District Not Recorded

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.

The Department of Justice, Civil Rights Division, and the Department of Education, Office for Civil Rights, today entered into a settlement agreement with the Arizona Department of Education (ADE) that requires ADE and Arizona public schools to offer targeted reading and writing intervention services to tens of thousands of English Language Learner (ELL) students who were prematurely exited or incorrectly identified as Initially Fluent English Proficient (IFEP) over the past five school years. The agreement also requires ADE to develop proficiency criteria that accurately identify and exit ELL students. 

“Proper classification of ELL students is essential to ensuring that students receive the services they need to help them overcome language barriers and participate equally in the instructional process,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division at the Department of Justice. “We commend Arizona’s Superintendent of Public Instruction and ADE for voluntarily agreeing to take significant steps to address the needs of Arizona’s ELL students.”

“This agreement highlights our commitment to ensuring that all ELL students receive the services they need to learn,” said Russlynn Ali, Assistant Secretary for the Office for Civil Rights at the Department of Education. “All students are entitled to equal opportunities, and this resolution will help to make sure Arizona students receive the education they deserve.”  

With the cooperation of ADE and Arizona school districts, the Departments of Justice and Education conducted an extensive investigation of the state’s ELL policies and programs, and determined that tens of thousands of ELL students had been misidentified as IFEPs or exited from ELL services without sufficient English proficiency in reading and writing, which is key to academic success. Because of this, the Departments found that ADE was in violation of Title VI of the Civil Rights Act of 1964 (Title VI) as well as the Equal Educational Opportunities Act. While ADE disagrees with OCR’s and DOJ’s findings of noncompliance, ADE entered into the agreement to voluntarily resolve the matter.

The enforcement of the Equal Educational Opportunities Act, which requires state and local education agencies to take appropriate action to overcome language barriers that impede students’ equal participation in instructional programs, and Title VI of the Civil Rights Act of 1964, which bans discrimination on the basis of race and national origin by schools that receive federal funds, are top priorities of the Justice Department’s Civil Rights Division.  Additional information about the Civil Rights Division of the Justice Department is available on its website at www.justice.gov/crt. Enforcement of Title VI is also a top priority of the Department of Education’s Office for Civil Rights.  Additional information about the Department of Education’s Office for Civil Rights is available on its website at www.ed.gov/ocr.

WASHINGTON - A British citizen was sentenced today to 30 years in prison for producing child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the District of Hawaii Florence T. Nakakuni. 

Simon Jasper McCarty, 39, was sentenced by U.S. District Judge J. Michael Seabright of the District of Hawaii.  In addition to his prison sentence, McCarty was sentenced to serve lifetime supervised release and pay $98,458 in restitution.

On Jan. 10, 2012, McCarty pleaded guilty to one count of producing child pornography.  At the time of the plea colloquy, McCarty admitted that between 2005 and 2007, he molested three different prepubescent boys outside of the United States and produced videos of the molestation.

McCarty was apprehended on Aug. 5, 2008, when he attempted to fly from Hilo, Hawaii, to Honolulu with computer media that contained child pornography.  A forensics examination of the media revealed approximately 400 still images and nearly 200 videos of child pornography.  Approximately 60 of the videos featured the three minors who were molested by McCarty.  McCarty brought the computer media with him when he flew from the United Kingdom to Hawaii on July 28, 2008.

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 Child Exploitation and Obscenity Section (CEOS) in the Justice Department's Criminal Division, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

The case was prosecuted by Assistant U.S. Attorney Larry Tong of the District of Hawaii and Assistant Deputy Chief Alexandra Gelber and Trial Attorney Mi Yung Park of CEOS.  The case was investigated by the Honolulu Office of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Hawaii County Police Department, Hawaii Department of Transportation, the Transportation and Security Administration and CEOS’s High Technology Investigative Unit.

WASHINGTON – A high ranking member of the Aryan Brotherhood of Texas (ABT) was sentenced today for his role in an aggravated assault that took place in Tomball, Texas, in September 2008, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Kenneth Magidson of the Southern District of Texas.

Steven Walter Cooke, 48, aka “Stainless,” pleaded guilty on March 16, 2012, to racketeering aggravated assault for his role in the beating of an ABT prospect member.  Cooke was sentenced today to 87 months in federal prison by senior U.S. District Court Judge Ewing Werlein Jr.  The sentence will run concurrent with a life sentence imposed by U.S. District Judge Marcia Crone on May 3, 2012, in the Eastern District of Texas in connection with Cooke’s role in a 2008 Liberty County, Texas, homicide.  

According to court documents, the defendant was a leader of the ABT, a powerful race-based, state-wide organization that operated inside and outside of state and federal prisons throughout the United States.  The ABT was established in the early 1980s within the Texas prison system.  The gang modeled itself after and adopted many of the precepts and writings of the Aryan Brotherhood, a California-based prison gang that was formed in the California prison system during the 1960s.  According to court documents, previously, the ABT was primarily concerned with the protection of white inmates and white supremacy/separatism.  Over time, the ABT has expanded its criminal enterprise to include illegal activities for profit.

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

According to court documents, Cooke, along with 11 fellow ABT gang members, participated in the beating of a prospective ABT member at Cooke’s home in Tomball on Sept. 22, 2008.  The ABT prospect, who sustained serious bodily injury, including an orbital blowout fracture, was beaten by ABT gang members because he violated ABT rules of conduct. 

Eleven of the 12 co-defendants previously pleaded guilty to violent crimes in aid of racketeering aggravated assault.  The 12th ABT gang member, David Harlow, 43, aka “Bam Bam,” was found guilty at trial by Senior Judge Werlein on March 21, 2012.  Harlow was sentenced on July 27, 2012, to 120 months in prison.

This case is being investigated by a multi-agency task force consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; the FBI; the U.S. Marshals Service; the Texas Rangers; the Texas Department of Public Safety; the Walker County, Texas, Sheriff’s Office; the Montgomery County, Texas, Sheriff’s Department; the Houston Police Department-Gang Division; the Tomball Police Department; the Texas Department of Criminal Justice – Inspector General; and the Harris County, Texas, Sheriff’s Office.

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

The Attorney General announced today the closure of the criminal investigations into the death of two individuals while in United States custody at overseas locations. Below is some background on the investigation and the Attorney General’s statement.

 

BACKGROUND ON INVESTIGATION:

 

On Jan. 2, 2008, Attorney General Michael Mukasey selected Assistant U.S. Attorney (AUSA) John Durham of the District of Connecticut to conduct a criminal investigation into the destruction of interrogation videotapes by the Central Intelligence Agency (CIA).

 

On Aug. 24, 2009, based on information the Department received pertaining to alleged CIA mistreatment of detainees, Attorney General Eric Holder announced that he had expanded Mr. Durham’s mandate to conduct a preliminary review into whether federal laws were violated in connection with the interrogation of specific detainees at overseas locations. Attorney General Holder made clear at that time, that the Department would not prosecute anyone who acted in good faith and within the scope of the legal guidance given by the Office of Legal Counsel regarding the interrogation of detainees. Accordingly, Mr. Durham’s review examined primarily whether any unauthorized interrogation techniques were used by CIA interrogators, and if so, whether such techniques could constitute violations of the torture statute or any other applicable statute.

 

In June of last year, the Attorney General announced that Mr. Durham recommended opening full criminal investigations regarding the death of two individuals while in United States custody at overseas locations, and closing the remaining matters. The Attorney General accepted that recommendation. Today, the Attorney General announced that those two investigations conducted over the past year have now been closed.

 

ATTORNEY GENERAL STATEMENT :

 

“AUSA John Durham has now completed his investigations, and the Department has decided not to initiate criminal charges in these matters. In reaching this determination, Mr. Durham considered all potentially applicable substantive criminal statutes as well as the statutes of limitations and jurisdictional provisions that govern prosecutions under those statutes. Mr. Durham and his team reviewed a tremendous volume of information pertaining to the detainees. That review included both information and matters that were not examined during the Department’s prior reviews. Based on the fully developed factual record concerning the two deaths, the Department has declined prosecution because the admissible evidence would not be sufficient to obtain and sustain a conviction beyond a reasonable doubt.

 

“During the course of his preliminary review and subsequent investigations, Mr. Durham examined any possible CIA involvement with the interrogation and detention of 101 detainees who were alleged to have been in United States custody subsequent to the terrorist attacks of September 11, 2001. He determined that a number of the detainees were never in CIA custody. Mr. Durham identified the matters to include within his review by examining various sources including the Office of Professional Responsibility’s report regarding the Office of Legal Counsel memoranda related to enhanced interrogation techniques, the 2004 CIA Inspector General’s report on enhanced interrogations, additional matters investigated by the CIA Office of Inspector General, the February 2007 International Committee of the Red Cross Report on the Treatment of Fourteen ‘High Value Detainees’ in CIA Custody, and public source information.

 

“Mr. Durham and his team of agents and prosecutors have worked tirelessly to conduct extraordinarily thorough and complete preliminary reviews and investigations. I am grateful to his team and to him for their commitment to ensuring that the preliminary review and the subsequent investigations fully examined a broad universe of allegations from multiple sources. I continue to believe that our Nation will be better for it.

 

“I also appreciate and respect the work of and sacrifices made by the men and women in our intelligence community on behalf of this country. They perform an incredibly important service to our nation, and they often do so under difficult and dangerous circumstances. They deserve our respect and gratitude for the work they do. I asked Mr. Durham to conduct this review based on existing information as well as new information and matters presented to me that I believed warranted a thorough examination of the detainee treatment issue.

 

“I am confident that Mr. Durham’s thorough reviews and determination that the filing of criminal charges would not be appropriate have satisfied that need. Our inquiry was limited to a determination of whether prosecutable offenses were committed and was not intended to, and does not resolve, broader questions regarding the propriety of the examined conduct.”

The Attorney General released the following statement on the ruling today in U.S. District Court for the District of Columbia in Texas v. Holder, the state’s proposed voter ID law:

 

“The court’s decision today and the decision earlier this week on the Texas redistricting plans not only reaffirm - but help protect - the vital role the Voting Rights Act plays in our society to ensure that every American has the right to vote and to have that vote counted. 

 

“The Department of Justice opposed preclearance of the Texas voter ID law because of the harm it would cause minority voters across the state of Texas.  Under the proposed law, many of those without the required voter identification would be forced to travel great distances to get one – and some would have to pay for the documents they might need to do so.  The legislature rejected reasonable efforts to mitigate these burdens.  We are pleased with the court's decision to deny preclearance because of these racially discriminatory effects.

 

“The Justice Department’s efforts to uphold and enforce voting rights will remain aggressive and even-handed.  When a jurisdiction meets its burden of proving that a proposed voting change would not have a racially discriminatory purpose or effect, the Department will not oppose that change -- when a jurisdiction fails to meet that burden, we will object.”

WASHINGTON – Edison Burgos-Montes, of Puerto Rico, was convicted after a two-month jury trial of cocaine possession with intent to distribute and killing a government witness, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the District of Puerto Rico Rosa Emilia Rodríguez-Vélez announced today. 

Burgos-Montes, 42, was convicted yesterday in U.S. District Court in San Juan of one count of conspiracy to possess with intent to distribute cocaine, one count of conspiracy to import cocaine, one count of murdering a witness to prevent testimony in an official proceeding, and one count of murdering a witness in retaliation for providing information to law enforcement.  U.S. District Court Judge Jay García-Gregory presided over the trial.

According to the superseding indictment, Burgos-Montes conspired to transport multi-kilogram quantities of cocaine from the Dominican Republic to Puerto Rico for further distribution in Puerto Rico for significant financial gain. 

On or about July 4, 2005, Burgos-Montes killed Madelin Semidey-Morales, a government witness and informant, to prevent her from further informing authorities about his unlawful narcotics trafficking and to retaliate against her for providing information relating to the commission or possible commission of a federal crime to a law enforcement officer.  Burgos-Montes was Semidey-Morales’s consensual partner.

Burgos-Montes faces a possible penalty of life in prison or the death penalty.  The death penalty phase of the trial will begin on Sept. 10, 2012.

The case is being prosecuted by Trial Attorney Julie Mosley of the Justice Department Criminal Division’s Capital Case Unit and Assistant U.S. Attorney Marcela Mateo of the District of Puerto Rico.  The case was investigated by Drug Enforcement Administration and the Puerto Rico Police Department, with assistance from the FBI’s San Juan Field Office Evidence Recovery Team. 

The United States has intervened and filed a complaint against the private, for-profit chain of schools, ATI Enterprises Inc. based in North Richland, Texas, the Justice Department announced today. ATI Enterprises, Inc., which does business as ATI Technical Training Center, ATI Career Training Center and ATI Career Training, operates career college campuses in Texas, Florida, Oklahoma and New Mexico.

 

The government’s complaint alleges that from 2007 through 2010, at three campuses in Dallas and North Richland Hills, Texas, ATI Enterprises knowingly misrepresented its job placement statistics to the Texas Workforce Commission in order to maintain its state licensure, and therefore its eligibility for federal financial aid under Title IV of the Higher Education Act of 1965, as amended. On Aug. 9, 2011, the Texas Workforce Commission revoked licenses for several of ATI’s programs at the three campuses after a third party audit of ATI’s reported placement statistics.

 

Furthermore, the complaint alleges that ATI employees at the three campuses knowingly enrolled students who were ineligible because they did not have high school diplomas or recognized equivalents; falsified high school diplomas, including five Dallas Independent School District diplomas for students who later defaulted on their federal student loans; fraudulently kept students enrolled even though they should have been dropped because they had poor grades or attendance; and made knowing misrepresentations to students about their future employability. The alleged misrepresentations included telling students that a criminal record would not prevent them from getting jobs in their fields of study, quoting higher salaries than the students would be likely to earn and reporting inflated job placement statistics both to the students and the Texas Workforce Commission. The complaint alleges that the executive directors at each campus, as well as various ATI corporate officers, including the chief operating officer, chief executive officer, executive vice president of operations, national director of career services, regional director of education, regional director of career placements and vice president of recruitment were aware of and in some cases encouraged the alleged conduct.

 

The complaint further alleges that ATI engaged in these practices in order to induce students to enroll and thereby increase the school’s receipt of federal dollars at the expense of students, who incurred long-term debt, and the taxpayers.

 

“Federal financial aid is designed to help students obtain an education ,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. “We are committed to ensuring that educational institutions place the interests of their students ahead of their own financial interests. ”

 

“Misuse of taxpayers’ dollars cannot be tolerated – not only for the sake of taxpayers, but especially in the case of innocent individuals who seek to improve their lives through a quality education,” said U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

 

“Abuse of the federal student aid program is unacceptable” said Kathleen Tighe, Inspector General of the U.S. Department of Education.   “Tracking down and holding accountable companies like ATI that take advantage of students to benefit the companies’ bottom line will continue to be a priority of our office.”

 

The suit was originally filed by Portia Aldridge, Tiffany Turner, Monica Lewis, James Lewis, Nathan Wallace and Lori Jackson, all former employees of the Texas campuses of ATI Enterprises. The False Claims Act allows private citizens to file whistleblower suits to provide the government information about wrongdoing. The government then has a period of time to investigate and decide whether to intervene and take over the litigation or decline to pursue the case and allow the whistleblower to proceed. If the United States proves that a defendant has knowingly submitted false claims, it is entitled to recover three times the damages that resulted and a penalty of $5,500 to $11,000 per claim. When the government intervenes, the whistleblower can collect a share of 15 to 25 percent of the United States' recovery.

 

This matter was investigated by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney's Office for the Northern District of Texas; and the Department of Education, Office of Inspector General; and Office of General Counsel.

 

The claims asserted against ATI in the United States’ complaint are allegations only, and there has been no determination of liability.

WASHINGTON – Bryan Underwood, a former civilian guard at a U.S. Consulate compound under construction in China, pleaded guilty today in the District of Columbia in connection with his efforts to sell for personal financial gain classified photographs, information and access related to the U.S. Consulate to China’s Ministry of State Security (MSS).

At a hearing today before U.S. District Judge Ellen S. Huvelle, Underwood pleaded guilty to one count of attempting to communicate national defense information to a foreign government with intent or reason to believe that the documents, photographs or information in question were to be used to the injury of the United States or to the advantage of a foreign nation. 

The guilty plea was announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Eric J. Boswell, Assistant Secretary of State for Diplomatic Security.

Underwood, 32, a former resident of Indiana, was first charged in an indictment on Aug. 31, 2011, with two counts of making false statements and was arrested on Sept. 1, 2011.  On Sept. 21, 2011, he failed to appear at a scheduled status hearing in federal court in the District of Columbia.  The FBI later located Underwood in a hotel in Los Angeles and arrested him there on Sept. 24, 2011.  On Sept. 28, 2011, Underwood was charged in a superseding indictment with one count of attempting to communicate national defense information to a foreign government, two counts of making false statements and one count of failing to appear in court pursuant to his conditions of release.  Sentencing for Underwood has been scheduled for Nov. 19, 2012.  He faces a maximum potential sentence of life in prison.

