District Not Recorded

The Justice Department announced today that it reached a settlement agreement with United Natural Foods Inc. (UNFI), resolving allegations that the company discriminated under the anti-discrimination provision of the Immigration and Nationality Act (INA), when it impermissibly “reverified” the work authority of lawful permanent residents and required some non-citizen workers to provide specific Form I-9 documentation.

In a charge filed with the department, the charging party, a lawful permanent resident, alleged that UNFI improperly terminated him after he failed to produce an unexpired lawful permanent resident card (also known as a “green card”) in connection with an erroneous reverification of his employment eligibility. The charging party had presented proper work authorization documentation at the time of hire, and UNFI had no reason to suspect that his documentation was not genuine. The employee was permanently work-authorized, but lost three weeks’ worth of wages as a result of UNFI’s practice. The department’s investigation revealed that UNFI reverified the documentation of similarly situated lawful permanent residents when their documentation expired but did not reverify expired documentation of U.S. citizens. The anti-discrimination provision prohibits treating employees differently in the employment eligibility verification and reverification processes based on citizenship or national origin.

In response to the department’s investigation, UNFI conducted an internal audit and undertook immediate corrective action to address and rectify its employment eligibility verification policies and practices. As part of its corrective action, UNFI rehired the charging party and gave him full back pay several months before the department had made its finding of discrimination. Under the settlement agreement, the company agrees to pay $3,190 in civil penalties to the United States, to conform all of its actions to ensure compliance with the INA’s anti-discrimination provision and to train its human resources personnel about the company’s responsibility to avoid discrimination in the employment eligibility verification process.

“The Civil Rights Division is pleased that UNFI has prioritized compliance with the Immigration and Nationality Act’s (INA), and we encourage all employers to evaluate their policies and practices to ensure compliance with the INA’s anti-discrimination provision,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.

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 process.

For more information about protections against employment discrimination under the immigration law, visit OSC’s website at www.justice.gov/crt/about/osc or email [email protected].

For more information about protections against employment discrimination under the immigration laws, call the OSC’s worker hotline at 1-800-255-7688 (1-800-237-2525, TDD for hearing impaired), call the OSC’s employer hotline at 1-800-255-8155 (1-800-362-2735, TDD for hearing impaired), sign up for a no-cost webinar at www.justice.gov/crt/osc/webinars.php, email [email protected] or visit the website at www.justice.gov/crt/about/osc.

A former financial services executive was indicted yesterday for his participation in a far-reaching conspiracy and scheme to defraud related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.

The three-count indictment was filed yesterday in the U.S. District Court in Charlotte, N.C. The indictment charges Phillip D. Murphy, a former executive for a financial institution, with participating in a wire fraud scheme and separate fraud conspiracies from as early as 1998 until 2006.

The charged conspiracies and scheme to defraud relate to the provision of a type of contract, known as an investment agreement, to public entities, such as state, county and local governments and agencies throughout the United States. Major financial institutions, including banks, investment banks, insurance companies and financial services companies, are among the providers of investment agreements and other related municipal finance contracts. Public entities seek to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issue to raise money for, among other things, public projects. Public entities typically hire a broker to conduct a competitive bidding process among various providers for the award of an investment agreement to invest such money. Competitive bidding for these agreements is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds. The company that employed Murphy marketed financial products and services, including services as a provider of investment agreements.            

“The individual charged yesterday allegedly participated in a complex fraud scheme and conspiracies to manipulate what was supposed to be a competitive process,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. “The division recently convicted at trial several individuals in this investigation, which is ongoing.  We will continue to prosecute those who engage in such illegal and anticompetitive behavior.

 
The indictment charges that Murphy conspired with Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products (CDR), a broker of municipal finance contracts, and others to increase the number and profitability of investment agreements and other municipal finance contracts awarded to the provider company where Murphy was employed. Murphy won investment agreements through CDR’s manipulation of the bidding process in obtaining losing bids from other providers, which is explicitly prohibited by U.S. Treasury regulations. As a result of the information, various providers won investment agreements and other municipal finance contracts at artificially determined prices. In exchange for this information, Murphy submitted intentionally losing bids for certain investment agreements and other contracts when requested, and, on occasion, agreed to pay or arranged for kickbacks to be paid to CDR and other co-conspirator brokers.

The indictment also alleges that Murphy and co-conspirators misrepresented to municipal issuers or bond counsel that the bidding process was in compliance with U.S. Treasury regulations. This caused the municipal issuers to award investment agreements and other municipal finance contracts to providers that otherwise would not have been awarded the contracts if the issuers had true and accurate information regarding the bidding process. Such conduct placed the tax-exempt status of the underlying bonds in jeopardy.

 
According to court documents, the efforts by Murphy and his co-conspirators to control and manipulate the bidding for investment contracts, and the execution of a variety of certifications that covered up their scheme, also obstructed the Internal Revenue Service (IRS)’s ability to monitor compliance with U.S. Treasury regulations and impeded the IRS’s ability to determine whether municipal issuers had correctly accounted for any money that was owed to the U.S. Treasury.

 
In a separate count, the indictment charges that Murphy conspired with others to falsify bank records related to marketing profits so that the co-conspirators could pay the kickbacks to CDR and others.

“Yesterday’s charges outline a fraudulent scheme to subvert competition in the marketplace. Those who engage in this type of criminal activity not only stand to defraud public entities, but erode the public’s trust in the competitive bidding process,” said Janice K. Fedarcyk, Assistant Director in Charge of the FBI in New York. “The FBI will continue to work with the Antitrust Division to ensure the integrity of competitive bidding in public finance.”

                                                                                             
“This case demonstrates the value of a coordinated approach by multiple agencies and law enforcement authorities,” said Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber. “IRS Criminal Investigation contributed to this joint effort by providing financial investigative expertise to uncover this complex and sophisticated scheme. Professionals, including financial service executives, should know we will devote all resources necessary to bring to justice those who commit financial crimes.”

Murphy is charged with two counts of conspiracy and one count of wire fraud. The fraud conspiracy with which Murphy is charged carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge carries a maximum penalty of 30 years in prison and a $1 million fine. The false bank records conspiracy carries a maximum penalty of five years in prison and a $250,000 fine. The maximum fines for each of these offenses 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.

The charges announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York and Cleveland Field Offices, the FBI and IRS-CI.  The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

To date, a total of 13 individuals and one company have pleaded guilty to charges stemming from the ongoing investigation. In May 2012, a federal jury in the Southern District of New York convicted Dominick Carollo, Steven Goldberg and Peter Grimm of multiple counts involving similar fraud conspiracies after a four-week trial. Three other former executives of a financial institution were indicted on Dec. 9, 2010, for participating in fraud schemes and conspiracies related to the bidding for investment agreements, and are awaiting trial, which is scheduled to begin in Manhattan on July 30, 2012.

Yesterday’s indictment 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.

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.

WASHINGTON – Anthony Mangione, 51, of Parkland, Fla., pleaded guilty today to one count of transportation of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, Acting Special Agent in Charge Jeffrey C. Mazanec of the FBI’s Miami Field Office and Sheriff Al Lamberti of the Broward County, Fla., Sheriff’s Office.
 
Mangione pleaded guilty today before U.S. Magistrate Judge James M. Hopkins in U.S. District Court in West Palm Beach, Fla.  He was taken into custody pending sentencing.

According to court documents, between March 2010 and September 2010, Mangione transported visual depictions of minors engaging in sexually explicit conduct. 

Mangione faces a mandatory minimum sentence of five years in prison and a maximum sentence of 20 years in prison.  Mangione also faces a term of supervised release of five years to life following his prison sentence, and will be required to register as a sex offender in any jurisdiction in which he lives, works or attends school.  Sentencing has been scheduled for Oct. 5, 2012.     

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

This case is being investigated by the Broward County Sheriff’s Office and the FBI’s Miami Field Office.  Assistant Deputy Chief Alexandra R. Gelber and Trial Attorney Michael Grant of the Criminal Division’s CEOS are prosecuting the case.

WASHINGTON –  After a seven week trial in federal court in Camden, N.J., multiple defendants were convicted on various felony counts of creating false records, trafficking in illegally possessed oysters, obstructing the Food and Drug Administration’s regulation of public health and safety, and conspiring to commit those crimes, announced Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, and Paul J. Fishman, U.S. Attorney for the District of New Jersey. 

Thomas Reeves, Todd Reeves, and Shellrock LLC, all of Port Norris, N.J., were convicted on multiple felony counts of violating the Lacey Act by creating false records for illegally possessed oysters, trafficking in illegally possessed oysters and falsifying records used by the FDA for tracking the movement of oysters in interstate commerce.  These same defendants, as well as Renee Reeves, an employee of Shellrock and the wife of Todd Reeves, were also found guilty of conspiring to commit those crimes and obstruct justice.

Kenneth Bailey, of Heislerville, N.J., was convicted on multiple felony counts of violating the Lacey Act by creating false records and trafficking in illegally possessed oysters, as well as falsifying records used by the FDA for tracking the movement of oysters in interstate commerce.

Mark Bryan, of New Market, Md, and the business he co-owns, Harbor House Seafood Inc., of Seaford, Del., were convicted on multiple felony counts of creating false records relating to their purchase of oysters, trafficking in illegally possessed oysters, as well as conspiring to obstruct justice and falsify records used by the FDA for tracking the movement of oysters in interstate commerce.

“The conspiracy to traffic in unreported and illegally possessed oysters from the Delaware Bay violated laws that protect public health and ensure the sustainability of resources that are vital to the region’s economy.  In the course of the conspiracy, defendants falsified FDA records that are used to track oysters in the event of an outbreak of oyster-borne disease,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice.  “After an extensive trial, today’s conviction by a federal jury sends the message that we will prosecute those who exploit protected resources, deceive law enforcement and deprive honest fisherman of the full measure of their labor.”

The Lacey Act prohibits creating or submitting false records for fish or wildlife moving in interstate commerce and also prohibits trafficking in fish or wildlife known to be illegally taken or possessed.  The FDA and state health agencies require that oyster purchasers and sellers maintain accurate records of the amounts and locations of oyster harvest for all oysters they buy and sell in order to protect the public health and minimize the impact of any oyster-borne outbreak of disease. 
 
Starting in at least 2004 and continuing through 2007, Thomas and Todd Reeves, oyster fishermen who owned Shellrock (dba Reeves Brothers), would take a greater amount of oysters from the Delaware Bay than was allowed by New Jersey.  The Reeveses would then falsify the records that New Jersey used to track the number of oysters harvested from Delaware Bay and sell those unreported oysters to Mark Bryan at Harbor House in Delaware.  Thomas Reeves, Todd Reeves and Renee Reeves, along with Mark Bryan at Harbor House, would also coordinate to cover up their overharvest by falsifying records required by the FDA, records which were used to protect the public health from outbreaks of oyster-borne disease.  In addition, the defendants conspired to obstruct the NOAA investigation into their illegal conduct by providing investigators with false records and making false statements that attempted to hide their conduct.

Bryan and Harbor House also purchased unreported oysters from Kenneth W. Bailey Sr., another Port Norris oyster fisherman.  Like the Reeveses, Bailey would create false records required by the state and the FDA to hide his overharvest.

The fair market retail value of the unreported oysters during this time was in excess of $750,000, and the defendants over-harvested their quota in some years by nearly 60 percent.  

The maximum penalty for conspiring to commit offenses and for violations of the Lacey Act is up to five years in prison and a $250,000 fine.  The maximum penalty for obstruction of justice counts is up to 20 years in prison and a $250,000 fine.  The maximum penalty for the corporations is up to five years of probation and a fine in an amount that is the greater of $500,000 or twice the gross gain, for each count.

The case was investigated by the National Oceanic and Atmospheric Administration, Office of Law Enforcement, and The New Jersey Department of Environmental Protection, Division of Fish and Wildlife.  The case was prosecuted by Wayne D. Hettenbach and Patrick M. Duggan of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division, with assistance from Assistant U.S. Attorney Matthew T. Smith of the U.S. Attorney’s Office for the District of New Jersey.

A grand jury sitting in Anchorage, Ala., returned a 90-count superseding indictment yesterday against 11 defendants, the Justice Department announced. The superseding indictment included a conspiracy charge to defraud the United States involving a scheme to use stolen Puerto Rican identities to file tax returns and obtain fraudulent income tax refunds. A number of the defendants had previously been charged with conspiracy to distribute cocaine, cocaine distribution and international money laundering.

To accomplish their tax refund scheme, the indictment alleges that the conspirators fabricated individual income tax returns using stolen personal identification information from residents of the Commonwealth of Puerto Rico. The defendants obtained laptop computers that contained over 2,600 stolen identities. The laptops also identified $19 million in fraudulent refund claims. The addresses used on some of the false tax returns were obtained by stealing mail from mailboxes in and around Anchorage. In other cases, it is alleged that one or more of the defendants contacted conspirators in locations such as New Jersey and Puerto Rico and requested that fraudulently obtained tax refund checks be sent to Anchorage using false names. The indictment further alleges that the conspirators negotiated refund checks in Anchorage with the help of corrupt bank employees. In order to negotiate the tax refund checks, the defendants allegedly used false identification documents. They allegedly obtained these documents by using the names, dates of birth and Social Security numbers of other individuals in applications made to the Alaska Department of Motor Vehicles.

The indictment also charges various defendants with submitting false claims for refund, possessing stolen mail, making false claims of U.S. citizenship, committing passport fraud, making false statements to banks and credit unions, passing forged U.S. Treasury checks, aggravated identity theft and drug charges. The fraud charges each carry maximum potential penalties of between two and 30 years of imprisonment, in addition to the five year mandatory minimum prison term required upon conviction on the drug charges.

The case is being jointly prosecuted by Assistant U.S. Attorneys Thomas C. Bradley and James Barkeley of the U.S. Attorney’s Office for the District of Alaska and Trial Attorney Stephanie Carowan Courter of the Justice Department’s Tax Division. The case was investigated by the Internal Revenue Service Criminal Investigation, U.S. Immigration and Customs Enforcement, which oversees Homeland Security Investigations, the U.S. Postal Inspection Service, the U.S. State Department’s Diplomatic Security Service, and the Drug Enforcement Administration. Additional assistance was provided by the U.S. Attorney’s Offices for the District of New Jersey, the Eastern District of Pennsylvania and the Southern District of New York.

An indictment is merely a formal accusation. Defendants are presumed innocent until proven guilty in a court of law.

Two foreign nationals have pleaded guilty for their roles in a scheme to traffic the identities of Puerto Rican U.S. citizens and corresponding identity documents.

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

Obdulio Edu Burgos-Dominguez, 35, a Guatemalan national formerly of Seymour, Ind., pleaded guilty today in the District of Puerto Rico to one count of conspiracy to commit identification fraud and one count of conspiracy to commit alien smuggling for profit. Jose Sergio Garcia-Ramirez, 37, a Mexican national formerly of Rockford, Ill., pleaded guilty in the District of Puerto Rico on July 17, 2012, to one count of conspiracy to commit identification fraud and one count of aggravated identity theft. Both pleas took place before U.S. Magistrate Judge Bruce J. McGiverin.

Burgos-Dominguez and Garcia-Ramirez were originally charged in an indictment returned by a federal grand jury in Puerto Rico on Mar. 22, 2012. To date, a total of 53 individuals have been charged for their roles in the identify trafficking scheme.

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

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

Burgos-Dominguez admitted that he operated as an identity broker in Seymour, Ind. Garcia-Ramirez admitted that he operated as an identity broker in Rockford, Ill.

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

Garcia-Ramirez and Burgos-Dominguez are the seventh and eighth defendants to plead guilty in this case.

At sentencing, scheduled for Nov. 30, 2012, Garcia-Ramirez faces a maximum sentence of 15 years in prison for conspiracy to commit identification fraud and a mandatory consecutive sentence of two years in prison for aggravated identity theft. At sentencing, scheduled for Nov. 13, 2012, Burgos-Dominguez faces a maximum sentence of 15 years in prison for conspiracy to commit identification fraud and 10 years in prison for conspiracy to commit alien smuggling for profit. Both defendants are also subject to a maximum fine of $250,000 for each charge.

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

The case is being prosecuted by the Criminal Division’s Human Rights and Special Prosecutions Section, with the assistance of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and the support of the U.S. Attorney’s Office for the District of Puerto Rico. The U.S. Attorneys’ Offices in the Northern District of Illinois, Southern District of Indiana, District of Connecticut, Western District of Virginia, Southern District of Ohio, and District of Nebraska provided substantial assistance.

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

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

Phillip Oliver, 46, an inmate at the Muskogee County Jail (MCJ) was sentenced today in U.S. District Court in Muskogee, Okla., to one year and a day followed by one year of supervised release for one count of conspiracy related to the orchestrated beating of a fellow inmate at the behest of a jailer on duty.

“Excessive force by individuals sworn to uphold the law will not be tolerated,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will continue to investigate and prosecute criminal civil rights violations whether committed directly by the hands of law enforcement or by inmates at the behest of law enforcement.”

Oliver pleaded guilty earlier this year and in so doing admitted that on Oct. 6, 2011, he conspired with a jailer on duty to violate the civil rights of the victim, a fellow inmate, by assaulting him. Specifically, Oliver and the jailer agreed to use physical violence to punish the victim because the victim, who was restrained in a separate cell, was making verbal comments. According to court documents, although Oliver was concerned about getting into trouble if he assaulted the victim, the jailer assured Oliver that he would cover for Oliver. Thereafter, the jailer remotely popped open the victim’s locked cell door so that Oliver could gain access. Oliver then punched the victim in the face, all at a time when the victim was not posing a threat to anyone.

This case was investigated by the Muskogee Resident Agency of the Oklahoma City Division of the FBI and was prosecuted by Trial Attorney Fara Gold of the Civil Rights Division of the U.S. Department of Justice and Assistant U.S. Attorney Ryan M. Roberts for the Eastern District of Oklahoma.

WASHINGTON – A Michigan resident pleaded guilty today for his role in a $13.8 million Detroit-area home health care fraud scheme, announced the Departments of Justice and Health and Human Services (HHS).

Nabeel Shaikh, 30, of Wixom, Mich., pleaded guilty today to one count of conspiracy to commit health care fraud before U.S. District Judge Gerald E. Rosen of the Eastern District of Michigan.  At sentencing, Shaikh faces a maximum penalty of 10 years in prison and a $250,000 fine.

‪According to information contained in plea documents, Shaikh purported to be a physical therapy assistant with a limited license who provided physical therapy services to homebound Medicare beneficiaries.  In fact, Shaikh had a forged physical therapy assistant’s degree and no medical license.  Beginning in approximately January 2009, Shaikh was paid to falsify medical documentation for two home health agencies, known as Physicians Choice Home Health Care LLC and Quantum Home Care Inc., each of which billed and received payments from Medicare for home health care services that were never rendered. 

According to court documents, Shaikh paid kickbacks and bribes to Medicare beneficiaries in order to obtain the beneficiaries’ Medicare information, which was then used to bill Medicare for home health services that were never provided.  Shaikh created evaluations, therapy revisit notes and other medical documentation memorializing purported physical therapy for patients he did not see or treat.  Shaikh and his co-conspirators had Medicare beneficiaries pre-sign forms and visit sheets that were later falsified to make it appear that the beneficiaries had received home health services when, in fact, they had not.  Shaikh knew that the documents that he signed would be used to support false claims to Medicare for home health services. 

