District Not Recorded

WASHINGTON – A county commissioner in Sumter County, Ga., was indicted today for his alleged role in soliciting illicit payments in exchange for his official efforts to secure government contracts for a private contractor, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Middle District of Georgia Michael J. Moore announced.

Al J. Hurley, 54, is charged in a three-count indictment filed in the Middle District of Georgia with attempted extortion, bribery and false statements.  According to the indictment, Hurley was an elected member of the five-member Sumter County Board of Commissioners in Sumter County.  As the primary governing body for the county, the Board of Commissioners presided over a variety of official matters, including the bidding process for and award of various county contracts.

The indictment alleges that from September to December 2011, Hurley, in his capacity as a county commissioner, solicited and agreed to accept cash payments, including $5,000 on Oct. 23, 2011, and $15,000 on Dec. 19, 2011, from a private contractor, in exchange for Hurley’s use of official action and influence to facilitate the award of county contracting work to the contractor.  In addition, according to the indictment, on Dec. 19, 2011, Hurley lied to special agents of the FBI when he falsely claimed that he never solicited money from the contractor.

If convicted of attempted extortion, Hurley faces 20 years in prison and a $250,000 fine.  On the bribery charge, Hurley faces 10 years in prison and a $250,000 fine.  The false statement charge carries a maximum five year prison sentence and an additional $250,000 fine.

This case is being prosecuted by Trial Attorney Eric G. Olshan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Crawford L. Seals of the Middle District of Georgia.  This case was investigated by the FBI.

WASHINGTON – Luigi “Louie” Manocchio, an admitted former boss and underboss of the New England La Cosa Nostra (NELCN), was sentenced today to 66 months in federal prison for his leadership of and participation in a racketeering and extortion conspiracy that demanded and received between $800,000 and $1.5 million in “protection” payments from several Rhode Island adult entertainment businesses from 1995-2009.

Raymond R. “Scarface” Jenkins, an admitted associate of the NELCN, was also sentenced today to 37 months in prison for his admitted participation in a conspiracy to extort $25,000 from a Rhode Island individual and his wife by using implied threats of violence, including a visit to the individual’s residence.

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

Manocchio and Jenkins were sentenced by U.S. District Court Judge William E. Smith in the District of Rhode Island.  Manocchio, 84, was also sentenced to serve three years of supervised release following his prison sentence.  Jenkins, 47, was sentenced to serve three years of supervised release following his prison sentence. 

Manocchio pleaded guilty on Feb. 22, 2012, to one count of racketeering conspiracy and Jenkins pleaded guilty on Feb. 23, 2012, to one count of conspiracy to violate the Hobbs Act by participating in extortion.

Manocchio and Jenkins are among eight Rhode Island men charged in a second superseding indictment returned on Sept. 22, 2011, for crimes involving racketeering and extortion.  Edward “Eddy” Lato, an NELCN leader; NELCN member Alfred “Chippy” Scivola; and NELCN associates Albino “Albie” Folcarelli, Thomas Iafrate and Richard Bonafiglia pleaded guilty to participating in racketeering and extortion activities.  Iafrate was sentenced on Dec. 12, 2011, to 30 months in prison to be followed by three years of supervised release.  The remaining defendants are awaiting sentencing.

An eighth defendant named in the second superseding indictment, Theodore Cardillo, pleaded not guilty to three counts of racketeering conspiracy and three counts of extortion conspiracy.  He is awaiting trial.

A third superseding indictment was returned in this matter on April 24, 2012, which charges Anthony L. Dinunzio, 53, of East Boston, Mass., the alleged acting leader of the NELCN, with one count each of racketeering and extortion, and five counts of travel in aid of racketeering.  He entered a plea of not guilty on April 25, 2012, and was ordered detained while awaiting trial.

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

WASHINGTON – The Department of Justice has seized more than $1.5 million in proceeds from the distribution of counterfeit sports apparel and jerseys as the result of an investigation into the sale of counterfeit goods on commercial websites, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney for the District of Columbia Ronald C. Machen Jr. and John Morton, Director of the Department of Homeland Security’s Immigration and Customs Enforcement (ICE).

The investigation also resulted in the seizure of three domain names used in the sale of counterfeit sports apparel.  The funds were seized from interbank accounts and six money service business accounts.  The seizure warrants were unsealed in U.S. District Court in the District of Columbia on May 7, 2012.
 
The developments are the latest result of Operation In Our Sites, a law enforcement initiative targeting online commercial intellectual property crime announced by ICE’s Office of Homeland Security Investigations (HSI) in June 2010.  Operation In Our Sites targeted online retailers of a diverse array of counterfeit goods, including sports equipment, shoes, handbags, athletic apparel, sunglasses and DVD boxed sets.  To date, 761 domain names of websites used in the sale and distribution of counterfeit goods and illegal copyrighted works have been seized as a result of Operation In Our Sites. 

Additionally, last month, the Department of Justice seized more than $896,000 in proceeds from the sale of counterfeit sports apparel on commercial websites as part of Operation In Our Sites.

According to court documents, investigation by federal law enforcement agents revealed that subjects whose domain names had been seized in a November 2010 In Our Sites operation continued to sell counterfeit goods using new domain names.  In particular, the individuals, based in China, sold counterfeit professional and collegiate sports apparel, primarily counterfeit sports jerseys.  Law enforcement agents made numerous undercover purchases from the websites associated with the new domain names.  After the goods were confirmed to be counterfeit or infringing, seizure warrants for three domain names used to sell the infringing goods were obtained from a U.S. Magistrate Judge in U.S. District Court for the District of Columbia.

The individuals conducted sales and processed payments for the counterfeit goods using money service business accounts and then wired their proceeds to bank accounts held at a Chinese bank, the court documents state.

Under warrants issued by a U.S. District Judge, law enforcement agents seized $1,455,438.72 in proceeds that had been transferred from the money service business accounts to various bank accounts in China.  The funds were seized from correspondent, or interbank, accounts held by the Chinese bank in the United States.  Under additional seizure warrants issued by a U.S. Magistrate Judge, law enforcement agents also seized $94,730.12 in funds remaining in six money service business accounts used by the subjects.

“The seizures we are announcing today are another step forward in our efforts to disrupt and disable those engaged in intellectual property crime,” said Assistant Attorney General Breuer.  “By seizing the domain names and profits of online counterfeit goods operations, we are protecting consumers and sending a message to criminals that we will use every tool at our disposal to stop them.”

“Within a matter of weeks, this law enforcement operation has seized more than $2.4 million in proceeds from individuals overseas who are preying on the American economy and consumers with their sales of counterfeit goods,” said U.S. Attorney Machen.  “We will continue to work with our law enforcement partners to target these unscrupulous operators where it hurts them the most – at the bank.”

“ICE will continue to target those who traffic in counterfeit goods by attacking the financial profits of counterfeiting sites and shutting them down,” said ICE Director Morton.  “Operation In Our Sites and the tireless work of the National Intellectual Property Rights Coordination Center protect consumers from fraud on the Internet and combat intellectual property theft which exacts a toll on our economy and industries.”
 
The investigation was conducted by the National Intellectual Property Rights Center and ICE-HSI.  The case is being prosecuted by Assistant U.S. Attorneys Jonathan Hooks and Diane Lucas of the District of Columbia, Senior Trial Attorney Pamela Hicks and Trial Attorney Katharine Wagner of the Asset Forfeiture and Money Laundering Section and Trial Attorney Thomas Dougherty of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division.  

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

WASHINGTON – Vice Lords gang member Jessie Lobbins was sentenced today in Nashville, Tenn., to life in prison by Chief U.S. District Judge Todd J. Campbell, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Jerry E. Martin for the Middle District of Tennessee.
           
On Aug. 23, 2011, Lobbins, 26, aka “Jessie Oliver” and “Trap,” of Memphis, Tenn., along with co-defendants Roger Wayne Battle, 30, aka “T-Wayne,” of Nashville, Tenn., and Gary Eugene Chapman, 32, aka “Wheat,” of Morristown, Tenn., were found guilty by a federal jury in Nashville of numerous violent crimes.  To date, six other individuals have pleaded guilty to various crimes related to their involvement in the Vice Lords gang. 

Specifically, Lobbins was found guilty on six counts, including for his role in the murder of Brandon Harris, aka “Chicago”; conspiracy to commit murder in aid of racketeering; carrying and using firearms during and in relation to crimes of violence; assault with a dangerous weapon resulting in serious bodily injury of a federal inmate in aid of racketeering; and tampering with a witness.  In addition, on March 21, 2012, Lobbins pleaded guilty to escaping from the custody of the Attorney General on Nov. 30, 2011, while being housed at the Robertson County, Tenn., jail.