“Bryan Underwood was charged with protecting a new U.S. Consulate compound against foreign espionage, but facing financial hardship, he attempted to betray his country for personal gain,” said Assistant Attorney General Monaco.  “This prosecution demonstrates that we remain vigilant in protecting America’s secrets and in bringing to justice those who attempt to compromise them.”

“Bryan Underwood was determined to make millions by selling secret photos of restricted areas inside a U.S. Consulate in China,” said U.S. Attorney Machen.  “His greed drove him to exploit his access to America’s secrets to line his own pockets.  The lengthy prison sentence facing Underwood should chasten anyone who is tempted to put our nation at risk for personal gain.”

“Bryan Underwood sought to benefit from his access to sensitive information, but his attempted betrayal was detected before our nation’s secrets fell into the wrong hands,” said FBI Assistant Director in Charge McJunkin.  “Together with our partners, the FBI will continue to work to expose, investigate and prevent acts of espionage that threaten our national security.”

“The close working relationship between the U.S. Department of State’s Diplomatic Security Service, the FBI and the U.S. Attorney’s Office resulted in the capture and conviction of Bryan Underwood before he could harm the security of our country,” said Assistant Secretary of State Boswell.  “The Diplomatic Security Service is firmly committed to thoroughly investigating all potential intelligence threats to our nation.”

According to court documents, from November 2009 to August 2011, Underwood worked as a cleared American guard (CAG) at the construction site of a new U.S. Consulate compound in Guangzhou, China.  CAGs are American civilian security guards with Top Secret clearances who serve to prevent foreign governments from improperly obtaining sensitive or classified information from the U.S. Consulate.  Underwood received briefings on how to handle and protect classified information as well as briefings and instructions on security protocols for the U.S. Consulate, including the prohibition on photography in certain areas of the consulate.

Plan to Sell Information and Access for $3 Million to $5 Million

In February 2011, Underwood was asked by U.S. law enforcement to assist in a project at the consulate and he agreed.  In March 2011, Underwood lost a substantial amount of money in the stock market.  According to court documents, Underwood then devised a plan to use his assistance to U.S. law enforcement as a “cover” for making contact with the Chinese government.  According to his subsequent statements to U.S. law enforcement, Underwood intended to sell his information about and access to the U.S. Consulate to the Chinese MSS for $3 million to $5 million. If any U.S. personnel caught him, he planned to falsely claim he was assisting U.S. law enforcement.

As part of his plan, Underwood wrote a letter to the Chinese MSS, expressing his “interest in initiating a business arrangement with your offices” and stating, “I know I have information and skills that would be beneficial to your offices [sic] goals.  And I know your office can assist me in my financial endeavors.”  According to court documents, Underwood attempted to deliver this letter to the offices of the Chinese MSS in Guangzhou, but was turned away by a guard who declined to accept the letter.  Underwood then left the letter in the open in his apartment hoping that the Chinese MSS would find it, as he believed the MSS routinely conducted searches of apartments occupied by Americans.

In May 2011, Underwood secreted a camera into the U.S. Consulate compound and took photographs of a restricted building and its contents.  Many of these photographs depict areas or information classified at the Secret level.  Underwood also created a schematic that listed all security upgrades to the U.S. Consulate and drew a diagram of the surveillance camera locations at the consulate.  In addition, according to his subsequent statements to U.S. law enforcement, Underwood “mentally” constructed a plan in which the MSS could gain undetected access to a building at the U.S. Consulate to install listening devices or other technical penetrations.

According to court documents, the photographs Underwood took were reviewed by an expert at the State Department’s Bureau of Diplomatic Security who had original classification authority for facilities, security and countermeasures at the U.S. Consulate.  The expert determined that many of the photographs contained images classified at the Secret level and that disclosure of such material could cause serious damage to the United States.

In early August 2011, Underwood was interviewed several times by FBI and Diplomatic Security agents, during which he admitted making efforts to contact the Chinese MSS, but falsely claimed that he took these actions to assist U.S. law enforcement.  On Aug. 19, 2011, Underwood was again interviewed by law enforcement agents and he admitted that he planned to sell photos, information and access to the U.S. Consulate in Guangzhou to the Chinese MSS for his personal financial gain.

The U.S. government has found no evidence that Underwood succeeded in passing classified information concerning the U.S. Consulate in Guangzhou to anyone at the Chinese MSS.

This investigation was conducted jointly by the FBI’s Washington Field Office and the State Department’s Bureau of Diplomatic Security.  The prosecution is being handled by the U.S. Attorney’s Office for the District of Columbia and Trial Attorney Brandon L. Van Grack from the Counterespionage Section of the Justice Department’s National Security Division.

WASHINGTON – A U.S. Army master sergeant pleaded guilty today to accepting thousands of dollars in gratuities from contractors during his deployment to Iraq as a field ordering officer at a forward operating base in Iraq, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the District of South Carolina William N. Nettles.

Julio Soto Jr., 52, of Columbus, Ga., pleaded guilty today before U.S. District Chief Judge Margaret B. Seymour in the District of South Carolina to a criminal information charging him with one count of conspiracy to accept illegal gratuities. 

According to court documents, Soto was a master sergeant in the U.S. Army, deployed to Forward Operating Base (FOB) Hammer in Iraq, as a field ordering officer (FOO), a public official.  FOO funds are used to purchase miscellaneous items and supplies such as paint, lumber and plywood from local vendors.  It is a violation of federal law for field ordering officers to accept gratuities from contractors dependent upon them for contracts.

In or about March 2007 through October 2008, Soto, along with an alleged U.S. Army co-conspirator, was involved with the construction of a government building at FOB Hammer by local Iraqi contractors.  Soto and his alleged co-conspirator unlawfully sought, received and accepted illegal gratuities for helping Iraqi contractors gain U.S. government contracts, and then purchased U.S. Postal money orders with the illegal proceeds and mailed them back to the United States.

At sentencing, Soto faces a maximum penalty of five years in prison, a fine of $250,000, or twice the pecuniary gain or loss, and up to three years of supervised release.  As part of his plea agreement, Soto agreed to pay $62,542 plus interest in restitution to the United States.

This case is being prosecuted by Special Trial Attorney Mark Grider of the Justice Department Criminal Division’s Fraud Section, on detail from the Special Inspector General for Iraq Reconstruction (SIGIR), and by Assistant U.S. Attorney Dean A. Eichelberger of the District of South Carolina.  The case is being investigated by SIGIR, the Defense Criminal Investigative Service and the Major Procurement Fraud Unit of the U.S. Army Criminal Investigation Command.

Everett Dwayne Avery, 36, of Detroit, Mich., pleaded guilty in federal court today to a federal hate crime, admitting that he assaulted a victim because he believed the victim was gay, the Justice Department, U.S. Attorney for the Eastern District of Michigan Barbara McQuade and Special Agent in Charge of the FBI Robert D. Foley, III announced today.

During the time of the plea, Avery admitted that on March 7, 2011, he struck the victim in the face while they were customers at a convenience store in Detroit because he believed that the victim was gay.  The victim suffered a fractured eye socket and other facial injuries as a result. 

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

Avery faces a maximum of 10 years in prison. His sentencing is scheduled for Nov. 28, 2012, before Judge John Corbett O’Meara.

“A hate crime is different than a simple assault because it is an attack on not just one individual victim, but an attack on everyone who shares a particular characteristic,” said U.S. Attorney McQuade. "By passing this statute, Congress made it clear that an attack based on a victim's sexual orientation will not be tolerated in America.”

"The FBI is committed to protecting the community from those who are motivated by hate to victimize anyone as the result of their sexual orientation,” said Special Agent in Charge Foley.

This case was investigated by the Detroit Division of the FBI and was prosecuted by Assistant U.S. Attorney Pam Thompson and Trial Attorney Sanjay Patel of the Justice Department’s Civil Rights Division.

WASHINGTON – A Miami-based ship surveyor was sentenced today for lying to the Coast Guard and for falsely certifying that inspections had been performed on two ships, which were designed to ensure that the ships were seaworthy and did not pose a threat to the crew or the marine environment, announced Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division at the Department of Justice, Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, Rear Admiral William D. Baumgartner, 7th Coast Guard District Commander, and Jonathan Sall, U.S. Coast Guard Investigative Service Special Agent in Charge.  
 
Alejandro Gonzalez, 60, of Miami-Dade County, Fla., was sentenced in U.S. District Court for the Southern District of Florida to 21 months in prison.

On May 24, 2012, a federal jury found Gonzalez guilty of lying to a Coast Guard inspector and a federal agent about the drydocking of the M/V Cala Galdana, a 68-meter cargo vessel, in San Juan, Puerto Rico, in April 2009 and December 2009. 

Coast Guard inspectors in San Juan discovered the vessel taking on water in August of 2008 and requested the last drydocking of the vessel.  Gonzalez concocted a false story about the vessel being drydocked in Colombia in 2006 when he knew it was not.  Gonzalez repeatedly claimed the vessel had been  drydocked in Cartegena, Colombia, in March of 2006, while evidence at the trial proved conclusively that the vessel was never in Colombia during 2006.

Gonzalez was also convicted of falsifying documents for the M/V Cosette, a 92-meter cargo vessel.  As the surveyor on behalf of Bolivia, Gonzalez certified the ship as safe for sea while the vessel was docked in Fort Pierce, Fla., in November 2009.  When the vessel shortly thereafter arrived in New York City harbor, Coast Guard inspectors discovered exhaust and fuel pouring into the engine room, endangering the crew and the ship.  For his action, Gonzalez was convicted of making a false statement and obstructing a Coast Guard Port State Control examination.

“Mr. Gonzalez is being held accountable today for making false statements and certifications to Coast Guard inspectors whose job it is to ensure the safety of ships at sea,” said Assistant Attorney General Moreno.  “Ship surveyors serve a crucial public safety role, and when they abdicate their responsibility they put mariners in danger and our nation's waters at risk of contamination.  Mr. Gonzalez's prosecution should send a message that we will not tolerate this type of egregious behavior.”

“Surveyors are responsible for the safety of the ships they inspect.  When they fail to do their jobs properly, lives are put at risk,” said U.S. Attorney Ferrer.  “Today’s sentence should remind those few surveyors who need reminding of the great responsibility that they carry and the consequences of their actions.”

The prosecution was handled by Assistant U.S. Attorney Jaime Raich and Trial Attorney Kenneth Nelson, of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.

WASHINGTON – A Virginia man pleaded guilty today to conspiring to willfully reproduce and distribute tens of thousands of infringing copies of copyrighted works without permission, including infringing copies of movies before they were commercially released on DVD, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Special Agent in Charge John P. Torres of U.S. Immigration and Customs Enforcement Homeland Security Investigations (ICE-HSI) in Washington, D.C., announced today. 

Jeramiah B. Perkins, 39, of Portsmouth, Va., pleaded guilty to one count of conspiracy to commit criminal copyright infringement.  The plea was entered before U.S. Magistrate Judge Tommy E. Miller in the Eastern District of Virginia.  At sentencing, scheduled for Jan. 3, 2013, Perkins faces a maximum sentence of five years in prison, a fine of $250,000 and three years of supervised release.

Perkins was indicted on April 18, 2012, along with three other leading members of the IMAGiNE Group, an organized online piracy group seeking to become the premier group to first release Internet copies of new movies only showing in theaters. 

According to court documents, Perkins and his co-conspirators sought to illegally obtain and disseminate digital copies of copyrighted motion pictures showing in theaters.  Perkins admitted he took the lead in renting computer servers in France and elsewhere for use by the IMAGiNE Group.  He also admitted he registered domain names for use by the IMAGiNE Group, and opened e-mail and PayPal accounts to receive donations and payments from persons downloading or buying IMAGiNE Group releases of pirated copies of motion pictures and other copyrighted works.  Perkins directed and participated in using receivers and recording devices in movie theaters to secretly capture the audio sound tracks of copyrighted movies and then synchronized the audio files with illegally recorded video files to create completed movie files suitable for sharing over the Internet among members of the IMAGiNE Group and others.  Perkins also admitted the IMAGiNE Group’s conduct resulted in a readily provable and reasonably foreseeable infringement amount of more than $400,000.

Co-defendants Sean Lovelady, Willie Lambert and Gregory Cherwonik each pleaded guilty to one count of conspiracy to commit criminal copyright infringement on May 8, 2012, June 22, 2012, and July 10, 2012, respectively.

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

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

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

The Justice Department announced today that it and the National Federation of the Blind have reached a settlement with the Sacramento Public Library Authority in Sacramento, Calif., to remedy alleged violations of the Americans with Disabilities Act (ADA). The agreement resolves allegations that the library violated the ADA by using inaccessible Barnes & Noble NOOK electronic reader devices in a patron lending program.

 

Under the settlement agreement, the library will not acquire any additional e-readers for patron use that exclude persons who are blind or others with disabilities who need accessible features such as text-to-speech functions or the ability to access menus through audio or tactile options. The library has also agreed to acquire at least 18 e-readers that are accessible to persons with disabilities. The settlement agreement also requires the library to train its staff on the requirements of the ADA.

 

“Emerging technologies like e-readers are changing the way we interact with the world around us and we need to ensure that people with disabilities are not excluded from the programs where these devices are used,” said Assistant Attorney General Thomas E. Perez.

 

“We are pleased that the Sacramento Public Library Authority worked so cooperatively to adopt measures that will allow patrons with disabilities to avail themselves equally of the library’s programs and services,” said U.S. Attorney for the Eastern District of California, Benjamin B. Wagner.

 

The ADA protects individuals with disabilities from discrimination in the services, programs, or activities of state and local government entities. Under title II of the ADA, state and local governments must afford individuals with disabilities an equal opportunity to participate in or benefit from aids, benefits, or services provided. For more information about the ADA, call the Department’s toll-free ADA Information Line at 800-514-0301 (TDD 800-514-0383) or access the ADA website at www.ada.gov .

WASHINGTON – William J. Ferry, a former stock broker and investment advisor, and Dennis J. Clinton, a former real estate investment manager, were found guilty by a federal jury in Santa Ana, Calif., today for their roles in a conspiracy to defraud a wealthy investor of $1 billion in a high-yield investment fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.  The investor was, in reality, part of an undercover FBI team that posed as wealthy investors and investment managers in an effort to stop fraudsters before they actually harmed victims. 

“Mr. Ferry and Mr. Clinton tried to dupe undercover agents into believing their high-yield investment program would earn them extremely high rates of return,” said Assistant Attorney General Breuer.  “In fact, Ferry and Clinton were conspiring to steal their money, along with the money of trusting investors.  Undercover operations are an integral part of our efforts to stop financial fraudsters before they wipe out the life savings of innocent victims.  Based on today’s verdict, the defendants will now pay a heavy price for their conduct.”
  
Ferry, 70, of Newport Beach , Calif., and Clinton, 64, of San Diego, were each found guilty in U.S. District Court for the Central District of California of one count of conspiracy, two counts of mail fraud and six counts of wire fraud.  They face a maximum penalty of 20 years in prison on each fraud count.  They will be sentenced on Feb. 1, 2013.

Paul R. Martin, a former senior vice president and managing director of Bankers Trust, was found guilty in U.S. District Court for the Central District of California for his role in the scheme in a separate trial on Aug. 3, 2012.  Martin, 63, of New Jersey, was convicted of one count of conspiracy, two counts of mail fraud and six counts of wire fraud.  At sentencing, scheduled for Feb. 1, 2013, Martin faces a maximum penalty of 20 years in prison on each fraud count.

On Aug. 21, 2008, Ferry, Clinton and Martin were indicted along with Oregon resident John Brent Leiske, Canadian citizen and resident Alex Chelak, Iowa resident Richard Arthur Pundt, California resident Brad Keith Lee and Florida resident Ronald J. Nolte. 

Evidence at trial established that, from February to December 2006, Ferry, Clinton, Martin and others conspired to promote a high-yield investment fraud scheme promising an extremely high return at little or no risk to principal.  The defendants claimed that their high-yield investment program (HYIP) was a “Fed trade program” regulated by the “Fed” (Federal Reserve Bank), that they had to follow strict Fed guidelines, and that a Fed trade administrator administered their program, with compliance duties handled by a Fed compliance officer. 

Investors also were told that once they had passed compliance, they would become registered in Washington, D.C., with the Fed.  The defendants falsely represented to FBI undercover agents that they would arrange for them to meet a Federal Reserve official and/or the chairman of the board of a major U.S. bank to confirm the existence of the defendants’ HYIP.  The defendants falsely claimed that these Fed investment programs existed primarily to generate funds for project funding and humanitarian purposes, such as Hurricane Katrina relief.  They further falsely claimed that the promised profits from investing in a Fed program had to be divided, in equal amounts, with one portion going for some humanitarian purpose, another portion for some kind of project financing, and the remainder to the investor.  The defendants represented to the undercover agents that the agents’ offshore bank account would be managed by a Swiss banker who was already managing billions of dollars for the defendants.  In the scheme: Ferry acted as an underwriter and member of the compliance team; Martin acted as a banking expert; Clinton acted as a troubleshooter during the compliance phase and transfer of funds to the Swiss banker; Lee acted as the contact with the Swiss banker; and Leiske acted as the trader.  Chelak is charged with having acted as a compliance officer.

