District Not Recorded

Today the United States filed a civil action against ATP Oil & Gas Corporation and ATP Infrastructure Partners, LP (ATP-IP) for civil penalties and injunctive relief under the Clean Water Act and the Outer Continental Shelf Lands Act.  The complaint was filed on behalf of the U.S. Department of the Interior’s Bureau of Safety and Environmental Enforcement (BSEE) and the U.S. Environmental Protection Agency (EPA).  The complaint addresses the defendants’ alleged unlawful discharges of oil and unpermitted chemical dispersants from the defendants’ floating oil and gas production platform, the ATP Innovator, into the Gulf of Mexico. 

The ATP Innovator is a production facility operating at Lease Block 711 of Mississippi Canyon in the Gulf of Mexico, approximately 45 nautical miles offshore of southeastern Louisiana. 

The violations were discovered during a BSEE inspection of the facility in March 2012.  Following further investigation by BSEE, the violations were referred to the Department of Justice by BSEE and EPA.  The case, United States v. ATP Oil & Gas Corporation et al., was filed in the District Court for the Eastern District of Louisiana. 

As alleged in the complaint, ATP failed to properly operate and maintain its wastewater treatment system on the ATP Innovator.  As a result, excess oil was discharged into the ocean, and an unauthorized chemical dispersant was added to the oily wastewater discharge to mask the presence of oil on the ocean’s surface.  The dispersant was added to the outfall pipe by way of a concealed metal tube that connected a tank of dispersant to the outfall pipe.  The connection of the metal tubing to the outfall pipe was located downstream of the sample collection point, making the addition of unauthorized dispersant undetectable in samples that are required to be collected to show compliance with ATP’s Clean Water Act discharge permit.

According to the complaint, the dispersant had been used from at least October 2010 to March 2012.  In addition to civil penalties under the Clean Water Act, the complaint also seeks injunctive relief for violations of the Clean Water Act and the Outer Continental Shelf Lands Act.

Related Materials:

ATP Complaint

NEW YORK -- Immigration Judge Joanna Bukszpan from the Executive Office for Immigration Review, New York Immigration Court, delivered the keynote speech and administered the oath of allegiance to approximately 150 candidates during a naturalization ceremony at 26 Federal Plaza in New York on Feb. 8, 2013. The New York District Office of U.S. Citizenship and Immigration Services, Department of Homeland Security, hosted the ceremony.

Biographical Information

Attorney General Janet Reno appointed Judge Bukszpan in September 1995. Judge Bukszpan received a bachelor of arts degree in 1963 from the City University of New York and a juris doctorate in 1976 from Brooklyn Law School. From 1978 to 1995, she was in private practice in New York. From 1976 to 1978, she worked as a trial attorney/general attorney (nationality) for the former Immigration and Naturalization Service in New York. Judge Bukszpan is a member of the District of Columbia and New York 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.

The Justice Department today moved to intervene in Murphy-Taylor v. State of Maryland, et al., a private lawsuit alleging sex discrimination by the state of Maryland, Queen Anne’s County and the Queen Anne’s County Sheriff. The United States’ complaint in intervention alleges that Kristy Murphy-Taylor’s supervisors in the sheriff’s office subjected her to severe sexual harassment and retaliated against her when she complained. The complaint alleges that these actions violate Title VII of the Civil Rights Act of 1964.

According to the complaint, over a number of years Ms. Murphy-Taylor was subjected to numerous acts of unwanted sexual conduct by multiple supervisors including, multiple incidents of unwanted sexual touching, sexually explicit comments about Ms. Murphy-Taylor and other female officers, and derogatory comments about Ms. Murphy-Taylor based on her sex and about women in general.

Despite Ms. Murphy-Taylor’s complaints to supervisory officials about the unwelcome conduct, the complaint alleges that the defendants failed to take prompt and effective corrective action, subjected her to intolerable working conditions intended to make her quit, and ultimately terminated her for complaining about the sexual harassment.

The United States determined that this case represents a matter of general public importance and that the Department of Justice should participate in it. By intervening, the United States will ensure that the law continues to protect employees and that the price of earning a living will not be enduring constant sexual harassment. The relief sought by the United States is past and future lost wages and compensatory damages for Ms. Murphy-Taylor as well as the implementation of effective sexual harassment policies and procedures and training on these policies and procedures.

Ms. Murphy-Taylor filed a charge of sex discrimination and retaliation with the Baltimore District Office of the Equal Employment Opportunity Commission (EEOC). After investigating these charges, finding reasonable cause to believe that the charging party was subject to discrimination because of her sex, and unsuccessfully attempting to conciliate the matter, the EEOC referred the charges to the Department of Justice. This lawsuit is brought by the Department of Justice as a result of a project designed to ensure vigorous enforcement of Title VII against state and local governmental employers by enhancing cooperation between the EEOC and the Civil Rights Division.

“The Department of Justice will not stand by while women are forced to endure unwanted sexual conduct in their workplaces and then penalized for protesting it,” said Jocelyn Samuels, Principal Deputy Assistant Attorney General for the Civil Rights Division. “Through our partnership with the EEOC, the department continues its commitment to vigorously enforcing the right of employees to be free from sex discrimination in the work place.”

“The work of the commission is made more effective and efficient with interagency coordination,” said Jacqueline A. Berrien, chair of the Equal Employment Opportunity Commission. “Our ongoing project with the Justice Department helps to ensure that employees receive the full protection of the laws prohibiting workplace discrimination.”

“By working more closely together in appropriate cases, EEOC and DOJ are able to use our resources more efficiently to ensure the vigorous enforcement of Title VII in the public sector,” said EEOC District Director Spencer H. Lewis Jr., of the EEOC’s Philadelphia District Office. The Philadelphia District Office of the EEOC oversees Pennsylvania, Maryland, Delaware, West Virginia and parts of New Jersey and Ohio.

Title VII prohibits discrimination in employment on the basis of sex, race, color, national origin or religion, and prohibits retaliation against an employee who opposes an unlawful employment practice, or because the employee has made a charge or participated in an investigation, proceeding or hearing under the Act. More information about Title VII and other federal employment laws is available at www.usdoj.gov/crt/emp/index.html .

The EEOC enforces federal laws prohibiting employment discrimination. Further information about the EEOC is available on its website at www.eeoc.gov.

A former registered nurse was sentenced today to serve 111 months in prison for his role in a health care fraud scheme involving defunct health provider Health Care Solutions Network Inc. (HCSN), 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; Michael B. Steinbach, Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Office of Investigations Miami office.

John Thoen, 53, of Miami, was sentenced by U.S. District Judge Cecilia M. Altonaga in the Southern District of Florida.  In addition to his prison term, Thoen was sentenced to serve three years of supervised release.

On Nov. 20, 2012, Thoen pleaded guilty in the Southern District of Florida to one count of conspiracy to commit health care fraud and one count of conspiracy to commit money laundering.

 According to court documents, HCSN operated community mental health centers (CMHC) at three locations in Miami-Dade County, Fla., and one location in Hendersonville, N.C.  HCSN purported to provide partial hospitalization program (PHP) services to individuals suffering from mental illness.  A PHP is a form of intensive treatment for severe mental illness.  According to court documents, HCSN obtained Medicare beneficiaries to attend HCSN for purported PHP treatment that was unnecessary and, in many instances, not even provided.  HCSN obtained those beneficiaries in Miami by paying kickbacks to owners and operators of assisted living facilities.

According to court documents, Thoen was a licensed registered nurse in both Florida and North Carolina.  In Florida, Thoen participated in the admission to HCSN of patients who were ineligible for PHP services.  Thoen participated in the routine fabrication of patient medical records that were utilized to support false and fraudulent billing to government sponsored health care benefit programs, including Medicare and Medicaid.

In North Carolina, Thoen, according to court documents, routinely submitted fraudulent PHP claims for Medicare patients who were not even present at the CMHC on days PHP services were purportedly rendered.  Thoen also caused the submission of fraudulent Medicare claims on days the CMHC was closed due to snow.

Thoen also admitted to his role in a money laundering scheme, involving Psychiatric Consulting Network Inc. (PCN), a Florida corporation that was utilized by HCSN as a shell corporation to launder health care fraud proceeds.  According to court documents, Thoen was president of PCN.

According to court documents, from 2004 through 2011, HCSN billed Medicare and the Florida Medicaid program approximately $63 million for purported mental health services.

Fifteen defendants have been charged for their alleged roles in the HCSN health care fraud scheme, and nine defendants have pleaded guilty.  Alleged co-conspirators Wondera Eason and Paul Layman are scheduled for trial on March 11, 2013, before Judge Altonaga in Miami.  And alleged co-conspirators Alina Feas, Dana Gonzalez, Gema Pampin and Lisset Palmero are scheduled for trial on June 3, 2013.  Defendants are presumed innocent until proven guilty at trial.

The cases are being prosecuted by Special Trial Attorney William Parente and Trial Attorney Allan J. Medina of the Criminal Division’s Fraud Section. This case 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 Southern District of Florida.  In support of the Medicare Fraud Strike Force, the FBI Criminal Investigative Division’s Financial Crimes Section has funded the Special Trial Attorney position.

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. 

Steven J. Wasserman, M.D., a dermatologist practicing in Venice, Fla., has agreed to pay $26.1 million to resolve allegations that he violated the False Claims Act by accepting illegal kickbacks from a pathology laboratory and by billing the Medicare program for medically unnecessary services, the Justice Department announced today. The settlement is the largest ever with an individual under the False Claims Act in the Middle District of Florida and one of the largest with an individual under the False Claims Act in U.S. history.

The government alleged that, in or around 1997, Dr. Wasserman entered into an illegal kickback arrangement with Tampa Pathology Laboratory (TPL), a clinical laboratory in Tampa, Fla., and Dr. José SuarezHoyos, a pathologist and the owner of TPL, in an effort to increase the lab’s referral business. Under that agreement, Dr. Wasserman allegedly sent biopsy specimens for Medicare beneficiaries to TPL for testing and diagnosis. In return, TPL allegedly provided Dr. Wasserman a diagnosis on a pathology report that included a signature line for Dr. Wasserman to make it appear to Medicare that he had performed the diagnostic work that TPL had performed. The government alleged that Dr. Wasserman then billed the Medicare program for TPL’s work, passing it off as his own, for which he received more than $6 million in Medicare payments. In addition, the government asserted that, in furtherance of his agreement with TPL, Dr. Wasserman substantially increased the number of skin biopsies he performed on Medicare patients, thus increasing the referral business for TPL.

The government further alleged that, in addition to his involvement in the alleged kickback scheme, Dr. Wasserman also performed thousands of unnecessary skin surgeries known as adjacent tissue transfers on Medicare beneficiaries. Adjacent tissue transfers are complicated and often time-consuming procedures physicians sometimes use to close a defect resulting from the removal of a growth on a patient’s skin. The government

alleged that Dr. Wasserman performed many of these procedures in order to obtain the reimbursement for them, and not because they were medically necessary.

“Doctors who take illegal kickbacks and perform unnecessary procedures not only put their own financial self-interest over their duty to their patients, they raise the cost of health care for all of us as patients and as taxpayers,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division of the Department of Justice. “The Department of Justice will not tolerate those who abuse the public health care programs to which we all contribute and on which we all depend.”

“This settlement represents a watershed achievement in our district’s civil healthcare fraud enforcement program,” said Robert O’Neill, U.S. Attorney for the Middle District of Florida. “Schemes of this magnitude require extraordinary remedies, and we are proud to have reached such an outstanding resolution for the taxpayers and their health programs.”

The allegations resolved by today’s settlement were initiated by a lawsuit originally filed in the District Court for the Middle District of Florida by Alan Freedman, M.D., a pathologist who formerly worked at TPL. Dr. Freedman filed the lawsuit under the qui tam, or whistleblower provisions of the False Claims Act. Under the False Claims Act, a private party may file suit on behalf of the United States for false claims and share in any recovery. The United States has the right to intervene in the action, which it did in this case, filing its own complaint in October 2010. Dr. Freedman will receive $4,046,000 of today’s settlement.

The United States previously settled with TPL and Dr. SuarezHoyos for $950,000 to resolve the allegations asserted against them in the same lawsuit.

“Anyone cheating patients and taxpayers should expect to pay a high price,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services.  “Besides paying more than $26 million, Dr. Wasserman is excluded from treating patients and being paid under Medicare, Medicaid and all other federal health care programs.”    

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $10.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14 billion.

Principal Deputy Assistant Attorney General Delery and U.S. Attorney O’Neill thanked the joint investigation team, which includes special agents with the Department of Health and Human Services-OIG and the FBI, for their efforts in the investigation of this matter.

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

The lawsuit is captioned U.S. ex rel. Freedman v. SuarezHoyos et al., No. 04-933 (M.D. Fla.).

Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius today released a new report showing that for every dollar spent on health care-related fraud and abuse investigations in the last three years, the government recovered $7.90.  This is the highest three-year average return on investment in the 16-year history of the Health Care Fraud and Abuse (HCFAC) Program.

The government’s health care fraud prevention and enforcement efforts recovered a record $4.2 billion in taxpayer dollars in Fiscal Year (FY) 2012, up from nearly $4.1 billion in FY 2011, from individuals and companies who attempted to defraud federal health programs serving seniors and taxpayers or who sought payments to which they were not entitled.  Over the last four years, the administration’s enforcement efforts have recovered $14.9 billion, up from $6.7 billion over the prior four-year period.  Since 1997, the HCFAC Program has returned more than $23 billion to the Medicare Trust Funds.

These findings, released today in the annual HCFAC Program report, are a result of President Obama making the elimination of fraud, waste and abuse, particularly in health care, a top priority for the administration.

The success of this joint Department of Justice and HHS effort was made possible by the Health Care Fraud Prevention and Enforcement Action Team (HEAT), created in 2009 to prevent fraud, waste and abuse in the Medicare and Medicaid programs and to crack down on individuals and entities that are abusing the system and costing American taxpayers billions of dollars.  These efforts to reduce fraud will continue to improve with new tools and resources provided by the Affordable Care Act.

“This was a record-breaking year for the Departments of Justice and Health and Human Services in our collaborative effort to crack down on health care fraud and protect valuable taxpayer dollars,” said Attorney General Holder.  “In the past fiscal year, our relentless pursuit of health care fraud resulted in the disruption of an array of sophisticated fraud schemes and the recovery of more taxpayer dollars than ever before.  This report demonstrates our serious commitment to prosecuting health care fraud and safeguarding our world-class health care programs from abuse.”

“Our historic effort to take on the criminals who steal from Medicare and Medicaid is paying off: We are gaining the upper hand in our fight against health care fraud,” said Secretary Sebelius. “This fight against fraud strengthens the integrity of our health care programs and helps us fulfill our commitment to our seniors.”

About $4.2 billion stolen or otherwise improperly obtained from federal health care programs was recovered and returned to the Medicare Trust Funds, the Treasury and others in FY 2012.  This is an unprecedented achievement for the HCFAC Program, a joint Justice Department and HHS effort to coordinate federal, state and local law enforcement activities to fight health care fraud and abuse.

The administration is also using tools authorized by the Affordable Care Act to fight fraud, including enhanced screenings and enrollment requirements, increased data sharing across the government, expanded recovery efforts for overpayments and greater oversight of private insurance abuses.  

Since 2009, the Justice Department and HHS have improved their coordination through HEAT and increased the number of Medicare Fraud Strike Force teams to nine.  The Justice Department’s enforcement of the civil False Claims Act and the Federal Food, Drug and Cosmetic Act have produced similar record-breaking results.  These combined efforts coordinated under HEAT have expanded local partnerships and helped educate Medicare beneficiaries about how to protect themselves against fraud.   In FY 2012, the two departments continued their series of regional fraud prevention summits, and the Justice Department hosted a training conference for federal prosecutors, FBI agents, HHS Office of Inspector General agents and others.

The strike force teams use advanced data analysis techniques to identify high-billing levels in health care fraud hot spots so that interagency teams can target emerging or migrating schemes as well as with chronic fraud by criminals masquerading as health care providers or suppliers. In July, Attorney General Holder and Secretary Sebelius announced the launch of a ground-breaking partnership among the federal government, state officials, leading private health insurance organizations and other health care anti-fraud groups to share information and best practices to improve detection of and prevent payments to scams that cut across public and private payers.

In FY 2012, the Justice Department opened 1,131 new criminal health care fraud investigations involving 2,148 potential defendants, and a total of 826 defendants were convicted of health care fraud-related crimes during the year.  The department also opened 885 new civil investigations.

The strike force coordinated a takedown in May 2012 that involved the highest number of false Medicare billings in the history of the strike force program.  The takedown involved 107 individuals, including doctors and nurses, in seven cities, who were charged for their alleged participation in Medicare fraud schemes, involving about $452 million in false billings.  As a part of the May 2012 takedown, HHS also suspended or took other administrative action against 52 providers using authority under the health care law to suspend payments until an investigation is complete.

Strike force operations in the nine cities where teams are based resulted in 117 indictments, informations and complaints involving charges against 278 defendants who allegedly billed Medicare more than $1.5 billion in fraudulent schemes.  In FY 2012, 251 guilty pleas and 13 jury trials were litigated, with guilty verdicts against 29 defendants, in strike force cases.  The average prison sentence in these cases was more than 48 months.

