District Not Recorded

WASHINGTON – A Los Angeles physician assistant who stole the identities of doctors to write medically unnecessary prescriptions for expensive durable medical equipment (DME) and diagnostic tests was sentenced today to serve 72 months in prison in connection with a $18.9 million Medicare fraud scheme, announced the Department of Justice, FBI and U.S. Department Health and Human Services (HHS). 

David James Garrison, 50, was sentenced by U.S. District Judge Consuelo B. Marshall in the Central District of California.  In addition to his prison term, Garrison was sentenced to three years of supervised release and ordered to pay $24,935 in restitution, jointly and severally with convicted co-defendants.
 
In June 2012, after a two-week trial, a federal jury found Garrison guilty of one count of conspiracy to commit health care fraud, six counts of health care fraud and one count of aggravated identity theft.  The trial evidence showed that Garrison worked at fraudulent medical clinics that operated as prescriptions mills and trafficked in fraudulent prescriptions and orders for medically unnecessary DME and diagnostic tests that were used by fraudulent DME supply companies and medical testing facilities to defraud Medicare.  Garrison wrote the prescriptions and ordered the tests on behalf of doctors whom he never met and who did not authorize him to write prescriptions and order tests on their behalf.

The trial evidence showed that between March 2007 and September 2008, Garrison’s co-conspirator Edward Aslanyan and others owned and operated several Los Angeles medical clinics established for the sole purpose of defrauding Medicare.  Aslanyan and others hired street-level patient recruiters to find Medicare beneficiaries willing to provide the recruiters with their Medicare billing information in exchange for expensive, high-end power wheelchairs and other DME, which the patient recruiters told the beneficiaries they would receive for free.  Often, the solicited Medicare beneficiaries did not have a legitimate medical need for the power wheelchairs and equipment.  The patient recruiters then provided the beneficiaries’ Medicare billing information to Aslanyan and others or brought the beneficiaries to the fraudulent medical clinics.  In exchange for recruiting the Medicare beneficiaries, Aslanyan and others paid the recruiters a cash kickback for every beneficiary they recruited.

The evidence presented at trial showed that Garrison wrote prescriptions for power wheelchairs, which the beneficiaries did not need and did not use.  In some cases, Garrison wrote power wheelchair prescriptions for beneficiaries he never examined and who never visited the clinics.  Once Garrison wrote the power wheelchair prescriptions, Aslanyan and others sold them from $1,000 to $1,500 to the owners and operators of approximately 50 different fraudulent DME supply companies, which used the prescriptions to submit fraudulent power wheelchair claims to Medicare.  The DME supply companies purchased the power wheelchairs wholesale for approximately $900 per wheelchair but billed the wheelchairs to Medicare at a rate of approximately $5,000 per wheelchair.  Aslanyan also used the prescriptions Garrison wrote at two fraudulent DME supply companies that Aslanyan owned and operated.

In addition, the trial evidence showed that Garrison ordered the same medically unnecessary diagnostic tests for every Medicare beneficiary, including tests for sleep studies, ultrasounds and nerve conduction.  These tests were then billed to Medicare by fraudulent diagnostic testing companies that paid Aslanyan kickbacks to operate from the medical clinics. 

The trial evidence showed that Garrison admitted to writing prescriptions for power wheelchairs and ordered diagnostic tests on behalf of approximately six different doctors, many of whom never met Garrison and never had a delegation of services agreement with him, as required by law.  The trial evidence also showed that Garrison was paid up to $10,000 a week in cash for his work at the clinics.

As a result of this fraud scheme, Garrison and his co-conspirators submitted over $18.9 million in false claims to Medicare and received $10.7 million on those claims.

Currently, Garrison is facing federal drug charges as a result of his alleged involvement with another medical clinic where medically unnecessary prescriptions for Oxycontin were distributed.  Garrison is scheduled for trial on the federal drug charges on Nov. 6, 2012.  He is presumed innocent of the charges against him.

Aslanyan pleaded guilty for his role in the scheme in April 2011 and was sentenced on Feb. 6, 2012, to 77 months in prison. Carolyn Vasquez, another co-conspirator, pleaded guilty for her role in the scheme in March 2011 and was sentenced on Jan. 9, 2012, to 60 months in prison.

Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney André Birotte Jr. for the Central District of California; Tony Sidley, Assistant Chief of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the HHS Office of Inspector General (HHS-OIG); and Timothy Delaney, Special Agent in Charge of the FBI’s Los Angeles Field Office.

The case is being prosecuted by Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David Kirman of the Central District of California.  The case is being investigated by the FBI 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 Central District of California. 

Since its inception in March 2007, strike force operations in nine locations have charged more than 1,330 defendants who collectively have billed the Medicare program for more than $4 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are 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, go to: www.stopmedicarefraud.gov.

Following a comprehensive investigation, the Justice Department announced today its findings that the Alamance County Sheriff’s Office (ACSO) in North Carolina, under the leadership of Sheriff Terry S. Johnson, engages in a pattern or practice of misconduct that violates the Constitution and federal law. The department conducted its investigation, which it opened on June 2, 2010, pursuant to the Violent Crime Control and Law Enforcement Act of 1994 and Title VI of the Civil Rights Act of 1964 (Title VI).

 

The Justice Department finds reasonable cause to believe 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, the Violent Crime Control and Law Enforcement Act and Title VI. ACSO’s discriminatory policing activities include:

• ACSO deputies target Latino drivers for traffic stops;
• 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;
• ACSO deputies routinely locate checkpoints just outside Latino neighborhoods, forcing residents to endure police checks when entering or leaving their communities;
• ACSO practices at vehicle checkpoints often vary based on a driver’s ethnicity. Deputies insist on examining identification of Latino drivers, while allowing drivers of other ethnicities to pass through without showing identification;
• ACSO deputies arrest Latinos for minor traffic violations while issuing citations or warnings to non-Latinos for the same violations;
• ACSO uses jail booking and detention practices, including practices related to immigration status checks, that discriminate against Latinos;
• 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 undermine ACSO’s ability to serve and protect Alamance County’s Latino residents and the community at large.

 

“The Alamance County Sheriff’s Office’s egregious pattern of racial profiling violates the Constitution and federal laws, creates distrust between the police and the community and inhibits the reporting of crime and cooperation in criminal investigations,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Constitutional policing and effective law enforcement go hand-in-hand. We hope to resolve the concerns outlined in our findings by working collaboratively with ACSO, but we will not hesitate to take appropriate legal action if ACSO chooses a different course.”

 

The Justice Department’s thorough and independent investigation included an in-depth review of ACSO policies, procedures, training materials, and data on traffic stops, arrests, citations, vehicle checkpoints and other documentary evidence. Department personnel also conducted interviews with more than 125 individuals, including Alamance County residents and current and former ACSO employees.

 

Addressing these findings and creating sustainable reforms will require ACSO to commit to long term structural, cultural and institutional change. 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.

 

The department will seek to obtain a court enforceable, comprehensive, written agreement remedying the violations and incorporating these reforms by attempting to work with ACSO officials.

 

The Special Litigation Section of the Civil Rights Division conducted this investigation with the assistance of consultants in law enforcement and statistical analysis. 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:

Letter of Findings

The Justice Department’s Tax Division has issued a new directive to further the efforts of the Tax Division and the U.S. Attorneys’ Offices to respond quickly and effectively to the grave challenges in stolen identity refund fraud (SIRF) cases.

Tax Division Directive 144

Tax Division Directive 144, which takes effect on Oct. 1, 2012, will allow prosecutors in U.S. Attorneys’ Offices that designate a point of contact for SIRF cases to open tax-related grand jury investigations, to charge by complaint criminals who are engaged in SIRF crimes and to obtain seizure warrants for forfeiture of criminally derived proceeds arising from SIRF crimes, all without prior authorization from the Tax Division.

To ensure fair and consistent nationwide enforcement of tax laws, the Tax Division has supervision over virtually all criminal proceedings arising under the internal revenue laws. Tax refund fraud involving the use of stolen identities has emerged as fast-growing and insidious crime that is all-too-simple in its execution. Strong coordination at all levels of law enforcement is vital to combating these criminals. The Tax Division has issued Directive 144 to further these coordination efforts.

SIRF Crimes Harm American Taxpayers

 SIRF crimes covered by Directive 144 involve the filing or attempted filing of fraudulent tax refund claims, using personal identification information such as Social Security numbers that have either been stolen or are otherwise being unlawfully used. When a stolen identity is used to commit tax refund fraud, tax dollars are paid out to fraudsters and all honest taxpayers are victims. An individual taxpayer whose personal identification information is misused to file false refunds will receive any rightfully due refund from the Internal Revenue Service (IRS), but may nonetheless experience burdens and delays in the process. In specific cases, the most vulnerable in our country have been personally victimized by this form of identity theft, and one recent prosecution resulted in a conviction for the murder of a postal worker by a thief seeking access to erroneous refunds.

Expedited Prosecution Procedures Also Announced

 The Tax Division has retained its authority in SIRF cases to review and authorize the filing of charges by indictment and information. Simultaneous with the issuance of Directive 144, the Tax Division has announced new expedited review procedures in cases involving arrests in jurisdictions where the U.S. Attorney’s Office is participating in the procedures established in Directive 144.

SIRF convictions have resulted from the investigative efforts of many local and federal law enforcement agencies. Prosecutions in SIRF cases brought by U.S. Attorneys’ Offices and the Tax Division have resulted in lengthy prison sentences and substantial fines and forfeitures.

It is important that the IRS obtain information, through SIRF investigations, to intercept fraudulent tax refund claims before erroneous refunds are sent to fraudsters. The procedures set out in Directive 144 and the new expedited review procedures are designed to facilitate this goal.

“Directive 144 and the new expedited review procedures are the result of a collaborative effort between the Tax Division and the U.S. Attorneys’ Offices to strengthen law enforcement’s response to stolen identity refund fraud crimes, which are an affront to all honest taxpayers,” said the Tax Division’s Assistant Attorney General, Kathryn Keneally. “The prosecution of these crimes is a national priority, and we will continue to look for the most effective ways to bring this conduct to an end and to punish these wrongdoers.”

“Streamlining the authority to prosecute Stolen Identity Refund Fraud (SIRF) investigations is yet another step toward combating this fast growing crime,” said Richard Weber, Chief, IRS Criminal Investigation. “We look forward to working with the United States Attorneys in aggressively tackling ID theft which has turned the lives of so many innocent taxpayers upside down when their identities have been stolen by thieves whose sole motivation is greed.”

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

Related Documents: Expedited and Parallel Review of Proposed Indictments Arising from Stolen identity Refund Fraud (PDF)

Directive 144 - Temporary Delegation of Authority to Authorize Grand Jury Investigations, Criminal Complaints, and Seizure Warrants for Certain Offenses Arising from Stolen Identity Refund Fraud (PDF)

Two Romanian nationals pleaded guilty today to participating in an international, multimillion-dollar scheme to remotely hack into and steal payment card data from hundreds of U.S. merchants’ computers.

 

Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; John P. Kacavas, U.S. Attorney for the District of New Hampshire; and Holly Fraumeni, Resident Agent in Charge of the U.S. Secret Service, Manchester, N.H., Resident Office, announced today that Iulian Dolan, 28, of Craiova, Romania, pleaded guilty to one count of conspiracy to commit computer fraud and two counts of conspiracy to commit access device fraud, and Cezar Butu, 27, of Ploiesti, Romania, pleaded guilty to one count of conspiracy to commit access device fraud.

 

In their guilty pleas, the defendants admitted that, from in or about 2009-2011, they participated in Romanian-based conspiracies with co-conspirator Adrian-Tiberiu Oprea, who is in U.S. custody and awaiting trial in the District of New Hampshire, to hack into hundreds of U.S.-based computers to steal credit, debit and payment account numbers and associated data (collectively “payment card data”) that belonged to U.S. cardholders and then use the stolen payment card data to make unauthorized charges on, and/or transfers of funds from, those cardholders’ accounts (or alternatively to transfer the stolen payment card data to other co-conspirators who would do the same).

 

At the plea hearings today, federal prosecutors noted that the conspiracies involved more than 146,000 compromised cards and more than $10 million in losses.

 

Dolan admitted that he, along with Oprea, remotely hacked into U.S. merchants’ “point-of-sale” (POS) or “check out” computer systems, where customers’ payment card data was electronically stored. Specifically, Dolan first remotely scanned the internet to identify U.S.-based vulnerable POS systems with certain remote desktop software applications (RDAs) installed on them. Using these RDAs, Dolan logged onto the targeted POS systems over the internet. These were typically password-protected, so Dolan would attempt to crack the passwords, where necessary, to gain administrative access. He would then remotely install software programs called “keystroke loggers” (or “sniffers”) onto the POS systems. These programs would record, and then store, all of the data that was keyed into or swiped through the merchants’ POS systems, including customers’ payment card data.

Dolan periodically remotely hacked back into the compromised merchants’ POS system to retrieve the customers’ payment card data and then electronically transferred the payment card data to various electronic storage locations (“dump sites”) that Oprea had set up. Dolan knew that Oprea later attempted to use the stolen payment card data to make unauthorized charges on, or transfers of funds from, the accounts. He also knew that Oprea attempted to sell, or otherwise transfer, the stolen payment card data to other co-conspirators for them to use in a similar manner. During the course of the conspiracies, the co-conspirators hacked into several hundred U.S. merchants’ POS systems. Dolan stole payment card data belonging to approximately 6,000 cardholders and was aware that Oprea was engaged in similar conduct. Dolan received approximately $5,000 - $7,500 in cash and personal property from Oprea for his efforts.

In his plea agreement, Butu admitted that he repeatedly asked Oprea to provide him with stolen payment card data and that Oprea provided him with instructions for how to access the website where Oprea had stored a portion of the stolen payment card data. Butu later attempted to use the stolen payment card data to make unauthorized charges on, or transfers of funds from, the accounts. He also attempted to sell, or otherwise transfer, the stolen payment card data to other co-conspirators for them to use in a similar manner. Butu acquired stolen payment card data from Oprea belonging to approximately 140 cardholders.

 

In his plea agreement, Dolan has agreed to be sentenced to seven years, and Butu has agreed to be sentenced to 21 months in prison.

The case was investigated by the U.S. Secret Service, with the assistance of the New Hampshire State Police and Romanian authorities.

 

The case is being prosecuted by Trial Attorney Mona Sedky in the Department of Justice’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Arnold H. Huftalen from the District of New Hampshire.

Martin Angelina, 50, of Philadelphia, was sentenced today to 57 months in prison for his participation in a racketeering conspiracy involving loan sharking and illegal gambling, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Zane David Memeger, U.S. Attorney for the Eastern District of Pennsylvania and George C. Venizelos, Special Agent in Charge of the FBI’s Philadelphia Division.

 

Angelina was sentenced by U.S. District Judge Eduardo C. Robreno in the Eastern District of Pennsylvania. In addition to his prison term, Judge Robreno ordered Angelina to serve three years of supervised release. On Aug. 8, 2012, Angelina pleaded guilty to conspiring to conduct and participate in the affairs of the Philadelphia La Cosa Nostra (LCN) Family through a pattern of racketeering activity. At the time of the plea, Angelina admitted he attempted to collect payments related to usurious loans by using extortionate means and operated an illegal video poker machine business in furtherance of the racketeering conspiracy.

 

Angelina is among 14 members and associates of the Philadelphia LCN Family charged with crimes involving racketeering conspiracy, extortion, loan sharking, illegal gambling, witness tampering and theft from an employee benefit plan in a third superseding indictment returned by a federal grand jury in Philadelphia on July 25, 2012. The other defendants charged in the 52-count third superseding indictment included Philadelphia LCN Family boss Joseph Ligambi, Philadelphia LCN Family underboss Joseph Massimino, George Borgesi, Gaeton Lucibello, Anthony Staino Jr., Damion Canalichio, Louis Barretta, Gary Battaglini, Robert Verrecchia, Eric Esposito, Robert Ranieri, Joseph Licata and Louis Fazzini.

 

Lucibello pleaded guilty to racketeering conspiracy charges on Aug. 2, 2012, and was sentenced to 51 months in prison. Barretta also pleaded guilty to racketeering conspiracy charges on Sept. 5, 2012, and is awaiting sentencing on Nov. 26, 2012.

 

The trial for Ligambi, Massimino, Borgesi, Staino Jr., Canalichio, Battaglini, Licata and Fazzini is scheduled for Oct. 9, 2012. The trial for Verrecchia, Esposito and Ranieri has not yet been scheduled. Ligambi, Massimino, Borgesi, Canalichio, Licata and Fazzini are detained while awaiting trial. Staino Jr., Battaglini, Verrecchia, Esposito and Ranieri are free on bond while awaiting trial.

 

The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Frank A. Labor III and Suzanne B. Ercole of the Eastern District of Pennsylvania. Valuable prosecutorial assistance was provided by the Pennsylvania Office of the Attorney General.

