District Not Recorded

Mary Young and Christian Young each pleaded guilty yesterday to one count of conspiracy to defraud the United States and one count of aggravated identity theft for their role in a stolen identity refund fraud (SIRF) scheme , announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney for the Middle District of Alabama George L. Beck Jr.

According to court documents, between January 2010 and June 2012, Mary Young, Christian Young, Octavious Reeves and others obtained stolen identities from individuals and used those stolen identities to file false tax returns.  The false tax returns were filed from the Youngs’ residence and the conspirators directed the false tax refunds to prepaid debit cards in the names of the identity theft victims.  The Youngs and others used the prepaid debit cards to withdraw the fraudulent proceeds, which allegedly totaled over $400,000. 

Sentencing has not yet been scheduled.  The Youngs each face a minimum sentence of two years imprisonment with a maximum of twelve years, as well as three years of supervised release, restitution and a maximum fine of $250,000, or twice the loss caused by the offense.  Reeves previously pleaded guilty and will be sentenced on Feb. 19, 2013.

The case was investigated by Special Agents of the IRS - Criminal Investigation.  Trial Attorneys Michael Boteler, Charles Edgar Jr. and Gregory Bailey of the Department’s Tax Division and Assistant U.S. Attorney Todd Brown are prosecuting the case.

Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.

Two individuals charged in connection with the operation of a fraudulent lottery scheme were arrested today in south Florida following their indictment by a federal grand jury in Miami on Oct. 31, 2013, the Justice Department, U.S. Postal Inspection Service, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the U.S. Marshals Service announced.  Althea Angela Peart and Charmaine Anne King were arrested on charges that they and their co-conspirators, some of whom operated from outside of the U.S., participated in a fraudulent lottery scheme.  As alleged in the indictment, co-conspirators induced elderly victims in the U.S. to send thousands of dollars to Peart and King to cover fees for lottery winnings that victims had not won.  The indictment, unsealed with Peart’s and King’s arrests, is part of the government’s crackdown on fraudulent international lottery schemes.

“Operators of foreign lottery schemes often cannot succeed without the assistance of co-conspirators in the United States,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division.  “These schemes can cause devastating financial harm to their victims, and the Department of Justice is committed to prosecuting those who engage in this criminal activity.”

From March 2012, Peart’s and King’s co-conspirators are alleged to have contacted victims in the U.S. and falsely informed them that they had won more than a million dollars in a lottery.  According to the indictment, the co-conspirators sent letters to the victims from a purported sweepstakes company in the U.S. and included false and fraudulent cashier’s checks made out to the victims for thousands of dollars.  As alleged in the indictment, these letters told victims to call “claims agents” who were actually co-conspirators, and when the victims called the purported claims agents, the agents informed the victims that they had to pay several thousand dollars in order to collect their purported lottery winnings.  The claims agents allegedly told the victims to deposit the cashier’s checks in the victims’ bank accounts in order to purportedly cover the money they had to pay.  The co-conspirators allegedly instructed the victims on how to send and wire this money to Peart and King. 

 
The indictment charges that Peart and King each kept a percentage of the money they received from victims and sent the rest of the money to their co-conspirators.  According to the indictment, because the cashier’s checks were false and fraudulent and had no value, any payments the victims sent to Peart and King were funded by their own money, and victims never received any lottery winnings.

“As fraudsters from outside of the United States seek to take advantage of some of the most vulnerable in our community, they rely on co-conspirators in the United States for help,” said U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer.  “As I have previously stated, we will continue to vigorously pursue and prosecute those responsible for these illegal schemes.”

Peart is charged with conspiracy, eight counts of mail fraud and three counts of wire fraud and with committing these offenses via telemarketing.  King is charged with conspiracy, four counts of mail fraud and three counts of wire fraud and with committing these offenses via telemarketing. 

“The U.S. Postal Inspection Service is committed to investigating fraudulent lottery schemes designed to defraud innocent victims,” said U.S. Postal Inspector in Charge in Miami Ronald Verrochio.  “Combating international lottery fraud is a priority of the Postal Inspection Service given that a significant amount of the money in these frauds is sent through the U.S. mail.  We are actively taking steps to educate Americans about the dangers of lottery frauds.” 

“These arrests show that HSI is committed to stopping individuals who prey on our senior citizens,” said Special Agent in Charge of HSI Miami Alysa D. Erichs.  “We will continue to work with our international partners and other law enforcement agencies to put an end to these criminal organizations.”

“The U.S. Marshals Service is proud to be part of the team bringing scam artists such as these to justice,” said Acting U.S. Marshal Neil DeSousa.  “These international lottery scams that prey on our elderly cannot be allowed to continue.  The arrests of these two perpetrators are a testament to federal law enforcement’s dedication to protecting our citizens against all types of crimes.”

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

An indictment is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.

A Northern California real estate investor pleaded guilty today for his role in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Kuo Hsuan “Chuck” Chang, of San Francisco, entered his guilty plea in U.S. District Court for the Northern District of California in San Francisco.  Felony charges were filed against Chang on Oct. 9, 2013.

Chang is the 37th individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Chang conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Francisco County, Calif.   Chang was also charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert co-conspirators’ money that would have otherwise gone to mortgage holders and others.  Chang is charged with participating in these conspiracies beginning as early as October 2009 and continuing until about November 2010.

“The Antitrust Division will continue to vigorously prosecute anticompetitive schemes that compromise local markets and cause financial harm to consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “Collusion at foreclosure auctions harmed both lenders and distressed homeowners in an already struggling real estate market, and the conspirators must be held accountable.”

As described in the charging document, the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at San Francisco 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.

“We urge anyone with information regarding fraudulent anticompetitive practices at foreclosure auctions to contact the FBI or our partners at the Antitrust Division,” said FBI San Francisco Special Agent in Charge David J. Johnson.  “The FBI will continue to work with our law enforcement partners and the community to root out and bring to justice those individuals who undermine the real estate market and victimize legitimate consumers.” 

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 charges against Chang 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, Alameda and Contra Costa 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, visit www.justice.gov/atr/contact/newcase.html or call the FBI tip line at 415-553-7400.

This case was 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.**

Nine members of a violent, armed, outlaw motorcycle gang were indicted and arrested today, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan.

The nine individuals are members of the Phantom Outlaw Motorcycle Club, which is headquartered in northwest Detroit and has chapters throughout Michigan, Ohio, and Kentucky.  According to court records, the club and its members are allegedly involved in a range of criminal activity including murder and attempted murder, robbery, narcotics trafficking, the possession and sale of stolen motor vehicles and motorcycles, and witness intimidation. 

The indictment charged the following individuals:

• Antonio Johnson, 39, of Detroit, charged with conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to commit assault with a dangerous weapon in aid of racketeering, use and carry of firearms during and in relation to a crime of violence, and felon in possession of firearms.

• Marvin Nicholson, 45, of Detroit, charged with conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to commit assault with a dangerous weapon in aid of racketeering, use and carry of firearms during and in relation to a crime of violence, assault of federal officers, and felon in possession of firearms.

• Raynard Brown, 37, of Detroit, charged with conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to commit assault with a dangerous weapon in aid of racketeering, and use and carry of firearms during and in relation to a crime of violence.

• Christopher Odum, 28, of Detroit, charged with conspiracy to commit murder in aid of racketeering.

• Roger Valdez, 28, of Pontiac, Mich., charged with conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to commit assault with a dangerous weapon in aid of racketeering, and use and carry of firearms during and in relation to a crime of violence.

• Brian Sorrell, 27, of Detroit, charged with conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to commit assault with a dangerous weapon in aid of racketeering, and use and carry of firearms during and in relation to a crime of violence. 

• Brian Jackson, 46, of Detroit, charged with conspiracy to commit murder in aid of racketeering.

Two additional individuals, known at this time only by their club nicknames, have been charged with conspiracy to commit murder in aid of racketeering.

The details contained in the indictment are allegations.  The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The arrests were made as part of the Detroit One Initiative, a collaborative effort between law enforcement and the community to reduce homicide and other violent crime in Detroit, and through the lead efforts of the CVRP (Comprehensive Violence Reduction Partnership) Task Force, which consists of representatives of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Detroit Police Department; Michigan State Police; Michigan Department of Corrections; and the FBI.  By working collaboratively, local, state, and federal law enforcement is striving to maximize its ability to identify and arrest the persons and groups initiating the violence in Detroit.  This indictment is a tangible and significant result of this joint effort.

The case is being prosecuted by the Criminal Division’s Organized Crime and Gang Section and the U.S. Attorney’s Office for the Eastern District of Michigan in Detroit.

Defendant is Latest in a Series of Defendants Charged with Failing to Report Income from Undeclared Accounts in Israel

David Raminfard of Los Angeles pleaded guilty today in the U.S. District Court for the Central District of California to conspiracy to defraud the United States, the Justice Department and Internal Revenue Service-Criminal Investigation (IRS-CI) announced. 

According to court documents, Raminfard, a U.S. citizen, maintained undeclared bank accounts at an international bank headquartered in Tel Aviv, Israel, identified in court documents as Bank A.  The accounts were held in the names of nominees in order to keep them secret from the U.S. government.  One of the accounts was held in the name of Westrose Limited, a nominee entity formed in the Turks and Caicos Islands.  To further ensure that his undeclared accounts remained secret, Raminfard placed a mail hold on his accounts.  Rather than having his account statements mailed to him, Raminfard would receive them from an international accounts manager with Bank A in Israel, who brought the statements to Los Angeles and reviewed them with Raminfard during meetings at a hotel.

In or about 2000, Raminfard began secretly using the funds in his undeclared accounts as collateral for back-to-back loans obtained from the Los Angeles branch of Bank A.  Raminfard used one of the loans to purchase commercial real estate in Los Angeles.  By using back-to-back loans, Raminfard was able to access his funds in Israel without the U.S. Government finding out about his undeclared accounts.  These loans also enabled Raminfard to claim the interest paid on the loans as a business expense on his companies’ business tax returns, while not reporting the interest earned in Israel as income on his individual income tax returns filed with the IRS.  For tax years 2005 through 2010, Raminfard failed to report approximately $521,000 in income.  The highest balance in Raminfard’s undeclared accounts was approximately $3 million.

Raminfard is the latest in a series of defendants charged in the U.S. District Court for the Central District of California with conspiring to defraud the United States in connection with using undeclared bank accounts in Israel to obtain back-to-back loans in the United States.

U.S. citizens and residents who have an interest in, or signature or other authority over, a financial account in a foreign country with assets in excess of $10,000 are required to disclose the existence of such account on Schedule B, Part III, of their individual income tax returns.  Additionally, U.S. citizens and residents must file a Report of Foreign Bank and Financial Reports (FBAR) with the U.S. Treasury disclosing any financial account in a foreign country with assets in excess of $10,000 in which they have a financial interest or over which they have signature or other authority.

Raminfard faces a potential maximum prison term of five years and a maximum fine of $250,000.  In addition, Raminfard has agreed to pay a civil penalty to the IRS in the amount of 50 percent of the high balance of his undeclared accounts for failing to file FBARs.   

Assistant Attorney General Kathryn Keneally of the Department’s Tax Division and U.S. Attorney for the Central District of California André Birotte Jr. thanked special agents of IRS-CI, who investigated the cases, Tax Division Senior Litigation Counsel John E. Sullivan and Assistant Chief Elizabeth C. Hadden, who prosecuted the cases, and Assistant U.S. Attorney Sandra A. Brown of the U.S. Attorney’s Office, who assisted with the prosecutions.

Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax /.

The Justice Department announced today that it will monitor elections on Nov. 5, 2013, in Detroit and Hamtramck, Mich.; Orange County, N.Y.; and Cuyahoga and Lorain Counties, Ohio.  The monitoring is designed to ensure compliance with the Voting Rights Act, which prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. 

In Cuyahoga, Lorain and Orange Counties, the Department will assign federal observers from the U.S. Office of Personnel Management (OPM) to monitor polling place activities based on court orders.  The observers will watch and record activities during voting hours at polling locations in these jurisdictions and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials.

In addition, Justice Department personnel will monitor polling place activities in Detroit and Hamtramck.  Civil Rights Division attorneys will coordinate federal activities and maintain contact with local election officials.

Each year, the department deploys federal observers from OPM, as well as departmental staff, to monitor elections across the country.  To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the department’s Civil Rights Division at 1-800-253-3931.

Visit www.justice.gov/crt/about/vot/ for more information about the Voting Rights Act and other federal voting rights laws.

WASHINGTON - Global health care giant Johnson & Johnson (J&J) and its subsidiaries will pay more than $2.2 billion to resolve criminal and civil liability arising from allegations relating to the prescription drugs Risperdal, Invega and Natrecor, including promotion for uses not approved as safe and effective by the Food and Drug Administration (FDA) and payment of kickbacks to physicians and to the nation’s largest long-term care pharmacy provider.  The global resolution is one of the largest health care fraud settlements in U.S. history, including criminal fines and forfeiture totaling $485 million and civil settlements with the federal government and states totaling $1.72 billion.

“The conduct at issue in this case jeopardized the health and safety of patients and damaged the public trust,” said Attorney General Eric Holder.  “This multibillion-dollar resolution demonstrates the Justice Department’s firm commitment to preventing and combating all forms of health care fraud.  And it proves our determination to hold accountable any corporation that breaks the law and enriches its bottom line at the expense of the American people.”

The resolution includes criminal fines and forfeiture for violations of the law and civil settlements based on the False Claims Act arising out of multiple investigations of the company and its subsidiaries. 

“When companies put profit over patients’ health and misuse taxpayer dollars, we demand accountability,” said Associate Attorney General Tony West.  “In addition to significant monetary sanctions, we will ensure that non-monetary measures are in place to facilitate change in corporate behavior and help ensure the playing field is level for all market participants.”

In addition to imposing substantial monetary sanctions, the resolution will subject J&J to stringent requirements under a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  This agreement is designed to increase accountability and transparency and prevent future fraud and abuse.

“As patients and consumers, we have a right to rely upon the claims drug companies make about their products,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “And, as taxpayers, we have a right to ensure that federal health care dollars are spent appropriately.  That is why this Administration has continued to pursue aggressively – with all of our available law enforcement tools -- those companies that corrupt our health care system.”

J&J Subsidiary Janssen Pleads Guilty to Misbranding Antipsychotic Drug

In a criminal information filed today in the Eastern District of Pennsylvania, the government charged that, from March 3, 2002, through Dec. 31, 2003, Janssen Pharmaceuticals Inc., a J&J subsidiary, introduced the antipsychotic drug Risperdal into interstate commerce for an unapproved use, rendering the product misbranded.  For most of this time period, Risperdal was approved only to treat schizophrenia.  The information alleges that Janssen’s sales representatives promoted Risperdal to physicians and other prescribers who treated elderly dementia patients by urging the prescribers to use Risperdal to treat symptoms such as anxiety, agitation, depression, hostility and confusion.  The information alleges that the company created written sales aids for use by Janssen’s ElderCare sales force that emphasized symptoms and minimized any mention of the FDA-approved use, treatment of schizophrenia.  The company also provided incentives for off-label promotion and intended use by basing sales representatives’ bonuses on total sales of Risperdal in their sales areas, not just sales for FDA-approved uses.  

 
In a plea agreement resolving these charges, Janssen admitted that it promoted Risperdal to health care providers for treatment of psychotic symptoms and associated behavioral disturbances exhibited by elderly, non-schizophrenic dementia patients.  Under the terms of the plea agreement, Janssen will pay a total of $400 million, including a criminal fine of $334 million and forfeiture of $66 million.  Janssen’s guilty plea will not be final until accepted by the U.S. District Court.

The Federal Food, Drug, and Cosmetic Act (FDCA) protects the health and safety of the public by ensuring, among other things, that drugs intended for use in humans are safe and effective for their intended uses and that the labeling of such drugs bear true, complete and accurate information.  Under the FDCA, a pharmaceutical company must specify the intended uses of a drug in its new drug application to the FDA.  Before approval, the FDA must determine that the drug is safe and effective for those specified uses.  Once the drug is approved, if the company intends a different use and then introduces the drug into interstate commerce for that new, unapproved use, the drug becomes misbranded.  The unapproved use is also known as an “off-label” use because it is not included in the drug’s FDA-approved labeling.

“When pharmaceutical companies interfere with the FDA’s mission of ensuring that drugs are safe and effective for the American public, they undermine the doctor-patient relationship and put the health and safety of patients at risk,” said Director of the FDA’s Office of Criminal Investigations John Roth.  “Today’s settlement demonstrates the government’s continued focus on pharmaceutical companies that put profits ahead of the public’s health.  The FDA will continue to devote resources to criminal investigations targeting pharmaceutical companies that disregard the drug approval process and recklessly promote drugs for uses that have not been proven to be safe and effective.”

