District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Department of Justice Will Not Challenge Proposed<br /> New York Hospital Association Gainsharing ProgramRead the Press Release
WASHINGTON – The Department of Justice announced today that it will not challenge a proposal by the Greater New York Hospital Association (GNYHA) to offer a gainsharing program to member hospitals in New York. The department said that the proposed program should not adversely affect competition because hospitals will not exchange any confidential information and because each hospital will independently determine physician gainsharing amounts. According to GNYHA, gainsharing programs are designed to encourage physicians to take into account their use of hospital resources in their decision-making process. The department said that under the program, physicians could receive a share of the savings generated from reducing costs for treating commercial health-insurance and Medicaid and Medicare managed-care patients if the physicians meet hospital-specific quality standards.The department’s position was stated in a business review letter to counsel for GNYHA, from Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
In issuing the letter, Assistant Attorney General Baer said, “Based on GNYHA’s representations, the proposed information sharing program is unlikely to facilitate collusion or otherwise raise competitive concerns.”
GNYHA is a trade association of hospitals and continuing care facilities in New York and several nearby states. GNYHA proposes to make available a voluntary gainsharing program to the approximately 100 hospitals that are its New York members.
Using publicly available and historical patient discharge data, an independent contractor of GNYHA will calculate a state-wide best practice norm for certain groups of treatments or procedures. The contractor will then use the data to measure the performance of individual physicians practicing at the participating hospitals relative to the best practice norm.
Each participating hospital will individually determine whether and how to use the performance data to determine physician gainsharing payments. Each hospital’s payment amounts to physicians will be limited by a cap that each participating hospital must independently establish. The cap must comply with all applicable fraud and abuse regulations. GNYHA reserves the right to exclude any hospital from the program if GNYHA believes that the hospital’s proposed cap does not comply with those laws and regulations.
Under the department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws based on the information provided. The department reserves the right to challenge the proposed action under the antitrust laws if it produces anticompetitive effects.
A file containing the business review request and the department’s response may be examined in the Antitrust Documents Group of the Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the business review procedure.
CEO and CFO of Assisted Living Facility Chain Sentenced<br /> in North Carolina to Five Years in Prison for Tax FraudRead the Press Release
Ronald E. Burrell, former chief executive officer (CEO) of Caremerica Inc., and Michael R. Elliott, former chief financial officer (CFO) of Caremerica Inc., were sentenced today in Wilmington, N.C., the Justice Department and Internal Revenue Service (IRS) announced. Judge James C. Fox sentenced both Burrell and Elliott to 60 months imprisonment and ordered them each to pay restitution of over $4.8 million.
Burrell, a resident of Wilmington, N.C., pleaded guilty to conspiracy to defraud the IRS on Jan. 3, 2012, and Elliott, a resident of Loris, S.C., pleaded guilty to conspiracy to defraud the IRS on July 18, 2012.
According to the charging documents, Burrell and Elliott co-owned and operated a chain of assisted living facilities (ALFs) in North and South Carolina. The ALFs were managed by Caremerica Inc., a Leland, N.C.-based company that Burrell and Elliott also owned and operated. Burrell was the president and CEO for Caremerica, the Caremerica ALFs and other related companies. Elliott, formerly a certified public accountant, served as the CFO and tax return preparer for the Caremerica companies. Burrell and Elliott were the corporate officers responsible for ensuring that the Caremerica companies collected, reported and paid over federal employment taxes to the IRS. However, with Burrell and Elliott at the helm, the Caremerica companies accrued more than $4.5 million in employment tax liabilities between approximately 2003 and 2006. Among other things, Burrell and Elliott filed, or caused to be filed, false IRS forms that reported full payment of the employment taxes due, when in fact only a small fraction of the taxes, or none at all, were paid.
Charging documents further allege that in 2003, Burrell and Elliott acquired majority ownership of Partners Pharmacy Services Inc. (PPS), which provided prescription drug and related services to the Caremerica ALFs. In April 2005, Burrell and Elliott sold PPS to a subsidiary of Omnicare Inc. At the closing, Burrell and Elliott received $1.6 million and $1.4 million, respectively. The PPS sale proceeds were disbursed at a time when the IRS was attempting to collect unpaid employment taxes from the Caremerica companies, as well as from Burrell personally. To prevent the IRS from discovering their PPS proceeds, Burrell and Elliott took active steps to conceal them. Among other things, Burrell formed a nominee company in his wife’s name through which he funneled a portion of his PPS sale proceeds in order to avoid IRS collection action. As a result of his concealment efforts, Burrell deceived the IRS into accepting a $29,000 settlement on a $300,000 personal tax liability and opened another assisted living facility with the PPS proceeds. Elliott directed his $1.4 million share to be wired into the bank account of his then-girlfriend. Burrell and Elliott then filed false 2005 federal income tax returns that failed to report the PPS proceeds. Elliott and Burrell also obstructed justice by making false statements under oath in bankruptcy proceedings and in IRS disclosure forms.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of the IRS - Criminal Investigation special agents who investigated the case, and Tax Division Trial Attorneys Adam Hulbig and Todd Ellinwood, who prosecuted the case.
Brazilian Husband and Wife Plead Guilty in Florida to Human SmugglingRead the Press Release
WASHINGTON – Two Brazilian nationals pleaded guilty today in Miami to smuggling undocumented migrants to the United States for profit, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.
Juliana Rose Tome-Froes, 36, and her husband, Fabio Rodrigues Froes, 49, pleaded guilty before U.S. District Court Judge Federico A. Moreno in the Southern District of Florida to six counts and two counts, respectively, of bringing and attempting to bring aliens to the United States for commercial advantage and private financial gain.
According to plea documents, from at least October 2008 until approximately September 2010, the defendants organized, operated and managed a human smuggling network that spanned from Brazil to France, England, The Bahamas and the United States. The defendants met with undocumented migrants and negotiated forms of payment to be smuggled into the United States. Before the undocumented migrants departed Brazil, the defendants instructed them to act like tourists and explained that the itinerary through Europe would support a tourist cover story. In exchange for approximately $16,000, Tome-Froes, with assistance from Froes, arranged air transportation from Brazil to Paris, then London and Nassau, Bahamas. Tome-Froes arranged the undocumented migrants’ lodging in Paris and Nassau, and then instructed them to fly to Freeport, Bahamas, where they waited for a boat to transport them to the United States. For the final leg into the United States, Tome-Froes coordinated with various individuals in South Florida to pilot a small boat to Freeport, which picked up the undocumented migrants and transported them to the United States.
At sentencing, scheduled for March 21, 2013, Juliana Tome-Froes faces a maximum penalty of 15 years in prison and a $250,000 fine, and Fabio Froes faces a maximum penalty of 10 years in prison and a $250,000 fine.
The case was prosecuted by Trial Attorney Jay Bauer of the Criminal Division’s Human Rights and Special Prosecutions Section, and Assistant U.S. Attorney Marton Gyires of the Southern District of Florida.
The investigation was conducted by ICE Homeland Security Investigations in Miami.
Peruvian Woman and Bahamian Woman Plead Guilty in Florida to Alien SmugglingRead the Press Release
WASHINGTON – A Peruvian national and a Bahamian national pleaded guilty to smuggling undocumented migrants to the United States for private financial gain, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida and U.S. Immigration and Customs Enforcement (ICE) Director John Morton announced today.
Jessie Katherine Gonzales Urquizo, 37, a Peruvian national, and Irene Mildred Janette Burrows, 66, a Bahamian national, pleaded guilty on Jan. 11, 2013, before U.S. District Court Judge Kenneth A. Marra in the Southern District of Florida. Urquizo pleaded guilty to three counts and Burrows pleaded guilty to two counts, respectively, of bringing and attempting to bring aliens to the United States for commercial advantage and private financial gain.
According to plea documents, Urquizo and her mother-in-law, Burrows, facilitated the illegal smuggling of Brazilian nationals into the United States by working for a known alien smuggler in Brazil. Urquizo and Burrows provided lodging and transportation to undocumented migrants waiting on a boat to take them to the United States and charged between approximately $100 and $125 per day. According to court documents, Urquizo and Burrows received instructions from Brazil-based smugglers on when and where to deliver certain undocumented migrants to waiting boats for passage to the United States.
Urquizo and Burrows admitted that they brought undocumented migrants, all of whom are Brazilian nationals, to the United States for financial gain. Urquizo admitted to taking payment for lodging the undocumented migrants at various hotels and stash houses, including a nursing home operated by Burrows, her co-defendant and mother-in-law. Urquizo further admitted that she arranged for food to be taken to the undocumented migrants, transported the undocumented migrants to a waiting boat upon instructions from a known human smuggler in Brazil and demanded payment for her services. For her part, Burrows admitted to working with Urquizo, taking payment for lodging undocumented migrants at her nursing home and providing transportation.
At sentencing, scheduled for March 22, 2013, Urquizo faces a maximum penalty of 15 years in prison and a $250,000 fine, and Burrows faces a maximum penalty of 10 years in prison and a $250,000 fine.
The case was prosecuted by Trial Attorney Jay Bauer of the Criminal Division’s Human Rights and Special Prosecutions Section, and Assistant U.S. Attorney Alexandra Hui of the Southern District of Florida.Pennsylvania Man Pleads Guilty to Coercion and Enticement of a Minor and Possession of Child PornographyRead the Press Release
WASHINGTON – A Pennsylvania man pleaded guilty today for coercing and enticing a minor and possessing child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Western District of Pennsylvania David J. Hickton and Special Agent in Charge John Kelleghan of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Philadelphia.
Jeffrey W. Herschell, 54, of Washington, Pa., pleaded guilty before U.S. District Judge David Stewart Cercone in the Western District of Pennsylvania. According to a statement of facts entered into the record by the government and agreed to by the defendant, Herschell sent money to the Philippines in February 2010 for a live, online sex show that included a 12-year-old minor female engaging in sexual activity. Herschell also admitted to possessing child pornography videos at his Pennsylvania residence.
At sentencing, Herschell faces a minimum sentence of 10 years in prison and a maximum sentence of life in prison on the coercion and enticement charge, and a maximum of 10 years in prison on the child pornography possession charge. Herschell also faces a term of supervised release of five years to life following his prison sentence, and will be required to register as a sex offender in any jurisdiction in which he lives, works or attends school. Sentencing has been scheduled for May 28, 2013. Judge Cercone deferred acceptance of the plea agreement until Herschell’s sentencing hearing.
This case was investigated by ICE-HSI Pittsburgh and the ICE-HSI Attache’s Office in the Philippines with significant assistance from the National Bureau of Investigation (Philippines) and the Philippine National Police. This case is being prosecuted by Assistant U.S. Attorney Jessica Lieber Smolar of the Western District of Pennsylvania and Trial Attorney Bonnie L. Kane of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS).
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Justice Department Reaches Settlement with Community State Bank Regarding Alleged Lending Discrimination in MichiganRead the Press Release
Community State Bank of St. Charles, Mich., will open a loan production office in an African-American neighborhood in Saginaw, Mich., invest $165,000 in majority African-American areas in and around Saginaw and take other steps as part of a settlement to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of race, the Justice Department announced today.
The settlement, which remains subject to court approval, was filed in conjunction with the department’s complaint in the U.S. District Court for the Eastern District of Michigan. The complaint alleges that Community State Bank violated the Fair Housing Act and the Equal Credit Opportunity Act (EOCA), which prohibit financial institutions from discriminating on the basis of race in their lending practices. The lawsuit alleges that Community State Bank between 2006 and 2009 served the credit needs of the residents of predominantly white neighborhoods in the Saginaw and Flint metropolitan areas to a significantly greater extent than it served the credit needs of majority African-American neighborhoods. Those neighborhoods are easily recognized because the Saginaw area has long had highly-segregated residential housing patterns, especially for African-Americans.
“The complaint filed today shows that the practice of drawing lending areas with boundaries that exclude borrowers in predominately minority neighborhoods is not just a shameful historical practice,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “We are pleased that Community State Bank will improve access to responsible and affordable credit to qualified borrowers in Saginaw’s minority neighborhoods.”
Barbara McQuade, the U.S. Attorney for the Eastern District of Michigan added: “Today’s settlement will bring badly needed resources to Saginaw and the surrounding areas. It will broaden opportunities for home ownership and home improvement for families who live in neighborhoods where credit has been unlawfully limited. We appreciate the bank’s cooperation in resolving this case.”
The lawsuit originated from a referral by the Federal Deposit Insurance Corporation (FDIC) to the Justice Department’s Civil Rights Division. Community State Bank is regulated by the FDIC.
Under the settlement, Community will invest $75,000 in a special financing program to increase the amount of credit the bank extends to majority African-American neighborhoods in and around Saginaw, $75,000 in partnerships with organizations that provides credit, financial, homeownership, and/or foreclosure prevention services to the residents of these neighborhoods, and $15,000 in outreach that promotes its products and services to potential customers in these neighborhoods. Community also will open a loan production office in a majority African-American neighborhood of Saginaw and conduct fair lending training for its employees. The agreement also prohibits Community from discriminating on the basis of race in any aspect of a credit transaction.
The Justice Department’s enforcement of fair lending laws is conducted by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Civil Right Division. Since the Fair Lending Unit was established in February 2010, it has filed or resolved 23 lending matters under the Fair Housing Act, the ECOA and the Servicemembers Civil Relief Act. The settlements in these matters provide for a minimum of $660 million in monetary relief for impacted communities and more than 300,000 individual borrowers. The attorney general’s annual reports to Congress subject to the ECOA highlight the department’s accomplishments in fair lending and are available at www.justice.gov/crt/publications .
This settlement was accomplished as part of the Financial Fraud Enforcement Task Force’s (FFETF) Non-Discrimination Working Group which focuses on discrimination in the housing and finance markets and is co-chaired by Assistant Attorney General for the Civil Rights Division Tom Perez. The Civil Rights Division, the U.S. Attorney’s Office for the Eastern District of Michigan and the FDIC are members of the FFETF, an interagency initiative, established by President Obama in 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force’s efforts, visit www.StopFraud.gov .
Additional information about fair lending enforcement by the Justice Department can be obtained from the Justice Department’s website at www.justice.gov/fairhousing .
Related Materials:
Community Complaint
Community Consent OrderJury Convicts Utah Man of Child Pornography ChargesRead the Press Release
WASHINGTON – A Utah man was convicted late yesterday by a federal jury in Salt Lake City of possessing, receiving and distributing child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David B. Barlow of the District of Utah.
Michael Loren Dunn, 43, of Park City, Utah, was convicted of one count each of possession, receipt and distribution of child pornography. U.S. District Judge Robert J. Shelby presided over the week-long trial.
According to evidence presented at trial, Dunn, who works in the computer industry, received and shared child pornography, and encrypted the files so that they could only be accessed by him. Evidence of child pornography was recovered from three different computers and two external hard drives owned by Dunn. Evidence also showed that the overwhelming majority of files the defendant searched for contained terms indicative of child pornography content.
Judge Shelby set sentencing in the case for April 8, 2013. Dunn faces up to 10 years in federal prison for his conviction on possession of child pornography. The potential maximum penalties for the receipt of child pornography and distribution of child pornography counts are 20 years per count with mandatory minimum five-year sentences for each count.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was investigated by special agents of the FBI and prosecuted by Assistant U.S. Attorneys Mark K. Vincent and Carol A. Dain of the District of Utah, and Trial Attorney Jeffrey H. Zeeman of CEOS.
Former Alabama Corrections Officer Pleads Guilty to Civil Rights Violations and Obstruction of JusticeRead the Press Release
Today, Matthew E. Davidson, a former corrections officer of the Alabama Department of Corrections, pleaded guilty in U.S. District Court in Montgomery, Ala., to two counts of violating the civil rights of a former inmate at Ventress Correctional Facility in Clayton, Ala., and to one count of conspiring with other corrections officers to obstruct justice by covering up the incident.
