District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Rockville, Md., Property Purchased with Nigerian Corruption Proceeds Forfeited Through Justice Department’s Kleptocracy InitiativeRead the Press Release
A forfeiture judgment was executed today against real property with an estimated value of more than $700,000 in Rockville, Md., that had been purchased with corruption proceeds traceable to Diepreye Solomon Peter Alamieyeseigha, a former Governor of Bayelsa State, Nigeria, announced Acting Assistant Attorney General Mythili Raman of the Criminal Division and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.
“Foreign officials who think they can use the United States as a stash-house are sorely mistaken,” said Acting Assistant Attorney General Raman. “Through the Kleptocracy Initiative, we stand with the victims of foreign official corruption as we seek to forfeit the proceeds of corrupt leaders’ illegal activities.”
“This investigation was initiated by ICE’s Homeland Security Investigations (HSI) Asset Identification & Removal Group (AIRG) in Baltimore, in an effort to recover the criminal proceeds from Diepreye Solomon Peter Alamieyeseigha’s assets, whose shell companies were convicted of money laundering offenses in Nigeria,” said ICE Director Morton. “HSI’s AIRG will continue working with the Department of Justice to seek to recover illicit proceeds gained through foreign corruption and to protect the U.S. financial system from being utilized by criminals.”
Alamieyeseigha, aka DSP, was the elected governor of oil-producing Bayelsa State in Nigeria from 1999 until his impeachment in 2005. As alleged in the U.S. forfeiture complaint, DSP’s official salary for this entire period was approximately $81,000, and his declared income from all sources during the period was approximately $248,000. Nevertheless, while governor, DSP accumulated millions of dollars’ worth of property located around the world through corruption and other illegal activities. The complaint alleges that DSP acquired the Rockville property during his first term as governor of Bayelsa State with funds obtained through corruption, abuse of office, money laundering and other violations of Nigerian and U.S. law. Title to the property was transferred to Solomon & Peters, Ltd., a shell corporation controlled by DSP and on whose behalf the former governor entered a guilty plea to money laundering in Nigeria in 2007.
On May 24, 2013, U.S. District Court Judge Roger W. Titus of the District of Maryland granted a motion for a default judgment filed by the Criminal Division’s Asset Forfeiture and Money Laundering Section and issued a final decree of forfeiture. The order extinguishes all prior title and authorizes forfeiture to the United States of the private residence located in Rockville, Maryland, estimated to be worth more than $700,000 and allows the United States to liquidate the property in accordance with federal law. In a related action in the District of Massachusetts, the Department of Justice and ICE Homeland Security Investigations successfully forfeited approximately $400,000 from an investment account traceable to DSP.
Both actions were brought under the Justice Department’s Kleptocracy Asset Recovery Initiative announced by the Attorney General in 2010. Through this initiative, the Department of Justice, along with federal law enforcement agencies, seeks to identify and forfeit the proceeds of foreign official corruption, and where possible and appropriate return those corruption proceeds for the benefit of the people of the nations harmed by the corruption.
The case was investigated by the HSI’s Asset Identification & Removal Group (AIRG) in Baltimore. The case was prosecuted by Assistant Deputy Chief Daniel H. Claman and Trial Attorney Tracy Mann of the Criminal Division’s Asset Forfeiture and Money Laundering Section, with assistance from the U.S. Attorney’s Office of the District of Maryland.
Individuals with information about possible proceeds of foreign corruption in the United States, or funds laundered through institutions in the United States, should contact Homeland Security Investigations or other federal law enforcement, or send an email to [email protected].
North Carolina Businessman Pleads Guilty to Tax FraudRead the Press Release
William Robert Hupman Jr., pleaded guilty today to corruptly endeavoring to obstruct or impede the due administration of the internal revenue laws, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to court documents, Hupman managed and controlled Security Concepts LLC, a security alarm company based in Mebane, N.C. Instead of receiving a salary from Security Concepts, Hupman received income by using a Security Concepts debit card to pay his expenses. Despite receiving over $770,000 in such fees between 2007 and 2011, Hupman has not filed an individual income tax return since tax year 2006.
In addition to his failure to comply with his personal income tax responsibilities, Hupman also failed to comply with his employment tax responsibilities at Security Concepts. As the person who managed and controlled Security Concepts, Hupman was responsible for withholding employment taxes and paying them over to the IRS on a periodic basis. Despite the fact that employment taxes were withheld from the wages of Security Concepts employees, Security Concepts has not paid employment taxes and filed the required tax form since the third quarter of 2009. Hupman neither paid over employment taxes nor filed the required tax form for the fourth quarter of 2009 and each of the quarters in 2010 and 2011. He also has not paid the federal unemployment taxes owed or filed the required tax form for years 2009, 2010, or 2011.
Hupman faces a maximum of three years in prison, one year of supervised release and a maximum fine of $250,000. Sentencing is scheduled for Aug. 29, 2013.Kathryn Keneally, Assistant Attorney General of the Justice Department?s Tax Division, thanked Special Agents of IRS - Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Todd Ellinwood and Kevin Lombardi for prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.Justice Department Signs Agreement with the City of West Columbia, S.C. to Ensure Civic Access for People with DisabilitiesRead the Press Release
The Justice Department today announced an agreement with the City of West Columbia, S.C., to improve access to all aspects of civic life for persons with disabilities. The agreement was reached under Project Civic Access (PCA), the department’s wide-ranging initiative to ensure that cities, towns and counties throughout the country comply with the Americans with Disabilities Act (ADA).
“The ADA is a passport to our nation’s cities for people with disabilities. This agreement ensures that all people have access to West Columbia’s parks and other programs, services and activities,” said Eve L. Hill, Senior Counselor to the Assistant Attorney General of the Civil Rights Division. “Access to our cities is a basic civil right and the ADA is shaping the way our country and its people think inclusively about themselves and people with disabilities.”
As part of the PCA initiative, department staff, including investigators and architects, survey local government facilities, services and programs across the country. The purpose of the surveying is to identify modifications needed in order for a city to comply with the ADA requirements. The agreements address the steps each community must take to improve access.
Under the agreement announced today, West Columbia will take important steps to improve access for people with disabilities, such as:
• Physically modifying facilities surveyed by the department so that parking, routes into buildings, entrances, service areas and counters, restrooms, public telephones and drinking fountains are accessible to people with disabilities;
• Surveying the city’s other facilities and programs and making modifications where necessary to achieve compliance with ADA requirements;
• Complying with the ADA’s architectural accessibility requirements when the city builds or alters its buildings and outdoor facilities;
• Posting, publishing and distributing notices to inform members of the public of the provisions of the ADA and their applicability to the city’s programs, services and activities;
• Officially recognizing Relay South Carolina telephone service as a key means of communicating with individuals who are deaf, are hard-of-hearing, or have speech impairments and training staff in using the relay service for telephone communications;
• Developing a method for providing information for interested persons with disabilities concerning the existence and location of the city’s accessible services, activities and programs;
• Posting an online policy that its web pages will be accessible, creating a process for implementation and ensuring that all new and modified web pages are accessible; and
• Implementing a comprehensive plan to improve the accessibility of sidewalks and curb cuts throughout the city.Today’s agreement was reached under Title II of the ADA, which prohibits discrimination against individuals with disabilities by state and local governments. The agreement requires the remediation actions to be completed within 3 years. The department will actively monitor compliance with the agreement throughout this timeframe.
People interested in finding out more about the ADA, today’s agreement with the city of West Columbia, the Project Civic Access initiative, or the ADA Best Practices Tool Kit for state and local governments may access the ADA Web page at www.ada.gov or call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY).Related Materials:
Settlement Agreement
Justice Department Reaches Agreement with California <br /> Water Agency on Bailout Under the Voting Rights ActRead the Press Release
The Justice Department announced that it has reached an agreement with the Yuba County Water Agency, a special district in California, that, if approved by the court, will allow for the district to bail out from its status as a “covered jurisdiction” under the special provisions of the Voting Rights Act, and thereby exempt the agency from the preclearance requirements of Section 5 of the Voting Rights Act. The agency covers Yuba County, Calif., which is a jurisdiction subject to Section 5. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia.
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 4 of the act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court for the District of Columbia, or from the Attorney General, prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bail out,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in U.S. District Court for the District of Columbia. A bailout judgment can be issued only if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the Attorney General can consent to entry of a judgment of bailout only if, based upon investigation, the Attorney General is satisfied that the jurisdiction meets the eligibility requirements.
The Yuba County Water Agency filed its bailout action in the U.S. District Court for the District of Columbia on March 19, 2013. Agency officials had contacted the Attorney General prior to filing its action, indicating that the agency was interested in seeking a bailout. The agency provided the Justice Department with substantial information, and the department conducted an investigation to determine the agency’s eligibility. Based on that investigation, the department is satisfied that the agency meets the Voting Rights Act’s requirements for bailout.
“In this case, the department carefully evaluated the information provided by the agency, and conducted its own investigation, which has satisfied us that the agency is eligible for bailout,” said Deputy Assistant Attorney General for the Civil Rights Division Matthew Colangelo. “We appreciate the agency’s cooperation in the resolution of this matter.”The consent decree details the legal and factual basis for a bailout determination and, if approved, will grant the agency’s request. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the agency that would have originally precluded the agency from bailing out if it had occurred during the 10 year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.Justice Department Finds Pennsylvania State Prison’s <br /> Use of Solitary Confinement Violates Rights of Prisoners Under the Constitution and Americans with Disabilities ActRead the Press Release
Today, the Justice Department issued a findings letter detailing the results of its investigation into the use of solitary confinement on prisoners with serious mental illness at the Pennsylvania State Correctional Institution at Cresson in Cambria County, Pa. The department found that Cresson’s use of long-term and extreme forms of solitary confinement on prisoners with serious mental illness, many of whom also have intellectual disabilities, violates their rights under the Eighth Amendment to the U.S. Constitution and under the Americans with Disabilities Act (ADA).
Though the Pennsylvania Department of Corrections now intends to close Cresson, many of the prison’s problematic policies and practices relating to the use of solitary confinement appear indicative of what is occurring statewide. For this reason, in its findings letter, the department also notified the governor that the department is expanding the investigation to include all prisons in the Pennsylvania Department of Corrections to determine whether these other prisons also engage in the unlawful use of prolonged and extreme isolation of prisoners with serious mental illness and intellectual disabilities. Secretary John Wetzel and his staff at the Department of Corrections have fully cooperated during the course of this investigation and the department looks forward to working collaboratively with them in the coming months.
In addition to finding that Cresson routinely resorts to locking prisoners with serious mental illness in their cells for 22 to 23 hours a day, for months or even years at a time, the department also found that Cresson often denies these prisoners basic necessities and subjects them to harsh and punitive conditions, including excessive uses of force. The department concluded that Cresson’s misuse of solitary confinement on prisoners with serious mental illness leads to serious harms, including mental decompensation, clinical depression, psychosis, self-mutilation, and suicide.
The department also found that Cresson came to rely on solitary confinement as a means of warehousing many of its prisoners with serious mental illness because of deficiencies relating to its mental health program. Those systemic deficiencies include a disorganized and fragmented mental health program, marginalization of mental health staff, and disciplinary procedures that result in the punishment of disability-related behaviors and the placement of actively psychotic prisoners into harsh solitary confinement. The department also found an oversight system that does not analyze suicides and other critical data.
“We found that Cresson often permitted its prisoners with serious mental illness or intellectual disabilities to simply languish, decompensate, and harm themselves in solitary confinement for months or years on end under harsh conditions in violation of the Constitution,” said Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division. “These practices have serious public safety consequences because many of these individuals are returned to the community. We look forward to continuing to work collaboratively with the Department of Corrections during the expanded investigation to bring an end to these practices.”
“The findings in this case are disturbing and expose a serious disregard for the health and safety of prisoners with serious mental illness,” said David J. Hickton, U.S. Attorney for the Western District of Pennsylvania. “We are dedicated to ensuring that prisoners throughout the Commonwealth are treated humanely and receive the appropriate mental health treatment in an effort to enhance their successful reintegration into the community upon release.”
The department initiated this investigation in December 2011 under the Civil Rights of Institutionalized Persons Act (CRIPA), which prohibits a pattern or practice of deprivation of constitutional rights of individuals confined to state or local government-run correctional facilities. During the course of the investigation, the department made additional findings under the ADA. The investigation also provided information to the department that justified an expanded investigation under CRIPA and the ADA.
The expanded investigation will focus on allegations that prisons throughout the Pennsylvania Department of Corrections subject prisoners with serious mental illness and intellectual disabilities to prolonged periods of isolation under conditions similar to those found at Cresson. Through this investigation the department will seek to determine whether the other prisons in the Commonwealth engage in a pattern or practice of the inappropriate use of prolonged isolation on prisoners with serious mental illness and intellectual disabilities in violation of the Constitution and federal law.
This investigation was conducted by attorneys with the Special Litigation Section of the Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Western District of Pennsylvania. The Civil Rights Division and the U.S. Attorney’s Office will be partnering again to conduct the expanded statewide investigation. Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.
For-Profit School in Texas to Pay United States up to $2.5 Million for Allegedly Submitting False Claims for Federal Student Financial AidRead the Press Release
American Commercial Colleges Inc. (ACC) has agreed to pay the United States up to $2.5 million, plus interest, to resolve allegations that it violated the civil False Claims Act by falsely certifying that it complied with certain eligibility requirements of the federal student aid programs, the Justice Department announced today.
To maintain eligibility to participate in federal student aid programs authorized by Title IV of the Higher Education Act of 1965, for-profit colleges such as ACC must obtain no more than ninety percent of their annual revenues from Title IV student aid programs. At least ten percent of their revenues must come from other sources, such as payments from students using their own funds or private loans independent of Title IV. Congress enacted this “90/10 Rule” based on the belief that quality schools should be able to attract at least a portion of their funding from private sources, and not rely solely upon the Federal Government. The civil settlement resolves allegations that ACC violated the False Claims Act when it orchestrated certain short-term private student loans that ACC repaid with federal Title IV funds to artificially inflate the amount of private funding ACC counted for purposes of the 90/10 Rule. The short-term loans at issue in this case were not sought or obtained by students on their own; rather, the United States contends ACC orchestrated the loans for the sole purpose of manipulating its 90/10 Rule calculations.
“American taxpayers have a right to expect federal student aid to be used as intended by Congress -- to help students obtain a quality education from an eligible institution,” said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division. “The Department of Justice is committed to making sure that for-profit colleges play by the rules and that Title IV funds are used as intended.”
Under the False Claims Act settlement, ACC, a privately-owned college operating several campuses in Texas, will pay the United States $1 million, plus interest, over five years, and could be obligated to pay an additional $1.5 million under the terms of the agreement.“Misuse of taxpayers’ dollars cannot be tolerated – not only for the sake of taxpayers, but especially in the case of innocent individuals who seek to improve their lives through a quality education,” said U.S. Attorney for the Northern District of Texas Sarah R. Saldaña.
Today’s settlement resolves allegations brought by Shawn Clark and Juan Delgado, former directors of ACC campuses in Odessa and Abilene, respectively, under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring an action on behalf of the United States and to share in any recovery. Messrs. Clark and Delgado will receive $170,000 of the $1 million fixed portion of the government’s recovery, and would receive an additional $255,000 if ACC becomes obligated to pay the maximum $1.5 million contingent portion of the settlement.
This case was handled by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the Northern District of Texas; and the Department of Education’s Office of Inspector General and Office of General Counsel.
The lawsuit is captioned United States ex rel. Clark, et al., v. American Commercial Colleges, Inc., No. 5:10-cv-00129 (N.D. Tex.). The claims settled by this agreement are allegations only, and there has been no determination of liability.
Manssor Arbabsiar Sentenced in New York City Federal Court to 25 Years in Prison for Conspiring with Iranian Military Officials to Assassinate the Saudi Arabian Ambassador to the United StatesRead the Press Release
Manssor Arbabsiar, aka “Mansour Arbabsiar,” was sentenced today in New York City federal court to 25 years in prison for participating in a plot to murder the Saudi Arabian Ambassador to the U.S. while the Ambassador was in the U.S., announced John Carlin, Acting Assistant Attorney General for the National Security Division at the Department of Justice and Preet Bharara, U.S. Attorney for the Southern District of New York.
Arbabsiar, a 58 year-old naturalized U.S. citizen holding both Iranian and U.S. passports, was arrested on Sept. 29, 2011, at John F. Kennedy International Airport. He pleaded guilty on Oct. 17, 2012, to one count of murder-for-hire, one count of conspiracy to commit murder-for-hire, and one count of conspiracy to commit an act of terrorism transcending national boundaries before U.S. District Judge John F. Keenan, who also imposed today’s sentence.
“Thanks to the collaborative efforts of many U.S. law enforcement and intelligence professionals, Manssor Arbabsiar is today being held accountable for his role in this assassination plot,” said Acting Assistant Attorney General for National Security John Carlin. “I applaud all those responsible for ensuring that Arbabsiar and his co-conspirators in Iran’s Qods Force failed in their efforts. Today’s sentencing serves as a reminder of the evolving threat environment we face.”
“Manssor Arbabsiar was an enemy among us – the key conduit for, and facilitator of, a nefarious international plot concocted by members of the Iranian military to assassinate the Saudi Ambassador to the United States and as many innocent bystanders as necessary to get the job done,” said U.S. Attorney Bharara. “And but for the vigilance of our FBI and DEA partners, his plot, and the unspeakable harm it would have caused, may well have come to fruition, which is exactly why our commitment to using every resource we have to root out, prosecute and punish people like Arbabsiar, who act as emissaries for our enemies, remains unflagging.”
According to the complaint and indictment filed in federal court:From the spring of 2011 to October 2011, Arbabsiar and his Iran-based co-conspirators, including members of Iran’s Qods Force, plotted the murder of the Saudi Arabian Ambassador to the U.S. In furtherance of this conspiracy, Arbabsiar met on a number of occasions in Mexico with a DEA confidential source (CS-1) who posed as an associate of a violent international drug trafficking cartel. Arbabsiar arranged to hire CS-1 and CS-1’s purported accomplices to murder the Ambassador with the awareness and approval of his Iran-based co-conspirators. Arbabsiar wired approximately $100,000 to a bank account in the U.S. as a down payment to CS-1 for the anticipated killing of the Ambassador, which was to take place in the U.S, also with the approval of his co-conspirators.
The Qods Force is a branch of the Iranian Islamic Revolutionary Guard Corps (IRGC), which conducts sensitive covert operations abroad, including terrorist attacks, assassinations, and kidnappings, and is believed to have sponsored attacks against Coalition Forces in Iraq. In October 2007, the U.S. Treasury Department designated the Qods Force as a terrorist supporter for providing material support to the Taliban and other terrorist organizations.
Arbabsiar met with CS-1 in Mexico on several occasions between May 2011 and July 2011. During the course of these meetings, he inquired as to CS-1’s knowledge with respect to explosives and explained that he was interested in, among other things, attacking an embassy of Saudi Arabia and the murder of the Saudi Ambassador to the U.S. In a July 14, 2011 meeting in Mexico, CS-1 told Arbabsiar that he would need to use at least four men to carry out the Ambassador’s murder and that his price for doing so was $1.5 million. Arbabsiar agreed and stated that the murder of the Ambassador should be handled first, before the execution of other attacks that he had discussed with CS-1. Arbabsiar also indicated that he and his associates had $100,000 in Iran to give CS-1 as a first payment toward the assassination.
