District Not Recorded

A federal jury in Detroit today convicted the office manager of a home health agency for her participation in a $5.8 million Medicare fraud scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Robert D. Foley III, Special Agent in Charge of the FBI Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Detroit Office.

Nabila Mahbub, 27, the office manager of All American Home Care Inc., was found guilty in U.S. District Court for the Eastern District of Michigan of one count of conspiracy to commit health care fraud.

Mahbub was charged in a superseding indictment returned March 27, 2012.  Nineteen other individuals who worked at or were associated with All American were previously convicted for their roles in the fraudulent scheme; one was acquitted at trial, but was convicted at trial for a separate, but related, scheme. 

According to evidence presented at trial, the defendant and her co-conspirators caused the submission of false and fraudulent claims to Medicare through All American, a home health care company located in Oak Park, Mich., that purported to provide skilled nursing and physical therapy services to Medicare beneficiaries in the greater Detroit area.

The evidence at trial showed that the defendant and her co-conspirators used patient recruiters, who paid Medicare beneficiaries to sign blank documents for physical therapy services that were never provided and/or medically unnecessary. The owners of All American paid physicians to sign referrals and other therapy documents necessary to bill Medicare. Physical therapists and physical therapist assistants then created fake medical records using blank, pre-signed forms obtained by the patient recruiters to make it appear as if physical therapy services were actually rendered, when, in fact, they were not.

According to evidence presented at trial, Mahbub doctored and directed the doctoring of fake patient files to facilitate the commencement and billing of home health services purportedly provided by physical therapists and physical therapist assistants working for All American. Mahbub also directed the physical therapists and physical therapist assistants who created fake therapy visit notes using blank, pre-signed forms, to make it appear that physical therapy services billed to Medicare were actually provided.

All American was paid over $5.8 million from Medicare between September 2008 and November 2009.

At sentencing, scheduled for July 25, 2013, Mahbub faces a maximum penalty of 10 years in prison.

This case is being prosecuted by Deputy Chief Gejaa T. Gobena and Trial Attorney Matthew C. Thuesen of the Criminal Division’s Fraud Section.  The investigation was led by the FBI and HHS-OIG, and was brought by the Medicare Fraud Strike Force, a joint effort of the U.S. Attorney’s Office for the Eastern District of Michigan and the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

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

Richard Castle, 46, a resident of the United Kingdom, has been extradited to the United States where he faces charges of coercion of a minor, travelling with intent to engage in illicit sexual contact with a minor, and transferring obscene material to minors. The charges are related to a trip he allegedly made to Ohio from his home in order to have sexual relations with a juvenile in June 2011.

Mythili Raman, Acting Assistant Attorney General of the Justice Department’s Criminal Division, Carter M. Stewart, U.S. Attorney for the Southern District of Ohio, and William A. Hayes, Acting Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Ohio and Michigan announced the charges today after Castle appeared before a U.S. Magistrate Judge in Dayton, Ohio, who ordered him held without bond pending trial.

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

The three-count indictment alleges that Castle, posing as a male named Richard Joshua Parker, used the internet between March 2009 and June 2011 to coerce a juvenile to engage in illicit sexual activity. He allegedly flew to Dayton in June 2011 to engage in illicit sexual relations with the juvenile and stayed approximately three weeks. The indictment also accuses Castle of transferring obscene materials to a juvenile.

Coercion and enticement of a minor is punishable by at least ten years in prison and up to life. Travel with intent to engage in illicit sexual conduct is punishable by up to 30 years and transfer of obscene material to minors is punishable by up to 10 years.

Raman and Stewart acknowledged the cooperative investigation by the Englewood Police Department, Vandalia Police Department and HSI special agents, as well as the invaluable support provided by the Miami Valley Regional Computer Forensics Laboratory, and the Ohio Internet Crimes Against Children Task Force, the U.S. Marshals Service, the HSI Attache London Office, and the assistance of the Justice Department’s Office of International Affairs in Castle’s extradition.

Assistant U.S. Attorney Sheila Lafferty with the Southern District of Ohio and Trial Attorney Mi Yung Claire Park with the Department of Justice’s Child Exploitation and Obscenity Section (CEOS) are representing the United States in the case.

An indictment is merely an accusation, and the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

The Attorney General released the following statement today on the ongoing investigation into the explosions in Boston: 

 

“I want to express my deepest sympathies to the victims of yesterday’s heinous attack in Boston, to those who suffered injuries, and to those who lost friends and loved ones. All of you will be in my thoughts and prayers.

 

“As our nation struggles to make sense of this attack, I want to assure the citizens of Boston – and all Americans – that the U.S. Department of Justice, the FBI, and all of our federal, state, and local partners are working tirelessly to determine who was responsible for these unspeakable acts, and to make certain they are held accountable to the fullest extent of the law and by any means available to us. To this end, I have directed that the full resources of the Department be deployed to ensure that this matter is fully investigated. We will continue working closely with the Boston Police Department and the Massachusetts State Police – who have performed superbly – to respond to this tragedy, to maintain a heightened state of security, and to prevent any future attacks from occurring.

 

“As President Obama stated earlier today, we are treating this event as an act of terror. This morning, I met with the President and my fellow members of his national security team to discuss our continuing response. Although it is not yet clear who executed this attack, whether it was an individual or group, or whether it was carried out with support or involvement from a terrorist organization – either foreign or domestic – we will not rest until the perpetrators are brought to justice. The FBI is spearheading a multi-agency investigation through the Boston Joint Terrorism Task Force. They are devoting extensive personnel and assets to this effort – and have already begun conducting exhaustive interviews, analyzing evidence recovered from the scene, and examining video footage for possible leads. In addition, the ATF is providing bomb technicians, explosives assets, and other substantial investigative support. The DEA and U.S. Marshals Service are providing further assistance. And the Office of Justice Programs will coordinate victim support that the City of Boston and the Commonwealth of Massachusetts may request under the Anti-terrorism Emergency Assistance Program.

 

“As our active and comprehensive investigation unfolds, these federal assets are coordinating with prosecutors from the U.S. Attorney’s Office for the District of Massachusetts, the Justice Department’s National Security Division, and federal agencies across the government – including members of the Intelligence Community. This matter is still in the early stages, and it’s important that we let the investigation run its full course. I urge members of the public to remain calm, cooperate with law enforcement, and be vigilant. The FBI has set up a tip line – at 1-800-CALL-FBI – for anyone who has information, images, or details relating to yesterday’s explosions along the Boston Marathon route. We are particularly interested in reviewing video footage captured by bystanders with cell phones or personal cameras near either of the blasts. In an investigation of this nature, no detail is too small.

 

“Finally, I want to recognize and thank all of the brave law enforcement officials, firefighters, National Guardsmen, medical staff, bystanders, and other first responders in Boston yesterday afternoon who heard the explosions, or received reports of casualties, or saw the shattered glass and rising smoke, and rushed to provide assistance to those in need.

 

“Each of these remarkable women and men placed the safety of others above their own. Their heroic actions undoubtedly saved lives. And their stories of courage and selflessness remind us that – even in our darkest moments – the American people have always displayed an extraordinary capacity for resilience. We will always be strongest when we stand united. And although today our hearts are broken, my colleagues and I are resolved to bring those responsible for this cowardly act to justice. We will be relentless in our pursuit of the individual or group that carried out this attack, while staying true to our most sacred values. And – as our investigation continues, I am confident that our nation will recover, and that we will emerge from this terrible tragedy not only safer, but stronger, than ever before.”

King County, Wash. and the city of Seattle have agreed to invest in major upgrades to local sewage and combined stormwater collection, piping and treatment under settlements with the Department of Justice and the U.S Environmental Protection Agency (EPA). The state of Washington was a co-plaintiff and partner in these settlements.

The agreements are the result of extensive federal and state government cooperation and pave the way for employing more “green infrastructure” projects like green roofs, permeable pavements and urban runoff gardens, which help reduce demands on local sewer and stormwater systems.

“Today’s settlement will substantially reduce overflows of sewage-contaminated stormwater into the Puget Sound and other area waterways and significantly benefit the environment and health of residents of King County and Seattle,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “The agreement provides a long-term planning approach to managing the area’s stormwater that integrates green infrastructure and requires improvements to system-wide sewer operations and maintenance.”

 “EPA is working with cities and counties to find smart, effective solutions to reduce raw sewage and contaminated stormwater,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s settlements allow Seattle and King County to use innovative solutions, like green infrastructure, to help dramatically improve local water quality.”
 
“We’re pleased with the commitments King County and Seattle make in these legal agreements to reduce and control these overflows off Seattle’s shores,” said Maia Bellon, Washington state Director of Ecology.  “The Consent Decrees allow flexibility in selecting and coordinating clean water projects, while setting firm dates to finish the job.”
 
 Both agreements allow the city and county to use an integrated planning approach, which encourages communities to set their own clean water project priorities and invest in fixing the most pressing problems first. The settlements also require King County and Seattle to develop and implement a joint plan to improve system-wide operations and maintenance, since Seattle conveys the combined sewage it collects to King County’s system for treatment prior to discharge.

KING COUNTY

Under the terms of the county settlement, King County will implement a long-term plan for controlling sewer overflows. By implementing these measures, King County will reduce its raw sewage discharges by approximately 95 to 99 percent, better protecting Puget Sound, Lake Washington and the Duwamish River from sewage-laced overflows. The improvements and upgrades are expected to cost approximately $860 million. In addition, King County will pay a civil penalty of $400,000.

The agreement allows the county to substitute green infrastructure projects, like green roofs, permeable pavements and urban gardens, which help reduce the demands on local sewer and stormwater systems, at four of its sewer overflow control projects. 

Between 2006 and 2010, King County discharged approximately 900 million gallons of raw sewage to waters of the United States on an annual basis through discharges from its combined sewer system. During this time period, the county also violated the effluent limitations of its discharge permit, including fecal coliform at more than one of its wastewater treatment plants, and allowed wastewater to bypass secondary treatment at one of its wastewater treatment plants in violation of its discharge permit and the Clean Water Act.

CITY OF SEATTLE

Under the settlement with the city of Seattle, the city will develop and implement a long-term plan for better controlling sewer overflows and improve system-wide operations and maintenance. The city will also implement plans to control fats, oils and greases, and reduce debris being discharged by the system. In addition, the settlement provides Seattle with the opportunity to also use an integrated planning approach and to substitute green infrastructure at several of its sewer overflow control projects. By implementing these measures, the city will reduce its raw sewage discharges by approximately 99 percent at an estimated cost of $600 million.  Seattle will also pay a civil penalty of $350,000.

Between 2007 and 2010, Seattle discharged approximately 200 million gallons of raw sewage into area waterways on an annual basis. During this time period, the city also improperly operated and maintained its sanitary sewer system, resulting in unauthorized discharges of raw sewage to public and private properties, including basement backups.
  
Keeping raw sewage and contaminated stormwater out of the waters of the United States is one of the EPA’s top priorities. Reductions in sewer and stormwater overflows are accomplished by obtaining cities’ commitments to implement timely, affordable solutions to these problems, which may also include the use of Integrated Municipal Stormwater and Wastewater Plans. This approach can also lead to more sustainable and comprehensive solutions, such as green infrastructure, that improve water quality and enhance community vitality.

The settlement, lodged today in the U.S. District Court for the Western District of Washington, is subject to a 30-day public comment period and approval by the federal court.  The consent decree can be viewed on the Justice Department website: http://www.justice.gov/enrd/Consent_Decrees.html

More information about the settlement:  www.epa.gov/enforcement/water/cases/washington.html

More information about EPA’s national enforcement initiative: http://www.epa.gov/compliance/data/planning/initiatives/2011sewagestormwater.html

More information about Integrated Municipal Stormwater and Wastewater Plans: http://cfpub.epa.gov/npdes/integratedplans.cfm

Parker Drilling Company, a publicly listed drilling-services company, headquartered in Houston, has agreed to pay an $11.76 million penalty to resolve charges related to the Foreign Corrupt Practices Act (FCPA) for authorizing payment to an intermediary, knowing that the payment would be used to corruptly influence the decisions of a Nigerian government panel reviewing Parker Drilling’s adherence to Nigerian customs and tax laws.  Acting Assistant Attorney General Mythili Raman of the Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia announced the charges.

The investigation of Parker Drilling stemmed from the Justice Department’s Panalpina-related investigations, which previously yielded criminal resolutions with Panalpina and five oil and gas service companies and subsidiaries and resulted in more than $156 million in criminal penalties. 

Today, the department filed a deferred prosecution agreement and a criminal information against Parker Drilling in U.S. District Court for the Eastern District of Virginia.  The one-count information charges Parker Drilling with violating the FCPA’s anti-bribery provisions.

According to court documents, in  2001 and 2002, Panalpina World Transport (Nigeria) Limited, working on Parker Drilling’s behalf, avoided certain costs associated with complying with Nigeria’s customs laws by fraudulently claiming that Parker Drilling’s rigs had been exported and then re-imported into Nigeria.  In late 2002, Nigeria formed a government commission, commonly called the Temporary Import (TI) Panel, to examine whether Nigeria’s Customs Service had collected certain duties and tariffs that Nigeria was due. In December 2002, the TI Panel commenced proceedings against Parker Drilling.  The TI Panel later determined that Parker Drilling had violated Nigeria’s customs laws and assessed a $3.8 million fine against Parker Drilling.

According to court documents, rather than pay the assessed fine, Parker Drilling contracted indirectly with an intermediary agent to resolve its customs issues.  From January to May 2004, Parker Drilling transferred $1.25 million to the agent, who reported spending a portion of the money on various things including entertaining government officials.  Emails in which the agent requested additional money from Parker Drilling referenced the agent’s interactions with Nigeria’s Ministry of Finance, State Security Service, and a delegation from the president’s office.  Two senior executives within Parker Drilling at the time reviewed and approved the agent’s invoices, knowing that the invoices arbitrarily attributed portions of the money that Parker Drilling transferred to the agent to various fees and expenses.  The agent succeeded in reducing Parker Drilling’s TI Panel fines from $3.8 million to just $750,000. 

Under the terms of the agreement, the Justice Department agreed to defer prosecution of Parker Drilling for three years.  Parker Drilling agreed, among other things, to implement an enhanced compliance program and internal controls capable of preventing and detecting FCPA violations, to report periodically to the department concerning Parker Drilling’s compliance efforts, and to cooperate with the department in ongoing investigations.  If Parker Drilling abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the term of the agreement expires. 

In entering into the deferred prosecution agreement with Parker Drilling, the Justice Department took into account a number of considerations.  Parker Drilling conducted an extensive, multi-year investigation into the charged conduct; engaged in widespread remediation, including ending its business relationships with officers, employees, or agents primarily responsible for the corrupt payments, enhancing scrutiny of high-risk third-party agents and transactions, increasing training and testing requirements, and instituting heightened review of proposals and other transactional documents for all the company’s contracts; otherwise significantly enhanced its compliance program and internal controls; and agreed to continue to cooperate with the department in any ongoing investigation of the conduct.

Parker Drilling also reached a settlement of a related civil complaint filed by the U.S. Securities and Exchange Commission (SEC) charging Parker Drilling with violating the FCPA’s anti-bribery, books and records, and internal controls provisions.  As part of that settlement, Parker Drilling agreed to pay $3.05 million in disgorgement and $1.04 million in prejudgment interest relating to those violations.

The criminal case is being prosecuted by Trial Attorney Stephen J. Spiegelhalter of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Jasmine Yoon of the U.S. Attorney’s Office for the Eastern District of Virginia, and is being investigated by the FBI. The department’s Office of International Affairs assisted in the investigation.  The department also acknowledges and is grateful for the assistance of the Crown Prosecution Service, the United Kingdom’s Metropolitan Police Service, and SEC.

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

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

Felony charges were filed today in the U.S. District Court for the Northern District of California in San Francisco against Mohammed Rezaian, of Novato, Calif. Rezaian is the 30th individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

According to court documents, Rezaian conspired with others not to bid against one another, but instead to designate a winning bidder to obtain selected properties at public real estate foreclosure auctions in San Francisco and San Mateo counties, Calif . Rezaian was also charged with conspiring to use the mail to carry out schemes to fraudulently acquire title to selected properties sold at public auctions, to make and receive payoffs, and to divert to co-conspirators money that would have otherwise gone to mortgage holders and others. According to court documents, a forfeiture allegation was also included in the charges against Rezaian.

The department said Rezaian conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in San Francisco and San Mateo counties beginning as early as July 2008 and continuing until about January 2011.

“As a result of this investigation, the Antitrust Division has thus far filed charges against 30 real estate investors in Northern California for their illegal activity at foreclosure auctions,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will vigorously pursue the perpetrators of these fraudulent and anticompetitive schemes.”

The department said that the primary purpose of the conspiracies was to suppress and restrain competition and to conceal payoffs in order to obtain selected real estate offered at San Francisco and San Mateo County public foreclosure auctions at non-competitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.

“Not only is bid rigging at public foreclosure auctions illegal, it also severely undermines the integrity of a fair and competitive marketplace,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “The FBI will continue to investigate and pursue those who commit fraudulent anticompetitive practices at foreclosure auctions and work with those who have fallen victim to such selfish crimes.”

