District Not Recorded

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.

Memorial Hospital (Memorial), an Ohio nonprofit corporation that operates an acute care hospital in Fremont, Ohio, has agreed to pay $8.5 million to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute by engaging in improper financial relationships with referring physicians, the Justice Department announced today.

“Improper financial relationships between health care providers and their referral sources can undermine physicians' judgment about patients' true health care needs and drive up health care costs for everyone,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  "The Justice Department is firmly committed to recovering the taxpayer dollars lost due to these arrangements and making sure that all health care providers follow the rules.” 

 The Anti-Kickback Statute and the Stark Statute restrict the financial relationships that hospitals may have with doctors who refer patients to them.  The settlement announced today involved allegations that financial relationships that Memorial had with two physicians – a joint venture between Memorial and a pain management physician and an arrangement under which an ophthalmologist purchased intraocular lenses and then resold them to Memorial at inflated prices - violated statutory requirements.  These issues were disclosed to the government by Memorial.

 "Physician referrals should be made exclusively based on what's best for the patient, not on financial relationships," said U.S. Attorney for the Northern District of Ohio Steven M. Dettelbach.  "We hope that this settlement will once again help drive that message home."

 The improper referrals at issue in this matter included Medicaid patients.  Medicaid is funded jointly by the states and the federal government.  The State of Ohio, which paid for some of the Medicaid claims at issue, will receive $600,383 of the settlement amount.

 “The price of such arrangements can be very costly to the nation’s health care system, taxpayers and provider organizations,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson.  “So, we are pleased that Memorial stepped forward to disclose these improper financial relationships and is working to avoid future occurrences.”

 This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of $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 case was handled by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Ohio and the Department of Health and Human Services Office of Inspector General.  The claims settled by this agreement are allegations only, and there has been no determination of liability.

John Bryan Villegas, 23, of Kittery, Maine, was sentenced today in federal court in New Hampshire to serve 33 months in prison for engaging in a type of cyber stalking known as “sextortion,” announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney John P. Kacavas of the District of New Hampshire.

On Sept. 18, 2013, Villegas pleaded guilty to an information charging him with one count of engaging in cyber stalking. The information charges that Villegas attempted to extort a New Hampshire female into providing him with sexually explicit photographs and videos of her. He sent her e-mail messages in which he threatened to publish on the internet – and distribute to the victim’s neighbors and work and social acquaintances – other sexually explicit photographs of the victim that were stored on her laptop computer, which had been recently stolen during a burglary of her residence. On Jan. 9, 2014, Villegas pleaded guilty in New Hampshire state court to charges that he committed that burglary.

The case was investigated by the U.S. Secret Service and was prosecuted by Senior Trial Attorney Mona Sedky of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Arnold H. Huftalen of the District of New Hampshire.

The department would like to thank the Dover, N.H., and Kittery, Maine, police departments and the Naval Criminal Investigative Service for their cooperation.

Christopher Davis, of Montgomery, Ala., was sentenced today to serve 60 months in prison, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney George L. Beck Jr. for the Middle District of Alabama.  Davis was also ordered to forfeit $300,559, which represented the proceeds of his offenses.  Davis previously pleaded guilty to charges of conspiracy to defraud the United States, wire fraud and aggravated identity theft.

According to court documents and evidence from the sentencing, Davis was the leader of a multi-state tax fraud conspiracy that operated by filing false tax returns using stolen identities, causing the Internal Revenue Service (IRS) to issue tax refunds.  Davis obtained personal identifying information from different sources, including a medical facility in Alabama.  He and a co-conspirator, Kenneth Blackmon, who was sentenced to serve 51 months in prison in April 2013, would then file false tax returns using the stolen identities in which they would direct the fraudulently claimed tax refunds to be deposited onto prepaid debit cards. 

According to court documents, Davis recruited Blackmon and several other individuals involved in the conspiracy to act as paid runners to help with obtaining the refund money.  Davis and Blackmon, who both lived in Alabama, would organize trips to Georgia and South Carolina during which the runners would use the debit cards loaded with fraudulently obtained tax refunds to make cash withdrawals at numerous locations across both states, and then provide the cash to Davis and Blackmon.  The runners would also buy new debit cards for use in the ongoing scheme.  In his plea agreement, Davis admitted that at one point during the scheme he had over 600 stolen identities and 200 prepaid debit cards with him in Georgia.    

The case was investigated by special agents of IRS - Criminal Investigation.  Trial Attorney Jason Poole for the Tax Division and Assistant U.S. Attorney Todd Brown prosecuted the case.  The Alabama Department of Pardons and Paroles and the Gwinnett County Sheriff’s Department in Georgia provided assistance in the investigation.

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

A licensed psychiatrist formerly employed by the Department of Veterans Affairs (VA) was sentenced today to serve 18 months in prison for falsely claiming to provide at-home services to Medicare beneficiaries.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York and Special Agent in Charge Thomas O’Donnell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.

Dr. Mikhail L. Presman, 56, of Brooklyn, N.Y., was sentenced by Judge I. Leo Glasser in the Eastern District of New York. Presman was sentenced to serve three years of supervised release following his prison term and ordered to forfeit $1.2 million and pay restitution to Medicare.

According to court documents, from Jan. 1, 2006, through May 10, 2013, Presman submitted approximately $4 million in Medicare claims for home treatment of Medicare beneficiaries notwithstanding his full-time salaried position as a psychiatrist at the VA hospital in Brooklyn. Presman did not provide any treatment to a substantial number of the beneficiaries he claimed to have treated. For example, Presman submitted claims to Medicare for home medical visits at locations within New York City even though he was physically located in China at the time of these purported home visits. Presman also submitted claims to Medicare for 55 home medical visits to beneficiaries who were hospitalized on the date of the purported visits.

The case was investigated by the HHS-OIG, with assistance from the VA Office of Inspector General, and brought as part of the Medicare Fraud Strike Force, under the supervision of the U.S. Attorney’s Office for the Eastern District of New York and the Criminal Division’s Fraud Section. The case was prosecuted by Trial Attorney Bryan D. Fields of the Fraud Section and Assistant United States Attorney Patricia E. Notopoulos of the Eastern District of New York.

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.

A former correctional officer in Puerto Rico was sentenced to serve 37 months in prison for attempting to smuggle heroin into state prison by delivering it to an inmate in the parking lot of the Medical Center in San Juan, Puerto Rico.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico made the announcement.

William Joel Medina, 32, of Quebradillas, Puerto Rico, pleaded guilty on Nov. 22, 2013, to conspiracy and attempt to distribute controlled substances. Medina was sentenced by U.S. District Judge Carmen C. Cerezo of the District of Puerto Rico.

From July through August 2009, Medina and a co-conspirator agreed to receive $2,500 to deliver heroin to an inmate at the Medical Center in San Juan. On Aug. 5, 2009, Medina and his co-conspirator met with an undercover agent, who they believed was a drug dealer, and were given what they believed to be a package of heroin. Medina delivered the purported heroin to an inmate in the parking lot of the Medical Center that same day.

In September 2009, Medina and a co-conspirator agreed to receive $4,000 to deliver another package of heroin to the same inmate at the Medical Center in San Juan. On Sept. 9, 2009, Medina and his co-conspirator met with an undercover agent, who they believed was a drug dealer, and were given what they believed to be a package of heroin. Medina’s co-conspirator delivered the purported heroin to the inmate that same day.

Medina also admitted in his plea agreement that he had engaged in a similar scheme on a third occasion.

The case was investigated by the FBI’s San Juan Division. The case was prosecuted by Trial Attorney Menaka Kalaskar of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Hector Ramirez-Carbó of the District of Puerto Rico.

George Despotopoulos and Steve Tepelidis pleaded guilty to tax evasion today in the District Court for the Eastern District of New York, the Justice Department and the Internal Revenue Service (IRS) announced.

According to court documents, Despotopoulos and Tepelidis jointly owned and operated Furniture Design by Knossos, a custom furniture and cabinetry business.  They caused business checks to be cashed and used some of the cash to supplement their reported income.  The informations allege that Despotopolous and Tepelidis filed or caused to be filed false individual income tax returns for the 2007 tax year.  Both Despotopoulos and Tepelidis have agreed to pay over $300,000 each in restitution. 

Tax evasion carries a statutory maximum sentence of five years in prison, three years of supervised release, and a $250,000 fine.

This case was investigated by special agents of IRS-Criminal Investigation and prosecuted by Trial Attorney Jennifer Laraia of the Tax Division.

The Justice Department and Internal Revenue Service (IRS) announced today that construction company owner Tomas Olazabal, of Fresh Meadows, N.Y., was convicted of two counts of filing false corporate tax returns for his corporation, Tupac Construction Corporation.  Olazabal was convicted by a jury sitting in the U.S. District Court for the Eastern District of New York.

According to the evidence admitted at trial, Olazabal was the sole owner and operator of Tupac Construction.  Between 2006 and 2008, Olazabal cashed a large number of checks representing gross receipts to Tupac Construction at a commercial check cashing service.  Olazabal did not tell his tax return preparer about the cashed checks and failed to report those gross receipts on Tupac Construction’s 2007 and 2008 corporate tax returns.

Olazabal faces a statutory maximum potential sentence of six years in prison and a fine of up to $500,000.

Assistant Attorney General Kathryn Keneally for the Tax Division commended the IRS-Criminal Investigation Special Agents who investigated the case, as well as Trial Attorneys Steve Descano and Mark Kotila of the Tax Division, who prosecuted the case.

In testimony delivered before the U.S. Sentencing Commission Thursday, Attorney General Eric Holder endorsed a proposed change to the Federal Sentencing Guidelines that would reserve the harshest penalties for the most serious drug offenders.

The Sentencing Commission proposal, first unveiled in January, would lower by two levels the base offense associated with various drug quantities involved in drug trafficking crimes. If adopted, the change would impact nearly 70% of all drug trafficking offenders and reduce the average sentence by 11 months, or nearly 18%, according to the Commission.

As an added result of the new proposal, the Commission projects that the Bureau of Prisons population would drop by 6,550 inmates at the end of five years.

“This straightforward adjustment to sentencing ranges – while measured in scope – would nonetheless send a strong message about the fairness of our criminal justice system,” Holder testified. “And it would help to rein in federal prison spending while focusing limited resources on the most serious threats to public safety.”

The move is Holder’s latest step to alter the federal government’s approach to dealing with nonviolent drug offenders. Last August, Holder announced his “Smart on Crime” initiative, which included a major change to the department’s charging policy intended to reserve strict, mandatory minimum sentences for high-level or violent drug traffickers.

The “Smart on Crime” initiative would help ease the nation’s overcrowded prison system. Today, the United States comprises just five percent of the world’s population but it incarcerates almost a quarter of the world’s prisoners. In 2010 alone, state and federal governments spent $80 billion on incarceration. And of the 216,000 current federal inmates, nearly half are serving time for drug-related crimes.
 
The Commission is expected to vote on the proposal endorsed by Holder in April. Until then, the Justice Department will direct prosecutors not to object if defendants in court seek to have the newly proposed guidelines applied to them during sentencing.
 
The complete text of the Attorney General’s statement to the Sentencing Commission, as prepared for delivery, is below.
 
Testimony by Attorney General Eric H. Holder, Jr.
U.S. Sentencing Commission
March 13, 2014

Chief Judge [Patti] Saris and Members of the Commission: good morning, and thank you for the invitation to appear before you to discuss our shared goals – and to provide the Justice Department’s views on proposed changes to the Federal Sentencing Guidelines related to certain drug trafficking crimes.

In particular, I appreciate the opportunity to speak in support of the amendments under consideration today.  The Justice Department strongly supports the Commission’s proposed change to the Drug Quantity Table.  If adopted, this amendment would lower by two levels the base offense levels associated with various drug quantities involved in drug trafficking crimes.  This would have the effect of modestly reducing guideline penalties for drug trafficking offenses while keeping the guidelines consistent with current statutory minimums – and continuing to ensure tough penalties for violent criminals, career criminals, or those who used weapons when committing drug crimes. 

This straightforward adjustment to sentencing ranges – while measured in scope – would nonetheless send a strong message about the fairness of our criminal justice system.  And it would help to rein in federal prison spending while focusing limited resources on the most serious threats to public safety.  Let me be clear, my primary obligation as Attorney General is to ensure the safety of the American people.  The changes that I have implemented over the past year are designed to do exactly that – while making our system more fair and more efficient.

This proposed amendment is consistent with the “Smart on Crime” initiative I announced last August.  Its implementation would further our ongoing effort to advance commonsense criminal justice reforms.  And it would deepen the Department’s work to make the federal criminal justice system both more effective and more efficient when battling crime and the conditions and behaviors that breed it.

As it stands – and as this Commission has recognized – certain types of cases result in too many Americans going to prison for too long, and at times for no truly good public safety reason.  Although the United States comprises just five percent of the world’s population, we incarcerate almost a quarter of the world’s prisoners.  One in 28 American children currently has a parent behind bars.  State and federal governments spent a combined $80 billion on incarceration during 2010 alone.  And as you know – of the more than 216,000 current federal inmates – nearly half are serving time for drug-related crimes.

This focused reliance on incarceration is not just financially unsustainable – it comes with human and moral costs that are impossible to calculate.  That’s why, in recent years – under the leadership of President Obama and alongside members of this Commission; with the support of policymakers as well as prosecutors; and with the expertise of advocates and researchers, law enforcement officials, and government leaders on both sides of the aisle – we have taken significant steps to improve criminal justice policies and implement targeted reforms.  I am particularly proud of the work we did together to reduce the inappropriate and unjust 100-to-1 sentencing disparity between crack and powder cocaine – a disparity that this Commission had correctly found to be unjustifiable, and which President Obama alleviated with the signing of the Fair Sentencing Act in 2010.

 Just over a year ago, in an effort to take our collective work to a new level, I launched a targeted Justice Department review of the federal criminal justice system – to identify areas for improvement, and to seek ways to make the system more efficient, more effective, and more closely aligned with our highest ideals, while not sacrificing our duty to promote public safety.  Last August, I announced a new “Smart on Crime” initiative – based on the results of that review – and it is already allowing the Justice Department to make critical improvements; to conserve precious resources; to improve outcomes; and to disrupt the destructive cycle of poverty, incarceration, and crime that traps too many Americans and weakens entire communities.