Davidson was charged by a grand jury on March 8, 2012, with two counts of felony civil rights violations, four counts of obstruction of justice-related violations and one count of making false statements . These charges stem from an incident that occurred at the Ventress prison on Aug. 4, 2010, when an inmate, 24-year-old Rocrast Mack, was severely beaten, suffered significant injuries and died the following day in a Montgomery hospital.
According to court documents, Davidson admitted that he tackled Mack on the prison yard and punched Mack in the head and upper torso area several times. After this beating on the prison yard, Davidson and former corrections officer Scottie Glenn, who pleaded guilty to similar charges in November 2011, escorted Mack in handcuffs to an office at the prison, knowing that Mack would be beaten again.
According to court documents, Davidson admitted that once the officers were inside the office, they were instructed by a supervisor to remove the handcuffs. After Davidson removed the handcuffs, the supervisor repeatedly stomped on, kicked, hit and struck Mack with a baton. Davidson also admitted that another officer struck Mack with a baton. Mack was severely injured as a result of this beating and was taken to the health care unit in the prison. Once there, Mack was pulled off the examination table by his handcuffs and repeatedly stomped on by the supervisor. Davidson further admitted that he and the other officers obeyed directions from the supervisor to lie in written reports and lie to investigators to cover up the beatings.
Davidson faces a maximum penalty of 20 years in prison on the civil rights violations and a maximum penalty of 20 years in prison on the obstruction of justice related violation when he is sentenced before U.S. District Court Judge Myron H. Thompson.
“Mr. Davidson admitted that he participated in, and attempted to cover up, the brutal and ultimately fatal assaults of Rocrast Mack,” said Assistant Attorney General Perez. “The Justice Department will continue to vigorously prosecute corrections officers who violate the constitutional rights of inmates, and who then use their official position to try to cover up their crimes.”
On March 8, 2012, former corrections officers Michael Smith and Joseph Sanders were also charged with felony civil rights violations, obstruction of justice-related violations and false statements violations. Their trial is scheduled to begin on June 10, 2013. Assistant Attorney General Perez and U.S. Attorney Beck emphasized that an indictment is merely an accusation, and the defendants are presumed innocent until proven guilty.
This case is being prosecuted by Trial Attorney Patricia Sumner of the U.S. Department of Justice’s Civil Rights Division and Assistant U.S. Attorney Jerusha Adams of the U.S. Attorney’s Office for the Middle District of Alabama.
Federal Court Permanently Bars San Antonio Tax Preparers from Preparing Tax ReturnsRead the Press Release
A federal court has permanently barred Pete Escalante Gutierrez and Jeanette Gutierrez from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which the Gutierrezes consented without admitting the allegations against them, was signed yesterday by Judge Orlando L. Garcia of the U.S. District Court for the Western District of Texas. The injunction permits their companies, FCRE Inc., Fast Cash Refund Express Electronic Tax Service LLC, Fast Cash Refund Express and Fast Cash Express Electronic Services, to continue to operate, though the Gutierrezes must sell their interests in these businesses and take no role other than administrative matters until they are sold. While the companies operate, they are permanently barred from promoting any false tax schemes and from advising or encouraging taxpayers to attempt to evade their correct federal tax liabilities. Each of the businesses and the Gutierrezes must turn over the names of the people for whom they prepared tax returns or claimed tax refunds since Jan. 1, 2012.
The government’s complaint alleged that Pete and Jeannette Gutierrez, through their companies, which have offices in San Antonio, prepared federal tax returns for customers that claimed false and exaggerated personal deductions, business deductions, educational and energy tax credits, and other tax credits to which their clients were not entitled, in order to unlawfully understate tax liabilities. As alleged in the complaint, the amount of tax loss resulting from these improper tax preparation activities likely exceeds $3 million for the years 2006 through 2010.
The IRS lists tax-preparer fraud as one of the “Dirty Dozen” tax scams. The Justice Department has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters in the past decade. Information about these cases is available on the Justice Department website.
Related Materials:
United States v. FCRE, Inc., et al.
Complaint for Permanent Injunction and Other Relief (PDF)
Stipulated Order of Permanent Injunction (PDF)
Eleven Defendants Indicted for Alleged Roles in Scheme <br /> to Fraudulently Control Homeowners’ Associations in Las VegasRead the Press Release
WASHINGTON – A federal grand jury in Nevada today returned an indictment against 11 individuals for their alleged roles in a scheme to fraudulently take control of homeowners’ associations in the Las Vegas area. The indictment was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Acting FBI Special Agent in Charge William C. Woerner of the Las Vegas Field Office, Sheriff Douglas C. Gillespie of the Las Vegas Metropolitan Police Department and Richard Weber, Chief of IRS-Criminal Investigation (IRS-CI).
The charged defendants, all from the Las Vegas area, include: Jose Luis Alvarez, 45; Rodolfo Alvarez-Rodriguez, 44; Ricky Anderson, 49; David Ball, 44; Leon Benzer, 46; Edith Gillespie, 51; Keith Gregory, 59; Maria Limon, 45; Barry Levinson, 45; Charles McChesney, 47; and Salvatore Ruvolo, 84. Each is indicted on one count of conspiracy to commit mail and wire fraud. Most of the defendants are also variously charged with individual counts of mail fraud and/or wire fraud. Limon is additionally charged with making a false statement to law enforcement.
According to court documents, the fraud scheme operated from approximately August 2003 through February 2009 to direct construction defect litigation and repairs at condominium complexes to a particular, conspiring law firm and Benzer’s construction company, Silver Lining Construction (SLC).
In order to accomplish the scheme, according to the indictment, Benzer and co-conspirators identified homeowners’ associations (HOAs) that could potentially bring construction defect cases. They then allegedly enlisted real estate agents to identify condominium units within the HOA communities for purchase.
According to court documents, Benzer and others, including Gillespie, then enlisted “straw purchasers” to use their names and credit to purchase condos in the complexes. The indictment alleges that Alvarez, Alvarez-Rodriguez, Anderson, Ball, Gillespie, Limon, McChesney and Ruvolo acted as straw purchasers. On at least 37 occasions, Benzer and certain co-conspirators allegedly provided the down payments and monthly payments on behalf of the straw purchasers, including HOA dues and mortgage payments, and various false and misleading statements were made to secure financing for the properties. To manage the properties, Benzer and others allegedly conspired to open at least five bank accounts through which they moved more than $8 million. Eventually, 33 of the 37 units went into foreclosure.
According to court documents, on several occasions and at the direction of Benzer, co-conspirators transferred a partial interest in particular condominiums to other co-conspirators to make them look like homeowners who could stand for election to the HOA board of directors, which many of these individuals and the straw purchasers agreed to do. To ensure conspirators won the elections, according to the indictment, the defendants employed deceitful tactics, such as submitting fake and forged ballots, some of which were sent through the U.S. mail. Co-conspirators also hired complicit attorneys to run the HOA board elections as “special election masters,” to preside over the HOA board elections and supervise the counting of ballots.
Once elected, according to the indictment, the conspiring board members met with Benzer and other co-conspirators in order to manipulate board votes and process, including the selection of property managers, contractors, general counsel and attorneys to represent the HOA – including Benzer’s construction company and the conspiring law firm. Gregory and Levinson, both attorneys licensed in Nevada, allegedly agreed to become the general counsel for the Vistana and Sunset Cliffs; and Park Avenue and Pebble Creek complexes, respectively.
Limon, Benzer and others also allegedly agreed to open a property management company in order to provide services at Chateau Nouveau and other condo complexes in furtherance of the scheme. According to the indictment, Limon falsely told law enforcement officials she did not communicate with Benzer about this and did not know he funded and controlled her company.
At the conclusion of the scheme, millions of dollars of Vistana’s construction defect settlement proceeds were transferred to Benzer and SLC, according to the indictment.
According to court documents, the defendants were each given cash or things of value from Benzer and others for their alleged roles in the conspiracy.The maximum potential penalty for each count of conspiracy to commit mail fraud and wire fraud, mail fraud, or wire fraud is 30 years in prison and a $1 million fine. The maximum potential penalty for making a false official statement is five years in prison and a $250,000 fine.
The charges and allegations against the indicted defendants are merely accusations, and the defendants are considered innocent unless and until proven guilty. Twenty-six other individuals have entered guilty pleas in this case and await sentencing. The investigation is ongoing.
The case is being prosecuted by Deputy Chief Charles La Bella, Trial Attorneys Thomas B.W. Hall and Mary Ann McCarthy and Senior Deputy Chief Kathleen McGovern of the Criminal Division’s Fraud Section. The case is being investigated by the FBI, the Las Vegas Metropolitan Police Department, Criminal Intelligence Section, and IRS-CI.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
Related Materials:
Benzer Indictment
Colorado Resident Sentenced to 168 Months in Prison for Defrauding Investors in Texas Real Estate SchemeRead the Press Release
WASHINGTON – The owner and president of Evans Real Estate Group LLC was sentenced today to 168 months in prison for defrauding investors in real estate funds that invested in the acquisition, renovation and continued operation of existing apartment complexes in Texas, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
Thomas B. Evans, 48, of Centennial, Colo. – a property manager and organizer of real estate investment funds – was sentenced today by U.S. District Judge Christine M. Arguello in Denver. In addition to his prison term, Evans was sentenced to serve five years of supervised release and ordered to pay $12,339,038.53 in restitution.
On Jan. 20, 2012, Evans pleaded guilty to one count of conspiracy to commit mail and wire fraud. According to plea documents, from at least April 2005 until April 2007, Evans and a co-conspirator engaged in a scheme to defraud investors in the Garden Stone Apartments LP; Ventana Apartments LP; and Aspen Chase Investments LP real estate investment funds, which invested in existing apartment complexes in Austin, Dallas and San Antonio, Texas. The complexes were to be sold for a profit when renovation was complete.
According to court documents, Evans and a co-conspirator misappropriated project funds; prepared monthly false financial statements for the projects that were sent to investors, banks and other lending institutions; prepared quarterly letters to investors misrepresenting the progress of apartment renovations and occupancy rates; and prepared falsified rent rolls to banks and lending institutions. When a receiver assumed operation of the properties in April 2007, Evans and his co-conspirator provided access to their electronic accounting system without informing the receiver that the system contained falsified information. Investors in Evans’ real estate ventures lost over $12 million.
The case is being prosecuted by Trial Attorney Fred Medick of the Criminal Division’s Fraud Section and investigated by the U.S. Postal Inspection Service.
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.
California Tax Return Preparer Pleads Guilty to Tax Refund ConspiracyRead the Press Release
Masood Chotani, a CPA and tax return preparer from Los Angeles County, Calif., pleaded guilty today to conspiracy to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced.
On June 23, 2010, Chotani was indicted by a federal grand jury in Riverside, Calif., on charges of engaging in a scheme to file false returns with the IRS using the names and Social Security numbers of deceased individuals.
According to the indictment and the plea agreement, in 2002 and 2003, Chotani misappropriated employer identification information from his client files and provided the information to his co-conspirator, Haroon Amin. Amin and another co-conspirator, Ather Ali, used the stolen employer data, as well as deceased people’s Social Security numbers and other identification information obtained from the Internet, to prepare and file fraudulent returns. These returns had fictitious Form W-2 wage and tax statements as attachments, falsely stating that the deceased people earned wages from those employers from which income tax had been withheld.
Chotani admitted that he was a knowing participant in this scheme. He also admitted filing similar false returns himself, in his parents’ names, also using employer identification information misappropriated from his files.
According to documents filed in two related cases, the scheme resulted in the filing of over 250 false returns claiming an aggregate of more than $2 million in income tax refunds. Although the IRS rejected the bulk of these refund claims, a number of refund checks were issued and delivered to addresses controlled by Amin, Ali, and their co-conspirators. Most of these refund checks then were delivered overseas to be deposited in bank accounts in Armenia and Pakistan.
Amin pleaded guilty to conspiracy to defraud the United States on Jan. 25, 2010, and is serving a 30-month prison term. Ali subsequently pleaded guilty to the same crimeon Feb. 12, 2010, and is serving a 37-month prison term.
Judge S. James Otero scheduled Chotani’s sentencing for April 22, 2013. Chotani faces a statutory maximum sentence of five years in prison and a maximum fine of $250,000. In addition, under the plea agreement, Chotani has agreed to pay restitution to the IRS for the losses arising from the tax fraud scheme.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of agents from the IRS Criminal Investigation Division in Laguna Niguel, Calif., as well as Assistant U.S. Attorney Charles E. Pell and Tax Division Trial Attorneys Joseph A. Rillotta and Ignacio Perez de la Cruz, who are prosecuting the case.
More information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax .
Los Angeles Check Cashing Store, Its Head Manager and Compliance Officer Sentenced for Violating Anti-money Laundering LawsRead the Press Release
WASHINGTON – A Los Angeles check cashing store, its head manager and its designated anti-money laundering compliance officer were sentenced today in the Central District of California for failing to follow reporting and anti-money laundering requirements for over $8 million in transactions in violation of the Bank Secrecy Act (BSA), announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Central District of California André Birotte Jr; Assistant Director in Charge Bill L. Lewis of the FBI Los Angeles Division; Chief of the Internal Revenue Service Criminal Investigation (IRS-CI) Richard Weber; and Glenn R. Ferry, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles region.
G&A Check Cashing, its manager, Karen Gasparian, and its compliance officer, Humberto Sanchez, were sentenced today by Judge John F. Walter in the Central District of California. Judge Walter sentenced Gasparian to serve 60 months in prison and two years of supervised release. Sanchez was sentenced to serve eight months in prison and two years of supervised release. And G&A was ordered to pay a fine of $962,932 and sentenced to two years probation. In addition, Gasparian and G&A were ordered to forfeit $240,733 related to the funds going through G&A for which currency transaction reports (CTRs) should have been filed.
“Karen Gasparian, Humberto Sanchez and their company G&A Check Cashing purposefully thwarted the Bank Secrecy Act, making it easier for others to use G&A to commit illegal activity,” said Assistant Attorney General Breuer. “They knew they were required to report transactions over $10,000, but deliberately failed to do so. As this case shows, check cashing businesses must adhere to our anti-money laundering rules, or else pay the consequences.”
On Oct. 2, 2012, G&A, a financial institution located in Los Angeles, pleaded guilty to one count of conspiring to fail to file CTRs and one count of failing to have an effective anti-money laundering program. On Sept. 20, 2012, Gasparian, 31, of Canyon Country, Calif., pleaded guilty to the same charges. On Oct. 2, 2012, Sanchez, 51, of Alhambra, Calif., pleaded guilty to one count of failing to have an effective anti-money laundering program (AML).
The BSA is a set of laws and regulations enacted by Congress to address an increase in criminal money laundering through financial institutions, which includes check cashing businesses. Check cashers enable people to cash checks without having to go to a bank or maintain a bank account. A check casher will typically charge a fee for this service.
Under the BSA, financial institutions, including check cashers, are required to file a CTR with the Department of Treasury for any transaction involving more than $10,000 in currency. As part of the CTR, the check casher is required to verify and accurately record the name and address of the individual who conducted the currency transaction, the individual on whose behalf the transaction was conducted, as well as the amount and date of the transaction. CTRs are important law enforcement tools for uncovering criminal activity.
The BSA also requires financial institutions, including check cashing businesses, to maintain an effective AML program. The purpose of an AML program is to effectively detect and prevent attempts to facilitate money laundering. Check-cashing businesses are therefore required to have written policies and procedures regarding CTR filings, records maintenance and responses to law enforcement.
In failing to have an effective anti-money laundering program, G&A, Gasparian and Sanchez failed to, among other things, create or retain required records, verify customer identification and file required reports such as CTRs. As a result, G&A and Gasparian engaged in multiple transactions involving $8,024,446, in which required CTRs were not filed.