From approximately January 2009 through September 2011, Medicare paid approximately $900,430 to Physicians Choice and Quantum for fraudulent physical therapy claims based on falsified files and notes signed by Shaikh.

Overall, between approximately July 2008 and September 2011, Physicians Choice, Quantum and two other fraudulent home health care agencies involved in the conspiracy, known as First Care Home Health Care LLC and Moonlite Home Care Inc., were paid approximately $13.8 million in fraudulent home health claims by the Medicare program for services that were medically unnecessary and/or never rendered.

Today’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, Acting Special Agent in Charge of the FBI’s Detroit Field Office Edward J. Hanko, and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General, Chicago Regional Office. 

This case was prosecuted by Trial Attorney Catherine K. Dick of the Criminal Division’s Fraud Section, with assistance from Trial Attorney Niall M. O’Donnell.  It was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. 
 
Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 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.

Port Arthur Chemical and Environmental Services LLC (PACES) and its former president Matthew L. Bowman have been charged with conspiracy to illegally transport hazardous materials, resulting in the deaths of two employees, in an indictment handed down by a federal grand jury in Beaumont, Texas, yesterday, announced Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division and John M. Bales, U.S. Attorney for the Eastern District of Texas.   

The 13-count indictment describes a scheme in which hazardous materials were transported illegally with false documents and without placards, and where workers were not properly protected from exposure to hazardous gases.  The exposure resulted in the deaths of two employees, who were truck drivers, at the PACES facility on Dec. 18, 2008, and April 14, 2009.  Both deaths are attributed to exposure to hydrogen sulfide.  

The defendants were charged with a conspiracy to violate the Hazardous Materials Transportation Uniform Safety Act (HMTUSA) and two counts of failure to implement appropriate controls to protect employees from exposure to hydrogen sulfide in violation of the Occupational Safety and Health Administration Act.  The defendants are also charged with transportation of hazardous materials without placards and with false documents in violation of HMTUSA, violations of the Resource Conservation and Recovery Act and making false statements.

According to the indictment, Bowman was president and owner of PACES, located in Port Arthur, Texas, and CES Environmental Services (CES) located in Houston.  PACES was in operation from about November 2008 to November 2010 and was in the business of producing and selling caustic materials to paper mills.  The production of caustic materials involved hydrogen sulfide.  Hydrogen sulfide is classified as a poisonous gas by HMTUSA.  According to the National Institute for Occupational Safety and Health, hydrogen sulfide is an acute toxic substance that is the leading cause of sudden death in the workplace.  Employers are required by the Occupational Safety and Health Administration (OSHA) to implement engineering and safety controls to prevent employees from exposure above harmful limits.

According to the indictment, Bowman was responsible for, among other duties, approving and directing PACES production operations, the disposal of hydrogen sulfide wastewater, employee safety precautions, directing the transportation of PACES wastewater, and determining what safety equipment could be purchased or maintained.

Both PACES and CES have filed for bankruptcy. 

The conspiracy and substantive counts of the indictment each carry a maximum possible sentence of five years in prison and a fine of $250,000, and a $500,000 maximum fine for the corporation.

The allegations in the indictment are mere accusations and all persons are presumed innocent until and unless proven guilty beyond a reasonable doubt in a court of law.

This case is being investigated by EPA Criminal Investigation Division; the U.S. Department of Transportation Office of Inspector General; the Texas Commission on Environmental Quality - Environmental Crimes Unit; and the Houston Police Department - Major Offenders, Environmental Investigations Unit; with assistance from the Texas Parks & Wildlife Department - Environmental Crimes Unit; the Travis County, Texas, District Attorney’s Office; the Harris County, Texas, District Attorney’s Office; the Houston Fire Department; OSHA; the U.S. Coast Guard; the Port Arthur Police Department; and the Port Arthur Fire Department.

The case is being prosecuted by U.S. Attorney’s Office for the Eastern District of Texas, Beaumont Division, and the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.

WASHINGTON – The former director of corporate maintenance and renovations at Medical Facilities of America Inc. (MFA) was today sentenced to serve 63 months in prison for accepting kickbacks from contractors and evading federal income taxes, the Department of Justice announced. MFA operates health care and nursing home facilities throughout Virginia and North Carolina.

John D. Henderson, of Colonial Heights, Va., was sentenced in U.S. District Court in Roanoke, Va., by Judge Samuel G. Wilson. In addition to his prison sentence, Henderson was ordered to pay a total of $698,088 in restitution and additional taxes, penalties and interest to the Internal Revenue Service for his participation in two separate conspiracies. The conspiracies involved steering contracts for the repair, maintenance and renovation at MFA health care and nursing home facilities. One of the conspiracies took place from about June 1998 until at least December 2006, and the other conspiracy took place from about July 2005 until at least December 2006. Henderson pleaded guilty on March 14, 2012, to two counts of conspiracy to commit mail and honest services fraud for the kickback schemes and to two counts for failing to include the kickbacks and other income he received on his federal income tax returns for years 2005 and 2006.

According to the four-count felony charge, Henderson oversaw the bidding process for repair, maintenance and renovation contracts at MFA facilities. To facilitate the conspiracies, Henderson steered contracts to several venders in return for kickbacks; created fictitious competitor bids that were higher than the quotes submitted by the venders who paid him, in order to create the appearance of competition; and directed subordinates to solicit quotes only from vendors who paid him. Henderson received more than $560,000 in kickbacks and had at least $101,000 more paid to a co-conspirator, and in return steered MFA contracts totaling more than $5 million.

“Through this kickback scheme, Henderson and his co-conspirators deprived MFA of competitive pricing to its financial detriment,” said Acting Assistant Attorney General Joseph Wayland in charge of the Antitrust Division. “Today’s sentencing demonstrates the division’s commitment to holding executives accountable for disrupting the competitive bidding process for service contracts.”

Henderson is the fifth individual to plead guilty in the department's fraud investigation into the award of repair, maintenance and renovation contracts at facilities owned by MFA. On Oct. 18, 2011, both Donald R. Holland and Larry R. Sumpter pleaded guilty in U.S. District Court in Roanoke to participating in the scheme. On Jan. 31, 2012, Holland and Sumpter were each sentenced by Judge Samuel G. Wilson to serve two years of probation and were fined $50,000 and $15,000, respectively. On April 4, 2011, Edward T. Fodrey pleaded guilty in U.S. District Court in Norfolk, Va., and was sentenced by Judge Mark S. Davis on Jan. 31, 2012, to serve 37 months in prison and was ordered to pay $326,799 in restitution. Gary L. Johns pleaded guilty on Dec. 12, 2011, in U.S. District Court in Roanoke and was sentenced by Judge Wilson on March 14, 2012 to serve three years of probation and to pay $169,341 in restitution.

The investigation is being conducted by the Antitrust Division’s Philadelphia Field Office, the U.S. Attorney’s Office for the Western District of Virginia, the FBI in Roanoke and the Internal Revenue Service-Criminal Investigation in Roanoke. Anyone with information concerning fraudulent behavior relating to the award of contracts by MFA should contact the Antitrust Division’s Philadelphia Field Office at 215-597-7405 or visit www.justice.gov/atr/contact/newcase.htm .

WASHINGTON – A Maine resident was charged in a criminal complaint unsealed today in the District of New Hampshire for allegedly engaging in a type of cyber extortion known as “sextortion,” announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney John P. Kacavas of the District of New Hampshire. 

John Bryan Villegas, 21, of Kittery, Maine, was arrested yesterday and made his initial appearance today in federal court in New Hampshire.  Villegas is charged with one count of engaging in computer intrusion involving extortion and one count of making extortionate interstate threats. 

The complaint affidavit alleges that Villegas attempted to extort the victim, a New Hampshire resident, into providing him with sexually explicit photographs and videos of the victim.  He sent the victim interstate e-mail messages in which he threatened to publish on the internet, and distribute to the victim’s neighbors and work and social acquaintances, other sexually explicit photographs of the victim that he obtained from a computer without authorization. 

If convicted, Villegas faces a maximum sentence of two years in prison on the interstate threats charge and five years in prison on the computer intrusion charge, to be followed by up to three years of supervised release, a fine of up to $500,000 and restitution.

The case was investigated by the U.S. Secret Service and is being prosecuted by Trial Attorney Mona Sedky of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Arnold H. Huftalen of the District of New Hampshire.  The Department would like to thank the cooperation of the Dover, N.H., and Kittery, Maine, police departments and the Naval Criminal Investigative Service (NCIS).

The details contained in the complaint are allegations.  The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

WASHINGTON – Cincinnati landlord Henry E. Bailey agreed to the entry of an $855,000 civil judgment against him, after admitting that he violated the Fair Housing Act as alleged in a complaint filed by the Justice Department in federal court, the department announced today.  The department’s complaint alleged that Bailey subjected female tenants and applicants for tenancy to unwanted sexual comments and touching, entered the apartments of female tenants without notice or permission, granted tangible housing benefits in exchange for sexual favors and took adverse actions against female tenants when they refused his sexual advances.

“The women involved were subjected to intimidating and severe acts of unwanted sexual conduct in their homes, where they expected to feel safe,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “This judgment reflects the gravity of the alleged conduct.”

Under the terms of the consent judgment, which was approved by the U.S. District Court for the Southern District of Ohio earlier today, Bailey is obligated to pay $800,000 in damages to 14 women he sexually harassed and $55,000 in a civil penalty to the United States.  In addition, the consent judgment enjoins Bailey from further acts of discrimination and requires him to retain an independent management company to manage any currently rented units and any future rental properties he acquires.

“This helps right the wrongs committed against vulnerable individuals,” said U.S. Attorney for the Southern District of Ohio Carter Stewart.  “Going forward, the decree sends a message that property owners must respect the rights of their tenants and those who seek safe, secure housing.”

The department began investigating Bailey after Housing Opportunities Made Equal, a Cincinnati-based non-profit fair housing advocacy group, notified the department of sexual harassment complaints it had received about Bailey.

The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status.  Individuals who believe that they may have been victims of housing discrimination should call the Justice Department’s Housing Discrimination Tip Line at 1-800-896-7743, email [email protected] or contact the U.S. Department of Housing and Urban Development at 1-800-669-9777.

Fair housing enforcement is a priority of the Civil Rights Division. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt.

The Justice Department announced today that it has filed a federal lawsuit against Rutherford County, Tenn., alleging that the county violated the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA) when, in compliance with a state chancery court ruling, it refused to process or issue a certificate of occupancy to the Islamic Center of Murfreesboro for a recently constructed mosque.  The department’s complaint states that a certificate of occupancy is needed immediately so that the Islamic Center can hold worship services at the new facility during the Islamic holy month of Ramadan, which begins at sundown on July 19.

The lawsuit, filed today in U.S. District Court for the Middle District of Tennessee, alleges that the county’s refusal came as a result of a recent state chancery court order last month, which, acting in response to a motion brought by individuals opposed to the mosque, enjoined the county from processing or issuing a certificate.  The chancery court ruled that the county had provided insufficient public notice prior to the hearing at which the county approved the mosque’s site-plan.  The chancery court imposed a heightened notice requirement on the mosque, one not imposed on other religious or secular organizations. 

“Our nation was founded on bedrock principles of religious liberty.  The Department of Justice will continue to vigorously enforce civil rights laws that protect religious freedom,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “When a faith community follows the rules, as the Islamic Center of Murfreesboro has done in seeking to construct its place of worship, it is impermissible to change the rules in a discriminatory way that prevents people of faith from exercising their fundamental right to worship.”

“The United States Attorney’s Office will zealously protect every citizen’s right to worship and assemble,” said Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee.  “If we do not protect the rights of these congregants in Rutherford County, then the rights of all people are endangered and diminished.”

The government’s complaint seeks a court order requiring the county to act promptly on the Islamic Center’s application for a certificate of occupancy despite the chancery court’s injunction.

The case began when the Islamic Center, which has been operating in Rutherford County since 1982, sought to construct a new mosque for its growing congregation.  In 2009, it purchased land for that purpose on Veals Road in Rutherford County and, in compliance with the county’s zoning regulation, subsequently applied for site-plan approval.  After considering the proposal at a regularly scheduled, advertised meeting, the county approved the site plan.  Following the county’s approval, opponents of the mosque filed a lawsuit in state court seeking to stop construction.  Ultimately, with the exception of the plaintiffs’ public-notice claim, the chancery court dismissed the plaintiffs’ claims.

RLUIPA prohibits religious discrimination in land use and zoning decisions.  Persons who believe that they been subjected to religious discrimination in land use or zoning may contact the Housing and Civil Enforcement Section of the Justice Department’s Civil Rights Division at 1-800-896-7743.  Additional information about the Justice Department’s efforts to combat religious discrimination may be found at www.justice.gov/crt/spec_topics/religiousdiscrimination/.

The complaint is an allegation of unlawful conduct.  The allegations must be proven in federal court.

Related Materials:

Complaint

WASHINGTON – Aleksandr Suvorov, of Estonia, was sentenced today to seven years in prison for his role in two separate hacking schemes involving a total of more than 240,000 stolen credit card numbers.

The sentence was announced today by Assistant Attorney General Lanny A. Breuer for the Criminal Division, U.S. Attorney for the Eastern District of New York Loretta E. Lynch, U.S. Attorney for the Southern District of California Laura E. Duffy and Director of the U.S. Secret Service Mark Sullivan.

Suvorov, 28, was sentenced by U.S. District Judge Sandra J. Feuerstein in Central Islip, N.Y.   Suvorov was an accomplice to Albert Gonzalez, one of the most prolific identity thieves ever prosecuted by the U.S. government.

Suvorov pleaded guilty in May 2009 to a wire fraud conspiracy charge, filed in the Eastern District of New York, for hacking into the national restaurant chain Dave & Buster’s and stealing more than 80,000 credit card numbers.  In addition, Suvorov pleaded guilty in November 2011 to a trafficking in unauthorized access devices charge, originally filed in the Southern District of California, related to the sale of more than 160,000 stolen credit card numbers to an undercover agent with the U.S. Secret Service.  The cases were consolidated in the Eastern District of New York for sentencing.  In addition to his prison term, Suvorov was ordered to pay $675,000 in restitution and to satisfy a $300,000 asset forfeiture judgment stemming from the New York charges.

“Mr. Suvorov participated in a scheme to sell thousands of credit card numbers stolen from unsuspecting consumers,” said Assistant Attorney General Breuer.  “Computer hackers like Mr. Suvorov victimize businesses and individuals, posing a serious threat to their financial security.  Today’s sentence sends a clear message that cyber criminals operating abroad will suffer severe consequences for their crimes.” 

“Suvorov reached across an ocean to victimize thousands of Americans,” said U.S. Attorney Lynch.  “That ocean was no protection from the reach of U.S. law enforcement, whose coordinated efforts put a stop to Suvorov and his cohorts’ criminal scheme.  He will now serve his sentence in the country of his victims.  Computer hackers and identity thieves who prey on innocent American consumers, businesses and financial institutions will find no refuge from U.S. criminal justice in any corner of the globe.”

“This international criminal enterprise thought that they could traffic in stolen credit card information from abroad, but due to the coordinated efforts of the United States Secret Service and the Justice Department, they were wrong,” said U.S. Attorney Duffy.  “The agents of the San Diego field office of the United States Secret Service are to be commended for their investigative work in dismantling this organization.”

“This case demonstrates the potential for criminals to inflict significant damage to our nation’s financial sector, but this investigation and the resulting sentences should serve as a warning to cyber criminals that law enforcement will continue to pursue them wherever they are,” said U.S. Secret Service Director Sullivan.  “The Secret Service, in conjunction with its many law enforcement partners across the United States and around the world, continues to successfully combat these crimes by adapting our investigative methodologies.  We realize our success in this investigation is due to the cooperation of these partners in more than a dozen international law enforcement agencies.”

According to court documents, in the New York case, Suvorov, Albert Gonzalez and a third co-conspirator devised a scheme to gain unauthorized access into the computer systems of Dave & Buster’s Inc. for the purposes of installing malicious software and extracting credit card information of the Dave & Buster’s patrons.  Gonzalez, who was in Miami, sent the software, known as a “packet sniffer,” to a co-conspirator in Ukraine.  A packet sniffer is malicious software designed, in this case, to collect credit card information.  The co-conspirator in Ukraine then provided the packet sniffer to Suvorov in Estonia.  Suvorov, working with another individual, gained unauthorized access to 11 Dave & Buster’s restaurants throughout the United States, one of which was in Islandia, N.Y., and installed the packet sniffer.  Suvorov and his co-conspirators ultimately obtained data from 81,005 credit cards.

Gonzalez was sentenced in March 2010 to 20 years in prison for his role in the Dave & Buster’s hack, as well as hacks into a major payment processor and several retail networks.  The other co-conspirator was arrested in Turkey on related identity theft charges, and was sentenced there to 30 years in prison.  

In the California case, Suvorov and an accomplice conspired to sell more than 160,000 stolen credit card numbers to a buyer in San Diego who was an undercover agent with the U.S. Secret Service.  Suvorov provided the stolen credit card numbers to an accomplice, who in turn sold them to the undercover agent.

The New York case was prosecuted by Assistant U.S. Attorney William Campos of the Eastern District of New York and Trial Attorneys James Silver and Evan Williams of the Criminal Division’s Computer Crime & Intellectual Property Section (CCIPS) and was investigated by the U.S. Secret Service Criminal Investigative Division Cyber Investigations Branch.  Former CCIPS Assistant Deputy Chief Howard Cox and Senior Counsel Kimberly Peretti also contributed significantly to the investigation and prosecution of this case.  The California case was prosecuted by Assistant U.S. Attorney Orlando Gutierrez of the Southern District of California and investigated by the U.S. Secret Service San Diego Field Office.  The Office of International Affairs in the Criminal Division provided significant assistance. 

A former financial institution employee pleaded guilty today for his participation in a conspiracy related to municipal bonds, the Department of Justice announced.

According to the plea proceeding held today in the U.S. District Court in Manhattan, Alexander Wright, a resident of New York City, engaged in a fraud conspiracy in the municipal finance industry. According to court documents, the New York-based financial institution that employed Wright as a vice president of the municipal derivatives marketing group was a provider of investment agreements as well as other municipal finance contracts to public entities. Public entities seek to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issue, to raise money for, among other things, public projects. Public entities typically hire a broker to conduct a competitive bidding process for the award of the investment agreements and often for other municipal finance contracts.

The department said in court documents that from approximately June 12, 2002, until approximately June 20, 2002, Wright participated in a fraud conspiracy with former executives from another financial institution, among others. One of the co-conspirators acted as the broker for a municipal finance contract, which was to be competitively bid. The co-conspirator gave Wright information about the prices or price levels of competitors’ bids, a practice known as a “last look.” The co-conspirator signaled Wright to change his bid to a specific number so that Wright’s employer could make more money. Wright and his co-conspirators represented to the municipal issuer that the bidding process was competitive when, in fact, it was not. The department said that, as a result of the bid manipulation, Wright’s employer won the contract at an artificially inflated price, which, since the issuer paid a higher price for the contract, deprived the municipal issuer of money and property.

