’s prosecutors for the extraordinary work that they have done over many months in this investigation,” said Assistant Attorney General Kathryn Keneally for the Tax Division.  “In particular, it is important to note that the IRS’s voluntary disclosure policy excludes disclosures after the government has received information about taxpayers’ identities.  If the investigation team now has the names of account holders who have not yet come forward, time has run out for them.”

“As alleged in the indictment, these defendants were in the business of creating layers of transactions so their US clients could launder criminal proceeds,” said Chief of IRS-Criminal Investigation Richard Weber.  “IRS Criminal Investigation is committed to unraveling complex financial and money laundering schemes and holding those accountable for creating mechanisms to hide assets offshore and dodge the tax system.”

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 maximum potential sentence of 20 years in prison for each count. 

The case was investigated by special agents of the IRS-Criminal Investigation.  Trial Attorneys Todd Ellinwood and Caryn Finley of the Department’s Tax Division and Assistant U.S. Attorney Kosta Stojilkovic of the U.S. Attorney’s Office for the Eastern District of Virginia are prosecuting the case. 

More information about the Tax Division and its offshore banking enforcement efforts can be found at the division website.

Related Materials:

United States v. Joshua Vandyk, etc.
Indictment

A Southern California man who ran a durable medical equipment (DME) supply company has been found guilty by a federal jury in Los Angeles for his role in a $1.5 million Medicare fraud scheme.

Acting Assistant Attorney General David A. O’Neil of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, Assistant Director in Charge Bill Lewis of the FBI’s Los Angeles Field Office and Special Agent in Charge Glenn R. Ferry of the Los Angeles Region of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

Vahe Tahmasian, 36, of Glendale, Calif., was found guilty on March 21, 2014, in U.S. District Court in the Central District of California of one count of conspiracy to commit health care fraud, six counts of health care fraud and six counts of aggravated identity theft. Sentencing is set for June 9, 2014.

The evidence introduced at trial showed that between April 2009 and February 2011, Tahmasian operated a Medicare fraud scheme at Orthomed Appliance Inc. (Orthomed), a DME supply company in West Hollywood, Calif. Tahmasian and his co-conspirator, Eric Mkhitarian, purchased Orthomed from the previous owners and put the company in the name of a straw owner. The defendant and his co-conspirator then stole the personal identifying information of Medicare beneficiaries and doctors in the company’s patient files and used that information to submit a large volume of fraudulent claims to Medicare. The evidence showed that during a three-month period in late 2010, Tahmasian submitted more than $1.2 million in fraudulent claims to Medicare for services that were never prescribed by a physician and never provided to the Medicare beneficiaries. Tahmasian and his co-conspirator then took out more than $622,000 in cash from the company over a six-week period in early 2011. The evidence at trial showed that Tahmasian used a fake California driver’s license during the course of the fraudulent scheme. Tahmasian submitted a total of $1,584,640 in claims to Medicare and received approximately $994,036 on those claims.

Mkhitarian, Tahmasian’s alleged co-conspirator, remains a fugitive.

The case was investigated by the FBI and the Los Angeles Region of HHS-OIG and 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 Central District of California. The case is being prosecuted by Assistant Chief Benton Curtis and Trial Attorney Alexander Porter of the Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion. In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov .

The leader of a piracy group engaged in the illegal distribution of copies of copyrighted Android mobile device applications and a co-conspirator have pleaded guilty for their roles in the scheme that distributed more than one million copies of copyrighted apps with a total retail value of more than $700,000.

Acting Assistant Attorney General David A. O’Neil of the Department of Justice’s Criminal Division, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia and Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Field Office made the announcement.

“These mark the first convictions secured by the Justice Department against those who illegally distribute counterfeit mobile apps,” said Acting Assistant Attorney General O’Neil.  “These men trampled on the intellectual property rights of others when they and other members of the Appbucket group distributed more than one million copies of pirated apps.  The Criminal Division has made fighting intellectual property crime a top priority, and these convictions demonstrate our determination to prosecute those who undermine the innovations of others in new technologies.”

“Copyright infringement discourages smart, innovative people from using their talents to create things that the rest of society can use and enjoy,” said U.S. Attorney Yates. “Theft is theft – whether the property taken is intellectual or tangible – and we will continue to prosecute those who steal copyrighted material.”

“The wholesale theft of intellectual property as seen in this case cannot and will not go unaddressed,” said FBI SAC Johnson.  “The FBI will continue to work with its various law enforcement partners in identifying, investigating and presenting for prosecution those individuals and groups engaged in such criminal activities that involve the attempt to profit from the hard work and the developed creative ideas of others.”

Nicholas Anthony Narbone, 26, of Orlando, Fla., pleaded guilty today to one count of conspiracy to commit criminal copyright infringement, and Thomas Allen Dye, 21, of Jacksonville, Fla., pleaded guilty to the same change on March 10, 2014. Sentencing is scheduled for July 8, 2014, and June 12, 2014, respectively.

An information filed on Jan. 24, 2014, charged Narbone, Dye and others with one count of conspiracy to commit criminal copyright infringement.  According to the information, Narbone, Dye and their fellow conspirators identified themselves as the Appbucket group, with Narbone as the leader, and, from August 2010 to August 2012, they conspired with other members of the Appbucket group to reproduce and distribute more than one million copies of copyrighted Android mobile device apps through the Appbucket alternative online market without permission from the copyright owners of the apps.

The investigation was conducted by the FBI.  The prosecution is being handled by Assistant U.S. Attorney Christopher Bly of the Northern District of Georgia and Assistant Deputy Chief for Litigation John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS). Significant assistance was provided by the CCIPS Cybercrime Lab, and the Office of International Affairs also provided assistance in this matter.

The Department of Justice filed a lawsuit today against Con-Way Freight Inc. alleging that the company violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by failing to promptly reassign Naval Reservist Dale Brown to his former position as a driver with appropriate seniority once he notified the company that he had fully recovered from a temporary service-related medical disability.                                          

According to the complaint, filed in the U.S. District Court for the Northern District of Illinois, Brown began working for Con-Way on Nov. 9, 1987, as a driver sales representative (DSR).  In 2006, Brown was working at Con-Way’s Rock Island, Ill., facility when he deployed for active duty.  While in Iraq, Brown suffered a serious shoulder injury in a truck accident during a night mission and returned to Con-Way in 2009 following an honorable discharge.  Con-Way placed him in a lower-paying position due to medical restrictions that prevented him from returning to the DSR position.  By 2012, Brown had made a full recovery and notified the company that he was able to resume work as a DSR without medical restrictions.  Con-Way refused to return Brown to the DSR position and instead made him apply for open positions as they became available.  Months later, Brown was eventually hired as a DSR, but, Con-Way treated him as a new employee with no seniority to bid on assignments.  As a result, Brown effectively received a 40 percent reduction in pay compared to what he was earning as a DSR prior to his military leave.  He also no longer has a regular work schedule because his seniority was not restored upon resinstatement and he must call in each day to see if and for how long he will work on a given day.

USERRA obligates employers to promptly reemploy returning servicemembers and place them as near as possible in the position that they would have been in absent military service, or a position of similar seniority, status and pay.  For servicemembers like Brown who return with a service-connected disability, the reemployment obligation extends to providing accommodations to the servicemember, which can include a temporary position until the servicemember has recovered and is able to return to his or her proper reemployment position.  Contrary to these requirements, Con-Way violated USERRA by treating Brown as a newly hired DSR, with no accrued seniority, rather than placing him in the position that he would have held had he not served his country and suffered a serious and debilitating injury that required temporary accomodation. 

The lawsuit seeks an adjustment to Brown’s seniority date as a DSR to his pre-deployment date with back wages for Con-Way’s six month delay in reemploying Brown once he asked for reinstatement as a DSR following his medical clearance, and his inability to bid on desirable shifts and routes due to his lack of seniority.

“Employers have a legal obligation under USERRA to accommodate servicemembers who suffer a disability while serving their country,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The Civil Rights Division is committed to protecting the rights of those who have served their country through military service.” 

This case stems from a referral by the U.S. Department of Labor (DOL) following an investigation by the DOL’s Veterans’ Employment and Training Service.  The case is being handled by the Employment Litigation Section of the Civil Rights Division.

Additional information about USERRA can be found on the Justice Department website’s Servicemember page and Employment Litigation Section page, as well as on the DOL website.

WASHINGTON—In a new step to further the Justice Department’s efforts towards enhancing reentry among formerly incarcerated individuals, Attorney General Eric Holder announced Monday that the Bureau of Prisons (BOP) will impose new requirements on federal halfway houses that help inmates transition back into society. Under the proposed new requirements, these halfway houses will have to provide a specialized form of treatment to prisoners, including those with mental health and substance abuse issues. For the first time, halfway houses will also have to provide greater assistance to inmates who are pursuing job opportunities, such as permitting cell phones to be used by inmates and providing funds for transportation. The new requirements also expand access to electronic monitoring equipment, such as GPS-equipped ankle bracelets, to allow more inmates to utilize home confinement as a reentry method. 
 
Holder announced the changes in a video message posted on the Department’s website.
 
The BOP’s new policies have the potential to be far-reaching. To ease their transition, those exiting prison typically spend the last few months of their sentence in either a federal halfway house—known as a residential reentry center (RRC)—or under home confinement, or a combination of the two.  These community-based programs provide much needed assistance to returning citizens in finding employment and housing, facilitating connections with service providers, reestablishing ties to family and friends, and more.
 
Last year alone, more than 30,000 federal inmates passed through a halfway house.
 
Among the most significant changes Holder announced is the requirement for standardized Cognitive Behavioral Programming (CBP) to be offered at all federal halfway houses. This treatment will address behavior that places formerly incarcerated individuals at higher risk of recidivism. As part of this treatment requirement, BOP is setting guidelines for instructor qualifications, class size and length, and training for all staff at the halfway houses.
 
Several other modifications are being made to the standard contracts that apply to federal halfway houses in order to provide greater support to returning citizens. Examples include requiring halfway houses to provide public transportation vouchers or transportation assistance to help residents secure employment, requiring all federal halfway houses to allow residents to have cell phones to facilitate communication with potential employers and family, and improving and expanding home confinement by increasing the use of GPS monitoring.
 
The proposed new requirements will be posted today on the Federal Business Opportunities website (www.fbo.gov).  Interested parties will have a 30-day period to comment on the proposal. The BOP anticipates implementing the new requirements beginning with contracts expiring in 2014. 

The complete text of the Attorney General’s video message is below:   “Today, America’s federal prison population is experiencing a period of significant negative growth, with nearly 4,000 fewer inmates behind bars than at the end of the last fiscal year.  This is the first major reduction in the federal prison population in three decades.

“Thanks to a variety of effective, evidence-based reentry programs and services, we’re doing more than ever to ensure that the tens of thousands of federal inmates who return to their communities each year have access to the substance abuse treatment, job training, affordable housing, parenting education, and other resources that so many need to break the cycle of poverty, criminality, and incarceration.

“Through innovative strategies like the Justice Department’s ‘Smart on Crime’ initiative, we’re working hard to tear down unnecessary barriers to opportunity and independence – while building up programs that enable former prisoners to reintegrate into their communities.  And nowhere is this work stronger than at the Federal Bureau of Prisons – where groundbreaking efforts are underway to make our criminal justice expenditures both smarter and more productive.

“Today, I’m pleased to announce that the Justice Department – through the Bureau of Prisons – is taking a critical step forward that will enable us to build on this important work – and improve the way reentry programming is implemented from coast to coast.

“For the first time, we will require all 200-plus halfway houses in the federal system to offer standardized treatment to prisoners with mental health and substance abuse issues. This treatment will be intensive, and must follow rigorous standards set forth by the Bureau of Prisons.  Once fully implemented, these services will be available to every single one of the approximately 30,000 inmates who are released through halfway houses each year.  This will ensure consistency and continuity of care between federal prisons and community-based facilities.  And it will enhance the programs that help prisoners overcome their past struggles, get on the right path, and stay out of our criminal justice system.