J&J and Janssen Settle Civil Allegations of Targeting Vulnerable Patients  with the Drugs Risperdal and Invega for Off-Label Uses

In a related civil complaint filed today in the Eastern District of Pennsylvania, the United States alleges that Janssen marketed Risperdal to control the behaviors and conduct of the nation’s most vulnerable patients: elderly nursing home residents, children and individuals with mental disabilities.  The government alleges that J&J and Janssen caused false claims to be submitted to federal health care programs by promoting Risperdal for off-label uses that federal health care programs did not cover, making false and misleading statements about the safety and efficacy of Risperdal and paying kickbacks to physicians to prescribe Risperdal.

“J&J’s promotion of Risperdal for unapproved uses threatened the most vulnerable populations of our society – children, the elderly and those with developmental disabilities,” said U.S. Attorney for the Eastern District of Pennsylvania Zane Memeger.  “This historic settlement sends the message that drug manufacturers who place profits over patient care will face severe criminal and civil penalties.”

In its complaint, the government alleges that the FDA repeatedly advised Janssen that marketing Risperdal as safe and effective for the elderly would be “misleading.”  The FDA cautioned Janssen that behavioral disturbances in elderly dementia patients were not necessarily manifestations of psychotic disorders and might even be “appropriate responses to the deplorable conditions under which some demented patients are housed, thus raising an ethical question regarding the use of an antipsychotic medication for inappropriate behavioral control.”

The complaint further alleges that J&J and Janssen were aware that Risperdal posed serious health risks for the elderly, including an increased risk of strokes, but that the companies downplayed these risks.  For example, when a J&J study of Risperdal showed a significant risk of strokes and other adverse events in elderly dementia patients, the complaint alleges that Janssen combined the study data with other studies to make it appear that there was a lower overall risk of adverse events.  A year after J&J had received the results of a second study confirming the increased safety risk for elderly patients taking Risperdal, but had not published the data, one physician who worked on the study cautioned Janssen that “[a]t this point, so long after [the study] has been completed … we must be concerned that this gives the strong appearance that Janssen is purposely withholding the findings.”

The complaint also alleges that Janssen knew that patients taking Risperdal had an increased risk of developing diabetes, but nonetheless promoted Risperdal as “uncompromised by safety concerns (does not cause diabetes).”  When Janssen received the initial results of studies indicating that Risperdal posed the same diabetes risk as other antipsychotics, the complaint alleges that the company retained outside consultants to re-analyze the study results and ultimately published articles stating that Risperdal was actually associated with a lower risk of developing diabetes.

The complaint alleges that, despite the FDA warnings and increased health risks, from 1999 through 2005, Janssen aggressively marketed Risperdal to control behavioral disturbances in dementia patients through an “ElderCare sales force” designed to target nursing homes and doctors who treated the elderly.  In business plans, Janssen’s goal was to “[m]aximize and grow RISPERDAL’s market leadership in geriatrics and long term care.”  The company touted Risperdal as having “proven efficacy” and “an excellent safety and tolerability profile” in geriatric patients.

In addition to promoting Risperdal for elderly dementia patients, from 1999 through 2005, Janssen allegedly promoted the antipsychotic drug for use in children and individuals with mental disabilities.  The complaint alleges that J&J and Janssen knew that Risperdal posed certain health risks to children, including the risk of elevated levels of prolactin, a hormone that can stimulate breast development and milk production.  Nonetheless, one of Janssen’s Key Base Business Goals was to grow and protect the drug’s market share with child/adolescent patients.  Janssen instructed its sales representatives to call on child psychiatrists, as well as mental health facilities that primarily treated children, and to market Risperdal as safe and effective for symptoms of various childhood disorders, such as attention deficit hyperactivity disorder, oppositional defiant disorder, obsessive-compulsive disorder and autism.  Until late 2006, Risperdal was not approved for use in children for any purpose, and the FDA repeatedly warned the company against promoting it for use in children.

The government’s complaint also contains allegations that Janssen paid speaker fees to doctors to influence them to write prescriptions for Risperdal.  Sales representatives allegedly told these doctors that if they wanted to receive payments for speaking, they needed to increase their Risperdal prescriptions.

In addition to allegations relating to Risperdal, today’s settlement also resolves allegations relating to Invega, a newer antipsychotic drug also sold by Janssen.  Although Invega was approved only for the treatment of schizophrenia and schizoaffective disorder, the government alleges that, from 2006 through 2009, J&J and Janssen marketed the drug for off-label indications and made false and misleading statements about its safety and efficacy.

As part of the global resolution, J&J and Janssen have agreed to pay a total of $1.391 billion to resolve the false claims allegedly resulting from their off-label marketing and kickbacks for Risperdal and Invega.  This total includes $1.273 billion to be paid as part of the resolution announced today, as well as $118 million that J&J and Janssen paid to the state of Texas in March 2012 to resolve similar allegations relating to Risperdal.  Because Medicaid is a joint federal-state program, J&J’s conduct caused losses to both the federal and state governments.  The additional payment made by J&J as part of today’s settlement will be shared between the federal and state governments, with the federal government recovering $749 million, and the states recovering $524 million.  The federal government and Texas each received $59 million from the Texas settlement.

Kickbacks to Nursing Home Pharmacies

The civil settlement also resolves allegations that, in furtherance of their efforts to target elderly dementia patients in nursing homes, J&J and Janssen paid kickbacks to Omnicare Inc., the nation’s largest pharmacy specializing in dispensing drugs to nursing home patients.  In a complaint filed in the District of Massachusetts in January 2010, the United States alleged that J&J paid millions of dollars in kickbacks to Omnicare under the guise of market share rebate payments, data-purchase agreements, “grants” and “educational funding.”  These kickbacks were intended to induce Omnicare and its hundreds of consultant pharmacists to engage in “active intervention programs” to promote the use of Risperdal and other J&J drugs in nursing homes.  Omnicare’s consultant pharmacists regularly reviewed nursing home patients’ medical charts and made recommendations to physicians on what drugs should be prescribed for those patients.  Although consultant pharmacists purported to provide “independent” recommendations based on their clinical judgment, J&J viewed the pharmacists as an “extension of [J&J’s] sales force.”

J&J and Janssen have agreed to pay $149 million to resolve the government’s contention that these kickbacks caused Omnicare to submit false claims to federal health care programs.  The federal share of this settlement is $132 million, and the five participating states’ total share is $17 million.  In 2009, Omnicare paid $98 million to resolve its civil liability for claims that it accepted kickbacks from J&J and Janssen, along with certain other conduct.

“Consultant pharmacists can play an important role in protecting nursing home residents from the use of antipsychotic drugs as chemical restraints,” said U.S. Attorney for the District of Massachusetts Carmen Ortiz.  “This settlement is a reminder that the recommendations of consultant pharmacists should be based on their independent clinical judgment and should not be the product of money paid by drug companies.”

Off-Label Promotion of the Heart Failure Drug Natrecor

The civil settlement announced today also resolves allegations that J&J and another of its subsidiaries, Scios Inc., caused false and fraudulent claims to be submitted to federal health care programs for the heart failure drug Natrecor.  In August 2001, the FDA approved Natrecor to treat patients with acutely decompensated congestive heart failure who have shortness of breath at rest or with minimal activity.  This approval was based on a study involving hospitalized patients experiencing severe heart failure who received infusions of Natrecor over an average 36-hour period.

In a civil complaint filed in 2009 in the Northern District of California, the government alleged that, shortly after Natrecor was approved, Scios launched an aggressive campaign to market the drug for scheduled, serial outpatient infusions for patients with less severe heart failure – a use not included in the FDA-approved label and not covered by federal health care programs.  These infusions generally involved visits to an outpatient clinic or doctor’s office for four- to six-hour infusions one or two times per week for several weeks or months.

The government’s complaint alleged that Scios had no sound scientific evidence supporting the medical necessity of these outpatient infusions and misleadingly used a small pilot study to encourage the serial outpatient use of the drug.  Among other things, Scios sponsored an extensive speaker program through which doctors were paid to tout the purported benefits of serial outpatient use of Natrecor.  Scios also urged doctors and hospitals to set up outpatient clinics specifically to administer the serial outpatient infusions, in some cases providing funds to defray the costs of setting up the clinics, and supplied providers with extensive resources and support for billing Medicare for the outpatient infusions.

As part of today’s resolution, J&J and Scios have agreed to pay the federal government $184 million to resolve their civil liability for the alleged false claims to federal health care programs resulting from their off-label marketing of Natrecor.  In October 2011, Scios pleaded guilty to a misdemeanor FDCA violation and paid a criminal fine of $85 million for introducing Natrecor into interstate commerce for an off-label use.

“This case is an example of a drug company encouraging doctors to use a drug in a way that was unsupported by valid scientific evidence,” said First Assistant U.S. Attorney for the Northern District of California Brian Stretch.  “We are committed to ensuring that federal health care programs do not pay for such inappropriate uses, and that pharmaceutical companies market their drugs only for uses that have been proven safe and effective.”

Non-Monetary Provisions of the Global Resolution and Corporate Integrity Agreement

In addition to the criminal and civil resolutions, J&J has executed a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS-OIG).  The CIA includes provisions requiring J&J to implement major changes to the way its pharmaceutical affiliates do business.  Among other things, the CIA requires J&J to change its executive compensation program to permit the company to recoup annual bonuses and other long-term incentives from covered executives if they, or their subordinates, engage in significant misconduct.  J&J may recoup monies from executives who are current employees and from those who have left the company.  The CIA also requires J&J’s pharmaceutical businesses to implement and maintain transparency regarding their research practices, publication policies and payments to physicians.  On an annual basis, management employees, including senior executives and certain members of J&J’s independent board of directors, must certify compliance with provisions of the CIA.  J&J must submit detailed annual reports to HHS-OIG about its compliance program and its business operations.

“OIG will work aggressively with our law enforcement partners to hold companies accountable for marketing and promotion that violate laws intended to protect the public,” said Inspector General of the U.S. Department of Health and Human Services Daniel R. Levinson.  "Our compliance agreement with Johnson & Johnson increases individual accountability for board members, sales representatives, company executives and management.  The agreement also contains strong monitoring and reporting provisions to help ensure that the public is protected from future unlawful and potentially harmful off-label marketing."

Coordinated Investigative Effort Spans Federal and State Law Enforcement

This resolution marks the culmination of an extensive, coordinated investigation by federal and state law enforcement partners that is the hallmark of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which fosters government collaborations to fight fraud.  Announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius, the HEAT initiative has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.

The criminal cases against Janssen and Scios were handled by the U.S. Attorney’s Offices for the Eastern District of Pennsylvania and the Northern District of California and the Civil Division’s Consumer Protection Branch.  The civil settlements were handled by the U.S. Attorney’s Offices for the Eastern District of Pennsylvania, the Northern District of California and the District of Massachusetts and the Civil Division’s Commercial Litigation Branch.  Assistance was provided by the HHS Office of Counsel to the Inspector General, Office of the General Counsel-CMS Division, the FDA’s Office of Chief Counsel and the National Association of Medicaid Fraud Control Units.

This matter was investigated by HHS-OIG, the Department of Defense’s Defense Criminal Investigative Service, the FDA’s Office of Criminal Investigations, the Office of Personnel Management’s Office of Inspector General, the Department of Veterans Affairs, the Department of Labor, TRICARE Program Integrity, the U.S. Postal Inspection Service’s Office of the Inspector General and the FBI.

One of the most powerful tools in the fight against Medicare and Medicaid financial fraud is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $16.7 billion through False Claims Act cases, with more than $11.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The department enforces the FDCA by prosecuting those who illegally distribute unapproved, misbranded and adulterated drugs and medical devices in violation of the Act.  Since 2009, fines, penalties and forfeitures that have been imposed in connection with such FDCA violations have totaled more than $6 billion.

The civil settlements described above resolve multiple lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the government and to share in any recovery.  From the federal government’s share of the civil settlements announced today, the whistleblowers in the Eastern District of Pennsylvania will receive $112 million, the whistleblowers in the District of Massachusetts will receive $27.7 million and the whistleblower in the Northern District of California will receive $28 million.  Except to the extent that J&J subsidiaries have pleaded guilty or agreed to plead guilty to the criminal charges discussed above, the claims settled by the civil settlements are allegations only, and there has been no determination of liability.
Court documents related to today’s settlement can be viewed online at www.justice.gov/opa/jj-pc-docs.html.

The Justice Department announced today that U.S. District Court Judge Myron H. Thompson sentenced four former corrections officers of the Alabama Department of Corrections – Michael Smith, Matthew Davidson, Joseph Sanders and Scottie Glenn – in connection with the beating death of former inmate Rocrast Mack.  Smith, 39, who was convicted by a federal jury on June 25, 2013, of seven counts of civil rights violations and obstruction of justice, was sentenced to 30 years imprisonment.  Davidson, 45, who pled guilty to two civil rights violations and an obstruction of justice violation, was sentenced to seven years.  Sanders, 32, who pled guilty to an obstruction of justice violation, was sentenced to five years.  Glenn, 30, who pled guilty to a civil rights violation and a conspiracy violation, was sentenced to five years. 

The incident occurred at Ventress Correctional Facility in Clayton, Ala., on Aug. 4, 2010, and at the time of the incident Smith was a lieutenant with supervisory authority over other officers on his shift.  According to the evidence presented at trial, Smith assaulted Mack in an office in the prison, repeatedly striking him with a baton, stomping on him and kicking him.  The evidence also showed that Smith assaulted Mack again several minutes later in the medical unit by repeatedly stomping on Mack’s head.  Mack died the following morning in a Montgomery, Ala., hospital.    

“These defendants each played a role in the vicious and fatal beating of Mr. Mack, and then they lied to authorities to conceal their culpability,” said Acting Assistant Attorney General for the Department’s Civil Rights Division Jocelyn Samuels.  “Their actions run completely counter to the responsibilities and trust given to law enforcement officers.  The Justice Department will continue to vigorously prosecute those officers who commit such heinous criminal acts, and I hope that these sentencings help bring some measure of closure to the Mack family.”

“The majority of our corrections officers are dedicated to protecting and serving the public,” said U.S. Attorney for the Middle District of Alabama George L. Beck Jr.  “These correctional officers were not so dedicated.  These correctional officers savagely beat, stomped, and tortured a restrained man and then lied to protect themselves.  There is no excuse for such behavior.  Correctional officers walk a tough line, but they cannot cross that line into the criminal element.  I hope that these sentences bring some sense of justice to the victim’s family and reinforce the notion that no one is above the law.”

This case was investigated by the Mobile, Ala., Division of the FBI in partnership with the Alabama Bureau of Investigation, and was prosecuted by Trial Attorney Patricia Sumner of the department’s Civil Rights Division and Assistant U.S. Attorney Jerusha Adams of the U.S. Attorney’s Office for the Middle District of Alabama.

Quentin Collick of Montgomery, Ala., and Deatrice Williams of Duluth, Ga., were sentenced Nov. 1, 2013, to serve 85 and 51 months in prison, respectively, announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney for the Middle District of Alabama George L. Beck Jr.  Collick and Williams were previously found guilty by a jury in the Middle District of Alabama of conspiring to file false claims, wire fraud, and aggravated identity theft.  Collick was also convicted of three counts of theft of public funds.  Corey Thompson, a co-conspirator, previously pleaded guilty and was sentenced to serve 30 months in jail.

Based on evidence introduced at trial and court filings, Williams worked for a debt collection company located in Norcross, Ga.  As an employee, Williams had access to a database that stored names, social security numbers and dates of birth of individuals who owed medical debts.  Williams stole the identities of a number of these individuals and provided the stolen information to Collick, her son-in-law.

Collick and Thompson used stolen identities to file false tax returns and fraudulently claim tax refunds.  In 2011 and 2012, Thompson worked as an independent contractor for a cable company installing cable and internet access for customers.  To conceal the filing of the false tax returns, Thompson used his specialized knowledge and equipment to shut down and hijack his customers’ internet service, and along with Collick, filed false tax returns using the customers’ internet access, making it appear as if the false tax returns were being filed by the customers.  Thompson and Collick then directed the tax refunds to be placed on pre-paid debit cards, which were mailed to Montgomery, Ala.  However, those cards were intercepted by the U.S. Postal Service.  Several tax refund checks were also mailed by the IRS, based upon the fraudulent returns, which Collick retrieved and cashed. 

This case was investigated by special agents of IRS - Criminal Investigation and prosecuted by Tax Division Trial Attorneys Michael Boteler, Jason H. Poole and Alexander Effendi

The owner of a Louisiana medical equipment supply company and a marketer who worked for the company have been indicted for allegedly engaging in a $3 million Medicare fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Special Agent in Charge Mike Fields of the Dallas Region of the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG), and Special Agent in Charge Michael Anderson of the FBI’s New Orleans Division made the announcement.

Tracy Brown, 43, of New Orleans, and Sandra Parkman Thompson, 62, who is currently incarcerated in Texas, were charged in the Eastern District of Louisiana in an 18-count indictment including charges of health care fraud, conspiracy to commit health care fraud, conspiracy to pay and receive health care fraud kickbacks, and illegal remuneration.  If convicted, the defendants face 10 years in prison for each health care fraud conspiracy and health care fraud count, and five years in prison for each remaining count.