 

The case is being investigated by the FBI, the Internal Revenue Service-Criminal Investigation, the Pennsylvania State Police, the New Jersey State Police, the Philadelphia Police Department, the U.S. Department of Labor’s Office of Inspector General Office of Labor Racketeering and Fraud Investigations and the U.S. Department of Labor’s Employee Benefits Security Administration.  Additional assistance was provided by the New Jersey Department of Corrections.

WASHINGTON – Three defendants pleaded guilty today to charges of conspiracy, smuggling, Lacey Act violations, money laundering and tax fraud for their roles in the international illegal trafficking of rhinoceros horn.  All of the defendants were charged in February 2012 as part of “Operation Crash,” a nationwide U.S. Fish and Wildlife Service crackdown on those involved in the black market trade of endangered rhinoceros horn.

The guilty pleas were announced by Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice; André Birotte Jr., U.S. Attorney for the Central District of California; and Dan Ashe, Director of the Department of the Interior’s U.S. Fish and Wildlife Service (FWS). 

Vin h Chung “Jimmy” Kha, 49, and Felix Kha, 26, both of Garden Grove, Calif., each pleaded guilty to five felony counts related to their roles in the smuggling conspiracy.  Win Lee Corp., owned by Jimmy Kha, pleaded guilty to two felony counts charging smuggling and Lacey Act trafficking. 

Two other defendants linked to the Khas – J in Zhao Feng, 45, of China and Jarrod Wade Steffen, 32, of Hico, Texas – previously pleaded guilty to federal charges in Los Angeles related to rhino horn trafficking. 

In their plea agreements, Jimmy and Felix Kha each admitted purchasing White and Black rhinoceros horn in interstate and intrastate commerce, knowing that animals were protected by federal law as endangered and threatened species.  Both defendants stated that they purchased the horns in order to export them overseas to be sold and made into libation cups or traditional medicine.  Both acknowledged making payments to Vietnamese customs officials to ensure clearance of horn shipments sent to that country.  In addition, Jimmy and Felix Kha each admitted to failing to pay income tax owed in 2009 and 2010.  

In an earlier plea agreement, which was filed with the court on Aug. 15, 2012, Feng admitted to fraudulently and knowingly attempting to smuggle a black rhinoceros horn, an endangered species, from the United States to China.  Steffen, who used money provided by the Khas to buy horns for them, pleaded guilty on June 14, 2012, to charges of conspiracy, smuggling, Lacey Act violations and money laundering.

“The Khas conspired to violate numerous federal laws, including those enacted by Congress to protect endangered species like the rhinoceros, a species that faces extinction in our time,” said Assistant Attorney General Ignacia S. Moreno.  “This prosecution and continuing investigation should send a clear message that we will vigorously investigate and prosecute those who are involved in this egregious and illegal trade.”

“It is unconscionable that a species as ancient and majestic as the African Black Rhino has been hunted to the brink of extinction by unscrupulous profiteers,” said U.S. Attorney André Birotte Jr.  “The rhino horn smuggling ring dismantled by Operation Crash contributed to the soaring increase in the trade of rhino horns both domestically and internationally and this illegal trade leads directly to increased poaching of the species in the wild.  Operation Crash represents a giant step forward in the global fight to save a beautiful species like the Black Rhino from extinction.”

“These individuals were interested in one thing and one thing only – making money,” said FWS Director Dan Ashe.  “They didn’t care about the law or about driving a species to the brink of extinction. We will continue to aggressively investigate and pursue traffickers who threaten the future of rhinos and other imperiled species.”

Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth.   They have no known predators other than humans.  All species of rhinoceros are protected under United States and international law, and all black rhinoceros species are endangered. 

Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets.  Nevertheless, the demand for rhinoceros horn and black market prices have skyrocketed in recent years due to the value that some cultures have placed on ornamental carvings, good luck charms or alleged medicinal purposes, leading to a decimation of the global rhinoceros population.  As a result, rhino populations have declined by more than 90 percent since 1970.  South Africa, for example, has witnessed a rapid escalation in poaching of live animals, rising from 13 in 2007 to a record 448 rhinos in 2011.  As of Aug. 27, the total for 2012 stood at 339 rhinos, with a predicted loss of 515 by year end if current poaching rates continue.

Operation Crash (named for the term used to describe a herd of rhinoceros) is an ongoing effort to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns.  The investigation is being led by the Special Investigations Unit of the FWS Office of Law Enforcement and involves a nationwide task force of FWS special agents focused on rhino trafficking. 

The first superseding information, plea agreements and statements made during court proceedings document the following facts: 

During the conspiracy, beginning in January 2010 and continuing to February 2012, Felix Kha would contact Steffen and others regarding individuals located throughout the United States who were willing to sell white or black rhinoceros horn.  On various dates, Jimmy Kha met with others who traveled to Long Beach, Calif., from various locations to provide compensation for previous rhinoceros horn purchases and shipments and to provide money to fund future purchases and shipments of rhinoceros horn.  Jimmy and Felix Kha received, bought, sold and facilitated the transportation of black rhinoceros horn, prior to exportation, knowing that such rhinoceros horn was intended for exportation and that it was illegal under U.S. law to do so.  Jimmy Kha paid, on average, between $5,000 to $7,000 per pound of rhinoceros horn.  The black and white rhinoceros horn acquired by the defendants   has a fair market value between, at a minimum, $1 million to $2.5 million.

Feng attempted to export a black rhinoceros horn, which he had obtained from the Khas,  from the U.S. to China, by concealing the horn at the bottom of a package. The package, which was deposited with the U.S. Postal Service, contained a single black rhinoceros horn concealed under a layer of chocolates, cigarettes, biscuits, candy, sponges and packing materials.  F eng falsely declared on a U.S. Postal Service Customs Declaration that the package contained “handcraft decorations” with a value of $25, “chocolate” with a value of $46, and “candy” with a value of $15.

As a supplier for the Khas, Steffen bought and mailed dozens of rhino horns to the pair and made at least 10 trips to California to pick up payment and collect money for additional purchases.  On the last of these trips, Transportation and Security Administration officers, acting at the FWS’s request, stopped Steffan and two travel companions at the airport in Long Beach before they boarded their homebound flight and retrieved $337,000 from their luggage.

In February 2012 at the time of the arrest of Jimmy and Felix Kha, FWS agents seized, among other items, rhinoceros mounts, rhinoceros horns, an additional $1 million in cash, approximately $1 million in gold ingots, jewelry, watches, precious stones, a 2009 BMW 759 Li Sedan and a 2008 Toyota Forerunner. 

Jimmy and Felix Kha each pleaded guilty to one count of conspiracy (maximum penalty of five years in prison), one count of smuggling goods from the United States (maximum penalty of ten years in prison), one count of Lacey Act trafficking (maximum penalty of five years in prison), one count of money laundering (maximum penalty of twenty years in prison), and one count of tax evasion (maximum penalty of five years in prison).  Win Lee Corp. faces additional penalties, including fines totaling up to $1 million. Under the terms of their plea agreements, all of the items recovered from their residence, person, and Jimmy Kha’s business will be forfeited.  In addition, Felix Kha will pay a tax fraud penalty and assessment of approximately $109,000, and Jimmy Kha will pay a tax fraud penalty and assessment of $76,000. 

Jimmy and Felix are scheduled to be sentenced by U.S. District Judge Christina A. Snyder on Dec. 10, 2012 at 2:30 p.m.  Feng will be sentenced on Oct. 10, 2012, and Steffen will be sentenced on Oct. 15, 2012.

U.S. Attorney Birotte Jr. and Assistant Attorney General Moreno commended FWS and its partners for their outstanding work on this investigation.  Assisting agencies included the U.S. Postal Inspection Service, the Internal Revenue Service Criminal Investigations, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

The case is being handled by the U.S. Attorney’s Office for the Central District of California and the Environmental Crimes Section of the U.S. Department of Justice’s Environment and Natural Resources Division.  Assistant U.S. Attorneys Joseph O. Johns and Dennis Mitchell and Shennie Patel, a Trial Attorney with the Environmental Crimes Section, are in charge of the prosecution.

Gaeton Lucibello, 59, of Philadelphia, was sentenced today to 51 months in prison for his participation in a racketeering conspiracy involving extortion and illegal gambling, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania and George C. Venizelos, Special Agent in Charge of the FBI’s Philadelphia Division. 

 

Lucibello was sentenced by U.S. District Judge Eduardo C. Robreno in the Eastern District of Pennsylvania.  In addition to his prison term, Lucibello was ordered to serve three years of supervised release.  On Aug. 2, 2012, Lucibello pleaded guilty to conspiring to conduct and participate in the affairs of the Philadelphia La Cosa Nostra (LCN) Family through a pattern of racketeering activity.  At the time of the plea, he admitted to the court that he assisted in shaking down a bookmaker for “street tax” payments and operated two illegal video poker machine businesses in furtherance of the racketeering conspiracy. 

 

Lucibello was among 14 members and associates of the Philadelphia LCN Family charged with crimes involving racketeering conspiracy, extortion, loan sharking, illegal gambling, witness tampering and theft from an employee benefit plan in a third superseding indictment returned by a federal grand jury in Philadelphia on July 25, 2012.  The other defendants charged in the 52-count third superseding indictment included Philadelphia LCN Family boss Joseph Ligambi, Philadelphia LCN Family underboss Joseph Massimino, George Borgesi, Martin Angelina, Anthony Staino Jr., Damion Canalichio, Louis Barretta, Gary Battaglini, Robert Verrecchia, Eric Esposito, Robert Ranieri, Joseph Licata and Louis Fazzini. 

 

Angelina pleaded guilty to racketeering conspiracy charges on Aug. 8, 2012, and is awaiting sentencing on Sep. 17, 2012.  Barretta also pleaded guilty to racketeering conspiracy charges on Sep. 5, 2012, and is awaiting sentencing on Nov. 26, 2012.

 

The trial for Ligambi, Massimino, Borgesi, Staino Jr., Canalichio, Battaglini, Licata and Fazzini is scheduled for Oct. 9, 2012.  The trial for Verrecchia, Esposito and Ranieri has not yet been scheduled.  Ligambi, Massimino, Borgesi, Canalichio, Licata and Fazzini are detained while awaiting trial.  Staino Jr., Battaglini, Verrecchia, Esposito and Ranieri are on bond while awaiting trial. 

 

The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Frank A. Labor III and Suzanne B. Ercole of the Eastern District of Pennsylvania.  Valuable prosecutorial assistance was provided by the Pennsylvania Office of the Attorney General.

 

The case is being investigated by the FBI, the Internal Revenue Service-Criminal Investigation, the Pennsylvania State Police, the New Jersey State Police, the Philadelphia Police Department, the U.S. Department of Labor’s Office of Inspector General Office of Labor Racketeering and Fraud Investigations, and the U.S. Department of Labor’s Employee Benefits Security Administration.  Additional assistance was provided by the New Jersey Department of Corrections.

A federal court in Philadelphia has permanently barred Deron O. Joe of Darby, Pa.; Edmund G. Dassin of Lansdowne, Pa.; and James M. Tokpawhiea of Philadelphia from preparing federal tax returns for others, the Justice Department announced today. The three men consented to the civil injunction order without admitting the allegations against them. Judge Paul S. Diamond of the U.S. District Court for the Eastern District of Pennsylvania signed the injunction.

According to the government complaint in the case, the defendants operated a tax preparation business called Edron Tax Professionals in Philadelphia until August 2011, when they changed the name to Urban Tax Professionals and moved the office to Collingdale, Pa. The complaint alleged that the defendants, three Liberian nationals who prepared tax returns for primarily Liberian clientele, repeatedly prepared fraudulent federal income tax returns that intentionally understated customers’ tax liabilities. Their methods allegedly included claiming bogus first-time-homebuyer credits and earned-income credits in order to claim large tax refunds. According to the complaint, Joe and Dassin told one employee to claim the first-time-homebuyer credit on every return he prepared.

The court required the defendants to send a copy of the order to all persons for whom they have prepared a federal tax return since 2009, and to give the government a list of those customers.

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

Related documents:

United States v. Deron O. Joe, et al., Stipulated Order and Judgment of Permanent Injunction (Edmund G. Dassin), Stipulated Order and Judgment of Permanent Injunction (Deron O. Joe), Stipulated Order and Judgment of Permanent Injunction (James M. Tokpawhiea)

Attorney General Eric Holder released the following statement today on the 18th anniversary of the Violence Against Women Act:

 

“Since the landmark Violence Against Women Act (VAWA) became law 18 years ago today, VAWA has vastly improved our ability to address domestic violence, dating violence, sexual assault, and stalking and has helped countless victims of these crimes get access to needed services.   It’s important to remember that none of this progress has been inevitable - it has been the result of the tireless work of advocates, law enforcement, prosecutors, and others.   On the front lines of this effort, the Office on Violence Against Women administers VAWA programs, providing states, territories, local and tribal governments, and nonprofit organizations with critical resources to initiate and sustain efforts to reduce and stop violence against women.  As Congress moves to consider reauthorizing this critical law, we urge lawmakers to come together on a bipartisan basis, as it has historically, to pass a VAWA reauthorization that expands rather than limits victim access to justice and strengthens law enforcement and prosecutorial tools to seek justice and hold violators accountable.  VAWA has been strengthened each time it has been reauthorized, with bipartisan support, and this year after 18 years of progress, it should be no different.” 

Mendy Gorodetsky and Shalom Rabkin, both residents of Brooklyn, N.Y., pleaded guilty today in U.S. District Court in the Eastern District of New York to tax evasion, the Justice Department and Internal Revenue Service (IRS) announced.

 

According to court records and admissions made by the defendants, Gorodetsky and Rabkin co-owned Asbestways Services Corp., an asbestos abatement and lead testing company located in Brooklyn. Gorodetsky and Rabkin attempted to evade their income taxes by not reporting the income they earned from Asbestways. In addition, Gorodetsky and Rabkin spent Asbestways corporate funds for personal use by charging personal expenses on an Asbestways corporate credit card. They cashed Asbestways gross receipts checks at a check cashing company and used the unreported cash proceeds for personal expenses. When Gorodetsky and Rabkin filed their 2006 individual income tax returns, they each falsely reported earning no income from Asbestways. 

 

Gorodetsky admitted that he underreported his income by at least $709,134 and that his criminal conduct between 2006 and 2008 caused a tax loss to the IRS of at least $188,757. Rabkin admitted that he underreported his income by at least $598,491 and that his criminal conduct between 2006 and 2008 caused a tax loss to the IRS of at least $148,999.  

 

Gorodetsky and Rabkin each face a potential maximum sentence of five years in prison and a fine of up to $250,000. Sentencing is set for Dec. 10, 2012, before U.S. District Judge Jack B. Weinstein.

           

The case was investigated by IRS - Criminal Investigation and is being prosecuted by Trial Attorneys Mark Kotila and Jeffrey Bender of the Justice Department’s Tax Division.

The United States and the city of Portland, Ore., announced today that they have reached a preliminary agreement to make changes to Portland Police Bureau policies, practices, training and supervision. This agreement was reached following a comprehensive investigation. Together with the agreement, the Justice Department today announced its findings that the Portland Police Bureau (PPB) has engaged in an unconstitutional pattern or practice of excessive force against people with mental illness. The Justice Department delivered a letter detailing the findings to Portland Mayor Sam Adams and Police Chief Michael Reese, who were cooperative throughout the department’s investigation.

The investigation, launched on June 8, 2011, and conducted by the Civil Rights Division’s Special Litigation Section and the U.S. Attorney’s Office for the District of Oregon, focused on whether PPB engages in unconstitutional or unlawful policing through the use of excessive force, with a particular interest in the use of force against people with mental illness or in mental health crisis. While the Justice Department found that most uses of force by PPB officers was lawful and reasonable, it also found reasonable cause to believe that PPB engages in a pattern or practice of excessive force, in violation of the Fourth Amendment of the U.S. Constitution and the Violent Crime Control and Law Enforcement Act of 1994, in certain contexts.

This finding is set against the backdrop of a larger mental health system that has gaps in services. The absence of a comprehensive community mental health infrastructure often shifts to law enforcement agencies throughout Oregon the burden of being first responders to individuals in mental health crisis. The Justice Department is working separately with state officials in a collaborative manner to address the broader issues.

Specifically, the Justice Department found that PPB uses excessive force during interactions with people who have or are perceived to have mental illness. These uses of force against persons with mental illness are manifest in three ways: (1) encounters too frequently result in a higher level of force than necessary; (2) officers use electronic control weapons (ECW), commonly referred to as “Tasers,” in circumstances when such force is not justified, or deploy ECWs more times than necessary on an individual; and (3) officers use a higher degree of force than justified for low level offenses.