During the same meeting, Arbabsiar also described to CS-1 his cousin in Iran, who he said had requested that Arbabsiar find someone to carry out the Ambassador’s assassination. Arbabsiar indicated that his cousin was a “big general” in the Iranian military, that he focuses on matters outside of Iran, and that he had taken certain unspecified actions related to a bombing in Iraq.
In a July 17, 2011, meeting in Mexico, CS-1 noted to Arbabsiar that one of his workers had already traveled to Washington, D.C., to surveil the Ambassador. CS-1 also raised the possibility of innocent bystander casualties. Arbabsiar made it clear that the assassination needed to go forward, despite mass casualties, telling CS-1, “They want that guy [the Ambassador] done [killed], if the hundred go with him f**k ‘em.” CS-1 and Arbabsiar discussed bombing a restaurant in the U.S. that the Ambassador frequented. When CS-1 noted that others could be killed in the attack, including U.S. senators who dine at the restaurant, Arbabsiar dismissed these concerns as “no big deal.”
On Aug. 1 and Aug. 9, 2011, Arbabsiar caused two overseas wire transfers totaling approximately $100,000 to be sent to an FBI undercover account as a down payment for CS-1 to carry out the assassination. Later, Arbabsiar explained to CS-1 that he would provide the remainder of the $1.5 million after the assassination. On Sept. 20, 2011, CS-1 told Arbabsiar that the operation was ready and requested that he either pay one half the agreed upon price ($1.5 million) for the murder or that Arbabsiar personally travel to Mexico as collateral for the final payment of the fee. Arbabsiar agreed to travel to Mexico to guarantee final payment for the murder.
On Sept. 28, 2011, Arbabsiar flew to Mexico, and he was refused entry into the country and placed on a return flight destined for his last point of departure. The following day, Arbabsiar was arrested by federal agents during a flight layover at JFK International Airport in New York. Several hours after his arrest, Arbabsiar was advised of his Miranda rights and he agreed to waive those rights and speak with law enforcement agents. During a series of Mirandized interviews, Arbabsiar confessed to his participation in the murder plot.
In addition, Arbabsiar admitted to agents that, in connection with this plot, he was recruited, funded, and directed by men he understood to be senior officials in Iran’s Qods Force. He said these Iranian officials were aware of, and approved of, the use of CS-1 in connection with the plot, as well as payments to CS-1, the means by which the Ambassador would be killed in the U.S., and the casualties that would likely result.
Arbabsiar also told agents that his cousin, whom he had long understood to be a senior member of the Qods Force, had approached him in the early spring of 2011 about recruiting narco-traffickers to kidnap the Ambassador. He told agents that he then met with CS-1 in Mexico and discussed assassinating the Ambassador. Arbabsiar said that afterwards, he met several times in Iran with Gholam Shakuri, aka “Ali Gholam Shakuri,” a co-conspirator and Iran-based member of the Qods Force, and another senior Qods Force official, where Arbabsiar explained that the plan was to blow up a restaurant in the U.S. frequented by the Ambassador and that numerous bystanders would be killed. According to Arbabsiar, the plan was approved by these officials.
In October 2011, after his arrest, Arbabsiar made phone calls at the direction of law enforcement to Shakuri in Iran that were monitored. During these calls, Shakuri confirmed that Arbabsiar should move forward with the plot to murder the Ambassador and that he should accomplish the task as quickly as possible, stating on Oct. 5, 2011, “[j]ust do it quickly, it’s late…” Shakuri also told Arbabsiar that he would consult with his superiors about whether they would be willing to pay CS-1 additional money. Shakuri, who was also charged in the plot, remains at large.
* * *
In addition to the prison term, Arbabsiar was ordered to pay forfeiture in the amount of $125,000.
This case was investigated by the FBI Houston Division, the DEA Houston Division, and the FBI New York Joint Terrorism Task Force, with the assistance of the Department of Justice’s Office of International Affairs, its National Security Division, and the Department of State. The Government of Mexico also cooperated with the investigation.
This case is being handled by the U.S. Attorney’s Office for the Southern District of New York, Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Glen Kopp, Edward Kim, and Stephen Ritchin are in charge of the prosecution with assistance from the Counterterrorism Section of the Justice Department’s National Security Division.
Justice Department Sues to Stop Georgia Tax Return PreparerRead the Press Release
The United States yesterday filed a complaint asking a federal court in Atlanta, Ga., to stop Matthew Adegbite and his companies MAS & Associates CPA, LLC and Mathew A. Adegbite CPA, PC, from preparing federal income tax returns for others, the Justice Department announced today.
The complaint alleges that since at least 2008, Adegbite, who operates out of Tucker, Ga., a suburb of Atlanta, has prepared more than 1,000 returns. The complaint alleges that Adebgite unlawfully understated income tax liabilities and overstated refunds by fabricating and/or exaggerating deductions and tax credits his clients are not eligible to take. Adegbite’s practices include fabricating Schedule C losses for non-existent businesses, and falsely claiming the First Time Home Buyer Credit for taxpayers who did not actually purchase a home. Altogether, the government complaint alleges that the loss to the U.S. Treasury from Adegbite’s activities may be in the millions of dollars.
Over the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s website.
Related Materials:
United States v. Matthew Adegbite, et al.
Complaint for Injunctive Relief (PDF)
Florida Accountant Sentenced to Federal Prison <br /> for Two Fraud SchemesRead the Press Release
Joseph Rizzuti, of Stuart, Fla., was sentenced to 80 months in federal prison for conspiracy to commit wire fraud and for corruptly endeavoring to obstruct the Internal Revenue Service (IRS), the Justice Department and the IRS announced today.
According to court documents, Rizzuti, an accountant and the owner of Beacon Accounting Services in Palm City, Fla., interfered with the IRS’s ability to collect taxes owed by two clients by stealing payments from those clients intended for the IRS and making misrepresentations to the clients, as well as the IRS, to conceal his scheme. Rizzuti also admitted to engaging in a criminal conspiracy to commit wire fraud by making material misrepresentations to individuals throughout the United States who believed the money they were investing with Rizzuti and his co-conspirators was funding Nigerian-related oil and Bahamian construction projects, but instead Rizzuti and his co-conspirators used the investors’ money for their own personal expenses. In total, Rizzuti and his co-conspirators stole approximately $3 million.
In addition to prison time, U.S. District Judge Donald L. Graham sentenced Rizzuti to serve three years of supervised release and to pay $298,000 in restitution to victims of his schemes to the IRS. Additional penalties will be assessed in the next 90 days.
This case was investigated by special agents of IRS - Criminal Investigation and the Treasury Inspector General for Tax Administration. Trial Attorneys Justin Gelfand and Rebecca Perlmutter of the Justice Department’s Tax Division prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Department of Justice Releases Report to Congress on Indian Country Investigations and ProsecutionsRead the Press Release
The Department of Justice released today a report to Congress entitled Indian Country Investigations and Prosecutions which provides a range of enforcement statistics required under the Tribal Law and Order Act of 2010. The report, based on data compiled from the case management system used by U.S. Attorney’s Offices (USAO) with Indian Country jurisdiction shows among other things a 54 percent increase in Indian Country criminal prosecutions since Fiscal Year 2009.
“Across the country, U.S. Attorneys have been focused on fighting crime in Indian Country and reinforcing the bond between federal and tribal law enforcement, which also strengthens the faith that people have in their criminal justice system,” said Attorney General Eric Holder. “This report on federal law enforcement efforts in Indian Country is beginning to show the fruits of this labor with an increase in Indian Country cases prosecuted in federal courts over the past three years, but we have more work to do. The department will continue in its commitment to working with our tribal partners to build safe, sustainable, and healthy communities in American Indian and Alaska Native communities.”
“Every day, the men and women from U.S. Attorney’s Offices who prosecute violent crimes in Indian Country work hard to improve public safety in those communities,” said Timothy Purdon, U.S. Attorney for the District of North Dakota and Chairman of the Attorney General’s Advisory Subcommittee on Native American Issues. “The notable increase in prosecutions of Indian Country crime described in this report are the result of the many initiatives led by U.S. Attorney’s Offices across the country, including community prosecution strategies that place federal prosecutors on the reservations on a frequent basis to enhance criminal investigations and communication, and Tribal Special Assistant U.S. Attorney programs that have enhanced coordination with cross-deputized tribal prosecutors. These efforts and the resulting increase in prosecutions are a testament to the Justice Department’s commitment to public safety in Indian Country and they are an encouraging step toward safer, stronger native communities.”
“The FBI has a sustained commitment to enhancing public safety in Indian Country,” said FBI Assistant Director Ron Hosko. “As this report demonstrates our investigative strategy is focused on fully leveraging vital partnerships with federal, state, local and tribal agencies to address violent crime and victimization in tribal communities. This approach not only produces investigative results in the short term but also develops the trust and collaboration necessary to ensure sustained enhancements to public safety in the long term.”
The information contained in the report shows the following:• The Justice Department’s prioritization of Indian country crime has resulted in a notable increase in commitment to overall law enforcement efforts in Indian country. Caseloads have increased overall from 1,091 cases filed in fiscal year (FY) 2009 to 1,138 in FY 2010 to 1,547 in FY 2011 to 1,677 in FY 2012. This represents a nearly 54 percent increase in the Indian country crime caseload.
• USAO data for calendar year (CY) 2011 indicate that just under 37 percent (1,041) of all Indian Country submissions for prosecution (2,840) were declined by USAOs. In CY 2012, USAOs declined approximately 31 percent (965) of all (3,145) Indian Country submissions for prosecution. Overall, a substantial majority of Indian Country criminal cases opened by USAOs were prosecuted.
• The most common reasons for declination by USAOs were insufficient evidence (61 percent in CY 2011 and 52 percent in CY 2012) and referral to another prosecuting authority (19 percent in CY 2011 and 24 percent in CY 2012).
• The most common reasons investigations during calendar years CY 2011 and 2012 were not referred included deaths determined to be due to non-criminal causes (e.g., natural causes, accidents, suicides) and allegations in which there was insufficient evidence to prove criminal activity.
•The report shows a new era of partnership between the federal government and American Indian tribes, including an unprecedented level of collaboration with tribal law enforcement. The increase in collaboration and communication strengthens the bond of trust between federal and tribal investigators, prosecutors, and other personnel in both federal and tribal criminal justice systems, and it will make communities safer as a result.
Read the entire report at www.justice.gov/tribal/tloa-report-cy-2011-2012.pdfRead about the Justice Department’s efforts to increase public safety in Indian County at www.justice.gov/tribal/accomplishments.html
Court Approves Consent Decree to Prevent and Address Racial Discrimination in Student Discipline in Meridian, Miss.Read the Press Release
The U.S. District Court for the Southern District of Mississippi today approved a landmark consent decree filed by the Justice Department, together with private plaintiffs and the Meridian Public School District in Meridian, Miss., to prevent and address racial discrimination in student discipline. The consent decree is a far-reaching plan to reform discipline practices, including suspensions, expulsions and school-based arrests that unlawfully channel black students out of their classrooms and, too often, into the criminal justice system.
“The consent decree approved by the court today will propel meaningful reform in Meridian schools and serve as a blueprint for school districts across the country,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General for the Civil Rights Division. “We commend the Meridian Public School District for its commitment to keeping its students in safe and inclusive classrooms, and out of the school-to-prison pipeline.”
The consent decree amends a longstanding federal school desegregation decree enforced by the United States, which prohibits the district from discriminating against students based on race.The district has already started to take action to implement the consent decree, which requires it to:
• Limit discipline that removes students from classrooms, such as suspensions, expulsions and alternative placement, as well as end exclusionary consequences for minor misbehavior;
• Expand use of a proven behavior management approach known as positive behavior intervention and supports and train teachers and administrators so they have the tools necessary to safely and effectively manage their classrooms and schools;
• Prevent school officials from involving law enforcement officers when a student’s behavior can be safely and appropriately handled under school disciplinary procedures;
• Provide training for school law enforcement officers on bias-free policing, child and adolescent development and age appropriate responses, practices proven to improve school climate, mentoring and working with school administrators;
• Create clear entry and exit criteria at the alternative school and provide support to facilitate students’ transitions back to their home schools;
• Enhance due process protections in student discipline hearings;
• Monitor discipline data to identify and respond to racial disparities; and
• Engage families and communities as partners in revising policies and through regular school and community forums.“This consent decree is a major stride toward equal justice and equal opportunity for all students in Meridian,” said Gregory K. Davis, United States Attorney for the Southern District of Mississippi. “The court’s order is a powerful reminder to schools that they may not discriminate against students on the basis of race or another protected status in administering discipline.”
The department filed a related case against the Meridian Police Department, the Lauderdale County Youth Court and the State of Mississippi in October 2012, alleging that those defendants systematically violate the due process rights of students referred by the district. That case remains pending in the United States District Court for the Southern District of Mississippi.
The enforcement of Title IV of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race, among other bases, in public schools is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.
Alabama Woman Pleads Guilty in Stolen Identity Refund Fraud SchemeRead the Press Release
Lea’Tice Phillips, of Montgomery County, Ala., pleaded guilty today to one count of wire fraud and one count of aggravated identity theft for her role in a stolen identity refund fraud scheme, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to the court documents, Phillips worked for an Alabama state agency and had access to state databases which contained means of identification of individuals. Between October 2009 and April 2012, Phillips conspired with Antoinette Djonret and others to file false tax returns using stolen identities. On multiple occasions, Phillips accessed a state database to obtain means of identification and used her state email to send means of identification to Djonret. Djonret and others used those means of identification to file false tax returns mostly from Djonret’s residence in Montgomery, Ala. Djonret and her co-conspirators used an elaborate network of individuals to launder the tax refunds. They recruited individuals to purchase prepaid debit cards and to provide the cards to them. Fraudulently obtained tax refunds were directed to the prepaid debit cards that Djonret and her co-conspirators used to obtain the proceeds. Some of the prepaid debit cards were in the name of Phillips. In total, Djonret filed over 1,000 false tax returns that claimed over $1.7 million in fraudulent tax refunds.
The sentencing of Phillips has not yet been scheduled. Phillips faces between two and 22 years in prison, three years of supervised release, restitution, and a maximum fine of $750,000, or twice the loss caused by the offense. Djonret was previously sentenced to 144 months in prison.
The case was investigated by the IRS - Criminal Investigation. Trial Attorneys Jason H. Poole and Michael Boteler of the Justice Department’s Tax Division and Assistant U.S. Attorney for the Middle District of Alabama Todd Brown are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Louisiana Correctional Officer Pleads Guilty to Covering up Assault on an InmateRead the Press Release
Jason Giroir, 35, a former correctional officer with the Louisiana State Penitentiary (LSP) in Angola, La., pleaded guilty today before U.S. District Judge James J. Brady for the Middle District of Louisiana for his role in covering up an incident in which correctional officers used excessive force against an inmate. Giroir admitted filing a false report and subsequently providing false information to the FBI about the incident. Investigation of the incident is ongoing.
According to the factual basis filed in connection with his guilty plea, on or about Jan. 24, 2010, Giroir, then a major at LSP, heard that an inmate had escaped from his assigned location. Shortly thereafter, the inmate surrendered to prison officials. Giroir, one of the first officers to arrive at the surrender site, handcuffed the inmate and placed him on the back of his truck. Kevin L. Groom Sr., and two other LSP officers accompanied the handcuffed inmate in the rear of Giroir’s truck. During the transport, Giroir saw one of the officers repeatedly swing his asp baton down towards the inmate, and realized that the inmate was being beaten.Some time after this incident, one of the officers who was in the back of the truck approached Giroir to talk about the incident. That officer admitted to Giroir that he had struck the inmate, but denied having used an asp baton.
Giroir also admitted that during the prison’s investigation of this incident, he wrote and submitted a false report denying that officers assaulted the inmate, and that he provided that same false information to the Federal Bureau of Investigation.
Giroir pleaded guilty to falsification of records in a federal investigation and to making a false statement to the FBI. As a result of his guilty plea, Giroir faces a statutory maximum sentence of 25 years.
“Instead of lawfully carrying out his critical public safety responsibilities, Mr. Giroir covered up the violent actions of other officers,” said Deputy Assistant Attorney General for the Civil Rights Division Roy Austin. “The Justice Department will continue to vigorously prosecute officers who cross the line and engage in criminal misconduct.”
U.S. Attorney for the Middle District of Louisiana Donald J. Cazayoux Jr. stated, “our public protection mission in law enforcement necessitates the protection of inmates from physical abuse by those who are charged with guarding them. We will prosecute vigorously those law enforcement officers who are sworn to protect the public and undermine this mission by fabricating and covering up crimes they witness.”
" Mr. Giroir's guilty plea clearly confirms that the FBI pursues all aspects of excessive force incidents, including any attempted obstructions of the investigation of the underlying unlawful use of physical force by others," said FBI Special Agent in Charge Michael Anderson.In a related case before Judge Brady, former LSP Officer Kevin Groom entered a guilty plea.
The investigation in this matter was conducted by Special Agent Taneka Harris of the FBI and prosecuted by Civil Rights Division Trial Attorney AeJean (Angie) Cha and Assistant U.S. Attorney for the Middle District of Louisiana Robert W. Piedrahita.French Oil and Gas Company, Total, S.A., <br /> Charged in the United States and France in Connection with an International Bribery SchemeRead the Press Release
Total, S.A., a French oil and gas company that trades on the New York Stock Exchange, has agreed to pay a $245.2 million monetary penalty to resolve charges related to violations of the Foreign Corrupt Practices Act (FCPA) in connection with illegal payments made through third parties to a government official in Iran to obtain valuable oil and gas concessions, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, and U.S. Attorney Neil H. MacBride for the Eastern of Virginia.
As part of the agreed resolution, the department today filed a criminal information in U.S. District Court for the Eastern District of Virginia charging Total with one count of conspiracy to violate the anti-bribery provisions of the FCPA, one count of violating the internal controls provision of the FCPA, and one count of violating the books and records provision of the FCPA. The department and Total agreed to resolve the charges by entering into a deferred prosecution agreement for a term of three years. In addition to the monetary penalty, Total also agreed to cooperate with the department and foreign law enforcement to retain an independent corporate compliance monitor for a period of three years and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations.
Also today, the U.S. Securities and Exchange Commission (SEC) entered into a cease-and-desist order against Total in which the company agreed to pay an additional $153 million in disgorgement and prejudgment interest. Total also agreed with the SEC to comply with certain undertakings regarding its FCPA compliance program, including the retention of a compliance consultant.
In addition, French enforcement authorities announced earlier today that they had requested that Total, Total’s Chairman and Chief Executive Officer, and two additional individuals be referred to the Criminal Court for violations of French law, including France’s foreign bribery law.
“Today we announce the first coordinated action by French and U.S. law enforcement in a major foreign bribery case,” said Acting Assistant Attorney General Raman. “Our two countries are working more closely today than ever before to combat corporate corruption, and Total, which bought business through bribes, now faces the criminal consequences across two continents.”