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

The charges today are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, Calif. These investigations are being conducted by the Antitrust Division’s San Francisco office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco office at 415-436-6660 , visit www.justice.gov/atr/contact/newcase.htm, or call the FBI tip line at 415-553-74 00.

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

**The fraud charge(s) referenced in this press release were

subsequently dismissed on the government’s motion.**

ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced today that defendant JOSEPH MITCHELL CASIL was sentenced by Chief Judge Frances Tydingco-Gatewood in the United States District Court, to twelve (12) months imprisonment for the offense of Concealment of a Material Fact. After defendant serves his term of imprisonment, he will be placed on supervised release for three years and required to perform community service.

Casil was aware that federal Marshals with the United States Marshals Service (USMS) were searching for a felony fugitive. Casil lied to the United States Marshals about the fugitive’s location. Casil’s lies to the Marshals caused the Marshals to unnecessarily extend their surveillance, but also delayed the arrest of the fugitive.

U.S. Attorney Limtiaco states, “This defendant interfered in the timely capture of a felony fugitive who was fleeing arrest for a methamphetamine distribution offense. An offense of this type places not only the United States Marshals at risk, but also members of the community who have a fleeing felon in their midst. Individuals who affirmatively mislead United States Marshals in the performance of their duties will face stiff penalties in the United States District Court.”

U.S. Attorney Limtiaco noted that this prosecution is part of the U.S. Department of Justice’s Project Safe Neighborhood (PSN) Initiative, a nationwide commitment to aggressively prosecute defendants who engage in drug distribution, gang involvement and violent crime.

Assistant U.S. Attorney Rosetta San Nicolas prosecuted the case for the United States. U.S. Attorney Limtiaco commends the investigative efforts of the United States Marshals Service.

A former San Francisco investment banker and his college friend both pleaded guilty today for their roles in an insider trading scheme involving two impending corporate mergers, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Northern District of California Melinda Haag.

Jauyo Lee, aka “Jason Lee,” 29, of New York, and Victor Chen, 29, of Sunnyvale, Calif., both pleaded guilty before U.S. District Judge Richard Seeborg in the Northern District of California to one count of conspiracy to commit securities fraud and one count of securities fraud.  Lee and Chen were charged in a criminal information on March 21, 2013.

“Insider trading undermines ordinary investors’ faith in our financial markets, and the Justice Department has zero tolerance for it,” said Acting Assistant Attorney General Raman. “Today's guilty pleas show that you cannot trade on inside information, pocket the profit and expect to escape responsibility.  Having now admitted their conduct, Mr. Lee and Mr. Chen must face the consequences.”

“Securities professionals cannot exploit their positions of trust to enrich themselves and their friends,” said U.S. Attorney Haag.  “Those tempted to corrupt our markets in this manner should know:  the government will get to the bottom of suspicious trading and prosecute securities fraud vigorously.”

            According to the plea agreements, Lee, who worked as an investment banker in the San Francisco office of Leerink Swann LLC, disclosed inside information to Chen, a friend from college, about two impending mergers involving Leerink clients.  Between Aug. 26, 2009, and Sept. 5, 2009, Lee disclosed inside information to Chen about the merger of Leerink’s client, Syneron Medical Ltd., and Candela Corporation, a medical device company publicly traded on the NASDAQ stock market.  Chen used the inside information to buy shares of Candela.  After the merger was announced, Candela’s stock price increased more than 40 percent and Chen sold his shares for a gain of approximately $62,589. 

Between June 1 and 13, 2010, Lee also provided Chen with inside information about the impending merger of Somanetics Corporation and a subsidiary of Covidien plc.  Leerink was the lead financial advisor to Somanetics, which also was publicly traded on the NASDAQ.  Chen used the inside information to buy shares and options of Somanetics.  Following the merger announcement, the price of Somanetics stock increased more than 30 percent and Chen ultimately realized a profit of approximately $547,510. 

 Lee and Chen are scheduled for sentencing on July 23, 2013, before Judge Seeborg.  The maximum penalty for conspiracy to commit securities fraud is five years in prison, and the maximum penalty for securities fraud is 20 years in prison.

This case is being prosecuted by Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Robert S. Leach of the Northern District of California.  The prosecution is the result of a one-year investigation by the FBI with substantial assistance from the Chicago Regional Office of the Securities and Exchange Commission, which initiated a civil enforcement action against Lee and Chen and referred the matter to the Department of Justice.

This prosecution is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

Charges have been unsealed against one current and one former executive of the U.S. subsidiary of a French power and transportation company for their alleged participation in a scheme to pay bribes to foreign government officials, Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the District of Connecticut David Fein and Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office announced today.

Frederic Pierucci, 45, a current company executive who previously held the position of vice president of global sales for the Connecticut-based U.S. subsidiary, was charged in an indictment unsealed yesterday in the District of Connecticut with conspiring to violate the Foreign Corrupt Practices Act (FCPA) and to launder money, as well as substantive charges of violating the FCPA and money laundering.  Pierucci, a French national, was arrested Sunday night at John F. Kennedy International Airport.

David Rothschild, 67, of Massachusetts, a former vice president of sales for the Connecticut-based U.S. subsidiary, pleaded guilty on Nov. 2, 2012, to a criminal information charging one count of conspiracy to violate the FCPA.  The charges against Rothschild and his guilty plea were unsealed today.

“Frederic Pierucci and David Rothschild allegedly used outside consultants to bribe foreign officials in Indonesia in exchange for lucrative power contracts,” said Acting Assistant Attorney General Raman.  “Stamping out foreign bribery is a Justice Department priority, and we are determined to continue our vigorous enforcement of the Foreign Corrupt Practices Act.”

“As alleged, this investigation has revealed a corrupt scheme to secure valuable contracts by bribing government officials in Indonesia,” said U.S. Attorney Fein.  “Corrupt payments to government officials erode public confidence in the global marketplace, and these charges demonstrate our commitment to hold people responsible for violating the FCPA.”

“Anyone who still believes that foreign bribery is an acceptable business practice should take a hard look at the charges against these executives.  There is no place for bribery in any business model or corporate culture,” said Assistant Director in Charge Parlave.  “Along with the Department of Justice, international law enforcement partners, and other U.S. federal agencies, the FBI is committed to investigating corrupt backroom deals that threaten our global commerce.” 

According to the charges, Pierucci and Rothschild, together with others, paid bribes to officials in Indonesia, including a member of Indonesian Parliament and high-ranking members of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia, in exchange for those officials’ assistance in securing a contract for the company to provide power-related services for the citizens of Indonesia, known as the Tarahan project.  The charges allege that, in order to conceal the bribes, the defendants retained two consultants purportedly to provide legitimate consulting services on behalf of the power company and its subsidiaries in connection with the Tarahan project.  In reality, however, the primary purpose for hiring the consultants was allegedly to use the consultants to pay bribes to Indonesian officials. 

The first consultant retained by the defendants allegedly received hundreds of thousands of dollars into his Maryland bank account to be used to bribe the member of Parliament, according to the charges.  The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official.  According to court documents, emails between Pierucci, Rothschild and their co-conspirators discuss in detail the use of the first consultant to funnel bribes to the member of Parliament and the influence that the member of Parliament could exert over the Tarahan project.  However, when Pierucci and others determined that the first consultant was not effectively bribing key officials at PLN, they allegedly retained the second consultant to accomplish that purpose.  The charges allege that the power company deviated from its usual practice of paying consultants on a pro-rata basis in order to make a much larger up-front payment to the second consultant so that the consultant could “get the right influence.”  An employee at the power company’s subsidiary in Indonesia sent an e-mail to Pierucci and others asking them to finalize the consultancy agreement with the front-loaded payments but stated that in the meantime the employee would give his word to a high-level official at PLN, according to the charges. 
  
The conspiracy to commit violations of the FCPA count carries a maximum penalty of five years in prison and a fine of the greater of $250,000 or twice the value gained or lost.  The substantive FCPA counts each carry a maximum penalty of five years in prison and a fine of the greater of $100,000 or twice the value gained or lost.  The conspiracy to commit money laundering count carries a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction.  The substantive money laundering counts each carry a maximum penalty of 20 years in prison and a fine of the greater of $500,000 or twice the value of the property involved in the transaction.

 An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

 The case is being prosecuted by Trial Attorney Daniel S. Kahn of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut.  The case is being investigated by FBI agents who are part of the Washington Field Office’s dedicated FCPA squad, with assistance from the Meriden, Conn., Resident Agency of the FBI.  Significant assistance was provided by the Criminal Division’s Office of International Affairs, and the department has also worked closely with its law enforcement counterparts in Indonesia at the Komisi Pemberantasan Korupsi (Corruption Eradication Commission) and deeply appreciates KPK’s assistance in this matter.

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

Deputy Warden James Hinton and seven former members of the Correctional Emergency Response Team (CERT) at Macon State Prison in Oglethorpe, Ga., were charged with federal civil rights, conspiracy or obstruction offenses arising out of incidents in which inmates were allegedly assaulted by officers in order to punish the inmates for prior misconduct. The indictment alleges that former CERT members Christopher Hall, Ronald Lach Jr., Delton Rushin, Kerry Bolden, Derrick Wimbush, Kadarius Thomas and Tyler Griffin, conspired to assault inmates, and that the seven former CERT members conspired with Deputy Warden Hinton and others to cover up their misconduct by writing false reports and providing misleading information to investigators.

 

The defendants face statutory maximum sentences of 10 years for the civil rights conspiracy charge; 10 years for the civil rights violation; and 20 years for each count of obstruction.

 

Three former CERT members: Emmett McKenzie, Darren Douglass-Griffin and Willie Redden, previously entered guilty pleas in related cases before U.S. District Judge Marc T. Treadwell.

 

The Georgia Bureau of Investigation initially conducted an investigation at Macon State Prison. The investigation by the Macon Resident Agency of the FBI is ongoing. The case is being prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Tona Boyd of the Civil Rights Division of the Department of Justice, with the assistance of the U.S. Attorney’s Office for the Middle District of Georgia.

 

An indictment is merely an allegation, and the defendants are presumed innocent until proven guilty.

Today, a federal court in Denver approved a comprehensive consent decree between the Department of Justice, the Congress of Hispanic Educators (CHE), and the Denver Public Schools (DPS) that requires DPS to provide language services to the more than 28,000 English Language Learner (ELL) students enrolled in the district’s 170 schools. The consent decree, which replaces a 1999 court order, is the product of compliance monitoring by the department and the CHE, and DPS’s recognition that the 1999 order no longer reflected the district’s own best practices for serving ELL students.

 

The consent decree requires the district to implement comprehensive measures to ensure that ELLs have equal opportunities to succeed academically in district educational programs, starting with the proper identification of ELL students when they enter DPS. Among other things, the consent decree requires DPS to: provide language acquisition services to ELL students in district schools, including charter schools, until they are proficient in English and to monitor ELL students after they exit services to ensure they are participating meaningfully and equally in mainstream classes; to make translation and interpretation services available for thousands of Limited English Proficient parents who speak more than 130 different languages – thus ensuring that all parents have access to essential information about their children’s education; to provide Pre-K language services at each school where DPS offers early childhood education; and to make appropriate language services available for ELL students who face unique challenges, including refugee students and students with disabilities.

 

“Today, the Denver Public Schools took a big step forward toward promoting the success of every student from the moment the child enters the district. Faithful implementation of this decree will ensure that ELL students, like all district students, have access to qualified teachers, grade-appropriate curriculum, and dedicated resources to meet their particular learning needs,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General for the Civil Rights Division.  “We commend DPS for joining with the Congress of Hispanic Educators and the United States to protect the rights of thousands of ELL students in Denver.”   

 

The enforcement of the Equal Educational Opportunities Act and Title VI of the Civil Rights Act of 1964 are top priorities of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt .

Related Materials:

DPS Consent Decree

Amgen Inc., a California-based biotechnology company, has agreed to pay the United States $24.9 million to settle allegations that it violated the False Claims Act, the Justice Department announced today. Amgen develops, manufactures, and sells pharmaceutical products, including products sold under the trade name Aranesp.

 

The settlement resolves allegations that Amgen paid kickbacks to long-term care pharmacy providers Omnicare Inc., PharMerica Corporation and Kindred Healthcare Inc. in return for implementing “therapeutic interchange” programs that were designed to switch Medicare and Medicaid beneficiaries from a competitor drug to Aranesp. The government alleged that the kickbacks took the form of performance-based rebates that were tied to market-share or volume thresholds. The government further alleged that, as part of the therapeutic interchange program, Amgen distributed materials to consultant pharmacists and nursing home staff encouraging the use of Aranesp for patients who did not have anemia associated with chronic renal failure.

 

“We will continue to pursue pharmaceutical companies that pay kickbacks to long-term care pharmacy providers to influence drug prescribing decisions,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “Patients in skilled nursing facilities deserve care that is free of improper financial influences.”

 

“By this agreement we are making important strides in holding drug manufacturers accountable for fraudulent and abusive practices not only in South Carolina but nationwide,” said William Nettles, U.S. Attorney for the District of South Carolina. “I am proud of the tireless work of this office to investigate this case across the country.”

 

This civil settlement resolves a lawsuit filed under the qui tam, or whistleblower, provision of the False Claims Act, which allows private citizens with knowledge of false claims to bring civil actions on behalf of the United States and share in any recovery. The False Claims Act suit was filed in the U.S. District Court for the District of South Carolina, and is captioned United States ex rel. Kurnik v. Amgen Inc., et al.

 

Acting Assistant Attorney General Delery noted that the settlement with Amgen, Inc. was the result of a coordinated effort among the Civil Division, the U.S. Attorney’s Office for the District of South Carolina, and the U.S. Department of Health and Human Services, Office of Inspector General.

 

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $10.3 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14.2 billion.

 

The claims settled by this agreement are allegations only; there has been no determination of liability.

Related Materials:

Amgen Settlement Agreement

Frederic Cilins, 50, a French citizen, has been arrested and accused of attempting to obstruct an ongoing investigation into whether a mining company paid bribes to win lucrative mining rights in the Republic of Guinea.

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

“Mr. Cilins is charged with scheming to destroy documents and induce a witness to give false testimony to a grand jury investigating potential violations of the Foreign Corrupt Practices Act,” said Acting Assistant Attorney General Raman.  “The Justice Department is committed to rooting out foreign bribery, and we will not tolerate criminal attempts to thwart our efforts.”

“A grand jury can never learn the truth, and justice cannot prevail, where documents are intentionally destroyed and testimony is tainted by lies,” said U.S. Attorney Bharara.  “As alleged, Frederic Cilins attempted to obstruct a significant investigation by corrupting evidence and testimony in precisely those ways.  With today’s arrest, he now begins his own path to justice for his alleged conduct.”

“As alleged, Cilins attempted to buy evidence he sought to destroy,” said FBI Assistant Director in Charge Venizelos.  “The destruction of evidence was in furtherance of Cilins’s alleged effort to obstruct an investigation into a bribery scheme. In effect, he was allegedly willing to commit bribery in an effort to cover up a bribery.”

Cilins was arrested in Jacksonville, Fla., on April 14, 2013, and a criminal complaint was filed in the Southern District of New York today charging Cilins with tampering with a witness, victim or informant; obstructing a criminal investigation; and destroying, altering or falsifying records in a federal investigation.  The obstruction charge carries a maximum penalty of five years in prison, and the tampering and record-destruction charges each carry a maximum penalty of 20 years in prison. Cilins made an initial appearance in the Middle District of Florida and was detained pending a detention hearing scheduled for April 18, 2013.

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

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

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

A complaint is merely an accusation, and the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

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

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

The United States has asked a federal court in Charleston, S.C., to permanently bar Stacy Middleton of Charleston, and George Jenkins of Blythewood, S.C., from preparing federal income tax returns for others, the Justice Department announced today. According to the government complaint, Middleton and Jenkins have prepared federal income tax returns in Charleston and Columbia, S.C., through a business named MBM Tax and Accounting Services LLC. The complaint alleges that they have prepared returns that unlawfully understate income tax liabilities and overstate refunds through a variety of schemes.

The government complaint alleges that Middleton and Jenkins prepared returns that unlawfully created fictitious deductions and credits as well as overstating and duplicating existing deductions and credits. The complaint also alleges that Middleton created fraudulent Forms 1099 on behalf of customers, creating fake income to enable Middleton to claim the Earned Income Tax Credit on behalf of those customers. According to the complaint, the Internal Revenue Service has examined 842 returns prepared by Middleton and Jenkins, and over 93 percent of those examinations resulted in an adjustment to their client’s tax liability. Altogether, the government complaint alleges that Middleton’s and Jenkins’s activities may have resulted in as much as $55 million of loss to the United States.

Over the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s website.

United States v. StacyMiddleton , etc.
Complaint for Permanent Injunction (PDF)

The Justice Department filed suit today asking the United States District Court for the Southern District of Florida to permanently bar Osvaldo J. Diaz from preparing federal tax returns for others. The civil injunction suit alleges that Diaz prepares returns through Professional Accounting Services Inc. in Coral Gables, Fla.

According to the complaint, Diaz prepares tax returns that fabricate deductions and credits in an attempt to understate his customers’ tax liabilities or inflate his customers’ refunds. The government alleges that Diaz fabricates business and personal expenses and inflates real estate losses for his customers. The Internal Revenue Service has examined 250 returns prepared by Diaz and found that 93 percent resulted in deficiencies. As alleged in the complaint, the IRS projects that the tax loss from the returns prepared by Diaz could be tens of millions of dollars.