 Among the key changes I mandated as part of this initiative is a modification of the Justice Department’s charging policies – to ensure that people convicted of certain low-level, nonviolent federal drug crimes will face sentences appropriate to their individual conduct – rather than stringent mandatory minimums, which will now be applied only to the most serious criminals.  The Commission’s proposed amendment to the Federal Sentencing Guidelines would help to further advance and institutionalize this work, controlling the federal prison population and ensuring just and proportional sentences.

I’m pleased to note that this approach enjoys significant bipartisan support on Capitol Hill, where a number of leaders, including Senators Patrick Leahy, Dick Durbin, and Mike Lee – along with Representatives Bobby Scott and Raul Labrador – have introduced legislation that would give judges more discretion in determining appropriate sentences for those convicted of certain crimes.  By reserving the most severe penalties for dangerous and violent drug traffickers, we can better promote public safety, deterrence, and rehabilitation while saving billions of dollars and strengthening communities.  And as my colleagues and I work with Congress to refine and pass this legislation, we are simultaneously moving forward with a range of other reforms.

We’re investing in evidence-based diversion programs – like drug treatment initiatives and veterans courts – that can serve as alternatives to incarceration in some cases.  We are working to reduce unnecessary collateral consequences for formerly incarcerated individuals seeking to rejoin their communities.  And we are building on innovative, data-driven reinvestment strategies that have in many cases been pioneered at the state level.

In recent years, no fewer than 17 states – supported by the Department’s Justice Reinvestment Initiative, and led by officials from both parties – have directed significant funding away from prison construction and toward evidence-based programs and services, like supervision and drug treatment, that are proven to reduce recidivism while improving public safety.  Rather than increasing costs, a new report – funded by the Bureau of Justice Assistance – projects that these 17 states will actually save $4.6 billion over a 10-year period.  Many have already seen drops in recidivism rates – as well as overall crime rates – even as their prison populations have declined.  And although the full impact of our justice reinvestment policies and other reforms remains to be seen, it’s clear that these efforts are bearing fruit – and showing significant promise across the country.

We can be encouraged by this ongoing work – which is enabling us to better promote public safety, deterrence, and rehabilitation while making our expenditures smarter and more productive.  Yet each of us is here this morning because we recognize that we cannot yet be satisfied.  And a great deal remains to be done.

By adopting these proposed amendments to the Federal Sentencing Guidelines, this Commission can take an important step to allow judges to make commonsense determinations; to provide legal professionals and law enforcement leaders with the 21st-century solutions they need to address 21st-century challenges; and to build on the progress we’ve already seen in constructing a criminal justice system that deters and punishes crime, keeps us safe, and ensures that those who have paid their debts have the chance to become productive citizens.

As the Commission considers these and other actions – and as you hear testimony from a diverse group of expert panelists over the course of today’s hearing – I urge you to seize this opportunity to make our criminal justice system more fair and to keep the American people more safe.

I look forward to continuing to work closely with each of you – and with leaders in Congress and throughout the Administration – to strengthen America’s criminal justice system and forge the more just society that everyone in this country deserves.

I thank you, once again, for the opportunity to appear before you today.  And I would be happy to take a few questions at this time.

A U.S. Army soldier was sentenced to serve 12 months and one day in prison for his role in stealing fuel at Forward Operating Base (FOB) Fenty near Jalalabad, Afghanistan.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney David J. Hale of the Western District of Kentucky made the announcement after sentencing by U.S. District Court Judge Thomas B. Russell in the Western District of Kentucky.

According to court documents, in May and June 2010, U.S. Army Sergeant Kevin Bilal Abdullah, 40, of Clarksville, Tenn., was involved in overseeing the delivery of fuel from FOB Fenty to other military bases. Abdullah created fraudulent documents called Transportation Movement Requests purporting to authorize the transport of fuel from FOB Fenty to other military bases, even though no legitimate fuel transportation was required. After the trucks were filled with fuel, these fraudulent documents were used by the drivers of the fuel trucks at FOB Fenty’s departure checkpoint to justify the trucks’ departures. In truth, the fuel was simply stolen, and Abdullah and his co-conspirators received payment in cash from a representative of the Afghan trucking company that allegedly stole the fuel.

Abdullah pleaded guilty on Aug. 29, 2013, to receiving payments from a representative of the trucking company in exchange for facilitating the theft of fuel in approximately 25 fuel trucks. He pleaded guilty to conspiracy to commit bribery and to the substantive count of bribery. At sentencing, he was ordered to pay $466,250 in restitution.

Abdullah’s sentencing was the fourth conviction arising from this investigation of fuel thefts at FOB Fenty. On Aug. 3, 2012, Jonathan Hightower, a civilian employee of a military contractor who had conspired with Abdullah and others, pleaded guilty to similar charges. After cooperating with the government, he was sentenced on Oct. 28, 2013, to serve 27 months in prison. On Oct.10, 2012, Christopher Weaver, another conspirator, pleaded guilty to fuel theft charges and, after cooperating with the government, was sentenced on Oct. 28, 2013, to serve 37 months in prison. On Sept. 5, 2013, former Specialist Stephanie Charboneau pleaded guilty, and on Feb. 4, 2014, she was sentenced to serve 87 months in prison. Weaver, Hightower and Charboneau were prosecuted in the District of Colorado.

These cases were investigated by the Special Inspector General for Afghanistan Reconstruction (SIGAR), the Department of the Army - Criminal Investigation Division, the Defense Criminal Investigative Service and the FBI.

The Abdullah case was handled by Special Trial Attorney Mark H. Dubester of the Criminal Division’s Fraud Section, on detail from SIGAR, and Assistant U.S. Attorney Michael Bennett.

Andreas Bachmann, 56, of Switzerland, pleaded guilty today to conspiring to defraud the Internal Revenue Service (IRS) in connection with his work as a banking and investment adviser for U.S. customers. 

Deputy Attorney General James Cole, Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally, Acting U.S. Attorney Dana J. Boente for the Eastern District of Virginia and IRS-Criminal Investigation Chief Richard Weber made the announcement after the plea was accepted by U.S. District Judge Gerald Bruce Lee.

“Today’s plea is just the latest step in our wide-ranging investigations into Swiss banking activities and demonstrates the Department of Justice's commitment to global enforcement against those that facilitate offshore tax evasion,” said Deputy Attorney General Cole.  “We fully expect additional developments over the course of the coming months.”

Bachmann was charged in a one-count superseding indictment on July 21, 2011, and faces a maximum penalty of five years in prison when he is sentenced on Aug. 8, 2014.

In a statement of facts filed with the plea agreement, Bachmann admitted that between 1994 and 2006, while working as a relationship manager in Switzerland for a subsidiary of an international bank, he engaged in a wide-ranging conspiracy to aid and assist U.S. customers in evading their income taxes by concealing assets and income in secret Swiss bank accounts.

As part of that conspiracy, Bachmann traveled to the United States twice each year to provide banking services and investment advice to his U.S. customers.  As a matter of practice, prior to traveling to the United States, Bachmann notified his executive management, including the head of the subsidiary’s private bank in Zurich and the chief executive officer of the subsidiary, of the planned trip and its objectives.

Although Bachmann had been informed of limitations under U.S. law on his ability to provide investment advice to U.S. account holders regarding U.S. securities, the highest ranking executive at the subsidiary was aware that Bachmann was violating U.S. law.  According to the statement of facts, Bachmann was effectively told by the chief executive officer for the subsidiary, “Mr. Bachmann, you know what we expect of you, don’t get caught.”

According to the statement of facts, Bachmann also engaged in cash transactions while traveling in the United States.  In the course of arranging meetings with U.S. customers, some clients would request that Bachmann either provide them with cash as withdrawals from their undeclared accounts or take cash from them as a deposit to their undeclared accounts.  As part of that process, Bachmann agreed to receive cash from U.S. customers and used that cash to pay withdrawals to other U.S. clients.  In one instance, Bachmann received $50,000 in cash from one U.S. customer in New York City and intended to deliver the money to another U.S. client in Southern Florida.  Airport officials in New York discovered the cash but let Bachmann keep the money after questioning him.  The client in Florida refused to take the money after the client learned about the questioning by New York airport officials, and Bachmann returned to Switzerland with the $50,000 in cash in his checked baggage.  Bachmann advised the executive management of the subsidiary about the incident with the cash.

Bachmann also understood that a number of his U.S. customers concealed their ownership and control of foreign financial accounts by holding those accounts in the names of nominee tax haven entities, or structures, which were frequently created in the form of foreign partnerships, trusts, corporations or foundations.

Bachmann dealt with Josef Dӧrig, a co-defendant, regarding the formation and/or maintenance of structures for U.S. customers, among others.  In approximately 1997, the international bank instructed Dӧrig to form his own company specializing in the formation and management of nominee tax haven entities because it was “too risky” to have Dörig perform that work from inside the international bank.  The international bank then directed the subsidiary and others to use Dӧrig and his Swiss trust company, Dӧrig Partner AG, as the preferred choice for the formation and management of structures.

This case is being investigated by IRS-Criminal Investigation.  Assistant U.S. Attorney Mark D. Lytle and Tax Division Trial Attorneys Mark F. Daly, Nanette L. Davis and Jason Poole are prosecuting the case.  

A copy of this press release may be found on this website for the United States Attorney’s Office for the Eastern District of Virginia.  Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia here and here.

Related Materials:

United States v. Andreas M. Bachmann, etc.
Plea Agreement
Statement of Facts

Today, the Justice Department sought a federal court order temporarily restraining the Ohio Department of Youth Services (DYS) from unlawfully secluding boys with mental health needs in its juvenile correctional facilities.  The requested order would require DYS to abide by safeguards in its use of seclusion until a final ruling on the claims that DYS’ seclusion practices violate the constitutional rights of boys in DYS custody.  In conjunction with its request for a temporary restraining order, the department sought to expand its existing complaint regarding the Scioto Juvenile Correctional Facility, to include claims of unlawful seclusion at all of the DYS facilities.

The department’s request for a restraining order detailed the state’s excessive use of seclusion, including the following information:  

·          In the second half of 2013, the state imposed a total of almost 60,000 hours of seclusion on 229 boys with mental health needs;

·          One boy spent 1,964 hours in seclusion over six months; the state gave another boy 21 straight days of seclusion;

·          Ten boys at one facility spent over 10 percent of their time in custody in seclusion;

·          While secluded, several boys were on suicide watch, had suicidal thoughts or hurt themselves.  

“The Ohio Department of Youth Services must stop violating the rights of youth in its custody through unlawful seclusion,” said Acting Assistant Attorney General Jocelyn Samuels for the Justice Department’s Civil Rights Division.  “The way in which Ohio uses seclusion to punish youth with mental health needs, victimizes one of the most vulnerable groups in our society.”

“Ohio’s juvenile correctional facilities must comply with the Eighth and 14th Amendments,” said U.S. Attorney Carter Stewart for the Southern District of Ohio.  “We will remain vigilant in protecting the constitutional rights of all our citizens, particularly young people and those with mental illness.”

“The facts in this case reveal a serious disregard for the rights of young people with mental health needs in Ohio’s custody,” said U.S. Attorney Steven M. Dettelbach for the Northern District of Ohio.  “The Ohio Department of Youth Services has a responsibility to ensure the health and safety of these young people, including providing appropriate mental health treatment, so that they can overcome challenging behaviors and return to the community to become successful adults.”

Following an investigation under the Violent Crime Control and Law Enforcement Act of 1994 and the Civil Rights of Institutionalized Persons Act (CRIPA), the Justice Department issued findings in May 2007 detailing significant constitutional deficiencies regarding use of physical force, grievance investigation and processing and use of seclusion.  In June 2008, the department entered into a consent decree with the state to correct these deficiencies at the Scioto Juvenile Correctional Facility.  However, the recent discovery that DYS continued to unlawfully seclude boys with mental health needs at Scioto Juvenile Correctional Facility and had moved boys to other DYS facilities also using unlawful seclusion prompted the department today to seek a temporary restraining order and an order allowing it to add the remaining DYS facilities to its complaint.

This case is being litigated by attorneys from the Special Litigation Section of the Civil Rights Division, the U.S. Attorney’s Office for the Southern District of Ohio and the U.S. Attorney’s Office for the Northern District of Ohio.  Copies of both motions and additional information about the Civil Rights Division will be available on its website.

A federal jury in Houston today convicted two owners of a former Houston mental health care company, Spectrum Care P.A. (Spectrum), several of its employees and the owners of certain Houston group care homes for their participation in a $97 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Kenneth Magidson of the Southern District of Texas, Special Agent in Charge Stephen L. Morris of the FBI’s Houston Field Office and Special Agent in Charge Mike Fields of the Dallas Regional Office of HHS’s Office of Inspector General (HHS-OIG), the Texas Attorney General’s Medicaid Fraud Control Unit (MFCU), Special Agent in Charge Joseph J. Del Favero of the Chicago Field Office of the Railroad Retirement Board, Office of Inspector General (RRB-OIG) and Special Agent in Charge Scott Rezendes of Field Operations of the Office of Personnel Management’s Office of Inspector General (OPM-OIG) made the announcement following a jury trial before U.S. District Judge Vanessa Gilmore in the Southern District of Texas.

Physicians Mansour Sanjar, 81, and Cyrus Sajadi, 66, the owners of Spectrum, were each convicted of conspiracy to commit health care fraud and conspiracy to pay kickbacks as well as related counts of health care fraud and paying illegal kickbacks. Adam Main, 33, a physician’s assistant, was convicted of conspiracy to commit health care fraud and related counts of health care fraud. Shokoufeh Hakimi, 66, administrator of Spectrum, was convicted of conspiracy to commit health care fraud, conspiracy to pay kickbacks and a related count of paying an illegal kickback. Chandra Nunn, 35, a group home owner, was also convicted of conspiracy to commit health care fraud, conspiracy to pay and receive kickbacks and related counts of receiving illegal kickbacks. Sharonda Holmes, 40, a patient recruiter, was convicted of conspiracy to pay and receive kickbacks and a related count of receiving an illegal kickback. Shawn Manney, 51, a group home owner, was convicted of conspiracy to pay and receive illegal kickbacks.