“These important changes and others are codified in BOP’s published requirements for halfway houses – which will be posted online this week.  Over the next 30 days, those who operate halfway houses will have the opportunity to provide feedback on these newly proposed requirements.  And I encourage members of the public to visit this site, learn about these tools, and make your voices heard as well – so we can all take an active part in constructing the more effective, more efficient, and more just system that everyone in this country deserves.”
 
The full video is available at http://www.justice.gov/agwa.php.

Okland Construction Co. Inc. has agreed to pay the government $928,000 to resolve allegations that it made false statements and submitted false claims under the Small Business Administration’s (SBA) Section 8(a) Program for Small and Disadvantaged Businesses, the Justice Department announced today.

“The purpose of the 8(a) Program is to assist small and disadvantaged businesses to compete in the American economy,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “The Justice Department is committed to making sure that those who participate in 8(a) contracts do so honestly and fairly.”

Okland Construction, a large construction company, entered into a mentor-protégé agreement with Saiz Construction Co., a participant in the 8(a) Program. The mentor-protégé program allows a large business mentor to form an SBA-approved joint venture with a small business protégé to jointly bid on and perform 8(a) contracts, which are contracts awarded by federal agencies that are set aside solely for small businesses. Without a qualifying joint venture, the mentor and protégé cannot jointly bid on 8(a) contracts, and the mentor cannot perform the primary functions of the contract.

The government alleged that Okland Construction did not form a qualifying joint venture with Saiz Construction and thus was not eligible to jointly bid on or perform the primary functions of eight 8(a) contracts with Saiz Construction. Nevertheless, Okland Construction allegedly prepared the bids for the 8(a) contracts and its employees served as project managers, submitted invoices and performed payroll and other accounting functions. Furthermore, Okland Construction allegedly concealed its extensive involvement in performing the 8(a) contracts by misrepresenting to the government that its employees were employees of Saiz Construction.

The government also alleged that Okland Construction’s relationship with Saiz Construction violated the terms of an SBA set-aside contract awarded to Saiz Construction that required Saiz Construction to perform at least 15 percent of the labor on the contract minus the cost of materials.

“Large businesses must not be allowed to fraudulently obtain access to contracts set aside for small businesses,” said SBA Inspector General Peggy E. Gustafson. “The SBA mentor-protégé program enhances the capability of 8(a) participants to compete more successfully for federal contracts through a relationship with another successful business; however, this program must not be used as a vehicle to improperly benefit large, non-disadvantaged companies.”

“SBA’s contracting programs, including the 8(a) Business Development Program, provide small businesses with the opportunity to grow and create jobs,” said SBA General Counsel Sara D. Lipscomb. “But SBA has no tolerance for waste, fraud or abuse in any government contracting program and is committed to working with our federal partners to ensure the benefits of these programs flow to the intended recipients.”

The civil settlement resolves a lawsuit filed by Saiz Construction and its owner Abel Saiz under the whistleblower provision of the False Claims Act, which permits private parties, known as relators, to file suit on behalf of the government for false claims and to share in any recovery. The relators filed the lawsuit after Saiz Construction terminated its mentor-protégé agreement with Okland Construction. Saiz Construction and Saiz will receive a total of $148,480.

This settlement with Okland Construction was the result of a coordinated effort among the Department of Justice’s Civil Division, the U.S. Attorney’s Office for the District of Utah, the SBA Office of Inspector General, the SBA Office of General Counsel, the Department of the Air Force and the Army Corps of Engineers.

The civil lawsuit was filed in the District of Utah and is captioned United States ex rel. Saiz Construction Co. Inc. and Abel Saiz v. Okland Construction Co. Inc., No. 2:11-cv-00362 (D. Utah). The claims resolved by this settlement are allegations only, and there has been no determination of liability.

Anthony Williams, of Baton Rouge, La., was sentenced to serve 24 months in prison followed by two years of supervised release, the Justice Department, the Internal Revenue Service (IRS) and the Treasury Inspector General for Tax Administration (TIGTA) announced today.  Williams previously pleaded guilty to threatening to retaliate against a witness by causing bodily injury.      

According to court documents, Williams is the son of Angela Myers, who was tried in federal court in Baton Rouge in March 2013 for filing fraudulent tax returns with stolen identities.  One of the witnesses at Myers’ trial was an individual who testified on March 6, 2013, and the next day Williams used Instagram, a popular social media platform, to make a threat against this witness.  Williams described the witness as a “rat” and threatened bodily injury against him in retaliation for his testimony.  As explained in court documents and court proceedings, federal law enforcement took steps to ensure the safety of the witness and to prevent the threat from being carried out.  On March 7, 2013, a jury found Myers guilty on 21 felony counts and she was later sentenced to serve 11 years in prison .  Williams was indicted in July 2013 and pleaded guilty to making the threat in October 2013. 

“Our legal system depends on witnesses testifying without the fear of retribution,” said Assistant Attorney General Kathryn Keneally for the Tax Division.  “This prosecution shows that the Justice Department will take action when someone threatens a witness.”

“Threatening or intimidating a witness in a federal criminal matter is a quick way to find yourself in federal prison,” said U.S. Attorney J. Walter Green for the Middle District of Louisiana.  “Our office will continue to have zero tolerance for such conduct and will continue to devote the necessary resources to aggressively pursue those who engage in such conduct.  No one should fear speaking the truth about possible federal criminal activity.”

“It is extremely important for witnesses who provide testimony in criminal matters to know that our justice system protects them from retaliation,” said Special Agent in Charge of IRS-Criminal Investigation Gabriel L. Grehan.  “It is also appropriate for Anthony Williams to suffer the consequences of his actions to threaten a witness in a criminal proceeding.  IRS-CI would like to thank the Department of Justice and our federal law enforcement partners for pursuing this case to its foreseeable end.”

Assistant Attorney General Keneally and U.S. Attorney Green commended the efforts of special agents of IRS - Criminal Investigation and TIGTA, who investigated the case, and of Tax Division Trial Attorney Jason Poole and Assistant U.S. Attorney Alan Stevens, who prosecuted the case.

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

Victor Lipukhin, formerly a resident of St. Charles, Ill., was indicted yesterday by a federal grand jury in Kansas City, Mo., for attempting to interfere with the administration of the internal revenue laws and filing false tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.  The charges relate to Lipukhin hiding millions of dollars in several Swiss bank accounts held at UBS AG.   

According to the indictment, Lipukhin formerly served as president of Severstal Inc. (USA), a subsidiary of AO Severstal, the largest steel producer in Russia.  He lived in St. Charles from at least 2001 through mid-2007.

Lipukhin, a Russian citizen and former lawful permanent U.S. resident, kept between approximately $4,000,000 and $7,500,000 in assets in two bank accounts with UBS in Switzerland from at least 2002 through 2007.  In 2002, he and another individual opened a UBS bank account in the name of Old Orchard, a sham Bahamian entity.  The account was initially funded with over $47,000,000 transferred into the account from a previously maintained UBS account in the Bahamas.  In 2003, the other individual left the account, leaving Lipukhin as the sole owner and signatory.  Lipukhin also maintained another account at UBS in Switzerland in the name of Lone Star, another sham Bahamian entity.  He directed virtually all transactions in the accounts, typically through a Bahamian national who served as the nominee director of the Old Orchard and Lone Star entities to help conceal Lipukhin’s ownership and control.  However, he failed to report his ownership of these accounts and failed to report any income earned in these accounts on his tax returns.

According to the indictment, in order to further conceal his ownership of the undisclosed UBS accounts, Lipukhin utilized fictitious mortgages through an entity called Dapaul Management, controlled by a Canadian attorney, to conceal his purchase of real estate in the United States with funds from the UBS accounts.  This includes his purchase of a historic building at 18 N. Fourth St, in St. Charles, Ill., for $900,000 in the name of Charlestal LLC, a domestic entity controlled by Lipukhin.  He also transferred funds from his UBS accounts to the Canadian attorney for ultimate transfer to a domestic Charlestal bank account in order to conceal the source of the funds, then used the funds in the Charlestal account to pay for various personal expenses and to withdraw cash for personal use.  Finally, Lipukhin impeded the administration of Internal Revenue laws by attempting to prevent an automobile dealer from filing a Form 8300 – which is required for certain cash transactions over $10,000 – with the IRS in order to report Lipukhin’s cash payment to purchase an automobile.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Lipukhin faces a potential maximum sentence of three years imprisonment on each count.  

U.S. citizens and permanent residents are required to report income from any source on their tax returns, regardless of whether the source of the income is inside or outside the United States.  Further, U.S. taxpayers who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are also required to disclose the existence of the account on Schedule B, Part III of an individual income tax return.  They must also disclose the existence of the account by filing a Report of Foreign Bank and Financial Accounts with the U.S. Treasury.

Assistant Attorney General Kathleen Keneally of the Tax Division commended the agents from IRS –Criminal Investigation who investigated the case and Trial Attorney Timothy J. Stockwell of the Tax Division, who is prosecuting the case.

A federal court in Fort Lauderdale, Fla., permanently barred Keisha Stewart, a tax preparer in Plantation, Fla., from preparing federal tax returns for others, the Justice Department announced today.  Stewart agreed to the civil injunction order, and a stipulated final judgment of permanent injunction was entered against her by the court on March 20, 2014.

The complaint alleged that Stewart prepared federal income tax returns for customers that inflated income or included fictitious income to qualify her customers to receive or to maximize the earned income tax credit; claimed false tax credits that are refundable or decrease the amount of tax on her customers' returns, including phony education credits (American Opportunity Credit) and residential energy credits; falsely claimed head of household status on behalf of customers who did not qualify in order to improperly decrease their reported tax liabilities; and claimed false dependents on behalf of customers and also claimed the child and additional child tax credits on their behalf.    

Return preparer fraud is one of the IRS'   Dirty Dozen Tax Scams for 2013 .  The IRS has some tips   on their website for choosing a tax preparer.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department  website .  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on   this page .  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the   Tax Division with details.

Related Materials:

United States v. Keisha Stewart, et al.
Stipulated Final Judgment of Permanent Injunction
 

The Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today that Flint Hills Resources of Port Arthur has agreed to implement innovative technologies to control harmful air pollution from industrial flares and leaking equipment at the company’s chemical plant in Port Arthur, Texas. This settlement is part of EPA’s national effort to advance environmental justice by protecting communities such as Port Arthur that have been disproportionately impacted by pollution. The company is also required to pay a $350,000 penalty for Clean Air Act violations.

Once fully implemented, EPA estimates that the settlement will reduce emissions of volatile organic compounds (VOCs), including benzene and other hazardous air pollutants (HAPs), by an estimated 1,880 tons per year, and will reduce emissions of greenhouse gases by approximately 69,000 tons per year.

“This agreement reflects the Justice Department’s and the EPA’s commitment to alleviate the environmental and human health challenges faced by vulnerable communities,” said Acting Assistant Attorney General Robert G. Dreher of the Justice Department’s Environment and Natural Resources Division. “This settlement will mean cleaner, healthier air for residents of the Port Arthur area who continue to bear a disproportionate burden from the impacts of industrial pollution.”

“Communities like Port Arthur are a focus of our enforcement efforts as they have been hit hard by air pollution,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “ By working with EPA, Flint Hills has advanced new air pollution controls that will help EPA bring similar air quality improvements to other American communities. EPA will continue to focus on tough pollution controls and cutting edge technologies in order to reduce the burden of air pollution on Americans who need it most.”

The settlement requires Flint Hills to operate state‑of‑the‑art equipment to recover and recycle waste gases and to ensure that gases sent to flares are burned with 98 percent efficiency. The company has spent approximately $16 million to implement these required controls on industrial flares.

When the agreement is fully implemented, the company estimates it will spend $28 million to reduce “fugitive” pollutant emissions that may leak from valves, pumps, and other equipment. The company must monitor leaks more frequently, implement more aggressive repair practices, adopt innovative new practices designed to prevent leaks and replace valves with new “low emissions” valves or use packing material to reduce leaks.

To further mitigate pollution impacting the community, the company will spend $2 million on a diesel retrofit or replacement project that is estimated to reduce nitrogen oxides and particulate matter by a combined 85 tons, in addition to 39 tons of carbon monoxide, over the next 15 years. The company will also spend $350,000 to purchase and install technologies to reduce energy demand in low income homes.

