District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Guy G. Gebhardt Is Appointed Acting U.S. Trustee for Florida, Georgia, Puerto Rico, Virgin IslandsRead the Press Release
WASHINGTON – Guy G. Gebhardt has been appointed by Attorney General Eric Holder as Acting U.S. Trustee for Florida, Georgia, Puerto Rico, and the U.S. Virgin Islands (Region 21), effective on January 12, 2013, the Executive Office for U.S. Trustees announced today. He replaces Donald F. Walton, who is retiring after 25 years with the U.S. Trustee Program (USTP), including the past four and a half as U.S. Trustee.
Mr. Gebhardt has served since 1991 as the Assistant U.S. Trustee in the Atlanta office. He has participated in numerous working groups to implement USTP priorities that include coordinating national enforcement against identity theft and unlawful “foreclosure rescue” operations, tracking and reporting civil enforcement activities, and streamlining field office operations. He was a recipient of the Director’s Award for Exemplary Service in November 2002 for his longstanding contributions to the USTP. Before joining the USTP, Mr. Gebhardt practiced law in Atlanta for 17 years. He received his undergraduate degree cum laude from Illinois Wesleyan University in Bloomington, Ill., and, after serving in the U.S. Army, received his law degree from Vanderbilt University School of Law in Nashville, Tenn.
The USTP is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The USTP has 21 regions and 95 field offices. Region 21 is headquartered in Atlanta with additional offices in Macon and Savannah, Ga.; Miami, Orlando, Tallahassee, and Tampa, Fla.; and San Juan, Puerto Rico.
Contact:Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees
(202) 305-7411Georgia Woman Indicted for Stealing Identities to Obtain Tax RefundsRead the Press Release
A federal grand jury in Montgomery, Ala., returned a superseding indictment charging Deatrice Smith Williams and Quentin Collick for their roles in a stolen identity refund fraud conspiracy, Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division, U.S. Attorney for the Middle District of Alabama George L. Beck Jr. and the Internal Revenue Service (IRS) announced today. The 13 count indictment charges Williams and Collick with conspiracy to file false claims, theft of public funds, wire fraud and aggravated identity theft.
On Aug. 9, 2012, Quentin Collick was indicted for his role in the conspiracy. In November 2012, pursuant to a criminal complaint, Williams was arrested for her role in the conspiracy. The superseding indictment was unsealed today.
According to court documents, Williams worked for a debt collection company in Georgia. As part of her employment, Williams had access to names and social security numbers. She provided several names and Social Security numbers to her son-in-law, Quentin Collick. Collick, and his co-conspirators used those names to file false tax returns from the Middle District of Alabama. Collick and his co-conspirators, in turn, cashed several fraudulent federal refund checks.
An indictment merely alleges that crimes have been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Collick and Williams each face maximum potential sentences of 10 years in prison for the conspiracy count, up to 20 years in prison for each wire fraud count, and a mandatory 2-year sentence for the aggravated identity theft counts. Collick also faces up to 10 years in prison for each theft of public funds count. They are also subject to fines and mandatory restitution if convicted.
The case was investigated by Special Agents of the IRS - Criminal Investigation. Tax Division Trial attorneys Jason H. Poole and Michael Boteler 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.
EMH Regional Medical Center and North Ohio Heart Center <br /> to Pay U.S. $4.4 Million to Resolve False Claims Act AllegationsRead the Press Release
EMH Regional Medical Center (EMH) has agreed to pay the United States $3,863,857 and North Ohio Heart Center Inc. (NOHC) has agreed to pay the United States $541,870 to settle allegations that they submitted false claims to Medicare, the Justice Department announced today.
EMH is a non-profit community hospital system located in Lorain County, Ohio. During the relevant time period, NOHC was an independent physician group located in Lorain County that practiced at EMH. The settlement resolves allegations that between 2001 and 2006 EMH and NOHC performed unnecessary cardiac procedures on Medicare patients. Specifically, the United States alleged that EMH and NOHC performed angioplasty and stent placement procedures on patients who had heart disease but whose blood vessels were not sufficiently occluded to require the particular procedures at issue.
“Billing Medicare for cardiac procedures that are not necessary or appropriate contributes to the soaring costs of health care and puts patients at risk. The settlement demonstrates the Department of Justice’s efforts both to protect public funds and safeguard Medicare beneficiaries,” said Stuart F. Delery, Principal Deputy Assistant Attorney General of the Justice Department’s Civil Division.
“ Most doctors act responsibly,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. “ These few didn't. Patient health and taxpayer dollars have to come before greed.”
This matter was initiated by the filing of a whistleblower complaint under the False Claims Act (FCA). Under the FCA, private citizens can bring suit for false claims on behalf of the United States and receive a share of the recovery obtained by the government. The whistleblower in this matter, Kenny Loughner, was the former manager of EMH’s catheterization and electrophysiology laboratory. As a result of the settlement, Mr. Loughner will receive $660,859 of the United States’ recovery.
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 $10.1 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 $13.8 billion.
The investigation was jointly handled by the U.S. Attorney’s Office for the Northern District of Ohio, the Justice Department’s Civil Division, the Office of the Inspector General of the Department of Health and Human Services Cleveland Field Office and the FBI. The claims resolved by this settlement are allegations only, and there has been no determination of liability.
The case is captioned United States ex rel. Loughner v. EMH Regional Medical Center, et al. , Case No. 1:06-cv-2441 (N.D. Oh.)
U.S. Soldier Sentenced in Texas to 18 Months in Prison for His Role in Fraudulent Military Recruiting Referral Bonus SchemeRead the Press Release
WASHINGTON ? A member of the U.S. military was sentenced today to serve 18 months in prison for his participation in a conspiracy to obtain approximately $244,000 in fraudulent recruiting referral bonuses from various U.S. military components and their contractor, announced Assistant Attorney General Lanny A. Breuer of the Justice Department?s Criminal Division.
U.S. Army Specialist Richard Garcia, 29, of Kirby, Texas, was sentenced today by Chief U.S. District Judge Fred Biery in the Western District of Texas. In addition to his prison term, Judge Biery sentenced Garcia to serve three years of supervised release and ordered Garcia to pay $244,000 in restitution, jointly and severally with co-conspirators.
On July 26, 2012, Garcia pleaded guilty to one count of conspiracy to commit wire fraud.
According to court documents, Garcia enlisted in the U.S. Army in approximately November 2005.
According to court documents, between 2005 and 2008, the U.S. Army, the U.S. Army Reserves and the National Guard Bureau entered into contracts with Document and Packaging Broker Inc. (Docupak) to administer recruiting bonus programs designed to offer monetary incentives to soldiers who referred others to join the U.S. military. In addition, the Army managed its own recruiting bonus programs, which offered bonuses to soldiers who referred other individuals to join the Army or the Army Reserves after registering online as recruiting assistants (RA) or sponsors. Through these recruiting programs, a participating soldier could receive up to $2,000 in bonus payments for every person he referred to serve in the U.S. military.
Garcia admitted that he participated in a fraud scheme whereby active duty and civilian contract recruiters provided RAs and sponsors with the names and Social Security numbers of ?walk-in? soldiers ? or persons who decided to join the military without being referred by anyone. Using this information, the RAs and sponsors claimed credit for referring these potential soldiers to join the military, when in fact they did not refer them. As part of the fraud scheme, the RAs and sponsors split the bonus payments with the recruiters and others who provided the potential soldiers? personal identifying information.
According to court documents, Garcia and his co-conspirators received at least $244,000 in fraudulent recruiting referral bonuses in total. Garcia and a co-conspirator personally received a total of approximately $13,000 in fraudulent recruiting referral bonuses by using Garcia?s RA account to claim that Garcia was responsible for referring certain potential soldiers to the U.S. Army, when in fact he had not referred those soldiers.
This case arose from an investigation concerning allegations that former and current soldiers and military and civilian contract recruiters in the San Antonio area engaged in a wide-ranging scheme to obtain fraudulent recruiting referral bonuses. To date, 10 individuals have been charged, all of whom have pleaded guilty. The investigation is ongoing.
The case is being prosecuted by Trial Attorneys Edward J. Loya Jr., Brian A. Lichter and Sean F. Mulryne of the Criminal Division?s Public Integrity Section. The case is being investigated by agents from the San Antonio Fraud Resident Agency of the Major Procurement Fraud Unit, U.S. Army Criminal Investigation Division.
U.S. Announces Clean Air Act Settlement with Wisconsin UtilityRead the Press Release
WASHINGTON – The Wisconsin Public Service Corporation (WPS) will invest approximately $300 million in pollution control technology, pay a civil penalty of $1.2 million, and spend $6 million on environmental mitigation projects to resolve violations of the Clean Air Act (CAA), according to the terms of a settlement with the United States, announced today by the Department of Justice and the U.S. Environmental Protection Agency (EPA).
“This settlement will eliminate thousands of tons of harmful air pollution each year, thus improving air quality in Wisconsin and downwind areas,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “The agreement, which requires WPS to reduce emissions from both of its coal-fired power plants in Wisconsin, demonstrates the Justice Department’s continuing efforts, along with EPA, to bring large sources of air pollution into compliance with the Clean Air Act.”“EPA is committed to protecting communities from the pollution problems that matter most, including reducing air pollution from the largest sources of emissions,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “The pollution reductions and the significant investment in local environmental projects under this agreement will ensure that the people of Wisconsin and neighboring states have cleaner, healthier air.”
“This resolution of the Clean Air Act claims against WPS not only ensures that the damage to our environment from past, excessive emissions will be addressed but that residents throughout the region will benefit from the latest technology, resulting in significant future reductions in air pollutants,” said James L. Santelle, U.S. Attorney for the Eastern District of Wisconsin. “The Justice Department and the EPA are strongly committed to promote innovative, alternative, and renewable sources of energy that also ensure that our next generations will breathe air that does not compromise their health. Today’s settlement promotes both goals—and accomplishes environmental justice for all Americans.”
The settlement, which covers the utility’s two power plants – the Pulliam plant in Green Bay, Wis., and the Weston plant in Rothschild, Wis. – requires WPS to install new pollution control technology on one of its largest units, to continuously operate the new and existing pollution controls, and to comply with stringent emission rates and annual tonnage limitations. The settlement also requires WPS to permanently retire, refuel or repower four additional coal-fired units at the Pulliam and Weston plants. The actions taken by WPS to comply with this settlement will result in annual reductions of sulfur dioxide (SO2), nitrogen oxides (NOx), and particulate matter emissions by approximately 15,000 tons from 2010 levels. This settlement covers all eight coal-fired boilers at WPS’s two power plants.
WPS will also spend $6 million on projects that will benefit the environment and human health in communities located near the WPS facilities. WPS must pay $250,000 each to the U.S. Forest Service and the National Park Service, to be used on projects to address the damage done from WPS’s alleged excess air emissions. Up to $4 million will be spent on a renewable energy resource enhancement project, up to $1.2 million on a wood stove change-out project, and up to $300,000 on a community digester project to convert food and/or animal waste to biogas or electricity. WPA may also fund a compressed natural gas or hybrid fleet conversion project, or a solar panel installation project.
Reducing air pollution from the largest sources of emissions, including coal-fired power plants, is one of EPA’s National Enforcement Initiatives for 2011-2013. SO2 and NOx, two key pollutants emitted from power plants, have numerous adverse effects on human health and are significant contributors to acid rain, smog and haze. These pollutants are converted in the air to fine particles of particulate matter that can cause severe respiratory and cardiovascular impacts, and premature death. Reducing these harmful air pollutants will benefit the communities located near WPS facilities, particularly communities disproportionately impacted by environmental risks and vulnerable populations, including children. Because air pollution from power plants can travel significant distances downwind, this settlement will also reduce air pollution outside of the immediate region.This is the 25th settlement secured as part of EPA’s national enforcement initiative to control harmful emissions from power plants under the Clean Air Act’s New Source Review requirements. The total combined sulfur dioxide and nitrogen oxides emission reductions secured from these settlements will exceed 2 million tons each year once all the required pollution controls have been installed and implemented.
The settlement was lodged in the U.S. District Court for the Eastern District of Wisconsin, and is subject to a 30-day public comment period and final court approval. It will be available for viewing at www.justice.gov/enrd/Consent_Decrees.html.
More information about the settlement: www.epa.gov/enforcement/air/cases/wps.html
More information about EPA’s enforcement initiative: www.epa.gov/compliance/data/planning/initiatives/2011airpollution.html
Pittsburgh Ex-Convict Pleads Guilty to Tax ObstructionRead the Press Release
Michael Carlow, a resident of Pittsburgh, pleaded guilty today to corruptly endeavoring to obstruct the Internal Revenue Service (IRS), the Justice Department and IRS announced. Carlow appeared before U.S. District Judge David Cercone.
In 1996, Carlow pleaded guilty to bank fraud and tax fraud in federal court and was sentenced to eight years in prison. Upon his release in 2002, Carlow resided at the home of his girlfriend, Elizabeth Jones, in Pittsburgh.
According to documents filed in the case, the IRS assessed more than $6 million in overdue taxes, interest and penalties against Carlow for the years 1992 through 1996. However, from 2000 through 2011, in order to thwart efforts by the IRS to collect what he owed, Carlow concealed his assets and income through Jones and eight different nominee corporations. According to documents filed in the case, Carlow maintained a secret interest in various corporations and had fees and royalties paid to Jones rather than to himself. He also failed to report his ownership and control of corporate assets to U.S. Probation and the IRS. Carlow filed false U.S. individual income tax returns for 2003-2006 and failed to file U.S. individual income tax returns from 2008 through 2011. In August 2011, Jones pleaded guilty to her conduct related to acting as a nominee for Carlow.
Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division, commended the investigative efforts of IRS - Criminal Investigation Special Agents, who investigated the case, and Tax Division Trial Attorneys Kenneth Vert and Jeffrey McLellan, who are prosecuting the case.
Sentencing is scheduled for Oct. 4, 2013.
Gail B. Geiger Is Appointed Acting U.S. Trustee for Alaska, Idaho, Montana, Oregon, WashingtonRead the Press Release
WASHINGTON – Gail B. Geiger has been appointed by Attorney General Eric Holder as Acting U.S. Trustee for Alaska, Idaho, Montana, Oregon, and Washington (Region 18), effective on January 5, 2013, the Executive Office for U.S. Trustees announced today. She replaces Robert D. Miller Jr., who is retiring after nearly 25 years with the U.S. Trustee Program (USTP), including the past two and a half as U.S. Trustee.
Prior to her appointment as Acting U.S. Trustee, Ms. Geiger served as the Assistant U.S. Trustee in the Eugene, Ore., office. She has also served as Special Assistant to the Office of the General Counsel in the Executive Office for U.S. Trustees (EOUST) in Washington, D.C., coordinating USTP enforcement activity relating to mortgage servicers and other creditors, and as Associate General Counsel for Consumer Practice in the EOUST's Office of the General Counsel, advising USTP field offices on consumer bankruptcy issues. In October 2011, she was part of a team of USTP employees who received the Attorney General's Award for Distinguished Service for their work on the $25 billion National Mortgage Settlement. Other assignments in the USTP include serving as Acting Assistant U.S. Trustee in Riverside, Calif.; a Trial Attorney in Seattle; and Attorney in Charge in Agana, Guam.
Before joining the USTP in 1990, Ms. Geiger practiced law with a Seattle law firm and served as an Assistant Attorney General for the Commonwealth of the Northern Mariana Islands. Ms. Geiger received her law degree cum laude from Willamette University Law School in Salem, Ore., and her undergraduate degree from Gonzaga University in Spokane, Wash.
The USTP is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The USTP has 21 regions and 95 field offices. Region 18 is headquartered in Seattle, with additional offices in Spokane, Wash.; Anchorage, Alaska; Boise, Idaho; Eugene and Portland, Ore.; and Great Falls, Mont.
Contact:Jane Limprecht, Public Information Officer
Executive Office for U.S. Trustees
(202) 305-7411Former Prince George’s County, Maryland, Correctional Officer Pleads Guilty to Obstruction of JusticeRead the Press Release
Anthony McIntosh, a former correctional officer at the Prince George’s County Detention Center, in Upper Marlboro, Md., today pleaded guilty to obstruction of justice for providing false information about the circumstances surrounding the in-custody death of Ronnie White on June 29, 2008. White, at the time of his death, was being detained on charges related to the death two days earlier of a Prince George’s County police officer.
McIntosh, 49, of Brooklyn, N.Y., pleaded guilty to a violation of 18 U.S.C. § 1519 for providing false information in a witness statement he submitted to a police detective investigating White’s in-custody death. McIntosh admitted during his guilty plea that when he wrote his witness statement, he omitted material information that was truthful, and included information that he knew was false. Specifically, McIntosh claimed in the false witness statement that another officer had discovered White unresponsive in his single-occupant cell and had then summoned McIntosh to the cell. During the guilty plea, McIntosh admitted that, in actuality, he had been the first correctional officer to find White unresponsive in the cell, and had failed to call a medical emergency signal as required by the Department of Corrections. McIntosh also admitted that he included in his statement the false claims that he never moved Ronnie White and that he “didn’t know what was going on” when his partner told him that White appeared to be unresponsive.