 

DOJ and the City of Portland have preliminarily reached an agreement that will address the following:

• Use of force policies to ensure that officers have necessary guidance when encountering someone with mental illness or perceived to have mental illness. In particular, the City will enhance its policy guidance on the use of ECW and techniques to de-escalate encounters arising from non-criminally related well-being checks and arrests for low level offenses;

• Increase capacity for crisis intervention with specially-trained officers and civilians;
• Enhance the early warning system to identify gaps in policy, training and supervision;
• Expedite the investigations of complaints of misconduct while preserving the thoroughness and quality of investigations and community participation; and   
• Create a body to ensure increased community oversight of reforms.

The agreement will be filed with the court, but the action will be dismissed and the court will review compliance only upon an assertion by the United States of a material breach that cannot be resolved though good faith negotiations between the parties. The city and the United States have committed to have a final agreement by Oct. 12, 2012.

 

“We are gratified by the city’s response, especially the response of Chief Reese and Mayor Adams, to our findings. While our investigation has revealed that inadequate systems of supervision and oversight and the absence of specialized training have permitted particular use of force violations to persist at the Portland Police Bureau, we are confident that the steps already taken and those contained in our tentative agreement will provide meaningful and sustainable reform.” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.

“Police officers have one of the most difficult jobs in the world. They are sworn to serve and protect, and these findings highlight where there has been a breakdown in that solemn vow,” said Amanda Marshall, U.S. Attorney for the District of Oregon. “These findings against PPB lay the framework for us to make meaningful changes that will not only make our community safer, but will empower Portland’s police officers to be more effective as trusted public servants. We all agree with the fundamental principal that all citizens, especially our most vulnerable, must be able to trust the police to protect their civil rights.”

The city and the United States recognize that these issues are of significant concern to the Portland community. Throughout the investigation, both the United States and the city have engaged in extensive community outreach. The current discussions between the parties have been informed by that community input. However, both the United States and the city will benefit from additional views of community members and leaders and will seek additional input in coming days and weeks. The United States invites those who have input that they want to share about this process to contact us.

For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt . If you have any comments or concerns specific to this matter, please feel free to contact us at [email protected] or 1-877-218-5228.

Related Materials:

Portland, Ore. - Letter of Findings

The Justice Department today announced an agreement with Schuylkill County, Pa., to improve access to all aspects of civic life for persons with disabilities. The agreement was reached under Project Civic Access (PCA), the department’s initiative to ensure that cities, towns and counties throughout the country comply with the Americans with Disabilities Act (ADA).

 

“All individuals have a civil right to equal access to civic facilities, programs and services, and the ADA guarantees that right for individuals with disabilities,” said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division.

 

PCA ensures that persons with disabilities have an equal opportunity to participate in civic life, a fundamental part of American society. As part of PCA, the Justice Department surveys state and local government facilities, services and programs in communities across the country to identify the modifications needed to comply with the ADA requirements. The agreements address the steps each community must take to improve access.

 

Under the agreement announced today, Schuylkill County will take important steps to improve access for individuals with disabilities, including:

• Making physical modifications to facilities so that parking, routes into buildings, entrances, service areas and counters, restrooms, public telephones and drinking fountains are accessible to people with disabilities;

• Surveying other facilities and programs and making modifications wherever necessary to achieve full compliance with ADA requirements;

• Posting, publishing and distributing a notice of the ADA’s requirements and their applicability to the county’s programs, services and activities;

• Training county staff in using the Pennsylvania Relay Service as a key means of communicating with individuals who are deaf, are hard-of-hearing or have speech disabilities;

• Undertaking the required planning and modifications to ensure equal, integrated access to emergency management for individuals with disabilities, including emergency preparedness, notification, evacuation, sheltering, response, clean up, and recovery;

• Ensuring that the county’s official website and other web-based services are accessible to people with disabilities;

• Developing a method for providing information for interested persons with disabilities concerning the existence and location of the county’s accessible services, activities and programs;

• Installing signs at any inaccessible entrance to a facility directing individuals with disabilities to an accessible entrance or to information about accessing programs and services at other accessible facilities; and

• Implementing a comprehensive plan to improve the accessibility of sidewalks, transportation stops, and pedestrian crossings by installing accessible curb ramps throughout Schuylkill County.

Today’s agreement was reached under Title II of the ADA, which prohibits discrimination against individuals with disabilities by state and local governments. The agreement will remain in effect for three years. The department will monitor compliance with the agreement until the required actions have been completed.

 

People interested in finding out more about the ADA, today’s agreement with Schuylkill County, the PCA initiative or the ADA Best Practices Tool Kit for state and local governments can access the ADA webpage at www.ada.gov or call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD).

Bank of America N.A. has agreed to maintain revised policies, conduct employee training and pay compensation to victims to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of disability and receipt of public assistance in violation of the Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA).

 

The settlement, which is subject to court approval, was filed today in federal court in Charlotte, N.C., where Bank of America is headquartered.  The terms of the settlement require Bank of America to pay $1,000, $2,500 or $5,000 to eligible mortgage loan applicants who were asked to provide a letter from their doctor to document the income they received from Social Security Disability Insurance (SSDI).  Applicants who were asked to provide more detailed medical information to document their income may be paid more than those who were asked to have a doctor verify their source of income. Bank of America will hire a third party administrator to search approximately 25,000 loan applications involving SSDI income to identify any other victims.  Under the settlement, Bank of America will conduct training of its underwriters and loan officers and will monitor loan applications to ensure that applications from disabled individuals are treated in a manner consistent with applicable law.

This lawsuit arose as a result of three complaints filed by loan applicants with the U.S. Department of Housing and Urban Development (HUD).  After investigating the complaints, HUD undertook a broader investigation into Bank of America’s practices.  Bank of America revised its policies for documenting disability income during HUD’s investigation.  The Assistant Secretary of HUD elected to have the case heard in federal court and referred the case to the Department of Justice.  The HUD complainants will receive a total of $125,000 to their harm and compensate them for costs associated with their loan applications.

 

“Loan applicants with disabilities should not be subjected to invasive requests for medical information from a doctor when they are applying for credit,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division.  “Today’s settlement shines a light on a practice that violates the Fair Housing Act and the Equal Credit Opportunity Act.”

 

The settlement comes after an investigation by the Justice Department.  Bank of America cooperated fully with the department’s investigation into its lending practices and agreed to settle this matter without contested litigation.  The lawsuit was developed and filed by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Justice Department’s Civil Rights Division.  Since the Fair Lending Unit was established in February 2010, it has filed or resolved 22 lending matters under the Fair Housing Act, the Equal Credit Opportunity Act, and the Servicemembers Civil Relief Act.  The finalized settlements in these matters provide for a minimum of $370 million in monetary relief for more than 200,000 individual borrowers.

 

“HUD and DOJ are committed to ensuring that lending institutions do not break the law. This settlement vindicates the rights of disabled homebuyers who were singled out just because they rely on disability payments,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity.  “Applicants who are otherwise qualified for a home loan should not have additional requirements placed on them because they have a disability.”

 

“This settlement confirms the resolve of this office to protect the civil rights of citizens in our district from illegal discriminatory practices,” said Anne M. Tompkins, U.S. Attorney of the Western District of North Carolina.  “Discrimination in lending has profound consequences that will not be tolerated.”

 

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. The task force has established financial fraud coordinators in every U.S. attorney’s office around the country to help make these broad mandates a reality on the ground. 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.

 

A copy of the complaint, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department’s website at www.justice.gov/fairhousing.

The Justice Department today announced a settlement agreement with Grand Circle LLC, based in Boston, doing business as Grand Circle Travel, to resolve alleged violations of the Americans with Disabilities Act (ADA) and ensure that persons with disabilities, including those who use wheelchairs or other mobility aids, are afforded full and equal access to the company’s travel services and facilities.

 

The settlement agreement resolves an ADA complaint alleging that Grand Circle Travel discriminated against persons with disabilities by cancelling a bus tour reservation by a person with a mobility disability. The complainant, who used a motorized scooter, alleged that, without offering a reason, Grand Circle Travel cancelled her reservation, made months in advance, although the trip took place with nine additional travelers added shortly before the scheduled departure date.

 

Under the agreement, Grand Circle Travel will not discriminate by excluding or providing unequal treatment to customers with disabilities. Grand Circle Travel also agrees to reasonably modify its policies, practices and procedures when necessary to avoid discriminating against persons with disabilities. Under the agreement, the company also agrees that if a customer with a disability who uses a wheelchair or other mobility aid wants to stow it, then Grand Circle Travel will stow the aid and not assess a fee. Finally, the agreement mandates that Grand Circle Travel post on its website and in its office a notice that it does not discriminate based on disability, provide employees training on its obligations under the ADA, and pay $10,000 in compensation and $10,000 as a civil penalty.

 

“By signing this agreement, Grand Circle Travel has affirmed its commitment to providing equal access to customers with disabilities who, like other Americans, have the same right to enjoy tours free from accommodation barriers,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We are pleased that Grand Circle Travel has agreed to make its business open to all.”

Title III of the ADA prohibits discrimination against customers with disabilities by businesses that serve the public. Among other things, the ADA requires travel services and other public accommodations to afford people with disabilities full and equal enjoyment of their goods, services, facilities, and accommodations, including providing accessible buses with lifts on bus tours. The ADA specifically requires public accommodations to make reasonable modifications in policies, practices and procedures to permit the use of wheelchairs or other mobility aids by persons with disabilities. The ADA prohibits businesses from imposing a surcharge on a person with a disability or any group of people with disabilities to cover the costs of measures, including reasonable modifications, which are required to provide that person or group with equal access and equal treatment.

 

Those interested in finding out more about this agreement or businesses’ 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].

WASHINGTON – Four individuals were charged in court documents unsealed today in the Eastern District of Michigan for their participation in a Medicare fraud scheme involving home health services, announced the Department of Justice, the Department of Health and Human Services (HHS), the FBI, and the HHS Office of Inspector General (HHS-OIG).

According to court documents unsealed today in U.S. District Court in Detroit, the scheme allegedly involved a total of more than $1.6 million in fraudulent claims submitted to Medicare for home health care services that were medically unnecessary and/or never provided.  All four defendants were arrested this morning.  In addition, law enforcement agents today executed search warrants at two locations and seizure warrants for 16 bank accounts related to the alleged fraud schemes.

Four individuals are charged in one indictment including one physician, two clinic owners and one nurse.  According to court documents, the conspiracy was allegedly operated out of Angle’s Touch Home Health Care LLC, a home health agency in Taylor, Mich.

Defendants charged include:  Dr. Sonjai Poonpanij, 77, of Rochester, Mich.; clinic owners Attaullah Arain, 45, of Brownstown, Mich., and Nadia Arain, 39, of Brownstown; and registered nurse Judith Ragasa, 49, of Windsor, Ontario, Canada.

The cases are being prosecuted by Trial Attorneys Niall M. O’Donnell and Catherine K. Dick of the Criminal Division's Fraud Section.  The investigations were conducted jointly by the FBI and HHS-OIG, as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney's Office for the Eastern District of Michigan and the Criminal Division's Fraud Section.

Indictments and criminal complaints contain merely charges, and defendants are presumed innocent until proven guilty.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 defendants who have collectively billed the Medicare program for more than $4 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.

WASHINGTON – Laura Pendergest-Holt, 39, the former chief investment officer of Houston-based Stanford Financial Group, was sentenced today to 36 months in prison for her role in obstructing a U.S. Securities and Exchange Commission (SEC) investigation into Stanford International Bank (SIB), the Antiguan offshore bank owned by convicted financier Robert Allen Stanford. 

Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; FBI Assistant Director Ronald T. Hosko of the Criminal Investigative Division; Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis C. Borzi; Chief Postal Inspector Guy J. Cottrell from the U.S. Postal Inspection Service (USPIS); and Chief Richard Weber, Internal Revenue Service-Criminal Investigation (IRS-CI).

The sentence was imposed by U.S. District Judge David Hittner in the Southern District of Texas.  In addition to her prison term, Holt was sentenced to three years of supervised release. Judge Hittner noted that Holt did not have the ability to pay a fine.  

In January 2009, the SEC sought testimony and documents related to SIB’s entire investment portfolio.  Although she was incapable of testifying about the vast majority of that portfolio, Holt nevertheless agreed to testify before the SEC.  In her guilty plea, Holt acknowledged that her eventual appearance and sworn testimony before the SEC was a stall tactic designed to frustrate the SEC’s efforts to obtain important information about SIB’s investment portfolio.  Holt admitted she took this action intentionally and corruptly, knowing that her testimony would impede the SEC’s investigation and help SIB continue operating.

Holt was remanded into custody today.

The investigation was conducted by the FBI’s Houston Field Office, USPIS, IRS-CI and the U.S. Department of Labor, Employee Benefits Security Administration.  The case against Holt is being prosecuted by Assistant U.S. Attorney Jason Varnado of the Southern District of Texas, Deputy Chief Jeffrey Goldberg of the Criminal Division’s Fraud Section and Fraud Section Trial Attorney Andrew Warren.  Former Assistant U.S. Attorney Gregg Costa of the Southern District of Texas and Fraud Section Deputy Chief William Stellmach were also involved in this case.

The Justice Department thanks the SEC for their assistance and cooperation in this matter.

Crystal Sayles, of Montgomery County, Ala., was sentenced today to 64 months in prison for filing false claims, access device fraud and aggravated identity theft.  Sayles had pleaded guilty to those charges on May 17, 2012.  She was also ordered to pay over $1 million in restitution and will serve three years on supervised release following her release from federal prison.  In addition to the sentence imposed today, Sayles had also agreed to the forfeiture of a Mercedes Benz as part of her plea agreement.

 

According to her plea agreement, between January 2010 and July 2011, Sayles and others were involved with the filing of at least 482 fraudulent tax returns using stolen identities. These returns sought over $2 million in tax refunds. All of the returns had been filed through a tax preparation business called Simmons Financial, which Sayles opened in the name of another individual in order to conceal her own involvement. The indictment alleged that the refunds were often directed to prepaid debit cards and in the plea agreement, Sayles admitted to using a debit card loaded with a fraudulently obtained refund to receive cash.

 

The case was investigated by Special Agents of the IRS - Criminal Investigation.  Trial attorneys Jason H. Poole and Michael Boteler of the United States Department of Justice, Tax Division, and Assistant U.S. Attorney Todd Brown prosecuted the case.

 

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

WASHINGTON – Anthony L. Dinunzio, 53, of East Boston, Mass., the acting leader of the New England La Cosa Nostra (NELCN) crime family, pleaded guilty today for his role in a conspiracy to extort protection payments from adult entertainment businesses in Rhode Island, according to a signed plea agreement filed today in U.S. District Court in Providence, R.I.

The plea agreement was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Peter F. Neronha, U.S. Attorney for the District of Rhode Island; Richard Deslauriers, Special Agent in Charge of the FBI’s Boston Field Office; Colonel Steven G. O’Donnell, Superintendent of the Rhode Island State Police; and Providence Public Safety Commissioner Steven M. Pare.

“Today, Anthony Dinunzio admitted to serving as a leader of the New England La Cosa Nostra, a criminal organization that, while under his control, extorted business owners throughout Rhode Island,” said Assistant Attorney General Breuer.  “Dinunzio is the eighth member of the NELCN to plead guilty for his role in the alleged mafia conspiracy that harmed its community for two decades, and this plea is a crucial step in the Justice Department’s fight to dismantle the NELCN.”

“Prosecutorial offices, when they are at their best, build cases.  And not just any cases, but impactful cases.  This case is one of those cases,” said U.S. Attorney Neronha.  “Through their painstaking hard work, the prosecutors, agents and detectives have decimated organized crime in Rhode Island and, with this plea today, have removed its leader in Boston.”

“Mr. Dinunzio’s guilty plea based on the evidence gathered by the FBI and our law enforcement partners shows undeniably we have shattered Omerta, the New England LCN’s code of silence,” said Special Agent in Charge DesLauriers.  “Our persistent, methodical, and unyielding investigation of those who are part of the LCN and other new national and transnational organized crime groups emerging from every corner of the globe will not stop.”

Dinunzio pleaded guilty before U.S. District Judge William E. Smith in the District of Rhode Island to one count of conspiracy to participate in a racketeering enterprise (RICO).  At sentencing, scheduled for Nov. 14, 2012, Dinunzio faces a maximum penalty of 20 years in prison.

According to the signed plea agreement, Dinunzio was a member and leader of the NELCN from at least 2002, as charged in a superseding indictment returned on April 24, 2012.  Dinunzio admitted committing multiple acts of extortion and knowingly assisted in the charged criminal racketeering conspiracy through the oversight and receipt of monthly protection payments, paid in cash by the owners and operators of certain adult entertainment businesses in Rhode Island.  Dinunzio also admitted to obstructing or impeding the administration of justice by, among other methods, attempting to influence, delay or prevent witness testimony related to the investigation and prosecution of NELCN members.

The superseding indictment alleges that Dinunzio participated with other alleged members and associates of NELCN in a racketeering conspiracy in which monthly cash payments for protection of $2,000 to $6,000 were demanded of the owners and operators of several adult entertainment businesses in Rhode Island.