Over the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s website .

Related Materials:

United States v. Ann M. Williams , etc.
Complaint for Permanent Injunction (PDF)

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SOUTH CAROLINA TAX RETURN PREPARERS

            WASHINGTON – The United States has asked a federal court in Charleston, S.C., to permanently bar Stacy Middleton of Charleston, and George Jenkins of Blythewood, S.C., from preparing federal income tax returns for others, the Justice Department announced today. According to the government complaint, Middleton and Jenkins have prepared federal income tax returns in Charleston and Columbia, S.C., through a business named MBM Tax and Accounting Services LLC. The complaint alleges that they have prepared returns that unlawfully understate income tax liabilities and overstate refunds through a variety of schemes.

            The government complaint alleges that Middleton and Jenkins prepared returns that unlawfully created fictitious deductions and credits as well as overstating and duplicating existing deductions and credits. The complaint also alleges that Middleton created fraudulent Forms 1099 on behalf of customers, creating fake income to enable Middleton to claim the Earned Income Tax Credit on behalf of those customers. According to the complaint, the Internal Revenue Service has examined 842 returns prepared by Middleton and Jenkins, and over 93 percent of those examinations resulted in an adjustment to their client’s tax liability. Altogether, the government complaint alleges that Middleton’s and Jenkins’s activities may have resulted in as much as $55 million of loss to the United States.

            Over the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax fraud promoters and dishonest tax return preparers.  Information about these cases is available on the Justice Department’s website.

Related Documents:

  United States v. StacyMiddleton , etc.
Complaint for Permanent Injunction


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A federal inmate pleaded guilty today for the violent murder of a fellow inmate in Pennsylvania’s Allenwood Correctional Complex, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Middle District of Pennsylvania Peter J. Smith.

Ritz D. Williams Jr., 32, of Gila River Indian Reservation, Sacaton, Ariz., pleaded guilty before Chief U.S. District Judge Yvette Kane to one count of first degree murder and possession of a weapon.

Williams and his co-conspirator Shawn Cooya were indicted by a federal grand jury in February 2008 and a superseding indictment was returned in July 2009.

According to court documents, Williams and Cooya aided each other in the premeditated murder of inmate Alvin Allery.  On Sept. 28, 2005, Williams and Cooya stabbed Allery 10 times with a homemade knife and repeatedly kicked him in the head and torso, which resulted in Allery’s death.

 On Jan. 8, 2013, Cooya pleaded guilty to one count of first degree murder.  On March 18, 2013, he was sentenced to serve life in prison without the possibility of parole.

As a result of Williams’s plea, he faces a mandatory sentence of life in prison.  His sentencing has been scheduled for May 15, 2013, in the Middle District of Pennsylvania.

The case is being prosecuted by Assistant U.S. Attorneys Wayne P. Samuelson and Michelle Olshefski of the Middle District of Pennsylvania and Trial Attorneys Julie B. Mosley and Mike Warbel of the Criminal Division’s Capital Case Unit (CCU) and former CCU Trial Attorney C.J. Williams.  The case was investigated by the Bureau of Prisons and the FBI.

Assistant Attorney General Bill Baer in charge of the Department of Justice’s Antitrust Division issued the following statement today on changes to the division’s carve-out practice regarding corporate plea agreements:

 

“Over the years, the Antitrust Division’s efforts to investigate and prosecute price fixing and other cartel conduct have produced outstanding results in holding both corporations and individuals accountable for their wrongdoing.  We are committed to continuing these efforts and to build on the division’s past successes.

 

“Going forward, we are making certain changes to the Antitrust Division’s approach to corporate plea agreements. In the past, the division’s corporate plea agreements have, in appropriate circumstances, included a provision offering non-prosecution protection to those employees of the corporation who cooperate with the investigation and whose conduct does not warrant prosecution.  The division excluded, or carved out, employees who were believed to be culpable. In certain circumstances, it also carved out employees who refused to cooperate with the division’s investigation, employees against whom the division was still developing evidence and employees with potentially relevant information who could not be located.  The names of all carved-out employees were included in the corporate plea agreements, which were publicly filed in the district courts where the charges were brought.

 

“As part of a thorough review of the division’s approach to corporate dispositions, we have decided to implement two changes.  The division will continue to carve out employees who we have reason to believe were involved in criminal wrongdoing and who are potential targets of our investigation.  However, we will no longer carve out employees for reasons unrelated to culpability. 

 

“The division will not include the names of carved-out employees in the plea agreement itself.  Those names will instead be listed in an appendix, and we will ask the court for leave to file the appendix under seal.  Absent some significant justification, it is ordinarily not appropriate to publicly identify uncharged third-party wrongdoers. 

 

“The Antitrust Division will continue to exclude from the non-prosecution protections of corporate plea agreements any employees whose conduct may warrant prosecution.  The division will continue to make these decisions on an employee-by-employee basis consistent with the evidence and the Principles of Federal Prosecution.  We will continue to demand the full cooperation of anyone who seeks to benefit from the non-prosecution protection of a corporate plea agreement, and will revoke that protection for anyone who does not fully and truthfully cooperate with division investigations.”

In an information made public today, the United States charged Francis Marimo, of Raleigh, N.C., with two counts of odometer tampering.

The information, filed in U.S. District Court for the Eastern District of North Carolina on April 10, 2013, alleges that from 2008 through 2012, Marimo fraudulently caused odometers in used motor vehicles to be altered to reflect false, low mileages. According to the Information, Marimo purchased used vehicles primarily through online advertisements, replaced the existing odometers with odometers showing lower mileages, and then sold the vehicles to consumers while representing the low mileages as accurate. One of the vehicles described in the Information was “rolled back” more than 100,000 miles.

“Consumers rely on mileage readings to determine the value and safety of used vehicles,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “Victims of odometer fraud lose thousands of dollars on what can turn out to be unreliable and potentially dangerous vehicles. We will continue to prosecute these schemes wherever we find them.”

The North Carolina Division of Motor Vehicles and the National Highway Traffic Safety Administration Office of Odometer Fraud Investigation investigated this case. The case is being prosecuted by the Justice Department’s Consumer Protection Branch.

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

The Department of Justice and the Council of State Governments (CSG) highlight 17 states that have cut corrections costs while reducing recidivism and improving public safety. With funding from the Justice Department’s Bureau of Justice Assistance (BJA), staff from the CSG Justice Center – in partnership with the Pew Center on the States – worked with lawmakers, policymakers, and a wide range of justice system professionals and stakeholders from each state to identify crime and corrections trends and formulate strategies that would save money and improve safety. 

Over the past 20 years, state spending on corrections has skyrocketed—from $12 billion in 1988 to more than $52 billion in 2011. Declining state revenues and other fiscal factors are straining many states’ criminal justice systems, often putting concerns about the bottom line in competition with public safety.

“Our nation pays a high price whenever our prisons and criminal justice systems fall short of delivering results that deter and punish crime, keep the American people safe, and ensure that those who pay their debts to society have the chance to become productive, law-abiding citizens,” said Attorney General Eric Holder. “These states have been able to achieve fundamental and positive reform because leaders from both sides of the aisle have come together to tackle these difficult issues. It is my hope that their success will be emulated by others across the country."

A new report, Lessons from the States: Reducing Recidivism and Curbing Corrections Costs Through Justice Reinvestment, summarizes the experiences of states participating in the Justice Reinvestment Initiative, an across-the-board analysis of statewide crime and corrections data designed to help officials redirect public funds from costly prison building projects to cost-effective programs aimed at ensuring greater public safety.  Based on these analyses, the states have enacted legislation and implemented justice reinvestment policies which incentivize use of risk based decision making, increase services and support for victims, target grants to law enforcement and establish state wide standards and training for probation agencies.

 According to the report, states are able to reach these goals when they:

1. Conduct a comprehensive analysis of crime, arrest, conviction, jail, prison, probation and parole data; 2. Engage diverse constituencies of elected and appointed leaders as well as criminal justice stakeholders; 3. Focus resources on individuals most likely to reoffend; 4. Reinvest taxpayer dollars in proven programs and strategies; 5. Strengthen community supervision by responding to violations swiftly, proportionately, and with approaches that are evidence-based; 6. And reward the performance of local agencies whose actions result in cost savings.

“We support states that are committed to taking a data-driven approach to lowering re-offense rates of people released from prison and jail,” said Denise E. O’Donnell, BJA Director. “This report serves as a reference for states that are looking to tackle this issue. It shows that evidence-based strategies can improve public safety and reduce recidivism, even in an era of reduced resources.”

“Through our Justice Reinvestment effort, we’re helping state leaders use data and research to wisely use scarce resources. This approach has shown that states don’t have to choose between safe communities and fiscal solvency.  Both are possible,” said Office of Justice Programs (OJP) Acting Assistant Attorney General Mary Lou Leary.

The 17 states involved in the Justice Reinvestment Initiative are Arkansas, Delaware, Georgia, Hawaii, Kansas, Kentucky, Louisiana, Missouri, New Hampshire, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, and West Virginia.
 
Being smarter and tougher on crime through innovative prevention, intervention, enforcement and reentry programs is a Justice Department priority. That’s why President Obama’s budget request for fiscal year 2014, released Wednesday, includes $85 million for the Justice Reinvestment Initiative.

To read the report, Lessons from the States: Reducing Recidivism and Curbing Corrections Costs Through Justice Reinvestment, or for more information on the Justice Reinvestment Initiative, please visit: www.justicereinvestment.org   

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

 

Guity Kashfi of Los Angeles, was charged today in the U.S. District Court for the Central District of California with conspiracy to defraud the United States, the Justice Department and Internal Revenue Service, Criminal Investigation (IRS-CI) announced. A signed plea agreement was filed along with the charging document.

 

According to court documents, Kashfi, a U.S. citizen, maintained undeclared bank accounts at an international bank headquartered in Tel Aviv, Israel. The accounts were held in the names of nominees in order to keep them secret from the United States government. Kashfi used the accounts to obtain “back-to-back” loans from a branch of the bank in Los Angeles. Although the loans were secured or collateralized with certificates of deposit held in Kashfi’s undeclared offshore accounts, that fact was concealed to keep Kashfi’s offshore accounts secret.

 

According to the plea agreement, in 2008, Kashfi was told by a banker in Los Angeles that the bank was going to use the funds in her account in Israel to pay off her back-to-back loans in Los Angeles. Rather than pay off the loans, Kashfi transferred approximately $2 million to an account located in Luxembourg at a branch of a second Israeli bank. Kashfi did this to avoid repatriating funds from her first Israeli account back to the United States to pay back her loans in Los Angeles. Kashfi eventually used the funds in Luxembourg to obtain a new back-to-back loan from a branch of the second Israeli bank located in Los Angeles. In 2009, Kashfi went to Luxembourg to close her account. While there, two foreign bankers advised Kashfi that her money was safe in Luxembourg because the bank was a private bank and no one could get information relating to bank accounts located in Luxembourg. In 2011, Kashfi closed all her accounts in Luxembourg by signing paperwork in Los Angeles. She then transferred the funds to banks in the United States.

 

According to the plea agreement, Kashfi never told her accountant about her undeclared accounts, and failed to report any income from the accounts on her individual income tax returns that were filed with the IRS. For tax years 2005 through 2011, Kashfi failed to report interest income of approximately $221,306. The highest balance in Kashfi’s undeclared accounts was approximately $2,501,469.

 

Kashfi is the second defendant charged in the U.S. District Court for the Central District of California with failing to report income from undeclared accounts in Israel.

 

On March 29, 2013, Zvi Sperling of Beverly Hills, Calif., appearing before United States District Judge John F. Walter, pleaded guilty to conspiring to defraud the United States in connection with back-to-back loans obtained in Los Angeles that were secured by funds in undeclared bank accounts in Israel. For tax years 2005 through 2008, Sperling failed to report income of approximately $381,563. The highest balance in Sperling’s undeclared accounts was approximately $4 million.

 

“Today’s guilty plea is a stark reminder that those who attempt to hide their income and assets from the United States are running out of places to hide,” said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally. “The Internal Revenue Service will find the hiding places and the Department of Justice will criminally prosecute the tax cheats. And in the end, they will still owe and be required to pay the taxes due.”

 

“We will continue to work aggressively to uncover and prosecute those who hide unreported income in secret offshore bank accounts as well as the employees of financial institutions and the financial institutions themselves who facilitate such crimes,” said U.S. Attorney for the Central District of California André Birotte Jr.

 

“Most individuals file truthful tax returns voluntarily and pay their share of taxes,” said Richard Weber, Chief, IRS-CI. “As these two defendants have learned, hiding income and assets offshore is not tax planning, it’s tax fraud. The IRS is vigorously pursuing unreported income in hidden offshore accounts, as well as the banks and bankers who assist them.”

 

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

 

Both Kashfi and Sperling have agreed to pay a civil penalty in the amount of 50 percent of the high balance of their undeclared accounts to resolve their civil liability with the IRS for failing to file FBARs.

 

Both Kashfi and Sperling face a potential maximum prison term of five years and a maximum fine of $250,000.

 

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

 

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

A jury convicted Stephen M. Kerr and Michael Quiel yesterday on federal tax charges stemming from their failure to disclose secret offshore bank accounts in Switzerland, the Justice Department and Internal Revenue Service (IRS) announced. Kerr and Quiel, prominent Phoenix businessmen, were each convicted of two counts of filing false individual income tax returns for 2007 and 2008 . Kerr was also convicted of two counts of failing to file a Report of Foreign Bank and Financial Accounts (FBAR). San Diego attorney Christopher M. Rusch had previously pleaded guilty to conspiracy to defraud the government and failing to file an FBAR on Feb. 6, 2013. 

 

According to the evidence presented at trial, Kerr and Quiel, with the assistance of Rusch and others, including Swiss nationals, established nominee foreign entities and corresponding bank accounts at UBS AG and Pictet & Cie to conceal Kerr and Quiel’s ownership and control of stock and income that were deposited into these accounts. Rusch testified at trial, admitting that he and others caused the sale of the shares of stock through the undeclared accounts . Kerr also hired Rusch to facilitate the domestic sale of 11.4 million shares of stock held in the name of a foreign entity controlled by Kerr and to transfer the proceeds from the sale of the stock to an undeclared foreign account at UBS AG to conceal that the money was income to Kerr that should have been reported on his tax returns. 

 

The evidence established that in order to create a further layer of separation between Kerr and Quiel and the income they concealed in the undeclared foreign accounts, they directed Rusch to transfer some of the money in the undeclared accounts back to the United States through Rusch’s Interest on Lawyer’s Trust Account (IOLTA) before dispersing the money for Kerr and Quiel’s benefit. Rusch transferred approximately $2,000,000 through his IOLTA account so that Kerr could purchase a golf course in Erie, Colo. Additionally, after transferring approximately $955,000 from Quiel’s undeclared foreign accounts to his IOLTA account, at Quiel’s direction, Rusch wrote checks payable to an Arizona bank account owned and controlled by Quiel. 

 

According to trial evidence, Kerr and Quiel filed false tax returns with the IRS that failed to report the proceeds of stock sales, interest and dividend income earned through the secret accounts, and further failed to report that they had a financial interest in bank accounts located in Switzerland. Kerr also failed to file FBARs in 2007 and 2008 that reported his offshore accounts to the IRS. Accountants for Kerr and Quiel testified that neither Kerr nor Quiel disclosed the existence of their offshore accounts in Switzerland during the preparation of their tax returns.

 

“Many investigations are underway and focusing upon an ever wider circle of banks worldwide, their clients and others who would help the clients try to hide income and assets offshore,” said Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally. “The lesson of today’s guilty verdicts is that no hiding place will prove safe enough.”

 

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

 

“Clients, as well as promoters, of international tax fraud are under the watchful scrutiny of the IRS.” said Richard Weber, Chief, IRS-Criminal Investigation. “Mr. Kerr and Mr. Quiel disregarded their legal responsibility to file true and accurate tax returns reporting all their income and interest.  They now face substantial monetary penalties and the risk of incarceration.”

 

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

 

Sentencing for Kerr and Quiel is scheduled for June 25, 2013. Sentencing for Rusch is scheduled for July 17, 2013. 

 

Department of Justice Tax Division Assistant Attorney General Kathryn Keneally thanked special agents of IRS-Criminal Investigation, who provided valuable assistance in conducting the investigation, and Trial Attorneys Timothy Stockwell and Monica Edelstein who prosecuted the case. 

 

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

Derek Matthews, 46, of Harwood, Md., pleaded guilty today to accepting bribes from a government contracting company in exchange for using his position to help the company find and win contracts. 

Neil H. MacBride, U. S. Attorney for the Eastern District of Virginia, Mythili Raman, Acting Assistant Attorney General for the Justice Department’s Criminal Division, and Charles K. Edwards, U.S. Department of Homeland Security (DHS) Deputy Inspector General, made the announcement after the plea was accepted by U.S. District Judge Leonie M. Brinkema. 

Matthews was charged by criminal information on April 11, 2013, with one count of conspiracy to commit bribery.  Matthews faces a maximum penalty of five years in prison when he is sentenced on July 19, 2013.    