According to the indictment, Brown owned Psalms 23-DME and is alleged to have billed Medicare more than $3 million for power wheelchairs, wheelchair accessories and orthotic equipment for Medicare beneficiaries who neither wanted nor needed the equipment.  Brown also allegedly paid illegal kickbacks to Thompson and other “marketers” to locate doctors who were willing to prescribe the equipment to Medicare beneficiaries who did not want or need these items.  Thompson and other marketers were paid for each prescription they obtained for Psalms 23-DME, regardless of whether the items prescribed were wanted or needed.

Thompson and other marketers allegedly obtained falsified prescriptions for medically unnecessary equipment from Drs. Anthony Jase and Michael Hunter.  A third physician allegedly provided falsified prescriptions directly to Brown.  In exchange, Brown paid this physician approximately $250 per prescription.

The indictment alleges that in some cases, the equipment Psalms 23-DME billed to Medicare was never provided to a Medicare beneficiary.  In other cases, Brown would bill for the most expensive types of durable medical equipment allowed by Medicare but would provide Medicare beneficiaries with much less expensive versions of the equipment, which would not have been reimbursed by Medicare.

According to the indictment, Brown allegedly paid Thompson and other marketers approximately $500 for each wheelchair referral submitted and between approximately $200 and $250 for a so-called “arthritis kit” referral, a term used by Psalms 23-DME for a number of braces and other orthotic items that were billed for Medicare beneficiaries regardless of medical need or physician request. 

Jase and Hunter pleaded guilty to health care fraud charges on Oct. 31, 2013, and Sept. 26, 2012, respectively, and are awaiting sentencing.

An indictment is merely an accusation and defendants are presumed innocent until and unless they are proven guilty. 

The case was investigated by HHS-OIG and the FBI and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section.  This case is being prosecuted by Trial Attorney Arunabha Bhoumik of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Patrice Sullivan of the Eastern District of Louisiana.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

The United States filed a complaint today asking a federal court in the Statesboro Division of the Southern District of Georgia, to enjoin Lakesia Michelle Mills, who does business as Willis Tax Service, from preparing federal income tax returns for others, the Justice Department announced.

The complaint alleges that since January 2011, Mills, who resides in and operates her business in Adrian, Ga., has prepared over 455 amended federal income tax returns.  According to the complaint, Mills understated her customers’ tax liabilities and overstated their refunds by preparing amended tax returns that improperly claimed the maximum First-Time Homebuyer Credit of $8,000.  Along with preparing the amended return, Mills provided customers a false settlement statement and proof of insurance to support the credit.  Mills prepared the amended returns without signing the returns or including her tax preparer identification number as is required.  Altogether, the government’s complaint alleges that the bogus credits claimed on the amended returns exceeded $3.6 million.

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2013 .  The Internal Revenue Service has tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional . In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website .

Related Materials:

United States v. Lakesia Michelle Mills, etc.
Complaint for Injunctive Relief
 

The Justice Department announced that on Nov. 1, 2013, it asked a federal court to bar Sergio Fernando Sosa and his company, Sergio Centro Latino, from preparing tax returns for others.  The civil injunction suit, filed in the U.S. District Court for the District of Utah, alleges that Sosa, who has been preparing returns in Orem, Utah since at least 1994, routinely prepares federal tax returns for individuals and corporations that improperly claim deductions and result in understated federal tax liabilities for his customers.

The complaint also alleges that Sosa prepares federal tax returns for his customers that falsely claim unqualified individuals as dependents, and that include false claims or inflated claims related to the Earned Income Tax Credit, false claims or inflated claims related to the Additional Child Tax Credit, false inclusion of expenses and deductions related to fictitious business entities, underreported income and inflated expenses of legitimate business entities, and failure to calculate or incorrect calculation of self-employment tax liabilities.  According to the complaint, Sosa has continued to engage in this conduct despite the fact that numerous penalties have been assessed against him for similar violations of the tax code.

The complaint alleges that Sosa’s actions have resulted in an estimated loss of as much as $416 million to the United States for tax returns prepared since 2008. 

Return preparer fraud is one of the Internal Revenue Service’s Dirty Dozen Tax Scams for 2013, which can be viewed at www.irs.gov/uac/Newsroom/IRS-Releases-the-Dirty-Dozen-Tax-Scams-for-2013 .  The Internal Revenue Service has tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional .  In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department website at www.justice.gov/tax/taxpress2013.htm

Related Materials:

United States v. Sergio Fernando Sosa, et al.
Complaint for Permanent Injunction and Other Relief

Oneike Mickhale Barnett pleaded guilty today in the U.S. District Court for the Southern District of Florida in Ft. Lauderdale to one count of conspiracy to commit wire fraud, the Justice Department, U.S. Postal Inspection Service, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and U.S. Marshals Service announced.  Barnett, a Jamaican citizen, was charged in connection with a lottery scheme based in Jamaica that fraudulently induced elderly victims in the U.S. to send Barnett and his co-conspirators thousands of dollars to cover fees for lottery winnings that victims had not won.

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

 
“All too often, what appears to be an unexpected lottery win is in fact a pernicious lottery scam, and one that cheats unsuspecting Americans out of their hard-earned savings,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division.  “The Department of Justice will continue our crackdown on those responsible for lottery schemes, particularly schemes that target the elderly.”

 
“As is evident by the prevalence of international lottery scams, fraudsters have no bounds,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida.  “While we will continue to combat fraud vigorously, and pursue and prosecute fraudsters using all legal means available to us, now more than ever, the public needs to be mindful of these schemes to avoid falling prey to them.  As I have previously stated, so long as fraudsters continue to line their pockets with the hard earned money of our most vulnerable citizens, we will be there to prosecute them and bring them to justice.”

 
Barnett was arrested in Orlando, Fla., in August 2013 following his indictment by a federal grand jury in Ft. Lauderdale on Aug. 9, 2012.  As part of his guilty plea, Barnett acknowledged that, had the case gone to trial, the U.S. would have proved beyond a reasonable doubt that, from 2008 through 2012, Barnett was a member of a conspiracy in which elderly victims were informed that they had won a large amount of money in a lottery and were induced to pay bogus fees in advance of receiving their purported lottery winnings.  Barnett also acknowledged that the government would have proved that he knew the claims of lottery winnings were completely fabricated and that he, along with his co-conspirators, kept the victims’ money for their own benefit without paying any lottery winnings.  Barnett also acknowledged that the government would have proved that, in an effort to convince the victims that the lottery winnings were real, the conspirators sent them written and electronic communications discussing their purported lottery winnings, which claimed to be from a genuine sweepstakes company and from federal agencies including the Internal Revenue Service and the Federal Reserve.  In fact, these communications were not from a genuine sweepstakes company or from agencies of the United States.        

“The United States Postal Inspection Service is dedicated to investigating and uncovering lottery fraud from Jamaica and combating such fraud,” said U.S. Postal Inspector in Charge for the Miami Division Ronald Verrochio. 

“Lottery fraud from Jamaica against American citizens is a very challenging problem, but as this case demonstrates, law enforcement in the U.S. working with our partners in Jamaica will continue to aggressively pursue such scammers even if they base their operations outside of the U.S.,” said Special Agent in Charge for Homeland Security Investigations in Miami Alysa D. Erichs.

“Working with our law enforcement partners at the Postal Inspection Service and Homeland Security Investigations, the Marshals Service was pleased to be able to help catch this defendant and bring him to justice,” said Acting U.S. Marshal Neil DeSousa.  

Assistant Attorney General Delery and U.S. Attorney Ferrer commended the investigative efforts of the U.S. Postal Inspection Service, Homeland Security Investigations, the U.S. Marshals Service and Jamaica’s Major Organized Crime and Anti-Corruption Task Force.  The case is being prosecuted by Assistant U.S. Attorney Bertha Mitrani and Consumer Protection Branch, Civil Division Assistant Director Jeffrey Steger and trial attorney Kathryn Drenning.

The U.S. Bankruptcy Court for the District of Delaware approved a settlement agreement today between the United States and the APCO Liquidating Trust (a successor in interest to APCO Oil Corporation).  The settlement follows seven years of litigation concerning the APCO Liquidating Trust’s liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or “Superfund”) for costs incurred by the U.S. Environmental Protection Agency (EPA) for the ongoing cleanup of the Oklahoma Refining Company (ORC) Superfund Site located in Cyril, Okla.

In February 2006, EPA filed a proof of claim in the Trust’s bankruptcy proceeding seeking the recovery of past and estimated future cleanup costs incurred in connection with the site.

Under the settlement agreement, the APCO Liquidating Trust and the APCO Missing Stockholder Trust have agreed to pay $14 million to the United States in order to resolve the U.S. action and related litigation. 

“We are very pleased that as a result of vigorous enforcement in the bankruptcy court, the United States was able to achieve a substantial recovery,” said Robert G. Dreher, Acting Assistant Attorney General for the Environment and Natural Resources Division.  “The settlement payments will be used to fund expected future cleanup at the ORC Superfund Site.  This is good news for U.S. taxpayers and the environment.”

The ORC Site was operated by Anderson-Prichard Oil Corporation and APCO Oil Corporation as an oil refinery from 1920 until about 1978, and then in a limited capacity by Oklahoma Refining Company until 1987.  In 1990, EPA placed the site on the National Priorities List.  EPA’s previous response actions addressed contamination of surface water, soil, and sediments on the southern portion of the site and the demolition and removal of refinery structures, tanks, and chemicals from the northern portion of the site. 

On June 17, 2013, EPA Region 6 and the Oklahoma Department of Environmental Quality issued a record of decision for Operable Unit 2.  This decision selected the remedy for the remaining contaminated soil, sediment, and light non-aqueous phase liquid on the north side of the site.  Work is expected to begin on this remedy in 2014.  When the necessary studies are completed, EPA and ODEQ will select a remedy for site ground water in a third and final record of decision. 

The Justice Department announced a settlement today with the Warren County, N.C. Board of Education that resolves a lawsuit the department filed on behalf of Army Reserve soldier Dwayne Coffer under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).

The settlement, which was filed as a consent agreement in the U.S. District Court for the Eastern District of North Carolina, resolves allegations that the Warren County Board of Education willfully violated USERRA by not renewing Coffer’s employment contract in 2008 because of his military service obligations.  Coffer, a Sergeant First Class in the U.S. Army Reserve, worked at Warren County High School as an assistant principal.  During his employment with the county, Coffer took periodic leave from work to fulfill his military obligations, including service in Kuwait and Afghanistan from February 2004 to February 2005.  According to the department’s complaint, the board did not renew Coffer’s contract as an assistant principal in 2008 because staff members expressed frustration at accommodating his military service during the school year.

USERRA prohibits employers from discriminating against servicemembers with respect to employment opportunities based on their past, current or future uniformed service obligations.  USERRA also requires employers to promptly reemploy service members following their return from military leave.  Under the terms of the consent agreement, the Warren County Board of Education will, among other stipulations, reemploy Coffer under a two-year contract as a Lead Teacher/Site Supervisor at the salary he would have received had he remained continuously  employed by the county, pay back-pay to Coffer in the amount of $10,000 and contribute lost retirement payments to Coffer’s retirement account in the amount of $13,702.63.

“USERRA affords military members who leave their civilian careers behind for significant periods of time to serve our country certain protections against unjust terminations,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division.  “It is important that veterans have the opportunity to serve their country free from worry about termination without cause.”

“I am pleased we were able to resolve this matter,” said U.S. Attorney Thomas G. Walker.  “Improper job terminations over military service cannot be tolerated.” 

The department initiated the lawsuit after Coffer filed a complaint with the Labor Department’s Veterans’ Employment and Training Service, which investigated the matter and determined that the complaint had merit.  This case was handled by the Employment Litigation Section of the Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of North Carolina.

Additional information about USERRA can be found on the Justice Department websites www.usdoj.gov/crt/emp and www.servicemembers.gov , as well as the Labor Department website www.dol.gov/vets/programs/userra/main.htm .

A federal jury in Houston has convicted Gwendolyn Climmons-Johnson, 53, of multiple counts of health care fraud for submitting false and fraudulent claims to Medicare for ambulance services.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas made the announcement.

After a three-day trial, the jury convicted Climmons-Johnson on Oct. 30, 2013, of one count of conspiracy to commit health care fraud and four counts of health care fraud.  She faces a maximum penalty of 10 years in prison for each count when she is sentenced on Feb. 7, 2014.

According to evidence presented at trial, Climmons-Johnson was the owner and operator of Urgent Response EMS (Urgent Response), a Texas-based entity that purportedly provided non-emergency ambulance services to Medicare beneficiaries in the Houston area.  The evidence showed that from January 2010 through December 2011, Climmons-Johnson and others conspired to unlawfully enrich themselves by submitting false and fraudulent claims to Medicare for ambulance services that were medically unnecessary and/or not provided.  Climmons-Johnson, who controlled the day-to-day operations of Urgent Response, submitted, and caused to be submitted, approximately $2.4 million in fraudulent ambulance service claims to Medicare. 

At trial, the evidence showed that patient records had been falsified and the Medicare beneficiaries for whom Climmons-Johnson had billed ambulance services did not need ambulance services and were not in the condition stated in the records. 

The case was investigated by the FBI, the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), and the Texas Attorney General Medicaid Fraud Control Unit.  The case was brought as part of the Medicare Fraud Strike Force, under the supervision of the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.

The case was tried by Assistant Chief Laura M.K. Cordova and Trial Attorney Christopher Cestaro of the Criminal Division’s Fraud Section, with assistance from former Special Assistant U.S. Attorney James S. Seaman. 

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

McAllen Area Man Allegedly Prepares Tax Returns Claiming False Deductions and Credits

The United States has filed a lawsuit asking a federal district court in McAllen, Texas, to permanently bar Hector Rangel Jr. from preparing federal tax returns for others, the Justice Department announced today.

According to the complaint, Rangel, who resides near and does business in McAllen, has been preparing federal tax returns for customers since 2003 that contain false, improper, or inflated itemized deductions or business-expense deductions.  The complaint also alleges that Rangel prepares returns that claim improper tax credits such as the earned income tax credit (EITC), fails to create or retain accurate “due diligence” documentation for EITC claims, and does not sign and provide his identification number on all returns he prepares.  Most of Rangel’s customers allegedly reside in southern Texas.

In one instance described in the complaint, Rangel allegedly claimed farming-expense deductions on three tax returns for a married couple who did not own a farming business and never provided any farm-expense documentation to Rangel.  The lawsuit also alleges that Rangel claimed improper tax credits on his own income tax returns for 2008 through 2010 and that the Internal Revenue Service (IRS) assessed accuracy-related penalties against him with respect to those returns.

The complaint further alleges that 96 percent of the returns examined by the IRS, which Rangel had prepared from the 2003 through 2012 tax-filing seasons, were found to have understated the tax liabilities of Rangel’s customers.  According to the complaint, the IRS estimates that the total tax harm from Rangel’s unlawful tax-preparation activities during that period could be over $15 million.

Return preparer fraud is one of the Internal Revenue Service’s Dirty Dozen Tax Scams for 2013 which can be viewed at www.irs.gov/uac/Newsroom/IRS-Releases-the-Dirty-Dozen-Tax-Scams-for-2013 .  The Internal Revenue Service has tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional . In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers.  Information about these cases is available on the Justice Department website at www.justice.gov/tax/taxpress2013.htm.

Related Materials:

United States v. Hector Rangel Jr., etc.
Complaint for Permanent Injunction

Vernon Harrison, of Montgomery, Ala., was sentenced to serve 111 months in prison and three years supervised release, along with an order to pay $82,791 restitution, for his role in a stolen identity refund fraud scheme , announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney for the Middle District of Alabama George L. Beck Jr.  Harrison was convicted on July 3, 2013, following a jury trial in the Middle District of Alabama.  He was found guilty of conspiracy to file false claims, as well as numerous counts of mail fraud, aggravated identity theft, and embezzlement from the mail. 

According to the evidence presented at the trial, Harrison was a corrupt U.S. Postal Service mail carrier who was recruited to join a stolen identity refund fraud conspiracy.  Members of the conspiracy used stolen identities to file false tax returns, which claimed fraudulent tax refunds.  The returns were filed from various locations, including houses and hotels around Montgomery and Birmingham, Ala.  The tax refunds were placed on debit cards that were mailed to addresses along Harrison’s postal route in Montgomery.  Harrison stole the debit cards from the mail and provided them to a co-conspirator in exchange for cash.  During this period Harrison stole over 100 debit cards from the mail for his co-conspirators. 

At trial, federal agents showed that they had uncovered substantial evidence of the conspiracy during the execution of search warrants at locations in Montgomery and near Birmingham.  This evidence included over 100 envelopes for debit cards that had been mailed to addresses on Harrison’s postal route, as well as agents’ observation that Harrison failed to deliver Turbo Tax debit cards.

Kathryn Keneally, Assistant Attorney General for the Justice Department's Tax Division, commended the efforts of special agents of the Internal Revenue Service - Criminal Investigation and the U.S. Postal Service, Office of the Inspector General, who investigated the case, and Tax Division Trial Attorneys Jason Poole and Michael Boteler, who prosecuted the case.  Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.justice.gov/tax .