According to evidence presented at trial, Sanjar and Sajadi orchestrated and executed a scheme to defraud Medicare beginning in 2006 and continuing until their arrest in December 2011.  Sanjar and Sajadi owned Spectrum, which purportedly provided partial hospitalization program (PHP) services.  A PHP is a form of intensive outpatient treatment for severe mental illness. The Medicare beneficiaries for whom Spectrum billed Medicare for PHP services did not qualify for or need PHP services.  Sanjar, Sajadi, Main and Moore signed admission documents and progress notes certifying that patients qualified for PHP services, when in fact, the patients did not qualify for or need PHP services.  Sanjar and Sajadi also billed Medicare for PHP services when the beneficiaries were actually watching movies, coloring and playing games–activities that are not covered by Medicare.

Evidence presented at trial showed that Sanjar, Sajadi and Hakimi paid kickbacks to Nunn, Holmes, Manney and other group care home operators and patient recruiters in exchange for delivering ineligible Medicare beneficiaries to Spectrum.  In some cases, the patients received a portion of those kickbacks. According to evidence presented at trial, Spectrum billed Medicare for approximately $97 million in services that were not medically necessary and, in some cases, werenot provided.

Sanjar, Sajadi and Nunn are scheduled to be sentenced on Sept. 8, 2014. Main, Hakimi, Holmes and Manney are scheduled to be sentenced on Sept. 15, 2014.

The case was investigated by the FBI, HHS-OIG, Texas MFCU, RRB-OIG and OPM-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Texas. The case is being prosecuted by Assistant Chief Laura M.K. Cordova and Trial Attorneys Jonathan T. Baum and William S.W. Chang 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 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 .

USDOJ: INTERPOL Washington: Updates

Department of Justice

INTERPOL Washington Director Shawn A. Bray Presents at the 2014 Symantec Government Symposium

WASHINGTON - On Tuesday, March 11, 2014, Director Bray attended the annual Symantec Government Symposium where he presented on the topic “Fighting Cybercrime in a Borderless World.” The theme for this year's symposium was “Resilient Security for Today's World.” Other distinguished members of the panel included Department of Justice's Principal Deputy Chief Richard Downing, Computer Crime and Intellectual Property; Catherine Lotrionte, Director of the Institute for Law, Science and Global Security from Georgetown University; and Senior Advisor for Cybercrime James Vigil, Bureau for International Narcotics and Law Enforcement Affairs at the Department of State. The Symantec Government Symposium is the world's largest annual information security event for government audiences where the nation's top IT leaders can discuss how government and industry can collaborate and best secure America's critical infrastructure.

Richard Castle, 47, a resident of the United Kingdom, has been sentenced to serve 192 months in prison in connection with a trip he made to Ohio from his home in the United Kingdom to have illicit sexual activity with a minor in June 2011.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Carter M. Stewart of the Southern District of Ohio and Special Agent in Charge Marlon Miller of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Ohio and Michigan made the announcement after the sentencing proceeding before U.S. District Judge Timothy S. Black in Dayton, Ohio.

Members of the Metropolitan Police Service’s Extradition Team and International Assistance Unit, housed within New Scotland Yard, arrested Castle at his home in Northampton, England, on Jan. 12, 2012.

A federal grand jury indicted Castle on Feb. 15, 2012, and Castle pleaded guilty on Oct. 3, 2013, to charges of coercion of a minor, travelling with intent to engage in illicit sexual contact with a minor and transferring obscene material to a minor. Castle admitted that, posing as a male named Richard Joshua Parker, he used the Internet between March 2009 and June 2011 to coerce a minor to engage in illicit sexual activity. He flew to Dayton in June 2011 to engage in illicit sexual relations with the minor and stayed approximately three weeks. Castle also admitted that he transferred obscene materials to this same minor.

The case was investigated by HSI, the Englewood Police Department, and the Vandalia Police Department. The Department is grateful for the invaluable support provided by the Miami Valley Regional Computer Forensics Laboratory, the Ohio Internet Crimes Against Children Task Force, the U.S. Marshals Service, the HSI Attaché London Office, and the ICE Office of the Principal Legal Advisor. The Criminal Division’s Office of International Affairs also provided assistance with Castle’s extradition.

The case was prosecuted by Assistant U.S. Attorney Sheila Lafferty of the Southern District of Ohio and Trial Attorney Mi Yung C. Park of the Criminal Division’s Child Exploitation and Obscenity Section.

WASHINGTON — Following a four-week trial, a federal jury today convicted two real estate investors for conspiring to rig bids at public real estate foreclosure auctions held in San Joaquin County, Calif.  One of the investors was also convicted of obstruction of justice for destroying evidence related to the crimes.

Andrew B. Katakis and Donald M. Parker were found guilty in the U.S. District Court for the Eastern District of California, of conspiring to rig bids at real estate foreclosure auctions held in San Joaquin County from at least September 2008 until at least October 2009.  Katakis was also found guilty of obstruction of justice for deleting electronic records related to the conspiracy.

Katakis was the owner of California Equity Management Group Inc. and managing partner of Lenders Financial Group LLC, both real estate investing companies based in Modesto, Calif.  Parker owned and worked for several real estate investing companies based in and around Sacramento and Stockton, Calif.

“Today’s convictions send a clear signal that conspirators who illegally seek to line their pockets at the expense of distressed homeowners will be held accountable for their crimes,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The Antitrust Division and its law enforcement partners are committed to vigorously prosecuting the perpetrators of anticompetitive schemes.”

“The depressed real estate market in the Central Valley provided opportunities for fraud, including bid-rigging at foreclosure auctions,” said Benjamin B. Wagner, U.S. Attorney for the Eastern District of California.  “The Antitrust Division has done great work in partnering with this office to attack this aspect of mortgage fraud.”

According to the evidence presented at trial, Katakis, Parker and co-conspirators agreed to suppress and restrain competition by rigging bids to obtain selected properties offered at public auctions in San Joaquin County.  The bid-rigging conspiracy lasted from at least September 2008 until at least October 2009.  The government also offered evidence that in September 2010, Katakis deleted electronic records related to the conspiracy after he received a letter notifying him that a federal grand jury had subpoenaed his bank account.

Evidence showed that after the conspirators’ designated bidder bought a property at a public auction, they would hold a second, private auction, at which each participating conspirator would bid the amount above the public auction price he or she was willing to pay.  The conspirator who bid the highest amount at the end of the private auction won the property.  The difference between the price at the public auction and that at the second auction was the group’s illicit profit, and it was divided among the conspirators in payoffs.

Also today, the jury could not reach a verdict on a count of mail fraud against Katakis and Parker. The jury also found W. Theodore Longley, an auctioneer who worked on behalf of various trustee companies to sell foreclosed houses at public auctions in San Joaquin County, not guilty on both counts.

Katakis and Parker were convicted of bid rigging in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.  The obstruction of justice conviction carries a maximum sentence of 20 years in prison and a $250,000 fine.

In addition to today’s convictions, 11 individuals have pleaded guilty in U.S. District Court for the Eastern District of California in connection with the investigation. They are: Anthony B. Ghio; John R. Vanzetti; Theodore B. Hutz; Richard W. Northcutt; Yama Marifat; Gregory L. Jackson; Walter Daniel Olmstead; Robert Rose; Kenneth A. Swanger; Wiley Chandler; and Anthony B. Joachim.

These convictions arose from an ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate auctions in San Joaquin County.  The investigation is being conducted by the Antitrust Division’s San Francisco Office, the U.S. Attorney’s Office for the Eastern District of California, the FBI’s Sacramento Division, and the San Joaquin County District Attorney’s Office.  Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-934-5300, visit www.justice.gov/atr/contact/newcase.htm, contact the U.S. Attorney’s Office for the Eastern District of California at 916-554-2700 or contact the FBI’s Sacramento Division at 916-481-9110.

The charges in this indictment were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.

Two Northern California real estate investors pleaded guilty for their roles in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Felony charges were filed on June 30, 2011, in the U.S. District Court for the Northern District of California in Oakland, against Grant Alvernaz, of Pleasant Hill, Calif., and Douglas Moore, of Walnut Creek, Calif.  Alvernaz pleaded guilty to the charges on Sept. 7, 2011.  Moore pleaded guilty to the charges on Aug. 24, 2011.  The charges and the guilty pleas were unsealed yesterday.  Including Alvernaz and Moore, a total of 46 individuals have pleaded guilty or agreed to plead guilty as a result of the department’s ongoing antitrust investigation into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Alvernaz and Moore conspired with others not to bid against one another, and instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in Contra Costa and Alameda counties, Calif.  Alvernaz and Moore were also charged with conspiring to commit mail fraud by fraudulently acquiring title to selected Contra Costa and Alameda County properties sold at public auctions and making and receiving payoffs and diverting money to co-conspirators that would have gone to mortgage holders and others by holding second, private auctions open only to members of the conspiracy.  The department said that the selected properties were then awarded to the conspirators who submitted the highest bids in the second, private auctions.  The private auctions often took place at or near the courthouse steps where the public auctions were held.   Alvernaz and Moore pleaded guilty to participating in the conspiracies in Contra Costa County beginning as early as February 2009 and continuing until in or about December 2010 and in Alameda County from as early as March 2009 and continuing until about November 2010.

“The integrity of real estate foreclosure markets depends on open and honest competition, which the perpetrators of these collusive schemes undermined,” said Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division.  “The division will continue to pursue those who illegally enrich themselves at the expense of lenders and financially distressed homeowners.”

The department stated that the primary purpose of the conspiracies was to suppress and restrain competition in order to obtain selected real estate offered at Contra Costa and Alameda County public foreclosure auctions at non-competitive prices.  When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.  According to court documents, these conspirators paid and received money that otherwise would have gone to pay off the mortgage and other holders of debt secured by the properties and, in some cases, the defaulting homeowner.

“The unsealed court documents narrate the criminal actions taken as part of this real estate bid-rigging conspiracy in northern California,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office.  “The public should consider this an example of how a competitive marketplace can be taken advantage of by those who are shortsighted by greed.”

A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than $1 million.  A count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine.  The government can also seek to forfeit the proceeds earned from participating in the conspiracy to commit mail fraud.

The charges are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, Calif.  These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco Office.  Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Office at 415-436-6660, or call the FBI tip line at 415-553-7400.

 
Today’s cases were brought in connection with the President’s Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud.  Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations.  Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants, including more than 2,900 mortgage fraud defendants.  For more information on the task force, please visit www.StopFraud.gov.

**The fraud charge(s) referenced in this press release were subsequently dismissed on the government’s motion.**

Anthony Merrell Tyler, 33, pleaded guilty in federal court today to violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act for his role in a 2011 racially motivated attack on a white man and an African-American woman in Marysville, Calif.  Tyler’s co-defendants, Billy James Hammett, 30, and Perry Sylvester Jackson, 28, pleaded guilty to the same offense on Dec. 17, 2013.

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.

“These defendants attacked the victims simply because of race,” said Acting Assistant Attorney General for the Civil Rights Division Jocelyn Samuels.  “Such violence and intimidation have no place in our society.  Where these acts occur, the Department will continue to aggressively prosecute them.”

“Diligently prosecuting hate crimes such as the unprovoked, racially motivated assault in this case has been a core mission of the U.S. Attorney’s Office in this district,” said U.S. Attorney Benjamin B. Wagner for the Eastern District of California.  “That mission will continue.”

Tyler’s sentencing is scheduled for July 8, 2014.  Hammett is scheduled to be sentenced on March 25, 2014, and Jackson has requested a sentencing date of April 22, 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.  The case is being prosecuted by U.S. Attorney Wagner and Trial Attorney Chiraag Bains of the Civil Rights Division.

Pharmaceutical manufacturer Teva Pharmaceuticals USA Inc. and a subsidiary, IVAX LLC, have agreed to pay the government and the state of Illinois $27.6 million for allegedly violating the False Claims Act by making payments to induce prescriptions of an anti-psychotic drug for Medicare and Medicaid beneficiaries .  Teva Pharmaceuticals USA is located in North Wales, Pa., and IVAX LLC is a Florida company. 

“The Department of Justice is committed to ensuring that pharmaceutical manufacturers who make payments to doctors to influence prescribing decisions are held accountable,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “Schemes such as the one alleged in this case undermine the health care system and take advantage of vulnerable patients.”

“ Pharmaceutical companies must not be allowed to improperly influence physicians’ decisions in prescribing medication for their patients,” said U.S. Attorney Zachary T. Fardon for the Northern District of Illinois.  “Instead, those decisions must be made solely on the basis of the patient’s best medical interests.”

The settlement resolves allegations that Teva and IVAX made payments to an Illinois physician, Dr. Michael J. Reinstein, to induce the prescription of generic clozapine, an anti-psychotic medication.  Clozapine has serious potential side effects and is generally considered a drug of last resort, particularly for elderly patients.  While clozapine has been approved for treatment-resistant forms of schizophrenia, it is also reported to cause numerous side effects, including a potentially deadly decrease in white blood cells, seizures, inflammation of the heart muscle and increased mortality in elderly patients.  The United States alleged that the payment scheme involving Reinstein began in August 2003, when Reinstein agreed to switch his patients to generic clozapine if IVAX, which was subsequently acquired by Teva Pharmaceuticals’ parent corporation, agreed to pay Reinstein $50,000 under a one-year “consulting agreement” and to provide other benefits to Reinstein , in violation of the federal Medicare and Medicaid Anti-Kickback Statute In addition to direct payments to Reinstein, IVAX allegedly also provided all-expenses paid trips to Miami for Reinstein, his wife and several of his employees.  Reinstein quickly became the largest prescriber of generic clozapine in the country, and prescribed the drug for many elderly patients.  Allegedly, the payments and other forms of remuneration from IVAX and later Teva Pharmaceuticals continued for many years, and resulted in the submission of thousands of false claims to the Medicare Part D and Illinois Medicaid programs. 

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and other federally funded programs.  The Anti-Kickback Statute is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based on the best interests of the patient. 

 
On Nov. 15, 2012, the United States filed a civil action against Reinstein in United States v. Reinstein , alleging that he violated the False Claims Act as a result of his involvement in the payment scheme with Teva and IVAX.   The civil action against Reinstein remains pending in the Northern District of Illinois. 

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

The settlement with Teva Pharmaceuticals and IVAX was the result of a coordinated effort by the U.S. Attorney’s Office for the Northern District of Illinois, the Commercial Litigation Branch of the Justice Department’s Civil Division, the Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation.

The claims resolved by this settlement are allegations only, and there has been no determination of liability.