On April 13, 2009, Lee pleaded guilty to wire fraud and conspiracy to commit mail and wire fraud.  On Jan. 11, 2010, he was sentenced to 24 months in prison. 

Leiske’s case was transferred to the District of Oregon, where he pleaded guilty to all counts on Jan. 24, 2012.  He is scheduled to be sentenced on Sept. 19, 2012.

Nolte was acquitted today of all charges by a jury in the Central District of California.  In August 2010, charges against Pundt were dismissed by the government.

Chelak remains a fugitive. 
 
This continuing investigation is being conducted by the FBI.  This case is being prosecuted by Senior Trial Attorney David Bybee and Trial Attorney Fred Medick of the Justice Department Criminal Division’s Fraud Section.

WASHINGTON – A Las Vegas man pleaded guilty today to operating a foreclosure rescue scam that defrauded distressed homeowners who were struggling to pay their mortgages, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

Alex P. Soria, 65, pleaded guilty before U.S. District Judge Lloyd D. George in the District of Nevada to one count of wire fraud and one count of theft of government funds in connection with a scheme to defraud homeowners who were behind on their mortgages. 

According to court documents, Soria identified homeowners whose mortgage debt exceeded the value of their homes and charged them a fee purportedly to reduce the principal balance of their mortgages using money from the Department of the Treasury’s Troubled Asset Relief Program (TARP).  Soria admitted in court that he lied to homeowners about his affiliation with several mortgage lenders and that he provided victims with fraudulent letters stating they had been approved for loans.  Soria also admitted he falsely told victims that his loan program had been successful in the past and charged homeowners for loan modifications he knew he could not deliver.  Court documents show that Soria concealed from homeowners the fact that the state of Nevada had issued a cease and desist order which legally prohibited him from working in the mortgage industry.  Soria collected more than $100,000 in fees from distressed homeowners, many of whom lost their homes to foreclosure after Soria failed to deliver the loan modifications he promised.

As part of the same case, Soria also pleaded guilty to continuing to collect Social Security Disability Insurance benefits while at the same time receiving income from his foreclosure rescue operation.  The Social Security Disability Insurance program is a federal program that replaces the wages of individuals who become unable to work due to a disability.  Soria admitted to collecting more than $200,000 in disability benefits from 1990 to 2010 while at the same time receiving income that he concealed from the Social Security Administration.

This case is being prosecuted by Trial Attorneys Brian R. Young and Mary Ann McCarthy of the Justice Department Criminal Division’s Fraud Section.  The case was investigated by the Offices of Inspector General for the Department of Housing and Urban Development and the Social Security Administration.  The U.S. Attorney’s Office for the District of Nevada assisted with the investigation and prosecution of this case.

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

GFI Mortgage Bankers Inc., a large independent home mortgage firm that concentrates on the New York, New Jersey, and Florida markets, will pay $3.555 million to resolve a lending discrimination lawsuit filed by the Department of Justice and the U.S. Attorney’s Office for the Southern District of New York. The lawsuit alleges that GFI engaged in a pattern or practice of discrimination by pricing residential mortgage loans for qualified African-American and Hispanic borrowers higher than for similarly-qualified non-Hispanic white borrowers between 2005 and 2009.

 

The settlement provides $3.5 million in compensation to approximately 600 African-American and Hispanic GFI borrowers identified by the United States as paying more for a loan based on their race or national origin, and it requires GFI to pay the maximum $55,000 civil penalty allowed by the Fair Housing Act. The settlement also requires GFI to develop and implement new policies that limit the pricing discretion of its loan officers, require documentation of loan pricing decisions, and monitor loan prices for race and national origin disparities not justified by objective borrower credit characteristics or loan features.

 

As part of the settlement, GFI admits that an analysis of the note interest rates and fees that it charged on mortgage loans to qualified borrowers showed statistically significant disparities between non-Hispanic white borrowers and both African-American and Hispanic borrowers that could not be explained by objective borrower characteristics or loan product features. The company also admitted that it provided financial incentives to its loan officers to charge higher interest rates and fees to borrowers and that it did not have fair lending training and monitoring programs in place to prevent those interest rate and fee disparities from occurring. The settlement came after the United States had filed its opposition to GFI’s motion to dismiss the case and the court had stated it was “skeptical” of GFI’s argument that federal law allows lenders to price loans in a way that produces such disparate impacts on minority borrowers.

 

The settlement, which was entered by the court, was filed in federal court in Manhattan, where GFI is headquartered.

 

“The Justice Department will not hesitate to litigate against lenders to enforce federal fair lending laws where the evidence warrants and to obtain compensation for borrowers who were victims of unlawful lending practices,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This department is determined to address discriminatory lending practices and to ensure equal credit opportunity for all borrowers in the years to come. We also greatly appreciate our strong partnership with the U.S. Attorney’s Office for the Southern District of New York, which worked jointly with the department to prosecute this case.”

 

“With the settlement we announce today, the hundreds of victims of lending discrimination committed by GFI will be made whole, and the company has admitted the conduct that led to this lawsuit, and agreed to reform its residential lending practices,” said Preet Bharara, U.S. Attorney for the Southern District of New York. The swift resolution of this case demonstrates the commitment of this Office and of the entire Department of Justice to aggressively enforcing the laws against discriminatory lending, and to holding accountable those who engage in this illegal conduct .”

 

The Department of Housing and Urban Development (HUD) started the investigation into GFI’s lending practices by opening a Secretary-initiated investigation under the Fair Housing Act. HUD reviewed GFI’s documents and loan files, interviewed GFI’s employees, and analyzed GFI’s loan data. HUD referred the lender to DOJ in January 2010 for a potential pattern or practice of discrimination.     

 

“No prospective home buyer should be saddled with a higher cost mortgage because of their race or national origin,” stated HUD Assistant Secretary for Fair Housing and Equal Opportunity John Trasviña. “This type of practice has no place in the mortgage market. HUD and the Justice Department have made a vigorous commitment to ending unlawful lending discrimination.”

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

A copy of the complaint and proposed consent 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

The proposed settlement provides for an independent administrator to contact and distribute payments of compensation at no cost to borrowers whom the Justice Department identifies as victims of GFI’s discrimination.  Borrowers who are eligible for compensation from the settlement will be contacted by the administrator.  The department will make a public announcement and post contact information on its website once the administrator begins contacting victims.  Individuals who believe that they may have been victims of lending discrimination by GFI and have questions about the settlement may email the department at [email protected] or call 1-800-896-7743, extension 9992 or 212-637-0840, or write to the following address:

 

 

Chief, Civil Rights Unit

U.S. Attorney’s Office, S.D.N.Y.

86 Chambers Street, 3rd Floor

New York, NY 10007  

Related Materials:

Consent Order

WASHINGTON – Nagoka, Japan-based Nippon Seiki Co. Ltd. has agreed to plead guilty and to pay a $1 million criminal fine for its role in a conspiracy to fix prices of instrument panel clusters, commonly known as meters, installed in cars sold in the United States and elsewhere, the Department of Justice announced today.

 

According to a one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Nippon Seiki engaged in conspiracies to rig bids for, and to fix, stabilize and maintain the prices of instrument panel clusters sold to an automaker in the United States and elsewhere. According to the court document, Nippon Seiki’s involvement in the conspiracy lasted from at least as early as April 2008 until at least February 2010.

 

Nippon Seiki manufactures and sells a variety of automotive parts, including instrument panel clusters. Instrument panel clusters are the mounted array of instruments and gauges housed in front of the driver of an automobile. The department said that Nippon Seiki and its co-conspirators carried out the conspiracy by agreeing, during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of instrument panel clusters, sold to an automaker in the United States and elsewhere, on a model-by-model basis.

 

As part of the plea agreement, which will be subject to court approval, Nippon Seiki has agreed to cooperate with the department’s investigation.

 

“For nearly two years, Nippon Seiki conspired to sell instrument control panels at collusive and noncompetitive prices, affecting the prices of many automobiles sold in the United States,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program.  “The division will continue to hold companies accountable for these types of anticompetitive practices that harm American consumers.”

 

Including Nippon Seiki, eight companies and 11 executives have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Furukawa Electric Co. Ltd., DENSO Corp., Yazaki Corp., G.S. Electech Inc., Fujikura Ltd. and Autoliv Inc. pleaded guilty and were sentenced to pay a total of more than $785 million in criminal fines. In July 2012, TRW Deutschland Holding GmbH agreed to plead guilty and is awaiting sentencing. Additionally, seven of the individuals – Junichi Funo, Hirotsugu Nagata, Tetsuya Ukai, Tsuneaki Hanamura, Ryoki Kawai, Shigeru Ogawa and Hisamitsu Takada – have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each. Makoto Hattori and Norihiro Imai have pleaded guilty and await sentencing. Kazuhiko Kashimoto and Toshio Sudo have also agreed to plead guilty.

 

Nippon Seiki is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine for the company may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information concerning this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.htm , or call the FBI’s Detroit Field Office at 313-965-2323.

Jessie Alan Fuller, 25, of Pensacola, Fla., was sentenced today by U.S. District Judge W. Keith Watkins to 37 months in prison and two years supervised release, the Justice Department announced. Fuller pleaded guilty on April 26, 2012, to one count of conspiracy against rights, a felony, and one count of deprivation of rights under color of law, a misdemeanor. These charges stemmed from Fuller’s stealing money and property from motorists on Interstate 65 in central Alabama while he was a police officer with the Fort Deposit Police Department.

 

During his plea, Fuller admitted that he and another former Fort Deposit police officer agreed to pull over vehicles under the guise of legitimate law enforcement activity and to steal cash from drivers and passengers. Fuller further admitted that between May and June 2009, he and the other officer committed numerous thefts together, including thefts of $200 each from two separate victims and $120 from a third victim. In each of these incidents, Fuller and the other officer worked together, acting with each other’s knowledge and cooperation, and shared the stolen money. In each incident, the two officers used a marked patrol car, wore police clothing and carried a firearm. Fuller also admitted to stealing a GPS device from a driver whom he pulled over and arrested on March 14, 2009.

 

“This defendant abused his power as a law enforcement officer for his own financial gain. He violated not only the law, but also the public trust,” said Thomas E. Perez, Assistant Attorney General for Civil Rights Division. “The Department of Justice is committed to holding those who abuse their authority and prey on members of the community accountable for their illegal actions.”

 

“It is terrible to see those sworn to uphold the law, break the law and prey on the public,” stated George L. Beck, U.S. Attorney for the Middle District of Alabama.  “While it is always difficult to prosecute a member of our law enforcement community, my office is dedicated to protecting the community and seeking justice for all.”

 

On June 12, 2012, an eight-count indictment was unsealed charging Carlos Tyson Bennett, of Greenville, Ala., as the other officer. Bennett was charged with one count of conspiracy against rights, four counts of deprivation of rights under color of law, and three counts of obstruction of justice. An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty. Trial is scheduled to begin in Bennett’s case on Sept. 10, 2012.

This case is being investigated by the Alabama Bureau of Investigation; the Butler County, Ala., Sheriff’s Office; and the Lowndes County, Ala., Sheriff’s Office. The case is being prosecuted by Assistant U.S. Attorney Gray Borden for the Middle District of Alabama and Trial Attorney Chiraag Bains from the Justice Department’s Civil Rights Division.

A federal court in San Diego has permanently barred a tax lawyer and his law firm from providing tax advice and from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order against Scott A. Waage, of San Diego, was signed by Judge William Q. Hayes of the U.S. District Court for the Southern District of California. Waage agreed to the injunction without admitting the allegations against him.

The government complaint in the case alleged that Waage, a self-proclaimed “visionary tax attorney,” promoted tax fraud schemes that helped customers evade income taxes through a concept he called “Strategic Integrated Planning.” According to the complaint, one of Waage’s schemes involved creating and using sham consulting corporations (purportedly headquartered in customers’ homes) that did not perform consulting services. Customers funneled funds to the sham companies to pay for and improperly deduct the customers’ personal expenses, the complaint alleged.

Waage also unlawfully used employee-benefit plans to pay customers’ personal expenses and used pension plans to illegally increase and accelerate deductions and avoid income taxes on plan payouts (illegally structured and funded by life insurance contracts), according to the allegations in the complaint. Robert O. Jensen, a certified public accountant, allegedly prepared the customers’ tax returns claiming the bogus deductions generated by Waage’s schemes. Last March the court enjoined Jensen from preparing tax returns that understate income.

The government complaint alleges that the harm to the Treasury as a result of Waage’s schemes exceeded $10.8 million.

The injunction order requires Waage to give the government a list of all clients who used his tax planning or tax preparation services since 2001. Waage also must send his former clients notice of the injunction order.

Since 2001, the Justice Department’s Tax Division has obtained hundreds injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. More information about these cases is available on the Justice Department website .

Related Documents: United States v. Scott A. Waage, etc., Stipulated Order and Judgment of Permanent Injunction (PDF)

GFI Mortgage Bankers Inc., una compañía grandde e independiente de préstamos hipotecarios en los mercados de Nueva York, Nueva Jersey y Florida, pagará 3.555 millones de dólares para resolver una demanda por discriminación en préstamos presentada por el Departamento de Justicia [Department of Justice (DOJ)] y la Fiscalía Federal para el Distrito Sur de Nueva York. La demanda alega que GFI exhibió un patrón o práctica de discriminación al establecer un precio mayor a los préstamos hipotecarios residenciales de prestatarios calificados afroestadounidenses e hispanos a los precios dados a prestatarios blancos no hispanos similarmente calificados entre 2005 y 2009.

El acuerdo conciliatorio establece 3.5 millones de dólares de indemnización para alrededor de 600 prestatarios afroestadounidenses e hispanos de GFI que los Estados Unidos identificaron que pagaron más por un préstamo por su raza u origen nacional, y además exige que GFI pague la multa civil máxima de 55,000 dólares permitida por la Ley de Vivienda Justa. El acuerdo conciliatorio también exige que GFI desarrolle e implemente políticas nuevas que limiten la discreción tarifaria de sus agentes de préstamos, requiere que se documenten las decisiones de fijación de precios de préstamos y controla los precios de préstamos en busca de disparidades por raza y origen nacional no justificadas por características crediticias objetivas del prestatario.

Como parte del acuerdo conciliatorio, GFI admite que el análisis de las tasas de interés y las tarifas que le cobró a prestatarios calificados por préstamos hipotecarios demostró disparidades significativas estadísticamente entre prestatarios blancos no hispanos y prestatarios afroestadounidenses e hispanos que no se podían explicar por características objetivas del prestatario o del producto crediticio. La empresa también admitió que ofrecía incentivos financieros a sus agentes de préstamos para que cobraran tasas de interés y tarifas más elevadas a los prestatarios y que no había implementado programas de capacitación y monitoreo sobre préstamos justos para evitar que se produjeran esas disparidades en la tasa de interés y las tarifas. El acuerdo conciliatorio se produjo después de que los Estados Unidos presentaran su oposición a la petición de GFI de desestimar el caso y que el tribunal hubiera declarado que tomaba con “escepticismo” el argumento de GFI de que la ley federal permite que los prestamistas fijen precios para los préstamos de una manera que produce este tipo de impacto desigual en los prestatarios de minorías.

El acuerdo conciliatorio, emitido por el tribunal, fue presentado en el tribunal federal de Manhattan, donde GFI tiene su sede.

 “El Departamento de Justicia no dudará en litigar contra prestamistas para hacer valer las leyes federales de préstamos justos cuando la evidencia lo justifique y en obtener una indemnización para los prestatarios que fueron víctimas de prácticas ilícitas en la obtención de préstamos”, dijo Thomas E. Perez, Secretario Auxiliar de la División de Derechos Civiles.   “Este departamento está decidido a combatir las prácticas crediticias discriminatorias y garantizar la igualdad de oportunidades crediticias para todos los prestatarios en los años venideros.   También agradecemos profundamente nuestra sólida asociación con la Fiscalía Federal para el Distrito Sur de Nueva York, que trabajó conjuntamente con el departamento para enjuiciar este caso”.

“Con el acuerdo conciliatorio que anunciamos hoy, los cientos de víctimas de la discriminación crediticia cometida por GFI serán compensados a capacidad. Además, la compañía admitió la conducta que llevó a esta demanda y aceptó reformar sus prácticas de préstamos residenciales”, dijo Preet Bharara, Fiscal Federal para el Distrito Sur de Nueva York. La rápida resolución de este caso demuestra el compromiso de esta Oficina y todo el Departamento de Justicia de hacer valer enérgicamente las leyes contra los préstamos discriminatorios y de responsabilizar a los que exhiben esta conducta ilegal”.

El Departamento de Vivienda y Desarrollo Urbano [Department of Housing and Urban Development (HUD)] inició la investigación sobre las prácticas crediticias de GFI abriendo una investigación iniciada por el Secretario bajo la Ley de Vivienda Justa. HUD revisó documentos y archivos crediticios de GFI, entrevistó a empleados de GFI y analizó los datos de préstamos de GFI. HUD remitió al prestamista al DOJ en enero de 2010 por un patrón o práctica potencial de discriminación.     