Vladimir Kats, 41, of Brooklyn, N.Y., pleaded guilty today in federal court before U.S. District Judge Denise L. Cote to money laundering and operating an unlicensed money transmitting business.  The charges stem from his role in running Liberty Reserve, a company that operated one of the world’s most widely used digital currency services and allegedly laundered more than $6 billion in suspected proceeds of crimes.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Preet Bharara of the Southern District of New York made the announcement. 

“Vladimir Kats, by his own admission, helped to create and operate an anonymous digital currency system that provided cybercriminals and others with the means to launder criminal proceeds on an unprecedented scale,” said Acting Assistant Attorney General Mythili Raman. “His conviction reinforces what we said when Liberty Reserve was first brought down: banking systems that allow criminals to conduct illegal transactions anonymously will not be allowed to stand, and professional money launderers will be brought to justice.”

“As a co-founder and operator of Liberty Reserve, Vladimir Kats served as a global banker for criminals, giving them an anonymous, online forum to hide the proceeds of their illegal and dangerous activities,” said U.S. Attorney Preet Bharara. “With his guilty plea today, we take a significant step toward punishing those responsible for creating and running this international den of cybercrime.”

According to court records, Liberty Reserve was incorporated in Costa Rica in 2006 and billed itself as the Internet’s “largest payment processor and money transfer system.”  Liberty Reserve allegedly was created and structured, and operated, to help users conduct illegal transactions anonymously and launder the proceeds of their crimes, and it emerged as one of the principal money transfer agents used by cybercriminals around the world to distribute, store, and launder the proceeds of their illegal activity.  Liberty Reserve allegedly was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cybercriminals to conduct anonymous and untraceable financial transactions. 

According to the indictment, before being shut down by the government in May 2013, Liberty Reserve had more than one million users worldwide, including more than 200,000 users in the United States, who conducted approximately 55 million transactions through its system and allegedly laundered more than $6 billion in suspected proceeds of crimes, including credit card fraud, identity theft, investment fraud, computer hacking, child pornography, and narcotics trafficking.  Kats co-founded Liberty Reserve and helped operate the company until in or about 2009.

Kats was arrested in Brooklyn in May 2013 and pleaded guilty today to one count of conspiring to commit money laundering, which carries a maximum sentence of 20 years in prison; one count of conspiring to operate an unlicensed money transmitting business, which carries a maximum sentence of five years in prison; one count of operating an unlicensed money transmitting business, which carries a maximum sentence of five years in prison; one count of receiving child pornography, which carries a maximum sentence of 40 years in prison and a mandatory minimum sentence of 15 years in prison; and one count of marriage fraud, which carries a maximum sentence of five years in prison.  A sentencing date has not yet been scheduled.

This case is being investigated by the Secret Service, the Internal Revenue Service-Criminal Investigation and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, with assistance from the Secret Service’s New York Electronic Crimes Task Force.  The Judicial Investigation Organization in Costa Rica; the National High Tech Crime Unit in the Netherlands, the Financial and Economic Crime Unit of the Spanish National Police; the Cyber Crime Unit at the Swedish National Bureau of Investigation; and the Swiss Federal Prosecutor’s Office also provided assistance. 

This case is being prosecuted jointly by the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) and the U.S. Attorney’s Office’s Complex Frauds Unit and Asset Forfeiture Unit in the Southern District of New York, with assistance from the Criminal Division’s Office of International Affairs and Computer Crime and Intellectual Property Section.

Trial Attorney Kevin Mosely of AFMLS and Assistant U.S. Attorneys Serrin Turner and Andrew Goldstein of the Southern District of New York are in charge of the prosecution, and Assistant U.S. Attorney Christine Magdo is in charge of the forfeiture aspects of the case.

The charges in the indictment against Kats’s co-defendants remain pending and are merely accusations.  Those defendants are presumed innocent unless and until proven guilty.

Assistant Attorney General for the Tax Division Kathryn Keneally and U.S. Attorney Melinda Haag for the Northern District of California announced that Noemi Rubio Baez, of Salinas, Calif., pleaded guilty to conspiracy to file false claims for tax refunds with the Internal Revenue Service (IRS) and to aggravated identity theft.

According to the plea agreement, beginning around Feb. 28, 2008 and continuing through April 16, 2012, Baez and a co-conspirator participated in a scheme to obtain and to help others obtain false claims from the IRS by electronically filing in her own name, and in the names of others, false federal income tax returns.  Baez and her co-conspirator created false income information in the names and Social Security numbers of multiple individuals, and filed materially false tax returns with the IRS claiming refunds derived from tax credits including the Earned Income Tax Credit, the Additional Child Tax Credit, and the Making Work Pay Credit.

According to court documents, in some instances, the taxpayers requested the returns be prepared, but in others the taxpayers did not provide Baez or her co-conspirator with their personal identification information and were unaware that the returns had been filed in their names.  Baez and her co-conspirator filed more than 150 false and fraudulent claims unlawfully seeking more than $400,000 in tax refunds.

At the time of her sentencing, scheduled for Jan. 23, 2014, before U.S. District Judge D. Lowell Jensen, Baez faces a maximum penalty of 12 years in prison, three years of supervised release and a fine of $500,000.

Assistant Attorney General Kathryn Keneally and U.S. Attorney Melinda Haag thanked special agents of IRS - Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Charles O’Reilly, Erin S. Mellen and Sonia M. Owens, who are prosecuting the case.

The Department of Justice announced today that a federal grand jury sitting in Salt Lake City returned a superseding indictment charging Macon Openshaw, 21, of Salt Lake City, on gun possession charges and a federal hate crime charge relating to a bias-motivated attack at a local synagogue.

The indictment alleges that between Jan. 1, 2012 and April 30, 2012, Openshaw intentionally defaced and damaged the Congregation Kol Ami synagogue in Salt Lake City by firing several rounds from a Walther .22 caliber handgun at the building, breaking windows and damaging the window frame of the building.  Openshaw allegedly performed these actions because of the religious character of the synagogue.  This charge carries a statutory maximum sentence of 20 years imprisonment.

The superseding indictment charges Openshaw with one count of using and carrying a firearm in relation to a crime of violence, possession of a firearm with a removed, obliterated or altered serial number and possession of a firearm while subject to a protective order.  An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.

The matter is being investigated by the Salt Lake City Division of the FBI and is being prosecuted by Assistant U.S. Attorney Carlos Esqueda of the U.S. Attorney’s Office for the District of Utah, Central Division, and Trial Attorney  Nicholas Durham of the U.S. Department of Justice’s Civil Rights Division.

The government has intervened in a lawsuit filed under the False Claims Act against United States Investigations Services LLC (USIS) in the U.S. District Court for the Middle District of Alabama, the Department of Justice announced today.  The lawsuit alleges that USIS, located in Falls Church, Va., failed to perform quality control reviews in connection with its background investigations for the U.S. Office of Personnel Management (OPM). 

 
The lawsuit was filed by a former employee of USIS, Blake Percival, under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties, known as relators, to sue on behalf of the government when they believe false claims for government funds have been submitted.  The private party is entitled to receive a share of any funds recovered through the lawsuit.  The False Claims Act also permits the government to investigate the allegations made in the relator’s complaint and to decide whether to intervene in the lawsuit, and to recover three times its damages plus civil penalties.  The government is intervening now based on the results of its investigation of the relator’s allegations and has requested that the court give it until Jan. 22, 2014, to file its own complaint. 

“We will not tolerate shortcuts taken by companies that we have entrusted with vetting individuals to be given access to our country’s sensitive and secret information,” said Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division.  “The Justice Department will take action against those who charge the taxpayers for services they failed to provide, especially when their non-performance could place our country’s security at risk.”

Since 1996, USIS has contracted with OPM to perform background investigations on individuals seeking employment with various federal agencies.  Executed in 2006, the contract at issue in the lawsuit required USIS to conduct the investigatory fieldwork on each prospective applicant.  It also required that a trained USIS Reviewer perform a full review of each background investigation to ensure it conformed to OPM standards before sending the file back to OPM for processing. 

According to the relator’s complaint, starting in 2008, USIS engaged in a practice known at USIS as “dumping.”  Specifically, USIS used a proprietary computer software program to automatically release to OPM background investigations that had not gone through the full review process and thus were not complete.  USIS allegedly would dump cases to meet revenue targets and maximize its profits.  The lawsuit alleges that USIS concealed this practice from OPM and improperly billed OPM for background investigations it knew were not performed in accordance with the contract. 

“Thorough, appropriate and accurate background checks are essential in the employment of government personnel,” said George L. Beck Jr., U.S. Attorney for the Middle District of Alabama.  “The increase in foreign and domestic terrorism places an increased responsibility on our government to ensure that unsuitable individuals are prohibited from government employment.”

“This is a clarion call for accountability,” said Patrick E. McFarland, Inspector General of OPM.   “As recent events have shown, it is vital for the safety and security of Americans to have these background investigations performed in a thorough and accurate manner.  We can accept no less.  Those responsible for any malfeasance that compromises the integrity of the background investigations process must be held accountable.”

“OPM does not tolerate fraud or falsification,” said Elaine Kaplan, Acting Director of OPM.  “We work hard to prevent and detect both through a variety of means including a robust integrity assurance program, multiple levels of review and workforce education and training.  We also work hand in hand with our Inspector General and the Department of Justice when we discover fraud so that bad actors are held accountable to the fullest extent of the law.”

This matter was handled by the Commercial Litigation Branch of the Justice Department’s Civil Division and the U.S. Attorney’s Office for the Middle District of Alabama in conjunction with OPM’s Office of Inspector General and Federal Investigative Service.

The claims asserted against USIS are allegations only, and there has been no determination of liability.

The Justice Department announced today that Anthony Williams, a resident of Baton Rouge, La., pleaded guilty today to one count of threatening to retaliate against a witness in a federal criminal tax trial.

According to court documents, Williams threatened to cause bodily injury to a witness who testified in the federal trial of United States v. Angela Myers.  In his plea agreement, Williams, who is Myers’ son, admitted to sending a threat via Instagram with the intent to retaliate against the witness for his testimony.  In March 2013, Myers was convicted by a jury for her role in a stolen identity tax refund fraud scheme, and was subsequently sentenced to serve 11 years in federal prison. 

Williams faces a potential maximum sentence of 20 years in federal prison and a $250,000 fine.  As part of his plea agreement, Williams also agreed to a condition of release prohibiting him from initiating any contact whatsoever with the witness he threatened.

This case was investigated by Special Agents of the Internal Revenue Service (IRS)- Criminal Investigation and the Treasury Inspector General for Tax Administration.  Trial Attorneys Justin Gelfand and Jason Poole of the Department’s Tax Division are prosecuting the case with the assistance of the U.S. Attorney’s Office for the Middle District of Louisiana.

Dr. Mikhail L. Presman, a licensed psychiatrist employed by the Department of Veterans Affairs (VA), pleaded guilty today to health care fraud for falsely billing Medicare for home medical treatment to Medicare beneficiaries and agreed to forfeit more than $1.2 million in illegal profits. 

 
Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta 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.

 
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.  Contrary to his representations, 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.  Additionally, Presman submitted claims to Medicare for 55 home medical visits to beneficiaries who were hospitalized on the date of the purported visits.

 
Presman is scheduled to be sentenced by U.S. District Judge I. Leo Glasser of the Eastern District of New York on Feb. 13, 2014, and faces a maximum sentence of 10 years in prison.

 
The case was investigated by the HHS-OIG, with assistance from the Department of Veterans Affairs Office of Inspector General, and brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of New York.  The case is being prosecuted by Trial Attorney Bryan D. Fields of the Fraud Section and Assistant U.S. 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 1,500 defendants who have collectively billed the Medicare program for more than $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.

GUAM –ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced the filing on October 30, 2013, of federal criminal charges against MICHAEL SAN NICOLAS SANTOS stemming from recent bomb threats directed at the Dededo Mall.

The federal criminal complaint (a copy of which is attached) alleges that on three occasion – September 26, 2013, October 10, 2013, and October 29, 2013 – SANTOS, using a cellular phone, called 911 and falsely reported a bomb threat to the Dededo Mall located in Dededo, Guam. On each of those dates, SANTOS was scheduled to appear as a defendant in a small claims case pending in the Superior Court of Guam, Northern Court Satellite, which is located in the Dededo Mall. Each of the phone calls was made shortly before SANTOS’ scheduled court appearance and caused the evacuation of the court and other occupants of the Dededo Mall, and the continuance of SANTOS’ hearing and all court cases. Santos was arrested on October 29, 2013, shortly after the most recent bomb threat.

The complaint charges three counts of violating Title 18, United States Code, Section 844(e). Under that statute, it is a federal criminal offense to willfully make a threat or maliciously convey false information, through the use of a telephone, an instrument of interstate or foreign commerce, concerning an alleged attempt being made to unlawfully damage or destroy a building by means of an explosive. Each violation of the statute carries a maximum potential sentence of ten years in federal prison and a $250,000 fine.
The defendant made his initial appearance before U.S. Magistrate Judge Joaquin V.E. Manibusan, Jr. on October 30, 2013, at 10:00 am. The Court set a preliminary examination hearing for November 13, 2013, at 2:30 pm, and remanded the defendant to the custody of the U.S. Marshals Service.

The investigation was conducted by the Federal Bureau of Investigation, the Guam Police Department, E911 personnel, the Guam Fire Department, and the Joint Terrorism Task Force. The case is being prosecuted by Assistant United States Attorney Marivic David.

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

Attorney General Eric Holder today announced a total of $6.7 million in grants to state and local criminal and civil legal services organizations across the country that provide legal defense services for the poor.  These grants from the Office of Justice Programs (OJP) are part of the Justice Department’s continuing efforts to improve indigent defense, which is often underfunded and understaffed, and to support training, mentoring, technical assistance, leadership development and research to enhance the effectiveness of adult, juvenile and tribal indigent defense practices.

 “Everyone accused of a serious crime has the right to legal representation – even if she or he cannot afford it,” said Attorney General Holder.  “In recent years, the Department of Justice has made a commitment to improving the delivery, quality and availability of legal services for everyone in our country, including the very poor.  Today's significant grant awards will help ensure America’s criminal justice system is fair for every defendant, regardless of wealth.”

 “These awards, in conjunction with other efforts we’re making to strengthen indigent defense, will fortify our public defender system and help us to meet our constitutional and moral obligation to administer a justice system that matches its demands for accountability with a commitment to fair, due process for poor defendants,” said Associate Attorney General Tony West.

 The FY 2013 grants, which promote cost-effective innovations to improve indigent defense, are administered by OJP’s Bureau of Justice Assistance (BJA), National Institute of Justice (NIJ) and Office of Juvenile Justice and Delinquency Prevention (OJJDP).

 In FY 2013, BJA awarded a total of $5.4 million.  Of this amount, $1 million was awarded to Gideon’s Promise, a nonprofit organization that partners with public defender offices to build a community of attorneys committed to indigent defense reform.  The funds will provide 25 new attorneys, including criminal defense lawyers working on tribal lands; establish training and leadership development for public defender trainers and supervisors and a semi-annual leadership summit for chief defenders; and create an advisory council to test measures and indicators showing the outcomes of providing effective counsel for all individuals. 

 Another $90,000 was awarded to the states of Mississippi, Tennessee and Utah through BJA’s National Training and Technical Assistance Center (NTTAC).  Through NTTAC, BJA assists jurisdictions with meeting their constitutional obligation to provide adequate representation to indigent defendants.  Services include assessing the effectiveness of indigent defense systems, developing recommendations to ensure adequate and appropriate services are provided consistently throughout the state and determining appropriate measures for evaluating a defender services program.

 The Measures for Justice (MFJ) initiative, which will provide a framework for using indicator metrics to evaluate local criminal justice systems against a national standard of excellence, received $50,000.  MFJ is conducting a pilot study in Milwaukee to examine the capacity and availability of resources at the local level and to determine where additional resources are needed within the criminal justice system.

Answering Gideon’s Call, a national assistance program to improve the effectiveness of right to counsel services, received $1.8 million of the $5.4 million awarded by BJA.  Of the $1.8 million, Seattle University received $450,000 to, in partnership with the Sixth Amendment Center (6AC), provide training and technical assistance to educate policymakers and aid the unfunded, legislatively established Office of the Public Defender in Mississippi and work with the Utah Judicial Council to develop standards assessing indigent defense services to help state legislatures meet their constitutional obligations.  Another $891,854 was awarded to the National Association of Criminal Defense Lawyers (NACDL) to train public defenders and assigned counsel by regions to meet specific jurisdictional needs, such as helping them to better manage workloads.  The remaining $450,000 went to American University in partnership with the National Legal Aid and Defender Association to conduct a nationwide self-assessment evaluating whether state and local indigent defense providers comply with standards incorporated into the American Bar Association’s Ten Principles, producing the first national empirical assessment of quality of indigent defense services. 