“By engaging in non-competitive practices, such as sharing confidential bidding information, the co-conspirators undermined the integrity of the municipal bond market and deprived the bond issuer of a fair and competitive price,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s Criminal Enforcement Program. “Today’s guilty plea demonstrates our continued efforts to hold accountable those who subvert the competitive process in our financial markets.”

The conspiracy to commit wire fraud for which Wright is charged carries a maximum penalty of five years in prison and a $250,000 criminal fine. The maximum fine for this offense 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.

“The type of bid-rigging scheme Wright and his co-conspirators participated in not only deprives the municipal issuer of a fair and just bidding process, but weakens the public’s trust in the municipal bond market,” said Janice K. Fedarcyk, Assistant Director in Charge of the FBI in New York. “Today’s guilty plea is proof of our continued determination to root out those whose business practices contribute to the deterioration of healthy competition in the financial markets.”

“This guilty plea is another step in our efforts to clean up the fraudulent practices in the municipal bond market,” said Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Richard Weber. “IRS Criminal Investigation will continue to provide financial investigative assistance to ensure individuals are held accountable for their criminal behavior.”

The charges announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York and Chicago Field Offices, the FBI and IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.    

To date, 12 individuals and one company have pleaded guilty to charges stemming from the ongoing investigation.  In May 2012, a federal jury in the Southern District of New York convicted Dominick Carollo, Steven Goldberg and Peter Grimm of multiple counts involving similar fraud conspiracies after a four-week trial.  Three other former executives of a financial institution were indicted on Dec. 9, 2010, for participating in fraud schemes and conspiracies related to the bidding for investment agreements, and are awaiting trial, which is scheduled to begin in Manhattan on July 30, 2012.

Today’s guilty plea 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. 

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-335-8000, the FBI at 212-384-5000 or IRS-CI at 212-436-1761, or visit www.justice.gov/atr/contact/newcase.htm.

Michael R. Elliott, former chief financial officer of Caremerica Inc., pleaded guilty today to conspiring to defraud the Internal Revenue Service (IRS), the Justice Department and IRS announced.

On Nov. 15, 2011, a grand jury sitting in Raleigh, N.C., returned an indictment charging Elliott with the following tax offenses: one count of conspiring to defraud the IRS, 25 counts of failing to pay over employment taxes, one count of filing a false tax return, and one count of obstructing the due administration of the tax laws. 

According to the charging document, Elliott co-owned and operated a chain of assisted living facilities (ALFs) in North Carolina. The ALFs were managed by Caremerica Inc., a company based in Leland, N.C., that Elliott also partly owned and operated. Elliott was the Chief Financial Officer for Caremerica, the Caremerica ALFs, and other related companies (Caremerica companies). As a corporate officer, Elliott was responsible for ensuring that the Caremerica companies collected, reported, and paid over federal employment taxes to the IRS. However, with Elliott as the chief financial officer, the Caremerica companies accrued more than $4.5 million in employment tax liabilities between approximately 2003 and 2006. Elliott failed to comply with his employment tax obligations by filing, and causing to be filed, false IRS forms and failing to pay the employment taxes due.

The indictment further alleges that in 2003, Elliott acquired partial ownership of Partners Pharmacy Services Inc. (PPS), which provided prescription drug and related services to the Caremerica ALFs. In March 2005, Elliott sold PPS to a subsidiary of Omnicare Inc. At the closing, Elliott received $1.4 million, which he directed to be deposited into a bank account in someone else’s name.

At his hearing before Judge James C. Fox, sitting in Wilmington, N.C., Elliott agreed that he should be ordered to pay restitution of $4.8 million.  His sentencing is set for the court’s term beginning Nov. 5, 2012.

This case was investigated by IRS-Criminal Investigation. It is being prosecuted by Trial Attorneys Adam Hulbig, Todd Ellinwood and Kevin Lombardi of the Justice Department’s Tax Division.

WASHINGTON – The Department of Justice, the U.S. Environmental Protection Agency (EPA), the Tennessee Department of Environment and Conservation and the Office of the Tennessee Attorney General announced today a comprehensive Clean Water Act settlement with the city of Chattanooga, Tenn.  Chattanooga has agreed to pay a $476,400 civil penalty and make improvements to its sewer systems, estimated by the city at $250 million, to eliminate unauthorized overflows of untreated raw sewage.  Chattanooga also has agreed to implement a green infrastructure plan and perform an $800,000 stream restoration project.

“Chattanooga residents will enjoy public health and environmental benefits for years to come as a result of the improvements required by this settlement agreement.  The agreement prioritizes neighborhood sewer rehabilitation projects and utilizes innovative stormwater controls in the urban core, reducing sewer overflows and overall reducing threats to public health posed by untreated sewage,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.  “This is another example of how we are working toward the goal of clean water for all communities through the vigorous enforcement of the Clean Water Act throughout the United States.”

“The EPA is working with communities across the country to address sewage overflows that impact the health of residents and impair local water quality,” said Cynthia Giles, Assistant Administrator for the EPA’s Office of Enforcement and Compliance Assurance.  “Today’s agreement with the city of Chattanooga will rehabilitate their aging sewer system and promote innovative green infrastructure efforts to reduce stormwater runoff, while increasing green space in communities.” 

A consent decree, filed today in U.S. District Court for the Eastern District of Tennessee in Chattanooga, represents the combined efforts of the United States and the state of Tennessee, co-plaintiffs in this settlement, and of the Tennessee Clean Water Network, a citizens’ plaintiff in this action.  The consent decree resolves claims for injunctive relief and civil penalties for Chattanooga’s alleged violations of the Clean Water Act and the Tennessee Water Quality Control Act.

“Sewage overflows are a significant problem affecting water quality and, ultimately, the health of our communities across the Southeast,” said Gwen Keyes Fleming, EPA Region 4 Administrator.  “The Chattanooga community will benefit from improved water quality and a cleaner, healthier environment as a result of this settlement.” 

The proposed consent decree will require Chattanooga to comprehensively assess and rehabilitate its entire sewer collection system to eliminate overflows of untreated raw sewage. Specifically, Chattanooga will perform rehabilitation projects to address known problems within the collection system; implement programs to ensure proper management, operation and maintenance of its sewer systems; and install additional controls on the Chattanooga Creek combined sewer outfalls to ensure compliance with water quality standards.

Prior to finalizing the proposed consent decree, the city, along with EPA and the Tennessee Department of Environment and Conservation, held two public meetings to provide information regarding the sewer system and to seek community input regarding the impact that sewer overflows were having in the community. 

Chattanooga has also agreed to perform a stream restoration supplemental environmental project at a cost of $800,000 in the 3800 Block of Agawela Drive, to restore the stream and stabilize the banks of a tributary of the South Chickamauga Creek and eliminate a significant source of sediment and solids to the creek.  Half of the civil penalty will be paid to the United States.  At the direction of the state, the other half of the civil penalty will be paid by Chattanooga through the performance of green infrastructure demonstration projects in the historic downtown Highland Park neighborhood to, among other things, improve water quality in the Dobbs Branch stream, which flows into Chattanooga Creek.  Green infrastructure involves the use of soils, vegetation and natural processes to store, infiltrate and evaporate storm water to prevent it from getting into the sewer system.

“Today's consent decree sets out a schedule that will ensure the city of Chattanooga moves forward in making the much needed infrastructure changes to its sewer system,” said Tennessee Department of Environment and Conservation Commissioner Bob Martineau.  “We’ve been pleased with the city's efforts and cooperative tone during these negotiations and will continue working together to ensure a cleaner, healthier environment for the citizens of Chattanooga.” 

“We have seen far too many violations of the Tennessee Water Quality Control Act due to aging infrastructure across the state,” said Tennessee Attorney General Bob Cooper.  “We hope this cooperative agreement to improve Chattanooga’s sewer system will improve the quality of our environment and economy.”

Keeping raw sewage and contaminated stormwater out of the waters of the United States is one of the EPA’s national enforcement initiatives for 2011 to 2013.  The initiative focuses on reducing sewer overflows, which can present a significant threat to human health and the environment.  These reductions are accomplished by obtaining commitments from municipalities to implement timely, affordable solutions to these problems, including the increased use of green infrastructure and other innovative approaches.

The United States has reached similar agreements with municipalities across the country, including the following in the Southeast: Mobile and Jefferson County (Birmingham), Ala.; Atlanta and Dekalb County, Ga.; Knoxville and Nashville, Tenn.; Miami-Dade County, Fla.; and Northern Kentucky Sanitation District #1 and Louisville, Ky.
 
The proposed consent decree with Chattanooga is subject to a 30-day public comment period and final court approval before becoming effective.  A copy will be available on the Department of Justice website at www.justice.gov/enrd/Consent_Decrees.html.

More information about the settlement: http://www.epa.gov/compliance/resources/cases/civil/cwa/cityofchattanooga.html.

More about EPA’s national enforcement initiative is available at: http://www.epa.gov/compliance/data/planning/initiatives/2011sewagestormwater.html.

WASHINGTON – The NORDAM Group Inc., a provider of aircraft maintenance, repair and overhaul (MRO) services based in Tulsa, Okla., has entered into an agreement with the Department of Justice to pay a $2 million penalty to resolve violations of the Foreign Corrupt Practices Act (FCPA), announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

According to the agreement, NORDAM, its subsidiaries and affiliates paid bribes to employees of airlines created, controlled and exclusively owned by the People’s Republic of China in order to secure contracts to perform MRO services for those airlines.  The bribes were paid both directly and indirectly to the airline employees.  In an effort to disguise the bribes, three employees of NORDAM’s affiliate entered into sales representation agreements with fictitious entities and then used the money paid by NORDAM to those entities to pay bribes to the airline employees. 

In addition to the monetary penalty, NORDAM agreed to cooperate with the department for the three-year term of the agreement, to report periodically to the department concerning NORDAM’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations. 

The department entered into a non-prosecution agreement with NORDAM as a result of NORDAM’s timely, voluntary and complete disclosure of the conduct, its cooperation with the department and its remedial efforts.  In addition, the agreement recognizes that a fine below the standard range under the U.S. Sentencing Guidelines is appropriate because NORDAM fully demonstrated to the department, and an independent accounting expert retained by the department verified, that a fine exceeding $2 million would substantially jeopardize the company’s continued viability.

The case is being handled by Trial Attorneys Daniel S. Kahn and Stephen J. Spiegelhalter of the Criminal Division’s Fraud Section.  The division’s Office of International Affairs provided assistance.  Assistant U.S. Attorney Kevin Leitch from the Northern District of Oklahoma also provided assistance in the case.  The case was investigated by the FBI’s Washington Field Office’s team of special agents dedicated to the investigation of foreign bribery cases. 

Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

Attorney General Eric Holder and Malaysian Minister for Home Affairs Datuk Seri Hishammuddin bin Tun Hussein met today, during the Attorney General’s official visit to Malaysia, to discuss transnational crime, terrorism and other areas of mutual law enforcement cooperation. Attorney General Holder and Minister Hishammuddin also signed a memorandum of understanding (MoU) on assistance in the field of transnational crimes.

“With the signing of this memorandum of understanding, we reaffirm that the United States and Malaysia share a robust commitment to protecting our citizens from criminal activities that transcend jurisdictions, cross international borders and span across the globe,” said Attorney General Eric Holder. “This agreement encourages direct cooperation between key authorities and law enforcement officials, allowing our two nations to more effectively – and more collaboratively – respond to the evolving transnational challenges we must confront.  I’m confident that it will strengthen our ability to safeguard our citizens and bring dangerous criminals to justice.”

Under the MoU, law enforcement officials from both countries will be able to share information in order to prevent and investigate transnational crime including human trafficking, drug trafficking, terrorism, money laundering, cybercrimes and organized crime. The MoU encourages expanded direct and informal cooperation among law enforcement officers in both countries to assist in investigations.  In addition, the MoU will enhance capacity-building efforts through training, consultations and exchanges. Information will not be shared where it is not legally permitted by either country. 

The MoU is also part of a larger picture of growing cooperation between the U.S. and Malaysia in a range of areas from law enforcement to trade, from educational and cultural exchanges to bilateral dialogue.

After the MoU signing ceremony, Attorney General Holder met with the Prime Minister of Malaysia Dato’ Sri Najib Tun Abdul Razak.

Earlier today, Attorney General Holder met with with U.S. embassy personnel and then spoke to sessions and magistrate court judges, prosecutors, government officials and the Malaysian Bar Council about their ongoing efforts to hold criminals accountable and protect the civil liberties of all citizens. Attorney General Holder will meet with local law enforcement before travelling to Singapore for meetings with the U.S. Ambassador to the Republic of Singapore David Adelman and local law enforcement counterparts.

For photos of Attorney General Holder’s official visit, please visit http://blogs.justice.gov/main/archives/2373 .

WASHINGTON – The Justice Department today announced a settlement with the state of Nevada and its Office of the State Controller to resolve allegations that they willfully violated the employment rights of Army reservist Col. Arthur Ingram when he returned from military service.  The settlement in this case represents the largest recovery the Civil Rights Division has obtained on behalf of a returning service member since 2004, when it assumed jurisdiction for the enforcement of the Uniformed Services Employment and Reemployment Rights Act (USERRA).

On July 13, 2012, the state of Nevada Board of Examiners ratified a settlement agreement previously filed by the parties and approved by the federal court in the U.S. District Court for the District of Nevada.  The settlement requires the defendants to pay Ingram $262,000 in back pay and $211,000 to fully fund his pension benefits for a nine-year time period from when Ingram started his active duty military service through settlement.

The Justice Department’s complaint alleges that the defendants willfully violated USERRA by failing to reemploy Ingram in his prior position as chief deputy controller when he returned from military service in June 2008.  According to the Justice Department’s complaint, after Ingram filed an initial complaint with the Labor Department’s Veterans’ Employment and Training Service to attempt to obtain reemployment, the defendants then willfully retaliated against him by withdrawing an offer to reemploy him in a lower paying position as a chief accountant, terminating his employment and backdating the termination to January 2007 to punitively prohibit his vesting in the Nevada state pension system.
 
USERRA requires all employers to promptly reemploy service members returning from military service in their pre-service position or a position of like seniority, status and pay.  USERRA also prohibits employers from retaliating against service members for asserting their reemployment rights under the statute. 

“Men and women called to active duty need to know they do not have to sacrifice their civilian jobs at home in order to serve our country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “The Civil Rights Division is committed to aggressive enforcement of USERRA to protect the rights of those who, through their bravery and sacrifice, secure the rights of all Americans.”

“The United States Attorney’s Office for the District of Nevada remains committed to protecting the employment rights of military reservists when they return home from active duty following service on behalf of the United States,” said U.S. Attorney for the District of Nevada Daniel G. Bogden. 

Additional information about USERRA can be found on the Justice Department websites www.usdoj.gov/crt/emp and www.servicemembers.gov, as well as the Labor Department website www.dol.gov/vets/programs/userra/main.htm.

WASHINGTON – The owner of a Detroit-area rehabilitation agency was sentenced today to 84 months in prison for his leading role in a $3 million Medicare fraud scheme, the Departments of Justice and Health and Human Services (HHS) announced.

Detroit-area resident Tariq Mahmud, 54, was sentenced by U.S. District Judge Avern Cohn in the Eastern District of Michigan.  In addition to his prison term, Mahmud was sentenced to three years of supervised release and was ordered to pay $1.8 million in restitution, joint and several with his co-defendants.

Mahmud was convicted by a federal jury on Feb. 2, 2012, after a four-day trial, of one count of conspiracy to commit health care fraud and six counts of health care fraud.  Mahmud was charged along with four other defendants in an indictment unsealed on Feb. 17, 2011, as part of a nationwide Medicare fraud takedown, and subsequently in a superseding indictment on Dec. 28, 2011.  The four other defendants have pleaded guilty and have been sentenced.

According to evidence presented during the trial, Mahmud was the owner of Comprehensive Rehabilitation Services Inc. (CRS), a fraudulent rehabilitation agency located in Dearborn, Mich.  Between January 2003 and February 2007, CRS purchased falsified physical and occupational therapy files from more than 30 therapy and rehabilitation companies and used them to fraudulently bill Medicare for more than $3 million.

As part of the scheme, Medicare beneficiaries were paid cash kickbacks and given prescription drugs to sign forms and visit sheets that were later falsified to indicate that they received therapy services that were never provided.  Physical and occupational therapists created false evaluations, progress notes and discharge papers indicating that the therapy services were given, when in fact they never were.  Evidence at trial showed that the therapists never met the beneficiaries and Mahmud never provided or supervised the therapy billed to Medicare. 

In addition to submitting more than $3 million in false therapy claims, Mahmud made additional false statements to Medicare regarding services that were never rendered.  For instance, when Medicare inquired regarding a beneficiary who complained that he had not received the services for which CRS billed Medicare, Mahmud returned the payment and told Medicare that he consulted with his professional staff and the beneficiary had not been satisfied with services.  In fact, CRS had no professional staff; the therapists who signed the beneficiary’s file never rendered any services; and the beneficiary never received services.  Evidence at trial established that the beneficiary’s identity was stolen and used by CRS and a fraudulent file-making company to bill Medicare.

Today’s sentence 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; Acting Special Agent in Charge of the FBI’s Detroit Field Office Edward J. Hanko; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (OIG) Chicago Regional Office.

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

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

WASHINGTON – Three individuals, including Alabama businessman Ronald Gilley, lobbyist Jarrod Massey and former Alabama state representative Terry Spicer were sentenced to prison today in Montgomery, Ala., for bribery-related offenses, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and FBI Special Agent in Charge Stephen Richardson. 

U.S. District Judge Myron H. Thompson of the Middle District of Alabama sentenced Gilley to 80 months in prison, Massey to 65 months in prison and Spicer to 57 months in prison.  Each defendant also was sentenced to a term of supervised release following his prison term.

Gilley, 47, of Dothan, Ala., and Massey, 41, of Troy, Ala., both pleaded guilty to a wide-ranging conspiracy to bribe multiple members of the Alabama legislature, as well as individual instances of federal program bribery involving legislators.  According to court documents and previous testimony, Gilley owned a controlling interest in the Country Crossing real estate, entertainment and gambling development in Houston County, Ala.  Country Crossing sought to offer electronic bingo gambling machines to the public.  Massey owned a lobbying business, Mantra Governmental, and Gilley was one of Massey’s largest clients. 

During the 2009 and 2010 Alabama legislative session, Gilley and Massey promoted the passage of pro-gambling legislation that would have been favorable to operating electronic bingo facilities.  Specifically, Gilley and Massey corruptly gave, offered and agreed to give money and other things of value to Alabama state legislators with the intent to influence and reward them in connection with pro-gambling legislation.  Gilley also pleaded guilty to money laundering for attempting to launder $200,000 in bribe payments to a state senator in order to disguise the illicit purpose of the money.  Gilley and Massey both assisted in the government’s investigation, and the government recommended that each receive a reduction in his sentence as a result.

In a separate bribery conspiracy, Spicer, 46, of Elba, Ala., pleaded guilty to a single count of federal program bribery for his solicitation and receipt of multiple things of value from Gilley and Massey, including cash payments ranging from $1,000 to $3,000 per month during a period of more than four years; an all-expenses-paid ski trip for his family valued at $10,000; a one-time payment of $9,000; a $20,000 campaign contribution; and more than $22,500 in free concert tickets.  In exchange, Spicer repeatedly offered official assistance, including by encouraging others to hire Massey as their lobbyist and by aiding Gilley as specific opportunities arose.
 