Matthews served as Deputy Assistant Director for Operations for the DHS’s Federal Protective Services (FPS) and was later promoted to FPS Regional Director for the National Capital Region.  In the fall of 2011, Matthews agreed with Keith Hedman, an executive at an Arlington, Va., security service consulting company referred to as Company B in court records, that in exchange for a monthly payment from Company B and a percentage of any new business obtained, Matthews would use his position to help Company B find and win U.S. government contracts, including with FPS.  Matthews engaged in a series of official acts, including lobbying of government officials and sharing of information with Hedman, in an effort to obtain business for Hedman and Company B. In turn, Hedman and Company B paid Matthews three monthly payments totaling $12,500.

Hedman pleaded guilty on March 18, 2013, to conspiracy to commit bribery in connection with Matthews’ scheme, along with conspiracy to commit major government fraud as part of a separate scheme to fraudulently obtain more than $31 million in government contract payments that should have gone to disadvantaged small businesses.

This case was investigated by the Washington Field Office for the DHS Office of the Inspector General (OIG), the National Aeronautics and Space Administration OIG, the Small Business Administration OIG, the Defense Criminal Investigative Service, and the General Services Administration OIG. Assistant U.S. Attorneys Chad Golder and Ryan Faulconer  are prosecuting the case on behalf of the United States.

Ashraf Hassan-Gouda, a former resident of Mays Landing, N.J., pleaded guilty to one count of assisting in the preparation of a false federal individual income tax return, the Justice Department and Internal Revenue Service (IRS) announced today. Hassan-Gouda was charged by a federal indictment returned on March 27, 2007.

 

According to court documents, during 2003, Hassan-Gouda was the owner of Tax World, a tax preparation business located in Atlantic City, N.J. Hassan-Gouda prepared the false tax return for a client at his business.

 

The matter had been scheduled for trial beginning May 6, 2013 before U.S. District Court Chief Judge Jerome B. Simandle in Camden, N.J. Sentencing is scheduled for June 17, 2013. Hassan-Gouda faces a maximum potential sentence of three years imprisonment and a fine of up to $250,000.

 

Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally thanked special agents of IRS - Criminal Investigation, for investigating the case, and Tax Division Trial Attorneys Yael Epstein, Thomas Voracek and Shawn Noud, who prosecuted the case.

Stephanie Charboneau, aka Stephanie Shankel, 34, of Fountain, Colo., formerly a Specialist in the United States Army, has been indicted in the District of Colorado for her alleged role in assisting the thefts of fuel in Afghanistan and laundering the proceeds of crime, Acting Assistant Attorney General Mythili Raman of the Criminal Division announced.    

According to the indictment returned on April 9, 2013, and now filed publicly, Charboneau was assigned to Forward Operating Base (FOB) Fenty, in eastern Afghanistan, as part of the 704th Brigade Support Battalion.  Her duties included overseeing the movement of fuel by private Afghan trucking companies from FOB Fenty to nearby military bases.  The indictment alleges that Charboneau conspired with Sergeant Christopher Weaver, her supervisor, and Jonathan Hightower, a civilian employee of FLUOR Inc., to facilitate the theft of fuel for money.  Charboneau and her co-conspirators allegedly received money from a representative of an Afghan trucking company to enable that company to steal truckloads of fuel.  The conspirators allegedly authorized the movement of truckloads of fuel from FOB Fenty – ostensibly to nearby bases – knowing and intending that when the fuel left FOB Fenty it would never reach the designated base and would instead be stolen.  These events occurred from approximately February 2010 through approximately May of 2010. 

In addition, the indictment charges that when Charboneau returned to the United States, she engaged in a series of transactions with the bribe proceeds to avoid the currency transaction reporting requirements.  Charboneau allegedly purchased an automobile for $33,179 in cash through a $5,000 down payment, two $9,900 cashier’s checks she funded but were in the name of two acquaintances, and an $8,379 cashier’s check in her name.

Charboneau was charged with conspiracy, bribery, theft, money laundering and structuring. If convicted, she faces penalties of 20 years in prison for money laundering, 15 for bribery, 10 for theft of government property, and five for conspiracy and structuring.  She also faces fines of $250,000 per count.

Weaver and Hightower have each pleaded guilty to a bribery conspiracy scheme and are awaiting sentencing.

This case was investigated by former Fraud Section Trial Attorney Mark Pletcher, who is currently an Assistant United States Attorney for the Southern District of California, and Special Trial Attorney Mark H. Dubester.  The case was investigated by the Special Inspector General for Afghanistan Reconstruction, the Department of the Army, Criminal Investigations Division, the Defense Criminal Investigative Service and the FBI Denver field office.

An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.

Kerry Michael Deevy pleaded guilty in U.S. District Court for the Southern District of Florida in Miami to 13 counts of an indictment pending against him, including one count of conspiracy to commit mail and wire fraud, three counts of mail fraud, and nine counts of wire fraud, the Justice Department and the U.S. Postal Inspection Service announced today.

Deevy, a Canadian citizen, was charged in connection with the operation of a series of fraudulent business opportunities. Deevy was arrested in Costa Rica in February 2012 following his indictment by a federal grand jury in Miami on Nov. 29, 2011. Following his arrest in Costa Rica, Deevy was extradited to the United States for prosecution. Deevy was arrested based on charges that he and his co-conspirators purported to sell vending machine and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The indictment is part of the government’s continued nationwide crackdown on business opportunity fraud.

In addition to Deevy, 11 other individuals have been charged in connection with business opportunity fraud ventures based in Costa Rica. Deevy is the ninth of those individuals to be convicted in the United States.

“The Department of Justice is committed to cracking down on financial fraud, including international telemarketing schemes,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “That is why we will continue to prosecute those who would deprive innocent, hardworking Americans of their hard-earned money by offering phony business opportunities.”

Beginning in 2006, Deevy and his coconspirators fraudulently induced purchasers in the United States to buy business opportunities in Cards-R-Us Inc., Premier Cards Inc. and Nation West Distribution Company. The business opportunities cost thousands of dollars each, and most purchasers paid at least $10,000.

Deevy participated in a conspiracy that used various means to make it appear to potential purchasers that the businesses were located entirely in the United States. In reality, Deevy operated out of Costa Rica to fraudulently induce potential purchasers in the United States to buy the purported business opportunities.

The companies made numerous false statements to potential purchasers of the business opportunities, including that purchasers would likely earn substantial profits; that prior purchasers of the business opportunities were earning substantial profits; that purchasers would sell a guaranteed minimum amount of merchandise, such as greeting cards; and that the business opportunity worked with locators familiar with the potential purchaser’s area who would secure or had already secured high-traffic locations for the potential purchaser’s merchandise stands.

The companies employed various types of sales representatives, including fronters, closers and references. A fronter spoke to potential purchasers when the prospective purchasers initially contacted the company in response to an advertisement. A closer subsequently spoke to potential purchasers to finalize deals. References spoke to potential purchasers about the financial success they purportedly had experienced since purchasing one of the business opportunities. The companies also employed locators, who were typically characterized by the sales representatives as third parties who worked with the companies to find high-traffic locations for the prospective purchaser's merchandise display racks.

Deevy, using aliases, was a fronter and reference for Cards-R-Us, Premier Cards and Nation West.

Each of the companies was registered as a corporation and rented office space to make it appear to potential purchasers that its operations were fully in the United States. Cards-R-Us was registered as a Nevada corporation and rented office space in Reno, Nev. Premier Cards was registered as a Colorado and Pennsylvania corporation and rented office space in Philadelphia. Nation West was a Colorado corporation and rented office space in Denver.

“Fraudsters must realize that financial fraud victimizing Americans will be prosecuted vigorously, even if the schemers conduct their fraudulent operations from abroad,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “Increased international law enforcement cooperation eliminates safe havens for those who cheat American citizens from overseas.”

“ The success of this investigation shows that the U.S. Postal Inspection Service continues to work closely with the Department of Justice and our law enforcement partners, both foreign and domestically, to protect the American consumer from the predatory nature of business opportunity and telemarketing schemes ,” said Tony Gomez, Acting U.S. Postal Inspector in Charge in Miami.

Acting Assistant Attorney General Delery commended the investigative efforts of the Postal Inspection Service. The case is being prosecuted by Assistant Director Jeffrey Steger and trial attorney Alan Phelps with the U.S. Department of Justice Consumer Protection Branch.

 
The Department of Justice’s Antitrust Division today issued the 2013 edition of its annual newsletter on its website. The newsletter includes a message from Assistant Attorney General Bill Baer which focuses on the need to protect and promote competition in industries that directly affect the day-to-day lives of consumers, as well as articles about the Antitrust Division’s civil and criminal enforcement actions, international cooperation efforts and competition advocacy.

 
The newsletter highlights the division’s criminal enforcement matters, including the significant fines and prison sentences obtained and litigation victories in trials relating to the liquid crystal display, municipal bonds and coastal freight investigations. The division also achieved convictions in its auto parts, real estate foreclosure auctions and tax liens cartel investigations.

 
Other newsletter articles describe the division’s active civil enforcement program–as evidenced by the six civil cases currently in litigation–in key sectors such as health care, telecommunications and technology, transportation, office supplies and other consumer products.

 

The newsletter also features articles about some of the division’s talented career litigators, the division’s new economics deputy, and competition advocacy efforts involving public workshops on intellectual property and most favored nations clauses. 

 
The newsletter can be found at http://www.justice.gov/atr/public/division-update/2013/index.html . Within each article, hyperlinks are provided so that the reader can easily access relevant documents such as press releases, court filings and speeches. 

                                               

A member of the Internet piracy group “IMAGiNE” was sentenced today to serve 23 months in prison, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Special Agent in Charge John P. Torres of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) in Washington, D.C.

 

Javier E. Ferrer, 41, of New Port Richey, Fla., was sentenced by Senior U.S. District Judge Henry C. Morgan in the Eastern District of Virginia. In addition to his prison term, Ferrer was sentenced to serve three years of supervised release and ordered to pay $15,000 in restitution.

 

On Nov. 29, 2012, Ferrer pleaded guilty to one count of conspiracy to commit criminal copyright infringement.  Ferrer is the fifth member of the IMAGiNE Group who has been sentenced to prison for the copyright conspiracy. 

 

On Sept. 13, 2012, Ferrer was charged in a criminal information for his role in the IMAGiNE Group, an organized online piracy ring that sought to become the premier group to first release Internet copies of movies only showing in theaters. Four other IMAGiNE Group members, including the group’s leader, were indicted on April 18, 2012, for their roles in the IMAGiNE Group. 

 

According to court documents, Ferrer and his co-conspirators sought to illegally obtain and disseminate digital copies of copyrighted motion pictures showing in theaters.  Ferrer actively participated in the IMAGiNE Group’s illegal efforts to film copyrighted motion pictures currently showing in theaters as his co-conspirators used receivers and recording devices to secretly capture audio sound tracks of copyrighted movies playing in movie theaters.  After the IMAGiNE Group obtained illegal copies of the audio and video portions of copyrighted motion pictures, Ferrer and his co-conspirators also engaged in processing or "encoding" the video files to enhance the picture quality and in synchronizing the audio files with the video files to make completed movies suitable for reproduction and distribution over the Internet, without the permission of the copyright owners. 

 

According to testimony by a representative of the Motion Picture Association of America, the IMAGiNE Group constituted the most prolific motion picture piracy release group operating on the Internet from September 2009 through September 2011.

 

Co-defendants Sean M. Lovelady, Willie O. Lambert, Gregory A. Cherwonik and Jeramiah B. Perkins pleaded guilty on May 9, June 22, July 11 and Aug. 29, 2012, respectively, to one count each of conspiracy to commit criminal copyright infringement, before U.S. District Judge Arenda L. Wright Allen in the Eastern District of Virginia . Lambert and Lovelady were sentenced on Nov. 2, 2012, to serve 30 months and 23 months in prison, respectively. Cherwonik was sentenced on Nov. 29, 2012, to serve 40 months in prison.  Perkins, the leader of the group, was sentenced on Jan. 3, 2013, to 60 months in prison.

 

The investigation of the case and the arrests were conducted by agents with the HIS Washington, D.C., Field Office. Assistant U.S. Attorney Robert J. Krask of the Eastern District of Virginia and Senior Counsel John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) are prosecuting the case. Significant assistance was provided by the CCIPS Cyber Crime Lab and the Criminal Division’s Office of International Affairs.

 

This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce .

 

This investigation was supported by the HSI-led National Intellectual Property Rights Coordination Center (IPR Center) in Washington. The IPR Center is one of the U.S. government's key weapons in the fight against counterfeiting and piracy. Working in close coordination with the Department of Justice’s IP Task Force, the IPR Center uses the expertise of its 21-member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and our war fighters.

The Department of Justice and the Federal Trade Commission (FTC) issued a joint summary of the activities of the Accountable Care Organization (ACO) Working Group, which took place between October 2011 and March 31, 2013. The department and the FTC established the working group to collaborate and discuss issues concerning ACOs created under the Affordable Care Act of 2010.  The act encourages physicians, hospitals and other health care providers to integrate their health care delivery systems in order to improve the quality and reduce the costs of health care services. 

 

The summary, which follows issuance of the agencies’ October 2011 antitrust enforcement policy statement regarding ACOs participating in the Medicare Shared Savings Program (MSSP), reports that during the time period covered, the ACO Working Group fielded 33 questions related principally to primary service area (PSA) share calculations, and two requests for voluntary expedited review from proposed ACOs.

 

Under the policy statement, an ACO may calculate its PSA shares to determine whether it falls within an antitrust safety zone for certain ACOs that are highly likely to raise significant competitive concerns. The ACO Working Group responded to most of the 33 PSA share questions within five business days, and in connection with the release of the summary is now making the questions and answers publicly available on their websites. The largest category of questions concerned obtaining and using Medicare and other data to calculate PSA shares.

 

Also under the policy statement, a newly formed ACO may request voluntary expedited antitrust review of its program. Both of the ACOs that sought such review during the time period covered by the summary withdrew their requests.

 

The joint summary and questions and answers can be found on the department’s website at www.justice.gov/atr/public/health_care/aco.html.

 

MEDIA CONTACT: Gina Talamona

Department of Justice

Office of Public Affairs

202-514-2007

 

Mitch Katz

FTC

Office of Public Affairs

202-326-2180

The Justice Department announced today that it has reached a settlement with Lee County, Fla. that, if approved by the district court, will resolve allegations that the county discriminated against three Hispanic employees on the basis of race and national origin in violation of Title VII of the Civil Rights Act of 1964, as amended.

 

The department’s complaint, previously filed in the Middle District of Florida, alleged that Lee County discriminated against Facilities Management Tradesworkers Leonides Sepulveda, Marco Ferreira, and Eduardo Rivera by subjecting them to racial and ethnic harassment. According to the complaint, from early 2007 through January 2009, the three employees were regularly subjected to racial and ethnic slurs by several of their co-workers. The discriminatory actions by co-workers included mocking Ferreira’s and Rivera’s accents, and making false accusations against Ferreira and Rivera to Lee County’s Office of Equal Opportunity in an effort to have the county terminate the two employees. The complaint further alleged that despite timely complaints about the harassment by the employees to their supervisors, as well as the supervisors’ direct observation of the harassment, Lee County failed to take any meaningful action to stop the harassment until January 2009, when the harassers were terminated. After the United States filed suit against Lee County, the three employees who were allegedly subjected to race and national original discrimination intervened in the lawsuit.

 

Under the terms of the settlement agreement, which must still be approved by the federal district court, the county is required to review and, if appropriate, revise its anti-discrimination policies for its workforce to protect its employees from discrimination. The county must also provide mandatory equal employment opportunity training to all Facilities Management employees that includes an emphasis on preventing race and national origin discrimination in the workplace. The settlement agreement also requires the county to pay the three affected employees $292,500 in monetary relief, including compensatory damages and attorney’s fees.

 

“Title VII ensures that employees have the right to work in an environment free of harassment based on their race and national origin,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General for the Civil Rights Division. “This settlement demonstrates the Civil Rights Division’s commitment to eradicate discriminatory harassment from the workplace.”

 

The continued enforcement of Title VII has been and remains a priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.usdoj.gov/crt/ .

The United States has filed a civil injunction lawsuit seeking to shut down Mo’ Money Taxes, a Memphis, Tenn., based tax-preparation chain that at one time operated as many as 300 offices in 18 states, the Justice Department announced today. The United States accuses Mo’ Money Taxes and its owners, Markey Granberry and Derrick Robinson, and store manager Eumora Reese of creating and maintaining a business environment that encourages the preparation of fraudulent federal income tax returns.

The government suit alleges that the defendants promote a culture that favors volume and profits over accuracy and integrity, and creates an environment where fraudulent return preparation and tax-law violations flourish. According to the complaint, Mo’ Money Taxes’ managers, licensees and employees prepare fraudulent returns that cause their customers to incorrectly report their federal tax liabilities and underpay their taxes and charge customers bogus and unconscionably high fees.

The complaint alleges that the defendants style themselves as savvy marketers and promoters of the Mo’ Money Taxes brand and image – as evidenced by their commercials – and that Granberry and Robinson decided to change the business’s name following bad publicity in 2012 surrounding customer allegations that Mo’ Money Taxes failed to provide tax refunds to customers in a reasonable amount of time, if at all. According to the complaint, Granberry and Robinson now do business under the name Marquis Taxes and, along with Reese, under the name Southern King Taxes.