“Ningún comprador potencial de vivienda debe tener que lidiar con una hipoteca de mayor costo por su raza u origen nacional”, declaró el Secretario Auxiliar de Vivienda Justa e Igualdad de Oportunidades de HUD John Trasviña. “Este tipo de práctica no tiene lugar en el mercado hipotecario. HUD y el Departamento de Justicia han hecho un fuerte compromiso para poner fin a la discriminación ilícita en los préstamos”.

El anuncio de hoy forma parte de iniciativas en curso de la Fuerza de Tarea de Coacción contra el Fraude Financiero del Presidente Barack Obama [Financial Fraud Enforcement Task Force (FFETF)], que fue creada en noviembre de 2009 para implementar una iniciativa agresiva, coordinada y proactiva para investigar y enjuiciar delitos financieros. Con más de 20 agencias federales, 94 fiscalías federales y asociados estatales y locales, es la coalición más amplia de la historia de agencias de las fuerzas del orden público, de investigación y regulatorias para combatir el fraude. Desde su formación, la fuerza de tarea ha hecho grandes avances para facilitar un incremento de la investigación y el enjuiciamiento de delitos financieros; mejorando la coordinación y cooperación entre autoridades federales, estatales y locales; abordando la discriminación en los mercados crediticios y financieros y brindando asistencia al público, las víctimas, instituciones financieras y otras organizaciones. En los últimos tres años fiscales, el Departamento de Justicia ha presentado más de 10,000 casos de fraude financiero contra casi 15,000 demandados, entre ellos más de 2,700 demandados por fraude hipotecario. Para obtener más información sobre la fuerza de tarea, visite www.stopfraud.gov.

Para obtener una copia de la demanda y del decreto por consentimiento propuesto, así como también información adicional sobre la labor del Departamento de Justicia para hacer valer las leyes de otorgamiento justo de préstamos, visite el portal del Departamento de Justicia en www.justice.gov/fairhousing.

El acuerdo conciliatorio propuesto establece a un administrador independiente para contactar y distribuir los pagos de indemnización sin costo para los prestatarios que el Departamento de Justicia identifica como víctimas de discriminación de GFI. Los prestatarios que son elegibles para recibir una indemnización del acuerdo conciliatorio serán contactados por el administrador. El departamento hará un anuncio público y publicará información de contacto en su portal una vez que el administrador comience a contactar a las víctimas. Las personas que crean haber sido víctimas de discriminación crediticia por parte de GFI y tengan preguntas sobre el acuerdo conciliatorio pueden enviar un correo electrónico al departamento a [email protected] o llamar al 1-800-896-7743, extensión 9992 o al 212-637-0840, o escribir a la siguiente dirección:

Chief, Civil Rights Unit
U.S. Attorney's Office, S.D.N.Y.
86 Chambers Street, 3rd Floor
New York, NY 10007

Material relacionado:

• Acuerdo conciliatorio (en inglés)

WASHINGTON – A Detroit-area resident pleaded guilty today in federal court in the Eastern District of Michigan for his role in managing a $13.8 million psychotherapy fraud scheme, announced the Department of Justice, the Department of Health and Human Services (HHS) and the FBI.

Jawad Ahmad, 42, pleaded guilty today before U.S. District Judge Gerald E. Rosen in Detroit to one count of conspiracy to commit health care fraud.  At his sentencing, scheduled for Nov. 28, 2012, Ahmad faces a maximum potential penalty of 10 years in prison and a $250,000 fine.

The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge of the FBI’s Detroit Field Office Robert D. Foley III; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG) Chicago Regional Office.

According to court documents, beginning in July 2008, two of Ahmad’s co-conspirators, Tausif Rahman and Muhammad Ahmad, acquired control over a home health care company known as Physicians Choice Home Health Care LLC (Physicians Choice).  From in or around January 2009 and continuing through in or around March 2010, Jawad Ahmad managed the operations of Physicians Choice.

Court documents indicate that Jawad Ahmad managed numerous aspects of the fraud at Physicians Choice, including delivering the payment of kickbacks to beneficiary recruiters who obtained Medicare beneficiaries’ information needed to bill Medicare for home health services, including physical therapy and skilled nursing, that were never rendered.  Jawad Ahmad also provided information to employees of Physicians Choice to check the billing eligibility of the Medicare beneficiaries before Physicians Choice began billing them.

In exchange for kickbacks, Medicare beneficiaries pre-signed forms and visit sheets that were later falsified to indicate they received home health services they had never received.  Jawad Ahmad delivered the pre-signed beneficiary paperwork to various medical professionals, including nurses, physical therapists and physical therapy assistants to create and/or sign fictitious patient files to document purported home health services that were never rendered.  From in or around January 2009 through in or around March 2010, Medicare paid more than $5 million for fraudulent home health care claims submitted by Physicians Choice.

According to court documents, from in or around May 2010 through in or around September 2011, Jawad Ahmad managed Phoenix Visiting Physicians PLLC, a company incorporated by co-conspirator Dr. Dwight Smith.  Dr. Smith signed home health care referrals for beneficiaries he had not seen or treated.  Phoenix employed individuals who held themselves out to be “doctors,” but who were not, in fact, licensed in the state of Michigan to perform any medical services.  The unlicensed “doctors” met and purported to examine non-homebound Medicare beneficiaries for home health care services.  Jawad Ahmad drove one unlicensed “doctor” to meet and purportedly examine beneficiaries who were not, in fact, homebound.

Between 2008 and 2009, Ahmad's co-conspirators acquired beneficial ownership and control over three additional home health care companies: First Care Home Health Care LLC, Quantum Home Care Inc., and Moonlite Home Care Inc.  Each of these home health companies billed Medicare and operated in a manner the same as or similar to Physicians Choice.  Each of these companies received fraudulent home health referrals from Dr. Smith through Phoenix Visiting Physicians.  From in or around May 2010 through in or around September 2011, Medicare paid more than $5 million for fraudulent home health care claims submitted by Physicians Choice, First Care, Quantum and Moonlite based on Dr. Smith’s fraudulent referrals.  The four home health companies at the center of the indictment received approximately $13.8 million from Medicare in the course of the conspiracy.

Eight other defendants have pleaded guilty in this case, including Tausif Rahman and Muhammad Ahmad, who each pleaded guilty to one count of conspiracy to commit health care fraud and one count of money laundering, as well as Dr. Dwight Smith who pleaded guilty to one count of conspiracy to commit health care fraud.

The case is being prosecuted by Trial Attorney Catherine K. Dick of the Criminal Division’s Fraud Section.  The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 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.

The Justice Department announced today that it will monitor elections on Aug. 28, 2012, in Lanett, Reform, and Phenix City, Ala., and Maricopa County, Ariz., 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 Lanett, Reform, Phenix City and Maricopa County based on the attorney general’s certification.  The observers will watch and record activities during voting hours at polling locations in these counties, and Civil Rights Division attorneys will coordinate the 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 for more information about the Voting Rights Act and other federal voting laws.

Russell Pike, 50, of Las Vegas, the former CEO of a Nevada sports energy drink company, Xyience Inc., was sentenced today by U.S. District Judge James C. Mahan to 52 months in prison for his April 2012 conviction for tax evasion, Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division and U.S. Attorney for the District of Nevada Daniel G. Bogden announced today.

 

On April 2, 2012, following a bench trial, Pike was convicted of one count of tax evasion for 2006 in which he evaded taxes due on over $7.9 million of income. According to evidence presented at trial, Pike founded Xyience Inc., which manufactured, marketed and sold sports energy drinks, most notably, Xenergy, which was sold in over 45,000 stores throughout the United States. Upon the inception of Xyience in 2004, Pike received at least 12 million shares of Xyience stock. During 2006, Pike sold over 4.4 million shares of his Xyience stock for approximately $7.9 million, which included a sale in November 2006 of over three million shares to an investor for $5 million. In early 2007, Pike requested that the investor change the date of the stock purchase agreement from 2006 to 2007, so that Pike could avoid paying taxes for 2006.

 

The evidence also established that during 2006, Pike expended millions of dollars to sustain his lavish lifestyle, drive luxury cars and bet millions of dollars at local sports books. Furthermore, Pike made payments on a 2005 Lexus SUV and 2005 Land Rover that were held in the name of a nominee. Also in 2006, Pike used a nominee to purchase a 2007 Mercedes Benz SL55 AMG for $151,614.

 

In addition to 52 months of prison, Judge Mahan sentenced Pike to three years of supervised release with a special condition that he pay $1,189,773 in restitution to the Internal Revenue Service (IRS).

 

U.S. Attorney Bogden and Assistant Attorney General Keneally commended the efforts of the special agents from IRS Criminal Investigation who investigated the case as well as Assistant United States Attorneys Nicholas D. Dickinson and Timothy Vasquez and Tax Division Trial Attorney Kimberly Shartar who prosecuted the case.

 

Additional information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax.

WASHINGTON – The United States has entered into a settlement agreement with Pacific Health Corporation (PHC) and related entities in which they agreed to pay the government and the state of California $16.5 million for allegedly engaging in an illegal kickback scheme in Los Angeles, the Justice Department announced today.  The civil settlement resolves a U.S. and state investigation of three PHC-affiliated hospitals for engaging in a scheme in which the hospitals paid recruiters to deliver homeless Medicare or Medi-Cal beneficiaries (homeless beneficiaries) by ambulance from the “Skid Row” area in Los Angeles to the hospitals for treatment that often was medically unnecessary. 

The hospitals, Los Angeles Metropolitan Medical Center (LA Metro); Newport Specialty Hospital, formerly known as Tustin Hospital and Medical Center; and Anaheim General Hospital, then allegedly billed Medicare and Medi-Cal for these services, violating rules that permit payment only for necessary treatment. The governments contended that these services were induced by illegal remuneration in violation of the Anti-Kickback statute (AKS), and the resulting billings to Medicare and Medi-Cal violated the False Claims Act.

Also as part of the resolution of this matter, a subsidiary of PHC, Los Angeles Doctors Hospital Inc., has agreed to plead guilty to a federal conspiracy charge arising out of the illegal kickback scheme. In addition, the three hospitals, a fourth related hospital (Bellflower Medical Center), and their related entities have entered into a corporate integrity agreement with the Inspector General for the U.S. Department of Health and Human Services intended to deter future misconduct.  PHC’s parent corporation, Health Investment Corporation, also is a party to the civil settlement and the corporate integrity agreement.

This settlement arises out of the same investigation which in 2010 resulted in consent judgments against Intercare Health Systems Inc., formerly doing business as City of Angels Medical Center, and its former owners Robert Bourseau and Rudra Sabaratnam, for a similar illegal kickback scheme in Los Angeles.  Several individuals have pleaded guilty in connection with the scheme, including Mr. Bourseau and Dr. Sabaratnam, who were sentenced to three years and one month, and two years in prison, respectively, for their part in the scheme.

Prohibitions against illegal kickbacks are important to insure that financial motives do not undermine the integrity of the medical judgment of physicians and other health care workers.

“The integrity of government health care programs is threatened when hospitals pay kickbacks to induce unnecessary or unwanted medical care,” said Stuart Delery, the Acting Assistant Attorney General in charge of the Justice Department’s Civil Division. “Kickbacks subvert medical decision making and cause government programs to pay much more for services than would otherwise be warranted.”

The investigation was handled by the U.S. Attorney's Office for the Central District of California, the Office of Inspector General of the U.S. Department of Health and Human Services, the FBI, the IRS-Criminal Investigation, the Justice Department’s Civil Division, the Attorney General's Office of the State of California, the California Department of Justice’s Bureau of Medi-Cal Fraud and Elder Abuse and the Health and Law Enforcement Team (HALT), a multi-agency task force operated by the Los Angeles County Health Department.

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $9.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $12.8 billion.

A Missouri woman pleaded guilty today for her role in a scheme to defraud consumers seeking immigration-related services, the Justice Department announced.

 

Elizabeth Lindsey Meredith, 24, pleaded guilty to conspiracy to commit mail fraud and wire fraud, six counts of mail fraud and seven counts of wire fraud in connection with Immigration Forms and Publications (IFP), a Sedalia, Mo., company that sold immigration forms generally available at no charge from the government. According to court documents, IFP sales representatives fraudulently told consumers that the company was affiliated with the government and that fees paid to IFP covered government processing charges. Meredith faces up to 20 years’ in prison, three years of supervised release and a fine of up to $250,000.

 

“Over a year ago, the Department of Justice announced its commitment to combatting immigration services scams, which often prey upon individuals who are in this country legally and trying to abide by the rules,” said Acting Associate Attorney General Tony West.  “Today’s guilty pleas represent an important step in our continued fight to protect vulnerable individuals against fraud.”

 

“Consumers trust that government services are what they claim.  We will not tolerate those who exploit that trust,” said Stuart Delery, Acting Assistant Attorney General of the Department of Justice’s Civil Division.

 

According to court documents, Meredith was a manager of IFP, which operated in 2009 and 2010. In pleading guilty, Meredith admitted that IFP representatives falsely told consumers that the company employed paralegals who would help customers correctly fill out immigration forms, that IFP handled excess call volume for U.S. Citizenship and Immigration Services (USCIS), that fees paid to IFP included government processing fees, and that forms purchased through IFP would be processed more quickly than if consumers dealt directly with USCIS.

 

“Law-abiding immigrants sought help to complete government forms, but instead this company cheated hundreds of victims out of more than $400,000 and provided little or no help at all,” said David M. Ketchmark, Acting U.S. Attorney for the Western District of Missouri. “This defendant managed the day-to-day operations of the Sedalia office; with her guilty plea today, all of the conspirators now will be held accountable for their fraud and deceit.”

 

U.S. Magistrate Judge Matt J. Whitworth presided over the change of plea hearing.

 

Thomas Joseph Strawbridge, 49, and Thomas Barret Laurence, 30, previously pleaded guilty for th eir conduct in the same scheme.

 

These cases are being prosecuted by Alan Phelps and Adrienne Fowler, Trial Attorneys for the Civil Division’s Consumer Protection Branch, and Tony Gonzalez, Assistant U.S. Attorney for the Western District of Missouri. The cases were investigated by the FBI, the U.S. Postal Inspection Service, the Missouri Secretary of State Corporate Division, the Missouri Secretary of State Securities Division and the Missouri Attorney General’s Office. The Justice Department has also been working with the Federal Trade Commission on immigration services fraud cases and thanks the FTC for its assistance in this matter.

 

For i nformation regarding immigration forms and information concerning the immigration process, go to the U.S. Citizenship and Immigration Services website: www.uscis.gov/avoidscams .

WASHINGTON – Eight individuals and a Miami-based corporation were convicted by a federal jury for their participation in a Medicare fraud scheme involving the submission of more than $50 million in fraudulent billings to Medicare, the Department of Justice, the FBI and the Department of Health and Human Services (HHS) announced today.

Antonio Macli, the owner of Biscayne Milieu Health Center Inc., a mental health care corporation, his son Jorge Macli, Biscayne Milieu’s CEO, and Antonio Macli’s daughter Sandra Huarte, an executive at the company, were each found guilty in U.S. District Court for the Southern District of Florida of one count of conspiracy to commit health care fraud, and one or more substantive counts of health care fraud, conspiracy to commit a health care kickback scheme and conspiracy to commit money laundering and substantive counts of money laundering.   Antonio Macli and Jorge Macli were also convicted of substantive kickback counts.  Dr. Gary Kushner, the medical director at Biscayne Milieu, was found guilty of conspiracy to commit health care fraud and a substantive count of health care fraud.  Rafael Alalu, a therapist, and Jacqueline Moran, who handled Medicare billing for Biscayne Milieu, were each found guilty of conspiracy to commit health care fraud and substantive  counts of health care fraud.  Anthony Roberts and Derek Alexander, two patient recruiters, were each found guilty of one count of conspiracy to commit a health care kickback scheme, and each was convicted of one health care kickback count.

The defendants were charged in a superseding indictment returned June 5, 2012.  Twenty other individuals who worked at Biscayne Milieu have all previously pleaded guilty.

Evidence at trial demonstrated that the defendants and their co-conspirators caused the submission of false and fraudulent claims to Medicare through Biscayne Milieu, a Florida corporation headquartered in Miami that purported to operate a partial hospitalization program (PHP) in that city.  Biscayne Milieu purported to provide PHP services, a form of intensive treatment for severe mental illness, for Medicare beneficiaries suffering from mental illnesses. In fact, however, the defendants devised a scheme in which they paid patient recruiters to refer ineligible Medicare beneficiaries to Biscayne Milieu for PHP services, which were never provided.  Many of the beneficiaries admitted to Biscayne Milieu were not eligible for PHP because they were chronic substance abusers, suffered from severe dementia or Alzheimer’s disease and would not benefit from group therapy, or had no mental health diagnosis at all.  Indeed, some beneficiaries were seeking fraudulent mental health treatment in order to be declared exempt from certain requirements for their applications for U.S. citizenship.

As part of a scheme orchestrated by Antonio Macli, Jorge Macli and Huarte, Biscayne Milieu used fraudulent documents created by Alalu and others and bogus certifications signed by psychiatrists, including Kushner, to bill Medicare for tens of millions of dollars in false and fictitious services.  Kushner did not treat patients but rather created and certified false documents to make it appear that ineligible patients were receiving legitimate PHP treatment.  In addition, the evidence at trial showed that Alexander and Roberts solicited and received illegal kickbacks in exchange for sending ineligible patients to Biscayne Milieu.