The case is being prosecuted by Deputy Chief M. Kendall Day and Trial Attorneys Emily Rae Woods and Marquest J. Meeks of the Public Integrity Section in the Justice Department’s Criminal Division.  The case is being investigated by the FBI’s Montgomery Field Office.

WASHINGTON – A federal grand jury in the District of Columbia has returned a superseding indictment charging Parviz Khaki, a citizen of Iran, and Zongcheng Yi, a resident of China, for their alleged efforts to obtain and illegally export to Iran U.S.-origin materials that can be used to construct, operate and maintain gas centrifuges to enrich uranium, including maraging steel, aluminum alloys, mass spectrometers, vacuum pumps and other items. Khaki is also accused of conspiring to procure radioactive source materials from the United States for customers in Iran.

The superseding indictment, which was returned late yesterday, was announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; and John Morton, Director of U.S. Immigration and Customs Enforcement (ICE).

The superseding indictment charges Khaki, age 43, aka “Martin,” and Yi, aka “Yi Cheng,” aka “Kohler,” aka “Kohler Yi,” each with one count of conspiracy to violate the International Emergency Economic Powers Act (IEEPA) by conspiring with others to cause the export of U.S. goods to Iran without the required U.S. Treasury Department license. Both defendants are also charged with one count of conspiracy to defraud the United States; two counts of smuggling; two counts of illegally exporting U.S. goods to Iran in violation of IEEPA; and one count of conspiracy to commit money laundering.

Khaki was arrested on May 24, 2012, by authorities in the Philippines in connection with a U.S. provisional arrest request stemming from a March 8, 2012 indictment in the District of Columbia. Yi, who is purported to be the managing director of Monalila Co. LTD, a company in Guangzhou City, China, remains at large.

Both defendants face a maximum potential sentence of 20 years in prison for conspiring to violate IEEPA; five years in prison for conspiring to defraud the United States; ten years in prison for each smuggling count; 20 years in prison for each IEEPA count and 20 years in prison for conspiracy to commit money laundering.

“Today’s indictment sheds light on the reach of Iran’s illegal procurement networks and the importance of keeping U.S. nuclear-related materials from being exploited by Iran. Iranian procurement networks continue to target U.S. and Western companies for technology acquisition by using fraud, front companies and middlemen in nations around the globe. I applaud the authorities in the Philippines and the many U.S. agents, analysts and prosecutors who worked on this important case,” said Lisa Monaco, Assistant Attorney General for National Security.

“This new indictment shows that we have no tolerance for those who try to traffic in commodities that can be used to support Iran’s nuclear program,” said U.S. Attorney Ronald C. Machen Jr. “It also underscores our commitment to aggressively enforcing export laws."

“By dismantling this complex conspiracy to deliver nuclear-related materials from the United States to Iran, we have disrupted a significant threat to national security,” said ICE Director John Morton. “Homeland Security Investigations will continue to pursue those who exploit U.S. businesses to illegally supply foreign governments with sensitive materials and technology that pose a serious risk to America and its allies.”

According to the indictment, from around October 2008 through January 2011, Khaki, Yi and others conspired to cause the export of goods from the United States to Iran in violation of the embargo. At no time during this period did the defendants have a license or authorization from the Treasury Department to export any U.S. goods to Iran.

In carrying out the conspiracy, the indictment alleges that Khaki directed Yi and others to contact U.S. companies about purchasing U.S.-origin goods. Yi and other conspirators then placed orders and purchased goods from various U.S. companies and had the goods exported from the United States through China and Hong Kong to Khaki and others in Iran. Yi and others allegedly made a variety of false statements to U.S. companies on behalf of Khaki to conceal that Iran was the final destination and end-user of the goods and to convince U.S. companies to export these items to a third country.

Efforts to Export to Iran U.S. Materials for Gas Centrifuges to Enrich Uranium

For example, the indictment alleges that on Dec. 6, 2008, Khaki asked an individual in China to obtain 20 tons of C-350 maraging steel from the United States for Khaki’s customer in Iran. In the months that followed, Khaki also had communications with Yi about purchasing 20 tons of maraging steel from a U.S. company with which Yi was in contact. Maraging steel is a special class of high-strength steel known for possessing superior strength without losing malleability. The enhanced strength of maraging steel makes it particularly suited for use in gas centrifuges for uranium enrichment.

In March 2009, Khaki allegedly began communicating with an undercover U.S. federal agent posing as an illegal exporter of U.S. goods. The agent told Khaki that the U.S. company (referenced above) could not sell Khaki the maraging steel because doing so was illegal, but that he (the undercover agent) could potentially help export the steel for a fee. Khaki allegedly replied to the agent with questions about price and payment. In the months that followed, Khaki continued to communicate with the agent in an effort to acquire and export the maraging steel to Iran, noting in one instance, “you know and I know this material are [sic] limited material and danger goods…” Khaki also discussed his desire to make money from the transaction.

The indictment also alleges that in late 2008, Khaki reached out to an individual in China about procuring 20 tons of 7075-O aluminum alloy 80mm rods and 20 tons of 7075-T6 aluminum alloy 150 mm rods from the United States or Europe. In one communication, Khaki explained to the individual that the aluminum alloy had to be American made because his Iranian customer had previously found that Chinese aluminum alloy was of poor quality.

Khaki also allegedly sought to obtain mass spectrometers from the United States. In a May 2009 email request to the undercover federal agent, Khaki specified that one magnetic mass spectrometer he sought was for the isotopic analysis of gaseous uranium hexafluoride. Uranium hexafluoride is the chemical compound used in the gas centrifuge process to enrich uranium. Khaki and Yi also conspired to obtain other items from U.S. companies that can be used for gas centrifuges, including measuring instruments, pressure transducers, vacuum pumps and other accessories, according to the charges.

Efforts to Export to Iran Radioactive Materials

The indictment further alleges that Khaki sought to obtain radioactive source materials from the United States. In May 2009, for instance, Khaki sent an email to the undercover agent asking the agent to purchase radioactive sources and test materials from a U.S. company. Attached to the email was a list of products, including barium-133 source and europium-152 source, as well as contact information for the U.S. company.

In January 2011, Khaki contacted the undercover agent again requesting that he purchase various radioactive sources. In one email to the agent, Khaki allegedly sent a product catalogue for radioactive sources, including cobalt-57 source, and in another email he requested the agent purchase cadmium-109 source.

Exports to Iran of Lathes and Nickel Alloy Wire through Hong Kong, China

The indictment alleges the defendants caused the illegal export of lathes and nickel alloy 120 wire from the United States through China to Iran. In February 2009, Khaki asked Yi to contact a U.S. company about procuring two Twister Speed Lathes. Yi allegedly purchased these items and arranged for them to be shipped from the United States to Hong Kong and ultimately to Iran in June 2009.

In another transaction, on Jan. 26, 2009, Khaki allegedly asked a conspirator to contact a U.S. company about purchasing nickel alloy 120. At Khaki’s request, the conspirator sent a U.S. company an order for nickel alloy, falsely stating that a company in China was the purchaser. In June 2009, the U.S. company shipped the nickel alloy to Yi in Hong Kong, who shipped it on to Iran, according to the charges.

This investigation was conducted by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigation (HSI) agents. Assistance was provided by authorities in the Philippines. The prosecution is being handled by the U.S. Attorney’s Office for the District of Columbia and Trial Attorney Brandon L. Van Grack of the Counterespionage Section of the Justice Department’s National Security Division. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance.

The public is reminded that an indictment contains mere allegations. Defendants are presumed innocent unless and until proven guilty in a court of law.

An indictment unsealed today in the Eastern District of Michigan charges 41 members and associates of the Devils Diciples Motorcycle Gang, including National President Jeff Garvin Smith and National Vice President Paul Anthony Darrah, for their alleged participation in a variety of criminal offenses, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Barbara McQuade for the Eastern District of Michigan and FBI Acting Assistant Director Valerie Parlave.

Thirty-one defendants were arrested today in Michigan and Alabama and five defendants were previously in custody. More than 60 firearms and more than 6,000 rounds of ammunition were seized during this investigation. In addition, eight methamphetamine manufacturing laboratories were dismantled during the investigation.

The indictment alleges that the 41 Devils Diciples members and associates, including Smith and Darrah, participated in various criminal acts, including violent crimes in aid of racketeering, drug trafficking, illegal firearms offenses, obstruction of justice, illegal gambling and other federal offenses. Eighteen of the defendants, including Smith and Darrah, are charged with violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act by conducting their illegal enterprise through a pattern of racketeering activity which included murder, robbery, extortion, drug trafficking, obstruction of justice and other federal and state offenses.

“For years, according to the indictment, the Devils Diciples have spread fear in cities throughout Michigan and around the country,” said Assistant Attorney General Breuer. “This violent criminal enterprise allegedly profits from drug trafficking and illegal gambling, and uses intimidation and violence to silence its adversaries and maintain control over its members. Today’s arrests of the Devils Diciples’ top leaders and 39 of the gang’s members and associates are an important step in our efforts to dismantle violent criminal enterprises across the country.”

“Removing violent criminal organizations from our community is essential to attaining the quality of life we expect and deserve,” said U.S. Attorney McQuade. “Federal law enforcement is using all legal tools available to prosecute violent criminal enterprises like this one.”

“Today’s law enforcement action takes violence off the streets,” said FBI Acting Assistant Director Valerie Parlave.  “The FBI appreciates the strong law enforcement partnerships leading to this activity and will continue its commitment to state and local communities to address this violent, and often brutal, criminal threat across the U.S.”

According to the indictment, the Devils Diciples is a criminal enterprise with its national headquarters in Clinton Township, Mich. The Devils Diciples operates regional chapters located in cities throughout Michigan, Alabama, Arizona, California, Illinois, Indiana, Ohio and elsewhere. The Devils Diciples engage in criminal activities for financial gain, including distribution of narcotics, theft, transportation and sale of stolen motorcycles, conducting illegal gambling businesses, robbery, extortion and acts of violence.

According to the indictment, membership in the Devils Diciples is based in part on successfully completing a probationary period, followed by formal approval by one or more members or leaders. Members are required to own Harley Davidson motorcycles and are commonly referred to as “full patched members.” Full patched members are identified by a club name or nickname for the express purpose of concealing their identity and thwarting identification by law enforcement. Members are required to follow orders from leadership, including orders to assault or use threats and intimidation against others, to transport or distribute drugs, to lie to law enforcement or to hide or destroy evidence. Members are also required to follow the Devils Diciples by-laws and attend regular meetings referred to as “church.”

The indictment alleges that the Devils Diciples committed acts involving attempted murder, robbery, extortion, assault and threats of violence to maintain the territory of the organization and to protect the organization and its members from detection and prosecution by law enforcement authorities.

The indictment charges the 41 Devils Diciples members and associates with a variety of criminal offenses including violent crimes in aid of racketeering, drug trafficking, illegal firearms offenses, obstruction of justice and other federal offenses.

Specifically, the indictment alleges that in August 2003, Vincent John Witort and multiple other Devils Diciples members robbed, kidnapped and attempted to murder other members of the Arizona Chapter for violating Devils Diciples rules.

The indictment alleges that in 2004, Smith possessed state and federal law enforcement manuals regarding outlaw motorcycle gangs marked “For Official Use Only” and “Law Enforcement Sensitive” and numerous documents related to criminal matters involving members of the Devils Diciples, including police reports, search warrants, affidavits, indictments and witness interview transcripts.

Smith allegedly assaulted another individual in August 2008, for the purpose of maintaining and increasing position in the Devils Diciples enterprise. The indictment also alleges that in late 2008, Smith, Paul Anthony Darrah and Cary Dale Vandiver assaulted Scott Thomas Perkins with a metal pipe.

According to the indictment, in February 2009, Ronald Raymond Roberts, Christopher Raymond Cook and Wayne Russell Werth allegedly assaulted Danny Russell Burby Jr. with a box cutter and a bottle, after various Devils Diciples members circulated flyers containing a photograph of Burby and stating that Burby was a “snitch.”

The indictment also alleges that in January 2012, David Randy Drozdowski and Smiley Villa assaulted an individual they believed was a member of a rival motorcycle club for being present in Devils Diciples territory.

Sixteen of the members and associates named in the indictment are charged with conspiracy to conduct an illegal gambling business. The defendants operated slot machines located in several Devils Diciples clubhouses in Michigan, Arizona and Alabama to generate income for the criminal enterprise and its members.

The 41 defendants charged are:

1.       Scott William Sutherland, aka “Scotty Z”

2.       Ronald Raymond Roberts, aka “Rockin’ Ronnie”

3.       David Thomas Roberts, aka “Detroit Dave”

4.       Patrick Michael McKeoun, aka “Magoo”

5.       Jeff Garvin Smith, aka “Fat Dog”

6.       Paul Anthony Darrah, aka “Pauli”

7.       Cary Dale Vandiver, aka “Gun Control”

8.       Vincent John Witort, aka “Holiday”

9.       Michael William Mastromatteo, aka “Iron Mike”

10.   Vernon Nelson Rich, aka “Vern”

11.   John Renny Riede, aka “Bear”

12.   Victor Carlos Castano

13.   Gary Lee Nelson

14.   Michael Kenneth Rich, aka “Tatu”

15.   Raymond Charles Melioli, aka “Romeo”

16.   Timothy Paul Downs, aka “Space”

17.   David Randy Drozdowski, aka “D”

18.   Smiley Villa, aka “SA”

19.   Dean Edward Jakiel, aka “Jesus”

20.   Tony Wayne Kitchens, aka “Trouble”

21.   Sylvester Gerard Wesaw, aka “Sly Dog”

22.   Ronald Nick Preletz, aka “Polar Bear”

23.   Howard Joseph Quant, aka “44”

24.   Scott Thomas Perkins, aka “Scotty P”

25.   Clifford Chansel Rhodes, II

26.   David Roy Delong, aka “Reverend”

27.   Christopher Raymond Cook, aka “Damien”

28.   Michael John Palazzola, aka “Utica Mike”

29.   Danny Russell Burby, Jr., aka “Thumbs”

30.   Ronald Leon Lambert, aka “Crow”

31.   Jason Joseph Cook, aka “Cookie”

32.   Edward Allen Taylor, aka “Big Ed”

33.   Salvatore Battaglia, aka Bando”

34.   William Scott Lonsby, aka “Buckwheat”

35.   Wayne Russell Werth

36.   Lauri Ann Ledford

37.   Jennifer Lee Cicola

38.   Dean Anthony Tagliavia

39.   Alexis Catherine May

40.   Paula Mileha Friscioni

41.   John Charles Scudder

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

The case was investigated by the FBI, the Michigan State Police, the Macomb County Sheriff’s Office, and the County of Macomb Enforcement Team (COMET), with assistance from the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the St. Clair County Sheriff’s Office. The case is being prosecuted by the Organized Crime and Gang Section of the Justice Department’s Criminal Division and the U.S. Attorney’s Office for the Eastern District of Michigan.

WASHINGTON – The Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today an agreement with over three dozen companies and government agencies that will result in a $56.4 million cleanup of the “Malone Services Company” Superfund Site in Texas City, Texas, a former waste-disposal site near the shore of Galveston Bay.   

“Cleanup under today’s settlement will address the threat from more than a quarter of a million cubic yards of contamination left behind by the site operators in tanks and in a large unlined earthen basin,” said Robert Dreher, Principal Deputy Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division.  “Through this agreement, the parties have avoided costly and time-consuming litigation and expedited a cleanup that will protect the health and safety of citizens of Texas City and the coastal environment along Swan Lake.”

The settlement, which is subject to court approval, requires a group of 27 companies to clean up the site, pay EPA $900,000 towards past and future costs, and reimburse the state of Texas for $796,726 in past costs.  Among the companies doing the clean-up work are BP Products North America Inc., Pharmacia (formerly Monsanto), Marathon Oil Company, Exxon Mobil Corporation and BASF Corporation.  Seventy-six entities, including the United States and the Texas Commission on Environmental Quality (TCEQ) are resolving their liability by paying cash to the group of 27.  The United States, which shipped 1.62 percent of the waste, will pay $1,490,029.  TCEQ, which shipped 0.00545 percent of the waste, will contribute $6,766.  (EPA previously completed four rounds of administrative settlements with approximately 230 relatively small contributors of waste, so-called “de minimis” parties, collecting approximately $8.4 million.  EPA will make at least $4.5 million from these and other recoveries available to the group of 27 companies carrying out the cleanup.) 

“Once approved by the court, this settlement will reinforce the 'polluter pays' principle that is central to the Superfund program by obtaining a commitment for funds for cleanup work from the responsible parties at this site,” said EPA Acting Regional Administrator Sam Coleman.  “This settlement ensures the cleanup of this site will continue, further protecting public health and the environment.”

The federal and state natural resource trustees for the site — the National Oceanic and Atmospheric Administration, the U.S. Department of the Interior represented by the U.S. Fish and Wildlife Service, TCEQ, the Texas Parks and Wildlife Department and the Texas General Land Office — determined that natural resources associated with upland-woodlands habitat, freshwater-marsh habitat and saltwater-marsh habitat, were injured by contamination.  The parties that shipped waste to the site will pay the trustees a total of $3,109,000 to implement environmental restoration projects, which will be selected in the future by the trustees and described in a restoration plan on which public comment will be solicited. 

The Malone Service Company operated a disposal facility for waste oil and waste chemicals between approximately 1964 and 1996.  Hundreds of entities sent a total of approximately 481 million gallons of waste to the Site.  Approximately 260,000 cubic yards of contaminated oily sludge is present in above-ground storage tanks and a multi-acre earthen impoundment.  The consent decree requires that the oily sludge be solidified and placed into an on-site RCRA-Subtitle C-equivalent cell, along with contaminated soil.  The groundwater will be monitored to confirm that the remedial action is preventing offsite migration.

The proposed settlement was lodged today in the U.S. District Court for the Southern District of Texas.  The settlement is subject to a 30-day public comment period and final court approval.  A copy of the proposed consent decree is available on the Justice Department web site at www.usdoj.gov/enrd/Consent_Decrees.html

The Department of Justice today filed the second largest fair lending settlement in the department’s history to resolve allegations that Wells Fargo Bank, the largest residential home mortgage originator in the United States, engaged in a pattern or practice of discrimination against qualified African-American and Hispanic borrowers in its mortgage lending from 2004 through 2009.

The settlement provides $184.3 million in compensation for wholesale borrowers who were steered into subprime mortgages or who paid higher fees and rates than white borrowers because of their race or national origin. Wells Fargo will also provide $50 million in direct down payment assistance to borrowers in communities around the country where the department identified large numbers of discrimination victims and which were hard hit by the housing crisis.

Additionally, Wells Fargo has agreed to conduct an internal review of its retail mortgage lending and will compensate African-American and Hispanic retail borrowers who were placed into subprime loans when similarly qualified white retail borrowers received prime loans. Compensation paid to any retail borrowers identified in the review process will be in addition to the $184.3 million to compensate wholesale borrowers who were victims of discrimination .