According to evidence presented at trial, Battle, leader of the Traveling Vice Lords, holding the rank of Five Star Universal Elite and controlling the Middle and East Tennessee regions, and Lobbins, a member of the Traveling Vice Lords, shot and killed Harris on Feb. 10, 2008.  Battle believed that Harris, who was a member of the Mickey Cobras, a gang aligned with the Vice Lords, had made statements regarding Battle having some involvement in the death of Donnell Valentine, aka “Hitman,” the leader of the Conservative Vice Lords in Murfreesboro, Tenn.  Subsequently, Battle lured Harris to O’Charley’s, a restaurant on Bell Road in Nashville, under the guise of a drug transaction.  Lobbins accompanied Battle to the location.  Battle and Lobbins then led Harris to Rice Road in Antioch, Tenn., where Battle and Lobbins shot Harris to death. 

Evidence presented at trial also established that on Nov. 21, 2009, Lobbins, while being housed at the Davidson County Criminal Justice Center in Nashville on the current charges, assaulted inmate Maurice Boyd for providing information to federal authorities regarding a homicide involving Lobbins’s fellow gang members.  Specifically, Lobbins violently attacked Boyd with a sharp object, cutting Boyd on the face, back and left forearm.  Although Boyd survived the attack, he was treated at Vanderbilt University Medical Center in Nashville, where he received more than 200 stitches.
           
Co-defendants Chapman and Battle are scheduled to be sentenced on June 6, 2012, and June 8, 2012, respectively. 
 
The investigation was a joint operation conducted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives; the Murfreesboro Police Department; and the Metropolitan Nashville Police Department.  The case was prosecuted by Assistant U.S. Attorney Van S. Vincent for the Middle District of Tennessee and Trial Attorney Cody L. Skipper of the Criminal Division’s Organized Crime and Gang Section.  

WASHINGTON – Two stock promoters, a securities lawyer and a stock trader associated with a Costa Rican brokerage firm were sentenced today in the Southern District of Florida for their participation in a stock manipulation scheme that defrauded investors in a company called CO2 Technologies, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida, Chief Postal Inspector Guy Cottrell of the U.S. Postal Inspection Service (USPIS) and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office. 

U.S. District Judge Richard W. Goldberg in Miami sentenced Michael Krome, 50, a securities attorney from New York, to 34 months in prison.  Stock promoters Timothy Barham Jr., 44, of Tennessee, and Robert Weidenbaum, 46, of Miami, were sentenced by Judge Goldberg to 30 months and 26 months in prison, respectively.  Krome, Barham and Weidenbaum previously pleaded guilty to conspiring to commit securities fraud, mail fraud and wire fraud.  Krome was ordered to forfeit $17,490; Barham was ordered to forfeit $250,000; and Weidenbaum was ordered to forfeit $360,000.

In a separate but related case, former stock trader David Ricci, 41, was sentenced by Judge Goldberg to 18 months in prison.  Ricci previously pleaded guilty to one count of conspiring to commit securities fraud, wire fraud and mail fraud.  Ricci had been employed as a stock trader at Sentry Global Securities, part of a company called Red Sea Management, an offshore brokerage firm that was based in San Jose, Costa Rica.

Two codefendants, Jonathan Randall Curshen, 47, the head of Red Sea Management and Sentry Global Securities, and Las Vegas stock promoter Nathan Montgomery, 31, were convicted of all counts after a two-week trial in January of this year.  Curshen and Montgomery are scheduled to be sentenced by Judge Goldberg in Miami on May 11, 2012.  Another codefendant, Ryan Reynolds, 40, of Dallas, awaits sentencing on his guilty plea to one count of conspiracy to commit securities fraud, wire fraud and mail fraud.

Weidenbaum and Barham admitted that they and others fraudulently “pumped” the market price and demand for CO2 Tech stock through false and misleading press releases.  They also admitted to engaging in secret coordinated trades of shares of CO2 Tech stock in order to create the appearance of legitimate buying interest by legitimate investors.  Ricci admitted that as the stock promoters pumped the price of the stock, Ricci and his conspirators facilitated the “dumping” of shares through the trading desk at Red Sea Management and Sentry Global Securities by selling the shares to the general investing public.  Weidenbaum and Barham also admitted that they and other conspirators were paid approximately $1 million in cash to buy CO2 Tech stock in order to inflate its price.  The cash was delivered to them in Miami via a private jet from an airport outside New York.  The stock manipulation scheme generated approximately $7 million in illegal proceeds.

Krome admitted that he participated in the conspiracy by evading federal securities registration requirements to facilitate the issuance of millions of unregistered and “free trading” shares of CO2 Tech that were used to execute the stock manipulation.  According to the indictment, the plan was orchestrated by two Israeli nationals, Eric “Ariav” Weinbaum and Izahack Zigdon, who are both fugitives.  Also charged was Ronny Salazar Morales, another trader at Sentry Global Securities and Red Sea Management.  Salazar is also a fugitive.

The case was investigated by the FBI’s Washington Field Office and the USPIS.  The case is being prosecuted by Trial Attorneys N. Nathan Dimock and Rina Tucker Harris of the Fraud Section in the Justice Department’s Criminal Division.  The U.S. Attorney’s Office for the Southern District of Florida provided significant assistance in this case.  The Department of Justice acknowledges the significant assistance of the Financial Industry Regulatory Authority (FINRA) and the U.S. Securities and Exchange Commission (SEC) in its investigation.  The criminal case originated as a referral from the SEC, which has a pending parallel civil case.  The Criminal Division’s Office of International Affairs and Costa Rican authorities also provided valuable assistance. 

The Department of Justice has established a website for potential victims of the crime, which may be accessed at www.justice.gov/criminal/vns/caseup/, under case numbers 11-cr-20121 and 12-cr-20049.  Potential victims are urged to contact the Department of Justice as directed on the website.

This prosecution is part of efforts under way by the 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.

WASHINGTON - El Departamento de Justicia entabló hoy una demanda civil en el tribunal federal contra el Condado de Maricopa, la Oficina del Alguacil del Condado de Maricopa [Maricopa County Sheriff’s Office (MCSO)] y el Alguacil Joseph M. Arpaio, debido a actos inconstitucionales e ilícitos cometidos por los demandados.

La demanda se entabla después de una investigación exhaustiva e independiente iniciada en junio de 2008, de acuerdo con la Sección 14141 de la Ley de Control de Delitos Violentos y Coacción Legal de 1994 y el Título VI de la Ley de Derechos Civiles de 1964. El 15 de diciembre de 2011, el departamento emitió una carta de conclusiones compuesta por 22 páginas, la que encontró causa razonable para creer que la MCSO y el Alguacil Arpaio exhibieron un patrón o práctica de conducta inconstitucional y/o cometieron violaciones a la ley federal. Después de la emisión de la carta de conclusiones, el departamento intentó alcanzar una solución con la MCSO y el Alguacil Arpaio y les proveyó un borrador de acuerdo conciliatorio integral. El acuerdo propuesto contenía una serie de reformas clave que habían sido implementadas con éxito en otros lugares. Sin embargo, las negociaciones no tuvieron éxito, principalmente porque la MCSO y el Alguacil Arpaio se negaron a aceptar cualquier supervisión independiente a ser realizada por un monitor.

La demanda alega que el Condado de Maricopa, la MCSO y el Alguacil Arpaio exhibieron, y siguen exhibiendo, un patrón o una práctica de:

• Acciones de coacción legal discriminatorias y, por otra parte, inconstitucionales, contra hispanos que eran parados, detenidos y arrestados debido a su raza, color u origen nacional;
• Prácticas carcelarias discriminatorias contra reclusos hispanos con conocimientos limitados del idioma inglés; y
• Represalias ilegales contra sus críticos percibidos, sujetándolos a acciones penales sin fundamento, demandas civiles infundadas o acciones administrativas sin mérito.