“The Eastern District of Virginia, through our strong partnership with the Criminal Division’s Fraud Section, is committed to holding accountable those who violate the Foreign Corrupt Practices Act,” said U.S. Attorney MacBride. “Today’s deferred prosecution agreement, with both its punitive and forward-looking compliance provisions, dovetails with our goals of bringing violators to justice and preventing future misconduct.”
According to the deferred prosecution agreement, in 1995 Total sought to re-enter the Iranian oil and gas market by attempting to obtain a contract with the National Iranian Oil Company (NIOC) to develop the Sirri A and E oil and gas fields. In May 1995, Total entered into negotiations with an Iranian official who served as the chairman of an Iranian state-owned and state-controlled engineering company. Total subsequently entered into a purported consulting agreement pursuant to which Total would corruptly make payments to an intermediary designated by the Iranian official to secure NIOC signing a development agreement with Total for the Sirri A and E project, which NIOC did in July 1995. Over the next two-and-a-half years, Total paid approximately $16 million in bribes under the purported consulting agreement.
In 1997, Total sought to negotiate a contract with NIOC to develop a portion of the South Pars gas field, the world’s largest gas field. At the direction of the Iranian official, Total and a second intermediary entered into another purported consulting agreement that called for Total to make large payments to the intermediary. In September 1997, Total executed a contract with NIOC that granted it a 40 percent interest in developing phases two and three of the South Pars gas field. Over the next seven years, Total made unlawful payments of approximately $44 million pursuant to the second purported consulting agreement.
In sum, between 1995 and 2004, at the direction of the Iranian official, Total corruptly made approximately $60 million in bribe payments under the agreements for the purpose of inducing the Iranian official to use his influence in connection with Total’s efforts to obtain and retain lucrative oil rights in the Sirri A and E and South Pars oil and gas fields. Total mischaracterized the unlawful payments as “business development expenses” when they were, in fact, bribes designed to corruptly influence a foreign official. Further, Total failed to implement effective internal accounting controls, permitting the consulting agreements’ true nature and true participants to be concealed and thereby failing to maintain accountability for assets.
The case is being prosecuted by Trial Attorney Andrew Gentin of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Charles Connolly of the U.S. Attorney’s Office for the Eastern District of Virginia. Significant assistance was provided by the Criminal Division’s Office of International Affairs and by the SEC’s New York Regional Office. The department also acknowledges and expresses its deep appreciation for the cooperation and partnership of French law enforcement authorities.
Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.
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DPAFormer Puerto Rico Police Officers Convicted <br /> of Extorting a Defendant for $50,000Read the Press Release
Two former police officers with the Police of Puerto Rico were convicted of attempting to extort a commonwealth defendant and soliciting bribe payments of $50,000, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico.
Abimael Arroyo-Cruz, 30, of Rio Grande, Puerto Rico, was convicted by a jury on charges including conspiracy to commit federal programs bribery, bribery, conspiracy to commit extortion and attempted extortion. Josue Becerril-Ramos, 36, of Carolina, Puerto Rico, pleaded guilty to the same counts during trial.
According to court records and evidence presented at trial, Arroyo and Becerril arrested eight individuals for possession of unregistered firearms and marijuana on Aug. 2, 2012. The officers then solicited from one individual a bribe payment of $50,000 to have his case dismissed. Beginning on Sept. 11, 2012, both officers spoke with the individual multiple times over the telephone, discussing payment details and strategies for dismissing the individual’s case. Arroyo and Becerril collected approximately $35,000 of the $50,000 in two different payment installments.
In exchange for the bribes, Arroyo and Becerril devised a plan whereby the officers would misidentify a co-defendant in court, leading to dismissal of that defendant’s case. When asked under oath at the preliminary hearing to identify the defendant, Arroyo instead identified a co-defendant.
Unbeknownst to the officers, the individuals who dropped off the payments were cooperating with federal law enforcement.
The case was investigated by the FBI’s San Juan Field Office. The case was prosecuted by Trial Attorneys Menaka Kalaskar and Marquest J. Meeks of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Timothy Henwood of the District of Puerto Rico.
Former Nevada Lobbyist Harvey Whittemore Convicted of Making Unlawful Senate Campaign ContributionsRead the Press Release
Following a two-week jury trial, F. Harvey Whittemore, a prominent lawyer and former lobbyist in Nevada, was convicted today of making unlawful campaign contributions to a Senate campaign committee in 2007 and causing a false statement to be made to the Federal Election Commission (FEC), announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Daniel G. Bogden, U.S. Attorney for the District of Nevada.
“Today, a jury convicted Mr. Whittemore of using dozens of straw donors to evade contribution limits so he could make good on a campaign fundraising promise,” said Acting Assistant Attorney General Raman. “The cornerstones of our campaign finance laws are contribution limits and transparency, and Mr. Whittemore’s crime was designed to undermine both. Today’s verdict demonstrates our resolve to aggressively pursue those who use illegal tricks to corrupt our democratic process.”
“Persons who knowingly violate campaign contribution laws will be investigated and prosecuted to the full extent of the law,” said U.S. Attorney Bogden. “Campaign laws exist to level the playing field. The public deserves to know that these laws are not just ‘on the books,’ and that persons with power and money who abuse the system for their own benefit will be prosecuted.”
Whittemore, 59, of Reno, Nev., was convicted of one count of making excessive campaign contributions, one count of making contributions in the name of others, and one count of causing a materially false statement to be made to the FEC, all felony offenses.
According to the indictment and evidence presented at trial, during 2007, Whittemore was the chief executive of Wingfield Nevada Group and was a registered lobbyist in Nevada.On Feb. 21, 2007, Whittemore met with a U.S. senator at a hotel in Las Vegas and agreed to raise $150,000 in contributions for the senator’s campaign committee by March 31, 2007, which marked the end of an FEC-mandated quarterly reporting period.
Federal laws prohibit persons from hiding their true identity when contributing to federal political campaigns, and also set limits on the amount that an individual can contribute to a campaign. In 2007, the maximum individual contribution was $2,300 for a primary election and $2,300 for a general election; thus, the maximum for one candidate was $4,600.
Aware of the strict limits on individual federal campaign contributions, Whittemore devised a scheme to unlawfully use about 29 family members, employees and their spouses as conduits to funnel more than $130,000 of his own money to the campaign. This scheme allowed Whittemore to make an individual campaign donation to the campaign committee in excess of the limits established by federal law. Whittemore concealed the scheme from the FEC, the senator, and the senator’s campaign committee.
In March 2007, Whittemore solicited family members, his employees and their spouses to make the maximum campaign donations to the senator’s campaign and Whittemore reimbursed or advanced the money to the contributors with personal checks and wire transfers. Whittemore also paid the contributors additional money on top of the reimbursements. If a conduit contributed $4,600, Whittemore reimbursed them $5,000; likewise if a couple contributed $9,200, he paid the couple $10,000.
On or about March 28, 2007, Whittemore caused one of his employees to transmit $138,000 in contributions to the senator’s campaign committee, the vast majority of which were conduit contributions that Whittemore had personally funded in order to satisfy his pledge to the senator. On April 15, 2007, the senator’s campaign then unknowingly filed a false report with the FEC stating that the conduits had made the contributions, when in fact, Whittemore had made them.
Whittemore is free on a personal recognizance bond pending sentencing, which is scheduled for Sept. 23, 2013. Whittemore faces up to five years in prison and a $250,000 fine on each count.
The case was investigated by the FBI, and is being prosecuted by Trial Attorney Eric G. Olshan of the Public Integrity Section in the Justice Department’s Criminal Division and First Assistant U.S. Attorney Steven W. Myhre of the District of Nevada.
Former Navy Reservist Pleads Guilty to Sexual Exploitation <br /> of Multiple Minors to Produce Child PornographyRead the Press Release
Anthony K. Mastrogiovanni, 30, of Crofton, Md., pleaded guilty today to the sexual exploitation of minors to produce child pornography.
The guilty plea was announced by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; and Postal Inspector in Charge Gary R. Barksdale of the U.S. Postal Inspection Service’s Washington Division.
According to filed court documents and proceedings, between 2006 and 2012, Mastrogiovanni was a U.S. Navy reservist who sexually exploited more than 30 male juveniles, ranging from 9 to 16 years of age, in Maryland and Louisiana to produce child pornography. During that time period, Mastrogiovanni met and befriended his victims through his involvement in civic organizations or his military affiliation. Mastrogiovanni captured sexually explicit video of the victims on cameras hidden in his residences in Louisiana and Maryland.
Mastrogiovanni has been in federal custody since he was arrested by inspectors of the U.S. Postal Inspection Service in Las Vegas on July 19, 2012. A search of his Las Vegas hotel room recovered external hard drives containing over 30,000 images of child pornography, including video of his juvenile victims. That same day, federal agents searched Mastrogiovanni’s apartment in Crofton where they discovered a hidden video camera and video transmitting equipment as well as digital media containing additional child pornography.
As part of his plea agreement, Mastrogiovanni will be required to register as a sex offender in the place where he resides, where he is an employee and where he is a student, under the Sex Offender Registration and Notification Act (SORNA).
Mastrogiovanni faces a minimum mandatory sentence of 15 years in prison and a maximum of 30 years in prison followed by up to lifetime of supervised release for sexual exploitation of a minor to produce child pornography. U.S. District Judge J. Frederick Motz has scheduled sentencing for July 31, 2013.
The investigation was conducted by the U.S. Postal Inspection Service, with the assistance of the Air Force Office of Special Investigations, Naval Criminal Investigative Service and FBI’s Maryland Child Exploitation Task Force. The case is being prosecuted by Trial Attorney Keith A. Becker of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney P. Michael Cunningham of the District of Maryland.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Alabama Resident Pleads Guilty in Stolen Identity Refund Fraud SchemeRead the Press Release
Today, Bridgette Rivers, a resident of Montgomery, Ala., pleaded guilty to her involvement in a conspiracy to use stolen identities to file fraudulent tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to the court documents, Rivers provided identity information to her co-conspirators, Barbara Murry, Veronica Temple and Yolanda Moses. Those co-conspirators used these stolen identities and others to file false tax returns that fraudulently requested tax refunds from the IRS. Rivers also recruited another individual to provide her bank account information to the conspiracy. The fraudulently obtained tax refunds went into that individual’s bank account and the individual would then withdraw the money to give to Rivers.
This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Michael Boteler and Jason Poole of the Justice Department’s Tax Division are prosecuting the case, with the assistance from the U.S. Attorney’s Office for the Middle District of Alabama and, in particular, Assistant U.S. Attorney Todd Brown.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Wal-Mart Pleads Guilty to Federal Environmental Crimes, Admits Civil Violations and Will Pay More Than $81 MillionRead the Press Release
Wal-Mart Stores Inc. pleaded guilty today in cases filed by federal prosecutors in Los Angeles and San Francisco to six counts of violating the Clean Water Act by illegally handling and disposing of hazardous materials at its retail stores across the United States. The Bentonville, Ark.-based company also pleaded guilty today in Kansas City, Mo., to violating the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) by failing to properly handle pesticides that had been returned by customers at its stores across the country.
As a result of the three criminal cases brought by the Justice Department, as well as a related civil case filed by the U.S. Environmental Protection Agency (EPA), Wal-Mart will pay approximately $81.6 million for its unlawful conduct. Coupled with previous actions brought by the states of California and Missouri for the same conduct, Wal-Mart will pay a combined total of more than $110 million to resolve cases alleging violations of federal and state environmental laws.
According to documents filed in U.S. District Court in San Francisco, from a date unknown until January 2006, Wal-Mart did not have a program in place and failed to train its employees on proper hazardous waste management and disposal practices at the store level. As a result, hazardous wastes were either discarded improperly at the store level – including being put into municipal trash bins or, if a liquid, poured into the local sewer system – or they were improperly transported without proper safety documentation to one of six product return centers located throughout the United States.
“By improperly handling hazardous waste, pesticides and other materials in violation of federal laws, Wal-Mart put the public and the environment at risk and gained an unfair economic advantage over other companies,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Today, Wal-Mart acknowledged responsibility for violations of federal laws and will pay significant fines and penalties, which will, in part, fund important environmental projects in the communities impacted by the violations and help prevent future harm to the environment.”
“Federal laws that address the proper handling, storage and disposal of hazardous wastes exist to safeguard our environment and protect the public from harm,” said André Birotte Jr., the U.S. Attorney for the Central District of California. “Retailers like Wal-Mart that generate hazardous waste have a duty to legally and safely dispose of that hazardous waste, and dumping it down the sink was neither legal nor safe. The case against Wal-Mart is designed to ensure compliance with our nation’s environmental laws now and in the future.”
“As one of the largest retailers in the United States, Wal-Mart is responsible not only for the stock on its shelves, but also for the significant amount of hazardous materials that result from damaged products returned by customers,” said Melinda Haag, U.S. Attorney for the Northern District of California. “The crimes in these cases stem from Wal-Mart's failure to comply with the regulations designed to ensure the proper handling, storage, and disposal of those hazardous materials and waste. With its guilty plea today, Wal-Mart is in a position to be an industry leader by ensuring that not only Wal-Mart, but all retail stores properly handle their waste.”
“This tough financial penalty holds Wal-Mart accountable for its reckless and illegal business practices that threatened both the public and the environment,” said Tammy Dickinson, U.S. Attorney for the Western District of Missouri. “Truckloads of hazardous products, including more than 2 million pounds of pesticides, were improperly handled under Wal-Mart’s contract. Today’s criminal fine should send a message to companies of all sizes that they will be held accountable to follow federal environmental laws. Additionally, Wal-Mart’s community service payment will fund important environmental projects in Missouri to help prevent such abuses in the future.”
“The FBI holds all companies, regardless of size, to the same standards,” said FBI Special Agent in Charge David J. Johnson of the San Francisco Field Office. “We will continue to work closely with our law enforcement partners to ensure there is a level playing field for all businesses and that everyone follows the rules.”
“Today Wal-Mart is taking responsibility for violating laws that protect people from hazardous wastes and chemicals,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Walmart is committing to safe handling of hazardous wastes at all of its facilities nationwide, and action that will benefit communities across the country.”
Wal-Mart owns more than 4,000 stores nationwide that sell thousands of products which are flammable, corrosive, reactive, toxic or otherwise hazardous under federal law. The products that contain hazardous materials include pesticides, solvents, detergents, paints, aerosols and cleaners. Once discarded, these products are considered hazardous waste under federal law.
Wal-Mart pleaded guilty this morning in San Francisco to six misdemeanor counts of negligently violating the Clean Water Act. The six criminal charges were filed by the U.S. Attorney’s Office in Los Angeles and San Francisco (each office filed three charges), and the two cases were consolidated in the Northern District of California, where the guilty pleas were formally entered before U.S. Magistrate Judge Joseph C. Spero. As part of a plea agreement filed in California, Wal-Mart was sentenced to pay a $40 million criminal fine and an additional $20 million that will fund various community service projects, including opening a $6 million Retail Compliance Assistance Center that will help retail stores across the nation learn how to properly handle hazardous waste.
In the third criminal case resolved today, Wal-Mart pleaded guilty in the Western District of Missouri to violating FIFRA. According to a plea agreement filed in Kansas City, beginning in 2006, Wal-Mart began sending certain damaged household products, including regulated solid and liquid pesticides, from its six return centers to Greenleaf LLC, a recycling facility located in Neosho, Mo., where the products were processed for reuse and resale. Because Wal-Mart employees failed to provide adequate oversight of the pesticides sent to Greenleaf, regulated pesticides were mixed together and offered for sale to customers without the required registration, ingredients, or use information, which constitutes a violation of FIFRA. Between July 2006 and February 2008, Wal-Mart trucked more than 2 million pounds of regulated pesticides and additional household products from its various return centers to Greenleaf. In November 2008, Greenleaf was also convicted of a FIFRA violation and paid a criminal penalty of $200,000 in 2009.
Pursuant to the plea agreement filed in Missouri and accepted today by U.S. District Judge John T. Maughmer, Wal-Mart agreed to pay a criminal fine of $11 million and to pay another $3 million to the Missouri Department of Natural Resources, which will go to that agency’s Hazardous Waste Program and will be used to fund further inspections and education on pesticide regulations for regulators, the regulated community and the public. In addition, Wal-Mart has already spent more than $3.4 million to properly remove and dispose of all hazardous material from Greenleaf’s facility.
In conjunction with today’s guilty pleas in the three criminal cases, Wal-Mart has agreed to pay a $7.628 million civil penalty that will resolve civil violations of FIFRA and Resource Conservation and Recovery Act (RCRA). In addition to the civil penalties, Wal-Mart is required to implement a comprehensive, nationwide environmental compliance agreement to manage hazardous waste generated at its stores. The agreement includes requirements to ensure adequate environmental personnel and training at all levels of the company, proper identification and management of hazardous wastes, and the development and implementation of Environmental Management Systems at its stores and return centers. Compliance with this agreement is a condition of probation imposed in the criminal cases.
The criminal cases announced today are a result of investigations conducted by the FBI and the EPA, which received substantial assistance from the California Department of Substance and Toxics Control, and the Missouri Department of Natural Resources.
In Missouri, the case was prosecuted by Deputy U.S. Attorney Gene Porter and ENRD Senior Trial Attorney Jennifer Whitfield of the Environmental Crimes Section of the Environment and Natural Resources Division. In California, the cases were prosecuted in Los Angeles by Assistant U.S. Attorney Joseph O. Johns and in San Francisco by Assistant U.S. Attorney Stacey Geis.
Pennsylvania Man Sentenced to 12 Years in Prison for<br /> Coercing and Enticing a Minor to Perform in an Online Sex ShowRead the Press Release
A Pennsylvania man was sentenced today to serve 12 years in prison for coercing and enticing a minor and possessing child pornography, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Western District of Pennsylvania David J. Hickton; and Special Agent in Charge John Kelleghan of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Philadelphia.
Jeffrey W. Herschell, 54, of Washington, Pa., was sentenced by U.S. District Judge David Stewart Cercone in the Western District of Pennsylvania. According to a statement of facts entered into the record by the government and agreed to by the defendant, Herschell sent money to the Philippines in February 2010 for a live, online sex show that included a 12-year-old minor female engaging in sexual activity. Herschell also admitted to possessing child pornography videos at his Pennsylvania residence.
This case was prosecuted by Assistant U.S. Attorney Jessica Lieber Smolar of the Western District of Pennsylvania and Trial Attorney Bonnie L. Kane of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS). This case was investigated by ICE-HSI Pittsburgh and the ICE-HSI Attache’s Office in the Philippines with significant assistance from the National Bureau of Investigation (Philippines) and the Philippine National Police.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
One of the World’s Largest Digital Currency Companies and Seven of Its Principals and Employees Charged in Manhattan Federal Court with Running Alleged $6 Billion Money Laundering SchemeRead the Press Release
Mythili Raman, Acting Assistant Attorney General for the Criminal Division of the U.S. Department of Justice; Preet Bharara, U.S. Attorney for the Southern District of New York; Steven G. Hughes, Special Agent-in-Charge of the New York Office of the U.S. Secret Service; Richard Weber, Chief of the Internal Revenue Service, Criminal Investigation (IRS-CI); and James T. Hayes Jr., Special Agent-in-Charge of the New York Field Office of the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), announced today the unsealing of an indictment charging Liberty Reserve, a company that operated one of the world’s most widely used digital currency services, and seven of its principals and employees with money laundering and operating an unlicensed money transmitting business. Liberty Reserve is alleged to have had more than one million users worldwide, including more than 200,000 users in the U.S., who conducted approximately 55 million transactions – virtually all of which were illegal – and 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.
