District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Florida Man Pleads Guilty to Tax EvasionRead the Press Release
A Florida man pleaded guilty today to evading the payment of more than $1.7 million he owed for tax years 2004 through 2014.
According to court documents and statements made in court, David Albert Fletcher, of Deltona, owned and operated several furniture liquidations businesses in Florida, including Century Liquidators. For tax years 2004 through 2013, Fletcher did not timely file his federal income tax returns or pay taxes. After an audit, the IRS assessed a total of $1.7 million in taxes, interest and penalties against him.
To evade collection of these taxes, Fletcher concealed his income and assets from the IRS. For example, Fletcher used nominees to hide his purchases of luxury vehicles, including Rolls Royces. Fletcher also filed false income tax returns that understated his income and when interviewed by an IRS special agent, falsely represented the amount of income he earned.
A sentencing hearing will be set at a later date. Fletcher faces a maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Roger B. Handberg for the Middle District of Florida made the announcement.
IRS Criminal Investigation investigated the case.
Trial Attorney Zachary A. Cobb and Charles A. O’Reilly of the Justice Department’s Tax Division and Assistant U.S. Attorney Sarah Megan Testerman for the Middle District of Florida are prosecuting the case.
California Mobile Phlebotomy Lab and Its Owners to Pay $135,000 to Resolve Allegedly False Claims for Blood Testing Services and Travel MileageRead the Press Release
Veni-Express Inc. (Veni-Express), headquartered in California, and its owners Myrna and Sonny Steinbaum have agreed to pay at least $135,000 to resolve False Claims Act allegations that they submitted false claims for mobile phlebotomy services and associated travel mileage and paid kickbacks to a third-party marketer of these services, in violation of the Anti-Kickback Statute (AKS). Veni-Express has agreed to pay $100,000, plus additional amounts based on the sale of company property. Myrna Steinbaum has agreed to pay $25,000, and Sonny Steinbaum has agreed to pay $10,000. These settlements are based on their ability to pay.
The United States alleged that from 2015 to 2019, Veni-Express and the Steinbaums knowingly caused false or fraudulent claims to federal health care programs for mobile phlebotomy services and associated travel mileage. Specifically, with the Steinbaum’s oversight and approval, Veni-Express submitted false claims for venipuncture (blood draw) procedures that the company did not actually perform during homebound patient visits, and for travel mileage associated with these visits that was not reimbursable by Medicare. The United States further alleged that, from July 2014 to June 2015, Veni-Express paid unlawful kickbacks (in the form of a percentage of company revenue) to a third-party, Altera Laboratories also known as Med2U Healthcare LLC, for the marketing of Veni-Express’ services, in violation of the AKS.
“Health care providers that bill for services they did not provide or offer illegal incentives to increase profits will be held accountable,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to safeguard federal health care programs against those who seek to abuse them.”
“Providers must not bill for services they did not perform. Further, the presence of unlawful kickbacks all too often corrupts medical judgment,” said U.S. Attorney Phillip A. Talbert for the Eastern District of California. “Our office is committed to investigating and holding accountable those who violate the False Claims Act and AKS to safeguard the public fisc and protect the integrity of our federal health care system.”
“Improper incentives and billing Medicare for services never actually provided divert taxpayer funding meant to pay for medically necessary services for Medicare enrollees,” said Special Agent in Charge Steven J. Ryan of the Department of Health and Human Services Office of the Inspector General (HHS-OIG). “HHS-OIG and our law enforcement partners remain committed to identifying and holding accountable those who engage in such unlawful relationships.”
The civil settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act by Banisha Evans, a former phlebotomist for another California provider, and Richard Drummond, a technical director at a Texas laboratory. Under those provisions, a private party can file an action on behalf of the United States for false claims and receive a portion of any recovery. The qui tam cases are captioned U.S. et al., ex rel. Evans v. PhlebXpress et al., No. 2:18-cv-2038 (EDCA) and U.S. ex rel. Drummond v. Veni-Express Inc., et al., No. 2:21-cv-1199 (EDCA).
The relators’ share of the settlement has not yet been determined.
The resolution obtained in this matter was the result of a coordinated effort between the Civil Division's Commercial Litigation Branch, Fraud Section, the U.S. Attorney’s Office for the Eastern District of California and HHS-OIG.
The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800-HHS-TIPS (800-447-8477).
Trial Attorney Gary R. Dyal of the Civil Division’s Commercial Litigation Branch, Fraud Section, and Assistant U.S. Attorney Colleen Kennedy for the Eastern District of California handled the matter.
The claims resolved by the settlement are allegations only. There has been no determination of liability.
Settlement
Truist Bank Pays over $9M to Resolve Allegations Concerning SunTrust Bank’s Administration of Trust AccountsRead the Press Release
Truist Bank (Truist), based in Charlotte, North Carolina, has agreed to pay the United States $9,125,000 to resolve claims under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), in connection with the administration of certain trust accounts by SunTrust Bank (SunTrust) from December 2011 through December 2015. SunTrust was acquired by Branch Banking and Trust Company in December 2019, and the combined entity was renamed Truist.
“Our federally insured financial institutions must act in accordance with the law, including meeting their obligations to beneficiaries when they serve as trustees,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Today’s settlement makes clear that the department will hold banks accountable when they knowingly run afoul of applicable legal requirements.”
The settlement announced today resolves claims arising out of SunTrust’s management of certain trust accounts it administered as part of its relationship with a New Jersey company doing business as The Halpern Group (Halpern). Halpern served as a “structured settlement facilitator” in matters involving individuals who received settlement awards in personal injury litigation and referred those individuals to SunTrust. These individuals then established trusts at SunTrust that were intended to help them preserve their recoveries by protecting against unwise disbursements. Both SunTrust and Halpern collected fees in exchange for their agreement to provide these services.
In or around December 2011, SunTrust began administering a group of trust accounts, known as the “Doe Run Accounts,” that were referred to the bank by Halpern and resulted from the settlement of lead poisoning cases near Herculaneum, Missouri. Those accounts involved beneficiaries who claimed various health and cognitive issues from lead poisoning. The United States contends that, rather than helping these beneficiaries avoid unwise disbursements, Halpern requested and SunTrust frequently approved imprudent disbursements that were not in the beneficiaries’ best interests, including disbursements for the benefit of third-parties (e.g., relatives). The United States contends that SunTrust’s approval of these disbursements violated its fiduciary obligations as the trustee of these accounts.
“Banks occupy a special place of trust in our society,” said U.S. Attorney Ryan K. Buchanan for the Northern District of Georgia. “This settlement shows that when banks violate that trust — especially in situations involving vulnerable customers — they will face accountability.”
The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Northern District of Georgia.
Senior Trial Counsel David W. Tyler of the Civil Division’s Commercial Litigation Branch and Assistant U.S. Attorney Austin M. Hall for the Northern District of Georgia handled the matter.
The claims resolved by the settlement are allegations only. There has been no determination of liability.
Settlement
Philadelphia Resident Charged for Election-Related Threat to State Party RepresentativeRead the Press Release
An indictment was unsealed today charging a Pennsylvania man with threatening to kill a representative of a state political party who was recruiting official poll watchers.
According to the indictment, on Sept. 6, John Pollard, 62, of Philadelphia, sent threatening text messages to Victim 1. Victim 1 had previously posted online, in Victim 1’s capacity as an employee of a state political party, that Victim 1 was recruiting volunteers to “help[] observe at the polls on Election Day” and included Victim 1’s phone number. Pollard allegedly texted Victim 1 that he was “interested in being a poll watcher” and included Victim 1’s first name. Pollard then allegedly texted three threats to Victim 1:
- “I will KILL YOU IF YOU DON’T ANSWER ME!”
- “Your days are numbered, B****!”
- “GONNA F***ING FIND YOU AND SKIN YOU ALIVE AND USE YOUR SKIN FOR F***ING TOILET PAPER, YOU F***ING KKK**T!”
Pollard was arrested today and appeared in federal court in Philadelphia. He is charged with one count of transmitting interstate threats. If convicted, he faces a maximum penalty of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, and U.S. Attorney Eric G. Olshan for the Western District of Pennsylvania made the announcement.
The FBI Pittsburgh Field Office is investigating the case.
Trial Attorney Jacob R. Steiner of the Criminal Division’s Public Integrity Section (PIN) and Assistant U.S. Attorney Nicole A. Stockey for the Western District of Pennsylvania are prosecuting the case, with assistance from the U.S. Attorney’s Office for the Eastern District of Pennsylvania.
This case is part of the Justice Department’s Election Threats Task Force. Announced by Attorney General Merrick B. Garland and launched by Deputy Attorney General Lisa Monaco in June 2021, the task force has led the department’s efforts to address threats of violence against election workers, and to ensure that all election workers — whether elected, appointed, or volunteer — are able to do their jobs free from threats and intimidation. The task force engages with the election community and state and local law enforcement to assess allegations and reports of threats against election workers, and has investigated and prosecuted these matters where appropriate, in partnership with FBI Field Offices and U.S. Attorneys’ Offices throughout the country. Three years after its formation, the task force is continuing this work and supporting the U.S. Attorneys’ Offices and FBI Field Offices nationwide as they carry on the critical work that the task force has begun.
Under the leadership of Deputy Attorney General Monaco, the task force is led by PIN and includes several other entities within the Justice Department, including the Criminal Division’s Computer Crime and Intellectual Property Section, Civil Rights Division, National Security Division, and FBI, as well as key interagency partners, such as the Department of Homeland Security and U.S. Postal Inspection Service. For more information regarding the Justice Department’s efforts to combat threats against election workers, read the Deputy Attorney General’s memo.
To report suspected threats or violent acts, contact your local FBI office and request to speak with the Election Crimes Coordinator. Contact information for every FBI field office may be found at www.fbi.gov/contact-us/field-offices/. You may also contact the FBI at 1-800-CALL-FBI (225-5324) or file an online complaint at www.tips.fbi.gov. Complaints submitted will be reviewed by the task force and referred for investigation or response accordingly. If someone is in imminent danger or risk of harm, contact 911 or your local police immediately.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
View the indictment here.
Justice Department Sues Rocket Mortgage, Appraisal Management Company and Appraiser for Race Discrimination in Mortgage Refinance ApplicationRead the Press Release
The Justice Department announced today that it has filed a lawsuit alleging that Rocket Mortgage LLC; Solidifi US Inc.; Maverick Appraisal Group Inc.; and Maksym Mykhailyna discriminated against a Black homeowner by undervaluing her home based on her race in an appraisal required as part of a home mortgage refinance application. The United States also alleges that Rocket Mortgage retaliated against the homeowner and interfered with her rights by cancelling her mortgage refinance application when she reported this discrimination.
“This lawsuit is part of our ongoing efforts to bring an end to appraisal bias which prevent Black communities and other consumers of color from accessing credit and benefitting from homeownership,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Appraisal bias exacerbates the racial wealth gap, and runs contrary to the principles of fairness, transparency and equity that we need in our housing market today. The Justice Department will continue to hold appraisers, lenders and others who discriminate against loan applicants accountable for their actions. No one should have to suffer the indignity and financial harm associated with appraisal bias.”
“The complaint alleges racially discriminatory practices by a lender and an appraiser that harmed a homeowner. These discriminatory practices have gone on for too long in Denver,” said Acting U.S. Attorney Matt Kirsch for the District of Colorado. “The U.S. Attorney’s Office is committed to addressing persistent inequities in housing through vigorous enforcement of federal laws prohibiting discrimination in housing and lending.”
The Justice Department’s complaint alleges that a homeowner applied for a mortgage refinance loan from Rocket Mortgage in January 2021, and Rocket Mortgage contracted with an appraisal management company, Solidifi US Inc., to complete the required home appraisal. Solidifi retained Mykhailyna and his company, Maverick Appraisal Group, to appraise the home, which is located in a neighborhood in Denver that is predominantly white. The complaint alleges that Mykhailyna used sales from properties in further-away neighborhoods with larger Black populations instead of closer neighborhoods that were predominantly white. In fact, the complaint alleges Mykhailyna failed to consider data from sales of homes less than a mile from the complainant’s property in an adjoining neighborhood, even though a few months earlier he had used sales of homes in that same neighborhood to support an appraisal of a home with a white owner in the complainant’s neighborhood. The complaint alleges that these and other errors demonstrate Mykhailyna undervalued the property because of race and color.
Mykhailyna appraised the property to be over $200,000 lower than an appraisal on the same property that had been completed less than a year before, a more than 25% decrease at a time of rising home values in the Denver.
As alleged in the complaint, Mykhailyna sent his appraisal to Solidifi, which reviewed it and then forwarded it to Rocket Mortgage and the homeowner. When the homeowner received the appraisal, she contacted Rocket Mortgage and explained why she believed it was discriminatory. In response, Rocket Mortgage cancelled her refinance application. She filed a complaint with the Department of Housing and Urban Development (HUD), which later conducted an investigation, determined that there was reasonable cause to conclude the defendants had violated the Fair Housing Act, and referred the matter to the Justice Department.
“HUD applauds today’s action and remains committed to working with DOJ to ensure appraisal companies and mortgage providers are held accountable when they violate our nation’s fair housing laws.” said Principal Deputy Assistant Secretary Diane M. Shelley of HUD’s Office of Fair Housing and Equal Opportunity. “It has been over 56 years since the passage of the Fair Housing Act, and it is unconscionable that Black and Brown families still face discrimination during housing transactions.”
More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Along with several federal agencies, the Justice Department issued a letter to The Appraisal Foundation underscoring the importance of incorporating federal nondiscrimination standards into appraisal standards. More information about the Interagency Task Force on Property Appraisal and Valuation Equity is available at pave.hud.gov.
Individuals may report housing discrimination to the Justice Department by calling 1-833-591-0291, emailing [email protected] or submitting a report online. Individuals also may report housing discrimination to HUD by calling 1-800-669-9777 or filing a complaint online.
rocket_complaint.pdf fourth_exposure_joint_letter.pdfJustice Department Issues Comprehensive Proposed Rule Addressing National Security Risks Posed to U.S. Sensitive DataRead the Press Release
Note: Read the Department’s fact sheet on this matter here.
The Justice Department today issued a Notice of Proposed Rulemaking (NPRM) to implement President Biden’s Executive Order 14117 (the E.O.) of Feb. 28, “Preventing Access to Americans’ Bulk Sensitive Personal Data and United States Government-Related Data by Countries of Concern.” The E.O. addresses the national security threat posed by the continued effort of certain countries of concern to access and exploit certain kinds of Americans’ sensitive personal data. The President charged the Justice Department with the responsibility of establishing and implementing this new national security regulatory program to address these risks. On March 5, the Department’s Advance Notice of Proposed Rulemaking (ANPRM) was published in the Federal Register. Informed by extensive stakeholder outreach and careful consideration of comments the NPRM addresses public comments received on the ANPRM and proposes a rule to establish this new program and implement the E.O.
This comprehensive proposed rule would implement the E.O. by establishing categorical rules for certain data transactions that pose an unacceptable risk of giving countries of concern or covered persons access to government-related data or bulk U.S. sensitive personal data. Among other things, the proposed rule identifies classes of prohibited and restricted transactions, identifies countries of concern and classes of covered persons to whom the proposed rule applies, identifies classes of exempt transactions, explains the Department’s methodology for establishing bulk thresholds, provides the Department’s initial assessment of economic and other regulatory impacts, establishes processes to issue licenses authorizing certain prohibited or restricted transactions, issue advisory opinions, and designate covered persons, and addresses recordkeeping, reporting, and other due-diligence obligations for covered transactions.
The Justice Department’s National Security Division requests public comment on the proposed rule within 30 days of its publication in the Federal Register. The Department seeks comments on the proposed rule from industry, trade association groups, civil society, subject-matter experts, organizations and entities potentially affected by the proposed rule, and others with interest in the rule or expertise on data security and cybersecurity. The public may submit written comments on the NPRM at www.regulations.gov.
The proposed rule is tailored to address the specific national security risks stemming from access by countries of concern and covered persons to Americans’ bulk sensitive personal data and certain sensitive U.S. government-related data. These measures complement the United States’ commitment to promoting an open, global, interoperable, reliable, and secure internet; protecting human rights online and offline; supporting a vibrant, global economy by promoting cross-border data flows that are required to enable international commerce and trade; and facilitating open investment.
As previewed in the ANPRM, the proposed rule does not authorize the imposition of generalized data localization requirements to store Americans’ bulk sensitive personal data or U.S. Government-related data or to locate computing facilities used to process such data in the United States. As also previewed in the ANPRM, the proposed rule also does not broadly prohibit U.S. persons from engaging in commercial transactions, including exchanging financial and other data as part of the sale of commercial goods and services with countries of concern or covered persons, or impose measures aimed at a broader decoupling of the substantial consumer, economic, scientific, and trade relationships that the United States has with other countries. To reflect this, the NPRM proposes a new exemption for telecommunications services, provides further clarity on exemptions regarding financial services and intra-corporate-group transfers that were previewed in the ANPRM, and seeks public comment on a new proposed exemption for clinical-trial data.
The proposed rule’s prohibitions and restrictions are consistent with other access restrictions on sensitive personal data that have been imposed in other contexts, including for transactions reviewed by the Committee on Foreign Investment in the United States (CFIUS) and the Committee for the Assessment of Foreign Participation in the U.S. Telecommunications Services Sector (Team Telecom). As the ANPRM previewed, the proposed rule exempts several classes of data transactions from the scope of its prohibitions and restrictions, including certain personal communications, financial services, corporate group transactions, transactions authorized by Federal law and international agreements, investment agreements subject to a CFIUS action, telecommunication services, biological product and medical device authorizations, clinical investigations, and others.