The Justice Department today announced a settlement under Title II of the Americans with Disabilities Act (ADA) with Blair County, Pa., to greatly improve physical accessibility at the county’s polling places for individuals who use wheelchairs and other mobility aids and for individuals who are blind or have vision impairments.  Title II prohibits discrimination on the basis of disability by a state or local government in any of its programs or services, including its voting program.

Under the terms of the settlement, accessibility will be a major criterion in the county’s selection of polling places.  To make that assessment, the county will use an evaluation form for each prospective polling place based on ADA architectural standards.  The settlement requires the county to either relocate inaccessible polling places to accessible facilities or to use temporary measures such as portable ramps, signs, traffic cones and doorbells where appropriate to ensure accessibility on Election Day.  The settlement will provide individuals with disabilities the opportunity to vote at the polls throughout Blair County, rather than solely through the use of an absentee ballot.

“The right to vote is the cornerstone of our democracy,” said Acting Assistant Attorney General for the Civil Rights Division Jocelyn Samuels.  “This agreement will ensure that persons with mobility disabilities and vision impairments have equal opportunities to exercise their right to vote in person at their assigned polling place, just like their neighbors.  The Justice Department is committed to continued, vigorous enforcement of the panoply of federal civil rights laws aimed at securing the right to vote for all Americans, including the Americans with Disabilities Act.”

More information about this settlement and the ADA is available at the Justice Department’s toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY), and via its ADA website.

USDOJ: INTERPOL Washington: Updates

Department of Justice

INTERPOL Stolen/Lost Travel Document Database

INTERPOL's Stolen/Lost Travel Document database (SLTD) is a searchable repository of information on passports, visas, and identity documents that have been reported stolen or lost, helping prevent the illicit international travel of criminals and terrorists. Currently containing over 40 million records, SLTD is available to police and border security authorities in 190 INTERPOL member countries through their respective National Central Bureaus (NCBs). INTERPOL's General Secretariat administers the database, which became operational in July 2002.

Designed as an investigative tool for law enforcement and border protection entities, SLTD allows authorized users to query specific passport numbers. The database returns information on suspect documents that includes the issuing country, document type, document number, date of theft/loss, and certain information related to the circumstances of the theft or loss.

A country's passport issuing authority, through its corresponding NCB, is the only entity authorized to enter and modify records in SLTD pertaining to the loss or theft of its national travel documents. The United States is one of the largest contributors to SLTD, with over 3 million records currently on file and updates occurring on a daily basis.

INTERPOL Washington, the U.S. National Central Bureau, manages U.S. participation in the SLTD program. Its related responsibilities include ensuring the timely and accurate entry of stolen/lost U.S. passport data into SLTD upon receipt from the U.S. Department of State, establishing and maintaining SLTD query access by U.S. law enforcement and border inspection authorities, and performing verification and resolution in cases involving foreign passports recorded in SLTD presented to U.S. Customs and Border Protection officers at all U.S. ports of entry. INTERPOL Washington also coordinates with its foreign counterparts to resolve any cases involving lost, stolen, and fraudulent U.S. passports presented at foreign border control points.

In May 2007, Congress, the Department of Homeland Security, and the Department of State formally recognized the importance of SLTD as a screening tool for all travelers seeking to enter the United States. International organizations such as the G8, the European Union, the Organization for Security and Co-operation in Europe and the United Nations Security Council have also endorsed the program. Presently all countries participating in the U.S. Visa Waiver Program report their stolen/lost passport data to INTERPOL for entry into SLTD, as set forth in the Implementing Recommendations for the 9/11 Commission Act of 2007, Pub. L. No. 110-53.

The United States currently screens the passports of all persons entering the country against SLTD. Additionally, the U.S. Department of State queries all U.S. visa applicants' passports against the database. In 2013, U.S. authorities conducted over 238 million SLTD queries, the majority of which came from the U.S. Department of Homeland Security.

Halifax Hospital Medical Center and Halifax Staffing Inc. (Halifax), a hospital system based in the Daytona Beach, Fla., area, have agreed to pay $85 million to resolve allegations that they violated the False Claims Act by submitting claims to the Medicare program that violated the Physician Self-Referral Law, commonly known as the Stark Law, the Justice Department announced today.   

The Stark Law forbids a hospital from billing Medicare for certain services referred by physicians who have a financial relationship with the hospital.  In this case, the government alleged that Halifax knowingly violated the Stark Law by executing contracts with six medical oncologists that provided an incentive bonus that improperly included the value of prescription drugs and tests that the oncologists ordered and Halifax billed to Medicare.  The government also alleged that Halifax knowingly violated the Stark Law by paying three neurosurgeons more than the fair market value of their work.

“Financial arrangements that compensate physicians for referrals encourage physicians to make decisions based on financial gain rather than patient needs,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “The Department of Justice is committed to preventing illegal financial relationships that undermine the integrity of our public health programs.”

In a Nov. 13, 2013, ruling, the U.S. District Court for the Middle District of Florida ruled that Halifax’s contracts with its medical oncologists violated the Stark Law.  The case was set for trial on March 3, 2014, on the government’s remaining claims against Halifax when the parties reached this settlement.  

“This settlement illustrates our firm commitment to pursue health care fraud," said U.S. Attorney for the Middle District of Florida A. Lee Bentley III.  “Medical service providers should be motivated, first and foremost, by what is best for their patients, not their pocketbooks.  Where necessary, we will continue to investigate and pursue these violations in our district.”

As part of the settlement announced today, Halifax also has agreed to enter into a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG), which obligates Halifax to undertake substantial internal compliance reforms and to submit its federal health care program claims to independent review for the next five years.

“Patients deserve to know that recommendations are based on sound medical practice, not illegal financial relationships between providers,” said Inspector General for the U.S. Department of Health and Human Services Daniel R. Levinson.  “Halifax now also is required to hire a legal reviewer to monitor provider arrangements and an additional compliance expert to assist the board in fulfilling its oversight obligations.  Both of these independent reviewers will submit regular reports to my agency.”

The settlement announced today stems from a whistleblower complaint filed by an employee of Halifax Hospital, Elin Baklid-Kunz, pursuant to the qui tam provisions of the False Claims Act, which permit private persons to bring a lawsuit on behalf of the government and to share in the proceeds of the suit.  The Act also permits the government to intervene and take over the lawsuit, as it did in this case as to some of Baklid-Kunz’s allegations.  Baklid-Kunz will receive $20.8 million of the settlement. 

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

The investigation and litigation was conducted by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Middle District of Florida and HHS-OIG.  The claims settled by this agreement are allegations only, and there has been no determination of liability, except as determined by the court’s Nov. 13, 2013, ruling.

The lawsuit is captioned United States ex rel. Baklid-Kunz v. Halifax Hospital Medical Center, et al., No. 09-cv-1002 (M.D. Fla.). 

A federal inmate pleaded guilty today for the murder of United States Correctional Officer Jose Rivera, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Benjamin Wagner for the Eastern District of California.

James Ninete Leon Guerrero, 48, of Guam, pleaded guilty before U.S. District Judge Phillip Pro to one count of murder by a federal prisoner serving a life sentence. According to court documents, Guerrero aided and abetted co-defendant Jose Cabrera Sablan in the stabbing death of Officer Rivera.

Court documents allege that on June 20, 2008, as Officer Rivera was on duty, conducting his daily count in the United States Penitentiary in Atwater, Calif., Sablan attacked him with an eight-inch homemade shank. Officer Rivera tried to flee, but he was knocked backwards by Sablan and tackled by Guerrero. Guerrero held Officer Rivera down as Sablan stabbed him with the shank more than 20 times. Officer Rivera was 22 years old at the time of his death and was a United States Navy veteran.

Sablan and Guerrero were indicted for murder on Aug. 14, 2008. As a result of Guerrero’s plea, he faces a mandatory sentence of life in prison. His sentencing has been scheduled for May 30, 2014, in the Eastern District of California.

Sablan’s case is set for trial on April 6, 2015. He is presumed innocent until and unless proven guilty beyond a reasonable doubt.

The investigation was conducted by the Bureau of Prisons and the FBI. This case is being prosecuted by Trial Attorney Bonnie Hannan of the Criminal Division’s Capital Case Section and Assistant U.S. Attorney Duce Rice of the Eastern District of California.

A Dominican national was sentenced today for his leading role in trafficking the identities and corresponding identity documents of Puerto Rican U.S. citizens.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Rosa E. Rodríguez-Vélez of the District of Puerto Rico, Deputy Director Daniel Ragsdale of U.S. Immigration and Customs Enforcement (ICE), Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS), Director Gregory B. Starr of the U.S. State Department’s Diplomatic Security Service (DSS) and Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.

Wilfredo Blanco-Diaz, 40, formerly of Caguas, Puerto Rico, was sentenced to serve 61 months in prison and three years of supervised release by U.S. District Judge Gustavo A. Gelpí in the District of Puerto Rico. Blanco-Diaz was also ordered to forfeit $422,793 in proceeds and to be removed from the United States after the completion of his sentence.

On Sept. 24, 2013, Blanco-Diaz pleaded guilty to one count of conspiracy to commit identification fraud, one count of conspiracy to commit human smuggling for financial gain and one count of aggravated identity theft. To date, 53 individuals have been charged for their roles in the identity trafficking scheme. All 49 arrested defendants have pleaded guilty and 42 defendants have been sentenced.

According to court documents, individuals located in the Savarona area of Caguas obtained Puerto Rican identities and corresponding identity documents. Other conspirators located in various cities throughout the United States solicited customers and sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set. The identity brokers in the United States ordered the identity documents from the document suppliers in Savarona on behalf of their customers by making coded telephone calls. The conspirators were charged with using text messages, money transfer services and express, priority or regular U.S. mail to complete their illicit transactions.

The court documents indicate that some of the conspirators assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation. Their customers generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses. Some customers obtained the documents to commit financial fraud and attempted to obtain a U.S. passport.

Blanco-Diaz was a supplier of Puerto Rican identity documents who operated in Caguas and provided Puerto Rican identities to brokers in Florida, Nebraska, North Carolina and Virginia, knowing that the identities would be sold to undocumented aliens who would then pose as U.S. citizens. Blanco-Diaz admitted that he was a manager and supervisor in the conspiracy.

Various identity brokers were operating in Rockford, DeKalb and Aurora, Ill.; Seymour, Columbus and Indianapolis, Ind.; Hartford, Conn.; Clewiston, Fla.; Lilburn and Norcross, Ga.; Salisbury, Md.; Columbus and Fairfield, Ohio; Dorchester, Lawrence, Salem and Worcester, Mass.; Grand Rapids, Mich.; Nebraska City, Neb.; Elizabeth, N.J.; Burlington and Hickory, N.C.; Hazelton and Philadelphia, Pa.; Houston; Abingdon and Albertville, Ala.; and Providence, R.I.

The charges are the result of Operation Island Express, an ongoing, nationally coordinated investigation led by the ICE Homeland Security Investigations’ (ICE-HSI) Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office and the DSS Resident Office in Puerto Rico. The Illinois Secretary of State Police; Elgin, Ill., Police Department; Seymour, Ind., Police Department; and Indiana State Police provided substantial assistance. The ICE-HSI Assistant Attaché office in the Dominican Republic and International Organized Crime Intelligence and Operations Center (IOC-2) as well as various ICE, USPIS, DSS and IRS-CI offices around the country provided invaluable support.

The case is being prosecuted by Trial Attorneys James S. Yoon, Hope S. Olds, Courtney B. Schaefer and Christina Giffin of the Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of the Criminal Division’s Asset Forfeiture and Money Laundering Section and the support of the U.S. Attorney’s Office for the District of Puerto Rico. The U.S. Attorney’s Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, District of Massachusetts, District of Nebraska, Middle District of North Carolina, Southern District of Ohio, Middle District of Pennsylvania, District of Rhode Island, Southern District of Texas and Western District of Virginia provided substantial assistance.

Potential victims and the public may obtain information about the case at: www.justice.gov/criminal/vns/caseup/beltrerj.html . Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at www.ice.gov/tipline . Anyone who may have information about particular crimes in this case should also report them to the ICE tip line or website.

Anyone who believes that they have been a victim of identity theft, or wants information about preventing identity theft, may obtain helpful information and complaint forms on various government websites including the Federal Trade Commission ID Theft Website, www.ftc.gov/idtheft . Additional resources regarding identity theft can be found at www.ojp.usdoj.gov/ovc/pubs/ID_theft/idtheft.html ; www.ssa.gov/pubs/10064.html ; www.fbi.gov/about-us/investigate/cyber/identity_theft ; and www.irs.gov/privacy/article/0,,id=186436,00.html .

Lanny Harris, a former sergeant at Roxbury Correctional Institution (RCI) in Hagerstown, Md., and Philip Mayo, a former correctional officer at RCI, were sentenced today for conspiring with other RCI officers on March 8-9, 2008, to assault an inmate at the prison, identified as K.D. 

Both Mayo and Harris previously pleaded guilty to conspiring to assault K.D. during the midnight shift (11 p.m. to 7 a.m.).  Mayo and Harris cooperated with authorities during the federal investigation and testified for the prosecution at the trial of former RCI officer James Kalbflesh, who was convicted for his role in the assaults on K.D. and the subsequent coverup.  U.S. District Judge James K. Bredar sentenced Harris and Mayo to each serve 30 months in prison.     

During their testimony at Kalbflesh’s trial and in court documents filed in connection with their respective guilty pleas, Harris and Mayo each admitted that they met with other officers at RCI during the midnight shift and agreed to assault K.D. in retaliation for a prior incident involving K.D. and another officer.  Harris, Mayo and two other correctional officers entered K.D.’s cell in order to assault the inmate, and the officers then went through with their plan and assaulted K.D.

“Every person in America has the right to be free from cruel and unusual punishment,” said Acting Assistant Attorney General for the Civil Rights Division Jocelyn Samuels.  “To ensure that this right is protected, the Justice Department will continue to vigorously prosecute correctional officers who violate the rights of inmates.”

To date, 16 current or former officers at RCI have been convicted in connection with a series of assaults that K.D. suffered on March 8-9, 2008.  There are 12 former RCI officers still awaiting sentencing before Judge Bredar, and two who were convicted in state court have already been sentenced. 

The case was investigated by the FBI’s Frederick Resident Agency and prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Sanjay Patel of the Civil Rights Division, with the help of Assistant U.S. Attorney Michael Cunningham for the District of Maryland.