Five defendants were arrested on May 24, 2013, including Arthur Budovsky, the principal founder of Liberty Reserve, who was arrested in Spain; Vladmir Kats, the co-founder of Liberty Reserve, who was arrested in Brooklyn, New York; Azzeddine El Amine, a manager of Liberty Reserve’s financial accounts, who was arrested in Spain; and Mark Marmilev and Maxim Chukharev, who helped design and maintain Liberty Reserve’s technological infrastructure, who were arrested in Brooklyn and Costa Rica, respectively. Two other defendants, Ahmed Yassine Abdelghani (Yassine) and Allan Esteban Hidalgo Jimenez (Hidalgo), are at large in Costa Rica.
In addition to the criminal charges brought in the indictment, five domain names were seized, namely, the domain name of Liberty Reserve and the domain names of four exchanger websites that were controlled by one or more of the defendants; 45 bank accounts were restrained or seized; and a civil action was filed against 35 exchanger websites seeking the forfeiture of the exchangers’ domain names because the websites were used to facilitate the Liberty Reserve money laundering conspiracy and constitute property involved in money laundering. The four exchangers whose domain names were seized, as well as the 35 exchangers whose domain names are the subjects of the civil forfeiture action, were all exchangers that transacted business with Liberty Reserve and were listed on Liberty Reserve’s website as “pre-approved exchangers.” The investigation and takedown involved law enforcement action in 17 countries, including Costa Rica, the Netherlands, Spain, Morocco, Sweden, Switzerland, Cyprus, Australia, China, Norway, Latvia, Luxembourg, the United Kingdom, Russia, Canada and the U.S.
In a coordinated action, the U.S. Department of the Treasury and its Financial Crimes Enforcement Network today announced that Liberty Reserve has been named as a financial institution of primary money laundering concern under Section 311 of the USA PATRIOT Act. This action includes a notice to the Federal Register proposing to prohibit covered U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for foreign banks that are being used to process transactions involving Liberty Reserve.
Acting Assistant Attorney General Raman said: “As charged, Liberty Reserve operated, on an enormous scale, a digital currency system designed to provide cyber and other criminals with a way to launder their profits without leaving a trace. The company’s very purpose was to launder its users’ criminal proceeds through the U.S. and global financial system. By indicting Liberty Reserve and its principals, restraining over $25 million in criminal proceeds, forfeiting domain names, and seizing servers in countries around the globe, our message is clear: money launderers can run, but they can’t hide from the U.S. justice system. Combating the threat of global illicit finance requires using every tool we have at our disposal, and today we demonstrate our resolve to ensure that criminals who exploit the U.S. and global financial system will be held to account.”
U.S. Attorney Bharara said: “ As alleged, the only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes – the coin of its realm was anonymity, and it became a popular hub for fraudsters, hackers, and traffickers. The global enforcement action we announce today is an important step towards reining in the ‘Wild West’ of illicit Internet banking. As crime goes increasingly global, the long arm of the law has to get even longer, and in this case, it encircled the earth.”
Secret Service Special Agent-in-Charge Hughes said: “These arrests are an example of the Secret Service’s commitment to investigate and apprehend criminals engaged in the misuse of virtual currencies to conduct global monetary fraud. Cyber criminals should be reminded today that they are unable to hide behind the anonymity of the Internet to avoid regulated financial systems. We are grateful to our many law enforcement partners throughout the world for assistance in this investigation, especially in Costa Rica, Spain and the Netherlands.”
IRS-CI Chief Weber said: “We are now entering the cyber age of money laundering. Technology advancements over the past several years have dramatically increased opportunities for criminals to move, conceal and enjoy their ill-gotten gains. Liberty Reserve and its principals have been charged with operating a sophisticated and complex system for structuring financial transactions which catered to those engaged in such criminal activity. What they did not anticipate was our robust partnerships with domestic and foreign law enforcement that allowed us collectively to follow the cyber money trail in the United States and around the world.”
ICE HSI Special Agent-in-Charge Hayes said: “The actions of the U.S. Secret Service, IRS, and HSI in dismantling the Liberty Reserve operation are critical because transnational criminal organizations can succeed only so long as they can funnel their illicit proceeds freely and without detection. HSI is proud of its partnership through the Global Illicit Financial Team and will continue to aggressively target financial institutions that deliberately enable businesses and individuals to evade global financial systems in furtherance of criminal schemes.”
According to the allegations in the indictment, the civil forfeiture complaint, and other documents filed in federal court:
Background
Liberty Reserve was incorporated in Costa Rica in 2006 and operated the digital currency commonly referred to as “LR.” While the company billed itself as the Internet’s “largest payment processor and money transfer system,” serving “millions” of people around the world, including the U.S., at no time did the company register with the U.S. Department of the Treasury as a money transmitting business, as required by law.
Budovsky, the principal founder of Liberty Reserve, directed and supervised its operations, finances, and corporate strategy. Kats, a co-founder, helped operate the company until 2009. The day-to-day operations of Liberty Reserve were managed, at different times, by Hidalgo and Yassine. El Amine managed various financial accounts controlled by Liberty Reserve, while Marmilev and Chukharev were primarily responsible for designing and maintaining the company’s technological infrastructure.
Overview of Liberty Reserve’s Money Laundering Operation
The defendants created, structured and operated Liberty Reserve as a criminal bank-payment processor designed to help users conduct illegal transactions anonymously and launder the proceeds of their crimes. It emerged as one of the principal money transfer agents used by cyber criminals around the world to distribute, store, and launder the proceeds of their illegal activity. The company grew into a financial hub of the cybercrime world, facilitating a broad range of online criminal activity, including credit card fraud, identity theft, investment fraud, computer hacking, child pornography and narcotics trafficking. Liberty Reserve was used extensively for illegal purposes, functioning as the bank of choice for the criminal underworld because it provided an infrastructure that enabled cyber criminals around the world to conduct anonymous and untraceable financial transactions.
The defendants also protected the criminal infrastructure of Liberty Reserve by, among other things, lying to anti-money laundering authorities in Costa Rica and pretending to shut down Liberty Reserve after learning the company was being investigated by U.S. law enforcement. They then continued operating the business through a set of shell companies, and moved tens of millions of dollars through shell company accounts maintained in Cyprus, Russia, China, Hong Kong, Morocco, Spain, Australia and elsewhere.
The Criminal Design of Liberty Reserve
In order to use LR currency, a user first had to open an account through the Liberty Reserve website and provide basic identifying information. Unlike traditional banks or legitimate online processors, Liberty Reserve did not require users to validate their identities. Users routinely established accounts under false names, including such blatantly criminal names as “Russia Hackers” and “Hacker Account.” As part of the investigation, a law enforcement agent opened and executed transactions through an undercover account at Liberty Reserve in the name of “Joe Bogus” and the address “123 Fake Main Street” in “Completely Made Up City, New York.”
Once an account was established, the user could conduct transactions with other Liberty Reserve users. In these transactions, the user could receive transfers of LR from other users’ accounts, and transfer LR from his or her own account to other users, including any “merchants” that accepted LR as payment. Liberty Reserve charged a one-percent fee up to a maximum of $2.99, every time a user transferred LR to another user through the Liberty Reserve system. For an additional “privacy fee” of 75 cents per transaction, a user could hide his or her own Liberty Reserve account number when transferring funds, effectively making the transfer completely untraceable, even within Liberty Reserve’s already opaque system.
To add an additional layer of anonymity, Liberty Reserve did not permit users to fund their accounts by transferring money to the company directly through a credit card transfer or other means. Users also could not withdraw funds from their accounts directly. Instead, Liberty Reserve users were required to make any deposits or withdrawals through the use of third-party “exchangers,” which enabled the company to avoid collecting any information about its users through banking transactions or other activity that would leave a centralized financial paper trail. Budovsky, Kats and El Amine owned and operated certain Liberty Reserve exchanger services.
The Liberty Reserve website recommended a number of “pre-approved” exchangers, which tended to be unlicensed money transmitting businesses operating in countries without significant governmental money laundering oversight or regulation, such as in Malaysia, Russia, Nigeria, and Vietnam. The exchangers charged transaction fees for their services that were much higher than the fees charged by mainstream banks or payment processors for comparable money transfers.
The Criminal Use of Liberty Reserve
To further enable the use of Liberty Reserve for criminal activity, its website offered a “shopping cart interface” that “merchant” websites could use to accept LR currency as a form of payment. The “merchants” who accepted LR currency were overwhelmingly criminal in nature. They included traffickers of stolen credit card data and personal identity information, peddlers of various types of online Ponzi and get-rich-quick schemes, computer hackers for hire, unregulated gambling enterprises, and underground drug-dealing websites.
In addition to being used to process payments for illegal goods and services online, Liberty Reserve was also used by cyber criminals to launder criminal proceeds and transfer funds among criminal associates. For example, Liberty Reserve was used by credit-card theft and computer-hacking rings operating in countries around the world, including Vietnam, Nigeria, Hong Kong, China, and the U.S., to distribute proceeds of these conspiracies among the members involved.
The defendants were well aware that Liberty Reserve functioned as an unlawful money-laundering enterprise. In an online chat between Kats and Yassine that was captured by law enforcement, Kats explicitly described Liberty Reserve’s activities as “illegal” and noted that “everyone in USA” such as “DOJ” knows “LR is [a] money laundering operation that hackers use.”
* * *
Liberty Reserve, Budovsky, 39, a citizen of Costa Rica who resides in the Netherlands, Kats, 41, of Brooklyn, New YorkYassine, 42, of Costa RicaHidalgo, 28, of Costa Rica,El Amine, 46, of Costa Rica,Marmilev, 33, of Brooklyn, New York, and Chukharev, 27, of Costa Rica,are each charged with one count of conspiracy to commit money laundering, which carries a maximum term of 20 years in prison, one count of conspiracy to operate an unlicensed money transmitting business, which carries a maximum term of five years in prison, and operation of an unlicensed money transmitting business, which carries a maximum term of five years in prison. The terms of incarceration apply to the individual defendants.
This case was investigated by the Secret Service, the IRS-CI and ICE HSI, which worked together in this case as part of the Global Illicit Financial Team. The Secret Service’s New York Electronic Crimes Task Force assisted with the investigation, as well as the Judicial Investigation Organization in Costa Rica, the National High Tech Crime Unit in the Netherlands, the Spanish National Police, Financial and Economic Crime Unit, the Cyber Crime Unit at the Swedish National Bureau of Investigation, and the Swiss Federal Prosecutor’s Office. The Shadowserver Foundation acted as the hosting provider for the domain names that were seized pursuant to the Court-authorized seizure warrants. The Department of Justice’s Office of International Affairs and Computer Crime and Intellectual Property Section also provided support.
This case is being prosecuted jointly with the Department of Justice’s Asset Forfeiture and Money Laundering Section, which is overseen by Acting Assistant Attorney General Mythili Raman; and the U.S. Attorney’s Office for the Southern District of New York’s Complex Frauds Unit and Asset Forfeiture Unit.
If you believe you were a victim of a crime and were defrauded of funds through the use of Liberty Reserve, and you wish to provide information to law enforcement and/or receive notice of future developments in the case or additional information, please contact (888) 238-0696 or (212) 637-1583.
The charges contained in the indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.
Former Corporate Officers of China-Based Oil and Gas Company <br /> Charged with Fraud and False StatementsRead the Press Release
WASHINGTON – The former president and CEO, and the former vice president of corporate finance of China North East Petroleum Holdings Limited (CNEP), an oil and gas company whose stock is traded in the United States, have been charged with defrauding investors in connection with public offerings of stock.
Acting Assistant Attorney General Mythili Raman of the Criminal Division; U.S. Attorney for the District of Columbia Ronald C. Machen Jr.; Assistant Director in Charge George Venizelos of the FBI’s New York Field Office; and Chief Richard Weber of the Internal Revenue Service’s Criminal Investigation (IRS-CI), made the announcement.
Wang Hongjun, 41, and Chao Jiang, 32, both Chinese citizens residing in California and New York, respectively, were indicted on May 23, 2013, with one count of conspiracy to commit wire and securities fraud and four counts of securities fraud, which each carry a maximum penalty of 25 years in prison. Jiang is also charged with two counts of false statements to the U.S. Securities and Exchange Commission (SEC) during sworn testimony, which each carry a maximum penalty of five years in prison. The indictment was made public today.According to the indictment, Hongjun served as the president and CEO of CNEP from 2009 to 2010, and as the chairman of the Board of Directors beginning in 2010. Jiang served as the vice president of corporate finance and corporate secretary of CNEP from 2008 until approximately 2011. The charges allege that in June of 2009, CNEP registered a shelf offering with the SEC proposing to sell up to $40 million of CNEP common stock in the United States on the New York Stock Exchange. In September and December of 2009, CNEP made two separate offerings pursuant to the June registration. In documents filed with the SEC related to the offerings, and in other public statements to investors, Hongjun and Jiang informed investors that CNEP intended to use the funds raised from the securities offerings for general corporate purposes and to repay a prior corporate debt.
The indictment alleges that, instead of using the offering proceeds as represented to CNEP’s investors, Hongjun and Jiang misappropriated approximately $1,265,000 of the proceeds by wiring the money to bank accounts in the name of their family members – approximately $965,000 to Jiang’s father and approximately $300,000 to Hongjun’s wife – which was used, in part, to purchase a home in California, jewelry and a Mercedes-Benz.
In addition, the indictment alleges that Jiang testified falsely under oath to the SEC in Washington, D.C., about these transactions. In that testimony, Jiang stated that none of his family members had received anything of value over $500 from CNEP, despite having wired $965,000 from CNEP’s bank account to the account of his father. Jiang also testified falsely regarding the use of proceeds from the securities offerings.
An indictment is merely an accusation, and defendants are presumed innocent until proven guilty in a court of law.
In a related action, the SEC had previously filed a civil enforcement action against Hongjun, Jiang and others in the Southern District of New York.
The case was investigated by the FBI’s New York Field Office and IRS-CI. The department wishes to thank the SEC for its significant assistance in this case. The investigation is continuing.
This case is being prosecuted by Trial Attorneys Daniel Kahn and Kevin Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Johnson for the District of Columbia.Federal Officials Close the Investigation into the Death of the Late Derek WilliamsRead the Press Release
The Department of Justice announced today that there is insufficient evidence to pursue federal criminal civil rights charges against any Milwaukee Police Department officer for the in-custody death of the late Derek Williams on July 6, 2011.Officials from the U.S. Attorney’s Office for the Eastern District of Wisconsin, the department’s Civil Rights Division and the FBI met today with the Williams family and its representatives to inform them of this decision.
The department conducted a comprehensive and independent investigation of the events surrounding the arrest of Mr. Williams, who died while in the custody of Milwaukee police officers. Specifically, special agents of the FBI interviewed over 50 civilian and law enforcement witnesses; consulted with various medical experts on Mr. Williams’ cause of death; conducted a physical examination of the involved squad car and recording system; and visited and canvassed the scene. The special agents of the FBI also analyzed the patrol car video of the incident; the police radio transmissions; the autopsy reports; the testimony and exhibits admitted at the public inquest; the Milwaukee Police Department’s investigative file, including all the eyewitness and forensic evidence; the Milwaukee County District Attorney’s Office’s memorandum declining state charges; the City of Milwaukee’s Fire and Police Commission’s report; and the report of the special prosecutor.
Under the applicable federal criminal civil rights law, prosecutors must establish, beyond a reasonable doubt, that a law enforcement officer willfully deprived an individual of a constitutional right, meaning with the deliberate and specific intent to do something the law forbids. This is the highest standard of intent imposed by law. Mistake, misperception, negligence or poor judgment are not sufficient to establish a federal criminal civil rights violation. Specifically, the team of prosecutors and FBI agents considered two types of potential violations of federal criminal civil rights law. First, they considered whether any Milwaukee police officer violated the law by willfully using unreasonable force during Mr. Williams’ arrest. Second, they examined whether the officers willfully and unreasonably failed to respond to Mr. Williams’ medical need.
The federal investigation revealed no medical evidence to corroborate the use of unreasonable force by any officer, such as using excessive force while restraining Mr. Williams on the ground. The vast majority of the witnesses interviewed provided no evidence of a willful violation of the applicable civil rights statute. The two civilian eyewitnesses who reported observing unreasonable force gave inconsistent and conflicting accounts that could not be corroborated.
There is also insufficient evidence that the response by any officer to Mr. Williams’ medical needs was objectively unreasonable or carried out with willful intent. The investigation did not reveal evidence that the officers had notice of Mr. Williams’ medical need, and the officers stated they did not know he had a medical need. The squad car video depicting Mr. Williams’ death as he sat in the back of the vehicle is tragic and alarming to watch, but the evidence does not establish that the video duplicates what the officers saw in the back of the squad car that night. The infrared camera, which captures images with little or no light, clearly showed Mr. Williams in the back of the car. However, it cannot be established that this was the vantage point of the subject officers for several reasons. First, there is no backseat lighting in the car and there were minimal artificial lighting sources where the squad car was located. Next, each officer had custody of Mr. Williams for only a short duration of time and no officer watched Mr. Williams for the entire time that he was in distress in the squad car. Finally, there is no evidence that the officers were watching Mr. Williams on the squad car monitor in the front seat.
Although Mr. Williams made repeated statements to officers that he could not breathe, the officers observed him to be breathing. Based on both officer and civilian witness testimony, the lack of more significant physical signs of asphyxiation diminished the officers’ beliefs that Mr. Williams was in any distress. Furthermore, the officers responded with medical treatment once it was obvious to them that Mr. Williams needed help. The facts do not establish beyond a reasonable doubt a willful failure to act in response to a known medical need.
Finally, after consulting with various medical experts, some of whom later testified at the county public inquest, the cause of Mr. Williams’ death remains unknown; it is equally unclear that any delay by officers in providing medical attention to Mr. Williams contributed to his death. Therefore, after a careful and thorough review, a team of experienced federal prosecutors and FBI agents determined that the evidence was insufficient to prove, beyond a reasonable doubt, that any Milwaukee police officer acted willfully with a bad purpose to violate the law. Accordingly, the investigation into this incident has been closed without prosecution.
The Office of the U.S. Attorney for the Eastern District of Wisconsin, the Civil Rights Division and the FBI devoted significant time and resources into conducting a thorough and independent investigation. The department is committed to investigating allegations of civil rights violations by law enforcement officers and will continue to devote the resources required to ensure that all allegations of serious civil rights violations are fully and completely investigated. The department aggressively prosecutes criminal civil rights violations whenever there is sufficient evidence to do so.
Federal Officials Close the Investigation into the Death of the Late Derek WilliamsRead the Press Release
The Department of Justice announced today that there is insufficient evidence to pursue federal criminal civil rights charges against any Milwaukee Police Department officer for the in-custody death of the late Derek Williams on July 6, 2011.Officials from the U.S. Attorney’s Office for the Eastern District of Wisconsin, the department’s Civil Rights Division and the FBI met today with the Williams family and its representatives to inform them of this decision.