As explained in the NPRM, countries of concern can use their access to these types of data to engage in malicious cyber-enabled activities and malign foreign influence activities, bolster their military capabilities, and track and build profiles on U.S. individuals (including members of the military and other Federal employees and contractors) for illicit purposes such as blackmail and espionage. Countries of concern can also exploit this data to collect information on activists, academics, journalists, dissidents, political opponents, or members of nongovernmental organizations or marginalized communities to intimidate them, curb political opposition, limit freedoms of expression, peaceful assembly, or association, or enable other forms of suppression of civil liberties.
The proposed rule would require vendor agreements, employment agreements, and investment agreements that qualify as restricted transactions to comply with the separately proposed security requirements that have been developed by the Department of Homeland Security’s Cybersecurity and Infrastructure Agency (CISA) in coordination with the Justice Department. These proposed security requirements require U.S. persons engaging in a restricted transaction to comply with organizational and system-level requirements, such as ensuring that basic organizational cybersecurity policies, practices, and controls are in place, and data-level requirements, such as data minimization and masking, encryption, and privacy-enhancing techniques. CISA is concurrently making these proposed security requirements available for public comment at www.regulations.gov.
Atlanta Attorney Pleads Guilty in Syndicated Conservation Easement Tax SchemeRead the Press Release
A Georgia man pleaded guilty last week to obstructing the IRS related to his participation in the promotion of abusive syndicated conservation easement tax shelters.
According to court documents and statements made in court, Vi Bui was an attorney and partner at Sinnott & Co., an Atlanta-based company. Beginning in at least in 2012 and continuing through at least May 2020, Bui participated in a scheme to defraud the IRS by organizing, marketing, implementing and selling illegal syndicated conservation easement tax shelters created and organized by Jack Fisher, Sinnott and others. For their involvement in the scheme, Fisher and Sinnott were convicted at trial and in January sentenced to 25 and 23 years in prison, respectively.
The scheme entailed the creation of partnerships that would purchase land and land-owning companies and then donate conservation easements over that land or the land itself. Appraisers would allegedly generate fraudulent and inflated appraisals of the conservation easements. The partnerships then claimed a charitable contribution tax deduction based on the inflated value of the conservation easement, resulting in a fraudulent tax deduction flowing to the wealthy clients who purchased units in the partnership. Many of these clients joined the tax shelters after the donation of the interest in land and after the close of the relevant tax year. Bui knew that, to make it appear that the participants had timely purchased their units in the tax shelters, Fisher, Sinnott and others backdated and instructed others to falsify documents, including subscription agreements, checks and other documents. And in at least one instance, Bui falsified documents himself.
Bui anticipated that the syndicated conservation easement transactions would be audited. To deceive the IRS, Bui and others took steps to make the partnerships appear as legitimate real estate development companies. They would create and disseminate lengthy documents disguising the true nature of the transaction, institute sham “votes” for what to do with the land that the partnership owned despite knowing that outcome was predetermined and falsify paperwork, such as appraisals and subscription agreements.
In one instance, when investigators conducted an undercover operation in 2018, Bui, believing that the IRS was auditing an individual’s 2014 tax return, prepared false documents that made it appear that the materials were executed before the purported donation of the conservation easement in 2014 and before the 2014 tax returns had been filed.
Bui earned substantial income for his role in the illegal scheme. He also used the fraudulent tax shelters to evade his own taxes, filing false personal tax returns from 2013 through 2018 that claimed false tax deductions from the illegal syndicated conservation easement tax shelters.
Bui is scheduled to be sentenced on Feb. 13, 2025, and faces a maximum penalty of three years in prison. Bui also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
To date, in addition to the convictions of Fisher and Sinnott noted above, nine additional defendants have pleaded guilty to criminal conduct related to the syndicated conservation easement tax shelter scheme, including appraiser Walter Douglas “Terry” Roberts, accountants Stein Agee; Corey Agee, CPA; Ralph Anderson, CPA; James Benkoil, CPA; Victor Smith, CPA; William Tomasello, CPA; Herbert Lewis, CPA; and Attorney Randall Lenz.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, U.S. Attorney Ryan K. Buchanan for the Northern District of Georgia and Chief Guy Ficco of the IRS Criminal Investigation (IRS-CI) made the announcement. They also thanked U.S. Attorney Dena J. King for the Western District of North Carolina for her office’s assistance.
IRS-CI and the U.S. Postal Inspection Service investigated the case.
Trial Attorneys Richard M. Rolwing, Parker Tobin, Jessica Kraft and Nicholas J. Schilling Jr., of the Justice Department’s Tax Division and Assistant U.S. Attorney Christopher Huber and deputy chief of the complex frauds section for the Northern District of Georgia are prosecuting the case.
Peruvian National Sentenced in Transnational Scheme to Defraud Spanish-Speaking United States ConsumersRead the Press Release
A Peruvian national was sentenced yesterday to 98 months in prison and to pay nearly $700,000 in restitution to his more than 1,100 victims for his role overseeing a transnational fraud conspiracy that targeted recent immigrants to the United States.
According to court documents, Jose Alejandro Zuñiga Cano, 40, of Lima, was the operator of a Peruvian call center that defrauded and extorted Spanish-speaking United States residents by falsely threatening them with arrest, court proceedings and immigration consequences. Zuñiga was extradited from Peru in March to face charges related to the scheme and pleaded guilty to conspiracy to commit mail and wire fraud in July.
In pleading guilty, Zuñiga admitted that he owned and operated a call center in Lima, that placed unsolicited calls to Spanish-speaking consumers in the United States and falsely claimed that they had won or qualified for free products, including computer tablets and English language courses. On later calls, Zuñiga and his co-conspirators falsely claimed that victims were contractually obligated to pay large sums to receive the products. Zuñiga and his co-conspirators impersonated lawyers, court officials, police officers and representatives of a supposed “minor crimes court” to intimidate victims and force them to send payments. Zuñiga and his co-conspirators queried potential victims about their country of origin and threatened victims with court proceedings, arrest and immigration consequences if they did not pay.
Many victims who made payments following these lies and threats were frequently re-victimized by Zuñiga and his co-conspirators with a related restitution scheme. The defendant and his co-conspirators placed additional calls to victims who had already paid and, while posing as lawyers for a U.S. court, falsely represented that victims were entitled to restitution payments and would receive their money back if they paid additional fees. In reality, there was no lawyer, no restitution order and no funds returned to the victims who made those additional payments. Instead, Zuñiga kept those additional victim payments for himself.
“The Justice Department’s Consumer Protection Branch is dedicated to protecting vulnerable U.S. consumers from fraudsters no matter where those fraudsters reside,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Today’s sentence demonstrates that individuals who defraud our immigrant communities will be held accountable in U.S. courts. We will continue to work with our partners to ensure that individuals who impersonate government and court officials are brough to justice.”
“The long arm of the American justice system has no limits when it comes to reaching fraudsters who prey on our nation’s most vulnerable populations, to include the elderly and recent immigrants,” said U.S. Attorney Markenzy Lapointe for the Southern District of Florida. “We will not allow transnational criminals to use fear tactics and intimidation to steal money from the public we serve. Individuals who defraud American consumers will be brought to justice, no matter where they are located.”
“Today’s sentencing of Jose Alejandro Zuñiga Cano is proof of the dedication between the U.S. Postal Inspection Service, the Justice Department’s Consumer Protection Branch and the U.S. Attorney’s Office to stop at nothing to bring those suspects who victimize our citizens to justice,” said Inspector in Charge Juan A. Vargas of the U.S. Postal Inspection Service (USPIS) Miami Division.
With today’s sentencing in the U.S. District Court for the Southern District of Florida, 12 defendants have now been convicted and sentenced in connection with a $15 million transnational fraud scheme that defrauded and threatened Spanish-speaking U.S. consumers, claiming they would suffer legal consequences if they did not pay for English-language learning products they never requested. Collectively, the scheme was responsible for defrauding more than 30,000 Spanish-speaking residents of the United States. Many of the victims were recent immigrants who had merely expressed interest in learning English.
The 12 defendants include eight Peruvian call center owner-operators and four distribution center owner-operators who processed payments, distributed products and facilitated the fraud in the United States. Many of the defendants shared strategies on how to defraud Spanish-speaking residents of the United States.
Zuñiga is the eighth defendant to be extradited from Peru and plead guilty in federal court to fraud charges related to Peruvian call centers involved in the English language learning scam. In 2021 and 2022, U.S. District Judge Robert N. Scola, Jr., sentenced Henrry Milla, Carlos Espinoza, Jerson Renteria, Fernan Huerta, Omar Cuzcano, Evelyng Milla and Josmell Espinoza to sentences ranging from 88 months to 110 months in prison.
USPIS and the Civil Division's Consumer Protection Branch investigated the case.
Senior Trial Attorney and Transnational Criminal Litigation Coordinator Phil Toomajian and Trial Attorney Carolyn Rice of the Civil Division’s Consumer Protection Branch are prosecuting the case, and Assistant U.S. Attorney Annika Miranda for the Southern District of Florida is handling asset forfeiture. The Justice Department’s Office of International Affairs, U.S. Attorney’s Office for the Southern District of Florida, State Department’s Diplomatic Security Service, U.S. Marshals Service, Peruvian National Prosecutor General’s Office and Peruvian National Police provided critical assistance.
The Justice Department continues to investigate and bring charges in other similar matters involving threats against Spanish-speaking residents of the United States.
If you or someone you know is age 60 or older and has experienced financial fraud, experienced professionals are standing by at the National Elder Fraud Hotline: 1-833-FRAUD-11 (1-833-372-8311). This Justice Department hotline, managed by the Office for Victims of Crime, can provide personalized support to callers by assessing the needs of the victim and identifying relevant next steps. Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting, connect callers directly with appropriate agencies and provide resources and referrals, on a case-by-case basis. Reporting is the first step. Reporting can help authorities identify those who commit fraud and reporting certain financial losses due to fraud as soon as possible can increase the likelihood of recovering losses. The hotline is open Monday through Friday from 10:00 a.m. to 6:00 p.m. ET. English, Spanish and other languages are available.
More information about the department’s efforts to help American seniors is available at its Elder Justice Initiative webpage. For more information about the Consumer Protection Branch and its enforcement efforts, visit www.justice.gov/civil/consumer-protection-branch. Elder fraud complaints can be filed with the FTC at www.reportfraud.ftc.gov/ or at 877-FTC-HELP. The Justice Department provides a variety of resources relating to elder fraud victimization through its Office for Victims of Crime, which can be reached at www.ovc.gov.
Condenan a un ciudadano peruano por un entramado transnacional para estafar a consumidores de habla hispana de los Estados UnidosRead the Press Release
WASHINGTON – Un ciudadano peruano fue condenado hoy a 98 meses de prisión por su participación en la supervisión de una organización de fraude transnacional dirigida contra inmigrantes recién llegados a los Estados Unidos.
Según los documentos judiciales, Jose Alejandro Zuñiga Cano, de 40 años de edad y oriundo de Lima (Perú), era el operador de un centro de llamadas peruano a través del cual estafaba y extorsionaba a residentes de habla hispana de los Estados Unidos con falsas amenazas de arresto, procesos judiciales y consecuencias inmigratorias. Zuñiga fue extraditado desde Perú en marzo para enfrentar cargos relacionados con el entramado y se declaró culpable de conspiración para cometer fraude postal y electrónico en julio.
Al declararse culpable, Zuñiga admitió que poseía y operaba un centro de llamadas en Lima, Perú, a través del cual realizaba llamadas no solicitadas a consumidores de habla hispana en los Estados Unidos y afirmaba falsamente que habían ganado o reunido los requisitos para productos gratuitos, que incluían tabletas informáticas y cursos de idioma inglés. En llamadas posteriores, Zuñiga y sus cómplices afirmaban falsamente que las víctimas estaban obligadas por contrato a pagar grandes sumas para recibir los productos. Zuñiga y sus cómplices se hicieron pasar por abogados, funcionarios judiciales, policías y representantes de un supuesto “Tribunal de Delitos Menores” para intimidar a las víctimas y obligarlas a enviar los pagos. Además, Zuñiga y sus cómplices preguntaban a las víctimas potenciales sobre su país de origen y las amenazaban con procedimientos judiciales, arrestos y consecuencias inmigratorias si no pagaban.
Muchas de las víctimas que efectuaron pagos a raíz de estas mentiras y amenazas fueron revictimizadas con frecuencia por Zuñiga y sus cómplices con un plan de devolución relacionado. El acusado y sus cómplices hicieron llamadas adicionales a las víctimas que ya habían pagado y, mientras se hacían pasar por abogados de un tribunal estadounidense, afirmaban falsamente que las víctimas tenían derecho al pago de devoluciones y que recibirían su dinero de vuelta si abonaban honorarios adicionales. En realidad, no había abogado, ni orden de devolución, ni fondos devueltos a las víctimas que hicieron esos pagos adicionales; sino que Zuñiga se quedó con esos pagos adicionales de las víctimas.
“La Subdivisión de Protección al Consumidor del Departamento de Justicia se dedica a proteger a los consumidores estadounidenses vulnerables de los estafadores, sin importar dónde residan”, dijo Brian M. Boynton, subprocurador general adjunto principal, jefe de la División Civil del Departamento de Justicia. “La sentencia de hoy demuestra que las personas que defraudan a nuestras comunidades de inmigrantes responderán ante los tribunales estadounidenses. Continuaremos trabajando con nuestros socios para garantizar que las personas que se hagan pasar por funcionarios del Gobierno y del tribunal sean llevados ante la justicia”.
“El brazo largo del sistema de justicia estadounidense no tiene límites cuando se trata de llegar a los estafadores que se aprovechan de las poblaciones más vulnerables de nuestra nación, que incluyen a las personas mayores y los inmigrantes recién llegados”, dijo el abogado estadounidense Markenzy Lapointe para el Distrito Sur de Florida. “No permitiremos que los criminales transnacionales utilicen tácticas de miedo e intimidación para robar dinero al público al que atendemos. Las personas que defrauden a los consumidores estadounidenses serán llevadas ante la justicia, sin importar dónde se encuentren”.
“La sentencia dictada hoy contra José Alejandro Zuñiga Cano es una prueba de la dedicación entre el Servicio de Inspección Postal de los Estados Unidos, la División de Protección al Consumidor del Departamento de Justicia y la Oficina del Fiscal de los Estados Unidos para no detenerse ante nada para llevar ante la justicia a los sospechosos que victimizan a nuestros ciudadanos”, dijo el inspector a cargo, Juan A. Vargas, de la División de Miami del USPIS.
Con la sentencia de hoy en el Tribunal de Distrito de los Estados Unidos para el Distrito Sur de Florida, doce acusados han sido condenados y sentenciados en relación con un entramado de fraude transnacional de $15 millones que estafó y amenazó a los consumidores estadounidenses de habla hispana, alegando que sufrirían consecuencias legales si no pagaban por productos de aprendizaje del inglés que nunca solicitaron. En conjunto, el entramado fue responsable de estafar a más de 30,000 residentes de habla hispana de los Estados Unidos. Muchas de las víctimas son inmigrantes recién llegados que simplemente habían expresado su interés por aprender inglés.
Entre los doce acusados figuran ocho propietarios-operadores de centros de llamadas peruanos y cuatro propietarios-operadores de centros de distribución que procesaban pagos, distribuían productos y posibilitaban el fraude en los Estados Unidos. Muchos de los acusados compartieron estrategias sobre cómo estafar a los residentes de habla hispana de los Estados Unidos.
Zuñiga es el octavo acusado extraditado desde Perú que se declara culpable ante un tribunal federal de cargos de fraude relacionados con los centros de llamadas peruanos implicados en la estafa del aprendizaje del inglés. En 2021 y 2022, el juez de distrito, Robert N. Scola, Jr. condenó a Henry Milla, Carlos Espinoza, Jerson Renteria, Fernan Huerta, Omar Cuzcano, Evelyng Milla y Josmell Espinoza a penas de entre 88 y 110 meses de prisión.
Además de condenar a Zuñiga a una pena de prisión federal, la jueza de distrito, Kathleen M. Williams, también ordenó a Zuñiga el pago de casi $700,000 dólares en concepto de indemnización a sus más de 1,100 víctimas.
USPIS y la Subdivisión de Protección al Consumidor investigaron el caso.
El fiscal principal y coordinador de Litigios Penales Transnacionales, Phil Toomajian, y la fiscal Carolyn Rice, de la Subdivisión de Protección de los Consumidores, llevan el caso, y la fiscal adjunta, Annika Miranda, del Distrito Sur de Florida, se ocupa del decomiso de bienes. La Oficina de Asuntos Internacionales del Departamento de Justicia, la Oficina del Fiscal del Distrito Sur de Florida, el Servicio de Seguridad Diplomática del Departamento de Estado, el Servicio de Alguaciles de Estados Unidos, la Oficina del Fiscal Nacional de Perú y la Policía Nacional de Perú prestaron una ayuda fundamental. El Servicio de Alguaciles, la Oficina del Fiscal General de la Nación y la Policía Nacional de Perú prestaron una ayuda fundamental.
El Departamento de Justicia sigue investigando y presentando cargos en otros asuntos similares relacionados con amenazas contra residentes de habla hispana de los Estados Unidos.
Si usted o alguien que conoce tiene 60 años o más y ha sido víctima de un fraude financiero, tiene a su disposición a profesionales experimentados en la Línea Directa Nacional contra el Fraude a Personas Mayores: 1-833-FRAUD-11 (1-833-372-8311). Esta línea directa del Departamento de Justicia, gestionada por la Oficina para las Víctimas de Delitos, puede prestar apoyo personalizado a quienes llaman, evaluando las necesidades de la víctima e identificando los siguientes pasos pertinentes. Los administradores del caso indicarán los organismos de denuncia pertinentes, facilitarán información a las personas que llamen para ayudarlas a denunciar, comunicarán directamente a las personas que llamen con los organismos adecuados y les ofrecerán recursos y remisiones, en función de cada caso. Denunciar es el primer paso. Denunciar puede ayudar a las autoridades a identificar a quienes cometen fraude y denunciar ciertas pérdidas financieras debido al fraude lo antes posible puede aumentar la probabilidad de recuperar las pérdidas. La línea directa está abierta de lunes a viernes de 10:00 a. m. a 6:00 p. m. ET. Se ofrece en inglés, español y otros idiomas.