The new authorities under the Affordable Care Act granted to HHS and the Centers for Medicare & Medicaid Services (CMS) were instrumental in clamping down on fraudulent activity in health care.  In FY 2012, CMS began the process of screening all 1.5 million Medicare-enrolled providers through the new Automated Provider Screening system that quickly identifies ineligible and potentially fraudulent providers and suppliers prior to enrollment or revalidation to verify the data.  As a result, nearly 150,000 ineligible providers have already been eliminated from Medicare’s billing system.

CMS also established the Command Center to improve health care-related fraud detection and investigation, drive innovation and help reduce fraud and improper payments in Medicare and Medicaid. 

From May 2011 through the end of 2012, more than 400,000 providers were subject to the new screening requirements and nearly 150,000 lost the ability to bill the Medicare program due to the Affordable Care Act requirements and other proactive initiatives.

The Department of Justice and HHS also continued their successes in civil health care fraud enforcement during FY 2012.  The Justice Department’s Civil Division Fraud Section, with their colleagues in U.S. Attorneys’ offices throughout the country, obtained settlements and judgments of more than $3 billion in FY 2012 under the False Claims Act (FCA).  These matters included unlawful pricing by pharmaceutical manufacturers, illegal marketing of medical devices and pharmaceutical products for uses not approved by the Food and Drug Administration, Medicare fraud by hospitals and other institutional providers, and violations of laws against self-referrals and kickbacks.  This marked the third year in a row that more than $2 billion has been recovered in FCA health care matters.  Additionally, the Civil Division’s Consumer Protection Branch, working with U.S. Attorneys’ offices, obtained nearly $1.5 billion in fines and forfeitures, and obtained 14 convictions in matters pursued under the Federal Food, Drug and Cosmetic Act.  

For more information on the joint DOJ-HHS Strike Force activities, visit: www.StopMedicareFraud.gov.

For more information on the fraud prevention accomplishments under the Affordable Care Act visit: http://www.healthcare.gov/news/factsheets/2012/02/medicare-fraud02142012a.html.

Related Material:

• FY 2012 HCFAC Report

BALTIMORE --Immigration Judge Lisa Dornell from the Executive Office for Immigration Review, Baltimore Immigration Court, delivered the keynote speech and administered the oath of allegiance to approximately 75 candidates during a naturalization ceremony at the George H. Fallon Federal Building in Baltimore, Md., on Feb. 8, 2012. The Baltimore District Office of U.S. Citizenship and Immigration Services, Department of Homeland Security, hosted the ceremony.

Biographical Information

Attorney General Janet Reno appointed Judge Dornell in April 1995. Judge Dornell received a bachelor of arts degree in 1983 from the University of Vermont and a juris doctorate in 1986 from the University of Texas at Austin School of Law. From 1990 to 1995, Judge Dornell served as senior litigation counsel, Office of Immigration Litigation, Civil Division, Department of Justice. From 1986 to 1990, she served as a trial attorney for the former Immigration and Naturalization Service (INS), New York district office, and as an assistant general counsel, INS Headquarters, Washington, D.C. Judge Dornell lectures on immigration topics and court procedure at several local law schools. She is a member of the District of Columbia and State of Texas 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.

A federal grand jury has indicted two members of the Compton 155 street gang on federal hate crime charges related to a racially motivated attack on four African-American juveniles at a residence in the city of Compton, Calif., on New Year’s Eve.

Jeffrey Aguilar, aka “Terco,” 19, and Efren Marquez Jr., who is also known as “Stretch” and “Junior,” 21, were named in a five-count indictment returned late yesterday by the grand jury.

The indictment specifically charges Aguilar and Marquez with one count of conspiracy to interfere with housing rights and four counts of interfering with housing rights. The indictment alleges that they attempted to intimidate African-Americans from living in Compton.

Aguilar and Marquez allegedly are members of the Compton 155 street gang, which uses violence and threats of violence in an effort to drive African-Americans out of their “territory” on the west side of Compton. According to the indictment, members of the Compton 155 gang often refer to themselves as “NK” or “N***** Killers.” To instill fear in African-Americans, members of the gang tag their gang moniker and “NK” throughout their “territory.”

“Hate-fueled crimes have no place in our society,” said U.S. Attorney for the Central District of California Andre Birotte Jr. “No one should have to look over their shoulder in fear because of who they are. Incidents like the one described in the federal indictment prove that we must remain vigilant to ensure that the rights of every single American resident are protected at all times.”

“The Civil Rights Division will continue to protect the right of every person who lives in this country to do so free of racially-based violence and intimidation," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division of the Department of Justice.  “The Justice Department will not tolerate those individuals or gangs who would prevent a family from living in a particular neighborhood simply because of their race or the color of their skin.” 

The indictment specifically alleges that on Dec. 31, 2012, Aguilar, Marquez and a co-conspirator confronted an African-American juvenile, who was walking on a street in Compton, and threatened him by referring to themselves as “NKs.” The 17-year-old victim ran to his girlfriend’s house, where three other African-American juveniles were located. Aguilar and Marquez followed the 17-year-old victim to the home, yelled racial slurs at the four juveniles at the residence, and demanded that the African-Americans get out of the neighborhood. Aguilar and Marquez then allegedly assaulted the 17-year-old victim with a metal pipe and threatened another juvenile with a gun.

After the juveniles managed to escape and run into the house, the indictment alleges that Aguilar and Marquez left the scene and informed other gang members that the African-American juveniles lived in their “territory.” Shortly thereafter, Aguilar and approximately 15 other gang members went to the victims’ home and threatened them by yelling racial slurs and warning the juveniles that they did not belong in the neighborhood. During this time, a member of the gang smashed one of the windows of the house.

“The FBI is committed to the protection of civil liberties,” said Bill Lewis, Assistant Director in Charge of the FBI's Los Angeles Field Office. “No one should tolerate violence based on the color of their skin or live in fear based on the hatred of others.”

“Hate crimes seriously threaten our society’s democratic principles and affect the entire community,” said Los Angeles County Sheriff Lee Baca. “We had one hate crime in Compton for 2012, but one is too many. Tolerance is the key element of democracy.”

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.

Aguilar and Marquez had been in state custody on unrelated charges. They were transferred to federal custody early this morning and are expected to be arraigned on the indictment this afternoon in U.S. District Court in Los Angeles.

If convicted, Aguilar and Marquez each would face a statutory maximum penalty of 10 years in prison for each of the five civil rights charges alleged in the indictment.

The case against Aguilar and Marquez is the result of an ongoing investigation being conducted by the Federal Bureau of Investigation and the Los Angeles County Sheriff’s Department.

The case is being prosecuted by Assistant U.S. Attorney Reema El-Amamy of the Violent and Organized Crime Section of the U.S. Attorney’s Office and Trial Attorney Saeed Mody of the Civil Rights Division of the Department of Justice.

Michael Farnell and James Farnell, residents of Boca Raton, Fla., were sentenced to prison terms today for income tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today. Michael Farnell and James Farnell were previously indicted on April 19, 2012. Judge William P. Dimitrouleas sentenced Michael Farnell to a term of 18 months in prison and his brother James, Farnell, was sentenced to a term of 42 months. Michael Farnell was remanded into custody.  James Farnell was already in custody.

According to statements made in court and publicly filed documents, Michael Farnell and James Farnell sold stock in a privately held Florida-based technology company between 2004 and 2006 and failed to report the capital gains or pay taxes on the capital gains from those stock sales. In 2004, the U.S. Securities and Exchange Commission (SEC) filed suit against the Farnell brothers for securities violations at another company that they operated the year 2000. A majority of the stock sales at issue in this case violated the injunction from the SEC’s lawsuit. 

According to public documents and statements made in court, the Farnell brothers held their stock in this Florida-based technology company in the name of nominee trusts. The proceeds of the stock sales were deposited into bank accounts titled in the name of these nominee trusts. Neither brother filed tax returns in 2004 and 2005. James Farnell also failed to file a 2006 tax return. As part of the sentencing, Michael Farnell and James Farnell both agreed that they failed to report additional income paid to them by this Florida-based technology in 2001 through 2003.  

Michael Farnell was ordered to pay restitution of $448,128 and James Farnell was ordered to pay restitution of $434,115, both to the IRS. 

Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, and Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, thanked IRS – Criminal Investigation for investigating the case, and also thanked the U.S. Securities and Exchange Commission and the U.S. Attorney’s Office for their assistance with the investigation. The case is being prosecuted by Tax Division Trial Attorney Jed Silversmith and Assistant U.S. Attorney Bertha Mitrani.

Sixteen people were sentenced to prison today for hate crimes arising out of a series of religiously-motivated assaults on practitioners of the Amish religion, announced Thomas E. Perez, the Assistant Attorney General for the Civil Rights Division; Steven M. Dettelbach, the U.S. Attorney for the Northern District of Ohio; and Stephen Anthony, Special Agent in Charge of the FBI – Cleveland Field Office.

The defendants all reside in Bergholz, Ohio, unless otherwise noted. Samuel Mullet, 67, received a 15 year sentence. Johnny S. Mullet, 39; Lester Mullet, 28, of Hammondsville, Ohio; Levi F. Miller, 54; and Eli M. Miller, 33, received seven year sentences. Daniel S. Mullet, 38; Lester Miller, 38; and Emanuel Schrock, 44, received five year sentences. Raymond Miller, 28, of Irondale, Ohio; and Linda Shrock, 45, both received two year sentences. Freeman Burkholder, 32, of Irondale; Anna Miller, 33; Elizabeth A. Miller, 38, of Irondale; Emma J. Miller, 38; Kathryn Miller, 23, of Irondale; and Lovina Miller, 33, all received a sentence of one year and one day.

A jury found the defendants guilty last September following a lengthy trial. The convictions stem from five separate assaults that occurred in four Ohio counties between September and November 2011. In each assault, defendants forcibly removed beard and head hair from practitioners of the Amish faith with whom they had ongoing religious disputes.

The manner in which Amish men wear their beards and Amish women wear their hair are symbols of their faith, according to trial testimony.

Samuel Mullet Sr., Johnny S. Mullet, Daniel S. Mullet, Lester S. Mullet, Levi F. Miller, Eli M. Miller, Emanuel Shrock, Lester Miller, Raymond Miller, Freeman Burkholder, Anna Miller and Linda Shrock were convicted of conspiracy to violate Title 18, U.S. Code, Section 249, also known as the Matthew Shepard-James Byrd Hate Crimes Prevention Act, which prohibits any person from willfully causing bodily injury to any person, or attempting to do so by use of a dangerous weapon, because of the actual or perceived religion of that person, and Title 18, United States Code, Section 1512, which prohibits obstruction of justice, including witness tampering and the destruction or concealment of evidence.

The jury also convicted various groups of defendants with separate assaults, and Samuel Mullet Sr. and Lester Mullet with concealing or attempting to conceal various items of tangible evidence, including a camera and photographs of the attacks.

Samuel Mullet Sr. is the Bishop of the Amish community in Bergholz, while the remaining defendants are all members of that community. Mullet Sr. exerted control over the Bergholz community by taking the wives of other men into his home, and by overseeing various means of disciplining community members, including corporal punishment, according to trial testimony.

As a result of religious disputes with other members of the Ohio Amish community, the defendants planned and carried out a series of assaults on their perceived religious enemies. The assaults involved the use of hired drivers, either by the defendants or the alleged victims, because practitioners of the Amish religion do not operate motor vehicles. The assaults all entailed using scissors and battery-powered clippers to forcibly cut or shave the beard hair of the male victims and the head hair of the female victims, according to trial testimony.

During each assault, the defendants restrained and held down the victims. During some of the assaults, the defendants injured individuals who attempted to intervene to protect or rescue the victims. Following the attacks, some of the defendants participated in discussions about concealing photographs and other evidence of the assaults, according to evidence presented at trial.

“From the time of its founding as a nation, the United States of America has always been a beacon for those who seek religious freedom,” said Assistant Attorney General Perez. “The Department of Justice and the Civil Rights Division will vigorously defend every American’s right to worship in the manner of their choosing, including the members of the defendants’ community. However, violent assaults are not a form of religious expression. The actions of the defendants were designed to terrorize the victims, desecrate sacred symbols of their faith, and interfere with their right to worship. These prosecutions reflect the fact that the Department of Justice will not tolerate religiously motivated violence.”

“From day one, this case has been about the rule of law and defending the right of people to worship in peace. This was never about ‘haircuts.’ These were violent, religiously motivated home invasions that left the victims bloody, bruised and beaten,” said U.S. Attorney Dettlebach. “Our nation was founded on the bedrock principle that everyone is free to worship how they see fit. Violent attempts to attack this most basic freedom have no place in our country.”

“This case is an excellent example of cooperation between the many law enforcement agencies that investigated these crimes, along with the prosecution team from the United States Attorney’s Office and the Department of Justice,” said FBI Special Agent in Charge Anthony. “The FBI is committed to investigating hate crimes, including those perpetrated against people motivated by bias toward religion as in this case, or other areas protected by our civil rights statutes.”

This case was investigated by the Cleveland Division of the FBI and was prosecuted by Assistant U.S. Attorneys Thomas Getz and Bridget M. Brennan of the U.S. Attorney’s Office for the Northern District of Ohio and Deputy Chief Kristy Parker of the Civil Rights Division’s Criminal Section. The prosecutor’s and sheriff’s offices from Holmes, Carroll, Jefferson and Trumbull counties also provided significant assistance in the investigation and prosecution of this case.

The Justice Department reached a settlement agreement today with Avant Healthcare Professionals LLC, a healthcare staffing company based in Casselberry, Fla. , resolving allegations that the company posted discriminatory job advertisements on the internet.

According to the department’s investigation, hundreds of Avant Healthcare Professionals’ internet-based job postings contained discriminatory language, impermissibly preferring foreign-trained individuals seeking permanent residence or H-1B visa sponsorship over U.S. workers. The Immigration and Nationality Act (INA) prohibits employers from discriminating on the basis of citizenship or immigration status unless required by law, regulation or government contract. None of those limited exceptions applied to Avant’s recruitment efforts.

Under the terms of the settlement agreement, Avant has agreed to pay $27,750 in civil penalties, to change its internal policies and written procedures to incorporate the INA’s anti-discrimination protections, and to be subject to reporting and compliance monitoring requirements for a period of three years.

“Federal law protects authorized U.S. workers from illegal and discriminatory preferences,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Employers have a statutory obligation to monitor their online job postings to ensure that they do not violate the anti-discrimination provision of Immigration and Nationality Act.”

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

WASHINGTON – The Department of Justice announced today that it has reached a settlement with Holtzbrinck Publishers LLC, which does business as Macmillan, and will continue to litigate against Apple Inc. for conspiring with Macmillan and four of the other largest U.S. book publishers to raise e-book prices to consumers.

Today’s proposed settlement was filed in the U.S. District Court for the Southern District of New York.  If approved by the court, the settlement will resolve the department’s competitive concerns involving Macmillan.  The department’s Antitrust Division previously settled its claims against four book publishers–Hachette Book Group Inc., HarperCollins Publishers L.L.C., Penguin Group (USA) Inc. and Simon & Schuster Inc. 

 
On April 11, 2012, the department filed a lawsuit against Apple and the five publishers alleging they conspired to eliminate retail price competition, resulting in consumers paying millions of dollars more for their e-books.  The settlement with Hachette, HarperCollins and Simon & Schuster was approved by the court in September 2012.  The public comment period on the department’s settlement with Penguin will close on March 5, 2013.  The trial against Apple is scheduled to begin in June 2013. 

“As a result of today’s settlement, Macmillan has agreed to immediately allow retailers to lower the prices consumers pay for Macmillan’s e-books,” said Jamillia Ferris, Chief of Staff and Counsel at the Department of Justice’s Antitrust Division.  “Just as consumers are already paying lower prices for the e-book versions of many of Hachette’s, HarperCollins’ and Simon & Schuster’s new releases and best sellers, we expect the prices of many of Macmillan’s e-books will also decline.”

According to the complaint, the five publishers and Apple were unhappy that competition among e-book sellers had reduced e-book prices and the retail profit margins of the book sellers to levels they thought were too low.  To address these concerns, the department said the companies worked together to raise retail e-book prices and eliminate price competition, substantially increasing prices paid by consumers.  Before the companies began their conspiracy, retailers regularly sold e-book versions of new releases and bestsellers for, as described by one of the publisher’s CEO, the “wretched $9.99 price point.”  As a result of the conspiracy, consumers were typically forced to pay $12.99, $14.99 or more for the most sought after e-books, the department said.

Under the proposed settlement agreement, Macmillan will immediately lift restrictions it has imposed on discounting and other promotions by e-book retailers and will be prohibited until December 2014 from entering into new agreements with similar restrictions.  The proposed settlement agreement also will impose a strong antitrust compliance program on Macmillan, including requirements that it provide advance notification to the department of any e-book ventures it plans to undertake jointly with other publishers and regularly report to the department on any communications it has with other publishers.  Also for five years, Macmillan will be forbidden from agreeing to any kind of most favored nation (MFN) provision that could undermine the effectiveness of the settlement.  

Macmillan has its principal place of business in New York City.  It publishes e-books and print books through publishers such as Farrar, Straus and Giroux and St. Martin’s Press. Verlagsgruppe Georg von Holtzbrinck GmbH owns Holtzbrinck Publishers LLC, which does business as Macmillan, and has its principal place of business in Stuttgart, Germany.