“Instead of lawfully carrying out his critical public safety responsibilities, Mr. McIntosh used his position to obstruct the search for the truth,” said Assistant Attorney General for the Civil Rights Division Thomas E. Perez. “The Justice Department will continue to vigorously prosecute officers who cross the line and engage in criminal misconduct.”
McIntosh faces a maximum penalty of 20 years in prison and a fine of $250,000. Sentencing is set for April 8, 2013, before U.S. District Judge Alexander Williams Jr.
The case was investigated by the Baltimore Division of the FBI and was prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Ali Ahmad of the Civil Rights Division of the Department of Justice, with the assistance of the U.S. Attorney’s Office for the District of Maryland.
Former Police Officer in New Town, North Dakota, Arrested on Federal Civil Rights ViolationRead the Press Release
The Justice Department announced today that Lindrith Tsoodle, 57, a former officer with the Three Affiliated Tribes Police Department, was apprehended and arrested on the Rocky Boy Reservation in Montana yesterday in relation to his indictment on civil rights and obstruction violations.
Tsoodle was indicted on Dec. 13, 2012. The indictment alleges that, on Dec. 6, 2010, Tsoodle, while acting in his capacity as a police officer, assaulted “T.K.” during an arrest while T.K. was handcuffed, thereby violating his civil rights. The indictment alleges that Tsoodle slammed T.K. against a wall, excessively tightened his handcuffs, shoved him into a police car, used Oleoresin Capsicum spray on him, and struck him repeatedly, both with his body and with a baton. The indictment further charges that T.K. suffered bodily injury as a result of Tsoodle’s use of excessive force.
According to the indictment, following the assault on T.K., Tsoodle attempted to convince a witness not to report the incident to other law-enforcement officials and lied to a federal agent about the assault.
Tsoodle is also charged with assaulting “S.L.” during a separate arrest. The indictment alleges that, on Nov. 20, 2010, while S.L. was in handcuffs, Tsoodle twisted his neck, shoved him to the ground, and kneed him in the chest, thereby violating his civil rights.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
This case is being investigated by the North Dakota Division of the FBI and is being prosecuted by Special Litigation Counsel Gerard V. Hogan and Trial Attorney Dana Mulhauser of the Civil Rights Division of the U.S. Department of Justice.
Former Owner of Employee Leasing Company Pleads Guilty in Salt Lake City to Federal Employment Tax CrimeRead the Press Release
Richard R. Whatley, a former owner of Alliance Staffing Management Inc. (ASM), pleaded guilty today for willfully failing to account for and pay over employment taxes, the Justice Department and the Internal Revenue Service (IRS) announced today. Whatley appeared before Judge David Nuffer in Salt Lake City.
In January 2010, a federal grand jury charged Whatley with five counts of willfully failing to account for and pay over employment taxes, relating to three different employee leasing companies that he operated and controlled between the years 2001 and 2006. According to the terms of the written plea agreement, Whatley pleaded guilty to one count of the superseding indictment and may serve between 41 months and 51 months in federal prison. Whatley will also pay $541,513.61 in restitution to the IRS.
According to the plea agreement, during the 2002 through 2004 tax years, Whatley held an ownership interest in and had the ability to control the finances of ASM, an employee leasing company. Whatley’s control included determining the amount of employment taxes that had to be paid over to the IRS and the authority to decide which bills would be paid and which bills would not be paid. Whatley was also a responsible person at ASM for paying over the employment taxes to the IRS. As charged in the superseding indictment, in the fourth tax quarter of 2003, Whatley caused the collection of employment taxes from ASM’s employees’ wages and then willfully failed to pay over $541,513.61 in employment taxes (employee portion) to the IRS.
Sentencing is scheduled for July 10, 2013 before Judge Nuffer in Salt Lake City.
The case is being prosecuted by Trial Attorneys Christopher J. Maietta and Stuart A. Wexler of the Justice Department’s Tax Division, and was investigated by special agents of IRS - Criminal Investigation.
More information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax .
Foreign National Pleads Guilty in Houston <br /> to Human Smuggling ChargesRead the Press Release
WASHINGTON – A foreign national pleaded guilty today to federal human smuggling charges for his role in a scheme to smuggle undocumented migrants from India into the United States, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Kenneth Magidson for the Southern District of Texas; and Special Agent in Charge Brian M. Moskowitz of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) in Houston
Fabiano Augusto Amorim, 28, a Brazilian national, pleaded guilty today at a hearing before U.S. District Judge Ewing Werlein Jr. in Houston, to one count of conspiracy to bring undocumented migrants into the United States for profit and to one count of unlawfully bringing two undocumented migrants into the United States for profit.
On June 6, 2012, Amorim was charged by indictment, along with four other individuals, with one count of conspiracy to smuggle undocumented migrants into the United States and six human smuggling counts related to five incidents in which Amorim helped smuggle undocumented migrants into the United States. Based on Amorim’s guilty plea, the government will dismiss the remaining human smuggling counts against him at sentencing.
At the plea hearing and in related court documents, Amorim admitted that between January 2011 and April 2012, he conspired with his co-defendants to bring undocumented migrants to the United States, and to encourage and induce undocumented migrants to come to the United States unlawfully. According to court documents, Amorim and his co-conspirators devised the scheme to profit financially.
In support of the conspiracy, Amorim and other conspirators recruited individuals in India who were willing to pay up to $60,000 to be smuggled into the United States. For their smuggling operations, Amorim and his co-conspirators used a network of alleged conspirators in South America, Central America, the Caribbean and the United States, including the state of Texas. Using this network, Amorim and his co-conspirators transported groups of undocumented migrants from locations within India through South America, Central America and the Caribbean and then into the United States by various means, including by air travel, automobiles, water craft and foot. Many of these smuggling events, including five of the incidents described in the indictment, involved illegal entry into the United States via the border between the United States and Mexico near McAllen and Laredo, Texas.
At sentencing, which is scheduled for April 5, 2013, Amorim faces a maximum sentence of 15 years in prison and a fine of up to $500,000. Amorim currently is serving a 36-month sentence in federal prison for participating in a separate conspiracy to smuggle undocumented migrants from Brazil and Peru into the United States via a maritime route from the Bahamas into southern Florida.
Amorim’s co-conspirator Maria Adela De Luna pleaded guilty on Nov. 9, 2012, to one count of conspiracy to harbor undocumented migrants in the United States. Co-conspirator Kaushik Jayantibhai Thakkar pleaded guilty on Dec. 3, 2012, to one count of conspiracy to bring undocumented migrants into the United States for profit and to one count of unlawfully bringing two undocumented migrants into the United States for profit.The investigation was conducted by agents with ICE-HSI in McAllen and Houston, with the assistance of U.S. Customs and Border Protection’s Alien Smuggling Interdiction Unit. This case is being prosecuted jointly by Trial Attorney Stephen Curran of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorneys Leo J. Leo III and Casey MacDonald of the Southern District of Texas.
The investigation was conducted under the Extraterritorial Criminal Travel Strike Force (ECT) program, a joint partnership between the Justice Department’s Criminal Division and HSI. The ECT program focuses on human smuggling networks that may present particular national security or public safety risks, or present grave humanitarian concerns. ECT has dedicated investigative, intelligence and prosecutorial resources. ECT coordinates and receives assistance from other U.S. government agencies and foreign law enforcement authorities.U.S. Army Major Pleads Guilty in South Carolina to Defrauding U.S. GovernmentRead the Press Release
WASHINGTON – A U.S. Army Major has pleaded guilty today to accepting thousands of dollars in gratuities from contractors while he was a U.S. Army captain deployed to Iraq, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the District of South Carolina William N. Nettles.
Ulysses S. Hicks, 40, of Sumter, S.C., pleaded guilty before U.S. District Chief Judge Margaret B. Seymour in the District of South Carolina to a criminal information charging him with one count of conspiracy to accept illegal gratuities.
According to court documents, Hicks was a captain in the U.S. Army, who was deployed to Forward Operating Base (FOB) Hammer in Iraq as a pay agent for field ordering officer (FOO) funds. FOO funds are used to purchase miscellaneous items and supplies such as paint, lumber and plywood from local vendors. It is a violation of federal law for pay agents to accept gratuities from contractors dependent upon them for contracts.
From about March 2007 through October 2008, Hicks, along with co-conspirator former U.S. Army Master Sergeant Julio Soto Jr., was involved with the construction of a government building at FOB Hammer by local Iraqi contractors. According to court documents, Hicks and Soto unlawfully sought, received and accepted illegal gratuities for helping Iraqi contractors gain U.S. government contracts. After accepting the illegal gratuities, Hicks and Soto purchased U.S. Postal money orders with the illegal proceeds and mailed them back to the United States.
At sentencing, Hicks faces a maximum penalty of five years in prison, a fine of $250,000 and up to three years of supervised release. As part of his plea agreement, Hicks agreed to pay $65,409 plus interest in restitution to the United States.
Soto pleaded guilty on Aug. 29, 2012, before U.S. District Chief Judge Seymour to a criminal information charging him with one count of conspiracy to accept illegal gratuities. On Dec. 7, 2012, Soto was sentenced to serve five years of probation and ordered to pay $62,542 in restitution.
This case is being prosecuted by Special Trial Attorney Mark Grider of the Criminal Division’s Fraud Section, on detail from the Special Inspector General for Iraq Reconstruction (SIGIR), and by Assistant U.S. Attorney Winston Holliday, Deputy Chief of the General Crimes Section of the U.S. Attorney’s Office for the District of South Carolina. The case was investigated by SIGIR, the Defense Criminal Investigative Service and the Major Procurement Fraud Unit of the U.S. Army Criminal Investigation Command.
Transocean Agrees to Plead Guilty to Environmental Crime and Enter Civil Settlement to Resolve U.S. Clean Water Act<br /> Penalty Claims from Deepwater Horizon IncidentRead the Press Release
WASHINGTON – Transocean Deepwater Inc. has agreed to plead guilty to violating the Clean Water Act (CWA) and to pay a total of $1.4 billion in civil and criminal fines and penalties, for its conduct in relation to the Deepwater Horizon disaster, the Department of Justice announced today. The criminal information and a proposed partial civil consent decree to resolve the U.S. government’s civil penalty claims against Transocean Deepwater Inc. and related entities were filed today in U.S. District Court in the Eastern District of Louisiana.
Transocean Deepwater Inc. has signed a cooperation and guilty plea agreement with the government, also filed today, admitting its criminal conduct. As part of the plea agreement, Transocean Deepwater Inc. has agreed, subject to the court’s approval, to pay $400 million in criminal fines and penalties and to continue its on-going cooperation in the government’s criminal investigation. In addition, pursuant to the terms of a proposed partial civil consent decree also lodged with the court today, Transocean Ocean Holdings LLC, Transocean Offshore Deepwater Drilling Inc., Transocean Deepwater Inc. and Triton Asset Leasing GMBH have agreed to pay an additional $1 billion to resolve federal Clean Water Act civil penalty claims for the massive, three-month-long oil spill at the Macondo Well and the Transocean drilling rig Deepwater Horizon. Under the civil settlement, the Transocean defendants also must implement court-enforceable measures to improve the operational safety and emergency response capabilities at all their drilling rigs working in waters of the United States.
“This resolution of criminal allegations and civil claims against Transocean brings us one significant step closer to justice for the human, environmental and economic devastation wrought by the Deepwater Horizon disaster,” said Attorney General Eric Holder. “This agreement holds Transocean criminally accountable for its conduct and provides nearly a billion dollars in criminal and civil penalties for the benefit of the Gulf states. I am particularly grateful today to the many Justice Department personnel and federal investigative agency partners for the hard work that led to today’s resolution and their continuing pursuit of justice for the people of the Gulf.”
“Today’s announced settlement will aid the Gulf region’s recovery from the Deepwater Horizon oil spill and require Transocean to take important steps that will help guard against such incidents happening in the future,” said Acting Associate Attorney General Tony West. “This resolution is the culmination of the tremendous efforts of many attorneys and staff in the Justice Department’s Criminal, Civil and Environment and Natural Resources Divisions – dedicated public servants whose hard work continues on behalf of the American people.”
“Transocean’s rig crew accepted the direction of BP well site leaders to proceed in the face of clear danger signs — at a tragic cost to many of them,” said Lanny A. Breuer, Assistant Attorney General for the Justice Department’s Criminal Division. “Transocean’s agreement to plead guilty to a federal crime, and to pay a total of $1.4 billion in criminal and civil penalties, appropriately reflects its role in the Deepwater Horizon disaster.”
“The development and exploration of a domestic source of energy is vitally important, and it can and must be done in a responsible and sound manner. This unprecedented settlement under the Clean Water Act demonstrates that companies will be held fully accountable for their conduct and share responsibility for compliance with the laws that protect the public and the environment from harm,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department's Environment and Natural Resources Division. “This settlement will provide immediate relief and benefits to the people of the five Gulf states, and requires Transocean to implement significant safety measures, as well as stringent auditing and monitoring to reduce the risk of any future disasters.”
“Today’s settlement and plea agreement is an important step toward holding Transocean and those responsible for the Deepwater Horizon disaster accountable,” said Cynthia Giles, Assistant Administrator for the U.S. Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance. “EPA will continue to work with DOJ and its federal partners to vigorously pursue the government’s claims against all responsible parties and ensure that we are taking every possible step to restore and protect the Gulf Coast ecosystem.”
According to court documents, on April 20, 2010, while stationed at the Macondo well site in the Gulf of Mexico, the Deepwater Horizon rig experienced an uncontrolled blowout and related explosions and fire, which resulted in the deaths of 11 rig workers and the largest oil spill in U.S. history. In agreeing to plead guilty, Transocean Deepwater Inc. has admitted that members of its crew onboard the Deepwater Horizon, acting at the direction of BP’s “Well Site Leaders” or “company men,” were negligent in failing fully to investigate clear indications that the Macondo well was not secure and that oil and gas were flowing into the well.
The criminal resolution is structured to directly benefit the Gulf region. Under the order presented to the court, $150 million of the $400 million criminal recovery is dedicated to acquiring, restoring, preserving and conserving – in consultation with appropriate state and other resource managers – the marine and coastal environments, ecosystems and bird and wildlife habitat in the Gulf of Mexico and bordering states harmed by the Deepwater Horizon oil spill. This portion of the criminal recovery will also be directed to significant barrier island restoration and/or river diversion off the coast of Louisiana to further benefit and improve coastal wetlands affected by the oil spill. An additional $150 million will be used to fund improved oil spill prevention and response efforts in the Gulf through research, development, education and training.
The civil settlement secures $1 billion in civil penalties for violations of the CWA, a record amount that significantly exceeds last year’s $70 million civil penalty paid by MOEX Offshore 2007 LLC, a 10 percent partner with BP in the Macondo well venture. The unprecedented $1 billion civil penalty is subject to the Resources and Ecosystems Sustainability, Tourist Opportunities and Revived Economies of the Gulf Coast States Act of 2012 (Restore Act), which provides that 80 percent of the penalty will be to be used to fund projects in and for the Gulf states for the environmental and economic benefit of the region. This civil resolution reserves claims for natural resource damages and clean-up costs.
Under the civil settlement, the Transocean defendants must also observe various court-enforceable strictures in its drilling operations, aimed at reducing the chances of another blowout and discharge of oil and at improving emergency response capabilities. Examples of these requirements include certifications of maintenance and repair of blowout preventers before each new drilling job, consideration of process safety risks, and personnel training related to oil spills and responses to other emergencies. These measures apply to all rigs operated or owned by the Transocean defendants in all U.S. waters and will be in place for at least five years.
The guilty plea agreement and criminal charge announced today are part of the ongoing criminal investigation by the Deepwater Horizon Task Force into matters related to the April 2010 Gulf oil spill. The Deepwater Horizon Task Force, based in New Orleans, is supervised by Assistant Attorney General Breuer and led by Deputy Assistant Attorney General John D. Buretta, who serves as the director of the task force. The task force includes prosecutors from the Criminal Division and the Environment and Natural Resources Division of the Department of Justice; the U.S. Attorney’s Office for the Eastern District of Louisiana, as well as other U.S. Attorneys’ Offices; and investigating agents from the FBI, EPA, Department of the Interior, National Oceanic and Atmospheric Administration Office of Law Enforcement, U.S. Coast Guard, U.S. Fish and Wildlife Service and the Louisiana Department of Environmental Quality.
The civil resolution announced today is part of the ongoing litigation against defendants BP Exploration and Production Inc., the Transocean defendants, and Anadarko Petroleum Corporation (among others) for civil penalties, injunctive relief, and a declaration of unlimited liability for removal costs and damages under the Oil Pollution Act. The civil enforcement effort is supervised by Assistant Attorney General Moreno for the Environment and Natural Resources Division and Deputy Assistant Attorney General Brian Hauck of the Civil Division. Numerous federal agencies have contributed immeasurably to these enforcement and settlement efforts, including the EPA, the U.S. Coast Guard, the National Oceanic and Atmospheric Administration, the Department of the Interior and the Department of Agriculture.
The criminal case against Transocean is being prosecuted by Deepwater Horizon Task Force Deputy Directors Derek A. Cohen and Avi Gesser, and task force prosecutors Richard R. Pickens II, Scott M. Cullen, Colin Black and Rohan Virginkar. Numerous Environment Division and Civil Division lawyers are pursuing the civil enforcement action, led by Steve O’Rourke and R. Michael Underhill.