Para obtener más información sobre las iniciativas del departamento para ayudar a los ciudadanos estadounidenses ancianos, visite la página web de la Iniciativa para la Justicia de Personas Mayores. Para obtener más información sobre la Subdivisión de Protección del Consumidor y sus iniciativas de aplicación, visite www.justice.gov/civil/consumer-protection-branch. Las quejas de fraude contra personas mayores se pueden presentar ante la FTC en www.reportfraud.ftc.gov/ o en 877-FTC-HELP. El Departamento de Justicia ofrece diversos recursos relacionados con la victimización por fraude de ancianos a través de su Oficina para las Víctimas de Delitos, que puede consultarse en www.ovc.gov.
Natural Gas Producer Agrees to Settlement to Reduce Emissions in New MexicoRead the Press Release
The Justice Department, Environmental Protection Agency (EPA) and New Mexico Environment Department (NMED) today announced a settlement with Hilcorp Energy Company resolving Clean Air Act and New Mexico state law violations at the company’s oil and gas production operations in New Mexico.
Under the settlement, Hilcorp agreed to pay a civil penalty of $9.4 million for violations resulting from Hilcorp’s failure to reduce emissions during well completion operations. The civil penalty will be split between the U.S. and the State of New Mexico. In addition, the company must employ an EPA-approved third-party auditor to ensure compliance with all applicable Clean Air Act and New Mexico Air Quality Control Act requirements.
Hilcorp is further directed to account for the excess volatile organic compound (VOC) and methane emissions released through improper well completions by replacing, on a faster timeline than federal regulations require, old process control equipment with equipment that does not emit air pollution. This mitigation project will occur on Tribal lands of the Jicarilla Apache Nation Reservation, in Rio Arriba County, and on Navajo Nation Off-Reservation Trust Land in San Juan and Sandoval counties; all of these areas have potential environmental justice concerns.
The work that Hilcorp will do under this agreement will result in the equivalent of over 113,000 tons of reduced carbon dioxide emissions over the next three years, similar to the number of reductions achieved by taking 24,000 cars off the road for one year. The settlement will also eliminate nearly 583 tons of VOC emissions annually.
The case is the first to address violations of the Clean Air Act New Source Performance Standards covering well completions following hydraulic fracturing, commonly referred to as “fracking.”
“Hilcorp is a large, sophisticated natural gas producer and should know better than to violate Clean Air Act requirements to capture and control gas produced as a result of fracking,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “We are committed to upholding the rule of law and holding industry accountable. Today’s settlement importantly includes commitments to make infrastructure upgrades that will result in significant reductions of methane and VOC emissions.”
“Oil and gas production results in significant air pollution, including emissions of methane that are one of the leading sources of near-term climate change, which makes today’s settlement with Hilcorp Energy a huge win for the environment and the planet,” said Assistant Administrator David M. Uhlmann of EPA’s Office of Enforcement and Compliance Assurance. “EPA is requiring Hilcorp to pay a $9.4 million penalty and make substantial investments in Clean Air Act compliance, which will reduce climate damaging emissions and improve air quality for all New Mexico residents, including communities with environmental justice concerns.”
“This settlement holds one of the San Juan Basin's largest polluters accountable for their contribution to climate change and ozone pollution,” said Secretary James Kenney of the New Mexico Environment Department. “If we want to make New Mexico’s air safe for future generations then Houston-based Hilcorp Energy Corporation executives need to step up their game and comply with federal and state rules."
Federal Clean Air Act and New Mexico state air regulations require oil and gas producers to capture gas that flows back to the surface following fracking using equipment that can accommodate flowback and to implement a reduced emission completion control, commonly referred to as a green completion. Producers have several green completion options to choose from. If none are technically feasible, producers may route the captured gas to a pollution control device like a flare.
Based on EPA’s and NMED’s investigations, the U.S. and the state allege that Hilcorp conducted at least 192 well completion operations in Rio Arriba and San Juan counties from Aug. 2, 2017, through Aug. 1, 2019.
At 145 of these well completions, Hilcorp captured none of the gas and instead released into the atmosphere all gas that flowed back following fracking. At the remainder of well completions, Hilcorp captured a portion of the gas and directed it to a flare but did not demonstrate that all green completion options were infeasible. Hilcorp’s actions resulted in thousands of tons of harmful methane and VOC emissions being released into the environment. Methane is a climate super pollutant and potent greenhouse gas that contributes to climate change, and VOCs adversely affect human health in multiple ways, including being involved in the formation of ground level ozone.
Hilcorp is one of the nation’s largest privately-owned oil and gas exploration and production companies, and a top producer of natural gas in New Mexico from 2018-2021. New Mexico is one of the top ten producing states for natural gas in the United States for 2018-2023. In 2022, on-shore oil and gas industry data reported to EPA showed that Hilcorp’s San Juan Basin operation emitted the most methane in the U.S. among all oil and gas operations.
The settlement is part of EPA’s Mitigating Climate Change National Enforcement and Compliance Initiative, which focuses, in part, on reducing methane emissions from oil and gas and landfill sources. Like all EPA’s national enforcement initiatives, the Mitigating Climate Change initiative prioritizes communities already overburdened by pollution and other potential environmental justice concerns.
More information on the settlement agreement is available on EPA’s Hilcorp Energy Company webpage.
The consent decree was filed with the U.S. District Court for the District of New Mexico and is subject to a 30-day comment period. Information on providing public comment and the complaint and proposed consent decree are available on the Justice Department’s website at www.justice.gov/enrd/consent-decrees.
EPA and NMED investigated the case.
Attorneys of the Environment and Natural Resources Division’s Environmental Enforcement Section are handling the case.
Former Tennessee Mental Health Center Owner Charged with Employment Tax CrimesRead the Press Release
A federal grand jury in Nashville returned an indictment yesterday charging a former business owner with willfully failing to account for and pay over employment taxes to the IRS.
According to the indictment, from at least 2011 through 2023, Mari Alexander, of Columbia, South Carolina, was the owner and president of Ross Behavioral Group, a mental health counseling center with multiple locations in middle Tennessee. Alexander controlled Ross Behavioral Group’s financial affairs and was responsible for withholding Social Security, Medicare and federal income taxes from employees’ wages and paying them over to the IRS. From at least 2015 through 2020, Alexander allegedly withheld these taxes from her employees’ wages, but did not fully pay the withheld taxes over to the IRS.
Each year, from at least 2015 through 2020, Alexander allegedly issued IRS Forms W-2, Wage and Tax Statements and paystubs to the employees that showed taxes taken out of their pay, which falsely implied that the withheld taxes were paid over to the IRS.
In total, Alexander is alleged to have caused a tax loss to the IRS of more than $1 million.
Alexander is charged with 11 counts of willfully failing to account for and pay over employment taxes. If convicted, she faces a maximum penalty of five years in prison on each count. She also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Thomas J. Jaworski for the Middle District of Tennessee made the announcement.
IRS Criminal Investigation is investigating the case with assistance from the Social Security Administration’s Office of the Inspector General.
Trial Attorney Ashley J. Stein of the Tax Division and Assistant U.S. Attorney Mitchell T. Galloway for the Middle District of Tennessee are prosecuting the case.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Five Defendants Sentenced for Long-Running Bid-Rigging Conspiracy in Georgia Concrete IndustryRead the Press Release
Four executives and a corporation were sentenced for participating in a long-running conspiracy to fix prices, rig bids and allocate jobs for ready-mix concrete in the greater Savannah, Georgia area.
James Clayton Pedrick, Gregory Hall Melton, John David Melton, Timothy “Bo” Strickland and Evans Concrete LLC were charged in September 2020 with conspiring to fix prices, rig bids and allocate jobs for the sale of ready-mix concrete used in residential, commercial and public projects. Pedrick, Strickland and Evans Concrete later pleaded guilty for their participation in this conspiracy. Gregory Hall Melton and John David Melton were convicted by a jury in the U.S. District Court in Savannah earlier this year. Argos USA LLC separately admitted to its role in the conspiracy and entered into a deferred prosecution agreement (DPA) with the Justice Department’s Antitrust Division in January 2021.
Gregory Hall Melton was sentenced today to 41 months in prison, and three years of supervised release and to pay a $50,000 fine. John David Melton was sentenced today to 26 months in prison, three years of supervised release and to pay a $10,000 fine. The court previously sentenced Strickland to five months in prison and to pay $150,000 fine, Pedrick to one year of probation and Evans Concrete to pay a $2.7 million fine. Argos USA LLC paid a $20 million criminal penalty as part of its DPA.
According to court documents, the defendants effectuated their conspiracy by coordinating the issuance of price-increase letters to customers, allocating specific ready-mix concrete jobs in the coastal Georgia area, and submitting bids to customers at collusive and noncompetitive prices. The charged conspiracy began as early as 2010 and continued until about July 2016.
“These sentences reflect the egregious nature of rigging bids for materials like ready-mix concrete which are essential to the American economy,” said Deputy Assistant Attorney General Manish Kumar of the Justice Department’s Antitrust Division. “The Antitrust Division and its law enforcement partners will hold accountable those who seek to exploit the critical need for these materials to harm consumers.”
“Concrete is an essential material in construction projects, with prices set in the free market by the forces of supply and demand,” said U.S. Attorney Jill E. Steinberg for the Southern District of Georgia. “However, the defendants in this case for several years illegally rigged the system to benefit themselves at the expense of customers and are being held accountable for their conduct.”
“Activities related to bid-rigging and collusion do not promote an environment conducive to open competition which harms the consumer,” said Executive Special Agent in Charge Kenneth Cleevely of U.S. Postal Service's Office of Inspector General (USPS OIG). “The sentencing in this case represents a win for all law enforcement agencies who investigate those who engage in this type of harmful conduct to ensure that justice is served."
“The sentences imposed today send a clear message to anyone who chooses corporate greed over open and fair competition,” said Special Agent in Charge Joseph Harris of the Department of Transportation's Office of Inspector General (DOT OIG), Southern Region. “Our commitment to working with our law enforcement partners and DOJ’s Antitrust Division is unwavering as we continue to pursue and uncover corrupt conduct and hold companies that intentionally engage in wrongdoing accountable.”
The FBI Washington Field Office, DOT OIG and USPS OIG investigated the case.
Trial Attorney Patrick S. Brown and former Trial Attorney Julia M. Maloney of the Antitrust Division’s Washington Criminal Section and Assistant U.S. Attorney E. Greg Gilluly Jr. for the Southern District of Georgia prosecuted the case.
Anyone with information on bid rigging, price fixing, market allocation or other anticompetitive conduct in the ready-mix concrete industry should contact the Antitrust Division’s Complaint Center at 888-647-3258 or visit www.justice.gov/atr/report-violations.
Attorney General Merrick B. Garland Announces Stephanie M. Hinds as Director of the Executive Office for U.S. AttorneysRead the Press Release
Attorney General Merrick B. Garland today announced that Stephanie M. Hinds has been appointed as the Director of the Executive Office for U.S. Attorneys (EOUSA).
“Stephanie is a superb leader with decades of experience at the Justice Department who will be an outstanding advocate for all 94 of our U.S. Attorneys’ Offices across the country,” said Attorney General Garland. “Since joining the Justice Department 29 years ago, Stephanie has advanced its mission in a wide range of roles. The Justice Department, and the American people, are fortunate to have her in this role. I am grateful to her for her continued dedication to this Department and to the public we serve.”
Prior to her appointment, Hinds served as Associate Deputy Attorney General beginning in May 2023. Hinds previously served as the Interim and Acting U.S. Attorney for the Northern District of California (NDCA) from March 2021 to March 2023. At NDCA since 1995, Hinds also served in various positions such as First Assistant U.S. Attorney, Deputy U.S. Attorney, Deputy Chief of the Criminal Division, Chief of the Asset Forfeiture Section, and as an Assistant U.S. Attorney.
Norman Wong, who has been serving as the Acting Director of EOUSA since July 1, 2023, will return to his position as Principal Deputy Director.
“Norm Wong has been an excellent steward of EOUSA since becoming Acting Director of the Office in July 2023,” said Attorney General Garland. “Norm is an extraordinary public servant, and I am grateful to him for all he has done and will continue to do on behalf of EOUSA.”
Learn more about EOUSA at www.justice.gov/usao.
Two CPAs Sentenced in Billion-Dollar Syndicated Conservation Easement Tax SchemeRead the Press Release
Two accountants were each sentenced today to 20 months in prison for their roles in the promotion and sale of abusive syndicated conservation easement tax shelters.
According to court documents and statements made in court, Victor Smith was a CPA and founding partner of an Atlanta-based accounting firm. Beginning at least in 2014 and through at least 2019, Smith promoted and sold tax deductions to his wealthy clients in the form of units in illegal syndicated conservation easement tax shelters organized and created by co-defendants Jack Fisher, James Sinnott and others. Smith, along with his firm, sold approximately $14 million in false tax deductions to their clients, causing a tax loss to the IRS of about $4.8 million. He earned $491,400 in commissions from Fisher and Sinnott for his role in the scheme.
William Tomasello was a CPA at another accounting firm who, at least in 2015 and through at least 2019, also promoted and sold units to his wealthy clients in these same syndicated conservation easement tax shelters. Tomasello sold approximately $8.5 million in false deductions, causing a tax loss of about $2.3 million. He earned approximately $525,072 in commissions.
The scheme entailed the creation of partnerships that would purchase land and land-owning companies and then donate conservation easements over that land or the land itself. Appraisers would value the land and the partnerships would then claim a charitable contribution tax deduction based on the appraised value of the conservation easement, resulting in tax deductions flowing to the wealthy clients who purchased units in the partnership. Many of these clients joined the tax shelters after the donation of the interest in land and after the close of the relevant tax year.
Smith and Tomasello both knew that, contrary to law, these syndicated conservation easement tax shelters lacked economic substance and that their wealthy clients participated in these sham investments only to obtain a tax deduction and received only a tax benefit for their participation in the tax shelters. For example, a client who purchased units in a partnership had to “vote” ostensibly on what to do with the partnership’s land. However, Smith and Tomasello knew that the “vote” held by the partnerships each year was just optics and that the land invariably would be donated largely as a conservation easement. Smith and Tomasello also knowingly instructed and caused their clients to falsely backdate documents — such as subscription agreements and checks — related to the illegal tax shelters.
In addition to their prison sentences, U.S. District Court Judge Timothy C. Batten Sr. for the Northern District of Georgia ordered Smith to serve two years of supervised release and to pay $4,878,990.90 in restitution. Judge Batten ordered Tomasello to serve three years of supervised release, to perform 120 hours of community service and to pay $2,386,816.04 in restitution.
Seven additional defendants have previously pleaded guilty to criminal conduct related to the syndicated conservation easement tax shelter scheme of Fisher and Sinnott (who were convicted after trial). These other defendants include appraiser Walter Douglas “Terry” Roberts, accountant Stein Agee, CPA Corey Agee, CPA Ralph Anderson, CPA James Benkoil, CPA Herbert Lewis and CPA and Attorney Randall Lenz.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, U.S. Attorney Ryan K. Buchanan for the Northern District of Georgia and IRS Criminal Investigation Chief Guy Ficco made the announcement. They also thanked U.S. Attorney Dena J. King for the Western District of North Carolina for her office’s assistance.
IRS Criminal Investigation and the U.S. Postal Inspection Service investigated the case.
Trial Attorneys Richard M. Rolwing, Parker Tobin, Jessica Kraft and Nicholas J. Schilling Jr. of the Tax Division and Assistant U.S. Attorney Christopher Huber, Deputy Chief of the Complex Frauds Section, for the Northern District of Georgia prosecuted the case.
Preliminary Injunction Entered in Justice Department Suit to Stop Alabama’s Systematic Removal of Voters from Registration RollsRead the Press Release
A federal court in the Northern District of Alabama has entered an order requiring the State of Alabama and the Alabama Secretary of State to cease a recently-implemented program to remove voters from Alabama’s voting rolls between now and the Nov. 5 general election. The court further ordered the State to issue guidance to all counties in Alabama to immediately restore deactivated voters unless those voters requested removal or are subject to removal for other reasons.
“This action sends a clear message that the Justice Department will work to ensure that the rights of eligible voters are protected,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The National Voter Registration Act’s 90 day Quiet Period Provision is an important safeguard to prevent erroneous eleventh-hour efforts that stand to disenfranchise eligible voters. The Justice Department remains steadfast in our resolve to protect voters from unlawful removal from the registration rolls and to ensure that states comply with the mandate of federal law.”
The department filed a lawsuit against the State of Alabama and the Alabama Secretary of State on Sept. 27 alleging that the Alabama Secretary of State’s voter list maintenance program announced on Aug. 13 violated Section 8(c)(2) of the National Voter Registration Act of 1993 (NVRA) by conducting a program intending to systematically remove voters within 90 days of a federal election. The court’s order requires the State of Alabama to facilitate a remedial mailing to each registrant inactivated as part of the voter removal process who has not submitted a request to be removed from the voter rolls and alert these voters that their voter status has since been reactivated.
The injunction also requires the state to work with country registrars to ensure that affected voters are notified that their inclusion in the state’s wayward removal program does not establish their ineligibility to vote or subject them to criminal prosecution for registering to vote or for voting. The injunction further requires the State to facilitate a remedial mailing to each registrant inactivated as part of the voter removal process who did submit a voter removal request advising them that if they are a U.S. citizen and otherwise meet voter qualifications, they have the right to vote. Finally, the court ordered the State to inform the Alabama Attorney General in writing that voters were inaccurately referred to the Attorney General for criminal investigation.