To date, seven leaders, underbosses, members or associates of the NELCN have pleaded guilty and been sentenced to federal prison for their involvement in the alleged racketeering and extortion conspiracy to extort protection payments from adult entertainment businesses and individuals in Rhode Island during the past two decades. Admitted NELCN crime boss Luigi “Louie” Manocchio is serving a sentence of 66 months in prison.  Edward “Eddy” Lato, an admitted capo, is serving a sentence of 108 months in prison.  Alfred “Chippy” Scivola, an admitted NELCN member, is serving a sentence of 46 months in prison. Admitted NELCN associates Richard Bonifiglia, 58, and Albino “Albie” Folcarelli, 54, are both serving sentences of 84 months in prison. Raymond “Scarface” Jenkins is serving a sentence of 37 months in prison.  And Thomas Iafrate is serving a sentence of 30 months in prison.

A ninth defendant, Theodore Cardillo, 69, has entered a plea of not guilty to three counts each of RICO conspiracy and extortion conspiracy and is awaiting trial.

An indictment is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

The cases are being prosecuted by Assistant U.S. Attorney William J. Ferland of the District of Rhode Island and Trial Attorney Sam Nazzaro of the Criminal Division’s Organized Crime and Gang Section.  The matter was investigated by the FBI, the Rhode Island State Police and the Providence Police Department.

A South Florida man, William D. Rodriguez, has been sentenced to serve 120 months in prison in connection with a multi-million dollar prescription drug diversion and money-laundering scheme, the Justice Department announced today. U.S. Judge Donald L. Graham of the Southern District of Florida also ordered that Rodriguez serve two years of supervised release after completion of his prison sentence.

 

In June, Rodriguez pleaded guilty to conspiring with Altec Medical Inc. to defraud the U.S. Food and Drug Administration (FDA) in a scheme involving the resale of prescription drugs that had been diverted from lawful channels of distribution and resold to Altec by two companies controlled by Rodriguez. Rodriguez also pleaded guilty to a separate conspiracy charge involving the laundering of proceeds of the diversion scheme.

 

“Drug diversion” refers to various ways in which prescription drugs are removed from lawful channels of distribution and then reintroduced into the marketplace for sale to consumers.

 

In a document submitted to the court at the time of his guilty plea, Rodriguez admitted that all of the drugs sold to Altec had been obtained from unlicensed, illegal drug distributors. Rodriguez advised the court that the drugs were often obtained from street-level transactions in Miami, including those where individuals sold their medications for money. In other instances, Rodriguez told the court that the drugs had been obtained from cargo thefts.

 

Rodriguez further admitted the conspirators created drug “pedigrees” that falsely said that the drugs had been obtained from legitimate sources, such as drug manufacturers or their authorized distributors. Pedigrees are records of wholesale drug transactions and must reflect all prior sales or distributions of the drugs. Rodriguez also admitted to conspiring to launder proceeds of the diversion scheme by cashing numerous checks over $10,000. On Aug. 20, 2012, the court ordered Rodriguez to forfeit $55 million, representing the proceeds of the scheme.

 

“Drug diversion is a serious crime that puts consumers at risk,” noted Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “Drugs diverted from the lawful channels of distribution may not have been properly handled and stored, which means they could have been contaminated, had their mechanisms of action altered, or they could be expired. Drug Diversion undermines the safety and effectiveness of our prescription drug system, and we will continue to prosecute those who engage in it.”

 

The Justice Department advises consumers who have concerns about a drug to check the lot numbers on the manufacturer’s web site to see if there are any warnings about it. Use of diverted drugs can cause unpredictable adverse side effects and may fail to treat the condition for which a consumer is taking the drugs.

 

On Aug. 10, 2012, Altec pleaded guilty to the diversion scheme, was fined $2 million, and was ordered to forfeit $1 million.

 

In April, Eduardo Torres, Rodriguez’s co-conspirator, pleaded guilty to the crime of providing a false drug pedigree. He is scheduled to be sentenced on Sept. 19, 2012.

 

The cases involving Rodriguez, Altec and Torres were investigated by the FDA’s Office of Criminal Investigations. The cases were prosecuted by Assistant U.S. Attorney Jon M. Juenger of the U.S. Attorney’s Office for the Southern District of Florida, and David A. Frank of the Justice Department’s Consumer Protection Branch. Additional assistance was provided by Joshua Eizen of the FDA’s Office of Chief Counsel for Enforcement.

WASHINGTON – A Minneapolis man was sentenced today to serve 72 months in prison for sexually abusing two minor boys, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Brigadier General Kevin Jacobsen of the U.S. Air Force, Office of Special Investigations; and John Morton, Director of U.S. Immigration and Customs Enforcement (ICE).

Joshua Gardner, 29, was sentenced by U.S. District Judge Ann D. Montgomery in the District of Minnesota.  In addition to his prison term, Gardner was sentenced to three years of supervised release.  Following Gardner’s prison term, he must register as a sex offender as a condition of release.

Gardner pleaded guilty on Jan. 5, 2012, to one count of abusive sexual contact of a child under the age of 12.

According to information presented at his plea hearing, Gardner sexually abused two boys under the age of 12, sometime between September 1997 and May 2002, on Kadena Air Force Base, Okinawa, Japan, which as a U.S. Air Force base was in the special maritime and territorial jurisdiction of the United States.  At the time of the offenses, Gardner resided in Okinawa.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice.   Led by U.S. Attorneys’ offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

This case was prosecuted by Trial Attorney Mi Yung Park of CEOS with the assistance of Assistant U.S. Attorney Kevin Ueland of the U.S. Attorney’s Office for the District of Minnesota.  This case is a result of investigative efforts by the U.S. Air Force Office of Special Investigations in Moody Air Force Base in Georgia and ICE Homeland Security Investigations in Minneapolis.

The Justice Department announced today that it will monitor elections on Sept. 13, 2012, in the Bronx, Manhattan and Queens, N.Y., to ensure compliance with the Voting Rights Act of 1965.  The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. 

 

Under the Voting Rights Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to jurisdictions that are certified by the attorney general or by a federal court order.  Federal observers will be assigned to monitor polling place activities in the Bronx and Manhattan based on the attorney general’s certification.  The observers will watch and record activities during voting hours at polling locations in these jurisdictions, and Civil Rights Division attorneys will coordinate the federal activities and maintain contact with local election officials. 

 

In addition, Justice Department personnel will monitor polling place activities in Queens.   A Civil Rights Division attorney will coordinate federal activities and maintain contact with local election officials.

 

Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country.  To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.

 

Visit www.justice.gov/crt/voting/index.php more information about the Voting Rights Act and other federal voting laws.

The Justice Department announced today that it and the AIDS Law Project of Pennsylvania have reached a settlement with the Milton Hershey School of Hershey, Pa., to remedy alleged violations of the Americans with Disabilities Act (ADA). The agreement resolves allegations that the school violated the ADA by refusing to consider a child, known by the pseudonym Abraham Smith, for enrollment due to the fact that he has HIV.

 

Under the settlement agreement, the school is required to pay $700,000 to Smith and his mother, adopt and enforce a policy prohibiting discrimination and requiring equal opportunity for students with disabilities, including those with HIV, in the school’s programs and services, and to provide training to staff and administrators on the requirements of the ADA. T he school must also pay a $15,000 civil penalty to the United States.

 

“Children should not be denied educational opportunities simply because they have HIV,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This settlement sends a clear message that unlawful discrimination against persons with HIV or AIDS will not be tolerated.”

“This is a very significant case, affirming the rights of persons with HIV, and we applaud the school for working so cooperatively to amend its position on this matter,” said Zane David Memeger, U.S. Attorney for the Eastern District of Pennsylvania.

 

The ADA requires public accommodations, including private schools such as the Milton Hershey School, to provide individuals with disabilities, including people with HIV, equal access to goods, services, privileges, accommodations, facilities, advantages and accommodations.

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

The Justice Department announced the release of its “Section 508 report to the President and Congress: “Accessibility of Federal Electronic and Information Technology.”  The report, authorized under Section 508 of the Rehabilitation Act of 1973, as amended (Section 508) provides findings based on a survey of federal agencies on the accessibility of their electronic and information technology (EIT) and the procedures used to implement the requirements of Section 508.

 

“Technology and technological innovations can improve everyone’s lives.  However, if technology is not accessible, persons with disabilities can’t benefit from those improvements,” said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division.  “It is not terribly difficult or expensive to ensure that technology is accessible, but accessibility has often been an afterthought.  Modifying existing technology to make it accessible is much more difficult and much more expensive than designing technology in an accessible manner in the first place.”

           

Section 508 requires federal agencies to ensure that their EIT is accessible to people with disabilities, unless certain exceptions apply.  EIT includes telecommunications products (such as telephones), information kiosks and transaction machines, websites, multimedia and office equipment, such as copiers and fax machines, computers, software, firmware and similar products and services.  Specifically, Section 508 requires federal agencies to ensure that EIT they develop, procure, maintain, or use allows employees with disabilities and members of the public seeking information or services to have access to and use of information and data that is comparable to that available to people who do not have disabilities.  Section 508 also requires the attorney general to report and offer recommendations periodically on the state of federal agency compliance with Section 508, including actions regarding individual complaints.

 

Pursuant to this statutory directive, the department in 2010-2011 created survey instruments and solicited answers from federal agencies regarding their implementation of Section 508.  The survey requested data in four important areas:  procurement, general processes for implementing Section 508, administrative complaints and civil actions and website compliance.  While the survey results indicated that a good deal of the EIT used by federal agencies is accessible, the department believes that there are simple steps that, if taken, can increase the extent to which federal EIT is more usable by people with disabilities.  In this regard, many of the department’s recommendations are designed to improve an agency’s procedures and processes to better implement the requirements of Section 508.

 

The report finds that most agency components have general Section 508 policies (over 50 percent), as well as Section 508 Coordinators (nearly 70 percent).  Most components (over 90 percent) incorporate Section 508 requirements into their procurements for EIT in some way.  Few agencies have received Section 508 complaints.  Most components (70 percent) have accessibility policies in place for websites and a majority (nearly 58 percent) perform some type of evaluation and remediation on their websites.  Agencies reported facing challenges in ensuring accessibility of software or multimedia they develop, in providing training and support for all staff who need information about Section 508 compliance, and in identifying specific Section 508 requirements, as opposed to general standardized language, to be incorporated in their procurements.  They also face challenges ensuring their testing of products and websites is complete and robust.

 

The report recommends, among other things, that agencies establish and publish Section 508 and web accessibility policies and procedures, appoint Section 508 Coordinators and establish Section 508 programs, provide more Section 508 training to personnel, ensure accessibility of EIT used in federally funded programs, develop procurement policies and specific solicitation language for Section 508 requirements, perform accessibility testing of EIT products and web pages, establish specific Section 508 complaint processes including alternative dispute resolution, and improve inter-agency coordination on Section 508 compliance.

 

The Justice Department’s report and additional information is available on the department’s website at www.ada.gov/508 .

The Justice Department announced today that Luther Burbank Savings will invest $2 million in California communities and take other steps as part of a settlement to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of race and national origin.

 

The settlement, which is subject to court approval, was filed in conjunction with the Justice Department’s complaint in the U.S. District Court for the Central District of California. The complaint alleges that from 2006 through mid-2011, Luther enforced a $400,000 minimum loan amount policy for its wholesale single-family residential mortgage loan program. The department alleges that this policy or practice had a disparate impact on the basis of race and national origin

 

“Today’s settlement demonstrates that the Justice Department is committed to addressing a wide range of abuses in the credit market,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “It is critical that lenders have policies in place to ensure that they don’t discriminate in their lending programs. We commend Luther Burbank Savings for revising its policies and working with the Justice Department to reach an appropriate resolution in this case.”

 

The complaint alleges that from 2006 through 2010, Luther Burbank Savings, a prime lender, originated very few single-family residential mortgage loans to African-American or Hispanic borrowers or in majority-minority tracts throughout California. In the greater Los Angeles area, for example, only 5.8 percent of Luther’s single-family residential mortgage loans were made to African-American and Hispanic borrowers during this time period, compared to 31.8 percent of such loans made to African-American and Hispanic borrowers by comparable prime lenders.

 

Similarly, only 5.2 percent of Luther’s single-family residential loans in the greater Los Angeles area were made in majority-minority census tracts (areas with a non-white population greater than 50 percent) during this time period, compared to 41.7 percent of such loans made in these tracts by comparable prime lenders. The complaint alleges that Luther continued its $400,000 minimum loan amount policy despite its knowledge that its low level of lending to African-American and Hispanic borrowers, and in majority-minority census tracts, was attributable to the policy.

 

“Discriminatory lending practices against minorities threaten the American dream of homeownership,” said U.S. Attorney André Birotte Jr. “The Department of Justice will not allow financial institutions to have in place residential lending practices that illegally impact minority communities.”

 

Under the settlement, Luther will invest $1.1 million in a special financing program to increase the residential mortgage credit that the bank extends to qualified borrowers seeking loans of $400,000 or less in California. The bank also will invest $450,000 in partnerships with community-based organizations that provide credit and financial services to minorities in the affected areas; spend $300,000 for outreach to potential customers and promotion of its products and services; spend $150,000 on consumer education programs; and conduct fair lending training for employees. Luther also is prohibited from establishing or implementing a $400,000 minimum loan amount policy. Since June 2011, the bank has operated with a $20,000 minimum loan amount policy for single-family residential mortgage loans.

 

The lawsuit originated from a 2010 referral by the Office of Thrift Supervision to the Justice Department’s Civil Rights Division. Luther is now subject to the regulatory authority of the Office of the Comptroller of the Currency. The lawsuit was developed and filed by the Fair Lending Unit of the Housing and Civil Enforcement Section in the Justice Department’s Civil Right Division. Since the Fair Lending Unit was established in February 2010, it has filed or resolved 21 lending matters under the Fair Housing Act, the Equal Credit Opportunity Act and the Servicemembers Civil Relief Act. The finalized settlements in 18 of these matters provide for a minimum of $370 million in monetary relief, including compensation for more than 200,000 individual borrowers.

 

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. The task force has established financial fraud coordinators in every U.S. attorney’s office around the country to help make these broad mandates a reality on the ground. 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

 

A copy of the complaint and proposed settlement order, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department website at www.justice.gov/fairhousing . 

Natacia Webster, an employee of the state of Alabama, pleaded guilty today to charges of conspiring to defraud the United States by filing false claims, wire fraud and aggravated identity theft, the Justice Department and the Internal Revenue Service (IRS) announced.

 

According to the indictment and other court documents, in 2011, Webster obtained identity information during her employment with the state of Alabama and provided that information to co-conspirator Melinda Clayton. Webster received money from Melinda Clayton in exchange for the stolen prisoner identities. Clayton used the stolen identities to file false tax returns that claimed fraudulent tax refunds. The refunds were directed to bank accounts and debit cards controlled by the conspirators. Clayton and several others were indicted in April 2011. Clayton pleaded guilty and was sentenced to 61 months in prison.

Sentencing has not yet been scheduled. Webster faces a minimum of two years in prison, a maximum of 32 years in prison, three years of supervised release, restitution and a maximum fine of $750,000, or twice the loss caused by the offense.

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

 

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

James Farnell, a resident of Boca Raton, Fla., pleaded guilty to one count of income tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today. Farnell was previously indicted on April 19, 2012.

 

In January 2004, after being sued by the U.S. Securities and Exchange Commission (SEC) for securities violations at another company, Farnell began selling shares of a company that were held in a nominee name to the investing public. These stock sales, which occurred between 2004 and 2006, violated an injunction against Farnell in a previously filed lawsuit filed by the SEC. According to information provided at the plea hearing, the proceeds from the stock sales from 2004-2006 were not properly reported on Farnell’s income tax returns.

 

Prosecutors informed the court that Farnell failed to file his individual income tax return for 2005 and failed to pay federal income tax on over $480,000 in unreported capital gains from these stock sales. As a result, Farnell evaded at least $200,000 in federal income tax on his unreported income.

 

Farnell faces a potential maximum sentence of five years in prison, a fine of up to $250,000, full restitution to the IRS and a term of supervised release. U.S. District Judge William P. Dimitrouleas, who is presiding over the matter, set a sentencing date of January 10, 2013.

 

On Aug. 10, 2012, James Farnell’s co-defendant and brother, Michael Farnell, pleaded guilty to tax evasion for similar conduct. His sentencing is scheduled for Jan. 3, 2013.

 

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

 

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

Stephen Thomas of York, Pa., pleaded guilty today in U.S. District Court for the District of Columbia to tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today.

 

According to court records, between 2002 and 2004, in the District of Columbia, Thomas formed multiple entities whose names contained the acronym ECG, which stood for ESOP Capital Group. ECG purported to provide financial, business and other management services to companies that were interested in creating ESOPs, which are employee stock ownership plans. In or about 2005 and 2006, Thomas, through ECG, contracted to provide such services to two companies in Maine.