 
Hachette Book Group USA has its principal place of business in New York City.  It publishes e-books and print books through its publishers such as Little, Brown and Company and Grand Central Publishing. 

HarperCollins Publishers L.L.C. has its principal place of business in New York City.  It publishes e-books and print books through publishers such as Harper and William Morrow.

Penguin Group (USA) Inc. has its principal place of business in New York City.  It publishes e-books and print books through publishers such as The Viking press and Gotham Books.  Penguin Group (USA) Inc. is the U.S. subsidiary of The Penguin Group, a division of Pearson plc, which has its principal place of business in London.

Simon & Schuster Inc. has its principal place of business in New York City.  It publishes e-books and print books through publishers such as Free Press and Touchstone.

Apple Inc. has its principal place of business in Cupertino, Calif.  Among many other businesses, Apple distributes e-books through its iBookstore.

The proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register, consistent with the requirements of the Antitrust Procedures and Penalties Act.  Any person may submit written comments concerning the proposed settlement within 60-days of its publication to John R. Read, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., 4th Floor, Washington, D.C. 20530.  These comments will be published either in the Federal Register or, with the permission of the court, will be posted electronically on the department’s website.  At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

A federal district judge in Florence, S.C., permanently barred Rachel D. Watson, of Florence, and Susann Allen of Darlington, S.C., from preparing federal income tax returns for others, the Justice Department announced today. The injunctions bar Watson and Allen from preparing returns for others and require them to send copies of the injunction to any employers for whom they prepared returns since Jan. 1, 2008.

According to the government’s complaint in the case, Watson and Allen prepared federal income tax returns at a number of businesses in South Carolina including, most recently, Fludd’s Express Tax Service and Gold Valley Pawn. The complaint alleged that Watson and Allen prepared returns that unlawfully claimed the Earned Income Tax Credit by reporting fictitious Schedule C businesses or business income or fictitious dependents. The complaint also alleged that Watson and Allen fabricated or inflated deductions. The complaint alleged that these activities led to their clients filing returns which unlawfully understated income tax liabilities and overstated refunds. Watson and Allen consented to the entry of the injunctions.

In the past 10 years the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website.

Related Materials:

United States v. Susann Allen, et al.

Permanent Injunction By Stipulation and Consent (Watson) (PDF)
Permanent Injunction By Stipulation and Consent (Allen) (PDF)

Granite Construction Company, a California-based construction company specializing in roads, tunnels, bridges, airports and other infrastructure-related projects, reached a settlement with the United States following an investigation of alleged false claims in connection with federal construction projects across the country, the Justice Department announced today. Granite has agreed to pay the United States $367,500.

The settlement resolves claims that Granite overcharged the government on certain federal construction projects funded by the Department of Transportation (DOT) and the Army Corps of Engineers between 2006 and 2008. Specifically, in certain instances, Granite sought price increases in the form of change orders and requests for equitable adjustment which were inflated because the general liability and workman’s compensation insurance rates used to support the adjustments included added amounts or “cushions” that were not actually incurred by the company and therefore should not have been charged to the federal government. Granite disclosed the potential overcharges to the Justice Department.

“Federal contractors will be held accountable for their billing practices,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Department of Justice’s Civil Division. “This settlement is an example of the department’s commitment to ensuring that contractors deal squarely and honestly with the government at all times.”

“To prevent and detect potential violations of law, we encourage federal contractors to apply consistent oversight to their operations throughout all phases of contracting,” said DOT Office of Inspector General Special Agent in Charge Hank Smedley.  “This settlement is an example of how we work with our law enforcement colleagues to protect taxpayer dollars.”

The investigation and settlement was the result of a coordinated effort by the Civil Division of the Department of Justice and the Department of Transportation Office of Inspector General. The claims settled by this agreement are allegations only, and there has been no determination of liability.

Antoinette Djonret was sentenced today to 144 months in prison for her involvement in two separate tax fraud schemes, the Justice Department and the Internal Revenue Service (IRS) announced. She was also ordered to pay $1,291,658 in restitution. In October 2012, Djonret had pleaded guilty to charges in the two cases. In the first case, Djonret pleaded guilty to charges of conspiracy and aggravated identity theft. She pleaded guilty to filing false tax returns in the second case.

According to court documents from the first case, between October 2009 and April 2012, Djonret and her co-conspirators used stolen identities to file more than 1,000 false tax returns that fraudulently claimed over $1.7 million in tax refunds. Djonret and her co-conspirators filed most of these tax returns from her residence in Montgomery, Ala.

According to court records, Djonret orchestrated this scheme. She obtained stolen identities from multiple sources, including Alabama state databases. She also established an elaborate network for laundering the refund money by recruiting a number of individuals to purchase prepaid debit cards for use in the scheme. The individuals Djonret recruited to launder the refund proceeds recruited other individuals to purchase the debit cards. Djonret and her co-conspirators used the debit cards onto which the fraudulent tax refunds were placed. Three of the co-conspirators she recruited have also pleaded guilty and are currently awaiting sentencing.

Documents introduced as part of the sentencing established that Djonret was also involved in a separate tax fraud scheme. Prior to beginning her identity theft scheme, Djonret worked at a tax return preparation business called Premier Tax, where she prepared false tax returns for clients of the business.

“Sophisticated Stolen Identity Refund Fraud schemes have the potential to harm many taxpayers and put large amounts of public money at risk,” said Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division. “Sentences like the one handed down today are a warning to criminal enterprises that there are severe penalties for committing these types of tax crimes.”

“These identity thieves are becoming more devious, creative, and conniving,” said George L. Beck, Jr., U.S. Attorney for the Middle District of Alabama. “They steal our identities, steal government money, and prey upon our citizens. However, my office is unrelenting. These criminals must be and will continue to be prosecuted in order to obtain justice for our victims from the Middle District of Alabama as well as justice for our nation.” 

“Today’s announcement exemplifies IRS Special Agents’ intense focus on the rigorous pursuit of identity theft and refund fraud,” said Richard Weber, Chief IRS Criminal Investigation. “Djonret perpetuated an elaborate scheme driven by insatiable greed and a blatant disregard for the tremendous damage inflicted on innocent victims. Be assured that IRS Criminal Investigation, together with our partners at the U.S. Attorney’s Office, will hold those who engage in similar behavior fully accountable.”

Assistant Attorney General Keneally commended the efforts of Special Agents of IRS - Criminal Investigation, who investigated the case, and Tax Division Trial attorneys Jason H. Poole, Justin Gelfand and Michael Boteler, and Assistant U.S. Attorney Jared Morris, who prosecuted the two cases.

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

St. Joseph’s Medical Center, a hospital located in Towson, Md., has reached a settlement with the United States to pay $4.9 million in connection with its submission of false claims to Medicare, Medicaid and other federal healthcare programs, the Justice Department announced today.

This settlement resolves the hospital’s civil liability to the United States under the False Claims Act for the hospital’s disclosure that from 2007-2009 it engaged in a practice of admitting patients to the hospital unnecessarily. In particular, the hospital disclosed that it admitted patients for short stays – typically one or two days – that were not warranted by the patient’s medical condition, and thereby generated a larger reimbursement than was proper for each patient. Of the $4.9 million to be paid by St. Joseph’s, $4.6 million will go the United States, and $152,406 will go to the state of Maryland, which is also a party to the agreement.

“The improper admission of patients for the purpose of obtaining increased reimbursement is a significant drain on the resources of federal and state healthcare programs,” said Stuart F. Delery, Principal Deputy Assistant Attorney General of the Justice Department’s Civil Division. “This recovery reflects the Department’s continuing efforts to safeguard federal funds.”

This resolution is part of the government's emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $10.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14 billion.

Mr. Delery thanked the Department of Health and Human Services, Office of the Inspector General; the U.S. Attorney’s Office for the District of Maryland; and the Justice Department’s Commercial Litigation Branch, for their resolution of this matter.

The United States has asked a federal court to shut down a tax-preparation office in Miami, the Justice Department announced today. The civil injunction suit, filed in U.S. District Court for the Southern District of Florida, alleges that Olivia Greene and Walter Jefferson of Miami prepare returns through Angel Tax Service with falsely-claimed credits, including fuel tax credits, the earned-income tax credit, the work pay credit and educational credits.

According to the complaint, in order to conceal her role in this scheme, Greene prepared returns using an alias, Olivia Mayo. The complaint alleges that after the Internal Revenue Service (IRS) rejected Greene’s application for a preparer ID number, she hired other persons to obtain ID numbers in their names for Greene to use.

The IRS lists return-preparer fraud and false fuel tax credits as two of its “Dirty Dozen” tax scams .

In the past decade the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website .

Related Materials:

 United States v. Olivia Greene, etc., et al.
Complaint and Request for Injunctive Relief (PDF)

Ashu Bhandari, the former president and CEO of GEM Manufacturing LLC, a U.S. Virgin Islands-based company, was sentenced Thursday in federal court in St. Thomas, U.S.V.I., for felony customs violations for his role in a scheme to illegally import protected black coral into the United States, the Department of Justice announced. Bhandari is the last defendant to be sentenced as the result of a far reaching investigation into the illegal trade in black coral. The scheme cost Bhandari’s company, GEM Manufacturing, millions of dollars in financial penalties and sent two of his trading partners to prison.

At today’s hearing, the court imposed a criminal fine of $918,950 and sentenced Bhandari to one month in jail, to be followed by one month of home confinement and one year of supervised release, during which Bhandari would be required to complete 300 hours of community service and be banned from any business venture involving coral or coral products. In addition to the fine, Bhandari will be required to pay $229,687 to the University of the Virgin Islands to be used for community service projects designed to research and protect black corals.  The court recognized that Bhandari’s sentence was based, in part, on his cooperation with federal investigators in related illicit coral trafficking cases.

On Nov. 7, 2012, Ashu Bhandari pleaded guilty to one felony count of false classification of goods for his efforts to conceal his illegal importation of internationally protected black coral in 2009.  GEM was in the business of manufacturing high-end jewelry and sculpture products that utilize black coral. During his term as CEO, Bhandari was responsible for ensuring the continued supply of raw black coral for the company. Black corals are considered important habitat for the deep sea marine environment and are protected by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Each of the species of black coral is listed in Appendix II of CITES and is subject to strict trade regulations. 

Bhandari admitted that by 2008, he learned that GEM’s Taiwanese suppliers of black coral could not obtain legitimate CITES certificates. In spite of this knowledge, Bhandari made a “business decision to go forward” with the Taiwanese suppliers. The Taiwanese suppliers would label the coral shipments as “plastic” in order to fool customs authorities in Hong Kong and the United States.  Bhandari admitted that by 2009 he knew that the shipments he arranged on behalf of GEM were coming into St. Thomas falsely labeled.

 “Mr. Bhandari actively participated in an illegal scheme to traffic in protected black coral, a trade that has helped deplete a world resource that serves as essential habitat for marine biodiversity,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division at the Department of Justice. “As this case clearly shows, the Department of Justice will continue to aggressively prosecute those who violate U.S. law by illegally trafficking in protected species.” 

“The effective stewardship of our natural resources by vigorously enforcing environmental laws is a priority of the Department of Justice,” said Ronald W. Sharpe, U.S. Attorney for the District of the Virgin Islands. “This prosecution, like many cases involving the investigation and prosecution of those who set out to exploit our precious natural resources, was complex, time consuming and required the expertise of multiple law enforcement agencies. The dedication and cooperative efforts of the various law enforcement agencies involved in the successful prosecution of this matter are to be commended.”

“This investigation is the culmination of a three year joint investigation led by U.S. Fish and Wildlife Service’s Office of Law Enforcement in partnership with the National Oceanic and Atmospheric Administration, U.S. Immigration and Customs Enforcement-Homeland Security Investigations, U.S. Attorney’s Office, the U.S. Justice Department’s Environment and Natural Resources Division and U.S. Customs and Border Protection,” said U.S. Fish and Wildlife Service Resident Agent in Charge David Pharo. “This investigation serves as a great example of multiple agencies, working together to stem the tide of exploitation of internationally protected species originating in marine environments. This investigation demonstrates our commitment to combat illegal international wildlife trafficking and bring justice to those that exploit protected marine resources for personal gain no matter where they are located.”

 “Illegal importation and exportation of commercial quantities of CITES-protected corals is one of our Division's high priorities,” said Otha Easley, Acting Special Agent in Charge for the National Oceanic and Atmospheric Administration’s Office of Law Enforcement's Southeast Division. “Effective enforcement of CITES helps ensure that collection of these species is sustainable and that their survival in the wild is assured.”

“This sentence sends a clear message to black coral traffickers that we and our federal law enforcement partners are in the business of preventing illegal wildlife trade,” said Angel Melendez, Acting Special Agent in charge of HSI San Juan and U.S.V.I. “We will continue to identify and apprehend those who exploit protected species for commercial gain.”

Black coral is a precious coral that can be polished to a high sheen, worked into artistic sculptures and used in inlaid jewelry. Black coral is typically found in deep waters and many species have long life spans and are slow-growing.  Using deep sea submersibles, scientists have observed that fish and invertebrates tend to accumulate around the black coral colonies. Thus, black coral communities serve important habitat functions in the mesophotic and deepwater zones.  In the last few decades, pressures from overharvesting, due in part to the wider availability of scuba gear and the introduction of invasive species have threatened this group of coral.  Recent seizures of illegal black coral around the world have led many to believe that black coral poaching is on the rise.

On Oct. 26, 2011, in the related case of U.S. v. GEM Manufacturing LLC, Case No. 2011-19 (D. Virgin Islands), GEM was sentenced to criminal financial penalties and forfeitures exceeding $4.47 million and three and a half years of probation that included a 10-point compliance plan that incorporated an auditing, tracking and inventory control program.  GEM was also banned from doing business with its former coral supplier, Peng Chia Enterprise Co. Ltd. and its management team of Ivan and Gloria Chu.  Ashu Bhandari was the individual known as “Co-conspirator X” in the related case of U.S. v. Gloria and Ivan Chu, Case No. 2010-003 (D. Virgin Islands).   In January 2010, federal agents arrested the Chus as part of a sting operation in Las Vegas.  The Chus were subsequently indicted in 2010 for illegally providing black coral to GEM.  On June 23, 2010, Ivan Chu was sentenced to serve 30 months in prison and pay a $12,500 fine.  Gloria Chu was sentenced to serve 20 months in prison and pay a $12,500 fine.

The case, developed as a result of Operation “Black Gold”, was investigated by agents of the U.S. Fish and Wildlife Service (FWS) and NOAA with support from U.S. Immigration and Customs Enforcement-Homeland Security Investigations and U.S. Customs and Border Protection.  Analysis of coral samples by the FWS’s National Forensics Laboratory in Ashland, Ore., was critical to the investigation. The case was prosecuted by Christopher Hale of the Justice Department’s Environmental Crimes Section, Environment and Natural Resources Division and Nelson Jones of the U.S. Attorney’s Office in the U.S. Virgin Islands.

Everett Dwayne Avery, 26, of Detroit, was sentenced today by U.S. District Judge John Corbett O’Meara after pleading guilty to committing a hate crime by assaulting a man because the man was gay. Avery was sentenced to serve 18 months in prison to be followed by three years of supervised release.

The assault occurred on March, 7, 2011, while Avery and the victim were at a convenience store in Detroit. Avery used anti-gay slurs toward the victim as Avery and the victim waited in line in the convenience store. Shortly after the first slurs, while still in the store, Avery used another anti-gay slur and punched the victim in the face, fracturing the victim’s eye socket. Avery pled guilty to violating the federal Hate Crimes Protection Act on Aug. 29, 2012.

"Hate-fueled incidents like this one have no place in a civilized society," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Justice Department is committed to using all the tools in our law enforcement arsenal, including the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act, to prosecute acts motivated by hate."

“Congress has made it clear that it is a crime to assault people solely on the basis of their sexual orientation.  Prosecutions under this law are important to ensure that all people in our community know that they have the full protection of the law,” said U.S. Attorney for the Eastern District of Michigan Barbara McQuade.

Special Agent in Charge Foley stated, "Hate Crimes have no place in a civilized society. We are a nation of laws and our laws embrace diversity and differences. The law does not tolerate the type of hate demonstrated in this matter and the FBI will investigate and put forth for prosecution a violation of that law."

The case was investigated by the FBI. The case was prosecuted by Assistant U.S. Attorney Pamela Thompson from the U.S. Attorney’s Office, and Trial Attorney Sanjay Patel from the Civil Rights Division of the U.S. Department of Justice.

RBS Securities Japan Limited, a wholly owned subsidiary of The Royal Bank of Scotland plc (RBS), has agreed to plead guilty to felony wire fraud and admit its role in manipulating the Japanese Yen London Interbank Offered Rate (LIBOR), a leading benchmark used in financial products and transactions around the world, Assistant Attorney General Lanny Breuer of the Justice Department’s Criminal Division, Deputy Assistant Attorney General Scott D. Hammond of the Justice Department’s Antitrust Division and Special Agent in Charge Timothy A. Gallagher of the FBI’s Washington Field Office Criminal Division announced today. 

A criminal information, being filed in U.S. District Court for the District of Connecticut, charges RBS Securities Japan with one count of wire fraud for engaging in a scheme to defraud counterparties to interest rate derivatives trades by secretly manipulating Yen LIBOR benchmark interest rates.  RBS Securities Japan has signed a plea agreement with the government admitting its criminal conduct, and has agreed to pay a $50 million fine.