An information is merely a charge and a defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
The proposed civil settlement is subject to a public comment period and final court approval. Information on submitting comment will be available at www.justice.gov/enrd/Consent_Decrees.html.
Related Material:
- Transocean Information
- Transocean Notice of Lodging
- Transocean Consent Decree
- Transocean Plea Agreement
The Department recognizes that parts of these documents 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 contact [email protected].
Several Retailers Agree to Resolve Allegations Concerning the Unlawful Advertising and Selling of Rayon Products as Being Made from BambooRead the Press Release
Amazon.com; Leon Max Inc., d/b/a Max Studio; Macy’s Inc.; and Sears, Roebuck and Co., Kmart Corporation and Kmart.com (collectively, Sears) have agreed to settle civil lawsuits concerning alleged violations of the Textile Fiber Product Identification Act and the Federal Trade Commission (FTC) Act, the Justice Department announced today.
The complaints, which were filed today in federal court along with proposed stipulated orders to settle the matters, allege that these retailers violated the Textile Act and the FTC Act by advertising and labeling textile products that were made from rayon as being made from “bamboo.” The cases were referred to the Justice Department by the FTC, which investigates violations of the Textile Act and FTC Act.
Under the terms of the proposed stipulated orders agreed to by the companies, the companies will take steps to prevent future violations, including distributing the orders to employee managers with responsibility for marketing or sale of textile products, keeping accounting and other records necessary to demonstrate compliance with the order, and reporting relevant data to the FTC. In addition, each company has agreed to make a monetary payment to the government as follows: Amazon ($455,000); Max Studio ($80,000); Macy’s ($250,000); and Sears ($475,000).
Under the Textile Act and Rules, a product’s label and advertising must accurately describe the type of fiber used to make the product. Unless a product is made directly with bamboo fiber, it cannot be labeled and advertised as “bamboo.” The complaints allege that these retailers advertised and sold products that were really made from a manufactured fiber, rayon, as being made from bamboo, widely understood to be a renewable resource.
According to the complaints, the manufacturing process for rayon requires the use of hazardous chemicals such as sodium hydroxide. The complaints further note that this manufacturing process emits hazardous air pollutants, including carbon disulfide, carbonyl sulfide, ethylene oxide, methanol, methyl chloride, propylene oxide and toluene.
“Consumers pay a premium for products labeled and advertised as being made from bamboo because they believe that the product is made from a renewable resource and is good for the environment,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. “Consumers expect that they will get what they pay for; here, they didn’t.”
The cases, United States v. Amazon.com, Inc.; United States v. Leon Max, Inc., d/b/a Max Studio; United States v. Macy’s, Inc.; and United States v. Sears, Roebuck and Co. et al. were filed in the District Court for the District of Columbia.
Principal Deputy Assistant Attorney General Delery thanked the FTC for referring this matter to the department. The Consumer Protection Branch of the Justice Department’s Civil Division brought the cases on behalf of the United States.
Owner of Detroit Adult Day Care Centers Pleads Guilty in Connection with Medicare Psychotherapy Fraud SchemeRead the Press Release
WASHINGTON – The owner of several Detroit-area adult day care centers pleaded guilty today for her role in a $13.2 million psychotherapy fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Chicago Regional Office.
Beth Jenkins, 48, of Farmington Hills, Mich., pleaded guilty to one count of conspiracy to commit health care fraud and five counts of health care fraud, before U.S. District Judge Stephen J. Murphy III in the Eastern District of Michigan.
Jenkins admitted that she and others conspired to defraud Medicare through Quality Recreation & Rehabilitation LLC (QRR) and Procare Rehabilitation Inc., two adult day care centers she owned and operated with alleged co-conspirators. According to court documents, Jenkins and her alleged co-conspirators owned and operated several Detroit-area adult foster care homes (AFCs) that housed severely mentally-disabled Medicare recipients. Court documents allege that Medicare beneficiaries living at AFCs, some of which were owned and operated by Jenkins and her alleged co-conspirators, were transported to QRR and Procare by Jenkins and others. According to court documents, Jenkins and her alleged co-conspirators used the AFC residents’ Medicare information to bill Medicare for group and individual psychotherapy that was never provided.
From 2004 through 2011, Jenkins and her alleged co-conspirators submitted more than 185,000 claims to Medicare totaling more than $13.2 million for group and individual psychotherapy that was not provided. According to court documents, Medicare paid $4,777,792 on these claims.
At sentencing, scheduled for April 19, 2013, Jenkins faces a maximum penalty of 60 years in prison and a $1,500,000 fine.
Jenkins’s co-defendants, Dr. Alphonso Berry and Marcus Jenkins, Beth Jenkins’s husband, are scheduled for trial on Jan. 8, 2013. They are presumed innocent until proven guilty at trial.
This case is being prosecuted by William G. Kanellis and Tarek Helou of the Criminal Division’s Fraud Section. It was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Mississippi Man Pleads Guilty for Conspiring to Commit Hate Crimes Against African-Americans in Jackson, MississippiRead the Press Release
Joseph Dominick, 21, from Brandon, Miss., pleaded guilty today in U.S. District Court in Jackson, Miss., to one count of conspiracy to commit federal hate crimes in connection with his role in the assault of African-Americans in Jackson. Defendants Deryl Paul Dedmon, 20; John Aaron Rice, 19; Dylan Wade Butler, 21; William Kirk Montgomery, 23; and Jonathan Kyle Gaskamp, 20, all from Brandon have previously entered guilty pleas in connection with their roles in these offenses. The conspiracy culminated in the death of James Craig Anderson, who was assaulted and killed on June 26, 2011.
The investigation conducted by the FBI revealed that, beginning in the spring of 2011, Dominick and others conspired with one another to harass and assault African-Americans in and around Jackson. On numerous occasions, the co-conspirators used dangerous weapons, including beer bottles, sling shots and motor vehicles to cause, and attempt to cause, bodily injury to African-Americans. They would specifically target African-Americans they believed to be homeless or under the influence of alcohol because they believed that such individuals would be less likely to report an assault. The co-conspirators would often boast about these racially motivated assaults.
On an occasion predating the death of Mr. Anderson, Dominick, Montgomery, Butler and others known to the government traveled to Jackson in Dominick’s truck for the purpose of finding and assaulting vulnerable African-Americans. The co-conspirators threw multiple glass beer bottles at African-American pedestrians. Dominick and his co-conspirators also purchased a sling shot and metal ball bearings to shoot at African-Americans, and then took turns shooting the sling shot at multiple African-Americans they encountered.
On June 25, 2011, Dominick and others attended a party/bonfire in Puckett, Miss., to celebrate Dominick’s birthday. During the party, Dominick and others, talked about going to Jackson to harass and assault African-Americans. By the early morning hours of June 26, 2011, Montgomery, Dedmon, Rice, Butler and three other co-conspirators known to the government agreed to carry out their plan to find, harass and assault African-Americans. Dominick did not go to Jackson on June 26, 2011. That evening culminated in Dedmon deliberately using his Ford F250 truck to run over Mr. Anderson, causing injuries which resulted in Mr. Anderson’s death.
“We hope that today’s guilty plea provides further assurance to the victim’s family and to the community that the Department of Justice will leave no stone unturned to find those responsible for these senseless racially motivated attacks,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Our investigation is ongoing, and we will continue to pursue those who participated in this violent conspiracy, which culminated in the tragic death of James Craig Anderson.”
“The acts carried out by Dominick and his co-conspirators against African-Americans are absolutely reprehensible. Bringing these individuals to justice is a top priority of this office and we will continue to assist the Department of Justice Civil Rights Division in this investigation,” said U.S. Attorney Gregory K. Davis.
Daniel McMullen, Special Agent in Charge of the FBI’s Jackson Field Office, said, “The FBI continues to investigate the hate fueled assaults on African-Americans in and around Jackson, Mississippi, which include the attack on and resulting death of James Anderson on June 26, 2011. This behavior, which seeks to deprive others of their civil rights based on the color of their skin, cannot be tolerated.”
These guilty pleas were the result of a cooperative effort between the U.S. Attorney’s Office for the Southern District of Mississippi, the United States Department of Justice’s Civil Rights Division, and the Hinds County District Attorney’s Office. This case was investigated by the Jackson Division of the FBI and the Jackson Police Department. It is being prosecuted by Trial Attorney Sheldon L. Beer and Deputy Chief Paige M. Fitzgerald of the Civil Rights Division and Assistant U.S. Attorney Glenda R. Haynes of the U.S. Attorney’s Office for the Southern District of Mississippi.
Leader of Internet Piracy Group “IMAGiNE” Sentenced in Virginia to 60 Months in Prison for Criminal Copyright ConspiracyRead the Press Release
WASHINGTON – The leader of the Internet piracy group “IMAGiNE” was sentenced today to serve 60 months in prison, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Special Agent in Charge John P. Torres of U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) in Washington, D.C.
Jeramiah B. Perkins, 40, of Portsmouth, Va., was sentenced by U.S. District Judge Arenda L. Wright Allen in the Eastern District of Virginia. In addition to his prison term, Perkins was sentenced to serve three years of supervised release and ordered to pay $15,000 in restitution. On Aug. 29, 2012, Perkins pleaded guilty to one count of conspiracy to commit criminal copyright infringement.
Perkins was indicted along with three other defendants on April 18, 2012, for their roles in the IMAGiNE Group, an organized online piracy ring that sought to become the premier group to first release Internet copies of movies only showing in theaters.
According to court documents, Perkins directed and participated in using receivers and recording devices in movie theaters to secretly capture the audio sound tracks of copyrighted movies and then synchronized the audio files with illegally recorded video files to create completed movie files suitable for sharing over the Internet among members of the IMAGiNE Group and others.
Perkins admitted he took the lead in renting computer servers in France and elsewhere for use by the IMAGiNE Group. He also admitted he registered domain names for use by the IMAGiNE Group, and opened e-mail and PayPal accounts to receive donations and payments from persons downloading or buying IMAGiNE Group releases of pirated copies of motion pictures and other copyrighted works.
According to testimony by a representative of the Motion Picture Association of America, the IMAGiNE Group constituted the most prolific motion picture piracy release group operating on the Internet from September 2009 through September 2011.
Co-defendants Sean M. Lovelady, Willie O. Lambert and Gregory A. Cherwonik each pleaded guilty to one count of conspiracy to commit criminal copyright infringement on May 9, June 22 and July 11, 2012, respectively. Lambert and Lovelady were sentenced on Nov. 2, 2012, to 30 months and 23 months in prison, respectively. Cherwonik was sentenced on Nov. 29, 2012, to 40 months in prison. A fifth co-defendant, Javier E. Ferrer, was charged in an information on Sept. 13, 2012, for his role in the IMAGiNE Group, and he pleaded guilty to one count of conspiracy to commit criminal copyright infringement on Nov. 29, 2012. Ferrer is scheduled to be sentenced on March 14, 2013.
The investigation of the case and the arrests were conducted by agents with HSI. Assistant U.S. Attorney Robert J. Krask of the Eastern District of Virginia and Senior Counsel John H. Zacharia of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) are prosecuting the case. Significant assistance was provided by the CCIPS Cyber Crime Lab and the Criminal Division’s Office of International Affairs.
This case is part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce.
This investigation was supported by the HSI-led National Intellectual Property Rights Coordination Center (IPR Center) in Washington. The IPR Center is one of the U.S. government's key weapons in the fight against counterfeiting and piracy. Working in close coordination with the Department of Justice’s IP Task Force, the IPR Center uses the expertise of its 21-member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and our war fighters.
Justice Department Reaches Settlement with Law Firm over Discrimination Against Deaf IndividualsRead the Press Release
The Justice Department today announced a settlement agreement with Peroutka and Peroutka P.A., a debt collection law firm based in Pasadena, Md., to resolve allegations that the law firm violated the Americans with Disabilities Act (ADA) by discriminating against people who are deaf.
The settlement agreement resolves two complaints alleging that Peroutka discriminated against deaf individuals by refusing to accept Video Relay Service calls, which were necessary for the complainants to communicate by phone with Peroutka employees. According to the complaint, Peroutka employees also hung up on one complainant and informed the other complainant that Peroutka could not assist her and that she had to call back at a specific time when a manager was present.
“People with disabilities cannot be denied services simply because they use alternative ways to communicate,” said Assistant Attorney General Thomas E. Perez. “The ADA does not tolerate this type of discrimination and neither does the Justice Department.”
Under the settlement, Peroutka is required to pay $30,000 in compensation to the complainants, to revise its policies and procedures to ensure that the office accepts Video Relay Service calls and treats people with disabilities equally, and to train its employees on the ADA’s obligations.
Title III of the ADA prohibits discrimination against people with disabilities at places of public accommodation, including law firms. Among other things, Title III requires public accommodations to afford people with disabilities full and equal enjoyment of their goods, services, and facilities. The ADA also requires public accommodations to make reasonable modifications to their policies, practices, and procedures when necessary to afford equal access to people with disabilities, unless doing so would fundamentally alter the goods or services provided.
Those interested in learning more about this settlement or an entity’s obligations under the ADA may call the Justice Department’s toll-free ADA Information Line at 800-514-0301 (TDD 800-514-0383) or access its ADA website at www.ada.gov . Additionally, ADA complaints may be filed by email to [email protected] .
Former Financial Services Broker Sentenced to Serve18 Months in Prison for Role in Conspiracies InvolvingInvestment Contracts for the Proceeds of Municipal BondsRead the Press Release
A former financial services broker was sentenced today in U.S. District Court for the Southern District of New York, for his participation in conspiracies related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.
Adrian Scott-Jones, of Morriston, Fla., a former broker for Tradition N.A., was sentenced by District Court Judge Harold Baer Jr. for his role in the conspiracies. Scott-Jones was sentenced to serve 18 months in prison and to pay a $12,500 criminal fine.
“From soliciting intentionally losing bids for investment agreements to paying out kickbacks to manipulate the competitive bidding process, the conspirators went to great lengths to defraud municipalities across the country,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division's criminal enforcement program. “Today's sentence sends a clear message that the division will continue to hold executives accountable for their anticompetitive conduct.”
On Sept. 8, 2010, Scott-Jones pleaded guilty to participating in multiple conspiracies with executives of General Electric Co. (GE) affiliates, from as early as 1999 until 2006. According to the charges, GE and other financial institutions and insurance companies (providers), offered a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities hired brokers like Scott-Jones and Tradition to conduct bidding for contracts to invest money from a variety of sources, primarily the proceeds of municipal bonds issued to raise money for, among other things, public projects. Scott-Jones also participated in a conspiracy with representatives of a second provider located in New York City.According to court documents, in each conspiracy, Scott-Jones gave co-conspirators information about the prices, price levels or conditions in competitors' bids, a practice known as a “last look,” which is explicitly prohibited by U.S. Treasury regulations. Scott-Jones also solicited and received intentionally losing bids for certain investment agreements and other municipal finance contracts. As a result of Scott-Jones’ role in corrupting the bidding process for investment agreements, he and his co-conspirators deprived the municipalities of competitive interest rates for the investment of tax-exempt bond proceeds used by municipalities for various public works projects, such as water pollution abatement projects and low-cost housing. The department said that the conspiracies cost municipalities around the country millions of dollars.
“Today's sentencing reaffirms the ongoing success of our efforts to weed out corruption in the municipal bond market,” said George Venizelos, Acting Director in Charge of the FBI in New York. “The FBI will continue to work closely with our partners from the Antitrust Division to protect the integrity of the competitive bidding process in public finance.”
“Individuals who manipulate the competitive bidding system to benefit themselves will be held accountable for their criminal activity,” said Richard Weber, Chief, Internal Revenue Service Criminal Investigation (IRS-CI). “Quite simply, Mr. Scott-Jones profited at the expense of the towns and cities that needed the money for important public works projects. IRS Criminal Investigation is committed to working with our law enforcement partners to uncover this kind of corruption and secure justice for American taxpayers.”
A total of 20 individuals have been charged as a result of the department's ongoing municipal bonds investigation, 19 of whom have been convicted at trial or pleaded guilty; one is currently awaiting trial. Additionally, one company has pleaded guilty.
The sentences announced today resulted from an ongoing investigation conducted by the Antitrust Division's New York Office, the FBI and IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.
Today's convictions 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.
Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division's New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.Florida-Based American Sleep Medicine to Pay $15.3 Million<br /> for Improperly Billing Medicare and Other Federal Healthcare ProgramsRead the Press Release
Florida-based American Sleep Medicine LLC has agreed to pay $15,301,341 to resolve allegations that it billed Medicare, TRICARE – the health care program for Uniformed Service members, retirees and their families worldwide – and the Railroad Retirement Medicare Program for sleep diagnostic services that were not eligible for payment, the Justice Department announced today.
American Sleep, headquartered in Jacksonville, Fla., owns and operates 19 diagnostic sleep testing centers throughout the United States, including in Alabama, California, Delaware, Florida, Illinois, Indiana, Kansas, Kentucky, Maryland, Missouri, New Jersey, Tennessee, Texas and Virginia. The company’s primary business is to provide testing for patients suffering from sleep disorders such as obstructive sleep apnea. The test results are used by doctors to determine the most appropriate course of treatment for patients. The most common tool used to diagnose sleep disorders, particularly sleep apnea, is a procedure called polysomnographic diagnostic sleep testing. Under federal program requirements for the reimbursement of claims submitted for sleep disorder testing, initial sleep studies must be conducted by technicians who are licensed or certified by a state or national credentialing body as sleep test technicians.