“The department’s action makes clear that we will hold financial institutions accountable, including some of the nation’s largest, for lending discrimination,” said Deputy Attorney General James M. Cole. “An applicant’s creditworthiness, and not the color of his or her skin, should determine what loans a borrower qualifies for. With today’s settlement, the federal government will ensure that African-American and Hispanic borrowers who were discriminated against will be entitled to compensation and borrowers in communities hit hard by this housing crisis will have an opportunity to access homeownership.”

The settlement, which is subject to court approval, was filed today in the U.S. District Court for the District of Columbia in conjunction with the department’s complaint, which alleges that between 2004 and 2008, Wells Fargo discriminated by steering approximately 4,000 African-American and Hispanic wholesale borrowers, as well as additional retail borrowers, into subprime mortgages when non-Hispanic white borrowers with similar credit profiles received prime loans.  All the borrowers who were allegedly discriminated against were qualified for Wells Fargo mortgage loans according to Well Fargo’s own underwriting criteria.

The United States also alleges that, between 2004 and 2009, Wells Fargo discriminated by charging approximately 30,000 African-American and Hispanic wholesale borrowers higher fees and rates than non-Hispanic white borrowers because of their race or national origin rather than the borrowers’ credit worthiness or other objective criteria related to borrower risk.

“By reaching a settlement in this case, African-American and Hispanic wholesale borrowers who received subprime loans when they should have received prime loans or who paid more for their loans will get swift and meaningful relief,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “As one of the largest mortgage lenders in the country, Wells Fargo’s commitment to conduct an internal review of its retail lending and compensate African American and Hispanic retail borrowers who may have been improperly placed in subprime loans is significant. We will continue to work aggressively to ensure that all qualified borrowers have access to credit on an equal basis.”

The United States’ complaint alleges that African-American and Hispanic wholesale borrowers paid more than non-Hispanic white wholesale borrowers, not based on borrower risk, but because of their race or national origin. Wells Fargo’s business practice allowed its loan officers and mortgage brokers to vary a loan’s interest rate and other fees from the price it set based on the borrower’s objective credit-related factors . This subjective and unguided pricing discretion resulted in African-American and Hispanic borrowers paying more. The complaint alleges that Wells Fargo was aware the fees and interest rates it was charging discriminated against African-American and Hispanic borrowers, but the actions it took were insufficient and ineffective in stopping it.

The United States’ complaint also alleges that, as a result of Wells Fargo’s policies and practices, qualified African-American and Hispanic wholesale borrowers were placed in subprime loans rather than prime loans even when similarly-qualified non-Hispanic white borrowers were placed in prime loans. The discriminatory placement of wholesale borrowers in subprime loans, also known as “steering,” occurred because it was the bank’s business practice to allow mortgage brokers and employees to place a loan applicant in a subprime loan even when the applicant qualified for a prime loan . In addition, Wells Fargo gave mortgage brokers discretion to request exceptions to the underwriting guidelines, and Wells Fargo’s employees had discretion to grant these exceptions.

This is the second time that the Justice Department has alleged and obtained relief for borrowers who were steered into loans based on race or national origin, a practice that systematically placed borrowers of color into subprime mortgage loan products while placing non-Hispanic white borrowers with similar creditworthiness in prime loans. By steering borrowers into subprime loans from 2004 to 2008, the complaint alleges, Wells Fargo harmed those qualified African-American and Hispanic borrowers. Subprime loans generally carried higher-cost terms, such as prepayment penalties and adjustable interest rates that started with low initial teaser rates, and then increased significantly after two or three years, often making the payments unaffordable and leaving the borrowers at a much higher risk of default or foreclosure.

The department began its investigation into Wells Fargo’s lending practices in 2009 and received a referral in 2010 from the Office of the Comptroller of the Currency (OCC) which conducted its own parallel investigation of Wells Fargo’s lending practices in the Baltimore and Washington, D.C. metropolitan areas. The OCC found that there was reason to believe that Wells Fargo engaged in a pattern or practice of discrimination in these metro areas on the basis of race or color, in violation of the FHA and ECOA.

This case was prosecuted by the Fair Lending Unit in the Civil Rights Division’s Housing and Civil Enforcement Section in conjunction with the U.S. Attorney’s Office for the District of Columbia. Since the attorney general established the unit in early 2010, it has filed a complaint in or resolved 19 matters. By way of contrast, from 1993 to 2008, the department filed or resolved 37 lending matters, an average of a little more than two cases per year.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.stopfraud.gov .

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

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 Wells Fargo’s discrimination. The department will make a public announcement and post contact information on its website once an administrator is chosen.  

Updated January 17, 2013

The 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 Wells Fargo’s discrimination.  The Department has approved Wells Fargo’s choice of Epiq Class Action & Claims Solutions, Inc. to administer the settlement on the parties’ behalf.  Over the next few months, Epiq will contact borrowers who are eligible for compensation from the settlement.  African-American and Hispanic borrowers who received loans originated by Wells Fargo between 2004 and 2009 and who believe that they may have been victims of lending discrimination by Wells Fargo and have questions about the settlement may contact Epiq, in English or Spanish, at 1-866-329-5282 or via email at [email protected].  The Department of Justice is in the process of providing Epiq information about borrowers who have contacted the Department since it announced the settlement, and Epiq will follow-up with those borrowers as appropriate.

Updated December 4, 2013

On November 25, 2013, the participation period ended for eligible victims to choose to participate in the settlement. In early 2014, the Settlement Administrator plans to mail a letter with the exact payment amount and a release form to those who returned the response form by the deadline. The Independent Settlement Administrator will mail checks on a rolling basis, upon receipt of a signed release form.

Updated March 28, 2014

In early 2014, the Settlement Administrator mailed a letter with the exact payment amount and a release form to those who returned the participation form by the deadline. The Independent Settlement Administrator will mail checks on a rolling basis, upon receipt of a valid, signed release form.

Related Materials:

Complaint
Borrower Letter Mailing Notice
Proposed Consent Decree
Settlement Administrator Selection Notice
Notice of Additional Monetary Relief

A former police officer of Puerto Rico was sentenced today in San Juan to 40 years in prison for his role in providing security for drug transactions, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Special Agent in Charge Joseph S. Campbell of the FBI’s San Juan Division.

Javier A. Diaz Castro, 30, was sentenced by U.S. District Judge Gustavo A. Gelpi for the District of Puerto Rico.

Diaz was convicted on Dec. 12, 2011, of two counts of conspiracy to possess with intent to distribute more than five kilograms of cocaine, two counts of attempting to possess with the intent to distribute more than five kilograms of cocaine, and two counts of possession of a firearm in furtherance of a drug transaction. Diaz was charged in an indictment unsealed on Oct. 6, 2010, along with 88 other law enforcement officers in Puerto Rico and 44 other individuals, as part of the FBI undercover operation known as Guard Shack. To date, 128 of the charged defendants have pleaded guilty or have been convicted at trial, including Diaz.

According to the evidence presented in court, on at least two occasions in 2010, Diaz provided security for what he believed were a series of illegal drug deals, but which in fact were part of the undercover FBI operation. Diaz, a 10-year veteran of the police force, was assigned to the frauds unit at the time of the transactions. According to information presented at trial, Diaz was brought into the scheme by another police officer of Puerto Rico.

In return for the security he provided, based on his departmental training and using his service weapon, Diaz received cash payments of $2,000 per transaction.

The case was prosecuted by Trial Attorneys Eric L. Gibson and Barak Cohen of the Public Integrity Section in the Justice Department’s Criminal Division. The case was investigated by the FBI. The U.S. Attorney’s Office for the District of Puerto Rico also participated in the investigation and prosecution of this case.

Sylvester Bruce, 44, a former corrections officer with Navajo Nation’s Shiprock Detention Center (SDC) in Shiprock, N.M., pleaded guilty today in federal court on charges related to the sexual abuse of an inmate during the summer and fall of 2010.  Specifically, Bruce pleaded guilty to one count of violating the civil rights of the victim when he touched her breasts against her will.  Bruce also pleaded guilty to making material false statements to the FBI when he denied taking pictures of inmates inside the cells of the SDC.

According to court documents, while the victim was incarcerated at SDC , Bruce repeatedly placed his hands under the victim’s shirt and bra, and grabbed her breasts, knowing that she did not consent to his actions.  Bruce did so in areas of the jail that did not have surveillance cameras.  Bruce further admitted that he lied to the FBI when he denied taking pictures of inmates in their cells, acknowledging that he had, in fact, photographed two female inmates asleep on a bed in their cell.

"Sexual assaults by corrections officers on those they are charged with keeping safe undermine the very foundation of our judicial system,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department will vigorously prosecute these crimes and work to vindicate the rights of the courageous victims who report them."

Under the terms of the plea agreement, Bruce will be sentenced to a term of imprisonment of 12 months and a day. Bruce will also not be able to serve in a law enforcement capacity again and will submit to federal and state sex offender registration requirements.

“Our system of justice is clear and unequivocal - every law enforcement officer must follow the laws they are sworn to enforce. While the vast majority of officers perform their duties to protect the public with professionalism and integrity often under very dangerous conditions, there are an unscrupulous few who do not,” said Kenneth J. Gonzales, U.S. Attorney for the District of New Mexico. “Every person in lock-up, regardless of the charge or crime of conviction, is entitled to be safe and certainly should never be victimized by those responsible for guarding them.  I commend the victim in this case for having the courage to step forward and assert her right to be free of sexual abuse, and for trusting the Department of Justice to protect her.”

“The FBI, as the lead agency for enforcing federal civil rights laws, will continue to vigorously investigate and bring to justice corrections officers who betray the great trust placed in them when they abuse the individuals in their custody,” said Carol K.O. Lee, Special Agent in Charge of the Albuquerque Division of the FBI. “I am proud of the fine work done by the FBI Special Agents in this case, and would like to express my gratitude for the assistance of the U.S. Justice Department's Civil Rights Division, the U.S. Attorney's Office, and the Navajo Department of Criminal Investigations.”

This case was investigated by the Farmington Resident Agency of the Albuquerque Division of the FBI and the Shiprock Division of the Navajo Nation Department of Public Safety, and was prosecuted by Assistant U.S. Attorney Mark Baker for the District of New Mexico and Fara Gold of the Justice Department’s Civil Rights Division.

WASHINGTON – El Departamento de Justicia presentó hoy el segundo mayor acuerdo conciliatorio de otorgamiento justo de préstamos de la historia del departamento, en resolución de alegatos de que Wells Fargo Bank, el mayor originador de hipotecas para vivienda de los Estados Unidos, exhibió un patrón o práctica de discriminación de prestatarios afroestadounidenses e hispanos en su otorgamiento de préstamos entre el 2004 y el 2009. 

El acuerdo conciliatorio dispone una compensación de 125 millones de dólares para prestatarios mayoristas que fueron orientados hacia hipotecas del tipo subpreferenciales ("subprime") o pagaron cargos y tasas más altos que prestatarios de raza blanca, debido a su raza u origen nacional.  Wells Fargo también proveerá 50 millones de dólares en asistencia directa para pagos iniciales a prestatarios en comunidades de todo el país, en lugares donde el departamento identificó grandes cantidades de víctimas de discriminación y que fueron fuertemente golpeados por la crisis de la vivienda. 

Asimismo, Wells Fargo ha acordado llevar a cabo una revisión interna de su otorgamiento de préstamos minoristas y compensará a los prestatarios minoristas afroestadounidenses e hispanos que recibieron préstamos subpreferenciales ("subprime"), cuando prestatarios de raza blanca con calificaciones similares recibieron préstamos del tipo preferenciales ("prime").   La compensación pagada a cualquier prestatario minorista identificado en el proceso de revisión será por encima de los 125 millones de dólares para compensar a prestatarios mayoristas quienes fueron víctimas de discriminación.

“La acción del departamento deja claro que las instituciones financieras, incluyendo algunas de las más grandes de la nación, responderán por discriminar en el otorgamiento de préstamos”, dijo el Secretario de Justicia Adjunto James M. Cole. “La solvencia del solicitante, y no el color de su piel, debe ser el factor determinante del tipo de préstamo que le será otorgado. Con el acuerdo conciliatorio de hoy, el gobierno federal asegurará que los prestatarios afroestadounidenses e hispanos discriminados tendrán derecho a compensación y que los prestatarios de comunidades fuertemente golpeadas por esta crisis de vivienda tengan una oportunidad de ser propietarios”.

El acuerdo conciliatorio,el cual es sujeto a aprobación judicial, fue presentado hoy en el Tribunal Federal de Distrito para el Distrito de Columbia en conjunto con la demanda del departamento, la cual alega que entre el 2004 y el 2008, Wells Fargo discriminó al orientar a aproximadamente 4,000 prestatarios mayoristas afroestadounidenses e hispanos, así como prestatarios minoristas adicionales, hacia hipotecas subpreferenciales, cuando prestatarios de raza blanca no hispanos con perfiles de crédito similares recibieron préstamos preferenciales.  Todos los prestatarios objeto de la discriminación alegada cumplían los requisitos para hipotecas de Wells Fargo, de acuerdo con los propios criterios de suscripción de Wells Fargo.

Asimismo, Estados Unidos alega que, entre el 2004 y el 2009, Wells Fargo cometió un acto de discriminación al cobrarles a aproximadamente 30,000 prestatarios mayoristas afroestadounidenses e hispanos cargos y tasas más altos que a prestatarios blancos no hispanos debido a su raza u origen nacional, en lugar de la solvencia de los prestatarios y otros criterios objetivos asociados al riesgo crediticio del prestatario. 

“Al lograr un acuerdo conciliatorio en este caso, los prestatarios mayoristas afroestadounidenses e hispanos que recibieron préstamos subpreferenciales, cuando deberían haber recibido préstamos preferenciales, o que pagaron más por sus préstamos, recibirán compensación rápida y significativa”, dijo Thomas E. Perez, Secretario Auxiliar de la División de Derechos Civiles.  “Como uno de los principales prestamistas hipotecarios del país, el compromiso de Wells Fargo de realizar una revisión interna de su otorgamiento de préstamos minoristas y compensar a prestatarios minoristas afroestadounidenses e hispanos a los que se les haya otorgado préstamos subpreferenciales indebidamente es importante. Seguiremos trabajando activamente para asegurar que todos los prestatarios aptos tengan acceso parajo al crédito”.

La demanda de los Estados Unidos alega que prestatarios mayoristas afroestadounidenses e hispanos pagaron más que prestatarios mayoristas blancos no hispanos, no basado en el riesgo financiero que presentaban, sino debido a su raza u origen nacional.  La práctica comercial de Wells Fargo permitió que sus oficiales de préstamos y corredores hipotecarios variaran la tasa de interés de un préstamo y otros cargos respecto al precio que estableció basándose con base en factores crediticios objetivos del prestatario.  Debido a esta libertad subjetiva y sin orientación, los prestatarios afroestadounidenses e hispanos pagaron más.  La demanda alega que Wells Fargo sabía que los cargos y las tasas de interés que estaba cobrando discriminaban contra prestatarios afroestadounidenses e hispanos, pero que las acciones que tomó fueron insuficientes e ineficaces para poner fin al hecho. 

La demanda entablada por los Estados Unidos también alega que, como resultado de las políticas y prácticas de Wells Fargo, se les otorgaron a prestatarios mayoristas afroestadounidenses e hispanos que reunían los requisitos necesarios, préstamos subpreferenciales en lugar de préstamos preferenciales, aunque se les otorgaron a prestatarios blancos no hispanos con calificaciónes similares préstamos preferenciales.  El otorgamiento discriminatorio de los préstamos subpreferenciales, también conocido como “direccionamiento” [“steering”], contra prestatarios mayoristas ocurrió porque era la práctica comercial de Wells Fargo permitir que los corredores y empleados hipotecarios otorgaran un préstamo subpreferencial a un prestatario, aunque el prestatario cumpliera con los requisitos para un préstamo preferencial.  Además, Wells Fargo les otorgó a los corredores hipotecarios la libertad de solicitar excepciones a las directrices de suscripción, y los empleados de Wells Fargo tenían la libertad de otorgar estas excepciones.      

Esta es la segunda vez que el Departamento de Justicia alega y obtiene reparación para prestatarios que fueron direccionados a los que se les otorgaron préstamos basados en su raza u origen nacional, una práctica que sistemáticamente otorgó a prestatarios de color productos hipotecarios subpreferenciales ("subprime"), y otorgó a prestatarios blancos no hispanos con solvencia similar préstamos del tipo preferenciales ("prime").  Al orientar a prestamistas hacia préstamos subpreferenciales del 2004 al 2008, alega la demanda, Wells Fargo perjudicó a dichos prestamistas afroestadounidenses e hispanos calificados.  Los préstamos subpreferenciales tenían, en general, costos más altos, tales como penalidades de pago prematuro y tasas de interés ajustables que comenzaban con tasas de interés iniciales bajas, y luego aumentaban repentinamente después de dos o tres años, haciendo, muchas veces, impagables las cuotas y colocando a los prestatarios bajo un riesgo mucho más alto de incumplimiento o ejecución hipotecaria.

El departamento inició su investigación de las prácticas de otorgamiento de préstamos de Wells Fargo en el 2009 y en el 2010 recibió una remisión de la Oficina del Controlador de la Moneda [Office of the Comptroller of the Currency (OCC, por sus siglas en inglés)] que realizó su propia investigación paralela de las prácticas de otorgamiento de préstamos de Wells Fargo en las áreas metropolitanas de Baltimore y Washington, D.C.  La OCC encontró que había motivos para creer que Wells Fargo exhibió un patrón o una práctica de discriminación en estas áreas metropolitanas basándose en raza o color, violando las disposiciones de la la Ley de Vivienda Justa (FHA, por sus siglas en inglés) y la Ley de Igualdades de Oportunidad al Crédito (ECOA, por sus siglas en inglés).

Este caso fue enjuiciado por la Unidad de Otorgamiento Justo de Préstamos de la Sección de Vivienda y Cumplimiento de la Ley Civil de la División de Derechos Civiles, en conjunto con la Fiscalía Federal del Distrito de Columbia.  Desde que el Secretario de Justicia de los Estados Unidos estableció la unidad a principios del 2010, la misma ha entablado demandas o resuelto 19 casos.  En contraste, entre el 1993 y el 2008, el departamento entabló o resolvió 37 casos asociados a préstamos, un promedio de un poco más de dos casos por año.

El anuncio del día de hoy es parte de un esfuerzo en marcha de la Fuerza de Tarea Interagencia de Coacción contra el Fraude Financiero del Presidente Obama (Financial Fraud Enforcement Task Force, FFETF, por sus siglas en inglés).  El Presidente Obama estableció la Fuerza de Tarea Interagencia de Coacción contra el Fraude Financiero para llevar a cabo una iniciativa enérgica, coordinada y proactiva para investigar y enjuiciar delitos financieros.   La fuerza de tarea incluye a representantes de una amplia gama de dependencias federales, autoridades regulatorias, inspectores generales y miembros de las fuerzas del orden público estatales y locales, quienes, trabajando juntos, aprovechan un poderoso espectro de recursos de coacción penal y civil. La fuerza de tarea está trabajando para mejorar la labor en todo el poder ejecutivo federal, y con asociados estatales y locales, para investigar y enjuiciar los delitos financieros importantes, asegurar un castigo justo y eficaz para quienes cometan delitos financieros, combatir la discriminación en los mercados de préstamos y financieros y recuperar fondos para las víctimas de delitos financieros.  Para obtener más información sobre la fuerza de tarea, visite www.stopfraud.gov.