The department conducted a comprehensive and independent investigation of the events surrounding the arrest of Mr. Williams, who died while in the custody of Milwaukee police officers. Specifically, special agents of the FBI interviewed over 50 civilian and law enforcement witnesses; consulted with various medical experts on Mr. Williams’ cause of death; conducted a physical examination of the involved squad car and recording system; and visited and canvassed the scene. The special agents of the FBI also analyzed the patrol car video of the incident; the police radio transmissions; the autopsy reports; the testimony and exhibits admitted at the public inquest; the Milwaukee Police Department’s investigative file, including all the eyewitness and forensic evidence; the Milwaukee County District Attorney’s Office’s memorandum declining state charges; the City of Milwaukee’s Fire and Police Commission’s report; and the report of the special prosecutor.
Under the applicable federal criminal civil rights law, prosecutors must establish, beyond a reasonable doubt, that a law enforcement officer willfully deprived an individual of a constitutional right, meaning with the deliberate and specific intent to do something the law forbids. This is the highest standard of intent imposed by law. Mistake, misperception, negligence or poor judgment are not sufficient to establish a federal criminal civil rights violation. Specifically, the team of prosecutors and FBI agents considered two types of potential violations of federal criminal civil rights law. First, they considered whether any Milwaukee police officer violated the law by willfully using unreasonable force during Mr. Williams’ arrest. Second, they examined whether the officers willfully and unreasonably failed to respond to Mr. Williams’ medical need.
The federal investigation revealed no medical evidence to corroborate the use of unreasonable force by any officer, such as using excessive force while restraining Mr. Williams on the ground. The vast majority of the witnesses interviewed provided no evidence of a willful violation of the applicable civil rights statute. The two civilian eyewitnesses who reported observing unreasonable force gave inconsistent and conflicting accounts that could not be corroborated.
There is also insufficient evidence that the response by any officer to Mr. Williams’ medical needs was objectively unreasonable or carried out with willful intent. The investigation did not reveal evidence that the officers had notice of Mr. Williams’ medical need, and the officers stated they did not know he had a medical need. The squad car video depicting Mr. Williams’ death as he sat in the back of the vehicle is tragic and alarming to watch, but the evidence does not establish that the video duplicates what the officers saw in the back of the squad car that night. The infrared camera, which captures images with little or no light, clearly showed Mr. Williams in the back of the car. However, it cannot be established that this was the vantage point of the subject officers for several reasons. First, there is no backseat lighting in the car and there were minimal artificial lighting sources where the squad car was located. Next, each officer had custody of Mr. Williams for only a short duration of time and no officer watched Mr. Williams for the entire time that he was in distress in the squad car. Finally, there is no evidence that the officers were watching Mr. Williams on the squad car monitor in the front seat.
Although Mr. Williams made repeated statements to officers that he could not breathe, the officers observed him to be breathing. Based on both officer and civilian witness testimony, the lack of more significant physical signs of asphyxiation diminished the officers’ beliefs that Mr. Williams was in any distress. Furthermore, the officers responded with medical treatment once it was obvious to them that Mr. Williams needed help. The facts do not establish beyond a reasonable doubt a willful failure to act in response to a known medical need.
Finally, after consulting with various medical experts, some of whom later testified at the county public inquest, the cause of Mr. Williams’ death remains unknown; it is equally unclear that any delay by officers in providing medical attention to Mr. Williams contributed to his death. Therefore, after a careful and thorough review, a team of experienced federal prosecutors and FBI agents determined that the evidence was insufficient to prove, beyond a reasonable doubt, that any Milwaukee police officer acted willfully with a bad purpose to violate the law. Accordingly, the investigation into this incident has been closed without prosecution.
The Office of the U.S. Attorney for the Eastern District of Wisconsin, the Civil Rights Division and the FBI devoted significant time and resources into conducting a thorough and independent investigation. The department is committed to investigating allegations of civil rights violations by law enforcement officers and will continue to devote the resources required to ensure that all allegations of serious civil rights violations are fully and completely investigated. The department aggressively prosecutes criminal civil rights violations whenever there is sufficient evidence to do so.
Attorney General Holder and USCIS Director Welcome New <br /> Citizens at Justice Department Building Swearing in CeremonyRead the Press Release
Attorney General Eric Holder delivered keynote remarks after U.S. Citizenship and Immigration Services (USCIS) Director Alejandro Mayorkas administered the Oath of Allegiance to 70 new citizens today during a special naturalization ceremony at the Department of Justice’s Great Hall.
“Like millions of immigrants who came before them – including my father and grandparents, who came to this country many years ago from Barbados – these new citizens have demonstrated remarkable faith in the principles of equality, opportunity and justice that have always stood at the core of our identity as a nation,” said Attorney General Holder. “Many of them have faced great difficulties – and grave dangers – to reach this moment. But each of their individual stories proves the enduring promise of the American dream, and it’s a tremendous honor to welcome them as the newest members of our great and diverse American family.”
“The Department of Justice has a proud history of protecting vulnerable immigrants from those who seek to exploit them,” said Director Mayorkas. “It is an honor to welcome these new citizens alongside the Attorney General in the Great Hall—a symbol of the promise our nation makes to all its citizens to secure equal justice under the law.”
The new citizens naturalized at today’s ceremony hailed from the following 34 countries: Afghanistan, Albania, Argentina, Bangladesh, Belarus, Bolivia, Brazil, Canada, Colombia, Egypt, El Salvador, Ethiopia, Germany, Ghana, India, Iran, Iraq, Kosovo, Lebanon, Mexico, Morocco, Mozambique, Nepal, Pakistan, Paraguay, Peru, the Philippines, Romania, Russia, South Korea, Syria, Turkey, United Kingdom and Vietnam.
The department and USCIS are part of a multi-agency, nationwide initiative to combat immigration services scams. This initiative targets immigration scams involving the unauthorized practice of immigration law (UPIL), which occurs when legal advice and/or representation regarding immigration matters is provided by an individual who is not an attorney or accredited representative.For more information on USCIS and its programs, please visit www.uscis.gov or follow USCIS on Twitter ( @uscis ), YouTube ( /uscis ), Facebook(/ uscis ), and the USCIS blog The Beacon .
Sixth Former Roxbury Correctional Officer Pleads Guilty,Admits Assault of Inmate and Cover-up ConspiracyRead the Press Release
Jeremy McCusker, a former correctional officer at Roxbury Correctional Institution (RCI) in Hagerstown, Md., yesterday pleaded guilty to assaulting an inmate and conspiring with other officers to cover up that assault. McCusker is the sixth former RCI officer to enter a guilty plea in federal court.
According to court documents filed in connection with his guilty plea, McCusker admitted that, during the midnight shift on March 8-9, 2008, he, Lanny Harris, Philip Mayo and two other RCI officers were involved in an assault of an inmate, identified by the initials K.D. McCusker acknowledged that he and other RCI officers assaulted K.D. in order to punish him for striking an officer during a prior shift.
McCusker also admitted that he and other RCI officers discussed how they would cover up their involvement in the assault of K.D. McCusker admitted that he provided false and misleading information to federal and state authorities in an effort to cover up his involvement in the assault.“Mr. McCusker has admitted that he and other correctional officers assaulted an inmate in order to punish him and that they subsequently conspired to cover up their criminal conduct,” said Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue to vigorously prosecute officers who use their official position to both commit and cover up violations of federal criminal law.”
McCusker faces a statutory maximum penalty of 15 years in prison. Sentencing is set for Aug. 23, 2013, before U.S. District Judge James K. Bredar.
In related cases before Judge Bredar, former RCI Correctional Officers Ryan Lohr, Philip Mayo, Dustin Norris, Walter Steele, and Lanny Harris each has entered a guilty plea. Nine other current or former RCI officers still face federal charges in connection with the alleged assault of K.D.
The investigation by the Frederick Resident Agency of the FBI is ongoing. The case is being prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Sanjay Patel of the Civil Rights Division of the Department of Justice, with the assistance of Michael Cunningham of the U.S. Attorney’s Office for the District of Maryland.
ISTA Pharmaceuticals Inc. Pleads Guilty to Federal Felony Charges; Will Pay $33.5 Million to Resolve Criminal Liability and False Claims Act AllegationsRead the Press Release
Pharmaceutical company ISTA Pharmaceuticals, Inc. pled guilty earlier today to conspiracy to introduce a misbranded drug into interstate commerce and conspiracy to pay illegal remuneration in violation of the Federal Anti-Kickback Statute, the Justice Department announced today. U.S. District Court Judge Richard J. Arcara accepted ISTA's guilty pleas. The guilty pleas are part of a global settlement with the United States in which ISTA agreed to pay $33.5 million to resolve criminal and civil liability arising from its marketing, distribution and sale of its drug Xibrom.ISTA pled guilty in the Western District of New York to criminal charges that the company conspired to illegally introduce a misbranded drug, Xibrom, into interstate commerce. Under the Food, Drug and Cosmetic Act (FDCA), it is illegal for a drug company to introduce into interstate commerce any drug that the company intends will be used for uses not approved by the Food and Drug Administration (FDA). Xibrom is an ophthalmic, nonsteroidal, anti-inflammatory drug that was approved by FDA to treat pain and inflammation following cataract surgery. In order to expand sales of Xibrom outside of its approved use, ISTA conspired to introduce misbranded Xibrom into interstate commerce.
Between 2005 and 2010, some ISTA employees promoted Xibrom for unapproved new uses, including the use of Xibrom following Lasik and glaucoma surgeries, and for the treatment and prevention of cystoid macular edema. The evidence showed that continuing medical education programs were used to promote Xibrom for uses that were not approved by the FDA as safe and effective, and that post-operative instruction sheets for unapproved uses were paid for by some company employees and provided to physicians. These activities are evidence of intended uses unapproved by FDA, which rendered the drug misbranded under the FDCA.
ISTA pled guilty to a felony based on evidence that some ISTA employees were told by management not to memorialize in writing certain interactions with physicians regarding unapproved new uses, and not to leave certain printed materials in physicians' offices relating to unapproved new uses. These instructions were given in order to avoid having their conduct relating to unapproved new uses being detected by others. ISTA agreed that this conduct represented an intent to defraud under the law.
In addition, ISTA pled guilty to a conspiracy to knowingly and willfully offering or paying remuneration to physicians in order to induce those physicians to prescribe Xibrom, in violation of the federal Anti-Kickback Statute. Under the law, it is illegal to offer or pay remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to physicians to induce them to refer individuals to pharmacies for the dispensing of drugs, for which payments are made in whole or in part under a Federal health care program. In this matter, certain ISTA employees, with the knowledge and at the direction of ISTA, offered and provided physicians with free Vitrase, another ISTA product, with the intent to induce such physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom. In addition, ISTA provided other illegal remuneration, including a monetary payment to sponsor an event of a non-profit group associated with a particular physician, a golf outing, a wine-tasting event, paid consulting or speaker arrangements, and honoraria for participation in advisory meetings which were intended to be marketing opportunities, with the intent to induce physicians to refer individuals to pharmacies for the dispensing of the drug Xibrom.
Under the terms of the plea agreement, ISTA will pay a total of $18.5 million, including a criminal fine of $16,125,000 for the conspiracy to introduce misbranded Xibrom into interstate commerce, $500,000 for the conspiracy to violate the Anti-Kickback Statute, and $1,850,000 in asset forfeiture associated with the misbranding charge.
ISTA also entered into a civil settlement agreement under which it agreed to pay $15 million to the federal government and states to resolve claims arising from its marketing of Xibrom, which caused false claims to be submitted to government health care programs. The civil settlement resolved allegations that ISTA promoted the sale and use of Xibrom for certain uses that were not FDA-approved and not covered by the Federal health care programs, including prevention and treatment of cystoid macular edema, treatment of pain and inflammation associated with non-cataract eye surgery, and treatment of glaucoma. The United States further alleged that ISTA's violations of the Anti-Kickback Statute resulted in false claims being submitted to federal health care programs. The federal share of the civil settlement is $14,609,746.16, and the state Medicaid share of the civil settlement is $390,253.84. Except as admitted in the plea agreement, the claims settled by the civil settlement agreement are allegations only, and there has been no determination of liability as to those claims.
"As today's global resolution demonstrates, the Department of Justice is committed to making sure that pharmaceutical companies play by the rules," said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. "Health care fraud in any form undermines the integrity of our health care system and can drive up costs for all of us."
"Today's resolution sends a clear message that pharmaceutical companies cannot put profit ahead of people, by disregarding laws designed to protect the health of the American public," said United States Attorney William J. Hochul, Jr. "The fact that ISTA offered doctors illegal inducements - such as a wine tasting, golf outing, and payments to attend what were in essence marketing sessions - makes the company's illegal conduct particularly deserving of the hefty penalty ISTA has agreed to pay."
"It is especially concerning when companies actively take steps to conceal improper conduct which may jeopardize public health," said Antoinette V. Henry, Special Agent in Charge, Metro-Washington Field Office, FDA Office of Criminal Investigations. "We will continue to work tirelessly with the Department of Justice and our law enforcement counterparts to uncover such conduct."
In addition to the criminal fines and asset forfeiture, ISTA's parent company, Bausch+Lomb, Incorporated (B+L), has agreed to maintain a Compliance and Ethics Program. B+L has agreed that it will maintain policies and procedures that: (1) prohibit the involvement of sales and marketing personnel and others on the businesses' commercial team in the final decision-making process with respect to educational grants in the United States, while also ensuring that the educational programming is focused on objective scientific and educational activities and discourse; (2) require sales agents to discuss only those product uses that are consistent with what is indicated on the product's approved package labeling and to forward requests for information regarding uses of B+L's products not approved by FDA to a Medical Affairs Professional; and (3) prohibit the company from engaging in any conduct that violates the Anti-Kickback Statute, including the offering or paying of any remuneration to any person to induce such person to prescribe any drug for which payment may be made in whole or in part under a Federal health care program. The Program also requires that B+L's President of Global Pharmaceuticals conduct an annual review of the effectiveness of B+L's Program as it relates to the marketing, promotion, and sale of prescription pharmaceutical products, and certify that to the best of his or her knowledge, the Program was effective in preventing violations of Federal health care program requirements and the FDCA regarding sales, marketing, and promotion of B+L's prescription pharmaceutical products.
The civil settlement resolves two lawsuits filed under the whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and obtain a portion of the government's recovery. The civil lawsuits were filed in the Western District of New York and are captioned United States ex rel. Keith Schenker v. ISTA Pharmaceuticals, Inc. and United States, et al., ex rel. DJ PARTNERSHIP 2011, LLP v. ISTA Pharmaceuticals, Inc. As part of today's resolution, Mr. Schenker will receive approximately $2.5 million from the federal share of the civil recovery.
Upon conviction for the criminal charges described above, ISTA will face mandatory exclusion from Federal healthcare programs. Exclusion will mean that on the effective date of the exclusion, any ISTA labeled drugs in ISTA's possession would no longer be reimbursable by Medicare, Medicaid, or other Federal healthcare programs. In June 2012, B+L acquired ISTA. Simultaneous with the False Claims Act settlement and the entry of the plea, the U.S. Department of Health and Human Services' Office of Inspector General, ISTA, and B+L will enter into a Divestiture Agreement under which ISTA agrees to be excluded for 15 years, effective six months after the date of the settlement. Under the terms of the Divestiture Agreement, ISTA will transfer all assets to B+L or a B+L subsidiary and will stop shipping ISTA labeled drugs within six months of the Divestiture Agreement. Six months after the effective date of the Divestiture Agreement, all ISTA labeled drugs in the possession of ISTA or B+L will no longer be reimbursable by Medicare, Medicaid, and other Federal healthcare programs. Those ISTA labeled drugs in the stream of commerce at that time will continue to be reimbursable.
"We agreed to enter into this Divestiture Agreement based on the facts of this case, including that B+L did not have a corporate relationship with ISTA during the improper conduct," said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. "In addition, B+L acquired ISTA more than a year after the improper conduct ended, and B+L did not hire any of ISTA's executives or senior management."
The criminal case was prosecuted by Assistant Director Jeffrey Steger of the Consumer Protection Branch of the Civil Division of the Department of Justice and Assistant United States Attorney MaryEllen Kresse of the Office of the U.S. Attorney for the Western District of New York. They were assisted by Associate Chief Counsel Kelsey Schaefer of the Food and Drug Division, Office of General Counsel, Department of Health and Human Services. The case was investigated by the Food and Drug Administration's Office of Criminal Investigations and Health and Human Services Office of Inspector General. The civil settlement was handled by Trial Attorneys Colin Huntley and Benjamin Young of the Commercial Litigation Branch of the Civil Division of the Department of Justice and Assistant United States Attorney Kathleen Lynch of the Office of the U.S. Attorney for the Western District of New York.
This resolution is part of the government's emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $10.4 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 are over $14.3 billion.
Three Defendants Plead Guilty to Participating in Ambush Murder and Attempted Murder of Ice Agents in MexicoRead the Press Release
Julian Zapata Espinoza, also known as “Piolin,” 32, pleaded guilty today to the murder of U.S. Immigration and Customs Enforcement (ICE) Special Agent Jaime Zapata and the attempted murder of ICE Special Agent Victor Avila in Mexico. The court also unsealed today the guilty pleas of three other defendants on related murder, attempted murder, racketeering and accessory charges.
The guilty pleas, in the U.S. District Court for the District of Columbia, were announced by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the District of Columbia Ronald C. Machen Jr.; Assistant Director Ronald T. Hosko of the FBI Criminal Investigative Division; and ICE Director John Morton.
As set forth in court filings, on Feb. 15, 2011, Espinoza, a commander in Los Zetas Cartel, a heavily armed Mexican narco-trafficking cartel and transnational criminal organization, attempted to hijack Special Agent Zapata’s and Special Agent Avila’s armored government vehicle as the agents were driving on Highway 57 in San Luis Potosi. Two armed Zetas hit squads, or “estacas,” forced the agents off the road and surrounded their vehicle. Espinoza, the leader of the attack, ordered the agents to exit their vehicle. When the agents refused and attempted to identify themselves as American diplomats from the U.S. Embassy, the hit squad members fired weapons near and into the vehicle, striking both agents. Estaca members continued to fire at the vehicle as the agents attempted to escape by driving away. Special Agent Zapata died as a result of the gunshot wounds he suffered during the attack, and Special Agent Avila was seriously injured.On April 19, 2011, Espinoza was indicted by a federal grand jury in the District of Columbia on multiple counts pertaining to the murder of ICE Special Agent Zapata and the attempted murder of ICE Special Agent Avila and, on Dec. 20, 2011, was extradited from Mexico to the United States. This morning, the defendant entered a guilty plea before Chief Judge Royce C. Lamberth to the murder of Special Agent Zapata, an officer and employee of the United States, and the attempted murder of Special Agent Avila, an officer and employee of the United States.
In addition to the announcing the guilty plea of Espinoza, prosecutors also announced related guilty pleas by three other defendants. Ruben Dario Venegas Rivera, also known as “Catracho,” 25, pleaded guilty on Aug. 1, 2011, to federal charges concerning the murder of Special Agent Zapata and attempted murder of Special Agent Avila. Jose Ismael Nava Villagran, also known as “Cacho,” 30, pleaded guilty on Jan. 4, 2012, also to federal charges concerning the murder and attempted murder of the ICE agents. Francisco Carbajal Flores, also known as “Dalmata,” 38, pleaded guilty on Jan. 10, 2012, to conspiracy to conduct the affairs of an enterprise through a pattern of racketeering activity and to being an accessory after the fact to the murder and attempted murder of the ICE agents.