For the past several years, Flint Hills has operated a system to monitor the ambient levels of the hazardous air pollutants benzene and 1,3-butadiene at the boundaries of the facility, also known as the “fence line.” The company has used the information collected to identify and reduce potential pollutant sources for communities living near the facility. In this settlement, Flint Hills has agreed to make its fence line monitoring data available online to the public.

The complaint, filed by DOJ on behalf of EPA at the same time as the settlement, alleges that the company improperly operated its steam-assisted flaring devices in a way that emitted excess amounts of VOCs, including benzene and other hazardous air pollutants.  It also alleges violations of EPA regulations designed to limit emissions from leaking equipment.

The measures required by the settlement will cut emissions of pollutants that can cause significant harm to public health. VOCs are a key component in the formation of smog or ground-level ozone, a pollutant that irritates the lungs, exacerbates diseases such as asthma, and can increase susceptibility to respiratory illnesses, such as pneumonia and bronchitis. Chronic exposure to benzene, which EPA classifies as a carcinogen, can cause numerous health impacts, including leukemia and adverse reproductive effects in women.

Today’s settlement is part of EPA’s national effort to reduce emissions of toxic air pollutants, with a particular focus on industrial flares and leaks from equipment. Improper operation of an industrial flare can emit hundreds of tons of hazardous pollutants into the air. EPA encourages companies to flare less, and when they do flare, to fully burn the harmful chemicals found in the waste gas.

Flint Hills’ plant in Port Arthur manufactures chemicals that are used in a variety of products, including medical devices, automotive parts and appliance components. The Port Arthur facility has the capacity to produce nearly 1.4 billion pounds of ethylene and 700 million pounds of propylene annually.

The consent decree, lodged in U.S. District Court for the Eastern District of Texas, is subject to a 30-day public comment period and court approval. The consent decree will be available for viewing at www.justice.gov/enrd/Consent_Decrees.html .

More information about the settlement: www2.epa.gov/enforcement/flint-hills-resources-port-arthur-clean-air-act-settlement

For more on recent settlements related to flaring: http://www2.epa.gov/enforcement/national-enforcement-initiatives

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A Massapequa, N.Y., man pleaded guilty today in U.S. District Court in Allentown, Pa., to conspiracy to commit odometer tampering, the Department of Justice announced.  The defendant, Edward Capicchioni, 53, pleaded guilty to one count of conspiracy to tamper with odometers and make false odometer certifications.  Capicchioni rolled back odometers on used cars and trucks to make the vehicles appear more valuable.  Doing business under the company name of The General’s Auto Sales, Capicchioni sold more than 50 vehicles with rolled back odometers.

“Tampering with a car’s odometer in order to trick a would-be buyer is not only pernicious, it is a federal crime,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “A car is an expensive purchase – indeed, for many of us, the most expensive purchase of our lives – and we have a right to know that the car we are buying is what it appears to be.  The Department of Justice will continue to take action against those who seek to defraud consumers.”

Capicchioni admitted to purchasing high-mileage cars, sport-utility vehicles and trucks from individual sellers in New York, Pennsylvania, Rhode Island and Maryland.  Capicchioni then worked with a co-conspirator to roll back and alter the odometers and resold the vehicles at a wholesale auto auction in Pennsylvania.  Capicchioni also took steps to hide his odometer fraud scheme.  He checked the Carfax public database to see if it included a mileage entry that was higher than the false, lower mileage to which he reset the odometer.  When Carfax included a higher mileage, Capicchioni submitted to Carfax fraudulent documentation in the name of the vehicle’s prior owner, in order to have the higher mileage reading removed. 

After Carfax discovered Capicchioni’s fraud scheme through an internal investigation, Carfax personnel alerted the Office of Odometer Fraud Investigation at the National Highway Traffic Safety Administration (NHTSA).  NHTSA conducted additional investigation into the full scope of Capicchioni’s criminal activities, and Carfax continued to provide information and assistance throughout NHTSA’s investigation.

This case is being prosecuted by Trial Attorney John W. Burke with the Consumer Protection Branch of the U.S. Department of Justice.

 
NHTSA has established a special hotline to handle odometer fraud complaints.   Individuals with information relating to odometer tampering should call (800) 424-9393 or

(202) 366-4761.  Tips on detecting and avoiding odometer fraud are available at   www.nhtsa.gov/staticfiles/nvs/pdf/811284.pdf . More information on odometer fraud is available at http://www.nhtsa.gov/Odometer-Fraud .

A federal jury convicted Jean Claude Roy, aka Dredd the Don and Dreddy, age 31, of Germantown, Md., late yesterday of conspiracy to commit sex trafficking by force, fraud or coercion, three counts of interstate transportation for prostitution and witness and evidence tampering.    

The verdict was announced by Acting Assistant Attorney General Jocelyn Samuels for the Department of Justice Civil Rights Division, U.S. Attorney Rod J. Rosenstein for the District of Maryland, Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and Chief J. Thomas Manger of the Montgomery County Police Department.  

“This defendant preyed on vulnerable young women and exploited them for prostitution,” said Acting Assistant Attorney General Samuels.  “The Civil Rights Division is committed to seeking justice on behalf of victims of human trafficking.”  

“Protecting our communities from those who engage in human trafficking is a top priority for HSI,” said Special Agent in Charge Winter.  “As a member of the Maryland Human Trafficking Task Force, HSI is committed to working with our law enforcement partners to investigate human trafficking, as well as working with our local non-governmental, community-based and faith-based organizations to identify, rescue and assist victims of trafficking.”  

According to evidence presented during the two week trial, between August and September 2012, Roy transported a victim across state lines to engage in prostitution and forced the victim to engage in prostitution by taking the victim’s identity documents, keeping all of the victim’s money and bragging about beating murder charges.    

In November 2012, Roy recruited co-defendant Brittney Creason to engage in prostitution at his direction.  Thereafter, Creason helped Roy recruit and transport girls from Illinois and North Carolina to engage in prostitution.  He continued to force women to engage in prostitution by bragging about beating murder charges, taking their identity documents and taking their money.   

Trial evidence also showed that from Jan. 1 through Jan. 10, 2013, while Roy was in jail on related state charges, he called an individual several times and had that person access online accounts and storage services belonging to Roy and Creason in order to erase evidence related to these charges.  

Roy faces a statutory maximum sentenced of life in prison for conspiracy to commit sex trafficking by force, fraud or coercion; a statutory maximum of 10 years in prison for each of three counts of interstate transportation for prostitution; and a statutory maximum of 20 years in prison for witness and evidence tampering.  U.S. District Judge Paul W. Grimm scheduled sentencing for July 16, 2014.

The jury found Roy not guilty of sex trafficking and attempted sex trafficking by force, fraud and coercion; and possessing and brandishing a firearm during a crime of violence.  

Creason, aka Kitty Amor, age 19, of Decatur, Ill., previously pleaded guilty to using a facility in interstate commerce for an illegal activity and awaits sentencing.    

This case was investigated by the Maryland Human Trafficking Task Force, which was formed in 2007 to discover and rescue victims of human trafficking while identifying and prosecuting offenders.  Members include federal, state and local law enforcement, as well as victim service providers and local community members.  For more information about the Maryland Human Trafficking Task Force, please visit this website.   

Report suspected instances of human trafficking to HSI's tip line at 866-DHS-2ICE (1-866-347-2423) or by completing its online tip form.  Both are staffed around the clock by investigators.  

Acting Assistant Attorney General Samuels and U.S. Attorney Rosenstein commended HSI Baltimore and the Montgomery County Police Department for their work in the investigation.  They also thanked Assistant U.S. Attorney Kristi N. O’Malley and Trial Attorney William E. Nolan of the Civil Rights Division's Human Trafficking Prosecution Unit, who are prosecuting the case.

Angela Althea Peart was sentenced in connection with her role in a fraudulent international lottery scheme that targeted U.S. citizens, the Justice Department announced today.  Peart was sentenced by U.S. District Court Judge K. Michael Moore for the Southern District of Florida in Miami to serve 33 months in prison and 5 years supervised release.  A hearing on restitution has been scheduled for June 5, 2014. 

Peart’s prosecution is part of the Department of Justice’s effort, working with federal and local law enforcement, to combat international lottery fraud schemes preying on American citizens.  According to the U.S. Postal Inspection Service, Americans have lost tens of millions of dollars to fraudulent foreign lotteries. 

 
“International lottery fraud aimed at stealing from elderly victims cannot, and will not, be tolerated by the Department of Justice,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will seek to hold accountable those who participate in illegal lottery schemes, including those in the U.S. who facilitate schemes directed from abroad.”

 
“As international fraudsters focus their criminal schemes on Americans, we will do all we can to prosecute and deter such criminal activity,” said U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer.  “N ow more than ever, the public needs to be mindful of these schemes to avoid falling prey to them.  So long as criminals continue to line their pockets with the money of our nation’s seniors, we will be there to prosecute them and bring them to justice.” 

 
A federal grand jury in Miami returned an indictment against Peart and co-conspirator Charmaine Anne King on Oct. 31, 2013.  Judge Moore adopted a report and recommendation accepting Peart’s guilty plea on Feb. 4, 2014.  Co-defendant King was convicted by a federal jury in Miami on Feb. 5, 2014, of one count of conspiracy, three counts of mail fraud and two counts of wire fraud.  King’s sentencing is scheduled for April 17, 2014.

 
As part of her guilty plea, Peart admitted that beginning in or around March 2012 and continuing through, in or around November 2013, she was a member of a conspiracy to fraudulently enrich herself by keeping victims’ money for her own benefit without paying any lottery winnings.  Peart acknowledged that a co-conspirator, believed to be located in Canada, mailed letters to elderly victims in the United States falsely informing the victims that they had won more than a million dollars in a lottery.  These letters purported to be from an actual sweepstakes company in the United States. 

 
Peart also admitted that as part of the conspiracy, victims were told that they must make a payment of several thousand dollars in order to collect their purported lottery winnings.  The victims were told to send their payments to Peart and others.  Peart acknowledged that she received victims’ funds, kept 10 percent of the money received from victims and then sent the rest to another member of the conspiracy.  Victims never received any lottery winnings.

Assistant Attorney General Delery commended the investigative efforts of the U.S. Postal Inspection Service, Homeland Security Investigations and the U.S. Marshals Service.  The case is being prosecuted by Assistant Director Jeffrey Steger and Trial Attorney Kathryn Drenning with the Department of Justice’s Civil Division, Consumer Protection Branch.

Kristopher Michael Montemayor, a county commissioner for Precinct 1 of the Webb County Commissioners Court in Texas, was arrested today on charges of bribery, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.

A federal grand jury in the Southern District of Texas returned an indictment on March 18, 2014, that charges Montemayor, 36, of Laredo, Texas, with two counts of federal programs bribery. The indictment was unsealed following today’s arrest.

According to allegations in the indictment, while serving as a county commissioner, Montemayor solicited and accepted bribes in exchange for promising to perform various official acts. Montemayor allegedly accepted the use of a 2012 Ford truck, which cost approximately $37,015, in exchange for promising to provide government jobs to both the vehicle’s owner and his spouse.

The indictment further alleges that Montemayor, while serving as a county commissioner, solicited and accepted approximately $11,000 in cash as well as electronics equipment worth approximately $2,700 from a businessman who, unbeknownst to Montemayor, was an undercover law enforcement agent. The indictment alleges that Montemayor promised to take official action to promote the business interests of the undercover agent in exchange for cash and electronics.

If convicted, Montemayor faces a maximum potential penalty of 10 years in prison for each bribery charge. Each charge also carries a maximum $250,000 fine.

The case is being investigated by the FBI’s Laredo Resident Agency. The case is being prosecuted by Trial Attorneys Emily Rae Woods and Mark Cipolletti of the Criminal Division’s Public Integrity Section.

The charges and allegations contained in the indictment are merely accusations and the defendant is presumed innocent unless and until he is proven guilty.

Tonawanda Coke Corporation was sentenced in federal court in Buffalo, N.Y., Wednesday to pay a $12.5 million penalty and $12.2 million in community service payments for criminal violations of the Clean Air Act (CAA) and the Resource Conservation and Recovery Act (RCRA), the Justice Department and the U.S. Environmental Protection Agency announced. Tonawanda was convicted by a federal jury in March 2013 on 11 counts of violating the CAA and three counts of violating the RCRA.