As court documents filed in this case indicate, check-cashing businesses are a common venue for individuals who want to anonymously cash large numbers of checks to facilitate fraud and money laundering schemes, precisely because they often fail to file required reports and to have effective anti-money laundering programs. According to the indictments, the use of check cashers to launder money is particularly prevalent in the area of health care fraud, where fraudulent health care businesses commonly convert the proceeds of their fraud into cash by presenting checks to check cashers who they know will not ask for proof of the payee’s identity and will either not file CTRs or file false CTRs.
“IRS-CI will take all necessary steps to identify, investigate and prosecute those who attempt to avoid their reporting obligations under the law,” said IRS-CI Chief Weber. “This joint effort continues to demonstrate our efforts to ensure that the financial services industry will not be used for personal financial gain and will be operated in a fair and honest manner to promote the public interest.”
“Check cashing businesses and other financial institutions that enable healthcare fraud will pay a heavy price,” said HHS-OIG Special Agent in Charge Ferry. “We will use sophisticated computer analytics as well as traditional investigative techniques to bring these criminals to justice.”
On Nov. 7, 2012, Aaron Krkasharyan, 48, of Los Angeles, pleaded guilty in a related case for making false statements to federal law enforcement officials investigating BSA violations at G&A. On Jan. 7, 2013, Judge Walter sentenced Krkasharyan to three years probation, which included a six-month term in a residential reentry center, and a $10,000 fine.The indictment filed in this case was one of four indictments, unsealed on June 14, 2012, that charged several individuals and check cashing businesses in Los Angeles, Brooklyn, N.Y., and Philadelphia with failing to file CTRs or falsely filing CTRs as well as failing to have effective AML programs.
In another Los Angeles case included in this widespread prosecution, AAA Cash Advance and its manager, Diana Brigitt, pleaded guilty on Sept. 19, 2012, in the Central District of California to various BSA violations. Brigitt pleaded guilty to eight counts of failing to file CTRs and one count of failing to maintain an effective anti-money laundering program. AAA pleaded guilty to one count of failing to maintain an effective AML program. On Oct. 15, 2012, AAA was sentenced to a statutory maximum term of five years probation and was also ordered to pay a fine. At sentencing, AAA also agreed to shut down its business permanently once its fine was paid. At sentencing, Brigitt faces a statutory maximum sentence of 45 years in prison and a fine of $2.25 million.
The cases announced today are being prosecuted by Money Laundering and Bank Integrity Unit Trial Attorneys Kevin Mosley and Matthew Klecka of the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS), AFMLS Forfeiture Unit Acting Assistant Deputy Chief Jeannette Gunderson and Trial Attorney Anand Sithian and Assistant U.S. Attorney David L. Kirman of the Central District of California. The department acknowledges the invaluable assistance of the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
The Money Laundering and Bank Integrity Unit investigates and prosecutes complex, multi-district and international criminal cases involving financial institutions and individuals who violate the money laundering statutes, the Bank Secrecy Act and other related statutes. The unit’s prosecutions generally focus on three types of violators: financial institutions, including their officers, managers and employees, whose actions threaten the integrity of the individual institution or the wider financial system; professional money launderers and gatekeepers who provide their services to serious criminal organizations; and individuals and entities engaged in using the latest and most sophisticated money laundering techniques and tools.
The cases are being investigated by agents from the FBI, IRS-CI and HHS-OIG.
Justice Department Settles Lawsuit Alleging Interference with <br /> Persons Exercising Right to Seek or Provide Reproductive <br /> Health CareRead the Press Release
WASHINGTON – The Department of Justice today settled a civil complaint against Richard A. Retta, of Rockville, Md, in the U.S. District Court for the District of Columbia, for violations of the Freedom of Access to Clinic Entrances (FACE) Act. The settlement permanently enjoins Retta from going inside the gated area in front of the entrance to the Planned Parenthood of Metropolitan Washington facility (PPMW) in Washington, D.C., and, during certain hours, from going within an additional 18.5 feet by six feet “buffer zone” directly outside the PPMW gate. Retta is further enjoined from violating, or directing or instructing others to violate, the FACE Act.
The complaint filed by the United States alleged that, on Jan. 8, 2011, inside the gated area in front of PPMW, Retta physically obstructed a patient attempting to enter PPMW and interfered with the rights of two volunteer escorts who were assisting the patient. The FACE Act prohibits the physical obstruction of any person providing or obtaining reproductive health services with the intent to intimidate or interfere with that person.
Early in the case, the court rejected the defendant’s motion to dismiss the lawsuit and held that, under FACE, the complaint need only allege that the defendant believed the individuals to be obtaining or providing reproductive health services, not that they were actually seeking or providing such services. This important ruling protects patient privacy, patients’ companions and volunteer escorts.
“While people have a First Amendment right to communicate their views and offer information, they do not have the right to prevent access to health care facilities,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Individuals who seek to obtain or provide reproductive health services should be able to do so without physical interference by those who disagree with them.”This civil action was filed by the Civil Rights Division Special Litigation Section Deputy Chief Julie Abbate and Trial Attorneys Aaron Zisser and Michelle Leung.
Justice Department Obtains Judgment Against Maine Landlord for Sexually Harassing TenantsRead the Press Release
WASHINGTON – The Justice Department today announced that property manager Rudy Ferrante agreed to a $15,000 civil judgment against him, to resolve allegations that he sexually harassed female tenants in Portland, Maine. The department’s complaint alleged that Ferrante subjected his female tenants to unwanted sexual comments and touching, granted tangible housing benefits in exchange for sexual favors and took adverse actions against female tenants when they refused his sexual advances.The consent order, which is subject to approval by the U.S. District Court for the District of Maine, imposes a $15,000 civil penalty against Ferrante. In addition, the consent order enjoins him from further acts of discrimination, requires him to undergo fair housing training and requires that he provide a copy of the order to his employees and any property owner on whose behalf he manages units.
“The women involved in this case were subjected to intimidating and severe acts of sexual harassment in their homes, where they have a right to feel safe,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This order sends the message that the Civil Rights Division does not tolerate such conduct and will enforce the right to equal access to housing when it learns of violations of the Fair Housing Act.”
The department began investigating Ferrante after Pine Tree Legal Assistance, a Portland-based legal aid organization, notified the department of sexual harassment complaints it had received about Ferrante.
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. Individuals who believe that they may have been victims of housing discrimination should call the Justice Department’s Housing Discrimination Tip Line at 1-800-896-7743, email [email protected] or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.
Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.
Attorney General Holder Appoints Chuck Adkins-Blanch as Vice Chairman of the Board of Immigration AppealsRead the Press Release
FALLS CHURCH, Va. – Attorney General Eric H. Holder, Jr., has announced the appointment of Chuck Adkins-Blanch as Vice Chairman of the Board of Immigration Appeals (BIA), effective January 13, 2013.
Mr. Adkins-Blanch received a bachelor of arts degree in 1984 from Grinnell College and a juris doctorate in 1990 from the National Law Center, George Washington University. He has served as a BIA member since 2008. From 2004 to 2008, he served as an immigration judge at the Headquarters Immigration Court and, from 1995 to 2004, Mr. Adkins-Blanch served in EOIR’s Office of the General Counsel, as general counsel from 2000 to 2004, as acting general counsel from 1999 to 2000, and as an associate general counsel from 1995 to 1999. From 1990 to 1995, he worked for the BIA as an attorney advisor entering on duty through the Attorney General’s Honors Program. From 1989 to 1990, he clerked in private practice with the firm of Maggio & Kattar, specializing in immigration and nationality law. Mr. Adkins-Blanch is a member of the District of Columbia and Virginia State 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 ReviewVirginia Man Sentenced for Trafficking in Counterfeit Gm Diagnostic EquipmentRead the Press Release
WASHINGTON – A Virginia man was sentenced today in federal court to serve one year and one day in prison for selling counterfeit General Motors (GM) automotive diagnostic devices used by mechanics to identify problems with and assure the safety of motor vehicles, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Virginia Neil H. MacBride, FBI Assistant Director Ronald T. Hosko of the Criminal Investigative Division and Jeffrey C. Mazanec, Special Agent in Charge of the FBI’s Richmond Field Office.
Justin DeMatteo, 31, of Saxe, Va., was sentenced by Senior U.S. District Judge Claude M. Hilton in the Eastern District of Virginia, following his Sept. 26, 2012, guilty plea to one count of trafficking in goods bearing counterfeit marks. In addition to his prison term, DeMatteo was sentenced to three years of supervised release and ordered to pay restitution of $328,500 (the full amount of GM’s losses). At DeMatteo’s plea proceeding, the court entered a consent order of forfeiture requiring him to forfeit $109,074 in criminal proceeds and all facilitating property and contraband seized during the execution of search warrants at his business and home on Dec. 15, 2011.
In court documents, DeMatteo admitted he sold counterfeit GM Corporation-branded “Tech 2” vehicle diagnostic systems between January and May 2011. The Tech 2 is a hand-held computer used to diagnose problems in vehicles that use electronic controls and interfaces. For newer vehicles, GM designed a new diagnostic interface – the Controller Area Network diagnostic interface (CANdi) module, which serves as an enhancement to the Tech 2 and completes the interface necessary to communicate with future on-board computer systems.
DeMatteo also admitted he offered for sale purported Tech 2 units and CANdi modules that bore counterfeit GM marks. DeMatteo sold the counterfeit Tech 2 units on eBay and accepted payment via PayPal. DeMatteo purchased the units from unauthorized manufacturers in the People’s Republic of China (PRC) and in many cases had them drop-shipped directly from the PRC to U.S. customers. On Dec. 15, 2011, federal agents executed search warrants at DeMatteo’s residence in Saxe and place of business in South Boston, Va. Among other things, agents seized numerous counterfeit GM Tech 2 units and CANdi modules, and various computer equipment and documents that contained evidence linking DeMatteo to the sale of the counterfeit Tech 2 units. According to the stipulated statement of facts and plea agreement, the number of Tech 2 and CANdi units sold by DeMatteo or seized during the searches totaled nearly 100. The retail price of 100 authentic products would have been more than $380,000.
The case was prosecuted by Assistant U.S. Attorney Lindsay Kelly of the Eastern District of Virginia and Trial Attorney Evan Williams of the Criminal Division’s Computer Crime and Intellectual Property Section and was investigated by the FBI’s Intellectual Property Rights Unit, as part of “Operation Engine Newity,” an international initiative targeting the production and distribution of counterfeit automotive products that impact the safety of the consumer, and the FBI Richmond Division.
The FBI is a full partner at the National Intellectual Property Rights Coordination Center (IPR Center). The IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy. The IPR Center uses the expertise of its 19 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to intellectual property (IP) theft. Through this strategic interagency partnership, the IPR Center protects the public’s health and safety, the U.S. economy and the war fighters. To report IP theft or to learn more about the IPR Center, visit www.IPRCenter.gov.
The sentencing announced today was the result of one of many enforcement efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force). 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/.
New Zealand Fishing Company and Chief Engineer Sentenced for Environmental Crimes and Obstruction of JusticeRead the Press Release
WASHINGTON – A New Zealand fishing company that owned and operated the tuna fishing vessel San Nikunau, and a former chief engineer on the ship, were sentenced in federal court today for environmental crimes and obstruction of justice, announced Assistant Attorney General Ignacia S. Moreno of the Justice Department’s Environment and Natural Resources Division and U.S. Attorney for the District of Columbia Ronald C. Machen Jr.
Sanford Ltd. was ordered to pay a criminal fine of $1.9 million and pay $500,000 in community service to the National Marine Sanctuaries Foundation for the benefit of the Fagatele Bay National Marine Sanctuary in American Samoa. The former Chief Engineer James Pogue was sentenced to 30 days in jail to be followed by two years of supervised release and ordered to pay a criminal fine of $6,000.
“Companies, like Sanford, who benefit from fishing in the oceans and selling their catch in the U.S. must comply with the laws that protect the oceans,” said Assistant Attorney General Moreno. “Today’s sentence makes clear that companies, like Sanford, who deliberately break the law by discharging oil waste into the ocean over a period of years and lie to the U.S. Coast Guard (USCG) about their activities, will be held fully accountable under U.S. laws.”
“Deliberately polluting our oceans is not only harmful to our environment– it is criminal,” said U.S. Attorney Machen. “Today’s sentence sends a clear message to owners and operators of commercial vessels who illegally dump oily waste and try to cover it up. We are committed to protecting our precious natural resources and will punish companies and individuals who ignore their obligations to our planet and future generations.”
“Some of the world's most pristine marine ecosystems are located in the South Pacific and it is important that the rule of law is regarded and respected even in the most remote areas,” said Captain Joanna Nunan, USCG Commander, Coast Guard Sector Honolulu and Captain of the Port in American Samoa. “The U.S. Coast Guard is committed to working with the maritime community to help ensure compliance with these environmental standards.”
According to the government’s evidence, in July 2011, the U.S. Coast Guard conducted a Port State Control examination when the vessel returned to Pago Pago, American Samoa. The investigation revealed that the vessel had been routinely discharging oily waste water, without first using equipment to clean the waste water, and making false entries or no entries in an oil record book that vessels are required to maintain accurately, all in violation of international and U.S. laws.
According to evidence presented at trial, Sanford Ltd. operates the fishing vessel San Nikunau, a vessel that routinely delivers tuna to a cannery in Pago Pago. Over the past five years, Sanford was paid over $24 million for tuna deliveries. Sanford Ltd. was convicted of numerous charges including conspiracy and causing the vessel to enter into the port of Pago Pago with a knowingly falsified oil record book. Sanford Ltd. was also convicted of failing to maintain an accurate oil record book and failing to disclose that required pollution prevention equipment had not been used on the vessel. Sanford Ltd. was also convicted of discharging machinery space bilge waste into the port of Pago Pago without using required pollution prevention equipment, including the oil water separator.
Pogue, of Idaho, served as the chief engineer on the vessel between 2001 and 2010. Pogue was convicted of failing to maintain an oil record book for the vessel and failing to account for transfers of machinery space bilge waste to other areas of the vessel. In addition, Pogue was convicted of intending to influence a Coast Guard investigation by falsely stating in the oil record book that required pollution prevention equipment had been used when it had not.
This case was investigated by the U.S. Coast Guard. The case was prosecuted by Trial Attorney Kenneth E. Nelson of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, Assistant U.S. Attorney Frederick W. Yette of the U.S. Attorney's Office for the District of Columbia and James E. McLeod, a Special Assistant U.S. Attorney from U.S. Coast Guard headquarters.
Justice Department Settles Lawsuit for Violation of the FACE ActRead the Press Release
The Justice Department announced today that a settlement has been reached with David Hamilton for violations of the Freedom of Access to Clinic Entrances (FACE) Act. Under the terms of the agreement Hamilton will pay $2,500 in compensatory damages to the victim of Hamilton’s use of force outside the EMW Women’s Surgical Center in Louisville, Ky. The United States and Hamilton came to the agreement at a settlement conference held Jan. 7, 2013, in Louisville. On Jan. 10, 2013, the United States sent Hamilton’s attorney a joint stipulation of dismissal to be filed with the court as soon as Hamilton tenders payment.
The agreement settles a lawsuit the United States filed against Hamilton for his alleged violation of the FACE Act, which makes it unlawful for any person to use force to intentionally injure, intimidate, or interfere with, or attempt to injure, intimidate, or interfere with, anyone because that person is or has been obtaining or providing reproductive health services. The United States’ complaint alleged that on Jan. 30, 2010, Hamilton, a regular protester, grabbed and pushed a volunteer escort at the center. At the time of the incident, the victim was attempting to escort a patient to the front entrance of the center. The complaint alleged that Hamilton’s actions constituted a use of force that intimidated and interfered with individuals who were attempting to obtain and provide reproductive health services at the center.
The FACE Act limits statutory compensatory damages to $5,000. The $2,500 Hamilton agreed to pay will go to the victim in this matter per the terms of the statute. Hamilton no longer resides in the Louisville area.
“It is absolutely crucial that those individuals who desire reproductive health services be able to obtain them in an environment that is free of interference, intimidation and fear,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “By continuing to enforce the Freedom of Access to Clinic Entrances Act, we are helping to ensure that they are able to do so.”