As part of their guilty pleas, Espinoza, Rivera and Villagran admitted to being members of a Los Zetas hit squad and to participating directly in the Feb. 15, 2011, ambush of the two Special Agents. The fourth defendant, Flores, acknowledged assisting Zetas members after the Feb. 15 attack.
All four defendants face a maximum sentence of life in prison. No sentencing date has been set for the defendants.
“Special Agent Zapata died for his country in a senseless and brutal attack, and Special Agent Avila was grievously wounded in the same ambush by members of Los Zetas Cartel,” said Acting Assistant Attorney General Raman. “Both men are American heroes who dedicated themselves to protecting the United States, only to be attacked by vicious thugs. I hope that today’s announcement of guilty pleas by the Cartel members directly responsible for the attack brings some measure of justice to the victims and their families. A team of dedicated prosecutors and investigators has worked day and night to identify and hold these defendants accountable. Our work is far from over, and we will continue to devote our full resources and work with our law enforcement partners here and abroad to investigate and prosecute those responsible.”
“The deadly ambush of two highly dedicated and courageous American law enforcement officers by the Los Zetas drug cartel demanded an intense, dedicated and forceful response,” said U.S. Attorney Machen. “The message to any criminal who dares to commit an act of violence against a U.S. law enforcement officer serving in a foreign land is unmistakable - if you commit such a heinous crime, we will not forget, we will not falter, and we will not rest until you are brought to justice. Our work in this critical case will continue until all of those who participated in the murder of Special Agent Zapata and attempted murder of Special Agent Avila are held accountable.”
“With the assistance of our law enforcement partners, assailants responsible for murdering Agent Zapata and wounding Agent Avila have been brought to justice,” said FBI Assistant Director Hosko. “While there is nothing we can do to change what happened that fateful day in Mexico, let it be known that an attack against any federal agent serving his or her country is an attack on all federal agents and as such remains a priority for the FBI until those responsible are brought to justice.”
“Today’s announcement is a very important milestone in the effort to see that justice is served in the murder of ICE Special Agent Zapata and the attempted murder of ICE Special Agent Victor Avila,” said ICE Director Morton. “Both men were trying to make the world a safer place, and today’s result is a very welcome step to honor their service and sacrifice.”
This case is being investigated by the FBI, with substantial assistance from ICE, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Drug Enforcement Administration, the Customs and Border Protection, the Diplomatic Security Service and the U.S. Marshals Service.
The case is being prosecuted by the Organized Crime and Gang Section and the Narcotic and Dangerous Drug Section of the Justice Department’s Criminal Division and the U.S. Attorney’s Office for the District of Columbia. The Office of International Affairs of the Justice Department’s Criminal Division provided substantial assistance.Owner of Investment Company Pleads Guilty to Engaging in a Fradulent Investment SchemeRead the Press Release
The owner of an investment company pleaded guilty today for his role in an investment scheme involving false promises, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Virginia Neil H. MacBride, and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office.
David Eugene Howard II, 34, of Queens Village, N.Y., pleaded guilty before U.S. District Judge T. S. Ellis III in the Eastern District of Virginia to one count of mail fraud.
According to the plea documents, from in or about March 2008 through in or about April 2009, Howard falsely represented to investors that his company, Flatiron Systems LLC, traded pooled equity accounts using a proprietary trading system called “Pathfinder.” Through distributing false and misleading letters, operating agreements, account statements and other materials, he caused investors to send investments of at least $5,000, which were deposited into an account that he exclusively controlled and which he later misappropriated for his own benefit and the benefit of others.
Over the course of his scheme, Howard directly misappropriated approximately $373,000 of $1.8 million in investor funds. Howard’s misappropriation included approximately $86,000 in transfers to his personal bank account, cash withdrawals and personal expenditures made with his company debit card, to include approximately $34,500 in charges at a night club and approximately $3,600 in charges towards the purchase of a Tiffany necklace for Howard’s girlfriend at the time.
According to court documents, in December 2008, Howard falsely informed investors that trading had been voluntarily halted so that an independent audit could be performed. Nonetheless, Howard continued to transfer approximately $26,500 in investor funds to his personal bank account, along with additional cash withdrawals and personal expenditures over the course of the following four months. Howard followed up with another letter which falsely advised investors of prolonged audit and tax procedures, which his nonexistent attorneys and accountants were purportedly diligently working on.
At sentencing, Howard faces a maximum penalty of 20 years in prison, a fine of $250,000 or twice the gross gain or loss, and full restitution. Sentencing is scheduled for Sept. 20, 2013.
In a related action, the U.S. Securities and Exchange Commission (SEC) filed a civil enforcement action against Howard on March 21, 2011.
This prosecution is the result of an investigation by the FBI’s Washington Field Office, along with a parallel investigation by the SEC. The case is being prosecuted by Trial Attorneys Mark Grider, N. Nathan Dimock, and Luke B. Marsh of the Justice Department Criminal Division’s Fraud Section, and by Assistant U.S. Attorney Kosta S. Stojilkovic of the Eastern District of Virginia.
Missouri Woman Indicted for Violating Civil Rights of Family by Setting Fire to Their HomeRead the Press Release
An Independence, Mo., woman was indicted by a federal grand jury today for violating the civil rights of an African-American family by setting fire to their residence, announced Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division of the Department of Justice, and Tammy Dickinson, U.S. Attorney for the Western District of Missouri.
Victoria A. Cheek-Herrera, 33, of Independence, was charged in a three-count indictment returned by a federal grand jury in Kansas City, Mo.
Today’s indictment charges Cheek-Herrera with participating in a conspiracy to threaten and intimidate an Independence family from exercising their constitutional right to reside in their home because of their race or color. It also charges Cheek-Herrera with committing a racially-motivated arson and with using fire during the commission of a felony.
According to the indictment, Cheek-Herrera conspired with others on June 26, 2008, to injure, oppress, threaten and intimidate Larry Davis, Stacey Little and the couple’s minor children in the free exercise of their constitutional right to occupy and rent their home in Independence, because of their race and color. Davis, Little and their children are all African American.
The indictment alleges that Cheek-Herrera discussed with others her desire to set fire to the home of Davis and Little, and that Cheek-Herrera and a co-conspirator drew a swastika and wrote the words “White Power” on the driveway to Davis and Little’s residence. Cheek-Herrera allegedly asked a juvenile acquaintance for gasoline then helped create a Molotov cocktail by filling a glass bottle with gasoline and inserting a rag into the bottle to serve as a wick. Cheek-Herrera and a co-conspirator then allegedly lit the wick and threw the gasoline-filled bottle into the side of the house that Davis and Little were renting, which set the residence on fire.
If convicted, Cheek-Herrera faces a statutory maximum penalty of 10 years in prison and a fine of $250,000 for one charged count of conspiracy against rights, a statutory maximum penalty of 10 years in prison and a fine of $250,000 for one charged count of interference with housing rights, and a penalty of 10 years imprisonment consecutive to any other sentence and a fine of $250,000 for one charged count of using fire during the commission of a felony.
The charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Assistant U.S. Attorney David M. Ketchmark and Trial Attorney Shan Patel of the Civil Rights Division of the U.S. Department of Justice. It was investigated by the FBI.
Mississippi Laboratory Operator Found Guilty of Falsifying Records on Industrial WastewaterRead the Press Release
The owner and sole operator of an environmental laboratory was found guilty yesterday in U.S. District Court for the Southern District of Mississippi of all counts of a federal indictment charging falsification of records and obstructing a federal criminal investigation, announced Assistant Attorney General Ignacia S. Moreno of the Justice Department’s Environment and Natural Resources Division and the U.S. Attorney for the Southern District of Mississippi Gregory K. Davis.
Tennie White, owner, operator and manager of Mississippi Environmental Analytical Laboratories Inc., was charged in a three-count felony indictment with two false statements counts and one count of obstructing proceedings. The jury found the White guilty of all counts after an eight day trial before U.S. District Judge Henry T. Wingate at the federal courthouse in Jackson, Miss.
“Our environmental regulatory system depends on the self-reporting of accurate information, including what is being released into the environment. When laboratories who are paid to test and report samples of what is being discharged into our nation’s waters fabricate results and lie to investigators, they will be prosecuted,” said U.S. Attorney Davis.
“Americans expect their public water supply to be clean and safe to use,” said Maureen O’Mara, Special Agent in Charge of EPA’s criminal enforcement program in Mississippi. “In order to safeguard public health it is absolutely essential that governments receive accurate test results and measurements. Violators who submit false reports undermine our efforts to protect the public and the environment. Today’s guilty verdict by a jury demonstrates that the American people will not tolerate laboratories and their managers who place the public at risk by knowingly falsifying test results.”
As describe in the indictment, White was hired to perform laboratory testing of a manufacturer’s industrial process waste water samples and then to use those results to complete monthly discharge monitoring reports for submission to the Mississippi Department of Environmental Quality. The indictment alleged that from October to December 2008 White created three discharge monitoring reports (DMRs) that falsely represented that laboratory testing had been performed on samples when, in fact, such testing had not been done. The indictment further alleged that White created a fictitious laboratory report and presented it to her client for use in preparing another DMR for January 2009. The indictment also alleged that White made false statements to a federal agent during a subsequent criminal investigation.
Sentencing has been scheduled for Aug. 8, 2013 in federal court in Jackson. For the false statements charges, the defendant is facing a maximum sentence of five years in prison and a $250,000 fine per count. The obstructing proceedings charge carries a maximum sentence of 20 years in prison and a $250,000 fine.
The case was prosecuted by Trial Attorney Richard J. Powers of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, and Assistant U.S. Attorney Gaines Cleveland of the U.S. Attorney’s Office for the Southern District of Mississippi.Justice Department Reaches Settlement with Leading Facility Services CompanyRead the Press Release
The Justice Department announced today that it has reached an agreement with ISS Facility Services Company resolving allegations that the company violated the anti-discrimination provision of the Immigration and Nationality Act (INA). ISS, with headquarters in San Antonio, Texas, employs approximately 15,000 employees in the United States.
The Justice Department’s investigation was initiated based on a referral from the U.S. Citizenship and Immigration Services (USCIS). The investigation focused on whether the ISS offices in Dallas and Houston were requiring non-citizens to present specific U.S. Department of Homeland Security-issued documents to establish their identity and work-authority while not making similar requests of U.S. citizens. The INA’s anti-discrimination provision prohibits employers from discriminating against noncitizens in the employment eligibility verification process by demanding more or different documents than U.S. citizens are required to present.
According to the settlement agreement, ISS agreed to ensure that all its offices complied with the company’s existing employment eligibility verification policies and procedures and to provide training of its human resources personnel on the INA’s anti-discrimination provision. ISS also agreed to pay $49,800 to the United States and to identify and compensate any individuals who may have suffered economic injuries as a result of its practices. Under the agreement, ISS’ employment eligibility verification practices will be subject to monitoring by the department for a period of two years.“Employers cannot create higher hurdles for non-U.S. citizens in the employment eligibility verification process than those required of U.S. citizens unless required by law,” said Gregory Friel, Deputy Assistant Attorney General for the Civil Rights Division. “We commend ISS for its exemplary cooperation in working with the department to identify the source of the problems in its employment eligibility verification process at two of its offices and to work with the department in addressing those problems.”
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA. The case was handled by Linda White Andrews, an OSC trial attorney. For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TTY for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TTY for hearing impaired), sign up for a no-cost webinar at www.justice.gov/about/osc/webinars.php , email [email protected] or visit the website at www.justice.gov/crt/about/osc .
Houston Man Charged with Threatening to Bomb SynagoguesRead the Press Release
A federal complaint has been unsealed charging Dante Phearse, 32, of Houston, with calling in bomb threats to two synagogues located in Houston, announced Deputy Assistant Attorney General for the Civil Rights Division Roy L. Austin Jr. and U.S. Attorney for the Southern District of Texas Kenneth Magidson.
The sealed complaint was filed Thursday, May 16, 2013, and unsealed today. Phearse is expected to make an initial appearance in Houston tomorrow at 10:00 a.m. before U.S. Magistrate Judge Nancy Johnson. At that time, the government expects to request he be detained pending further criminal proceedings.
Phearse is charged with one count of using an instrument of interstate commerce to communicate a threat to destroy a building by means of an explosive device. The complaint and accompanying affidavit allege that on the evening of April 30, 2013, Phearse telephoned two different synagogues in Houston - Congregation Beth Israel and Congregation Or Ami - and left voice mails threatening to bomb the Jewish houses of worship on May 2, 2013.
A criminal complaint is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.
If convicted, Phearse faces up to 10 years in federal prison and a possible $250,000 fine.
The case is being investigated by the Houston Police Department and the FBI. Trial Attorneys Saeed Mody and Nicholas Murphy of the Civil Rights Division and Assistant U.S. Attorneys for the Southern District of Texas Ruben R. Perez and Joe Magliolo are prosecuting.
Former Texas Police Officer Ordered to Federal Prison for Deprivation of Civil RightsRead the Press Release
Frank Carter, 43, a former officer with the Laredo, Texas, Police Department (LPD), has been sentenced to prison following his conviction for violating the civil rights of an arrestee, announced Assistant Attorney General for the Civil Rights Division Thomas E. Perez and U.S. Attorney Kenneth Magidson. Carter pleaded guilty on Thursday, March 7, 2013.Today, U.S. District Judge Diana Saldana, who accepted the guilty plea, handed Carter a sentence of a year and a day in federal prison to be immediately followed by one year of supervised release. In handing down the sentence, Judge Saldana commended Carter for accepting responsibility for his actions. Carter will also have to complete 75 hours of community service in the first six months following his release from prison.
Carter admitted that on May 26, 2012, while using his authority as a LPD officer, he struck a male victim who was handcuffed and detained in the backseat of Carter’s patrol car. Carter admitted he struck the victim several times.
According to information presented in court at the time of the plea, rear facing dash camera audio and video recordings revealed Carter had yelled obscenities at the victim while he punched the victim in the head and body. Carter also repeatedly slammed the victim’s face into the back of the seat. The victim remained handcuffed during the entire incident and never resisted or attempted to harm Carter.
Carter was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.
This case was investigated by the LPD, FBI and Texas Rangers. Civil Rights Division Trial Attorneys Ryan Murguia and Christopher Lomax and Assistant U.S. Attorney Ruben R. Perez prosecuted the case.
Former Chicago Police Officer and Two Members of Latin Kings Street Gang Sentenced in Indiana for Racketeering<br /> Conspiracy and Related CrimesRead the Press Release
A former Chicago police officer and two members of the Latin Kings street gang were sentenced to prison today in Hammond, Ind., federal court for racketeering conspiracy and related crimes.
Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana made the announcement following the sentencing hearings before U.S. District Judge Rudy Lozano in the Northern District of Indiana.
A former officer with the Chicago Police Department, Antonio C. Martinez, Jr., 40, of Chicago, was sentenced today to 144 months in prison after pleading guilty on Nov. 18, 2011, to racketeering, drug, and robbery conspiracies and other related charges. According to court records, Martinez and another officer committed armed robberies on behalf of a Latin Kings gang member – in some instances while in uniform and driving police-issued vehicles. They stole drugs, weapons and cash, and in some instances they were given a portion of the funds they stole as payment for committing the armed robberies.
Hiluterio Chavez, aka “Tails,” 37, of Chicago, was sentenced today to 240 months in prison after pleading guilty on Jan. 24, 2012, to racketeering and drug conspiracies. Chavez, who became a Latin Kings member at an earlier age, admitted in court that he traveled with other Latin Kings leadership from the Chicago area to Texas to facilitate the organization of the Latin Kings in Texas and to ensure their allegiance to the Chicago Latin Kings. Among other crimes, Chavez participated in a robbery with Martinez and presented himself as a law enforcement officer.
Jermaine Ellis, aka “J-Dub,” 21, of Chicago, was sentenced today to 205 months in prison after pleading guilty on July 30, 2010, to racketeering conspiracy. Ellis, who also became a Latin Kings member at an early age, admitted that while a juvenile he participated in the shooting deaths of James Walsh and Gonzalo Diaz in Griffith, Ind., on Feb. 25, 2007.
Court records allege that the Latin Kings is a nationwide gang that originated in Chicago and has branched out throughout the United States. The Latin Kings is a well-organized street gang that has specific leadership and is composed of regions that include multiple chapters.
The Latin Kings enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault and threats against those who violate the rules or pose a threat to the Latin Kings. Members are required to follow the orders of higher-ranking members, including taking on assignments often referred to as “missions.”
Twenty-three Latin Kings members and associates have been indicted in this case. Aside from Martinez, Ellis and Chavez, 19 of the other defendants pleaded guilty and one remains a fugitive.
This case was investigated by the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; ICE Homeland Security Investigations; the National Gang Intelligence Center; the Chicago Police Department; the Houston Police Department; the Griffith Police Department; the Highland Police Department; the Hammond Police Department; and the East Chicago Police Department.The case is being prosecuted by Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section and David J. Nozick of the U.S. Attorney’s Office for the Northern District of Indiana. Andrew Porter of the U.S. Attorney’s Office for the Northern District of Illinois provided significant assistance.
Alabama Woman Pleads Guilty for Involvement in a Large Scale Stolen Identity Refund FraudRead the Press Release
Tracey Montgomery, of Montgomery County, Ala., pleaded guilty today in the U.S. District Court for the Middle District of Alabama to her role in a large scale stolen identity refund fraud, the Justice Department and the Internal Revenue Service (IRS) announced today.
On April 17, 2013, a federal grand jury in Montgomery, Ala., indicted Montgomery on conspiracy and theft of government money charges. According to court documents, Montgomery opened two bank accounts which were used to receive deposits of fraudulent tax refunds. Between August 2009 and February 2011, at least six false federal income tax refunds totaling approximately $49,221 were directed to Montgomery’s bank accounts. Montgomery was able to withdraw the false tax refund money before the IRS caught her. The overall scheme Montgomery participated in is alleged to have involved over $500,000 in false refunds. As a result of her plea, Montgomery faces a maximum potential sentence of 10 years in prison.This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Charles M. Edgar Jr., Michael Boteler, and Greg Bailey of the Justice Department's Tax Division are prosecuting the case with the assistance from the U.S. Attorney’s Office for the Middle District of Alabama and, in particular, Assistant U.S. Attorney Todd Brown.
Alabama Man Pleads Guilty to His Role in Cashing <br /> Fraudulently Obtained Tax Refund ChecksRead the Press Release
Rodriquez Thomas, of Montgomery County, Ala., pleaded guilty today in the U.S. District Court for the Middle District of Alabama to conspiring to cash fraudulently obtained federal tax refund checks, the Justice Department and the Internal Revenue Service (IRS) announced.
According to court documents, Thomas, along with his co-conspirators, Jesse Johnson and Quanesha Johnson, obtained U.S. Treasury tax refund checks that were issued as a result of the filing of fraudulent tax returns. Thomas and the Johnsons and others cashed approximately 77 fraudulently obtained U.S. Treasury tax refund checks that totaled approximately $137,016 by bringing them to a bank teller, Debora Gray, who worked for a bank in Wetumpka, Ala., and who participated in the scheme.