De acuerdo con la demanda, desde aproximadamente 2006, la MCSO y el Alguacil Arpaio vienen discriminando intencionalmente y sistemáticamente a hispanos. Han logrado esto al parar a hispanos en sus vehículos con una frecuencia de cuatro a nueve veces superior que a conductores no hispanos en situación similar. Además, la MCSO para a hispanos en los caminos del condado sin la justificación legal requerida. Asimismo, la MCSO detiene y registra a hispanos en los caminos, en sus hogares y en sus lugares de trabajo, sin justificación legal para hacerlo. Además, la MSCO maltrata a los detenidos hispanos con conocimientos limitados del inglés al ignorar solicitudes importantes si no se realizan en inglés y castigar a los detenidos si no comprenden órdenes impartidas en inglés. Finalmente, la MSCO entabla acciones administrativas, acciones civiles y casos penales infundados contra sus críticos percibidos, con la intención de limitar la libre expresión.

La conducta de la MCSO se aparta significativamente de las prácticas de coacción legal estándar de muchas maneras. Como describe la demanda, “La MSCO promueve y es indiferente a la conducta discriminatoria de sus agentes de las fuerzas del orden público, según lo demuestran políticas inadecuadas, capacitación inefectiva, medidas de responsabilización prácticamente inexistentes, supervisión deficiente, mecanismos de recolección de datos escasos, priorización de coacción distorsionada, [y] un sistema disciplinario y de quejas ineficaz.

Asimismo, la demanda alega que la conducta es producto de una cultura de indiferencia hacia los hispanos que comienza en la cima y se extiende por la organización. Con frecuencia, los empleados de la MCSO utilizan términos derogatorios para referirse a los hispanos, y el Alguacil Arpaio y supervisores de la MCSO, a través de sus palabras y acciones, sentan las bases y crean una cultura de parcialidad que contribuye a la realización de acciones ilícitas.

En la demanda, el departamento solicita un desagravio judicial y declaratorio que asegure que la MCSO implemente políticas y procedimientos para prevenir el patrón o la práctica de la conducta inconstitucional identificada en la demanda.

“En su esencia, se trata de un caso de abuso de poder contra el Alguacil Arpaio y la oficina del alguacil que ha hecho caso omiso de la Constitución, ignorado prácticas policiales sólidas, y que no hesitó en aplicar represalias contra críticos percibidos en una variedad de maneras ilícitas”, dijo Thomas E. Perez, Secretario de Justicia Auxiliar de la División de Derechos Civiles. “La acción policial constitucional y la acción policial eficaz van de la mano. La demanda detalla cómo las acciones del Alguacil Arpaio no han sido ni constitucionales ni eficaces. Nadie en el Condado de Maricopa está por arriba de la ley y el departamento luchará para asegurar que la promesa de la Constitución sea realizada por todos en el Condado de Maricopa".

Esta demanda fue entablada después de una investigación exhaustiva e independiente de las políticas y prácticas de la MCSO. Abogados, investigadores y expertos del Departamento realizaron entrevistas con más de 400 personas, incluidos 75 supervisores y delegados actuales y anteriores de la MSCO, entre los que se incluyó el Alguacil Arpaio y 150 actuales y anteriores presidiarios de la MCSO. Además, el departamento analizó miles de páginas de documentos. Muchas de estas entrevistas y gran parte de este análisis se demoró cuando la MCSO se negó a proveer los documentos y el acceso requeridos. Finalmente, la MCSO brindó el acceso y los documentos requeridos después de que el departamento entabló una demanda bajo el Título VI en septiembre de 2010.

La Sección 14141 prohíbe a las agencias de las fuerzas del orden público, como la MCSO, realizar actividades que representen un patrón o una práctica de violación de la Constitución o de leyes de los Estados Unidos. El Título VI y las normas que lo implementan disponen que los beneficiarios de asistencia financiera federal, tales como el Condado de Maricopa y la MCSO, no pueden discriminar debido a raza, color u origen nacional.

Desde la divulgación de sus conclusiones en diciembre de 2011, el departamento ha intentado en repetidas oportunidades lograr el cumplimiento voluntario de la Constitución y del Título VI por parte del Condado de Maricopa. La MSCO puso punto final a estos intentos en abril de 2012. Debido a la naturaleza profundamente arraigada de los problemas que enfrenta la MCSO, la demanda solicita una serie de reformas, incluida una orden judicial que exija que los demandados:

• Desarrollen e implementen nuevas políticas y procedimientos, y capaciten a sus agentes en servicios policiales eficaces y constitucionales;
• Implementen sistemas para asegurar la responsabilización y mejoren la calidad de los servicios policiales en todo el condado; y
• Eliminen la parcialidad ilícita en todos los niveles de decisión asociada a la coacción legal.

Además, la experiencia del Departamento de Justicia indica que el camino más eficaz hacia la reforma sostenible incluye la designación de un monitor independiente que trabaje en conjunto con el departamento y la comunidad para asegurar la implementación eficaz de las disposiciones de cualquier orden judicial.

Esta investigación fue conducida por la Sección de Litigios Especiales de la Sección de Coordinación y Cumplimiento Federales de la División de Derechos Civiles con la asistencia de profesionales de las fuerzas del orden público, incluidos ex jefes de la policía, un asesor en prácticas carcelarias y un asesor en análisis estadístico. Actualmente, la investigación de la manera en que la MCSO maneja el abuso sexual sigue en curso. Los miembros de la comunidad del Condado de Maricopa que deseen brindar información al Departamento de Justicia pueden llamar al 1-877-613-2137 o enviar un mensaje de correo electrónico a [email protected].

Para obtener más información sobre la División de Derechos Civiles del Departamento de Justicia, visite www.justice.gov/crt.

The Department of Justice filed a civil lawsuit in federal court today against Maricopa County, the Maricopa County Sheriff’s Office (MCSO) and Sheriff Joseph M. Arpaio, arising from unconstitutional and unlawful actions by the defendants.

 

The lawsuit follows a comprehensive and independent investigation initiated, in June 2008, under Section 14141 of the Violent Crime Control and Law Enforcement Act of 1994 and Title VI of the Civil Rights Act of 1964. On Dec. 15, 2011, the department issued a 22 page letter of findings, which found reasonable cause that MCSO and Sheriff Arpaio were engaged in a pattern or practice of unconstitutional conduct and/or violations of federal law. Following the issuance of the letter of findings, the department attempted to reach a resolution with MCSO and Sheriff Arpaio and provided them with a comprehensive draft settlement agreement. The proposed agreement contained a number of key reforms that had been successfully implemented elsewhere. However, negotiations were unsuccessful, primarily because MCSO and Sheriff Arpaio refused to agree to any independent oversight by a monitor.

 

The complaint alleges that Maricopa County, MCSO and Sheriff Arpaio engaged in and continue to engage in a pattern or practice of:

 

·          Discriminatory and otherwise unconstitutional law enforcement actions against Latinos who are frequently stopped, detained and arrested on the basis of race, color, or national origin;

·          Discriminatory jail practices against Latino inmates with limited English skills; and

·          Illegal retaliation against their perceived critics, subjecting them to baseless criminal actions, unfounded civil lawsuits, or meritless administrative actions.

 

According to the complaint, since approximately 2006, MCSO and Sheriff Arpaio have intentionally and systematically discriminated against Latinos. They have accomplished this by stopping Latinos in their vehicles four to nine times more often than similarly situated non-Latino drivers. In addition, MCSO stops Latinos on the county’s roads without the required legal justification. Also, MCSO detains and searches Latinos on the roads, in their homes, and in their workplaces without legal justification for doing so. Further, MCSO mistreats Latino detainees with limited English proficiency by ignoring important requests if they are not made in English and punishing detainees if they fail to understand orders given in English. Finally, MCSO files baseless administrative actions, civil actions and criminal cases against its perceived critics in an attempt to chill free speech.

 

The conduct of MCSO dramatically departs from standard law enforcement practices in numerous ways. As described in the complaint, “MCSO promotes and is indifferent to the discriminatory conduct of its law enforcement officers, as is demonstrated by inadequate policies, ineffective training, virtually non-existent accountability measures, poor supervision, scant data collection mechanisms, distorted enforcement prioritization [and] an ineffective complaint and disciplinary system.”

 

Additionally, the complaint alleges that the conduct is the product of a culture of disregard for Latinos that starts at the top and pervades the organization. MCSO employees frequently use derogatory terms to refer to Latinos, and Sheriff Arpaio and MCSO supervisors, through their words and actions, set the tone and create a culture of bias that contributes to unlawful actions.

 

In the complaint, the department seeks declaratory and injunctive relief that would ensure that MCSO implements policies and procedures to prevent the pattern or practice of unconstitutional conduct identified in the complaint.