The United States contend that Medicare and TRICARE claims submitted by American Sleep during this period were false because the diagnostic testing services were performed by technicians who lacked the required credentials or certifications, when it knew this violated the law. American Sleep submitted false claims to Medicare and TRICARE between Jan. 1, 2004, and Dec. 31, 2011, according to the United States’ allegations.
“Medicare patients and military families deserve to be treated by appropriately credentialed professionals when seeking medical care,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “When companies providing those services seek to skirt the rules, there will be a steep price to pay.”
“Pursuing health care fraud is a priority of my office and the Department of Justice. We will continue to work with the Department of Health and Human Services and the public to ensure that fraudulent claims are investigated and those responsible are required to pay,” stated David J. Hale, U.S. Attorney for the Western District of Kentucky. “Medical providers who overbill Medicare defraud the taxpayers and drive up the cost of health care for us all. Recovering taxpayer dollars lost to fraud helps keep strong those critical public health care programs so many people depend on.”
“Patients seeking care from licensed professionals deserve to receive exactly what was represented, and the taxpayer-funded Medicare program expects no less,” said Derrick Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General Region IV, which includes Kentucky. “The company has agreed to Federal monitoring and reporting requirements designed to avoid such problems in the future.”
The allegations covered by today’s settlement were raised in a lawsuit filed against American Sleep under the qui tam, or whistleblower, provisions of the False Claims Act. United States ex rel. Daniel Purnell v. American Sleep Medicine LLC, no. 3:07-cv-12-S (W.D. Ky.). The act allows private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery. Relator Daniel Purnell will receive $2,601,228 as part of today’s settlement.
In addition to the $15.3 million payment, American Sleep entered into a five-year Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services. The agreement requires enhanced accountability and wide-ranging monitoring activities conducted by both internal and independent external reviewers.
Principal Deputy Assistant Attorney General Delery thanked the Office of the Inspector General for the Department of Health and Human Services, the Medicare Railroad Retirement Program, the Defense Criminal Investigative Service, the FBI, the U.S. Attorney’s Office for the Western District of Kentucky and the Commercial Litigation Branch for the collaboration that resulted in today’s settlement. The claims settled by this agreement are allegations only, and there has been no determination of liability.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.1 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 $13.9 billion.
Colorado Man Pleads Guilty to Conspiracy to Defraud the IRS out of $1.8 Million DollarsRead the Press Release
Thomas William Quintin, 65, formerly of Denver, pleaded guilty to one count of conspiracy to defraud the United States with respect to claims, and one count of misuse of a Social Security number (SSN), before U.S. District Court Judge R. Brooke Jackson, the U.S. Department of Justice and Internal Revenue Service (IRS) announced. Quintin is scheduled to be sentenced by Judge Jackson on April 2, 2013.
Quintin and a co-conspirator were indicted by a federal grand jury in Denver on Feb. 8, 2012. According to the stipulated facts contained in the plea agreement, starting in July 2009, Quintin participated in a conspiracy to submit to the IRS thousands of false federal individual income tax returns claiming a total of $1,834,011 in refunds in the names of deceased individuals. As part of the scheme, the conspirators established, controlled, and operated a Colorado entity known as Total Tax Services and/or Total Tax and Accounting (TTS), which maintained an office location in Englewood, Colo. They hired other individuals to work at TTS, which they used during the period of July 2009 through October 2009 to prepare and file the false tax returns.
According to court records, Quintin and his coconspirator obtained from an online database the names, dates of birth, SSNs and other identifying information of deceased individuals which they used to prepare and file tax returns in their names. They hired at least one individual whose job was to create email accounts for those deceased individuals; establishing email accounts in the names of the deceased individuals was necessary in order to file the tax returns on-line. They also obtained employer identification numbers (EINs) for various businesses, which they used to claim falsely on tax returns that the deceased individuals had worked at those businesses during the year 2008, earned income, and had taxes withheld from that income; all to allow Quintin and his coconspirator to claim false refunds based on that false income tax withholding.
“The investigation and prosecution of those who commit stolen identity refund fraud is a top priority of the Justice Department,” said Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division. “The theft of deceased persons’ identities to steal money from the Treasury victimizes all honest taxpayers, and adds to the burdens of grieving family members.”
“ Identity theft creates a significant hardship for many American families, and robs our Nation of taxpayer dollars,” stated Richard Weber, Chief, IRS Criminal Investigation. IRS remains vigilant in identifying, investigating and prosecuting those individuals who seek to willfully defraud the United States Treasury and have a blatant disregard for the victims of their schemes.”
Quintin faces a maximum potential sentence of 10 years in federal prison on the conspiracy charge, and five years on the misuse of a SSN charge. On both charges, he faces a fine of up to $250,000.
This case was investigated by IRS-Criminal Investigation, and is being prosecuted by Tax Division Trial Attorney John Scully with the assistance of the U.S. Attorney’s Office for the District of Colorado.
Las Vegas Physician Pleads Guilty to Tax EvasionRead the Press Release
WASHINGTON – Robert David Forsyth, of Las Vegas, pleaded guilty today in federal district court to count one of a federal indictment charging him with income tax evasion, the Justice Department and Internal Revenue Service (IRS) announced. Forsyth was indicted for tax crimes in April 2012.
According to court documents, from 1999 through 2008, Forsyth worked as a physician and earned income from a variety of sources, including his medical practice, expert witness fees, and Social Security benefits beginning in 2002. Forsyth failed to file an individual income tax return from 1999 through 2008, however. In fact, according to the indictment, Forsyth has not filed an income tax return since the 1994 tax year.
According to papers filed as part of the plea agreement, instead of filing tax returns and paying his taxes, Forsyth, a Canadian citizen and U.S. permanent resident alien, admitted that he closed all of his personal bank accounts and used a third party business to cash his paychecks. Forsyth also used the same third party business to make payments on his behalf, including his American Express credit card bills. Forsyth made extensive use of cash including using cash to pay personal expenses in an effort to avoid detection.
According to court documents, throughout the years that Forsyth evaded payment of his taxes, he used income that he earned to fund his own lifestyle. Instead of paying the IRS, Forsyth spent money on gambling, luxury items, and hotel accommodations in San Jose, Costa Rica and Bangkok, Thailand. Forsyth admitted to taking trips to Costa Rica, Thailand and Mexico rather than pay his tax liabilities.
Forsyth’s actions resulted in a tax loss to the United States, including interest and penalties, of over $600,000. As part of his plea agreement, Forsyth has agreed to pay restitution to the IRS in full, including $50,000 prior to his sentencing, which is scheduled for April 22, 2013, before U.S. District Judge Philip Pro at the federal courthouse in Las Vegas.
Forsyth faces a maximum possible sentence of five years in prison and a fine of up to $250,000.
The case was investigated by the Criminal Investigations Division of the IRS and was prosecuted by Tax Division Trial Attorney Mark L. Williams and former Tax Division Trial Attorney Stephanie Courter.
Justice Department Reaches Agreement with California Irrigation District on Bailout Under the Voting Rights ActRead the Press Release
The Justice Department announced that it has reached an agreement with the Browns Valley Irrigation District, a special district in California, that, if approved by the court, will allow for the district to bail out from its status as a “covered jurisdiction” under the special provisions of the Voting Rights Act, and thereby exempt the district from the preclearance requirements of Section 5 of the Voting Rights Act. The district covers part of Yuba County, which is a jurisdiction subject to Section 5. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia.
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 4 of the act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court for the District of Columbia, or from the U.S. Attorney General, prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bail out,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in U.S. District Court for the District of Columbia. A bailout judgment can be issued only if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout only if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
The Browns Valley Irrigation District filed its bailout action in the U.S. District Court for the District of Columbia on Sept. 26, 2012. District officials had contacted the attorney general prior to filing its action, indicating that the district was interested in seeking a bailout. The district provided the Justice Department with substantial information, and the department conducted an investigation to determine the district’s eligibility. Based on that investigation, the department is satisfied that the district meets the Voting Rights Act’s requirements for bailout.
“In this case, the department carefully evaluated the information provided by the district, and conducted its own investigation, which has satisfied us that the district is eligible for bailout,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I appreciate the cooperation of district officials in providing the department with information that we have requested, and in moving toward a resolution of this matter in the way envisioned by the Voting Rights Act.”
The consent decree details the legal and factual basis for a bailout determination and, if approved, will grant the district’s request. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the district that would have originally precluded the district from bailing out if it had occurred during the 10 year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act, and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Department of Justice Will Not Challenge Proposed Joint <br /> Venture Between Flight Support Service Operators at <br /> Connecticut AirportRead the Press Release
WASHINGTON – The Department of Justice today announced that it will not challenge a proposal by Columbia Fuel Services Inc. and Lanmar Aviation Inc., the only providers of flight support services at the Groton-New London Airport, in Groton, Conn., to combine their fuel and hangar resources into a newly formed joint venture, Mystic Jet Center. Flight support service operators, or fixed-base operators (FBOs), provide an array of flight support services to general aviation customers including fuel, ramp and hangar rentals; office space rentals; and other services such as pilot lounges, baggage handling and flight planning support.
The department’s position was stated in a business review letter to counsel for Columbia and Lanmar, from Renata B. Hesse, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. In issuing today’s letter, Acting Assistant Attorney General Hesse stated, “Based on parties’ representations, it does not appear likely that the proposed joint venture between Columbia and Lanmar will produce anticompetitive effects.”
According to representations made by Columbia and Lanmar, although the joint venture will result in Mystic Jet Center being the solitary, but not exclusive, FBO at the airport, Mystic Jet Center will not be able to impose supra-competitive prices due to sufficient competitive pressure from several sources, including the pricing and availability of aviation fuel and hangar storage at surrounding airports, the ability of modern private aircraft to tanker fuel and the availability of developable land for future and additional FBOs at the airport.
Based on these representations, as well as the department’s investigation into the particular facts and circumstances relating to competitive conditions at the airport, the department has no present intention to challenge the proposed joint venture.
Under the department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws based on the information provided. The department reserves the right to challenge the proposed action under the antitrust laws if it produces anticompetitive effects.
A file containing the business review request and the department’s response may be examined in the Antitrust Documents Group of the Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the Business Review Procedure.
Justice Department Announces Successful Resolution of Case Regarding Delaware State PrisonsRead the Press Release
The Justice Department announced that the state of Delaware has fully complied with the parties’ amended memorandum of agreement (MOA) which was reached after an investigation of three Delaware state prisons. The MOA, which includes reforms in mental health care, medical care and suicide prevention, was entered into after an investigation of the conditions at the James T. Vaughn Correctional Center, the Howard R. Young Correctional Institution and the Sussex Correctional Institution.
“Prisons are a critical component of the public safety system. The conditions in prisons affect not only those confined there, but the staff, prisoners’ families and the community at large,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We commend the state for its successful efforts to improve medical and mental health care for Delaware inmates, and for its commitment to ensuring that the constitutional rights of inmates are protected. In the Justice Department’s view, the state of Delaware has met the requirements necessary for termination of the amended memorandum of agreement.”
Among other reforms, the state established the Bureau of Correctional Healthcare Services, which, with the department’s input, designed and implemented an excellent continuous quality improvement program which has become a sought-after model among other states and municipalities.
In December 2006, the department and state entered into the original MOA to resolve the department’s findings of unlawful conditions at the facilities, following a comprehensive investigation under the Civil Rights of Institutionalized Persons Act (CRIPA) which began in March 2006. The settlement called for broad reforms in areas related to medical care, mental health care, and suicide prevention. When the original MOA expired by its terms in December 2009, the department and the state negotiated a successor, the amended MOA, with which the state has achieved substantial compliance, resulting in this termination.
For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt.
Attorney General Eric Holder Welcomes Bill Baer as Assistant Attorney General for the Antitrust DivisionRead the Press Release
Attorney General Eric Holder today welcomed the confirmation of Bill Baer as the Department of Justice’s Assistant Attorney General for the Antitrust Division.
“Bill is a highly-skilled and well-respected antitrust lawyer who understands the importance of promoting competition in order for consumers to reap the benefits of lower prices and better quality products and services,” said Attorney General Holder. “I have no doubt that he will lead the Antitrust Division effectively in its vigorous enforcement of the antitrust laws.”
Since January 2000, Baer was a partner and head of Arnold & Porter LLP’s Antitrust Practice Group in Washington, D.C. Baer’s practice included providing counsel on a broad range of antitrust and consumer protection issues, including international cartel investigations and merger and acquisition reviews in the United States and the European Commission. He has extensive antitrust experience in various industries, including high tech, intellectual property, communications and health care. Baer also served as a partner at the firm from 1983 to 1995 and as an associate from 1980 to 1983. During that time, Baer specialized in complex civil and criminal antitrust litigation.
From April 1995 to October 1999, Baer was the Federal Trade Commission’s (FTC) Director of the Bureau of Competition. During that time, the FTC achieved significant enforcement successes, including blocking anticompetitive mergers involving two major office supply stores and of the four leading drug wholesalers. Under his leadership, the commission also successfully challenged exclusionary practices in a variety of industries, including toys, high tech and the leading brand name and generic drug manufacturers. From 1975 to 1980, Baer also served in other positions at the FTC, including Assistant General Counsel for Legislation & Congressional Relations, Assistant to Chairman Michael Pertschuk, and as a trial attorney and Assistant to the Director of the Bureau of Consumer Protection.
Baer is a member of the American Bar Association’s Antitrust Section. He has lectured in the United States and around the world on various antitrust and consumer protection issues.
Baer received his J.D. from Stanford Law School in 1975, and served as editor of Stanford’s Law Review. He received his B.A. from Lawrence University in 1972 where he graduated Cum Laude and Phi Beta Kappa.
Federal Court Bars Alleged Co-Owner of Las Vegas Instant Tax Service Franchise from Preparing Tax ReturnsRead the Press Release
A Nevada federal court has permanently barred Benyam Tewolde from preparing tax returns for others, the Justice Department announced today. Tewolde and his wife, Yordanos Kidanits, are the alleged co-owners of an Instant Tax Service franchise that operates at multiple locations in the Las Vegas area. Instant Tax Service is a nationally franchised tax preparation company based in Dayton, Ohio.
Kidantis and the franchisee, Koraggio LLC, were also permanently enjoined from engaging in certain abusive practices. The civil injunction orders, to which the defendants consented without admitting the allegations against them, were signed on Dec. 27 by Judge Miranda M. Du of the U.S. District Court for the District of Nevada.
According to the government complaint, the defendants helped employees at their Instant Tax Service franchise offices to engage in a variety of misconduct, including:
- Preparing phony tax-return forms with fabricated businesses and income,
- Falsely claiming education credits,
- Claiming false filing status,
- Claiming false dependents,
- Selling deceptive loan products,
- Filing tax returns without customer consent or authorization, and
- Preparing bogus W-2 forms, based on information from employee paystubs
The complaint further alleged that Tewolde personally prepared fraudulent returns.
The injunction permanently bars Tewolde from preparing or filing federal tax returns for others, training tax preparers and owning or managing a tax preparation business.
Kidane and Koraggio are enjoined from violating the federal tax laws and consumer protection laws. The court order requires them to hire a monitor at their expense who will periodically report to the Justice Department to ensure compliance with the injunction. The order also bars Kidane and Koraggio from marketing abusive loan products, including holiday, or instant cash loan or advance products offered to customers based on information obtained from the customer’s paystub.
The case is one of five similar lawsuits that the Justice Department brought against Instant Tax Service franchises earlier this year. One of those suits is pending against the nationwide franchisor of Instant Tax Service and its owner, Fesum Ogbazion, in Dayton. The court in that case has entered a preliminary injunction , and trial on the government’s request to shut down the Instant Tax Service franchisor permanently is scheduled for next May.
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 .
Department Reaches Settlement with Custer County and the State of Idaho for Cooperation over Roads on Federal LandRead the Press Release
BOISE, Idaho – The Department of Justice and the U.S. Bureau of Land Management announced today – Dec. 28, 2012 – a settlement of the United States’ federal court lawsuit against Custer County and the State of Idaho concerning county action on roads and trails on federal land in Custer County. The Environment and Natural Resources Division of the Department of Justice initially filed suit in the U.S. District Court for the District of Idaho to halt the county’s threatened actions to reopen a section of the Herd Creek Road that adjoins the Jerry Peak Wilderness Study Area, which section BLM had closed in 1999. After the Honorable B. Lynn Winmill, Chief District Judge for the U.S. District Court for the District of Idaho, issued an order temporarily restraining the county from taking any action to reopen the road without BLM's approval, the parties reached an agreement to resolve the dispute.
Under the terms of the agreement, Custer County has agreed to refrain from any on-the-ground action affecting roads and trails on federal land without the agreement of federal land management agencies or prior court approval. The County further agrees it will not interfere with any federal employees or agents in the lawful commission of their official activities. In return, the United States agrees to dismiss the lawsuit.
“I am pleased that Custer County has agreed to work together with federal land managers to avoid disputes over the management of federal lands, including public lands managed by the Challis Field Office of the Bureau of Land Management and lands managed by the U.S. Forest Service,” said Ignacia Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This settlement furthers both the BLM's and Forest Service's mission to address important interests on federal lands, including protecting public health and safety, wilderness values, and the environment.”