 

As part of his guilty plea, Thomas admitted that he failed to file his 2005 through 2007 individual income tax returns and failed to file 2005 through 2007 corporate income tax returns for ECG. Thomas further admitted that he engaged in a series of affirmative acts of evasion during 2005 through 2007, including concealing his income by moving earnings from the Maine companies into bank accounts in the name of his wife, withdrawing cash on a weekly basis which totaled more than $400,000, using cashier’s checks, and titling his primary residence in the name of his wife. Thomas further admitted that he failed to report at least $573,785 of income and that his tax evasion during 2005 through 2007 resulted in a tax loss to the IRS of at least $154,362.

 

Thomas faces a potential maximum sentence of five years in prison and a fine of up to $250,000. U.S. District Judge Amy Berman Jackson, who is presiding over the matter, set a sentencing date of Dec. 3, 2012.

 

This case was investigated by a special agent of IRS-Criminal Investigation and an investigator from Department of Labor, Employee Benefits Security Administration, and is being prosecuted by Trial Attorneys Jessica Moran and Jeffrey Bender of the Justice Department’s Tax Division.

WASHINGTON – A patient recruiter for several Louisiana durable medical equipment (DME) companies was sentenced today to serve 18 months in prison for her role in a Medicare fraud scheme involving fraudulent claims and illegal kickback payments for unnecessary DME, announced the Department of Justice, the Department of Health and Human Services (HHS), the FBI and the Louisiana State Attorney General's Office.
 
Karen T. Rayburn, 47, was sentenced today by U.S. District Judge James J. Brady of the Middle District of Louisiana. In addition to her prison term, Rayburn was sentenced to two years of supervised release and ordered to pay $3.18 million in restitution.

Rayburn pleaded guilty on Jan. 19, 2012, to one count of conspiracy to commit health care fraud.

According to court documents, Rayburn worked as a recruiter for Healthcare 1 LLC, Medical 1 Patient Services LLC and Lifeline Healthcare Services Inc., Louisiana-based companies that fraudulently billed medical equipment to the Medicare program from 2004 to 2009.  She and other recruiters were hired to obtain prescriptions for medical equipment such as leg braces, arm braces, power wheel chairs and wheel chair accessories.  Rayburn obtained information from Medicare beneficiaries as well as falsified prescriptions for medical equipment.  These prescriptions were then used to submit fraudulent claims to the Medicare program.

According to court documents, from 2004 to 2009, the companies involved in these schemes submitted more than $21 million in fraudulent claims to Medicare, and as a result of the prescriptions that Rayburn collected the companies submitted more than $6 million in fraudulent claims.

Eight other defendants have been sentenced for their roles in this scheme, and three additional defendants await sentencing.

Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Donald J. Cazayoux Jr. of the Middle District of Louisiana; Mike Fields, Special Agent-in-Charge of Dallas Region for the HHS Office of the Inspector General (HHS-OIG); Michael Anderson, Special Agent-in-Charge of the FBI's New Orleans Division; and James Buddy Caldwell, Louisiana State Attorney General.
 
The case was prosecuted by Assistant Chiefs Ben Curtis and William Pericak and Trial Attorneys David Maria and Abigail Taylor of the Criminal Division's Fraud Section.  The case was investigated by the FBI, HHS-OIG, and the Medicaid Fraud Control Unit of the Louisiana State Attorney General’s Office (MFCU), 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 Middle District of Louisiana.

Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have billed the Medicare program for more than $4 billion.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are 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.

The Justice Department filed a motion to intervene today in a lawsuit against Jerry Estopy, d/b/a Estopy Farms, a sorghum and soy farm in McAllen, Tex., which also provides equipment and equipment operators for harvests at other farms.  The Justice Department seeks to intervene in a lawsuit filed by two U.S. citizens against the farm.  The department alleges that the company discriminated against one of the U.S. citizens when it refused to hire him based on his citizenship status.   The Immigration and Nationality Act’s (INA) anti-discrimination provision prohibits employers from discriminating against workers based on national origin or citizenship status in the hiring or firing process.

According to the department’s complaint, the injured party, a U.S. citizen with over twelve years experience operating cotton combines and tractors, applied for a position with Estopy Farms as a cotton picker operator around June of 2010.  The U.S. citizen was not hired, and Estopy Farms hired a number of seasonal foreign workers instead. The department found reasonable cause to believe that the company did not hire the U.S. citizen because it preferred to hire foreign workers under the H-2A visa program.  The H-2A visa program allows foreign nationals into the U.S. for temporary or seasonal agricultural work.  Employers that seek to participate in the program file an application with the U.S. Department of Labor certifying that they have actively tried to recruit U.S. workers for the jobs and that the temporary workers’ employment will not adversely affect the wages and working conditions of similarly employed U.S. workers.  The U.S. Citizenship and Immigration Services is charged with approving applications for the H-2A visas.

 

“The Justice Department will not tolerate discriminatory hiring practices,” said Thomas E. Perez, Assistant Attorney General in charge of the Civil Rights Division. “While the department does not enforce the rules pertaining to the H-2A program, we will vigorously enforce the INA’s anti-discrimination provision, which protects U.S. workers against an employer’s illegal and discriminatory preferences.”

 

Texas Rio Grande Legal Aid filed a lawsuit with the Office of the Chief Administrative Hearing Officer (OCAHO) within the Justice Department’s Executive Office for Immigration Review on behalf of the two U.S. citizens on Nov. 14, 2011.   Because a complaint has already been filed, the department seeks to intervene in the existing lawsuit.   The Justice Department is represented by trial attorney Liza Zamd in this matter. 

 

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 INA, call 1-800-255-7688 (OSC’s worker hotline) (1-800-237-2525, TDD for hearing impaired), 1-800-255-8155 (OSC’s employer hotline) (1-800-362-2735, TDD for hearing impaired), or 202-616-5594; email [email protected] ; or visit OSC’s website at www.justice.gov/crt/osc

The Justice Department today announced that Rawland Leon Sorensen, the owner and manager of dozens of residential rental properties in Bakersfield, Calif., will be obligated to pay more than $2 million in monetary damages and civil penalties to settle a Fair Housing Act lawsuit alleging that he sexually harassed women tenants and prospective tenants.

 

The department’s complaint alleges that Sorensen sexually harassed the women by making unwelcome sexual comments and advances, exposing his genitals to women tenants, touching women without their consent, granting and denying housing benefits based on sex and taking adverse actions against women who refused his sexual advances. Sorensen has operated his rental business for more than 30 years. This represents the largest monetary settlement ever agreed to in a sexual harassment lawsuit brought by the Justice Department under the Fair Housing Act.

 

The consent decree, which is subject to approval by the U.S. District Court, will result in a judgment against Sorensen requiring him to pay $2,075,000 in monetary damages to 25 individuals identified by the United States as victims of his discriminatory conduct. That amount includes court costs and attorneys’ fees for two of the victims who are private plaintiffs. In addition, Sorensen must also pay a $55,000 civil penalty to the United States, the maximum penalty available under the Fair Housing Act. The consent decree requires Sorensen to hire an independent manager to manage his rental properties and imposes strict limits on his ability to have contact with current and future tenants.

 

“The conduct in this case was egregious,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “Women have the right to feel safe in their homes and not to be subjected to sexual harassment just because their families need housing. The Justice Department can and will vigorously prosecute landlords who violate those rights.”

 

“The Eastern District of California is committed to enforcing the civil rights of all persons in the District,” said Benjamin B. Wagner, U.S. Attorney for the Eastern District of California. “This case involved a course of conduct that spanned several years and affected many vulnerable persons. The decree sends a strong message to property owners that discrimination will not be tolerated.”

 

Fighting illegal housing discrimination is a top priority of the Justice Department. The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt . Individuals who believe that they may have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at [email protected] or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.

Sheila Birnbaum, Special Master of the September 11th Victim Compensation Fund (VCF), released the following statement on the final rule by the National Institute for Occupational Safety and Health (NIOSH) to include certain cancers into the World Trade Center Health Program: 

 

“As previously stated, the September 11th Victim Compensation Fund (VCF) will follow the medical analyses conducted by the doctors and scientists at the National Institute for Occupational Safety and Health (NIOSH) who operate the World Trade Center Health Program (Health Program).  Individuals who have been diagnosed with one of the cancers added by the Health Program today will be eligible for compensation from the VCF provided the cancer is determined to be a result of the September 11th attacks under the standards to be developed by the Health Program and provided they meet the VCF’s other eligibility criteria.  These criteria include proving physical presence at one of the crash sites between September 11, 2001 and May 30, 2002, a specific medical condition that is a direct result of the terrorist-related crashes or the debris removal at the crash sites, and a physical injury treated by a medical professional within a reasonable time from the date the injury was discovered.”

 

For more information about the September 11th Victim Compensation Fund, including answers to Frequently Asked Questions, please visit: www.vcf.gov     

Washington, DC – Charles T. Massarone was sworn in as a member of the U.S. Parole Commission on August 16, 2012, by the Honorable Karen K. Caldwell, U.S. District Judge for the Eastern District of Kentucky.  On May 23, 2011, President Barack Obama nominated him to the fill the position formerly held by Edward F. Reilly, Jr., and the United States Senate confirmed the appointment on May 24, 2012.

"The Parole Commission welcomes Commissioner Massarone," said Isaac Fulwood, Jr., Commission Chair. "We look forward to working with him as he brings his experience in state parole and law enforcement to bear on the work of the Commission."

Commissioner Massarone has 30 years' experience in law enforcement. At the time of his appointment, he was a Member of the Kentucky Parole Board. Massarone conducted approximately 16,000 state parole hearings during each year of the more than three years he served as a Member.

From 2010 to 2011, prior to his confirmation to the U.S. Parole Commission, Mr. Massarone served on the Public Safety Officer Medal of Valor Review Board. From 2004 to 2007, Massarone served on the Kentucky Justice and Public Safety Cabinet, rising to become its Deputy Executive Director of Intergovernmental Affairs. From 2000 to 2004, he served as President of the Fraternal Order of Police Lodge of Lexington, and before that he spent over fourteen years as a police officer in the State of Kentucky.

A native of Kentucky, Mr. Massarone is a graduate of the Criminal Justice Training program at Eastern Kentucky University.

For more information, please call Johanna Markind at (202) 346-7036.

The Justice Department announced today that it has filed a lawsuit against the owner and operator of the Heritage Point mobile home park in Montgomery, Ala., alleging that the companies and their employees or officers discriminated against African-Americans.

 

The complaint, filed in the U.S. District Court for the Middle District of Alabama, names several defendants, including Lawrence Properties Inc., which manages Heritage Point, William Bounds, the district supervisor for Lawrence Properties, Lawrence at Lakewood LLC, which owns the property and Michael Lawrence, the president of the Lawrence at Lakewood, LLC. The complaint alleges that Lawrence instructed property managers not to rent to African-American applicants at Heritage Point or other mobile home parks managed by Lakewood throughout Alabama and Georgia.

 

“No one should be prevented from living in a mobile home park or anywhere else just because of their race,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “It takes courage to come forward and report such discrimination. We will continue to defend the rights of those who step forward to report discrimination by holding owners and managers who violate the law accountable for their discriminatory conduct.”

 

“Our Fair Housing laws protect mobile home park residents just as they do all other people seeking to rent or buy a home or seek a home loan,” stated John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity.  “HUD and DOJ are committed to combating all violations of the Fair Housing Act.”

 

The lawsuit seeks an order prohibiting the defendants from engaging in future unlawful discrimination. It also seeks the payment of a civil penalty and monetary damages for the persons who were refused the opportunity to rent at Heritage Point because of their race.

 

Fighting illegal discrimination in housing is a top priority of the Justice Department. The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt . Individuals who believe that they have been victims of housing discrimination or have information related to this lawsuit can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at [email protected] or contact the Department of Housing and Urban Development at 1-800-669-9777.

Charles A. Davis, 63, formerly of Mooresville, N.C. was sentenced today in U.S. District Court to 120 months in prison for committing tax fraud, the Justice Department and Internal Revenue Service (IRS) announced. U.S. Judge Richard L. Voorhees in the Western District of North Carolina also ordered Davis to serve twelve months of supervised release after his prison term and pay $538,569 as restitution to the IRS.

 

Following a three-day trial in March 2012, a federal jury convicted Davis of 10 counts of filing false tax returns and one count of obstructing the IRS. According to evidence presented at trial and court records, from 1983 through 2011 Davis was employed as a commercial airline pilot for US Airways. From 1996 through 2007, Davis failed to file timely income tax returns despite receiving wages ranging from $129,950 to $190,510. For years 1997 through 2005, Davis’s employer withheld little or no federal income tax from his wages because Davis previously had falsely represented that he was exempt from income tax withholding.

Trial evidence established that in April 2006, Davis filed five fraudulent amended income tax returns for 1996 through 2000, falsely claiming that he earned little or no adjusted gross income in each of those years. And from April 2008 to February 2009, Davis filed five fraudulent individual income tax returns for 2004 through 2008, reporting false amounts of federal income tax withheld for each of those years and requesting fraudulent refunds from the IRS in amounts up to approximately $1.5 million. The evidence also established that during the time he failed to pay his taxes, the defendant drove a Ferrari and a Mercedes, and lived in a lakefront home on Lake Norman, N.C.

According to trial records and today’s sentencing hearing, during the IRS’s efforts to collect Davis’s tax debt, Davis obstructed and impeded the IRS by submitting fraudulent payment documentation to the IRS and concealing his assets and income in a nominee bank account. Davis also used a fraudulent address in Texas to avoid paying state income taxes, and currently owes the North Carolina Department of Revenue in excess of $150,000.

In handing down the sentence, Judge Voorhees emphasized the egregious nature of Davis’s conduct and Davis’s lack of regret and remorse.

According to filed documents and today’s sentencing hearing, Davis also took various steps to avoid IRS levies on his US Airways payroll account and his bank accounts, including filing for bankruptcy and diverting funds to his 401(k) account.

“Those who flout the tax laws by filing fraudulent tax returns, hiding assets, and obstructing the IRS risk criminal prosecution resulting in conviction and imprisonment, as well as being required to pay the taxes owed, with interest and penalties,” said Kathryn Keneally, Assistant Attorney General of the Justice Department’s Tax Division. “The Tax Division remains committed to prosecuting tax defier conduct throughout the United States.”

“Today’s lengthy sentence of longtime tax scofflaw Davis should send a message to those to seek to evade taxes,” said U.S. Attorney for the Western District of North Carolina Anne Tompkins. “Our office aggressively investigates and prosecutes those who attempt to cheat our tax system.”

“Davis used a foundation of fraud and deceit in order to cheat the government,” said Richard Weber, Chief, IRS - Criminal Investigation. Those who engage in tax schemes to evade payment of taxes will be prosecuted no matter how they try to hide the truth.”

Davis has been in local federal custody since his conviction in March 2012. Upon designation of a federal facility he will be transferred to the custody of the Federal Bureau of Prisons. Federal sentences are served without the possibility of parole.

 

Assistant Attorney General Keneally and U.S. Attorney Tompkins commended the efforts of special agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Trial Attorney Jonathan R. Marx and Assistant U.S. Attorney Jenny Grus Sugar, who prosecuted the case.

The Scotts Miracle-Gro Company, a producer of pesticides for commercial and consumer lawn and garden uses, was sentenced today in federal district court in Columbus, Ohio, to pay a $4 million fine and perform community service for eleven criminal violations of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA), which governs the manufacture, distribution, and sale of pesticides. Scotts pleaded guilty in February 2012 to illegally applying insecticides to its wild bird food products that are toxic to birds, falsifying pesticide registration documents, distributing pesticides with misleading and unapproved labels and distributing unregistered pesticides. This is the largest criminal penalty under FIFRA to date.

In a separate civil agreement with the U.S. Environmental Protection Agency (EPA), Scotts agreed to pay more than $6 million in penalties and spend $2 million on environmental projects under a settlement that resolves additional civil pesticide violations. The violations include distributing or selling unregistered, canceled or misbranded pesticides, including products with inadequate warnings or cautions. This is the largest civil settlement under FIFRA to date.

“As the world’s largest marketer of residential use pesticides, Scotts has a special obligation to make certain that it observes the laws governing the sale and use of its products. For having failed to do so, Scotts has been sentenced to pay the largest fine in the history of FIFRA enforcement,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “The Department of Justice will continue to work with EPA to assure that pesticides applied in homes and on lawns and food are sold and used in compliance with the laws intended to assure their safety.”

“The misuse or mislabeling of pesticide products can cause serious illness in humans and be toxic to wildlife,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “Today’s sentence and unprecedented civil settlement hold Scotts accountable for widespread company noncompliance with pesticide laws, which put products into the hands of consumers without the proper authorization or warning labels.”