Para obtener una copia de la demanda y de la orden de acuerdo conciliatorio propuesto, así como 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 dispone que un administrador independiente se comunique con prestatarios identificados por el Departamento de Justicia como víctimas de discriminación por parte de Wells Fargo y distribuya sin ningún costo a los mismos pagos de compensación.  El departamento realizará un anuncio público y publicará información de contacto en su portal en Internet una vez que se haya elegido el administrador. Los prestatarios elegibles para recibir indemnizaciones provenientes del acuerdo conciliatorio serán luego contactados por el administrador. Las personas que crean que pueden haber sido víctimas de discriminación en el otorgamiento de préstamos por parte de Wells Fargo y tengan preguntas sobre el acuerdo conciliatorio pueden enviar un mensaje de correo electrónico al departamento a [email protected].

WASHINGTON — The owner of a former New York City insulation service company pleaded guilty today to a three-count indictment charging him with conspiring to rig bids on contracts for re-insulation services to New York Presbyterian Hospital (NYPH), conspiring to defraud the Internal Revenue Service (IRS) and filing a false tax return, the Department of Justice announced.

David Porath pleaded guilty in the U.S. District Court in Manhattan to charges originally filed under seal on Feb. 18, 2010. At the time of the indictment, Porath was living in Israel. He was extradited and returned to the United States on Feb. 16, 2012. According to the indictment, between early 2000 and March 2005, Porath and his co-conspirators engaged in a bid-rigging conspiracy whereby they created the illusion of a competitive bidding process at NYPH by preparing and submitting fictitious, intentionally high bids so that Porath’s company would be awarded the contracts for re-insulation services for having the “low” bid.

“By submitting intentionally high, non-competitive bids, the co-conspirators deceived NYPH and distorted the competitive market,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “The division will continue to apprehend and bring to justice those who rig bids and thereby deprive the public of the benefits afforded by a truly competitive bidding process.”

The indictment further charged that between October 2000 and February 2005, Porath conspired with Andrzej Gosek, the owner of a Pennsylvania-based asbestos abatement company, and others, to defraud the IRS and to subscribe to false tax returns. Porath gave Gosek checks made out to companies in Brooklyn, purportedly for work done at NYPH by the Brooklyn companies as sub-contractors to Porath’s company. However, the companies had not performed the work. The checks totaled approximately $229,100 in 2000; $1.19 million in 2001; $760,000 in 2002; $50,000 in 2003; and $125,000 in 2004.

The Brooklyn companies cashed the checks and Gosek delivered the cash, less approximately five percent, back to Porath. Based upon these checks to the Brooklyn companies, Porath took false deductions on his company’s and his personal federal tax returns, allowing Porath to fraudulently reduce his taxable income. The indictment also charged Porath with filing a false federal tax return on or about Feb. 17, 2005, which substantially understated his income.

The bid-rigging charge carries a maximum penalty of 10 years in prison and a $1 million fine. The tax fraud conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine. The false subscription charge carries a maximum penalty of three years in prison and a $100,000 fine. The maximum fine for each of these charges may be increased to twice the gain derived from the crimes or twice the loss suffered by the victims of the crimes, if either of those amounts is greater than the statutory maximum fine.

Including Porath and Gosek, who pleaded guilty in November 2010, 15 individuals and six companies have been convicted of or pleaded guilty to charges arising out of this federal antitrust investigation of bid rigging, fraud, bribery and tax-related offenses relating to the award of contracts by the facilities operations department of NYPH.

The investigation was conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service - Criminal Investigation’s New York Field Office. The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance. Anyone with information concerning bid rigging, bribery, tax offenses or fraud related at NYPH should contact the Antitrust Division’s New York Field Office of the at 212-335-8000,  visit www.justice.gov/atr/contact/newcase.htm , or call the FBI’s New York Division at 212-384-1000.

A New York 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. The 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 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.

Gregory A. Cherwonik, 53, of Canandaigua, N.Y., pleaded guilty to one count of conspiracy to commit criminal copyright infringement.  The plea was entered before U.S. District Judge Arenda L. Wright Allen in the Eastern District of Virginia.  Cherwonik faces up to five years in prison, a fine of $250,000 and three years of supervised release. 

Cherwonik 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, Cherwonik and his co-conspirators sought to illegally obtain and disseminate digital copies of copyrighted motion pictures showing in theaters.  Cherwonik admitted that he helped to create a new website for the IMAGiNE Group hosted on a computer server located in France.  Cherwonik ordered receivers and recording devices for the purpose of secretly using them in movie theaters to capture the audio sound tracks of copyrighted movies (referred to as “capping”).  After obtaining, editing and filtering audio sound tracks and uploading them to servers utilized by the IMAGiNE Group, his co-conspirators used software to synchronize the audio file with an illegally obtained video file of a movie to create a completed movie file suitable for sharing over the Internet among members of the IMAGiNE Group and others.  Mr. Cherwonik also admitted that the IMAGiNE Group’s conduct resulted in a readily provable and reasonably foreseeable infringement amount of more than $400,000.

A co-defendant, Sean Lovelady, pleaded guilty on May 8, 2012, to one count of conspiracy to commit criminal copyright infringement. Another co-defendant, Willie Lambert, pleaded guilty to the same charge on June 22, 2012. Charges remain pending against co-defendant Jeramiah Perkins. He is innocent until proven guilty beyond a reasonable doubt in a court of law.  

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 Computer Crime and Intellectual Property Section (CCIPS) in the Justice Department’s Criminal Division are prosecuting the case.  Significant assistance was provided by the CCIPS Cyber Crime Laboratory and the Office of International Affairs in the Justice Department’s Criminal Division.

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 20 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 today filed a lawsuit against the Robertson Fire Protection District (RFPD) in North Saint Louis County, Mo., for unfairly retaliating against a firefighter who provided testimony against the RFPD, in violation of Title VII of the Civil Rights Act of 1964, as amended. Title VII is a federal statute which prohibits retaliation for opposing instances of employment discrimination.

According to the complaint, filed in the U.S. District Court for the Eastern District of Missouri, Steve Wilson, who is a firefighter, was subjected to acts of retaliation by RFPD after he provided testimony in support of a Title VII case brought by the department in 2007 on behalf of two former African-American firefighters. Wilson's deposition testimony in 2008 described how RFPD Chief David Tilley asked Wilson to participate in discriminatory conduct and how Wilson refused to do so. The lawsuit alleges that RFPD retaliated against Wilson after he provided the testimony about the discriminatory conduct that occurred in RFPD.

“Employees who refuse to participate in discriminatory activity and provide testimony against their employers’ unlawful discrimination should be applauded, not punished,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Title VII not only protects those who have suffered discrimination, it also protects those who oppose discrimination in the workplace. We will not tolerate public employers retaliating against their employees who participate in the investigations and lawsuits necessary to combat unlawful discrimination.”

The continued enforcement of Title VII has been a priority 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.usdoj.gov/crt/.

Related Materials:

Robertson Complaint

The Justice Department today filed a lawsuit against the Texas Department of Agriculture (TDA) and Texas General Land Office (GLO) alleging that both state agencies are liable for discrimination against three female employees on the basis of sex, in violation of Title VII of the Civil Rights Act of 1964, as amended, which occurred at Texas Department of Rural Affairs (TDRA). Title VII is a federal statute which prohibits employment discrimination on the basis of sex, race, color, national origin or religion.

The lawsuit, filed in U.S. District Court in the Western District of Texas, alleges that the TDA and GLO, both of which assumed responsibilities of the now defunct TDRA, discriminated against three women in Program Specialist VII positions by paying them significantly less than their male colleagues for performing substantially the same work.

According to the complaint, the TDRA analyzed the salaries of all Program Specialist VIIs in the Disaster Recovery Division, found that the salaries of the women fell significantly short of those of men in comparable positions, and raised the women’s salaries. However, after the TDRA concluded that pay disparities existed between men and women, it did not raise women’s salaries to be comparable to the wages made by their male counterparts, nor did it compensate the women for the substantial amount of time their salaries were undervalued.

The suit also alleges that the women were subject to retaliation through the agency’s termination of their employment as an outgrowth of their claims of sex discrimination in compensation.

The complaint seeks declaratory and injunctive relief requiring the TDA and GLO to ensure that policies are in place to prevent their employees from being subjected to discrimination and retaliation, as well as monetary damages for the total time the women's salaries were undervalued, both after the raise and throughout the entire time of the women's employment in the Program Specialist VII position. The U.S. Equal Employment Opportunity Commission (EEOC) has also filed a lawsuit against the TDA and GLO alleging violations of the Equal Pay Act. The department will collaborate with the EEOC in seeking remedies.

“This lawsuit highlights the critical need for continued attention to equal pay issues in this country,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The wage gap between women and men persists, and the Civil Rights Division is committed to using all the tools available under this nation’s employment discrimination laws to ensure equal pay for equal work. We are pleased to collaborate with the EEOC in this critical enforcement effort.”

The continued enforcement of Title VII has been a priority 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.usdoj.gov/crt .

Related Materials:

U.S. v. Texas Department of Agriculture and Texas General Land Office Complaint

A Newport News, Va., federal grand jury has indicted Jeffrey Charles for conspiring with his daughter and son-in-law to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today. Charles is charged with one count of conspiracy, three counts of aiding and assisting in the preparation of false tax returns and one count of filing a false tax return. The court has not yet set a trial date.

According to the indictment, Charles conspired with his daughter and son-in-law to impair and impede the IRS in ascertaining, computing, assessing and collecting federal income taxes. The indictment also alleges that Charles aided and assisted in the preparation of three false tax returns in his daughter’s name for tax years 2000, 2001 and 2005, and attached false documents to each tax return. As alleged in the indictment, Charles also filed a false tax return in his own name for tax year 2006 in which he allegedly falsely reported earning $0.00 income.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Charles faces a maximum of 17 years in federal prison and a maximum fine of $1.25 million.

The case is being investigated by IRS Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Brian Samuels of the Eastern District of Virginia and Trial Attorney Justin K. Gelfand of the Justice Department’s Tax Division.

WASHINGTON — Two individuals and three corporations were sentenced in the U.S. District Court in Manhattan by Judge George B. Daniels today to serve time in prison and to pay criminal fines for their participation in an eight-year conspiracy involving kickbacks in excess of $2.3 million to defraud New York Presbyterian Hospital (NYPH), the Department of Justice announced. The individuals and the corporations were convicted after a four-week trial in February 2012.

Michael Yaron, the owner of two of the companies convicted for their roles in the conspiracy—Cambridge Environmental & Construction Corp, doing business as National Environmental Associates (Cambridge/NEA) and Oxford Construction & Development Corp.—was sentenced to serve 60 months in jail, and to pay a $500,000 criminal fine. Cambridge/NEA and Oxford Construction were each sentenced to pay a $1 million criminal fine.

Moshe Buchnik, the president of an asbestos abatement company that also did business at NYPH, was sentenced to serve 48 months in jail, and to pay a $500,000 criminal fine for his role in the conspiracy.

Artech Corp., a company owned by a relative of Santo Saglimbeni, a former vice president of facilities operations at NYPH, was also sentenced to pay a $1 million criminal fine.

Two additional charged co-conspirators, Saglimbeni and Emilio “Tony” Figueroa, a former director of facilities operations at NYPH, who were convicted along with Yaron, Buchnick, Cambridge/NEA, Oxford Construction and Artech, are scheduled to appear in court on July 31, 2012.

“The sentences imposed today are consistent with the seriousness of the crimes for which the individuals and companies were found guilty,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “Today’s sentences hold accountable the unlawful conduct of those involved in illegal kickback conspiracies.”

The department said the scheme to defraud NYPH centered on Saglimbeni, who with the assistance of Figueroa, awarded asbestos abatement, air monitoring and general construction contracts to Yaron, Buchnik and their companies in return for more than $2.3 million in kickbacks. The kickbacks were funneled by Yaron to Saglimbeni through Artech Corp., a sham company Saglimbeni created in his mother’s name in order to conceal the kickbacks.

Yaron, Buchnik, Saglimbeni, Figueroa, Cambridge/NEA, Oxford Construction and Artech, were each convicted of conspiracy to defraud NYPH. Additionally, Yaron, his companies, Buchnik, Saglimbeni and Artech were also convicted of a substantive wire fraud violation.

The sentences announced today resulted from a federal antitrust investigation of bid rigging, fraud, bribery and tax-related offenses in the award of construction, maintenance and service contracts to the facilities operations department of NYPH. Including today’s sentencings, 14 individuals and six companies have been convicted of or pleaded guilty to charges arising out of this investigation.

The investigation was conducted by the Antitrust Division’s New York Field Office with the assistance of the FBI and the Internal Revenue Service - Criminal Investigation’s New York Field Office. Anyone with information concerning bid rigging, bribery, tax offenses, or fraud at NYPH should contact the Antitrust Division’s New York Field Office of the at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or the FBI’s New York Division at 212-384-1000.

ADC Telecommunications Inc. will pay the United States $1 million to resolve allegations that the company submitted false claims to federal agencies when it sold telecommunications goods manufactured in countries prohibited by the Trade Agreements Act (TAA).

From October 2005 through December 2008, ADC manufactured and sold telecommunications hardware, such as communication modems, extender modules and shelf adapters to various federal agencies through its General Services Administration (GSA) Multiple Award Schedule contract. This settlement resolves allegations disclosed by the company that it knowingly manufactured and sold products from countries such as China that do not have reciprocal trade agreements with the United States and are not on the list of designated countries. The client government agencies included a number of federal agencies, including the Departments of Defense, Homeland Security and Interior.

Compliance with the TAA is required by GSA Multiple Award Schedule contracts. Goods purchased under these contracts must be manufactured in one of a list of designated countries deemed to trade fairly with the United States.

“Protecting the federal procurement process is central to the mission of the Department of Justice,” said Stuart Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division.   “It is incumbent upon contractors that supply products to federal agencies to abide by the legal requirements designed to protect U.S. trade interests.” 

“This settlement demonstrates this office’s commitment to ensure that products sold to the government are made in countries that respect and adhere to our nation’s trade policies,” said Ronald C. Machen Jr., the U.S. Attorney for the District of Columbia. “We expect all companies who do business with the United States to understand and comply with the laws that govern their transactions.”

GSA Inspector General Brian Miller stated “We appreciate ADC's cooperation in the OIG’s investigation of this matter.”

This matter was jointly handled by the GSA Office of the Inspector General, the Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Columbia.

The Justice Department announced today that it has reached a settlement in its lawsuit against the Pennsylvania Department of Corrections (PDOC).  The settlement, filed with the U.S. District Court for the Middle District of Pennsylvania, resolves allegations that PDOC violated the reemployment rights of U.S. Army Reservist David C. Fyock under the Uniformed Services Employment and Reemployment Rights Act (USERRA). 

The department’s complaint, which was filed on Oct. 27, 2011, alleges PDOC violated USERRA by failing to retroactively promote Fyock from a corrections officer 1 to a corrections officer 2 position at the State Correctional Institution Mercer in Mercer, Pa., based on his successful performance on a make-up promotional examination after returning from a military deployment.  According to the complaint, Fyock’s score on the make-up examination was higher than the score of any person promoted to any of the 13 vacant corrections officer 2 positions filled based on the May 2007 promotional test he missed.

Under the terms of the settlement, Fyock will receive a promotion to corrections officer 2 (sergeant), as well as back pay and other benefits. 

Subject to certain conditions, USERRA requires employers to promptly reemploy returning service members in the positions they would have held had their employment not been interrupted by military service, or in positions of like seniority, status and pay.  

“The Civil Rights Division is committed to protecting the reemployment rights of the men and women who serve our country in uniform,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “No service member should have to forego an opportunity for advancement in his or her civilian career due to military service.”

“This office strongly supports the rights of service members and the objective of the statute which is to help veterans reclaim their rightful positions in the workforce after they complete their military service,” said Peter J. Smith, U.S. Attorney for the Middle District of Pennsylvania.

This matter was litigated by Assistant U.S. Attorneys Melissa Swauger and Timothy Judge of the Civil Division of the U.S. Attorney’s Office for the Middle District of Pennsylvania in collaboration with attorneys from the Justice Department’s Civil Rights Division.  The case stems from a referral from the U.S. Labor Department's Veterans' Employment and Training Service.

The Justice Department's Civil Rights Division has given a high priority to the enforcement of service members' rights under USERRA.  Additional information about USERRA can be found at www.servicemembers.gov.

A former U.S. civilian contractor was sentenced today to 24 months in prison for conspiring to steal military generators in Iraq and selling them on the black market, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Thomas G. Walker for the Eastern District of North Carolina.

David John Welch, 36, of Hope Mills, N.C., was sentenced by U.S. District Judge W. Earl Britt in the Eastern District of North Carolina. Welch was also sentenced to three years of supervised release following his prison term and was ordered to pay $160,000 in restitution to the Department of Defense. Welch pleaded guilty on April 2, 2012, to a criminal information charging him with conspiracy to steal property under the control of a government contractor.

According to court documents and information presented at his plea hearing, Welch was the operations and maintenance manager of a U.S. government contractor on Victory Base Complex in Baghdad. In this capacity, Welch had the ability to influence the distribution and movement of military equipment as well as U.S. government equipment. In addition, Welch was in charge of overseeing the movement of generators from the compound to the Defense Reutilization & Marketing Office (DRMO). In October 2011, Welch and a co-conspirator entered into a scheme to steal and later sell approximately 38 generators on the black market in Iraq to unknown co-conspirators by diverting these generators from the DRMO to an undisclosed location off-base in Iraq. After the generators were stolen from the compound, Welch’s co-conspirator provided him with four stacks of $100 bills, totaling approximately $38,600.

This case is being prosecuted by Special Trial Attorney Mark Grider of the Criminal Division’s Fraud Section, on detail from Special Inspector General for Iraq Reconstruction (SIGIR), with assistance from Assistant U.S. Attorney Banumathi Rangarajan of the U.S. Attorney’s Office for the Eastern District of North Carolina. The case is being investigated by the FBI, SIGIR and the Major Procurement Fraud Unit of the U.S. Army Criminal Investigation Command.

An indictment charging five individuals involved in the death of U.S. Border Patrol Agent Brian Terry was unsealed today in Tucson, and a reward of up to $1 million from the FBI for information leading to the arrest of four fugitives, was announced by Department of Justice officials.

According to the indictment, Manuel Osorio-Arellanes, Jesus Rosario Favela-Astorga, Ivan Soto-Barraza, Heraclio Osorio-Arellanes and Lionel Portillo-Meza are charged with crimes including first degree murder, second degree murder, conspiracy to interfere with commerce by robbery, attempted interference with commerce by robbery, use and carrying a firearm during a crime of violence, assault on a federal officer and possession of a firearm by a prohibited person. A sixth defendant, Rito Osorio-Arellanes, is charged only with conspiracy to interfere with commerce by robbery.