The fine is one of the largest fines ever levied in an air pollution case involving a federal criminal trial. The community service payment will go to fund an epidemiological study and an air and soil study to help determine the extent of health and environmental impacts of the coke facility on the Tonawanda community.

In addition, Tonawanda Coke Environmental Control Manager, Mark L. Kamholz, 66, of West Seneca, N.Y., who was convicted of 11 counts of violating the CAA, one count of obstruction of justice and three counts of violating the RCRA, was sentenced to one year in prison, 100 hours of community service, and a $20,000 fine.

“This sentence holds Tonawanda Coke Corporation and its environmental manager accountable for attempting to deceive federal and state environmental regulators while exposing the local community to toxic emissions,” said Robert G. Dreher, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “The environmental regulations designed to protect our citizens also place trust in industry not to choose pollution over profit. Tonawanda Coke Corporation betrayed that trust. We hope the federal and state investigation, prosecution and sentencing of Tonawanda begins to bring justice to a community that has born too high a burden for having simply been the neighbor of Tonawanda Coke. They deserved a better neighbor.”

“Today’s sentencing holds Tonawanda Coke and its Environmental Control Manager accountable for one of the most egregious environmental pollution crimes in this area’s history,” said William J. Hochul Jr., U.S. Attorney for the Western District of New York. “As found by the jury, these defendants released hundreds of tons of poisonous, benzene-laden gas containing into the atmosphere, while also dumping additional hazardous waste out in the open. Such conduct is the equivalent to releasing known killers into the community. As expressed in citizen letters, this criminal conduct at a minimum caused substantial emotional and psychological harm, to say nothing of possible physical harm. The fact that remedial measures would have cost a small fraction of the company's multimillion dollar profits only adds to the seriousness of these crimes.”

“Today’s sentence is some measure of justice for the communities of Tonawanda that for too long have been overburdened by toxic air pollution,” said Cynthia Giles, Assistant Administrator of U.S. EPA’s Office of Enforcement and Compliance Assurance. “Environmental crimes have real victims, as the residents of these communities know well. When local companies break the law, EPA and its partners will step in to reduce dangerous air toxics and fight for those vulnerable to pollution.”

“The NYS Department of Environmental Conservation (DEC) has worked closely with the Department of Justice and Environmental Protection Agency to address serious environmental violations at Tonawanda Coke,” said DEC Commissioner Joe Martens. “This sentencing is an important step in redressing the environmental insults borne by the Tonawanda community based on Tonawanda Coke Corporation's gross disregard for federal and state environmental laws. DEC will continue to work on the civil enforcement action with our federal partners to further protect public health and the environment.”

According to evidence presented at trial, Tonawanda Coke released coke oven gas containing benzene into the air through an unreported pressure relief valve. In addition, a coke-quenching tower was operated without baffles, a pollution control device required by TCC’s Title V Clean Air Act permit designed to reduce the particulate matter that is released into the air during coke quenches.

In addition, prior to an inspection conducted by the U.S. Environmental Protection Agency in April of 2009, defendant Kamholz told another TCC employee to conceal the fact that the unreported pressure relief valve, during normal operations, emitted coke oven gas directly into the air, in violation of the TCC’s operating permit.

The defendants also stored, treated and disposed of hazardous waste without a permit to do so, in violation of the Resource Conservation and Recovery Act. These offenses related to TCC’s practice of mixing its coal tar sludge, a listed hazardous waste that is toxic for benzene, on the ground in violation of hazardous waste regulations.

The sentences are the culmination of an investigation on the part of the U.S. Environmental Protection Agency, Criminal Investigation Division, under the direction of Director Doug Parker, and Assistant Special Agent-In-Charge, Vernesa Jones-Allen and investigators of the New York State Department of Environmental Conservation Police, Bureau of Environmental Crimes Investigation, under the direction of Captain Frank Lauricella.

Assistant U.S. Attorney Aaron J. Mango of the Western District of New York and Senior Trial Attorney Rocky Piaggione of the Environmental Crimes Section in the Justice Department’s Environment and Natural Resources Division handled the prosecution.  

LSB Industries Inc. (LSB), the largest merchant manufacturer of concentrated nitric acid in North America, and four of its subsidiaries have agreed to reduce harmful emissions of nitrogen oxides (NOx) by meeting emission limits that are among the lowest for the industry in the nation at plants in Alabama, Arkansas, Oklahoma and Texas, the U.S. Environmental Protection Agency (EPA) and Department of Justice announced today.

EPA estimates that the measures required by today’s settlement will reduce NOx emissions by more than 800 tons per year, directly benefitting surrounding communities, which include low-income and minority populations living near the Arkansas and Texas plants. The companies estimate that it will cost between $6.3 and $11.7 million to implement the measures required by the settlement.

“With today’s settlement, LSB and its subsidiaries are further improving the nitric acid manufacturing process and reducing harmful air pollution across four states,” said Robert G. Dreher, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “In response to the Clean Air Act and state law claims, the companies have taken a constructive and cooperative approach by agreeing to implement global operational changes and mitigate past emissions. These actions raise the bar for compliance in this industry sector.”

“This case is about cleaner air for people living in communities near manufacturing plants,” said Cynthia Giles, Assistant Administrator of EPA’s Office of Enforcement and Compliance Assurance. “LSB Industries has committed to dramatic cuts in air pollution and ensuring they are in compliance with the law. We expect others in the industry to recognize the imperative to adopt reforms and reduce pollution in communities where they operate.”

LSB and its four nitric acid producing subsidiaries will also pay a total penalty of $725,000 to resolve alleged violations of the Clean Air Act and applicable Oklahoma state law. In addition to paying the penalty, the companies must continuously monitor emissions and make any necessary operational improvements such as installing new pollution controls or upgrading current controls to meet the new NOx limits.

The settlement applies to the 10 nitric acid manufacturing plants owned or operated by the following Oklahoma City-based LSB subsidiaries: El Dorado Chemical Co., in El Dorado, Ark. (four plants); Cherokee Nitrogen Co. in Cherokee, Ala. (two plants); El Dorado Nitrogen Co. in Pryor, Okla. (three plants); and El Dorado Nitrogen Co. in Baytown, Texas (one plant).  The complaint, filed concurrently with the settlement, alleges that the Cherokee, El Dorado and Pryor subsidiaries constructed or made modifications to their plants that resulted in increased emissions of NOx without first obtaining pre-construction permits and installing pollution controls. The complaint does not allege any violations regarding the Texas facility.

Today’s action is part of EPA’s national enforcement initiative to control harmful air pollution from the largest sources of emissions, including acid manufacturing facilities. High concentrations of NOx in the air can irritate the lungs and lower resistance to respiratory infections such as influenza. Continued or frequent exposure may cause increased incidence of acute respiratory illness in children. Further, airborne NOx can significantly contribute to acid rain and lead to the formation of smog.

The companies have also agreed to spend $150,000 to remediate and reforest ten acres of land with acidified soils located near El Dorado, Ark. NOx emissions, such as those from nitric acid plants, can contribute to soil acidification. The project will help to minimize erosion, reduce stormwater runoff, improve habitat for wildlife and capture carbon dioxide, a greenhouse gas.

The states of Oklahoma and Alabama are co-plaintiffs in today’s settlement and will receive a portion of the total penalty as follows: $206,250 will be paid to the Oklahoma Department of Environmental Quality and $156,250 will be paid to the Alabama Department of Environmental Management.

LSB, headquartered in Oklahoma City, Okla., is a major producer of nitrogen-based fertilizers, including anhydrous ammonia, urea and ammonium nitrate. The company owns and operates the largest fleet of concentrated nitric acid rail cars in the United States. LSB and its subsidiaries produce nitric acid for use in products that include herbicides, metal treatment, explosives and pharmaceuticals.

The consent decree, lodged in U.D. District Court for the Western District of Oklahoma, is subject to a 30-day public comment period and court approval. The consent decree is available for viewing at www.justice.gov/enrd/Consent_Decrees.html .
 

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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, entered a plea of guilty 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 Mythili Raman 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 pleaded guilty to engaging in a seven-year scheme to pay – and conceal – bribes to a high-ranking member of Parliament and other foreign officials in Indonesia,” said Acting Assistant Attorney General Raman.  “The company refused to play by the rules, then refused to cooperate with the government’s investigation.  Now Marubeni faces the consequences for its crooked business practices in Indonesia .”

“For several years, the Marubeni Corporation worked in concert with a Connecticut company, among others, to bribe Indonesian officials in order to secure a contract to provide power-related services in Indonesia,” said Acting U.S. Attorney Michael J. Gustafson.  “Today’s guilty plea by Marubeni Corporation is an important reminder to the business community of the significant consequences of participating in schemes to bribe government officials, whether at home or abroad.”

“Companies that wish to do business in the United States or with U.S. companies must adhere to U.S. law, and that means bribery is unacceptable,” said Assistant Director in Charge Parlave.  “The FBI continues to work with our international law enforcement partners as demonstrated in this case to ensure that companies are held accountable for their criminal conduct.  I want to thank the agents, analysts and prosecutors who brought this case to today’s conclusion.”

Marubeni entered a plea of guilty to an eight-count criminal information filed today in the U.S. District Court for the District of Connecticut, charging Marubeni with one count of conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and seven counts of violating the FCPA. Marubeni admitted its criminal conduct and has agreed to pay a criminal fine of $88 million, subject to the district court’s approval. Sentencing has been scheduled for May 15, 2014.

As part of the plea agreement, Marubeni has agreed to maintain and implement an enhanced global anti-corruption compliance program and to cooperate with the department’s ongoing investigation. The plea agreement cites Marubeni’s decision not 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, its failure to properly remediate and the lack of its voluntary disclosure of the conduct as some of the factors considered by the department in reaching an appropriate resolution.

Frederic Pierucci, who was the vice president of global boiler sales 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. The charges against Hoskins and Pomponi are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

According to 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 Marubeni 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.

As admitted in court documents, Marubeni and its co-conspirators retained the first consultant in the fall of 2002. However, in the fall of 2003, before the Tarahan contract had been awarded, Marubeni and its co-conspirators determined that the first consultant was not bribing key officials at PLN effectively. One e-mail between employees of the power company’s subsidiary in Indonesia described a meeting between Marubeni employees, employees of its consortium partner, and PLN officials during which the PLN officials expressed “concern” that if Marubeni and its consortium partner win the project, whether the agent would give the officials “rewards” that they would consider “satisfactory,” or “only give them pocket money and disappear. Nothing has been shown by the agent that the agent is willing to spend money.” Shortly thereafter, a Marubeni employee sent an e-mail to other employees at Marubeni and its consortium partner stating that “unfortunately our agent almost did not execute his function at all, so far. In case we don’t take immediate action now now [sic], we don’t have any chance to get this project forever.”

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 first 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. Marubeni and its co-conspirators paid hundreds of thousands of dollars into the first consultant’s bank account in Maryland 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.

This case is being investigated by FBI agents from the Washington Field Office, with assistance from the Resident Agency of the FBI in Meriden, Conn. 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 colleagues 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 .

U.S. Attorney General Eric Holder, U.S. Secretary of Transportation Anthony Foxx, U.S. Attorney for the Southern District of New York Preet Bharara, Inspector General of the U.S. Department of Transportation (DOT) Calvin L. Scovel III, National Highway Traffic Safety Administration (NHTSA) Acting Administrator David Friedman and Federal Bureau of Investigation (FBI) Deputy Assistant Director Joe Campbell announced a criminal wire fraud charge against Toyota Motor Corporation (“TOYOTA” or “the company”), an automotive company headquartered in Toyota City, Japan, that designs, manufactures, assembles, and sells Toyota and Lexus brand vehicles.  The charge is that TOYOTA defrauded consumers in the fall of 2009 and early 2010 by issuing misleading statements about safety issues in Toyota and Lexus vehicles.   