In the plea agreement, Scotts admitted that it applied the pesticides Actellic 5E and Storcide II to its bird food products even though EPA had prohibited this use. Scotts had done so to protect its bird foods from insect infestation during storage. Scotts admitted that it used these pesticides contrary to EPA directives and in spite of the warning label appearing on all Storicide II containers stating, “ Storcide II is extremely toxic to fish and toxic to birds and other wildlife.” Scotts sold this illegally treated bird food for two years after it began marketing its bird food line and for six months after employees specifically warned Scotts management of the dangers of these pesticides. By the time it voluntarily recalled these products in March 2008, Scotts had sold more than 70 million units of bird food illegally treated with pesticide that is toxic to birds.

Scotts also pleaded guilty to submitting false documents to EPA and to state regulatory agencies in an effort to deceive them into believing that numerous pesticides were registered with EPA when in fact they were not. The company also pleaded guilty to having illegally sold the unregistered pesticides and to marketing pesticides bearing labels containing false and misleading claims not approved by EPA. The falsified documents submitted to EPA and states were attributed to a federal product manager at Scotts.

In addition to the $4 million criminal fine, Scotts will contribute $500,000 to organizations that protect bird habitat, including the Ohio Audubon’s Important Bird Area Program, the Ohio Department of Natural Resources’ Urban Forestry Program, the Columbus Metro-Parks Bird Habitat Enhancement Program, the Cornell University Ornithology Laboratory, and The Nature Conservancy of Ohio to support the protection of bird populations and habitats through conservation, research, and education.

At the time the criminal violations were discovered, EPA also began a civil investigation that uncovered numerous civil violations spanning five years. Scotts’ FIFRA civil violations included the nationwide distribution or sale of unregistered, canceled or misbranded pesticides, including products with inadequate warnings or cautions. As a result, EPA issued more than 40 Stop Sale, Use or Removal Orders to Scotts to address more than 100 pesticide products.

In addition to the $6 million civil penalty, Scotts will complete environmental projects, valued at $2 million, to acquire, restore and protect 300 acres of land to prevent runoff of agricultural chemicals into nearby waterways.

The criminal case was investigated by EPA’s Criminal Investigation Division and the Environmental Enforcement Unit of the Ohio Attorney General’s Office, Bureau of Criminal Identification & Investigation. It was prosecuted by Senior Trial Attorney Jeremy F. Korzenik of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division, by Michael J. McClary, EPA Criminal Enforcement Counsel and Special Assistant U.S. Attorney and by Assistant U.S. Attorney J. Michael Marous.

The civil case was investigated by U.S. EPA Region 5’s Land and Chemicals Division and Office of Regional Counsel, and the U.S. EPA Headquarters Office of Civil Enforcement, assisted by the Office of Pesticides Program.

More information about the civil settlement and recalled products: www.epa.gov/compliance/resources/cases/civil/fifra/scottsmiraclegro.html

More information about EPA’s criminal enforcement program: www.epa.gov/enforcement/criminal/index.html

More information about EPA’s pesticide program: http://epa.gov/pesticides/

The Justice Department announced today that it has sued two Dallas tax return preparers, seeking to bar them from preparing federal tax returns for others. The civil injunction suit alleges that Ricardo Solomon and Leslie Mosley, who operate a business called Trini Tax, claim false deductions and credits on customers’ federal tax returns.

According to the government complaint, Solomon and Mosley included fabricated claims for federal fuel tax credit and for education tax credits on tax returns that they prepared. The complaint alleges that Solomon and Mosley’s false claims for federal fuel tax credits have appeared on at least 187 tax returns, and claimed at least $700,000 for the year 2011 alone. The complaint alleges that Solomon prepared a 2010 tax return for one customer that claimed false fuel tax credits for purported fuel purchases that would have cost the customer far more than she reported receiving in income that year.

Fraudulently claiming expenses in order to secure larger refundable credits, including the fuel tax credit, is one of the Internal Revenue Service’s Dirty Dozen tax scams for 2012. The federal fuel tax credit is available only to taxpayers who operate farm equipment or off-highway business vehicles.

The complaint further alleges that Solomon and Mosley repeatedly prepared tax returns that falsely claimed their customers were entitled to an education tax credit, although they did not attend an accredited post-secondary educational institution at any point during the tax year.

In the past decade the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website at www.justice.gov/tax/taxpress2012.htm .

Related Documents:

United States v. Ricardo G. Solomon, et al.

Complaint for Permanent Injunction and Other Relief (PDF)

WASHINGTON – A Wisconsin man was sentenced today in Milwaukee to 60 months in prison for traveling to a foreign country and engaging in and attempting to engage in illicit sexual conduct with a minor, announced Assistant Attorney General Lanny A. Breuer of the Justice Department's Criminal Division; U.S. Attorney James L. Santelle of the Eastern District of Wisconsin; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); and Scott Bultrowicz, Director of the U.S. State Department's Diplomatic Security Service (DSS). 

Roland J. Flath, 72, of Fond du Lac, Wis., was sentenced in U.S. District Court in the Eastern District of Wisconsin by Judge J.P. Stadtmueller.  In addition to his prison term, Flath was sentenced to 10 years of supervised release.  Flath pleaded guilty before Judge Stadtmueller on May 19, 2012.

According to court documents, Flath traveled to Belize in July 2006, and subsequently sexually molested a minor girl from that country.  Flath was originally charged by a criminal complaint filed in the Eastern District of Wisconsin in October 2010.  He was arrested by the Guatemalan National Civil Police on Feb. 20, 2011, expelled to the United States and arrested in the United States by ICE agents and the U.S. Marshals Service.  Flath was indicted on March 22, 2011, by a grand jury sitting in the Eastern District of Wisconsin.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice.  Led by U.S. Attorneys' offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

This case was prosecuted by Assistant U.S. Attorney Penelope Coblentz of the Eastern District of Wisconsin and Trial Attorney Mi Yung Park of CEOS.  Assistance was provided by the Office of International Affairs in the Justice Department’s Criminal Division.  This case is a result of investigative efforts led by ICE Homeland Security Investigations in Milwaukee and the DSS’s Regional Security Office in Belize, CEOS’s High Technology Investigative Unit, and the Belize Police Department.

The government has intervened in a whistleblower lawsuit against Hospice of the Comforter Inc. (HOTCI) alleging false Medicare billings, the Justice Department announced today. HOTCI provides hospice services to patients residing in the vicinity of Orlando, Fla.

 

The Medicare hospice benefit is available for patients who elect palliative treatment (medical care focused on providing patients with relief from pain and stress) for a terminal illness, and have a life expectancy of six months or less if their disease runs its normal course. When an individual is admitted to a hospice facility, that individual is no longer entitled to receive curative care (services designed to cure his or her illness).

 

The lawsuit, filed by HOTCI’s former vice-president of finance, Douglas Stone, alleges that HOTCI knowingly submitted false claims to Medicare for hospice care for patients who were not terminally ill. Specifically, the lawsuit contends that HOTCI’s chief executive officer verbally instructed HOTCI employees to admit Medicare recipients for hospice care even where there had not yet been a determination that they were eligible for the hospice benefit. The lawsuit also alleges that, after being notified that it would be audited by its Medicare contractor, HOTCI formed an internal committee to review the eligibility of its Medicare patients and discharged at least 150 patients in 2009-2010 as being ineligible for the Medicare hospice benefit.

 

“The hospice benefit is intended only for people who qualify for and require such care,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. “We will continue to protect this important component of the Medicare program by ensuring that entities providing hospice care are only treating, and billing for, qualified patients.”

 

“Some of the most vulnerable people in our district rely on hospice services,” said Robert O’Neill, U.S. Attorney for the Middle District of Florida. “It is critically important that Medicare remains solvent in order to provide hospice benefits, and that we confront those whose practices in this area put economic gain before patient care.”

 

The lawsuit was filed under the qui tam , or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the United States for the submission of false claims to the government. The private plaintiffs are entitled to receive a share of any funds recovered through the lawsuit. The False Claims Act authorizes the United States to intervene in such a lawsuit and take over primary responsibility for litigating it. The False Claims Act permits the government to recover three times its damages plus civil penalties.

 

The government’s intervention in this action 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 $9.3 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $13 billion.

 

This matter was investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Middle District of Florida and the Department of Health and Human Services’ Office of Inspector General. The claims asserted against HOTCI are allegations only, and there has been no determination of liability.

 

The lawsuit is captioned United States ex rel. Stone v. Hospice of the Comforter, Inc., No. 6:11-cv-1498-ORL-22-AAB (M.D. Fla).

WASHINGTON – A Wisconsin man was sentenced today to life in prison for his participation in an international criminal network, known as Dreamboard, dedicated to the sexual abuse of children and the creation and dissemination of graphic images and videos of child sexual abuse throughout the world, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Stephanie Finley of the Western District of Louisiana and Director of U.S. Immigration and Customs Enforcement (ICE) John Morton.

John Wyss, aka “Bones,” 55, of Monroe, Wis., was sentenced by U.S. District Judge Maurice Hicks in the Western District of Louisiana.  On May 17, 2012, Wyss was found guilty after trial of one count of engaging in a child exploitation enterprise, one count of conspiracy to advertise child pornography and one count of conspiracy to distribute child pornography.  Evidence presented at trial revealed that Wyss had been an active member of Dreamboard, an online child pornography bulletin board, since January 2008 and had made numerous postings revealing that he had produced child pornography by capturing images of minors engaging in sexually explicit activity via webcam, including one video in which adult males were engaged in sexual intercourse with prepubescent girls.
 
Wyss was charged in an indictment unsealed on Aug. 3, 2011.  The charges against Wyss are the result of Operation Delego, an ongoing investigation that was launched in December 2009 that targeted individuals around the world for their participation in Dreamboard.  Dreamboard was a private, members-only, online bulletin board that was created and operated to promote pedophilia and encourage the sexual abuse of very young children, in an environment designed to avoid law enforcement detection. 

A total of 72 individuals, including Wyss, have been charged as a result of Operation Delego.  To date, 56 of the 72 charged defendants have been arrested in the United States and abroad.  Forty-three individuals have pleaded guilty, and Wyss was convicted after a four-day jury trial.  Forty of the 43 individuals who have pleaded guilty for their roles in the conspiracy have been sentenced to prison and have received sentences ranging between 15 years and life in prison.  Wyss is the third defendant to receive a life sentence.  Thirteen of the 72 charged individuals remain at large and are known only by their online identities.  Efforts to identify and apprehend these individuals continue.  Operation Delego represents the largest prosecution to date in the United States of individuals who participated in an online bulletin board conceived and operated for the sole purpose of promoting child sexual abuse, disseminating child pornography and evading law enforcement.

According to court documents and information presented at trial, Wyss and other Dreamboard members traded graphic images and videos of adults molesting children 12 years-old and under, often violently, and collectively created a massive private library of images of child sexual abuse.  The international group prized and encouraged the creation of new images and videos of child sexual abuse.

According to court documents and evidence presented at trial, Dreamboard members employed a variety of measures designed to conceal their criminal activity from detection by law enforcement.  Members communicated using aliases or “screen names,” rather than their actual names.  Links to child pornography posted on Dreamboard were required to be encrypted with a password that was shared only with other members.  Members accessed the board via proxy servers, which routed internet traffic through other computers so as to disguise a user's actual location and prevent law enforcement from tracing internet activity.  Dreamboard members also encouraged the use of encryption programs on their computers, which password-protect computer files to prevent law enforcement from accessing them in the event of a court-authorized search.

Membership was tightly controlled by the administrators of the bulletin board, who required prospective members to upload child pornography portraying children 12 years of age or younger when applying for membership.  Once they were given access, members were required continually to upload images of child sexual abuse in order to maintain membership.  Members who failed to follow this rule would be expelled from the group.

According to court documents, Dreamboard members were divided into groups based on status and ranking.  The highest level of membership was “Super VIP.”.  Individuals who obtained that title had created new images of child pornography by molesting children and shared those images with the board administrators.  The next level of membership was “Super VIP,” which was comprised of trusted members of the website.  The next level after Super VIP was the VIP rank.  Individuals in the lowest level of membership were called Members.  Those in the lower ranks could only access a limited quantity of child pornography on the bulletin board.  The higher the rank, the more material was available to the member. Individuals advanced to higher levels of membership by providing child abuse images that the individual had produced, providing a large number of images, or providing images that had never been seen before. 

The bulletin board included rules of conduct, printed in English, Russian, Japanese and Spanish.  The rules required prospective members to upload material depicting children under the age of 12 engaged in sexually explicit activity.  Approved members were required to observe strict posting rules designed to encourage members to disseminate large quantities of child pornography, thwart efforts by law enforcement to identify members of the board, and encourage members to sexually abuse children in order to produce new material for the board.  The board rules also required members to organize postings based on the type of content.  One particular category was entitled “Super Hardcore.”  The rules for that category described in graphic language that the only posts permitted were those involving adults having violent sexual intercourse with “very young kids” who were being subjected to both physical and sexual abuse and were obviously “in distress, and or crying.”

Operation Delego involved extensive international cooperation to identify and apprehend Dreamboard members abroad.  Through coordination between ICE; the Department of Justice; Eurojust, the European Union's Judicial Cooperation Unit; and dozens of law enforcement agencies throughout the world, 20 Dreamboard members across five continents and 14 countries have been arrested to date outside the United States, including two of the five lead administrators of the board.  Those countries include Canada, Denmark, Ecuador, France, Germany, Guatemala, Hungary, Kenya, the Netherlands, the Philippines, Qatar, Serbia, Sweden and Switzerland.  Numerous foreign investigations related to Operation Delego remain ongoing.  The location and arrest of Dreamboard members abroad have led to the capture and investigation of other global targets.

Evidence obtained during the operation revealed that at least 38 children across the world were suffering sexual abuse at the hands of the members of the group.  Efforts by federal, state, local and international law enforcement to locate and identify the victims of sexual abuse and exploitation by Dreamboard members are ongoing.

Operation Delego is a spinoff investigation from leads developed through “Operation Nest Egg,” the prosecution of another online group dedicated to the sharing and dissemination of child pornography.  Operation Nest Egg was a spinoff investigation developed from leads related to another international investigation, “Operation Joint Hammer,” which targeted transnational rings of child pornography trafficking. 

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice.  Led by U.S. Attorneys’ offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

The case is being prosecuted by Assistant U.S. Attorney John “Luke” Walker of the Western District of Louisiana and Trial Attorney Keith Becker of CEOS.  The Criminal Division’s Office of International Affairs provided substantial assistance.  The investigation was conducted by ICE-Homeland Security Investigations, the Child Exploitation Section of ICE's Cyber Crime Center, CEOS, CEOS’s High Technology Investigative Unit and 35 ICE offices in the United States and 11 ICE attaches offices in 13 countries around the world, with assistance provided by numerous local and international law enforcement agencies across the United States and throughout the world.

The investigation was part of Operation Predator, a nationwide ICE initiative to identify, investigate and arrest those who prey on children, including human traffickers, international sex tourists, Internet pornographers and foreign-national predators whose crimes make them deportable.

ICE encourages the public to report suspected child predators and any suspicious activity through its toll-free hotline at 1-866-DHS-2ICE.  This hotline is staffed around the clock by investigators.

A federal judge in Worcester, Mass., sentenced William Scott Dion today to 84 months in prison for conspiring to defraud the United States, and for obstructing the Internal Revenue Service (IRS), the Justice Department and IRS announced. U.S. District Judge F. Dennis Saylor also ordered Dion to pay restitution in the amount of $3 million. 

 

On April 2, 2012, a federal jury convicted Dion and Catherine Floyd, both of Sanbornville, N.H., and Charles Adams, of Norwood, Mass., for conspiracies to defraud the United States through the promotion and use of multiple tax fraud schemes. The jury convicted all three of conspiracy to defraud the IRS by promoting an “under the table” payroll scheme.  Dion and Floyd were also convicted for conspiracy to defraud the IRS through the use of an “underground warehouse banking” scheme designed to conceal customer income and assets from the IRS. Floyd and Dion were also convicted separately for corruptly endeavoring to obstruct the IRS’s ability to determine their own income. Adams was separately convicted of tax evasion.  

 

According to the evidence presented at trial, Dion, Floyd and Adams ran a payroll tax scheme in order to pay employees “under the table” without properly accounting for, withholding, and paying over to the IRS the payroll taxes required by law. The three promoted the payroll scheme to employers and individuals who wanted to avoid payment of employer payroll taxes and individual payroll taxes. The three ran the payroll scheme under three different names: Contract America, Talent Management and New Way Enterprises. Approximately 150 individuals subscribed to the payroll scheme and in excess of $2.5 million in unreported wages and compensation were paid through the system.

 

The evidence at trial also established that Dion and Floyd conspired to defraud the United States by promoting and operating an “underground warehouse banking” scheme which helped subscribers conceal income and assets from the IRS. According to the evidence, the warehouse scheme operated under three different names: Your Virtual Office, Office Services and Calico Management. As part of the warehouse banking scheme, the defendants maintained accounts at several banks and used the accounts to deposit and commingle business receipts and other funds received from subscribers in order to mask the true ownership of the funds. According to evidence presented at trial, more than $28 million in deposits were made into the various bank accounts used in the scheme. 