The United States has sued The Tax Helper Corp, a tax preparation business with a store located in Chicago, and seeks to permanently bar the company and its alleged co-owner, Johnnie Pernell Jr., from preparing federal tax returns for others, the Justice Department announced today. 

According to the complaint, Pernell Jr. prepared tax returns that falsely claimed deductions for fake business expenses and phony education expenses.  One example described in the complaint details how Pernell Jr. allegedly prepared a tax return that improperly claimed a fake electrical business for one customer – reporting no income from the electrical business, but more than $24,000 in bogus losses.  The customer, according to the complaint, informed the Internal Revenue Service (IRS) that he did not own an electrical business, had not provided any documents to Pernell Jr. to support the expenses that were claimed and had no idea how Pernell Jr. had determined the amount of expenses reported on his return.    

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.

USDOJ: INTERPOL Washington: Updates

Department of Justice

INTERPOL Washington and the U.S. Department of State to Host International Workshop on Human Smuggling

WASHINGTON - INTERPOL Washington (U.S. National Central Bureau) and the U.S. Department of State, Bureau of International Narcotics and Law Enforcement (INL), will conduct a “Workshop on Investigations and Prosecutions of Human Smuggling in the Americas” March 11th through March 13th at the International Law Enforcement Academy in San Salvador.

Ambassador Adam Blackwell, the Secretary of Multidimensional Security at the Organization of American States (OAS) in Washington, D.C., will deliver the keynote address at the opening ceremony.

The two and one-half-day event aims to provide a venue for representatives from various agencies responsible for investigating and prosecuting the crime of human smuggling to network, share best practices, and discuss the related criminal justice gaps and capacity-building efforts in the Americas region.

Approximately 30 participants from 18 countries are expected to attend, to include senior law enforcement and prosecutorial officials responsible for migrant smuggling and human trafficking, international legal experts, along with representatives from INTERPOL Headquarters, the United Nations Office on Drugs and Crime, and the Organization of American States.

Frederic Cilins, 51, a French citizen, pleaded guilty today in the Southern District of New York to obstructing a federal criminal investigation into whether a mining company paid bribes to win lucrative mining rights in the Republic of Guinea.

Mythili Raman, Acting Assistant Attorney General for the Justice Department’s Criminal Division; Preet Bharara, the U.S. Attorney for the Southern District of New York; and George Venizelos, the Assistant Director in Charge of the FBI’s New York Field Office, made the announcement.

Cilins pleaded guilty to a one-count superseding information filed today, which alleges that Cilins agreed to pay money to induce a witness to destroy, or provide to him for destruction, documents sought by the FBI. According to the superseding information, those documents related to allegations concerning the payment of bribes to obtain mining concessions in the Simandou region of the Republic of Guinea.

According to publicly filed documents, Cilins allegedly attempted to obstruct an ongoing federal grand jury investigation concerning potential violations of the Foreign Corrupt Practices Act and laws proscribing money laundering. Court documents state the federal grand jury was investigating whether a particular mining company and its affiliates – on whose behalf Cilins had been working – transferred into the United States funds in furtherance of a scheme to obtain and retain valuable mining concessions in the Republic of Guinea’s Simandou region. During monitored and recorded phone calls and face-to-face meetings, Cilins allegedly agreed to pay substantial sums of money to induce a witness to the bribery scheme to turn over documents to Cilins for destruction, which Cilins knew had been requested by the FBI and needed to be produced before a federal grand jury. Court documents also allege that Cilins sought to induce the witness to sign an affidavit containing numerous false statements regarding matters under investigation by the grand jury.

Court documents allege that the documents Cilins sought to destroy included original copies of contracts between the mining company and its affiliates and the former wife of a now-deceased Guinean government official, who at the relevant time held an office in Guinea that allowed him to influence the award of mining concessions. The contracts allegedly related to a scheme by which the mining company and its affiliates offered the wife of the Guinean official millions of dollars, which were to be distributed to the official’s wife as well as ministers or senior officials of Guinea’s government whose authority might be needed to secure the mining rights.

According to court documents, the official’s wife incorporated a company in 2008 that agreed to take all necessary steps to secure the valuable mining rights for the mining company’s subsidiary. That same contract stipulated that $2 million was to be transferred to the official’s wife’s company and an additional sum was to be “distributed among persons of good will who may have contributed to facilitating the granting of” the valuable mining rights. According to the complaint, in 2008, the mining company and its affiliates also agreed to give 5 percent of its ownership of particular mining areas in Guinea to the official’s wife.

The case is being investigated by the FBI. The case is being prosecuted by Trial Attorney Tarek Helou of the Criminal Division’s Fraud Section and Assistant United States Attorney Elisha J. Kobre of the Southern District of New York. The Justice Department’s Office of International Affairs and Office of Enforcement Operations also assisted in the investigation.

Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa .

Calling the rise in overdose deaths from heroin and other prescription pain-killers an “urgent public health crisis,” Attorney General Eric Holder vowed Monday that the Justice Department would combat the epidemic through a mix of enforcement and treatment efforts. As an added step, the Attorney General is also encouraging law enforcement agencies to train and equip their personnel with the life-saving, overdose-reversal drug known as naloxone.
 
Speaking in a video message posted on the Justice Department’s website, Holder noted that between 2006 and 2010, heroin overdose deaths increased by 45 percent.
 
“When confronting the problem of substance abuse, it makes sense to focus attention on the most dangerous types of drugs.  And right now, few substances are more lethal than prescription opiates and heroin,” Holder said.
 
Relatedly, Holder is urging first responders to carry the drug known as naloxone. When administered quickly and effectively, naloxone immediately restores breathing to a victim in the throes of a heroin or opioid overdose. Seventeen states and the District of Columbia have amended their laws to increase access to naloxone, resulting in over 10,000 overdose reversals since 2001. Used in concert with “Good Samaritan” laws, which grant immunity from criminal prosecution to those seeking medical help for someone experiencing an overdose, naxolone can save lives.
 
The Attorney General also urged the public to view the award-winning documentary, “The Opiate Effect,” to learn more about the realities, and the dangers, of opiate abuse. The video is available for free online HERE.

The complete text of the Attorney General’s video message is below:   “When confronting the problem of substance abuse, it makes sense to focus attention on the most dangerous types of drugs.  And right now, few substances are more lethal than prescription opiates and heroin.
 
“Addiction to heroin and other opiates – including certain prescription pain-killers – is impacting the lives of Americans in every state, in every region, and from every background and walk of life – and all too often, with deadly results.  Between 2006 and 2010, heroin overdose deaths increased by 45 percent.  Scientific studies, federal, state and local investigations, addiction treatment providers, and victims reveal that the cycle of heroin abuse commonly begins with prescription opiate abuse.  The transition to—and increase in—heroin abuse is a sad but not unpredictable symptom of the significant increase in prescription drug abuse we’ve seen over the past decade.
 
“It’s clear that opiate addiction is an urgent – and growing – public health crisis.  And that’s why Justice Department officials, including the DEA, and other key federal, state, and local leaders, are fighting back aggressively.
 
“Confronting this crisis will require a combination of enforcement and treatment.  The Justice Department is committed to both.
 
“On the enforcement side, we’re doing more than ever to keep illicit drugs off the streets – and to bring violent traffickers to justice.  With DEA as our lead agency, we have adopted a strategy to attack all levels of the supply chain to prevent pharmaceutical controlled substances from getting into the hands of non-medical users.  DEA proactively investigates the diversion of controlled substances at all levels of the supply chain.  This includes practitioners that illegally dispense prescriptions, pharmacists that fill those prescriptions, and distributors that send controlled substances downstream without due diligence efforts.  DEA also uses its regulatory authority to review and investigate new pharmacy applications in targeted areas to identify and prevent storefront drug traffickers from obtaining DEA registrations.  And they’re also going after “pill mills.”
 
“Since 2011, DEA has opened more than 4,500 investigations related to heroin.  They’re on track to open many more.  And as a result of these aggressive enforcement efforts, the amount of heroin seized along America’s southwest border increased by more than 320 percent between 2008 and 2013.
 
“Of course, enforcement alone won’t solve the problem.  That’s why we are enlisting a variety of partners – including doctors, educators, community leaders, and police officials – to increase our support for education, prevention, and treatment.  DEA engages in widespread education of pharmacists, doctors, and other health practitioners in the identification and prevention of controlled substance diversion during the healthcare delivery process.  In the Northern District of Ohio, for example, the U.S. Attorney convened a summit at the Cleveland Clinic, bringing together health and law enforcement professionals to address that area’s 400-percent rise in heroin-related deaths.  And nationwide, the Justice Department is supporting more than 2,600 specialty courts that connect over 120,000 people convicted of drug-related offenses with the services they need to avoid future drug use and rejoin their communities.
 
“We can, and should, be proud of these results.  But more can be done.  And frequently, the most effective efforts are those that begin at home.  Parents and families can help raise awareness about the devastating consequences of opiate abuse.  And Americans like the Gates family of Skowhegan, Maine, are showing the way.  Their son, Will, was a bright young student at the University of Vermont who overdosed on heroin and lost his life – five years ago this month.
 
“During their grief, Will’s parents and his brother have transformed their story of heartbreaking loss into a powerful force for change.  Working with the U.S. Attorney’s Office in Vermont, they created an award-winning documentary – called “The Opiate Effect” – to educate people about the realities, and the dangers, of opiate abuse.  Fifty thousand people have already watched this video for free online.  And I urge you to do the same – because it’s only by working together that we can confront this crisis, strengthen our communities, and save lives.”
 
The full video is available at http://www.justice.gov/agwa.php
 

The Department of Justice announced that this morning John W. Ng, 58, of Albuquerque, N.M., made his initial appearance in federal court on a criminal complaint charging him with a hate crime offense.  This charge is related to anti-Semitic threats Ng made against a Jewish woman who owns and operates the Nosh Jewish Delicatessen and Bakery in Albuquerque.

Ng was arrested by the FBI on March 7, 2014, based on a criminal complaint alleging that he interfered with the victim’s federally protected rights by threatening her and interfering with her business because of her religion.  According to the criminal complaint, between Jan. 22, 2014, and Feb. 8, 2014, Ng allegedly posted threatening anti-Semitic notes on and in the vicinity of the victim’s business.

A criminal complaint merely establishes probable cause, and Ng is presumed innocent unless proven guilty.  If convicted on the offense charged in the criminal complaint, Ng faces a maximum statutory penalty of one year in prison.

This matter was investigated by the Albuquerque Division of the FBI and is being prosecuted by Assistant U.S. Attorney Mark T. Baker of the U.S. Attorney’s Office for the District of New Mexico and Trial Attorney AeJean Cha of the U.S. Department of Justice’s Civil Rights Division.

Sea Star Line LLC and Horizon Lines LLC have agreed to resolve allegations that they violated the False Claims Act by fixing the price of government cargo transportation contracts between the continental United States and Puerto Rico, the Department of Justice announced today. Under the settlement agreements, Sea Star Line has agreed to pay $1.9 million, and Horizon Lines has agreed to pay $1.5 million.

“Today’s civil settlements demonstrate our continuing vigilance to ensure that those doing business with the government do not engage in anticompetitive conduct,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “Government contractors who seek to profit at the expense of taxpayers will face serious consequences.”

The government alleged that former executives of the defendant ocean shippers used personal email accounts to communicate confidential bidding information, thereby enabling each of the shippers to know the transportation rates that its competitor intended to submit to federal agencies for specific routes. This information allowed the shippers to allocate specific routes between themselves at predetermined rates. Among the contracts affected were U.S. Postal Service contracts to transport mail and Department of Agriculture contracts to ship food. Both Sea Star Line and Horizon Lines previously pleaded guilty, in related criminal proceedings, to anticompetitive conduct in violation of the Sherman Act.

“Postal Service contractors must understand and know that actions that undermine the contracting process, such as conspiring to suppress and eliminate competition, will not be tolerated and will be aggressively investigated,” said Tom Frost, Special Agent in Charge of the Major Fraud Investigations Division (MFID) with the Postal Service Office of Inspector General. “MFID will continue to work with DOJ, both criminally and civilly, to bring those individuals and companies to justice.”

The civil settlements resolve allegations in a lawsuit filed in federal court in Jacksonville, Fla., by former Sea Star Line executive William B. Stallings. The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The Act also allows the government to intervene and take over the action, as it did in this case. Stallings will receive $512,719 of the recovered funds.

The settlements were the result of a coordinated effort by the Civil Division of the Department of Justice and the U.S. Postal Service Office of Inspector General.

The case is captioned United States ex rel. Stallings v. Sea Star Line LLC, et al., Case No. 3:13-cv-152-J-12JBT (M.D. Fla.). The claims resolved by the settlements are allegations only, except to the extent the conduct was admitted as part of the defendants’ prior guilty pleas, and there has been no determination of liability.

          ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that Defendant KUAN SIONG TAN, age 23, and Defendant CHOON BOON TAN, age 27, both citizens of Malaysia, were sentenced on March 5, 2014, in the District Court of Guam, for their convictions of aggravated identity theft.  Each defendant was sentenced to a 24-month term of imprisonment to be followed by three years of supervised release.  They were also ordered to pay restitution to the victims of their criminal conduct in the amount of $634.42 for CHOON BOON TAN and $1,961.43 for KUAN SIONG TAN.

On January 8, 2013, KUAN SIONG TAN and CHOON BOON TAN entered Guam from Malaysia.  A secondary inspection by the U.S. Customs and Border Protection agency was conducted, and the defendants were found with numerous counterfeit access devices or credit cards.  Prior to their arrival into Guam, the defendants used counterfeit access devices or credit cards to fraudulently obtain goods and services from a hotel and merchants in Kuala Lumpur, Malaysia, and Bangkok, Thailand.  KUAN SIONG TAN possessed 47 counterfeit cards while CHOON BOON TAN possessed 39 such cards.  Some of the credit cards were encoded with stolen credit card account information of account holders in the mainland United States with institutions such as Chase Bank, Bank of America, and Capital One Bank.  KUAN SIONG TAN and CHOON BOON TAN were arrested on January 8, 2013, by agents with the Homeland Security Investigations and the U.S. Secret Service. 