In addition, the government is filing a criminal information in the District of Connecticut which charges parent company RBS as part of a deferred prosecution agreement (DPA).  The information charges RBS with wire fraud for its role in manipulating LIBOR benchmark interest rates, and with participation in a price-fixing conspiracy in violation of the Sherman Act by rigging the Yen LIBOR benchmark interest rate with other banks.  The DPA requires the bank to admit and accept responsibility for its misconduct as described in an extensive statement of facts, to continue cooperating with the Justice Department in its ongoing investigation and to pay a $100 million penalty beyond the fine imposed upon RBS Securities Japan.  

Together with approximately $462 million in regulatory penalties and disgorgement – $325 million as a result of a Commodity Futures Trading Commission (CFTC) action and approximately $137 million as a result of a U.K. Financial Services Authority (FSA) action – the Justice Department’s criminal penalties bring the total amount of the resolution with RBS and RBS Securities Japan to approximately $612 million.

“As we have done with Barclays and UBS, we are today holding RBS accountable for a stunning abuse of trust,” said Assistant Attorney General Breuer.  “The bank has admitted to manipulating one of the cornerstone benchmark interest rates in our global financial system, and its Japanese subsidiary has agreed to plead guilty to felony wire fraud.  The department’s ongoing investigation has now yielded two guilty pleas by significant financial institutions.  These are extraordinary results, and our investigation is far from finished.  Our message is clear:  no financial institution is above the law.”

“RBS secretly rigged the benchmark interest rates upon which many transactions and consumer financial products are based,” said Deputy Assistant Attorney General Hammond. “RBS’ conduct not only harmed its unsuspecting counterparties, it undermined the integrity and the competitiveness of financial markets everywhere.”

“The manipulation of LIBOR by RBS and its subsidiary directly affected the rates referenced by financial products held by and on behalf of American companies and investors. The FBI works to uncover wrongdoing such as this in order to protect American consumers and the integrity of financial markets,” said Special Agent in Charge Gallagher.  “Today’s announcement is the result of the hard work of the FBI special agents, financial analysts, and forensic accountants as well as the prosecutors who dedicated significant time and resources to investigating this case.”

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

LIBOR, published by the British Bankers’ Association (BBA), a trade association based in London, is calculated for 10 currencies at 15 borrowing periods, known as maturities, ranging from overnight to one year.  The LIBOR for a given currency at a specific maturity is the result of a calculation based upon submissions from a panel of banks for that currency (the Contributor Panel) selected by the BBA.  From at least 2006 through 2010, RBS has been a member of the Contributor Panel for a number of currencies, including Yen LIBOR and Swiss Franc LIBOR, which are the focus of the plea agreement and DPA.

According to the DPA, at various times from at least 2006 through 2010, certain RBS Yen and Swiss Franc derivatives traders – whose compensation was directly connected to their success in trading financial products tied to LIBOR – engaged in efforts to move LIBOR in a direction favorable to their trading positions.  Through these schemes, RBS allegedly defrauded counterparties who were unaware of the manipulation affecting financial products referencing Yen and Swiss Franc LIBOR.  The alleged schemes included hundreds of instances in which RBS employees sought to influence LIBOR submissions in a manner favorable to their trading positions in two principal ways: internally at RBS through requests by derivatives traders for Yen and Swiss Franc LIBOR submissions, and externally through an agreement with a separately charged derivatives trader to request Yen LIBOR submissions.  The trader, Tom Alexander William Hayes, was formerly employed by a Japanese subsidiary of another Contributor Panel bank, UBS AG (UBS).

According to the DPA, RBS employees engaged in this conduct through electronic communications, which included both emails and electronic chats.  For example, in an electronic chat on March 16, 2009, an RBS Swiss Franc derivatives trader, (Trader-7), sought to benefit his trading book by asking the RBS LIBOR submitter (Submitter-1), “can we pls get a very very very low 3m [3 month] and 6m [6 month] fix today [please]” because “we have rather large fixings!”  Submitter-1 responded, “perfect, if that’s what u want.”  After thanking Submitter-1, Trader-7 informed Submitter-1 that “from tomorrow . . .  we need them thru the roof!!!!!” 

In another electronic chat on May 20, 2009, involving an RBS Yen derivatives trader, (“Trader-2”), Submitter-1, and others, the following exchange occurred:

 Trader-2: high 3s and low 6s pls [Submitter-1]

 Submitter-1: no problems

 Trader-2: grazias amigo . . . where will you lower 6s to?

 Submitter-1: 70

That day, RBS’s 6-month Yen LIBOR submission dropped two basis points from .72 to .70, before reverting to .72 the following two days.
 
RBS employees also allegedly furthered their collusive scheme with Hayes to fix the price of derivative instruments tied to Yen LIBOR through electronic communications.  For instance, in an electronic chat on April 20, 2007, Hayes requested that an RBS derivatives trader, (“Trader-3”), ask Submitter-1 for a low 3 month Yen LIBOR submission: 

Hayes: . . . if you could ask your guys to keep 3m low wd be massive help as long as it doesn’t interfere with your stuff . . . tx in adavance.

Approximately 30 minutes later, Hayes and Trader-3 had the following exchange:

Hayes:   mate did you manage to spk to your cash boys?

Trader-3:  yes u owe me they are going 65 and 71

Hayes:  thx mate yes i do . . . in fact i owe you big time

Approximately 45 minutes later, Hayes sent the following message to Trader-3:

Hayes:  mater they set 64! . . . thats beyond the call of duty!

* * * *
 Trader-3: no worries

By entering into a DPA with RBS, the Justice Department credits RBS’ cooperation in disclosing LIBOR misconduct within the financial institution, recognizes the significant remedial measures undertaken by RBS’ management to enhance internal controls, and acknowledges the additional reporting, disclosure and cooperation requirements undertaken by the bank.  The DPA does not prevent the Justice Department from prosecuting individuals for related conduct. 

The pending charges against Hayes are merely accusations and he is considered innocent unless and until proven guilty.

The prosecution of RBS is being handled by Deputy Chief Patrick Stokes and Trial Attorney Gary Winters of the Criminal Division’s Fraud Section, and New York Field Office Assistant Chief Elizabeth Prewitt and Trial Attorneys Eric Schleef and Richard Powers of the Antitrust Division.  Deputy Chiefs Daniel Braun and William Stellmach, Assistant Chief Rebecca Rohr and Trial Attorneys Luke Marsh and Alex Berlin of the Criminal Division’s Fraud Section, Trial Attorneys Daniel Tracer and Kristina Srica of the Antitrust Division, Jeremy Verlinda of the Antitrust Division’s Economic Analysis Group, Assistant U.S. Attorneys Eric Glover and Liam Brennan of the U.S. Attorney’s Office for the District of Connecticut and the Criminal Division’s Office of International Affairs have also provided valuable assistance in this matter.  The investigation is being conducted by special agents, forensic accountants and intelligence analysts of the FBI’s Washington Field Office. 
 
The investigation leading to these cases has required, and has greatly benefited from, a diligent and wide-ranging cooperative effort among various enforcement agencies both in the United States and abroad.  The Justice Department acknowledges and expresses its deep appreciation for this assistance.  In particular, the CFTC’s Division of Enforcement referred this matter to the department and, along with the FSA, has played a major role in the investigation.  The Securities and Exchange Commission has also played a significant role in the LIBOR series of investigations.  Various agencies and enforcement authorities from other nations are also participating in different aspects of the broader investigation relating to LIBOR and other benchmark rates, and the department is grateful for their cooperation and assistance.
 
This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes. For more information about the task force visit: www.stopfraud.gov.

Related Materials:

Deferred Prosecution Agreement
Plea Agreement and Statement of Facts

The Justice Department announced today that, as part of its Barrier-Free Health Care Initiative, it has reached a settlement with Castlewood Treatment Center LLC, of St. Louis, Mo., under the Americans with Disabilities Act (ADA).  The settlement resolves allegations that Castlewood Treatment Center violated the ADA by refusing to treat a woman for a serious eating disorder because she has HIV.  This is the second settlement addressing HIV discrimination by a medical provider reached by the Justice Department in two weeks. 

The Justice Department found that Castlewood refused to treat Susan Gibson because of her HIV, despite Castlewood’s determination that she was qualified to receive counseling treatment for her eating disorder, and despite advice from its own medical staff that they were able to treat someone with HIV at Castlewood.  The department also determined that for months Castlewood staff told Gibson that she was on a waiting list for the program, even though they had no intention to admit her into the program.  In the meantime, Gibson’s condition worsened and her health declined.  Castlewood’s actions delayed Gibson from receiving appropriate medical treatment for up to seven months.  Gibson’s complaint was brought to the Justice Department’s attention by the American Civil Liberties Union, LGBT & AIDS Project.

“Excluding a person from necessary medical treatment solely because of HIV is unconscionable,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “The Civil Rights Division takes HIV discrimination in any form seriously, and will not allow for the marginalization of those living with HIV.” 

Under the settlement, the Castlewood Treatment Center must pay $115,000 to Gibson and $25,000 in civil penalties.  In addition, Castlewood must train its staff on the ADA and develop and implement an anti-discrimination policy.  The department will monitor Castlewood’s compliance for four years.

Last week the department announced a similar agreement with the Fayetteville Pain Center to address HIV discrimination.  Both settlements are part of the Department of Justice’s Barrier-Free Health Care Initiative, a partnership of the Civil Rights Division and U.S. Attorney’s offices across the nation, to target enforcement efforts on a critical area for individuals with disabilities.  The initiative, launched on the 22nd anniversary of the ADA in July 2012, includes the participation of 40 U.S. Attorney’s offices.  The division expects the initiative to address access to health care for people with HIV and those with hearing disabilities, as well as physical access to medical facilities.  In 2012, the division and U.S. Attorneys offices reached two settlement agreements regarding access to medical care for people with HIV and four settlements regarding access to medical care for people with hearing disabilities.  For more information on the Barrier Free Health Care Initiative visit http://www.ada.gov/usao-agreements.htm.

For more information on the ADA and HIV visit www.ada.gov/aids.   Those interested in finding out more about these settlements or the obligations of public accommodations under the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov.  ADA complaints may be filed by email to [email protected].

Related Materials:

Castlewood Settlement Agreement

Louis Daniel Smith, 42, and Karis Delong, 38, both of Ashland, Ore., were charged with defrauding regulators and suppliers in a scheme to manufacture and sell industrial bleach as a cure for numerous illnesses, including arthritis, cancer, and the seasonal flu. Also charged were Chris Olson, 49, and Tammy Olson, 50, of Nine Mile Falls, Wash. A federal grand jury returned an indictment, unsealed yesterday, charging Smith, Delong and Tammy Olson with one count of conspiracy, four counts of interstate sales of misbranded drugs, and one count of smuggling. The grand jury charged Chris Olson with one count of conspiracy, one count of the interstate sale of a misbranded drug and one count of smuggling.

The indictment alleges that Smith and Delong operated a business called “Project GreenLife” (PGL) from 2004 to 2011. PGL provided various health products for sale over the internet. According to the indictment, Smith and Delong arranged the manufacture and sale of the “Miracle Mineral Supplement” (MMS), a mixture of Sodium Chlorite and water. Sodium chlorite is not meant for human consumption. Suppliers of the chemical include a warning sheet with the chemical that states that it is harmful if swallowed.

According to the indictment, PGL provided consumers directions to combine MMS with citric acid to create Chlorine Dioxide, and the instructions told consumers to drink this mixture to cure numerous illnesses. Chlorine Dioxide is a potent agent used to bleach textiles, among other industrial applications. In humans, Chlorine Dioxide is a severe respiratory and eye irritant that can cause nausea, diarrhea and dehydration.

As part of the scheme to manufacture MMS, the indictment alleges that Smith, Delong, and others smuggled sodium chlorite into the United States from Canada using fraudulent invoices to hide the true end use of the product. In these invoices, according to the indictment, they falsely claimed that the ingredients they were purchasing for MMS were to be used in wastewater treatment facilities.

According to the charging documents, Smith and Delong were the managing members of PGL Smith co-founded the company, and Delong frequently handled financial transactions for the company and recruited friends and family to participate in the business. The indictment alleges that Smith and Delong paid Tammy Olson to handle all customer inquiries regarding the product. It is alleged that Tammy Olson continued selling MMS on her own website after federal agents shut down the Project GreenLife website and production facilities.

The indictment also alleges that Smith and Delong paid Chris Olson to clandestinely manufacture MMS in a building on his property after regulators from the Food and Drug Administration (FDA) inspected PGL’s original manufacture and shipping locations.

“The Department of Justice is committed to protecting the health and safety of people with cancer and other serious medical conditions,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “Our most vulnerable citizens need real medicine – not dangerous chemicals peddled by modern-day snake oil salesmen.”

Charges contained in the indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty it is to determine guilt or innocence.

The case was investigated by agents of the FDA’s Office of Criminal Investigations and the U.S. Postal Inspection Service. The case is being prosecuted by Christopher E. Parisi, a Trial Attorney at the Department of Justice’s Consumer Protection Branch in Washington, D.C.

Five individuals and five corporations have been charged in an indictment unsealed today in Brooklyn, N.Y., for allegedly importing hazardous and counterfeit toys from China for sale in the United States, announced Assistant Attorney General Lanny Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of New York Loretta E. Lynch; Special Agent in Charge of Homeland Security Investigations (HSI) in New York James T. Hayes Jr.; Robert E. Perez, New York Field Operations Director of Customs and Border Protection (CBP); Chairman Inez Tenenbaum of the Consumer Product Safety Commission (CPSC); and Commissioner Raymond W. Kelly of the New York City Police Department (NYPD).
 
The 24-count indictment charges Chenglan Hu, 51, Hua Fei Zhang, 52, and Xiu Lan Zhang, 60, all Chinese nationals and residents of Queens, N.Y., and Guan Jun Zhang, 29, and Jun Wu Zhang, 28, both naturalized citizens and Queens residents, along with their closely held companies Family Product USA Inc., H.M. Import USA Corp., ZCY Trading Corp., Zone Import Corp. and ZY Wholesale Inc., with importing and trafficking hazardous toys in violation of the Consumer Product Safety Act (CPSA) and toys bearing copyright-infringing images and counterfeit trademarks, smuggling, money laundering and structuring.
 
“The defendants are accused of importing and selling toys that posed significant health hazards to children or were the product of blatant intellectual property theft,” said Assistant Attorney General Breuer. “They allegedly retooled their operations many times in order to avoid detection, and despite repeated citations by the authorities, they continued to peddle counterfeit toys featuring Dora the Explorer, SpongeBob SquarePants and other popular children’s characters.  Today’s actions reflect a Justice Department focused on ensuring that consumers receive safe and legitimate goods.”
 
“For years, the defendants sought to enrich themselves by importing and selling dangerous and counterfeit children’s toys without regard for the law or the health of our children,” said U.S. Attorney Lynch.  “Profits from the counterfeit items, as well as toys riddled with lead and choking hazards, went to provide the defendants with luxury cars.  We stand committed to protecting the residents of our communities from those who would engage in such conduct.”  
 
The five individual defendants were arrested this morning, and a federal task force comprising HSI agents, other federal agents and NYPD officers, aided by CBP officers and CPSC investigators, executed four search warrants and nine seizure warrants.  The agents, officers and investigators searched the defendants’ warehouse, two residences and an email account.  In addition, three luxury vehicles, including a Porsche and Lexus, three personal bank accounts and three corporate accounts were seized.  The agents also filed lis pendens on two of the defendants’ properties in Queens, N.Y.  The defendants’ initial appearances are scheduled this afternoon before U.S. Magistrate Judge Ramon E. Reyes Jr. in the Eastern District of New York.
 
The indictment charges that from July 2005 through January 2013 the individual defendants used their companies, the corporate defendants, to import toys from China that they sold, both wholesale and retail, from a storefront and warehouse in Ridgewood, N.Y., and other locations in Brooklyn and Queens.

According to the indictment, the defendants’ companies had children’s toys seized by CBP from shipping containers entering the United States from China on 33 separate occasions.  Seventeen of the 33 seizures were of violative toys – toys prohibited from import into and distribution in the United States, under laws and regulations enforced by the CPSC, because of excessive lead content, excessive phthalate levels, small parts that presented choking, aspiration or ingestion hazards, and easily accessible battery compartments.  Sixteen of the 33 seizures were of toys bearing copyright-infringing images and counterfeit trademarks, including knockoff versions of toys featuring a wide variety of popular children’s characters, such as Winnie the Pooh, Dora the Explorer, SpongeBob SquarePants, Betty Boop, Teenage Mutant Ninja Turtles, Power Rangers, Spiderman, Tweety, Mickey Mouse, Pokémon, as well as those from movies, such as the “Cars,” “Toy Story” and “High School Musical.”

The indictment charges that following each of the 33 seizures, the violator toy company was served written notice by CBP detailing the reason for the seizure, and a representative of the company signed a release form acknowledging the seizure and abandoning the seized goods.  Additionally, the violator company and its principal were served written notice by CPSC of the specific safety violations of the toys, and each time a representative of the company signed a release form acknowledging the seizure and abandoning the seized goods. 

Due to the number and volume of the seizures, the individual defendants allegedly shifted their use of the companies and alternated formal roles, in order to continue importing and distributing violative and infringing toys.  Each time the number of seizures accumulated for one company, the individual defendants allegedly formed a new toy company to continue importing the violative and infringing toys.