“I commend the cooperation shown by Custer County and our federal land management agencies in reaching this settlement,” said Wendy J. Olson, U.S. Attorney for Idaho. “Under this settlement, the BLM and the Forest Service can continue to manage and protect our public resources in a way that benefits all Idahoans, indeed the entire country.”
Victory Pharma Inc. of San Diego Pays $11.4 Million to Resolve Kickback Allegations in Connection with Promotion of Its DrugsRead the Press Release
Victory Pharma Inc., a specialty pharmaceutical company headquartered in San Diego, has agreed to pay $11,420,743 to resolve federal civil and criminal liability arising from its marketing of the pharmaceutical products Naprelan, Xodol, Fexmid and Dolgic, the Justice Department announced today. Under the agreement announced today, Victory entered into a deferred prosecution agreement and paid a criminal forfeiture of $1.4 million to resolve federal Ant-Kickback Statute allegations, and paid $9,938,310 to resolve False Claims Act allegations.
The settlement resolves allegations that Victory engaged in a scheme to promote its drugs by paying kickbacks to doctors to induce them to write prescriptions for Victory’s products, including prescriptions for patients covered by Medicare and other federal health insurance programs. The kickbacks included tickets to professional and collegiate sporting events; tickets to concerts and plays; spa outings; golf and ski outings; dinners at expensive restaurants; and numerous other out-of-office events. Victory also encouraged its sales representatives to schedule paid “preceptorships,” which involved sales representatives “shadowing” doctors in their offices. The settlement also resolves allegations that Victory improperly used these preceptorships to induce doctors to prescribe Victory’s products.
“Kickback schemes undermine the integrity of medical decisions, subvert the health marketplace and waste taxpayer dollars,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. “We will continue to hold accountable those who refuse to play by the rules and provide illegal incentives to influence the decision making of health care providers.”
“This resolution underscores the need for physicians to make treatment decisions based on their own independent medical judgment, without being influenced by kickbacks or other improper benefits,” said Laura E. Duffy, U.S. Attorney for the Southern District of California. “Protecting taxpayers from health care fraud is a priority of this office. We will continue to work closely with our investigative partners in taking both criminal and civil measures to combat health care fraud.”
The settlement resolves a False Claims Act lawsuit filed in the Southern District of California by Chad Miller, a former sales representative for Victory. The whistleblower, or qui tam, provisions of the False Claims Act permit the whistleblower (or relator) to obtain a portion of the proceeds obtained by the federal government. As part of today’s resolution, Mr. Miller will receive $1.7 million.
“Patients expect health care providers to be concerned only with patients’ best medical interests,” said Glenn R. Ferry, Special Agent in Charge for the U.S. Department of Health and Human Services Office of Inspector General Los Angeles region. “Financial kickbacks betray that patient trust, and taxpayers’ expectation that federal and state health dollars be put only to the wisest use.”
FBI Special Agent in Charge Daphne Hearn commented, “Many laws of this nation are put in place to protect our citizens from corrupt practices that may endanger our health and safety. When individuals or businesses operate outside of the fence in order to turn a bigger profit the FBI will pursue them in the justice system.”
Chris Hendrickson, Special Agent in Charge, Western Field Office, Defense Criminal Investigative Service, stated: “The Department of Defense is committed to its partnership with the Department of Justice and other federal and state enforcement agencies to aggressively pursue those who take advantage of taxpayer-funded health care systems for illicit gain. Doctors providing services to our military members and their families should be free from undue influence in prescribing medicines and other care decisions, and DCIS will act swiftly against those who engage in these illegal and unethical acts.”
This settlement is the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Southern District of California; the FBI; and the Offices of Inspectors General for Health and Human Services, the Department of Defense, the Department of Labor, the U.S. Postal Service, the Veteran’s Administration, and the Office of Personnel Management.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.1 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 $13.9 billion.
Caddell Construction Co. Commits to Pay $2 Million Penalty<br /> in Agreement to Resolve Criminal Fraud ViolationsRead the Press Release
WASHINGTON – Caddell Construction Company Inc., a major commercial and industrial federal government construction contractor based in Montgomery, Ala., has entered into an agreement with the Department of Justice to resolve criminal fraud violations arising from Caddell’s intentional overstating of developmental assistance provided to a disadvantaged small business as part of a Department of Defense (DoD) program. The agreement, including a $2 million penalty to be paid by Caddell, was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
According to the non-prosecution agreement (NPA) between the government and Caddell, in February 2003, Caddell entered into an agreement with Mountain Chief – which is certified as a Native American, woman-owned and economically-disadvantaged small business – to participate in the DoD’s Mentor-Protégé Program, in which major DoD contractors (mentor firms) contract with and provide developmental assistance to disadvantaged small businesses (protégé firms) and are reimbursed by the DoD for related costs.
Around the same time, Caddell began participating with Mountain Chief in DoD’s Indian Incentive Program, which provides incentives – in the form of a rebate of 5 percent of the total dollar amount of work – for major DoD contractors to engage Native-American-owned businesses as subcontractors and suppliers. Caddell and Mountain Chief participated in these programs in connection with two DoD construction contracts at Fort Bragg, N.C., each worth approximately $65 million and a DoD construction project at Fort Campbell, Ky., worth approximately $34 million.
According to the NPA, from February 2004 to March 2005, Caddell submitted more than 20 requests for payment to the DoD in connection with the Mentor-Protégé Program that significantly overstated the amount of developmental assistance Caddell had provided Mountain Chief. In addition, Caddell filed documents falsely stating Mountain Chief’s size and income, as well as the status of Mountain Chief’s technical capabilities and business infrastructure. From April 2003 to October 2004, Caddell also submitted at least eight requests to the DoD for the Indian Incentive Program, for rebates based on services purportedly performed on subcontracts Caddell gave to Mountain Chief. Mountain Chief performed few, if any of these services, and the invoices were created solely to support Caddell’s applications for payment.
As part of the NPA, Caddell will pay a $2 million criminal penalty, and must cooperate with the Department of Justice for the two-year term of the agreement. The agreement recognizes Caddell’s voluntary disclosure; thorough self-investigation of the underlying conduct; and full cooperation with the department and remedial measures already undertaken and to be undertaken, including employment actions and improving reporting systems, corporate governance, and compliance training and oversight. As a result of these factors, among others, the department agreed not to prosecute Caddell for the improper pay requests, provided Caddell satisfies its ongoing obligations under the agreement.
In January 2012, Daniel W. Chattin, 50, of Granite Bay, Calif., the son of Mountain Chief’s owner and a project manager and consultant for Mountain Chief, and Mark L. Hill, 57, of Montgomery, Ala., the Mentor-Protégé Program Coordinator and a director of business development at Caddell, were indicted in the Middle District of Alabama on three counts of major fraud against the United States stemming from the same scheme. In addition, Hill was charged with one count of making a false statement to the DoD. Chattin and Hill await trial, which is scheduled to begin on April 22, 2013. The charges and allegations against Chattin and Hill are merely accusations and they are considered innocent unless and until proven guilty.
This investigation is being conducted by the General Services Administration – Office of Inspector General, and the DoD’s Defense Criminal Investigative Service. This case is being handled by Assistant Chief Albert B. Stieglitz Jr. and Trial Attorney Thomas B.W. Hall of the Criminal Division’s Fraud Section.
Illinois-based Hardware Distributor W.W. Grainger Pays US<br /> $70 Million to Resolve False Claims Act AllegationsRead the Press Release
W.W. Grainger Inc. has agreed to pay the United States $70 million to resolve allegations that it submitted false claims under contracts with the General Services Administration (GSA) and the U.S. Postal Services (USPS), the Department of Justice announced today. Grainger is a national hardware distributor headquartered in Lake Forest, Illinois.
Grainger entered into a contract to sell hardware products and other supplies to government customers through the GSA’s Multiple Award Schedule (MAS) program. The MAS program provides the government and other GSA-authorized purchasers with a streamlined process for procurement of commonly-used commercial goods and services. To be awarded a MAS contract, and thereby gain access to the broad government marketplace, contractors must agree to disclose their commercial pricing policies and practices to assist the government in negotiating the terms of the MAS contract.
Today’s settlement resolves issues discovered during a GSA post-award audit of Grainger’s MAS contract. The GSA Office of Inspector General learned that Grainger failed to meet its contractual obligations to provide the GSA with current, accurate and complete information about its commercial sales practices, including discounts afforded to other customers. As a result, government customers purchasing items under the Grainger MAS contract paid higher prices than they should have.
In addition, today’s settlement resolves allegations that Grainger failed to meet its contractual obligations to provide “most-favored customer” pricing under two USPS contracts for sanitation and maintenance supplies. The USPS contracts required Grainger to treat USPS as Grainger’s “most-favored customer” by ensuring that USPS received the best overall discount that Grainger offered to any of its commercial customers. Agents and auditors from the USPS Office of Inspector General (OIG) investigated Grainger’s pricing practices and discovered that Grainger did not consistently adhere to this requirement, causing USPS to pay more than it should have for purchases made under the two contracts.
“Misrepresentations during contract negotiations undermine the integrity of the government procurement process,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. “The Justice Department is committed to ensuring that government purchasers of commercial products receive the prices to which they are entitled.”
“The substantial payment by Grainger reflects the Justice Department’s focused and productive work in the economic interests of our citizen constituents,” commented United States Attorney James L. Santelle of the Eastern District of Wisconsin. “This settlement shows that we are committed to ensuring that false claims are investigated fully and pursued effectively so that government monies are used properly and the integrity of our contracting system is upheld.”
“This case is another demonstration of the value of the work performed by Inspectors General ,” said GSA Inspector General Brian D. Miller. “Our auditors and agents worked tirelessly to reach this critical settlement.”
“The U.S. Postal Service Office of Inspector General aggressively pursues instances of contracting improprieties that negatively impact the Postal Service and cause unnecessary expenses. We appreciate the partnership of the Civil Divisions of the Department of Justice and the United States Attorney’s Office for their support in this case,” said Joanne Yarbrough, Special Agent-in-Charge of the OIG’s Major Fraud Investigations Division.
This settlement was the result of a coordinated effort by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Eastern District of Wisconsin; the GSA Office of Inspector General; and the USPS Office of Inspector General and Office of General Counsel. The claims settled by this agreement are allegations only, and there has been no determination of liability.
Justice Department Seeks to Shut Down Georgia Tax PreparersRead the Press Release
The United States has asked a federal court in Atlanta to bar Larry J. Heath, who operates Heath’s Income Tax II in Cartersville, Ga., and his brother Andrew R. Heath, who operates Excellent Tax Service of Acworth, Ga., from preparing tax returns for others, the Justice Department announced today. According to the government complaint, the Heaths and their businesses have repeatedly prepared federal tax returns that unlawfully understate customers’ federal tax liabilities. The suit alleges that the defendants concoct bogus losses, expenses, education credits, business expenses and charitable contributions, which they falsely report on their customers’ federal income tax returns.
According to the complaint, the Internal Revenue Service (IRS) previously suspended Larry Heath’s IRS-issued electronic filing identification number (EFIN) because of the large number of erroneous returns he prepared. In response, the complaint alleges, Larry Heath purported to “sell” his business to two different individuals and used their EFINs to continue to file tax returns.
The suit alleges that the IRS has examined thousands of income tax returns prepared by the Heaths and their businesses and found that 94.5 percent of tax returns required IRS adjustments. According to the complaint, the total harm to the U.S. Treasury caused by Larry and Andy Heath’s misconduct could exceed $100 million.
Claiming bogus tax refunds is one of the IRS’s Dirty Dozen Tax Scams . In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax preparers. Information about these cases is available on the Justice Department website .
Related Materials:
Heath Injunction Complaint
United States v. Larry J. Heath, et al.
Complaint for Permanent Injunction and Other Relief (PDF)Justice Department Enters into Agreement to Reform the Puerto Rico Police DepartmentRead the Press Release
The Justice Department (DOJ) today entered into a sweeping agreement with the Commonwealth of Puerto Rico and Governor Luis Fortuño to resolve its civil investigation of the Puerto Rico Police Department (PRPD). The complaint and the agreement were filed today in the U.S. District Court of Puerto Rico, along with a joint motion requesting a temporary stay of the proceedings until April 15, 2013 to provide the incoming administration of Governor-elect Alejandro García Padilla sufficient time to review the agreement.
The comprehensive agreement addresses wide-ranging and ongoing constitutional violations by PRPD that were documented in a lengthy DOJ report issued in September 2011. The department found reasonable cause to believe that PRPD engages in a pattern or practice of use of excessive force, use of unreasonable force designed to suppress protected speech, and unconstitutional searches and seizures. The agreement also addresses allegations that PRPD fails to investigate sex crimes and domestic violence, and engages in discriminatory policing.
“We appreciate the hard work of Governor Fortuño, Superintendent Hector Pesquera, and their staff. Together, and with great input from the public, we have designed a comprehensive blueprint for reform that provides a solid foundation that will professionalize and support the hardworking men and women of PRPD as they protect the people of Puerto Rico,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We have also met with Governor-elect Garcia-Padilla, who recognizes that constitutional policing and effective policing go hand in hand. We look forward to working with Governor-elect García Padilla and his incoming administration to finalize the agreement and begin the critical work of rebuilding PRPD. Ensuring effective, constitutional policing is not a partisan issue, and we appreciate the commitment of Governor Fortuño and Governor-elect García Padilla to the reforms embodied in the agreement. The successful implementation of the reforms contained in this agreement will help to reduce crime, ensure respect for the Constitution and restore public confidence in PRPD.”
Today’s agreement was reached after extensive negotiations with commonwealth officials and their police consultants. The agreement provides a comprehensive blueprint for meaningful, sustainable reform and reflects the input of many community stakeholders from throughout the Commonwealth, including police affinity groups, members of the Puerto Rico business community, students, representatives of the Dominican community, and members of the lesbian, gay, bisexual, transsexual and transgender communities.
The agreement addresses the policies, procedures, training, internal and external oversight, disciplinary systems and information and data integrity mechanisms that caused or contributed to the pattern or practice of misconduct. It also details necessary changes intended to ensure that police services are delivered to the people of Puerto Rico in a manner that is effective, complies with the Constitution, and promotes the community’s trust in PRPD. For instance, the agreement contains provisions that are designed to increase transparency and promote PRPD’s responsiveness to the community, including measures that require regular meetings with community representatives to facilitate cooperation and communication; collection and dissemination of accurate and up-to-date crime statistics; community outreach programs in each PRPD region; and independent and periodic compliance assessments that are available to the public.
The purpose of the joint motion requesting a temporary stay of the proceedings is to provide the incoming administration with a meaningful opportunity to review the agreement. The department and representatives of Governor Fortuño have met independently with Governor-elect García Padilla and his transition team to brief them on the investigation’s findings and the agreement. The stay, requested until April 15, 2013, will provide Governor-elect García Padilla and his incoming administration with a meaningful opportunity to review the agreement, and either accept it or negotiate necessary changes, before the department and Commonwealth request approval and entry of the agreement as an order. During this period, the department will continue its ongoing outreach into communities across Puerto Rico to seek input and feedback. Once approved and entered by the district court, the agreement will resolve the department’s civil action, and the implementation phase will immediately begin.
A copy of the complaint, the agreement, the joint motion to stay the proceedings, and September 2011 letter of findings can be found at www.justice.gov/crt .
Related Materials:
PRPD Summary of Agreement
PRPD Complaint
PRPD Agreement
PRPD Joint MotionJustice Department Announces Agreement with the State of New Hampshire on Bailout of Covered Jurisdictions Under the Voting Rights ActRead the Press Release
The Justice Department announced today that it has reached an agreement with the State of New Hampshire that will allow for all 10 of the towns in that state that are covered jurisdictions under the special provisions of the Voting Rights Act to bail out from coverage by these provisions. These 10 covered jurisdictions are the towns or townships of Antrim, Benton, Boscawen, Millsfield, Newington, Pinkham’s Grant, Rindge, Stewartstown, Stratford, and Unity, in New Hampshire. Bailout would exempt these 10 towns, along with local school districts within these towns, from the preclearance requirements of Section 5 of the Voting Rights Act. The agreement is in the form of a consent decree filed today in the U.S. District Court for the District of Columbia and must be approved by the court.
“In the department’s view, these covered towns and townships have met the requirements necessary for bailout. We reached this conclusion after thoroughly reviewing information provided by the State and the covered jurisdictions gathered during the department’s independent investigation,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I commend the State and the covered jurisdictions on their cooperation to ensure resolution of this matter.”
Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 5 of the act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court for the District of Columbia or from the U.S. attorney general, prior to their implementation. Section 5 of the act provides that a covered jurisdiction may seek to “bail out,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in the U.S. District Court for the District of Columbia. A bailout judgment can be issued only if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout only if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.
The state of New Hampshire filed its bailout action on behalf of the 10 covered towns and townships in the U.S. District Court for the District of Columbia on Nov. 15, 2012. Counsel for the state contacted the attorney general prior to filing the action, indicating that the State was interested in seeking to bailout its covered jurisdictions. The state and covered jurisdictions provided the Justice Department with substantial information, and the department conducted an investigation to determine the covered towns and townships’ eligibility. Based on that investigation, the department is satisfied that the 10 covered towns and townships meet the Voting Rights Act’s requirements for bailout.