Through its Encouraging Innovation:  Field Initiated Programs, BJA awarded a total of $619,700 to the San Francisco Public Defender’s Office ($395,231) to create the first local and nationally applicable checklist system to better guide attorneys through key moments in cases, ensuring competent representation and avoiding costly errors, and to NACDL ($224,469) to develop pretrial release manuals for the defense bar and to provide onsite training and distance learning to give attorneys the necessary tools to engage in effective bail advocacy.

The remaining $1.9 million of BJA’s awarded $5.4 million was provided through the Tribal Civil and Criminal Legal Assistance Initiative, designed to improve access to tribal justice systems and strengthen representation of indigent defendants in civil causes of action and in criminal cases under Indian tribes’ jurisdiction.  Of the $1.9 million, the Tulalip Foundation received $262,943 to provide regional, direct legal services to tribal members and $121,779 to create a Criminal Conflict Counsel Program to train defense counsel and provide services to resolve cases.  The Native American Rights Fund received $715,944 to continue its partnership with the National American Indian Legal Association and its 25 Indian Legal Services organizations providing civil legal representation to tribes and tribal members, and a second award of $515,940 to provide indigent defense services to tribes and tribal members.  The William Mitchell College of Law received $283,394 to provide direct criminal defense services and legal assistance to up to seven tribes.

OJJDP made two FY 2013 awards, totaling more than $1 million, to the National Juvenile Defender Center in the District of Columbia in order to improve juvenile indigent defense across the nation.  The first award, in the amount of $400,000, will provide juvenile defense counsel with customized technical assistance, training, and resources for policy development and reform.  The second award, in the amount of $695,000, will support the Juvenile Indigent Defense Special Initiative to reduce the overrepresentation of minority youth in the juvenile justice system and to improve access to counsel and quality of representation for youth with unique needs, including lesbian, gay, bisexual and transgender youth and those with disabilities, substance abuse behaviors and language access needs. 

In FY 2013, NIJ awarded $334,000 to the RAND Corp. in Pittsburgh, Pa., for an empirical evaluation of the holistic approach to individual defense, which includes the defense attorney as one member of an interdisciplinary team providing comprehensive services to address defendants’ legal and social needs.  The study will examine the effect of holistic defense on case outcomes such as plea status, verdict and sentence and disposition length and estimate the effectiveness of the holistic approach for subgroups of offenses or defendants. 

 More information about the Justice Department’s Access to Justice Initiative, which works to strengthen and improve legal services for disadvantaged groups, is available at www.usdoj.gov/atj.

 OJP, headed by Assistant Attorney General Karol V. Mason, provides federal leadership in developing the nation’s capacity to prevent and control crime, administer justice and assist victims.  OJP has six components: the Bureau of Justice Assistance; the Bureau of Justice Statistics; the National Institute of Justice; the Office of Juvenile Justice and Delinquency Prevention; the Office for Victims of Crime and the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering and Tracking.  More information about OJP can be found at www.ojp.gov.

U.S. District Court Judge S. Thomas Anderson sentenced Terrence Yarbrough, aka “T-Rex,” 38, of Memphis, Tenn., to serve 536 months in prison, the Justice Department announced today. A jury convicted Yarbrough on Dec. 5, 2012 of 10 counts of sex trafficking and one count of conspiracy to commit food stamp fraud.

“The Civil Rights Division is committed to pursuing justice on behalf of vulnerable members of our society,” said Acting Assistant Attorney General Jocelyn Samuels. “Today’s sentence sends a clear message that the United States will not tolerate modern-day slavery and will work tirelessly to restore the rights and dignity of its victims.”

“Today’s sentence of 536 months in prison ensures Terrence Yarbrough, a ruthless predator who inflicted unspeakable physical and emotional harm upon vulnerable young women, will be held accountable for his depraved acts,” said Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee. “We will continue to prosecute those who engage in such reprehensible conduct of coercion and exploitation.”

During the trial, victims recounted a series of violent acts perpetrated by Yarbrough to coerce them into prostituting for him, including being beat with belts, wooden coat hangers, crowbars, padlocks and dog chains; being thrown down stairs; having their heads smashed in car doors; having their legs burned with irons; and being scalded with boiling water.

“The horrific physical violence, sexual abuse, and emotional torment suffered by the victims in this case cannot be undone, but this sentence ensures that their violent and evil predator will face the consequences of his actions,” said A. Todd McCall, Special Agent in Charge of the Memphis Division of the Federal Bureau of Investigation.  “The efforts of the FBI and our law enforcement partners have removed a human trafficker from our streets.  We will continue to work together to aggressively pursue and bring to justice those who cruelly exploit others for profit, and to restore the rights and dignity of human trafficking victims.”

“ The USDA-Office of Inspector General is committed to the investigation and prosecution of those individuals who fraudulently obtain food stamp benefits,” said Karen Citizen-Wilcox, Special Agent in Charge of the Southeast Region for the U.S. Department of Agriculture’s Office of the Inspector General.  “We are very pleased we were able to work with the U.S. Attorney's Office and other law enforcement agencies in this case .”

Evidence presented at trial included the testimony of 10 victims identified in the indictment as well as several eyewitnesses. Numerous witnesses testified that Yarbrough repeatedly lured vulnerable victims, some as young as 15 years old, into prostitution with false promises of love, family and prosperity. The evidence showed that any time a victim refused to engage in prostitution, Yarbrough resorted to threats, intimidation and violence.  The jury heard testimony that Yarbrough’s pattern of recruitment, exploitation, and violent coercion continued for years before his 2009 arrest in St. Louis.

One victim testified that Yarbrough forced her to engage in prostitution the entire time she was pregnant with his child and that he frequently beat her on the stomach when she did not want to comply with his demands. He induced labor through a severe beating in her eighth month of pregnancy, during which time he also had her working as a prostitute in Tunica, Miss. Yarbrough drove her back to Memphis, dropped her off at a hospital, and forced her to resume prostituting the day after her release. At a later date, Yarbrough smashed her on the head with a lamp and kicked out her front teeth when she tried to stop prostituting for him.

Another victim testified that Yarbrough lured her into prostitution by promising to reunite her with their children, then beat her severely when she insisted on seeing them and refused to continue working, punching her in the face so hard that he broke three of her teeth. On another occasion, he beat her knees with a metal pipe, causing injuries that continue to affect her. She also testified that Yarbrough threatened to prostitute their nine-year-old daughter.

Further testimony showed that a victim slept through a phone call from a client after prostituting for days on end with almost no sleep, and that when Yarbrough found out that she had missed the call, he smashed her head into a car door, dragged her by the hair to his hotel room and beat her with his belt. Jurors also saw a letter addressed to the same victim and signed by Yarbrough stating that he was proud she did not scream during the aforementioned beating.

Witnesses testified that as a warning, Yarbrough bragged about his beatings of some victims to other victims. Jurors also saw the “T-Rex” logos Yarbrough tattooed on four separate victims, and heard that he claimed that they had been “branded” as his property. Testimony and jail recordings showed that Yarbrough confiscated his victims’ identification documents and money to make it difficult for them to escape. 

Jurors also heard testimony that Yarbrough conspired with his mother, Norma Yarbrough Webb, 66, and Michelle Johnson, 41, to fraudulently obtain food stamp benefits while Yarbrough was incarcerated. Johnson and Webb previously pled guilty to related charges.

The case was investigated by the FBI and the U.S. Department of Agriculture Office of the Inspector General, with assistance from the St. Louis Police Department. Assistant U.S. Attorney Jonathan Skrmetti and Trial Attorney Benjamin J. Hawk of the United States Department of Justice Civil Rights Division’s Human Trafficking Prosecution Unit prosecuted the case.

Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank)   has entered into an agreement with the Department of Justice to pay a $325 million penalty to resolve violations arising from Rabobank’s submissions for the London InterBank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (Euribor), which are leading benchmark interest rates around the world, the Justice Department announced today. 

A criminal information will be filed today in U.S. District Court for the District of Connecticut that charges Rabobank as part of a deferred prosecution agreement (DPA).  The information charges Rabobank with wire fraud for its role in manipulating the benchmark interest rates LIBOR and Euribor.  In addition to the $325 million penalty, the DPA requires the bank to admit and accept responsibility for its misconduct as described in an extensive statement of facts.  Rabobank has agreed to continue cooperating with the Justice Department in its ongoing investigation of the manipulation of benchmark interest rates by other financial institutions and individuals.  

“For years, employees at Rabobank, often working with traders at other banks around the globe, illegally manipulated four different interest rates – Euribor and LIBOR for the U.S. dollar, the yen, and the pound sterling – in the hopes of fraudulently moving the market to generate profits for their traders at the expense of the bank’s counterparties,” said Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.  “Today’s criminal resolution – which represents the second-largest penalty in the Criminal Division’s active, ongoing investigation of the manipulation of global benchmark interest rates by some of the largest banks in the world – comes fast on the heels of charges brought against three former ICAP brokers just last month.  Rabobank is the fourth major financial institution that has admitted its misconduct in this wide-ranging criminal investigation, and other banks should pay attention: our investigation is far from over.”

“Rabobank rigged multiple benchmark rates, allowing its traders to reap higher profits at the expense of their unsuspecting counterparties,” said Deputy Assistant Attorney General Leslie C. Overton of the Justice Department’s Antitrust Division.  “Not only was this conduct fraudulent, it compromised the integrity of globally-used interest rate benchmarks – undermining financial markets worldwide.”

“Rabobank admitted to manipulating LIBOR and Euribor submissions which directly affected the rates referenced by financial products held by and on behalf of companies and investors around the world,” said Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office.  “Rabobank’s actions resulted in the deliberate harm to counterparties holding products referencing the manipulated rates.  Today’s announcement is yet another example of the tireless efforts of the FBI special agents and forensic accountants who are dedicated to investigating complex fraud schemes and, together with prosecutors, bringing to justice those who participate in such schemes.”

Together with approximately $740 million in criminal and regulatory penalties imposed by other agencies in actions arising out of the same conduct – $475 million by the Commodity Futures Trading Commission (CFTC) action, $170 million by the U.K. Financial Conduct Authority (FCA) action and approximately $96 million by the Openbaar Ministerie (the Dutch Public Prosecution Service) – the Justice Department’s $325 million criminal penalty brings the total amount to be paid by Rabobank to more than $1 billion.   

According to signed documents, LIBOR is an average interest rate, calculated based upon submissions from leading banks around the world and reflecting the rates those banks believe they would be charged if borrowing from other banks.  LIBOR serves as the primary benchmark for short-term interest rates globally and is used as a reference rate for many interest rate contracts, mortgages, credit cards, student loans and other consumer lending products.  The Bank of International Settlements estimated that as of the second half of 2009, outstanding interest rate contracts were valued at approximately $450 trillion. 

LIBOR is published by the British Bankers’ Association (BBA), a trade association based in London.  At the time relevant to the conduct in the criminal information, LIBOR was calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year.  The LIBOR for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks for that currency (the Contributor Panel) selected by the BBA.  From at least 2005 through 2011, Rabobank was a member of the Contributor Panel for a number of currencies, including United States dollar (dollar) LIBOR, pound sterling LIBOR, and yen LIBOR. 

The Euro Interbank Offered Rate (Euribor) is published by the European Banking Federation (EBF), which is based in Brussels, Belgium, and is calculated at 15 maturities, ranging from overnight to one year.  Euribor is the rate at which Euro interbank term deposits within the Euro zone are expected to be offered by one prime bank to another at 11:00 a.m. Brussels time.  The Euribor at a given maturity is the result of a calculation based upon submissions from Euribor Contributor Panel banks.  From at least 2005 through 2011, Rabobank was also a member of the Contributor Panel for Euribor. 

According to the statement of facts accompanying the agreement, from as early as 2005 through at least November 2010, certain Rabobank derivatives traders requested that certain Rabobank dollar LIBOR, yen LIBOR, pound sterling LIBOR, and Euribor submitters submit LIBOR and Euribor contributions that would benefit the traders’ trading positions, rather than rates that complied with the definitions of LIBOR and Euribor. 

In addition, according to the statement of facts accompanying the agreement, from as early as January 2006 through October 2008, a Rabobank yen LIBOR submitter and a Rabobank Euribor submitter had two separate agreements with traders at other banks to make yen LIBOR and Euribor submissions that benefitted trading positions, rather than submissions that complied with the definitions of LIBOR and Euribor.

The Rabobank LIBOR and Euribor submitters accommodated traders’ requests on numerous occasions, and on various occasions, Rabobank’s submissions affected the fixed rates.

According to the statement of facts, Rabobank employees engaged in this conduct through electronic communications, which included both emails and electronic chats.  For example, on Sept. 21, 2007, a Rabobank Yen derivatives trader emailed the Rabobank Yen LIBOR submitter at the time with the subject line “libors,” writing: “Wehre do you think today’s libors are?  If you can, I would like 1mth libors higher today.”  The submitter replied: “Bookies reckon 1m sets at .85.”  The trader wrote back: “I have some fixings in 1 mth so would appreciate if you can put it higher mate.”  The submitter replied: “No prob mate let me know your level.”  The trader responded: “Wud be nice if you could put 0.90% for 1mth cheers.”  The submitter wrote back: “Sure no prob. I’ll probably get a few phone calls but no worries mate!”  The trader replied: “If you may get a few phone calls then put 0.88% then.”  The submitter responded: “Don’t worry mate – there’s bigger crooks in the market than us guys!”  That day, as requested, Rabobank’s 1-month Yen LIBOR submission was 0.90, an increase of seven basis points from its previous submission, whereas the other panel banks’ submissions decreased by approximately a half of a basis point on average.  Rabobank’s submission went from being tied as the tenth highest submission on the Contributor Panel on the previous day to being the highest submission on the Contributor Panel.

On Nov. 29, 2006, a Rabobank dollar derivatives trader wrote to Rabobank’s Global Head of Liquidity and Finance and the head of Rabobank’s money markets desk in London, who supervised rate submitters: “Hi mate, low 1s high 3s LIBOR pls !!! Don't tell [another Rabobank U.S. Dollar derivatives trader] haa haaaaaaa.  Sold the market today doooooohhhh!”  The money markets desk head replied: “ok mate , will do my best …speak later.”  After the LIBOR submissions that day, Rabobank’s ranking compared to other panel banks dropped as to 1-month dollar LIBOR and rose as to 3-month dollar LIBOR. Two days later, on Dec. 1, 2006, the trader again wrote to the money markets desk head: “Appreciate 3s go down, but a high 3s today would be nice… cheers chief.”  The money markets desk head wrote back: “I am fast turning into your LIBOR bitch!!!!”  The trader replied: “Just friendly encouragement that’s all , appreciate the help.”  The money markets desk head wrote back: “No worries mate , glad to help ….We just stuffed ourselves with good ol pie , mash n licker !!”

In an example of an agreement with traders at other banks, on July 28, 2006, a Rabobank rate submitter and Rabobank trader discussed their mutual desires for a high fixing.  The submitter stated to the trader: “setting a high 1m again today - I need it!” to which the trader responded: “yes pls mate…I need a higher 1m libor too.”  Within approximately 20 minutes, the submitter contacted a trader at another Contributor Panel bank and wrote: “morning skipper.....will be setting an obscenely high 1m again today...poss 38 just fyi.”  The other bank’s trader responded, “(K)...oh dear..my poor customers....hehehe!! manual input libors again today then!!!!”  Both banks’ submissions on July 28 moved up one basis point, from 0.37 to 0.38, a move which placed their submissions as the second highest submissions on the Contributor Panel that day.

As another example, on July 7, 2009, a Rabobank trader wrote to a former Rabobank yen LIBOR submitter: “looks like some ppl are talking with each other when they put libors down. . . quite surprised that 3m libors came down a lot.”  The former submitter replied: “yes deffinite manipulation – always is tho to be honest mate. . . i always used to ask if anyone needed a favour and vise versa. . . . a little unethical but always helps to have friends in mrkt.”

By entering into a DPA with Rabobank, the Justice Department took several factors into consideration, including that Rabobank has no history of similar misconduct and has not been the subject of any criminal enforcement actions or any significant regulatory enforcement actions by any authority in the United States, the Netherlands, or elsewhere.  In addition, Rabobank has significantly expanded and enhanced its legal and regulatory compliance program and has taken extensive steps to remediate the misconduct.  Significant remedies and sanctions are also being imposed on Rabobank by several regulators and an additional criminal law enforcement agency (the Dutch Public Prosecution Service). 

This ongoing investigation is being conducted by special agents, forensic accountants, and intelligence analysts of the FBI’s Washington Field Office.  The prosecution of Rabobank is being handled by Assistant Chief Glenn S. Leon and Trial Attorney Alexander H. Berlin of the Criminal Division’s Fraud Section and Trial Attorneys Ludovic C. Ghesquiere, Michael T. Koenig and Eric L. Schleef of the Antitrust Division.  Deputy Chiefs Daniel Braun and William Stellmach of the Criminal Division’s Fraud Section, Criminal Division Senior Counsel Rebecca Rohr, Assistant Chief Elizabeth B. Prewitt and Trial Attorney Richard A. Powers of the Antitrust Division’s New York Office, and Assistant U.S. Attorneys Eric Glover and Liam Brennan of the U.S. Attorney’s Office for the District of Connecticut, along with Criminal Division’s Office of International Affairs, have provided valuable assistance in this matter.  
 