According to the complaint, the defendants encourage Mo’ Money preparers to

·          Falsely claim the earned-income credit;

·          Claim improper filing status;

·          Claim bogus education credits;

·          Improperly prepare returns using paystubs rather than employer-issued W-2 forms;

·          Fabricate bogus W-2 forms;

·          File tax returns without customers’ consent;

·          Sell false and deceptive loan products; and

·          Charge deceptive and unconscionable fees.

The complaint cites alleged examples of Mo’ Money Taxes customers in Memphis; Atlanta; Richmond, Va.; Jackson, Miss.; and Nashville, Tenn., whose returns had such fraudulent claims. The complaint also refers to several state-government actions related to Mo’ Money Taxes’ sale of refund-anticipation loans and charging of undisclosed or improper fees.

The complaint alleges that the estimated tax loss from fraudulent tax return preparation at Mo’ Money Taxes offices in Memphis, Atlanta, Richmond and Jackson in 2011 exceeds $9 million.

Return preparer fraud, claiming false income or expenses to secure larger refundable credits such as the earned-income credit, and identity theft are among the IRS’s “ Dirty Dozen ” Tax Scams for 2013.

“The nation’s tax system relies on the integrity of tax preparers,” said Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division. “Most tax preparers are honest. We owe it to them and to all American taxpayers to use appropriate law enforcement tools to stop those who prepare fraudulent tax returns or who lure customers with deceptive loan products.”

“Americans understand that the timely and equitable collection of tax revenues is essential to ensuring the financial security of our citizens and nation as a whole,” said Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee.  “Those who abuse the tax filing process by fraudulently diverting public revenues into their own pockets are essentially stealing from every American and should expect to be held accountable to the fullest extent of the law.”

The United States previously obtained a permanent injunction against Toney Fields and Trumekia Shaw, who operated a Mo’ Money Taxes location in Nashville.

In the past decade the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website . For more information about choosing a tax return preparer, see the IRS website and the IRS YouTube Channel.

Related Materials:

United States v. Markey Granberry, et al.
Complaint for Permanent Injunction and Other Relief (PDF)

Thirty-four individuals and 23 entities have been indicted and accused of operating an illegal sports bookmaking business that solicited more than $1 billion in illegal bets, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney for the Western District of Oklahoma Sanford C. Coats.

“These defendants allegedly participated in an illegal sports gambling business, lining their pockets with profits from over a billion dollars in illegal gambling proceeds,” said Acting Assistant Attorney General Raman. “Today’s charges demonstrate that we are as determined as ever to hold accountable those involved in facilitating illegal online gambling by U.S. citizens, regardless of where the business operates, or where the defendants reside.”

“The defendants cannot hide the allegedly illegal sports gambling operation behind corporate veils or state and international boundaries,” said U.S. Attorney Sanford C. Coats.  “I thank the IRS and FBI for their diligent work over several years to investigate this billion dollar international gambling enterprise.”

According to the indictment, Bartice Alan King, aka “Luke” and “Cool,” 42, of Spring, Texas, conspired with others to operate internet and telephone gambling services first from San Jose, Costa Rica and then from Panama City, which took wagers almost exclusively from gamblers in the United States seeking to place bets on sports. Known since 2003 as Legendz Sports, the enterprise allegedly used bookies located in the United States to illegally solicit and accept sports wagers as well as settle gambling debts.

The 34 defendants are alleged to have been employees, members and associates of the ongoing Legendz Sports enterprise.  The 23 corporate defendants are alleged to have been used by Legendz Sports to facilitate gambling operations, operate as payment processors, own websites and domain names used in the enterprise, launder gambling funds and make payouts to gamblers.

The indictment alleges that Legendz Sports sought to maximize the number of gamblers who opened wagering accounts by offering both “post-up” betting, which requires a bettor to first set up and fund an account before placing bets and “credit” betting, which allowed the bettor to place a wager without depositing money in advance through face-to-face meetings with bookies or agents.

The indictment alleges that Legendz Sports solicited millions of illegal bets totaling over $1 billion.

“These defendants allegedly participated in an illegal sports gambling business, lining their pockets with profits from over a billion dollars in illegal gambling proceeds,” said Acting Assistant Attorney General Raman. “Today’s charges demonstrate that we are as determined as ever to hold accountable those involved in facilitating illegal online gambling by U.S. citizens, regardless of where the business operates, or where the defendants reside.”

“The defendants cannot hide the allegedly illegal sports gambling operation behind corporate veils or state and international boundaries,” said U.S. Attorney Sanford C. Coats.  “I thank the IRS and FBI for their diligent work over several years to investigate this billion dollar international gambling enterprise.”

“Individuals cannot skirt the laws of the United States by setting up illegal internet gambling operations in a foreign country, while living in the United States and enjoying all the benefits of U.S. citizens,” said Jim Finch, Special Agent in Charge of the FBI Oklahoma City Field Office.  “The FBI, along with our law enforcement partners, will continue to be diligent in investigating such violations of federal law.”

“Combining the financial investigative expertise of the IRS with the skills and resources of the FBI makes a formidable team for combating major, greed-driven crimes,” said Andrea D. Whelan, Internal Revenue Service Special Agent in Charge.  “This massive indictment is the result of our highly effective law enforcement partnership.”

If convicted, the defendants face up to 20 years in prison for racketeering, up to 20 years in prison for conspiring to commit money laundering, up to 10 years in prison for money laundering and up to five years in prison for operating an illegal gambling business.

In addition, the indictment seeks a forfeiture money judgment of at least $1 billion traceable to numerous specific assets that include real estate, bank accounts, brokerage and investment accounts, certificates of deposit, individual retirement accounts, domain names, a Sabreliner aircraft, a gas lease and vehicles.

The public is reminded that the indictment is merely an accusation and that the defendants are each presumed innocent unless and until proven guilty.
This case is the result of an investigation by the FBI and Internal Revenue Service-Criminal Investigation, with the assistance of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the U.S. Marshals Service.  The case is being prosecuted by Assistant U.S. Attorneys Susan Dickerson Cox and William Lee Borden Jr., from the Western District of Oklahoma and Trial Attorney John S. Han with the Department of Justice Criminal Division Organized Crime and Gang Section.

For further information, reference is made to the 95-page indictment which can be found at www.justice.gov/usao/okw/index.html.

A federal court in Baton Rouge, La. permanently barred Ann Williams and her tax preparation firm, Ann’s Tax Service, from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Williams and Ann’s Tax Service agreed without admitting the allegations against them, was signed by Judge James J. Brady of the U.S. District Court for the Middle District of Louisiana.

The government complaint alleged that Williams and her business had repeatedly prepared false federal income tax returns that understated customers’ tax liabilities. According to the complaint, Williams inflated or fabricated business expenses, reported fictitious business income, and fraudulently claimed the earned-income credit on customers’ tax returns. The government suit alleges that Williams’s fraudulent practices may have resulted in as much as $2.2 million in lost tax revenue. The U.S. Attorney’s Office of the Middle District of Louisiana assisted in the filing of this lawsuit by acting as local counsel.

The IRS lists return-preparer fraud as one of the Dirty Dozen Tax Scams for 2013. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax preparers. Information about these cases is available on the Justice Department website.

Related Materials:

 United States v. Ann M. Williams , etc.
Complaint for Permanent Injunction (PDF)
Order of Permanent Injunction (PDF)
 

Attorney General Eric Holder announced today that President Obama’s FY 2014 Budget proposal totaling $27.6 billion for the Department of Justice identifies over $561.4 million in efficiencies, savings and rescissions while providing resources to increase critical national security programs, and uphold the department’s traditional missions with an increased focus on gun safety, cyber security, financial and mortgage fraud, immigration laws, civil rights, prisons and detention capacity, and assistance for our state, local and tribal law enforcement partners. Although sequestration cut over $1.6 billion from the department’s budget in FY 2013 and creates countless operational challenges, the President’s budget replaces and repeals joint committee enforcement and provides for the department’s key priorities. The request represents a 3 percent increase in budget authority from the FY 2012 enacted level.

“The President’s budget request reflects a strong commitment to building upon the record of progress we have established in fulfilling the Justice Department’s most critical missions.  The proposed budget will provide the department with the resources necessary to protect the American people from terrorism and other national security threats; to prevent and respond to violent crime; to enforce the civil rights to which everyone in this country is entitled; to protect the most vulnerable among us; to combat financial and mortgage fraud; and to work alongside key state, local and tribal law enforcement partners in achieving the goals we share,” said Attorney General Holder.  “As in previous years, this budget incorporates department-wide savings and efficiencies, but the need for a balanced, bipartisan deficit reduction plan remains an urgent priority.  And it is imperative that we eliminate current fiscal uncertainty and ensure that these critical enhancements can be implemented.” 

The $27.6 billion budget request includes investments for critical administration priorities, including $4.4 billion to sustain the department’s critical national security mission; $395.1 million to combat gun violence; $92.6 million to increase funding for enforcement of cyber security; $55 million to investigate and prosecute financial and mortgage crimes; $25 million increase to address the growing immigration caseload; $7.5 million increase to prevent human trafficking, hate crimes and police misconduct; and $236.2 million to ensure prisoners and detainees are securely confined. The budget addresses the federal prison population by allowing eligible inmates to earn sentence reductions for good behavior and participation in certain reentry programs, freeing up federal prison space and reducing long-term costs. Finally, the budget continues to foster valued partnerships through state, local and tribal assistance to enhance public safety, protect women and children, and reduce recidivism.

The Department of Justice’s key priorities include:

 

·          $4.4 billion for national security;

·          $395.1 million to protect Americans from gun violence;

·          $92.6 million enhancement for cyber security;

·          $55 million increase for investigating and prosecuting financial and mortgage fraud;

·          $25 million increase to support immigration laws;

·          $258.6 million to help meet the Nation’s civil rights challenges;

·          $236.2 million investment for federal prisons and detention;

·          $2.3 billion – a net increase of $201.3 million – to maintain assistance to state, local and tribal law enforcement; and

·          $561.4 million in federal program offsets and rescissions (includes $236.8 million in efficiencies, savings and offsets and $324.6 in one-time balance rescissions).  

 

National Security

 

Defending our nation’s security from both internal and external threats remains the Department of Justice’s highest priority. The FY 2014 budget request provides a total of $4.4 billion to maintain critical counterterrorism and counterintelligence programs and sustain recent increases for intelligence gathering and surveillance capabilities.

The Administration supports critical national security programs within the Department, including those led by the FBI and the National Security Division (NSD). In FY 2012, the FBI dedicated approximately 4,200 agents to investigate more than 33,000 national security cases. NSD has continued to carry out its primary functions to prevent acts of terrorism and espionage in the United States and to facilitate the collection of information regarding the activities of foreign agents and powers.

In FY 2014, the department is investing $14 million to improve intelligence coordination and collection, expand information sharing efforts, and strengthen investigations of national security efforts in order to protect the nation and secure the homeland.

For more information, view the National Security Fact Sheet at www.justice.gov/jmd/2014factsheets/

 

Gun Safety

 

Gun violence has touched every state, county, city, and town in America.  The President laid out a comprehensive plan to reduce gun violence and save lives. As part of this effort, the department’s FY 2014 request of $395.1 million, including $173.1 million invested in federal programs and a total of $222 million in grant programs, provides additional resources to combat gun violence and improve the process used to ensure that those prohibited from purchasing or owning guns are kept from doing so. Funding increases are also provided to improve criminal history records information; initiate a new Comprehensive School Safety Program; provide active shooter response training to state and local law enforcement officers, first responders and school officials; and enhance the enforcement of existing gun laws.

Specifically, the request strengthens the national background check system by investing $100 million to double the existing transaction capacity of the FBI’s National Instant Criminal Background Check System (NICS). This is vital to ensure the NICS system can support a Universal Background Check requirement. We are also taking a thorough look at our federal laws and our enforcement priorities to ensure that we are doing everything possible at the federal level to keep firearms away from traffickers and others prohibited by law from possessing firearms.  As directed by the President, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) has recently published guidance to federal agencies on how to trace recovered firearms and requests $51.1 million to support additional investigative and regulatory resources as well as improvements to ATF’s tracing system.  The department is also requesting $22 million to enhance the National Integrated Ballistics Information Network and better support law enforcement’s ability to connect incidents of criminal firearms use.

And while most of the Department’s efforts will be focused on keeping guns out of the wrong hands, we also want to help those on the ground prevent and mitigate violent situations when they do occur.  To this end, t he grant program request includes $55 million to improve the submission of state criminal and mental health records to NICS; $150 million to develop and improve school safety plans and enable states to hire additional school resource officers and to purchase school security equipment. It will further provide $2 million to encourage the development of innovative gun safety technology and $15 million for the VALOR Initiative, including training for active shooter situations.

For more information, view Gun Safety Fact Sheet at www.justice.gov/jmd/2014factsheets/

 

Cyber Security

 

Investigating cybercrime and protecting our nation’s critical network infrastructure is a top priority of the department in an era when cyber-attacks and crimes are increasingly common, sophisticated, and dangerous. The President’s FY 2014 budget request maintains recent increases for the FBI’s cyber terrorism investigations, the National Cyber Investigative Joint Task Force (NCIJTF) and the forensic examination of digital evidence by expanding funds to support the Next Generation Cyber Initiative and capabilities to combat cyber threats from individuals, organized groups, and rogue actors.

The department has a unique and critical role in cyber security that emphasizes domestic mitigation of threats and involves countering these threats by investigating and prosecuting intrusion cases, gathering intelligence, and providing legal and policy support to other departments. The department is also responsible for establishing effective internal network defense and serving as a model for other departments and agencies.

The department is committed to carrying out its role consistent with the Administration’s Executive Order on Improving Critical Infrastructure Cyber Security which emphasizes intelligence and information sharing as well as the preservation of privacy, data confidentiality, and civil liberties. As part of this effort, the department continues to maintain and strengthen its cyber security environment to counter cyber threats, including insider threats, and to ensure personnel have unimpeded access to the IT systems, networks, and data necessary to achieve their missions. In FY 2014, the department is requesting $92.6 million to support efforts to combat and keep pace with increasingly sophisticated and rapidly evolving cyber threats.

For more information, view the Cyber Security Fact Sheet at www.justice.gov/jmd/2014factsheets/

 

Financial Fraud Law Enforcement

Investigating and prosecuting financial fraud continues to be a priority for the Obama Administration. The Justice Department is proposing a program increase of $55 million for financial and mortgage fraud initiatives to complement ongoing efforts to combat financial and health care fraud, that are supported by existing direct resources and reimbursable funding.

Continuing efforts already underway, the FY 2014 budget requests resources to strengthen the department’s ability to pursue large-scale financial fraud investigations ensuring that Americans, their investments and our financial markets are protected. The department remains committed to efforts to help restore confidence in our financial markets, protecting the federal Treasury and defending the interests of the U.S. government.

Ongoing efforts by the President’s Financial Fraud Enforcement Task Force (FFETF) are included in the department’s requests for program increases for a variety of financial fraud enforcement efforts. This increase will support additional FBI agents, criminal prosecutors, civil litigators, investigators, forensic accountants and other support positions. The additional resources will sustain the department’s investigation and prosecution of securities and commodities fraud, investment scams and mortgage foreclosure schemes and a broad range of financial crimes, including cases being investigated and brought by the FFETF’s Residential Mortgage-Backed Securities Working Group.

For more information, view the Financial and Mortgage Fraud Fact Sheet at www.justice.gov/jmd/2014factsheets/ .

 

Immigration

 

The department maintains substantial responsibilities with respect to immigration, including enforcement, detention, judicial functions, administrative hearings, and litigation. The department’s Executive Office for Immigration Review (EOIR) maintains a nationwide presence overseeing the immigration court and appeals process. EOIR receives cases directly from the Department of Homeland Security (DHS) enforcement personnel. Combined with the Civil Division’s Office of Immigration Litigation, the department has a wide and important role in immigration enforcement.

However, in recent years, the department’s resource enhancements have not kept pace with immigration enforcement efforts, thereby undermining the effectiveness and efficiency of overall immigration enforcement, adjudication and detention programs. For example, EOIR’s immigration court caseload has continued to outpace department resources increasing by 42 percent, from 229,000 to 326,000, between FY 2009 and FY 2012.

The 2014 request includes a $25 million investment to support an additional 30 Immigration Judge Teams and 15 Board of Immigration Appeals attorneys. This will allow EOIR to address caseload increases emanating from DHS programs, including the Secure Communities Initiative and the Criminal Alien Program. Additional funding is included to enable EOIR to create a pilot program that provides counsel to vulnerable populations, such as unaccompanied alien children, and to expand their Legal Orientation Program that improves efficiencies in immigration court proceedings for detained aliens.

For more information, view the Immigration Fact Sheet at www.justice.gov/jmd/2014factsheets/

Civil Rights

 

It is the mission of the department to uphold the civil and constitutional rights of all Americans, particularly the most vulnerable members of our society. Accomplishing this requires necessary resources both to investigate and to litigate. The department maintains substantial responsibilities with respect to enforcing the nation’s civil rights laws and protecting vulnerable populations. The FY 2014 budget will support the department’s vigorous enforcement of federal civil rights laws – including human trafficking, hate crimes, police misconduct, fair housing, fair lending, disability rights, and voting. As such, the department’s FY 2014 budget requests $258.6 million to help meet the nation’s civil rights challenges. The request includes $7.5 million in program increases for the Civil Rights Division and Community Relations Service.