The consent decree details the legal and factual basis for a bailout determination and, if approved by the court, the State’s request will be granted. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the towns or townships that would have originally precluded the covered towns or townships from bailing out if it had occurred during the 10-year period preceding entry of the consent decree.
Information about bailout, the Voting Rights Act and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/voting . Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Related Materials:
New Hampshire Proposed Consent Decree
El Departamento de Justicia realiza acuerdo para la reforma del Departamento de Policía de Puerto RicoRead the Press Release
El Departamento de Justicia [Department of Justice (DOJ)] realizó hoy un acuerdo global con el Estado Libre Asociado de Puerto Rico y el Gobernador Luis Fortuaño en resolución de su investigación civil del Departamento de Policía de Puerto Rico [Puerto Rico Police Department (PRPD)]. La demanda y el acuerdo fueron presentados hoy al Tribunal Federal de Distrito de Puerto Rico, junto con una petición conjunta para el aplazamiento temporal del proceso hasta el 15 de abril de 2013, para brindarle al gobierno entrante del Gobernador electo Alejandro García Padilla tiempo suficiente para examinar el acuerdo.
El acuerdo integral se ocupa de violaciones constitucionales amplias y constantes cometidas por el PRPD que fueron documentadas en una denuncia larga del DOJ emitida en septiembre de 2011. El departamento encontró justificación razonable para creer que el PRPD exhibe un patrón o una práctica de uso de fuerza excesiva, uso de fuerza irrazonable diseñada para suprimir la libertad de expresión, y allanamientos y confiscaciones inconstitucionales. El acuerdo también trata de alegatos de que el PRPD deja de investigar delitos sexuales y violencia doméstica, y realiza acciones policiales discriminatorias.
"Valoramos el arduo trabajo del Gobernador Fortuaño, el Superintendente Héctor Pesquera y los equipos de los mismos. Juntos, y con gran participación del público, hemos diseñado una huella integral para la reforma que brinda una base sólida que profesionalizará y brindará apoyo a los hombres y mujeres trabajadores del PRPD en sus tareas de protección del pueblo de Puerto Rico", dijo Thomas E. Perez, Secretario de Justicia Auxiliar de la División de Derechos Civiles. "También nos hemos reunido con el Gobernador electo García Padilla, quien reconoce que la acción policial constitucional va de la mano con la acción policial efectiva. Nos complacerá trabajar con el Gobernador electo García Padilla y su equipo en finalizar el acuerdo y comenzar la tarea crítica de reconstruir el PRPD. El garantizar una acción policial efectiva y constitucional no es una cuestión partidaria, y valoramos el compromiso asumido por el Gobernador Fortuaño y el Gobernador electo García Padilla para con las reformas reflejadas en el acuerdo. La implementación exitosa de las reformas que contiene este acuerdo ayudarán a reducir la delincuencia, asegurarán el respeto por la Constitución y restaurarán la confianza pública en el PRPD".
El acuerdo de hoy fue alcanzado después de negociaciones amplias con autoridades del estado y sus consultores policiales. El acuerdo brinda una huella integral para una reforma significativa y sostenible y refleja las opiniones de muchos actores de la comunidad de todo el estado, incluidos grupos con afinidad policial, miembros de la comunidad empresaria de Puerto Rico, estudiantes, representantes de la comunidad dominicana y miembros de las comunidades lesbiana, gay, bisexual, transexual y transgénero.
El acuerdo trata de los procedimientos, políticas, capacitación, supervisión interna y externa, sistemas disciplinarios y mecanismos de integridad de la información y de datos que causaron o contribuyeron para el patrón o la práctica de conducta indebida. También detalla cambios necesarios para garantizar que los servicios policiales sean brindados al pueblo de Puerto Rico de manera efectiva, que cumpla con la Constitución y promueva la confianza de la comunidad en el PRPD. Por ejemplo, el acuerdo contiene disposiciones diseñadas para aumentar la transparencia y promover el grado de reacción policial respecto de la comunidad, incluidas medidas que requieren reuniones periódicas con representantes comunitarios para facilitar la cooperación y la comunicación; la recolección y diseminación de estadísticas de delincuencia precisas y actualizadas; programas de extensión comunitaria en cada región del PRPD; y evaluaciones de cumplimiento independientes y periódicas que estén disponibles al público.
La finalidad de la petición conjunta que solicita un aplazamiento temporal del proceso es brindarle al próximo gobierno una oportunidad significativa de examinar el acuerdo. El departamento y representantes del Gobernador Fortuaño se han reunido de manera independiente con el Gobernador electo García Padilla y su equipo de transición para informarles acerca de las conclusiones de la investigación y sobre el acuerdo. El aplazamiento, solicitado hasta el 15 de abril de 2013, le brindará al Gobernador electo García Padilla y su gobierno entrante una oportunidad significativa de examinar el acuerdo y aceptarlo o negociar cambios necesarios, antes de que el departamento y el estado soliciten la aprobación y el asiento del acuerdo en forma de orden. Durante este período, el departamento continuará con sus iniciativas de extensión comunitaria en curso en todo Puerto Rico para pedir opiniones y comentarios. Una vez aprobado y asentado por el tribunal de distrito, el acuerdo resolverá la acción civil entablada por el departamento, y comenzará la fase de implementación de inmediato.
Se encuentra una copia de la demanda, del acuerdo y de la petición conjunta para el aplazamiento del proceso, y la carta de conclusiones de septiembre de 2011 en www.justice.gov/crt.
Material relacionado:
- Resumen del Acuerdo con el PRPD
District Court Enters Permanent Injunction Against New Mexico-Based Producer of Peanut Butter Productsand Company’s President and Chief Executive OfficerRead the Press Release
WASHINGTON - U.S. District Court Judge William P. Johnson entered a consent decree of permanent injunction against Sunland Inc., a Portales, N.M.-based producer of peanut butter, and Jimmie D. Shearer, president and chief executive officer of Sunland, the Justice Department announced today. The department, at the request of the Food and Drug Administration (FDA), asked the court to enter the consent decree.
The Centers for Disease Control and Prevention (CDC) has reported that since September 2012 at least 35 people from 19 states have been infected with a strain of Salmonella Bredeney. Eight of these individuals were hospitalized as a result of their infection. Peanut butter manufactured by Sunland was identified by FDA and the CDC as a likely source of this outbreak.
As set forth in the complaint filed by the United States on December 20, FDA conducted an inspection of defendants’ facility from Sept. 9 to Oct. 16, 2012. According to the complaint, FDA analyses of samples collected during the 2012 inspection confirmed that certain of Sunland’s nut products were contaminated with Salmonella Bredeney and established the widespread presence of Salmonella Bredeney in Sunland’s facility. Salmonella Bredeney is a pathogenic organism that has a reasonable probability of causing serious adverse health consequences or death to humans.
FDA suspended the registration of Sunland’s food facility on Nov. 26, 2012. As the FDA’s suspension letter explained, the FDA’s analysis found that the Salmonella Bredeney detected at Sunland was indistinguishable from the Salmonella Bredeney identified in the multistate outbreak and the FDA’s investigation uncovered a number of practices that likely result in cross-contamination between raw peanuts and peanuts that had been roasted or brined. Specifically, packaging equipment was not effectively cleaned to prevent contamination; collapsible mesh totes used to store and transport nuts were not cleaned and sanitized between uses; employees came into contact with ready to package, roasted, in-shell peanuts with their bare hands; and processing equipment had unused connections that could facilitate the growth of pathogenic bacteria by allowing food material and water to accumulate.
The FDA concluded that unless and until Sunland implemented a number of corrective actions, and FDA evaluated the completed corrective actions to assure their adequacy, food manufactured and held by Sunland would continue to pose a reasonable probability of causing serious adverse health consequences or death to humans or animals.
Shortly after the suspension of Sunland’s registration, the United States filed suit to permanently enjoin Sunland and Shearer from delivering adulterated foods into interstate commerce. The consent decree entered resolves that suit by requiring Sunland to take a wide range of actions to correct its violations and ensure that they do not happen again. Among other actions, Sunland must develop and implement sanitation control programs; provide FDA the opportunity to inspect the facilities to assure Sunland’s compliance with the consent decree, the Food, Drug and Cosmetic Act, and applicable regulations; and receive written authorization from FDA to resume operations. Sunland must also implement testing, monitoring and remediation protocols.“This consent decree prohibits Sunland from selling processed foods to consumers until it 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 sell the food we eat follow the law.”
Principal Deputy Assistant Attorney General Delery thanked the FDA for referring this matter to the Department of Justice. Roger Gural, Trial Attorney at the Consumer Protection Branch of the Justice Department, in conjunction with Assistant U.S. Attorney Michael Hoses in the District of New Mexico, and Scott Kaplan and Jillian Wein Riley, Counsel at FDA’s Office of the Chief Counsel, brought this case on behalf of the United States.
Ohio-Based Wheelchair Manufacturer Agrees to Consent Decree to Resolve Allegations of Food, Drug and Cosmetic Act ViolationsRead the Press Release
The Justice Department, at the request of the Food and Drug Administration (FDA), today filed a complaint and a proposed consent decree in the U.S. District Court for the Northern District of Ohio against Invacare Corp., Gerald B. Blouch and Ronald J. Clines. The complaint and proposed consent decree are being filed today in accordance with an agreement with the defendants resolving numerous allegations of violations of the Food, Drug and Cosmetic Act (FDCA).
The defendants design, manufacture and distribute powered wheelchairs and powered hospital beds, which are medical devices under the FDCA. Medical device manufacturers are required to comply with the FDA’s Current Good Manufacturing Practices (CGMP) regulatory requirements in order to ensure the safety and effectiveness of their devices.
The FDA conducted multiple inspections of Invacare’s corporate headquarters and Taylor Street manufacturing facility, both located in Elyria, Ohio, between September 2002 and August 2011. Those inspections revealed significant violations of the CGMP regulatory requirements. Many of the violations related to design controls, complaint handling, and corrective and preventive action (CAPA). Those regulations ensure that when a device manufacturer learns that one of its devices has malfunctioned or has caused injury to a patient, the complaint is thoroughly investigated and necessary design changes are implemented. Without such controls, recurring defects may not be identified or corrected, endangering patients who rely on the defendants’ powered wheelchairs and beds.
Under the terms of the agreement reached with the government, the defendants cannot resume manufacturing power wheelchairs or conducting design activities related to wheelchairs and power beds at the two Ohio facilities until an independent expert inspects the company’s operations and certifies that the defendants are in compliance with the law. FDA can then evaluate that certification. Until FDA provides written notification that the facilities are in compliance with the law, they cannot resume operations.
“Today’s proposed consent decree would require Invacare to establish procedures that will help ensure their products are safe and effective for the patients who rely on them,” said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division of the Department of Justice. “Consumers who need wheelchairs or powered hospital beds should not have to risk being harmed by the very products meant to help them.”
“This resolution underscores the commitment of our office and this department to protecting consumers, particularly those who have to use wheelchairs or hospital beds,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio.
The matter was handled by the Justice Department’s Consumer Protection Branch, the FDA’s Office of the General Counsel, and the U.S. Attorney’s Office for the Northern District of Ohio.
Justice Department and Lesley University Sign Agreement to Ensure Meal Plan Is Inclusive of Students with Celiac Disease and Food AllergiesRead the Press Release
The Justice Department today announced an agreement with Lesley University in Cambridge, Mass., to ensure that students with celiac disease and other food allergies can fully and equally enjoy the university’s meal plan and food services in compliance with the Americans with Disabilities Act (ADA).
Food allergies may constitute a disability under the ADA. Individuals with food allergies may have an autoimmune response to certain foods, the symptoms of which may include difficulty swallowing and breathing, asthma and anaphylaxis. For example, celiac disease, which is triggered by consumption of the protein gluten (found in foods such as wheat, barley and rye), can cause permanent damage to the surface of the small intestines and an inability to absorb certain nutrients, leading to vitamin deficiencies that deny vital nourishment to the brain, nervous system, bones, liver and other organs. Celiac disease affects about 1 in 133 Americans.
“By implementing this agreement, Lesley University will ensure students with celiac disease and other food allergies can obtain safe and nutritional food options,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The agreement ensures that Lesley’s meal program is attentive to the schedules and demands of college students with food allergies, an issue colleges and universities across the country need to consider.”
Under the settlement, Lesley University agrees to amend its policies and practices to:
· Continually provide ready-made hot and cold gluten- and allergen-free food options in its dining hall food lines;
· Develop individualized meal plans for students with food allergies, and allow those students to pre-order allergen free meals, that can be made available at the university’s dining halls in Cambridge and Boston;
· Provide a dedicated space in its main dining hall to store and prepare gluten-free and allergen-free foods and to avoid cross-contamination;
· Enable students to request food made without allergens, and ensure that a supply of allergen-free food is available;
· Work to retain vendors that accept students’ prepaid meal cards that offer food without allergens;
· Display notices concerning food allergies and identify foods containing specific allergens;
· Train food service and University staff about food allergy related issues;
· Pay $50,000 in compensatory damages to previously identified students who have celiac disease or other food allergies.
The settlement agreement was reached under the ADA, which prohibits discrimination against individuals with disabilities by public accommodations, including colleges and universities, in their full and equal enjoyment of goods, services, and facilities. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt . More information about the settlement with Lesley University can be found at www.ada.gov or by calling the toll-free ADA Information Line at 800-514-0301 or 800-514-0383 (TTY).
Related Materials:
Lesley University Agreement
Justice Department Files Civil Rights Lawsuit Against the Alamance County, N.C., Sheriff’s OfficeRead the Press Release
The Justice Department today filed a civil rights lawsuit against Terry S. Johnson, in his official capacity as head of the Alamance County Sheriff’s Office (ACSO) in North Carolina. The complaint alleges that ACSO routinely discriminates against and targets Latinos for enforcement action, in violation of the U.S. Constitution and Section 14141 of the Violent Crime Control and Law Enforcement Act of 1994.
The lawsuit follows a comprehensive investigation of ACSO’s police practices. The department’s investigation included interviews with over 125 individuals, a review of ACSO policies, procedures, training materials and analysis of data on traffic stops, arrests, citations, vehicle checkpoints, and other documentary evidence. On Sept. 18, 2012, the department issued a formal findings letter detailing ACSO’s discriminatory policing practices and inviting ACSO to negotiate a court-enforceable agreement to remedy the violations found. ACSO declined to enter into meaningful settlement negotiations.
The complaint alleges that ACSO engages in a pattern or practice of discriminatory policing against Latinos in violation of the Equal Protection Clause of the Fourteenth Amendment, the Fourth Amendment and the Violent Crime Control and Law Enforcement Act. The complaint alleges that ACSO’s discriminatory policing activities include:
· ACSO deputies unlawfully target Latino drivers for traffic stops:
o A study of ACSO’s traffic stops on three major county roadways found that deputies were between four and 10 times more likely to stop Latino drivers than non-Latino drivers;
o ACSO deputies arrest Latinos for minor traffic violations while issuing citations or warnings to non-Latinos for comparable violations;
o ACSO deputies use vehicle checkpoints in a discriminatory manner to target Latinos.
· ACSO uses jail booking and detention practices, including practices related to immigration status checks, that discriminate against Latinos.
The complaint further alleges that these discriminatory practices are deeply rooted in a culture that begins with Sheriff Johnson and permeates the entire agency. For example:
· The sheriff and ACSO’s leadership explicitly instruct deputies to target Latinos with discriminatory traffic stops and other enforcement activities;
· The sheriff and ACSO leadership foster a culture of bias by using anti-Latino epithets; and
· ACSO engages in substandard reporting and monitoring practices that mask its discriminatory conduct.
Taken together, these practices violate the constitutional and federal rights of Latinos in Alamance County and undermine ACSO’s ability to serve and protect Alamance County’s Latino residents and the community at large.
“This is an abuse of power case involving a sheriff who misuses his position of authority to unlawfully target Latinos in Alamance County,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Sheriff Johnson’s directives and leadership have caused ACSO to violate the constitutional rights of Latinos in Alamance County and eroded public trust in ACSO.”
In this lawsuit, the Justice Department seeks a court enforceable, comprehensive, written agreement that will ensure long term structural, cultural and institutional change at ACSO. In particular, ACSO must develop and implement new policies, procedures and training in effective and constitutional policing. Any reform efforts must also include systems of accountability to ensure that ACSO has eliminated unlawful bias from its decision making at all levels.
Members of the Alamance County community who wish to provide information to the Department may call 1-877-871-9726 or email [email protected] . For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov.crt .
Related Materials:
ACSO Complaint
Federal Inmate in Alabama Pleads Guilty to Tax Fraud Perpetrated While in PrisonRead the Press Release
WASHINGTON – David Marrero, an inmate in the custody of the Federal Bureau of Prisons serving a 10-year sentence for a Florida Medicare fraud scheme, pleaded guilty today in Montgomery, Ala., to filing a false claim for a $2,719,438 tax refund, the Justice Department and Internal Revenue Service (IRS) announced today.