This civil action was filed by Civil Rights Division Special Litigation Section Deputy Chief Julie Abbate and Trial Attorneys Aaron Fleisher and Jack Morse.
Justice Department Seeks to Shut Down Florida Tax PreparerRead the Press Release
The Justice Department announced today that it has sued a Kissimmee, Fla., tax return preparer, seeking to bar him permanently from preparing federal tax returns for others. The civil injunction suit, filed in Orlando, Fla., with the U.S. District Court for the Middle District of Florida, alleges that Carlos A. Cabrera and his business – Cabrera Financial Group – prepare federal income tax returns for customers that claim improper losses for non-existent businesses and fabricated education credits in order to unlawfully understate customers’ tax liabilities.
According to the civil injunction complaint, Cabrera prepared over 17,000 tax returns for 2009 and 2010, with an average tax understatement of $4,222 per return for returns the Internal Revenue Service examined. The government suit alleges that the total losses to the U.S. Treasury from Cabrera’s misconduct could be tens of millions of dollars for those two years alone.
This lawsuit is part of the Justice Department’s nationwide crackdown on tax scams, including the preparation of fraudulent federal tax returns. Over the last decade, the Justice Department has obtained hundreds of injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. More information about these cases and the Justice Department’s Tax Division can be found on the Department’s web site.
Related Materials:
United States v. Carlos A. Cabrera
Complaint for Permanent Injunction and Other Relief (PDF)
Justice Department Reaches Agreement to Protect Rights of Military and Overseas Voters in IllinoisRead the Press Release
The Justice Department announced that yesterday it reached an agreement with Illinois officials to help ensure that military service members, their family members and other U.S. citizens living overseas have an opportunity to participate fully in the upcoming Feb. 26, 2013, special primary election, and the April 9, 2013, special election to fill a vacated seat in the state’s 2nd Congressional District. The agreement is necessary to ensure Illinois’s compliance with the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA) as amended by the 2009 Military and Overseas Voter Empowerment Act (MOVE Act).
The agreement, filed yesterday evening, which must be approved by the federal district court in Chicago, requires that by Jan. 15, 2013, the state will ensure expedited transmittal of ballots for the special primary election to UOCAVA voters who have requested them by that date. The agreement also requires that by Jan. 31, 2013, the state will resolve any candidate petition challenges and ensure expedited notice to UOCAVA voters of the final list of candidates for the special primary election. The voted ballots must be postmarked by Feb. 25, 2013, and received by March 6, 2013, to be counted in the special primary election.
The agreement also requires that by March 8, 2013, the state will ensure expedited transmittal of ballots for the April 9, 2013 special election to all UOCAVA voters who have requested them. Under Illinois law, the voted ballots must be postmarked by April 8, 2013, and received by April 23, 2013 to be counted in the special election.
In addition, for both the special primary election and the special election, the state will provide all UOCAVA voters the option of returning their marked ballots by email, fax or express mail at no expense to the voter.
“This agreement reflects this department’s continued and resolute commitment to ensure that members of our armed forces, their families and overseas citizens are offered a full and meaningful opportunity to vote in all federal elections, including special elections scheduled to fill vacated seats,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I am pleased that we are able to reach this agreement with Illinois officials, which will ensure that these voters can fully participate in the state’s upcoming special primary election and special election.”
The UOCAVA requires states to allow uniformed service voters, serving both overseas and within the United States, and their families and overseas citizens to register to vote and to vote absentee for all elections for federal office. In 2009, Congress enacted the MOVE Act, which made broad amendments to UOCAVA. Among those changes was a requirement that states transmit absentee ballots to voters covered under UOCAVA, by mail or electronically at the voter’s option, no later than 45 days before federal elections.
Under the terms of the agreement, the state will also provide detailed reports to the department concerning the transmission of ballots for the special primary election and special election. The state will also take actions as are necessary to assure that UOCAVA voters shall have a fair and reasonable opportunity to participate in future federal elections, including actions needed to fully remedy any potential UOCAVA violations arising from Illinois law governing the state’s special election calendar.
More information about UOCAVA and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/about/vot/misc/activ_uoc.php . Please report any complaints to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Related Materials:
Illinois Complaint
Illinois Proposed Consent DecreeIdaho Businessman Convicted of Income Tax EvasionRead the Press Release
Assistant Attorney General for the Tax Division Kathryn Keneally, U.S. Attorney for the District of Idaho Wendy J. Olson and the Internal Revenue Service (IRS) announced today that a Coeur d’Alene, Idaho, jury convicted Michael George Fitzpatrick, 51, of Hope, Idaho, of two counts of income tax evasion after a four-day trial before U.S. District Judge Larry A. Burns. In September 2012, Fitzpatrick was tried on four tax fraud counts. That jury rendered guilty verdicts on two counts of failure-to-file 2004 corporate income tax returns but was unable to reach verdicts on the tax evasion counts. The verdict today was the result of a second trial on those two charges. Fitzpatrick was remanded into custody immediately.
According to the indictment and evidence introduced at both trials, Fitzpatrick operated a business selling products which purported to help individuals eliminate credit card debt. During 2003 and 2004 the business’s gross sales exceeded $9 million, operating under the names Dynamic Solutions Inc. (DSI) and NAES. The evidence proved Fitzpatrick last filed an individual income tax return in 1996. At trial the government proved the corporations failed to report $3.7 million and Fitzpatrick himself failed to report over $500,000 in income, resulting in a total tax loss of almost $1.4 million.
The evidence at trial established that Fitzpatrick sent over $5 million offshore to WWIN, a “warehouse” bank located in the Dominican Republic. Fitzpatrick accessed this money through the use of a debit card and through wire transfers. During a two-year period, Fitzpatrick used his offshore funds to purchase his personal residence and two four-unit apartment buildings in northern Idaho, with a combined cost of over $700,000. Fitzpatrick also wired $114,980 from his offshore bank accounts to the Bellagio Casino during nine trips to Las Vegas.
Sentencing is scheduled for May 13, 2013. The maximum penalty Fitzpatrick faces on each count of tax evasion is five years in prison and a $250,000 fine. The two convictions for failure to file corporate income tax returns each carry a maximum penalty of one year in prison and a $100,000 fine.
“Paying income tax is a solemn obligation of citizenship,” said Olson. “Those who hide income and evade taxes by sending money off-shore, undermine our democracy. This verdict sends a strong message that those who seek to avoid their tax responsibilities will be punished to the fullest extent of the law.”
“This verdict should send a clear message, it’s imperative for all Americans to pay their share of taxes and those who commit income tax evasion will be brought to justice,” said Stephen Boyd, IRS Criminal Investigation Special Agent in Charge for the State of Idaho.
The case was investigated by special agents from the Boise, Idaho, office of IRS-Criminal Investigation and prosecuted by Tax Division Trial Attorneys Lori A. Hendrickson, Christopher P. O’Donnell and Erin S. Mellen, with valuable support from the U.S. Attorney’s Offices in Boise and Coeur d’Alene.
Today’s announcement 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.
Former Deputy Sheriff Pleads Guilty to Civil Rights ViolationsRead the Press Release
Craig Billings, 39, a former deputy sheriff with the Murray County Sheriff’s Office in Sulphur, Okla., pleaded guilty today in federal court to a one-count information charging him with Deprivation of Rights for using unreasonable force and violating the civil rights of an individual who was being booked into the Murray County Jail.
According to court documents, on Oct. 8, 2011, Billings, while working in his capacity as a deputy sheriff, physically assaulted the victim, who was handcuffed at the time and not a physical threat to anyone. Billings tackled the victim to the ground, positioned himself over the victim, grabbed the victim by the chin and began to bang the victim’s head into the floor. In so doing, Billings subjected the victim to unreasonable force, punishing him for verbally offending Billings. As a result, the victim sustained a mild concussion and suffered pain and swelling to his head. Billings knew that he was prohibited from using physical force on a restrained arrestee who is not a physical threat, and assaulted the victim anyway.
“Every person in America has the right to be free from excessive physical force when they are taken into custody by law enforcement officers,” said Assistant Attorney General Thomas E. Perez of the Department of Justice’s Civil Rights Division. “While the vast majority of officers uphold this right on a daily basis, the Department of Justice and the Civil Rights Division will vigorously prosecute officers who do not act in accordance with the Constitution.
Billings was remanded into custody at the time of his guilty plea. He faces a maximum sentence of 10 years in prison. A sentencing date has not yet been set.
This case was investigated by the Ardmore Resident Agency of the Oklahoma City Division of the FBI and is being prosecuted by Assistant U.S. Attorney Dean Burris for the Eastern District of Oklahoma and Trial Attorney Fara Gold of the Civil Rights Division of the U.S. Department of Justice.
Former Chicago Police Officer and Two Members of Latin Kings Street Gang Sentenced in Indiana for Roles in Racketeering ConspiracyRead the Press Release
WASHINGTON – A former Chicago police officer and two members of the Latin Kings street gang were sentenced this week in Indiana to serve prison time for their roles in a racketeering conspiracy and other related charges, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana.
Former Chicago Police Officer Alex Guerrero, 41, of Chicago, was sentenced today to serve 228 months in prison and five years of supervised release. Antonio Gudino, aka “Chronic,” 31, of Hammond, Ind., was sentenced yesterday to serve 175 months in prison and two years of supervised release. Brandon Clay, aka “Cheddar,” “Cheddar Boy,” “Swiss” and “Slick” 25, of Chicago, was sentenced Wednesday to serve 360 months in prison and five years of supervised release. Guerrero, Gudino and Clay were each sentenced by U.S. District Judge Rudy Lozano in the Northern District of Indiana.On Aug. 2, 2012, Guerrero pleaded guilty to one count each of conspiracy to participate in racketeering activity, conspiracy to possess with intent to distribute and distribute five kilograms or more of cocaine and 1,000 kilograms or more of marijuana, interference with commerce by threats or violence, and use and carrying of a firearm during and in relation to crimes of violence and drug trafficking. On July 31, 2012, Gudino and Clay each pleaded guilty to one count of racketeering conspiracy.
According to the third superseding indictment filed in this case, the Latin Kings is a nationwide gang that originated in Chicago and has branched out throughout the United States. The Latin Kings is a well organized street gang that has specific leadership and is composed of regions that include multiple chapters. The third superseding indictment charges that the Latin Kings were responsible for at least 19 murders, including juveniles and one pregnant woman, in the Chicago/Northwest Indiana area and Big Spring, Texas.
According to the third superseding indictment, the Latin Kings enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault and threats against those who violate the rules or pose a threat to the Latin Kings. Members are required to follow the orders of higher-ranking members, including taking on assignments often referred to as “missions.”
During their guilty plea proceedings, Guerrero, who was a Chicago Police Department officer, admitted to being associated with the Latin Kings, and Gudino and Clay admitted to being Latin King members from an early age. They also acknowledged they were aware that the Latin Kings distributed more than 150 kilograms of cocaine and 1,000 kilograms of marijuana over the course of the racketeering conspiracy. Guerrero admitted in his plea agreement that he was responsible for possession of and distribution of 150 kilograms or more of cocaine. Gudino and Clay admitted to participating in street activities to further the drug trafficking and other gang activities.Guerrero also admitted to participating in robberies at the direction of Latin Kings leader and co-conspirator Sisto Bernal. Specifically, Guerrero acknowledged that in approximately December 2006, he entered into the Hammond residence of James Walsh, a rival gang member. Guerrero and his police partner and co-defendant Antonio Martinez physically restrained Walsh and others while the home was searched and robbed. Guerrero admitted that by committing these crimes while employed as a Chicago police officer, he abused a position of public trust in a manner that significantly facilitated the commission or concealment of the offense. Bernal and Martinez previously pleaded guilty for their roles in the racketeering and robbery conspiracies.
Guerrero resigned from the Chicago Police Department following his plea hearing.
Clay acknowledged that on Feb. 25, 2007, he, along with four other defendants, rode on a “mission” from Illinois to Griffith, Ind. While armed with three firearms, they were ordered to shoot to kill rival gang members who were attending a party. Once the two rival members – James Walsh and Gonzalo Diaz – left the party, several Latin Kings members, including Clay, rode up in a vehicle, and Clay and another defendant got out of the vehicle and shot and killed Walsh and Diaz. On April 22, 2009, Clay, along with two other defendants, drove to a rival gang neighborhood and caused the shooting death of Christiana Campos, a member of a rival gang.
Twenty-three Latin Kings members and associates have been indicted in this case. Twenty have pleaded guilty; one was found guilty following a jury trial; one awaits trial; and one remains a fugitive.
This case was investigated by the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; ICE Homeland Security Investigations; the National Gang Intelligence Center; the Chicago Police Department; the Houston Police Department; the Griffith Police Department; the Highland Police Department; the Hammond Police Department; and the East Chicago Police Department.The case is being prosecuted by Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section and David J. Nozick of the U.S. Attorney’s Office for the Northern District of Indiana. Assistant U.S. Attorney Andrew Porter of the U.S. Attorney’s Office for the Northern District of Illinois provided significant assistance.
The third superseding indictment is not evidence of guilt. The defendants who have not been convicted are innocent unless and until proven guilty beyond a reasonable doubt in a court of law.
Court Finalizes Consent Decree to Transform the New Orleans Police DepartmentRead the Press Release
Today, U.S. District Court for the Eastern District of Louisiana entered an order granting the joint motion of the United States and the city of New Orleans to enter the consent decree regarding the New Orleans Police Department (NOPD). This order is a critical milestone in reforming the long-troubled NOPD and is an important step in dealing with the public safety crisis in New Orleans and in restoring community confidence in the New Orleans criminal justice system. The court’s order ensures critical changes to policy and practices, oversight by a federal monitor and transparency so that the community can continue to participate in and track the reform process. The order finalizes this binding agreement that was extensively negotiated between the department and the city, and allows for that agreement’s immediate implementation. The department and the city signed the agreement in July 2012.
“The Department of Justice appreciates the court’s careful attention to this matter,” said Thomas E. Perez, Assistant Attorney General for Civil Rights. “The court’s action today ensures that the people of New Orleans will have a police department that respects the Constitution, ensures public safety and earns the confidence of the community. This decree will provide the city with important tools to reduce crime, ensure effective, constitutional policing and restore public confidence in NOPD.”
As outlined in the court’s order, approval of the consent decree comes after thorough review of the consent decree to determine if it is fair, reasonable and adequate to address the long-standing constitutional deficiencies within NOPD. The review included hearing extensive testimony from the United States, the city, the Office of the Independent Police Monitor, the Fraternal Order of Police and the Police Association of New Orleans and many other New Orleans stakeholders and residents. The testimony reaffirmed both that NOPD engages in unconstitutional conduct, and that there is a public safety crisis in New Orleans that the NOPD can only address by implementing the reforms required by the decree.
The court’s approval of the consent decree comes at a time of continuing and serious public safety challenges in New Orleans.
“The deficiencies within NOPD that the Department of Justice identified during its extensive investigation continue to plague New Orleans,” said Assistant Attorney General Perez. “Time is of the essence. We look forward to the immediate implementation of the agreement, and stand ready to work with all stakeholders in New Orleans to continue the reform process.”
The department opened an investigation into NOPD in May 2010 after Mayor Landrieu asked for the department’s help with a complete transformation of NOPD. After a thorough investigation of NOPD’s policies and practices the department issued a letter of findings in March 2011 that outlined a pattern of unconstitutional conduct and violations of federal law that stemmed from entrenched practices within NOPD. These constitutional violations include use of excessive force; unconstitutional stops, searches and arrests, and; discriminatory and biased policing based on gender, race, national origin and sexual orientation.
“In his first days in office, Mayor Landrieu called for a comprehensive federal civil rights investigation of NOPD, and said that ‘nothing short of the complete transformation is necessary and essential to ensure safety for the citizens of New Orleans.’ This consent decree provides the roadmap for the complete transformation of NOPD,” said Assistant Attorney General Perez.