Also today, the Department of Justice announced a deferred prosecution agreement with TOYOTA (“the agreement”) under which the company admits that it misled U.S. consumers by concealing and making deceptive statements about two safety issues affecting its vehicles, each of which caused a type of unintended acceleration.  The admissions are contained in a detailed statement of facts attached to the agreement.  The agreement, which is subject to judicial review, requires TOYOTA to pay a $1.2 billion financial penalty – the largest penalty of its kind ever imposed on an automotive company, and imposes on TOYOTA an independent monitor to review and assess policies, practices and procedures relating to TOYOTA’s safety-related public statements and reporting obligations.  TOYOTA agrees to pay the penalty under a Final Order of Forfeiture in a parallel civil action also filed today in the Southern District of New York.             

The criminal charge is contained in an Information (“the information”) alleging one count of wire fraud.  If TOYOTA abides by all of the terms of the agreement, the Government will defer prosecution on the information for three years and then seek to dismiss the charge.

“Rather than promptly disclosing and correcting safety issues about which they were aware, Toyota made misleading public statements to consumers and gave inaccurate facts to Members of Congress,” said Attorney General Eric Holder.  “When car owners get behind the wheel, they have a right to expect that their vehicle is safe.  If any part of the automobile turns out to have safety issues, the car company has a duty to be upfront about them, to fix them quickly, and to immediately tell the truth about the problem and its scope. Toyota violated that basic compact.  Other car companies should not repeat Toyota’s mistake: a recall may damage a company’s reputation, but deceiving your customers makes that damage far more lasting.”

“Safety is our top priority,” said Transportation Secretary Anthony Foxx.  “Throughout this recall process, NHTSA investigators worked tirelessly to make sure that Toyota recalled vehicles with defects causing unintended acceleration, and to determine when they learned of it, and as we learned today, they succeeded in this effort in spite of extraordinary challenges.  Today’s penalties follow NHTSA’s own record civil penalties of more than $66 million – together, they send a powerful message to all manufacturers to follow our recall requirements or they will face serious consequences.”

“Toyota stands charged with a criminal offense because it cared more about savings than safety and more about its own brand and bottom line than the truth,” said U.S. Attorney Preet Bharara for the Southern District of New York.  “In its zeal to stanch bad publicity in 2009 and 2010, Toyota misled regulators, misled customers, and even misstated the facts to Congress.  The tens of millions of drivers in America have an absolute right to expect that the companies manufacturing their cars are not lying about serious safety issues; are not slow-walking safety fixes; and are not playing games with their lives.  Companies that make inherently dangerous products must be maximally transparent, not two-faced.  That is why we have undertaken this landmark enforcement action.  And the entire auto industry should take notice.”

“To the families and friends of those who died or were injured as a result of these incidents, I offer my deepest sympathies for your loss and my highest admiration for the strength you demonstrate every day,” said DOT Inspector General Calvin L. Scovel III.  “As is true for Secretary Foxx and DOT, safety is and will remain the highest priority of my office.  The OIG is committed to working with our law enforcement and prosecutorial partners in pursuing those who commit criminal violations of the Department of Transportation’s or related laws. The efforts of this dedicated multi-agency team and the agreement reached with Toyota must serve as a clarion call to all auto manufacturers of the need to always be as vigilant and forthcoming as possible to keep the public safe.” 

According to the allegations in the information, as well as other documents filed today in Manhattan federal court, including the Statement of Facts:

In the fall of 2009, TOYOTA deceived consumers and its U.S. regulator, the National Highway Traffic Safety Administration (“NHTSA”), by claiming that it had “addressed” the “root cause” of unintended acceleration in its vehicles through a limited safety recall of eight models for floor-mat entrapment, a dangerous condition in which an improperly secured or incompatible all-weather floor mat can “trap” a depressed gas pedal causing the car to accelerate to a high speed.  Such public assurances deceived customers and NHTSA in two ways:  First, at the time the statements were made, TOYOTA knew that it had not recalled some cars with design features that made them just as susceptible to floor-mat entrapment as some of the recalled cars.  Second, only weeks before these statements were made, TOYOTA had taken steps to hide from NHTSA another type of unintended acceleration in its vehicles, separate and apart from floor-mat entrapment: a problem with accelerators getting stuck at partially depressed levels, known as “sticky pedal.” 

Floor-Mat Entrapment: A Fatal Problem

TOYOTA issued its misleading statements, and undertook its acts of concealment, against the backdrop of intense public concern and scrutiny over the safety of its vehicles following a widely publicized Aug. 28, 2009 accident in San Diego, Calif., that killed a family of four.  A Lexus dealer had improperly installed an incompatible all-weather floor mat into the Lexus ES350 in which the family was traveling, and that mat entrapped the accelerator at full throttle.  A 911 emergency call made from the out-of-control vehicle, which was speeding at over 100 miles per hour, reported, “We’re in a Lexus . . . and we’re going north on 125 and our accelerator is stuck . . . there’s no brakes . . . we’re approaching the intersection . . . Hold on . . . hold on and pray . . . pray.”  The call ended with the sound of the crash that killed everyone in the vehicle.

The San Diego accident was not the first time that TOYOTA had faced a problem with floor-mat entrapment.  In 2007, following a series of reports alleging unintended acceleration in Toyota and Lexus vehicles, NHTSA opened a defect investigation into the Lexus ES350 model (the vehicle involved in the 2009 San Diego accident), and identified several other Toyota and Lexus models it believed might likewise be defective.  TOYOTA, while denying to NHTSA the need to recall any of its vehicles, conducted an internal investigation in 2007 which revealed that certain Toyota and Lexus models, including most of the ones that NHTSA had identified as potentially problematic, had design features rendering entrapment of the gas pedal by an all-weather floor mat more likely.  TOYOTA did not share these results with NHTSA.  In the end, the Company negotiated a limited recall of 55,000 mats (no vehicles) – a result that TOYOTA employees touted internally as a major victory:  “had the agency . . . pushed for recall of the throttle pedal assembly (for instance), we would be looking at upwards of $100 million + in unnecessary costs.”

Shortly after TOYOTA announced its 2007 mat recall, company engineers revised internal design guidelines to provide for, among other things, a minimum clearance of 10 millimeters between a fully depressed gas pedal and the floor.  But TOYOTA decided those revised guidelines would only apply where a model was receiving a “full model redesign” –  something each Toyota and Lexus model underwent only about once every three to five years.  As a result, even after the revised guidelines had been adopted internally, many new vehicles produced and sold by TOYOTA – including the Lexus ES350 involved in the 2009 San Diego accident – did not comply with TOYOTA’s 2007 guidelines.

After the fatal and highly publicized San Diego accident, TOYOTA agreed to recall eight of its models, including the ES350, for floor-mat entrapment susceptibility.  Thereafter, as part of an effort to defend its brand image, TOYOTA began issuing public statements assuring customers that this limited recall had “addressed the root cause of unintended acceleration” in its U.S.-sold vehicles. 

As TOYOTA knew from internal testing it had completed by the time these statements were made, the eight-model recall had not in fact “addressed the root cause” of even the floor-mat entrapment problem.  Models not recalled – and therefore still on the road – bore design features rendering them just as susceptible to floor-mat entrapment as those within the recall population.  One engineer working at a TOYOTA facility in California had concluded that the Corolla, a top-selling car that had not been recalled, was among the three “worse” vehicles for floor-mat entrapment.  In October 2009, TOYOTA engineers in Japan circulated a chart showing that the Corolla had the lowest rating for floor-mat entrapment under their analysis.  None of these findings or this data were shared with NHTSA at the time.

The Sticky Pedal Problem

What is more misleading, at the same time it was assuring the public that the “root cause” of unintended acceleration had been “addressed” by the 2009 eight-model floor-mat entrapment recall, TOYOTA was hiding from NHTSA a second cause of unintended acceleration in its vehicles: the sticky pedal.  Sticky pedal, a phenomenon affecting pedals manufactured by a U.S. company (“A-Pedal Company”) and installed in many Toyota brand vehicles in North America as well as Europe, resulted from the use of a plastic material inside the pedals that could cause the accelerator pedal to become mechanically stuck in a partially depressed position.  The pedals incorporating this plastic were installed in, among other models, the Camry, the Matrix, the Corolla, and the Avalon sold in the United States. 

The sticky pedal problem surfaced in Europe in 2008.  There, reports reflected instances of “uncontrolled acceleration” and unintended acceleration to “maximum RPM,” and customer concern that the condition was “extremely dangerous.” 

In early 2009, TOYOTA circulated to European Toyota distributors information about the sticky pedal problem and instructions for addressing the problem if it presented itself in a customer’s vehicle.  These instructions identified the issue as “Sudden RPM increase/vehicle acceleration due to accelerator pedal sticking,” and stated that should a customer complain of pedal sticking, the pedal should be replaced with pedals manufactured by a company other than A-Pedal Company.  Contemporaneous internal TOYOTA documents described the sticky pedal problem as a “defect” that was “[i]mportant in terms of safety because of the possibility of accidents.” 

TOYOTA did not then inform its U.S. regulators of the sticky pedal problem or conduct a recall.  Instead, beginning in the spring of 2009, TOYOTA quietly directed A-Pedal Company to change the pedals in new productions of affected models in Europe, and to plan for the same design changes to be rolled out in the United States (where the same problematic pedals were being used) beginning in the fall of 2009.  The design change was to substitute the plastic used in the affected pedal models with another material and to change the length of the friction lever in the pedal.

Meanwhile, the sticky pedal problem was manifesting itself in U.S. vehicles.  On or about the same day the San Diego floor-mat entrapment accident occurred, staff at a U.S. TOYOTA subsidiary in California sent a memorandum to staff at TOYOTA in Japan identifying as “critical” an “unintended acceleration” issue separate and apart from floor-mat entrapment that had been identified in an accelerator pedal of a Toyota Matrix vehicle in Arizona.  The problem identified, and then reproduced during testing of the pedal on Sept. 17, 2009, was the sticky pedal problem.  Also in August, the sticky pedal problem cropped up in a U.S. Camry.

On Sept. 9, 2009, an employee of a U.S. TOYOTA subsidiary who was concerned about the sticky pedal problem in the United States and believed that TOYOTA should address the problem prepared a “Market Impact Summary” listing (in addition to the August 2009 Matrix and Camry) 39 warranty cases that he believed involved potential manifestations of the sticky pedal problem.  This document, which was circulated to TOYOTA engineers and, later, to staff in charge of recall decisions in Japan, designated the sticky pedal problem as priority level “A,” the highest level. 

By no later than September 2009, TOYOTA recognized internally that the sticky pedal problem posed a risk of a type of unintended acceleration – or “overrun,” as Toyota sometimes called it – in many of its U.S. vehicles.  A September 2009 presentation made by a manager at a U.S. TOYOTA subsidiary to TOYOTA executives gave a “current summary of O/R [overrun] types in NA [North American] market” that listed the three confirmed types as: “mat interference” (i.e., floor-mat entrapment), “material issue” (described as “pedal stuck and . . . pedal slow return/deformed”) and “simultaneous pedal press” by the consumer.  The presentation further listed the models affected by the “material issue” as including “Camry, Corolla, Matrix, Avalon.”

Hiding Sticky Pedal from NHTSA and the Public

 As noted, TOYOTA had by this time developed internal plans to implement design changes for all A-Pedal-Company-manufactured pedals in U.S. Toyota models to address, on a going-forward basis, the still-undisclosed sticky pedal problem that had already been resolved for new vehicles in Europe.  On Oct. 5, 2009, TOYOTA engineers issued to A-Pedal Company the first of the design change instructions intended to prevent sticky pedal in the U.S. market.  This was described internally as an “urgent” measure to be implemented on an “express” basis, as a “major” change – meaning that the part number of the subject pedal was to change, and that all inventory units with the old pedal number should be scrapped.

On Oct. 21, 2009, however, in the wake of the San Diego floor-mat entrapment accident, and in the midst of TOYOTA’s discussions with NHTSA about its eight-model entrapment recall, engineers at TOYOTA and the leadership of TOYOTA’s recall decision group decided to cancel the design change instruction that had already been issued and to suspend all remaining design changes planned for A-Pedal Company pedals in U.S. models.  U.S. TOYOTA subsidiary employees who had been preparing for implementation of the changes were instructed, orally, to alert the manufacturing plants of the cancellation.  They were also instructed not to put anything about the cancellation in writing.  A-Pedal Company itself would receive no written cancellation at this time; instead, contrary to TOYOTA’s own standard procedures, the cancellation was to be effected without a paper trail.