Individuals who are eligible voters and believe that they may have been wrongly removed from the voter rolls as a result of Alabama’s – or any other state’s – systematic removal process should contact the Civil Rights Division’s Voting Section through the internet reporting portal at www.civilrights.justice.gov or by telephone at 1-800-253-3931. More information about voting and elections, including guidance documents on the NVRA and other statutes, is available at www.justice.gov/voting. Learn more about the NVRA and other federal voting laws at www.justice.gov/crt/voting-section. Complaints about possible violations of federal voting rights laws can be submitted at www.civilrights.justice.gov or by telephone at 1-800-253-3931.
Data Center Company CEO Indicted for Major Fraud and Making False Statements to the U.S. Securities and Exchange CommissionRead the Press Release
A federal grand jury in the District of Columbia returned an indictment yesterday charging a Maryland man with major fraud against the United States and making false statements to the U.S. Securities and Exchange Commission (SEC) for his alleged participation in a scheme to deceive the SEC into thinking his company’s data center was certified at the highest rating level for reliability, availability, and security, when it was not.
According to the indictment, Deepak Jain, 49, of Potomac, was the CEO of an information technology services company (referred to in the indictment as Company A) that provided data center services to customers, including the SEC. From 2012 through 2018, the SEC paid Company A approximately $10.7 million for the use of Company A’s data center in Beltsville, Maryland.
As alleged in the indictment, Jain created an entity called Uptime Council, which purported to inspect and audit data centers. In order to obtain the SEC data center contract and conceal that Company A did not meet the SEC contract’s requirements, Jain allegedly drafted Uptime Council certification letters, which falsely claimed Uptime Council had certified Company A’s data center as a Tier IV data center, the highest possible rating for reliability, availability, and security. Throughout the pendency of the contract between Company A and the SEC, the SEC experienced several issues with Company A’s data center, including issues with security, cooling, and power — all of which were subjects of the standard referenced in the fraudulent Uptime Council certification letters.
“As alleged in the indictment, Jain orchestrated a years-long scheme to defraud the SEC by falsely certifying that his company’s data center met the highest rating level, when the actual rating did not satisfy the SEC contract,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Jain allegedly sought to enrich himself and his company at the expense of the reliability, availability, and security of the SEC’s electronic data. Yesterday’s charges make clear that the Criminal Division will not tolerate fraud schemes that threaten the security of the government’s electronic data.”
“This indictment demonstrates our shared commitment with the Justice Department to hold bad actors accountable for engaging in schemes to defraud the SEC that undermine the integrity and fairness of the government procurement process,” said Inspector General Deborah Jeffrey of the SEC.
Jain is charged with six counts of major fraud against the United States and one count of making false statements. If convicted, he faces a maximum penalty of 10 years in prison on each count of major fraud and a maximum penalty of five years in prison on the making false statements count.
The SEC Office of Inspector General is investigating the case.
Senior Litigation Counsel Vasanth Sridharan and Trial Attorney Spencer Ryan of the Criminal Division’s Fraud Section are prosecuting the case.
If you believe you are a victim in this case, please contact the Fraud Section’s Victim Witness Unit toll-free at (888) 549-3945 or by email at [email protected].
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Connecticut Fisherman Sentenced for Tax EvasionRead the Press Release
A Connecticut man was sentenced today to one year and one day in prison for evading taxes on income he earned from commercial fishing in Massachusetts.
According to court documents and statements made in court, Brian Kobus, of Durham, worked as a commercial fisherman and deckhand for various fishing companies in Massachusetts. After each fishing trip, the companies paid Kobus by check. Despite receiving over $1.2 million in fishing income between 2011 through 2013, and 2017 through 2021, Kobus never filed a federal income tax return or paid the taxes that he owed. To conceal the source and disposition of his income from the IRS, Kobus regularly cashed his paychecks from the fishing companies and used the cash to fund his personal lifestyle.
In total, Kobus caused a tax loss to the IRS of approximately $377,839.90.
In addition to his prison sentence, U.S. District Court Judge Nathaniel M. Gorton for the District of Massachusetts ordered Kobus to serve one year of supervised release and to pay $377,839.90 in restitution to the United States.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts made the announcement.
IRS Criminal Investigation is investigating the case.
Trial Attorney Matthew L. Cofer of the Tax Division and Assistant U.S. Attorney Victor Wild for the District of Massachusetts prosecuted the case.
Virginia Contractor Settles False Claims Act Liability for Failing to Secure Medicare Beneficiary DataRead the Press Release
ASRC Federal Data Solutions LLC (AFDS), headquartered in Reston, Virginia, has agreed to resolve False Claims Act allegations in connection with a government contract related to its storage of unsecured personally identifiable information of Medicare beneficiaries. Under the resolution, AFDS will pay $306,722. It will also waive any rights to reimbursement for remediating a data breach involving the information, including at least $877,578 in costs it incurred notifying beneficiaries and providing credit monitoring. AFDS promptly notified the Centers for Medicare and Medicaid Services (CMS) of the data breach, worked with CMS to address the impact of the breach, cooperated with the Justice Department’s investigation and took other remedial measures.
“Government contractors that handle personal information must take required steps to safeguard that information from cyberattacks,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will vigilantly pursue contractors that fail to comply with required cybersecurity protocols, while at the same time extending cooperation credit where warranted for self-disclosure, cooperation and remediation.”
AFDS provided certain Medicare support services under a contract with CMS. The settlement resolves allegations that from March 10, 2021, through Oct. 8, 2022, AFDS and a subcontractor stored screenshots from CMS systems containing personally identifiable information and potentially personal health information of Medicare beneficiaries on the subcontractor’s server without individually encrypting the files to protect them against exposure in the event of a breach. The subcontractor’s server employed disk-level encryption that protected files from unauthorized access but not from access using authorized credentials. The subcontractor’s server was breached by a third party in October 2022 and the unencrypted screenshots were allegedly compromised during that breach.
The United States alleged that the storing of screenshots on the subcontractor’s server violated AFDS’ contractual cybersecurity requirements, and that AFDS knowingly billed CMS in violation of these requirements.
“Safeguarding patients’ sensitive personal information is of paramount importance,” said Special Agent in Charge Stephen Niemczak of the Department of Health and Human Services Office of the Inspector General (HHS-OIG). “This settlement demonstrates the commitment by HHS-OIG and our law enforcement partners to use every available tool to protect the health care data of all Americans and to investigate allegations of fraud, waste and abuse against the public and taxpayer-funded health care programs.”
On Oct. 6, 2021, Deputy Attorney General Lisa Monaco announced the department’s Civil Cyber-Fraud Initiative, which aims to hold accountable entities or individuals that put U.S information or systems at risk by knowingly providing deficient cybersecurity products or services, knowingly misrepresenting their cybersecurity practices or protocols or knowingly violating obligations to monitor and report cybersecurity incidents and breaches. Information on how to report cyber fraud can be found here.
The resolution obtained in this matter was the result of a coordinated effort between the Civil Division's Commercial Litigation Branch, Fraud Section, and HHS-OIG.
Senior Trial Counsel Jonathan H. Gold of the Civil Division’s Fraud Section handled the matter.
The claims resolved by the settlement are allegations only. There has been no determination of liability.
Settlement
California Businessman Sentenced for Tax EvasionRead the Press Release
A California man was sentenced today to 15 months in prison for evading more than $1 million of individual and corporate income taxes owed to the IRS and California Franchise Tax Board.
According to court documents and statements made in court, Haim Jerry Kohen owned and operated a business that bought and sold bulk quantities of used clothing. Between 2005 and 2017, Kohen evaded his taxes by, among other things, filing false individual and corporate income tax returns with federal and state taxing authorities on which he underreported income.
He also attempted to conceal this income from the IRS by diverting it from his business to himself and by dealing in cash. Kohen collected cash payments owed to his business from a significant customer and kept the cash for himself instead of depositing it into his business’ bank account. Kohen did not report the diverted cash on either the corporate tax returns or on his individual income tax returns. Kohen continued this conduct even after he became aware that he was under criminal investigation by the IRS.
Additionally, in November 2013, that same customer owed Kohen’s business over $648,000. Kohen and the customer executed a promissory note where the customer agreed to repay the debt to Kohen personally, and not to his business. Kohen received payments pursuant to the note in cash and did not report them on any tax return. Over the years, Kohen also loaned money to people and did not report the interest payments he received on his personal returns.
Kohen also did not report rental income from two properties he owned in Beverly Hills and Tarzana, California. Kohen bought the Beverly Hills property in 2011 and soon thereafter deeded it to close family members. However, Kohen continued to collect the rental income for the property and exercised ownership and control over it. He also did not report the rental income he received from the Tarzana property.
In total, Kohen caused a tax loss to the IRS and State of California of $1,471,323.
In addition to the term of imprisonment, U.S. District Judge Stanley Blumenfeld, Jr. ordered Kohen to serve one year of supervised release, pay a fine of $95,000 and to pay $1,471,323 in restitution.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Martin Estrada for the Central District of California made the announcement.
IRS Criminal Investigation’s International Tax and Financial Crimes group investigated the case.
Senior Litigation Counsel Mark F. Daly and Trial Attorneys Sara E. Henderson and John C. Gerardi of the Justice Department’s Tax Division and Assistant U.S. Attorney Ranee Katzenstein for the Central District of California prosecuted the case.
Readout of the Justice Department’s Interagency Convening on Advancing Equity in AIRead the Press Release
The Justice Department’s Civil Rights Division on Wednesday convened principals of federal agency civil rights offices and senior government officials to foster AI and civil rights coordination.
This was the fourth such convening by the Civil Rights Division, coming up on the one-year anniversary of President Biden’s Executive Order on the Safe, Secure and Trustworthy Development and Use of Artificial Intelligence (EO 14110), which tasks the Civil Rights Division with coordinating federal agencies to use our authorities to prevent and address unlawful discrimination and other harms that may result from the use of AI in programs and benefits, while preserving the potential social, medical and other advances AI may spur.
The convening highlighted a recent Justice Department symposium on AI focusing on combating technology-enabled crime — including crime facilitated by AI. The Civil Rights Division’s Chief Technologist presented remarks at the symposium, and the event included discussion of the department’s role in negotiating the first international agreement providing a shared baseline for using AI in a way that is consistent with respect for human rights, democracy and the rule of law.
To strengthen the division’s efforts to ensure equity in AI, the Civil Rights Division recently retained a Chief Technologist, Dr. Laura Edelson. She is helping to systematically expand the division’s AI enforcement capacity and to increase the efficiency of its operations by harnessing technological modernization.
At the convening, agency technologists and researchers, including Dr. Edelson, discussed the role of auditing in preventing, investigating, monitoring, and remedying algorithmic bias. Auditing is used to verify that algorithms generate accurate results, as opposed to reflecting historical bias against protected classes.
Agencies discussed their efforts to safeguard civil rights through robust enforcement, policy initiatives, rulemaking and ongoing education and outreach. These accomplishments include:
- A Federal Trade Commission report finding that large social media and video streaming companies engaged in vast surveillance of their users, including kids and teens, with insufficient privacy controls;
- An Equal Employment Opportunity Commission report highlighting barriers to equal opportunity in the high tech workforce and sector and calling for concerted efforts to address discriminatory barriers;
- A Department of Labor (DOL) sponsored resource to help employers consider disability inclusion and accessibility in AI hiring technologies; and
- A Department of Education guide that reminds developers who design for education with AI that they share responsibility with educators for advancing equity and protecting students’ civil rights.
The interagency convening's attendees included representatives from the Departments of Agriculture, Commerce, Education, Energy, Health and Human Services, Homeland Security, Interior, Labor, Transportation and Treasury, as well as the Consumer Financial Protection Bureau, Equal Employment Opportunity Commission, Federal Trade Commission and Social Security Administration. Director Naomi Barry-Perez of the DOL’s Civil Rights Center and Department of Transportation Civil Rights Director Irene Marion were in attendance to provide updates for their agencies.
All participants pledged to continue collaboration to protect the American public against any harm that might result from the increased use and reliance on AI, algorithms and other advanced technologies. The agencies also agreed to partner on external stakeholder engagement around their collective efforts to advance equity and civil rights in AI.
For more information, see the Civil Rights Division’s webpage, which centralizes content related to the division’s work on AI and civil rights. This resource provides information about how advanced technologies can result in unlawful discrimination and what the division can do to assist victims of discrimination. The webpage also includes key resources on AI and civil rights from enforcement agencies throughout the federal government.
Justice Department Sues Virginia for Violating Federal Law’s Prohibition on Systematic Efforts to Remove Voters Within 90 Days of an ElectionRead the Press Release
The Justice Department announced today that it has filed a lawsuit against the State of Virginia, Virginia State Board of Elections and Virginia Commissioner of Elections to challenge a systematic state program aimed at removing voters from its election rolls too close to the Nov. 5 general election in violation of the National Voter Registration Act of 1993 (NVRA).
Section 8(c)(2) of the NVRA, also known as the Quiet Period Provision, requires states to complete systematic programs aimed at removing the names of ineligible voters from voter registration lists no later than 90 days before federal elections. The Quiet Period Provision applies to certain systematic programs carried out by states that are aimed at striking names from voter registration lists based on a perceived failure to meet initial eligibility requirements — including citizenship — at the time of registration.
“As the National Voter Registration Act mandates, officials across the country should take heed of the law’s crystal clear and unequivocal restrictions on systematic list maintenance efforts that fall within 90 days of an election,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “By cancelling voter registrations within 90 days of Election Day, Virginia places qualified voters in jeopardy of being removed from the rolls and creates the risk of confusion for the electorate. Congress adopted the National Voter Registration Act’s quiet period restriction to prevent error-prone, eleventh hour efforts that all too often disenfranchise qualified voters. The right to vote is the cornerstone of our democracy and the Justice Department will continue to ensure that the rights of qualified voters are protected.”
The Quiet Period is an important protection for voters, because systematic removal programs may be error-ridden, cause voter confusion and remove eligible voters days or weeks before Election Day who may be unable to correct the State’s errors in time to vote or may be dissuaded from voting at all. States may remove names from official lists of voters in various ways and for various reasons, but they may not carry-on this kind of systematic removal program so close to a federal election.
On Aug. 7, the governor of Virginia signed an executive order requiring among other things that the commissioner of the Department of Elections certify that the Department of Elections was conducting “Daily Updates to the Voter List.” These updates included “compar[ing] the list of individuals who have been identified as non-citizens” by the State Department of Motor Vehicles “to the list of existing registered voters.” Local registrars were then required to “notify any matches of their pending cancellation unless they affirm their citizenship within 14 days.” The letter directs recipients who are in fact U.S. citizens and eligible to vote to complete and return an Affirmation of Citizenship form. The notice informs voters that, if they do not respond to the notice within 14 days, they will be removed from the list of registered voters. This process has led to U.S. citizens having their voter registrations cancelled.
The process laid out in the executive order formalized an ongoing list maintenance procedure that has been carried out into the quiet period, including at least as recently as late September. This systematic voter removal program, which the State is conducting within 90 days of the upcoming federal election, violates the Quiet Period Provision.
The Justice Department seeks injunctive relief that would restore the ability of impacted eligible voters to vote unimpeded on Election Day and would prohibit future quiet period violations. The department also seeks remedial mailings to educate eligible voters concerning the restoration of their rights and adequate training of local officials and poll workers to address confusion and distrust among eligible voters accused of being noncitizens.
Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division, U.S. Attorney Jessica Aber for the Eastern District of Virginia and U.S. Attorney Christopher R. Kavanaugh for the Western District of Virginia made the announcement.
Individuals who are eligible voters and believe that they may have been removed from the voter rolls as a result of Virginia’s systematic removal process should contact the Civil Rights Division’s Voting Section through the internet reporting portal at civilrights.justice.gov or by telephone at 1-800-253-3931. More information about voting and elections, including guidance documents and other resources, is available at www.justice.gov/voting. More information about the NVRA and other federal voting laws is available at www.justice.gov/crt/voting-section. The department recently announced a new guidance document addressing limits on when and how jurisdictions may remove voters from their voter lists. Complaints about discriminatory voting practices may be reported to the Civil Rights Division’s Voting Section through the internet reporting portal at civilrights.justice.gov or by telephone at 1-800-253-3931.
Justice Department Sues South Bend, Indiana, for Discriminating Against Black and Female Police Officer ApplicantsRead the Press Release
The Justice Department filed a lawsuit today against the City of South Bend, Indiana, alleging that the hiring process for entry-level police officers at the South Bend Police Department (SBPD) violates Title VII of the Civil Rights Act. Specifically, the department alleges that South Bend uses a written examination that discriminates against Black applicants and a physical fitness test that discriminates against female applicants.
Title VII is a federal statute that prohibits employment discrimination based on race, sex, color, national origin and religion. Title VII prohibits not only intentional discrimination but also employment practices that result in a disparate impact on a protected group, unless such practices are job related and consistent with business necessity.
“Equal employment opportunity is critical to ensuring that law enforcement agencies do not unfairly exclude otherwise eligible job applicants based on discriminatory practices,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Discriminatory barriers that deny qualified Black and female applicants the opportunity to be police officers violate civil rights and undermine public safety efforts. The Justice Department is committed to equal access to employment opportunities in the policing sector so that all qualified applicants have a fair chance to protect and serve their communities.”
The lawsuit stems from a pattern and practice investigation launched by Civil Rights Division in 2021 into SBPD’s hiring practices. The investigation found that SBPD’s written examination and physical fitness test do not meaningfully distinguish between applicants who can and cannot perform the position of entry-level police officer. These tests also had the effect of disqualifying Black and female applicants from the hiring process at significantly disproportionate rates. The department thus concluded that these tests violate Title VII’s bar on discrimination in employment.