 

“At its core, this is an abuse of power case involving Sheriff Arpaio and a sheriff’s office that disregarded the Constitution, ignored sound police practices, and did not hesitate to retaliate against perceived critics in a variety of unlawful ways,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “Constitutional policing and effective policing go hand in hand.  The complaint outlines how Sheriff Arpaio’s actions were neither constitutional nor effective.  No one in Maricopa County is above the law and the department will fight to ensure that the promise of the Constitution is realized by everyone in Maricopa County.” 

 

This complaint was filed after a thorough and independent investigation of MCSO’s policies and practices. Department attorneys, investigators and experts conducted interviews with more than 400 individuals including, 75 current and former MCSO supervisors and deputies, including Sheriff Arpaio, and 150 former and current MCSO inmates. In addition, the department reviewed thousands of pages of documents. Many of these interviews and much of this review was delayed when MCSO refused to provide required documents and access. MCSO finally provided the required access and documents after the department filed a lawsuit under Title VI in September 2010.

 

Section 14141 prohibits law enforcement agencies, such as MCSO, from engaging in activities that amount to a pattern or practice of violating the Constitution or laws of the United States. Title VI and its implementing regulations provide that recipients of federal financial assistance, such as Maricopa County and MCSO, may not discriminate on the basis of race, color or national origin.

 

Since releasing its findings in December 2011, the department has repeatedly reached out to MCSO in an effort to achieve voluntary compliance with the Constitution and Title VI. MCSO ended these efforts in April 2012. In light of the deeply rooted nature of the problems facing MCSO, the complaint seeks a host of reforms, including a court order requiring that the defendants:

 

·          Develop and implement new policies and procedures and train MCSO officers in effective and constitutional policing;

·          Implement systems to ensure accountability and improve the quality of policing throughout the county; and

·          Eliminate unlawful bias from all levels of law enforcement decision.

 

In addition, the Justice Department’s experience has shown that the most effective path to sustainable reform includes the appointment of an independent monitor to work collaboratively with the department and the community to ensure the effective implementation of the provisions of any court order.

 

This investigation was conducted by the Special Litigation Section and the Federal Coordination and Compliance Section of the Civil Rights Division with the assistance of law enforcement professionals, including former police chiefs, a jail practices consultant and a consultant on statistical analysis. The investigation into the handling of sexual assaults by MCSO remains ongoing at this time. Members of the Maricopa County community who may wish to provide information to the Justice Department may call 1-877-613-2137 or email [email protected] .

 

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

Related Materials:

Remarks by Assistant Attorney General Thomas E. Perez at the Maricopa County Press Conference
MCSO Complaint

WASHINGTON – Pharmacia Corporation and Bayer CropScience Inc. have agreed to pay $4.25 million to federal and state natural resource trustees to resolve claims for natural resource damages connected with the Industri-plex Superfund site located in Woburn, Mass., the Department of Justice announced today.

Operations at the Industri-plex Superfund site from the 1850s to the 1960s contaminated the Aberjona River, as well as associated wetlands and the Mystic Lakes, with arsenic, chromium and other hazardous substances.  Under the Comprehensive Environmental Response, Compensation, and Liability Act, parties that have disposed of hazardous substances at a site are liable for damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction or loss.  In this case, the federal natural resource trustees, which include the U.S. Department of the Interior, through the U.S. Fish and Wildlife Service, and the National Oceanic and Atmospheric Administration, as well as the state natural resource trustee, the Massachusetts Executive Office of Energy and Environmental Affairs, determined that the hazardous substances disposed of by the settling defendants or their predecessors had degraded wetland, river and lake habitat used by a variety of wildlife, including  fish, turtles, amphibians and migratory birds, such as great blue herons, black ducks and kingfishers. 

In settlement of the trustees' natural resource damages claims, the defendants have agreed to pay $4.25 million.  Of this amount, $3,812,127 will be used by the trustees to implement natural resource restoration projects to compensate for injury caused by the hazardous substances disposed of at the site.  The trustees have not determined which particular projects will be implemented, but examples of potential projects include the creation of new wetlands and the restoration, enhancement or protection of existing wetlands.  The remaining amount of the settlement figure – $437,873 –  will reimburse federal and state trustees for damages assessment costs.
 
“This is good news for the environment and the resources that depend on wetlands for habitat,” said Acting Assistant Secretary of the Interior for Fish and Wildlife and Parks Rachel Jacobson.  “After many years and much hard work, this agreement will enable the Department of the Interior to work closely with other co-trustees to restore habitat that was contaminated by industrial activities for decades.”

“This settlement will ensure that those responsible for damaging the environment will pay to replace the injured natural resources,” said Massachusetts Attorney General Martha Coakley.  “Massachusetts rivers and wetlands deserve our rigorous protection and our environmental laws provide a remedy for harm to natural resources no matter how long ago the violations occurred.”

“The U.S. Fish and Wildlife Service is proud to be one step closer to restoring the Aberjona River area to a cleaner, healthier environment for wildlife and people,” said Wendi Weber, U.S. Fish and Wildlife Service Northeast Regional Director.  “We look forward to working with local communities to select and implement restoration projects that will be funded by the responsible parties without cost to the taxpayer.”

“We're proud to join with our federal and municipal partners to hold industry accountable for environmental harm.  Protecting our precious environmental resources is important work for our communities, our wildlife and for the benefit of future generations,” said Massachusetts Energy and Environmental Affairs Secretary Rick Sullivan.

“We will ensure that stakeholders active in the Mystic River watershed will be active participants in the process to use these NRD funds to restore the injured natural resources,” said Commissioner Kenneth Kimmell of the Massachusetts Department of Environmental Protection, which will staff the Trustee Council for the Commonwealth.

During the period from the late 1850s to the 1960s, predecessors of Pharmacia Corporation and Bayer CropScience manufactured various products at the site, including sulfuric acid, arsenic insecticides, organic chemicals, munitions, and glue.  Those predecessors include the Merrimac Chemical Company and the Stauffer Chemical Company, among others.   

The settling defendants have entered into prior consent decrees approved by the U.S. District Court of the District of Massachusetts in 1989 and 2008, under which they have agreed to implement remedies selected for the site by the U.S. Environmental Protection Agency.  These prior settlements did not address the trustees' natural resource damages claims.

The Department of Justice will be taking public comments on the settlement for a period of 30 days from publication of a notice of the settlement, which should appear shortly in the Federal Register. The settlement also has a state comment period ending 120 days after lodging of the consent decree in court.  Instructions on how to comment during the state period are provided in the consent decree at: www.justice.gov/enrd/Consent_Decrees.html.

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

Sean M. Lovelady, 28, of Pomona, Calif., 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.  Lovelady faces up to five years in prison, a fine of $250,000 and three years of supervised release. 

Lovelady 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, Lovelady and his co-conspirators sought to illegally obtain and disseminate digital copies of copyrighted motion pictures showing in theaters.  Lovelady admitted that he went to movie theaters near his California residence and secretly used receivers and recording devices 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, Lovelady 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.

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 Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) are prosecuting the case on behalf of the United States.  Significant assistance was provided by the CCIPS Cyber Crime Lab 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.

Attorney General Eric Holder today convened the third meeting of thefederal interagency Reentry Council at the Department of Justice. The council represents 20 federal agencies working to make communities safer by reducing recidivism and victimization; assist those who return from prison and jail in becoming productive citizens; and save taxpayer dollars by lowering the direct and collateral costs of incarceration. The Attorney General chairs the council which he established in January 2011 .

 

“When reentry fails, the costs—both societal and economic—are high,” said Attorney General Eric Holder.  “Our joint commitment is to eliminate barriers to successful reentry by improving employment, housing, treatment and education opportunities for individuals who have been incarcerated so they can support themselves and their families and contribute to their communities.”

 

Among the topics discussed at today’s meeting were important new efforts to reduce barriers to employment. For example, the Equal Employment Opportunity Commission recentlyupdated enforcement guidance on the use of arrest and conviction records in employment decisions under Title VII of the Civil Rights Act of 1964. The revised guidance clarifies and updates the EEOC’s longstanding policy concerning the use of arrest and conviction records in employment, which will assist job seekers, employees, employers, and many other agency stakeholders. The Department of Labor is working to educate the One-Stop Career Centers’ network on the new guidance and other nondiscrimination obligations under federal law. The centers provide a full range of assistance to job seekers under one roof. Established under the Workforce Investment Act , they offer training referrals, career counseling, job listings, and similar employment-related services. Customers can visit a center in person or connect to the center's information through PC or kiosk remote access.