TOYOTA decided to suspend the pedal design changes in the United States, and to avoid memorializing that suspension, in order to prevent NHTSA from learning about the sticky pedal problem.

In early November 2009, TOYOTA and the leadership of a U.S. TOYOTA subsidiary became aware of three instances of sticky pedal in U.S. Corollas.  Shortly thereafter, the leadership of the recall decision group within TOYOTA discussed a plan to finally disclose the sticky pedal problem to NHTSA.  The recall decision group was aware at this time not only of the problems in the three Corollas in the United States but also of the problems that had surfaced in a Matrix and a Camry in August 2009 and been reproduced through testing in September 2009.  The group was also familiar with the sticky pedal problem in Europe, the design changes that had been implemented there, and the cancellation and suspension of similar planned design changes in the United States.  Knowing all of this, the group’s leadership decided that (a) it would not disclose the September 2009 Market Impact Summary to NHTSA; (b) if any disclosure were to be made to NHTSA, it would be limited to a disclosure that there were some reports of unintended acceleration apparently unrelated to floor-mat entrapment; and (c) NHTSA should be told that TOYOTA had made no findings with respect to the sticky pedal problem reflected in the reports concerning the three U.S. Corollas, and that the investigation of the problem had just begun.

On Nov. 17, 2009, before TOYOTA had negotiated with NHTSA a final set of remedies for the eight models encompassed by the floor-mat entrapment recall, TOYOTA informed NHTSA of the three Corolla reports and several other reports of unintended acceleration in Toyota model vehicles equipped with pedals manufactured by A‑Pedal Company.  In TOYOTA’s disclosure to NHTSA, TOYOTA did not reveal its understanding of the sticky pedal problem as a type of unintended acceleration, nor did it reveal the problem’s manifestation and the subsequent design changes in Europe, the planned, cancelled, and suspended design changes in the United States, the August 2009 Camry and Matrix vehicles that had suffered sticky pedal, or the September 2009 Market Impact Summary. 

TOYOTA’s Misleading Statements

After the August 2009 fatal floor-mat entrapment accident in San Diego, several articles critical of TOYOTA appeared in U.S. newspapers.  The articles reported instances of TOYOTA customers allegedly experiencing unintended acceleration and the authors accused TOYOTA of, among other things, hiding defects related to unintended acceleration.

On Nov. 25, 2009, TOYOTA, through a U.S. subsidiary, announced its floor- mat entrapment resolution with NHTSA.  In a press release that had been approved by TOYOTA, the U.S. subsidiary assured customers: “The safety of our owners and the public is our utmost concern and Toyota has and will continue to thoroughly investigate and take appropriate measures to address any defect trends that are identified.”  A spokesperson for the subsidiary stated during a press conference the same day, “We’re very, very confident that we have addressed this issue.” 

In truth, the issue of unintended acceleration had not been “addressed” by the remedies announced.  A-Pedal Company pedals which could experience stickiness were still on the road and still, in fact, being installed in newly-produced vehicles.  And the best-selling Corolla, the Highlander, and the Venza – which had design features similar to models that had been included in the earlier floor-mat entrapment recall – were not being “addressed” at all.

Again, on Dec. 23, 2009, TOYOTA responded to media accusations that it was continuing to hide defects in its vehicles by authorizing a U.S. TOYOTA subsidiary to publish the following misleading statements on the subsidiary’s website: “Toyota has absolutely not minimized public awareness of any defect or issue with respect to its vehicles.  Any suggestion to the contrary is wrong and borders on irresponsibility.  We are confident that the measures we are taking address the root cause and will reduce the risk of pedal entrapment.”   In fact, TOYOTA had “minimized public awareness of” both sticky pedal and floor-mat entrapment.  Further, the measures TOYOTA had taken did not “address the root cause” of unintended acceleration, because TOYOTA had not yet issued a sticky pedal recall and had not yet recalled the Corolla, the Venza, or the Highlander for floor-mat entrapment.

TOYOTA’s False Timeline

When, in early 2010, TOYOTA finally conducted safety recalls to address the unintended acceleration issues it had concealed throughout the fall of 2009, TOYOTA provided to the American public, NHTSA and the United States Congress an inaccurate timeline of events that made it appear as if TOYOTA had learned of the sticky pedal in the United States in “October 2009,” and then acted promptly to remedy the problem within 90 days of discovering it.  In fact, TOYOTA had begun its investigation of sticky pedal in the United States no later than August 2009, had already reproduced the problem in a U.S. pedal by no later than September 2009, and had taken active steps in the months following that testing to hide the problem from NHTSA and the public.

*                *                *

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  Assistant U.S. Attorney Bonnie Jonas, Deputy Chief of the Criminal Division and Assistant U.S. Attorney Sarah E. McCallum are in charge of the prosecution, and Assistant U.S. Attorney Sharon Cohen Levin, Chief of the Money Laundering and Asset Forfeiture Unit is responsible for the forfeiture aspects of the case. 

Related Materials:

Deferred Prosecution Agreement
Toyota Information
Toyota Statement of Facts

USDOJ: INTERPOL Washington: Updates

Department of Justice

Joint Law Enforcement Operation Leads to Return of Accused Argentine War Criminal Hiding in United States

WASHINGTON - An exhaustive investigation spearheaded by INTERPOL Washington and the U.S. Marshals Service International Investigations Branch ended with one of Argentina's most sought-after war criminals being located in Miami.

In December 2013, INTERPOL Buenos Aires requested assistance from U.S. law enforcement officials in establishing the whereabouts of Rodolfo Adolfo Gimenez. A former Argentine military officer, Gimenez, is accused of committing atrocities against civilians during Argentina's “dirty war” in the 1970s.

Knowing that an international arrest warrant would be forthcoming, Gimenez fled Argentina in October 2013, traveling through Chile and ultimately seeking safe haven in Florida. INTERPOL Washington and investigators from the U.S. Marshals Service subsequently determined Gimenez had taken refuge in a safe house situated well within the Spanish speaking community in Miami, where he believed that he could easily acclimatize and blend in.

On Friday, at the request of INTERPOL Washington, U.S. Marshals Service personnel from the Southern District of Florida and agents from the Miami office of U.S. Immigration and Customs Enforcement - Homeland Security Investigations positively located and identified Gimenez and facilitated his removal from the United States back to Argentina. There, he was taken into custody by Argentine National Police representatives from INTERPOL Buenos Aires.

“This is an excellent example of U.S. law enforcement and the Argentina government working together to apprehend a wanted fugitive,” said Amos Rojas, U.S. Marshal for the Southern District of Florida. “The Marshals Service is dedicated to pursuing all those who choose to flee rather than face justice.”

According to the INTERPOL Red Notice and warrants of arrest issued by Federal Courts in Argentina, Gimenez is specifically implicated “in the unlawful imprisonment of 22 year old Juan Marcos Herman, a political activist in student circles and a member of the anti-military Peronist Youth Movement. In July 1977, Herman was kidnapped at gunpoint by a group of military personnel.” He was subsequently taken to a clandestine detention center in Buenos Aires where he was “subjected to repeated mental and physical torture, and relentless interrogation.” Herman was never again seen alive, and his remains have never been recovered. If convicted as charged, Gimenez faces life in prison.

“I commend the work of all the law enforcement authorities involved in this investigation,” said INTERPOL Washington Director Shawn Bray. “This is a great example of U.S. law enforcement agencies and their international partners sharing information to locate and bring criminals to justice. No matter how far and hard this fugitive ran he could not escape the coordinated international effort to locate him.”

INTERPOL Washington credits the combined efforts of INTERPOL, INTERPOL Buenos Aires, the U.S. Marshals Service, U.S. Immigration and Customs Enforcement – Homeland Security Investigations and Enforcement Removal Operations, U.S. Customs and Border Protection, U.S. Citizenship and Immigration Services, the Transportations Security Administration, the U.S. Department of State Bureau of Diplomatic Security, and the U.S. Department of Justice Office of International Affairs.

A Florida man who had been the straw owner of a physical therapy rehabilitation facility has been sentenced to serve 30 months in prison for his role in a $28.3 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Middle District of Florida A. Lee Bentley III, Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office and 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 made the announcement.

Roberto Fernandez Gonzalez, 63, formerly of southwest Florida, was sentenced by U.S. District Judge Susan C. Bucklew in the Middle District of Florida and was ordered to forfeit $446,738 and pay the same amount in restitution. Fernandez pleaded guilty on June 24, 2013, to conspiracy to commit health care fraud.

According to court documents, Fernandez and his co-conspirators used various physical therapy clinics and other business entities throughout Florida – including Rehab Dynamics Inc. in Venice, Fla. – to submit approximately $28.3 million in fraudulent reimbursement claims to Medicare from 2005 through 2009. Medicare paid approximately $14.4 million on those claims.

Fernandez’s co-conspirators obtained and controlled Rehab Dynamics. They engaged in a sham sale of Rehab Dynamics to Fernandez, a Cuban immigrant with no background in the health care industry. Fernandez did not have the money to buy Rehab Dynamics. Instead, the co-conspirators paid Fernandez approximately $20,000 to serve as the straw owner of Rehab Dynamics from January 2008 through March 2008. During that time, Rehab Dynamics submitted approximately $1.6 million in fraudulent claims to Medicare seeking reimbursement for rehabilitation therapy services that were not provided. Medicare paid approximately $446,738 on those false claims.

This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida. This case is being prosecuted by Trial Attorneys Christopher J. Hunter and Andrew H. Warren of the Criminal Division’s Fraud Section and Assistant United States Attorney Simon A. Gaugush of the U.S. Attorney’s Office for the Middle District of Florida.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 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 .

Alexander Beltran Herrera, 37, a commander of the FARC terrorist organization, pleaded guilty today in the U.S. District Court for the District of Columbia to hostage-taking charges stemming from the 2003 kidnappings of three U.S. citizens in Colombia.

The guilty plea was announced by John P. Carlin, Acting Assistant Attorney General for the Justice Department’s National Security Division; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; and George L. Piro, Special Agent in Charge of the FBI’s Miami Division.

Beltran Herrera pleaded guilty to three counts of hostage-taking. He is to be sentenced July 25, 2014, by the Honorable Royce C. Lamberth. The offense of hostage taking carries a maximum sentence of life in prison, although as part of the extradition process from Colombia, the United States agreed not to seek a sentence exceeding 60 years.

According to a statement of facts submitted as part of the plea hearing, t he FARC is an armed, violent organization in Colombia, which since its inception in 1964, has engaged in an armed conflict to overthrow the Republic of Colombia, South America’s longest-standing democracy. The FARC has consistently used hostage taking as a primary technique in extorting demands from the Republic of Colombia, and hostage taking has been endorsed and commanded by FARC senior leadership. The FARC has characterized American citizens as “military targets” and has engaged in violent acts against Americans in Colombia, including murders and hostage taking. The FARC was designated as a foreign terrorist organization by the U.S. Secretary of State in 1997 and remains so designated.

Beltran Herrera, a commander in the FARC, was involved in the hostage taking of three United States citizens: Marc D. Gonsalves, Thomas R. Howes, and Keith Stansell.  These three, along with Thomas Janis, a United States citizen, and Sergeant Luis Alcides Cruz, a Colombian citizen, were seized on Feb. 13, 2003, by the FARC, after their single-engine aircraft made a crash landing in the Colombian jungle.

Members of the FARC murdered Mr. Janis and Sgt. Cruz at the crash site.  Mr. Gonsalves, Mr. Howes, and Mr. Stansell were held by the FARC at gunpoint and were advised by FARC leadership that they would be used as hostages to increase pressure on the government of Colombia to agree to the FARC’s demands.  At various times, the FARC marched the hostages from one site to another, placing them in the actual custody of various FARC fronts.