 

In August 2009, the three defendants were indicted with four other individuals relating to the promotion and use of these schemes. On Dec. 9, 2011, prior to trial, Gail and Myron Thorick of West Warwick, R.I., pleaded guilty to conspiring to defraud the United States by helping operate the “warehouse banking” scheme, and for filing false tax returns. On that same date, Gary Alcock pleaded guilty to conspiracy by using the payroll scheme, as well as to tax evasion and willful failure to file tax returns. On Jan. 24, 2012, Kenneth Scott Alcock pleaded guilty to conspiracy relating to the payroll scheme and to one count of tax evasion. All four defendants are awaiting sentencing. 

 

Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, and Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts, commended the efforts of special agents of IRS – Criminal Investigation, who investigated the case, Tax Division Assistant Chief John N. Kane, former Tax Division Trial Attorney Jeffrey L. Shih, Assistant U.S. Attorney Victor A. Wild, who prosecuted the case.

The Justice Department announced today that it seeks to intervene in a class action lawsuit against the Law School Admission Council (LSAC) in federal court in San Francisco to remedy violations of the Americans with Disabilities Act (ADA). The lawsuit, The Department of Fair Employment and Housing v. LSAC, Inc., et al., charges LSAC with widespread and systemic deficiencies in the way it processes requests by people with disabilities for testing accommodations for the Law School Admission Test (LSAT). As a result, the lawsuit alleges, LSAC fails to provide accommodations where needed to best ensure that those test takers can demonstrate their aptitude and achievement level rather than their disability.

 

The department’s proposed complaint identifies additional victims of LSAC’s discriminatory policies and details LSAC’s routine denial of accommodation requests, even in cases where applicants have submitted thorough supporting documentation from qualified professionals and demonstrated a history of testing accommodations.

 

The department further alleges that LSAC discriminates against prospective law students with disabilities by unnecessarily “flagging” test scores obtained with certain testing accommodations in a way that identifies the test taker as a person with a disability and discloses otherwise confidential disability-related information to law schools during the admissions process. LSAC’s practice of singling out persons with disabilities by flagging their scores – essentially announcing to law schools that examinees who exercise their civil right to the testing accommodation of extended time may not deserve the scores they received – is discrimination prohibited by the ADA. The department’s proposed complaint seeks declaratory and injunctive relief, compensatory damages and a civil penalty against LSAC.

 

“Credentialing examinations, such as the LSAT, are increasingly the gateway to educational and employment opportunities, and the ADA demands that each individual with a disability have the opportunity to fairly demonstrate their abilities so they can pursue their dreams,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department’s participation in this action is critical to protecting the public interest in the important issues raised in this case.”

 

One of the victims identified in the complaint, for example, has severe visual impairments and previously received special education services at a school for people who are blind. Even though she provided LSAC with extensive medical documentation of her conditions, as well as proof that she had received testing accommodations since kindergarten, LSAC denied nearly all her requested accommodations, and even refused to provide her a large print test book. When she tried to appeal the denial, LSAC informed her that she had missed the deadline for reconsideration. She then reapplied two more times for testing accommodations, resubmitting all the information previously provided to LSAC, as well as additional medical documentation. Despite her extensive history of receiving the very same testing accommodations throughout her educational career and on standardized tests, and in disregard of the recommendations of a qualified professional, LSAC refused her requested testing accommodations on three separate occasions.

 

“The action taken in this case demonstrates the U.S. Attorney’s Office’s commitment to ensuring equal access to educational opportunities for everyone,” said U.S. Attorney Melinda Haag, U.S. Attorney for the Northern District of California.

 

Title III of the ADA prohibits discrimination on the basis of disability by public accommodations and by entities that offer examinations or courses related to applications, licensing, certification, or credentialing for secondary or postsecondary education, professional, or trade purposes. The ADA mandates that testing entities administer examinations in an accessible manner. This requires testing entities to administer examinations, such as the LSAT, so as to best ensure that, when the examination is administered to a person with a disability, the examination results accurately reflect his or her aptitude or achievement level, or whatever other factor the examination purports to measure, rather than the individual’s disability. In addition, Title V of the ADA prohibits any entity from coercing, intimidating, threatening, or interfering with an individual’s exercise or enjoyment of a right granted by the ADA.

 

Those interested in finding out more about federal disability rights laws may call the Justice Department’s toll-free ADA information Line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov.  ADA complaints may be filed by email to [email protected].

Following a comprehensive investigation, the Justice Department today released its letter of findings determining that the Topeka Correctional Facility (TCF), an all-female facility in Topeka, Kan., under the jurisdiction of the Kansas Department of Corrections (KDOC), fails to protect women prisoners from harm due to sexual abuse and misconduct from correctional staff and other prisoners in violation of their constitutional rights.  The Justice Department delivered a letter detailing the findings to Governor Samuel D. Brownback and Secretary of the KDOC Ray Roberts. 

The investigation was conducted by the Civil Rights Division’s Special Litigation Section and focused on whether prisoners at the facility were subject to sexual abuse in violation of their constitutional rights.  The Justice Department, with the assistance of an expert consultant in custodial sexual abuse, found that KDOC and TCF violate women prisoners’ constitutional rights under the Eighth Amendment of the U.S. Constitution by continuing to expose them to harm and the serious risk of harm from prisoner-on-prisoner and employee-on-prisoner sexual abuse and assault.

The investigation concluded that TCF fails to protect women prisoners from sexual abuse and misconduct from correctional staff and other prisoners in violation of their constitutional rights.  TCF has a past history of officer-on-prisoner and prisoner-on-prisoner sexual abuse and misconduct.  The women at TCF live in an environment with repeated and open sexual behavior, including sexual relations between staff and prisoners and non-consensual sexual conduct between the female prisoners.  Much of the inappropriate sexual behavior, including sexual abuse, continues and remains unreported due to insufficient staffing and supervision, a heightened fear of retaliation, a dysfunctional grievance system and inadequate investigative processes.  To date, KDOC and TCF have failed to remedy the myriad systemic causes of harm to the women prisoners at TCF despite repeated, well-documented and detailed investigations and audits exposing the problems.

 

“Our investigation has revealed that multiple deficiencies in the operations of the Topeka Correctional Facility have exposed female prisoners to harm and the serious risk of harm from prisoner-on-prisoner and employee-on-prisoner sexual abuse and assault,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “It is our strong desire to work with both the facility and the Kansas Department of Corrections to implement reforms to address these repeatedly-documented deficiencies.”

The department’s investigation involved an in-depth review and analysis of a broad array of documents, including policies and procedures, incident reports, investigative reports, prisoner grievances, disciplinary reports, unit logs, orientation materials, medical records, staff training materials and video footage.  The Justice Department interviewed administrative staff, security staff, medical and mental health staff, facilities management staff, training staff and prisoners.

Throughout the investigation, the Justice Department provided feedback and technical assistance to TCF officials.  

“Our office stands ready to work with the state of Kansas on solving the problems in the Topeka Correctional Facility,” said Barry Grissom, U.S. Attorney for the District of Kansas. “The report has identified a very serious and troubling situation at the facility.  Action needs to be taken immediately.”     

The Justice Department looks forward to continued cooperation with the State of Kansas, KDOC and TCF to timely resolve these findings under mutually agreeable terms that will provide accountability and accomplish the remedial measures within a fixed period of time.  

For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt .

WASHINGTON – Joshua Schichtel, 30, of Phoenix, was sentenced today to 30 months in prison for selling command-and-control access to and use of thousands of malware-infected computers, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the District of Columbia Ronald C. Machen Jr.

Schichtel was sentenced by Chief U.S. District Judge Royce C. Lamberth in the District of Columbia.  In addition to his prison term, Schichtel was ordered to serve three years of supervised release. 

Schichtel entered a guilty plea on Aug. 17, 2011, to one count of attempting to cause damage to multiple computers without authorization by the transmission of programs, codes or commands, a violation of the Computer Fraud and Abuse Act.

According to court documents, Schichtel sold access to “botnets,” which are networks of computers that have been infected with a malicious computer program that allows unauthorized users to control infected computers.  Individuals who wanted to infect computers with various different types of malicious software (malware) would contact Schichtel and pay him to install, or have installed, malware on the computers that comprised those botnets.  Specifically, Schichtel pleaded guilty to causing software to be installed on approximately 72,000 computers on behalf of a customer who paid him $1,500 for use of the botnet.

This case was investigated by the Washington Field Office of the FBI.  The case is being prosecuted by Corbin Weiss, Senior Counsel in the Criminal Division’s Computer Crime and Intellectual Property Section and Special Assistant U.S. Attorney for the District of Columbia.

WASHINGTON – Louis Barretta, 48, of Philadelphia, pleaded guilty today to participating in a racketeering conspiracy involving loan sharking and illegal gambling, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania and George C. Venizelos, Special Agent in Charge of the FBI’s Philadelphia Division. 

At the plea hearing before U.S. District Judge Eduardo C. Robreno of the Eastern District of Pennsylvania, Barretta pleaded guilty to conspiring to conduct and participate in the affairs of the Philadelphia La Cosa Nostra (LCN) Family through a pattern of racketeering activity.  He admitted to the court that he made usurious loans and collected payments on these loans by using extortionate means, and he conducted a sports bookmaking business in furtherance of the racketeering conspiracy.  His sentencing is scheduled for Nov. 26, 2012.

Barretta was among 14 members and associates of the Philadelphia LCN Family charged with crimes involving racketeering conspiracy, extortion, loan sharking, illegal gambling, witness tampering and theft from an employee benefit plan in a third superseding indictment returned by a federal grand jury in Philadelphia on July 25, 2012.  The other defendants charged in the 52-count third superseding indictment included Philadelphia LCN Family boss Joseph Ligambi, Philadelphia LCN Family underboss Joseph Massimino, George Borgesi, Martin Angelina, Anthony Staino Jr., Gaeton Lucibello, Damion Canalichio, Gary Battaglini, Robert Verrecchia, Eric Esposito, Robert Ranieri, Joseph Licata and Louis Fazzini. 

Lucibello pleaded guilty to racketeering conspiracy charges on Aug. 2, 2012, and is awaiting sentencing on Sept. 14, 2012.  Angelina also pleaded guilty to racketeering conspiracy charges on Aug. 8, 2012, and is awaiting sentencing on Sept. 17, 2012.

The trial for Ligambi, Massimino, Borgesi, Staino, Canalichio, Battaglini, Licata and Fazzini is scheduled for Oct. 9, 2012.  The trial for Verrecchia, Esposito and Ranieri has not yet been scheduled.  Ligambi, Massimino, Borgesi, Canalichio, Licata and Fazzini are detained while awaiting trial.  Staino, Battaglini, Verrecchia, Esposito and Ranieri are free on bond while awaiting trial. 

The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Frank A. Labor III and Suzanne B. Ercole of the Eastern District of Pennsylvania.  Valuable prosecutorial assistance was provided by the Pennsylvania Office of the Attorney General.

The case is being investigated by the FBI, the Internal Revenue Service-Criminal Investigation, the Pennsylvania State Police, the New Jersey State Police, the Philadelphia Police Department, the U.S. Department of Labor’s Office of Inspector General Office of Labor Racketeering and Fraud Investigations, and the U.S. Department of Labor’s Employee Benefits Security Administration.  Additional assistance was provided by the New Jersey Department of Corrections.

Bruce Gregory Harrison III of Greensboro, N.C., was sentenced today to 144 months in prison following his December 2011 conviction for payroll tax fraud and other crimes, announced Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division; Ripley Rand, U.S. Attorney for the Middle District of North Carolina; and Richard Weber, Chief of Internal Revenue Service (IRS) - Criminal Investigation.

 

Harrison was convicted on a 63-count indictment alleging large-scale payroll tax fraud and failure to file individual income tax returns. The evidence at trial and at sentencing showed that Harrison failed to pay over more than $40 million dollars in federal taxes withheld from the pay of his thousands of employees in the years 2004-2006 and 2009.

 

“The integrity of our Social Security and Medicare system depends on payroll deductions from honest, hard-working taxpayers being properly paid over,” said Assistant Attorney General Keneally. “The sentence handed down today demonstrates that those who steal the taxes paid by their employees risk lengthy prison sentences, and in the end, will still owe the taxes together with civil penalties.”

 

“Greg Harrison used a foundation of fraud and deceit to build his reputation as a successful businessman and prominent local citizen,” commented U.S. Attorney Rand, “but appearances, no matter how polished, cannot overwhelm the truth. The substantial sentence handed down today shatters the Harrison myth and represents justice appropriate to his shameless thievery.”

 

“Mr. Harrison is being held accountable today because he defrauded his employees and attempted to conceal his fraud by lying to the IRS” said Chief Richard Weber, IRS - Criminal Investigation.  “He used employee taxes for personal gain which resulted in the significant loss of tax revenue to the United States government and the potential loss of future Social Security or Medicare benefits for the employees. IRS - Criminal Investigation is committed to vigorously pursuing those who violate employment tax laws.”

 

According to the trial evidence and other documents filed in the case, Harrison did business under various corporate names including U.S.A. Staffing and Compensation Management Inc. He owned or controlled temporary staffing companies operating in at least nine states. Harrison’s staffing companies were headquartered in Guilford County, N.C., and contracted with client businesses to provide temporary workers. Harrison’s companies promised to assume full responsibility for the payment of wages and the withholding and transmitting of taxes to the IRS for those employees. Instead, Harrison failed to account for and pay over in excess of $40 million in federal payroll taxes for the employees of those companies. The evidence at trial showed that Harrison caused false bank statements to be presented to auditors to conceal the nonpayment of the payroll taxes.

 

Harrison was also convicted of corruptly endeavoring to obstruct the IRS by means of false statements to IRS revenue officers. Evidence established he had used company funds to purchase personal residences, to buy a yacht and to finance commercial motion pictures, including National Lampoon’s Pucked and Home of the Giants. Harrison was also convicted of failing to timely file his own income tax returns for 2004, 2005 and 2006.

 

U.S. District Court Chief Judge James A. Beaty, Jr., who presided over the trial and imposed the sentence, had ordered Harrison jailed as a flight risk after the jury rendered its verdict on Dec. 20, 2011. At sentencing, Chief Judge Beaty ordered Harrison to pay more than $43 million in restitution to the IRS.

 

Assistant Attorney General Keneally and U.S. Attorney Rand commended Assistant U.S. Attorneys Frank Chut and Terri-Lei O’Malley and Tax Division Trial Attorney Jeffrey McLellan, and the IRS Agents who assisted them, for their outstanding work in investigating and prosecuting the case.

The Justice Department announced that it has reached an agreement with U.S. Virgin Islands officials to help ensure that military service members, their family members and U.S. citizens living overseas have the opportunity to participate fully in the territory’s Sept. 8, 2012 primary election and the Nov. 6, 2012, general election.

The agreement was filed Friday in the federal district court in St. Thomas, along with a complaint to enforce the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA) .  The suit alleges that the Virgin Islands failed to send absentee ballots to the territory’s eligible military and overseas voters for the primary election – and will fail to do so for the general election – in sufficient time for those voters to receive, cast and return their ballots.  If approved by the court, the agreement will provide additional time for receipt of absentee ballots to ensure eligible military and overseas voters, who requested ballots, will have sufficient time to vote in the primary election. Under the agreement, the territory is required to express mail ballots to UOCAVA voters who requested ballots be sent to them by mail for the primary and general elections.  UOCAVA voters in these federal elections will also be offered the opportunity to receive their ballots by email or fax, and the option of returning their ballots by express delivery, email or fax.

“This agreement reflects this department’s steadfast and continued commitment to ensure that members of our armed forces, their families and overseas citizens are offered a full and meaningful opportunity to vote in our nation’s elections,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “I am most appreciative that election officials in the Virgin Islands worked cooperatively with the department and agreed to take actions to ensure the territory’s military and overseas voters will have a full opportunity to have their votes counted in the upcoming primary and general elections as well as in future federal elections.”

“The right to vote and have it count is a fundamental tenet of our democracy,” said Ronald W. Sharpe, U.S. Attorney for the District of the Virgin Islands. “This agreement ensures that Virgin Islands’ voters, including our brave women and men serving in the military, will have the opportunity to fully participate in the upcoming primary election and future federal elections.”

UOCAVA requires states, including the territory of the Virgin Islands, to allow uniformed service voters (those serving both overseas and within the United States) and their families and overseas citizens to register to vote and to vote absentee for all elections for federal office.  In 2009, Congress enacted the MOVE Act, which made broad amendments to UOCAVA.  Among those changes was a requirement that states must transmit absentee ballots to voters covered under UOCAVA, by mail or electronically at the voter’s option, no later than 45 days before federal elections.  