The court documents can be viewed at www.justice.gov/crt/about/spl/nopd.php.
Connecticut Couple Arrested on Tax Evasion and Conspiracy ChargesRead the Press Release
Husband and wife John and Sandra Cote, both of Brooklyn, Conn., were arrested on tax charges, the Justice Department and Internal Revenue Service (IRS) announced today. On Dec. 18, 2012, a federal grand jury in New Haven, Conn., returned an indictment charging the Cotes with conspiracy to defraud the IRS and four counts of tax evasion. Sandra Cote was arrested and appeared in court on Jan. 9, 2013, in Providence, R.I. John Cote was arrested Jan. 10, 2013, and his initial appearance in court took place today in Miami.
According to the indictment, the Cotes had not filed a timely or valid tax return since 1994, despite earning income from John Cote’s work as a consultant in the high technology welding industry. The IRS assessed John Cote’s unpaid 1995-1996 taxes based on Forms 1099-MISC. Per the indictment, the Cotes responded to IRS efforts to assess and collect taxes for these years by concealing income and assets from the government and by submitting obstructive letters and other documents, including fake financial instruments and false criminal complaints against IRS employees. For the years 1998-2009, the Cotes allegedly prevented the companies for which John Cote consulted from filing Forms 1099 bearing his Social Security Number with the IRS and caused these companies to pay his compensation to nominee bank accounts, including accounts in Costa Rica, Antigua and Sweden. The Cotes also used a nominee entity called “Sandra Cote, Overseer of God's Battery Ministry, and Her Successors, a Corporation Sole (*an unincorporated Altruistic Spiritual Order)” to conceal income and assets from the IRS. In 2003, Sandra Cote conveyed their personal residence to this entity.
An indictment merely alleges that crimes have been committed and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted on all counts, the Cotes face a maximum potential sentence of 25 years in prison and fines of up to $1,250,000.
This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Melissa Siskind and Jeff McLellan 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 .
Axius Ceo Roland Kaufmann Pleads Guilty <br /> to Conspiracy to Pay Bribes in Stock SalesRead the Press Release
WASHINGTON – Roland Kaufmann, CEO of Axius Inc., pleaded guilty today in Brooklyn for conspiring to bribe stock brokers, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Eastern District of New York Loretta E. Lynch.
Kaufmann, 60, a Swiss citizen, pleaded guilty before U.S. District Judge John Gleeson in the Eastern District of New York to one count of conspiracy to violate the Travel Act.
“Roland Kaufmann conspired to bribe stock brokers and fleece investors in Axius stock,” said Assistant Attorney General Breuer. “He took the crooked path, and now faces the prospect of years in prison. Although he committed his crimes from outside the United States, U.S. authorities tracked him down and he has now been held to account. This case shows our determination to prosecute all those who seek to corrupt U.S. securities markets.”
“Roland Kaufman sought to game the system with his scheme to bribe stockholders to help him artificially raise the price of his company’s stock,” said U.S. Attorney Lynch. “He reached across the ocean to insert his deception into U.S. markets, thereby placing investors at risk. We will continue to bring our resources to bear against anyone who would harm the integrity of United States capital markets for their own personal financial gain, even when those who try to exploit our investors are hatching their schemes from abroad.”
“The flagrant market manipulation engaged in by Kaufmann was designed to make him rich,” said George Venizelos, Assistant Director in Charge, FBI New York Field Office. “Absent the undercover agent, the scheme also would have made honest investors much poorer. The FBI is committed to policing the securities industry to prevent unjust enrichment for cheaters, victimization of honest investors, and the undermining of public confidence in market integrity.”
“This case demonstrates the value of a coordinated approach by law enforcement authorities,” said Richard Weber, Chief, Internal Revenue Service (IRS) Criminal Investigation. “As a result of the collaborative effort in this investigation, investors were protected from further financial harm. IRS Criminal Investigation is always ready to lend its financial investigative expertise to the investigation of complex and sophisticated financial crimes.”
Kaufmann admitted to conspiring with co-defendant Jean-Pierre Neuhaus, another Swiss citizen, to violate the Travel Act by bribing stock brokers. Axius, which refers to itself as a “holding company and business incubator” that develops other businesses, is incorporated in Nevada, and its principal offices are in Dubai, United Arab Emirates. As part of the scheme, Kaufmann and Neuhaus, while located overseas, enlisted the assistance of an individual they believed had access to a group of corrupt stock brokers; this individual was in fact an undercover law enforcement agent. Kaufmann and Neuhaus believed that the undercover agent controlled a network of stockbrokers in the United States with discretionary authority to trade stocks on behalf of their clients.
According to court documents, Kaufmann and Neuhaus instructed the undercover agent to direct brokers to purchase Axius shares that were owned or controlled by Kaufmann in return for a secret kickback of approximately 26 to 28 percent of the sale price. Kaufmann and Neuhaus instructed the undercover agent as to the price the brokers should pay for the stock, and Kaufmann specifically instructed the undercover agent, in Neuhaus’s presence, that the brokers would have to pay gradually higher prices for the shares they were buying. Kaufmann and Neuhaus directed the undercover agent that the brokers were to refrain from selling the Axius shares they purchased on behalf of their clients for a one-year period. By preventing sales of Axius stock, Kaufmann and Neuhaus intended to maintain the fraudulently inflated share price for Axius stock. Kaufmann and Neuhaus agreed to sell approximately $3.5 million to $5 million worth of Axius shares through the undercover agent’s stock brokers.
Kaufmann and Neuhaus were arrested on March 8, 2012. On Oct. 10, 2012, Neuhaus pleaded guilty to conspiracy to commit securities fraud and violate the Travel Act.
At sentencing, scheduled for May 17, 2013, Kaufmann faces a maximum penalty of five years in prison. As part of his plea agreement, Kaufmann agreed to forfeit $298,740 that victims lost as a result of the crime.
This case is being prosecuted by Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Ilene Jaroslaw of the Eastern District of New York. The case was investigated by the FBI New York Field Office and the IRS New York Field Office. The department also thanks the Securities and Exchange Commission for its assistance in this matter.
Three Men Convicted in Puerto Rico in Final<br /> Operation Guard Shack ProsecutionRead the Press Release
WASHINGTON – Three men, including two former officers with the Police of Puerto Rico, were convicted today by a federal jury in San Juan, Puerto Rico, for their roles in providing security for drug transactions, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Rosa E. Rodriguez-Velez of the District of Puerto Rico, and Special Agent in Charge Joseph S. Campbell of the FBI’s San Juan Field Office.
Former Police of Puerto Rico Officers Daviel Salinas Acevedo, 29, of Bayamon, Puerto Rico, and Miguel Santiago Cordero, 30, of Lares, Puerto Rico, were each convicted of one count of conspiracy to possess with intent to distribute more than five kilograms of cocaine and one count of possession of a firearm in furtherance of a drug transaction.
Wendell Rivera Ruperto, 38, of Las Marias, Puerto Rico, was convicted of one count each of conspiracy to possess with intent to distribute more than five kilograms of cocaine, attempting to possess with the intent to distribute more than five kilograms of cocaine and possession of a firearm in furtherance of a drug transaction. Rivera Ruperto had been convicted previously of 15 other counts arising from his participation in other, related drug transactions.
Salinas Acevedo, Santiago Cordero and Rivera Ruperto were charged in a superseding indictment returned in the District of Puerto Rico on Sept. 30, 2010, in addition to 87 other law enforcement officers and 43 other individuals, as part of the FBI undercover operation known as “Operation Guard Shack.” To date, 131defendants have pleaded guilty or been convicted, and 119 defendants have been sentenced. Today’s convictions were the last of the Guard Shack defendants to stand trial.According to the evidence presented in court, Salinas Acevedo, Rivera Ruperto and Santiago Cordero each provided security for what they believed were illegal cocaine deals that occurred on March 24, April 9 and July 8, 2010, respectively. In fact, each purported drug transaction was one of dozens of simulated transactions conducted as part of the undercover FBI operation. The three men performed armed security for the multi-kilogram cocaine deals by frisking the buyer (a confidential informant working for the FBI), standing guard as the kilos were counted, and inspecting and escorting the buyer in and out of the transaction. In return for the security they provided, Salinas Acevedo, Santiago Cordero and Rivera Ruperto each received a cash payment of $2,000.
In return for the security they provided, Salinas Acevedo, Santiago Cordero and Rivera Ruperto each received a cash payment of $2,000. The money was never returned by any of the defendants, and none of the defendants ever reported the transactions.
Sentencing in the case will be scheduled by U.S. District Judge Carmen Consuelo Cerezo for later this year. At sentencing, Salinas Acevedo and Santiago Cordero face mandatory minimum sentences of 15 years in prison and a maximum sentence of life in prison. Rivera Ruperto is presently serving a sentence of 126 years and 10 months in prison for his prior convictions and faces a mandatory minimum sentence of 35 years in prison and a maximum penalty of life in prison for his convictions today.
The case was prosecuted by Trial Attorneys Anthony J. Phillips and Edward J. Loya Jr., of the Criminal Division’s Public Integrity Section. The case was investigated by the FBI. The Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Puerto Rico Department of Justice also provided assistance in this case. The U.S. Attorney’s Office for the District of Puerto Rico also participated in the investigation and prosecution of this case.
Justice Department Obtains Comprehensive Agreement to Resolve Long Standing Litigation Regarding the Rights of People with Developmental DisabilitiesRead the Press Release
Today, the Justice Department announced that it filed in federal court yesterday afternoon a comprehensive agreement that will resolve long running litigation with the state of Tennessee originally concerning conditions of care at the former Arlington Developmental Center (ADC). On Jan. 15, 2013, the U.S. District Court in Memphis, Tenn., will conduct a hearing to determine whether to approve the agreement. Individuals affected by the agreement are invited to attend the hearing and provide comment to the Court.
Over the 20-year course of the litigation, the state has made significant changes in the delivery of services for a class comprised of former ADC residents and many other individuals who were deemed at-risk of placement at ADC. Tennessee closed ADC in October 2010. The new agreement reaches many of those in the group deemed at risk of placement in ADC prior to its closure.
The agreement resolves remaining issues in the litigation by expanding community-based services so that the state can serve people with developmental disabilities, including intellectual disabilities, in their own homes, their families’ homes or other integrated community settings. The agreement also will provide class members in nursing homes to choice to receive services in integrated, community-based settings. Over the next year, Tennessee will expand community services by providing home and community-based Medicaid waivers to Medicaid-eligible individuals; seeking new and cost-efficient models of care for class members with behavioral needs; and providing supported employment for class members seeking work. This expansion will provide people the opportunity to transition successfully from nursing and other facilities to community settings that can meet their needs and prevent new people from being unnecessarily institutionalized.
“This agreement will provide remaining class members with developmental disabilities in western Tennessee the opportunity to live successfully in their homes and communities and bring this long-standing litigation to an appropriate end,” said Assistant Attorney General Thomas E. Perez. “I commend Governor Haslam for his leadership on this issue, and we will continue to work with states around the country, as we have with Virginia, Georgia, Delaware, North Carolina, and – today – Tennessee, to ensure that people with disabilities are given the choice to live in community-based settings.”
“This is an example of the state of Tennessee making the choice to do what is not only legally right, but right in the grander sense,” said U.S. Attorney Edward L. Stanton III. “Protecting the civil rights of every citizen is a fundamental duty of our office and this agreement does so while preserving the dignity and improving the quality of life for some of our most vulnerable citizens.”
Upon the state’s successful completion of the agreement, the litigation is expected to come to an end. In 1991, the department released a findings letter pursuant to the Civil Rights for Institutionalized Persons Act (CRIPA) detailing conditions at ADC that violated residents’ constitutional rights. The following year the department brought suit to remedy those conditions. The court joined that suit with a separate suit brought by People First of Tennessee concerning ADC and the rights of people at risk of institutionalization at ADC. People First remains active in the case and also is a party to the agreement .
Civil Rights Division staff Jonathan Smith, chief; Shelley Jackson, deputy chief; and senior trial attorneys Jonas Geissler and Michelle Jones, worked on the case and the agreement .
For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt . If you have any comments or concerns specific to this matter, please feel free to contact the division at1-877-218-5228.
Related Materials:
ADC Agreement
Justice Department Files Antitrust Lawsuit Against Bazaarvoice <br /> Inc. Regarding the Company’s Acquisition of PowerReviews Inc.Read the Press Release
WASHINGTON – The Department of Justice filed a civil antitrust lawsuit today against Bazaarvoice Inc. challenging the company’s June 2012 acquisition of PowerReviews Inc. The department said that the $168.2 million transaction substantially lessened competition in the market for product ratings and reviews platforms in the United States, resulting in higher prices and diminished innovation.
The department’s lawsuit, filed in the U.S. District Court in the Northern District of California, in San Francisco, seeks to restore the competition that was extinguished by the transaction.
Bazaarvoice’s acquisition of PowerReviews was not reported under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which requires companies to notify and provide information to the department and the Federal Trade Commission before consummating certain acquisitions. The department began its investigation shortly after the transaction closed.
“Bazaarvoice bought PowerReviews knowing that it was acquiring its most significant rival and hoping to benefit from diminished price competition,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Without competitive pressure from PowerReviews, Bazaarvoice will be able to increase prices to retailers and manufacturers for its product ratings and reviews platform. This lawsuit seeks to prevent one firm from dominating the product rating and review platforms market, and demonstrates that transactions that are not reported to us are not immune from scrutiny.”
Consumer-generated product ratings and reviews are a ubiquitous part of the online shopping experience and are displayed on retailers’ and manufacturers’ websites. This feature allows consumers to read feedback from authentic product owners before making a purchasing decision. This content is also a valuable asset for retailers and manufacturers because it can increase sales, decrease product returns and provide valuable structured, product-level data about consumer preferences and behavior. Retailers and manufacturers use product ratings and reviews platforms to collect, organize and display consumer-generated product ratings and reviews online.
According to the department’s complaint, Bazaarvoice is the dominant commercial supplier of product ratings and reviews platforms in the United States, and PowerReviews was its closest rival. Before the transaction, PowerReviews was an aggressive price competitor, and Bazaarvoice routinely responded to competitive pressure from PowerReviews. As a result of the competition between Bazaarvoice and PowerReviews, many retailers and manufacturers received substantial price discounts, the department said. As the complaint describes, Bazaarvoice sought to stem competition through the acquisition of PowerReviews. The complaint quotes internal company documents in which senior Bazaarvoice executives describe PowerReviews’s role in the market:
- One of the company’s co-founders noted that the acquisition of PowerReviews would “[e]liminat[e] [Bazaarvoice’s] primary competitor” and provide “relief from [] price erosion;”
- The company’s current chief executive officer wrote that Bazaarvoice had “literally, no other competitors” beyond PowerReviews; and
- The company’s former chief executive officer projected that, as a result of the transaction, Bazaarvoice would have “[n]o meaningful direct competitor.”
The department alleges that the acquisition of PowerReviews has given Bazaarvoice the incentive and ability to raise the price of its product ratings and reviews platform above a competitive level. As a result of the transaction, many customers have lost critical negotiating leverage and are vulnerable to anticompetitive price increases.
Bazaarvoice is a Delaware corporation with its principal place of business in Austin, Texas. In its 2012 fiscal year, Bazaarvoice had revenues of approximately $106 million.
Before the transaction, PowerReviews was a Delaware corporation with its principal place of business in San Francisco. In the 2011 calendar year, PowerReviews had revenues of approximately $11.5 million.
Justice Department Challenges Joint Contracting <br /> on Behalf of Oklahoma ChiropractorsRead the Press Release
WASHINGTON – The Department of Justice announced today that it has reached a settlement that will require the Oklahoma State Chiropractic Independent Physicians Association (OSCIPA) and its executive director to stop jointly determining prices and negotiating contracts with insurers on behalf of competing chiropractors in Oklahoma. The department said that the association and executive director negotiated at least seven contracts with insurers that set prices for chiropractic services on behalf of OSCIPA’s members, and that their conduct caused consumers to pay higher fees for chiropractic services in Oklahoma.The department’s Antitrust Division filed a civil antitrust lawsuit in the U.S. District Court for the Northern District of Oklahoma against OSCIPA and executive director, Larry M. Bridges. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the lawsuit.