 

“The Department of Labor is committed to ensuring that all Americans have access to the help they need in getting the necessary skills to move forward along a sustainable career pathway,” said Secretary of Labor Hilda L. Solis. “That means promoting programs to specifically address the needs of those with traditional barriers to employment, but it also means making sure that the workforce system is able to offer proper guidance regardless of where and how people are looking for employment help.” 

The Federal Trade Commission covered their new employer education flyer, “ Using Consumer Reports: What Employers Need to Know ,” which outlines employer obligations when they use reports, including criminal histories, for employment decisions such as hiring, promotion reassignment and retention. Also, the Small Business Administration recently joined the Reentry Council as the 20th agency, providing new linkages to small business networks, entrepreneurship training, and microloan opportunities. 

 

“Ensuring equal employment opportunity is critical to a strong economy and central to the reentry conversation,” said EEOC Chair Jacqueline A. Berrien. “Engaging with a broad range of federal agencies through the federal interagency Reentry Council helps us in our work to eliminate unnecessary barriers to employment.”

Today’s Reentry Council meeting was attended by Department of Labor Secretary Hilda Solis, Department of Health and Human Services Secretary Kathleen Sebelius, Department of Education Secretary Arne Duncan, Office of National Drug Control Policy Director R. Gil Kerlikowske, Equal Employment Opportunity Commission Chair Jacqueline A. Berrien and White House Domestic Policy Council Director Cecilia Muñoz. Participants also included representatives from the following agencies: Departments of Interior, Agriculture, Housing and Urban Development and Veterans Affairs, Office of Management and Budget, Federal Trade Commission, Small Business Administration, Internal Revenue Service, Social Security Administration, Office of Personnel Management, and the U.S. Interagency Council on Homelessness.

For more information about the federal Reentry Council, visit www.nationalreentryresourcecenter.org/reentry-council .

The “Reentry Myth Busters” fact sheets are available at www.nationalreentryresourcecenter.org/documents/0000/1090/REENTRY_MYTHBUSTERS.pdf . 

For more information about reentry and the Second Chance Act, visit www.nationalreentryresourcecenter.org . 

To access the National Institute of Justice’s reentry research portfolio visit www.nij.gov/nij/topics/corrections/reentry/welcome.htm .

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WASHINGTON – The city of Unalaska, Alaska, will undertake a major upgrade of its municipal sewage treatment plant under a settlement of a Clean Water Act enforcement action filed against the city and the state of Alaska by the Department of Justice on behalf of the Environmental Protection Agency (EPA).

Under the proposed settlement, Unalaska will spend at least $18 million to upgrade its treatment plant over the next three years to meet the requirements of its current National Pollution Discharge Elimination System (NPDES) permit, which was issued by EPA under the Clean Water Act.  The city has also committed to adhere to fecal coliform limits that are 50 times more stringent than the current permit’s limits.

The Clean Water Act lawsuit, filed in June 2011, alleged that the city continually violated its NPDES permit by discharging pollutants into South Unalaska Bay in excess of discharge permit limits.  According to monitoring reports that the city is required to file with EPA, Unalaska’s treatment plant had more than 5,500 violations of permit limits between October 2004 and September 2011, including discharges of harmful fecal coliform bacteria that were often more than double the permit limit.

The treatment plant upgrade will significantly reduce the level of pollution, including fecal coliform bacteria, being discharged into Unalaska Bay, which is part of the Bering Sea.  The city will also pay a $340,000 penalty for past NPDES permit violations.

“This agreement will result in cleaner water in Unalaska Bay, which is home to a vital commercial fishery as well as protected wildlife,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice.  “Unalaska residents and the fishermen who depend on the bay will be the beneficiaries of this agreement for many years to come.” 

Edward Kowalski, director of EPA’s Office of Compliance and Enforcement in Seattle, noted that today’s agreement paves the way for a long-overdue enhancement of the city’s primary wastewater treatment process.
 
“Today’s settlement represents an investment in Unalaska’s future,” said EPA’s Kowalski.  “By agreeing to modernize its wastewater treatment plant, the city of Unalaska will help protect the waters of Unalaska Bay and meet current discharge permit limits.”

With a year-round population of approximately 4,400, Unalaska (commonly known as Dutch Harbor), is Alaska’s 11th largest city.  Lying roughly 800 miles southwest of Anchorage in the Aleutian Island chain, Dutch Harbor serves as homeport to one of the nation’s most productive commercial fishing fleets, supporting both industrial-scale fishing and fish processing. During the height of the fishing season, Unalaska’s population more than doubles, reaching as high as 10,000.

Unalaska Bay is protected for a number of uses, including boating, recreational and commercial fishing, and shellfish harvest. It also provides habitat for several endangered or threatened species, including northern sea otters and Steller’s eiders, a species of sea duck.  However, the bay is currently listed as an impaired water-body, which means it fails to meet state water quality standards.

As required by the Clean Water Act, the state of Alaska must be a party to this action.  The Department of Justice will be taking public comment on the settlement for a period of 30-days from publication of a notice of the settlement, which should appear shortly in the Federal Register.  After resolution of all comments received, the settlement will be entered in federal court.  It will take effect on the day it is entered by the court.  A copy of the settlement agreement can be obtained at: www.justice.gov/enrd/Consent_Decrees.html.

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

Roland J. Flath, 72, pleaded guilty before U.S. District Judge J.P. Stadtmueller.

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

Flath faces a maximum penalty of up to 30 years in prison and a fine of $250,000.

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

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

The Attorney General issued the following statement today:

 

“Today, we mourn the loss of Nicholas Katzenbach, one of our Nation's great champions of civil rights and equal justice.  Throughout a life that spanned 90 years, he served our country in many ways – as an attorney, activist, Presidential Advisor, U.S. Attorney General and Deputy Attorney General, and U.S. Army Officer.  During WWII, Second Lieutenant Katzenbach battled oppression overseas – and survived more than a year in a German prison camp – before returning home to fight for the cause of equal opportunity.  Throughout one of the most challenging and consequential eras in American history, his extraordinary talents – and dedicated leadership of the Department of Justice – helped to guide our Nation forward from the dark days of segregation and to secure the successful passage of the landmark Civil Rights and Voting Rights Acts .  I am especially grateful for his work to ensure a peaceful end to the legendary “Stand in the Schoolhouse Door,” when – on June 11, 1963 – Deputy Attorney General Katzenbach faced down Governor George Wallace and personally assisted two African-American students, James Hood and Vivian Malone – a bright young woman who would later become my sister-in-law – in successfully integrating the University of Alabama.

 

“As we remember and honor his many achievements and contributions, our thoughts and prayers are with the Katzenbach family.  Although Nick Katzenbach will be sorely missed, there is much to celebrate in the life he lived, in the example he set, and in the inspiration he will continue to provide – for me, for my colleagues across the Department of Justice, and for the Nation he was so proud to serve.”

Karl Herrington, of Parma, Mich., was sentenced today to 97 months in prison, following convictions at trial for corruptly endeavoring to obstruct the administration of the Internal Revenue laws, filing false tax forms with the Internal Revenue Service (IRS) and being a felon in possession of firearms, the Justice Department, the Treasury Inspector General for Tax Administration (TIGTA), the IRS and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) announced today. U.S. District Judge Stephen J. Murphy III of the Eastern District of Michigan, presided over the trials and imposed the sentence.

 

Separate Detroit juries returned guilty verdicts on the tax charges on Aug. 24, 2011, and on the firearms charge on Aug. 25, 2011. Herrington was convicted of two counts of corruptly endeavoring to obstruct the administration of the Internal Revenue laws, four counts of filing false tax forms with the IRS, and one count of being a felon in possession of six different firearms.

 

According to the evidence at trial, Herrington submitted false forms to the IRS to intimidate and harass state and local government officials and employees. These included IRS Forms 1099-OID falsely reporting that Herrington paid original issue discount, which is taxable as interest, to law enforcement personnel and judges involved in a criminal case against him in Jackson County, Mich. In that case, Herrington was charged with being an accessory after the fact for harboring his wife, who was wanted for outstanding arrest warrants.

 

Further, the evidence established that Herrington sent false IRS Forms 1099-OID to federal attorneys prosecuting a criminal tax case against his wife in the Northern District of Ohio in order to interfere with that case. The tax forms included an individual income tax return for himself falsely reporting federal tax withholdings of more than $8 million.