“The people and companies involved in this illegal trade not only allegedly infringed on intellectual property rights, they placed the lives of innocent children in danger,” said HSI Special Agent in Charge Hayes.  “They allegedly sold toys with high lead content and cheap knock offs with substandard parts that break easily and pose a choking hazard.  HSI is firm on using its unique customs expertise and law enforcement partnerships to put an end to the importation and sale of dangerous goods.”

“Customs and Border Protection is on the forefront of intercepting unsafe, counterfeit products,” said CBP New York Field Operations Director Perez.  “We are proud to have done our part preventing these dangerous toys from getting in the hands of our children.”

“Today’s action highlights the unprecedented level of cooperation and coordination among federal regulatory and law enforcement partners to keep U.S. consumers safe,” said CPSC Chairman Tenenbaum.  “The United States has some of the strongest toy standards and lowest lead limits in the world, and CPSC is committed to enforcing these child safety requirements at the ports and in the marketplace.”

“When it comes to trademark infringement, don’t mess with Mickey or other American icons,” said NYPD Commissioner Kelly.

In the indictment, the government is seeking forfeiture of the seized vehicles and bank accounts and the restrained properties, in addition to a money judgment to be determined at trial.

The charges and allegations contained in the indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

The case is being prosecuted by Trial Attorney Evan Williams of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Claire Kedeshian and William Campos of the Eastern District of New York.  This case was jointly investigated by the HSI Intellectual Property Rights Group and the NYPD, through its participation in the New York Border Enforcement Security Taskforce, with the assistance of CPSC and CBP.

The enforcement action announced today is one of many 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/.

The U.S. District Court for the District of Arizona today approved a consent decree filed by the Department of Justice, together with private plaintiffs and the Tucson Unified School District. The consent decree is a detailed and concrete plan to desegregate Tucson public schools that will provide African-American and Latino students the educational support and programs they need to learn and thrive.

The consent decree is the latest step in this longstanding desegregation case, originally filed in 1974.  The United States intervened in the case in 1976.  In 2012, the court asked the parties to develop a plan to desegregate the district. After extensive negotiations, the parties jointly submitted the four-year plan requiring the district to undertake a robust set of measures to comply with its longstanding obligations to desegregate its schools. The consent decree touches on nearly every aspect of school operations and lays a strong foundation for a high quality educational environment for all students.

“The plan approved by the court today is a game-changer for the children of Tucson,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “It reflects the collective efforts of families and educators in Tucson, and the strong collaboration of the parties in this case, to forge a new path forward for the Tucson public schools.”

The consent decree will ensure that the district:

·          Implements a range of student assignment and transportation strategies to promote integration;

·          Builds and supports a diverse community of teachers and administrators;

·          Establishes culturally responsive curricula to engage and increase the academic achievement of African-American and Latino students;

·          Promotes a safe and inclusive school environment through effective and supportive school discipline policies;

·          Provides all students with increased access to advanced academic opportunities;

·          Strengthens programs to support the academic success and engagement of African-American and Latino students;

·          Develops and implements training and professional development to support culturally responsive learning environments;

·          Engages students, families and communities in school programs and activities;

·          Conducts ongoing monitoring and data-driven evaluations of its desegregation efforts, and submits regular compliance reports. 

The racial desegregation of schools is a top priority of the Civil Rights Division. The United States is involved in nearly 200 racial desegregation cases in school districts around the country. Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt.

Attorney General Eric Holder announced today the appointment of U.S. Attorney for the District of North Dakota Timothy Q. Purdon as chair of the Native American Issues Subcommittee (NAIS) of the Attorney General’s Advisory Committee of U.S. Attorneys (AGAC).  Attorney General Holder also appointed U.S. Attorney for the Western District of Oklahoma Sanford C. Coats to serve as vice chair.  

“The Native American Issues Subcommittee, the oldest subcommittee of the Attorney General’s Advisory Committee, is vital to the department’s mission in Indian Country to build and sustain safe and secure communities for future generations,” said Attorney General Holder.  “I am confident that U.S. Attorneys Purdon and Coats have the expertise and dedication to lead this important group as we work to fulfill the department’s role in protecting and serving this country’s first Americans.”

U.S. Attorney Purdon was appointed to the NAIS in 2010, and he served as vice chair throughout 2012.  U.S. Attorney Purdon replaces U.S. Attorney for the District of South Dakota Brendan V. Johnson. 

U.S. Attorney Coats was appointed to the NAIS in 2010, and he also served in the AGAC from 2010 through 2011.  U.S. Attorney Coats continues his work with the AGAC’s Resource Allocation Working Group.

Attorney General Holder also thanked U.S. Attorney Johnson for serving as chair of the NAIS for the past three years, 2009-2012.  “Brendan Johnson’s dedication and commitment to improving public safety in Indian Country will continue to positively impact tribal communities for years to come.  His leadership has brought the U.S. Attorney community together to address a myriad of important issues in Indian Country, and his guidance has been an invaluable asset to this department.  I look forward to my ongoing work with U.S. Attorney Johnson as a member of the AGAC.”

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.  The NAIS is made up of 30 U.S. Attorneys from across the United States whose Districts contain Indian Country or one or more federally recognized tribes. The NAIS focuses exclusively on Indian Country issues, both criminal and civil, and is responsible for making policy recommendations to the Attorney General of the United States regarding public safety and legal issues that impact tribal communities.

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

Felony charges were filed today in the U.S. District Court for the Northern District of California in San Francisco against Gilbert Chung of Burlingame, Calif. Chung is the 27th individual to plead guilty or agree to plead guilty as a result of the department’s ongoing antitrust investigations into bid rigging and fraud at public real estate foreclosure auctions in Northern California.

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

The department said Chung conspired with others to rig bids and commit mail fraud at public real estate foreclosure auctions in San Francisco and San Mateo counties beginning as early as January 2010 and continuing until about December 2010.

“The conspirators went to great lengths to suppress competition and prices at these foreclosure auctions,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will continue to vigorously enforce the antitrust laws and to prosecute those who violate them at the expense of distressed homeowners.”

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

"Today’s charges are another example of our resolve to bring to justice those who engaged in fraudulent bid rigging and anticompetitive practices at foreclosure auctions,” said FBI Special Agent in Charge David J. Johnson of the San Francisco Field Office. “We continue our partnership with the Antitrust Division in aggressively pursuing individuals who participate in these criminal acts.”

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

The charges today are the latest filed by the department in its ongoing investigation into bid rigging and fraud at public real estate foreclosure auctions in San Francisco, San Mateo, Contra Costa and Alameda counties, Calif. These investigations are being conducted by the Antitrust Division’s San Francisco Office and the FBI’s San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division’s San Francisco Field Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

Today’s charges are 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.

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

subsequently dismissed on the government’s motion.**

The Justice Department announced today that it has sued two Miami tax return preparers, seeking to bar them from preparing federal tax returns for others. The civil injunction suit alleges that Marlen Monzon, her son Yanko Rodriguez, and their Miami business, Tri Stars Multiservices Corporation, claim bogus deductions and credits on customers’ federal tax returns.

Monzon and Rodriguez allegedly included fabricated claims for business expenses on customers’ tax returns even though the customers have no business. According to the complaint, these fabricated expenses offset the customer’s wage income and improperly lower the customer’s reported taxable income. This generates (or increases) a refund, and often qualifies customers for credits to which they are not entitled. The complaint alleges that the Internal Revenue Service has examined 498 tax returns for tax years 2008 through 2011, and found that nearly every return claimed that the customer operated a nonexistent business and reported a business loss. This allegedly reduced the customers’ reported tax liability by an average of $7,031 per return, for a total of $3,494,336 in lost revenue.

According to the complaint, in 2008, the IRS assessed penalties against Monzon in the amount of $43,000 based on her preparation of tax returns claiming bogus Fuel Tax Credits. The complaint alleges that, rather than claiming bogus Fuel Tax Credits, Monzon now simply reports bogus gasoline expenses related to nonexistent businesses on her customers’ tax returns.

In the past 10 years the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Website .

Related Materials:

Rodriguez Complaint

A Miami title agent and former mortgage broker was found guilty late yesterday, Feb. 4, 2013, for her role in a “reverse mortgage” fraud scheme in connection with a loan worth more than $400,000, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.

After a six-day jury trial before the Honorable Richard W. Goldberg, sitting by designation in the Southern District of Florida, a federal jury convicted Yesenia Pouparina (aka Yesenia Campos), 40, of four counts of wire fraud and one count of mail fraud for her role in securing a fraudulent Home Equity Conversion Mortgage (HECM), commonly referred to as a reverse mortgage loan, and making false representations related to the occupancy of the property and its subsequent “short sale.”  A HECM is a federally insured loan that enables older Americans to withdraw equity from a home so they can remain independent and financially secure.  The jury also found that three bank accounts controlled by the defendant, which were seized by the government during the course of the investigation, should be forfeited.

According to court documents and evidence presented at trial, Pouparina, a licensed title agent in the state of Florida, devised a scheme to obtain a reverse mortgage loan on her own property in the name of her mother, an individual who failed to meet the requirements of the HECM program.  Pouparina submitted to a lending institution a false loan application and doctored records in support of that application, misrepresenting her mother’s eligibility to participate in the HECM program.  Pouparina acted as the title agent for the loan and disbursed the loan proceeds directly to her own personal bank accounts.  Pouparina also enriched herself by collecting fees generated by the loan, and also profited by using the loan proceeds in connection with her business as a “hard money lender” in other mortgage deals.   

Judge Goldberg ordered Pouparina to surrender to the U.S. Marshals on Feb. 20, 2013.  At sentencing, currently scheduled for May 9, 2013, Pouparina faces a maximum potential penalty per count of 20 years in prison and a $250,000 fine, or twice the net gain or loss from the offense.

This case was investigated by the Office of Inspector General, U.S. Department of Housing and Urban Development.  Trial Attorneys Sandra L. Moser and Mary Ann McCarthy of the Justice Department Criminal Division’s Fraud Section prosecuted the case, with assistance from the U.S. Attorney’s Office for the Southern District of Florida.

This conviction 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.

Attorney General Eric Holder announced today that the Department of Justice has filed a civil lawsuit against the credit rating agency Standard & Poor’s Ratings Services alleging that S&P engaged in a scheme to defraud investors in structured financial products known as Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs). The lawsuit alleges that investors, many of them federally insured financial institutions, lost billions of dollars on CDOs for which S&P issued inflated ratings that misrepresented the securities’ true credit risks. The complaint also alleges that S&P falsely represented that its ratings were objective, independent, and uninfluenced by S&P’s relationships with investment banks when, in actuality, S&P’s desire for increased revenue and market share led it to favor the interests of these banks over investors.

“Put simply, this alleged conduct is egregious – and it goes to the very heart of the recent financial crisis,” said Attorney General Holder. “Today’s action is an important step forward in our ongoing efforts to investigate – and – punish the conduct that is believed to have contributed to the worst economic crisis in recent history. It is just the latest example of the critical work that the President’s Financial Fraud Enforcement Task Force is making possible.”

Attorney General Eric Holder was joined in announcing the filing of the civil complaint by Acting Associate Attorney General Tony West, Principal Deputy Assistant Attorney General for the Civil Division Stuart F. Delery, and U.S. Attorney for the Central District of California André Birotte Jr. Also joining the Department of Justice in making this announcement were the attorneys general from California, Connecticut, Delaware, the District of Columbia, Illinois, Iowa and Mississippi, who have filed or will file civil fraud lawsuits against S&P alleging similar misconduct in the rating of structured financial products. Additional state attorneys general are expected to make similar filings today.

“Many investors, financial analysts and the general public expected S&P to be a fair and impartial umpire in issuing credit ratings, but the evidence we have uncovered tells a different story,” said Acting Associate Attorney General West. “Our investigation revealed that, despite their representations to the contrary, S&P’s concerns about market share, revenues and profits drove them to issue inflated ratings, thereby misleading the public and defrauding investors. In so doing, we believe that S&P played an important role in helping to bring our economy to the brink of collapse.”

Today’s action was filed in the Central District of California, home to the now defunct Western Federal Corporate Credit Union (WesCorp), which was the largest corporate credit union in the country. Following the 2008 financial crisis, WesCorp collapsed after suffering massive losses on RMBS and CDOs rated by S&P.

“Significant harm was caused by S&P’s alleged conduct in the Central District of California,” said U.S. Attorney for the Central District of California Birotte. “Across the seven counties in my district, we had huge numbers of homeowners who took out subprime mortgage loans, many of which were made by some of the country’s most aggressive lenders only because they later could be securitized into debt instruments that were given flawed ‘AAA’ ratings by S&P. This led to an untold number of foreclosures in my district. In addition, institutional investors located in my district, such as WesCorp, suffered massive losses after putting billions of dollars into RMBS and CDOs that received flawed and inflated ratings from S&P.”

The complaint, which names McGraw-Hill Companies, Inc. and its subsidiary, Standard & Poor’s Financial Services LLC (collectively S&P) as defendants, seeks civil penalties under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) based on three forms of alleged fraud by S&P: (1) mail fraud affecting federally insured financial institutions in violation of 18 U.S.C. § 1341; (2) wire fraud affecting federally insured financial institutions in violation of 18 U.S.C. § 1343; and (3) financial institution fraud in violation of 18 U.S.C. § 1344. FIRREA authorizes the Attorney General to seek civil penalties up to the amount of the losses suffered as a result of the alleged violations. To date, the government has identified more than $5 billion in losses suffered by federally insured financial institutions in connection with the failure of CDOs rated by S&P from March to October 2007.

“The fraud underpinning the crisis took many different forms, and for that reason, so must our response,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Department’s Civil Division.  “As today’s filing demonstrates, the Department of Justice is committed to using every available legal tool to bring to justice those responsible for the financial crisis.”

According to the complaint, S&P publicly represented that its ratings of RMBS and CDOs were objective, independent and uninfluenced by the potential conflict of interest posed by S&P being selected to rate securities by the investment banks that sold those securities. Contrary to these representations, from 2004 to 2007, the government alleges, S&P was so concerned with the possibility of losing market share and profits that it limited, adjusted and delayed updates to the ratings criteria and analytical models it used to assess the credit risks posed by RMBS and CDOs. According to the complaint, S&P weakened those criteria and models from what S&P’s own analysts believed was necessary to make them more accurate. The complaint also alleges that, from at least March to October 2007, and because of this same desire to increase market share and profits, S&P issued inflated ratings on hundreds of billions of dollars’ worth of CDOs. At the time, according to the allegations in the complaint, S&P knew that the quality of non-prime RMBS was severely impaired, and that the ratings on those mortgage bonds would not hold. The government alleges that S&P failed to account for this impairment in the CDO ratings it was assigning on a daily basis. As a result, nearly every CDO rated by S&P during this time period failed, causing investors to lose billions of dollars.

The underlying federal investigation, code-named “Alchemy,” that led to the filing of this complaint was initiated in November 2009 in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov

Due to public interest in this case, the Department of Justice is releasing documents that may not be in an accessible format. If you have a disability and the format of any material on the site interferes with your ability to access some information, please email the Department of Justice webmaster at [email protected] or contact Adora Andy at 202.514.2007. To enable us to respond in a manner that will be of most help to you, please indicate the nature of the accessibility problem, your preferred format (electronic format (ASCII, etc.), standard print, large print, etc.), the web address of the requested material, and your full contact information so we can reach you if questions arise while fulfilling your request.

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Related Materials:

Standard & Poor's Complaint
Attorney General Eric Holder Speaks at the Press Conference Announcing Lawsuit Against S&P
Acting Associate Attorney General Tony West Speaks at the Press Conference Announcing Lawsuit Against S&P
Principal Deputy Assistant Attorney General for the Civil Division Stuart F. Delery Speaks at the Press Conference Announcing Lawsuit Against S&P

William W. Lowery IV, 44, of Tappahannock, Va., pleaded guilty today to trafficking in illegally-harvested striped bass, in violation of the Lacey Act, announced Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, and Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia. 

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.

Lowery was indicted on Nov. 8, 2012, by a federal grand jury on one count each of violating the Lacey Act and Destruction of Evidence.  Lowery faces a maximum penalty of one year in prison, a $100,000 fine, and one-year of supervised release.  He is scheduled to be sentenced on May 9, 2013. 

As part of his plea agreement, Lowery has agreed to serve 30 days in jail, pay a $5,000 fine and $1,300 in restitution to the National Oceanic and Atmospheric Administration (NOAA) for the illegally-harvested striped bass, and surrender his captain’s license for life.  As part of his plea agreement, Lowery has also agreed that he will not engage in the charter fishing industry in any capacity during the term of his supervised release. 

In a statement of facts filed with his plea agreement, Lowery admitted that on Jan. 15, 2010, he took a charter fishing trip into the Exclusive Economic Zone (EEZ) to fish for striped bass, knowing that it was illegal to fish for striped bass in the EEZ. When Lowery’s boat, the Anna Lynn was approached by law enforcement, Lowery attempted to flee.  When the Anna Lynn was caught, law enforcement officers observed a plastic trash barrel with 13 Striped Bass floating in the water near the Anna Lynn. The trash barrel had been thrown overboard from the Anna Lynn during the pursuit, and the striped bass contained within the trash barrel had been harvested by fishermen aboard the Anna Lynn within the EEZ.

This case was investigated by the National Oceanic and Atmospheric Administration, Fisheries, Office for Law Enforcement, and the U.S. Coast Guard 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.