Jesse and Quanesha Johnson and Debora Gray have all previously pleaded guilty to their involvement and are awaiting sentencing. Thomas faces a maximum sentence of five years in prison for the conspiracy. He is also subject to fines, mandatory restitution and forfeiture.
The case was investigated by Special Agents of IRS - Criminal Investigation. Trial Attorneys Charles Edgar Jr. 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.
Two Members of Latin Kings Street Gang Sentenced in Indiana for Racketeering Conspiracy and Related CrimesRead the Press Release
Two members of the Latin Kings street gang were sentenced today in Hammond, Ind., federal court for racketeering conspiracy, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana.
Martin Anaya, aka “Lefty,” 42, of Chicago, was sentenced today by U.S. District Judge Rudy Lozano to 360 months in prison after a jury returned a guilty verdict on Sept. 26, 2012, to racketeering and drug conspiracies.
Jason Ortiz, aka “Creeper” 29, of Chicago, was sentenced today to serve 300 months in prison after pleading guilty on July 30, 2010, to racketeering conspiracy by U.S. District Judge Lozano.
According to the third superseding indictment filed in this case, the Latin Kings is a nationwide gang that originated in Chicago and has branched out throughout the United States. The Latin Kings is a well-organized street gang that has specific leadership and is composed of regions that include multiple chapters. The third superseding indictment charges that the Latin Kings were responsible for more than 20 murders.
Also according to the third superseding indictment, the Latin Kings enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault and threats against those who violate the rules or pose a threat to the Latin Kings. Members are required to follow the orders of higher-ranking members, including taking on assignments often referred to as “missions.”
During Anaya’s trial, the government presented evidence of several murders committed by the members of the Latin Kings. In addition, cooperating defendants testified that the Latin Kings were responsible for more than 150 kilograms of cocaine and 1,000 kilograms of marijuana over the course of the racketeering conspiracy.
Evidence of one the murders presented at trial involved the shooting death of Christina Campos that occurred at 107th block of Hoxie Avenue, Chicago, on April 22, 2009. Witnesses testified that Anaya, Ortiz, Brandon Clay, a defendant previously sentenced to 360 months in this case, and a fourth Latin King member drove across the south side of Chicago to a Latin Counts’ neighborhood. The Latin Kings confronted Campos and two other Latin Count members as they were walking to their car. Ultimately, gun shots were fired resulting in Campos being fatally shot. At the trial, the jury acquitted Anaya on the charges related to Campos’ murder. Nevertheless, during the sentencing hearing, Judge Lozano found Anaya responsible for Campos’ death.
During his guilty plea proceeding, Ortiz acknowledged that on Feb. 25, 2007, he, along with four other defendants, rode on a “mission” from Illinois to Griffith, Ind. While armed with three firearms, they were ordered to ambush – that is shoot to kill – rival gang members who were attending a party. Once two Latin Dragon members James Walsh, aka “Jim Boy” and Gonzalo Diaz, aka “Chalo,” left the party, the Latin Kings, including Ortiz, rode up in a vehicle and two of Ortiz’s co-defendants got of the vehicle and shot and killed Walsh and Diaz.
Twenty-three Latin Kings members and associates have been indicted in this case. Aside from Anaya and Ortiz, 20 of the other defendants pleaded guilty and one remains a fugitive.
This case was investigated by the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; ICE Homeland Security Investigations; the National Gang Intelligence Center; the Chicago Police Department; the Houston Police Department; the Griffith Police Department; the Highland Police Department; the Hammond Police Department; and the East Chicago Police Department.The case is being prosecuted by Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section and David J. Nozick of the U.S. Attorney’s Office for the Northern District of Indiana. Andrew Porter of the U.S. Attorney’s Office for the Northern District of Illinois provided significant assistance.
An indictment is not evidence of guilt. Those charged in the indictment are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Justice Department Finds Unconstitutional Conditions of Confinement at Escambia County, Fla. JailRead the Press Release
Today, the Justice Department’s Civil Rights Division issued a letter detailing the findings of its investigation into conditions of confinement at Escambia County Jail, a jail located in northwest Florida, housing roughly 1,300 prisoners. The department found that, although the jail under the leadership of Sheriff David Morgan has recently implemented a series of meaningful reforms, conditions at the jail still routinely violate the constitutional rights of prisoners.
Specifically, the department concluded that known systemic deficiencies at the facility, stemming mainly from staffing shortages, continue to subject prisoners to excessive risk of assault by other prisoners and to inadequate mental health care. Additionally, the department found that until recently, the jail had an informal policy and practice of designating some of its housing units as only for African-American prisoners. By segregating some of its prisoners on the basis of race, the jail not only stigmatized and discriminated against many of its African-American prisoners, it also fanned combustible racial tensions within the jail.
“We commend Sheriff Morgan for his willingness to work aggressively to remedy many of the problems brought to his attention during the course of our investigation,” said Roy L. Austin Jr., Deputy Assistant Attorney General of the Civil Rights Division. “We hope to work cooperatively with the Sheriff and the County to address and remedy the remaining unconstitutional conditions of confinement at Escambia Jail.”
The department conducted this investigation pursuant to its authority under the Civil Rights of Institutionalized Persons Act (CRIPA) to enforce constitutional mandates. The department’s investigation was broad based and included a review of practices relating to the level of security at the jail, the adequacy of medical and mental health services, and sanitation/environmental conditions.
Under its CRIPA authority, in addition to investigating the conditions of confinement at correctional facilities, the department has also investigated conditions at psychiatric hospitals, nursing homes, residential facilities serving persons with developmental disabilities, and juvenile correctional facilities. CRIPA’s focus is on systemic deficiencies rather than on the misconduct of individuals. Please visit www.justice.gov/crt to learn more about CRIPA and other laws enforced by the Department’s Civil Rights Division
The investigation was conducted by Special Litigation Counsel Avner Shapiro and Senior Trial Attorney David Deutsch of the Civil Rights Division’s Special Litigation Section. The findings letter will be available on the Department’s Web site at www.justice.gov/crt.
Related Materials:
Escambia County Jail Findings Letter
Health Care Clinic Director Sentenced in Miami to 111 Months <br /> for His Role in $63 Million Health Care Fraud SchemeRead the Press Release
A former health care clinic director and licensed therapist was sentenced in Miami to 111 months in prison today in connection with a health care fraud scheme involving defunct health provider Health Care Solutions Network Inc. (HCSN).
Acting Assistant Attorney General Mythili Raman of the Justice Department's Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Special Agent in Charge of the FBI's Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office, made the announcement.
Paul Thomas Layman, 66, of Miami, pleaded guilty on March 7, 2013, to conspiracy to commit health care fraud.
During the course of the conspiracy, Layman was employed as a substance abuse counselor, therapist and clinical director of HCSN’s Partial Hospitalization Program (PHP). A PHP is a form of intensive treatment for severe mental illness.
HCSN of Florida (HCSN-FL) operated community mental health centers at three locations. During his employment, Layman worked full time at all HCSN-FL locations in various capacities. According to court documents, Layman was aware that HCSN-FL paid illegal kickbacks to owners and operators of Miami-Dade County Assisted Living Facilities (ALF) in exchange for patient referral information to be used to submit false and fraudulent claims to Medicare and Medicaid. Layman also knew that many of the ALF referral patients were ineligible for PHP services because many patients suffered from mental retardation, dementia and Alzheimer's disease.Court documents reveal that Layman was aware that HCSN-FL personnel were fabricating patient medical records. Many of these medical records were created weeks or months after the patients were admitted to HCSN-FL for purported PHP treatment and were utilized to support false and fraudulent billing to government sponsored health care benefit programs, including Medicare and Florida Medicaid. During his employment at HCSN-FL, Layman signed fabricated PHP therapy notes and other medical records used to support false claims to government sponsored health care programs.
HCSN of North Carolina (HCSN-NC) operated one location in Hendersonville, N.C. At HCSN-NC, Layman served as the clinical director and assisted HCSN owner Armando Gonzalez in obtaining necessary licensing, credentials and Medicare authorizations for HCSN-NC. According to court documents, from 2008 through 2009, Layman purportedly supervised the therapists within the HCSN-NC PHP, including Alexandra Haynes, who was an unlicensed therapist purportedly performing PHP therapy to HCSN-NC patients. Gonzalez and Haynes were sentenced to 168 months and 70 months, respectively, in prison.
According to court documents, from 2004 through 2011, HCSN billed Medicare and the Florida Medicaid program approximately $63 million for purported mental health services.
This case is being investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division's Fraud Section and the U.S. Attorney's Office for the Southern District of Florida. The cases are being prosecuted by Trial Attorney Allan J. Medina and Special Trial Attorney William J. Parente 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 & 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.
African Trophy Hunter Indicted for Violating Endangered Species Act and Lacey ActRead the Press Release
Charles Kokesh was indicted by a federal grand jury in Pensacola, Florida, for violating the Endangered Species Act and the Lacey Act by selling two African elephant tusks and for making false accounts of wildlife related to that sale, the Justice Department announced today.
The three count indictment returned yesterday alleges that Kokesh legally imported a sport-hunted African elephant trophy mount from Namibia, but thereafter illegally sold the two tusks, from New Mexico to a buyer in Florida. The sale price was approximately $8,100, to be paid in a combination of currency and guns. After the sale, Kokesh allegedly falsely described that sale, in an email to personnel at the U.S. Fish and Wildlife Service, as a shipment to an appraiser in anticipation of a donation to a non-profit entity. Kokesh similarly falsely accounted for the location and disposition of the tusks in subsequent correspondence. Each false account and record is charged under the Lacey Act.
African elephants are protected under the Endangered Species Act and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Both the United States and Namibia are signatories to CITES. African elephant populations in Namibia are listed in Appendix II of CITES, which includes species that are not necessarily threatened with extinction now, but may become so unless trade in specimens of such species is strictly regulated. Since 2000, the Namibian African elephant listing has specified that the species cannot be used for commercial purposes.
The United States implements CITES through the Endangered Species Act and regulations issued thereunder. To implement the CITES prohibition against commercial use of African elephant specimens, regulations issued under the Endangered Species Act proscribe the commercial use, including sale, of sport-hunted African elephant trophies, even if the trophies are legally hunted and imported.
According to a recent report produced by CITES and partner organizations, entitled “Elephants in the Dust –The African Elephant Crisis,” populations of elephants in Africa are under severe threat as the illegal trade in ivory grows – with the number of elephants killed doubling and the amount of ivory seized tripling over the last decade. An estimated 17,000 elephants were illegally killed in 2011 to feed the illegal trade. More information is available at www.cites.org/eng/news/pr/2013/20130306_ivory.php.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty in a court of law.
The maximum penalty for the charged violation of the Endangered Species Act is up to six months in prison and a $25,000 fine. The maximum penalty for making a false statement is up to five years in prison and a $250,000 fine.
The case was investigated by the U.S. Fish and Wildlife Service and the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives and is being prosecuted by the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division and the U.S. Attorney’s Office for the Northern District of Florida.
For more information about CITES visit www.CITES.org.
U.S. Renal Care to Pay $7.3 Million<br /> to Resolve False Claims Act AllegationsRead the Press Release
U.S. Renal Care, headquartered in Plano, Texas, has agreed to pay $7.3 million to resolve allegations that Dialysis Corporation of America (DCA) violated the False Claims Act by submitting false claims to the Medicare program for more Epogen than was actually administered to dialysis patients at DCA facilities, the Justice Department announced today. U.S. Renal Care, which acquired DCA in June 2010, owns and operates more than 100 freestanding outpatient dialysis facilities throughout the United States.
Epogen is an intravenous medication that is used to treat anemia, a common condition afflicting patients with end-stage renal disease. Epogen vials contain a small amount of medication in excess of the labeled amount, known as “overfill,” to compensate for medication that may remain in the vial after extraction and in the syringe upon administration. The United States contends that from January 2004 through May 2011, DCA billed for 10-11% overfill whenever it administered Epogen. However, because of the types of syringes DCA used, the United States alleges that DCA was not able to withdraw and administer 10-11% overfill every time it administered Epogen to patients, and thus submitted false claims to Medicare that overstated the amount of Epogen that it was actually providing.
“Today’s settlement shows that the Justice Department will aggressively pursue those health care providers who cut corners at the expense of the American taxpayers, such as by billing for items and services that were not provided,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “We will continue to protect scarce Medicare dollars.”
“Medical care providers who submit false claims for services and products that were not actually delivered threaten the financial viability of the Medicare Trust Fund,” said Rod J. Rosenstein, U.S. Attorney for the District of Maryland.
“Health providers billing for phantom services cheat taxpayers, cheat programs straining to pay for vitally needed care, and cheat patients who pay inflated copayments,” said Nick DiGiulio, Special Agent in Charge, Office of Inspector General, U.S. Department of Health and Human Services for the region including Maryland. “We will continue to work with the Department of Justice to ensure health professionals get reimbursed only for services they actually provide”
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14.2 billion.
The allegations settled today arose from a lawsuit filed by Laura Davis against DCA under the qui tam, or whistleblower, provisions of the False Claims Act. The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery. Ms. Davis will receive $1,314,000 as part of today’s settlement.
This case was handled by the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the District of Maryland with assistance from the Office of Inspector General for the Department of Health and Human Services. The claims settled by this agreement are allegations only, and there has been no determination of liability. The whistleblower suit is captioned United States ex rel. Laura Davis v. Dialysis Corporation of America, No. 1:08-cv-2829 (D. Md.).
Two Denso Corporation Executives Agree to Plead Guilty for Price Fixing and Bid Rigging on Auto Parts Installed in U.S. CarsRead the Press Release
Two DENSO Corp. executives – Yuji Suzuki and Hiroshi Watanabe – have agreed to plead guilty for their roles in international conspiracies to fix prices and rig bids of certain automotive components installed in U.S. cars, the Department of Justice announced today. The executives, both Japanese nationals, have also agreed to serve time in a U.S. prison.
Yuji Suzuki, a senior manager in DENSO’s Toyota Sales Division, has agreed to serve 16 months in a U.S. prison, to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation. Hiroshi Watanabe, a group leader in DENSO’s Toyota Sales Division at the time of the offense, has agreed to serve 15 months in a U.S. prison, to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation.
“The conspirators reached agreements to fix prices and allocate bids, and took measures such as using code names and meeting in secret to cover their tracks,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Cracking down on international price-fixing cartels that target U.S. businesses and consumers has been, and will continue to be, among the top priorities for the Antitrust Division.”
According to the two-count felony charge filed today in U.S. District Court for the Eastern District of Michigan in Detroit, Suzuki, along with co-conspirators, engaged in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of, electronic control units and heater control panels sold to Toyota Motor Corporation and Toyota Motor Engineering and Manufacturing North America Inc. in the United States and elsewhere. According to the charges, Suzuki participated in the electronic control units conspiracy from at least as early as August 2005 until at least December 2008 and participated in the heater control panels conspiracy from at least as early as July 2005 until at least December 2008.
According to a one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Watanabe participated in a conspiracy to rig bids for, and to fix, stabilize and maintain the prices of, heater control panels sold to Toyota from at least as early as June 2008 and continuing until at least February 2010 in the United States and elsewhere.
In March 2012, DENSO pleaded guilty and was sentenced to pay a $78 million criminal fine for its role in the conspiracies related to electronic control units and heater control panels.
Electronic control units are electrical components, similar to tiny computers, which are embedded throughout cars and control various electrical systems or subsystems in an automobile. For example, a body electronic control unit controls the power windows, power locks and other electronic components on the door. Heater control panels are located in the center console of a car and control the temperature inside the car.
“Those individuals who engage in price fixing and bid rigging negatively impact the automotive industry by causing vehicle buyers and makers to pay higher prices. The FBI is committed to pursuing and prosecuting these criminals,” said Robert D. Foley III, Special Agent in Charge, FBI Detroit Division.
According to the charges against Suzuki and Watanabe, they carried out the conspiracies by participating, or directing the participation of subordinate employees, in meetings and conversations to coordinate and fix prices of automotive parts installed in U.S. cars and elsewhere.
To date, nine companies and 14 executives have pleaded guilty or agreed to plead guilty in the department’s ongoing investigation into price fixing and bid rigging in the automotive parts industry. DENSO, Nippon Seiki Ltd., Tokai Rika Co. Ltd., Furukawa Electric Co. Ltd, Yazaki Corp., G.S. Electech Inc., Fujikura Ltd., Autoliv Inc. and TRW Deutschland Holding GmbH pleaded guilty and were sentenced to pay a total of more than $809 million in criminal fines. Additionally, 12 individuals have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each.
Suzuki and Watanabe are charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The charges are the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by each of the Antitrust Division’s criminal enforcement sections and the FBI. Today’s charges were brought by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office, with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information on price fixing, bid rigging and other anticompetitive conduct related to other products in the automotive parts industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Detroit Field Office at 313-965-2323.
Related Materials:
Watanabe Information
Suzuki InformationMembers of International Sex Trafficking Ring IndictedRead the Press Release
Arturo Rojas-Coyotl, Odilon Martinez-Rojas, and Severiano Martinez-Rojas, all of Tenancingo in the state of Tlaxcala, Mexico have been indicted on charges of sex trafficking and alien harboring, announced the Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Northern District of Georgia. A fourth man, Daniel Garcia-Tepal, also of Tlaxcala, Mexico, is charged with encouraging and inducing aliens to enter and reside in the United States unlawfully.
According to U.S. Attorney Yates, the charges and other information presented in court: Rojas-Coyotl and his uncles Odilon Martinez-Rojas and Severiano Martinez-Rojas used force, fraud and coercion to compel three women to engage in prostitution in Atlanta and Norcross, Ga. at various times between 2006 and 2008. Daniel Garcia-Tepal and Arturo Rojas-Coyotl are also charged with encouraging and inducing a fourth woman to unlawfully enter and remain in the United States between 2010 and 2013.
Special Agents of the FBI and ICE Homeland Security Investigations arrested Arturuo Rojas-Coyotl, Odilon Martinez-Rojas, and Daniel Garcia-Tepal in a highly coordinated law enforcement sweep today. Severiano Martinez-Rojas remains a fugitive and is believed to be in Mexico. The FBI will coordinate with its legal attaché in Mexico City to affect his arrest and subsequent extradition back to the U.S. Four search warrants were also executed today in Atlanta and Norcross, Ga. in conjunction with the arrests.
Rojas-Coyotl, 26, Martinez-Rojas, 41, Martinez-Rojas, 48, and Garcia-Tepal, 28, are scheduled for arraignment today. Each sex trafficking charge carries a maximum sentence of life in prison while each alien harboring charge has a maximum sentence of 10 years in prison, with all counts carrying a fine of up to $250,000 each. In determining the actual sentence, the Court will consider the United States Sentencing Guidelines, which are not binding but provide appropriate sentencing ranges for most offenders.
This case is being investigated by Special Agents of the FBI and the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. Interagency cooperation in international sex trafficking operations is imperative and vital to the success of the prosecution.
Assistant U.S. Attorney Susan Coppedge and Trial Attorney Benjamin Hawk of the Civil Rights Division’s Human Trafficking Prosecution Unit are prosecuting the case.
Anyone with information related to sex trafficking should call the Atlanta FBI hotline at 404-679-9000 or the National Human Trafficking Resource Center at 1-888-3737-888.