 

Herrington was also convicted of possessing firearms on May 25, 2011, the day of his arrest on the underlying tax charges. According to the evidence at trial, Herrington was previously convicted of a felony offense. When he was arrested, Herrington possessed six different firearms, including five shotguns and a magnum rifle.

 

Special agents from TIGTA, IRS-Criminal Investigation and ATF conducted the investigation. Tax Division Trial Attorneys Kenneth Vert and Jeffrey McLellan prosecuted the case for the United States. Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division commended the special agents and thanked U.S. Attorney Barbara L. McQuade and her entire office for their assistance.

 

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

WASHINGTON – A Manalapan, N.J., woman pleaded guilty today to producing child pornography by sexually abusing a five-year-old girl on more than one occasion and streaming footage of a sexual assault over the Internet, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and New Jersey U.S. Attorney Paul J. Fishman announced.

 

Jennifer Mahoney, 33, pleaded guilty to one count of sexual exploitation of a child.  She entered her guilty plea in Trenton, N.J., federal court before U.S. District Judge Mary L. Cooper.

 

“Ms. Mahoney sexually abused a five-year-old girl and streamed footage of this abuse to others over the Internet,” said Assistant Attorney General Breuer.  “Now that she has pleaded guilty to these reprehensible crimes, she faces a minimum of 15 years in prison.  No prison sentence can repair the damage she has caused, or restore the innocence of the child she abused.  But, she and other child predators should know this:  we in law enforcement will use every measure available to us to prevent and deter child exploitation, and to punish men or women who still succeed in committing the kind of horrific crimes to which Ms. Mahoney has now confessed.”

 

“Today, Jennifer Mahoney admitted that she sexually abused a five-year old girl entrusted to her care and then shared recordings of that abuse over the Internet,” said U.S. Attorney Fishman.  “This horrible crime is a stark example of how harmful ‘child pornography’ is, and how its young victims bear not just the physical and emotional scars of violent sexual assault, but lifelong trauma as others repeatedly watch.  Those like Mahoney, who create and feed the market, perpetuate unimaginable suffering for the children they abuse.”

 

According to court documents, Mahoney admitted she sexually assaulted a five-year-old girl and streamed the assault live over the Internet via Skype, a video chat service.  Mahoney also admitted that on another occasion last year, she abused the girl, recorded the abuse on her iPhone, and e-mailed the video to at least one other person.  Additionally, Mahoney admitted to viewing other videos of child sexual abuse streamed to her using Skype.

 

Special agents of the FBI and other law enforcement personnel executed a search warrant at Mahoney’s home in Manalapan on Dec. 13, 2011.  Law enforcement had previously seized a computer during a search of a Texas man’s home.  Subsequent to both searches, law enforcement recovered from the Texas man’s computer three videos of Mahoney having sexual contact with a child.

 

Two of the videos were of the video chat session, in which Mahoney is shown molesting the child while laughing and talking to someone, apparently the party on the other end of the chat session.  The third video depicts Mahoney sexually abusing the child in a bathtub while filming it with her phone.

 

The charge of sexual exploitation of children carries a mandatory minimum penalty of 15 years in prison, a maximum potential penalty of 30 years in prison and a $250,000 fine.  Sentencing is currently set for Aug. 22, 2012.  In the interim, Mahoney will remain in state custody on related charges.

 

The case was investigated by the New Jersey FBI Cyber Crimes Task Force and the Monmouth County Prosecutor’s Office.

 

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

 

The government is represented by Assistant U.S. Attorney John E. Clabby of the U.S. Attorney’s Office Criminal Division in Trenton, N.J., and CEOS Trial Attorney Keith A. Becker of the Justice Department’s Criminal Division.

WASHINGTON – A former security officer in the Birmingham City School System, who was also a substitute bus driver for Shelby County, Ala., schools, was sentenced today to 30 years in prison for producing child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Joyce White Vance of the Northern District of Alabama, Northern District of Alabama FBI Special Agent in Charge Patrick J. Maley and Birmingham Police Chief A.C. Roper.

U.S. District Judge Inge P. Johnson also sentenced Michael Wayne Wooten, 61, of Alabaster, Ala., to lifetime supervised release following his prison term.  The court noted during the hearing that Wooten had numerous child victims.  Law enforcement efforts have identified 11 children whom he exploited.

Wooten pleaded guilty in January 2012 to the child pornography charge.
 
“Mr. Wooten used his position as a school security guard to gain access to young children,” said Assistant Attorney General Breuer.  “But rather than protect school students, he sexually abused them and captured this abuse in dozens of photographs.  Today, appropriately, he was sentenced to 30 years in prison.”

“Restoring the innocence and trust this defendant stole from his victims is impossible, but the judge’s sentence punishes him for the harm he did and ensures he will never exploit another child,” said U.S. Attorney Vance.  “This defendant will be eligible for release when he is 91.  Today, we confirm that victimizing children by taking sexually explicit photographs of them is abhorrent criminal behavior and it will be not tolerated.”

“Mr. Wooten used and abused his position of trust to satisfy his own perverse sexual interest in children,” said Special Agent in Charge Maley.  “Working with our law enforcement partners, the FBI will bring to justice those individuals who prey on the innocent.”

“We believe that justice has been served, and this is the appropriate sentence in a case where so many innocent children have been affected,” said Police Chief Roper.  “We appreciate all the various criminal justice agencies that came together to bring this investigation to a successful conclusion.”
 
According to court documents, Wooten, a retired Birmingham police officer, worked as a security officer for the Birmingham City Schools from July 1997 until May 2011.  Before his November arrest, Wooten had worked as a substitute bus driver in Shelby County schools during the current school year.

Between August 2009 and April 2010, Wooten used an office at Dupuy Elementary School in Birmingham to take modeling photos of numerous juvenile girls, according to court records.  After one of these modeling sessions, one of the victims told her parents of potentially inappropriate conduct by Wooten.  A subsequent search of Wooten’s residence yielded multiple computers containing child pornography images, including images produced by Wooten depicting several victims, between four and nine years of age, engaged in sexually explicit conduct. 

The FBI and the Birmingham Police Department investigated the case.  Assistant U.S. Attorney Daniel Fortune of the Northern District of Alabama and Trial Attorney Jeffrey H. Zeeman of the Justice Department Criminal Division’s Child Exploitation and Obscenity Section prosecuted the case.

Veronica Dale and Alchico Grant, who jointly ran a stolen identity refund fraud ring that attempted to defraud the United States of millions of dollars over several years, were sentenced to federal prison today, the Justice Department and Internal Revenue Service (IRS) announced. Veronica Dale, of Montgomery, Ala., was sentenced to 334 months and Alchico Grant of Lowndes County, Ala., was sentenced to 310 months in prison. In addition, Dale and Grant were both ordered to pay over $2.8 million in restitution to the IRS.

 

In December 2010, Dale and Grant were originally indicted, along with three others, on various tax and tax-related charges including aggravated identity theft. Dale and Grant continued their tax refund fraud while on pretrial release and as a result, Grant was indicted again in April 2011, and Dale was later named in a superseding indictment in August 2011. Both were ordered detained following the second set of indictments and have remained in custody.

 

On Sept. 14, 2011, Grant pleaded guilty to a total of five charges from both indictments, including conspiracy, wire fraud and aggravated identity theft. On Oct. 14, 2011, Dale pleaded guilty to a total of seven charges from both indictments, including conspiracy, filing false claims, wire fraud and aggravated identity theft.

According to the first indictment, the plea agreements and other court documents, beginning in 2009 and continuing through 2010, the defendants were part of a scheme that involved fraudulently obtaining tax refunds by filing false tax returns using stolen identities. Dale admitted that she filed over 500 fraudulent returns that sought at least $3,741,908 in tax refunds. These returns were filed using the names of Medicaid beneficiaries, whose personal information Dale obtained while earlier employed by a company that serviced Medicaid programs. Dale directed the refunds to different bank accounts that she and other co-conspirators controlled.

 

Also according to the first indictment, plea agreements and other court documents, Grant admitted that he opened bank accounts to receive some of the refunds and recruited others to do the same. One such recruit opened a bank account in the name of a business into which more than $1.3 million in fraudulently obtained tax refunds were deposited. Thereafter, Grant directed distribution of the proceeds which included having third parties cash checks drawn on the various accounts and remit the funds to him. Grant also instructed individuals to lie to law enforcement authorities when questioned about the checking account activities. Dale and Grant’s co-defendants – Laquanta Grant, Leroy Howard, and Isaac Dailey – have all pleaded guilty, as have two other co-conspirators, Wendy Delbridge and Betty Washington, who pleaded guilty to criminal informations.