Throughout the course of the fraud conspiracy, beneficiaries who did not qualify for PHP services attended treatment programs that did not provide legitimate PHP services.  Biscayne Milieu billed tens of millions of dollars in services to patients who did not need the services and to whom the appropriate services were not provided.  According to the evidence, co-conspirators personally altered, and caused the alteration of, patient files and therapist notes for the purpose of making it appear, falsely, that patients being treated by Biscayne Milieu were qualified for PHP treatments and that the treatments provided were legitimate PHP treatments.  Evidence further revealed that Kushner signed patient files without providing meaningful treatment, and Biscayne Milieu then billed Medicare for millions of dollars in PHP treatment for these patients under his name as the attending physician.  Once Biscayne Milieu received reimbursement from Medicare for these fraudulent services, its owners and executives laundered the money through various accounts to launder the proceeds of their illegal scheme.

Kushner and Alalu were remanded into custody.  Antonio Macli, Jorge Macli, Huarte, Alexander and Roberts were already in custody. 

Today’s verdicts were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Acting Special Agent-in-Charge of the FBI Miami field office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.

The criminal case is being prosecuted by Assistant U.S. Attorneys Michael Davis, Marlene Rodriguez, and Alicia Shick of the Southern District of Florida, and Trial Attorney James V. Hayes of the Justice Department Criminal Division’s Fraud Section.  The investigation was led by the FBI with assistance from HHS-OIG, and was brought by the Medicare Fraud Strike Force, a joint effort of the U.S. Attorney’s Office for the Southern District of Florida and the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 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.

The U.S. District Court for the Eastern District of Virginia has approved a comprehensive settlement agreement between the United States and the Commonwealth of Virginia, resolving the department’s findings that Virginia’s system for serving people with intellectual and developmental disabilities violated the Americans with Disabilities Act (ADA).  The department had found that Virginia was violating the ADA requirement, as interpreted by the Supreme Court’s decision in Olmstead v. L.C., to provide people with intellectual and developmental disabilities the opportunity to live and receive services in the community. 

 

As the court noted in its order approving the settlement agreement, it “addresses pressing needs” and “dramatically changes the way Virginia provides services to” individuals with developmental disabilities.  The settlement agreement will provide relief to more than 5,000 people by expanding community services and supports, including Medicaid-funded home and community-based waivers, crisis services, housing and employment supports and by establishing a comprehensive quality management system.  The court further found that the agreement “is completely consonant with the principles set forth in the ADA, as interpreted . . . in Olmstead.” 

 

The agreement is court-enforceable, and an independent reviewer with decades of experience will monitor the commonwealth’s compliance with the agreement, meet with the parties and stakeholders, and issue regular reports.

 

The Justice Department and Virginia submitted the agreement for the court’s approval on Jan. 26, 2012.  On March 6, 2012, the court provisionally approved the agreement and solicited public comment on it.  After considering hundreds of submittals from a wide range of stakeholders and conducting a day-long hearing on June 8, 2012, the court determined that the agreement  was “fair, reasonable, and adequate” with limited modifications.  The department and the commonwealth then submitted modifications, and on August 23, 2012, the court formally approved the agreement as modified and entered it as a court order.

 

“We are pleased that the court, after hearing from thousands of very engaged stakeholders and examining the extensive record, gave final approval to the settlement agreement,” said Thomas E. Perez, Assistant Attorney General for Civil Rights.  “We commend the commonwealth of Virginia, and particularly the leadership of Governor McDonnell and Secretary Hazel, on the commitment they are already demonstrating to fully implementing the agreement. We also appreciate the deep interest and involvement of stakeholders, including those who have long fought for these changes as well as those who raised concerns.” 

 

“We are committed to ensuring that the agreement is implemented fairly on behalf of all Virginians with intellectual and developmental disabilities.” said U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.

 

The Civil Rights Division enforces the ADA, which authorizes the Attorney General to investigate whether a state is serving individuals in the most integrated settings appropriate to their needs. Please visit www.ada.gov/olmstead to find the settlement agreement and fact sheet about the agreement, and to learn more about the division’s ADA Olmstead enforcement efforts, and www.justice.gov/crt to learn more about the other laws enforced by the Justice Department’s Civil Rights Division.

A jury convicted Arvind Ahuja yesterday on federal tax charges stemming from his failure to disclose offshore bank accounts maintained in India and the Bailiwick of Jersey, the Justice Department and Internal Revenue Service (IRS) announced. Trial began on Aug. 15, 2012 before U.S. District Judge Charles N. Clevert, Jr., in Milwaukee. Ahuja, a prominent neurosurgeon in Milwaukee, was convicted of one count of filing a false 2009 individual income tax return and one count of failing to file a Report of Foreign Bank and Financial Accounts (FBAR).

 

According to the evidence presented at trial, Ahuja transferred millions of dollars from bank accounts in the United States to undeclared bank accounts located in India at HSBC bank. Ahuja invested the funds in these accounts in certificates of deposit, which earned more than $2.7 million in interest income during the years 2005 through 2009. Ahuja also maintained an HSBC bank account in the Bailiwick of Jersey, a British Crown dependency located in the Channel Islands off the coast of Normandy, France. Ahuja used credit and debit cards linked to this account to pay personal expenses while on trips to London. Ahuja managed his offshore accounts with the assistance of bankers who worked at an HSBC India representative office in New York.

 

The evidence established that for tax year 2009, Ahuja filed a false tax return with the IRS that failed to report the interest income earned on his certificates of deposit at HSBC India, and failed to report he had signature authority over bank accounts located in India and Jersey. Ahuja also failed to file an FBAR for 2009 to report his offshore accounts to the IRS. Ahuja?s accountant testified that Ahuja never disclosed the existence of his offshore accounts during the preparation of his tax returns.

 

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

 

Sentencing is scheduled for Jan. 18, 2013.

 

?This prosecution reflects the continuing commitment of the United States Department of Justice, including my office and the Tax Division, to identify, investigate and prosecute individuals who fail to abide by well-established obligations to report and pay on their tax indebtedness,? said James L. Santelle, U.S. Attorney for the Eastern District for Wisconsin.  ?In combination with the Internal Revenue Service, we are committed to enforcing the tax laws fairly and even-handedly, and the jury?s verdict in this case appropriately reflects the understanding of all law-abiding citizens that underreporting income and failing to report foreign bank accounts will not be tolerated.?

 

?This case is a warning to individuals who still think they can use offshore bank accounts to commit tax crimes,? said John A. DiCicco, Principal Deputy Assistant Attorney General for the Justice Department?s Tax Division. ?Citizens who honestly report their income and pay their taxes can take comfort that the Department of Justice is committed to the prosecution of tax cheats who use these offshore accounts.?

 

Principal Deputy Assistant Attorney General DiCicco thanked special agents of IRS - Criminal Investigation, who provided valuable assistance in conducting the investigation, and Senior Litigation Counsel John E. Sullivan, Trial Attorney Melissa S. Siskind, and Assistant U.S. Attorney Tracy M. Johnson, who prosecuted the case.

 

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

Two Missouri men pleaded guilty today for their roles in a scheme to defraud consumers seeking immigration-related services, the Department of Justice announced.

 

Thomas Joseph Strawbridge, 49, and Thomas Barret Laurence, 30, pleaded guilty to conspiracy to commit mail fraud and wire fraud in connection with Immigration Forms and Publications (IFP), a Sedalia, Mo., a company that sold immigration forms otherwise available at no charge from the government. According to court documents, IFP sales representatives fraudulently told consumers that the company was affiliated with the government and that fees paid to IFP covered government processing charges. Strawbridge and Laurence each face up to 20 years in prison, three years’ supervised release and a fine of up to $250,000.

 

“Over a year ago, the Department of Justice announced its commitment to combatting immigration services scams, which often prey upon individuals who are in this country legally and trying to abide by the rules,” said Acting Associate Attorney General Tony West.  “Today’s guilty pleas represent an important step in our continued fight to protect vulnerable individuals against fraud.”

 

“Those who seek to defraud immigrants should heed the message of this case: you cannot take advantage of someone’s unfamiliarity with the immigration process, engage in fraud, and expect to get away with it,” said Stuart Delery, Acting Assistant Attorney General of the Justice Department’s Civil Division.

 

According to court documents, Strawbridge founded and owned IFP, while Laurence managed the business, which operated in 2009 and 2010. In pleading guilty, Strawbridge and Laurence admitted that IFP representatives falsely told consumers that the company employed paralegals who would help customers correctly fill out immigration forms, that IFP handled excess call volume for U.S. Citizenship and Immigration Services (USCIS), that fees paid to IFP included government processing fees, and that forms purchased through IFP would be processed more quickly than if consumers dealt directly with USCIS.

 

“This company preyed on legal immigrants who were doing their best to follow the law,” said David M. Ketchmark, Acting U.S. Attorney for the Western District of Missouri. “These defendants operated a busy call center where so-called agents lied to hundreds of customers about the firm’s affiliation with the government. Their victims paid more than $400,000 in total to purchase government forms that anyone can obtain for free.”

 

U.S. District Judge Nannette K. Laughrey presided over the change of plea hearing.

 

Elizabeth Lindsey Meredith, 24, was also charged in the scheme.

 

These cases are being prosecuted by Alan Phelps and Adrienne Fowler, Trial Attorneys for the Civil Division’s Consumer Protection Branch, and Tony Gonzales, Assistant U.S. States Attorney for the Western District of Missouri. They were investigated by the FBI, the U.S. Postal Inspection Service, the Missouri Secretary of State Corporate Division, the Missouri Secretary of State Securities Division and the Missouri Attorney General’s Office. The Justice Department has also been working with the Federal Trade Commission on immigration services fraud cases and thanks the FTC for its assistance in this matter.

 

For information regarding immigration forms and information concerning the immigration process, go to the U.S. Citizenship and Immigration Services website: www.uscis.gov/avoidscams .

WASHINGTON – Under the terms of a consent decree lodged in federal court today, the Boston Water and Sewer Commission (BWSC) will implement extensive remedial measures to minimize the discharge of sewage and other pollutants into the water bodies in and around Boston, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today.  The BWSC will also pay a civil penalty of $235,000 for violations of the Clean Water Act and will perform a supplemental environmental project worth at least $160,000.

The work required under this consent decree will significantly reduce remaining pollution sources discharging into and degrading water quality in Boston Harbor.  The consent decree is the result of a federal enforcement action brought by the Department of Justice on behalf of the EPA, and by the Conservation Law Foundation (CLF), which filed the original complaint in the case and was an active plaintiff in the case.

“This settlement will require BWSC to take specific steps to significantly reduce discharges from its storm drain and sanitary sewer systems that have contributed pollutants to Boston Harbor and its tributaries,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice.  “This settlement will produce lasting benefits for the people of Boston, incorporating green infrastructure, low impact development and other controls that will help reduce harmful discharges and protect the environment.” 

 “Together with our co-plaintiff CLF, we were able to progress from litigation to a settlement that is both comprehensive in its scope and stringent in its requirements and deadlines,” said Carmen Ortiz, U.S. Attorney for the District of Massachusetts.  “I am pleased that the BWSC is prepared to be proactive by taking a broad range of actions to minimize the pollutants in its stormwater discharges to Boston’s rivers, streams and harbor.” 
 
“This settlement represents a critical next-step in the ongoing cleanup of Boston Harbor and its associated urban rivers,” said Curt Spalding, regional administrator of EPA’s New England region. “Over the past decades there’s been a remarkable transformation as Boston Harbor and local waterways have been cleaned up, thanks to work by government at all levels and environmental advocates. Under this settlement, the City of Boston will use green infrastructure and low-impact techniques to control pollutants being discharged in its stormwater to local beaches, rivers and streams, benefiting all residents of Boston who enjoy outdoor recreation in the Hub.”

Water sampling conducted by EPA indicated untreated sanitary sewage discharging from numerous BWSC stormwater outfalls.  In response, the consent decree establishes an aggressive schedule for BWSC to investigate the sources of sewage being discharged from BWSC’s storm drains.  The BWSC will first complete its investigations of drainage areas discharging to Constitution, Tenean and Malibu beaches.  BWSC will prioritize the rest of the investigations according to the sensitivity of receiving waters and evidence of sewage.  The agreement also requires BWSC to remove all identified sources of sewage as expeditiously as possible.  In addition, the settlement requires BWSC to conduct frequent and enhanced monitoring (in both dry and wet weather) of its stormwater outfalls.

The consent decree also requires BWSC to control pollutants other than sewage, such as phosphorus and metals, being discharged from its storm drain system.  To accomplish this goal, BWSC will conduct stormwater modeling and implement appropriate Best Management Practices (BMPs) to control stormwater discharges.  In evaluating BMPs, the consent decree requires BWSC to implement Green Infrastructure and Low Impact Development (GI/LID) techniques wherever possible.  These types of techniques involve the use of natural or engineered systems to direct stormwater to areas where it can be stored, infiltrated, evapotranspirated or reused. 

While some of the studies and planning required by the settlement will take several years to complete, the agreement also requires BWSC to initiate GI/LID demonstration projects in East Boston’s Central Square, Audubon Circle in the Kenmore/Fenway area of the city, and at City Hall Plaza on an expedited schedule.

Finally, the settlement requires the establishment of construction and industrial inspection programs necessary to meet the requirements of BWSC’s Municipal Separate Storm Sewer System (MS4) permit.

To settle the case, BWSC has also committed to implement a supplemental environmental project to address leakage from private sewer laterals.   BWSC has determined that a number of sewer lines connecting buildings to the BWSC sewage system (laterals) are leaking sewage from cracks in the laterals into the BWSC’s storm drains.  BWSC will line a minimum of 25 private sewer laterals that have been identified as sources of sewage to its storm drains.

The complaints filed by CLF and the United States alleged violations of the Clean Water Act involving the discharge of raw sewage and other pollutants to surface waters near heavily used recreation areas, such as Constitution Beach and Tenean Beach in Boston Harbor, as well as to the Charles, Mystic and Neponset Rivers.  According to the allegations, these discharges have occurred through both illegal sewer connections to the BWSC storm drain system and sanitary sewer overflows that discharge to the BWSC storm drain system or directly to local surface waters.

The complaints also alleged that BWSC violated conditions of its MS4 permit regarding the implementation of its Illicit Discharge Detection and Elimination Program, discharged pollutants in stormwater that violated water quality standards, and failed to develop and implement a number of programs required by the permit, including a program to inspect stormwater controls at construction sites throughout the city of Boston.

The consent decree, lodged in the U.S. District Court for the District of Massachusetts, is subject to a 30-day public comment period and approval by the federal court.  Once it is published in the Federal Register, a copy of the consent decree will be available on the Justice Department website at www.usdoj.gov/enrd/Consent_Decrees.html.

WASHINGTON – The Justice and Interior Departments this week launched a new training seminar for tribal and federal law enforcement on investigating and prosecuting sexual assault cases on tribal lands. More than 75 participants from throughout the United States participated in the three day training course, which began on Monday, August 20, 2012.  They included tribal and federal law enforcement officers, prosecutors and victim specialists from 23 tribal nations and 23 states.  Topics included law enforcement response, children as victims and witnesses, forensic examinations with adult victims and developing a coordinated community response to sexual assault.

The course, held at the National Advocacy Center in Columbia, S.C., was taught by the Justice Department’s National Indian Country Training Coordinator and other nationally recognized subject matter experts including Joanne Archambault; FBI Forensic Interviewer Stephanie Knapp; Jennifer Peirce-Week, Past President of the International Association of Forensic Nurses; and Dr. Barbara Knox, Medical Director of the University of Wisconsin Child Protection Program at the American Family Children’s Hospital.

“It will take committed federal and tribal partnerships and a coordinated response to address the high rates of sexual violence in Indian Country today,” said Leslie A. Hagen, National Indian Country Training Coordinator for the Justice Department’s Executive Office for U.S. Attorneys.  “This new training series will help build capacity for tribal and federal law enforcement first responders as well as the tribal and federal prosecutors who can help achieve justice for victims of sexual crimes, and who must also take into careful consideration the needs of victims in native communities.”

“The training program we are launching jointly with the Department of Justice to address the high rates of sexual assault on tribal lands builds on our efforts to reduce violent crime in Indian Country,” said Darren Cruzan, Deputy Director of the Bureau of Indian Affairs Office of Justice Services.  “I want to thank our federal and tribal partners for working with us to develop this comprehensive training program.  It is an important part of OJS’s mission to improve public safety in tribal communities, and underscores our commitment to achieving justice for violent crime victims.”
 
For more information on the national Indian Country training program, contact Leslie A. Hagen at [email protected].

The Justice Department today concurrently filed a complaint and consent decree against the Burke County, N.C., Department of Social Services, alleging that the county did not have an effective harassment and discrimination policy in place and did not provide sufficient training in race harassment and discrimination for its employees and supervisors, in violation of Title VII of the Civil Rights Act of 1964, as amended.  Title VII is a federal statute which prohibits employment discrimination on the basis of sex, race, color, national origin or religion.