For more information, view the Civil Rights Fact Sheet at www.justice.gov/jmd/2014factsheets/.

Prisons and Detention

The department has made strategic investments in law enforcement initiatives that have improved the nation’s security and made communities safer. The result of these important enforcement efforts has been an expansion in the need for prison and detention capacity. The department continues to prioritize the maintenance of secure, controlled detention and prison facilities, as well as investment in programs that can reduce recidivism. The FY 2014 budget requests a total of $8.5 billion for prisons and detention. The request invests in prisons and detention capacity, providing $236.2 million for program increases to maintain current services, improve prisoner reentry and ensure prisoners are confined in secure facilities.

For the Federal Bureau of Prisons (BOP), the budget includes resources to begin activation of three prisons – FCI Hazelton, W.Va., U.S. Penitentiary Yazoo City, Miss., and Administrative Maximum U.S. Penitentiary Thomson, Ill. – and full activation for two prisons that received partial funding in FY 2012 – Federal Corrections Institution (FCI) Aliceville, Ala., and FCI Berlin, N.H. These resources will increase federal prison capacity and address overcrowding and related security issues.

Additionally, the request provides funds for renovation of the Thomson Correctional Center, additional contract beds, and plans to expand the residential drug abuse treatment program, Residential Reentry Centers, and reentry-specific education programs. These resources provide critical opportunities for inmates to successfully transition back into the community, resulting in fewer taxpayer resources directed at housing inmates.

For more information, view the Prisons and Detention Fact Sheet at www.justice.gov/jmd/2014factsheets/

 

State, Local and Tribal Law Enforcement

 

In total, the FY 2014 budget requests $2.3 billion for state, local and tribal law enforcement assistance. These funds will allow the department to continue to support our state, local and tribal partners who fight violent crime, combat violence against women and support victim programs.  The FY 2014 request will bolster the department’s efforts to ensure that federal grant funding flows to evidence-based purposes and helps to advance knowledge of what works in state and local criminal justice.

The request increases funding for an evaluation clearinghouse; enhances funding for evidence-based competitive programs; and couples formula grant programs with competitive “bonus” funds to incentivize better, evidence-based, uses of funds. The request also includes funding to address school safety and gun violence with additional resources to improve criminal history records information and to fund a comprehensive school safety program.

The FY 2014 budget request for the Office on Violence Against Women (OVW), a total of $412.5 million, will provide communities with the opportunity to combat sexual assault and violence against women. The request includes an increase of $3.5 million to the Rural Domestic Violence and Child Abuse Enforcement Assistance Program, which will improve the safety of children, youth and adults who are victims of domestic violence, dating violence, sexual assault and stalking by supporting projects uniquely designed to address and prevent these crimes in rural jurisdictions.  The department is requesting $1.5 billion for the Office of Justice Programs’ (OJP) grant programs to expand established programs that have shown to be successful, such as the Residential Substance Abuse Treatment, Second Chance and Byrne Criminal Justice Innovation Programs. It also proposes to create new competitive grant programs that are structured on evidence-based principles and funding to establish programs that will provide supplementary awards to states and localities using base formula grant funds for evidence-based purposes. The OJP request also includes additional funding to address gun violence, including funding for a gun safety research initiative and enhanced funding for the National Criminal History Improvement Program and the VALOR Initiative.

For more information, view the State, Local and Tribal Law Enforcement Fact Sheet at www.justice.gov/jmd/2014factsheets/ .

 

Eric Majette, 52, a tax return preparer and owner and operator of the Berrisford Group, located in Somerville, N.J., pleaded guilty today to corruptly endeavoring to obstruct and impede the Internal Revenue laws and to preparing a false tax return, the Justice Department and Internal Revenue Service (IRS) announced.

 

On Jan. 17, 2013, a federal grand jury sitting in Trenton, N.J., returned a superseding indictment, charging Eric Majette with twenty-nine counts of aiding and assisting in the preparation of false tax returns for clients and one count of corruptly endeavoring to obstruct and impede the Internal Revenue laws. According to the superseding indictment, Majette prepared false tax returns for clients by inflating itemized deductions and credits such as charitable contributions, unreimbursed employee expenses, and energy credits. In addition, when his clients were audited, Majette submitted false charitable contribution receipts to the IRS to support the fraudulent returns that he prepared.

 

Sentencing has been scheduled for Sept. 24, 2013. The case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Tino M. Lisella and Robert C. Kennedy of the Justice Department’s Tax Division are prosecuting the case.

 

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

The Department of Justice announced today that it has entered into a consent decree with the city of Millbrook, Ala., that, if approved by the U.S. District Court for the Middle District of Alabama, will resolve the department’s complaint alleging sex discrimination and retaliation in violation of Title VII of the Civil Rights Act of 1964, as amended. The complaint, which was filed along with a proposed consent decree, alleges that Millbrook discriminated against Kristen Spraggins, a female officer employed by the Millbrook Police Department, by subjecting her to harassment and disparate treatment based on her sex, and then terminating her in retaliation for her opposition to the discrimination.

 

Spraggins began employment with Millbrook as patrol officer in January 2008 and, at the time, was Millbrook’s only female police officer. According to the complaint, Spraggins received excellent performance evaluations from her superiors in the Millbrook Police Department until she rejected unwanted sexual advances by a co-worker and reported those advances to her superiors. The complaint alleges that Millbrook violated Title VII by failing to take effective disciplinary action against the co-worker who harassed her, a male sergeant, and instead subjecting Spraggins to unwarranted disciplinary actions. The complaint further alleges that Millbrook eventually terminated Spraggins from employment with the Police Department in retaliation for her pursuing internal complaints with the department about the sexual harassment and because she filed a charge of sex discrimination with the Equal Employment Opportunity Commission. Under the terms of the consent decree, Millbrook must pay Spraggins compensatory damages as part of the settlement with the department. The consent decree also provides for injunctive relief requiring Millbrook to revise and enforce its policies and procedures that prohibit sex discrimination and retaliation, and to train its officers and other employees on the prevention of sex discrimination and retaliation.

 

“The Justice Department is committed to the vigorous enforcement of all federal civil rights laws under its jurisdiction, including Title VII’s prohibition against harassment and retaliation in the workplace,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General of the Civil Rights Division. “This lawsuit should send a clear message that the Department will take necessary action to eliminate and remedy the effects of unlawful harassment in our public sector workplaces.”

 

The enforcement of Title VII and other federal employment discrimination laws is a top priority of the Justice Department’s Civil Rights Division.  Additional information about the Civil Rights Division and its work is available on its website at www.justice.gov/crt.

The Justice Department today reached an agreement with Milestone Management Company, a nationwide residential property management firm headquartered in Dallas, resolving claims that the staffing company violated the anti-discrimination provision of the Immigration and Nationality Act (INA).

 

In a charge filed with the department, a lawful permanent resident alleged that after working for Milestone for three years, the company improperly demanded that he produce an unexpired lawful permanent resident card, despite the fact that he had presented proper work authorization documentation at the time of hire. The company discharged the worker when he was unable to present the document. The department’s investigation revealed that Milestone had also improperly reverified the documentation of other lawful permanent residents when their documentation expired and that it did not reverify expired documentation of U.S. citizens. The anti-discrimination provision generally prohibits treating employees differently in the employment eligibility verification and reverification processes based on citizenship or national origin unless required by law.

 

In response to the Justice Department’s investigation, Milestone immediately reinstated the charging party and provided full backpay for his six weeks of lost wages. Milestone cooperated with the department’s requests for information regarding its employment authorization verification processes throughout the investigation, and took proactive steps in collaboration with the department to provide corrective training for Milestone employees before the investigation had been concluded.

 

Under the terms of the agreement, Milestone agreed to pay $20,000 in civil penalties to the United States, undergo Justice Department training on the anti-discrimination provision of the INA and be subject to monitoring of its employment eligibility verification practices for a period of three years. The case settled prior to the Justice Department filing a complaint in this matter.

 

“We commend Milestone’s full cooperation with the Department’s investigation of this matter, and its proactive efforts to ensure that all of its employees responsible for completing Form I-9 are fully aware of their obligations under the INA’s antidiscrimination provisions,” said Gregory B. Friel, Deputy Assistant Attorney General for the Civil Rights Division. 

 

The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provision of the INA.   For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TDD for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TDD for hearing impaired), sign up for a no-cost webinar at www.justice.gov/about/osc/webinars.php , email [email protected] or visit the website at www.justice.gov/crt/about/osc.

WASHINGTON – With the annual tax filing deadline approaching on April 15, the Justice Department today announced highlights of its work during the past year to defend and enforce the nation’s tax laws. The Tax Division has worked together with the Internal Revenue Service (IRS) to carry out their combined tax enforcement missions in several critical areas, including prosecuting tax fraud and evasion, halting the spread of abusive tax shelters, tracking down tax cheats who use offshore accounts, and combating stolen identity refund fraud. Previously, the division announced that it has shut down more than 30 fraudulent tax preparers over the past six months.

 

The Tax Division’s primary purpose is to enforce the nation’s tax laws fully, fairly, and consistently, through both criminal and civil litigation. Some of the division’s accomplishments from the past fiscal year (FY 2012) include:

 

· Favorable outcomes were achieved in over 95 percent of all civil and criminal cases litigated by the Tax Division.

 

· The division authorized 938 grand jury investigations and 1,751 prosecutions of individual defendants.

 

· Division prosecutors obtained 127 indictments and 137 convictions. Those figures do not include additional criminal tax prosecutions handled exclusively by U.S. Attorney’s Offices nationwide.

 

· The division collected over $290 million through affirmative civil litigation and retained over $1.1 billion through defensive tax refund and other litigation.

 

· Taking into account the tax dollars collected and refunds not paid as a result of our successful litigation efforts, over the past five fiscal years (FY 2008-2012), the division’s attorneys have returned to the Federal Treasury an average of $14 for each dollar invested.

 

“As honest taxpayers prepare to meet their filing obligations by April 15, they should know that we are committed to enforcing the tax laws against those who would cheat on their responsibilities,” said Assistant Attorney General Kathryn Keneally. “The department will continue to use all available law enforcement tools to recover tax revenue and to punish tax offenders.”

 

“The IRS and Department of Justice have made significant strides in recent months to combat tax fraud, identity theft, and offshore tax evasion,” said IRS Acting Commissioner Steven T. Miller. “We appreciate the Justice Department’s strong support and cooperation to protect the interests of the nation’s taxpayers.”

 

Prosecuting Tax Offenses

The Tax Division has supervisory authority over all criminal conduct involving federal tax laws. The Division has always maintained as a central focus the investigation and prosecution of tax crimes, including tax evasion, failure to file returns, submission of false tax returns, and other conduct designed to violate federal tax laws. Tax Division attorneys are also particularly adept at prosecuting tax defiers—those individuals who purposefully refuse to comply with the tax laws and use frivolous arguments to support their positions.

 

Some of the Tax Division’s criminal tax prosecution highlights from the past year include:

 

· April 2013 - Jeffrey Charles of Grimstead, Va., was sentenced to 46 months in prison and ordered to pay $300,000 in restitution for conspiracy, aiding and assisting in the preparation of false tax returns, and filing a false tax return.

 

· March 2013 - Tyrone Thompson, a Georgia tax return preparer, was sentenced to 137 months in prison and ordered to pay $516,363 in restitution for conspiracy and filing fraudulent tax returns in order to receive tax refunds to which he was not entitled.

 

· March 2013 - Timothy Turner, the self-proclaimed “president” of the so-called sovereign citizen group “Republic for the United States of America” (RuSA), was found guilty of conspiracy to defraud the United States, attempting to pay taxes with fictitious financial instruments, attempting to obstruct and impede the IRS, failing to file a 2009 federal income tax return, and falsely testifying under oath.

 

· January 2013 - Michael Wayne Davis, II, of Raleigh, N.C., formerly of Eagle, Idaho, was sentenced to 51 months in prison and ordered to pay nearly $1 million in restitution for wire fraud and filing a false tax return. Davis formerly owned Xpress Flex Inc., a Boise-based company that administered employee-benefit plans, and Payroll America, a Boise payroll services company.

 

· October 2012 - James Norman Turek, former president of a Lexington, Ky., based company, was sentenced to 18 years in prison for securities fraud and tax fraud. The evidence showed that Turek, through his company, Plasticon International Inc., defrauded thousands of investors nationwide out of more than $18 million, and that he filed false tax returns by failing to report approximately $12 million.

 

· June 2012 - Richard Stewart of Mitchellville, Md., was sentenced to 24 months in prison and ordered to pay $5,414,647 in restitution for failing to pay over employment taxes in connection with his ownership of Montgomery Mechanical Services.

Halting the Spread of Tax Shelters

The Tax Division plays a critical role in the government's efforts to combat abusive tax shelters.These cases involve more than a billion dollars in tax revenue, and affect billions more owed by other taxpayers.In recent years, the division’s civil litigators at both the trial and appellate levels have won important victories in cases involving tax shelters with names such as Son of BOSS, BLIPS, CARDS, DAD and SILO/LILO.

 

Some of the division’s successes this year include:

 

· February 2013 - the division prevailed in a tax shelter case involving $1 billion in phony tax deductions claimed by a major U.S. corporation as a result of two abusive tax shelter transactions. In United States v. Chemtech Royalty Associates, L.P., the federal district court in Baton Rouge, La., following a lengthy trial, determined that the shelter transactions lacked economic substance and that the partnership at issue should be disregarded because it had no purpose other than to create tax benefits. In addition to rejecting the purported tax benefits from these transactions, the court also imposed penalties.

 

· February 2013 - the division’s appellate section successfully defended a favorable Tax Court ruling in Crispin v. Commissioner, a case involving the CARDS tax shelter. The Third Circuit Court of Appeals upheld both the denial of the claimed tax benefits and the imposition of a 40 percent gross-valuation-misstatement penalty.

· January 2013 - the division’s appellate section secured a reversal of the lone trial court decision that had upheld the purported tax benefits generated by the “lease-in/lease-out” (LILO) tax shelter, in Consolidated Edison Co. v. United States, a case decided by the Federal Circuit.

 

Investigating Offshore Evasion

The Tax Division continues to play a leading role in investigations and prosecutions involving the use of foreign tax havens. According to a 2008 Senate report, the use of secret offshore accounts to evade U.S. taxes costs the Treasury at least $100 billion annually. The Division is committed to investigating offshore tax evasion around the globe. The division’s current offshore program began in 2008, with the investigation of UBS, which resulted in the 2009 UBS deferred prosecution agreement . Since 2008, the division has charged a total of 30 banking professionals and 62 account holders, which charges have so far resulted in three convictions after trial and 55 guilty pleas, including 16 guilty pleas this year alone.

 

In January, 2013, the U.S. Attorney’s Office in the Southern District of New York secured the guilty plea of Wegelin Bank, the oldest private bank in Switzerland, and the first foreign bank to plead guilty to felony tax charges. Appearing on behalf of the bank, managing partner Otto Bruderer admitted that the bank had conspired to defraud the United States by helping U.S. account holders hide assets from the IRS in undeclared accounts. In the same month, the federal district court in New York entered an order authorizing the IRS to issue a “John Doe” summons seeking records of Wegelin’s United States correspondent account at UBS, which will allow the United States to determine the identity of U.S. taxpayers who may hold accounts at Wegelin and other banks based in Switzerland to evade federal income taxes. In the past year, the Division has charged 8 banking professionals and 11 account holders in connection with investigations into offshore banks located in India, Israel, and Switzerland.

 

Some highlights from the division and the U.S. Attorney’s Offices includes:

 

· March 2013 - Zvi Sperling, of Los Angeles, pleaded guilty to conspiring to defraud the United States in connection with loans secured by funds in undeclared bank accounts in Israel. As part of the plea, Sperling admitted to failing to report over $380,000 in income and agreed to pay a civil penalty of 50 percent on his share of the high balance in the Israeli accounts, which at one point was $4 million.

 

 

· January 2013 - Mary Estelle Curran of Palm Beach, Fla., pleaded guilty to filing a false tax return for 2006 and 2007 and admitted that she had maintained an undeclared account at UBS. The plea agreement included a penalty of over $21.6 million for failing to file Reports of Foreign Bank and Financial Accounts (FBARs).

 

· August 2012 - Arvind Ahuja, a Wisconsin neurosurgeon who maintained an undeclared account at HSBC India, was convicted following a jury trial of filing a false 2009 income tax return and failing to file an FBAR.

 

Combating Identity Theft

The Tax Division, in conjunction with the IRS and U.S. Attorneys nationwide, has made a high priority the investigation and prosecution of individuals who engage in stolen identity refund fraud (SIRF). The division is targeting individuals involved in all stages of these schemes, including those who illegally obtain the Social Security numbers and other personal identifying information, those who file the false returns with the IRS, those who knowingly facilitate cashing the checks or otherwise obtaining the refunds, and those who mastermind or promote these scams.