The 11-count third superseding indictment, which was handed up by a federal grand jury in the District of Arizona on Nov. 7, 2011, alleges that on Dec. 14, 2010, five of the defendants (Manuel Osorio-Arellanes, Jesus Rosario Favela-Astorga, Ivan Soto-Barraza, Heraclio Osorio-Arellanes and Lionel Portillo-Meza) engaged in a firefight with Border Patrol agents. During the exchange of gunfire, Agent Terry was shot and killed. The indictment alleges that the defendants had illegally entered the United States from Mexico for the purpose of robbing drug traffickers of their contraband. In addition to the murder of Agent Terry, the indictment also alleges that the five defendants assaulted Border Patrol Agents William Castano, Gabriel Fragoza and Timothy Keller, who were with Agent Terry during the firefight.

“Agent Terry served his country honorably and made the ultimate sacrifice in trying to protect it from harm, and we will stop at nothing to bring those responsible for his murder to justice,” said Attorney General Eric Holder. “This investigation has previously resulted in one defendant being charged with Agent Terry’s murder and taken into custody, and today’s announcement reflects the department’s unrelenting commitment to finding and arresting the other individuals responsible for this horrific tragedy so that Agent Terry’s family, friends and fellow law enforcement agents receive the justice they deserve.”

U.S. Attorney for the Southern District of California Laura E. Duffy said, “ Agent Terry died in the line of duty while protecting his country. But he was more than a federal agent – he was a son, a brother, a co-worker and a friend to many. The indictment unsealed today reflects the progress our dedicated law enforcement team has made piecing together this complex murder case. But there is more work to be done and we will not rest until we bring justice to the family of Brian Terry.”

“U.S. Border Patrol Agent Brian Terry made the ultimate sacrifice in December of 2010, while protecting our border,” stated James L. Turgal Jr., FBI Special Agent in Charge, Phoenix Division. “Today’s announcement is an important step forward in the pursuit of justice for Border Patrol Agent Terry and his family. It is our hope that the publicity surrounding this case will lead to information concerning the whereabouts of the remaining four fugitives. The FBI and our law enforcement partners will continue to pursue those individuals responsible for the murder of Border Patrol Agent Brian Terry.”

Manuel Osorio-Arellanes has been in custody since his arrest the night of the shooting. Rito Osorio-Arellanes has been in custody since Dec. 12, 2010, when he was arrested by Border Patrol agents on immigration charges. The indictment is being unsealed today in order to seek the public’s assistance in locating the fugitive defendants.

This case is being prosecuted in federal court in Tucson by attorneys from the Southern District of California, Special Attorneys Todd W. Robinson, David D. Leshner, and Fred A. Sheppard. The U.S. Attorney’s Office for the District of Arizona is recused. This case is being investigated by the FBI.

An indictment is a formal charging document and defendants are presumed innocent until the government meets its burden in court of proving guilt beyond a reasonable doubt.

Anyone with information concerning the whereabouts of the fugitives should contact the FBI's Phoenix field office at (623) 466-1999. You may also contact your local FBI office or the nearest American Embassy or Consulate.

WASHINGTON – The chief executive officer (CEO) of Axius Inc., a Nevada corporation, and a finance professional were indicted today on multiple charges for their alleged roles in a scheme to bribe stock brokers and manipulate the share price of Axius stock, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Loretta E. Lynch for the Eastern District of New York.

Roland Kaufmann, a Swiss citizen and the CEO of Axius, and Jean-Pierre Neuhaus, a Swiss citizen and finance professional, were each charged in an indictment filed today in the Eastern District of New York with one count of conspiracy to commit securities fraud and to violate the Travel Act, one count of securities fraud, one count of wire fraud, one count of violating the Travel Act, one count of conspiracy to commit money laundering and one count of money laundering.  According to court documents, Axius is incorporated in Nevada and its principal offices are in Dubai, United Arab Emirates.  Axius is a “holding company and business incubator” that develops other businesses. 

“As CEO of Axius, Mr. Kaufmann allegedly conspired with Mr. Neuhaus to fraudulently manipulate the value of his company’s stock,” said Assistant Attorney General Breuer.  “According to today’s indictment, he attempted to bribe stock brokers into artificially propping up the value of Axius stock.  With our partners in the U.S. Attorneys’ Offices, the Criminal Division’s Fraud Section is pursuing a nationwide effort to investigate and prosecute fraudulent conduct in our securities markets.”

“Rather than rely on the market to set the true value of Axius’ stock, the defendants allegedly sought to buy the best price possible through bribery and deception,” said U.S. Attorney Lynch.  “Their scheme stood to enrich themselves at the expense of the investing public.  We will vigorously investigate and prosecute any such corruption in the securities markets.”

“Conspiring to inflate the price of Axius shares artificially was likely to result in unjust enrichment for the defendants and undeserved losses for investors,” said Assistant Director-in-Charge Janice K. Fedarcyk of the FBI in New York.  “Market-driven fluctuations in share prices are risks investors have to accept. Illegal manipulations become the subject of FBI investigations.”

The indictment alleges that Kaufmann, 60, agreed with Neuhaus, 55, to defraud investors in Axius common stock by bribing stock brokers and manipulating the share price.  As part of the scheme, they enlisted the assistance of an individual they believed to have access to a group of corrupt stock brokers; this individual was in fact an undercover law enforcement agent.  Kaufmann and Neuhaus believed that the undercover agent controlled a network of stockbrokers in the United States with discretionary authority to trade stocks on behalf of their clients. 

The indictment alleges that Kaufmann and Neuhaus instructed the undercover agent to direct brokers to purchase Axius shares that were owned or controlled by Kaufmann in return for a secret kickback of approximately 26 to 28 percent of the share price.  Kaufmann and Neuhaus allegedly instructed the undercover agent as to the price the brokers should pay for the stock, and Kaufmann specifically instructed the undercover agent that the brokers would have to pay gradually higher prices for the shares they were buying.  The indictment alleges that Kaufmann and Neuhaus directed the undercover agent that the brokers were to refrain from selling the Axius shares they purchased on behalf of their clients for a one-year period.  By preventing sales of Axius stock, Kaufmann and Neuhaus allegedly intended to maintain the fraudulently inflated share price for Axius stock.

Kaufmann and Neuhaus were originally charged in a criminal complaint filed in the Eastern District of New York on March 8, 2012.  They were arrested on March 8, 2012.  No investors were actually defrauded in the undercover operation. 

In a related action, the Securities and Exchange Commission (SEC) today filed a civil enforcement action against Kaufmann and Neuhaus in the Eastern District of New York.  The department thanks the SEC for its cooperation in this matter.

This case is being prosecuted by Trial Attorney Justin Goodyear of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Shannon Jones of the Eastern District of New York.  The case was investigated by the FBI and the Internal Revenue Service. 

This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.  For more information about the task force visit: www.stopfraud.gov.

Jacqueline Slaton pleaded guilty today in the Middle District of Alabama to one count of filing a false tax return and one count of aggravated identity theft, the Department of Justice and the Internal Revenue Service (IRS) announced. Slaton was indicted in April 2012.

According to her plea agreement, between December 2011 and March 2012, Slaton filed at least 102 fraudulent federal and state income tax returns using stolen identities, claiming a total of $154,904 in fraudulent income tax refunds. Slaton had the tax refunds directed to prepaid debit cards and had the cards mailed to various addresses on a U.S. carrier’s route. A postal employee agreed to collect the prepaid debit cards for a fee.

Sentencing has not yet been scheduled. Slaton faces a mandatory minimum of two years in prison, and a maximum potential sentence of seven years in prison, up to three years of supervised release, mandatory restitution and a fine of up to $500,000 or twice the loss caused by her offenses.

Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, thanked special agents of IRS - Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Jason H. Poole and Michael Boteler and Assistant United States Attorney Jared Morris, who prosecuted the case.

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

Louis Dreyfus Energy Services has paid the United States $4,084,000 to settle allegations that it violated the False Claims Act by failing to pay money owed on natural gas acquired from the Department of the Interior, the Justice Department announced today. Louis Dreyfus, which is based in Connecticut, is an energy company that is involved in merchandising, transportation, trading and storage of natural gas.

The settlement agreement resolves contentions by the United States that from December 2004 to March 2008, Louis Dreyfus Energy Services made false claims or misleading statements to the Department of the Interior involving contracts to buy natural gas produced from federal oil and gas leases in the Gulf of Mexico. Starting in 2004, Louis Dreyfus agreed to pay the Interior Department for natural gas based on a price associated with the delivery of the gas at a fixed point along a natural gas pipeline. After its contracts with the Interior Department were executed, the company requested and received a discount in the price it would pay the Interior Department for the natural gas obtained under the contracts. The United States contends that this price discount applied only when there was a complete or near-complete constraint in the natural gas pipeline such that Louis Dreyfus was unable to transport natural gas along the pipeline. However, the energy services company claimed and obtained the price discounts even on days when it was able to ship natural gas along the pipeline. Thus, the United States contends that Louis Dreyfus was not entitled to the price discounts that it sought and received from the Department of the Interior.

“Companies that deal with the United States have to live up to their commitments, whether they relate to the use of the nation’s natural resources or to other government programs or benefits,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “The American taxpayers will not tolerate those that claim price discounts from the United States to which they are not entitled.”

“Oil and natural gas companies must understand that using false or misleading claims to get a better price is unfair and unlawful. For companies that make such claims, there are significant consequences,” said John Walsh, U.S. Attorney for the District of Colorado.

“This settlement is a message to industry and the public that federal government agencies, working together, are focused on the promise that the American taxpayers will get their fair share of all monies owed from public resources,” said Mary L. Kendall, Acting Inspector General of the Department of the Interior.

“Energy companies have a responsibility to respect the public trust in their efforts to help fuel this nation’s energy needs,” said Paul Mussenden, the Department of the Interior’s Deputy Assistant Secretary for Natural Resources Revenue Management. “It is imperative they honor that trust and pay the appropriate revenues that are due to American taxpayers for these precious natural resources.” Mussenden added that “ONRR will remain diligent in its efforts to collect every dollar due to the public and the U.S. Government.”

In addition to resolving the company’s False Claims Act liability, the settlement today also resolves certain administrative claims between the Interior Department’s Office of Natural Resources Revenue and Louis Dreyfus.

The investigation and settlement of this matter were jointly handled by the U.S. Attorney for the District of Colorado, the Justice Department’s Civil Division, the Office of Natural Resources Revenue, the Department of the Interior’s Office of the Solicitor and the Energy Investigations Unit of the Department of the Interior’s Office of Inspector General. The claims settled by this agreement are allegations only. There has been no determination of liability.

WASHINGTON – The Justice Department today filed a lawsuit against the city of Corpus Christi, Texas, alleging that the city’s police department engaged in a pattern or practice of employment discrimination against women in violation of Title VII of the Civil Rights Act of 1964.  The lawsuit challenges the police department’s use of a physical ability test for the hiring of entry-level police officers.  According to the complaint, the physical test used by the city between 2005 and 2011 had the effect of excluding qualified women from consideration for hire as entry-level police officers and did not screen candidates for job-related skills.

Title VII prohibits employment practices that result in a disparate impact on various bases, including sex, unless the employer can prove that such practices really test for what the job requires.  The complaint alleges that the challenged physical ability test does not meet this standard and, thus, qualified women have been unnecessarily kept out of entry-level police officer jobs. 

 “This complaint demonstrates that employment practices that unnecessarily exclude qualified candidates on account of sex are unacceptable,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “The Justice Department is looking forward to working with the city to resolve this matter in a way that eliminates the use of the unlawful physical ability test and gives women who were screened out of the process an opportunity to become Corpus Christi police officers.”

In the lawsuit, the Justice Department seeks a court order that would require the city to stop using the challenged physical ability test, develop hiring procedures that comply with Title VII and provide relief that makes victims whole, including offers of hire, retroactive seniority and back pay to individual women who have been harmed as a result of the city’s use of the test.

Additional information about Title VII and other federal employment laws is available on the Civil Rights Division’s website at www.justice.gov/crt/.

WASHINGTON – The Department of Justice today announced that it will not challenge a proposal by seven nuclear power plant operators to share resources and coordinate best practices and other operational activities through a proposed venture to be named the STARS Alliance LLC. The members of the proposed STARS Alliance each operate single nuclear electric generation plants of a similar design – pressurized water reactors – and vintage.

The department’s position was stated in a business review letter to counsel for the STARS Alliance, from Joseph Wayland, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.

STARS members propose to share best practices and resources such as personnel, parts and equipment, as well as coordinate contingency planning, including coordinated responses to new Nuclear Regulatory Commission requirements adopted in the aftermath of the nuclear disaster in Fukushima, Japan.  None of the proposed activities involve the procurement of goods and services or the sale or purchase of electric power.  Membership and participation in all of the activities of the proposed STARS joint venture is voluntary.

In issuing the letter, Acting Assistant Attorney General Wayland stated, “To the extent that the proposed cooperative activities increase efficiencies that result in lower costs, increased output or increased safety, the proposed conduct could have a procompetitive effect.”

The department noted that the cooperative activities STARS proposes to undertake should not have any adverse effect on competition.  STARS members would represent 13 of the 69 operating commercial nuclear pressurized water reactors in the United States and 13 of the 104 operating commercial nuclear reactors in the United States.  The STARS members, for the most part, are in separate geographic areas and do not compete against each other for the sale of electricity. In the two instances where members both have reactors in the same electricity transmission organization, the members’ nuclear units are not likely to have an impact on price.  The members will be prohibited from sharing competitively-sensitive pricing or marketing information.

The STARS Alliance participants are:  Union Electric Co., with its Callaway plant in Missouri; Arizona Public Service Co., with its Palo Verde plant in Arizona; Luminant Generation Company LLC, with its Comanche Peak plant in Texas; Pacific Gas and Electric Co., with its Diablo Canyon plant in California; Southern California Edison Co., with its San Onofre plant in California; STP Nuclear Operating Co., with its STP plant in Texas; and Wolf Creek Nuclear Operating Co., with its Wolf Creek plant in Kansas. 

Under the department’s business review procedure, an organization may submit a proposed action to the Antitrust Division and receive a statement as to whether the division currently intends to challenge the action under the antitrust laws based on the information provided. The department reserves the right to challenge the proposed action under the antitrust laws if it produces anticompetitive effects.

A file containing the business review request and the department’s response may be examined in the Antitrust Documents Group of the Antitrust Division, U.S. Department of Justice, 450 Fifth Street, N.W., Suite 1010, Washington, D.C. 20530.  After a 30-day waiting period, the documents supporting the business review will be added to the file, unless a basis for their exclusion for reasons of confidentiality has been established under the Business Review Procedure.

Wanda Davis pleaded guilty in the Middle District of Alabama today to one count of filing a false tax return, the Justice Department and the Internal Revenue Service (IRS) announced.

According to court documents, from 2007 to 2011, Davis prepared false tax returns for clients while working at Davis Fast Tax and Davis Tax Service in Montgomery, Ala. Davis included false and inflated deductions as well as fictitious businesses on her clients’ tax returns resulting in inflated refunds to which the client was not entitled. By her actions, Davis sought over $200,000 in false tax refunds.

Sentencing has not yet been scheduled. Davis faces a maximum potential sentence of three years in prison, up to three years of supervised release, mandatory restitution and a fine of up to $250,000 or twice the loss caused by her offenses.

This case was investigated by special agents of IRS – Criminal Investigation. Trial Attorneys Michael Boteler and Jason Poole of the Justice Department’s Tax Division are prosecuting the case with the assistance of the U.S. Attorney’s Office in the Middle District of Alabama.

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

WASHINGTON – Christopher Castro, 31, of San Antonio, Texas, and Ernest Gonzales, 51, also of San Antonio, were sentenced for their participation in a conspiracy to obtain approximately $244,000 in fraudulent recruiting referral bonuses from various U.S. military components and their contractor, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

On June 29, 2012, Chief U.S. District Judge Fred Biery sentenced Christopher Castro to one year and a day in prison, to be followed by three years supervised release.  Ernest Gonzales was sentenced on June 29, 2012, by Chief Judge Biery to five years probation.  Chief Judge Biery also ordered Castro and Gonzales to pay $244,000 in restitution, to be paid jointly and severally.

Castro pleaded guilty to conspiracy to commit wire fraud on Nov. 3, 2011.  Gonzales pleaded guilty to conspiracy to commit wire fraud on Jan. 28, 2010.

According to court documents filed in U.S. District Court for the Western District of Texas, Castro served at different times in the Army National Guard and the Army Reserves from February 2007 through February 2008.  Castro also served as a civilian contract recruiter from June 2007 through October 2009.  Gonzales has served at different times in the Army National Guard and the Army Reserves from June 2005 to present.

According to court documents, between 2005 and 2008, the U.S. Army, the U.S. Army Reserves and the National Guard Bureau entered into contracts with Document and Packaging Broker Inc. to administer recruiting bonus programs designed to offer monetary incentives to soldiers who referred others to join the U.S. military.  In addition, the Army managed its own recruiting bonus programs, which offered bonuses to soldiers who referred other individuals to join the Army or the Army Reserves.  To participate in the recruiting bonus programs, an eligible soldier needed to establish an online Recruiting Assistant (RA) or Sponsor account.  Through these recruiting programs, a participating soldier could receive up to $2,000 in bonus payments for every person he referred to serve in the U.S. military.

Castro and Gonzales admitted that they participated in a fraud scheme whereby active duty and civilian contract recruiters provided RAs and Sponsors with the names and Social Security numbers of “walk-in” soldiers—or persons who decided to join the military without being referred by anyone.  Using this information, the RAs and Sponsors claimed credit for referring these potential soldiers to join the military, when in fact they did not refer them.  As part of the fraud scheme, the RAs and Sponsors split the bonus payments with the recruiters and others who provided the potential soldiers’ personal identifying information.

In total, Castro, Gonzales and their co-conspirators received at least $244,000 in fraudulent recruiting referral bonuses according to court documents.  Castro personally received $26,000 in fraudulent recruiting referral bonuses using RA accounts in his name and an RA account in his relative’s name.  In his capacity as a civilian contract recruiter, Castro admitted that he also sold the names and Social Security numbers of potential soldiers to a co-conspirator, in return for a portion of the fraudulent recruiting referral bonuses obtained by Aves and others.  Gonzales personally received $17,000 in fraudulent recruiting referral bonuses using his RA account and permitted a co-conspirator to receive an additional $18,000 in fraudulent recruiting referral bonuses through Gonzales’s RA account.

This case arose from an investigation concerning allegations that former and current soldiers and military and civilian contract recruiters in the San Antonio area engaged in a wide-ranging scheme to obtain fraudulent recruiting referral bonuses.  To date, eight individuals have been charged, six of whom have pleaded guilty.  The investigation is ongoing.  The individuals who have pleaded not guilty are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

The case is being prosecuted by Trial Attorneys Edward J. Loya Jr. and Brian A. Lichter of the Criminal Division’s Public Integrity Section.  The case is being investigated by agents from the San Antonio Fraud Resident Agency of the Major Procurement Fraud Unit, U.S. Army CID.

Global health care giant GlaxoSmithKline LLC (GSK) agreed to plead guilty and to pay $3 billion to resolve its criminal and civil liability arising from the company’s unlawful promotion of certain prescription drugs, its failure to report certain safety data, and its civil liability for alleged false price reporting practices, the Justice Department announced today. The resolution is the largest health care fraud settlement in U.S. history and the largest payment ever by a drug company.