U.S. Attorney Alicia A.G. Limtiaco stated, “Identity theft and related white collar and financial fraud crimes victimize individuals, financial institutions and merchants.  The U.S. Attorney’s Office for the Districts of Guam and the Northern Mariana Islands and the Department of Justice are committed to combating identity theft and other white collar and financial fraud crimes.  We will continue to dedicate federal resources effectively to prevent, investigate and prosecute the unlawful use of identifying information.  Federal and local law enforcement are committed to protecting our community and consumers against theft, fraud and other related criminal activity.”

This case was investigated by special agents from the Department of Homeland Security/Homeland Security Investigations and U.S. Secret Service and prosecuted by Assistant U.S. Attorney Stephen F. Leon Guerrero.

SUMMARY: The Executive Office for Immigration Review (EOIR) invites interested parties to participate in a meeting providing a general overview of EOIR's recognition and accreditation program.

DATE: Friday, March 21, 2014, at 2 p.m.

MEETING LOCATION: 5107 Leesburg Pike, Suite 1800, Falls Church, VA.

RSVP: To RSVP for the meeting, please contact Lauren Alder Reid, Counsel for Legislative and Public Affairs, 703-305-0289, [email protected], by noon on March 20, 2014. In-person attendance will be limited to the first forty (40) individuals to RSVP. Those who are unable to attend in person will be able to participate via teleconference and to view meeting slides via the Internet during the meeting. Call-in and Web access information will be available to those who RSVP. To attend the meeting via conference call and Web, please RSVP with the name(s) of the attendee(s), the attendee's organization, and an email address where instructions may be sent for accessing the conference call and Web meeting.

- EOIR -

The Executive Office for Immigration Review (EOIR) is an agency within the Department of Justice. Under delegated authority from the Attorney General, immigration judges and the Board of Immigration Appeals interpret and adjudicate immigration cases according to United States immigration laws. EOIR’s immigration judges conduct administrative court proceedings in immigration courts located throughout the nation. They determine whether foreign-born individuals—whom the Department of Homeland Security charges with violating immigration law—should be ordered removed from the United States or should be granted relief from removal and be permitted to remain in this country. The Board of Immigration Appeals primarily reviews appeals of decisions by immigration judges. EOIR’s Office of the Chief Administrative Hearing Officer adjudicates immigration-related employment cases. EOIR is committed to ensuring fairness in all of the cases it adjudicates.

On Feb. 26, 2014, a federal grand jury sitting in the District of Columbia returned a 17 count indictment charging Sherri Davis, previous owner and operator of 2FT Fast Facts Tax Service, a tax return preparation business located in Washington, D.C., for conspiring to defraud the Internal Revenue Service (IRS), aiding and assisting in the preparation of false individual income tax returns and filing false individual income tax returns, the Justice Department and IRS announced following the unsealing of Davis’ indictment today. 

According to the indictment, from 2006 through 2011, Davis conspired with others to defraud the IRS by preparing and filing false income tax returns that contained fraudulent deductions, expenses, losses and credits to which 2FT clients were not entitled, thereby generating fraudulent income tax refunds.  Davis instructed co-conspirator LaDonna Davis to falsify tax documents for 2FT clients in order to reduce their taxable income and to get a larger refund than what the client was entitled to receive.  Davis also provided 2FT clients with false documentation to support fraudulently claimed charitable contributions and mileage expenses on their individual income tax returns for use in a potential or pending audit. 

The indictment also alleges that Davis filed false 2007 through 2009 individual income tax returns for herself, which underreported 2FT’s gross receipts and falsely claimed business losses for 2FT.  Davis faces a statutory maximum potential sentence of 53 years in prison and a fine of up to $4,250,000. 

The case is being prosecuted by Trial Attorneys Jessica Moran and Tiwana Fleming of the Justice Department’s Tax Division.  Additional information about the division and its enforcement efforts may be found at its website .

The leader of an identity theft ring that stole more than 600 identities from U.S. government employees and others was sentenced today to serve 12 years in prison, followed by three years of supervised release.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting United States Attorney Dana J. Boente of the Eastern District of Virginia, Special Agent in Charge Kathy A. Michalko of the United States Secret Service’s Washington Field Office and Chief Edwin C. Roessler Jr. of the Fairfax County Police Department made the announcement.

Jenaro Blalock, 31, of Clinton, Md., pleaded guilty on Oct. 29, 2013, to access device fraud and aggravated identity theft and was sentenced by United States District Judge Claude M. Hilton. Blalock was also ordered to pay full restitution to victims.

According to court documents, between June 2011 and July 2013, Blalock and co-leader Christopher Bush recruited women with access to identity information through their employers to steal more than 600 identities, primarily belonging to employees of the U.S. Department of State, the U.S. Department of Defense and the U.S. Agency for International Development. Blalock provided blank driver’s licenses so that Bush could make fraudulent driver’s licenses bearing the victims’ real names, addresses and dates of birth. Blalock also made fraudulent credit cards bearing victims’ names. Members of the identity theft ring, including Blalock, used those fraudulent driver’s licenses and victims’ social security numbers to open instant credit lines at retailers and obtain rental cars, which were frequently sold on the black market with altered vehicle identification numbers. According to information provided at sentencing, the identity theft ring caused victim losses of between $1 million and $2.5 million.

On Jan. 17, 2014, Bush was sentenced to serve 10 years in prison for his role in the scheme.

This case was investigated by the United States Secret Service and the Fairfax County Police Department, with assistance from the City of Fairfax Police Department, Prince George’s County Washington Area Vehicle Enforcement, Prince George’s County Financial Crimes Section, the Metropolitan Washington Airport Authority, the Delaware State Police, the Maryland State Police, the D.C. Metropolitan Police Department, the U.S. Postal Inspection Service, the Office of the Inspector General of the U.S. Department of Agriculture and the Office of the Inspector General of the U.S. Department of State .

The case was prosecuted by Trial Attorney Peter Roman of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Lindsay Kelly of the Eastern District of Virginia.

The United States filed a civil complaint asking a federal court in Fresno, Calif., to enjoin Ken Mendoza and Alice Mendoza from preparing federal tax returns for others, the Justice Department announced today.  The complaint alleges that the Mendozas frequently prepare tax returns for individuals claiming refunds from the federal government that are not deserved.  According to the complaint, since 2010, the Mendozas have prepared over 600 tax returns for individuals in the Fresno area.

According to the complaint, the Mendozas improperly understate their customers’ federal tax liabilities by fabricating business expenses, claiming false or inflated credits, particularly educational credits, and deducting customers’ personal expenses that are not legally deductible.  In total, the complaint alleges that the loss to the U.S. Treasury from the Mendozas’ activities could be as much as $2.8 million for tax years 2010 through 2011.

In addition, the complaint seeks to enjoin anyone acting in concert with the Mendozas from preparing or filing federal tax returns; to prohibit the Mendozas from requesting or directing the preparation of federal tax returns for others; to require the Mendozas, within 30 days of entry of an injunction issued in this case, to contact all persons for whom they prepared a federal tax return since Jan. 1, 2008, and to inform all such persons of the permanent injunction entered against them; to require the Mendozas to provide a list of all such persons to the United States; to allow the United States to monitor the Mendozas’s compliance with any such injunction; and to request that the court retain jurisdiction over this case to enforce any injunction entered against the Mendozas.

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. Ken Mendoza, etc., et al.
Complaint for Permanent Injunction and Other Equitable Relief

WASHINGTON – Estados Unidos inició una demanda civil en la que pidió a un juzgado federal de Fresno, California, que prohibiera a Ken Mendoza y Alice Mendoza preparar declaraciones de impuestos federales para terceros, anunció hoy el Departamento de Justicia. La demanda alega que los Mendoza solían preparar declaraciones de impuestos para terceros, en las que pedían al gobierno federal reintegros indebidos. De acuerdo con la demanda, los Mendoza prepararon desde 2010 más de 600 declaraciones de impuestos para personas del área de Fresno.

De acuerdo con la demanda, los Mendoza declaran indebidamente las obligaciones de impuestos federales de sus clientes al inventar gastos de negocios, pedir créditos falsos o inflados, especialmente créditos educativos, y deducir gastos personales de los clientes que no son legalmente deducibles. En total, la demanda alega que el Tesoro de EE.UU. pudo haber perdido debido a las actividades de los Mendoza hasta 2.8 millones de dólares para los años fiscales 2010 a 2011.

Además, la demanda busca prohibir a cualquiera que actúe en conjunto con los Mendoza preparar o presentar declaraciones de impuestos federales; prohibir a los Mendoza solicitar o instruir la preparación de declaraciones de impuestos federales para terceros; que se les exija a los Mendoza, en el plazo de 30 días a partir de la emisión de un interdicto en este caso, que se comuniquen con todas las personas para quienes prepararon una declaración de impuestos federales desde el 1° de enero de 2008, y que informen a todas dichas personas del interdicto permanente en su contra; que se les exija a los Mendoza que provean a Estados Unidos una lista de todas dichas personas; que se le permita a Estados Unidos controlar el cumplimiento de dicho interdicto por parte de los Mendoza; y solicita que el tribunal retenga jurisdicción sobre este caso para hacer valer cualquier interdicto emitido contra los Mendoza.

El fraude de preparación de declaraciones de impuestos es uno de los ardides de la Docena sucia de ardides tributarios de 2013 del Servicio de Impuestos Internos [Internal Revenue Service (IRS)]. El IRS tiene algunos consejos en su portal en Internet para la elección de un preparador de impuestos. En la última década, la División de Impuestos ha obtenido interdictos contra cientos de preparadores de impuestos inescrupulosos. Se puede encontrar información sobre estos casos en el portal del Departamento de Justicia. Se encuentra una lista alfabética de personas prohibidas de preparar declaraciones de impuestos y promover ardides tributarios en esta página. Si usted cree que una de las personas o empresas bajo prohibición puede estar violando un interdicto, por favor comuníquese con la División de Impuestos para proveer detalles.

          ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that Defendant John A. Cruz, age 47, and Defendant Mae Tedtaotao Cruz, age 45, husband and wife, and residents of Yona, were sentenced on March 6, 2014, by Chief Judge Frances Tydingco-Gatewood, in the District Court of Guam.  John A. Cruz received 78 months for his conviction of conspiracy to distribute more than 50 grams of methamphetamine and an additional five years for using, carrying or possessing a firearm during a drug trafficking crime.  The five years are consecutive to the conspiracy charge.   John A. Cruz was assessed a $200 special assessment fee, 400 hours community service and five years supervised release.  Mae Tedtaitao Cruz was sentenced to 27 months imprisonment on the conspiracy charge, 400 hours community service, a $100 special assessment fee and five years supervised release.
           
On October 27, 2011, postal inspectors intercepted an Express Mail package and searched it pursuant to a federal search warrant; the package contained 86 grams of 91.1% pure ice.  Agents secured a warrant to search the defendants’ residence, where they were arrested.  Agents seized, among other things, $38,000 cash, five firearms (all registered); a Toyota Forerunner, an FJ Cruiser and two all-terrain vehicles. They later seized a Lexus SUV.  All these items have been forfeited.

This case was investigated by special agents from the U.S. Postal Inspection Service (USPIS); Drug Enforcement Administration (DEA); Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); Department of Homeland Security/Homeland Security Investigations (HSI); and officers from the Guam Police Department and  Guam Customs and Quarantine Agency.  The case was prosecuted by Assistant U.S. Attorney Clyde Lemons.

A former state marshal and a correctional officer in Puerto Rico were sentenced today for attempting to smuggle heroin to inmates in exchange for payment, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico.

Joel Torres-Velazquez, 49, of Guánica, Puerto Rico, was sentenced to serve 37 months in prison, followed by three years of supervised release, by U.S. District Judge Francisco A. Besosa of the District of Puerto Rico. He pleaded guilty on Nov. 6, 2013, to a one-count indictment charging him with attempt to distribute a controlled substance.

Jessica Moreno-Alicea, 39, of Ponce, Puerto Rico, was sentenced to serve 37 months in prison, followed by four years of supervised release, by U.S. District Judge Daniel R. Dominguez of the District of Puerto Rico. She pleaded guilty on Dec. 6, 2013, to a one-count indictment charging her with attempt to distribute a controlled substance.

Torres-Velazquez was paid $600 to deliver a package of heroin to an inmate at the Ponce Superior Court, where Torres-Velazquez worked as a state marshal. On March 30, 2011, Torres-Velazquez met with an undercover agent, who he believed was a drug dealer, and was given what he believed to be a package of heroin. He delivered the purported heroin to an inmate in the courthouse that same day.

Moreno was paid $800 to deliver a package of heroin to an inmate at the Ponce State Penitentiary, where Moreno worked as a correctional officer. On Feb. 3, 2011, Moreno met with an undercover agent, who she believed was a drug dealer, and was given what she believed to be heroin. She delivered the purported heroin to an inmate in the prison on Feb. 8, 2011.

The case was investigated by the FBI’s San Juan Division. The case was prosecuted by Assistant U.S. Attorney Hector Ramirez-Carbó of the District of Puerto Rico and Trial Attorney Menaka Kalaskar of the Criminal Division’s Public Integrity Section.

Ranti Azeez-Taiwo of Staten Island, N.Y., was sentenced to serve 18 months in prison to be followed by one year of supervised release, the Justice Department and Internal Revenue Service (IRS) announced today.  Azeez-Taiwo was also ordered to pay $24,802 in restitution.  On Sept. 30, 2013, a federal jury in the Eastern District of New York convicted Azeez-Taiwo of 16 counts of aiding or assisting in the preparation of false income tax returns for clients. 

According to evidence introduced at trial, the defendant operated a tax preparation business called Lot Associates Inc., located in Staten Island.  Evidence showed that the defendant aided, advised and prepared false individual income tax returns for clients during the 2006 through 2010 tax years.  These false individual income tax returns claimed unreimbursed employee expenses and charitable donations that taxpayers testified the defendant claimed on their returns without the taxpayers’ knowledge.  Several taxpayers testified they paid fines and interest to the IRS as a result of the false income tax returns Azeez-Taiwo had prepared and submitted to the IRS.    

This case was investigated by IRS-Criminal Investigation and was prosecuted by Trial Attorneys Mark Kotila and Mark McDonald of the Tax Division.

A former Detroit-area physician pleaded guilty today for his role in an $11.5 million health care fraud scheme.

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

Jose Mercado-Francis, 60, formerly of Brownstown Township, Mich., pleaded guilty before U.S. District Judge Nancy G. Edmunds in the Eastern District of Michigan to one count of conspiracy to commit health care fraud.