 

Some highlights of the Tax Division’s success prosecuting perpetrators of identity theft over the past year include:

 

· March 2013 - Mary Bennett of Elmore County, Ala., was sentenced to 75 months in prison after pleading guilty to conspiracy to commit mail and wire fraud, as well as aggravated identity theft. Her two co-conspirators were sentenced to 24 and 18 months in prison.

 

· February 2013 - Antoinette Djonret of Montgomery, Ala., was sentenced to 144 months in prison and ordered to pay almost $1.3 million in restitution. Djonret and her co-conspirators filed over 1,000 false tax returns, establishing an elaborate network for laundering the refund money, and recruiting a number of individuals to purchase prepaid debit cards for use in the scheme.

 

· January 2013 - Masood Chotani, a CPA and tax return preparer from Los Angeles, pleaded guilty to conspiracy to defraud the United States for his role in a scheme in which he misappropriated employer identification numbers from his client files and provided information to co-conspirators who then filed over 250 fraudulent returns claiming more than $2 million in refunds. The refunds were deposited in foreign bank accounts. His co-conspirators are currently serving 30- and 37-month prison terms.

 

· November 2012 - Andrew J. Watts, a Barbados national, was sentenced in Chicago to 114 months in prison and ordered to pay restitution of just under $1.7 million for devising and executing a SIRF scheme in which he filed over 470 false federal income tax returns, claiming fraudulent refunds in excess of $120 million.

 

· May 2012 - Veronica Dale was sentenced to 27 years and 10 months in prison, and her co-conspirator, Alchico Grant, was sentenced to 25 years and 10 months in prison, for their roles as the leaders of a Montgomery, Ala., SIRF ring. They were also ordered to pay over $2.8 million in restitution to the IRS. Using the stolen identities of Medicare beneficiaries, Dale and Grant filed over 500 fraudulent refund claims, and then recruited others to set up a bank account in the name of a business into which more than $1.5 million in fraudulently obtained refunds were deposited.

 

Return Preparer Fraud

Corrupt accountants and fraudulent tax return preparers present a serious law enforcement concern. Some accountants and return preparers dupe unwitting clients into filing fraudulent returns, while others serve as willing “enablers,” providing a veneer of legitimacy for clients predisposed to cheat. The division’s civil injunction program, now more than 10 years old, continues to be an effective way to quickly shut down fraudulent return preparers and illegal tax-scheme promoters – especially during filing season – thereby reducing the harm to the public while potential criminal investigations are ongoing. In March, the Tax Division announced recent successes in its civil injunction program including more than 30 injunctions entered against both large-scale tax return preparation franchises and smaller, independent return preparers and promoters across the country in recent months.

 

Hiding income offshore, identity theft, and return preparer fraud are all part of the IRS’s “ Dirty Dozen Tax Scams.” More information about the Tax Division’s civil and criminal enforcement efforts in these and other areas is available on the Justice Department website. For more on the Dirty Dozen Tax Scams, see the IRS website and the IRS YouTube Channel.

A former U.S. Department of Homeland Security Office of Inspector General (DHS-OIG) special agent in charge and another special agent were indicted in the Southern District of Texas late yesterday for their roles in a scheme to falsify records and to obstruct an internal field office inspection, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and Special Agent in Charge Armando Fernandez of the FBI San Antonio Field Office.

The indictment returned by a federal grand jury in Brownsville, Texas, charges Eugenio Pedraza, 49, of McAllen, Texas, with six counts of falsification of records in federal investigations, five counts of obstructing an agency proceeding, one count of obstruction of justice and one count of conspiracy.  The indictment also charges Marco Rodriguez, 40, of Mission, Texas, with two counts of falsification of records in federal investigations, two counts of obstructing an agency proceeding and one count of conspiracy.

DHS-OIG is the principal component within DHS with the responsibility to investigate alleged criminal activity by DHS employees, including corruption affecting the integrity of U.S. borders.

According to the indictment, in September 2011, DHS-OIG conducted an internal inspection of its McAllen Field Office to evaluate whether its internal investigative standards and policies were being followed.  At that time, Pedraza was the special agent in charge of the McAllen Field Office, and Rodriguez was a special agent stationed there.  According to the indictment, in anticipation of the inspection, Pedraza allegedly directed Rodriguez and other DHS-OIG employees to engage in a scheme to falsify documents in open criminal investigative case files, including numerous investigations in which DHS employees were suspected of participating in the unlawful smuggling of undocumented aliens and/or narcotics into the United States.

More specifically, the indictment charges that at Pedraza’s direction, DHS-OIG employees allegedly created and placed into these investigative files backdated memoranda of activity that falsely reflected investigative activity by agents that had not occurred; backdated case review worksheets that falsely reflected supervisory case reviews that Pedraza had not conducted with his subordinate agents; and backdated, unsent letters that were signed by Pedraza and purported to inform the FBI of the opening of a DHS-OIG investigation.
                                                                                     
According to the indictment, the scheme’s purpose was to conceal severe lapses in DHS-OIG’s investigative standards from individuals conducting an internal field office inspection.  The scheme was allegedly devised to conceal Pedraza’s failure to ensure that investigations were being conducted promptly and thoroughly, his failure to provide his subordinates with adequate training and supervision, and his failure to ensure that the FBI was being timely notified of DHS-OIG’s investigations.

The indictment also charges Pedraza with allegedly directing two DHS-OIG employees to falsify memoranda of activity on additional occasions, and with obstructing justice by removing the falsified supervisory case review sheets that he had created from DHS-OIG files after becoming aware of the FBI and grand jury investigation into his conduct.

In a related case, on Jan. 17, 2013, Wayne Ball, a former DHS-OIG special agent, pleaded guilty in U.S. District Court for the Southern District of Texas before U.S. District Judge Randy Crane to one count of a multi-object conspiracy to falsify records in federal investigations and to obstruct an agency proceeding for his participation in the scheme.  Ball is scheduled to be sentenced on July 31, 2013.

The charge of falsification of records in federal investigations carries a maximum penalty of 20 years in prison.  The charge of obstructing an agency proceeding carries a maximum penalty of five years in prison.   The charge of obstruction of justice carries a maximum penalty of 20 years in prison.   The charge of conspiracy carries a maximum penalty of five years in prison.  Each of these charges carry a maximum fine of $250,000.

An indictment is not evidence of guilt.  All defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The case is being prosecuted by Trial Attorneys Eric L. Gibson and Timothy J. Kelly of the Criminal Division’s Public Integrity Section.  The case is being investigated by agents of the FBI, San Antonio Division.

U.S. District Court Judge Joseph F. Bianco entered a consent decree of permanent injunction between the United States, Kabco Pharmaceuticals Inc. and its CEO and President Abu Kabir, the Justice Department announced today. The consent decree entered by the court enjoins the defendants from violating the Federal Food, Drug and Cosmetic Act (FDCA) in connection with their manufacturing, packing and distributing of dietary supplements. 

 In a complaint filed with the court, the United States alleged that Food and Drug Administration (FDA) inspections found that Kabco distributed dietary supplements, including Brewers Yeast Tablets, Dandelion Root Capsules, Night-Time Herb Capsules, Inositol Calcium & Magnesium Capsules, Vitamin C-500 with Rose Hips Time Released Tablets and Joint All Capsules, that did not meet product specifications.  As alleged in the complaint, during inspections of the defendants’ manufacturing facilities, FDA investigators found numerous current good manufacturing practice (cGMP) violations.  Among other violations, Kabco did not review and investigate product complaints, failed to hold dietary supplements under conditions designed to prevent product mix-ups and included unlabeled raw ingredients in their dietary supplements, including whey polio, an undeclared allergen.  Individuals who are allergic to milk could have a serious adverse health reaction from consuming any product with an undeclared milk allergen like whey polio.  

“When consumers purchase dietary supplements, they are entitled to know that they got what they paid for,” said Stuart F. Delery, Acting Assistant Attorney General of the Justice Department’s Civil Division.  “When supplement manufacturers fail to ensure that their products contain their labeled ingredients – especially when the labels do not warn consumers that the products may contain allergens dangerous to them – they put consumers at risk.  We stand ready to take appropriate enforcement steps against the manufacturers who cannot comply with their good manufacturing practice obligations.”   

 According to the government’s complaint, the FDA previously inspected the defendants’ facility and noted a history of violations and warnings.  As a result of the defendants’ most recent violations, as well as a history of unheeded warnings, the Justice Department filed this injunction.  Under the consent decree, the defendants agreed to stop manufacturing and distributing dietary supplements until, among other corrective actions, the company demonstrates to the FDA that it is meeting the quality, safety and labeling standards required by law.  The consent decree further requires the defendants to engage in appropriate, independent outside oversight to ensure compliance.

 Acting Assistant Attorney General Delery thanked the FDA for referring this matter for litigation.  Lauren Bell, Trial Attorney at the Consumer Protection Branch of the Justice Department, in conjunction with Melissa Mendoza, Associate Chief Counsel at FDA’s Office of the Chief Counsel, brought this case on behalf of the United States. 

NEW YORK -- Immigration Judge Javier Balasquide from the Executive Office for Immigration Review, New York Immigration Court, delivered the keynote speech and administered the oath of allegiance to approximately 150 candidates during a naturalization ceremony at 26 Federal Plaza in New York on April 5, 2013. The New York District Office of U.S. Citizenship and Immigration Services, Department of Homeland Security, hosted the ceremony.

Biographical Information

Attorney General Alberto Gonzales appointed Judge Balasquide in July 2006. Judge Balasquide received a bachelor of arts degree in 1988 from the University of Delaware and a juris doctorate in 1991 from the Interamerican University School of Law. From March 2003 to July 2006, he served as chief counsel at U.S. Immigration and Customs Enforcement (ICE), Department of Homeland Security (DHS), in Arlington, Va. From February 1999 to March 2003, he served at the former Immigration and Naturalization Service (INS) in Arlington and Falls Church, Va., in various capacities, including district counsel, appellate counsel, and assistant district counsel. From November 1991 to February 1999, Judge Balasquide served as an assistant district counsel for INS in Miami, entering on duty through the Attorney General=s Honors Program. Judge Balasquide is a member of the Puerto Rican Bar.

- EOIR -

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

Executive Office for Immigration Review

ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that Defendants Kenneth L. McLain, age 32, and Karl Kaii Baker, age 34, were sentenced today in the United States District Court, for Conspiracy to distribute more than 50 grams of methamphetamine (ice). McLain was sentenced to 108 months in prison, five years supervised release upon his release from prison and a $500 fine. Baker was sentenced to a term of 78 months in prison and five years supervised release. Additionally, the Court recommended to the Bureau of Prisons that McLain and Baker be placed in a drug rehabilitation program in a California.

In September 2011, the U.S. Postal Inspection Service (USPIS) intercepted a package in the mail containing methamphetamine. A search of the package revealed methamphetamine; the sender attempted to cover the odor emitted by the drug. Federal and local law enforcement conducted a controlled delivery of the package to McLain and Baker, who were subsequently arrested.

U.S. Attorney Limtiaco commends the hard work and efforts of the USPIS, Drug Enforcement Administration (DEA), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), Department of Homeland Security, Homeland Security Investigations, Guam Customs and Quarantine, Guam Police Department and the Guam Superior Court Probation office for their participation and assistance in this investigation. Assistant U.S. Attorney Clyde Lemons prosecuted the case.

The Department of Justice today announced that it has reached a settlement that will require Ecolab Inc. and Permian Mud Service Inc. to divest assets used by Permian’s subsidiary, Champion Technologies Inc., to provide production chemical management services in the U.S. Gulf of Mexico in order to proceed with their proposed merger.  The department said that the transaction, as originally proposed, would combine two of the three leading providers of production chemical management services for deepwater wells in the U.S. Gulf of Mexico. Without the divestitures, the department said the transaction would lead to higher prices, reduced service quality and diminished innovation.

 

The department’s Antitrust Division filed a civil lawsuit today in the U.S. District Court for the District of Columbia to block the proposed transaction.  At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the department’s competitive concerns and the lawsuit.

 

“Ecolab’s subsidiary, Nalco Company, and Champion are currently the largest and second-largest providers of production chemical management services to deepwater wells in the U.S. Gulf of Mexico and have vigorously competed against one another to the benefit of their customers,” said Leslie C. Overton, Deputy Assistant Attorney General of the Department of Justice’s Antitrust Division. “The proposed remedy will preserve competition to provide these critical services, which support efficient production of oil and gas in deepwater environments.”

 

Production chemical management services involve the application of specially formulated chemical solutions to oil and gas wells to facilitate hydrocarbon production and protect well infrastructure.  These critical services are administered by experienced personnel including scientists, engineers and other lab technicians who customize the chemical blends and application methodology for specific well formations.

           

The department’s complaint alleges that the proposed acquisition would eliminate significant competition between Nalco and Champion in the already highly concentrated market for production chemical management services for deepwater wells in the U.S. Gulf of Mexico.  The proposed settlement requires the companies to divest to Clariant Corporation and its affiliate, Clariant International, assets Champion has been using to provide deepwater production chemical management services in the Gulf, including the patent for Champion’s best-selling production chemical in the deepwater Gulf,  exclusive licenses to all other production chemicals used by Champion in the U.S. Gulf of Mexico for use in that region, and the option to buy additional assets, including Champion’s deepwater production chemical blending and distribution facility in Broussard, La., and related equipment.  The settlement also provides Clariant with an extensive right to hire the merged firm’s relevant personnel, who possess essential expertise and know-how. 

           

Ecolab, headquartered in St. Paul, Minn., provides water treatment and sanitation products and services for a variety of industries, and began serving the oil and gas industry when it acquired Nalco in late 2011.  Nalco supplies specialty chemicals and services to the upstream and downstream segments of the oil and gas industry.  Ecolab generated $1.87 billion in revenues from oil and gas-related products and services in 2011. 

 

Permian, headquartered in Houston, is a privately held company that provides specialty chemicals and services to the oil and gas industry. Permian generated $1.25 billion in revenues in 2011. 

 

Clariant Corporation, headquartered in Charlotte, N.C., is the U.S. affiliate of Swiss-based Clariant International Ltd., the fourth largest provider of production chemical management services globally. Clariant has significant deepwater experience outside of the U.S. Gulf of Mexico.

 

As required by the Tunney Act, the proposed settlement and the department’s competitive impact statement will be published in the Federal Register.  Any person may submit written comments concerning the proposed settlement during a 60-day comment period to William H. Stallings, Chief, Transportation, Energy and Agriculture Section, Antitrust Division, U.S. Department of Justice, 450 Fifth St. N.W., Suite 8000, Washington, D.C. 20530, 202-514-9323.  At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon finding that it is in the public interest.

The U.S. Department of Justice announced today that it has reached a settlement with Chiropractic Associates Ltd. of South Dakota (CASD), an association comprising approximately 80 percent of all practicing chiropractors in South Dakota.  The settlement prohibits CASD from jointly determining prices and negotiating contracts with insurers on behalf of competing chiropractors in South Dakota, North Dakota, Minnesota and Iowa.  The department said that CASD negotiated at least seven contracts with insurers that set prices for chiropractic services on behalf of CASD’s members and that CASD’s conduct caused consumers to pay higher fees for chiropractic services.

 

The department’s Antitrust Division filed a civil antitrust lawsuit in the U.S. District Court for the District of South Dakota against CASD.  At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the lawsuit.

 

“Chiropractic Associates Ltd. of South Dakota negotiated contracts on behalf of all its members, including competing providers, resulting in increased prices for chiropractic services in South Dakota,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Today’s settlement promotes competition among health care providers and prevents collective action that harms consumers and violates the antitrust laws.”

 

According to the complaint, since 1997, CASD collectively negotiated the rates and price-related terms for at least seven contracts with insurers on behalf of CASD’s members.  Except for members who were part of the same practice groups, CASD’s members were not clinically or financially integrated, and CASD’s actions were not necessary to achieve any benefits for consumers. 

 

The proposed settlement will prevent CASD from establishing prices or terms for chiropractic services and from negotiating with insurers on behalf of competing chiropractors. The proposed settlement will also require CASD to terminate its current payer contracts at various specified times, but in no event later than three months after the court's entry of the final judgment.

 
CASD is a company organized and doing business under the laws of the state of South Dakota, with its principal place of business in Brookings, S.D.

 

The proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register as required by the Antitrust Procedures and Penalties Act.  Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Peter J. Mucchetti, Chief, Litigation I Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 4100, Washington, D.C. 20530.  At the conclusion of the 60-day comment period, the court may enter the final judgment upon finding that it serves the public interest.

ALICIA A. G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced today that defendant Francisco S. Pangelinan was sentenced in the U.S. District Court for the Northern Mariana Islands, to time served, followed by a three-year term of supervised release with conditions that he not possess a firearm and to perform 100 hours of community service. The defendant was ordered to serve an additional six (6) months ofhouse arrest on top of the eight (8) months house arrest he had already completed. Pangelinan' s sentence was the result of a Plea Agreement filed January 18, 2012, for Deprivation of Rights Under Color ofLaw. The conviction stemmed from a three-count indictment which charged Pangelinan with Deprivation of Rights Under Color ofLaw, in violation of Title 18, United States Code, Section 242. On July 26,2010, then a police officer, Pangelinan, unlawfully sprayed Felipe Kalen with DPS issued, Oleoresin Capsicum. At sentencing, Pangelinan apologized for his behavior to Felipe Kalen and acknowledged that he exceeded the force needed to deal with an ongoing argument at that time. Felipe Kalen accepted this apology and stated in court that he forgave the defendant. Pangelinan is no longer employed by the CNMI Department of Public Safety.