FALLS CHURCH, Va. – The Executive Office for Immigration Review (EOIR) today announced the investiture of a new assistant chief immigration judge. Chief Immigration Judge Brian M. O’Leary presided over the investiture during a ceremony held at EOIR’s headquarters on Feb. 1, 2013.

After a thorough application process, Attorney General Eric Holder appointed Abigail M. Price to her new position. “We are pleased to welcome Ms. Price as our newest assistant chief immigration judge,” said O’Leary. “She will be responsible for the continuing development and implementation of the Office of the Chief Immigration Judge’s emphasis on providing immigration proceedings for all respondents that are fundamentally fair and timely. We are proud to be able to place in this important role someone with Judge Price’s strong background in working with vulnerable populations.”

Biographical information follows.

Abigail M. Price, Assistant Chief Immigration Judge

Abigail M. Price was appointed as an assistant chief immigration judge in January 2013, with responsibility for continuing the development and implementation of EOIR policy concerning vulnerable populations. She received a bachelor of arts degree in 1982 from Wheaton College, in Norton, Mass.; a juris doctorate in 1988 from Case Western Reserve University School of Law in Cleveland, Ohio; and a master of laws degree in 1989 from New York University School of Law. From April 2012 to December 2012, Judge Price served as a consultant to Catholic Relief Services in Baltimore, Md. From April 2011 to December 2011, she was a consultant for the International Rescue Committee (IRC) in New York. From April 2009 to April 2011, Judge Price served as deputy and national legal services director for Kids in Need of Defense in Washington, D.C. From 2001 to 2009, she worked for the IRC, as national director of immigration programs, and as global advisor on the prevention of exploitation. From 2000 to 2001, Judge Price was a resettlement expert for the Office of the United Nations High Commissioner for Refugees, Department of International Protection, Resettlement Section, in Geneva, Switzerland. From 1996 to 2000, she served as immigration policy advisor for the National Catholic Conference of Bishops/United States Catholic Conference, Migration and Refugee Services, in Washington, D.C. From 1994 to 1996, Judge Price served as the Washington representative for Church World Service, Immigration and Refugee Program, National Council of Churches USA, in New York. From 1993 to 1994, she was supervising attorney for Haitian Legal Services. From June 1992 to December 1992, Judge Price served as supervising attorney for the Haitian Refugee Program for Catholic Legal Immigration Network, Inc. From 1990 to 1992, she served as supervising attorney for the Diocese of Brooklyn, Catholic Migration Office, in New York. Judge Price is a member of the Connecticut Bar.

- EOIR -

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

Six individuals have been sentenced to federal prison by U.S. District Judge William P. Dimitrouleas for filing false claims for tax refunds, announced Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and Jose A. Gonzalez, Special Agent in Charge, IRS-Criminal Investigation (IRS-CI), Miami Office.

On Jan. 28, 2013, Penny Jones of Rigby, Idaho, was sentenced to 144 months in prison. Jones had pleaded guilty, without the benefit of a plea agreement, to conspiracy to defraud the United States and 41 counts of filing false claims for tax returns. On that same day, John Michael Smith Jr. of Hidden Hills, Calif., was sentenced to 36 months in prison. Smith pleaded guilty to filing a false claim for a tax refund. According to court documents related to the plea, Smith had sought over $208,000, an amount to which he knew he was not entitled.

Defendants Michael D. Beiter, Jr. formerly of Coral Springs, Fla., David Clum, Jr., of Whites Creek, Tenn., Dale Peters, of San Mateo, Calif., and Christopher Marrero, of Davie, Fla., were all sentenced on Feb. 1, 2013. All four were convicted, following a four-week trial in October 2012, of conspiracy to defraud the United States with respect to claims and multiple counts of filing false claims for tax refunds.

Beiter was sentenced to 300 months in prison, which is to be served consecutively to a ten year sentence he is currently serving for promoting a separate tax fraud scheme. Clum was sentenced to 293 months in prison. Peters was sentenced to 144 months in prison. Marrero was sentenced to 180 months in prison.

“Taxpayers should be wary of deals that appear too good to be true,” said Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division. “Instigators of these tax scams take money from these taxpayers, who may end up paying substantial penalties to the IRS. Sentences like the ones handed down in this case show that peddlers of these bogus tax schemes face significant jail time for their crimes.”

U.S. Attorney Wifredo A. Ferrer stated, “Tax refund scams are the latest crime du jour. For a $750 fee, complicit clients across the United States expected the defendants to submit false returns to the IRS on their behalf, claiming exorbitant fraudulent refunds, to be shared with the defendants. Instead of receiving enormous refunds, however, the defendants were sentenced to substantial jail time and the clients received substantial civil penalties and were subject to aggressive collection efforts by the IRS. As this case demonstrates, we will continue to crack down on fraudsters and will not let them line their pockets with our tax dollars.”

“The defendants who perpetrated this scheme systematically defrauded the government and the taxpaying public,” said Richard Weber, Chief IRS Criminal Investigation. “At the IRS, protecting taxpayer money is a matter we take very seriously.  IRS Criminal Investigation will continue to vigorously pursue those who unjustly enrich themselves by preparing false claims for refunds.”

The evidence at trial showed that Jones, Beiter, Clum, Peters and others operated a scheme to defraud the IRS out of tax refunds. The false return scheme operated under the name PMDD Services LLC, and, later, Forever Grace LLC. The false return scheme was nationwide, causing the filing of tax returns for at least 180 clients from 30 different states, requesting more than $160 million in fraudulent tax refunds. The defendants and clients of the scheme collectively filed more than 380 tax returns, mostly from tax year 2008 but also for other tax years. The tax returns falsely reported the amount of their personal debt obligations as both income and as federal tax withholding. The fictitious income and withholding was reported to the IRS on Forms 1099-OID.

According to the evidence at trial, the tax returns prepared as part of the scheme fraudulently claimed refunds in amounts specifically intended to allow the clients to pay off their mortgages, credit cards, student loans, and other personal debts. Clients paid $750 to have the defendants prepare a tax return reporting this fictitious “OID” income, and clients agreed to share 10 percent of their tax refund with defendants. The trial evidence also showed that defendant Beiter and Clum held seminars in Florida and Tennessee, respectively, in which they recruited potential clients.

The evidence at trial further established that most clients of the scheme did not receive the enormous refunds requested, but instead received substantial civil penalties. Those who did receive refunds were typically subject to collection efforts by the IRS.

In addition, the evidence showed that defendants Beiter, Clum and Marrero recruited clients for the scheme. Clum also filed false “OID” tax returns himself. Peters was PMDD Services’ information technology specialist, writing software and implementing computerized procedures to automate the process of preparing the fraudulent tax returns.

Separate from the 1099-OID scheme, Marrero was convicted of filing three false tax returns at three separate IRS offices on the same day. Each return requested a refund in excess of $80,000 based on non-existing gambling income and associated tax withholding.

Previously, in a related case, a client of the scheme, Philip Butcher, formerly of Rogers, Ark., pleaded guilty to filing a false claim for a tax refund. Butcher filed two tax returns reporting his loans as OID income and tax withholding, claiming tax refunds totaling $1,456,696.

These cases were investigated by Special Agents of IRS-Criminal Investigation. Assistant U.S. Attorney Bertha Mitrani and Tax Division Trial Attorneys Jonathan Marx and Jed Silversmith prosecuted the cases.

Related Materials:

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

The United States filed two lawsuits to shut down three tax preparers in Prince George’s County, Md., the Justice Department announced today. The civil injunction complaints were filed in U.S. District Court in Greenbelt, Md. One suit names Tonya Hubbard and her Lanham, Md.-based tax preparation business, Universal Tax Service LLC, as defendants. The other suit was filed against Hubbard’s ex-husband, Marvin Binion Sr., and his son, Marvin Binion II. The complaint alleges that the son owns and operates Marvin Binion’s Universal Tax & Immigration Service in Hyattsville, Md.

The government complaints allege that the defendants prepare fraudulent tax returns for customers containing bogus deductions for items like charitable contributions, unreimbursed employee business expenses, and other miscellaneous expenses. According to the suit Binion Sr., pleaded guilty in 2007 to filing 13 false federal income tax returns and was later convicted of making false declarations to a federal court in connection with that criminal tax case. The suit alleges that Binion Sr. was released from prison in May 2012.

The lawsuits allege that Hubbard, Universal Tax Service LLC and the Binions violate federal law by not signing the returns they prepare for customers and by not placing IRS preparer tax identification numbers on the returns. All tax preparers are required to place an IRS-issued tax preparer identification number on every federal income tax return they prepare for a customer.

According to the complaints the defendants prepare customer returns using Turbo Tax software, place the returns in postage paid, pre-addressed envelopes and instruct customers to sign and mail the returns to the IRS on their own. The suits allege that defendants do this to hide from the IRS their role in preparing the returns.

The government alleges that Hubbard, Binion Sr. and Binion II generally charge customers a tax return preparation fee of $300 and that the Binions may have earned as much as $30,000 per day preparing fraudulent returns.

The Internal Revenue Service has listed 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 ten years. Information about these cases is available on the Justice Department website .

Related Materials:

United States v. Marvin L. Binion Sr., etc.
Binion Complaint for Permanent Injunction (PDF)
Hubbard Complaint for Permanent Injunction (PDF)

The Department of Justice’s National Indian Country Training Initiative (NICTI) partnered with the National Strangulation Training Institute to deliver the first-ever national Indian Country training on the investigation and prosecution of non-fatal strangulation and suffocation offenses.  The training, held from Jan. 29 – Feb. 1, 2013, drew attendance from over 50 federal and tribal participants, representing 17 tribes, U.S. Attorney’s Offices, the FBI and the Bureau of Indian Affairs. Students included prosecutors, law enforcement, advocates, paramedics and sexual assault nurse examiners.
 
The training, held at the National Advocacy Center in Columbia, S.C., provided an in-depth examination of the mechanics of strangulation and suffocation from a medical, legal and law enforcement perspective. In addition to substantive information on strangulation and suffocation, students received information on how to effectively train others in their community about the investigation and prosecution of strangulation crimes and how to serve as an expert witness on the issue in court.

 “Strangulation has been identified as one of the most lethal forms of domestic violence and sexual assault. Expert training in this area is critical as external signs of strangulation are absent in over half of all victims. Death can occur without any external marks at all,” said Leslie A. Hagen, National Indian Country Training Coordinator.
 
“If we can prevent even one homicide by early prosecution of an abuser when he strangles his partner and she survives, all our work will be worth it,” said Gael Strack, the Project Director of the National Strangulation Training Institute and CEO of the National Family Justice Center Alliance.

“When men choke women, those men might as well be raising their right hand and saying ‘I am a killer’ to everyone that is paying attention,” said Casey Gwinn, President of the National Family Justice Center Alliance and faculty at this week’s training. “After 20 years of research and practice, it is clear that men who choke women are the same men who are likely to later kill those women, kill children, and kill police officers.” 
 
Facts about strangulation:

• Strangulation is more common than professionals have realized. Recent studies have now shown that 34 percent of abused pregnant women report being “choked” (Bullock, 2006); 47 percent of female domestic violence victims reported being “choked” (Block, 2000) and most experts believe the rate is higher given the minimization by victims and the lack of education. 

• Victims of multiple strangulation “who had experienced more than one strangulation attack, on separate occasions, by the same abuser, reported neck and throat injuries, neurologic disorders and psychological disorders with increased frequency”. (Smith,  2001)

• Almost half of all domestic violence homicide victims had experienced at least one episode of non-fatal strangulation prior to a lethal violent incident (Glass, Sage, 2008).  Victims of prior non-fatal strangulation are 800 percent more likely of later becoming a homicide victim. (Glass, et al, 2008).

• Strangulation is more serious than professionals have realized. Loss of consciousness can occur within 5 to 10 seconds and death within 4 to 5 minutes. (Watch, 2009; Hawley, McClane, 2001). The seriousness of the internal injuries may take a few hours to be appreciated and delayed death can occur days later. (Hawley, McClane, 2001).

• Because most strangulation victims do not have visible injuries, strangulation cases may be minimized or trivialized by law enforcement, medical and mental health professionals. 

Several family members were sentenced Friday in the Middle District of Alabama for their involvement in a $1.9 million dollar stolen identity refund fraud scheme, the Justice Department and the Internal Revenue Service (IRS) announced. Barbara Murry, Veronica Temple and Yolanda Moses each received a sentence of 57 months in prison and ordered to pay restitution in the amount of $1,908,659. Douglas Murry received a sentence of 24 months in prison and was ordered to pay restitution in the amount of $142,038. Almetta Johnson received a sentence of eight months home detention. Lee Moses, Jeffrey Temple and Courtney Johnson each received a sentence of probation.

On April 25, 2012, Barbara Murry, Douglas Murry, Yolanda Moses, Lee Moses, Veronica Temple, Jeffrey Temple, Almetta Johnson and Courtney Johnson were charged in a multi-count indictment by a federal grand jury on a variety of charges relating to an identity theft and tax fraud scheme. According to court documents, between January 2006 and April 2012, the defendants and their co-conspirators directed over 900 false tax refunds claiming in excess of $1.9 million to several bank accounts controlled by the defendants and their co-conspirators. The conspiracy consisted of two parts. First, the defendants received false tax refunds into their bank accounts and provided a portion of the funds to the third-party preparers. None of the defendants obtained the identities or prepared the tax returns in this part of the conspiracy.

According to court documents, the second part of the conspiracy centered on B & B Weaving Shop and B & B Tax Service. Barbara Murry owned and operated B & B Weaving Shop, located in Montgomery, Ala. B& B Weaving Shop was located in the same building as B & B Tax Service. Barbara Murry’s daughters, Yolanda Moses and Veronica Temple, ran B & B Tax Service. Veronica Temple and her sister, Yolanda Moses, obtained stolen identities from multiple sources. Veronica Temple, Yolanda Moses, and others filed false tax returns from both B & B Tax Service and their homes and directed the tax refunds to numerous bank accounts controlled by the defendants and their co-conspirators. Veronica Temple, Yolanda Moses, and Barbara Murry recruited individuals, including Douglas Murry, to open bank accounts in furtherance of the scheme. Many of the identity victims were 16 and 17 year-old minors.

“The Justice Department will investigate and prosecute stolen identity refund fraud crimes, whether they are committed by a single thief, or a ring of thieves,” said Assistant Attorney General Kathryn Keneally. “The prison sentences handed down today demonstrate that such invasions of personal privacy and theft of public monies will not be tolerated.”

“Individuals who commit identity theft and refund fraud of this magnitude deserve to be punished to the fullest extent of the law,” said Richard Weber, Chief IRS Criminal Investigation.  “These individuals demonstrated a blatant disregard of the integrity of the United States tax system and caused immeasurable hardship to innocent victims. IRS Criminal Investigation remains committed to the pursuit of identity theft and, together with our partners at the U.S. Attorney’s Office, we will hold those who engage in similar conduct accountable.”

Assistant Attorney General Keneally commended the efforts of special agents of IRS - Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Jason H. Poole and Michael Boteler, and Assistant U.S. Attorney Jared Morris, who prosecuted the case.

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

Larreka Jackson pleaded guilty today in the Middle District of Alabama to her role in a multi-million dollar conspiracy to use stolen identities to obtain tax refunds, the Justice Department and the Internal Revenue Service (IRS) announced today.

On Aug. 15, 2012, a federal grand jury in Montgomery, Ala., returned a 25-count indictment charging Larreka Jackson for conspiring to file false tax returns using stolen identities, filing false claims, wire fraud and aggravated identity theft. According to the indictment, Jackson operated a tax preparation business called It’s Tax Time in Montgomery. Jackson used It’s Tax Time as a front to file false tax returns using stolen identities. Jackson unlawfully obtained the names and Social Security numbers of actual persons and filed false tax returns using those names. Jackson directed the fraudulent tax refund to bank accounts controlled by her and her co-conspirators.

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

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

The company that operates Path, an online social networking application, agreed to pay an $800,000 penalty to settle charges that it violated the Federal Trade Commission (FTC) Act and the Children’s Online Privacy Protection Rule, the Justice Department announced today.

In a complaint filed on Jan. 31, 2013, the United States alleged that San Francisco-based Path Inc. violated the Children’s Online Privacy Protection Rule by collecting personal information from children under the age of 13 without obtaining parental consent. According to the complaint, in over 3,000 instances, Path collected personal information from the address books in children’s mobile devices, including the names, addresses, phone numbers and email addresses of the child’s contacts. Path also collected personal information from children during the registration process and by allowing them to post content online.

“The rules established by the Children’s Online Privacy Protection Act play an important role in keeping kids safe online,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. “Companies that market to children must respect their privacy by getting parental consent before collecting any personal information, and the Justice Department will work with the FTC to ensure that they do.”

According to the complaint, Path also violated the FTC Act by failing to disclose to consumers that it was automatically collecting information from users’ address books on their mobile devices. Path’s privacy policy and “Add Friends” feature led consumers to believe that this information would be collected only with the user’s consent.

Along with the civil penalty, Path agreed to an injunction barring future violations of the FTC Act and the Children’s Online Privacy Protection Rule. Path further agreed that it would delete all information previously collected from children under age 13, implement a comprehensive privacy program, and submit to regular assessments by an independent third party.