According to court documents, Mercado-Francis admitted that, beginning in approximately September 2009 and continuing through February 2012, he held himself out as a licensed physician and purported to provide physician home services to Medicare beneficiaries, when actually his medical license had been revoked and he was not licensed to practice medicine in Michigan.

Court documents allege that Mercado-Francis operated his scheme out of a medical practice known as House Calls Physicians P.L.L.C., which was located in Allen Park, Mich., and owned by a co-conspirator. Mercado-Francis prepared medical documentation that licensed physicians signed as if they had provided services to Medicare beneficiaries, when, in fact, they had not. The services were then billed to Medicare as if the licensed physicians had performed them.

Court documents further allege that, between approximately May 2008 and October 2012, House Calls Physicians billed Medicare more than $11.5 million for the cost of physician home services. Of that amount, Dr. Mercado-Francis caused the submission of approximately $1.1 million in false and fraudulent physician services claims.

At sentencing, which will be scheduled at a later date, Mercado-Francis faces a maximum penalty of 10 years in prison and a $250,000 fine.

This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. This case is being prosecuted by Trial Attorney Matthew C. Thuesen 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, the HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

Acting Assistant Attorney General Jocelyn Samuels of the Civil Rights Division and U.S. Attorney Carmen M. Ortiz of the District of Massachusetts announced today that they have entered into a consent decree with HRB Digital LLC and HRB Tax Group Inc., subsidiaries of H&R Block Inc., to remedy alleged violations of the Americans with Disabilities Act (ADA).  The decree resolves the department’s allegations that individuals with disabilities are denied full and equal enjoyment of largely tax-preparation focused goods and services that are provided through H&R Block’s website and mobile applications.  The decree has been filed with the U.S. District Court for the District of Massachusetts for the court’s approval.

On Dec. 11, 2013, the Civil Rights Division and the U.S. Attorney’s Office for the District of Massachusetts filed a complaint in intervention in the lawsuit National Federal of the Blind (NFB) et al. v. HRB Digital LLC et al. to enforce Title III of the ADA.  The decree resolves the complaints by the NFB, two individual plaintiffs and the United States filed in the District of Massachusetts. 

H&R Block is one of the largest tax return preparers in the United States.  It offers a wide range of services through its website, www.hrblock.com, and its mobile apps, including professional and do-it-yourself tax preparation, instructional videos, office location information, interactive live video conference and chat with tax professionals, online and in-store services and electronic tax-return filing.

The complaint alleged that H&R Block failed to code its website in a manner that would make it accessible to individuals who have vision, hearing and physical disabilities.  As described in the complaint, individuals with disabilities use various assistive technologies to access the Internet, including screen reader software, refreshable Braille displays, keyboard navigation and captioning, among others that are not currently compatible with H&R Block’s website.  These technologies have been widely used for decades.  The recognized international industry standards for web accessibility, known as the Web Content Accessibility Guidelines (WCAG) 2.0, can be found online and are freely available to help companies ensure that individuals with disabilities can fully and equally enjoy their web-based goods and services.

“This landmark decree ensures that individuals with disabilities will have an equal opportunity to independently and conveniently obtain information and complete taxes as others do,” said Acting Assistant Attorney General Samuels.  “H&R Block is to be commended for working with the NFB and the Justice Department in resolving to take such steps.”

“For those with disabilities, an inaccessible website puts them at a great disadvantage and further perpetuates a feeling of dependence and reliance on others,” said U.S. Attorney Ortiz.  “With thoughtful and proper web design, businesses and organizations can have a great impact on the daily lives of people with disabilities who, like everyone else, seek to enjoy the benefits of technology.”

Under the terms of the five year decree, H&R Block’s website, tax filing utility and mobile apps will conform to the Level AA Success Criteria of the WCAG 2.0.  According to the decree, the H&R Block website will be accessible for the start of the next tax filing term on Jan. 1, 2015, with additional accessibility deadlines over the following years of the decree.  Additionally, HRB Digital and HRB Tax Group have agreed to: appoint a skilled web accessibility coordinator who will report to H&R Block’s enterprise Chief Information Officer; adopt a web accessibility policy; initiate training on accessible design for its web content personnel; evaluate employee and contractor performance based on successful web access programming; conduct regular automated and user group testing; and hire an approved outside consultant to prepare annual independent evaluations of Block’s online accessibility.  H&R Block will also pay $45,000 to the two individual plaintiffs, and a $55,000 civil penalty.

An accessible version of the consent decree is available on the ADA website.

A former owner and operator of a Florida-based airline fuel supply service company pleaded guilty today to participating in a kickback scheme to defraud Illinois-based Ryan International Airlines, a charter airline company located in Rockford, Ill., the Department of Justice announced.

 
Sean E. Wagner, the former owner and operator of Aviation Fuel International Inc. (AFI), pleaded guilty in the U.S. District Court for the Southern District of Florida in West Palm Beach to one count of conspiracy to commit honest services wire fraud.  On Aug. 13, 2013, a grand jury returned an indictment against Wagner and AFI, charging them for their roles in a conspiracy to defraud Ryan International Airlines.  According to the indictment, Wagner and AFI made kickback payments to Wayne Kepple, a former vice president of ground operations for Ryan, in exchange for awarding business to AFI.  According to court documents, from at least as early as December 2005 through at least August 2009, Wagner and others at AFI made kickback payments to Kepple totaling more than $200,000 in the form of checks, wire transfers, cash and gift cards.  The charges against AFI were dismissed on Feb. 21, 2014.

Ryan provided air passenger and cargo services for corporations, private individuals and the U.S. government – including the U.S. Department of Defense and the U.S. Department of Homeland Security.

 
“These types of kickback schemes subvert the competitive process and increase costs to American consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The Antitrust Division will vigorously prosecute individuals who defraud American taxpayers and businesses.”

Wagner pleaded guilty to one count of conspiracy to commit honest services wire fraud.  The count carries a maximum sentence of 20 years in prison and a $250,000 criminal fine for individuals.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.

As a result of the ongoing investigation, four other individuals have pleaded guilty and have been ordered to serve sentences ranging from 16 to 87 months in prison and to pay more than $580,000 in restitution. 

The investigation is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the U.S. Department of Defense’s Office of Inspector General’s Defense Criminal Investigative Service, Southeast Field Office, headed by Special Agent in Charge John F. Khin, with assistance from the U.S. Attorney’s Office for the Southern District of Florida.  Anyone with information concerning anticompetitive conduct in the airline charter services industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or visit www.justice.gov/atr/contact/newcase.htm.

Hector Orjuela Jr., 47, was sentenced today to serve 30 years in prison, followed by a lifetime of supervised release, for molesting children under the age of 12 and producing child pornography, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office and Assistant Secretary of State for Diplomatic Security Gregory B. Starr.

Orjuela pleaded guilty on Oct. 3, 2013, before U.S. District Court Judge Ellen Segal Huvelle in the District of Columbia, to two counts of engaging in and attempting to engage in illicit sexual conduct in a foreign place and one count of producing child pornography.

According to court documents, Orjuela is a U.S. citizen who worked as an English teacher and tutor in Shanghai, China. In July 2012, Orjuela traveled to Maryland and molested a girl under the age of 12 and produced child pornography of the sexual abuse. In August 2012, Orjuela traveled to China and molested one girl and attempted to molest another, both of whom were under the age of 12 and residing in China at that time. Orjuela traveled back to the United States in early November 2012 and then returned to China later that month where he continued to molest the same two young girls.

This case is a result of investigative efforts led by the FBI Washington Field Office, with assistance from the FBI Beijing Legat Office; the U.S. Department of State’s Bureau of Diplomatic Security’s Regional Security Office in Shanghai; the Shanghai Public Security Bureau’s International Cooperation Division; the Shanghai Criminal Investigation Division and the Shanghai Exit and Entry Bureau. This case was prosecuted by Trial Attorneys Sarah Chang and Mi Yung Park of the Criminal Division’s Child Exploitation and Obscenity Section, with assistance from the U.S. Attorney’s Offices for the District of Columbia and the District of Maryland.

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

The Department of Justice has frozen more than $458 million in corruption proceeds hidden in bank accounts around the world by former Nigerian dictator Sani Abacha and conspirators. A civil forfeiture complaint unsealed today in the United States District Court in the District of Columbia seeks recovery of more than $550 million in connection with the largest kleptocracy forfeiture action brought in the department’s history.

The restraint of funds announced today includes approximately $313 million in two bank accounts in the Bailiwick of Jersey and $145 million in two bank accounts in France. In addition, four investment portfolios and three bank accounts in the United Kingdom with an expected value of at least $100 million have also been restrained, but the exact amounts in the accounts will be determined at a later date.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office made the announcement.

“General Abacha was one of the most notorious kleptocrats in memory, who embezzled billions from the people of Nigeria while millions lived in poverty,” said Acting Assistant Attorney General Raman.  “This is the largest civil forfeiture action to recover the proceeds of foreign official corruption ever brought by the department.  Through our Kleptocracy Initiative, we are seizing the assets of foreign leaders who steal funds that properly belong to the citizens they serve.  Today’s action sends a clear message: we are determined and equipped to confiscate the ill-gotten riches of corrupt leaders who drain the resources of their countries.”

“We will not let the U.S. banking system be a tool for dictators to hide their criminal proceeds,” said Assistant Director in Charge Parlave. “This action demonstrates the FBI’s ability to combat international corruption and money laundering by seizing the assets of those involved. I want to thank the special agents, financial analysts and prosecutors whose hard work over the years resulted in today’s announcement.”

The over $458 million in frozen funds and the additional assets named in the complaint represent the proceeds of corruption during and after the military regime of General Abacha, who assumed the office of the president of the Federal Republic of Nigeria through a military coup on Nov. 17, 1993, and held that position until his death on June 8, 1998. The complaint alleges that General Abacha, his son Mohammed Sani Abacha, their associate Abubakar Atiku Bagudu and others embezzled, misappropriated and extorted billions from the government of Nigeria and others, then laundered their criminal proceeds through the purchase of bonds backed by the United States using U.S. financial institutions.

As alleged in the complaint, General Abacha and others systematically embezzled billions of dollars in public funds from the Central Bank of Nigeria on the false pretense that the funds were necessary for national security. The conspirators withdrew the funds in cash and then moved the money overseas through U.S. financial institutions.  General Abacha and his finance minister also allegedly caused the Government of Nigeria to purchase Nigerian government bonds at vastly inflated prices from a company controlled by Bagudu and Mohammed Abacha, generating an illegal windfall of more than $282 million.  In addition, General Abacha and his associates allegedly extorted more than $11 million from a French company and its Nigerian affiliate in connection with payments on government contracts. Funds involved in each of these schemes were allegedly laundered through the United States.

The complaint seeks to forfeit bank accounts and investment portfolios with funds located in Bailiwick of Jersey, France and the United Kingdom. On Feb. 25 and 26, 2014, U.S. arrest warrants for the assets were enforced in Jersey and France though mutual legal assistance requests and in the United Kingdom through litigation brought pursuant to the U.K. Civil Jurisdiction and Judgments Act. The complaint also seeks to forfeit five corporate entities registered in the British Virgin Islands.

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

The investigation was conducted by the FBI. The case is being prosecuted by Trial Attorney Elizabeth Aloi and Assistant Deputy Chief Daniel Claman of the Criminal Division’s Asset Forfeiture and Money Laundering Section, with substantial support from the Criminal Division’s Office of International Affairs. The department appreciates the extensive assistance provided by the Governments of Jersey, France and the United Kingdom in this investigation.

Related Materials:

Abacha Complaint

A federal jury in San Francisco has found two individuals and one company guilty of economic espionage, theft of trade secrets, bankruptcy fraud, tax evasion, and obstruction of justice for their roles in a long-running effort to obtain U.S. trade secrets for the benefit of companies controlled by the government of the People’s Republic of China (PRC), announced U.S. Attorney Melinda Haag; John P. Carlin, Acting Assistant Attorney General for National Security at the Department of Justice; David Johnson, Special Agent in Charge of the Federal Bureau of Investigation (FBI), San Francisco Division; and Jose Martinez, Special Agent in Charge of the Oakland Field Office, Internal Revenue Service (IRS), Criminal Investigation.

The jury found that Walter Lian-Heen Liew (aka Liu Yuanxuan), his company, USA Performance Technology Inc. (USAPTI), and Robert Maegerle conspired to steal trade secrets from E.I. du Pont de Nemours & Company regarding their chloride-route titanium dioxide production technology and sold those secrets for large sums of money to state-owned companies of the PRC. The purpose of their conspiracy was to help those companies develop large-scale chloride-route titanium dioxide production capability in the PRC, including a planned 100,000-ton titanium dioxide factory in Chongqing.  This case marks the first federal jury conviction on charges brought under the Economic Espionage Act of 1996.

“Fighting economic espionage and trade secret theft is one of the top priorities of this Office and we will aggressively pursue anyone, anywhere who attempts to steal valuable information from the United States,” said U.S. Attorney Melinda Haag.  “As today’s verdict demonstrates, foreign governments threaten our economic and national security by engaging in aggressive and determined efforts to steal U.S. intellectual property.  I commend the efforts of the women and men of the FBI and the IRS in protecting America’s businesses and our national security.”

“The theft of America’s trade secrets for the benefit of a foreign government poses a substantial threat to our economic and national security” said Acting Assistant Attorney General John Carlin. “Today’s verdict clearly demonstrates that we take this threat seriously. This case shows that we will not hesitate to pursue and prosecute those who steal from American businesses.”

“The battle against economic espionage has become one of the FBI’s main fronts in its efforts to protect U.S. national security in the 21st century,” said Special Agent in Charge David Johnson.

"This is a case about lying, cheating, and stealing," said José M. Martínez, Special Agent in Charge, IRS Criminal Investigation. "The defendants stole secrets, lied to the bankruptcy court and cheated the IRS and creditors.  In today's economic environment, it's more important than ever that the American people feel confident that everyone is playing by the rules and paying their fair share."

The jury also found that Liew, USAPTI, and Maegerle obstructed justice during the course of their conspiracy. The jury found that Liew filed false tax returns for USAPTI and Performance Group, a predecessor company to USAPTI, and made false statements and oaths in bankruptcy proceedings for Performance Group. The guilty verdicts followed a seven-week jury trial before the Honorable Jeffery S. White, U.S. District Court Judge.