GSK agreed to plead guilty to a three-count criminal information, including two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce and one count of failing to report safety data about the drug Avandia to the Food and Drug Administration (FDA). Under the terms of the plea agreement, GSK will pay a total of $1 billion, including a criminal fine of $956,814,400 and forfeiture in the amount of $43,185,600. The criminal plea agreement also includes certain non-monetary compliance commitments and certifications by GSK’s U.S. president and board of directors. GSK’s guilty plea and sentence is not final until accepted by the U.S. District Court.

GSK will also pay $2 billion to resolve its civil liabilities with the federal government under the False Claims Act, as well as the states. The civil settlement resolves claims relating to Paxil, Wellbutrin and Avandia, as well as additional drugs, and also resolves pricing fraud allegations.

“Today’s multi-billion dollar settlement is unprecedented in both size and scope. It underscores the Administration’s firm commitment to protecting the American people and holding accountable those who commit health care fraud,” said James M. Cole, Deputy Attorney General. “At every level, we are determined to stop practices that jeopardize patients’ health, harm taxpayers, and violate the public trust – and this historic action is a clear warning to any company that chooses to break the law.”

“Today’s historic settlement is a major milestone in our efforts to stamp out health care fraud,” said Bill Corr, Deputy Secretary of the Department of Health and Human Services (HHS). “For a long time, our health care system had been a target for cheaters who thought they could make an easy profit at the expense of public safety, taxpayers, and the millions of Americans who depend on programs like Medicare and Medicaid. But thanks to strong enforcement actions like those we have announced today, that equation is rapidly changing.”

This resolution marks the culmination of an extensive investigation by special agents from HHS-OIG, FDA and FBI, along with law enforcement partners across the federal government. Moving forward, GSK will be subject to stringent requirements under its corporate integrity agreement with HHS-OIG; this agreement is designed to increase accountability and transparency and prevent future fraud and abuse. Effective law enforcement partnerships and fraud prevention are hallmarks of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which fosters government collaboration to fight fraud. 

Criminal Plea Agreement

Under the provisions of the Food, Drug and Cosmetic Act, a company in its application to the FDA must specify each intended use of a drug. After the FDA approves the product as safe and effective for a specified use, a company’s promotional activities must be limited to the intended uses that FDA approved. In fact, promotion by the manufacturer for other uses – known as “off-label uses” – renders the product “misbranded.”

Paxil: In the criminal information, the government alleges that, from April 1998 to August 2003, GSK unlawfully promoted Paxil for treating depression in patients under age 18, even though the FDA has never approved it for pediatric use. The United States alleges that, among other things, GSK participated in preparing, publishing and distributing a misleading medical journal article that misreported that a clinical trial of Paxil demonstrated efficacy in the treatment of depression in patients under age 18, when the study failed to demonstrate efficacy. At the same time, the United States alleges, GSK did not make available data from two other studies in which Paxil also failed to demonstrate efficacy in treating depression in patients under 18. The United States further alleges that GSK sponsored dinner programs, lunch programs, spa programs and similar activities to promote the use of Paxil in children and adolescents. GSK paid a speaker to talk to an audience of doctors and paid for the meal or spa treatment for the doctors who attended. Since 2004, Paxil, like other antidepressants, included on its label a “black box warning” stating that antidepressants may increase the risk of suicidal thinking and behavior in short-term studies in patients under age 18. GSK agreed to plead guilty to misbranding Paxil in that its labeling was false and misleading regarding the use of Paxil for patients under 18.

Wellbutrin: The United States also alleges that, from January 1999 to December 2003, GSK promoted Wellbutrin, approved at that time only for Major Depressive Disorder, for weight loss, the treatment of sexual dysfunction, substance addictions and Attention Deficit Hyperactivity Disorder, among other off-label uses. The United States contends that GSK paid millions of dollars to doctors to speak at and attend meetings, sometimes at lavish resorts, at which the off-label uses of Wellbutrin were routinely promoted and also used sales representatives, sham advisory boards, and supposedly independent Continuing Medical Education (CME) programs to promote Wllbutrin for these unapproved uses. GSK has agreed to plead guilty to misbranding Wellbutrin in that its labeling did not bear adequate directions for these off-label uses. For the Paxil and Wellbutrin misbranding offenses, GSK has agreed to pay a criminal fine and forfeiture of $757,387,200.

Avandia: The United States alleges that, between 2001 and 2007, GSK failed to include certain safety data about Avandia, a diabetes drug, in reports to the FDA that are meant to allow the FDA to determine if a drug continues to be safe for its approved indications and to spot drug safety trends. The missing information included data regarding certain post-marketing studies, as well as data regarding two studies undertaken in response to European regulators’ concerns about the cardiovascular safety of Avandia. Since 2007, the FDA has added two black box warnings to the Avandia label to alert physicians about the potential increased risk of (1) congestive heart failure, and (2) myocardial infarction (heart attack). GSK has agreed to plead guilty to failing to report data to the FDA and has agreed to pay a criminal fine in the amount of $242,612,800 for its unlawful conduct concerning Avandia.

“This case demonstrates our continuing commitment to ensuring that the messages provided by drug manufacturers to physicians and patients are true and accurate and that decisions as to what drugs are prescribed to sick patients are based on best medical judgments, not false and misleading claims or improper financial inducements,” said Carmen Ortiz, U.S. Attorney for the District of Massachusetts.

“Patients rely on their physicians to prescribe the drugs they need,” said John Walsh, U.S. Attorney for Colorado. “The pharmaceutical industries’ drive for profits can distort the information provided to physicians concerning drugs.  This case will help to ensure that your physician will make prescribing decisions based on good science and not on misinformation, money or favors provided by the pharmaceutical industry.”

Civil Settlement Agreement

As part of this global resolution, GSK has agreed to resolve its civil liability for the following alleged conduct: (1) promoting the drugs Paxil, Wellbutrin, Advair, Lamictal and Zofran for off-label, non-covered uses and paying kickbacks to physicians to prescribe those drugs as well as the drugs Imitrex, Lotronex, Flovent and Valtrex; (2) making false and misleading statements concerning the safety of Avandia; and (3) reporting false best prices and underpaying rebates owed under the Medicaid Drug Rebate Program.

Off-Label Promotion and Kickbacks: The civil settlement resolves claims set forth in a complaint filed by the United States alleging that, in addition to promoting the drugs Paxil and Wellbutrin for unapproved, non-covered uses, GSK also promoted its asthma drug, Advair, for first-line therapy for mild asthma patients even though it was not approvedor medically appropriate under these circumstances. GSK also promoted Advair for chronic obstructive pulmonary disease with misleading claims as to the relevant treatment guidelines. The civil settlement also resolves allegations that GSK promoted Lamictal, an anti-epileptic medication, for off-label, non-covered psychiatric uses, neuropathic pain and pain management. It further resolves allegations that GSK promoted certain forms of Zofran, approved only for post-operative nausea, for the treatment of morning sickness in pregnant women. It also includes allegations that GSK paid kickbacks to health care professionals to induce them to promote and prescribe these drugs as well as the drugs Imitrex, Lotronex, Flovent and Valtrex. The United States alleges that this conduct caused false claims to be submitted to federal health care programs.

GSK has agreed to pay $1.043 billion relating to false claims arising from this alleged conduct. The federal share of this settlement is $832 million and the state share is $210 million.

This off-label civil settlement resolves four lawsuits pending in federal court in the District of Massachusetts under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery.

Avandia: In its civil settlement agreement, the United States alleges that GSK promoted Avandia to physicians and other health care providers with false and misleading representations about Avandia’s safety profile, causing false claims to be submitted to federal health care programs. Specifically, the United States alleges that GSK stated that Avandia had a positive cholesterol profile despite having no well-controlled studies to support that message. The United States also alleges that the company sponsored programs suggesting cardiovascular benefits from Avandia therapy despite warnings on the FDA-approved label regarding cardiovascular risks. GSK has agreed to pay $657 million relating to false claims arising from misrepresentations about Avandia. The federal share of this settlement is $508 million and the state share is $149 million.

Price Reporting: GSK is also resolving allegations that, between 1994 and 2003, GSK and its corporate predecessors reported false drug prices, which resulted in GSK’s underpaying rebates owed under theMedicaid Drug Rebate Program. By law, GSK was required to report the lowest, or “best” price that it charged its customers and to pay quarterly rebates to the states based on those reported prices. When drugs are sold to purchasers in contingent arrangements known as “bundles,” the discounts offered for the bundled drugs must be reallocated across all products in the bundle proportionate to the dollar value of the units sold. The United States alleges that GSK had bundled sales arrangements that included steep discounts known as “nominal” pricing and yet failed to take such contingent arrangements into account when calculating and reporting its best prices to the Department of Health and Human Services. Had it done so, the effective prices on certain drugs would have been different, and, in some instances, triggered a new, lower best price than what GSK reported. As a result, GSK underpaid rebates due to Medicaid and overcharged certain Public Health Service entities for its drugs, the United States contends. GSK has agreed to pay $300 million to resolve these allegations, including $160,972,069 to the federal government, $118,792,931 to thestates, and $20,235,000 to certain Public Health Service entities who paid inflated prices for the drugs at issue.

Except to the extent that GSK has agreed to plead guilty to the three-count criminal information, the claims settled by these agreements are allegations only, and there has been no determination of liability.

“This landmark settlement demonstrates the Department’s commitment to protecting the American public against illegal conduct and fraud by pharmaceutical companies,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “Doctors need truthful, fair, balanced information when deciding whether the benefits of a drug outweigh its safety risks.  By the same token, the FDA needs all necessary safety-related information to identify safety trends and to determine whether a drug is safe and effective.  Unlawful promotion of drugs for unapproved uses and failing to report adverse drug experiences to the FDA can tip the balance of those important decisions, and the Justice Department will not tolerate attempts by those who seek to corrupt our health care system in this way.”

Non-monetary Provisions and Corporate Integrity Agreement

In addition to the criminal and civil resolutions, GSK has executed a five-year Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). The plea agreement and CIA include novel provisions that require that GSK implement and/or maintain major changes to the way it does business, including changing the way its sales force is compensated to remove compensation based on sales goals for territories, one of the driving forces behind much of the conduct at issue in this matter. Under the CIA, GSK is required to change its executive compensation program to permit the company to recoup annual bonuses and long-term incentives from covered executives if they, or their subordinates, engage in significant misconduct. GSK may recoup monies from executives who are current employees and those who have left the company.  Among other things, the CIA also requires GSK to implement and maintain transparency in its research practices and publication policies and to follow specified policies in its contracts with various health care payors.

“Our five-year integrity agreement with GlaxoSmithKline requires individual accountability of its board and executives,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. “For example, company executives may have to forfeit annual bonuses if they or their subordinates engage in significant misconduct, and sales agents are now being paid based on quality of service rather than sales targets.”    

“The FDA Office of Criminal Investigations will aggressively pursue pharmaceutical companies that choose to put profits before the public’s health,” said Deborah M. Autor, Esq., Deputy Commissioner for Global Regulatory Operations and Policy, U.S. Food and Drug Administration. “We will continue to work with the Justice Department and our law enforcement counterparts to target companies that disregard the protections of the drug approval process by promoting drugs for uses when they have not been proven to be safe and effective for those uses, and that fail to report required drug safety information to the FDA.”

“The record settlement obtained by the multi-agency investigative team shows not only the importance of working with our partners, but also the importance of the public providing their knowledge of suspect schemes to the government,” said Kevin Perkins, Acting Executive Assistant Director of the FBI’s Criminal, Cyber, Response and Services Branch. “Together, we will continue to bring to justice those engaged in illegal schemes that threaten the safety of prescription drugs and other critical elements of our nation’s healthcare system.”

“ Federal employees deserve health care providers and suppliers, including drug manufacturers, that meet the highest standards of ethical and professional behavior,” said Patrick E. McFarland, Inspector General of the U.S. Office of Personnel Management. “Today’s settlement reminds the pharmaceutical industry that they must observe those standards and reflects the commitment of Federal law enforcement organizations to pursue improper and illegal conduct that places health care consumers at risk.”

“Today’s announcement illustrates the efforts of VA OIG and its law enforcement partners in ensuring the integrity of the medical care provided our nation’s veterans by the Department of Veterans Affairs,” said George J. Opfer, Inspector General of the Department of Veterans Affairs. “The monetary recoveries realized by VA in this settlement will directly benefit VA healthcare programs that provide for veterans’ continued care.”

“This settlement sends a clear message that taking advantage of federal health care programs has substantial consequences for those who try,”  said Rafael A. Medina, Special Agent in Charge of the Northeast Area Office of Inspector General for the U.S. Postal Service. “The U.S. Postal Service pays more than one billion dollars a year in workers' compensation benefits and our office is committed to pursuing those individuals or entities whose fraudulent acts continue to unfairly add to that cost.”

A Multilateral Effort

The criminal case is being prosecuted by the U.S. Attorney’s Office for the District of Massachusetts and the Civil Division’s Consumer Protection Branch. The civil settlement was reached by the U.S. Attorney’s Office for the District of Massachusetts, the U.S. Attorney’s Office for the District of Colorado and the Civil Division’s Commercial Litigation Branch. Assistance was provided by the HHS Office of Counsel to the Inspector General, Office of the General Counsel-CMS Division and FDA’s Office of Chief Counsel as well as the National Association of Medicaid Fraud Control Units.

This matter was investigated by agents from the HHS-OIG; the FDA’s Office of Criminal Investigations; the Defense Criminal Investigative Service of the Department of Defense; the Office of the Inspector General for the Office of Personnel Management; the Department of Veterans Affairs; the Department of Labor; TRICARE Program Integrity; the Office of Inspector General for the U.S. Postal Service and the FBI.

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 in May 2009 by Attorney General Eric Holder and Kathleen Sebelius, Secretary of HHS. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. Over the last three years, the department has recovered a total of more than $10.2 billion in settlements, judgments, fines, restitution, and forfeiture in health care fraud matters pursued under the False Claims Act and the Food, Drug and Cosmetic Act.

Court documents related to today’s settlement can be viewed online at www.justice.gov/opa/gsk-docs.html .

Related Materials:

Remarks by the Deputy Attorney General James M. Cole at the GSK Press Conference
Remarks by Acting Assistant Attorney General for the Civil Division Stuart F. Delery at the GSK Press Conference

WASHINGTON – Willie Redden, 24, of Albany, Ga., a former member of the Correctional Emergency Response Team (CERT) at Macon State Prison in Oglethorpe, Ga., pleaded guilty today to conspiring with other correctional officers to violate the civil rights of inmates in 2010, the Justice Department announced.
 
In connection with his guilty plea, Redden admitted that he and other correctional officers assaulted and injured inmates in separate incidents at Macon State Prison in 2010.  Redden indicated that correctional officers beat these inmates in order to punish them.  One inmate was beaten until he was unresponsive and had to be transported from Macon State Prison in an ambulance.

Redden further acknowledged that he and other correctional officers tried to cover up CERT’s role in beating and injuring inmates.  Redden stated that more senior officers told him to write a false report and to stick to their cover story when speaking with investigators.

“Mr. Redden admitted today that instead of lawfully carrying out his public safety responsibilities, he conspired with fellow officers to assault inmates and then cover up those assaults,” said Assistant Attorney General for the Civil Rights Division Thomas E. Perez.  “The Justice Department will continue to vigorously prosecute officers who cross the line and engage in criminal misconduct.”

“When people are incarcerated, the sentence they are required to serve is their time locked up in prison,” said U.S. Attorney for the Middle District of Georgia Michael J. Moore.  “It is not a part of their sentence that they be subjected to beatings by the correctional officers.  The Department of Justice and I share a zero tolerance policy for those who violate another’s civil rights.”

Redden faces a maximum penalty of five years in prison.  His sentencing date has not yet been set.

This case is being investigated by the FBI and is being prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Tona Boyd of the Civil Rights Division of Department of Justice, with the assistance of the U.S. Attorney’s Office for the Middle District of Georgia. 

WASHINGTON – James E. Price III, 42, of Plantation, Fla., was convicted on June 29, 2012, by a federal jury on one count each of distribution and possession of child pornography, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, announced today.

According to court documents and three days of testimony during the trial, the case originated from a South Florida Internet Crimes Against Children Task Force (ICAC) investigation into an individual suspected of possessing and trading child pornography using a peer to peer file sharing network.  The individual was later identified as Price.  A search warrant was executed on Price’s residence, where agents discovered a hard drive hidden behind boxes in the home.  Subsequent examination revealed that the hard drive was protected by encryption and contained hundreds of images and videos of child pornography. 

Price faces a maximum term of 10 years in prison for the possession of child pornography charge and 15 years in prison for the distribution charge, a maximum fine of $250,000 on each count, and the possibility of lifetime supervised release.  Price is scheduled to be sentenced on Oct. 10, 2012, at 10:00 a.m before U.S. District Judge Kathleen M. Williams.

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

The case is being prosecuted by Assistant U.S. Attorneys Marc Anton and Mark Dispoto of the Southern District of Florida and by Trial Attorney Thomas Franzinger of CEOS in the Justice Department’s Criminal Division.  The case was investigated by the South Florida ICAC, including the Martin County, Fla., Sherriff’s Office; the Broward County, Fla., Sherriff’s Office; and the Fort Lauderdale Police Department, with assistance from the CEOS High Technology Investigative Unit. 

WASHINGTON – An Asheville, N.C., resident pleaded guilty today in U.S. District Court in Miami for her role in a health care fraud scheme that resulted in the submission of more than $63 million in fraudulent claims to Medicare and Medicaid in Miami and Hendersonville, N.C., announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).

Serena Joslin, 31, a Licensed Psychological Associate, pleaded guilty before U.S. District Judge Cecilia M. Altonaga in Miami to one count of conspiracy to commit health care fraud.  Joslin admitted to participating in a fraud scheme that was orchestrated through an entity called Health Care Solutions Network (HCSN).  HCSN operated purported partial hospitalization programs (PHPs), a form of intensive mental health treatment for severe mental illness, in both Miami and Hendersonville.

According to an indictment unsealed on May 2, 2012, HCSN obtained Medicare beneficiaries to attend HCSN for purported PHP treatment that was unnecessary and, in many instances, not provided.  HCSN obtained those beneficiaries by paying kickbacks to owners and operators of assisted living facilities (ALFs) or by otherwise recruiting them from ALFs and nursing homes.  According to court documents, Joslin admitted that she was aware that HCSN recruited patients who were inappropriate for PHP treatment.  Nevertheless, Joslin agreed with other HCSN employees to, among other things, fabricate therapy notes and other medical records, and to direct therapists to fabricate therapy notes and other medical records, all to make it appear as if HCSN patients received appropriate PHP services.  Joslin was aware that fraudulent claims to Medicare would be submitted on behalf of these patients.

At sentencing, scheduled for Jan. 11, 2013, Joslin faces a maximum of 10 years in prison and a $250,000 fine.

Eight other charged defendants, including the owner and operators of HCSN, await trial before Judge Altonaga.  Defendants are presumed innocent until proven guilty at trial.

Today’s guilty plea was 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; Xanthi C. Mangum, 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 is being prosecuted by Trial Attorneys Steven Kim, William Parente and Allan Medina of the Criminal Division’s Fraud Section.  The case was investigated by the FBI, HHS-OIG and Medicaid Fraud Control Unit 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 their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,330 defendants who collectively have falsely billed the Medicare program for more than $4 billion.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.