“By jointly negotiating fees on behalf of competing chiropractors, the association and its executive director increased the prices that consumers paid for chiropractic services in Oklahoma,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Today’s settlement promotes competition among Oklahoma chiropractors and prevents the association and its executive director from engaging in illegal conduct that caused consumers to pay more for their health care.”
According to the complaint, OSCIPA–which is comprised of approximately 45 percent of all practicing chiropractors in Oklahoma–and Bridges collectively negotiated the rates and price-related terms for at least seven contracts with insurers on behalf of OSCIPA’s members and required members to suspend their pre-existing contracts with those same insurers. The association and Bridges also required OSCIPA’s members to accept only reimbursements above a certain level and prohibited members from offering insurers incentives or rebates, such as by waiving deductibles. Except for members who were part of the same practice groups, OSCIPA’s members were not clinically or financially integrated, and the association’s and Bridges’ actions were not necessary to achieve any benefits for consumers.
The proposed settlement will prevent the association and Bridges from establishing prices or terms for chiropractic services and from negotiating with insurers on behalf of competing chiropractors. The proposed settlement also will prevent them from attempting to facilitate joint negotiations and from communicating with chiropractors about any aspect of pricing or contracting.
The Oklahoma State Chiropractic Independent Physicians Association is headquartered in Tulsa, Okla. Bridges has been employed by OSCIPA as its executive director since at least 1999.
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.
Georgia Men Plead Guilty to Bribing Official to Secure Government ContractsRead the Press Release
WASHINGTON – Two men employed by a machine products vendor in Albany, Ga., have pleaded guilty to bribing a public official working for a military organization at the Marine Corps Logistics Base Albany (MCLB-Albany) to secure contracts for machine products, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Michael J. Moore for the Middle District of Georgia.
Thomas J. Cole Jr., 43, and Fredrick W. Simon, 55, both of Albany, each pleaded guilty before U.S. District Judge W. Louis Sands in the Middle District of Georgia to one count of bribery of a public official.
During their guilty pleas, Cole, the general manager of an Albany-based machine products vendor, and Simon, an employee responsible for processing sales orders, admitted to participating in a scheme to secure sales order contracts from the Maintenance Center Albany (MCA) at MCLB-Albany by subverting a competitive bid process. The MCA is responsible for rebuilding and repairing ground combat and combat support equipment, much of which has been utilized in military missions in Afghanistan and Iraq, as well as other parts of the world. To accomplish the scheme, Cole and Simon bribed a MCA purchase tech responsible for placing machine product orders. Cole and Simon admitted to participating in the scheme at the purchase tech’s suggestion, after Simon had spoken with the purchase tech about how his company could obtain business from the MCA. Cole and Simon admitted that, at the purchase tech’s request, they paid the purchase tech a bribe of at least $75 for each of the more than 1,000 sales orders MCA placed with their company. According to court documents, the purchase tech would transmit sales bids to Simon and then communicate privately to him exactly how much money the company should bid for each particular order. Cole and Simon admitted that these orders were extremely profitable, often times exceeding the fair market value of the machine products, sometimes by as much as 1,000 percent.
Cole and Simon further admitted that, at the purchase tech’s urging, in 2011 they began routing some orders through a second company, owned by Cole, because the volume of orders MCA placed with the first company was so high. They also admitted that the purchase tech increased the bribe required for orders as the scheme progressed. Cole and Simon admitted to paying the purchase tech approximately $161,000 in bribes during the nearly two-year scheme. Cole admitted to personally receiving approximately $209,000 in proceeds from the scheme; Simon admitted to personally receiving approximately $74,500. Both admitted that the total loss to the Department of Defense from overcharges associated with the machine product orders placed during the scheme was approximately $907,000.
At sentencing, Cole and Simon each face a maximum penalty of 15 years in prison and a fine of not more than twice the pecuniary loss to the government. As part of their plea agreements with the United States, Cole and Simon both agreed to forfeit the proceeds they received from the scheme, as well as to pay full restitution to the Department of Defense. Sentencing has not yet been scheduled.
The case is being prosecuted by Trial Attorneys Richard B. Evans and J.P. Cooney of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney K. Alan Dasher of the Middle District of Georgia. The case is being investigated by the Naval Criminal Investigative Service, with assistance from the Dougherty County District Attorney’s Office Economic Crime Unit and the Defense Criminal Investigative Service.
Barrio Azteca Associate Sentenced in Texas to 18 Months in Prison for Role in Racketeering ConspiracyRead the Press Release
WASHINGTON – An associate of the Barrio Azteca (BA), a trans-national border gang allied with the Juarez Cartel, was sentenced today to serve 18 months in prison, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Robert Pitman for the Western District of Texas, FBI Special Agent in Charge Mark Morgan of the FBI’s El Paso, Texas, Office and Administrator Michele M. Leonhart of the U.S. Drug Enforcement Administration (DEA).
April Cardoza, 24, was sentenced today by U.S. District Judge Kathleen Cardone in the Western District of Texas. In addition to her prison term, Cardoza was sentenced to serve five years of supervised release.
On Oct. 18, 2012, Cardoza pleaded guilty to one count of conspiracy to commit racketeering offenses (RICO).
According to court documents and information presented in court throughout this case, the Barrio Azteca is a violent street and prison gang that began in the late 1980s and expanded into a transnational criminal organization. In the 2000s, the BA formed an alliance in Mexico with “La Linea,” which is part of the Juarez Drug Cartel (also known as the Vincente Carrillo Fuentes Drug Cartel or “VCF”). The purpose of the BA-La Linea alliance was to battle the Chapo Guzman Cartel and its allies for control of the drug trafficking routes through Juarez and Chihuahua. The drug routes through Juarez, known as the Juarez Plaza, are important to drug trafficking organizations because they are a principal illicit drug trafficking conduit into the United States.
According to court documents and information presented in court, Cardoza assisted the BA by providing communication to and from BA members, including BA Captain Manuel Cardoza, and facilitating money laundering.
Cardoza and 34 other BA members and associates based in the United States and Mexico were charged in a 12-count third superseding indictment unsealed in March 2011. The indictment contains charges related to various alleged criminal acts, including racketeering, narcotics distribution and importation, retaliation against persons providing information to U.S. law enforcement, extortion, money laundering, obstruction of justice and murder, including the 2010 Juarez consulate murders.
Of the 35 defendants charged, 33 have been apprehended. Twenty-five of those defendants, including Cardoza, have pleaded guilty. One defendant committed suicide while imprisoned during his trial. Another defendant was extradited from Mexico and is awaiting trial. Six other defendants are pending extradition from Mexico. U.S. and Mexican law enforcement are actively seeking to apprehend the two remaining fugitives in this case, including Luis Mendez and Eduardo Ravelo, an FBI Top Ten Most Wanted Fugitive.
The case is being prosecuted by Trial Attorney Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section, Trial Attorney Brian Skaret of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney John Gibson of the Western District of Texas, El Paso Division. The U.S. Attorney’s Office for the District of New Mexico provided significant assistance in this case, including by Assistant U.S. Attorney Sarah Davenport. Valuable assistance was provided by the Criminal Division’s Offices of International Affairs and Enforcement Operations.
The case was investigated by the FBI’s El Paso Field Office, Albuquerque Field Office (Las Cruces Resident Agency), DEA Juarez and DEA El Paso. Special assistance was provided by the Bureau of Alcohol, Tobacco, Firearms and Explosives; U.S. Immigration and Customs Enforcement; the U.S. Marshals Service; U.S. Customs and Border Protection; Federal Bureau of Prisons; U.S. Diplomatic Security Service; the Texas Department of Public Safety; the Texas Department of Criminal Justice; El Paso Police Department; El Paso County Sheriff’s Office; El Paso Independent School District Police Department; Texas Alcohol and Beverage Commission; New Mexico State Police; Dona Ana County, N.M., Sheriff’s Office; Las Cruces, N.M., Police Department; Southern New Mexico Correctional Facility; and Otero County Prison Facility New Mexico.
Alabama Man Pleads Guilty to Stolen Identity Refund FraudRead the Press Release
Kenneth Jerome Blackmon Jr., a resident of Montgomery, Ala., pleaded guilty today to aggravated identity theft and access device fraud, the Justice Department and the Internal Revenue Service (IRS) announced today.
According to court documents, Blackmon was involved in a scheme to use stolen identities to file false federal income tax returns with the IRS. Blackmon admitted to acquiring identity information, to using that information on false tax returns, and to directing fraudulent tax refunds onto debit cards. He admitted to possessing at least fifteen Social Security numbers for the purpose of obtaining fraudulent tax refunds from the IRS.
Blackmon faces a maximum potential sentence of 10 years in prison for the access device fraud count and a mandatory two-year sentence for the aggravated identity theft count. He is also subject to fines and mandatory restitution.
This case was investigated by special agents of IRS - Criminal Investigation. Trial Attorneys Justin Gelfand and Jason Poole 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 .
Virginia Charter Fishing Boat Captain Pleads Guilty to Felony Lacey Act ViolationRead the Press Release
WASHINGTON – Jeffery S. Adams, 41, of Hudgins, Va., and his corporation Adams Fishing Adventures Inc. pleaded guilty today to trafficking in illegally-harvested striped bass, in violation of the Lacey Act. Among other things, the Lacey Act makes it unlawful for any person to import, export, transport, sell, receive, acquire or purchase any fish and wildlife taken, possessed, transported or sold in violation of any law or regulation of the United States, or to attempt to do so. Under the Lacey Act, it is a “sale” of fish or wildlife for any person, for money or other consideration, to offer or provide guiding, outfitting, or other services.
Ignacia S. Moreno, Assistant Attorney General for the U.S. Department of Justice’s Environment and Natural Resources Division, and Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia, made the announcement after the plea was accepted by U.S. District Judge Mark S. Davis.
Adams and Adams Fishing Adventures were indicted on Nov. 8, 2012, by a federal grand jury on charges of conspiracy, Lacey Act violations and false statements. Adams faces a maximum penalty of five years in prison and a $250,000 fine, as well as forfeiture of the fishing vessel used during the commission of the crimes. Adams Fishing Adventures Inc. faces a maximum fine of $500,000, as well as forfeiture of the fishing vessels used during the commission of the crimes. Sentencing is set for April 18, 2013.
In a statement of facts filed with his plea agreement, Adams and Adams Fishing Adventures admitted that they sold a charter striped bass fishing trip on Jan. 19, 2010, for $800. As part of that charter fishing trip, Adams knowingly took his charter clients into the exclusive economic zone (EEZ) to harvest striped bass, even though Adams knew that it was a violation of federal law to harvest striped bass inside the EEZ. Adams’ clients illegally harvested 10 striped bass within the EEZ on Jan. 19, 2010, and Adams then transported the illegally harvested striped bass back to Rudee Inlet in Virginia Beach, Va., where the sale of Adams’ charter fishing services was finalized.
This case was investigated by the National Oceanic and Atmospheric Administration, Fisheries, Office for Law Enforcement, and the Virginia Marine Police with assistance from the Federal Communications Commission Enforcement Bureau, Norfolk, Va. Office. Trial Attorney James B. Nelson of the Department of Justice’s Environmental Crimes Section of the Environment and Natural Resources Division and Assistant U.S. Attorney Stephen W. Haynie from the Eastern District of Virginia are prosecuting the case on behalf of the United States.
Chicago Man Pleads Guilty to Transporting Woman Across State Lines for ProstitutionRead the Press Release
Montell Williams, of Chicago, pleaded guilty today in Hammond, Ind., to violating the Mann Act by transporting a woman across state lines for the purpose of having her engage in prostitution. Williams was indicted on Oct. 4, 2012 and indicted on additional charges on Dec. 13, 2012.
According to court documents, Williams admitted that on several occasions between June 2011 and Feb. 5, 2012, Williams drove an adult woman across state lines from Indiana to Illinois so that she could engage in prostitution.
Williams faces up to 10 years in prison. Sentencing has been set for April 25, 2013, before U.S. District Judge Rudy Lozano.
“The guilty plea of Mr. Williams brings justice to the young woman who fell victim to his scheme and was led into prostitution at his hands,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We are committed to combating human trafficking and prosecuting those who sexually exploit vulnerable women for financial benefit.”
"The FBI is the lead agency for investigating violations of federal civil rights and human trafficking is one of our top civil rights violation priorities. Through partnerships with our local, state, federal and international law enforcement partners, we investigate human trafficking and sexual exploitation. Our goal is to ensure the safety of victims and that those involved in this systematic abuse and degradation are brought to justice,” said Special Agent in Charge Robert A. Jones, FBI Indianapolis.
The case was investigated by the FBI and the Gary Police Department. The case is being prosecuted by Assistant U.S. Attorney Jill Koster, Civil Rights Division Special Litigation Counsel John Richmond, and Civil Rights Division Trial Attorney Amanda Gregory.
Canadian Citizen Sentenced in Scheme to Defraud Consumers Purchasing Pharmaceuticals OnlineRead the Press Release
A Canadian citizen was sentenced to four years in prison today for his role in a scheme to defraud consumers purchasing pharmaceuticals online, the Justice Department announced. Andrew J. Strempler was also ordered to pay a forfeiture of $300,000 and a fine of $25,000. A restitution hearing was set for February 26, 2013.
In October 2012, Strempler pleaded guilty to conspiracy to commit mail fraud in connection with his role as owner and president of Mediplan Health Consulting Inc., a Canadian company that also operated under the name RxNorth.com. RxNorth was an Internet, mail and telephone order pharmacy, through which Strempler and others marketed and sold prescription drugs to residents of the United States.
According to court documents, the Food and Drug Administration (FDA) advised Strempler in a 2001 letter that his prescription drug sales would be illegal in the United States if the drugs were not FDA approved. The FDA letter explained that the FDA approves drugs based on evidence that they are safe and effective, and that the quality of drugs from foreign sources could not be assured.
Strempler and his co-conspirators unlawfully enriched themselves by selling prescription drugs to individuals in the United States, falsely representing that RxNorth was selling safe prescription drugs in compliance with regulations in Canada, the United Kingdom and the United States. Strempler obtained the prescription drugs from various other source countries without properly ensuring the safety or authenticity of the drugs. In fact, some of the drugs sold by Strempler included counterfeit drugs.
Strempler caused prescription drugs from foreign countries to be shipped to a facility that Strempler operated in the Bahamas. Prescription orders made through RxNorth were then filled at the Bahamas facility, with labels on the vials and drug cartons stating they had been filled by RxNorth in Canada. Strempler then used indirect routes involving multiple countries to ship packages with prescription drugs from the Bahamas to individuals in the United States. Shipments mailed from the Bahamas, containing packages addressed to individuals in the Southern District of Florida, included counterfeit prescription drugs.
“Internet websites that illegally sell potentially substandard, counterfeit or otherwise unsafe pharmaceuticals, pose a real threat to consumers,” said Principal Deputy Assistant Attorney General Stuart F. Delery. “The sentence handed down today serves as an effective deterrent to those who would peddle counterfeit pharmaceuticals—particularly those drugs trafficked over the Internet.”
U.S. Attorney Wifredo A. Ferrer stated, “Counterfeit prescription drugs sold through the internet pose a serious health hazard to consumers in the United States. These drugs can be adulterated, ineffective and unsafe. The U.S. Attorney’s Office is committed to assisting the FDA enforce regulations to protect American consumers from these unsafe drugs.”