The case was investigated by agents from the Federal Bureau of lnvestigation and was prosecuted by Assistant United States Attorney Frederick A. Black.

The founder and president of the National Association of Special Police and Security Officers (NASPSO) was sentenced to 76 months in prison today for stealing union treasury and pension funds, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.

Caleb Gray-Burriss, 62, of Washington, D.C., was convicted on Dec. 4, 2012, of six counts of mail fraud, seven counts of theft from a labor organization, one count each of obstruction of justice and criminal contempt, and three counts of union recordkeeping offenses. Gray-Burriss was sentenced by U.S. District Judge Richard W. Roberts of the District of Columbia and ordered to pay $252,000 in restitution and to perform 100 hours of community service. Because of these convictions Gray-Burris is also now disqualified by federal law from serving as an officer or being employed by a labor union or employee benefit plan until 13 years following his release from prison.

NASPSO represents private security guards assigned to protect federal buildings in the metro Washington area. According to the evidence at trial, from approximately June 2004 through February 2011, Gray-Burriss wrote numerous checks to himself or to other third parties from the NASPSO pension plan checking account.  Gray-Burriss spent more than $100,000 of the pension plan funds in this way, while falsely maintaining it was an operational fund that he was properly administering and that was providing benefits to the beneficiaries.  The evidence further showed that Gray-Burriss committed criminal contempt of a court order addressing his prior misappropriation of pension and health plan funds after Gray-Burriss resumed his scheme in 2009 to defraud employers and NASPSO members of pension funds.

 In addition, the evidence presented at trial showed that Gray-Burriss, while an officer and employee of NASPSO, stole over $150,000 in NASPSO funds consisting of cash withdrawals to himself, unauthorized salary increases and bonuses to himself and another person, fraudulently drawn checks to himself – purportedly for employment taxes on behalf of NASPSO – and unlawfully used NASPSO funds to pay his personal fines in a civil lawsuit.

The jury also found that Gray-Burriss committed obstruction of justice by destroying or concealing NASPSO financial records during a grand jury investigation; failing to file required annual reports on behalf of NASPSO, falsifying those reports, and failing to maintain properly the records of NASPSO.

The investigation was conducted by agents and investigators of the U.S. Department of Labor.  Trial Attorney Vincent J. Falvo of the Criminal Division’s Organized Crime and Gang Section and Trial Attorney Tracee Plowell, of the Criminal Division’s Public Integrity Section prosecuted the case.

A former Los Angeles resident, who fled to Canada and was a federal fugitive for 12 years, pleaded guilty today to aggravated identity theft and bankruptcy fraud in connection with leading a nearly 15-year foreclosure-rescue scam that fraudulently postponed foreclosure sales for more than 800 distressed homeowners, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Central District of California André Birotte Jr., U.S. Attorney for the Northern District of California Melinda Haag, Assistant Director in Charge Bill L. Lewis of the FBI’s Los Angeles Field Office, Special Agent in Charge David J. Johnson of the FBI’s San Francisco Field Office and Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP).
 
Glen Alan Ward, 48, pleaded guilty in connection with three separate sets of charges in the Central and Northern Districts of California, all stemming from Ward’s 15-year fraud.  In 2000, Ward became a federal fugitive when he failed to appear in court after signing a plea agreement, which arose out of federal charges in 2000 in the Central District of California related to Ward’s early conduct in the scheme.  In 2002, Ward was indicted on multiple counts of bankruptcy fraud in the Northern District of California for continuing the scheme in and around San Francisco.  On Aug. 17, 2012, Ward was indicted on mail fraud, aggravated identity theft, and additional bankruptcy fraud counts in the Central District of California after fleeing to Canada and continuing his fraud from there. While in Canada, Ward recruited Frederic Alan Gladle, who was indicted in the Central District of California for bankruptcy fraud and identity theft in 2011, and was sentenced in 2012 to 61 months in custody for engaging in similar conduct.

On April 5, 2012, Ward was arrested in Canada by the Royal Canadian Mounted Police and the Waterloo Regional Police Service based on a U.S. provisional arrest warrant. On Dec. 21, 2012, Ward was extradited to the United States to answer all three sets of charges.

“Glen Alan Ward spent years preying on distressed homeowners and stealing the identities of bankruptcy debtors, all to pad his own pockets,” said Acting Assistant Attorney General Raman. “Now he faces years in prison for his crimes. This successful prosecution illustrates our commitment to tirelessly pursuing fraudsters and ensuring that sophisticated schemes that prey on vulnerable homeowners will not go unpunished.”

“Mr. Ward fled the United States years ago in an attempt to keep his fraudulent foreclosure scheme running,” said United States Attorney André Birotte Jr.  “Today's conviction should serve as a reminder that criminals can run, but they can't hide.  The reach of the federal law is long and scammers like Ward, who try to take advantage of distressed homeowners, will be tracked down and prosecuted regardless of their efforts to do otherwise.”

According to the plea agreement filed today before U.S. District Judge Dale S. Fischer in the Central District of California, Ward admitted to engaging in a fraud scheme that took place from 1997 to April 5, 2012, the day he was arrested by Canadian authorities.  According to the plea agreement, Ward led a scheme that solicited and recruited homeowners whose properties were in danger of imminent foreclosure.  Ward promised to delay their foreclosures for as long as the homeowners could afford his $700 monthly fee.  Once a homeowner paid the fee, Ward accessed a public bankruptcy database and retrieved the name of an individual debtor who recently filed bankruptcy.  Ward admitted that he obtained copies of unsuspecting debtors’ bankruptcy petitions and directed his clients to execute, notarize and record a grant deed transferring generally a 1/100th fractional interest in their distressed home into the name of the debtor that Ward provided.  Then, after stealing the debtor’s identity, Ward faxed a copy of the bankruptcy petition, the notarized grant deed and a cover letter to the homeowner’s lender or the lender’s representative, directing it to stop the impending foreclosure sale due to the bankruptcy. 

Because bankruptcy filings give rise to automatic stays that protect debtors’ properties, the receipt of the bankruptcy petitions and deeds in the debtors’ names forced lenders to cancel foreclosure sales.  The lenders, which included banks that received government funds under the Troubled Asset Relief Program (TARP), could not move forward to collect money that was owed to them until getting permission from the bankruptcy courts, thereby repeatedly delaying the lenders’ recovery of their money for months and even years.  In addition, if a distressed homeowner wanted to complete a loan modification or short sale, they were left to the mercy of Ward to send them forged deeds, supposedly signed by the debtors, to re-unify their title as required by most lenders.

As part of the scheme, Ward delayed the foreclosure sales of approximately 824 distressed properties by using at least 414 bankruptcies filed in 26 judicial districts across the country.  During that same period, Ward admitted to collecting more than $1.2 million from his clients who paid for his illegal foreclosure-delay services, all of which he has agreed to forfeit.

“Today's announcement is the result of a collaborative international effort and the FBI is grateful to our partners with the Royal Canadian Mounted Police and the Waterloo Regional Police for their assistance in the fugitive investigation and apprehension,” said Bill Lewis, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “Mr. Ward's long-term scheme is an extreme example of calculated fraud based on greed, and I'm proud of the persistence shown by our federal partners at SIGTARP, the Office of United States Trustees, and the United States Attorney's Office, in pursuing this case to its successful end."

“We are committed to pursuing those who defraud the most vulnerable victims of the real estate market,” said FBI San Francisco Special Agent in Charge David J. Johnson. “This is an excellent example of how closely we work with our law enforcement partners here and abroad to ensure that criminals are brought to justice.” 

“With today’s plea, justice is served for the victims of Ward’s long-running bankruptcy fraud scheme,” said Christy Romero, Special Inspector General for TARP (SIGTARP).  “While on the run for 12 years and having fled to Canada to avoid answering for earlier charges of bankruptcy fraud, Ward continued to victimize hundreds of struggling homeowners, steal the identities of unsuspecting U.S. taxpayers involved in bankruptcy proceedings, and exploit civil protections under bankruptcy law to defraud lenders, including numerous TARP recipients.  SIGTARP and our law enforcement partners will continue to ensure that those responsible for fraud related to TARP are brought to justice and answer for their crimes.”

Each count of bankruptcy fraud carries a maximum sentence of five years in prison. Aggravated identity theft carries a two-year mandatory sentence, to run consecutive to any other sentence. Ward will be sentenced on July 29, 2013 before United States District Judge Dale S. Fischer, and will continue to be held without bond.

This case is being prosecuted by Trial Attorney Paul Rosen of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Evan Davis of the U.S. Attorney’s Office for the Central District of California.  Assistant U.S. Attorney Jonathan Schmidt is prosecuting the charges in the Northern District of California, which were transferred to the Central District of California for entry of the guilty pleas.  The investigation was conducted by SIGTARP and the FBI, which received substantial assistance from the U.S. Trustee’s Office.  In addition, the Canadian Waterloo Regional Police Service and Royal Canadian Mounted Police provided exceptional support and assistance in connection with Ward’s arrest and extradition.

This prosecution is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

After an eight-week trial, a jury in Brooklyn, N.Y. today convicted Gustave Drivas, M.D.,  for his role at a clinic that engaged in a $77 million Medicare fraud scheme, announced the Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of New York Loretta Lynch, Assistant Director-in-Charge Janice K. Fedarcyk of the FBI’s New York field office and Special Agent-in-Charge Thomas O’Donnell of the HHS Office of Inspector General (HHS-OIG).

Dr. Gustave Drivas, 50, of Staten Island, N.Y., was convicted today of health care fraud conspiracy and health care fraud. He was acquitted of kickback conspiracy.

The trial evidence showed that Drivas, a medical doctor licensed in the state of New York, worked for a clinic in Brooklyn  that operated under three corporate names: Bay Medical Care PC, SVS Wellcare Medical PLLC and SZS Medical Care PLLC (the Bay Medical clinic). Owners, operators and employees of the Bay Medical clinic paid cash kickbacks to Medicare beneficiaries and used the beneficiaries’ names to bill Medicare for more than $77 million in services that were medically unnecessary and never provided.  The clinic billed Medicare for a wide variety of fraudulent medical services and procedures, including physician office visits, physical therapy and diagnostic tests. The evidence at trial demonstrated that Drivas was a “no show” doctor, yet his Medicare billing number was used to bill more than $20 million to the Medicare program, of which more than $12 million was paid.  Drivas signed numerous clinic applications to Medicare, was a signatory on two clinic bank accounts that received the ill-gotten Medicare money and was listed on bank paperwork as the president of Bay Medical.

The government’s investigation included the use of a court-ordered audio/video recording device hidden in a room at the clinic, identified in the complaint as the “Kickback Room,” in which the conspirators paid cash kickbacks to corrupt Medicare beneficiaries. The conspirators were recorded paying approximately $500,000 in cash kickbacks during a period of approximately six weeks from April to June 2010.  The Kickback Room was marked “PRIVATE” and featured a Soviet-era poster of a woman with a finger to her lips and the words “Don’t Gossip” in Russian. The purpose of the kickbacks was to induce the beneficiaries to receive unnecessary medical services or to stay silent when services not provided to the patients were billed to Medicare.

To generate the large amounts of cash needed to pay the patients, the conspirators used a network of external money launderers. The owners/operators of the clinic wrote clinic checks to numerous shell companies that were controlled by money launderers. These checks did not represent payment for any legitimate service at or for the Bay Medical clinics, but rather were written to launder the Bay Medical clinics’ fraudulently obtained Medicare proceeds. Two of the external money launderers, Anatoly Kraiter and Larisa Shelabadova, pleaded guilty prior to trial.  Irina Shelikhova and her son Maksim Shelikhov, who directed the money laundering operation from inside the clinic, also pleaded guilty prior to trial to conspiracy to commit money laundering.

At sentencing before U.S. District Judge Nina Gershon of the Eastern District of New York, scheduled for July 9, 2013, Drivas faces a maximum penalty of 20 years in prison. Drivas faces mandatory restitution to be paid jointly and severally with his co-defendants of up to $50 million, and a fine of up to $100 million. 

The charges were announced by the Justice Department's Criminal Division; U.S. Attorney for the Eastern District of New York Loretta E. Lynch; Assistant Director-in-Charge Janice K. Fedarcyk of the FBI’s New York field office; and Special Agent-in-Charge Thomas O’Donnell of the HHS Office of Inspector General (HHS-OIG).

The case is being prosecuted by Assistant U.S. Attorneys William C. Campos , Shannon C. Jones and Trial Attorney Sarah M. Hall of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS.

In total, 16 individuals were charged in the Bay Medical scheme, including two doctors, nine clinic owners/operators/employees and five external money launderers. Prior to trial, twelve defendants pleaded guilty. At trial, Alexander Zaretser, 32, of Brooklyn, New York was acquitted of money laundering conspiracy and two substantive counts of money laundering; and Vladimir Kornev, 53, and Yelena Galper, 40, both of Brooklyn, New York were acquitted of money laundering conspiracy.

The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section.   The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

U.S. District Court Judge Melinda Harmon entered an order of permanent injunction against Chung’s Products LP, a Houston-based producer of egg  rolls and other foods, Charlie A. Kujawa, Chung’s president of operations, and Gregory S. Birdsell, Chung’s former director of quality assurance, the Justice Department announced today. 

The permanent injunction was issued by the district court along with the court’s opinion and order granting the United States’ motion for summary judgment against the defendants for violating the Federal Food, Drug and Cosmetic Act.  Chung’s products are sold in grocery stores and large retail stores nationwide.

As set forth in the complaint filed by the United States on March 8, 2010, the Food and Drug Administration (FDA) conducted inspections from 2005 through 2009 at Chung’s facility located in Houston.  According to the complaint, the defendants, among other things, violated the Food, Drug and Cosmetic Act by preparing, packing and holding shrimp egg rolls under insanitary conditions, whereby they may have become contaminated with filth and rendered injurious to health.

In a decision entered on April 4, 2013, Judge Harmon found that the defendants had a long history of violating the Food, Drug and Cosmetic Act, including producing food under insanitary conditions and failing to control for the risks of Clostridium Botulinum, “the most potent toxin known to man,” in their seafood products and a potentially deadly strain of listeria in their manufacturing environment.  The court also noted defendants’ numerous refusals to cooperate with the FDA.  Based on the evidence before it, the Court concluded there is a reasonable possibility that Chung’s food products were both contaminated with filth and unsafe and injurious to health.  The court further found that the defendants’ challenges to FDA testing methods were “frivolous” and “demonstrated [a] wanton disregard of a potential food safety hazard in [Chung’s] products.”

“We will continue to take strong action against those who would risk the safety of the American food supply by manufacturing and storing products under insanitary conditions or flouting important food safety rules,” said Acting Assistant Attorney General Stuart F. Delery of the Justice Department’s Civil Division.  “The Court’s ruling ensures that these defendants will take appropriate steps to ensure that consumers who purchase their foods will receive products that are prepared, packaged and held under sanitary conditions as required by law.”

Pursuant to the injunction issued by the Court, defendants are enjoined from receiving, processing, preparing, packing, holding and distributing food from Chung’s Houston-based facility or any other facility until defendants take the remedial action required by the Court’s order. 

Principal Deputy Assistant Attorney General Delery thanked the FDA for referring this matter to the Department of Justice.  David Sullivan, Trial Attorney at the Consumer Protection Branch of the Justice Department, in conjunction with Assistant U.S. Attorney Jose Vela Jr. in the Southern District of Texas and Sonia Nath, Associate Chief Counsel for Enforcement at FDA’s Office of the Chief Counsel, brought this case on behalf of the United States.

Update, April 10, 2013

On April 9, 2013, U.S. District Court Judge Melinda Harmon modified a paragraph of the injunction issued on April 4, 2013.  The modification enjoins defendants from receiving, processing, preparing, packing, holding and distributing any fish or fishery products from Chung’s Houston-based facility or any other facility until defendants take the remedial action required by the court’s order.

BALTIMORE --Immigration Judge Phillip T. Williams from the Executive Office for Immigration Review, Baltimore Immigration Court, delivered the keynote speech and administered the oath of allegiance to approximately 75 candidates during a naturalization ceremony at the George H. Fallon Federal Building in Baltimore, Md., on April 5, 2013. The Baltimore District Office of U.S. Citizenship and Immigration Services, Department of Homeland Security, hosted the ceremony.

Biographical Information

Attorney General Janet Reno appointed Judge Williams in March 1995. Judge Williams received a bachelor of arts degree in 1978 from Temple University, a master of arts degree in 1981 from Howard University, and a juris doctorate in 1986 from Howard University School of Law. From 1997 to 2008, he was an assistant chief immigration judge. From 1995 to 1997, he served as an immigration judge in New York. From 1987 to 1995, Judge Williams was an attorney with Maggio & Kattar in Washington, D.C. From 1984 to 1986, he worked as a District of Columbia pre-trial services officer. Judge Williams is a member of the District of Columbia and Pennsylvania Bars.

- EOIR -

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

Executive Office for Immigration Review