                                   

The consent decree, filed in the U.S. District Court in the Western District of North Carolina, requires Burke County to modify its policy designed to prevent harassment and discrimination in the workplace and provide annual training to Burke County supervisors and employees about discrimination and harassment.  The lawsuit was filed with the assistance of the U.S. Attorneys’ office for the Western District of North Carolina.

                                                                       

“Federal law requires employers to maintain a workplace free of racial harassment,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “I commend Burke County for working with the Justice Department to put effective policies and training in place to prevent workplace discrimination and harassment.”

 

The complaint alleges that while investigating a claim of racial discrimination involving the use of a racial epithet by a Burke County supervisor in the presence of subordinates, the division learned that Burke County supervisors and employees had received no training on race harassment and discrimination, and as such, the supervisor claimed to be unaware of potential consequences for use of a racial epithet that was offensive to her employees.

 

“Racial harassment and discrimination should not be tolerated anywhere, particularly in the workplace, said Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina.  “The U.S. Attorney’s office is committed to protecting employees from working in hostile work environments, and will continue to enforce Title VII.”

 

The filing of this lawsuit and consent decree reflects the department’s ongoing commitment to actively enforce federal employment discrimination laws.  Additional information about the Justice Department’s Civil Rights Division is available on its website at www.justice.gov/crt .

Related Materials:

Complaint
Consent Decree

The Justice Department announced today that it has entered into an agreement with the state of North Carolina to ensure the state is in compliance with the Americans with Disabilities Act (ADA) and the Rehabilitation Act. The agreement will transform the state’s system for serving people with mental illness. Under the settlement agreement, over the next eight years, North Carolina’s system will expand community-based services and supported housing that promote inclusion and independence and enable people with mental illness to participate fully in community life.

 

Under the ADA, as interpreted by the Supreme Court’s landmark decision in Olmstead v. L.C., people with disabilities have the right to receive services in the most integrated settings appropriate to their needs.  The settlement follows an investigation by the Department of North Carolina’s mental health service system that began in 2010. Since the department’s letter of findings was issued one year ago, in July 2011, the state has worked cooperatively with the department to negotiate an agreement..

 

“As the Supreme Court noted over a decade ago, the unnecessary segregation of people with disabilities is based on the unsupported assumption that they are unworthy of participating in community life,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “This agreement will enable North Carolinians with mental illness to live in community-based settings, enriching their lives and the lives of their neighbors, and recognizing their worth and dignity. I commend Governor Bev Perdue and North Carolina’s Department of Health and Human Services Secretary Al Delia for their leadership, which played a crucial role in making this comprehensive agreement a reality.”

 

Over the next eight years, North Carolina will provide integrated supported housing to 3,000 people, expand Assertive Community Treatment teams to serve 5,000 individuals, and provide a range of crisis services. The agreement will also expand integrated employment opportunities for people with mental illness by providing supported employment services to 2,500 individuals. These services will allow the state to serve people with mental illness effectively in their communities while avoiding costly institutional settings.

 

“North Carolina has taken an important step towards offering a choice to individuals with mental illness who prefer to live in the community,” said Thomas G. Walker, U.S. Attorney for the Eastern District of North Carolina. “The agreement, made possible by the coordinated and cooperative efforts of the state’s executive and legislative branches of government, will ensure that more North Carolinians with mental illness will be able to enjoy integrated lives in their communities.”

 

The agreement calls for a person-centered discharge planning process to help people move smoothly and successfully to community-based settings, while a pre-admission screening process will prevent people from unnecessarily entering institutional settings. Provisions of the agreement will ensure that people discharged from adult care homes designated as Institutions for mental disease are discharged in a safe, coordinated manner.

 

North Carolina will implement a comprehensive and robust quality assurance and performance improvement monitoring system to ensure that people are safe and are receiving integrated housing, services and supports that meet their needs. Compliance with the agreement will be monitored by an independent reviewer with extensive experience in mental health systems.

 

The Civil Rights Division enforces the ADA, which authorizes the attorney general to investigate whether a state is serving individuals in the most integrated settings appropriate to their needs. Visit www.justice.gov/crt to learn more about the Olmstead decision, the ADA and other laws enforced by the Justice Department’s Civil Rights Division.

 

This agreement is due to the efforts of the following Civil Rights Division staff: Alison Barkoff, Special Counsel for Olmstead Enforcement; Gregory Friel, Acting Chief; Anne Raish, Deputy Chief; Regan Rush, Joy Levin Welan, Travis England, and Regina Kline, Trial Attorneys; with support and assistance from Lance Simon.

Related Materials:

Settlement Agreement

The United States has joined a whistleblower lawsuit against The Gallup Organization, the Justice Department announced today. The lawsuit was filed by Michael Lindley, a former Gallup employee, who alleges that Gallup violated the False Claims Act by making false claims for payment under contracts with the U.S. Mint, the State Department and other federal agencies to provide polling services for various government programs.

 

According to the whistleblower’s complaint, Gallup violated the False Claims Act by giving the government inflated estimates of the number of hours that it would take to perform its services, even though it had separate and lower internal estimates of the number of hours that would be required. The complaint further alleges that the government paid Gallup based on the inflated estimates, rather than Gallup’s lower internal estimates. The government intervened in the lawsuit with respect to Gallup’s contracts with the Mint and the State Department.

 

“Contractors must understand that it is unlawful to use inflated estimates to obtain higher contract prices,” said Stuart F. Delery, Acting Assistant Attorney General for the Department’s Civil Division. “The decision to join this civil lawsuit underscores the commitment of the Department of Justice to recover federal funds that are unlawfully claimed.”

 

The lawsuit was filed under the qui tam, or whistleblower, provisions of the False Claims Act, wh ich permit private parties to sue on behalf of the United States for 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 allows for recovery of three times the government’s losses, plus civil penalties.

“Contractors who do business with the federal government must honor their obligations to provide honest services and products,” said U.S. Attorney Ronald C. Machen Jr. “Working with relators and federal investigators, we will do all that we can to act against those who illegitimately bill the American taxpayers.”

In its notice announcing intervention, the United States also indicated that it plans to assert additional claims related to Gallup’s subcontract with the Federal Emergency Management Agency (FEMA).  These claims relate to allegations in the whistleblower lawsuit that Gallup negotiated for employment with a FEMA official who was responsible for Gallup’s subcontract while, at the same time, Gallup was seeking to obtain additional funding from FEMA for Gallup’s subcontract. 

The lawsuit, which was filed in the District of Columbia, is captioned U.S. ex rel. Lindley v. The Gallup Organization, 09-cv-01985. The claims made in the complaint are only allegati ons and do not constitute a determination of liability.

WASHINGTON – Two former senior executives of Austin, Texas-based ArthroCare Corp., a publicly traded medical device company, were arrested this morning in Morristown, N.J. and Orange County, Calif., for their alleged roles in a scheme to defraud the company’s shareholders and members of the investing public by falsely inflating ArthroCare’s earnings by tens of millions of dollars, announced Assistant Attorney General Lanny A. Breuer of the Department of Justice’s Criminal Division and U.S. Attorney Robert Pitman for the Western District of Texas. The department said that the loss to the company’s shareholders and the investing public was more than $400 million.

A 16-count indictment was unsealed today in the U.S. District Court for the Western District of Texas against John Raffle, the former senior vice president of strategic business units of ArthroCare and David Applegate, the former senior vice president in charge of ArthroCare’s spine division.  Raffle was arrested in Morristown and Applegate was arrested in Orange County.

The indictment, which was originally returned on Aug. 21, 2012, charges Raffle and Applegate with one count of conspiracy to commit wire, mail and securities fraud; four counts of wire fraud; eight counts of mail fraud; and three counts of securities fraud.  The indictment also seeks forfeiture of assets held by Raffle and Applegate.

“The indictment unsealed today alleges that these senior corporate executives participated in a scheme to artificially inflate their company’s stock prices, cheating shareholders and the investing public out of hundreds of millions of dollars,” said Assistant Attorney General Breuer.  “The Criminal Division will continue to vigorously pursue those who defraud American investors.”

According to the indictment, between in or about December 2005 through in or about December 2008, Raffle, Applegate and other senior executives and employees of ArthroCare allegedly inflated falsely ArthroCare’s sales and revenue through a series of end-of-quarter transactions involving several of ArthroCare’s distributors.  According to court documents, Raffle and Applegate determined the type and amount of product to be shipped to distributors based on ArthroCare’s need to meet Wall Street analyst forecasts, rather than distributors’ actual orders.  Raffle, Applegate and others then allegedly caused ArthroCare to “park” millions of dollars worth of ArthroCare’s medical devices at its distributors at the end of each relevant quarter.  ArthroCare would then report these shipments as sales in its quarterly and annual filings at the time of the shipment, enabling the company to meet or exceed internal and external earnings forecasts. 

According to the indictment, ArthroCare’s distributors agreed to accept shipment of millions of dollars of product in exchange for substantial, upfront cash commissions, extended payment terms and the ability to return product, as well as other special conditions, allowing ArthroCare to inflate falsely its revenue by tens of millions of dollars.  ArthroCare did not disclose the conditions of the purported sales to investors.

The indictment further alleges that Raffle, Applegate and others used DiscoCare, a privately owned Delaware corporation, as one of the distributors to cover shortfalls in ArthroCare’s revenue.  According to the indictment, ArthroCare shipped product to DiscoCare that far exceeded DiscoCare’s needs at Raffle and Applegate’s direction. 

According to court documents, between the fourth quarter of 2005 and the fourth quarter of 2007, ArthroCare reported more than $37 million in revenue in its publicly filed financial statements based on purported sales to DiscoCare.  However, during the same time period, DiscoCare’s actual net cash payments to ArthroCare for the products were less than $50,000.  Court documents further allege that, to conceal the fact that DiscoCare owed ArthroCare a substantial amount of money on unused inventory, Raffle and Applegate caused ArthroCare to acquire DiscoCare on Dec. 31, 2007. 

According to the indictment, in the third quarter of 2007, Raffle and Applegate began a new program at ArthroCare, called “Son of DRS.”  Under the Son of DRS program, ArthroCare allegedly shipped medical devices from its sports division to its customers free of charge and recorded the revenue once DiscoCare had been invoiced for the product.  According to court documents, DiscoCare never was required to pay ArthroCare for any of the product DiscoCare purportedly purchased under the Son of DRS program because ArthroCare acquired DiscoCare before any payments came due. The indictment alleges that, between August and November 2007, Raffle and Applegate caused ArthroCare to falsely report more than $7 million in revenue in its publicly filed financial statements based on purported sales to DiscoCare under this program.

According to court documents, between December 2005 and December 2008, ArthroCare’s shareholders held more than 25 million shares of ArthroCare stock.  On July 21, 2008, after ArthroCare announced publicly that it would be restating its previously reported financial results from the third quarter 2006 through the first quarter 2008 to reflect the results of an internal investigation, the price of ArthroCare shares dropped from $40.03 to $23.21 per share.  The drop in ArthroCare’s share price caused an immediate loss in shareholder value of more than $400 million.

Upon conviction, Raffle and Applegate face a maximum prison sentence of five years for the conspiracy charge and 20 years for each count of mail and wire fraud.  Raffle and Applegate also face a maximum sentence of 25 years in prison for each securities fraud count.

An indictment is merely a charge, and the defendants are presumed innocent until proven guilty.

The case is being prosecuted by Assistant Chief Benjamin D. Singer and Trial Attorney Henry P. Van Dyck of the Criminal Division’s Fraud Section.  This case was investigated by the FBI’s Austin Field Office.

The Justice Department announced today that it reached an agreement with MicroLink Devices, a manufacturer of semiconductor structures and advanced solar cells based in Niles, Ill.  The agreement resolves allegations that the company violated the anti-discrimination provision of the Immigration and Nationality Act (INA), when it placed six online job postings that explicitly stated citizenship status preferences or requirements that excluded certain work-authorized non-citizens from consideration. 

 

Under the INA, employers may not discriminate on the basis of citizenship status unless required to comply with law, regulation, executive order or government contract.   Although MicroLink Devices is a party to several federal contracts subject to the International Traffic in Arms Regulations (ITAR), which control the export and import of sensitive technology, ITAR does not require or permit employers to limit job applicants to or prefer U.S. citizens in the hiring process.  The job postings therefore impermissibly discriminated against non-citizen workers eligible for the advertised positions, such as lawful permanent residents, refugees and those given asylum in the United States.

 

Under the settlement agreement, MicroLink Devices will pay $12,000 in civil penalties to the United States.  MicroLink Devices further agreed to revise its hiring and recruiting procedures, conform future job postings to the requirements of the law, and to be subject to training, reporting and compliance and monitoring requirements.   The case settled prior to the Justice Department filing a complaint in this matter.

 

“Employers must give all eligible candidates the equal opportunity to compete for employment,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “The department is committed to ensuring employers do not discriminate against protected individuals based on citizenship status.”

 

The Office of Special Counsel (OSC) for Immigration-Related Unfair Employment Practices is responsible for enforcing the anti-discrimination provision of the INA, which protects work-authorized individuals from employment discrimination on the basis of citizenship status or national origin discrimination, including discrimination in hiring and the employment eligibility verification (Form I-9) process. 

 

For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 or the OSC’s employer hotline at 1-800-255-8155.  TDD for hearing impaired is 800-237-2515.  You may also sign up for a no-cost webinar at www.justice.gov/crt/osc/webinars.php , email [email protected] or visit the website at www.justice.gov/crt/about/osc .

WASHINGTON – A Detroit-area social worker pleaded guilty for his role in a $3.1 million Medicare fraud scheme, the Justice Department, FBI and Department of Health and Human Services (HHS) announced today. 

Gregory Lawrence, 54, of Detroit, pleaded guilty yesterday before U.S. District Court Judge Victoria A. Roberts in the Eastern District of Michigan to one count of conspiracy to commit health care fraud.

On July 30, 2012, Lawrence’s co-conspirators Felicia Marsh, 54, and Jamie Moreau, 34, both of Detroit, each pleaded guilty before Judge Roberts in the Eastern District of Michigan to one count of conspiracy to commit health care fraud for their roles in the scheme.

According to plea documents, Lawrence, Marsh and Moreau were employees at New Century Adult Day Program Services LLC, a purported psychotherapy clinic in Flint, Mich.  From November 2009 to April 2012, New Century used Medicare beneficiary information to bill Medicare for more than $3.1 million in psychotherapy services that were not medically necessary and/or not provided.  Court documents reveal that New Century lured Medicare beneficiaries – many of whom were mentally or developmentally disabled – from adult foster care homes and off the street with the promise of seeing a doctor who would prescribe them prescription pain medication.  When they arrived at New Century, beneficiaries were told that they must sign up for its psychotherapy program in order to see the doctor.  New Century would use the signatures provided by these beneficiaries as a basis to bill Medicare for group and individual psychotherapy purportedly rendered to them.  In fact, no psychotherapy was provided.

Court documents show that Lawrence, Marsh and Moreau played key roles in this scheme.  Lawrence was a licensed social worker, who helped direct New Century’s operations and created documents that gave the impression that he had provided psychotherapy, when, in fact, he had not.  Lawrence’s provider identification number (PIN) was used by New Century to bill Medicare for group and individual psychotherapy services for approximately $1,247,059, of which Medicare paid approximately $395,060.

Plea documents show that, like Lawrence, Marsh used her training as a social worker to create documents for herself and others to give the impression that New Century had rendered psychotherapy that was not provided.  New Century submitted approximately $488,331 in claims using Marsh’s PIN, and Medicare paid New Century approximately $153,333 on these claims.

Court documents show that Moreau collected signatures of Medicare beneficiaries that would be used by New Century to defraud Medicare.  Moreau also prepared billing paperwork based upon these signatures.  Moreau knew that these signatures were being used at New Century to bill Medicare for psychotherapy services that were not provided.  From October 2011 through April 2012, Moreau was responsible for $615,751 of the amount New Century billed Medicare.  Medicare paid New Century approximately $192,001 on these claims.
 
At sentencing, Lawrence, Marsh and Moreau each face a maximum of 10 years in prison and a $250,000 fine.  Lawrence’s sentencing hearing is scheduled for Jan. 29, 2013.  The sentencing hearings for Marsh and Moreau are scheduled for Jan. 8, 2013.

Lawrence’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Special Agent in Charge of the FBI’s Detroit Field Office Robert D. Foley III, and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General (HHS-OIG), Chicago Regional Office. 

The case was prosecuted by Trial Attorney William G. Kanellis of the Justice Department Criminal Division Fraud Section and Fraud Section Assistant Chief Gejaa T. Gobena.  The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
 
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 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 – Sterling Suffolk Racecourse LLC will pay a civil penalty of $1.25 million to resolve violations of the Clean Water Act (CWA) at its Suffolk Downs racetrack facility in Revere and East Boston, Mass., the U.S. Department of Justice and U.S. Environmental Protection Agency (EPA) announced today.  The company is also spending more than $3 million to prevent polluted water from entering nearby waterways and will perform three environmental projects worth approximately $742,000 that will provide water quality monitoring and protection efforts for more than 123 square miles of watershed.  The terms of the settlement are contained in a consent decree lodged in federal court in Boston today.