The investigation leading to these cases has required, and has greatly benefited from, a diligent and wide-ranging cooperative effort among various enforcement agencies both in the United States and abroad.  The Justice Department acknowledges and expresses its deep appreciation for this assistance.  In particular, the CFTC’s Division of Enforcement referred this matter to the department and, along with the FCA, has played a major role in the investigation.  The department has also worked closely with the Dutch Public Prosecution Service and De Nederlandsche Bank (the Dutch Central Bank) in the investigation of Rabobank.  Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the department is grateful for their cooperation and assistance.  In particular, the Securities and Exchange Commission has played a significant role in the LIBOR investigation, and the department expresses its appreciation to the United Kingdom’s Serious Fraud Office for its assistance and ongoing cooperation.  
 
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.  For more information about the task force visit: www.stopfraud.gov.

Related Materials:

Deferred Prosecution Agreement
Statement of Fact

The owners and supervisor of Alpha Ambulance Inc. (Alpha), a now-defunct Los Angeles-area ambulance transportation company, have pleaded guilty in connection with an ambulance fraud scheme.

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

Alex Kapri, aka Alex Kapriyelov or Alexander Kapriyelov, 56; Aleksey Muratov, aka Russ Muratov, 32; and Danielle Hartsell Medina, 36, pleaded guilty on Oct. 28, 2013, before U.S. District Court Judge Audrey B. Collins in the Central District of California to conspiracy to commit health care fraud.  They face a maximum penalty of 10 years in prison when they are sentenced on Feb. 24, 2014. 

Kapri and Muratov were owners and operators of Alpha, an ambulance transportation company that operated in the greater Los Angeles area and that specialized in the provision of non-emergency ambulance transportation services to Medicare-eligible beneficiaries, primarily dialysis patients.  Medina was employed by Alpha and ultimately supervised the training and education of its employees. 

According to court documents, Kapri, Muratov and Medina knowingly provided non-emergency ambulance transportation services to Medicare beneficiaries whose medical condition at that time did not require those services.  With Kapri’s knowledge, Muratov and Medina instructed certain Alpha employees to conceal the Medicare beneficiaries’ medical conditions by altering requisite paperwork and creating fraudulent reasons that justified, on paper, the transportation services.  Based on these medically unnecessary transportation services, the defendants caused Alpha to submit false and fraudulent claims to Medicare. 

Additionally, as the defendants were submitting false and fraudulent claims to Medicare, Medicare notified Alpha the company would be subject to a Medicare audit.  In response to this notice, Muratov and Medina instructed Alpha employees – with Kapri’s knowledge – to alter requisite paperwork and create fraudulent reasons that justified, on paper, transportation services for the beneficiaries identified as the subject of Medicare’s audit. 

From at least June 2008 through at least July 2012, Alpha submitted more than $49 million in claims for ambulance transportation services.  As a result, Medicare paid Alpha more than $13 million for these claims, many of which were false and fraudulent. 

The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  This case was prosecuted by Trial Attorneys Blanca Quintero and Alexander F. Porter and Assistant Chief O. Benton Curtis III. 
                       
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

A Massachusetts man was sentenced to serve 30 months in prison today for engaging in an illegal practice known as “swatting,” in which he made hoax emergency telephone calls reporting an ongoing, dangerous crime to elicit an armed police response from a SWAT team to a specific location, typically in order to harass someone he believed was at the location.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Carmen M. Ortiz of the District of Massachusetts made the announcement after sentencing by U.S. District Court Judge Timothy Hillman. 

Nathan Hanshaw, 22, of Athol, Mass., pleaded guilty on Aug. 30, 2013, to a three-count information charging him with one count of making interstate threats, one count of threats to use explosives and one count of threats to use a firearm.

According court records, Hanshaw typically claimed in his swatting calls that he was a fugitive who was wanted by the authorities; that he was armed with weapons, explosives and nerve agents; and that he had taken hostages.  He demanded cash and a helicopter ride to Mexico and threatened to detonate his bombs and kill his hostages if his demands were not met.  He also threatened to kill any law enforcement personnel who arrived at the location.  Hanshaw generally claimed to be, and, because he used techniques to disguise his location, appeared to be, calling from an address that, unbeknownst to the law enforcement officers responding to the call, was the address of his intended swatting victim.

At the change of plea hearing in August, prosecutors told the court that, had the case proceeded to trial, the government would have proven that, from September 2012 through mid-January 2013, Hanshaw made swatting calls to emergency services numbers across the United States, including Denver; Ventura, Calif.; and Waverly, N.Y.  In each case, armed police responses ensued.  In response to Hanshaw’s swatting call to Ventura, for example, more than 40 local and federal officers arrived at the purported crime scene, a hotel was evacuated, and nearby streets were closed for several hours.  His activities created a serious risk of physical harm to innocent victims and caused extensive disruptions to important public services.

The case was investigated by the FBI and is being prosecuted by Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Adam Bookbinder of the District of Massachusetts’ Computer Crimes Unit.

The Justice Department announced today that, jointly with the Commonwealth of Puerto Rico, it is moving in the U.S. District Court for the appointment of Juan Mattos Jr. as Technical Compliance Advisor (TCA).  Mattos will be responsible for evaluating the implementation of a comprehensive settlement agreement to reform the Puerto Rico Police Department (PRPD).  He will begin his term as TCA pursuant to appointment by U.S. District Court Judge Gustavo A. Gelpí.

Under the agreement, the TCA will assist in determining whether the terms of the reform plan have been fully implemented in a timely manner.  The TCA’s assessment will include a thorough review of PRPD’s policies, training curricula, standard operating procedures, plans, protocols and other operational documents related to the agreement.  The TCA will also assess whether the implementation of the agreement results in constitutional policing, increased community trust and the professional treatment of individuals by PRPD officers. To this end, the TCA will engage community stakeholders including representatives of civic and community organizations, minority communities, lesbian, bisexual, gay, transgender and transsexual communities, student and labor groups, civil rights organizations, and women’s advocacy groups to ensure they have a voice in the reform process. The TCA will also assess and report on PRPD’s compliance, as well as provide technical assistance to promote constitutional policing. Once appointed, Mattos will assist PRPD officials with the development of action plans to modernize its administrative systems and professionalize its police force.

The parties jointly selected Mattos to serve as TCA given his extensive experience in law enforcement and his efforts in the successful implementation of a federal consent decree. Mattos is a career law enforcement officer with nearly 40 years of service in the New Jersey State Police (NJSP) and the United States Marshals Service. During his tenure with the NJSP, Mattos served as a state trooper, an equal employment opportunity/affirmative action officer, as Commandant of the NJSP Academy and as Commander of both the Division Staff and Intelligence Services Sections. Mattos also actively supervised the efforts of the NJSP to comply with a 1999 consent decree related to racial profiling. Under his leadership, the NJSP received national recognition for its patrol practices and procedures. Following his retirement from the NJSP, Mattos joined the Middlesex County Prosecutor’s Office where he oversaw the development of policies and procedures for the office’s Bias Crime Unit and established a community outreach initiative with minority community leaders and advocacy groups in Middlesex County. Currently, Mattos serves as the U.S. Marshal for the District of New Jersey, having been appointed to the position by President Obama in July 2011. Mattos intends to hire several other experienced law enforcement professionals to assist him in assessing compliance with the agreement.

“We are pleased to have worked collaboratively with the Commonwealth to select Mr. Mattos, who we believe is uniquely positioned to assess and report on the Puerto Rico Police Department’s reform efforts,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division. “We look forward to working with Mr. Mattos, the Commonwealth of Puerto Rico and the community to ensure effective and constitutional policing throughout the commonwealth.”

A copy of the complaint, the final agreement and the September 2011 letter of findings can be found at www.justice.gov/crt If individuals have information that is relevant to the case and PRPD, you may contact the Department of Justice at [email protected] or at 877-871-9726.

The Civil Rights Division and U.S. Attorney Carmen M. Ortiz announced today the filing of a complaint alleging that the Iron Workers District Council of New England Pension Fund (the Pension Fund) and the Trustees of the Iron Workers District Council of New England Pension Fund (the Trustees) willfully violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by failing to credit U.S. Navy Reserve Member Thomas Shea, a member of the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 7 (the Union), with service time while he was serving in the armed forces in Afghanistan.  The suit was filed in the Federal District Court for the District of Massachusetts.

USERRA requires that service members who leave their civilian jobs to serve in the military be treated as not having incurred a break in service with regard to their pension plans.  USERRA further provides that each period served by a person in the uniformed services shall upon reemployment be deemed to constitute service with the employer(s) maintaining the plan for the purpose of determining the nonforfeitabilty of the person's accrued benefits and for the purpose of determining the accrual of benefits under the plan.

The complaint alleges that the Pension Fund and the trustees violated USERRA by refusing to grant Shea pension credits that he earned while on military duty unless and until he worked at least 300 hours in the one year period following his discharge from the military and accrued 2.5 pension credits, which is equal to 3,000 hours, in the subsequent five year period following his release from active duty.  Both of these requirements exceed those placed on members of the Pension Fund who do not take military leave and therefore violate USERRA.  The complaint also seeks back payment of annuity contributions that were not made while Shea was on active duty.

“Congress enacted USERRA to protect our men and women in uniform from experiencing exactly this kind of injustice,” said Jocelyn Samuels, Acting Assistant Attorney General for the Department of Justice’s Civil Rights Division.  “The Justice Department is committed to vigorously enforcing federal laws that protect the employment rights of our service members.”

“Reservists who are called to active duty sacrifice time away from their jobs to serve their country,” said Ortiz.  “USERRA ensures that they are not discriminated against after they have returned from service and that their employment rights are protected.  We are committed to vigorously enforcing USERRA’s protections.”

"It is important for all employers and their organizations to realize that the Labor Department is here to protect the employment and reemployment rights of American service members under USERRA," said Assistant Secretary Keith Kelly of the Veterans' Employment and Training Service.  "We owe these brave Americans every protection when they return from their military obligations."

The U.S. Department of Labor’s (DOL) Veterans’ Employment and Training Service investigated Shea’s allegations with the assistance of the DOL’s Office of Regional Solicitor.  This case is being handled jointly by the Civil Rights Division and the U.S. Attorney’s Office for the District of Massachusetts.

Additional information about USERRA can be found on the Justice Department website: www.servicemembers.gov and www.usdoj.gov/crt/emp, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.

Holly Springs Tax Preparers Allegedly File Fraudulent Tax Returns for Customers

The United States has sued Eric Hardaway, aka Eric Brittenum, and Yvonne Hardaway, seeking to bar them and their business, Hardaway Taxx, from preparing federal tax returns for others, the Justice Department announced today.

The civil injunction complaint, filed in U.S. District Court for the Northern District of Mississippi, alleges that the Hardaways, of Holly Springs, Miss., have prepared federal income tax returns for customers that fraudulently understated their tax liabilities or overstated refunds by claiming frivolous fuel tax credits.  According to the complaint, an Internal Revenue Service (IRS) investigation revealed that 156 income tax returns prepared by the Hardaways and audited by the IRS resulted in tax deficiencies.  The lawsuit alleges that the tax harm caused by the Hardaways’ misconduct exceeds $321,000 in erroneous refunds issued to taxpayers.

Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2013, which can be viewed at www.irs.gov/uac/Newsroom/IRS-Releases-the-Dirty-Dozen-Tax-Scams-for-2013 .  The IRS has tips for choosing a tax preparer: www.irs.gov/Tax-Professionals/Choosing-a-Tax-Professional .  In the past ten years, the Justice Department's Tax Division has obtained injunctions against hundreds of unscrupulous tax-return preparers.  Information about these cases is available on the Justice Department Website at www.justice.gov/tax/taxpress2013.htm .

Related Materials:

United States v. Eric Hardaway, etc. et al.
Complaint for Permanent Injunction and Other Relief
 

A Rockford, Ill., man was arrested today in connection with an indictment charging three Chicago-area residents for their roles in an alleged $12 million health care fraud scheme. 

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Zachary Fardon of the Northern District of Illinois, Acting Special Agent in Charge Robert J. Shields Jr. of the FBI’s Chicago Office, and Special Agent in Charge Lamont Pugh III of the Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.

According to the 10-count indictment returned on Oct. 23, 2013, and unsealed today, Rick E. Brown, 56, and two other individuals allegedly participated in a Medicare fraud scheme operating out of a home visiting physician practice, Medicall Physicians Group Ltd., in Schaumburg, Ill., that billed for services that Medicall never provided.  Medicare allegedly paid the company approximately $4.7 million for fraudulently reported services from January 2007 to December 2011.

Brown and an alleged co-conspirator, Roger A. Lucero, 62, of Elmhurst, Ill., are charged with conspiracy to commit health care fraud and health care fraud.  The two men and another defendant, Mary C. Talaga, 53, of Elmwood Park, Ill., are also charged with making false statements relating to health care matters. 

According to the indictment, Lucero and Brown owned and operated Medicall, and Talaga submitted the company’s bills to Medicare.  The indictment alleges that Brown instructed employees to bill Medicare for patient oversight and other services that were never provided, and Lucero created backdated records in an effort to conceal the fraudulent billings.  Talaga is alleged to have billed Medicare for these services even though she knew they had not been documented, a practice that required her to fabricate the information submitted to Medicare.

The charges of health care fraud conspiracy and health care fraud each carry a maximum potential penalty of 10 years in prison and a $250,000 fine.  The charges of false statements relating to health care matters carry a maximum potential penalty of five years in prison and a $250,000 fine.

An indictment is merely a charge and defendants are presumed innocent unless and until proven guilty.

The investigation is being conducted jointly by the FBI and HHS-OIG and brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Northern District of Illinois.  The case is being prosecuted by Trial Attorney Brooke Harper of the Criminal Division’s Fraud Section. 

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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

United States Attorney Alicia A.G. Limtiaco, announced today that after undergoing a six-week curriculum taught by Gang Resistance Education And Training (G.R.E.A.T.) officers, over 75 fifth grade students at P.C. Lujan Elementary School will be receiving their certificates of completion on Wednesday, October 30, 2013, at 9:00 A.M., in the school's cafeteria.

Parents are invited and highly encouraged to attend and participate alongside our students, in the graduation. The G.R.E.A.T. Program's primary objective is awareness and prevention of delinquency, youth violence, and gang membership. The G.R.E.A.T. lessons, aimed at elementary and middle school students, focus on providing life skills to help students avoid delinquent behavior and violence to solve problems.

Mr. Jon Fernandez, Guam Department of Education Superintendent and Barrigada Mayor June U. Blas have also been invited to attend.

U.S. Attorney Limtiaco stated, AWe praise the hard work, motivation and significant accomplishments of our students in completing the G.R.E.A.T. Program, and the continued commitment and dedication of the G.R.E.A.T. instructors to our youth in taking the G.R.E.A.T. message to our schools in Guam.

Anyone interested in learning more about the program can log on to www.great-online.org.

A former U.S. Army Sergeant and a co-conspirator have been sentenced in the District of Colorado for their roles in stealing fuel at Forward Operating Base (FOB) Fenty, Afghanistan, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division announced.  

U.S. Army Sergeant Christopher Weaver, 30, of Fort Carson, Colo., was sentenced on Oct. 28, 2013, to serve 37 months in prison.  Weaver pleaded guilty Oct. 20, 2012, and was sentenced by U.S. District Court Judge Marcia S. Krieger.                     

Jonathan Hightower, 31, of Houston, Texas, who worked at FOB Fenty as a civilian employee of a contractor and who had conspired with Weaver, was also sentenced on Oct. 28, 2013, to serve 27 months in prison. He pleaded guilty Aug. 3, 2012, and was sentenced by U.S. District Court Judge William J. Martinez.

A third conspirator, former soldier Stephanie Charboneau, pleaded guilty on Sept. 5, 2013, before U.S. District Court Judge Philip A. Brimmer.  Her sentencing is set for Dec. 9, 2013.

Weaver and Hightower were also ordered to pay $1,225,000 in restitution, jointly with Charboneau.  Hightower was also ordered to pay $400,000 in restitution for a related fuel theft scheme that was the subject of the prosecution.

According to court documents, from in or about January 2010 through June 2010, Weaver, Hightower and Charboneau were involved in handling the uploading and transportation of fuel from FOB Fenty, near Jalalabad, Afghanistan, to nearby military bases.  Weaver and Charboneau created false and fraudulent documents purporting to authorize the transport of fuel from FOB Fenty to other military bases, even though no legitimate fuel transportation was required.  Hightower was a civilian who worked at the base’s “fuel point” uploading fuel trucks, occasionally filling the trucks with fuel to be stolen and taking other steps to assist the conspiracy.  At the direction of Weaver and Charboneau, fuel truck drivers used the fraudulent documents to justify the filled trucks’ departures from FOB Fenty.  In truth, after the filled fuel truck left the base, the fuel was simply stolen, and Weaver and Charboneau would receive cash from the representative of the trucking company that supplied the fuel trucks.  The cash would be split among the three conspirators.     
 