Filed in the Northern District of Indiana, the lawsuit alleges that, since at least 2016, South Bend has used a written examination that has disproportionately excluded Black applicants and a physical fitness test that has disproportionately excluded female applicants from consideration for police officer positions. The complaint asserts that South Bend’s uses of these tests are neither job related nor consistent with business necessity, and thus, violate Title VII.
The Justice Department is seeking a court order to ensure that South Bend uses only lawful tests in its entry-level police officer hiring process. The department also seeks relief for Black and female applicants disqualified by the challenged tests, including back pay and, for those who can successfully complete the new lawful selection process, job offers with retroactive seniority.
The full and fair enforcement of Title VII is a top priority of the Civil Rights Division. The division recently proposed consent decrees to resolve lawsuits challenging similarly discriminatory hiring processes at the Maryland Department of State Police and the Durham Fire Department. The division has issued a fact sheet on combating hiring discrimination by police and fire departments to help applicants for public safety jobs understand their Title VII rights to be free from discriminatory hiring processes. More information about the Civil Rights Division can be found at www.justice.gov/crt.
California Home Health Agency and Owner Settle False Claims Act Allegations Relating to Improper Paycheck Protection Program LoanRead the Press Release
Allstar Health Providers Inc., a California home health agency, and its owner, Maria Chua, have agreed to pay $399,990 to the United States to resolve allegations that they violated the False Claims Act when they knowingly received and retained more than one Paycheck Protection Program (PPP) loan prior to Dec. 31, 2020, in violation of PPP rules.
The PPP, an emergency loan program established by Congress in March 2020 under the Coronavirus Aid, Relief and Economic Security (CARES) Act and administered by the Small Business Administration (SBA), was intended to support small businesses struggling to pay employees and other business expenses during the COVID-19 pandemic. A borrower applying for a PPP loan was required to make multiple certifications relating to its eligibility and compliance with program rules. Among other things, PPP loan applicants in 2020 were required to certify that they would not receive more than one PPP loan prior to Dec. 31, 2020.
The United States alleged that Chua submitted two PPP loan applications on behalf of Allstar Health Providers in May 2020, and in both applications, she certified that the company would not receive more than one loan prior to Dec. 31, 2020. Despite these certifications, the United States alleged that Allstar Health Providers received two PPP loans in 2020, and thereafter knowingly and improperly retained the second, duplicate loan. According to the United States, Allstar Health Providers failed to repay the duplicate loan, which resulted in a loss to the SBA when it purchased the loan guaranty on the duplicate loan.
“PPP loans were intended to provide critical relief to small businesses,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The department is committed to pursuing those who knowingly violated the requirements of the PPP or other COVID-19 assistance programs and obtained relief funds to which they were not entitled.”
“When an individual violates the False Claims Act by fraudulently receiving and retaining PPP loans, taxpayers lose,” said U.S. Attorney Martin Estrada for the Central District of California. “Those who violate the law by fraudulently receiving and retaining PPP loans will be held accountable.”
“This is another excellent example of the success of the combined investigative efforts of the Small Business Administration and the Department of Justice in aggressively pursuing instances of misconduct and recovering funds from those who choose to commit fraudulent acts against SBA’s COVID-relief programs,” said General Counsel Therese Meers of SBA.
The settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act by J. Bryan Quesenberry. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned U.S. ex rel. Quesenberry v. 2 Evil Geniuses et al., No. 20-cv-8495 (C.D. Cal.). Mr. Quesenberry will receive a total of approximately $60,000 in connection with this settlement.
The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Central District of California, with assistance from the SBA’s Office of General Counsel and Office of the Inspector General.
Trial Attorney Jared S. Wiesner of the Civil Division and Assistant U.S. Attorney Frank Kortum for the Central District of California handled the matter.
On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Justice Department in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international actors committing civil and criminal fraud and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit www.justice.gov/coronavirus.
Tips and complaints from all sources about potential fraud affecting COVID-19 government relief programs can be reported by visiting the webpage of the Civil Division’s Fraud Section, which can be found here. Anyone with information about allegations of attempted fraud involving COVID-19 can also report it by calling the Justice Department’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The claims resolved by the settlement are allegations only. There has been no determination of liability.
Settlement
Three Assistant U.S. Trustees Appointed for U.S. Trustee Program Offices in Missouri, Ohio and WashingtonRead the Press Release
The Justice Department’s Executive Office for U.S. Trustees announced today the appointment of three Assistant U.S. Trustees to offices in Missouri, Ohio and Washington.
Jill Parsons was appointed in September as the Assistant U.S. Trustee for the Kansas City office, which serves the Western District of Missouri (Region 13). Before joining the U.S. Trustee Program (USTP), Parsons served as a chapter 7 panel trustee since 2009 and practiced bankruptcy law, representing both creditors and debtors in Kansas City for over 20 years. Parsons received her bachelor’s degree in English from Weber State University and her law degree with honors from the University of Missouri-Kansas City.
Angela Abreu was appointed in August as the Assistant U.S. Trustee for the Cleveland office, which serves the Northern District of Ohio (Region 9). Abreu joined the USTP after several years in private practice specializing in creditors’ rights and chapter 7 bankruptcy practice. Most recently, Abreu was a corporate vice president and loss mitigation manager at a regional bank. Abreu received her bachelor’s degree in psychology and general administration of justice from Saint Vincent College and her law degree cum laude from Duquesne University.
Hilary Mohr was appointed in August as the Assistant U.S. Trustee for the Seattle office, which serves the Western District of Washington and the District of Alaska (Region 18). Mohr joined the USTP as a trial attorney in the Seattle office in January 2016 after working as a partner at a Seattle law firm focused primarily on creditors’ rights litigation and bankruptcy matters. Mohr received her bachelor’s degree in political science from University of Washington, worked in the nonprofit sector and received a law degree summa cum laude from Seattle University.
The USTP’s mission is to promote the integrity and efficiency of the bankruptcy system for the benefit of all stakeholders – debtors, creditors and the public. The USTP consists of 21 regions with 89 field offices nationwide and an Executive Office in Washington, D.C. Learn more about the USTP at www.justice.gov/ust.
Readout of Principal Deputy Associate Attorney General Benjamin C. Mizer’s Participation in OECD Global Roundtable on Equal Access to JusticeRead the Press Release
Principal Deputy Associate Attorney General (PDASG) Benjamin C. Mizer traveled to Ottawa, Canada, on Oct. 8-9, to represent the United States at the Organization for Economic Cooperation and Development (OCED) Global Roundtable on Equal Access to Justice. The roundtables are a forum for the exchange of practices and lessons learned and provide an opportunity for policymakers to share experiences on improving access to justice for all, including from the perspective of people and businesses. PDASG Mizer provided remarks on behalf of the United States at the OECD Roundtable’s High-Level Dialogue.
On the sidelines of the dialogue, PDASG Mizer met with a range of stakeholders, including representatives from ministries of justice and civil society organizations from around the world. During the roundtable, the Office for Access to Justice moderated a workshop with Department of Justice Canada on people-centered approaches to administrative justice and participated in panel discussion on inclusive justice strategies.
High-Level Dialogue at the Organization for Economic Cooperation and Development (OCED) Global Roundtable on Equal Access to Justice.Ohio Man Sentenced for Creating and Distributing Videos Depicting Monkey Torture and MutilationRead the Press Release
An Ohio man was sentenced today to 54 months in prison and three years of supervised release in connection with his involvement with online groups dedicated to creating and distributing videos depicting acts of extreme violence and sexual abuse against monkeys.
According to court documents, Ronald P. Bedra, of Etna, conspired with others to create and distribute videos depicting acts of sadistic violence against baby and adult monkeys. The conspirators used encrypted chat applications to direct money to individuals in Indonesia willing to commit the requested acts of torture on camera. Bedra also mailed a thumb drive containing 64 videos of monkey torture to a co-conspirator in Wisconsin.
According to a statement of facts signed by defendant Bedra, the videos in question included depictions of monkeys having their digits and limbs severed and monkeys being forcibly sodomized with a heated screwdriver. Bedra pleaded guilty in April.
“Defendant Ronald Bedra commissioned grotesque videos of torture of juvenile and baby monkeys,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “Such appalling conduct has no place in our society. The Justice Department stands ready to prosecute individuals engaging in this activity to the fullest extent of the law.”
“We will punish participants of sadistic conspiracies like this one no matter their role in the crime,” said U.S. Attorney Kenneth L. Parker for the Southern District of Ohio. “As this case shows, even if you do not commit the torture firsthand, you will be held accountable for promoting this obscene animal abuse.”
“The torture of animals in this case is disturbing, cruel and illegal,” said Special Agent in Charge Elena Iatarola of FBI’s Cincinnati Field Office. “The FBI and our partners will continue to work to protect defenseless animals and investigate those who intentionally harm them.”
“Today’s sentencing underscores the U.S. Fish and Wildlife Service’s unwavering commitment to combating the exploitation of wildlife in any form,” said Assistant Director Edward Grace of the U.S. Fish and Wildlife Service’s Office of Law Enforcement. “These monstrous crimes are indefensible. This case serves as a stark reminder that those who harm animals protected under federal and international laws and treaties will face serious consequences. We continue to work diligently with our partners to identify and prosecute individuals engaged in these cruel activities to the fullest extent of the law.”
The FBI and U.S. Fish and Wildlife Service investigated the case. Homeland Security Investigations provided critical assistance.
Trial Attorney Mark Romley and Senior Trial Attorney Adam Cullman of the Environment and Natural Resources Division’s Environmental Crimes Section and Assistant U.S. Attorney Nicole Pakiz for the Southern District of Ohio are prosecuting the case.
New Jersey Construction Company Owner Pleads Guilty to Tax EvasionRead the Press Release
A New Jersey man pleaded guilty today to tax evasion for evading employment tax penalties assessed against him.
According to court documents and statements made in court, Joseph Caravella, of Randolph, owned several masonry companies in New Jersey. From 2008 to 2016, the IRS assessed approximately $650,000 in Trust Fund Recovery penalties against Caravella for causing three masonry businesses that he owned to not pay their federal employment taxes. From around March 2008 through in or around April 2019, Caravella sought to evade the payment of these penalties by placing companies that he controlled in the names of nominee owners and avoiding using a bank account in his own name to prevent the IRS from levying the funds. Also during that time, Caravella continued to cause his businesses not to pay employment taxes, resulting in an additional loss of $1.2 million to the IRS.
In total, Carvalla caused a tax loss to the IRS of $1,885,519.39.
Caravella is scheduled to be sentenced on March 18. He faces a maximum penalty of five years in prison, a period of supervised release, restitution and monetary penalties. A federal judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Philip R. Sellinger for the District of New Jersey made the announcement.
IRS Criminal Investigation are investigating the case.
Trial Attorneys Kenneth Vert and Evan Mulbry of the Tax Division and Assistant U.S. Attorney Shontae Gray for the District of New Jersey are prosecuting the case.
Justice Department Files Suit for Unpaid Duties and Penalties for Alleged Misclassification and Failure to Pay Duties on Imported Chinese Solar PanelsRead the Press Release
The Justice Department has filed a civil lawsuit against Paul Bakhoum, who was the Vice President for Operations for Ecosolargy Inc., a California Corporation that imported Chinese-manufactured solar panels into the United States. The lawsuit alleges that Mr. Bakhoum made false statements to customs officials and, as a result, avoided paying harmonized tariff schedule (HTS), antidumping and countervailing duties owed on the imported solar panels.
At the time merchandise is entered into the United States, the importer is responsible for providing all information necessary to enable Customs and Border Protection (CBP) to assess the applicable duties owed on the goods, including any HTS, antidumping and countervailing duties applicable to the merchandise. The HTS sets duties based on the category of the product (for example, solar cells), while antidumping and countervailing duties are trade remedies that help protect domestic industries from unfair trade practices by foreign businesses and countries, such as government subsidies or below market sales.
The United States’ complaint contends that Bakhoum caused Ecosolargy to falsely classify solar panels imported from China as LED lights. In particular, the United States alleges that Bakhoum negligently misrepresented to CBP the imported solar panels’ HTS code and value and failed to identify both the proper antidumping duty and countervailing duty rates applicable to the panels.
“The Justice Department is committed to pursuing those who evade customs duties or otherwise engage in unfair trade practices that harm U.S. manufacturers,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to employ all of our available tools to ensure that U.S. manufacturers are competing on a level playing field.”
“CBP takes its trade mission of protecting the U.S. economy very seriously as we strive to maintain fair trade and preserve American jobs from predatory practices,” said Executive Director Susan Thomas of CBP’s Cargo and Conveyance Security, Office of Field Operations. “These civil penalties should serve as a warning to those who attempt to do harm to our economy and American businesses.”
The complaint seeks the recovery of almost $300,000 in import duties and almost $800,000 in civil penalties.
CBP’s Electronics Center of Excellence and Expertise investigated the case. CBP and Homeland Security Investigations are the agencies responsible for enforcing U.S. laws related to the importation of merchandise into the United States, including the collection of duties and assessment of penalties.
Trial Counsel Daniel Hoffman of the Civil Division’s Commercial Litigation Branch, National Courts Section, handled the case.
The case, which is filed in the Court of International Trade, is captioned United States v. Paul Bakhoum No. 24-00188.
To combat trade fraud, including avoidance of import duties, the Justice Department created a Trade Fraud Task Force. The Task Force partners with CBP and other law enforcement agencies to ensure compliance with United States trade laws.
The claims in the complaint are allegations only. There has been no determination of liability.
Justice Department Concurs with Federal Trade Commission’s Changes to Premerger Notification Form Used in Merger ReviewRead the Press Release
The Justice Department’s Antitrust Division announced today its concurrence with the Federal Trade Commission (FTC)’s unanimous vote to finalize changes to the premerger notification form and associated instructions, as well as to the premerger notification rules implementing the Hart-Scott-Rodino (HSR) Act.
The final rule, which was adopted after a rigorous public comment process, marks the first large-scale material update to the HSR form since it was first established in 1978. The rule will address critical gaps in the information available to the Justice Department and the FTC (the Agencies) when they review merger filings, making the Agencies’ initial review more efficient and effective. In response to public comment on the proposed rule, the final rule contains many changes aimed at reducing the burden on parties while still improving the information the Agencies receive to help streamline initial merger review.
“Access to better information at the beginning of the merger review process ensures that the antitrust agencies can devote our resources to the most important issues and reduces the burden on filers, third parties, and other market participants,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “I’m grateful to the Commissioners who have worked diligently to evaluate the public comments to develop the excellent rule.”
Under the HSR Act, parties to certain mergers and acquisitions are required to submit premerger notification forms that disclose certain information about their proposed deal and business operations. The Agencies use this information to conduct a premerger assessment in the short time allowed under the HSR Act, typically 30 days, to determine which transactions may violate the antitrust laws, and thus require additional review.
The requests added to the HSR form reflect the dramatic changes over the past four decades in global markets and in how mergers and acquisitions are conducted. These additions include:
- Requiring parties to submit transaction-related documents prepared by or for the supervisory leader of the deal team;
- Requiring parties to describe their principal categories of products and services as reflected in the parties’ ordinary course business documents;
- Requiring disclosure of additional information about the buyer’s officers, directors, and investors, including those with management rights over the firm; and
- Ensuring the Agencies have access to translations of all documents submitted in a language other than English.
This additional information will enable the Agencies to streamline their initial reviews and make decisions more quickly. In some circumstances, it will allow the Agencies to evaluate a merger without opening a preliminary investigation or seeking additional information through a second request. In this way, the final rule complements the FTC’s decision to lift its temporary suspension on early termination of HSR filings. When additional information is necessary to review a merger, the final rule will enable the Agencies to issue more targeted requests, reducing the time and effort required to respond. Under the prior form, the Agencies routinely had to rely on third parties, many of whom were small businesses, to fill in informational gaps. By helping to fill some of these gaps, the final rule can alleviate the burden on third parties as well.
The new information required by the final rule is already within the possession of the filing parties. The rule was carefully structured to provide the Agencies with important additional factual and documentary information that is readily available to the merging parties. Moreover, the Agencies carefully reviewed the hundreds of public comments filed in response to the proposed rule and made substantial changes to reduce the burden on merging parties. The final rule differs from the proposed rule in many ways, including among other things, eliminating the requirements to:
- Submit preliminary drafts of deal-related documents;
- Collect and produce ordinary course documents from people who report directly to the CEO;
- Provide information about employees’ commuting zones and occupation classifications;
- Report prior acquisitions that are more than five years old or involve entities with less than $10 million in sales or revenue; and
- Certify that the filer took steps to preserve documents.
These changes eliminated substantial costs to filing parties while ensuring that the Agencies will receive the additional information they require to more effectively and efficiently review merger filings.
The final rule will be effective 90 days after it is published in the Federal Register.
Drug Maker Teva Pharmaceuticals Agrees to Pay $450M in False Claims Act Settlement to Resolve Kickback Allegations Relating to Copayments and Price FixingRead the Press Release
Teva Pharmaceuticals USA Inc. (Teva USA) and Teva Neuroscience Inc. (collectively, Teva) have agreed to pay $450 million to resolve two matters that allege Teva violated the Anti-Kickback Statute (AKS) and the False Claims Act (FCA). Teva, headquartered in Parsippany, New Jersey, is the largest generic drug manufacturer in the United States. The settlement amount was based on Teva’s ability to pay.
“Kickbacks designed to induce referrals or purchases of healthcare goods or services distort physician and patient decision-making, thwart competition and bypass controls put in place to protect federal health care programs,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Justice Department is committed to pursuing those who engage in kickback violations, including drug manufacturers, to ensure that federal health care programs continue to serve the interests of taxpayers and program beneficiaries.”