The federal complaint alleges that Suffolk allowed polluted wastewater, including horse manure, urine and bedding material, to discharge into Sales Creek, a tributary of Belle Isle Inlet and Boston Harbor. In addition, the federal complaint alleges that Suffolk operated its concentrated animal feeding operation (CAFO), which stables race horses from March through November, without a permit under the CWA.

“Today’s agreement will prevent further discharges of wastewater from Suffolk Downs into local waterways and will bring the racetrack into compliance with the Clean Water Act, which protects America’s streams, wetlands and rivers from the impacts of Concentrated Animal Feeding Operations,” said Ignacia S. Moreno, Assistant Attorney General of the Environment and Natural Resources Division of the Department of Justice.  “The settlement also brings lasting benefits to residents and the environment by requiring water quality monitoring in the Mystic and Saugus river watersheds and a salt marsh habitat protection project near the racetrack.”

“This settlement reduces a major source of pollution into Boston Harbor,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance.  “In addition, the settlement’s environmental projects include monitoring water quality in the harbor’s watershed, helping to protect a valuable urban waterway for the use and enjoyment of Boston area residents and visitors.”

In response to EPA’s enforcement at this facility, Suffolk is completing construction of a wastewater collection system, is making improvements to its stormwater collection system and has applied for a National Pollutant Discharge Elimination System (NPDES) permit.  Suffolk will minimize the volume of and properly manage the wastewater it produces, which will now be collected in a detention pond and discharged during non-peak hours to the sanitary sewer system.  Suffolk will also implement green infrastructure and low impact development techniques to address stormwater discharges from the racetrack and maintenance areas of the facility.  These techniques involve the use of natural or engineered systems to direct stormwater to areas where it can be stored, infiltrated, evapotranspirated or reused.

“This case is yet another reminder of the department’s longstanding commitment to defending the integrity of our precious natural resources through vigorous enforcement of our environmental laws,” said U.S. Attorney for the District of Massachusetts Carmen Ortiz.  “Today’s settlement will help safeguard a cleaner environment for the citizens of the commonwealth to preserve and enjoy, and protect sensitive waterways and wetlands from harmful pollution.”
 
EPA inspections revealed that Suffolk Down’s process wastewater discharged from the facility to Sales Creek during dry and wet weather.  EPA inspectors observed stormwater contaminated with manure and turbid, brown runoff being discharged from the facility to Sales Creek.  Sampling conducted at various outfalls discharging from the Suffolk Downs facility   indicated elevated levels of pollutants, including ammonia, suspended solids and bacteria. Animal wastes contain excessive levels of nutrients and pathogens, which produce adverse environmental impacts including reduction of oxygen in the water, which affects aquatic life.

Suffolk will undertake three supplemental environmental projects under this settlement, including two water quality monitoring projects and one habitat protection project.  Suffolk will work with the Mystic River Watershed Association (MyRWA) to conduct monthly baseline and targeted water quality sampling throughout the Mystic River watershed and will work with the Saugus River Watershed Council (SRWC) to conduct a Saugus River watershed sampling program.  Both the Mystic River watershed and Saugus River watershed data will be available to the public for free on the MyRWA and SRWC websites.  Suffolk will also construct a habitat protection boardwalk in the Belle Isle Marsh, which is immediately downstream of the Suffolk Downs facility and represents one of the largest remaining areas of salt marsh in Boston Harbor.  The Belle Isle Marsh encompasses 275 acres of salt marsh, salt meadow and tidal flats, and is part of the Rumney Marsh Area of Critical Environmental Concern (ACEC). 

Preventing animal waste from contaminating surface and ground waters of the United States is one of EPA’s National Enforcement Initiatives for 2011-2013.  The initiative focuses on large and medium sized CAFOs that are discharging pollution without or in violation of a permit.

The consent decree, lodged in the U.S. District Court for the District of Massachusetts, is subject to a 30-day public comment period and approval by the federal court.  Once notice is published in the Federal Register, a copy of the consent decree will be available on the Justice Department website at www.usdoj.gov/enrd/Consent_Decrees.html.

More information about the case is available at www.epa.gov/compliance/resources/cases/civil/cwa/sterlingsuffolk.html.

WASHINGTON – The owner of multiple durable medical equipment (DME) companies that operated in Louisiana was sentenced today to serve 180 months in prison for his role in multiple Medicare fraud schemes 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.
  
Henry Lamont Jones, 37, of Prairieville, La., was sentenced by U.S. District Judge James J. Brady of the Middle District of Louisiana.  In addition to his prison term, Jones was sentenced to serve three years of supervised release and ordered to pay $13,397,759 in restitution, jointly and severally with convicted co-defendants.

Jones, along with his ex-wife, Chikenna D. Jones, at various times operated McKenzie Healthcare Solutions Inc., and owned and operated Healthcare 1 LLC, Lifeline Healthcare Services Inc., Medical 1 Patient Services Inc. and Rose Medical Equipment Inc., Louisiana-based companies that fraudulently billed medical equipment to the Medicare program from 2004 to 2010.  Jones had also worked as a patient recruiter for Unique Health Solution Inc.  For his involvement with Unique, Jones, along with co-defendants Nnanta “Felix” Ngari, Sofjan M. Lamid and Ernest Payne, was convicted of conspiracy to commit health care fraud and conspiracy to defraud the United States and to pay or receive health care kickbacks after a jury trial in August 2011. Henry Jones and Chikenna Jones were convicted of conspiracy to commit health care fraud and conspiracy to defraud the United States and to pay or receive health care kickbacks after a jury trial in November 2011 for their role in the operation of McKenzie Healthcare Solutions Inc., and Jones pleaded guilty to Medicare fraud charges against him relating to the remaining companies in advance of a trial scheduled for February 2012.

In operating the various DME companies, Jones fraudulently billed the Medicare program for medical equipment that either was not medically necessary or not provided.  Jones hired patient recruiters to obtain Medicare beneficiary information and prescriptions for medical equipment such as leg braces, arm braces, power wheel chairs and wheel chair accessories.  These prescriptions were then used to submit fraudulent claims to the Medicare program. 

According to court documents, during the period when Jones was operating Healthcare 1, Lifeline Healthcare Services, Medical 1 Patient Services, Rose Medical Equipment and McKenzie Healthcare Solutions, these companies submitted more than $22.5 million in fraudulent claims to the Medicare program.  During the period of time when Jones was a patient recruiter for Unique Medical Solution, the company submitted more than $4.5 million in fraudulent claims to the Medicare program. 
 
Today’s sentences were 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 the 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 Unique/Ngari matter was prosecuted by Assistant Chief Ben Curtis and Trial Attorney David Maria of the Justice Department Criminal Division’s Fraud Section.  The McKenzie matter was prosecuted by Assistant Chief Ben Curtis and Trial Attorneys David Maria and Alex Berlin.  And the Jones matter was prosecuted by Assistant Chief Ben Curtis and Trial Attorneys David Maria and Abigail Taylor.  The cases were investigated by the FBI, HHS-OIG and the Medicaid Fraud Control Unit of the Louisiana State Attorney General’s Office (MFCU), and were 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, 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.

Iraqi citizen Mohanad Shareef Hammadi pleaded guilty to federal terrorism charges today in U.S. District Court for the Western District of Kentucky before Senior Judge Thomas B. Russell, announced Lisa Monaco, Assistant Attorney General for National Security; David J. Hale, U.S. Attorney for the Western District of Kentucky; and Perrye K. Turner, Special Agent in Charge of the FBI Louisville Division.

 

Hammadi, 24, a former resident of Iraq, pleaded guilty to all counts of a 12-count superseding indictment. The superseding indictment charged him with five counts of attempting to provide material support to terrorists and four counts of attempting to provide material support to al-Qaeda in Iraq (AQI), a designated foreign terrorist organization. The superseding indictment also charged him with one count of conspiracy to transfer, possess and export Stinger missiles and with two counts of making false statements in immigration matters. Hammadi was first indicted on May 26, 2011 and was subsequently charged in a superseding indictment returned on Feb. 15, 2012 by a federal grand jury meeting in Bowling Green, Ky.

 

Hammadi faces a maximum sentence of life in prison under the sentencing guidelines and a mandatory minimum of 25 years in prison. Hammadi’s sentencing is scheduled for Dec. 5, 2012, in U.S. District Court in Bowling Green before Senior Judge Russell at 11:30 am.

 

Hammadi’s co-defendant, Waad Ramadan Alwan, pleaded guilty to all counts of the 23-count indictment on Dec. 16, 2011, before Senior Judge Russell in Bowling Green. Alwan was charged with conspiracy to kill U.S. nationals abroad; conspiracy to use a weapon of mass destruction (explosives) against U.S. nationals abroad; distributing information on the manufacture and use of Improvised Explosive Devices (IEDs); attempting to provide material support to terrorists and to AQI; as well as conspiracy to transfer, possess and export Stinger missiles.

 

Hammadi and Alwan were both arrested on May 25, 2011, in Bowling Green on criminal complaints. Both defendants were closely monitored by federal law enforcement authorities in the months leading up to their arrests. Neither was charged with plotting attacks within the United States.

 

“Today’s guilty plea is another testament to the effectiveness of the intelligence and law enforcement communities in bringing terrorists to justice and preventing them from harming the American people,” said Lisa Monaco, Assistant Attorney General for National Security. “I applaud all those responsible for this successful outcome.”

 

“In open court today, Mohanad Hammadi admitted to engaging in terrorist activities here in the United States. He admitted that he tried to send numerous weapons from Kentucky to Iraq to be used against American soldiers,” said U.S. Attorney Hale. “Bringing Hammadi to justice is the result of a comprehensive law enforcement effort. The FBI agents of the Louisville Division, along with the federal and local law enforcement members of the Joint Terrorism Task Forces here in Kentucky, including the Bowling Green Police Department, and our many other partners, are to be commended. Their collaborative law enforcement effort successfully thwarted the ongoing intentions of an experienced terrorist. The guilty plea today sends a strong message to anyone who would attempt similar crimes that they will face the same determined law enforcement and prosecution efforts.”

“Protecting the United States from terrorist attacks remains the FBI's top priority,” said Perrye K. Turner, Special Agent in Charge of the FBI in Kentucky. “Using our growing suite of investigative and intelligence capabilities, FBI Agents and Analysts assigned to our Bowling Green office were able to neutralize a potential threat. Our local Joint Terrorism Task Force, comprised of FBI Agents and other local, state and federal agencies from across the Commonwealth, remains committed to dismantling extremist networks and cutting off financing and other forms of support provided by terrorist sympathizers, whether they are operating in Kentucky or worldwide.”

 

According to the charging documents, Hammadi entered the United States in July 2009, and after first residing in Las Vegas, moved to Bowling Green. Alwan entered the United States in April 2009, and has lived in Bowling Green since his arrival.

 

According to court documents in this case, the Bowling Green office of the FBI’s Louisville Division initiated an investigation of Waad Ramadan Alwan, which, beginning in 2010, utilized a confidential human source (CHS). The CHS met with Alwan and recorded their meetings and conversations beginning in August 2010. The CHS represented to Alwan that he was working with a group to ship money and weapons to Mujahadeen in Iraq. Mujahadeen generally refers to Muslim fighters or warriors engaged in jihad. From September 2010 to January 2011, Alwan participated in deliveries of weapons and money that he believed were destined for terrorists in Iraq.

In January 2011, Alwan recruited Hammadi, a fellow Iraqi national living in Bowling Green, to assist in these material support operations. Beginning in January 2011, and continuing until his arrest in late May 2011, Hammadi participated with Alwan in money and weapons deliveries that he believed were destined for terrorists in Iraq, including AQI. Hammadi also detailed to the CHS his prior activities as an insurgent in Iraq, including his prior participation in IED attacks against U.S. troops in Iraq. After his arrest on May 25, 2011, Hammadi admitted to his participation in the purported material support operations involving weapons and money that occurred between January and May, 2011. Hammadi also admitted his involvement in insurgent activities while living in Iraq, including his membership in an insurgent group and his participation in various attacks on U.S. troops in Iraq.

 

None of the weapons, including Stinger missiles, nor any of the money delivered by Alwan or Hammadi in connection with the CHS in the United States were provided to AQI, but instead were carefully controlled by law enforcement as part of the undercover operation.

 

This case is being investigated by the Louisville Division of the FBI. Assisting in the investigation were members of the Louisville and Lexington Joint Terrorism Task Forces, U.S. Immigration and Customs Enforcement, U.S. Marshals Service, U.S. Department of Defense, U.S. Citizenship and Immigration Services and the Bowling Green Police Department.

 

The prosecution is being handled by Trial Attorney Larry Schneider from the Counterterrorism Section of the Justice Department’s National Security Division, and Assistant U.S. Attorneys Michael Bennett and Bryan Calhoun from the U.S. Attorney’s Office for the Western District of Kentucky.

WASHINGTON – The owner of a Miami-area assisted living facility was sentenced today to serve 30 months in prison for his role in a kickback scheme that funneled patients to a fraudulent mental health provider, American Therapeutic Corporation (ATC), the Department of Justice, the FBI and the Department of Health and Human Services announced today.

Bobby Ramnarine, 36, was sentenced by U.S. District Judge Donald M. Middlebrooks in the Southern District of Florida.  In addition to his prison term, Ramnarine was sentenced to serve two years of supervised release and was ordered to pay $165,881 in restitution, jointly and severally with co-defendants.  Ramnarine pleaded guilty on May 22, 2012, to one count of conspiracy to commit health care fraud. 

Ramnarine was the owner of an assisted living facility called Elmina Inc., located in Lauderhill, Fla.  According to court documents, Ramnarine agreed to send Elmina residents to ATC in exchange for illegal health care kickbacks.  ATC purported to operate partial hospitalization programs (PHPs), a form of intensive treatment for severe mental illness, in seven different locations throughout South Florida and Orlando, Fla.  According to court documents, Ramnarine admitted that he knew ATC falsely billed Medicare for PHP treatment based on his fraudulent referrals.  Ramnarine also admitted he referred his residents to ATC because he would receive a cash kickback and because his residents had Medicare and were willing to go to ATC.  According to the plea agreement, Ramnarine’s participation in the fraud resulted in more than $445,025 in fraudulent billing to the Medicare program.

ATC, its management company, Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011.  ATC, Medlink and more than 20 of the individual defendants charged in these cases have pleaded guilty or have been convicted at trial.

The sentencing was announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Michael B. Steinbach, Acting Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.

The case was prosecuted by Trial Attorneys Allan J. Medina, Steven Kim and William Parente of the Justice Department Criminal Division’s Fraud Section.  The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
 
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 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.

WASHINGTON – Seizure orders have been executed against three website domain names engaged in the illegal distribution of copies of copyrighted Android cell phone apps, Assistant Attorney General Lanny A. Breuer of the Department of Justice’s Criminal Division, U.S. Attorney Sally Quillian Yates of the Northern District of Georgia and Special Agent in Charge Brian D. Lamkin of the FBI’s Atlanta Field Office announced today.  The department said that this is the first time website domains involving cell phone app marketplaces have been seized.
 
The seizures are the result of a comprehensive enforcement action taken to prevent the infringement of copyrighted mobile device apps.  The operation was coordinated with international law enforcement, including Dutch and French law enforcement officials.

The three seized domain names – applanet.net, appbucket.net and snappzmarket.com – are in the custody of the federal government.  Visitors to the sites will now find a seizure banner that notifies them that the domain name has been seized by federal authorities and educates them that willful copyright infringement is a federal crime.

“Cracking down on piracy of copyrighted works – including popular apps – is a top priority of the Criminal Division,” said Assistant Attorney General Breuer.  “Software apps have become an increasingly essential part of our nation’s economy and creative culture, and the Criminal Division is committed to working with our law enforcement partners to protect the creators of these apps and other forms of intellectual property from those who seek to steal it.”

“Criminal copyright laws apply to apps for cell phones and tablets, just as they do to other software, music and writings.  These laws protect and encourage the hard work and ingenuity of software developers entering this growing and important part of our economy.  We will continue to seize and shut down websites that market pirated apps, and to pursue those responsible for criminal charges if appropriate,” said U.S. Attorney Yates.
 
“The theft of intellectual property, particularly within the cyber arena, is a growing problem and one that cannot be ignored by the U.S government’s law enforcement community.  These thefts cost companies millions of dollars and can even inhibit the development and implementation of new ideas and applications.  The FBI, in working with its various corporate and government partners, is not only committed to combating such thefts but is well poised to coordinate with the many jurisdictions that are impacted by such activities,” said FBI Special Agent in Charge Lamkin.
 
During the operation, FBI agents downloaded thousands of copies of popular copyrighted mobile device apps from the alternative online markets suspected of distributing copies of apps without permission from the software developers who would otherwise sell copies of the apps on legitimate online markets for a fee.  In most cases, the servers storing the apps sold by these alternative online markets were being hosted in other countries, and our international law enforcement partners assisted in obtaining or seizing evidence stored on these servers.  Nine search warrants were also executed in six different districts across the country today as part of the operation.