At the conclusion of one 40-day long march, in or about November 2004, the hostages were delivered to members of the FARC’s 27th Front, who imprisoned the hostages for nearly two years.  During part of this period, Beltran Herrera was responsible for moving the hostages and keeping them imprisoned.  Throughout the captivity of these three hostages, FARC jailors and guards used choke harnesses, chains, padlocks and wires to restrain the hostages, and used force and threats to continue their detention and prevent their escape. In July 2008, the Colombian military conducted a daring operation which resulted in the rescue of the hostages.

All told, members of the FARC held the Americans hostage for 1,967 days.

“This case underscores our resolve to hold accountable those who target our citizens with violence anywhere in the world,” said Acting Assistant Attorney General Carlin. “With this guilty plea, Alexander Beltran Herrera has admitted his participation in the hostage taking and captivity of three Americans by the FARC, a Colombian terrorist organization.  I want to thank all of the prosecutors, agents, and analysts who made this result possible.”

“Alexander Beltran Herrera was a terrorist and commander in the FARC organization who held three Americans hostage in the Colombian jungle,” said U.S. Attorney Machen. “With today's guilty plea, he admitted to his role in terrorizing these Americans, who were held in captivity for more than five years. His extradition and prosecution reflect our determination to bring to justice anyone who sets out to harm our fellow citizens overseas.”

“Alexander Beltran Herrera was a commander within FARC, a foreign terrorist organization based in Colombia that considered U.S. citizens to be targets for murder and hostage taking,” said Special Agent in Charge Piro. “First captured, then extradited to the United States, Herrera has now admitted to his role in moving and keeping hostage three American citizens, Marc D. Gonsalves, Thomas R. Howes and Keith Stansell.  Once again, the excellent, longstanding cooperation between the Colombian National Police and U.S. law enforcement has ended another terrorist’s career of violence and thuggery.”

This case was investigated by the FBI’s Miami Division. The prosecution is being handled by Assistant U.S. Attorneys Anthony Asuncion and Fernando Campoamor-Sanchez from the National Security Section of the U.S. Attorney’s Office for the District of Columbia, and Trial Attorney David Cora, from the Counterterrorism Section of the Justice Department’s National Security Division. The case was indicted by Assistant U.S. Attorney Kenneth Kohl, of the National Security Section of the U.S. Attorney’s Office.

The FBI’s Miami Division partnered in the investigation with the Justice Department’s Office of International Affairs, the Department’s Judicial Attachés in Colombia, and the FBI’s Office of the Legal Attaché in Bogota, Colombia. The Directorate of Intelligence (DIPOL) and the Anti-Kidnapping Unit (GAULA) of the Colombian National Police also provided valuable support during the investigation.

The Justice Department announced today that it has reached an agreement in principle with the city of New York and intervening plaintiffs to settle an employment discrimination lawsuit involving the New York City Fire Department (FDNY).  Under the agreement in principle, the city of New York will pay a total of approximately $98 million to resolve allegations that the FDNY engaged in a pattern or practice of employment discrimination against African-American and Hispanic applicants for the entry-level firefighter position by using two discriminatory written tests in 1999 and 2002.  The parties’ agreement in principle will be incorporated into a consent decree that is subject to a fairness hearing and must be approved by the district court. 

“This resolution will help ensure that those who seek to serve as firefighters in New York City have an equal opportunity to do so, regardless of their race,” said Associate Attorney General Tony West.  “The agreement we are announcing today – which is the result of the collective efforts of the Justice Department, the private plaintiffs, and the city of New York – not only will compensate victims of discriminatory hiring practices, it will also put in place an entry-level hiring process that should more accurately identify firefighter candidates who are best qualified to do the job.”

“This agreement in principle to settle will provide significant and long-awaited relief to African-American and Hispanic applicants for employment with the FDNY who were harmed by the FDNY’s discriminatory hiring practices,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “We applaud the city of New York and Mayor de Blasio for their efforts to bring this important matter to a resolution.  The Department of Justice stands committed to ensuring justice and compensation to those who are victims of unfair employment practices.”

The lawsuit originated in 2007 when the department filed its complaint alleging that the FDNY’s use of two written tests violated Title VII of the Civil Rights Act of 1964 by disproportionately screening out African-American and Hispanic applicants for the entry-level firefighter position.  The FDNY was unable to show that these screening devices identified the candidates who were best qualified to perform the job of firefighter, as required in order to keep the tests in place.

“We commend the city for its commitment to rectifying past discrimination against qualified African-American and Hispanic firefighter applicants,” stated U.S. Attorney Loretta Lynch for the Eastern District of New York.  “We look forward to a new era in which African-American and Hispanic firefighters are full and equal participants in the FDNY’s proud tradition of protecting and serving the people of the city of New York.”

Under the terms of the agreement in principle, the FDNY will pay $98 million to those African-American and Hispanic victims of discrimination who filed claim forms and who have already been found eligible for relief by the court.  The method of distribution has not yet been determined and must be approved by the court before any money is distributed.  With today’s agreement in principle, the parties have committed to streamline the claims process and to expedite the distribution of monetary relief to eligible claimants. 

In addition to today’s agreement in principle, the court has already ordered several changes to take place within the FDNY to remedy the city’s discriminatory hiring practices.  In September 2012, the court approved the use of an entry-level firefighter exam which was jointly developed by the United States, the intervening plaintiffs and the city.  As a result, for the first time in at least 15 years, the FDNY is using an entry-level firefighter exam that accurately predicts which candidates will perform better on the job and complies with Title VII.  In May 2013, the Second Circuit Court of Appeals upheld on appeal most of an order outlining changes that must be made to the FDNY’s recruiting, post-examination hiring and Equal Employment Opportunities Office processes, and appointing a court monitor to oversee this reform.  In addition, the court has ordered the city to appoint up to 293 eligible claimants as priority hires to the FDNY, provided that they take and pass all of the same tests and other steps in the hiring process as the other candidates for appointment with the FDNY.  The first groups of priority hires joined the FDNY in July 2013 and January 2014, and additional priority hires are expected to join in July 2014.

The parties expect to release further details about the terms of the proposed settlement agreement in the next few weeks.  For more information about this litigation, please see the Department of Justice website.  Eligible claimants in this lawsuit may obtain more information about how the settlement affects their claims for relief at this page, which will have updated information about the settlement in the coming days and weeks.

Alex Wisidagama, a citizen of Singapore formerly employed by Glenn Defense Marine Asia (GDMA), pleaded guilty today to one count of conspiracy to defraud the United States for his role in a scheme to overbill the U.S. Navy for ship husbanding services. Wisidagama’s plea is the second in an expanding investigation into acts of alleged fraud and bribery committed by GDMA and several United States Navy officers and personnel.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Laura E. 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 after the plea was accepted by U.S. Magistrate Judge Jan M. Adler of the Southern District of California. The plea is subject to acceptance by U.S. District Judge Janis Sammartino. Sentencing is set for June 13, 2014, before Judge Sammartino.

Wisidagama, who was arrested in San Diego, Calif., on Sept. 16, 2013, served as the general manager of global government contracts for GDMA, which was owned and operated by his cousin, Leonard Glenn Francis . GDMA was a multi-national corporation with headquarters in Singapore and operating locations in other countries, including Japan, Thailand, Malaysia, Korea, India, Hong Kong, Indonesia, Australia, Philippines, Sri Lanka and the United States. GDMA provided the U.S. Navy with hundreds of millions of dollars in husbanding services, which involve the coordinating, scheduling and procurement of items and services required by ships and submarines when they arrive at port. These services included providing tugboats; paying port authority and customs fees; furnishing security and transportation; supplying provisions, fuel and water; and removing trash and collecting liquid waste.

In his plea agreement, Wisidagama admitted to conspiring to defraud the U.S. Navy in different ways. Wisidagama and other GDMA employees generated bills charging the U.S. Navy for port tariffs that were far greater than the tariffs that GDMA actually paid. In some cases, Wisidagama and others created fictitious port authorities for ports visited by U.S. Navy ships, and in other cases, Wisidagama and GDMA created fake invoices from legitimate port authorities purporting to bill the U.S. Navy at inflated tariff rates. Wisidagama and GDMA also overbilled the U.S. Navy for fuel by creating fraudulent invoices which represented that GDMA acquired fuel at the same cost that it charged the U.S. Navy when in fact GDMA sold the fuel to the U.S. Navy for far more than it actually paid. Wisidagama and GDMA also defrauded the U.S. Navy on the provision of incidental items by creating fake price quotes purportedly from other vendors to make it appear that the other vendors’ offering prices were greater than GDMA’s prices.

Wisidagama is the second defendant to plead guilty as part of this investigation. On Dec. 17, 2013, former NCIS Supervisory Special Agent John Bertrand Beliveau Jr. pleaded guilty to conspiracy to commit bribery after admitting to providing Francis with sensitive law enforcement information in exchange for things of value such as cash, travel accommodations, lavish dinners, and prostitutes. In addition to Beliveau and Wisidagama, Francis and U.S. Navy Commanders Michael Vannak Khem Misiewicz and Jose Luis Sanchez have been charged as part of a bribery and fraud scheme designed to defraud the U.S. Navy. The charges against Misiewicz, Sanchez and Francis are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

The ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service and the Defense Contract Audit Agency. Significant assistance was provided by the Criminal Division’s Office of International Affairs, as well as the Drug Enforcement Administration, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Royal Thai Police and the Corrupt Practices Investigation Bureau in Singapore.

The case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California, Director of Procurement Fraud Catherine Votaw and Trial Attorney Brian Young of the Criminal Division’s Fraud Section, and Trial Attorney Wade Weems, on detail to the Fraud Section from the Special Inspector General for Afghan Reconstruction.

Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline , or call (800) 424-9098.

The Justice Department, the Internal Revenue Service (IRS) and the Treasury Inspector General for Tax Administration (TIGTA) announced that Matthew Bender, of Detroit, was convicted today of obstructing the IRS and nine counts of aiding and assisting in the preparation of false federal income tax returns following a jury trial in the U.S. District Court for the Eastern District of Michigan.

According to court documents and evidence produced at trial, Bender prepared over 3,000 tax returns between 2006 and 2011 and earned over $500,000 in tax preparation fees.  However, Bender failed to report his own income to the IRS, either by filing false tax returns for himself or by failing to file his own tax returns at all.  The evidence showed that Bender caused his customer’s tax refunds to be inflated by placing false deductions on their returns. 

Following the conviction, Bender remains detained pending sentencing.  For each of the 10 counts of conviction, Bender faces a statutory maximum sentence of three years in prison and a maximum fine of $250,000.

The case was investigated by special agents of IRS – Criminal Investigation and TIGTA.  Trial Attorneys Kenneth Vert and Jeffrey McLellan of the Tax Division prosecuted the case.

California attorney Christopher M. Rusch was sentenced to serve 10 months in prison for helping his clients Stephen M. Kerr and Michael Quiel, both businessmen from Phoenix, hide millions of dollars in secret offshore bank accounts at UBS AG and Pictet & Cie in Switzerland, the Justice Department and the Internal Revenue Service (IRS) announced today. U.S. District Judge James A. Teilborg also ordered Rusch to serve three years of supervised release following his prison sentence. On Feb. 6, 2013, Rusch pleaded guilty to conspiracy to defraud the government and failing to file a Report of Foreign Bank and Financial Accounts (FBAR). Kerr and Quiel were sentenced in September 2013 to each serve 10 months in prison after both were tried and convicted of filing false income tax returns for 2007 and 2008. The jury also convicted Kerr of failing to file FBARs for 2007 and 2008.

According to the evidence presented at trial, Kerr and Quiel, with the assistance of Rusch and others, including Swiss nationals, established nominee foreign entities and corresponding bank accounts in Switzerland to conceal Kerr and Quiel’s ownership and control of stock and income they deposited in these accounts. Rusch testified at trial, admitting that he and others caused the sale of the shares of stock through the undeclared accounts. Rusch further testified that, at Kerr and Quiel’s direction, he transferred some of the money in the secret accounts back to the United States through Rusch’s Interest on Lawyer’s Trust Account before dispersing the money for Kerr and Quiel’s benefit, including the purchase of a multi-million dollar golf course in Erie, Colo. According to court documents and evidence presented at trial, with Rusch’s assistance, Kerr and Quiel each failed to report more than $ 4,600,000 and $2,000,000 of income, respectively, during 2007 and 2008 which they hid in the undeclared accounts with Rusch’s assistance.