The FTC, which oversees the Children’s Online Privacy Protection Rule, referred the case to the Justice Department. The lawsuit, United States v. Path Inc., was filed in the Northern District of California.

Principal Deputy Assistant Attorney General Delery thanked the FTC for investigating this matter and referring it to the department. The Consumer Protection Branch of the Justice Department’s Civil Division brought the case on behalf of the United States.

A Maryland man was found guilty by a federal jury yesterday and sentenced today to serve 30 years in prison for his participation in a global online child pornography conspiracy, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Joseph H. Hogsett of the Southern District of Indiana.

Following a four-day trial, Roger Lee Loughry Sr., 57, of Baltimore, was found guilty yesterday by a federal jury in the Southern District of Indiana of one count of conspiracy to advertise child pornography, one count of conspiracy to distribute child pornography, 12 counts of advertising child pornography and two counts of distributing child pornography, in connection with his role as an administrator of an online child pornography bulletin board. 

Loughry was sentenced today by U.S. District Court Judge Sarah Baker in the Southern District of Indiana.  In addition to his prison term, Loughry was sentenced to serve lifetime supervised release.

Evidence presented at trial revealed that Loughry had been an active member of a child pornography bulletin board since November 2005 and had participated in numerous administrative functions on the online board during his membership, including adding new members to the board.  In addition, evidence introduced at trial established that Loughry’s home was searched in September 2008, at which time computers and computer media were seized.  Trial evidence showed that upon review of the seized materials, investigators discovered images and videos depicting minors engaging in sexually explicit conduct. 

 The charges against Loughry were a result of “Operation Nest Egg,” a joint investigation led by the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), the U.S. Attorney’s Office for the Southern District of Indiana, the U.S. Postal Inspection Service (USPIS) and U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).  Operation Nest Egg, launched in February 2008, targeted 26 defendants charged in the Southern District of Indiana, as well as approximately 500 additional individuals located throughout the world for their involvement in an online group dedicated to trading images of child pornography.

 Loughry had previously been tried and convicted of the same charges in April 2010.  On Oct. 11, 2011, his convictions were reversed and the case was remanded for a new trial. 

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.

The case was prosecuted by Assistant U.S. Attorney Steven D. DeBrota of the Southern District of Indiana and CEOS Trial Attorneys Keith Becker and Amy Larson.  The investigation was conducted jointly by CEOS’ High Technology Investigative Unit, USPIS and ICE, with assistance provided by the Indiana Internet Crimes Against Children Taskforce, Indiana State Police, and numerous local and international law enforcement agencies across the United States and Europe.

The United States has asked a federal court to shut down a tax-preparation office in Riverview, Fla., the Justice Department announced today. The civil injunction suit, filed in U.S. District Court in Tampa, Fla., alleges that Tyree Middleton, of Palmetto, Fla., operates Middleton Financial Group and Middleton Financial Professional Tax & Accounting Inc. in Riverview and intentionally prepares and files fraudulent federal income tax returns to obtain improper tax refunds.

According to the complaint, Middleton induces potential customers to “get excited” about their tax refunds, asserting that if they “file today,” they will “smile today,” when Middleton has reason to know that his customers are not entitled to the refunds he claims on their behalf. The lawsuit further alleges that Middleton repeatedly prepared federal tax returns that falsely claimed first-time home buyer credits, underreported income, claimed false business deductions, and claimed false education and earned-income credits.

The complaint further alleges that Middleton stole identities so that he could file income tax returns falsely claiming refunds, and have the refunds deposited into his bank account. According to the complaint Middleton prepared income tax returns for two deceased persons, falsely claiming the same items on each return.

The Internal Revenue Service lists return-preparer fraud and identify theft as two of its “Dirty Dozen” tax scams .

In the past decade the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website .

Related Materials:

United States v. Tyree Middleton, etc.
Complaint and Request for Injunctive Relief
 

The Justice Department today announced a settlement with the city of Lomita, Calif., resolving allegations that the city violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA) when it denied the Islamic Center of the South Bay’s application to build a new mosque on its property. The settlement, which still must be approved by the U.S. District Court in Los Angeles, is in the form of an agreed order and resolves a lawsuit filed today by the United States against the city.

The case arose from the Lomita City Council’s 2010 denial of an application by the Islamic Center to take down the aging, separate structures on its property, which it has been using for worship and various other religious activities since 1985, and construct a single building that would serve its needs. The government’s complaint, which was filed with the court along with the agreed order resolving the lawsuit, alleges that the structures currently being used by the Islamic Center are insufficient to enable the community to come together for worship and fellowship or to perform religious rituals properly. The lawsuit alleges that the city’s denial of the Islamic Center’s application to construct a new center in place of these inadequate facilities imposed a substantial burden on the religious exercise of the Islamic Center and its members.

“Religious freedom is among our most fundamental rights, and there are few aspects of that right more basic than the ability of a religious community to come together for worship and fellowship in a decent and appropriate setting on its own property,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “With RLUIPA, Congress has sought to ensure that this basic right is protected from encroachment by unjustified local zoning actions.”

“The right to religious freedom includes the ability to build places of worship and to assemble at those places,” said U.S. Attorney André Birotte Jr. “This settlement will ensure that worshippers at the Islamic Center will be able to exercise their rights and enjoy the cherished freedoms in our Constitution.”

As part of this settlement, which incorporates portions of a related agreement between the city and the Islamic Center, the city has agreed to consider a renewed application by the Islamic Center on an expedited schedule. The city also agreed that its leaders and employees who make land-use decisions will attend training on the requirements of RLUIPA. In addition, the city periodically will report to the Justice Department.

RLUIPA prohibits land use decisions that discriminate based on religion or impose substantial and unjustified burdens on religious exercise. Persons who believe their rights under RLUIPA have been violated may contact the Housing and Civil Enforcement Section of the Justice Department’s Civil Rights Division at 1-800-896-7743. More information about RLUIPA, including a report on the first 10 years of its enforcement, may be found at www.justice.gov/crt/about/hce/rluipaexplain.php .

Related Materials:

Lomita Proposed Agreed Order
Lomita Complaint

A Kansas City, Kan., federal court permanently barred an Instant Tax Service franchisee, A&S Tax Services LLC, from further operating or preparing federal tax returns for others, the Justice Department announced today. Instant Tax Service is a national tax-preparation chain operated by ITS Financial LLC, based in Dayton, Ohio. An Ohio federal court entered a preliminary injunction against ITS Financial LLC and its owner last November.

In the Kansas case, the owner of A&S Tax Services, Semere Tsehaye of St. Louis was also permanently enjoined from engaging in certain abusive practices. Both A&S Tax Services and Tsehaye consented to the civil injunction order without admitting the allegations against them. The order, signed by Judge John W. Lungstrum of the U.S. District Court for the District of Kansas, also provides that A&S Tax Services will pay $100,000 in civil tax penalties.

According to the government complaint , the defendants operated Instant Tax Service offices at multiple locations in the Kansas City metropolitan area. The defendants allegedly instructed A&S Tax Services employees at Instant Tax Service offices to engage in systemic and pervasive tax fraud, including routinely preparing tax forms falsely claiming education and dependent-care credits, reporting items pertaining to phony companies, and reporting fictitious income and expenses in order to fraudulently inflate the Earned Income Tax Credit.

Last year, Judge Lungstrum permanently enjoined Tsehaye’s brother, Ahferom Goitom, from preparing federal tax returns.

In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department’s website .

Related Materials:

United States v. Semere Tsehaye, et al.
Stipulated Order for Permanent Injunction Other Relief Against Semere Tsehaye and A & S Tax Services, LLC
 

Two members of the Aryan Brotherhood of Texas gang (ABT) pleaded guilty to racketeering charges related to their membership in the ABT’s criminal enterprise, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.

Ben Christian Dillon, aka “Tuff,” 40, of Houston, and James Marshall Meldrum, aka “Dirty,” 40, of Dallas, each pleaded guilty today before U.S. District Judge Sim Lake in the Southern District of Texas to one count of conspiracy to participate in racketeering activity.

According to court documents, Dillon, Meldrum and other ABT gang members and associates, agreed to commit multiple acts of murder, robbery, arson, kidnapping and narcotics trafficking on behalf of the ABT gang.  Dillon, Meldrum and numerous ABT gang members met on a regular basis at various locations throughout Texas to report on gang-related business, collect dues, commit disciplinary assaults against fellow gang members and discuss acts of violence against rival gang members, among other things.  

Dillon and Meldrum admitted to being ABT gang members and engaging in multiple acts in support of the criminal enterprise.  Dillon admitted to trafficking in methamphetamine, acting as an enforcer to collect drug debts owed to the ABT enterprise, committing acts of arson for the gang and attempting to kill a fellow ABT gang member who had been marked for death by senior ABT officials. Meldrum admitted to trafficking in methamphetamine and severely beating a subordinate gang member. 

According to the superseding indictment, the ABT was established in the early 1980s within the Texas prison system.  The gang modeled itself after and adopted many of the precepts and writings of the Aryan Brotherhood, a California-based prison gang that was formed in the California prison system during the 1960s.  According to the superseding indictment, previously, the ABT was primarily concerned with the protection of white inmates and white supremacy/separatism.  Over time, the ABT has expanded its criminal enterprise to include illegal activities for profit.

Court documents allege that the ABT enforced its rules and promoted discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, arson, assault, robbery and threats against those who violate the rules or pose a threat to the enterprise.  Members, and oftentimes associates, were required to follow the orders of higher-ranking members, often referred to as “direct orders.”

According to the superseding indictment, in order to be considered for ABT membership, a person must be sponsored by another gang member.  Once sponsored, a prospective member must serve an unspecified term, during which he is referred to as a prospect, while his conduct is observed by the members of the ABT.

At sentencing, Dillon and Meldrum each face a maximum penalty of life in prison. Dillon’s sentencing hearing is scheduled for April 24, 2013, and Meldrum’s sentencing hearing is scheduled for Sept. 26, 2013.

Dillon and Meldrum are two of 34 defendants charged in October 2012 with conducting racketeering activity through the ABT criminal enterprise, among other charges.
 
This case is being investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; FBI; U.S. Marshals Service; Federal Bureau of Prisons; U.S. Immigration and Customs Enforcement Homeland Security Investigations; Texas Rangers; Texas Department of Public Safety; Montgomery County, Texas, Sheriff’s Office; Houston Police Department-Gang Division; Texas Department of Criminal Justice – Office of Inspector General; Harris County, Texas, Sheriff’s Office; Tarrant County Sheriff’s Office; Atascosa County, Texas, Sheriff’s Office; Orange County, Texas, Sheriff’s Office; Waller County, Texas, Sheriff’s Office; Fort Worth, Texas, Police Department; Alvin, Texas, Police Department; Carrollton, Texas, Police Department; Montgomery County District Attorney’s Office; Atascosa County District Attorney’s Office; and the Kaufman County, Texas, District Attorney’s Office.

The case is being prosecuted by David Karpel of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Jay Hileman of the Southern District of Texas.

After a 14-day trial, Mohamed Osman Mohamud, 21, a naturalized U.S. citizen from Somalia and resident of Corvallis, Ore., was convicted today by a federal jury in the District of Oregon of attempting to use a weapon of mass destruction (explosives) in connection with a plot to detonate a vehicle bomb at an annual Christmas tree lighting ceremony in Portland.

At sentencing, Mohamud faces a maximum statutory sentence of life in prison.  Mohamud was arrested on Nov. 26, 2010, after he attempted to detonate what he believed to be an explosives-laden van that was parked near the tree lighting ceremony in Portland.  The arrest was the culmination of a long-term undercover operation, during which Mohamud was monitored closely for months as his bomb plot developed.  The device was in fact inert; and the public was never in danger from the device.

“When an individual concocts a plan to commit mass violence – and is determined to follow through – law enforcement has an obligation to take action to protect the public.  Today’s verdict shows that they will be held to account,” said Lisa Monaco, Assistant Attorney General for National Security. “I applaud all those who worked so diligently to thwart this plot and ensure no one was harmed.”

“This trial provided a rare glimpse into the techniques Al Qaeda employs to radicalize home-grown extremists. With the verdict today, the jury has held this defendant accountable,” said Amanda Marshall, U.S. Attorney for the District of Oregon.   “I thank the dedicated professionals in the law enforcement and intelligence communities who were responsible for this successful outcome.  I look forward to our continued work with Muslim Communities in Oregon who are committed to ensuring that all young people are safe from extremists who seek to radicalize others to engage in violence.” 

“The verdict returned in the Mohamed Mohamud case highlights the difficult, but important, work that FBI employees do every day.  Whether an employee is an undercover agent or analyst or technician – each has a role to play in keeping our community safe while at the same time respecting the freedoms that make this country strong. Indeed, in this country everyone has a right to live, work and worship freely and without fear. FBI employees – in Oregon and around the world – find strength in preserving and protecting these core values,” said Gregory Fowler, Special Agent in Charge of the FBI Portland Division.

According to court documents and evidence presented by the government at trial, in February 2009, Mohamud began communicating via e-mail with Samir Khan, a now-deceased al-Qaeda terrorist who published Jihad Recollections, an online magazine that advocated violent jihad, and who also published Inspire, the official magazine of al-Qaeda in the Arabian Peninsula.  Between February and August 2009, Mohamed exchanged approximately 150 emails with Khan.  Mohamud wrote several articles for Jihad Recollections that were published under assumed names.

In August 2009, according to evidence presented at trial, Mohamud was in email contact with Amro Al-Ali, a Saudi national who was in Yemen at the time and is today in custody in Saudi Arabia for terrorism offenses.  Al-Ali sent Mohamud detailed emails designed to facilitate Mohamud’s travel to Yemen to train for violent jihad.  In December 2009, while Al-Ali was in the northwest frontier province of Pakistan, Mohamud and Al-Ali discussed the possibility of Mohamud traveling to Pakistan to join Al-Ali in terrorist activities. Mohamud responded to Al-Ali in an email: “yes, that would be wonderful, just tell me what I need to do.”  Al-Ali referred Mohamud to a second associate overseas and provided Mohamud with a name and email address to facilitate the process.

In the following months, Mohamud made several unsuccessful attempts to contact Al-Ali’s associate.  Ultimately, an FBI undercover operative contacted Mohamud via email under the guise of being an associate of Al-Ali’s. Mohamud and the FBI undercover operative agreed to meet in Portland in July 2010.  At the meeting, Mohamud told the FBI undercover operative he had written articles that were published in Jihad Recollections.  Mohamud also said that he wanted to become “operational.” Asked what he meant by “operational,” Mohamud said he wanted to put an explosion together, but needed help.

According to evidence presented at trial, at a meeting in August 2010, Mohamud told undercover FBI operatives he had been thinking of committing violent jihad since the age of 15.  Mohamud then told the undercover FBI operatives that he had identified a potential target for a bomb: the annual Christmas tree lighting ceremony in Portland’s Pioneer Courthouse Square on Nov. 26, 2010.  The undercover FBI operatives cautioned Mohamud several times about the seriousness of this plan, noting there would be many people at the event, including children, and emphasized that Mohamud could abandon his attack plans at any time with no shame.  Mohamud indicated the deaths would be justified and that he would not mind carrying out a suicide attack on the crowd.

According to evidence presented at trial, in the ensuing months Mohamud continued to express his interest in carrying out the attack and worked on logistics.  On Nov. 4, 2010, Mohamud and the undercover FBI operatives traveled to a remote location in Lincoln County, Ore., where they detonated a bomb concealed in a backpack as a trial run for the upcoming attack.  During the drive back to Corvallis, Mohamud was asked if he was capable of looking at all the bodies of those who would be killed during the explosion.  In response, Mohamud noted, “I want whoever is attending that event to be, to leave either dead or injured.” Mohamud later recorded a video of himself, with the assistance of the undercover FBI operatives, in which he read a statement that offered his rationale for his bomb attack. 

On Nov. 18, 2010, undercover FBI operatives picked up Mohamud to travel to Portland to finalize the details of the attack.  On Nov. 26, 2010, just hours before the planned attack, Mohamud examined the 1,800 pound bomb in the van and remarked that it was “beautiful.”  Later that day, Mohamud was arrested after he attempted to remotely detonate the inert vehicle bomb parked near the Christmas tree lighting ceremony

This case was investigated by the FBI, with assistance from the Oregon State Police, the Corvallis Police Department, the Lincoln County Sheriff’s Office and the Portland Police Bureau.  The prosecution is being handled by Assistant U.S. Attorneys Ethan D. Knight and Pamala Holsinger from the U.S. Attorney’s Office for the District of Oregon.  Trial Attorney Jolie F. Zimmerman, from the Counterterrorism Section of the Justice Department’s National Security Division, is assisting.

Ricky Lee Greenwood, of Portland, Ore., was indicted late last night on nine counts of wire fraud, nine counts of filing false claims for tax refunds, and eight counts of aggravated identity theft, the Justice Department and the Internal Revenue Service (IRS) announced. Greenwood made his initial appearance in court Wednesday in Portland.

According to the 26-count indictment, Greenwood electronically filed at least 66 false tax returns with fictitious wage and false dependent information, requesting at least $300,000 in fraudulent refunds. Greenwood is alleged to have obtained the names and Social Security numbers of unemployed individuals in order to file fraudulent tax returns in their names. According to the indictment, Greenwood also obtained the Social Security numbers of children and claimed them on the tax returns of unrelated individuals to maximize refundable credits – such as the Earned Income Tax Credit and the Additional Child Tax Credit – and further inflate the fraudulent refunds. In addition, according to the indictment, Greenwood had the fraudulent refunds delivered to him or deposited into accounts that he controlled.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Greenwood faces a maximum sentence of 5 years in prison for each false claims count, up to 20 years in prison for each wire fraud count, and a mandatory 2-year sentence on the aggravated identity theft counts. If convicted, he could be subject to fines, mandatory restitution and a money judgment.