Liew, 56, of Walnut Creek, Calif., was convicted of conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, attempted economic espionage, attempted theft of trade secrets, possession of trade secrets, conveying trade secrets, conspiracy to obstruct justice, witness tampering, conspiracy to tamper with evidence, false statements, filing false tax returns, false statements in bankruptcy proceedings, and false oath in bankruptcy proceedings. Liew was an owner and president of USAPTI, a company headquartered in Oakland, Calif., that offered consulting services.  USAPTI was found guilty of conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, attempted economic espionage, attempted theft of trade secrets, possession of trade secrets, conveying trade secrets, and conspiracy to obstruct justice.

Evidence at trial showed that in the 1990s, Liew met with the government of the PRC and was informed that the PRC had prioritized the development of chloride-route titanium dioxide (TiO2) technology.  TiO2 is a commercially valuable white pigment with numerous uses, including coloring paint, plastics, and paper.  DuPont’s TiO2 chloride-route process also produces titanium tetrachloride, a material with military and aerospace uses.  Liew was aware that DuPont had developed industry leading TiO2 technology over many years of research and development and assembled a team of former DuPont employees, including Robert Maegerle, to assist him in his efforts to convey DuPont's TiO2 technology to entities in the PRC.  Liew executed contracts with state-owned entities of the PRC for chloride-route TiO2 projects that relied on the transfer of illegally obtained DuPont technology. Liew, Maegerle, and USAPTI obtained and sold DuPont’s TiO2 trade secret to the Pangang Group companies for more than $20 million.

Robert Maegerle, 78, of Harbeson, Del., was found guilty of conspiracy to commit theft of trade secrets, attempted theft of trade secrets, conveying trade secrets, and conspiracy to obstruct justice. Evidence at trial showed that Maegerle was employed by DuPont as an engineer from 1956 to 1991 where he had developed detailed knowledge of DuPont's TiO2 technology and expertise in building TiO2 production lines. He also had access to DuPont TiO2 trade secrets, including specific information regarding DuPont’s TiO2 facility at Kuan Yin, Taiwan. He provided these trade secrets to Liew and USAPTI in furtherance of their contracts with state-owned companies of the PRC for chloride-route TiO2 projects.

The jury also found Liew, Maegerle, and USAPTI guilty of obstructing justice by causing an answer to be filed in a federal civil lawsuit in which they falsely claimed that no information from DuPont’s Kuan Yin plant was used in the USAPTI designs for the development of TiO2 manufacturing facilities.  Liew was also found guilty of witness tampering for his efforts to influence a co-defendant’s testimony in the civil lawsuit. The jury also convicted Liew of conspiring with his wife, Christina Liew, to mislead the FBI by corruptly concealing records, documents, and other objects during the FBI’s investigation into their criminal activity.

Liew was also convicted of filing a false income tax return for his company, Performance Group, for calendar years 2006, 2007, and 2008 and for USAPTI in 2009 and 2010. The jury also found Liew guilty of making false statements and a false oath in connection with filing for bankruptcy for Performance Group in 2009.

Liew, as co-owner of USAPTI, entered into contracts worth in excess of $20 million to convey TiO2 trade secret technology to Pangang Group companies. The Liews received millions of dollars of proceeds from these contracts. The proceeds were wired through the United States, Singapore, and ultimately back into several bank accounts in the PRC in the names of relatives of Christina Liew.

DuPont is a company based in Wilmington, Del., that manufactures a wide variety of products, including TiO2. DuPont invented the chloride-route process for manufacturing TiO2 in the late-1940s and since then has invested heavily in research and development to improve that production process. The global titanium dioxide market has been valued at roughly $12 billion per year, and DuPont has the largest share of that market.

The chloride-route process is cleaner, more efficient, and produces a higher-quality product than the sulfate-route process prevalent in the PRC. The object of the defendants’ conspiracy was to convey DuPont’s secret chloride-route technology to the PRC companies for the purpose of building modern TiO2 production facilities in the PRC without investing in time-consuming, costly research and development.

The second superseding indictment also charges, Liew’s wife, Christina Hong Qiao Liew (aka Qiao Hong), with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, attempted theft of trade secrets, possession of trade secrets, witness tampering, conspiracy to tamper with evidence, and false statements. The charges against Ms. Liew were severed from those against Walter Liew, Maegerle, and USAPTI. Ms. Liew will appear before the Honorable Jeffery S. White on Thursday, March 6, 2014, in San Francisco to set the date for her trial.

Tze Chao (aka Zhao Zhi), a former DuPont employee who was also charged in the second superseding indictment, pleaded guilty to conspiracy to commit economic espionage on March 1, 2012.

Hou Shengdong, the Vice Director of the Chloride Process TiO2 Project Department for the Pangang Group, was also charged in the second superseding indictment with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, and attempted economic espionage.  He is currently a fugitive.

Charges of conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, and attempted economic espionage are also pending against the four PRC state-owned companies charged in the second superseding indictment.

The sentencing hearings for Liew, Maegerle, and USAPTI are scheduled for June 10, 2014, before Judge White in Oakland, Calif. Liew was remanded to the custody of the U.S. Marshals pending sentencing. Maegerle remains out of custody on conditions of release.  The maximum statutory penalties for each of the counts are listed below. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

The case is being prosecuted by the Special Prosecutions and National Security Unit of the U.S. Attorney’s Office in San Francisco, the Counterespionage Section of the National Security Division of the U.S. Department of Justice in Washington, D.C., the FBI, Palo Alto Resident Agency, and Oakland Field Office, IRS Criminal Investigation.

For more information about the case and the remaining defendants: www.justice.gov/opa/pr/2012/February/12-nsd-180.html

Attorney General Eric Holder released the following statement on the Senate’s procedural vote on Debo Adegbile to serve as the Assistant Attorney General for the Civil Rights Division:

“I’m very disappointed in the Senate’s vote.  At a time when significant voting rights cases and other consequential matters are pending, it is more critical than ever to have a confirmed leader for the Civil Rights Division. Mr. Adegbile is a uniquely qualified nominee and an exceptional lawyer. He deserved to have his nomination considered wholly on the merits. His record was either misunderstood, or intentionally misrepresented for the sake of politics. Our legal system hinges on the fundamental ideal that every accused individual has a constitutional right to counsel. It is a very dangerous precedent to set for the legal profession when individual lawyers can have their otherwise sterling qualifications denigrated based solely on the clients that their organizations represent.”

The Justice Department and the Equal Employment Opportunity Commission (EEOC) announced today that they have entered into a consent decree that, if approved by the court, will resolve both agencies’ claims against Harmony Public Schools on behalf of Nicole M. Tuchscherer, a former teacher at Harmony Science Academy-Austin.   The EEOC suit, filed on Oct. 30, 2012, in the U.S. District Court for the Western District of Texas, alleges that Harmony Public Schools violated the Equal Pay Act of 1963 (EPA) when it paid Tuchscherer less than a male teacher who performed the same or substantially similar work, and when it retaliated against her for opposing such compensation practices. 

The Justice Department’s complaint, which was filed with the consent decree in the U.S. District Court for the Western District of Texas, alleges that Harmony Public Schools violated Title VII of the Civil Rights Act of 1964 when it retaliated against Tuchscherer by failing to renew her teaching contract because she complained of pay discrimination.  The parties are seeking to consolidate the two cases and have asked the U.S. District Court to enter the consent decree resolving the claims of both the Justice Department and the EEOC.

Tuchscherer, who taught art at Harmony Science Academy-Austin for five years, held a State of Texas teaching certification and met the state’s Highly Qualified teacher criteria, earned $40,000 in her fifth year of teaching.  In comparison, an uncertified male art teacher with no previous teaching experience was paid an annual salary of $44,000 by Harmony Public Schools to teach at another Austin-area school.  The EEOC, which has litigation authority against state and local governments pursuant to the EPA, has alleged that in paying Tuchscherer less than a male counterpart who performed the same or substantially similar work, Harmony violated the EPA.

In May 2010, during an annual salary negotiation meeting with the school principal, Tuchscherer asked Harmony to pay her a salary equal to that of male teachers of Turkish descent at the school.  According to the Justice Department’s complaint, when Tuchscherer told Principal Halit Erdogdu that she believed Harmony discriminates against women and Americans in compensation, he became angry with Tuchscherer for raising these issues and called her unprofessional and negative.  Two weeks later, Harmony Public Schools informed Tuchscherer that her teaching contract had not been renewed.  Both the EEOC and the Justice Department allege that this decision was in retaliation for Tuchscherer complaining of unlawful discrimination.  This is the second joint EPA-Title VII litigation effort in Texas resolved by the two federal agencies.

Under the terms of the consent decree, Harmony Public Schools has agreed to pay $125,000 in lost wages and compensatory damages to Tuchscherer.  Harmony Public Schools has also agreed to: include two previously-written reference letters in Tuchscherer’s official personnel file; develop and distribute comprehensive anti-discrimination and anti-retaliation policies; train the employees at its five Austin-area schools regarding employee rights and employer obligations under the EPA and Title VII; and post on the premises of its Austin-area schools a notice to employees.

“Both Title VII and the Equal Pay Act protect employees who have the courage to  challenge discriminatory compensation practices from unlawful retaliation by their employers,” said Acting Assistant Attorney General for the Civil Rights Division Jocelyn Samuels.  “We are pleased to have been able to work cooperatively with the Equal Employment Opportunity Commission to achieve a broad range of injunctive and monetary relief in this important case.”

“The EEOC’s Strategic Enforcement Plan has made sex-based wage discrimination a national enforcement priority,” said EEOC General Counsel David Lopez.  “This case represents our latest litigation effort to combat this problem and reflects our commitment to work collaboratively on equal pay issues with our governmental partners.”

In Fiscal Year 2012, EEOC received over 4,100 charges of gender-based wage discrimination, and obtained over $24 million in relief for victims of gender-based wage discrimination through administrative enforcement efforts and litigation.  The EEOC and Justice Department also continue to serve as key members of the National Equal Pay Enforcement Task Force, a federal government initiative focused on ending the gender pay gap.

The EEOC’s case was litigated by Senior Trial Attorney Eduardo Juarez and Supervisory Trial Attorney Judith Taylor of the EEOC, and the Justice Department’s case was handled by Senior Trial Attorneys Valerie Meyer and Amy Kurren and Deputy Chief Karen Woodard of the Civil Rights Division’s Employment Litigation Section. 

More information about the EEOC is available on its website .  Additional information about the Employment Litigation Section of the Civil Rights Division is available on its website .

The Department of Justice announced the filing of a lawsuit today against the School District of Philadelphia alleging that the district discriminated against Siddiq Abu-Bakr, as well as other similarly-situated individuals, on the basis of religion in violation of Title VII of the Civil Rights Act of 1964.  The lawsuit further alleges that the district’s employment policies constitute a pattern or practice of religious discrimination, also in violation of Title VII.

The complaint, filed in the U.S. District Court for the Eastern District of Pennsylvania, alleges that the district discriminated against Abu-Bakr and similarly-situated individuals by failing to accommodate their religious beliefs after it instituted a new grooming policy in October 2010 that prevented school police officers and security officers from having beards longer than one-quarter inch.  Abu-Bakr, a school police officer since 1987, is a member of the Islamic faith, which requires him not to cut his beard.  Consistent with his religious beliefs, Abu-Bakr has maintained an untrimmed beard longer than one-quarter inch for the 27 years that he has worked for the district, without evidence that the maintenance of an uncut beard has interfered with his job performance.  When Abu-Bakr notified his supervisor that he could not comply with the new grooming policy due to his religious beliefs, Abu-Bakr was issued a written reprimand for violating the policy.  According to the complaint, the district failed to consider Abu-Bakr’s request for reasonable accommodation to its grooming policy that would have been in accordance with his religious beliefs, and later denied his request without making the requisite showing that doing so would cause an undue hardship. 

Through this lawsuit, the United States is seeking declaratory and injunctive relief requiring the district to develop and implement new grooming policies that would prevent its employees from being discriminated against based upon religion, as well as monetary damages for Abu-Bakr and similarly-situated individuals. 

“Individuals should not have to choose between maintaining their jobs and practicing their faith when accommodations can be reasonably made,” said Acting Assistant Attorney General for the Civil Rights Division Jocelyn Samuels.  “Federal law requires all employers, even those with grooming and uniform policies, to reasonably accommodate the religious observances and practices of their employees.”

Abu-Bakr originally filed a charge of religious discrimination with the Equal Employment Opportunity Commission (EEOC).  The EEOC’s Philadelphia District Office investigated the matter, determined that there was reasonable cause to believe that discrimination had occurred, and referred the matter to the Department of Justice.

“No employee should be forced to violate his religious beliefs in order to earn a living,” said District Director Spencer H. Lewis Jr. of the EEOC’s Philadelphia District Office.  “Modifying a dress or grooming code is a reasonable accommodation that enables employees to keep working without posing an undue hardship on the employer.  We are pleased that the EEOC's collaboration with the Department of Justice protects public employees from religious discrimination.”

The continued enforcement of Title VII is a priority of the Justice Department’s Civil Rights Division.  Additional information about the Civil Rights Division of the Department of Justice is available on its website .  

The United States filed a complaint seeking to bar Kavivah Branson, aka Kavivah Bradley, and her Jackson, Miss., business, Branson Tax Service, from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction complaint, filed in the U.S. District Court for the Southern District of Mississippi, alleges that Branson, of Clinton, Miss., prepares federal income tax returns for customers that understate the tax actually due.  According to the complaint, Branson allegedly claims improper earned income tax credits and education credits for her customers without performing required due diligence and despite lack of supporting documentation.  This results in understated taxes, and because the improperly claimed credits are refundable, the complaint alleges Branson also often overstates her customers’ refunds.  Consequently, even taxpayers who do not report any federal tax liability can receive a refund up to the amount of the refundable credit claimed. 

According to the complaint, over 99 percent of the 2,401 returns Branson has prepared since Jan. 1, 2009, sought a refund, and 97 percent of the 287 returns the Internal Revenue Service (IRS) has audited to date understated the customer’s tax liability by an average of $5,006.  Given the number of returns Branson has prepared since 2009, her alleged actions could result in millions of dollars of tax harm to the United States.  

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. Kavivah Branson, et al.
Complaint