The operation reflects a coordinated effort by the Department of Justice Criminal Division’s Computer Crime and Intellectual Property Section and the Office of International Affairs; the U.S. Attorney’s Office for the Northern District of Georgia; the FBI’s Atlanta Field Office; and six other U.S. Attorney’s Offices, including the Southern District of Mississippi, the Middle District of Florida, the Western District of Michigan, the Southern District of Indiana, the District of Rhode Island and the Northern District of Texas.
 
The FBI is a full partner at the National Intellectual Property Rights Coordination Center (IPR Center).  The IPR Center is one of the U.S. government’s key weapons in the fight against criminal counterfeiting and piracy.  The IPR Center uses the expertise of its 19 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to intellectual property (IP) theft.  Through this strategic interagency partnership, the IPR Center protects the public’s health and safety, the U.S. economy and the war fighters.  To report IP theft or to learn more about the IPR Center, visit www.IPRCenter.gov.
 
The enforcement actions announced today are one of many efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force).  Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work.  The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to www.justice.gov/dag/iptaskforce/.

The U.S. District Court for the Western District of Tennessee today approved a comprehensive consent order in McFerren v. County Board of Education of Fayette County, which the Department of Justice negotiated with the Board of Education of Fayette County, Tennessee and the NAACP Legal Defense & Education Fund to desegregate the Fayette County public schools.  

 

The consent order requires the district to implement a controlled choice program by the start of the 2014-15 school year for three of its six elementary schools so that all three schools achieve desegregated enrollments.  To further desegregation at the other elementary schools, the district must close two of its elementary schools, construct a new elementary school, revise attendance zone lines and create a magnet program at the elementary school with the highest percentage of African-American enrollment.  If the magnet program fails to produce a desegregated school after three years, the consent order requires the district to take additional steps.  The district further agreed to provide gifted services at each elementary school, offer additional advanced courses at the high school, and continue certain intra-district student transfers that further desegregation among its schools. 

 

“We are pleased that the parties were willing to work so hard to reach such a substantial and important agreement in this case,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “The order shows the type of meaningful progress parties can achieve toward ensuring equal educational opportunities for all students if they are willing to be both steadfast and creative, and we look forward to working with the district over the next few years to implement the order and bring this case to a close.”

 

The enforcement of Title IV of the Civil Rights Act of 1964 in school districts is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt .

Sonya Darrington pleaded guilty in the Middle District of Alabama to conspiracy to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today.

 

According to court documents related to the guilty plea, Darrington had been involved in a stolen identity federal tax refund fraud scheme from April 2006 through June 2011. In April 2006, Darrington opened a bank account that received a total of $129,144 in fraudulently obtained tax refunds.

 

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

 

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

WASHINGTON – The Department of Justice and the U.S. Environmental Protection Agency today announced a settlement with two subsidiaries of Sinclair Oil Corporation to resolve alleged violations of air pollution limits established in a 2008 consent decree at refineries in Casper and Sinclair, Wyo.  Sinclair Casper Refining Co. and Sinclair Wyoming Refining Co. will pay stipulated penalties totaling $3,844,000 and spend approximately $10.5 million on additional pollution control equipment and other projects to resolve the allegations.  The settlement will require the Sinclair companies to reduce emissions of nitrogen oxides (NOx), sulfur dioxide (SO2) and particulate matter by approximately 24, 385 and 59 tons per year, respectively.

“Parties who enter into consent decrees with the United States must adhere to their obligations, and failure to comply will result in further penalties,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice.  “This settlement requires Sinclair to pay a significant $3,844,000 penalty and provide additional emission reductions beyond those required in the original settlement.”

 “EPA is committed to ensuring that companies comply with environmental requirements that protect people's health,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance.  “This settlement holds Sinclair accountable for exceeding the emissions limits agreed to in a previous settlement for Clean Air Act violations and ensures that the people of Wyoming have cleaner, healthier air.”

The alleged violations stem from Sinclair’s failure to meet the terms of the 2008 consent decree, including exceeding NOx emissions limits at the Casper and Sinclair refineries and failing to comply with requirements to install ,operate and maintain a flare gas recovery system at the Sinclair refinery, resulting in excess emissions of SO2.  The problems will be addressed by installing and operating a selective catalytic reduction system to control NOx emissions and by upgrading the flare gas recovery system to meet SO2 emissions limits.  Sinclair will also complete a project to provide road paving at its Casper refinery that will reduce particulate matter emissions by an additional 59 tons per year and reduce fuel oil burning at the Casper refinery from the existing 188 tons per year limit to no more than 95 tons per year.

The settlement is subject to a 30-day public comment period and final court approval. The settlement documents may be viewed at www.justice.gov/enrd/Consent_Decrees.html.

Additional information on the settlement is available at www.epa.gov/compliance/resources/cases/civil/caa/sinclair.html.

More information on EPA’s civil enforcement of the Clean Air Act is available at www.epa.gov/compliance/civil/caa/index.html.

More information on EPA’s refinery initiative is available at www.epa.gov/compliance/resources/cases/civil/caa/oil/.

WASHINGTON – A federal jury today found House of Raeford Farms Inc., the owner and operator of a poultry slaughtering and processing facility located in Raeford, North Carolina, guilty of 10 counts of knowing violations of the Clean Water Act.

House of Raeford allowed plant employees to bypass the facility’s pretreatment system and send its untreated wastewater directly to the city of Raeford’s wastewater treatment plant, without notifying city officials.  In addition, House of Raeford failed to prevent employees from sending thousands of gallons of wastewater into a pretreatment system that did not have the capacity to adequately treat the wastewater before it was discharged to the city plant.  The untreated wastewater that was discharged directly to the city plant was contaminated with waste from processing operations, including blood, grease and body parts from slaughtered turkeys.  A House of Raeford former employee admitted that the facility would continue to “kill turkeys” despite being warned that the unauthorized bypasses had an adverse impact on the city’s wastewater treatment plant.  The city plant was responsible for treating industrial, commercial and residential wastewater before it was discharged to Rockfish Creek in Hoke County. 

The bypasses and failure to report them violated House of Raeford’s pretreatment permit as well as the city’s sewer use ordinance.  Many of the bypasses took place while House of Raeford was subject to a consent order with the city that required it to construct a new pretreatment system and comply with all requirements of its pretreatment permit.  A number of the bypasses were recorded in log books kept by House of Raeford Inc. wastewater operators, and were never revealed to the city.

“The convictions today demonstrate the Justice Department’s commitment to prosecuting those who knowingly violate pretreatment permits and the Clean Water Act by releasing untreated and contaminated wastewater to municipal wastewater treatment plants,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice.  “The violations here are especially egregious and will not be tolerated.  The evidence showed that House of Raeford allowed overflows of untreated wastewater to bypass a critical part of their pretreatment system.  Many of these bypasses were not disclosed to the city of Raeford, and placed an additional burden on the city’s wastewater treatment plant.”

“Publicly owned wastewater treatment plants must be protected from companies that cut corners by discharging wastewater illegally,” said Maureen O’Mara, Special Agent in Charge of of EPA Region 4, which covers the southeast United States including North Carolina.  “The defendants in this case deliberately discharged turkey parts, blood and grease into the wastewater plant for over 16 months, bypassing treatment.  Today’s conviction sends the message that the American public will not tolerate companies putting profit ahead of compliance.”

“Families and businesses depend on having clean water.  Our SBI agents will continue to work closely with their federal partners to protect the safety of our water supply and hold polluters accountable,” said North Carolina Attorney General Roy Cooper.
 
House of Raeford Inc. faces a maximum fine of $500,000 or twice the gain or loss resulting from the offenses, whichever is greater, per count.  Sentencing has been scheduled for Nov. 28, 2012.

The case was prosecuted by the Justice Department’s Environmental Crimes Section and was investigated by U.S. Environmental Protection Agency Criminal Investigation Division and North Carolina State Bureau of Investigation.

WASHINGTON – Federal authorities have charged a former Los Angeles man with aggravated identity theft and having operated a foreclosure-rescue scam in Southern California and elsewhere that promised to postpone foreclosure sales for more than 800 distressed homeowners.
 
Glen Alan Ward, 47, of Canada, was indicted today in the Central District of California on two counts of bankruptcy fraud, one count of mail fraud and two counts of aggravated identity theft.

In 2000, Ward became a federal fugitive when he failed to appear in court after signing a plea agreement, which stemmed from federal charges in the Central District of California associated with a similar scheme.  On April 5, 2012, Ward was arrested in Canada on a U.S. provisional arrest warrant based on the charges in the Central District of California.  His extradition to the United States is pending.

Today’s indictment charges the defendant with identity theft and a scheme to defraud that took place from July 2007 to April 5, 2012, while he was a fugitive.  According to the indictment, Ward led a scheme that solicited and recruited homeowners whose properties were in danger of imminent foreclosure.  Ward allegedly promised to delay their foreclosures for as long as the homeowners could afford his $700 monthly fee.  Once a homeowner paid the fee, Ward accessed a public bankruptcy database and retrieved the name of an individual debtor who recently filed bankruptcy.  The indictment alleges that Ward also obtained a copy of the debtor’s bankruptcy petition and directed his clients to execute, notarize and record a grant deed transferring a 1/100th fractional interest in their distressed home into the name of the debtor he provided.  Then, Ward allegedly faxed a copy of the bankruptcy petition, the notarized grant deed and a cover letter to the homeowner’s lender or the lender’s representative, directing it to stop the impending foreclosure sale due to the bankruptcy. 

Because bankruptcy filings give rise to automatic stays that protect debtors’ properties, the receipt of the bankruptcy petitions and deeds in the debtors’ names forced lenders to cancel foreclosure sales.  The lenders, which included banks that received government funds under the Troubled Asset Relief Program (TARP), could not move forward to collect money that was owed to them until getting permission from the bankruptcy courts, thereby repeatedly delaying the lenders’ recovery of their money.

As part of the scheme, Ward delayed the foreclosure sales of approximately 824 distressed properties by using at least 414 bankruptcies filed in 26 judicial districts across the country.  During that same period, Ward collected more than $1 million from his clients who paid for his illegal foreclosure-delay services.

The indictment was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California, Acting Assistant Director in Charge Timothy Delaney of the FBI’s Los Angeles Field Office, and Christy Romero, Deputy Special Inspector General for the Troubled Asset Relief Program (SIGTARP).

“Today’s charges underscore our commitment to relentlessly pursue those who prey on the vulnerabilities of distressed homeowners to defraud lenders and pad their own pockets,” said Assistant Attorney General Breuer.  “As this case illustrates, we will not stop pursuing them, no matter where they are, and no matter how long it takes.

“Con artists who seek to victimize homeowners in distress are truly shameless,” said U.S. Attorney for the Central District of California André Birotte Jr. “The long arm of the law can and will find and reach such financial pirates wherever they hide, and we will be tireless in our pursuit of justice for the people they victimize.”

“Ward was on the lam for 12 years running from earlier charges of bankruptcy fraud, and it’s time he answered for his alleged conduct,” said Christy Romero, Special Inspector General at SIGTARP.  “In order to advance his scheme, from at least July 2007 until the time of his arrest in Canada in April, Ward allegedly stole the identities of unsuspecting U.S. taxpayers already in the dire straits of bankruptcy proceedings and exploited civil protections under bankruptcy law to defraud lenders, including multiple TARP recipients, and distressed homeowners facing foreclosure.  SIGTARP and our partners in law enforcement will continue to hold accountable those responsible for all fraud related to TARP.”

“Mr. Ward’s fugitive odyssey is over, in large part thanks to our Canadian law enforcement partners,” said Timothy Delaney, Acting Assistant Director in Charge of the FBI’s Los Angeles Field Office.  “The charges against Mr. Ward tell a disturbing tale of avarice whereby scores of homeowners facing foreclosure were further victimized.  The FBI will continue to work with our partners at SIGTARP and at the U.S. Attorney’s Office to tackle this reprehensible crime problem facing Americans.”

The crime of bankruptcy fraud carries a maximum sentence of five years in prison. Mail fraud carries a maximum sentence of 30 years in prison.  Each aggravated identity theft charge carries a two-year mandatory, consecutive sentence.

This case is being prosecuted by Trial Attorney Paul Rosen of the Fraud Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Evan Davis of the U.S. Attorney’s Office for the Central District of California.  The investigation was conducted by the SIGTARP and the FBI, which received substantial assistance from the U.S. Trustee’s Office.

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

WASHINGTON – William Duran Vizzerra Jr. pleaded guilty today to illegally disposing of hazardous waste, a felony criminal offense, at a storage lot in Anchorage, Alaska, announced Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division, and Karen L. Loeffler, U.S. Attorney for the District of Alaska.

According to the plea agreement filed in U.S. District Court in the District of Alaska, Vizzerra was the president, director and part-owner of Precision Pavement Markings Inc. (PPMI), a road and parking lot painting and striping business that operated from a storage lot in Anchorage from at least 2006 through 2009.  Vizzerra used the storage lot to store hazardous waste, including methyl methacrylate paint and toluene that was used to flush the paint lines, nozzles and sprayers used in his business.  Having made no attempts to properly dispose of the waste, on approximately Nov. 1, 2009, Vizzerra illegally abandoned approximately 321 55-gallon drums, 179 five-gallon pails and two 200-gallon totes of hazardous waste.  The waste, totaling 204,750 pounds, was determined to be hazardous because it was extremely flammable. 

In November 2010, a citizen reported the abandoned drums to the U.S. Environmental Protection Agency (EPA).  EPA Criminal Investigation Division Agents observed several hundred 55-gallon drums and smaller containers at the storage lot, some of which were stacked two-high on a trailer and some of which were stored directly on the ground.  Many of the drums were marked “waste” or held hazardous markings, such as “flammable” or “flammable liquid.” Many were rusted and in decrepit condition or bulging.  The investigation revealed that some of the drums were from a prior pavement business of Vizzerra’s that had dissolved several years earlier.
 
Under the Resource Conservation and Recovery Act, hazardous waste, due to its dangerous qualities, may only be disposed of at a licensed treatment, storage or disposal facility.  The storage lot Vizzerra used was neither equipped nor permitted for the disposal of hazardous waste.  Yet, knowing this, Vizzerra illegally abandoned and disposed of the waste at the lot, which cost his landlord $380,877.60 to clean up and properly dispose of the waste. 

“The illegal disposal of hazardous waste puts everyone in our community at risk,” said U.S. Attorney Loeffler.  “The defendant in this case knowingly abandoned hundreds of barrels of toluene and other dangerous and highly flammable chemicals.  We are fortunate that this dangerous situation was reported, and that the EPA responded to insure that the waste was removed and nobody was hurt.   The U.S. Attorney’s Office for the District of Alaska is committed to actively prosecuting environmental crimes for the protection of all Alaskans.”

“By first neglecting and then abandoning hazardous chemicals at his place of business, Vizzera's actions put both people and the environment at risk," said Tyler Amon, Special Agent in Charge of EPA's criminal enforcement program in the Northwest.  “Adding insult to injury, he then saddled an innocent property owner and taxpayers with a total cleanup cost approaching half a million dollars.  Our message in this matter is clear: if you fail to manage hazardous waste safely and responsibly, you will be investigated and prosecuted.”

The maximum penalties for knowingly disposing of hazardous waste include five years of incarceration and a fine of $50,000 per day of violation.  U.S. District Court Judge Ralph R. Beistline set Vizzerra’s sentencing for Nov. 14, 2012.

The investigation was conducted by the EPA’s Criminal Investigation Division.  The case was prosecuted by the Environmental Crimes Section of the Justice Department, the U.S. Attorney’s Office for the District of Alaska, and the Regional Criminal Enforcement Counsel for the Environmental Protection Agency’s Region 10 in Seattle.

A tax return preparer from Macon, Ga., pleaded guilty Thursday to filing a false claim for tax refund, theft of government money and aggravated identity theft, the Justice Department and the Internal Revenue (IRS) announced.

 

According to court documents, Willie C. Grant is a former tax return preparer who used many of his former clients’ names and Social Security numbers to file false federal income returns in their names and without their knowledge. On these tax returns, Grant intentionally claimed false tax refunds and directed the IRS either to electronically deposit the false refunds into his personal or business bank accounts or to issue paper refund Treasury checks which he then cashed or deposited into his personal or business bank accounts. Grant spent the proceeds of his false refund scheme on personal items including expensive cars and personal living expenses.

 

Court documents further established that from 2003 through 2008, Grant owned and operated a tax return preparation business, Grant Income Tax Bookkeeping and Check Cash (GIT) out of his home in Macon, eventually closing GIT in 2009. During calendar years 2006 through 2009, Grant prepared and filed false tax returns in the names of unsuspecting individuals. Many of the individuals were elderly or disabled former clients of GIT or deceased individuals. Grant admitted that that he abused his position of private trust as a professional paid tax preparer in committing his crimes.

 

Grant faces a potential maximum sentence of 17 years in prison and a fine of up to $500,000. U.S. District Court Chief Judge C. Ashley Royal, who is presiding over this matter, set a sentencing date of Oct. 30, 2012.

 

The case was investigated by special agents of IRS – Criminal Investigation, and is being prosecuted by Trial Attorneys Charles M. Edgar, Jr. and Justin K. Gelfand of the Justice Department’s Tax Division.