All three conspirators pleaded guilty to receiving payments from a representative of the trucking company in exchange for facilitating the theft of approximately 70 5,000-gallon truckloads of fuel.  Each of the three acknowledged that the loss to the United States was in excess of $1 million.

The cases were investigated by the Special Inspector General for Afghanistan Reconstruction, the Department of the Army, Criminal Investigations Division (CID); the Defense Criminal Investigative Service; and the FBI.

These cases were handled by Special Trial Attorney Mark H. Dubester of the Criminal Division’s Fraud Section, who is on detail from the Special Inspector General for Afghanistan Reconstruction (SIGAR). 

The Justice Department announced today that the U.S. District Court of Nevada has approved a settlement in which the owners and operators of Rosewood Park Apartments, a 902 unit apartment complex in Reno, Nev., will pay $167,000 to resolve a lawsuit alleging discrimination against persons with disabilities who use assistance animals.  

Under the agreement, the defendants in United States v. Rosewood Park LLC et al., will pay a total of $127,500 to a family that was not allowed to move into the complex because one of the members of the household used an assistance animal and to the Silver State Fair Housing Council, a non-profit Nevada organization that assisted the family and conducted testing to investigate the rental practices at Rosewood Park.  The defendants will also pay an additional $25,000 to compensate any other persons harmed by the defendants’ discriminatory policies, who are identified through a process established by the agreement, and will pay $15,000 to the government in civil penalties.  The agreement also requires that defendants adopt and maintain a new policy regarding assistance animals, provide non-discrimination training to their employees and agree to record keeping and monitoring requirements for the terms of the agreement.  The agreement has been approved by the U.S. District Court of Nevada, and takes the form of a consent order that can be enforced by the court.

The department’s complaint had alleged that the owners, employees and management company of Rosewood Park Apartments violated the Fair Housing Act by limiting individuals with certain assistance animals to a particular section of Rosewood Park Apartments; subjecting such individuals to pet fees; requiring assistance animals to be licensed or certified; and barring companion or uncertified service dogs altogether.  The case began when a family that had sought housing at Rosewood Park and the Silver State Fair Housing Council filed complaints with the Department of Housing and Urban Development (HUD).   HUD investigated the complaint, issued a charge of discrimination and referred the matter to the Department of Justice.  

“The Fair Housing Act ensures that persons with disabilities searching for a home are protected from discrimination,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division.  “The Justice Department will continue to vigorously protect the civil rights of persons with disabilities in Nevada and across the country.”

“Persons who think they have been discriminated against in housing issues should not hesitate to file a report with HUD,” said U.S. Attorney Bogden.  “The U.S. Attorney’s Office, as part of the U.S. Department of Justice, works with HUD to ensure that companies that are treating disabled persons unfairly are punished, and that they adopt policies to prevent further discrimination.”

“Assistance animals play a vital role in helping people with disabilities conduct everyday activities and fully enjoy their homes,” said Bryan Greene, HUD's Acting Assistant Secretary for Fair Housing and Equal Opportunity.  “HUD and DOJ will continue to enforce the Fair Housing Act's protections and ensure that housing providers do not illegally limit assistance animals.”

Fighting illegal housing discrimination is a top priority of the Justice Department.  The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.

More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt/ .  Persons who believe they have experienced or witnessed unlawful housing discrimination may call the Justice Department at 1-800-896-7743, e-mail the Justice Department at [email protected] or contact HUD at 1-800-669-9777.  More information about the Fair Housing Act can also be found at hwww.justice.gov/crt/housing/ or www.hud.gov/fairhousing .

The Department of Justice announced today that it has reached a settlement with All Battery Sales and Service (ABS) of Everett, Wash., to resolve a lawsuit it filed on behalf of Curtis Kirk, a U.S. Army reservist.  The lawsuit alleged that the company violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by failing to properly reemploy Kirk in September 2010 after he returned from military service in support of Operation Iraqi Freedom.  The lawsuit also alleged that the defendant unlawfully demoted and then terminated Kirk’s employment without proper cause.  If approved by the court, the settlement would resolve the allegations that the defendant violated the reemployment rights of Kirk. 

ABS is a wholesaler, distributor and retailer of battery products, parts and services.  According to the complaint, filed in the U.S. District Court for the Western District of Washington, the defendant violated USERRA by not properly reemploying Kirk in a position as a front counter representative, or in a position with comparable seniority, status and pay.  The defendant reemployed Kirk in a lower status position than the one he held when he left for active duty service, with fewer guaranteed working hours, a less lucrative commission and bonus structure and fewer opportunities for promotion.  ABS later demoted Kirk further and terminated his employment without cause, also in violation of USERRA.                       

Under the terms of the settlement, ABS must pay Kirk $37,500 to compensate him for lost or reduced wages and benefits.  Among other things, the settlement also requires the defendant to provide training to ABS’ high-level officials and human resources staff on the USERRA rights and obligations of employers and covered employees. 

“Employers have a legal obligation to ensure service members get their jobs back when they return from military duty as required by law,” said Jocelyn Samuels, Acting Assistant Attorney General for the Civil Rights Division.  “The Civil Rights Division is committed to protecting the rights of those who, through their courage and sacrifice, secure the rights of all Americans.” 

“Just as our dedicated men and women of the military protect our freedoms overseas, we must protect their interests here at home,” said U.S. Attorney Jenny A. Durkan.  “These soldiers have made many sacrifices, and the loss of a career or the job they are entitled to when they return home cannot be allowed.  The U.S. Attorney’s Office is committed to enforcing the laws that protect the rights of those brave men and women who serve our country proudly.”

Subject to certain conditions, USERRA requires employers to promptly reemploy returning service members in the positions they would have held had their employment been not interrupted by military service or in a position of like seniority, status and pay.  In addition, any individual with Kirk’s length of absence for military service who is reemployed cannot be terminated within one year after the date of full and proper reemployment except for just cause.

The case was litigated by Assistant U.S. Attorney J. Michael Diaz in the U.S. Attorney’s Office for the Western District of Washington, in collaboration with Andrew Braniff, USERRA/USAO Program Coordinator, in the Employment Litigation Section of the Civil Rights Division of the Justice Department. 

The Justice Department’s Civil Rights Division has given a high priority to the enforcement of service members’ rights under USERRA.  Additional information about USERRA can be found on the Justice Department’s websites at www.usdoj.gov/crt/emp and www.servicemembers.gov , as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm .

The former president of Port Arthur Chemical and Environmental Services LLC (PACES) has been sentenced for occupational safety crimes which resulted in the death of an employee, announced Robert G. Dreher, Acting Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division and John M. Bales, U.S. Attorney for the Eastern District of Texas.

Matthew Lawrence Bowman, 41, of Houston, pleaded guilty on May 9, 2013, to violating the Occupational Safety and Health Act (OSH Act) and making a false statement and was sentenced to serve 12 months in federal prison today by U.S. District Judge Marcia Crone.  Bowman was also ordered to pay fines in the amount of $5,000.  

Bowman admitted to not properly protecting PACES employees from exposure to hydrogen sulfide, a poisonous gas resulting in the death of truck driver Joey Sutter on Dec. 18, 2008.  In addition, Bowman admitted to directing employees to falsify transportation documents to conceal that the wastewater was coming from PACES after a disposal facility put a moratorium on all shipments from PACES after it received loads containing hydrogen sulfide. 

“Today’s sentence is a just punishment for Bowman’s actions, which placed workers at unacceptable risk and had fatal consequences,” said Acting Assistant Attorney General Dreher. “The Justice Department and the U.S. Attorney’s Offices will continue to work with our law enforcement partners to vigorously investigate and prosecute those who violate the laws enacted to ensure the safety of workers handling hazardous materials and to prevent the kind of tragedies that occurred in this case.”

“The government’s prosecution of Matthew Bowman is now complete.  While Mr. Bowman is being held accountable for his criminal conduct, and that is appropriate, there is no amount of time in prison; no amount of criminal fine that can be levied that will compensate for the loss of life at PACES.  We extend our deepest condolences and well wishes to the friends and family of Mr. Sutter, who died pitilessly and needlessly because of the criminally negligent actions of Matthew Bowman,” said U.S. Attorney Bales.  “The agents and prosecutors conducted an outstanding investigation and prosecution.”

"The sentencing today is a clear signal of the U.S. Department of Transportation’s (USDOT), and its Office of Inspector General’s (OIG) commitment to protecting the public from illegally transported hazardous materials,” said Max Smith, regional Special Agent-in-Charge, USDOT OIG.  “Working with our law enforcement and prosecutorial colleagues we will continue our vigorous efforts to prosecute to the fullest extent of the law those who would seek to disregard the Nation’s transportation laws and endanger the public.”

“Environmental violations are serious crimes, and in a worst-case scenario, they can kill people,” said Ivan Vikin, special Agent in Charge of EPA’s criminal enforcement program in Texas.  “In this case, a senior manger’s actions led directly to the death of one of his employees.  This is why we have laws regarding the safe and legal handling of hazardous materials.  Enforcement of these laws must be consistent and uncompromising.”

“When a worker loses his or her life on the job, it has a ripple effect on their families, friends, community and the workplace. Matt Bowman and PACES knowingly violated workplace safety standards that led to Joey Sutter's death,” said OSHA's Deputy Regional Administrator Eric Harbin in Dallas. “OSHA standards are in place to protect workers and employers will be held accountable when they fail to follow these standards.”
According to information presented in court, Bowman was president and owner of PACES, located in Port Arthur, Texas, and CES Environmental Services (CES) located in Houston.  PACES was in operation from November 2008 to November 2010, and was in the business of producing and selling caustic materials to paper mills.  The production of caustic materials involved hydrogen sulfide, a poisonous gas.  According to the National Institute for Occupational Safety and Health, hydrogen sulfide is an acute toxic substance that is the leading cause of sudden death in the workplace.  Employers are required by OSHA to implement engineering and safety controls to prevent employees from exposure above harmful limits of hydrogen sulfide.
  
Bowman was responsible for approving and directing PACES production operations, the disposal of hydrogen sulfide wastewater, and ensuring implementation of employee safety precautions. In some cases, Bowman personally handled the investigation of work-related employee injuries, directed the transportation of PACES wastewater, and determined what safety equipment could be purchased or maintained.  In the cases at issue, hazardous materials were transported illegally with false documents and without the required placards.  Most importantly, the workers were not properly protected from exposure to hazardous gases.  The exposure resulted in the deaths of two employees, Joey Sutter and Charles Sittig, who were truck drivers, at the PACES facility on Dec. 18, 2008 and Apr. 14, 2009.  Placarding is critical to ensure the safety of first responders in the event of an accident or other highway incident.  Bowman and PACES were indicted by a federal grand jury on July 18, 2012. 

This case was investigated by EPA Criminal Investigation Division; the U.S. Department of Transportation Office of Inspector General; the Texas Commission on Environmental Quality - Environmental Crimes Unit, part of the Texas Environmental Enforcement Task Force; the Texas Parks & Wildlife Department - Environmental Crimes Unit; the Houston Police Department - Major Offenders, Environmental Investigations Unit; the Travis County, Texas - District Attorney’s Office; the Harris County, Texas, District Attorney’s Office - Environmental Crimes Division; the Houston Fire Department; OSHA; the U.S. Coast Guard; the Port Arthur Police Department; and the Port Arthur Fire Department.

The case was prosecuted by the U.S. Attorney’s Office for the Eastern District of Texas and the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division. 

Former U.S. Congressman Rick Renzi was sentenced today to serve 36 months in prison following his June conviction by a federal jury in Tucson, Ariz., for extortion, bribery, insurance fraud, money laundering and racketeering. Renzi’s co-defendant, James Sandlin, was also sentenced today to serve 18 months in prison for his role in the extortion, bribery and money laundering scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, First Assistant U.S. Attorney Elizabeth A. Strange of the District of Arizona, Special Agent in Charge Douglas G. Price of the FBI’s Phoenix Division, and Special Agent in Charge Dawn Mertz of the Internal Revenue Service – Criminal Investigation (IRS-CI) made the announcement following sentencing by Senior U.S. District Judge David C. Bury.

Renzi, 55, of Burke, Va., and Sandlin, 62, of Sherman, Texas, were convicted on June 11, 2013. Renzi was found guilty of 17 felony offenses including conspiracy, honest services wire fraud, extortion under color of official right, racketeering, money laundering and making false statements to insurance regulators. Sandlin was convicted of 13 felony offenses including conspiracy, honest services wire fraud, extortion under color of official right and money laundering.

“Mr. Renzi abused the power – and the corresponding trust – that comes with being a member of Congress by putting his own financial interests over the interests of the citizens he had sworn to serve,” said Acting Assistant Attorney General Raman.  “He fleeced his own insurance company to fund his run for Congress, and then exploited his position for personal gain.  Mr. Renzi’s conviction and today’s sentence demonstrate the Justice Department’s commitment to fighting corruption at the highest levels of government.”

“Former Congressman Renzi disregarded his oath to uphold the law, ignoring the interests of the people he was elected to serve in favor of his own interests,” stated First Assistant U.S. Attorney Strange.  “The sentences imposed today reinforce the fundamental principle that no one, including an elected official, is above the law.”

“When our elected officials betray the trust of the American people it strikes at the very core of our democracy,” said FBI Special Agent in Charge Price.  “The sentencing of former Congressman Rick Renzi illustrates the commitment by the FBI and our law enforcement partners to investigate and prosecute corruption at all levels.   Today’s sentencing is a reminder that when a public official violates the public's trust they will be held accountable to the fullest extent of the law.”

“The public expects its elected officials to be honest, to be trustworthy and to show respect for the law," stated IRS Special Agent in Charge Mertz.  “Those in public office should be held to a higher standard and are not exempt from criminal prosecution.  The prison sentence imposed today should serve as a wake-up call to other public officials who believe there are no consequences for betraying the public trust.”

According to evidence at trial, Renzi, then a member of Congress from Arizona’s 1st Congressional District, promised in 2005 to use his legislative influence to profit from a federal land exchange that involved property owned by Sandlin, a real-estate investor.

At the time, Sandlin owed Renzi $700,000 in future payments from their business dealings, and Renzi threatened proponents of the land exchange that he would not support it unless they purchased Sandlin’s property in Cochise County, Ariz.  When they refused, Renzi promised a second proponent of a land exchange that he would support the exchange if they purchased Sandlin’s property.  According to an agreement reached in May 2005, Sandlin was paid $1 million in earnest money, out of which he paid $200,000 to Renzi.  Just before Sandlin received the $1.6 million balance owed on the exchange, he paid an additional $533,000 to Renzi. 

Evidence at trial further showed that from 2001 to 2003, Renzi engaged in insurance fraud by diverting his clients’ insurance premiums to fund his first campaign for Congress, and he subsequently sent false letters to his insurance customers and provided false statements to various state regulators who were investigating his activities.  

This case was investigated by the FBI and the Internal Revenue Service – Criminal Investigation.  The prosecution was handled by Trial Attorneys David Harbach and Sean Mulryne of the Department of Justice’s Public Integrity Section and Assistant U.S. Attorneys Gary Restaino and James Knapp of the District of Arizona.

Nolan L. Agner, the last of five Virginia Beach charter fishing boat captains convicted of poaching Atlantic striped bass was sentenced today in federal court in Norfolk, Va.  All five captains – including Agner, Jeffery S. Adams, Raymond Carroll Webb, David Dwayne Scott, and William W. “Duby” Lowery IV – were sentenced for violating the Lacey Act by selling illegally-harvested striped bass, the Justice Department announced.

“As charter boat captains, these men had an obligation to know and follow the laws that protect this natural resource from overharvesting,” said Robert G. Dreher, Acting Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Their illegal poaching of striped bass gave them an unfair economic advantage over law abiding fisherman and irresponsibly posed a threat to this food supply.  “With these sentences, they will pay the price by serving jail time or receiving probation, as well as paying fines, surrendering their captain’s license, or having their operations closely monitored or curtailed.”

In 1984, Congress passed the Atlantic Striped Bass Conservation Act, recognizing that “Atlantic striped bass are of historic commercial and recreational importance and economic benefit to Atlantic coastal States and to the Nation,” and that it “is in the national interest to implement effective procedures and measures to provide for effective inter-jurisdictional conservation and management of this species.”  Since 1990, the Secretary of Commerce has imposed a moratorium on fishing for striped bass within the exclusive economic zone (EEZ), the zone where the U.S. and other coastal nations have jurisdiction over economic and resource management.  The moratorium makes it unlawful to fish for or harvest striped bass in the EEZ.  The moratorium also makes it unlawful to retain any striped bass that were taken in or from the EEZ.

The Lacey Act makes it unlawful for any person to import, export, transport, sell, receive, acquire or purchase any fish or wildlife taken, possessed, transported or sold in violation of any law or regulation of the United States, or to attempt to do so.  Such conduct constitutes a felony crime if the market value of the fish or wildlife is in excess of $350.  Under the Lacey Act, it is a “sale” of fish or wildlife for any person, for money or other consideration, to offer or provide guiding, outfitting, or other services.  