The settlement encompasses two alleged kickback schemes. First, Teva has agreed to resolve allegations in a complaint the United States filed in the District of Massachusetts in August 2020 that Teva violated and conspired to violate the AKS and FCA by paying Medicare patients’ cost sharing obligations (copays) for the multiple sclerosis drug Copaxone from 2006 through 2017, while steadily raising Copaxone’s price. In particular, the United States alleged that Teva coordinated and conspired with multiple third parties, including a specialty pharmacy and two allegedly independent copay assistance foundations, to ensure that purported donations to the foundations were used specifically to cover the copays of Medicare Copaxone patients, which Teva knew was prohibited by the AKS, and that Teva thereby caused the submission of false claims to Medicare.
Second, Teva USA has agreed to resolve separate allegations that it conspired with other generic drug manufacturers to fix prices for pravastatin, a drug widely used to treat high cholesterol and triglyceride levels, as well as two other generic drugs, clotrimazole and tobramycin. Teva USA previously entered into a deferred prosecution agreement with the Justice Department’s Antitrust Division to resolve related criminal charges. Teva USA paid a criminal penalty of $225 million and admitted to conspiring with three other generic drug companies to fix prices on certain generic drugs. Under the civil settlement announced today, Teva agreed to resolve allegations that the benefits it received under its price fixing scheme constituted illegal kickbacks.
Teva will pay collectively $450 million to resolve the two kickback schemes. This payment is in addition to the criminal penalty paid by Teva USA under its deferred prosecution agreement.
“Kickback arrangements by pharmaceutical companies escalate the costs for critical drugs used by our citizens and federal health care programs,” said U.S. Attorney Jacqueline Romero for the Eastern District of Pennsylvania. “My office is proud to work with the rest of the Department of Justice and our investigative partners to enforce federal laws prohibiting kickback arrangements. We will continue to take action to lower the drug costs for our country and its health care programs supporting senior citizens, our military service members and others.”
“For far too long, Teva gamed the charitable foundation process by paying kickbacks through two foundations, and with the aid of a specialty pharmacy. Those kickbacks undermined the purpose of the Medicare co-pay system and violated the Anti-Kickback Statute,” said Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. “This office has taken the leading role in cracking down on these highly lucrative schemes that drive up the cost of essential drugs by bringing multiple enforcement actions that have returned more than $1 billion to the Medicare system. We will continue to pursue these actions to ensure that all pharmaceutical companies play by the rules and to protect the American taxpayers.
“The Medicare program’s copay structure serves as a safeguard against the artificial inflation of drug prices. When a pharmaceutical company manipulates drug prices through collusion, or disguises kickbacks as charitable donations to subsidize copays for its own drugs, the integrity of the Medicare program is jeopardized,” said Assistant Inspector General for Investigations Adam Globerman of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “This type of conduct is unacceptable, and HHS-OIG remains committed to thoroughly pursuing allegations of price fixing and kickbacks that put the Medicare program at risk.”
“The Defense Criminal Investigative Service, the law enforcement arm of the Department of Defense Office of Inspector General, seeks to protect the integrity of TRICARE, the healthcare system for U.S. military members and their dependents,” said Special Agent in Charge Patrick J. Hegarty of DCIS Northeast Field Office. “When pharmaceutical corporations artificially inflate prices, they place an unnecessary financial burden on the TRICARE program. The settlement agreement announced today demonstrates our commitment to partner with investigative agencies and the Department of Justice, including the Civil Division and the U.S. Attorney’s Office for the Eastern District of Pennsylvania, to combat healthcare fraud.”
Since 2017, the United States has collected over $1 billion, in addition to today’s settlement, from pharmaceutical companies that allegedly used third-party foundations as conduits to unlawfully pay patient copays. The department has also reached settlements with four foundations and a specialty pharmacy pertaining to those allegations. Today’s resolution with Teva is the largest of these settlements to date. The settlement of Teva’s price fixing conduct is the seventh pertaining to allegations of price fixing involving generic drugs, with total recoveries exceeding $500 million.
The government’s pursuit of these matters illustrates the department’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 800‑HHS‑TIPS (800-447-8477).
The resolution of the patient copay matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and U.S. Attorney’s Office for the District of Massachusetts, with investigative support from HHS-OIG and the FBI.
Attorneys Douglas Rosenthal and Nelson Wagner of the Civil Division’s Fraud Section and Assistant U.S. Attorneys Abraham R. George, Diane Seol and Evan Panich for the District of Massachusetts handled the matter.
The civil resolution of the price fixing matter was the result of a coordinated effort between the Fraud Section and the U.S. Attorney’s Office for the Eastern District of Pennsylvania, with investigative support from HHS-OIG, the Defense Health Agency Program Integrity Office, DCIS and Office of Inspector General for the Department of Veterans Affairs.
Senior Trial Counsel Jennifer L. Cihon and Senior Litigation Counsel Laurie A. Oberembt of the Civil Division and Assistant U.S. Attorneys Landon Y. Jones III, Rebecca S. Melley and Anthony D. Scicchitano for the Eastern District of Pennsylvania handled the matter. Fraud Section financial analyst Sheryl Paynter provided support for both matters.
The civil action in Massachusetts is captioned United States v. Teva Pharmaceuticals USA, Inc. et al., No. 20-cv-11548 (DMA).
DMA Settlement
EDPA Settlement
Court Prohibits Two Texas Physicians from Prescribing Opioids and Imposes $1.2M in Civil Penalties for Alleged Unlawful Opioid DistributionRead the Press Release
A federal court has prohibited two Dallas-area physicians from prescribing opioids and other controlled substances and imposed a total of $1.2 million in judgments against them in a case alleging the physicians violated the Controlled Substances Act (CSA), the Justice Department announced today.
In a civil complaint filed in 2019 in the Northern District of Texas, the United States alleged that Cesar B. Pena Rodriguez M.D. and Leovares A. Mendez M.D. violated the CSA by issuing prescriptions for opioids and other powerful drugs outside the usual course of professional practice and not for a legitimate medical purpose. The complaint alleged that the defendants issued thousands of prescriptions without apparent regard for patient harm, including prescriptions for a combination of an opioid, a short-acting benzodiazepine, and a muscle relaxer — a dangerous and frequently-abused drug cocktail known as the “trinity.” In an order filed Oct. 8, the court imposed a $291,451 civil penalty judgment against Mendez in addition to a $914,021 civil penalty judgment against Pena Rodriguez entered earlier this year.
“Prescribing opioids for no legitimate purpose betrays the trust placed in our medical professionals and significantly threatens the communities they serve,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division. “The Justice Department will continue to use every available tool to stop doctors who fail to uphold their obligation to prescribe controlled substances lawfully.”
“Doctors are charged with protecting and healing us when we are sick and vulnerable. Instead of healing vulnerable members of our community, these doctors sought to profit off of their addictions,” said U.S. Attorney Leigha Simonton for the Northern District of Texas. “The U.S. Attorney’s Office’s Civil Division, in conjunction with our partners in the Consumer Protection Branch, sought immediate injunctive relief to prevent these doctors from prescribing to addicts and have now terminated their ability to ever put their patients at risk in this way again.”
“Peña-Rodríguez and Mendez were distributing deadly controlled substances mix known as the ‘trinity’ outside the course of a legitimate medical need, simply to get rich,” said Special Agent in Charge Eduardo A. Chávez of the Drug Enforcement Administration (DEA) Dallas. “Following our successful criminal prosecution, we issued a trinity of ourselves through not just criminal penalties, but now civil and administrative ones as well. Standards for our medical professionals must stay high because patients deserve a doctor they can trust. We will continue to partner with the U.S. Attorney’s Office to seek all avenues of justice and accountability against all medical providers who violate their code of conduct.”
The defendants agreed to consent judgments to settle the allegations in the complaint. The orders entered by the court permanently prohibit Pena Rodriguez and Mendez from ever again prescribing, dispensing, administering or distributing controlled substances. The orders also bar them from holding DEA registrations or working at, supervising or owning a medical practice where controlled substances are present.
In a separate criminal action, Pena Rodriguez previously pleaded guilty to one count of conspiracy to unlawfully distribute controlled substances. Mendez was found guilty at a jury trial of one count of conspiracy to distribute a controlled substances and six counts of unlawful distribution of controlled substances. Mendez was sentenced to seven years in prison. Dr. Pena Rodriquez was sentenced to two years in prison.
The DEA investigated the case.
Assistant U.S. Attorney Sarah Delaney for the Northern District of Texas and Trial Attorney Scott B. Dahlquist of the Civil Division’s Consumer Protection Branch prosecuted the case.
The claims made in the complaint are allegations that the United States would need to prove by a preponderance of the evidence if the case proceeded to trial.
North Carolina Physician and Medical Practice Agree to Pay $625,000 to Settle Kickback AllegationsRead the Press Release
Dr. Eric Troyer, of Landis, North Carolina, and his medical practice, Troyer Medical Inc. P.C. (TMI), have agreed to pay $429,254 to the United States to resolve alleged False Claims Act violations arising from their involvement in laboratory kickback schemes. Troyer and TMI will pay an additional $195,746 to the State of North Carolina, which jointly funded claims paid by the North Carolina Medicaid program. Troyer and his practice have agreed to cooperate with the Justice Department’s investigations of other participants in the alleged schemes.
“Kickbacks to healthcare providers can undermine the integrity of taxpayer-funded healthcare programs and medical decision making,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to pursue those who pay or receive illegal financial inducements, including unlawful inducements for laboratory testing.”
The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, TRICARE and other federally funded healthcare programs. The Anti-Kickback Statute is intended to ensure that medical providers’ judgments are not compromised by improper financial incentives and are instead based on the best interests of their patients.
The settlement announced today resolves allegations that, from August 2015 to November 2021, Troyer and his medical practice received kickbacks from a laboratory in Anderson, South Carolina, in return for Troyer’s referrals to that laboratory. According to the settlement, the kickbacks to Troyer and his medical practice allegedly were disguised as payments for purported phlebotomy services, rental of office space and the lease of a chemistry analyzer machine and resulted in the submission of false or fraudulent laboratory testing claims to Medicare, Medicaid and TRICARE in violation of the False Claims Act.
“Patients should be able trust that their healthcare provider’s recommendations are for their well-being and not for the provider’s financial gain,” said U.S. Attorney Adair Ford Boroughs for the District of South Carolina. “We will continue to hold accountable those who undermine the integrity of the healthcare system by giving or receiving kickbacks.”
“This resolution demonstrates the FBI’s dedication to addressing violations that undermine the public's trust in our healthcare systems,” said Special Agent in Charge Steve Jensen of the FBI Columbia Field Office. “The FBI, along with our law enforcement and regulatory partners, remains committed to ensuring healthcare professionals provide transparent and ethical standards of service.”
“Kickback arrangements aimed at improperly influencing medical decisions will remain a top investigative priority for our agency,” said Special Agent in Charge Tamala E. Miles of the Department of Health and Human Services Office of Inspector General (HHS-OIG). “Our ongoing enforcement efforts in this area are focused on protecting the integrity of taxpayer-funded healthcare programs like Medicare and Medicaid, and preventing schemes that could improperly manipulate the healthcare decisions of patients and their doctors.”
“Improper financial relationships between physicians and laboratories undermine patient healthcare and trust,” said Special Agent in Charge Christopher Dillard of Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS) Mid-Atlantic Field Office. “Kickbacks should never be a consideration in a medical practice selecting a company for laboratory testing. DCIS will continue to bring to justice medical providers who illegally enrich themselves at the expense of the American taxpayer and wellbeing of our Warfighters.”
The settlement was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of South Carolina, with assistance from HHS-OIG, DCIS, FBI and the Medicaid Investigations Division of the North Carolina Attorney General’s Office.
Senior Trial Counsel Christopher Terranova of the Civil Division’s Commercial Litigation Branch, Fraud Section, and Assistant U.S. Attorney Beth C. Warren for the District of South Carolina handled the case. The United States previously resolved allegations that other physicians in South Carolina, North Carolina and Texas received kickbacks from the same laboratory.
The government’s pursuit of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to HHS at 1-800-HHS-TIPS (800-447-8477).
The claims resolved by the settlement are allegations only. There has been no determination of liability.
Mastermind of Multimillion-Dollar Penny-Stock Scam Indicted for Fraud and ObstructionRead the Press Release
A federal grand jury in the District of Columbia returned an indictment yesterday charging a Michigan man with defrauding investors in Minerco Inc. (stock ticker MINE) — leading to millions of dollars in investor losses — as well as obstructing a Securities and Exchange Commission (SEC) proceeding by destroying evidence.
According to the indictment, Bobby Shumake Japhia (Shumake), 56, also known as Robert Samuel Shumake Jr., Robert Japhia, and Shaman Bobby Shu, of Michigan, allegedly ran Minerco’s day-to-day operations and organized a scheme to defraud investors in the publicly traded securities of Minerco by, among other things, making or causing to be made materially false and misleading statements to the public, including in press releases, in an effort to artificially inflate the share price of, and demand for, Minerco stock. Beginning in or around January 2020, Minerco purported publicly to be in the business of developing, marketing, and distributing psilocybin mushrooms, also known as magic mushrooms or psychedelic mushrooms.
As alleged in the indictment, Shumake concealed his role with Minerco, even though he controlled all aspects of Minerco, by recruiting another individual, Julius Jenge, to serve as the nominal chief executive officer of Minerco because Shumake had a criminal history and negative news articles about Shumake were available on the internet. To further conceal the scheme, Shumake allegedly made materially false and misleading statements to investigators from the Financial Industry Regulatory Authority who were investigating Minerco.
Shumake allegedly used an alias to promote Minerco on an investor message board and provided the false and misleading impression that he was not affiliated with Minerco and was an independent investor. Shumake also allegedly recruited others to promote Minerco on internet message boards to further create the false and misleading impression that the public had a favorable view of Minerco.
Shumake allegedly sold nearly one billion shares of Minerco that he covertly acquired and then caused himself or entities under his control to receive at least $2.5 million from the sale of the shares. Shumake’s scheme to defraud allegedly caused the share price of, and demand for, Minerco’s securities to artificially increase, ultimately resulting in Minerco investors’ losing millions of dollars.
After learning of an SEC investigation into Minerco, Shumake allegedly obstructed the SEC proceedings by deleting the contents of at least one Minerco email account, which Shumake used to conduct Minerco business.
Shumake is charged with one count of securities fraud and one count of obstruction. If convicted, he faces a maximum penalty of 20 years in prison on each count.
The chief executive officer of Minerco, Julius Jenge, was arrested earlier this year on charges of securities fraud related to a scheme to defraud investors in Minerco.
Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; SEC Inspector General Deborah Jeffrey; and Inspector in Charge Eric Shen of the U.S. Postal Inspection Service (USPIS) Criminal Investigations Group made the announcement.
The SEC Office of Inspector General and USPIS are investigating the case.
Trial Attorney Kyle Crawford of the Criminal Division’s Fraud Section is prosecuting the case.
If you believe you are a victim in this case, please contact the Fraud Section’s Victim Witness Unit toll-free at (888) 549-3945 or by email at [email protected]. You are also encouraged to visit the webpage for this case at www.justice.gov/criminal/case/united-states-v-bobby-shumake-japhia.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Justice Department, Federal Trade Commission and Consumer Financial Protection Bureau Warn Consumers About Potential Scams and Price Gouging in the Wake of Hurricanes and other Natural DisastersRead the Press Release
As the nation braces for another major hurricane, the Justice Department, along with the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB), is warning consumers about those looking to take advantage of natural disasters by engaging in potential fraud, price gouging and collusive schemes.
Scammers quickly exploit weather emergencies and take advantage of people trying to recover or donate to disaster victims. Weather emergencies provide disruptions to the supply chain, which can also provide opportunities for wrongdoers to engage in collusive schemes that inflate prices charged to customers who are under extreme stress and therefore unable to fight back against collusive or anticompetitive prices.
“Companies are on notice: do not use the hurricane as an excuse to exploit people through illegal behavior,” said Deputy Assistant Attorney General Manish Kumar of the Justice Department’s Antitrust Division. “The Antitrust Division and its law enforcement partners will act quickly to root out anticompetitive behavior and use every tool available to hold wrongdoers accountable.”
“Wrongdoers are looking to exploit opportunities and victims of natural disasters for their own personal gain,” said U.S. Attorney Ronald C. Gathe Jr. for the Middle District of Louisiana, who is also Executive Director of the National Center for Disaster Fraud (NCDF). “The Justice Department, including the NCDF, stands ready to prevent these bad actors from fraudulent activity. We are here to support victims of natural disasters during these difficult times together with our state, local and federal partners, and agencies. In an effort to assist the most vulnerable neighbors who are susceptible to these types of fraudulent schemes, we encourage you to be diligent in reporting suspicious activity on their behalf.”
“As Americans seek safety from natural disasters, we’re hearing troubling reports of price gouging for essentials that are necessary for people to get out of harm’s way — from hotels to groceries to gas,” said FTC Chair Lina M. Khan. “No American should have to worry about paying grossly inflated prices when fleeing a hurricane. In partnership with state enforcers, the FTC will keep fighting to ensure that Americans can get the relief they need without being ripped off by bad actors exploiting a crisis.”
“Price gouging during a natural disaster is just plain wrong, and excessive price increases can be unfair under the law,” said CFPB Director Rohit Chopra. “The CFPB will be on the lookout for financial companies that take advantage of natural disasters to rip people off.”
Possible types of natural disaster scams include:
- Fraudulent charities soliciting donations for disaster victims that often imitate the names of charities linked to the disaster;
- Scammers impersonating government officials, offering disaster relief in exchange for personal information or money;
- Scammers promoting non-existent businesses or investment opportunities related to disaster recovery, such as rebuilding or flood-proofing;
- Price gouging for essential goods and services needed by disaster victims; and
- Businesses using supply chain disruptions as a cover for collusion to overcharge customers.