 

The second indictment charged a conspiracy that involved Dale, Grant, Melinda Clayton, and Stephanie Adams. As court documents show, this conspiracy extended from January 2011 to April 2011, when federal agents executed a search warrant at Clayton’s house and arrested her. In her plea agreement, Dale admitted that this scheme involved a fraud loss of between $400,000 and $1 million. Dale admitted to providing Clayton with stolen identities in furtherance of the new scheme. Clayton stored these and other lists of stolen identities at her home. The tax refunds were directed to bank accounts and prepaid debit cards purchased by Dale and Grant. Dale, Grant, Clayton and Adams all pleaded guilty to their roles in the second scheme, as did Valerie Byrd, who pleaded guilty to a criminal information.

 

“The Justice Department remains committed to protecting Americans from thieves who would steal their identities and use them to commit refund fraud,” said Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division. “Those who commit stolen identity refund fraud will be punished to the full extent of the law.”

 

"These sentences once again demonstrate the wide-spread and destructive nature of identity theft," observed George Beck, U.S. Attorney for the Middle District of Alabama. "I commend the IRS for their strict enforcement of these violations of federal laws. Our office remains dedicated to rooting out those evil wrongdoers who systematically steal taxpayers’ money."

 

“Identity theft is a despicable crime that victimizes honest taxpayers and causes immense hardship,” said Richard Weber, Chief, IRS Criminal Investigation. “This sentencing should serve as a strong warning to those considering similar conduct.”

 

The cases were investigated by Special Agents of the IRS - Criminal Investigation. Trial attorneys Jason H. Poole and Michael Boteler of the Tax Division are prosecuting the cases, with assistance from the U.S. Attorney’s Office, and in particular Assistant U.S. Attorneys Todd Brown and Jared Morris.

 

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

WASHINGTON – Detroit-area residents Zahir Yousafzai and Dr. Dwight Smith pleaded guilty yesterday for their roles in a $13.8 million home health care fraud and money laundering scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).

Yousafzai, 42, pleaded guilty before U.S. District Judge Gerald E. Rosen of the Eastern District of Michigan to one count of conspiracy to commit health care fraud and one count of money laundering.  Smith, 59, pleaded guilty before Judge Rosen to one count of conspiracy to commit health care fraud. 

According to information contained in plea documents, in 2009, Yousafzai and his co-conspirators acquired beneficial ownership and control over two home health companies, First Care Home Health Care LLC and Moonlite Home Care Inc.  Yousafzai also assisted in the operation of two home health care companies owned by co-conspirators, Physicians Choice Home Health Care LLC and Quantum Home Care Inc.  Yousafzai admitted that these home health agencies billed Medicare for home health visits that never occurred.  Between July 2008 and September 2011, Yousafzai and his co-conspirators submitted or caused the submission of approximately $13.8 million in fraudulent home health claims to the Medicare program by the four home health agencies.  Medicare paid more than $4 million to First Care and Moonlite, the companies that Yousafzai beneficially owned in whole or in part.

Yousafzai admitted to paying and directing the payment of various medical professionals, including doctors, nurses, physical therapists and physical therapy assistants, to create fictitious patient files to document purported home health services that were never provided.  Yousafzai, a physical therapy assistant, also signed fictitious patient files in which physical therapy services were documented, but never actually provided.

Yousafzai also admitted that he paid and directed the payment of kickbacks to recruiters who obtained beneficiaries’ information and used the information to submit claims for home health services that were never provided.  The beneficiaries sometimes pre-signed forms and visit sheets that were later falsified to indicate that they received home health services that were never provided.  Other times, the beneficiaries’ signatures were forged on forms and visit sheets.

Additionally, Yousafzai admitted that he incorporated a shell company known as A-1 Nursing and Rehab Inc. for the purpose of laundering the proceeds of health care fraud, which were obtained through the submission of false and fraudulent claims to Medicare.

According to plea documents, beginning in or around September 2009, Smith began referring Medicare beneficiaries for home health care services to Physicians Choice Home Health Care LLC and Quantum Home Care Inc.  During that time, Smith owned and controlled Supreme Medical Associates PLLC, a Michigan corporation doing business in Detroit under the assumed name of Smith Medical Center.  In May 2010, Smith incorporated Phoenix Visiting Physicians PLLC.

Smith Medical Center and Phoenix employed individuals who claimed to be doctors, but, in fact, were not licensed in the state of Michigan to perform any medical services.  The unlicensed doctors met with and purported to examine Medicare beneficiaries for home health care services.  Smith did not meet or examine these beneficiaries and they were not homebound.  Many of the beneficiaries were paid to pre-sign patient visit forms and did not receive home health services from Physicians Choice, First Care and Quantum.  From in or around September 2009 through in or around September 2011, Medicare paid approximately $6.5 million for fraudulent home health care claims submitted by Physicians Choice, First Care and Quantum based on Smith’s referrals.

The guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; 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 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 their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,300 defendants who collectively have falsely billed the Medicare program for more than $4 billion.  In addition, the HHS 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.

Direct Resource Inc. has agreed to pay the government $450,000 to resolve allegations that the company falsely claimed payment in violation of the Trade Agreements Act (TAA), which prohibits the sale of products to federal agencies from countries that do not have a reciprocal trade agreement with the United States, the Justice Department announced today. The Columbus, Ohio, company allegedly knowingly sold products from China, a country that does not have such an agreement with the United States.

 

Direct Resource sells a variety of products to U.S. agencies, including office supplies. The General Services Administration (GSA) contracts at issue require that all products sold to the U.S. government be manufactured in one of a list of designated countries deemed to trade fairly with the United States.

“It is central to the mission of the Department of Justice to protect the federal procurement process from improper charges and false claims,” said Stuart F. Delery, Acting Assistant Attorney General for the Department of Justice’s Civil Division. “Contractors who undermine U.S. trade interests will be held accountable for their actions.”

 

The allegations regarding the company arose from a whistleblower lawsuit filed in a federal court in the District of Columbia under the qui tam, or whistleblower, provisions of the False Claims Act. Those provisions allow private individuals known as “relators” to sue on behalf of the United States and to share in the proceeds of any settlement or judgment if the suit is successful. The relator, Louis Scutellaro, in this case will receive $67,500 of the total recovery as a statutory award.

 

“American businesses must get a fair shake in the government contracting process,” said Ronald C. Machen Jr., U.S. Attorney for the District of Columbia. “When contractors violate the Trade Agreements Act, we will step in to hold them accountable. This settlement makes clear the depth of our commitment to ensuring that government contractors play by the rules.”

“Passing off unauthorized foreign products to GSA contract users cheats them out of the products they actually contracted for,” declared GSA Inspector General Brian Miller.

 

The claims settled by this agreement are allegations only, and there has been no determination of liability. The matter was investigated by GSA’s Office of the Inspector General, the U.S. Attorney’s Office for the District of Columbia and the Justice Department’s Civil Division.

Margaret Kirksey, a resident of Montgomery, Ala., was sentenced today in the Middle District of Alabama to 81 months in federal prison for filing false tax returns using stolen identities, the Justice Department and Internal Revenue Service (IRS) announced.

 

On Jan. 24, 2012, Kirksey pleaded guilty to charges of conspiracy to defraud the government and aggravated identity theft. She was indicted by a federal grand jury on July 27, 2011, on charges of conspiracy, aggravated identity theft, wire fraud, false claims and lying to federal agents.

 

According to court documents, Kirksey and her co-conspirator, Yumeitrius Manuel, each owned and operated a tax preparation business in Montgomery, located in the same physical place. The two fraudulently inflated tax refunds by placing false information on their clients’ tax returns. They also filed tax returns in the names and Social Security numbers of individuals who did not know about, and did not authorize, the filing of tax returns on their behalf. Both Manuel and Kirksey admitted that their respective crimes involved over $1 million in tax loss and more than 50 victims of identity theft. Manuel has also pleaded guilty to a tax conspiracy and is scheduled to be sentenced on Aug. 8, 2012.

 

U.S. District Judge Mark E. Fuller also ordered Kirksey to pay $52,242 in restitution to the IRS.

 

This case was investigated by special agents of IRS-Criminal Investigation and was prosecuted by Trial Attorneys Justin Gelfand and Jason Poole of the Justice Department’s Tax Division.