According to court records, while serving a federal sentence in Montgomery County, Ala., Marrero began sending various false documents to the IRS and to the federal judge who had presided over his case. Among the documents he admitted sending were false money orders and false tax returns making claims for refunds. The false tax returns were based upon false IRS Forms 1099-OID that Marrero had fabricated claiming that various companies withheld a substantial amount of federal taxes from him when, in fact, the companies had withheld nothing. Marrero also used financial documents he had obtained from other people, without their knowledge or consent, as supporting documentation for his fraudulent claims.
Under the plea agreement, Marrero faces an additional 46 months in federal prison on top of the 10-year sentence he is currently serving. He also faces a maximum fine of $250,000. A sentencing date has not yet been set by the U.S. District Court in the Middle District of Alabama.
This case was investigated by IRS – Criminal Investigation special agents. Trial Attorneys Justin Gelfand and Jason Poole of the Justice Department’s Tax Division are prosecuting the case.
IRS Form 1099-OID schemes are one of the IRS’s “Dirty Dozen” tax scams for 2012. Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
Department of Justice Will Not Challenge STARS Alliance LLC’s <br /> Joint Procurement ProposalRead the Press Release
WASHINGTON – The Department of Justice today announced that it will not challenge a proposal by STARS Alliance LLC (STARS), a group of seven nuclear power plant operators, to procure jointly certain goods and services. The STARS members each operate single nuclear electric generation plants and seek to obtain efficiencies similar to those of a nuclear fleet operator through the proposed joint procurement.
The department said that, based on representations made by the applicants, the proposed joint procurement was not likely to restrict competition in either the upstream markets for the particular goods and services or the downstream markets for electricity.
The department’s position was stated in a second business review letter to counsel for the STARS Alliance, from Renata B. Hesse, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The proposed conduct may allow the joint venture to increase efficiencies that result in lower costs for electricity, benefitting consumers,” said Hesse.
On July 3, 2012, the department issued its first business review letter to counsel for STARS stating that the department would not challenge proposed conduct relating to the sharing of resources and coordination of best practices and other operational activities through STARS.
In issuing today’s letter, the department noted that none of the proposed joint procurement involves the sale or purchase of the electric power or the purchase of nuclear fuel, that STARS will adopt measures to prevent anticompetitive exchanges of information and that membership and participation in all of the activities of STARS is voluntary.
The department determined that the expanded joint venture meets the requirements of the antitrust safety zone set forth in Section 4.2 of the Department of Justice’s and Federal Trade Commission’s Collaboration Among Competitors Guidelines. The guidelines provide an “antitrust safety zone” under which, absent extraordinary circumstances, the agencies will not challenge a joint venture when the market shares of the joint venture and its members are not more than 20 percent of each relevant market. STARS represented that its members collectively account for less than 20 percent of each relevant market in which STARS proposed joint procurement.
With respect to electricity, the STARS members, for the most part, are in separate geographic markets and do not compete against each other for the sale of electricity. In the two instances where members both have reactors in the same electricity transmission organization, the members’ nuclear units are not likely to have an impact on price.
The STARS Alliance members are: Union Electric Company, with its Callaway plant in Missouri; Arizona Public Service Company, with its Palo Verde plant in Arizona; Luminant Generation Company LLC, with its Comanche Peak plant in Texas; Pacific Gas and Electric Company, with its Diablo Canyon plant in California; Southern California Edison Company, with its San Onofre plant in California; STP Nuclear Operating Company, with its STP plant in Texas; and Wolf Creek Nuclear Operating Company, with its Wolf Creek plant in Kansas.
Under the department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws based on the information provided. The department reserves its right to challenge the proposed action under the antitrust laws if it produces anticompetitive effects.A file containing the business review request and the department’s response may be examined in the Antitrust Division’s Antitrust Documents Group, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530. After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the business review procedure.
Clinical Director for Miami-based Health Care Clinic Sentenced to Prison for Role in $50 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A former clinical director for Biscayne Milieu, a Miami-based mental-health clinic, was sentenced today to 100 months in prison for his participation in a Medicare fraud scheme involving the submission of more than $50 million in fraudulent billings to Medicare, 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, Acting 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.
Rafael Alalu, 47, of Miami, was sentenced today by U.S. District Judge Robert N. Scola Jr. in the Southern District of Florida. Alalu was convicted on Aug. 24, 2012, of one count of conspiracy to commit health care fraud and two substantive counts of health care fraud, following a two-month jury trial. The evidence at trial showed that Alalu participated in treating ineligible patients, concealing that fact by falsifying patient files and writing fraudulent group therapy notes, and instructing others to do the same. In addition to the prison term, Alalu was ordered to pay more than $5.6 million in restitution, jointly and severally with his co-defendants.
Various owners, doctors, managers, therapists, patient brokers and other employees of Biscayne Milieu have also been charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed in September 2011 and May 2012. Biscayne Milieu, its owners, and more than 25 of the individual defendants charged in these cases have pleaded guilty or have been convicted at trial. Antonio and Jorge Macli and Sandra Huarte – the owners and operators of Biscayne Milieu – and Dr. Gary Kushner – its medical director – were each convicted at trial of various offenses and are scheduled for sentencing in March 2013.
According to the evidence at trial, the defendants and their co-conspirators caused the submission of over $50 million dollars in false and fraudulent claims to Medicare through Biscayne Milieu, which purportedly operated a partial hospitalization program (PHP) – a form of intensive treatment for severe mental illness. Instead, the defendants devised a scheme in which they paid patient recruiters to refer ineligible Medicare beneficiaries to Biscayne Milieu for services that were never provided. Many of the patients admitted to Biscayne Milieu were not eligible for PHP because they were chronic substance abusers, suffered from severe dementia and would not benefit from group therapy, or had no mental health diagnosis but were seeking exemptions for their U.S. citizenship applications. The evidence at trial showed that once these ineligible patients were admitted to Biscayne Milieu, Alalu and others concealed the fraud by falsifying patients’ group therapy notes to reflect legitimate PHP treatment that was never provided, and directed others to do so.
The case is being prosecuted by Assistant U.S. Attorneys Michael Davis and Marlene Rodriguez of the U.S. Attorney’s Office for the Southern District of Florida, and by Trial Attorney James V. Hayes of the Fraud Section of the Justice Department’s Criminal Division. The case was investigated by the FBI with the assistance of HHS-OIG, and was brought by the U.S. Attorney’s Office for the Southern District of Florida in coordination with the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section.
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,480 defendants who have collectively billed the Medicare program for more than $4.8 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to www.stopmedicarefraud.gov.
UBS Securities Japan Co. Ltd. to Plead Guilty to Felony Wire Fraud for Long-running Manipulation of LIBOR Benchmark Interest RatesRead the Press Release
UBS Securities Japan Co. Ltd. (UBS Japan), an investment bank, financial advisory securities firm and wholly-owned subsidiary of UBS AG, has agreed to plead guilty to felony wire fraud and admit its role in manipulating the London Interbank Offered Rate (LIBOR), a leading benchmark used in financial products and transactions around the world, Attorney General Eric Holder announced today. The criminal information, filed today in U.S. District Court in the District of Connecticut, charges UBS Japan with one count of engaging in a scheme to defraud counterparties to interest rate derivatives trades by secretly manipulating LIBOR benchmark interest rates.
As part of the ongoing criminal investigation by the Criminal and Antitrust Divisions of the Justice Department and the FBI into LIBOR manipulation, two former senior UBS traders also are charged. Tom Alexander William Hayes, 33, of England, and Roger Darin, 41, of Switzerland, were both charged with conspiracy in a criminal complaint unsealed in Manhattan federal court earlier today. Hayes is also charged with wire fraud, based on the same scheme, and a price fixing violation arising from his collusive activity with another bank to manipulate LIBOR benchmark rates.
UBS Japan has signed a plea agreement with the government admitting its criminal conduct, and has agreed to pay a $100 million fine. In addition, UBS AG, the parent company of UBS Japan headquartered in Zurich, has entered into a non-prosecution agreement (NPA) with the government requiring UBS AG to pay an additional $400 million penalty, to admit and accept responsibility for its misconduct as set forth in an extensive statement of facts and to continue cooperating with the Justice Department in its ongoing investigation. The NPA reflects UBS AG’s substantial cooperation in discovering and disclosing LIBOR misconduct within the financial institution and recognizes the significant remedial measures undertaken by new management to enhance internal controls.
Together with approximately $1 billion in regulatory penalties and disgorgement – $700 million as a result of the Commodity Futures Trading Commission (CFTC) action; $259.2 million as a result of the U.K. Financial Services Authority (FSA) action; and $64.3 million as a result of the Swiss Financial Markets Authority (FINMA) action – the Justice Department’s criminal penalties bring the total amount of the resolution to more than $1.5 billion.
“By causing UBS and other financial institutions to spread false and misleading information about LIBOR, the alleged conspirators we’ve charged – along with others at UBS – manipulated the benchmark interest rate upon which many transactions and consumer financial products are based. They defrauded the company’s counterparties of millions of dollars. And they did so primarily to reap increased profits, and secure bigger bonuses, for themselves,” said Attorney General Holder. “Today’s announcement – and $1.5 billion global resolution – underscores the Justice Department’s firm commitment to investigating and prosecuting such conduct, and to holding the perpetrators of these crimes accountable for their actions.”
“UBS manipulated one of the cornerstone interest rates in our global financial system,” said Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division. “The scheme alleged is epic in scale, involving people who have walked the halls of some of the most powerful banks in the world. Today’s agreement by UBS Japan to plead guilty, the charges against individual alleged perpetrators of these crimes, and our agreement recognizing the steps being taken by UBS AG to right itself demonstrate the Justice Department’s determination to hold accountable those in the financial marketplace who break the law. We cannot, and we will not, tolerate misconduct on Wall Street of the kind admitted to by UBS today, and by Barclays last June. We will continue to follow the facts and the law wherever they lead us in this matter, as we do in every case.”
“The criminal complaint charges two senior UBS traders with colluding to manipulate Yen LIBOR interest rates for the purpose of improving trading positions held by Hayes and UBS,” said Deputy Assistant Attorney General Scott D. Hammond of the Justice Department’s Antitrust Division. “Coordinating the movement of interest rates even by a very small margin meant higher profits and bigger bonuses for the conspirators at the expense of those that relied on LIBOR as a reference rate.”
“The manipulation of LIBOR affects financial products including mortgages, credit cards, student loans and many other interest rate products,” said FBI Associate Deputy Director Kevin L. Perkins. “This practice further erodes Main Street’s confidence in Wall Street. The public expects our financial institutions to maintain proper oversight of their businesses and to ensure the public is not harmed by criminal activity within these institutions. In this case, UBS acknowledged its failures and cooperated with our investigation. The FBI would like to thank its federal partners in this investigation – the Department of Justice Criminal Division’s Fraud Section and Antitrust Division, Commodity Futures Trading Commission’s Division of Enforcement and the Securities and Exchange Commission’s Division of Enforcement whose joint efforts brought a successful resolution to this matter.”
According to documents filed in these cases, LIBOR is an average interest rate, calculated based on 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 estimated 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.
Between July 2006 and September 2009, Hayes was a senior trader employed in the Tokyo office of UBS Japan, which then operated under the name UBS Securities Japan Ltd. Among other financial products, Hayes traded in interest rate derivatives that essentially consisted of bets against other traders on the direction in which Yen LIBOR would move. UBS was a member of the Yen LIBOR panel, and Darin was, at certain times relevant to the criminal complaint, a trader responsible for making and supervising LIBOR submissions to the BBA on behalf of the bank. In a statement of facts attached to the NPA and plea agreement, Hayes is referred to as “Trader-1” and Darin is referred to as “Submitter-1.”
Beginning in September 2006, UBS Japan and Hayes orchestrated a sustained, wide-ranging and systematic scheme to move Yen LIBOR in a direction favorable to Hayes’ trading positions, defrauding UBS’ counterparties and harming others with financial products referencing Yen LIBOR who were unaware of the manipulation. Between November 2006 and August 2009, Hayes or one of his colleagues endeavored to manipulate Yen LIBOR on at least 335 of the 738 trading days in that period, and during some periods on almost a daily basis. Because of the large size of Hayes’ trading positions, even slight moves of a fraction of a percent in Yen LIBOR could generate large profits. For example, Hayes once estimated that a 0.01 percent movement in the final Yen LIBOR fixing on a specific date could result in a $2 million profit for UBS.
According to the charging documents, UBS Japan and Hayes employed three strategies to execute the scheme: from November 2006 through September 2009, Hayes conspired with Darin and others within UBS to cause the bank to make false and misleading Yen LIBOR submissions to the BBA; also, Hayes caused cash brokerage firms, which purported to provide market information regarding LIBOR to panel banks, to disseminate false and misleading information about short-term interest rates for Yen, which those banks could and did rely upon in formulating their own LIBOR submissions to the BBA; and Hayes communicated with interest rate derivatives traders employed at three other Yen LIBOR panel banks in an effort to cause them to make false and misleading Yen LIBOR submissions to the BBA.
As alleged in the charging documents, Hayes, Darin and other co-conspirators often executed their scheme through electronic chats. On Nov. 20, 2006, for example, Hayes asked a UBS Yen LIBOR submitter who was substituting for Darin, “hi . . . [Darin] and I generally coordinate ie sometimes trade if ity [sic] suits, otherwise skew the libors a bit.” Hayes went on to request, “really need high 6m [6-month] fixes till Thursday.” The submitter responded, “yep we on the case there . . . will def[initely] be on the high side.” The day before this request, UBS’s 6-month Yen LIBOR submission had been tied with the lowest submissions included in the calculation of the LIBOR fix. Immediately after this request for high submissions, however, UBS’s 6-monthYen LIBOR submissions rose to the highest submission of any bank in the contributor panel and remained tied for the highest, precisely as Hayes had requested.
Another example of such an alleged accommodation occurred on March 29, 2007, when Hayes asked Darin, “can we go low 3[month] and 6[month] pls? . . . 3[month] esp.” Darin responded “ok”, and the two had the following exchange:
Hayes: what are we going to set?
Darin: too early to say yet . . . prob[ably] .69 would be our unbiased contribution
Hayes: ok wd really help if we cld keep 3m low pls
Darin: as i said before - i [don’t] mind helping on your fixings, but i'm not setting libor 7bp away from the truth. . . i'll get ubs banned if i do that, no interest in that.
Hayes: ok obviousl;y [sic] no int[erest] in that happening either . . . not asking for it to be 7bp from reality anyway any help appreciated[.]
Hayes received the help he requested.
In addition, the criminal complaint charges Hayes with colluding with a trader employed at another LIBOR panel bank in May 2009, in violation of the Sherman Antitrust Act. Hayes allegedly engaged in the collusive scheme to fix the price of derivative instruments whose price was based on Yen LIBOR. In electronic chats, Hayes asked the trader to move 6-month Yen LIBOR up due to a “gigantic” position Hayes had taken. For the trade in question, UBS trading records confirmed that each 0.01 percent movement in LIBOR would generate profits of approximately $459,000 for Hayes’ book. The trader at the other bank responded that he would comply, and his bank’s submission moved by 0.06 percent compared to its submission the previous day, for which Hayes thanked him.
In entering into the NPA with UBS AG, the Justice Department considered information from UBS, and from regulatory agencies in Switzerland and Japan, demonstrating that in the last two years UBS has made important and positive changes in its management, compliance and training to ensure adherence to the law. T he department received favorable reports from the Swiss Financial Market Supervisory Authority (FINMA) and the Japan Financial Services Authority (JFSA) describing, respectively, progress that UBS has made in its approach to compliance and enforcement and UBS Japan’s effective implementation of the remedial measures the JFSA imposed based on findings relating to the attempted manipulation of Yen benchmarks.
The investigation is being handled by Deputy Chiefs William Stellmach and Daniel Braun and Trial Attorney Luke Marsh of the Criminal Division’s Fraud Section, and Assistant Chief Elizabeth Prewitt and Trial Attorney Richard Powers of the Antitrust Division, New York Field Office. Assistant Chief Rebecca Rohr and Trial Attorneys Alexander Berlin and Thomas Hall of the Criminal Division’s Fraud Section, Trial Attorneys Portia Brown and Wendy Norman of the Antitrust Division, and Assistant U.S. Attorneys Eric Glover and Liam Brennan of the U.S. Attorney’s Office for the District of Connecticut have also provided valuable assistance. The Criminal Division’s Office of International Affairs also provided assistance in this matter. The investigation is being conducted by 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 Commodity Futures Trading Commission’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 and, among other efforts, has made an invaluable contribution to the investigation relating to UBS. The Department of Justice also wishes to acknowledge and thank FINMA, the Japanese Ministry of Justice, and the JFSA. 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 Material:- UBS Statement of Facts
- UBS Non-Prosecution Agreement
- Hayes, Tom and Darin Complaint
- Hayes Complaints Exhibits
- Plea Agreement
- Attorney General Eric Holder Speaks at the UBS Press Conference
The Department recognizes that parts of these documents 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 contact [email protected].
Sanofi US Agrees to Pay $109 Million to Resolve False Claims Act Allegations of Free Product Kickbacks to PhysiciansRead the Press Release
Sanofi-Aventis U.S. Inc. and Sanofi-Aventis U.S. LLC, subsidiaries of international drug manufacturer Sanofi (collectively, Sanofi US), have agreed to pay $109 million to resolve allegations that Sanofi US violated the False Claims Act by giving physicians free units of Hyalgan, a knee injection, in violation of the Anti-Kickback Statute, to induce them to purchase and prescribe the product. The settlement also resolves allegations that Sanofi US submitted false average sales price (ASP) reports for Hyalgan that failed to account for free units distributed contingent on Hyalgan purchases. The government alleges that the false ASP reports, which were used to set reimbursement rates, caused government programs to pay inflated amounts for Hyalgan and a competing product.