To avoid scams and frauds while you’re recovering from a hurricane or another natural disaster, remember only scammers will insist you pay for services by wire transfer, gift card, payment app, cryptocurrency or in cash. Avoid anyone who promises they can help you qualify for relief for a fee. That’s a scam. You are not required to pay a fee to get disaster relief. Never sign your insurance check over to someone else. Be sure to research contractors and get estimates from more than one before signing a contract for work. Get a written contract for repairs and read it carefully before signing it.
The Justice Department established the NCDF in the wake of Hurricane Katrina to deter, investigate and prosecute fraud in the wake of disasters. More than 50 federal, state and local agencies participate in the NCDF, which reminds the public to be aware of and report any instances of alleged fraudulent activity related to relief operations and funding for victims. Complaints of fraud may be reported online at www.justice.gov/DisasterComplaintForm. Complaints may also be reported to the NCDF at (866) 720-5721, a hotline that is staffed 24 hours a day, seven days a week.
Consumers and businesses with concerns about potentially anticompetitive conduct like price-fixing, bid-rigging, or customer-allocation can report those concerns to the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or by visiting www.justice.gov/atr/report-violations.
Justice Department Obtains Injunction to Prevent California Company from Manufacturing and Distributing Adulterated Food Following Listeria OutbreakRead the Press Release
A federal court yesterday enjoined a California company from manufacturing and distributing adulterated food products following a listeria outbreak linked to multiple hospitalizations and two deaths.
In a civil complaint filed on Sept. 27 in the U.S. District Court for the Eastern District of California, the United States alleged that Rizo Lopez Foods Inc., along with its president, chief executive officer and co-owner, Edwin Rizo, and its chief financial officer, secretary and co-owner Tomas Rizo, violated the Federal Food, Drug and Cosmetic Act (FDCA) at the company’s facility in Modesto, California, by manufacturing and distributing adulterated food products. Rizo Lopez Foods produced cotija cheese and other cheeses, yogurt, sour cream and other foods sold under the brand names Tio Francisco, Don Francisco, Rizo Bros, Rio Grande, Food City, El Huache, La Ordena, San Carlos, Campesino, Santa Maria, Dos Ranchitos, Casa Cardenas and 365 Whole Foods Market.
The complaint further alleged that, in January, Hawaiian state health officials detected Listeria monocytogenes (L. mono), the bacterial pathogen that can cause listeriosis, in cheese made by the defendants. The government further alleged that during a subsequent inspection of the defendant’s facility, the Food and Drug Administration (FDA) found L. mono in two locations as well as various insanitary conditions. The complaint alleged that a genetic analysis matched the L. mono strain collected in Hawaii to the strain from defendants’ facility, as well as to L. mono samples from patients sickened as early as 2014 during a years-long listeriosis outbreak. An investigation by the Centers for Disease Control identified 26 cases of listeriosis in 11 states linked to the same L. mono strain. The CDC reported that 23 individuals were hospitalized as a result of the outbreak, including two patients who died. In February, Rizo Lopez recalled all cheese and dairy products produced at their facility.
“Food manufacturers have an important responsibility to ensure the safety of their products,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Justice Department and FDA will continue to work closely on enforcement actions against food manufacturers who fail to meet their obligations and put the health of their customers at risk.”
“Food producers in the Eastern District of California feed the nation,” said U.S. Attorney Phillip A. Talbert for the Eastern District of California. “Our office is committed to assuring compliance with the FDCA throughout the District.”
The defendants agreed to settle the suit and be bound by a consent decree of permanent injunction. The injunction entered by the court permanently enjoins the defendants from violating the FDCA. As part of the settlement, the defendants represented that they have discontinued all operations related to preparing and processing food. Under the permanent injunction, the defendants must notify FDA in advance of resuming such operations, comply with specific remedial measures set forth in the injunction and allow FDA to inspect their facility, including the buildings, sanitation-related systems, equipment, utensils, all articles of food and relevant records.
Trial Attorney David G. Crockett Jr. and Senior Trial Attorney James Nelson of the Justice Department’s Civil Division prosecuted this case, with assistance from Assistant Chief Counsel for Enforcement Lauren Fash of the FDA’s Office of Chief Counsel.
Additional information about the Consumer Protection Branch and its enforcement efforts can be found at www.justice.gov/civil/consumer-protection-branch.
The claims resolved by the consent decree announced today are allegations only. There has been no determination of liability.
Consent Decree
NH Learning Solutions Corporation Agrees to Pay $975,000 to Resolve False Claims Act Suit for Allegedly Inflating Post 9/11 GI-Bill Tuition BenefitsRead the Press Release
The Justice Department announced today that NH Learning Solutions Corp. (NHLS) has agreed to pay $975,000 to resolve allegations that it submitted false claims to the Department of Veterans Affairs (VA) for inflated educational assistance benefits under the Post-9/11 Veterans Educational Assistance Act of 2008 (Post-9/11 GI Bill). The United States filed suit against NHLS under the False Claims Act (FCA) in December 2022, in the U.S. District Court for the Eastern District of Michigan. Detroit-based NHLS provided technology-focused, non-college degree programs at locations across the Midwest and Northeast.
“The Post-9/11 GI Bill was designed to support the educational needs of our veterans, not to permit schools to illegally profit at the expense of the American taxpayers,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “Today’s settlement shows that the Justice Department will hold schools accountable for violating program requirements and submitting inflated claims for payment.”
“The Post-9/11 GI Bill benefits are part of our nation’s promise to the brave men and women who have served our country,” said U.S. Attorney Dawn N. Ison for the Eastern District of Michigan. “My office is committed to protecting the integrity of our federal programs to ensure the assistance reaches the intended beneficiaries.”
“Safeguarding Post-9/11 GI Bill education benefit funds reserved for deserving veterans remains a priority, and our investigators are working diligently in the field to ensure these programs are not exploited for financial gain,” said Special Agent in Charge Gregory Billingsley of the VA's Office of Inspector General (VA OIG)’s Central Field Office. “The VA OIG thanks the Justice Department for its efforts in this investigation.”
Under the Post-9/11 GI Bill, the VA pays tuition and fees directly to qualifying schools on behalf of enrolled students. For veteran students properly enrolled in a course, the VA pays the actual net cost for tuition and fees charged by the school, after it has applied any scholarships, waivers, grants or other assistance designed to defray the cost of tuition and fees, which is known as the “last payer rule.” The rule ensures that the VA is the payer of last resort and receives the benefit of any tuition-based, financial support available to a student.
The government’s amended complaint alleged that NHLS knowingly submitted false claims for inflated tuition and fees, in violation of the last payer rule, at five NHLS locations in Illinois, Ohio and Michigan. More specifically, the government alleged that NHLS repeatedly reported tuition and fees to the VA on student invoices, where it failed to deduct the tuition scholarships, grants or waivers it provided to certain veterans, thereby causing the VA to overpay NHLS for educational assistance benefits under the Post-9/11 GI-Bill for these veterans.
The lawsuit is captioned United States v. NH Learning Solutions Corp. No. 2:22-cv-13045 (EDMI). The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Eastern District of Michigan, with substantive assistance from VA OIG.
Senior Trial Counsel Christopher Wilson of the Civil Division and Assistant U.S. Attorney Anthony C. Gentner for the Eastern District of Michigan handled the matter.
The claims asserted against defendant are allegations only. There has been no determination of liability.
Settlement
California Tax Preparer Sentenced for Preparing False ReturnsRead the Press Release
A California man was sentenced yesterday to six years in prison for preparing false tax returns for clients.
According to court documents and statements made in court, Salvador Gonzalez, of Corona, operated for more than a decade Grace’s Lighthouse Resource Center Inc., a return-preparation business.
During that time, on thousands of returns he prepared for clients, Gonzalez consistently claimed false deductions like charitable donations and medical expenses, which reduced the amount of income taxes his clients paid. Gonzalez also directed his clients to create sham corporations and fraudulently deduct personal expenses — such as their mortgage, car and utility payments — as business expenses on the tax returns filed for these phony corporations. These fabricated losses flowed through to the clients’ individual income tax returns, thereby fraudulently reducing the amount of individual income taxes they paid.
In total, Gonzalez caused a tax loss to the IRS of at least $28 million.
In addition to his prison sentence, the court ordered Gonzalez to serve one year of supervised release and to pay $403,908 in restitution to the United States.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Martin Estrada for the Central District of California made the announcement.
IRS Criminal Investigation investigated the case.
Trial Attorney Lauren K. Pope of the Justice Department’s Tax Division and Assistant U.S. Attorney Eli A. Alcaraz for the Central District of California prosecuted the case.
Consistent with the plea agreement, the U.S. Attorney’s Office’s Tax Section filed a civil complaint against Gonzalez in U.S. District Court for the Central District of California. The complaint seeks to permanently enjoin Gonzalez from preparing, assisting in, directing or supervising the preparation or filing of federal tax returns, amended tax returns or other related documents or forms for others. The civil complaint alleges that over a period of years, Gonzalez prepared tax returns that understate the federal income-tax liability of his customers using a scheme which has harmed the United States, the IRS, his customers and the public. Yesterday, Gonzalez consented to the entry of the civil judgment and permanent injunction.
Taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers. The IRS has information on its website for choosing a tax return preparer and has launched a free directory of federal tax preparers. The IRS also offers tips to recognize tax scams and fraud.
In the past decade, the Justice Department has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page.
Bob Dean Jr. and Affiliated Corporate Entities Agree to $8.2M Consent Judgment to Resolve Allegations of Financial Misconduct Stemming from Evacuation of Nursing Homes During Hurricane IdaRead the Press Release
Bob Dean Jr. and several companies that he owned and operated have agreed to an $8.2 million consent judgment to resolve allegations that they violated the National Housing Act of 1934 (NHA), by misappropriating and misusing the assets and income of four nursing homes in Louisiana before and after Hurricane Ida’s landfall in August 2021. The four nursing homes, all of which were owned and operated by Dean and his companies, and had loans insured by the Federal Housing Administration (FHA), are Maison De’Ville Nursing Home in Houma; Maison De’Ville Nursing Home in Harvey; Maison Orleans Healthcare in New Orleans; and West Jefferson Health Care Center in Harvey.
The FHA, part of the Department of Housing and Urban Development (HUD), provides mortgage insurance on loans that cover residential care facilities, such as nursing homes, pursuant to the NHA. To encourage lenders to make loans to such facilities, FHA mortgage insurance provides lenders with protection against losses that result from borrowers defaulting on their mortgage loans. To obtain such FHA-insured loans, loan recipients must enter into regulatory agreements with the FHA that provide, among other requirements, that the assets and income of an FHA-insured nursing home may only be spent on goods and services that are reasonable and necessary to the operation of the nursing home. The NHA permits the United States to recover twice the amount of any assets and income of FHA-insured nursing homes that were improperly distributed or misspent.
In 2023, the government filed a complaint against Dean and his corporate entities alleging that they misspent the nursing homes’ assets and income. The United States alleged that in the five years leading up to Hurricane Ida, Dean funneled money that should have been used to prepare an evacuation site for nursing home residents to his personal bank accounts, leaving his nursing homes — and, more importantly, the nursing homes’ residents — unprepared for a hurricane. As a result, when Hurricane Ida made landfall in August 2021, the residents of Dean’s nursing homes had to ride out the storm in an overcrowded and ill-prepared industrial warehouse Dean owned through a corporate entity. The United States alleged that at Dean’s evacuation center, his nursing homes’ residents languished in squalor and did not receive adequate care, leading to the Louisiana Department of Health evacuating the nursing home residents from Dean’s warehouse and revoking Dean’s nursing homes’ licenses. The United States further alleged that, following the hurricane, Dean did not use the homes’ income and assets solely to operate or maintain the nursing homes, but instead to purchase personal goods and services, including antiques, firearms and cars.
“This settlement demonstrates the department’s continuing commitment to holding accountable those who put their own financial gain over the needs of our nation’s seniors,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to take action to protect the integrity of federal programs designed to ensure that nursing home residents, who are among our most vulnerable citizens, receive appropriate care.”
“As the residents of Louisiana well know, hurricanes and natural disasters can devastate people’s lives,” said U.S. Attorney Ronald C. Gathe Jr for the Middle District of Louisiana. “Nursing home operators like Mr. Dean have an obligation to protect their residents during such events, particularly if they are going to rely on federal programs to support or sustain their businesses. This settlement will ensure that those individuals charged with caring for our community’s most vulnerable residents take seriously their duty to have proper safeguards and plans in place to avoid tragedies like the one we saw in Independence, Louisiana, after Hurricane Ida.”
“Nursing home providers have obligations to protect the health, safety, and welfare of residents entrusted to their care,” said HUD General Counsel Damon Smith. “Owners of FHA-insured nursing homes should be on notice that we will hold them accountable when we learn of allegations that they have failed to meet those obligations.”
“By the time Hurricane Ida bore down on the vulnerable nursing home residents at properties operated by Mr. Dean, he illegally skimmed funding from those facilities and failed to maintain sanitation and adequately equip the warehouse he designated as the evacuation site,” said HUD Inspector General Rae Oliver Davis. “He unfairly enriched himself while residents under his charge endured horrid conditions including insufficient food and medical care. HUD OIG will continue to work with our law enforcement and prosecutorial partners to hold accountable those who misappropriate funds at the expense of vulnerable populations.”
The Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Middle District of Louisiana handled the case, with substantial assistance from HUD and HUD’s Office of Inspector General. Trial Attorneys Christopher Reimer and Samuel Robins of the Civil Division’s Fraud Section and Assistant U.S. Attorneys Davis Rhorer Jr. and Chase Zachary for the Middle District of Louisiana handled the matter.
The United States’ complaint stemmed from an investigation that the Justice Department initiated as part of its Elder Justice Initiative, which supports the efforts of state and local prosecutors, law enforcement and other elder justice professionals to combat elder abuse, neglect and financial exploitation, with the development of training, resources and information. Learn more about the Justice Department’s Elder Justice Initiative at www.justice.gov/elderjustice.
The claims settled by this agreement are allegations only. There has been no determination of liability.
Owner of Massachusetts Cellular Phone Tower Installation and Repair Business Pleads Guilty to Employment Tax CrimesRead the Press Release
A Massachusetts man pleaded guilty on Friday to willful failure to collect, account for and pay over any payroll taxes owed by businesses he owned and controlled.
According to court documents, Kenneth Marston, of Kingston, was the owner and operator of Bowmar Steel Industries Inc., a steel fabrication company, and Teleconstructors Inc., which provided installation services on cellular phone towers. Marston was responsible for withholding Social Security, Medicare and income taxes from his employees’ paychecks and paying those funds over to the IRS.
However, from approximately March 2015 through December 2018, Marston caused Bowmar Steel and Teleconstructors to not withhold taxes or pay them to the IRS on approximately $3.8 million in wages.
In total, Kenneth Marston caused a tax loss to the IRS of between $550,000 and $1.5 million.
Marston is scheduled to be sentenced on Jan. 3. He faces a maximum penalty of five years in prison. He also faces a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts made the announcement.
IRS Criminal Investigation is investigating the case.
Trial Attorney Mark McDonald of the Tax Division and Assistant U.S. Attorney James R. Drabick for the District of Massachusetts are prosecuting the case.
Omaha Man Sentenced for Methamphetamine ConspiracyRead the Press Release
United States Attorney Susan Lehr announced that Randall Lee Duncan, age 64, of Omaha, Nebraska, was sentenced October 3, 2024, in federal court in Omaha for his participation in a methamphetamine drug conspiracy. Chief United States District Judge Robert F. Rossiter, Jr. sentenced Duncan to 96 months’ imprisonment. There is no parole in the federal system. After Duncan’s release from prison, he will begin a 3-year term of supervised release. Duncan also agreed to the forfeiture of his 2014 Ford F-250 King Ranch Super Duty Crew Cab pickup which was used to facilitate the drug conspiracy.
As part of a long-term investigation into a known source-of-supply (SOS) operating out of Mexico, the DEA began investigating various related meth distributors operating in the Omaha metro area. One of the local distributors was identified as Randall Duncan.
Beginning on August 17, 2022, Duncan arranged with the SOS to purchase meth for distribution, and DEA surveilled Duncan’s meeting with another known distributor working for the SOS. Following the meeting, Duncan messaged the SOS with complaints about the quality of the meth he had received. Duncan sent a text message photograph of a bag of meth. Law enforcement obtained the photograph.
In April 2023, law enforcement utilized a confidential source to purchase one pound of meth from Duncan. Law enforcement ultimately searched Duncan’s residence and located an additional seven pounds of meth.
This operation was part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and
transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.
This case was investigated by the Drug Enforcement Administration, the Omaha Police Department, and Bellevue Police Department.
Readout of Deputy Attorney General Lisa Monaco’s Trip to the G7 Interior Minister’s Meeting in ItalyRead the Press Release
Deputy Attorney General (Deputy AG) Lisa Monaco traveled to Mirabella Eclano, Italy, on Oct. 3-4 for the G7 Interior Ministers Meeting, where she highlighted the importance of international partnerships in supporting the rule of law and protecting against persistent global threats.
The Deputy AG described the current threat environment to her G7 colleagues as a time where the threats have never been more diverse — from more aggressive actors — and all fueled by international conflicts and emerging, disruptive technologies — especially cyber and AI. She urged the ministers to stay united against threats posed by autocratic nations like Russia, Iran, and China looking to project power at home and abroad through transnational repression, malicious cyber activity, the abuse of emerging technologies, such as AI and cryptocurrencies, and malign foreign influence — especially in a global election year.
The Deputy AG joined her colleagues in committing to deepening international collaboration against these threats, as well as against terrorism, malign cyber actors, and synthetic drugs such as fentanyl. She shared how the Justice Department is targeting the broader ecosystem that allows cyber criminals and malign nation state actors to flourish — by prioritizing disruptions and placing victims first — and also highlighted how the Department is tackling all aspects of the deadly fentanyl supply chain, in every part of the globe, to protect innocent lives.