“We are getting more and more information all the time about offshore banking activities,” said Assistant Attorney General Kathryn Keneally for the Tax Division. “We are committed to investigating and prosecuting those who continue to evade taxes and reporting requirements. As these sentences show, those who fail to come into compliance risk high penalties and jail.”

“This prosecution serves notice that the Department of Justice will not tolerate fraudulent activity designed to undermine the integrity of our income tax system,” said U.S. Attorney John S. Leonardo for the District of Arizona.

“Today, Mr. Rusch has been held accountable for his actions in assisting wealthy individuals hide millions of dollars in secret offshore bank accounts and dodge the tax system,” said Chief of IRS-Criminal Investigation Richard Weber. "In addition, Mr. Rusch used his attorney trust account to funnel money from the secret offshore accounts back to Mr. Kerr and Mr. Quiel for their personal benefit, including the purchase of a multi-million dollar golf course. As the investigation into offshore tax evasion continues, Criminal Investigation will leave no financial stone unturned as we continue to vigorously pursue new leads."

The case was investigated by special agents of IRS-Criminal Investigation, and was prosecuted by Trial Attorney Timothy J. Stockwell for the Tax Division and Assistant U.S. Attorney Monica Edelstein for the District of Arizona.

Additional information about the Justice Department’s Tax Division and its enforcement efforts is available at the website.

American Family Care Inc. has agreed to pay the government $1.2 million to resolve allegations under the False Claims Act that it knowingly submitted claims to Medicare for outpatient office visits that were billed at a higher rate than was appropriate, the Justice Department announced today.  American Family Care is a network of walk-in medical clinics headquartered in Birmingham, Ala., with offices in Alabama, Tennessee and Georgia.

“Mischarging the government for office visits wastes valuable government resources that could be used to care for other patient needs,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “At a time of increasing concern about the cost of medical care, it is especially important to ensure that health care providers are not overbilling the government by improperly inflating their claims.”

Following guidance adopted by the Centers for Medicare and Medicaid Services, health clinics such as American Family Care bill Medicare for their services by selecting a corresponding Evaluation and Management code.  The codes are divided into five different levels - from basic (level 1) to most complex (level 5).  Higher level codes result in higher reimbursement from Medicare than lower level codes.  The government alleged that American Family Care knowingly selected Evaluation and Management codes for a level of services that exceeded those actually provided in order to artificially increase the amount of reimbursement it received for those visits.

“The False Claims Act is a critical tool for weeding out fraud and protecting the taxpayers,” said U.S. Attorney for the Northern District of Alabama Joyce White Vance.  “My office will continue to return funds, like the $1.2 million in this case, to the taxpayers by proceeding against those who abuse our public health programs."

“Billing the government for services not provided as claimed cheats both taxpayers and patients,” said Derrick L. Jackson, Special Agent in Charge of the Office of Inspector General, U.S. Department of Health and Human Services region including Alabama.  “We will pursue aggressively providers like American Family Care alleged to have improperly maximized reimbursements.”

The civil settlement resolves a lawsuit filed by Anita C. Salters, a former employee of American Family Care, under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the government for false claims and to obtain a portion of the government’s recovery.  Salters’ share has not yet been determined. 

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused on efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.

This settlement with American Family Care was the result of a coordinated effort among the U.S. Attorney’s Office for the Northern District of Alabama; the Department of Justice’s Civil Division, Commercial Litigation Branch; the Office of Inspector General of the U.S. Department of Health and Human Services and the Federal Bureau of Investigation. 

The lawsuit is captioned United States ex rel. Anita C. Salters v. American Family Care Inc. (N.D. Ala.).  The claims resolved by this settlement are allegations only, and there has been no determination of liability.

Dmitry Firtash, 48, a Ukrainian businessman, was arrested Wednesday by Austrian authorities in Vienna on a provisional arrest request based on charges filed in the Northern District of Illinois, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.

The charges result from an investigation, which the FBI has conducted for several years, of an alleged international corruption conspiracy. Firtash’s arrest is not related to recent events in Ukraine.

Firtash, who controls Group DF, an international conglomerate of companies, remains in Austrian custody unless he meets the bail condition of posting a €125 million bond, which was set today in a Vienna court. The U.S. government will seek his extradition.

The charges are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

The department has worked closely with and has received significant assistance from its law enforcement counterparts in Austria and greatly appreciates their assistance in this matter.  Significant assistance was also provided by the Criminal Division’s Office of International Affairs. The Chicago Office of the FBI conducted the investigation.

Several patient recruiters, including a medical clinic owner, were sentenced today for their participation in a health care fraud scheme involving Flores Home Health Care Inc., a defunct home health care company.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Acting Special Agent in Charge Brian P. Martens of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement.

Lerida Labrada, 59; Mayra Flores, 49; and German Martinez, 36, all of Miami, were sentenced by U.S. District Judge Ursula Ungaro of the Southern District of Florida to serve 37 months, 24 months, and 24 months in prison, respectively. In addition to their prison terms, all of the defendants were sentenced to three years of supervised release and ordered to pay between $200,000 and $400,000 in restitution.

On Jan. 7, 2014, Labrada pleaded guilty to conspiracy to commit health care fraud, and Flores and Martinez pleaded guilty to conspiracy to defraud the United States and receive health care kickbacks.

According to court documents, the defendants worked as patient recruiters for the owners and operators of Flores Home Health, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries. Labrada also owned and operated a Miami medical clinic that provided fraudulent prescriptions to patient recruiters and to the owners and operators of Flores Home Health.

The defendants would recruit patients for Flores Home Health and would solicit and receive kickbacks and bribes from the owners and operators of Flores Home Health in return for allowing the company to bill the Medicare program on behalf of the recruited Medicare patients. These Medicare beneficiaries were billed for home health care and therapy services that were not medically necessary and/or were not provided.

From approximately October 2009 through approximately June 2012, Flores Home Health was paid approximately $8 million by Medicare for fraudulent claims for home health services.

The case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division's Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 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

The owner and operator of a Miami medical clinic, Merfi Corp., was sentenced today to serve 108 months in prison for her participation in multiple health care fraud schemes.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Special Agent in Charge George L. Piro of the FBI’s Miami Field Office and Acting Special Agent in Charge Brian P. Martens of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office made the announcement.

Isabel Medina, 49, of Miami, was sentenced by U.S. District Judge Ursula Ungaro of the Southern District of Florida. In addition to her prison term, Medina was also sentenced to serve three years of supervised release and was ordered to pay $8,437,393 in restitution.

On Jan. 7, 2014, Medina pleaded guilty before Judge Ungaro to conspiracy to commit health care fraud.

According to court documents, Medina was an owner and operator of Merfi Corp., a Miami medical clinic that employed physicians, physician assistants and other medical professionals who were authorized by law to dispense prescriptions for home health care services. Through Merfi Corp., Medina and her co-conspirators provided fraudulent home health and therapy prescriptions to the owners and operators of Flores Home Health Care Inc. and other home health care agencies, as well as to patient recruiters, in return for kickbacks and bribes.

Flores Home Health and these other home health care agencies purported to provide home health and therapy services to Medicare beneficiaries, but were in fact operated for the purpose of billing Medicare for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided.

Medina has acknowledged that her involvement in fraudulent schemes at multiple home health care companies resulted in losses to the Medicare program exceeding $20 million.

The case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case is being prosecuted by Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 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

A federal court in the Northern District of Georgia permanently barred Andrew R. Heath, an Acworth, Ga., area tax preparer from preparing tax returns for others, the Justice Department announced today.  Heath agreed to the civil injunction order without admitting the allegations against him.  The government’s complaint in the injunction suit was brought against both Andrew Heath and his brother, Larry J. Heath, who previously agreed to a civil injunction order. 

The government complaint alleged that Andrew Heath, who operated Excellent Tax Service, repeatedly prepared federal tax returns that unlawfully understated customers’ federal tax liabilities.  The suit alleged that Andrew Heath concocted bogus losses, expenses, education credits, business expenses and charitable contributions, which he falsely reported on his customers’ federal income tax returns.    

Return preparer fraud is one of the IRS'   Dirty Dozen Tax Scams for 2013 .  The IRS has some tips   on their website for choosing a tax preparer.  In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department  website .  An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on   this page .  If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the   Tax Division with details.

Related Materials:

United States v. Andrew R. Heath, etc.
Complaint for Permanent Injunction and Other Relief
Stipulated Final Judgment of Permanent Injunction and Order Against Defendant Andrew R. Heath

Steven A. Murray, 54, of Pelham, Ala., and his company, Bio-Tech Management Inc., pleaded guilty today in federal court in Macon, Ga., to charges of conspiracy, unlawful use of pesticides, false statements and mail fraud in connection with the misapplication of pesticides in Georgia nursing homes, announced Acting Assistant Attorney General Robert G. Dreher of the Justice Department’s Environment and Natural Resources Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.

According to the plea agreement, from October 2005 to June 2009, Murray and Bio-Tech provided monthly pest control services to nursing homes in Georgia by spraying pesticides in and around their clients’ facilities. Bio-Tech employees routinely applied the pesticide Termidor indoors, contrary to the manufacturer’s label instructions.  After the Georgia Department of Agriculture made inquiries regarding Bio-Tech’s misuse of Termidor and other pesticides, Murray directed several of his Bio-Tech employees to alter company service reports with the intent to obstruct an investigation.

“These defendants misapplied potentially harmful pesticides around senior citizens and conspired to obstruct an investigation by state and federal law enforcement,” said Acting Assistant Attorney General Dreher. “It is essential that companies and individuals who handle pesticides do so lawfully and honestly, and those that fail to do so will be held accountable under the law.”

“When our loved ones make the transition to a nursing home, the last thing any of us wants to worry about is whether our parents or grandparents are being subjected to improperly applied chemicals,” said U.S. Attorney Moore.  “When Mr. Murray and his company used this pesticide like they did, they created a potentially harmful situation for the residents and another reason to worry for the residents’ families.”

“The defendants took advantage of some of our most vulnerable citizens by deliberately applying pesticides contrary to federal law in nursing homes around the state of Georgia,” said Maureen O'Mara, Special Agent in Charge of EPA's Criminal Enforcement Program in Georgia. “What is even more shameful is they then took steps to conceal it. This plea agreement shows that we will not tolerate individuals or companies who put profit over protection.”

Dustin Norris and Ryan Lohr, former officers at Roxbury Correctional Institution (RCI) in Hagerstown, Md., were sentenced today for conspiring with other RCI officers on March 9, 2008, in connection with the assault of an inmate at the state prison, identified as K.D.  Lohr and Norris were the first two former RCI officers to enter guilty pleas in the federal investigation of the assault and ensuing cover up.

Both Norris and Lohr previously pleaded guilty to conspiracy.  Norris admitted that he had conspired with other officers to assault K.D. during the day shift, while Lohr acknowledged that he had agreed with other officers to cover up the day shift officers’ assault.  Both Norris and Lohr cooperated with the government during the federal investigation, and testified for the prosecution at the trial of former RCI Sergeant Josh Hummer, who was convicted of obstruction of justice.  U.S. District Judge James K. Bredar sentenced Dustin Norris to serve 15 months in prison.  Ryan Lohr was ordered to serve one year and one day in prison.   

During his testimony at Hummer’s trial and in court documents filed in connection with his respective guilty pleas, Norris admitted that he and other day shift officers had assaulted K.D. in retaliation for a prior incident involving K.D. and another officer.  Lohr, meanwhile, admitted that he watched Norris and other officers assault the inmate, then observed a supervisor use a magnet in an apparent attempt to destroy surveillance footage related to the assault.

“Correctional officers are expected to uphold the law,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The Justice Department will continue to vigorously prosecute correctional officers who use their position either to commit violent crimes or to cover up criminal conduct by other officers.”

To date, 16 current or former officers at RCI have been convicted in connection with a series of assaults carried out on K.D. on March 8-9, 2008.  Eight former RCI officers still await sentencing before 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 support of Assistant U.S. Attorney Michael Cunningham for the District of Maryland.