This case was investigated by the IRS Criminal Investigation Stolen Identity Refund Fraud Task Force. Trial Attorneys Leslie A. Goemaat and Todd P. Kostyshak of the Justice Department’s Tax Division and Assistant U.S. Attorney Claire Fay are prosecuting the case.

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

The Justice Department announced today that, as part of its Barrier-Free Health Care Initiative, it has reached a settlement with the Fayetteville Pain Center under the Americans with Disabilities Act (ADA).  The settlement resolves allegations that the Fayetteville Pain Center violated the ADA by refusing to treat a woman because she has HIV.

The complainant, a woman with HIV who was suffering from back pain as a result of a car accident, visited the Fayetteville Pain Center in Fayetteville, N.C., seeking treatment.  According to the complaint, the woman was unable to obtain medical treatment because the doctor at the Fayetteville Pain Center refused to treat a person with HIV.  The ADA requires public accommodations such as doctors’ offices, medical clinics, hospitals, and other health care providers, to provide people with disabilities, including those with HIV, equal access to goods, services, and facilities.

Under the settlement, the Fayetteville Pain Center must pay $10,000 to the complainant and $5,000 to the United States in civil penalties, train its staff on the ADA, and develop and implement an anti-discrimination policy.

“All people deserve equal access to medical treatment.  People with HIV and other disabilities must not be denied health care because of their disabilities.  Medical professionals, perhaps more than anyone, should understand that the universal precautions they use when treating all patients mean no one should be excluded from treatment based on HIV,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “This type of discrimination will not be tolerated.”

The U.S. Attorney in Eastern North Carolina, Thomas G. Walker, emphasized that “this settlement should also send a message to all health care providers in Eastern North Carolina that a disability cannot be a factor in determining accessibility to care and treatment.”

This settlement is part of the Department of Justice’s Barrier-Free Health Care Initiative, a partnership of the Civil Rights Division and U.S. Attorneys’ offices across the nation, to target enforcement efforts on a critical area for individuals with disabilities.  The initiative was announced on the anniversary of the ADA in July 2012 and 40 U.S. Attorneys’ offices are participating.  The division expects the initiative to address access to health care for people with HIV and hearing disabilities, as well as physical access to medical facilities.  In 2012, the division and U.S. Attorneys reached two settlement agreements regarding access to medical care for people with HIV and four settlements regarding access to medical care for people with hearing disabilities. 

For more information on the ADA and HIV visit www.ada.gov/aids.  Those interested in finding out more information about these settlements or the obligations of public accommodations under the ADA, including how it protects people with HIV in accessing medical care, may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov.  ADA complaints may be filed by email to [email protected].

The Justice Department announced today that it has reached an agreement with Houston Community College (HCC) resolving allegations that the college violated the anti-discrimination provision of the Immigration and Nationality Act (INA).  HCC employs approximately 6,000 employees across 20 campuses and is one of the largest community colleges in the country.
 
The Justice Department’s investigation began after an individual filed a charge alleging that she was discriminated against in the hiring process.  The department’s investigation revealed that for at least the last two years, HCC has engaged in a pattern or practice of discrimination by requiring non-U.S. citizens to provide specific documentation establishing their work authority, while not making similar demands from U.S. citizens.  The department did not find that the individual that filed the charge was herself a victim of the discriminatory practice.
 
Under the terms of the agreement, HCC will pay $83,600 in civil penalties and agreed to abandon its prior department-based employment eligibility verification process in favor of a centralized verification process. HCC also agreed to create a $20,000 back pay fund to compensate potential victims who lost wages as a result of the discriminatory practices, to undergo Justice Department training on the anti-discrimination provision of the INA and to be subject to monitoring of its employment eligibility verification practices for a period of two years.   The case was handled by Trial Attorney Liza Zamd and settled prior to the Justice Department filing a complaint in this matter.
 
“Employers cannot create higher hurdles for non-U.S. citizens in the employment process, including the employment eligibility verification process, than those required of U.S. citizens or those required by law,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “We commend HCC for restructuring its hiring processes to ensure that it will no longer be treating new-hires differently based on their citizenship status.”
 
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.

Related Materials:

HCC Settlement Agreement

WASHINGTON – The Department of Justice filed a civil antitrust lawsuit today challenging Anheuser-Busch InBev’s (ABI) proposed acquisition of total ownership and control of Grupo Modelo.  The department said that the $20.1 billion transaction would substantially lessen competition in the market for beer in the United States as a whole and in 26 metropolitan areas across the United States, resulting in consumers paying more for beer and having fewer new products from which to choose. 

Americans spent at least $80 billion on beer last year.  According to the department, ABI’s Bud Light is the best selling beer in the United States and Modelo’s Corona Extra is the best-selling import.  Because of the size of the beer market in the United States, even a small increase in the price of beer could result in billions of dollars of harm to American consumers, the department said.

The department’s lawsuit, filed in the U.S. District Court for the District of Columbia, seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate.

“ The department is taking this action to stop a merger between major beer brewers because it would result in less competition and higher beer prices for American consumers,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “If ABI fully owned and controlled Modelo, ABI would be able to increase beer prices to American consumers.  This lawsuit seeks to prevent ABI from eliminating Modelo as an important competitive force in the beer industry.”   

ABI and Modelo–the largest and third largest beer firms, respectively–together control about 46 percent of annual sales in the United States.  MillerCoors, the second largest beer firm, accounts for about 29 percent of nationwide sales.  Beer is generally grouped into four distinct segments by industry participants–sub-premium, premium, premium plus and high-end.  The sub-premium segment includes: Busch (owned by ABI); and Keystone (owned by MillerCoors).  The premium segment includes:  Bud Light; Coors Light; and MillerLite.  The premium plus segment includes:  Michelob (owned by ABI); and Modelo Especial (owned by Modelo).  The high-end segment includes: imports such as Corona (owned by Modelo) and Heineken; and a variety of craft beers.

According to the department’s complaint, the U.S. beer market is already highly concentrated, and prices are increased by strategic interactions among the largest brewers, including ABI and MillerCoors.  ABI generally acts as the price leader, implementing annual price increases in the sub-premium, premium and premium plus segments of the U.S. beer industry.  MillerCoors and other brewers have typically joined the ABI price increases, while Modelo has not.  By pricing aggressively, Modelo–through its importer, Crown Imports–puts pressure on ABI to maintain or lower prices, especially in certain parts of the country.  As a result, Modelo has become a particularly important competitor in the U.S. market. 

The complaint quotes internal company documents demonstrating both ABI’s determination to maintain its upward price leadership in the U.S. beer industry and Modelo’s present-day position as a significant competitive threat to ABI:  

• ABI has implemented a “conduct plan,” whereby ABI hopes to establish “the highest level of [price] followership” by its large rivals by being as “consistent,” “simple” and “transparent” as possible;

• ABI believes that its conduct plan provides the highest possibility of “sustaining a price increase” and “ensuring competition does not believe they can take share through pricing”;

• By contrast, Modelo’s pricing strategy in the United States is known as the “momentum plan” and aims to narrow the “price gap” between Modelo’s imports and domestic premium beers, such as ABI’s Bud Light, stealing market share from ABI by enticing consumers to “trade up” to Modelo beer; and

• ABI executives acknowledge that Modelo has “put increasing pressure” on ABI competitively, and that Modelo’s strategy is at odds with ABI’s well-established practice of leading prices upward with the expectation that its competitors will follow.

The complaint also discusses ABI’s efforts to target Corona.  ABI considered Corona to be a significant threat, and launched Bud Light Lime in 2008 to compete with Corona.  ABI went as far as to mimic Corona’s distinctive clear bottle.   Ultimately, instead of trying to compete head-to-head with its own product, Bud Light Lime, ABI is thwarting competition by buying Modelo.

The department alleges that ABI’s acquisition of total ownership and control of Modelo would eliminate the existing competition between ABI and Modelo, further concentrating the beer industry, enhancing ABI’s market power and facilitating coordinated pricing between ABI and the remaining large players.  Consumers would, as a result, see higher prices and less innovation.

The department’s complaint also alleges that ABI and Modelo efforts to remedy the anticompetitive aspects of their transaction are inadequate.  The complaint states that ABI has agreed to sell Modelo’s existing 50 percent interest in Crown to its Crown joint venture partner, Constellation.  ABI would also enter into an exclusive agreement to supply Constellation with Modelo beer to import into the United States, although ABI can terminate this supply agreement after 10 years and would retain the Modelo brands and its brewing and bottling facilities.

“The companies’ attempt to fix this anticompetitive deal through t he sale of Modelo’s existing interest in Crown and a temporary supply agreement is not sufficient to prevent consumer harm from ABI’s acquisition of its competitor, Modelo,” said Baer.

The complaint states that the combined effect of the proposed acquisition of Modelo and the proposed fix is to eliminate from the marketplace a sophisticated brewing firm with a long history of success and replace it with an importer which will own no brands or brewing facilities and be totally dependent on ABI for its supply of Corona and other Modelo brands.  The documents in the case show that as Crown’s CEO wrote to his employees after the acquisition was announced:  “our #1 competitor will now be our supplier…it is not currently or will not, going forward, be ‘business as usual.’”  The department’s complaint said that not only will competition be harmed by the loss of Modelo as a competitor, but by removing an independent brewer–Modelo–from the market, strategically coordinated pricing will become easier in the future.

ABI is a Belgian corporation with its principal place of business in Leuven, Belgium.  In 2011, ABI had revenues of approximately $39 billion.  ABI currently has a 43 percent voting interest and a 50.35 percent economic interest in Modelo.  ABI has stated in its annual reports filed with the Securities and Exchange Commission that it does not have voting or other effective control of Modelo.  Through the proposed acquisition, ABI would acquire control of, and the remaining economic interest in Modelo.

Modelo is a Mexican corporation with its principal place of business in Mexico City.  In 2011, Modelo had revenues of approximately $7 billion.

Jesus Enrique Rejon Aguilar, aka “Mamito” and “Caballero,” a high ranking member of the “Los Zetas” drug cartel, pleaded guilty today to conspiracy to import multi-ton quantities of cocaine and marijuana into the United States, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Administrator Michele M. Leonhart of the Drug Enforcement Administration (DEA). 

Rejon Aguilar, 36, pleaded guilty before U.S. District Judge Barbara J. Rothstein in the District of Columbia.  Rejon Aguilar was extradited to the United States in September 2012 and was ordered detained in federal custody pending trial.

On Nov. 4, 2010, Rejon Aguilar and 19 co-defendants were charged in a superseding indictment with conspiracy to manufacture and distribute five kilograms or more of cocaine and 1,000 kilograms or more of marijuana for importation into the United States.  The indictment charges that between 2000 and 2010, members of Los Zetas, including Rejon Aguilar, engaged in a conspiracy with members of the Gulf Cartel in an arrangement referred to as the “Company” to import drugs into the United States.  Rejon Aguilar was an original member of Los Zetas and held a high ranking position with the Company.

 “As a leader of the Company’s drug trafficking operation, Rejon Aguilar ensured that mass quantities of cocaine and marijuana were brought into the United States for distribution,” said Assistant Attorney General Breuer.  “The Justice Department is committed to working with its law enforcement partners to bring cartel members and associates to justice for their crimes.”

“As an original and high-ranking member of the Los Zetas cartel, Jesus Enrique Rejon Aguilar was responsible for funneling massive amounts of marijuana and cocaine into the United States while using violence to intimidate anyone that stood in his way,” said DEA Administrator Leonhart.  “Rejon Aguilar’s plea today was possible only with the strength and power of international law enforcement cooperation.  DEA, along with our Mexican counterparts, are committed to bringing violent criminals like Rejon Aguilar, to justice.”

According to the indictment, the Company transported shipments of cocaine and marijuana by motor vehicles from Mexico to cities in Texas for distribution to other cities within the United States.  The indictment alleges that Rejon Aguilar, his co-defendants and others organized, directed and carried out various acts of violence to retaliate against and to intimidate anyone who interfered with, or who were perceived to potentially interfere with, the cocaine and marijuana trafficking activities of the Company.

On April 15, 2009, under the Foreign Narcotics Kingpin Designation Act, the President identified Los Zetas as a Significant Foreign Narcotics Trafficker.  On March 24, 2010, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) named Rejon Aguilar as a Significant Foreign Narcotics Trafficker.  On July 25, 2011, an executive order was issued that blocks the transfer, payment or export of property belonging to certain transnational criminal organizations, including Los Zetas.

The department expressed its gratitude and appreciation to the government of Mexico for its assistance in this matter.  

 At sentencing, Rejon Aguilar faces a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison. 
 
The case is being prosecuted by trial attorneys from the Criminal Division’s Narcotic and Dangerous Drug Section.  The Criminal Division’s Office of International Affairs provided significant assistance in the extradition.  The investigation in this case was led by the DEA’s Houston Field Division and the DEA Bilateral Investigation Unit.

U.S. District Court Judge Lesley Wells entered a consent decree of permanent injunction against Ben Venue Laboratories Inc., a Bedford, Ohio-based drug manufacturer, the Justice Department announced today.  The permanent injunction was also entered against George P. Doyle, president and chief executive officer, Kimberly A. Kellermann, vice president of operations, and Douglas A. Rich, vice president of quality operations, for Ben Venue. The department, at the request of the Food and Drug Administration (FDA), asked the court to enter the consent decree.

Ben Venue manufactures numerous generic sterile injectable drug products, including cancer medications. As set forth in the complaint filed by the United States on January 22, FDA conducted an inspection of defendants’ facility from Nov. 7 to Dec. 2, 2011, and documented 10 deviations from current good manufacturing practices. According to the complaint, the FDA found, among other things, that the company failed to create and follow appropriate procedures to prevent contamination of drugs which were purported to be sterile. The FDA also found that the company failed to properly clean and maintain its equipment to ensure the safety and quality of the drugs it manufactured. In addition, the FDA determined that the company failed to conduct adequate investigations of drugs that did not meet their specifications.

Compliance with current good manufacturing practices requirements assures that drugs meet the safety requirements of the law and have the identity and strength and meet the quality and purity characteristics that they purport to or are represented to possess. FDA regulations, which establish minimum current good manufacturing practices applicable to human drugs, require manufacturers to control all aspects of the processes and procedures by which drugs are manufactured in order to prevent the production of unsafe and ineffective products.

According to the complaint, t he deviations observed by FDA during the November - December 2011 inspection were similar to deviations observed by FDA during its many previous inspections of Ben Venue’s facility. During FDA’s May 2011 inspection, FDA documented 48 deviations from current good manufacturing practices including an inadequate quality control unit, inadequate and untimely investigations, inadequately designed aseptic processing areas, poor employee aseptic practices, failure to prevent microbial contamination of drug products purporting to be sterile and failure to determine the root cause for microbial contaminants.

As described in the complaint, FDA’s long inspection and regulatory history of Ben Venue, including 35 inspections since 1997, and approximately 40 recalls since February 2002 associated with drugs manufactured at the Ben Venue facility (including 10 recalls in 2011 and 10 recalls in 2012), reflects a continuing pattern of significant deviations from current good manufacturing practices with its drugs. Some recalls involved drugs contaminated with glass and other particulates. Additional recalls were based on the company’s inability to assure the drug’s sterility. Of the roughly 40 recalls, nine were classified by FDA as “Class I,” meaning that FDA determined that there was “a reasonable probability that the use of . . . a violative product will cause serious adverse health consequences or death.”

The consent decree entered resolves the complaint by requiring Ben Venue to take a wide range of actions to correct its violations and ensure that they do not happen again.  The injunction establishes a series of steps which must occur before Ben Venue can fully resume operations, including the retention of an expert to inspect the company’s facility, the development and then implementation of a remediation plan, and an inspection by FDA to confirm that the company’s manufacturing processes are fully compliant with the law.

“This consent decree restricts Ben Venue from manufacturing and distributing certain drugs until the company fully complies with the law,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division.  “As this case demonstrates, the Department of Justice and FDA will work together to protect the health and safety of Americans by making sure that those who produce and distribute prescription drugs follow the law.”    

“This resolution comes following nearly three dozen inspections which revealed inadequate quality control, including contaminated drugs, and led to approximately 40 recalls on products from this facility alone,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “The Justice Department and the Food and Drug Administration will continue to place its highest priority on protecting consumers.”

Under the decree, Ben Venue may continue to manufacture and distribute a subset of their drugs (listed on Attachment A to the decree), which FDA has determined are currently in shortage (domestically or abroad) or are vulnerable to shortage. However, prior to distribution of each batch of these drugs, the company’s expert must conduct a batch-by-batch review and certify that no deviations occurred during the manufacture of the drug that would adversely affect the safety or quality of the batch.

Principal Deputy Assistant Attorney General Delery thanked the FDA for referring this matter to the Department of Justice.  Jeffrey Steger, Assistant Director of the Consumer Protection Branch of the Justice Department and Michele Svonkin, Counsel at FDA’s Office of the Chief Counsel, brought this case on behalf of the United States.