Ahead of the one-year anniversary of Hamas’s brutal October 7 terrorist attacks in Israel, the Deputy AG and Ministers unequivocally condemned terrorism and violent extremism in all forms, both online and offline. They pledged to continue the information sharing and law enforcement partnerships that are integral to thwarting acts of terror around the world.
The Deputy AG and ministers also met virtually with Ukrainian Interior Minister, Ihor Klymenko, and reaffirmed their unwavering support for Ukraine and their resolve to hold Russia accountable for the war crimes and atrocities it is perpetrating in its war of aggression. She reiterated the need for sustained coordination in these efforts and underscored the Justice Department’s continued efforts to deprive the Russian war machine of funding and supplies. She joined the other ministers in announcing new efforts to help Ukraine build the rule of law and fight corruption, including through a new G7 Anti-Corruption Task Force.
As part of their efforts to build cooperation and coordination among the G7 to promote the rule of law around the world, the Deputy AG and Ministers discussed common frameworks to harness the promise of AI while also protecting against the perils of its abuse. The Deputy AG cautioned that AI is changing how crimes are committed, from intensifying cyberattacks, to making fraud scams more believable, to creating child exploitative material, to supercharging malign foreign influence in elections.
On the margins of the G7 Ministerial, the Deputy AG held several bilateral meetings, including with United Kingdom Home Secretary Yvette Cooper; Canadian Minister of Public Safety Dominic Leblanc; German Minister of Interior Nancy Faeser; and European Commissioner for Home Affairs Ylva Johansson. The Deputy AG also met with the G7 host, Italian Minister of the Interior Matteo Piantedosi, to thank him for his leadership of the G7 and his hospitality. In all these discussions, the Deputy AG reinforced the steadfast commitment of the Justice Department to partnerships that uphold the rule of law and strengthen democracies around the world.
Italian Minister of the Interior Matteo Piantedosi welcoming Deputy AG Monaco to the G7 Ministerial. Photo credit: Italian Ministry of the Interior. Deputy AG Monaco with UK Home Secretary Yvette Cooper. Photo credit: UK Home Office. Deputy AG Monaco with G7 leaders. Photo credit: Italian Ministry of the Interior. Deputy AG Monaco meeting with Italian Minister of the Interior Matteo Piantedosi. Photo credit: Italian Ministry of the Interior.Michigan Attorney Indicted on Tax ChargesRead the Press Release
A federal grand jury in Detroit charged a Michigan attorney yesterday with filing false tax returns and willfully failing to file tax returns.
According to the indictment, Shawn Smith, who calls himself “Shawn the Law,” is a lawyer residing in Birmingham. For 2017 through 2020, Smith allegedly filed false individual income tax returns that did not report hundreds of thousands of dollars of gross receipts that he earned from his law business. In addition, Smith allegedly did not file an individual income tax return for 2021 and 2022.
If convicted, Smith faces a maximum penalty of three years in prison for each false return count and a maximum penalty of one year in prison for each count of failing to file a tax return. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, U.S. Attorney Dawn N. Ison for the Eastern District of Michigan and IRS Special Agent in Charge Charles Miller made the announcement.
IRS Criminal Investigation is investigating the case.
Trial Attorneys Jeffrey A. McLellan and Kenneth C. Vert of the Tax Division are prosecuting the case.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Men Sentenced to Prison for Multiple RobberiesRead the Press Release
BIRMINGHAM, Ala. – A federal judge has sentenced two Birmingham men for committing armed robberies, announced U.S. Attorney Prim F. Escalona and FBI Special Agent in Charge Carlton L. Peoples.
Chief U.S. District Court Judge R. David Proctor sentenced Dedrick Taylor, 33, of Birmingham, to 155 months in prison. In July, Taylor pleaded guilty to two counts of Hobbs Act Robbery, possession of a firearm during a crime of violence, and felon in possession of a firearm. According to the plea agreement, on April 14, 2022, Taylor committed two armed robberies at businesses in Birmingham—a Citgo gas station and a Dollar General store.
Previously, Chief Judge Proctor sentenced co-defendant Dominic Bimbow, 31, of Birmingham, to 120 months in prison for his role as Taylor’s getaway driver for both robberies. That sentence followed Bimbow’s guilty pleas to two counts of Hobbs Act Robbery, possession of a firearm during a crime of violence, and felon in possession of a firearm.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the Department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results. For more information about Project Safe Neighborhoods, please visit Justice.gov/PSN.
Justice Department to Award More Than $84M in Grants to American Indian and Alaska Native TribesRead the Press Release
The Justice Department has awarded 152 grants to 90 American Indian and Alaska Native Tribes through its Coordinated Tribal Assistance Solicitation (CTAS), totaling more than $84 million.
Attorney General Merrick B. Garland announced these awards during a Justice Department and Department of the Interior convening with Tribal leaders, advocates, members of the media, and federal officials to discuss how media coverage can be channeled to help address the crisis of missing or murdered Indigenous peoples (MMIP) and human trafficking (HT).
The grants awarded under CTAS are designed to help enhance Tribal justice systems and strengthen law enforcement responses, improve the handling of child abuse cases, combat domestic and sexual violence, support Tribal youth programs, and fund an array of services for American Indian and Alaska Native crime victims. The CTAS awards are administered through the Office of Justice Programs (OJP) and the Office of Community Oriented Policing Services (COPS Office).
“We have heard from Tribal leaders about the complex public safety challenges their communities are facing and about the innovative and culturally appropriate solutions they propose to meet those challenges,” said Acting Assistant Attorney General Brent J. Cohen of OJP. “These investments in Tribal community safety infrastructure, Tribal youth programs, law enforcement activities in Indian country, and services for American Indian and Alaska Native survivors represent a strong and steady commitment on the part of the Office of Justice Programs to the safety of Tribal communities.”
Of the more than $84 million in grants awarded under CTAS, a streamlined application that helps Tribes apply for Tribal-specific grant programs, OJP funded more than $53 million in awards, and the COPS Office funded more than $31 million.
OJP funding supports system-wide strategic planning, the strengthening of Tribal justice system infrastructure, the investigation and prosecution of child abuse cases, juvenile healing to wellness courts, and tribal programs for youth.
The COPS Office awarded funds to assist 49 Tribes in hiring personnel, purchasing equipment, and making training grants to expand the implementation of community policing. This CTAS funding can be used to hire or re-hire full-time career law enforcement officers, village public safety officers, and school resource officers and to procure essential equipment, technology, and training to assist in initiating or enhancing Tribal policing efforts.
“The COPS Office is honored to continue assisting with our Tribal partners by providing funding for vital resources that help law enforcement agencies improve services to both their officers and the communities they serve,” said Director Hugh T. Clements Jr. of the COPS Office. “This support is integral to enhancing public safety, protecting the community and continuing to build trust and sustain relationships.”
In addition to the CTAS awards, OJP’s Office for Victims of Crime awarded nearly 200 grants totaling more than $54 million through the Tribal Victim Services Set-Aside to provide services for crime victims in Tribal communities.
Additionally, OJP’s Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking awarded 20 Tribes a total of $7 million to assist in their development of registration and notification.
Justice Department and Federal Trade Commission Meet with G7 Enforcement Partners in Rome to Discuss the Challenges of Ensuring Competition in AIRead the Press Release
The Justice Department’s Antitrust Division and the Federal Trade Commission participated in the G7 Competition Authorities and Policymakers Summit yesterday and today to discuss how enforcers and policymakers can ensure healthy competition in AI-related technologies, products and applications.
The Summit was convened by the G7 Industry, Technology and Digital Ministerial Declaration and hosted in Rome by the Italian Competition Authority (Autorità Garante della Concorrenza e del Mercato). The Antitrust Division was led by Principal Deputy Assistant Attorney General Doha Mekki.
“Sharing the United States’ experiences and perspectives and reflecting on best practices alongside international enforcers helps us better apply the U.S. antitrust laws to unlock economic opportunity for the American people,” said Principal Deputy Assistant Attorney General Doha Mekki. “We thank Italy for organizing an exceptional G7 summit and for driving a timely conversation on promoting competition in AI.”
At the conclusion of the Summit, G7 competition authorities and policymakers issued a communiqué, which highlights potential competition concerns in AI-related markets and identifies guiding principles to apply to ensure healthy competition in AI. The communiqué also underscores the important role that competition authorities and policymakers have in addressing competitive threats, emphasizing that the potential risk of concentrated market power in AI-related markets and possible collusion or improper information sharing using AI technologies necessitate careful vigilance and vigorous and timely competition enforcement. The G7 competition authorities and policymakers are committed to working to safeguard open and fair competition in digital markets and AI, and to ensure that the benefits of AI are fully realized and widely available in our societies.
Federal Court Issues Preliminary Injunction Against Town of Thornapple, Wisconsin, Requiring Use of Accessible Voting System during November ElectionRead the Press Release
The Justice Department announced today that a federal court in the Western District of Wisconsin has entered a preliminary injunction requiring the Town of Thornapple, Wisconsin, to comply with federal law by offering an accessible voting system at each of its polling places during the Nov. 5 federal general election.
“This preliminary injunction affirms the right of voters with disabilities to participate on the same terms as every other voter,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Help America Vote Act protects that right in every town in Wisconsin, and every jurisdiction across the country, by requiring that every voter has the opportunity to use an accessible voting system.”
The United States filed a complaint on Sept. 20 alleging that the Town of Thornapple, among other defendants, had violated Section 301 of the Help America Vote Act (HAVA) by failing to provide voting systems that allowed voters with disabilities to participate in the same private and independent manner as other voters during Wisconsin’s April and August federal primary elections. The preliminary injunction requires Thornapple to comply with Section 301 of HAVA by making available an accessible system during the Nov. 5 federal general election. The injunction also requires Thornapple to prominently post signage alerting voters that an accessible system is available for use, to train election officials on the use of that system, to certify to the court by Oct. 31 that its accessible system is ready for use in the November general election and to allow Justice Department personnel to monitor compliance with the terms of the injunction.
Congress passed HAVA in 2002 in part to make in-person voting more accessible for voters with disabilities. Among other things, Section 301 of HAVA requires that each polling place used for federal elections provide at least one voting system that provides voters with disabilities the same opportunity for access and participation as other voters are provided, including the same opportunity to cast ballots privately and independently.
More information about voting and elections, including guidance documents and other resources, is available at www.justice.gov/voting. Learn more about HAVA and other federal voting laws at www.justice.gov/crt/voting-section. Complaints about possible violations of federal voting rights laws can be submitted at civilrights.justice.gov or by telephone at 1-800-253-3931.
California Real Estate Agent Charged with Tax CrimesRead the Press Release
A federal grand jury in Los Angeles returned an indictment yesterday charging a California man with evading the payment of his individual income taxes and obstructing the IRS in its efforts to collect those taxes.
According to the indictment, Gabriel Guerrero, a Los Angeles-based commercial real estate agent, did not timely file tax returns for many years. In 2014, he allegedly filed more than 10 years’ worth of returns but did not pay the amounts he self-reported he owed. When the IRS began trying to collect those outstanding taxes, Guerrero allegedly sought to prevent the IRS from being able to do so in at least two ways: by not depositing substantial commission checks he earned from commercial real estate sales into his bank accounts and using cashier’s checks to circumvent IRS levies of those accounts. The indictment also alleges that Guerrero further obstructed collection efforts by submitting false financial disclosure forms to the IRS, which significantly underreported his income and by not disclosing a bank account he used to deposit his income.
In total, Guerrero is alleged to have caused a tax loss to the IRS of more than $350,000.
If convicted, he faces a maximum penalty of five years in prison for tax evasion and three years in prison for obstructing the IRS. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Martin Estrada for the Central District of California made the announcement.
IRS Criminal Investigation is investigating the case.
Trial Attorneys Robert Kemins and Christopher Gerace of the Tax Division and Assistant U.S. Attorney Steven Arkow for the Central District of California are prosecuting the case.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Attorney General Merrick B. Garland Statement Marking One Year Since Hamas’s October 7 Terrorist Attacks in IsraelRead the Press Release
The Justice Department issued the following statement from Attorney General Merrick B. Garland marking one year since Hamas’s October 7 terrorist attacks in Israel:
“Monday, October 7 will mark one year since Hamas terrorists murdered nearly 1,200 people, including more than 40 Americans, kidnapped hundreds of civilians, and perpetrated the deadliest massacre of Jews since the Holocaust.
As made clear by the charges we recently unsealed against Yahya Sinwar and other senior leaders of Hamas, the Justice Department is committed to pursuing the terrorists responsible for murdering Americans — and those who illegally provide them with material support — for the rest of their lives. We are targeting every aspect of Hamas’s operations, and our work is far from over.
We are also committed to continuing to combat the disturbing rise in the volume and frequency of threats against Jewish, Muslim, Arab, and Palestinian communities here in the United States that we saw in the wake of last year’s attacks. The Justice Department has responded forcefully to these threats, and we have no tolerance for unlawful acts fueled by hatred of any kind.
We also recognize that as we mark one year since the attacks, we do so at a time when millions of Jewish Americans are observing the High Holidays. Today, and every day, the Justice Department reaffirms its commitment to ensuring that Jews in this country feel safe and are protected. No person and no community should have to live in fear of hate-fueled violence, and the Justice Department will aggressively investigate and prosecute criminal acts and threats of hate whenever and wherever they occur.”
Readout of the Criminal Division’s Symposium on Artificial Intelligence in the Justice DepartmentRead the Press Release
The Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) co-hosted the Artificial Intelligence in the Department of Justice Symposium in Washington, D.C., at the Center for Strategic and International Studies (CSIS) on Oct. 2.
Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Criminal Division, kicked off the symposium by delivering a keynote speech describing the promises and perils of artificial intelligence (AI) and announcing a new Strategic Approach to Countering Cybercrime that is part of the division’s plan to combat cybercrime and other offenses enabled by emerging technology like AI. The Strategic Approach emphasizes the division’s focus on using all tools to disrupt criminal activity and hold criminal actors accountable, developing law and policy to prevent and prosecute cybercrime, and promoting cybersecurity through capacity building and public education.
As part of the Strategic Approach’s focus on developing law and policy to prevent and prosecute cybercrime, PDAAG Argentieri announced the division’s support for the UN Convention on Cybercrime, which the department negotiated along with its interagency partners to address the need for international cooperation on combatting cybercrime while protecting civil rights.
In addition, PDAAG Argentieri announced that, as part of the Strategic Approach’s focus on promoting cybersecurity, the division will engage with external stakeholders to update CCIPS’s Vulnerability Disclosure Framework to foster the responsible use of vulnerability testing and reporting and to account for the need for good-faith security research into AI systems. As PDAAG Argentieri noted, such research can help identify systems whose operations or outputs are unsafe, inaccurate, or ineffective for their intended uses and can protect against potentially serious harms to individual rights.
A newly released Fact Sheet illustrates the recent enforcement actions that CCIPS has taken in furtherance of its Strategic Approach. Since 2021, CCIPS, working with domestic and international law enforcement partners, has:
Disrupted seven of the most prolific ransomware variants, including by seizing their infrastructure and distributing their decryption keys to victims—thereby saving victims from having to pay hundreds of millions of dollars in ransom payments;
Ended the operation of a malicious proxy service, three criminal cryptocurrency money laundering or transmitting services, two major hacker forums, and two online criminal marketplaces — thereby disrupting criminals who were using those services for narcotics trafficking, computer crimes, identity theft, and child exploitation;
Liberated more than 20 million computers from botnets or other forms of malicious software; and
Publicly announced the conviction of over 100 defendants in connection with schemes involving ransomware, malware, criminal marketplaces, and cryptocurrency.
The symposium was attended by members of government, industry, academia, civil society, and the public, and a recording of the livestream is available on the symposium webpage.
PDAAG Argentieri Delivers Remarks at the Symposium on Artificial Intelligence in the Justice Department.Miami Tax Return Preparers and Brothers Agree to Permanent InjunctionRead the Press Release
The U.S. District Court for the Southern District of Florida issued a permanent injunction today against Miami tax return preparers and brothers, George and Luis Brito, and their businesses. The permanent injunction bars George Brito from preparing federal income tax returns, working for or having any ownership stake in any tax preparation business, assisting others (including family members) prepare tax returns or set up business as a preparer and transferring or assigning customer lists to any other person or entity. The court similarly enjoined Luis Brito, George’s brother, from preparing income tax returns for individuals. The Britos consented to entry of the permanent injunction against them.
The complaint alleged that George and Luis Brito owned or controlled Brito and Brito Accounting USA Inc. According to the complaint, the Brito brothers prepared returns for customers that claimed various false or fabricated deductions and credits, including fabricated residential energy credits, false and exaggerated itemized deductions and fictitious and inflated business expenses.
According to the permanent injunction, George Brito and his businesses are forever barred from preparing returns for others and from any involvement in the preparation of federal tax returns. He has closed his office located at 407 Lincoln Rd #9A, Miami Beach, FL 33139.
The terms of the agreed order require Luis Brito to inform his customers that has been permanently enjoined from preparing tax returns except for certain types of business forms, including those reporting payroll, unemployment and corporate income taxes. The agreed order states that as a condition for being allowed to prepare those forms, the IRS is allowed to make unscheduled and random on-site visits to Luis Brito’s business and requires him to complete at least 24 hours of tax preparation education by Dec. 31.
Deputy Assistant Attorney General David A. Hubbert of the Justice Department’s Tax Division made the announcement.
Taxpayers seeking a return preparer should remain vigilant against unscrupulous tax preparers. The IRS has information on its website for choosing a tax return preparer and has launched a free directory of federal tax preparers.
In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.
Brito Consent Injunction.pdf