“FDA’s Office of Criminal Investigations, working in concert with the United States Attorney’s Office and other foreign and domestic government agencies, will protect the public health by aggressively targeting those responsible for counterfeiting prescription drugs,” said David W. Bourne, Special Agent in Charge of the FDA Office of Criminal Investigations Miami Field Office. “This case highlights that even when complex criminal networks engage in such illegal activities on a global scale from a foreign-based location, without regard for risk to human life, they are still held accountable for their actions in the United States. We commend the United States Attorney’s Office in Miami and our international law enforcement partners for their tireless efforts in connection with the investigation and subsequent prosecution of this case.”
U.S. District Judge Jose E. Martinez presided over the sentencing.
This case was prosecuted by Assistant U.S. Attorney Ana Maria Martinez of the U.S. Attorney’s Office for the Southern District of Florida, Roger J. Gural of the Justice Department’s Consumer Protection Branch, and Nathan Sabel of the Food and Drug Administration, Office of Chief Counsel. The case was investigated by the FDA Office of Criminal Investigations.
To learn more about safely buying medicines over the Internet, consumers should consult FDA’s BeSafeRX campaign at http://www.fda.gov/Drugs/ResourcesForYou/Consumers/BuyingUsingMedicineSafely/BuyingMedicinesOvertheInternet/default.htm.
South Florida Woman Pleads Guilty to Failing to Disclose Income from Swiss Bank Accounts and Agrees to $21 Million PenaltyRead the Press Release
Mary Estelle Curran of Palm Beach, Fla., pleaded guilty today in the U.S. District Court for the Southern District of Florida to filing false tax returns for tax years 2006 and 2007, the Justice Department and Internal Revenue Service, Criminal Investigation (IRS-CI) announced.
According to court documents, Curran, a U.S. citizen, maintained undeclared bank accounts at UBS AG in Switzerland and a bank in Liechtenstein, which she inherited from her husband in 2000. The accounts at UBS AG were held in the names of nominee foreign entities, including the Flognet Foundation and Norega Investment. The account earned income each year, which Curran failed to report on her 2001 through 2007 individual income tax returns.
According to the plea agreement, Curran’s conduct caused a tax loss to the government of approximately $667,716. The value of all undeclared foreign financial accounts owned or controlled by Curran exceeded $42 million in 2007. In order to resolve her civil liability for failure to report her foreign bank accounts, Curran has agreed to pay a civil penalty in the amount of 50 percent of the high balance of the accounts, which is $21,666,929.
“The Justice Department continues to pursue those who hide income and assets from the IRS through the use of nominee businesses and offshore bank accounts,” said Assistant Attorney General Keneally. “U.S. taxpayers who fail to come forward in the voluntary disclosure program risk prosecution and substantial fines, as this case demonstrates.”
“U.S. citizens who seek to avoid their tax obligations by hiding income in undeclared bank accounts abroad should by now be fully on notice that they will be held accountable for their actions, both civilly and criminally,” said U.S. Attorney for the Southern District of Florida Wifredo A. Ferrer. “The U.S. Attorney’s Office is committed to helping the IRS enforce our nation’s tax laws.”
“Offshore accounts can no longer be used to hide from the IRS and avoid paying the fair amount of tax,” said Richard Weber, Chief, IRS Criminal Investigation. “IRS Criminal Investigation is aggressively pursuing tax cheats – both domestically and internationally. We owe it to every American taxpayer to use all lawful means to identify and prosecute both those who evade their taxes and those who assist them in evading their tax obligations.”
Curran faces a potential maximum prison term of six years. A sentencing date has not been set.
Assistant Attorney General Keneally and U.S. Attorney Ferrer thanked Special Agents of IRS - CI, who investigated the case, and Tax Division Senior Litigation Counsel Mark F. Daly and Trial Attorney Michelle M. Petersen and Assistant U.S. Attorney Thomas P. Lanigan, who prosecuted the case.
Former Bernalillo County, New Mexico, Corrections Officer Sentenced for Civil Rights ViolationsRead the Press Release
Demetrio Juan Gonzales, 40, a former corrections officer at the Bernalillo County Metropolitan Detention Center (MDC) in Albuquerque, N.M., was sentenced today in federal court to 33 months in prison followed by three years of supervised released for violating the civil rights of an individual in his custody when he struck and choked the victim in the shower room/dress out area of MDC. Gonzales pleaded guilty in October 2012.
According to court documents, during the early morning hours of Dec. 21, 2011, Gonzales was assigned to the Receiving-Discharge-Transfer (RDT) Unit at MDC where individuals are brought to be booked soon after they are arrested. Gonzales’ job was to photograph and fingerprint those who are brought to RDT for booking. The victim, who had been arrested for driving while intoxicated, was verbally uncooperative during the booking process, but was not a physical threat to anyone. Nonetheless, Gonzales became angry at the victim and walked him to the shower room/dress out area where he knew there were no surveillance cameras. Several other corrections officers followed Gonzales to the shower room/dress out area. There, Gonzales physically assaulted the victim, striking him multiple times, and choking him. As a result of Gonzales’ actions, the victim started bleeding. Gonzales acknowledged that the victim did nothing to justify the beating, and as a corrections officer, he was not permitted to assault inmates just because they angered him.
“Corrections officers who abuse their authority by physically assaulting prisoners undermine the foundations of the rule of law and violate basic constitutional guarantees that protect every person in America,” said Assistant Attorney General Thomas E. Perez of the Department of Justice’s Civil Rights Division. “The Department of Justice and the Civil Rights Division will continue to aggressively prosecute civil rights violations that occur in our jails and prisons.”
“We depend on the guards in our prison system not only to do an important job, but also to carry out their duties in a way that respects their positions of authority, the law and ultimately the population they supervise,” said Kenneth J. Gonzales, U.S. Attorney for the District of New Mexico. “Abuses of authority, under any circumstances, have no place in our prison system and will not be tolerated.”
“Our citizens have the right to expect their corrections officers to act legally and in accordance with the Constitution,” said Carol K.O. Lee, Special Agent in Charge of the Albuquerque Division of the FBI. “We hope today's sentencing serves as a reminder to all public servants that nobody is above the law. The Albuquerque FBI Division will continue to work with our law enforcement partners to vigorously investigate all allegations of civil rights violations. I want to thank the U.S. Attorney's Office and the Department of Justice Civil Rights Division for their support in this case. I also want to acknowledge the assistance given to the FBI by the Metropolitan Detention Center's executive management and internal affairs staff and the Bernalillo County Sheriff's Office.”
Fellow former MDC corrections officers Kevin Casaus, 24, and Matthew Pendley, 26, were indicted by a federal grand jury in June 2012, and are awaiting trial on charges related to this assault. Casaus is charged with violating the victim’s civil right rights when he allegedly shoved and struck the victim while in the shower area/dress out area. Casaus is further charged with obstruction of justice and falsification of records, first for making false statements to detectives of the Bernalillo County Sheriff’s Office (BCSO) and then for falsifying his incident report. Similarly, Matthew Pendley is also charged with obstruction of justice for making false statements to BCSO detectives, and also for tampering with evidence by cleaning up blood from the shower room/dress out area. Casaus and Pendley are presumed innocent unless proven guilty.
This case is being investigated by the Albuquerque Division of the FBI and is being prosecuted by Assistant U.S. Attorney Mark T. Baker for the District of New Mexico and Trial Attorney Fara Gold of the Civil Rights Division of the U.S. Department of Justice.
Federal Inmate Pleads Guilty in Pennsylvania <br /> to Premeditated Prison MurderRead the Press Release
WASHINGTON – A federal inmate formerly held in Pennsylvania's Allenwood Federal Correctional Complex pleaded guilty today in Harrisburg, Pa., before U.S. District Judge Yvette Kane, to first degree murder for stabbing and kicking a fellow inmate to death.
Assistant Attorney General Lanny A. Breuer of the Justice Department's Criminal Division and U.S. Attorney for the Middle District of Pennsylvania Peter J. Smith announced the plea, entered today by Shawn Cooya, 33, formerly of White River, Ariz.
According to documents filed in this case and Cooya's admissions in court, in September 2005, Cooya, allegedly along with co-defendant Ritz Williams – another inmate at Allenwood in White Deer, Pa. – aided each other in the premeditated murder of inmate Alvin Allery by repeatedly stabbing him with a homemade knife and repeatedly kicking him in the head and torso.
Cooya and Williams were indicted by a federal grand jury in Williamsport in February 2008 and a superseding indictment was returned in July 2009.
As a result of his plea, Cooya faces a mandatory sentence of life in prison. Sentencing has been scheduled for March 18, 2013.
A trial date for Williams has been scheduled for April 15, 2013. He is considered innocent unless and until proven guilty.
The case was investigated by the FBI, Williamsport, Pa., Resident Agency and the Federal Bureau of Prisons. The case is being prosecuted by Assistant U.S. Attorneys Wayne Samuelson and Michelle Olshefski of the Middle District of Pennsylvania and Michael Warbel of the Criminal Division's Capital Case Unit.
Dreamboard Member Sentenced to 45 Years in Prison for Participating in International Criminal Network Organized to Sexually Exploit ChildrenRead the Press Release
A Massachusetts man was sentenced today to serve 45 years in prison for his participation in an international criminal network, known as Dreamboard, dedicated to the sexual abuse of children and the creation and dissemination of graphic images and videos of child sexual abuse throughout the world, announced Assistant Attorney General Lanny A. Breuer of the Justice Department's Criminal Division, U.S. Attorney Stephanie Finley of the Western District of Louisiana and Raymond R. Parmer, Special Agent In Charge of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) in New Orleans.
David Ettlinger, aka ee1, 35, of Newton, Mass., was sentenced by U.S. District Judge Maurice Hicks in the Western District of Louisiana. In addition to his prison term, Ettlinger was sentenced to lifetime supervised release.
David Ettlinger will spend 45 years in prison for his role in a horrific international conspiracy to sexually exploit young children, said Assistant Attorney General Breuer. Ettlinger participated in a criminal online community that encouraged members to regularly produce content depicting extreme sexual abuse of children. The members of Dreamboard attempted to evade law enforcement by disguising their locations, but today's sentencing is a strong reminder that the department is dedicated to working with its law enforcement partners to track down child predators who seek to take advantage of our most vulnerable citizens.
U.S. Attorney Finley said, sexual abuse is a growing problem around the world, and it has devastating consequences for the victimized children. Child pornography on the internet is another growing problem. In addition to the abuse these children suffer, images of the abuse circulate worldwide across the internet for many years, repeating the abuse. Children should not be victims. This sentence sends a strong message to people who abuse children that they will pay a heavy price for their actions. My office, along with our federal, state and local partners, remains committed to protecting children by aggressively pursuing, prosecuting and punishing those who seek to exploit them.
The sexual abuse of an innocent child by a teacher is one of the most heartbreaking violations of trust imaginable, said HSI New Orleans Special Agent in Charge Parmer. Investigating and prosecuting the perpetrators of these horrendous crimes is one of our highest priorities and today's sentencing ensures this predator will never again have the opportunity to harm another child.
On Aug. 15, 2012, Ettlinger pleaded guilty to one count of engaging in a child exploitation enterprise. Evidence presented in court documents and at sentencing revealed that Ettlinger, a former elementary school teacher in Newton, Mass., had been an active member of Dreamboard, an online child pornography bulletin board, since 2009.
Ettlinger was charged in an indictment unsealed on Aug. 3, 2011. The charges against Ettlinger are the result of Operation Delego, an ongoing investigation launched in December 2009 that targeted individuals around the world for their participation in Dreamboard. Dreamboard was a private, members-only, online bulletin board that was created and operated to promote pedophilia and encourage the sexual abuse of very young children, in an environment designed to avoid law enforcement detection.
A total of 72 individuals, including Ettlinger, have been charged as a result of Operation Delego. To date, 57 of the 72 charged defendants have been arrested in the United States and abroad. Forty-five individuals have pleaded guilty, and one was convicted after trial. Forty-two of the 45 individuals who have pleaded guilty for their roles in the conspiracy have been sentenced to prison and have received sentences ranging between 10 years and life in prison. Fifteen of the 72 charged individuals remain at large and are known only by their online identities. Efforts to identify and apprehend these individuals continue. Operation Delego represents the largest prosecution to date in the United States of individuals who participated in an online bulletin board conceived and operated for the sole purpose of promoting child sexual abuse, disseminating child pornography and evading law enforcement.
Ettlinger and other Dreamboard members traded graphic images and videos of adults molesting children 12 years-old and under, often violently, and collectively created a massive private library of images of child sexual abuse. The international group prized and encouraged the creation of new images and videos of child sexual abuse.
Dreamboard members employed a variety of measures designed to conceal their criminal activity from detection by law enforcement. Members communicated using aliases or 'screen names, rather than their actual names. Links to child pornography posted on Dreamboard were required to be encrypted with a password that was shared only with other members. Members accessed the board via proxy servers, which routed internet traffic through other computers so as to disguise a user's actual location and prevent law enforcement from tracing internet activity. Dreamboard members also encouraged the use of encryption programs on their computers, which password-protect computer files to prevent law enforcement from accessing them in the event of a court-authorized search.
Membership was tightly controlled by the administrators of the bulletin board, who required prospective members to upload child pornography portraying children 12 years of age or younger when applying for membership. Once they were given access, members were required continually to upload images of child sexual abuse in order to maintain membership. Members who failed to follow this rule would be expelled from the group.
Operation Delego involved extensive international cooperation to identify and apprehend Dreamboard members abroad. Through coordination between ICE; the Department of Justice; Eurojust, the European Union's Judicial Cooperation Unit; and dozens of law enforcement agencies throughout the world, 20 Dreamboard members across five continents and 14 countries have been arrested to date outside the United States, including two of the five lead administrators of the board. Those countries include Canada, Denmark, Ecuador, France, Germany, Guatemala, Hungary, Kenya, the Netherlands, the Philippines, Qatar, Serbia, Sweden and Switzerland. Numerous foreign investigations related to Operation Delego remain ongoing. The location and arrest of Dreamboard members abroad have led to the capture and investigation of other global targets.
Evidence obtained during the operation revealed that at least 38 children across the world were suffering sexual abuse at the hands of the members of the group. Efforts by federal, state, local and international law enforcement to locate and identify the victims of sexual abuse and exploitation by Dreamboard members are ongoing.
Operation Delego is a spinoff investigation from leads developed through Operation Nest Egg, the prosecution of another online group dedicated to the sharing and dissemination of child pornography. Operation Nest Egg was a spinoff investigation developed from leads related to another international investigation, Operation Joint Hammer, which targeted transnational rings of child pornography trafficking.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case is being prosecuted by Assistant U.S. Attorney John Luke Walker of the Western District of Louisiana and Trial Attorney Keith Becker of CEOS. The Criminal Division's Office of International Affairs provided substantial assistance. The investigation was conducted by ICE-Homeland Security Investigations, the Child Exploitation Section of ICE's Cyber Crime Center, CEOS, CEOS's High Technology Investigative Unit and 35 ICE offices in the United States and 11 ICE attaches offices in 13 countries around the world, with assistance provided by numerous local and international law enforcement agencies across the United States and throughout the world.
The investigation was part of Operation Predator, a nationwide ICE initiative to identify, investigate and arrest those who prey on children, including human traffickers, international sex tourists, Internet pornographers and foreign-national predators whose crimes make them deportable.
ICE encourages the public to report suspected child predators and any suspicious activity through its toll-free hotline at 1-866-DHS-2ICE. This hotline is staffed around the clock by investigators.
Detroit Doctor Pleads Guilty in Connection <br /> with Medicare Psychotherapy Fraud SchemeRead the Press Release
WASHINGTON – The Detroit doctor at the center of a $13.2 million psychotherapy fraud scheme, which used the Medicare information of mentally-disabled Detroit residents to defraud Medicare, pleaded guilty today for his role in the scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Chicago Regional Office.