Each of the captains, all of whom operated charters out of Rudee Inlet in Virginia Beach, was charged separately on Nov. 8, 2012, with violating the Lacey Act by selling charter fishing trips to harvest striped bass illegally from the EEZ, among other charges.

Today, Agner, captain of the Flat Line, having previously pleaded guilty to violating the Lacey Act, was sentenced to pay a $3,500 fine.  He and his corporation, Agner, Inc., were also placed on three years’ probation with special conditions requiring them to purchase and maintain a Vessel Monitoring System (VMS) device on any vessel that they own or operate for fishing purposes during the term of probation.
  
The other four defendants all previously pleaded guilty to violating the Lacey Act and have been sentenced:

On, April 25, 2013, Scott, captain of the Stoney’s Kingfisher, was sentenced to a $5,600 fine and $1,900 in restitution to the National Oceanic and Atmospheric Administration (NOAA).  Scott was also sentenced to three years’ probation with special conditions prohibiting Scott from engaging in either the charter or commercial fishing industries, anywhere in the world, in any capacity, during the term of his probation.  Scott is prohibited not only from captaining a vessel, but also rendering any assistance, support, or other services, with or without compensation, for other charter or commercial fishermen. 

Also on April 25, 2013, Adams, captain of the Providence II, and his corporation Adams Fishing Adventures, were sentenced to three years’ probation with special conditions requiring them to apply for and receive a Federal Fisheries permit, and to purchase and install a VMS device on any vessel that they own or operate during the term of probation.

On May 30, 2013, Lowery, captain of the Anna Lynn, was sentenced to 30 days’ in jail, followed by 12 months of supervised release with the special conditions that Lowery surrender his captain’s license to the U.S. Coast Guard and that he not be eligible for reinstatement of that license.  Lowery is also prohibited from engaging in the charter fishing industry in any capacity during the term of his supervised release. 

 On July 2, 2013, Webb, captain of the Spider Webb, and his corporation Peake Enterprises were sentenced to pay a $3,000 fine and $1,000 restitution to NOAA.  Webb and Peake Enterprises were also sentenced to three years’ probation with special conditions requiring them to apply for and receive a Federal Fisheries permit, and to purchase and install a VMS device on any vessel that they own or operate during the term of probation.

This case was investigated by NOAA’s Office of Law Enforcement and the Virginia Marine Police with assistance from the Federal Communications Commission Enforcement Bureau, Norfolk Office.  Assistant U.S. Attorney Stephen W. Haynie of the United States Attorney’s Office for the Eastern District of Virginia and Trial Attorney James B. Nelson of the Department of Justice’s Environmental Crimes Section of the Environment and Natural Resources Division prosecuted the case on behalf of the United States.

ALABAMA MAN PLEADS GUILTY TO HIS INVOVLEMENT IN AN
IDENTITY THEFT SCHEME USING STOLEN PRISONER NAMES AND A CORRUPT POSTAL EMPLOYEE

 According to court documents and court proceedings, Harvey James obtained stolen identities from individuals who had access to inmate information from the Alabama Department of Corrections.  For several years, James, his sister, Jacqueline Slaton, and others used those inmate names to file false federal and state tax returns.  James and Slaton directed some of the false refunds to be sent to either prepaid debit cards or issued via check.  In 2012, James and Slaton enlisted the assistance of U.S. Postal Service mail carrier Vernon Harrison in the scheme.  Harrison, who provided James and his co-conspirators with mailing addresses to which they could mail debit cards, retrieved the debit cards from the mail and delivered them to James and his co-conspirators.  In exchange, Harrison received substantial payments.  Between 2010 and 2012, James and his co-conspirators filed hundreds of federal and state income tax returns that claimed over $1,000,000 in fraudulent tax refunds.

 Sentencing has not yet been scheduled.  James faces a minimum sentence of two years in prison and a maximum sentence of twenty-two years in prison, three years of supervised release, restitution and a maximum fine of $250,000.  Slaton already pleaded guilty and was sentenced to 70 months in prison.  In July 2013, Harrison was found guilty by a jury for his role in the scheme.  Harrison will be sentenced on Oct. 31, 2013.

 The case was investigated by Special Agents of the IRS - Criminal Investigation.  Trial Attorneys Jason H. Poole and Michael Boteler of the Justice Department’s Tax Division and Assistant U.S. Attorney Todd Brown are prosecuting the case.

 Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.

Jason W. Pleau, 35, of Providence, R.I., was sentenced today to life in prison for the murder and robbery of Woonsocket, R.I., gas station manager David D. Main.  Pleau chased, shot at close range and robbed Main on Sep. 20, 2010, as Main approached the doorstep of a Woonsocket bank where he was to have deposited receipts belonging to the gas station that he managed.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Peter F. Neronha of the District of Rhode Island; Rhode Island Attorney General Peter F. Kilmartin; Colonel Steven G. O’Donnell, Superintendent of the Rhode Island State Police; Woonsocket Police Chief Thomas S. Carey; and Special Agent in Charge Vincent B. Lisi of the FBI’s Boston Field Office made the announcement following sentencing by U.S. District Court Judge William E. Smith.

Pleau pleaded guilty on July 31, 2013, to conspiracy to commit Hobbs Act robbery; Hobbs Act robbery; and carrying, using, and discharging a firearm during and in relation to a federal crime of violence resulting in death. 

Co-defendant Jose A. Santiago, 36, formerly of Springfield, Mass., pleaded guilty on Sep. 5, 2013, to conspiracy to commit Hobbs Act robbery; Hobbs Act robbery; and carrying, using, and discharging a firearm during and in relation to a federal crime of violence resulting in death.  Santiago is scheduled to be sentenced on Jan. 9, 2014.

A third defendant, Kelly Marie Lajoie, 35, formerly of Springfield, Mass., pleaded guilty on Dec. 9, 2011, to Hobbs Act conspiracy, aiding and abetting a Hobbs Act robbery, and use of a firearm during a federal crime of violence.  A sentencing hearing has not been scheduled.

The matter was investigated by the Woonsocket Police Department, Rhode Island State Police and the FBI.

The case was prosecuted by Assistant U.S. Attorneys Adi Goldstein and William J. Ferland of the District of Rhode Island and Trial Attorney Jacabed Rodriguez-Coss of the Criminal Division's Capital Case Section.

The Justice Department today filed a lawsuit against the owner and operators of a Fremont, Calif., apartment complex, alleging that they had discriminated against families with children in violation of the Fair Housing Act by prohibiting children from playing in the common grassy areas of the complex.

“Families with children should have the same ability to enjoy their homes as all other tenants,” said Jocelyn Samuels, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division.    

The lawsuit, filed in the U.S. District Court for the Northern District of California, alleges that the owners and rental staff of Woodland Garden Apartments, a 37 unit apartment complex, adopted and enforced a policy prohibiting children from playing outside in the common grassy areas of the complex.  The complex is owned by Fred Martin and managed by Fatima Rivera, both of whom are named in the suit.  Alfredo Rivera, a former maintenance worker who participated in enforcing the policy, is also named as a defendant in the suit. 

This lawsuit arose as a result of complaints filed with the Department of Housing and Urban Development (HUD) by five families with children who lived at Woodland Garden Apartments, and Project Sentinel, a non-profit organization based in Santa Clara, Calif., that promotes fair housing.  After HUD investigated the complaints, it issued a charge of discrimination and the matter was referred to the Justice Department.

“Housing providers cannot impose more restrictive policies on families with children or evict them simply because their children leave the unit,” said Bryan Greene, HUD Acting Assistant Secretary for Fair Housing and Equal Opportunity.  “HUD and DOJ are committed to enforcing the fair housing rights of all people, including families with children.”

The lawsuit seeks a court order prohibiting future discrimination by the defendant, monetary damages for those harmed by the defendant’s actions and a civil penalty.

The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability.  Individuals who believe they may have been victims of housing discrimination may contact the Justice Department at 1-800-896-7743, e-mail the Justice Department at [email protected] ., or contact HUD at 1-800-669-9777 or through www.hud.gov/fairhousing .  

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

Dr. Ronald Eugene Jamerson of Schererville, Ind., entered a guilty plea to one count of willfully failing to truthfully account for, collect and pay over employment taxes to the Internal Revenue Service (IRS), the Department of Justice and IRS announced today.  Under the terms of the plea agreement, Jamerson also agreed to pay restitution in the amount of $541,083.20 to the IRS.

On June 20, 2012, Jamerson was indicted on 11 counts of willfully failing to file quarterly employment tax returns (Forms 941) with the IRS and willfully failing to pay over to the IRS the federal income taxes and the Federal Insurance Contributions Act (FICA) taxes due and owing from the second quarter of 2006 through the fourth tax quarter of 2008.  According to the indictment and other court pleadings, Jamerson, an ear, nose and throat surgeon who opened his own medical practice in the late 1990s, deducted and collected from his employees’ paychecks federal income taxes and FICA taxes, but he failed to file the employment tax returns and related employment taxes from 2003 through 2008.  In the plea agreement, Jamerson agrees that the total tax loss based on his failure to report and pay employment taxes is $541,083.20.

Sentencing is scheduled for Jan. 24. 2014. Jamerson faces a maximum penalty of five years in prison, three years of supervised release and a maximum fine of $250,000.

The case was investigated by Special Agents from IRS - Criminal Investigation and prosecuted by Justice Department Trial Attorneys Erin S. Mellen and Chris J. Maietta, with valuable support from the United States Attorney’s Office in Hammond, Indiana.

David Ostermeyer, who retired from the U.S. Agency for International Development (USAID) in 2012, will pay the government a $30,000 penalty to settle allegations that he participated in a matter in which he had a financial interest that conflicted with his duties when he was Chief Financial Officer of the agency, the Justice Department announced today. 

 
“We expect government officials to earn and maintain the trust of taxpayers by acting with the highest integrity,” said Stuart F. Delery, Assistant Attorney General for the Civil Division.  “This requires, at a minimum, that they do their work free of prohibited conflicts of interest.  The Justice Department will pursue those who violate their ethical obligations.” 

The government alleged that shortly before Ostermeyer retired from USAID, he helped the agency draft a contract solicitation for a senior advisor – a position that Ostermeyer intended to apply for after he retired .  In an effort to ensure he would be awarded the position, Ostermeyer allegedly tailored the solicitation to his specific skills and experiences. 

 
Federal conflict of interest laws prohibit executive branch employees from participating personally and substantially in matters in which they have a financial interest.  Since Ostermeyer had a financial interest in the contract solicitation, the government alleged that he could not participate in drafting it and, therefore, violated 18 U.S.C. § 208(a).

 
“To maintain public trust in our institutions, it is vital that those in government adhere to the highest standards of integrity,” said Michael Carroll, Acting Inspector General for USAID.  “The exceptional work of the investigators and attorneys on this case reflects our resolve to uphold these standards.”

This settlement was the result of a coordinated effort by the Justice Department’s Civil Division and USAID’s Office of Inspector General.  The claims resolved by this settlement are allegations only; there has been no determination of liability.   

An indictment was unsealed today charging Dominick Pannitti, formerly of North Bellmore, N.Y., with tax crimes, the Justice Department announced.

According to the indictment, which was returned by a grand jury on Sept. 26, 2013, Pannitti was Head of Operations at a securities brokerage firm in Syosset, N.Y.  The securities firm had an automated system designed to adjust customers’ trading accounts for amounts less than $1,000.  During 2005 and 2006, Pannitti used the automated system to credit his own trading accounts hundreds of times in increments less than $1,000.  Pannitti was not entitled to most of these credits, which totaled over $570,000.  Pannitti concealed from his accountant the income he obtained and failed to report the income on his tax returns. 

A trial date has not been scheduled.  An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.  Pannitti faces a potential maximum sentence of eight years in prison and a potential fine of up to $500,000.

The case was investigated by the Internal Revenue Service (IRS) - Criminal Investigation and the FBI.  The case is being prosecuted by Trial Attorneys Mark Kotila and Jeffrey Bender of the Justice Department’s Tax Division.

Harvey James pleaded guilty to one count of mail fraud and one count of aggravated identity theft for his role in a Stolen Identity Refund Fraud (“SIRF”) scheme , announced Assistant Attorney General Kathryn Keneally of the Justice Department's Tax Division and U.S. Attorney for the Middle District of Alabama George L. Beck Jr.

According to court documents and court proceedings, Harvey James obtained stolen identities from individuals who had access to inmate information from the Alabama Department of Corrections.  For several years, James, his sister, Jacqueline Slaton, and others used those inmate names to file false federal and state tax returns.  James and Slaton directed some of the false refunds to be sent to either prepaid debit cards or issued via check.  In 2012, James and Slaton enlisted the assistance of U.S. Postal Service mail carrier Vernon Harrison in the scheme.  Harrison, who provided James and his co-conspirators with mailing addresses to which they could mail debit cards, retrieved the debit cards from the mail and delivered them to James and his co-conspirators.  In exchange, Harrison received substantial payments.  Between 2010 and 2012, James and his co-conspirators filed hundreds of federal and state income tax returns that claimed over $1,000,000 in fraudulent tax refunds.

Sentencing has not yet been scheduled.  James faces a minimum sentence of two years in prison and a maximum sentence of twenty-two years in prison, three years of supervised release, restitution and a maximum fine of $250,000.  Slaton already pleaded guilty and was sentenced to 70 months in prison.  In July 2013, Harrison was found guilty by a jury for his role in the scheme.  Harrison will be sentenced on Oct. 31, 2013.

The case was investigated by Special Agents of the IRS - Criminal Investigation.  Trial Attorneys Jason H. Poole and Michael Boteler of the Justice Department’s Tax Division and Assistant U.S. Attorney Todd Brown are prosecuting the case.

Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.

ALABAMA MAN PLEADS GUILTY TO STEALING TAX REFUNDS

According to court documents, Tellis obtained and used the stolen means of identification of individuals, including their names, dates of birth and Social Security numbers, for the purpose of filing false federal income tax returns.  Tellis instructed his co-conspirators and others to provide him with bank account numbers for accounts at financial institutions that were used to receive the fraudulently obtained tax refunds.  Tellis used the account numbers and stolen means of identification to file false tax returns that claimed over $700,000 in false refunds.  As a result of his plea, Tellis faces a maximum sentence of 17 years in prison and a maximum fine of $250,000 per count.

This case was investigated by special agents of the Internal Revenue Service (IRS) - Criminal Investigation.  Trial Attorneys Charles M. Edgar Jr. and Michael Boteler of the Justice Department’s Tax Division prosecuted the case.

Two men from Miami have pleaded guilty to laundering millions of dollars obtained through a $10.5 million Medicare fraud scheme using shell companies they controlled.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, Acting U.S. Attorney for the Middle District of Florida A. Lee Bentley III, Special Agent in Charge Paul Wysopal of the FBI’s Tampa Field Office, and Special Agent in Charge Christopher B. Dennis of the U.S. Health and Human Services Office of Inspector General (HHS-OIG) region including all of Florida made the announcement.

Rafael Roche, 43, and Alain Remy, 35, pleaded guilty on Oct. 24, 2013, and Oct. 23, 2013, respectively, in the U.S. District Court for the Middle District of Florida to an indictment charging them with conspiracy to commit money laundering involving the proceeds of a health care fraud scheme.  Remy is scheduled for sentencing on Jan. 16, 2014; Roche’s sentencing date has yet to be scheduled.  They each face a maximum penalty of 20 years in prison.

According to documents filed in the case, Roche, Remy and others conspired to engage in financial and monetary transactions of health care fraud proceeds from Renew Therapy Center of Port St. Lucie LLC (Renew Therapy), a comprehensive outpatient rehabilitation facility.  From November 2007 through August 2009, Renew Therapy submitted approximately $10,549,361 in fraudulent claims for reimbursement to Medicare for therapy services that were not legitimately prescribed and not legitimately provided to Medicare beneficiaries.  As a result of those fraudulent claims, Medicare deposited approximately $6,248,056 into a Renew Therapy bank account.  The fraud proceeds in that account were subsequently disbursed to various entities, including a combined total of $1,847,222 to Ariguanabo Investment Group Inc. and IRE Diagnostic Center Inc., shell companies that Roche and Remy controlled.

Court records indicate that more than $1.2 million was laundered through Ariguanabo Investment Group between Feb. 5, 2009, and Sep. 22, 2009.  The money was subsequently removed from the Ariguanabo Investment Group bank account to various individuals and entities, including to Ibiza Future Planning Inc., a shell company that Remy established and controlled.

More than $600,000 was laundered through IRE Diagnostic Center from Aug. 7, 2008, and Jan. 29, 2009.  The money was subsequently removed from the IRE Diagnostic Center bank account to various individuals and entities, including to A&R Medical Services of South Florida Inc., another shell company that Roche and Remy established and controlled.
 
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 U.S. Attorney’s Office for the Middle District of Florida.  This case is being prosecuted by Trial Attorney Christopher J. Hunter of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, the HHS Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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