The United States contends that, facing pressure from a lower-priced competitor, Sanofi US provided its sales representatives with thousands of free “sample” Hyalgan units and trained its sales representatives to market the “value add” of these units to physicians. In practice, the United States alleges, Sanofi US sales representatives often entered into illegal sampling arrangements with physicians, using the free units as kickbacks and promising to provide negotiated numbers of them in order to lower Hyalgan’s effective price. The government contends that there were numerous such arrangements, including:
- A Southern California-based Sanofi US sales representative who allegedly provided 25 Hyalgan samples to a physician practice for every 100 Hyalgan units purchased, and who supplemented these kickbacks by regularly treating the entire practice to lavish dinners at Sanofi US’s expense and with Sanofi US’s approval.
- A New York-based Sanofi US sales representative who allegedly provided 12 Hyalgan samples to a physician practice for every 50 Hyalgan units purchased, and whose manager supplemented these kickbacks by treating the practice, along with friends and family members, to a lavish dinner in Manhattan at Sanofi US’s expense and with Sanofi US’s approval.
- A Central Texas-based Sanofi US sales representative who allegedly promised a physician practice 125 free Hyalgan syringes in exchange for a purchase of 500 Hyalgan units and was lauded by Sanofi US’s Texas sales team for “[u]tiliz[ing] samples to provide value for the office.”
The United States contends that price was important to physicians because Hyalgan and its direct competitor were reimbursed at the same, fixed rate by Medicare and other insurers. Thus, the less expensive option afforded a greater reimbursement “spread,” or profit, to physicians’ practices. According to the government’s allegations, Sanofi US chose not to compete by lowering the actual invoiced price of Hyalgan, for fear of setting off a price war with its competitor that would lead to a “downward spiral” in prices and reimbursements. Instead, the government alleges, Sanofi US surreptitiously lowered the effective price of Hyalgan by promising the free units to doctors who agreed to purchase the product. The government alleges that Medicare and other federal health care programs paid millions of dollars in kickback-tainted claims for Hyalgan.
“Kickback schemes subvert the health care marketplace and undermine the integrity of public health care programs,” said Principal Deputy Assistant Attorney General for the Civil Division Stuart Delery. “We will continue to hold accountable those who we allege are providing illegal incentives to influence the decision making of health care providers in federal health care programs.”
“The government’s allegations describe a situation where a drug manufacturer used valuable free units of a drug to subvert Medicare’s drug reimbursement system for physicians,” said Carmen M. Ortiz, United States Attorney for the District of Massachusetts. “This is not the first time that this Office has brought action against a manufacturer who engaged in such an illegal scheme, and the government will remain vigilant in policing such conduct.”
“Patients expect their health providers to be concerned solely with their best medical interests” said Daniel R. Levinson, Inspector General for the U.S. Department of Health. “Kickbacks undermine that all-important patient trust, and taxpayers’ expectation that government health dollars be put only to the wisest of uses.”
Today’s settlement with the France-based pharmaceutical manufacturer resolves a lawsuit filed by former sales representative Mark Giddarie under the qui tam, or whistleblower provisions, of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. Giddarie will receive $18.5 million as his share of the government’s recovery.
This settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the District of Massachusetts; the FBI; and the Offices of the Inspectors General of the U.S. Department of Health and Human Services, the U.S. Postal Service, and the Office of Personnel Management.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.1 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 $13.9 billion.
This case is docketed as United States ex rel. Giddarie v. sanofi-aventis U.S., Inc., No. 10-CV-10070 (D. Mass.).
Owners of Two Miami Home Health Companies Plead Guilty in $48 Million Health Care Fraud SchemeRead the Press Release
The owners and operators of two Miami health care agencies pleaded guilty today for their participation in a $48 million home health Medicare fraud scheme, 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, Acting Special Agent in Charge of the FBI’s Miami Field Office; and Special Agent in Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
Rogelio Rodriguez, 43, and Raymond Aday, 48, each pleaded guilty before U.S. District Judge Federico A. Moreno in the Southern District of Florida to one count of conspiracy to commit health care fraud.
According to court documents, Rodriguez was the owner of both Caring Nurse Home Health Corp. and Good Quality Home Health Inc., and Aday was a manager at Caring Nurse and owner of Good Quality.
According to plea documents, Rodriguez and Aday conspired with patient recruiters for the purpose of billing the Medicare program for unnecessary home health care and therapy services. Rodriguez, Aday and their alleged co-conspirators paid kickbacks and bribes to patient recruiters in return for these recruiters providing patients to Caring Nurse and Good Quality, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services for Medicare beneficiaries. Rodriguez and Aday used these prescriptions, POCs and medical certifications to fraudulently bill the Medicare program for home health care services, which Rodriguez and Aday knew was in violation of federal criminal laws.
According to court documents, at Caring Nurse and Good Quality, nurses and office staff falsified patient files for Medicare beneficiaries to make it appear as though those beneficiaries qualified for home health care and therapy services from Caring Nurse and Good Quality when, in fact, Rodriguez and Aday knew that the beneficiaries did not actually qualify for and did not receive such services. Rodriguez admitted to knowing that these files were falsified so that the Medicare program could be billed for medically unnecessary therapy and home health related services.
From approximately January 2006 through June 2011, Caring Nurse and Good Quality submitted approximately $48 million in claims for home health services that were not medically necessary and/or not provided. According to court documents, Medicare paid approximately $33 million for these fraudulent claims.
At sentencing, scheduled for Feb. 27, 2013, Rodriguez and Aday each face a maximum penalty of 10 years in prison.
This case is being prosecuted by Senior Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The 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.
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 .
Owner of Pavement Painting Business Sentenced in Alaska for Illegally Disposing Hazardous WasteRead the Press Release
WASHINGTON – The former owner of a road and parking lot painting and striping business in Anchorage, Alaska, was sentenced today for illegally disposing of more than 200,000 pounds of highly flammable hazardous waste in Anchorage, announced Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division, and Karen L. Loeffler, U.S. Attorney for the District of Alaska.
William Duran Vizzerra, Jr., 43, was sentenced by Chief Judge Ralph R. Beistline to 15 months in prison. In addition, the court ordered Vizzerra to pay $395,319 in restitution to two victims.
Vizzerra pleaded guilty on Aug. 17, 2012 in U.S. District Court in the District of Alaska. Vizzerra was the president, director and part-owner of Precision Pavement Markings Inc. (PPMI), a road and parking lot painting and striping business that operated out of a storage lot in Anchorage from 2006 through 2009. Vizzerra used the storage lot to store hazardous waste, including methyl methacrylate paint and toluene that was used to flush the paint lines, nozzles and sprayers used in his business. Vizzerra ordered employees to dispose of the waste at a local landfill but the employees were turned away because the waste was hazardous. Vizzerra was also told by an environmental services company that it would cost tens of thousands of dollars to properly dispose of the hazardous waste. On approximately Nov. 1, 2009, Vizzerra illegally abandoned approximately 321 55-gallon drums, 179 five-gallon pails and two 200-gallon totes of hazardous waste to avoid the costs of proper disposal. Vizzerra abandoned a total of 204,750 pounds of hazardous waste, all of which was determined to be flammable. The landowners where Vizzerra abandoned the hazardous waste incurred almost $400,000 in clean-up costs.
In November 2010, a citizen reported the abandoned drums to the U.S. Environmental Protection Agency (EPA). An investigation led by EPA Criminal Investigation Division agents revealed several hundred 55-gallon drums and smaller containers at the storage lot, some of which were stacked two-high on a trailer and some of which were stored directly on the ground. Many of the drums were marked "waste" or held hazardous markings, such as "flammable" or "flammable liquid." Many were rusted and in decrepit condition or bulging. The investigation revealed that some of the drums were from a prior pavement business of Vizzerra's that had dissolved several years earlier.
Under the Resource Conservation and Recovery Act, hazardous waste, due to its dangerous qualities, may only be disposed of at a licensed treatment, storage or disposal facility. The storage lot Vizzerra used was neither equipped nor permitted for the disposal of hazardous waste. Yet, knowing this, Vizzerra illegally abandoned and disposed of the waste at the lot, which cost the land owner and lease holder $394,062 in clean-up, disposal and legal fees.“The defendant exposed the environment and the public to hundreds of gallons of hazardous waste. Today’s sentence is an appropriate penalty for this egregious crime against the people and environment of Alaska,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This case shows that we will not tolerate and will vigorously prosecute those who abandon their legal responsibility to properly dispose of hazardous waste.”
“The potential danger posed by the improper disposal of hazardous wastes are well known,” said U.S. Attorney Loeffler. “The U.S. Attorney’s Office is committed to enforcing our nation’s environmental laws to protect the people of Alaska. We have an obligation to insure that our citizens are not injured and our lands are not polluted by the illegal disposal of hazardous materials.”
“By abandoning hundreds of bulging, rusty drums of hazardous chemicals, Defendant Vizzera knowingly saddled the property owners with a monumental mess and a cleanup bill of close to $400k,” stated Tyler Amon, Special Agent in Charge of EPA's criminal enforcement program in the Northwest and Alaska. “Being sent to jail should send the message to Vizzera and others -- there are severe consequences for environmental crime.”
The investigation was conducted by the EPA’s Criminal Investigation Division. The case was prosecuted by the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, the U.S. Attorney’s Office for the District of Alaska, and the Regional Criminal Enforcement Counsel for the Environmental Protection Agency’s Region 10 in Seattle.New Mexico Probation Officer Indicted <br /> <br /> on Sexual Assault ChargesRead the Press Release
A federal grand jury in Albuquerque, N.M., has indicted Gordon Chavez, 35, a probation officer with the New Mexico Corrections Department on charges related to the sexual assault of a probationer whom he supervised. The New Mexico Corrections Department placed Chavez on administrative leave following his arrest on Dec. 4, 2012.
Chavez was charged with violating the civil rights of the victim by engaging in unwanted sexual contact. The indictment also charges Chavez with making material false statements to the FBI. Specifically, the latter count charges Chavez with lying to the FBI when he denied touching the breasts of any female under his supervision and when he denied asking females under his supervision for naked photographs. The indictment alleges that Chavez knew these statements were false at the time that he made them because he had, in fact, engaged in these behaviors.
This investigation is ongoing. Anyone with additional information is encouraged to call the Albuquerque Division of the FBI at (505) 889-1300.
Chavez faces a maximum of six years in prison on both counts. An indictment is merely an accusation and Chavez is presumed innocent unless proven guilty.
This case is being investigated by the Albuquerque Division of the FBI and is being prosecuted by Assistant U.S. Attorney Mark Baker for the District of New Mexico and Fara Gold of the Civil Rights Division of the U.S. Department of Justice.
New Jersey Company Pleads Guilty for Role in Bid-Rigging Scheme at Municipal Tax Lien AuctionsRead the Press Release
A New Jersey company in the business of receiving the assignment of municipal tax liens pleaded guilty today for its role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities in New Jersey, the Department of Justice announced.
A felony charge was filed today in U.S. District Court for the District of New Jersey in Newark, against Mercer S.M.E. Inc., a company located in Burlington, N.J. According to the charges, from at least 2003 until approximately February 2009, Mercer, in conjunction with a nonprofit corporation and others participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey. As part of the conspiracy, the co-conspirators agreed to allocate the liens on which each would bid. Among other things, Mercer was assigned tax liens it understood were purchased in accordance with the unlawful agreement.
“The conspirators agreed to coordinate their bids and allocate the tax liens amongst themselves, at the expense of distressed property owners,” said Scott D. Hammond, Deputy Assistant Attorney General for the Antitrust Division’s criminal enforcement program. “Today’s guilty plea sends a message that those who profit from illegal, anticompetitive conduct will be held accountable.”
The department said that the primary purpose of the conspiracy was to suppress and restrain competition in order to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent property owners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.According to the court documents, Mercer, along with the nonprofit corporation which assigned some of its liens to Mercer, was involved in a conspiracy with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition, the department said.
A violation of the Sherman Act carries a maximum penalty of $100 million criminal fine for corporations. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victims if either amount is greater than the statutory maximum.
Today’s plea is the 11th guilty plea resulting from an ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. Eight individuals – Isadore H. May, Richard J. Pisciotta Jr., William A. Collins, Robert W. Stein, David M. Farber, Robert E. Rothman, Stephen E. Hruby and David Butler – and two companies, DSBD LLC and Crusader Servicing Corp., have previously pleaded guilty as part of this investigation.
Today’s charge 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.
This ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the Atlantic City Resident Agency of the FBI at 609-677-6400.
Las Vegas Real Estate Agent Sentenced to 70 Months in Prison for Her Role in Mortgage Fraud SchemeRead the Press Release
WASHINGTON – A Las Vegas real estate agent was sentenced today to serve 70 months in prison for her participation in a mortgage fraud scheme that netted more than $10 million in fraudulent mortgage loans, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Daniel G. Bogden of the District of Nevada, and Special Agent in Charge Kevin Favreau of the FBI’s Las Vegas Field Office.
Linda Marie Kot, 58, was sentenced by U.S. District Judge Kent J. Dawson in the District of Nevada. In addition to her prison term, Kot was sentenced to serve five years of supervised release and ordered to pay $3,891,811 in forfeiture.
In May 2012, after a five-day trial, a federal jury in Las Vegas found Kot guilty of three counts of bank fraud and one count of conspiracy to commit mail, wire and bank fraud.
According to court documents and evidence presented at trial, Kot participated in a scheme with members of an investment group to submit fraudulent loan documents to lenders that involved “straw buyers,” individuals with good credit scores whose names were put on the properties but who were not intended to be responsible for the payment of the mortgages or other expenses of the properties. The scheme took place in 2006 and involved 13 new home purchases, three existing home sales and several loan applications that were not approved.
According to the evidence at trial and court documents, Kot and her co-conspirators caused material misstatements to be placed on loan applications, including information about the true owners and controllers of the properties; whether the properties would be primary residences; and the level of assets and income of the straw buyers. In some cases, Kot put straw buyers on her bank account to make it appear that the straw buyers had assets that they did not have, in order to help them qualify for mortgage loans for which they otherwise would not have been eligible. Kot made over $276,000 in commissions on the fraudulent sales, the evidence at trial showed.
One of the counts of conviction involved a similar scheme that Kot engaged in with members of her family from 2005 to 2006. The evidence at trial showed that Kot and members of her family used straw buyers and fraudulent loan applications to buy properties. Kot and members of her family paid the straw buyers fees, and any profits on sale of the houses were split among family members.
While Kot and her family members were able to sell most of the properties they bought with straw buyers before the market downturn, the investment group that Kot conspired with was not able to do so, according to evidence presented at trial. As a result, most of the mortgages for the houses that the investment group bought in 2006, where Kot acted as the realtor, ended up in default and foreclosure, with many of the straw buyers ending up in bankruptcy.
Three co-conspirators, Hugo Coutelin, Jeff Thomas and Michael Perry, previously pleaded guilty for their roles in the fraud scheme. In September 2012, Coutelin and Perry were each sentenced to 15 months in prison and Thomas was sentenced to time served.
This case was investigated by the FBI. Trial Attorneys Nicholas S. Acker and Fred Medick of the Fraud Section in the Justice Department’s Criminal Division prosecuted the case, with assistance from the U.S. Attorney’s Office for the District of Nevada. Fraud Section Trial Attorney Brian Young and former Fraud Section Trial Attorneys Matt Klecka and Joseph Capone also assisted with the investigation.
Today’s sentencing was a result of efforts 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.
Justice Department Settles Immigration-Based Discrimination Claim Against New York HospitalRead the Press Release
The Justice Department announced today that it reached an agreement with Holliswood Hospital, a hospital in Queens, N.Y., resolving claims that the hospital violated the anti-discrimination provision of the Immigration and Nationality Act (INA), when it required newly hired lawful permanent residents to provide more or different documents during the Form I-9 employment eligibility verification process.
The investigation stemmed from a charge filed by an individual that Holliswood terminated her after discovering that her employment eligibility needed to reverified in the future, despite the fact that she was work authorized. The subsequent investigation revealed that Holliswood imposed greater requirements to verify employment eligibility for lawful permanent residents as compared to U.S. citizen employees and terminated the charging party as a result of the discriminatory documentary practices. The INA requires employers to treat all authorized workers in the same manner during the employment eligibility verification process, regardless of their national origin or citizenship status.
Under the settlement agreement, Holliswood will pay $1,182 in back pay to the charging party and $5,000 in civil penalties to the United States. Holliswood will also train its human resources staff about employers’ responsibilities to avoid discrimination in the employment eligibility verification process and be subject to reporting and compliance monitoring by the department for 18 months.
“The Civil Rights Division is committed to protecting all work authorized individuals from discriminatory practices in the employment eligibility verification process, which can create unwarranted barriers to the lawful employment of immigrant workers,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We commend Holliswood for working with the division to reach a fair resolution that prioritizes future compliance.”
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 .