The agreement will commit the Virgin Islands to report back to the United States about the number of UOCAVA ballots received and counted for the 2012 federal election cycle.  In addition, the agreement requires the Virgin Islands to take steps to ensure compliance with UOCAVA in future federal elections and provide reports to the United States on those efforts. 

More information about UOCAVA and other federal voting laws is available on the Department of Justice website at www.justice.gov/crt/about/vot/misc/activ_uoc.php   Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.

Related Materials:

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Proposed Consent Decree

WASHINGTON – A Dominican national pleaded guilty today in connection with his leading role in trafficking the identities of Puerto Rican U.S. citizens and corresponding identity documents. 

The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Rosa E. Rodríguez-Vélez for the District of Puerto Rico; Director John Morton of U.S. Immigration and Customs Enforcement (ICE), which oversees Homeland Security Investigations (HSI); Chief Postal Inspector Guy J. Cottrell of the U.S. Postal Inspection Service (USPIS); Scott P. Bultrowicz, Director of the U.S. State Department’s Diplomatic Security Service (DSS); and Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber.

Rafael Joaquin Beltre-Beltre, 35, formerly of Caguas, Puerto Rico, pleaded guilty to one count of conspiracy to commit identification fraud, one count of conspiracy to commit alien smuggling for financial gain and one count of international money laundering.  He also agreed to forfeit $422,793 in illegal proceeds and deportation after serving his sentence.  The plea took place in the District of Puerto Rico before U.S. Magistrate Judge Marcos E. Lopez.

Beltre-Beltre was charged in a superseding indictment returned by a federal grand jury in Puerto Rico on Mar. 22, 2012.  To date, a total of 53 individuals have been charged for their roles in the identity trafficking scheme.

Court documents allege that individuals located in the Savarona area of Caguas, Puerto Rico (Savarona suppliers) obtained Puerto Rican identities and corresponding identity documents.  Other conspirators located in various cities throughout the United States (identity brokers) allegedly solicited customers and sold Social Security cards and corresponding Puerto Rico birth certificates for prices ranging from $700 to $2,500 per set.  The superseding indictment alleges that identity brokers ordered the identity documents from Savarona suppliers, on behalf of the customers, by making coded telephone calls.  The conspirators are charged with using text messages, money transfer services and express, priority or regular U.S. mail to complete their illicit transactions.

Court documents allege that some identity brokers assumed a Puerto Rican identity themselves and used that identity in connection with the trafficking operation.  Their customers allegedly generally obtained the identity documents to assume the identity of Puerto Rican U.S. citizens and to obtain additional identification documents, such as legitimate state driver’s licenses.   Some customers allegedly obtained the documents to commit financial fraud and attempted to obtain a U.S. passport.

According to court documents, various identity brokers were operating in Rockford, Ill.; DeKalb, Ill.; Aurora, Ill.; Seymour, Ind.; Columbus, Ind.; Indianapolis; Hartford, Conn.; Clewiston, Fla.; Lilburn, Ga.; Norcross, Ga.; Salisbury, Md.; Columbus, Ohio; Fairfield, Ohio; Dorchester, Mass.; Lawrence, Mass.; Salem, Mass.; Worcester, Mass.; Grand Rapids, Mich.; Nebraska City, Neb.; Elizabeth, N.J.; Burlington, N.C.; Hickory, N.C.; Hazelton, Pa.; Philadelphia; Houston; Abingdon, Va.; Albertville, Ala.; and Providence, R.I.

Beltre-Beltre admitted that he operated as a Savarona supplier and was a leader and organizer in the conspiracy.  At sentencing, Beltre-Beltre faces a maximum sentence of 15 years in prison for conspiracy to commit identification fraud, 10 years in prison for conspiracy to commit alien smuggling for financial gain and 20 years in prison for international money laundering.  Beltre-Beltre is also subject to a maximum fine of $250,000 for each charge.

Another defendant involved in the scheme, Alma Yesenia Garcia-Ramirez, 28, a foreign national formerly of Crystal Lake, Ill., pleaded guilty today to one count of conspiracy to commit alien smuggling for financial gain and agreed to forfeit $35,900 in illegal proceeds as well as to deportation to Mexico after serving her sentence.  According to court documents, Garcia-Ramirez assisted an Illinois-based identity broker and transferred money on behalf of the organization.  Additionally, she used a Puerto Rican identity herself to commit financial fraud and traffic the identities.  Garcia-Ramirez also admitted to obstructing justice in relation to the investigation by attempting to hide evidence from law enforcement investigators.  Garcia-Ramirez’s plea took place in the District of Puerto Rico before U.S. Magistrate Judge Bruce J. McGiverin.  At sentencing, Garcia-Ramirez faces a maximum sentence of 10 years in prison and a maximum fine of $250,000.

Beltre-Beltre and Garcia-Ramirez are the 14th and 15th defendants to plead guilty in this case.

The charges are the result of Operation Island Express, an ongoing, nationally-coordinated investigation led by the ICE-HSI Chicago Office and USPIS, DSS and IRS-CI offices in Chicago, in coordination with the ICE-HSI San Juan Office.  The Illinois Secretary of State Police; Elgin, Ill., Police Department; Seymour, Ind., Police Department; and Indiana State Police provided substantial assistance.  The ICE-HSI Assistant Attaché office in the Dominican Republic, and International Organized Crime Intelligence and Operations Center (IOC-2) as well as various ICE, USPIS, DSS and IRS-CI offices around the country provided invaluable assistance.

The case is being prosecuted by Trial Attorneys James S. Yoon, Hope S. Olds, Sarah Chang, Christina Giffin and Courtney B. Schaefer of the Justice Department Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of Trial Attorney Jeannette Gunderson of the Justice Department Criminal Division’s Asset Forfeiture and Money Laundering Section, and the support of the U.S. Attorney’s Office for the District of Puerto Rico.   The U.S. Attorney’s Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, District of Massachusetts, District of Nebraska, Southern District of Ohio and Western District of Virginia provided substantial assistance.

Potential victims and the public may obtain information about the case at: www.justice.gov/criminal/vns/caseup/beltrerj.html.  Anyone who believes their identity may have been compromised in relation to this investigation may contact the ICE toll-free hotline at 1-866-DHS-2ICE (1-866-347-2423) and its online tip form at www.ice.gov/tipline.  Anyone who may have information about particular crimes in this case should also report it to the ICE tip line or website.

Anyone who believes that they have been a victim of identity theft, or wants information about preventing identity theft, may obtain helpful information and complaint forms on various government websites including the Federal Trade Commission ID Theft Website, www.ftc.gov/idtheft.  Additional resources regarding identity theft can be found at www.ojp.usdoj.gov/ovc/pubs/ID_theft/idtheft.html; www.ssa.gov/pubs/10064.html;  www.fbi.gov/about-us/investigate/cyber/identity_theft; and www.irs.gov/privacy/article/0,,id=186436,00.html.

WASHINGTON — 3M Co. abandoned its plan to acquire Avery Dennison Corp.’s Office and Consumer Products Group, its closest competitor in the sale of adhesive-backed labels and sticky notes, after the Department of Justice informed the companies that it would file a civil antitrust lawsuit to block the deal.  The department said that the proposed acquisition would have substantially lessened competition in the sale of labels and sticky notes, resulting in higher prices and reduced innovation for products that millions of American consumers use every day.

On Dec. 21, 2011, 3M and Avery agreed that 3M would acquire Avery’s Office and Consumer Products Group, which includes Avery’s labels business, for approximately $550 million.  The agreement specifically excluded some sticky notes assets, but left Avery without its brand or the sales and distribution system necessary to compete effectively in the sticky notes market. 

“We welcome the companies’ decision to abandon this deal, which raised competitive concerns in the sale of labels and sticky notes,” said Joseph Wayland, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “As a result of the abandonment of this transaction, American customers will continue to receive the benefits of competition including lower prices and greater innovation in these basic office supplies.”

The department’s investigation found that 3M and Avery have dominated adjacent spaces in the office products business for many years – Avery in labels and 3M in sticky notes sold under its Post-it Brand.  3M entered the labels market in the United States in 2009 and began competing with Avery.  Avery responded to 3M’s entry by lowering wholesale prices, increasing promotions and customer rebates and accelerating innovations in labels.  Avery also responded to 3M’s labels competition by selling Avery branded sticky notes.  As a result of the competition between 3M and Avery for the sale of office products, customers have saved millions of dollars and benefited from innovative labels and sticky notes products, the department said. 

 

The proposed merger would have given 3M more than an 80 percent share of both the U.S. labels and sticky notes markets, according to the department.

                          

3M is a Delaware corporation based in Saint Paul, Minn.  3M had 2011 revenues of $27 billion, has operations in 65 countries, and is one of the world’s largest manufacturers and suppliers of office products, including tape, sticky notes, labels, flags and other office products.  In 2011, 3M’s Office Supplies Division had world-wide sales of approximately $1.6 billion.

 

Avery Dennison is a Delaware corporation based in Pasadena, Calif.  Avery had 2011 revenues of $6 billion and is a leading global manufacturer and supplier of office and consumer products, including labels, dividers, binders, note tabs, writing instruments and sticky notes.  In 2011, Avery’s Office and Consumer Products Group had $765 million in world-wide sales.

A federal jury in New York City today convicted three former financial services executives for their participation in frauds related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts , the Department of Justice announced.

Peter Ghavami, Gary Heinz and Michael Welty, all former UBS AG executives, were found guilty on conspiracy and fraud charges in the U.S. District Court in New York City. Ghavami was found guilty on two counts of conspiracy to commit wire fraud and one count of substantive wire fraud. Heinz was found guilty on three counts of conspiracy to commit wire fraud and two counts of substantive wire fraud. Welty was found guilty on three counts of conspiracy to commit wire fraud. Heinz was found not guilty on one count of witness tampering and Welty was found not guilty on one count of substantive wire fraud.

The trial began on July 30, 2012. Ghavami, Heinz and Welty were initially indicted on Dec. 9, 2010.

“For years, these executives corrupted the competitive bidding process and defrauded municipalities across the country out of money for important public works projects,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “Today’s convictions demonstrate that the division is committed to holding accountable those who seek to unfairly and illegally undermine competitive markets.”

 

According to evidence presented at trial, while employed at UBS, Ghavami, Heinz and Welty participated in separate fraud conspiracies and schemes with various financial institutions and with a broker, at various time periods from as early as March 2001 until at least November 2006. These financial institutions, or providers, offered a type of contract—known as an investment agreement— to state, county and local governments and agencies, and not-for-profit entities, throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Public entities typically hire a broker to assist them in investing their money and to conduct a competitive bidding process to determine the winning provider.

 

According to evidence presented at trial, while acting as providers, Ghavami, Heinz and Welty, with their provider and broker co-conspirators, corrupted the bidding process for more than a dozen investment agreements to increase the number and profitability of the agreements awarded to UBS.  At other times, while acting as brokers, Ghavami, Heinz, Welty and their co-conspirators arranged for UBS to receive kickbacks in exchange for manipulating the bidding process and steering investment agreements to certain providers.

 

Ghavami, Heinz and Welty deprived the municipalities of competitive interest rates for the investment of tax-exempt bond proceeds that were to be used by municipalities to refinance outstanding debt and for various public works projects, such as for building or repairing schools, hospitals and roads. Evidence at trial established that they cost municipalities around the country and the U.S. Treasury millions of dolla rs.

During the trial, the government presented specific evidence relating to approximately 26 corrupted bids and approximately 76 recorded conversations made by the co-conspirator financial institutions. Among the issuers and not-for-profit entities whose agreements or contracts were subject to the defendants' schemes were the Commonwealth of Massachusetts, the New Mexico Educational Assistance Foundation, the Tobacco Settlement Financing Corporation of Rhode Island and the RWJ Health Care Corp at Hamilton.

“Corrupt bidding schemes serve to weaken the public’s trust in the municipal bond market and prevent public entities from enjoying the benefits of a true competitive bidding process,” said Mary E. Galligan, Acting Assistant Director in Charge of the FBI in New York. “Today’s conviction is further proof of our efforts to weed out these corrupt criminals and ensure justice is served.”

 

“Today's verdict is important because it confirms that these complex, seemingly uninteresting backroom deals have a real impact on taxpayers, who should benefit from a municipal bond issue and are ultimately responsible for paying it off,” said Richard Weber, Chief, Internal Revenue Service-Criminal Investigation (IRS-CI). “Today’s convictions send a strong message to the municipal bond industry and demonstrates the commitment of the Internal Revenue Service and the Justice Department to rid the industry of corrupt practices.

A total of 20 individuals have been charged as a result of the department’s ongoing municipal bonds investigation. Including today’s convictions, a total of 19 individuals have been convicted or pleaded guilty, and one awaits trial. Additionally, one company has pleaded guilty.

Two of charged fraud conspiracies carry a maximum penalty per count of 30 years in prison and a $1 million fine.  A third fraud conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine.  The two wire fraud charges carry a maximum penalty per count of 30 years in prison and a $1 million fine.  These maximum fines per count may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either amount is greater than the statutory maximum fine.

 

The verdict announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York and Chicago Offices, the FBI and the 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.

WASHINGTON - Eduardo Arellano-Felix, 55, one of the alleged members of the Arellano-Felix Organization (AFO), was extradited today by the government of Mexico to the United States to face racketeering, money laundering and narcotics trafficking charges in the Southern District of California.

The extradition was announced by U.S. Attorney for the Southern District of California Laura E. Duffy and Assistant Attorney General Lanny A. Breuer of the Justice Department?s Criminal Division.  Arellano-Felix was arrested by Mexican authorities in Tijuana, Baja California, Mexico, on Oct. 25, 2008, following a gun battle with a Mexican Special Tactical Team.  A final order of extradition to the United States was granted in 2010.  After two years of unsuccessful appeals, Arellano-Felix arrived in the United States this afternoon.  He is scheduled to make his initial appearance on Tuesday, Sept. 4, 2012, in U.S. District Court in San Diego before U.S. Magistrate Judge Barbara Lynn Major.  

U.S. Attorney Duffy, whose office secured the indictment against Arellano-Felix, said, "This extradition is a significant step in our effort to bring another key figure in the Arellano Felix Organization to answer, in an American court of law, to very serious charges.  We are grateful to the Government of Mexico for its assistance in the extradition."

?Today's extradition is a milestone in our fight against the Mexican drug cartels.  I want to thank the Criminal Division's Office of International Affairs for its tireless work in helping to ensure that Eduardo Arellano-Felix and numerous of his alleged co-conspirators face justice in the United States,? said Assistant Attorney General Breuer.

?The extradition of Eduardo Arellano-Felix today marks the end of a 20-year DEA investigation into this vicious drug cartel,? said William R . Sherman, Acting Special Agent in Charge of the San Diego Drug Enforcement Administration (DEA).  ?This extradition illustrates that DEA and all its law enforcement partners will relentlessly pursue these drug traffickers until they are brought to justice.?

San Diego FBI Special Agent in Charge Daphne Hearn said, "The FBI is pleased with Mexico's efforts to bring to justice a leader from one of the most violent criminal enterprises in our history.  The spirit of cooperation between our two countries is a powerful force in disrupting the criminal activities of these groups that instill fear and threaten the safety of our citizens in the border regions of the United States."

Long-reputed to be one of the most notorious multi-national drug trafficking organizations, the AFO controlled the flow of cocaine, marijuana and other drugs through the Mexican border cities of Tijuana and Mexicali into the United States.  Its operations also extended into southern Mexico as well as Colombia.

The seventh superseding indictment charges Arellano-Felix with conducting the affairs of an illegal enterprise through a pattern of racketeering activity (RICO), conspiracy to import and distribute cocaine and marijuana, as well as money laundering.  The indictment alleges that the leadership of the AFO negotiated directly with Colombian cocaine-trafficking organizations for the purchase of multi-ton shipments of cocaine, received those shipments by sea and by air, in Mexico, and then arranged for the smuggling of the cocaine into the United States and its further distribution throughout the U.S.  The indictment also alleges that the proceeds of the AFO's drug trafficking, estimated by law enforcement to be in the hundreds of millions of dollars, were then smuggled back into Mexico.

Brothers and former leaders of the AFO, Benjamin Arellano-Felix and Francisco Javier Arellano Felix, are currently serving sentences in the United States following their convictions for racketeering, drug trafficking and money laundering charges.

This case is being investigated by agents from the DEA, the FBI, and the Internal Revenue Service-Criminal Investigation and prosecuted in the Southern District of California by Assistant U.S. Attorneys Joseph Green, James Melendres and Dan Zipp.  The Criminal Division=s Office of International Affairs provided significant assistance in the extradition.  The investigation of Arellano-Felix was coordinated by an Organized Crime Drug Enforcement Task Force (OCDETF).  The OCDETF program was created to consolidate and coordinate all law enforcement resources in this country's battle against major drug trafficking rings, drug kingpins, and money launderers.

The public is reminded that an indictment is not evidence that the defendant committed the crimes charged.  The defendant is presumed innocent until the government meets its burden in court of proving guilt beyond a reasonable doubt.