Members of the public are reminded that the indictment contains only allegations. A defendant is presumed innocent of the charges and it will be the government's burden to prove a defendant's guilt beyond a reasonable doubt at trial.
Attorney Convicted in Multimillion-Dollar Stock FraudRead the Press Release
Attorney Mitchell J. Stein, 53, of Hidden Hills, Calif., was convicted by a jury in the Southern District of Florida for his role in operating a five-year, multimillion-dollar market manipulation and fraud scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.
Stein was charged in a December 2011 indictment and on May 20, 2013, he was convicted on all counts: conspiracy to commit mail and wire fraud and three counts each of mail fraud and wire fraud, each of which carries a maximum penalty of 20 years in prison; three counts of securities fraud, which each carry a maximum penalty of 25 years; three counts of money laundering, which each carry a maximum penalty of 10 years; and one count of conspiracy to obstruct justice, which carries a maximum penalty of five years in prison. Stein is being detained until sentencing, which is scheduled for Aug. 16, 2013.
According to evidence presented at trial, Stein’s wife held a controlling interest in Signalife Inc., a publicly-traded company currently known as Heart Tronics that purportedly sold electronic heart monitoring devices. Stein engaged in a scheme to artificially inflate the price of Signalife stock by creating the false impression of sales activity for Signalife. Specifically, the evidence at trial showed that Stein and his co-conspirators created fake purchase orders and related documents from fictitious customers, then caused Signalife to issue press releases and file documents with the U.S. Securities and Exchange Commission (SEC) trumpeting these fictitious sales. Evidence at trial also proved that in a further effort to create the false appearance of sales activity, Stein arranged to have Signalife products shipped to and temporarily stored with an individual who had not purchased any products.
Evidence at trial further proved that Stein disguised his selling of stock during the conspiracy by placing shares in purportedly blind trusts, and that he had a co-conspirator sell shares of Signalife stock after Stein caused false information to be disseminated to the public. Stein also caused Signalife to issue shares to third parties so that those third parties could sell the shares and remit the proceeds of those sales to Stein. From one co-conspirator alone, Stein received illicit gains of over $1.8 million.
In addition, evidence at trial proved that Stein conspired to obstruct the SEC’s investigation into Heart Tronics by testifying falsely and arranging for others to testify falsely in an effort to conceal the scheme described above.This case was investigated by the U.S. Postal Inspection Service and the Office of the Special Inspector General for the Troubled Asset Relief Program.
This matter was referred to the Department by the SEC, which conducted a parallel investigation and in December 2011 announced the filing of a civil enforcement action against Stein and others. The Department thanks the SEC for its substantial assistance in this matter. The Department also acknowledges the substantial assistance of FINRA’s Criminal Prosecution Assistance Group.
This case is being prosecuted by Assistant Chief Albert B. Stieglitz, Jr. and Trial Attorneys Kevin B. Muhlendorf and Andrew H. Warren of the Criminal Division’s Fraud Section.Virginia Investment Firm Officer Sent to Prison in<br /> KPMG Tax Shelter CaseRead the Press Release
Michael Parker, of Baltimore, Md., who was the chief operating officer of TransCapital Corporation, a tax-advantaged investments company based in Northern Virginia, was sentenced yesterday to 54 months in prison by U.S. District Judge Sandra S. Beckwith in Cincinnati, Ohio, the Justice Department and Internal Revenue Service (IRS) announced. In addition, Parker was sentenced to serve three years of supervised release after his release from prison. In December 2009, Parker pleaded guilty to one count of conspiracy to defraud the United States for his role in KPMG’s promotion, marketing, and implementation of a tax shelter product known as SLOTS.
According to the plea agreement and statements made during trial and related proceedings before U.S. District Judge Sandra S. Beckwith in Cincinnati, Ohio, Parker admitted to conspiring with others to defraud the IRS with regard to tax shelter transactions. Parker, a CPA and an attorney, acted as the Chief Operating Officer of TransCapital Corporation during the alleged conspiracy. Parker testified at the trial of an accountant who was a tax partner at KPMG, LLC, at its Tysons Corner, Va., office, and an attorney for TransCapital, both of whom were acquitted of conspiracy charges after a four-week jury trial.
According to the plea agreement, trial testimony and other statements, from 1998 through 2006, Parker and others marketed and implemented a tax shelter to KPMG clients called the Sale Leaseback of Tenant Improvements Strategy (SLOTS). The SLOTS shelter enabled client corporations to claim tax deductions totaling more than $240 million on corporate income tax returns filed with the IRS. During 2002 through 2004, the IRS audited three U.S. corporations that had claimed losses generated by SLOTS transactions, including The Kroger Company. Parker identified Kroger as the Fortune 500 corporation that did the largest SLOTS tax shelter transaction, and which claimed over $178 million in loss deductions, causing over $64 million in tax loss to the IRS. Parker admitted that he and the others conspired to impede and impair the IRS by making false and misleading statements to IRS agents and attorneys during these audits, including the Kroger audit. Additionally, Parker admitted that he and others concealed certain aspects of the tax shelter transaction from SLOTS clients, including Kroger, for the purpose of impeding and impairing the IRS. Parker further acknowledged that the SLOTS tax shelter and related transactions were themselves nothing more than devices to disguise and conceal mere financing transactions.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, thanked the U.S. Attorney’s Office for the Southern District of Ohio for their assistance in this case, and also thanked the IRS-Criminal Investigation agents who investigated the case, as well as Tax Division Attorneys John E. Sullivan, Richard M. Rolwing, and Alexander Robbins who prosecuted the case.
Additional information about the Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.
Two Alabama Real Estate Investors and Their Company Sentenced for Their Roles inBid-Rigging and Mail Fraud Conspiracies Involving Real Estate Purchased at Public Foreclosure AuctionsRead the Press Release
Two Alabama real estate investors and their company were sentenced today in U.S. District Court for the Southern District of Alabama in Mobile, for their participation in conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in southern Alabama, the Department of Justice announced.
Robert M. Brannon, of Laurel, Miss., and his son, Jason R. Brannon, of Mobile, Ala., were each sentenced to serve 20 months in prison for their participation in the conspiracies. The Brannons and their Mobile-based company, J&R Properties LLC, were ordered to pay $21,983 in restitution to the victims of the crime.
“Today’s sentences send a strong message that the Antitrust Division will continue to hold individuals and companies accountable for their anticompetitive conduct,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Whether on a local, national or international scale, bid rigging and fraud subvert the competitive process and the division will remain vigilant in vigorously pursuing those who violate the antitrust laws for their own financial enrichment.”
On Dec. 12, 2012, the Brannons and their company, pleaded guilty to an indictment originally returned on June 28, 2012, in the U.S. District Court for the Southern District of Alabama, charging each of them with one count of bid rigging and one count of conspiracy to commit mail fraud. According to court documents, the Brannons and their company conspired with others not to bid against one another at public real estate foreclosure auctions in southern Alabama. After a designated bidder bought a property at a public auction, which typically takes place at the county courthouse, the conspirators would generally hold a secret, second auction, at which each participant would bid the amount above the public auction price he or she was willing to pay. The highest bidder at the secret, second auction won the property.
The indictment also charged the Brannons and their company with conspiring to use the U.S. mail to carry out a fraudulent scheme to acquire title to rigged foreclosure properties sold at public auctions at artificially suppressed prices; to make payoffs to and to receive payoffs from co-conspirators; and to cause financial institutions, homeowners and others with a legal interest in rigged foreclosure properties to receive less than the competitive price for the properties. The indictment charged the Brannons and their company with participating in the bid-rigging and mail fraud conspiracies from as early as October 2004 until at least August 2007.“The success of this investigation represents the FBI’s staunch commitment to target and investigate those who are willing to abuse and exploit illegal advantages during this legal process for personal gain at the expense of suffering citizens and businesses,” said Stephen E. Richardson, Special Agent in Charge of the FBI’s Mobile Division.
A total of eight individuals and two companies have pleaded guilty in the U.S. District Court for the Southern District of Alabama, in connection with this investigation. The sentences announced today resulted from an ongoing investigation conducted by the Antitrust Division and the FBI’s Mobile Office, with the assistance of the U.S. Attorney’s Office for the Southern District of Alabama. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.html¬.
Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. 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.
Justice Department Reaches Settlement with Cinemark<br /> Holdings Inc. and Rave Holdings LLC Movie TheatersRead the Press Release
The Department of Justice announced today that it has reached a settlement with Cinemark Holdings Inc. and Rave Holdings LLC (Rave Cinemas) that requires Cinemark to divest movie theaters in Kentucky, New Jersey and Texas, in order to proceed with its $220 million acquisition of Rave Cinemas movie theaters. In addition, Cinemark’s chairman is required to divest Movie Tavern Inc., which operates theaters in Ft. Worth and Denton, Texas, that compete with Rave Cinemas. The department said that the original deal is likely to lead to higher ticket prices for moviegoers and that the divestitures of theaters in Louisville, Ky., southern New Jersey, Fort Worth, and Denton or Hickory Creek, Texas, will preserve competition in those areas, benefitting consumers.
The department’s Antitrust Division and the state of Texas filed a civil lawsuit today in U.S. District Court in Washington, D.C., to block the proposed acquisition. At the same time, the department and the state of Texas filed a proposed settlement that requires the divestitures. If approved by the court, the settlement would resolve the lawsuit and the department’s and the state of Texas’ concerns about the competitive harm to consumers that would result from the acquisition.
“Cinemark’s proposed acquisition of Rave Cinemas would likely reduce competition among theaters showing first-run, commercial movies in the affected areas of Kentucky, New Jersey and Texas, causing moviegoers to pay higher ticket prices,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The divestitures required by the department and the state of Texas will ensure that competition among movie theaters in the affected areas is preserved.”
According to the complaint, the movie theaters compete on multiple dimensions to attract moviegoers, such as the quality of the viewing experience, sound systems, largest screens, best picture clarity, best seating, and quality of food and drinks. More than 1 billion movie tickets were sold in the United States in 2012, with total box office revenue reaching about $9.7 billion.
The department said that Cinemark and Rave Cinemas are each other’s most significant competitor in the area in and around Voorhees-Somerdale, N.J., and in the eastern portion of Louisville, Ky., and that Rave Cinemas and Movie Tavern are each other’s most significant competitor in the western portion of Fort Worth, Texas. In the area in and around Denton, Texas, all three companies presently operate theatres. In markets in which Movie Tavern and Rave Cinemas currently compete, the department said that Cinemark’s chairman, Lee Roy Mitchell, would have an ability and financial incentive to dampen competition once Rave Cinemas was acquired by Cinemark.
The proposed acquisition would likely reduce price competition among Cinemark, Rave Cinemas and Movie Tavern in the affected markets. The complaint states that if no longer motivated to compete, Cinemark, Rave Cinemas and Movie Tavern would also have less incentive to maintain, upgrade and renovate their theaters, to improve those theaters’ amenities and services and to license the most popular movies, reducing the quality of the viewing experience for the moviegoer.
The requirement to divest three movie theaters in the locations where Cinemark and Rave Cinemas are currently each other’s closest competitor and to require Mitchell to divest Movie Tavern and its 16 theaters will alleviate the competitive harm to moviegoers from this transaction.
Cinemark, a Plano, Texas-based company, owns and operates 298 theaters with a total of 3,916 screens in 39 states. Its U.S. box office revenues were approximately $1 billion in 2012.
Rave Cinemas, a Dallas-based company, owns and operates 35 movie theaters with a total of 518 screens in 12 states. Its U.S. box office revenues were approximately $169 million in 2012.
Movie Tavern, also a Dallas-based company, owns and operates 16 movie theaters with a total of 130 screens in seven states. Its U.S. box office revenues were approximately $31 million in 2012. Movie Tavern is owned by Alder Wood Partners L.P., a Dallas-based limited partnership controlled by Mitchell and his wife.
As required by the Tunney Act, the proposed settlement and the department’s competitive impact statement will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during a 60-day comment period to John R. Read, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, N.W., Suite 4000, Washington, D.C. 20530 (telephone: 202-307-0468). At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed consent decree upon finding that it serves the public interest.
Eighth Individual Sentenced in Connection with Costa Rica-Based Business Opportunity Fraud VenturesRead the Press Release
Sean Rosales, a dual United States and Costa Rican citizen, was sentenced today in connection with a series of business opportunity fraud ventures based in Costa Rica, the Justice Department and the U.S. Postal Inspection Service announced today. Rosales was sentenced by U.S. District Court Judge Ursula M. Ungaro in Miami to 97 months in prison and 5 years supervised release. Rosales was also ordered to pay more than $7.3 million in restitution.
On March 20, Rosales pled guilty to one count of an indictment pending against him, charging conspiracy to commit mail and wire fraud. Rosales was arrested in Chicago, Illinois late last year following his indictment by a federal grand jury in Miami on Nov. 29, 2011. The indictment alleged that Rosales and his co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The charges form part of the government’s continued nationwide crackdown on business opportunity fraud.
Prior to Rosales’ sentencing today, eleven other individuals were charged in connection with business opportunity fraud ventures based in Costa Rica. Rosales is the eighth of those individuals to be convicted and sentenced in the United States.
“Many Americans dream of owning and operating their own small business, but fraud schemes such as the one perpetrated by this defendant can turn that dream into a nightmare,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “The Department of Justice will continue to be aggressive in prosecuting those who take advantage of innocent, hardworking Americans through business opportunity fraud.”
Beginning in May 2005, Rosales and his coconspirators fraudulently induced purchasers in the United States to buy business opportunities in USA Beverages Inc., Twin Peaks Gourmet Coffee Inc., Cards-R-Us Inc., Premier Cards Inc., The Coffee Man Inc., and Powerbrands Distributing Company. The business opportunities cost thousands of dollars each, and most purchasers paid at least $10,000. Each company operated for several months, and after one company closed, the next opened. The various companies used bank accounts, office space and other services in the Southern District of Florida and elsewhere.
Rosales, using aliases, participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, Rosales operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities.
The companies made numerous false statements to potential purchasers of the business opportunities, including that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards and beverages; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands. Potential purchasers also were falsely told that the profits of some of the companies were based in part on the profits of the business opportunity purchasers, thus creating the false impression that the companies had a stake in the purchasers’ success and in finding good locations.
The companies employed various types of sales representatives, including fronters, closers and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to finalize deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities. The companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchaser's merchandise display racks.
Rosales, using aliases, was a fronter for USA Beverages, a fronter and reference for Twin Peaks, a fronter and reference for Cards-R-Us, a fronter, locator and reference for Premier Cards, a locator for Coffee Man, and a locator for Powerbrands.
Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. USA Beverages was registered as a Florida and New Mexico corporation and rented office space in Las Cruces, N.M. Twin Peaks was registered as a Florida and Colorado corporation and rented office space in Fort Collins, Colo., and Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia, and The Coffee Man was registered as a Colorado corporation and rented office space in Denver. Powerbrands was registered as a Wisconsin corporation and rented office space in Glendale, Wisconsin and Palm Beach Gardens, Fla.
“Fraudulent business opportunity sellers must realize that financial fraud victimizing Americans will be prosecuted vigorously, even if the fraudsters conduct their operations from abroad,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “Increased international law enforcement cooperation eliminates safe havens for those who seek to cheat Americans from overseas.”“The success of this investigation shows that the U.S. Postal Inspection Service is committed to working with the Department of Justice and our law enforcement partners, both foreign and domestically, to protect Americans from the predatory nature of business opportunity frauds,” said Ronald Verrochio, U.S. Postal Inspector in Charge, Miami Division.
Acting Assistant Attorney General Delery commended the investigative efforts of the Postal Inspection Service. The case was being prosecuted by Assistant Director Jeffrey Steger and trial attorney Alan Phelps with the U.S. Department of Justice Consumer Protection Branch.
United States Sues Brooklyn Fish Processors in Food Safety CaseRead the Press Release
The Department of Justice has filed a lawsuit and sought a preliminary injunction against N.Y. Fish Inc.; New York City Fish Inc.; Maxim Kutsyk, Pavel Roytkov, Leonid Staroseletesky, and Steven Koyfman under the federal Food, Drug, and Cosmetic Act (FDCA). New York City Fish manufactures and distributes ready-to-eat fishery products, including smoked salmon and mackerel, and operates out of a food processing facility located at 738 Chester Street in Brooklyn. N.Y. Fish previously operated a similar fish processing business out of the same location, employing virtually all of the same employees. Although N.Y. Fish has ceased manufacturing, FDA believes that N.Y. Fish products continue to be distributed and sold. The complaint alleges that all defendants have a history of processing fishery products under insanitary conditions, with inadequate safety procedures.
“Consumers depend on food producers to follow the right procedures to make sure our food is safe to eat,” said Acting Assistant Attorney General for the Civil Division Stuart F. Delery. “As this case demonstrates, the Department of Justice is committed to taking action against those who produce or process food under insanitary conditions or with inadequate safety procedures.”
“Inspectors who visited the defendants’ facility found more than Nemo; they found life-threatening bacteria. Despite repeated warnings and direction to sanitize the facility, the defendants have failed to do so. They cannot be allowed to continue to distribute potentially unsafe food to our families. Those who store, package and sell the food that we eat must maintain basic standards of cleanliness in their facilities. We are committed to protecting the public from health risks by ensuring that food manufacturers comply with federal laws prohibiting them from preparing, packing and holding food products under insanitary conditions,” stated Loretta E. Lynch, the United States Attorney for the Eastern District of New York.
According to the complaint, FDA conducted seven inspections of the Chester Street facility between 2006 and 2013. The inspections showed a repeated failure to minimize the risk of contamination by two dangerous types of bacteria: Listeria monocytogenes and Clostridium botulinum. People who eat food contaminated with Listeria monocytogenes can contract the disease listeriosis, which can be serious,even fatal,for vulnerable groups such as newborns and those with impaired immune systems. Complications from the disease can also lead to miscarriage. Clostridium botulinum spores can produce the toxin that causes botulism. Eating food tainted with this toxin can lead to paralysis and potentially death.
FDA’s most recent inspection occurred in February 2013, when New York City Fish was operating the Chester Street facility. According to court filings, the company missed critical processing steps that are essential to prevent the growth and toxin production of Clostridium botulinum and to eliminate any Listeria monocytogenes contamination, including heating fish for a dangerously short time and using insufficiently salty brining solution.
FDA previously investigated the facility in August 2012, when it was operated by N.Y. Fish. FDA inspectors discovered widespread sanitation problems and a similar failure to meet critical steps necessary to prevent contamination. They also found salmon products and production equipment contaminated with Listeria monocytogenes, even after the company attempted to clean and sanitize the facility.
Further testing by the FDA revealed that certain strains of Listeria monocytogenes it found likely had persisted in the Chester Street facility for years. FDA contends that the facility is so infiltrated with Listeria monocytogenes that New York City Fish must institute heightened monitoring and strict sanitation procedures to have any hope of eradicating this life-threatening organism, but that it has failed to do so.
The lawsuit is being brought by Assistant U.S. Attorney Elliot M. Schachner of the Eastern District of New York, and Trial Attorney Adrienne Fowler of the Civil Division’s Consumer Protection Branch, with the assistance of Associate Chief Counsel for Enforcement Julie Dohm of the FDA.