Dr. Alphonso Berry, 51, of Orchard Lake, Mich., pleaded guilty before U.S. District Judge Stephen J. Murphy III in the Eastern District of Michigan to one count of conspiracy to commit health care fraud and five counts of health care fraud. Marcus Jenkins and Beth Jenkins , Dr. Berry’s co-conspirators in the scheme, pleaded guilty on Jan. 7 and Jan. 3, 2012, respectively, to the same charges for their roles in the scheme.
Dr. Berry admitted that he and others conspired to defraud Medicare through Quality Recreation & Rehabilitation LLC (QRR) and Procare Rehabilitation Inc. (Procare), two Detroit adult day care centers. Dr. Berry admitted that he created a Medicare provider number for these businesses to allow them to bill Medicare for psychotherapy in his name. According to court documents, the Medicare recipients at QRR and Procare were severely mentally-disabled residents of Detroit adult foster care homes. Dr. Berry admitted that, although he did not provide any psychotherapy to these patients at QRR and Procare, he signed psychotherapy progress notes that were used at these companies to submit psychotherapy claims to Medicare, including claims that he provided psychotherapy to a dead person.
Court documents allege that Dr. Berry and his co-conspirators used Dr. Berry’s Medicare number to submit more than 116,000 psychotherapy claims in his name, amounting to more than $8.2 million. From 2004 through 2011, QRR and Procare submitted more than 185,000 claims to Medicare totaling more than $13.2 million for group and individual psychotherapy that was not provided. According to court documents, Medicare paid $4,777,792 on these claims.
At sentencing, scheduled for April 26, 2013, Dr. Berry faces a maximum penalty of 60 years in prison and a $1,500,000 fine.
This case is being prosecuted by William G. Kanellis and Tarek Helou of the Criminal Division’s Fraud Section. It was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
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.
U.S. Attorneys Loretta E. Lynch and Sally Yates to Lead Attorney General’s Advisory CommitteeRead the Press Release
Attorney General Eric Holder announced today the appointment of U.S. Attorney for the Eastern District of New York Loretta E. Lynch as chair of the Attorney General’s Advisory Committee of U.S. Attorneys (AGAC). Attorney General Holder also appointed U.S. Attorney for the Northern District of Georgia Sally Quillian Yates to serve as vice chair. Both appointments became effective Jan. 1, 2013.
“I’m confident that U.S. Attorneys Lynch and Yates have the expertise and dedication to lead this critical group in a challenging time, as we work to fulfill the department’s commitment to protecting the American people,” said Attorney General Holder. “I’m deeply grateful for their service and leadership – and look forward to continuing to work closely with all 94 of our United States Attorneys.”
U.S. Attorney Lynch was appointed to the AGAC in May 2010 and has served as vice chair since 2011. She replaces U.S. Attorney for the District of New Jersey Paul J. Fishman. U.S. Attorney Lynch has also served as the chair for the Advisory Committee’s Office, Management and Budget Subcommittee.
U.S. Attorney Yates was appointed to the AGAC in May 2010 and has served on several subcommittees including Civil Rights, White Collar Fraud, and Criminal Practice and Law Enforcement Coordination/Victim/Community Issues.
Attorney General Holder also thanked U.S. Attorney Fishman for serving as chair of the AGAC for the past two years. “U.S. Attorney Fishman’s leadership, vision and unselfish dedication have brought the U.S. Attorney community together to address a myriad of law enforcement issues. His guidance and sage counsel have been invaluable to department leadership as we work together to enforce the laws of this nation.”
The AGAC was created in 1973 to serve as the voice of the U.S. Attorneys and to advise the attorney general on policy, management and operational issues impacting the offices of the U.S. Attorneys.
Romanian National Sentenced to 21 Months in Prison for Role in Multimillion-Dollar Scheme to Remotely Hack into and Steal Payment Card Data from Hundreds of U.S. Merchants’ ComputersRead the Press Release
WASHINGTON – A Romanian national was sentenced today to serve 21 months in prison for his role in an international, multimillion-dollar scheme to remotely hack into and steal payment card data from hundreds of U.S. merchants’ computers, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the District of New Hampshire John P. Kacavas; and Holly Fraumeni, Resident Agent in Charge of the U.S. Secret Service (USSS), Manchester, N.H., Resident Office.
Cezar Butu, 27, of Ploiesti, Romania, was sentenced by Judge Steven J. McAuliffe in U.S. District Court in New Hampshire.
On Sept. 17, 2012, Butu pleaded guilty to one count of conspiracy to commit access device fraud.
In his guilty plea, Butu admitted that, from approximately 2009-2011, he participated in a Romanian-based conspiracy to hack into hundreds of U.S.-based computers to steal credit, debit and payment account numbers and associated data (collectively “payment card data”) that belonged to U.S. cardholders. According to court documents, Butu and his co-conspirators used the stolen payment card data to make unauthorized charges on, and/or transfers of funds from, cardholders’ accounts (or alternatively to transfer the stolen payment card data to other co-conspirators who would do the same). Butu admitted that he repeatedly asked an alleged co-conspirator to provide him with stolen payment card data and that the alleged co-conspirator provided him with instructions for how to access a website where a portion of the stolen payment card data was stored. Butu later attempted to use the stolen payment card data to make unauthorized charges on, or transfers of funds from, the accounts. According to Butu’s plea agreement, he also attempted to sell, or otherwise transfer, the stolen payment card data to other co-conspirators for them to use in a similar manner. Butu admitted to acquiring stolen payment card data belonging to approximately 140 cardholders during the course of the scheme.
In his plea agreement, Butu agreed to be sentenced to 21 months in prison.
Butu’s co-conspirator Iulian Dolan pleaded guilty to one count of conspiracy to commit computer fraud and two counts of conspiracy to commit access device fraud, and has agreed to be sentenced to seven years in prison. Dolan’s sentencing hearing is scheduled for April 4, 2013.
Alleged co-conspirator Adrian-Tiberiu Oprea is scheduled for trial on Feb. 20, 2013, in U.S. District Court in New Hampshire.
The case was investigated by the USSS, with the assistance of the New Hampshire State Police and the Romanian Directorate of Investigation of Organized Crime and Terrorism.The case is being prosecuted by Trial Attorney Mona Sedky in the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Arnold H. Huftalen from the District of New Hampshire.
Owner of Detroit Adult Day Care Centers Pleads Guilty in Connection with Medicare Psychotherapy Fraud SchemeRead the Press Release
WASHINGTON – The owner of several Detroit-area businesses that housed severely mentally-disabled Medicare recipients pleaded guilty today for his role in a $13.2 million fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Chicago Regional Office.
Marcus Jenkins, 51, of Farmington Hills, Mich., pleaded guilty before U.S. District Judge Stephen J. Murphy III in the Eastern District of Michigan to one count of conspiracy to commit health care fraud and five counts of health care fraud. Jenkins’s wife, Beth Jenkins, pleaded guilty to the same charges on Jan. 3, 2013, for her involvement in the scheme.
Marcus Jenkins admitted that he and others conspired to defraud Medicare through Quality Recreation & Rehabilitation LLC (QRR) and Procare Rehabilitation Inc., two adult day care centers he owned and operated with Beth Jenkins. According to court documents, Jenkins also owned and operated several Detroit-area adult foster care homes (AFCs) that housed severely mentally-disabled Medicare recipients. Court documents allege that Jenkins used the Medicare information of more than 100 Detroit-area AFC residents to bill Medicare through QRR and Procare for individual and group psychotherapy. Jenkins admitted that he caused claims to be submitted to Medicare for psychotherapy services that were not provided, including claims for psychotherapy purportedly given to a patient who was deceased on the dates of claimed service.
From 2004 through 2011, Marcus Jenkins, Beth Jenkins and alleged co-conspirators submitted more than 185,000 claims to Medicare totaling more than $13.2 million for group and individual psychotherapy that was not provided. According to court documents, Medicare paid $4,777,792 on these claims.
At sentencing, scheduled for April 19, 2013, Jenkins faces a maximum penalty of 60 years in prison and a $1.5 million fine.
Jenkins’s co-defendant Dr. Alphonso Berry, is scheduled for trial on Jan. 8, 2013. He is presumed innocent until proven guilty at trial.
This case is being prosecuted by William G. Kanellis and Tarek Helou of the Criminal Division’s Fraud Section. It was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
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.
Louisiana Home Inspector Sentenced to 78 Months in Prison<br /> for Tax FraudRead the Press Release
Jack Ray Carr, of Baton Rouge, La., was sentenced today to 78 months in federal prison for one count of corruptly interfering with the due administration of the Internal Revenue laws, four counts of filing false income tax returns and one count of aiding and assisting in the preparation of a false income tax return, the Justice Department, Internal Revenue Service (IRS) and Treasury Inspector General for Tax Administration (TIGTA) announced. Additionally, Carr was sentenced to one year of supervised release.
On June 20, 2012, following a three-day jury trial in the Middle District of Louisiana, Carr was convicted on all six counts. The evidence at trial established that Carr, a home inspector, threatened violence against a federal agent, filed false documents and tax returns with the IRS, and attempted to pay his tax debt with fraudulent bonds, fictitious money orders and a fake check. On three successive personal income tax returns, Carr falsely reported that his and his wife’s income was “$0.00,” despite earning hundreds of thousands of dollars in total during the 2001, 2002 and 2003 tax years. In 2009, on two tax returns, Carr falsely reported more than $100,000 of federal income tax withholdings based on fictitious IRS Forms 1099-OID attached to the tax returns that Carr filed in his own name and in the name of his wife. In doing so, Carr claimed more than $150,000 of fraudulent tax refunds from the U.S. government.
Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, thanked the special agents of IRS - Criminal Investigation and TIGTA, who investigated this case. Assistant Attorney General Keneally also thanked Tax Division Trial Attorneys Justin Gelfand and Jason Poole who prosecuted this case.
Justice Department to Monitor Municipal Special Election in South CarolinaRead the Press Release
The Justice Department announced today that it will monitor the municipal special election on Jan. 8, 2013, in Branchville, S.C., to ensure compliance with the Voting Rights Act of 1965. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group.
Justice Department personnel will monitor polling place activities in Branchville. A Civil Rights Division attorney will coordinate federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from Office of Personnel Management, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit www.justice.gov/crt/voting/index.php for more information about the Voting Rights Act and other federal voting laws.
Justice Department Reaches Settlement with South Carolina Food Service Provider to Resolve Immigration-Related Unfair Employment PracticesRead the Press Release
The Justice Department announced today that it reached an agreement with Centerplate Inc., resolving allegations that the company violated the anti-discrimination provision of the Immigration and Nationality Act (INA). Centerplate, based in Spartanburg, S.C., is one of the largest hospitality companies in the world. With over 10,000 employees nationwide, Centerplate provides food service to over 250 stadiums, convention centers and entertainment venues across the country.
The Justice Department’s investigation was initiated based on a referral from the U.S. Citizenship and Immigration Services (USCIS) under a memorandum of agreement between the Civil Rights Division and USCIS. The department’s investigation concluded that, for at least the past three years, Centerplate engaged in a pattern or practice of treating work-eligible non-U.S. citizens differently from U.S. citizens during the INA’s employment eligibility verification processes, including E-Verify, by requiring specific documents issued by the Department of Homeland Security from non-U.S. citizens, while not making similar requests of U.S. citizens.
Under the terms of the agreement, Centerplate has agreed to pay $250,000 in civil penalties, the third highest amount paid through settlement since enactment of the INA’s anti-discrimination provision in 1986. Centerplate has also agreed to fully compensate any victims who lost wages as a result of Centerplate’s practices, 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.
“Work-eligible applicants – citizens and non-citizens alike – deserve fair and equal treatment in the eligibility verification process,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Therefore, we will continue to vigorously enforce the anti-discrimination provision of the INA.”
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 .
Justice Department Files Lawsuit in Idaho AgainstJerome County Sheriff’s Office to Enforce the Employment Rights of Army National Guard MemberRead the Press Release
The United States Justice Department and U.S. Attorney Wendy J. Olson announced today the filing of a complaint alleging that the Jerome County Sheriff’s Office willfully violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by failing to reemploy and terminating Idaho Army National Guard Member Mervin Jones while he was recuperating from a knee injury that he sustained while performing military service. The suit was filed in federal district court in Idaho.
Subject to certain limitations, USERRA requires that service members who leave their civilian jobs to serve in the military be reemployed promptly by their civilian employers in the positions they would have held if their employment had not been interrupted by military service or in positions of comparable seniority, pay, and status. In addition, USERRA requires employers to accommodate service members who are injured in the line of duty, and allows service members who are recuperating from such an injury up to two years to obtain reemployment without facing termination by their civilian employers.
The complaint states that Jones began working for the Jerome County Sheriff’s Office as a correctional deputy in 2002. By 2007, he had been promoted through the ranks to Corporal. During his employment with the Sheriff’s Office, Jones was also a member of the Idaho Army National Guard. He suffered a knee injury while deployed to Iraq in 2004, which Jones later aggravated in 2008 during a weekend training event with his Guard unit. The complaint alleges that in 2009, while Jones was still recuperating from multiple knee surgeries, the Sheriff’s Office forced him to complete Family Medical Leave Act (FMLA) paperwork even though his leave was protected under USERRA, denied him light duty work to accommodate his physical limitations caused by the knee injury, attempted to subject him to an unlawful “fitness for duty” evaluation and physical fitness test before allowing him to return to work, and terminating his employment during the period of time permitted by USERRA to recover from an injury incurred in the line of duty.
“When Congress enacted USERRA, it was to protect our men and women in uniform from experiencing exactly this kind of injustice,” said Thomas E. Perez, Assistant Attorney General for the Department of Justice’s Civil Rights Division. “The Justice Department is committed to vigorously enforcing federal laws that protect the employment rights of our service members.”
“Members of the Army National Guard sacrifice time away from their jobs to serve their country,” said Olson. “USERRA ensures that they are not discriminated against after they have returned and their employment rights are protected. We are committed to vigorously enforcing USERRA’s protections.”
The case stems from a referral by the United States Department of Labor following an investigation by the Department of Labor’s Veterans’ Employment and Training Service. This case is being handled by the Civil Rights Division and the U.S. Attorney’s Office for the District of Idaho.
Additional information about USERRA can be found on the Justice Department website: www.servicemembers.gov and www.usdoj.gov/crt/emp, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.
Related Materials:
Jones Complaint
Judy A. Robbins to Serve as U.S. Trustee for District of Columbia, Maryland, South Carolina, Virginia, and West Virginia for Interim PeriodRead the Press Release
WASHINGTON – Judy A. Robbins, the U.S. Trustee for the Southern and Western Districts of Texas (Region 7), has been designated by Attorney General Eric Holder also to serve as the U.S. Trustee for the District of Columbia, Maryland, South Carolina, Virginia, and West Virginia (Region 4) for an interim period beginning on February 1, 2013, the Executive Office for U.S. Trustees announced today. She replaces W. Clarkson McDow, Jr., who is retiring after serving as the U.S. Trustee for Region 4 since June 1994.
Ms. Robbins has served as U.S. Trustee for Region 7 since September 2010. Prior to that appointment, she served as an Assistant U.S. Attorney, Civil Division, in the Southern District of Texas, focusing on bankruptcy, civil fraud, commercial litigation and employment discrimination. She has also served as a bankruptcy attorney for the Federal Deposit Insurance Corporation in Houston, a Trial Attorney for the U.S. Trusteeç´ office in Houston, an estate administrator for the U.S. Bankruptcy Court for the Southern District of Texas and a pro se law clerk for the U.S. District Court for the Southern District of Texas. Ms. Robbins received her law degree from the University of Houston College of Law and her undergraduate degree cum laude from the University of Houston.
The USTP is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The USTP has 21 regions and 95 field offices. Region 4 is headquartered in Columbia, S.C., with additional offices in Alexandria, Norfolk, Richmond, and Roanoke, Va.; Baltimore and Greenbelt, Md.; and Charleston, W.Va.
Contact:Jane Limprecht, Public Information Officer
Monday, July 15, 2013 3:10 PM
Executive Office for U.S. Trustees
(202) 305-7411