The Justice Department announced today that the Civil Rights Division will monitor the election on Tuesday, May 8, 2012, in Milwaukee. The monitoring will ensure compliance with the Voting Rights Act of 1965. The Voting Rights Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. In addition, the act requires certain covered jurisdictions to provide language assistance during the election process. The city of Milwaukee is required to provide assistance in Spanish.

 

Justice Department personnel will monitor polling place activities in Milwaukee. Civil Rights Division attorneys will coordinate federal activities and maintain contact with local election officials.

 

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

 

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

The Justice Department announced today that it reached an agreement with Imagine Schools Inc., resolving allegations that the company discriminated under the anti-discrimination provision of the Immigration and Nationality Act, when it fired an employee at its Imagine School in Groveport, Ohio, in connection with a “reverification” of his employment eligibility.

 

In a complaint filed with the department, the employee, a lawful permanent resident, alleged that Imagine School improperly terminated him after he failed to produce an unexpired lawful permanent resident card, also known as “green card,” during reverification of his employment eligibility status for purposes of Form I-9. The employee had originally presented a valid lawful permanent resident card when he was hired, and alleged that his reverification, along with the request for a specific document, was unlawful under the anti-discrimination provision of the Immigration and Nationality Act. Under the rules governing employment eligibility verification, certain documents, including lawful permanent resident cards and U.S. passports, are not subject to reverification. The anti-discrimination provision prohibits discrimination based on citizenship or national origin in the employment eligibility verification process or reverification process.

 

Under the settlement agreement, Imagine Schools Inc. agrees to pay $20,169 in back pay plus interest to the charging party and $600 in civil penalties to the United States.  Imagine Schools Inc. also agrees to comply with the law, to train its human resources personnel about employers’ responsibilities to avoid discrimination in the employment eligibility verification process, and to be subject to reporting and compliance monitory requirements for 18 months.

 

“All work-authorized individuals have the right to work without facing discriminatory hurdles during the employment eligibility verification or reverification process based on their citizenship status or national origin,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “The department is committed to ensuring authorized workers are treated fairly during the employment eligibility verification process.”

 

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

 

For more information about protections against employment discrimination under the immigration law, call 1-800-255-7688 (OSC’s worker hotline) (1-800-237-2525, TDD for hearing impaired), 1-800-255-8155 (OSC’s employer hotline) (1-800-362-2735, TDD for hearing impaired) or 202-616-5594; sign up for a no-cost webinar at www.justice.gov/crt/about/osc/webinars.php ; email [email protected] ; or visit OSC’s website at www.justice.gov/crt/about/osc .

Related Materials:

Imagine Schools Inc Settlement Agreement - Redacted

WASHINGTON – James Mozie of Oakland Park, Fla., was sentenced today to life in prison on charges of sex trafficking of minors and production of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; and John V. Gillies, Special Agent in Charge, FBI Miami Field Office. 

Mozie, 35, was sentenced by U.S. District Judge William P. Dimitrouleas in the Southern District of Florida.  In addition to the life prison term, Mozie was sentenced to 10 years of supervised release.

On Dec. 20, 2011, Mozie was found guilty of all 10 counts against him, including sex trafficking of minors, conspiracy to commit sex trafficking of minors and production of child pornography.    

At trial, seven different victims, many minor runaways at the time they met Mozie, testified that they worked or were recruited to work as prostitutes at Mozie’s residence, which he advertised as “The Boom Boom Room.”  According to the trial evidence, The Boom Boom Room, also known as Lot 29, operated for more than one year as a house of prostitution.  Mozie advertised the business through the use of mass text messages to his contacts, letting people know about the activities taking place at the house each night.  When customers arrived, they paid a cover charge to the security guard working the front door.  The females, many of them minors, worked in the house dancing for tips and engaging in sexual activity with male customers for money.

The seven victims, all minors when the offenses occurred, testified that when they first arrived at the residence, Mozie asked them to complete an application with information such as name, stage name, date of birth and the sexual acts they were willing to perform.  All of the minor victims testified that they provided their correct dates of birth to Mozie, who advised them not to tell customers that they were underage.  Several of the minor victims testified that before working as a prostitute for Mozie, he required them to have sex with him as part of their “orientation,” which he explained was his way of “testing the merchandise.”  They also testified that Mozie would take sexually explicit pictures of them, which he attached to the text messages advertising the brothel.

Previously, co-defendant Laschell “Shelly” Harris pleaded guilty to one count of sex trafficking of a minor and was sentenced to 13 years in prison.  Co-defendant Willie David Rice pleaded guilty to one count of being a felon in possession of a firearm and was sentenced to four years in prison. 

The case was investigated by the FBI and the Broward County, Fla., Sheriff’s Office Minor Vice Task Force.  The case was prosecuted by Assistant U.S. Attorneys Harry Wallace and Corey Steinberg of the Southern District of Florida and Trial Attorney Thomas Franzinger of the Child Exploitation and Obscenity Section in the Justice Department’s Criminal Division.

WASHINGTON – An Alabama man was arrested today on charges of conspiracy, federal programs bribery and operating an illegal gambling business, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

An indictment filed in the Northern District of Alabama and unsealed today charges Robert E. Taylor Jr., 41, of Warrior, Ala., with conspiring to bribe and bribing a public official in order to protect his interest in an illegal gambling business.  According to the indictment, from approximately November 2010 to approximately April 2011, Taylor and several others operated an illegal gambling business in the city of Kimberly, Ala., approximately 20 miles north of Birmingham, by placing numerous video gambling machines in private residences in and around the city. 

The indictment further alleges that Taylor conspired with eight other individuals to expand, protect and conceal the illegal gambling business, including by offering and paying bribes to Kimberly’s mayor, a public official.  In exchange for more than a dozen cash payments over the course of 15 weeks totaling $4,000, the mayor was expected to ensure that law enforcement officers from Kimberly and the surrounding area did not interfere with the illegal gambling operation.  In addition, the mayor was expected to notify a member of the conspiracy if Kimberly or any neighboring jurisdictions received complaints or tips regarding the illegal gambling business.

The indictment reveals, however, that the mayor of Kimberly was cooperating with the FBI throughout the entire period of the investigation.

An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty in a court of law.

This case is being prosecuted by Trial Attorneys Anthony J. Phillips and Richard B. Evans of the Criminal Division’s Public Integrity Section, and investigated by the FBI.

Global Health Care Company Abbott Laboratories Inc. has pleaded guilty and agreed to pay $1.5 billion to resolve its criminal and civil liability arising from the company’s unlawful promotion of the prescription drug Depakote for uses not approved as safe and effective by the Food and Drug Administration (FDA), the Justice Department announced today.  The resolution – the second largest payment by a drug company – includes a criminal fine and forfeiture totaling $700 million and civil settlements with the federal government and the states totaling $800 million.  Abbott also will be subject to court-supervised probation and reporting obligations for Abbott’s CEO and Board of Directors. 

“Today’s settlement shows further evidence of our deep commitment to public health and our determination to hold accountable those who commit fraud,” said James M. Cole, Deputy Attorney General. “We are resolute in stopping this type of activity and today’s settlement sends a strong message to other companies.”

 

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

 

Abbott has pleaded guilty to misbranding Depakote by promoting the drug to control agitation and aggression in elderly dementia patients and to treat schizophrenia when neither of these uses was FDA approved. In an agreed statement of facts filed in the criminal action, Abbott admits that from 1998 through 2006, the company maintained a specialized sales force trained to market Depakote in nursing homes for the control of agitation and aggression in elderly dementia patients, despite the absence of credible scientific evidence that Depakote was safe and effective for that use. In addition, from 2001 through 2006, the company marketed Depakote in combination with atypical antipsychotic drugs to treat schizophrenia, even after its clinical trials failed to demonstrate that adding Depakote was any more effective than an atypical antipsychotic alone for that use.

Illegal Promotion of Depakote to Control Agitation and Aggression in Dementia Patients

       The FDA approved Depakote for only three uses: epileptic seizures, bipolar mania and the prevention of migraines.  The FDA never approved the drug as safe and effective for the off-label use of controlling behavioral disturbances in dementia patients. In 1999, Abbott was forced to discontinue a clinical trial of Depakote in the treatment of dementia due to an increased incidence of adverse events, including somnolence, dehydration and anorexia experienced by the elderly study participants administered Depakote.

Abbott trained its sales force to promote Depakote to health care providers and employees of nursing homes as advantageous over antipsychotic drugs for controlling agitation and aggression in elderly dementia patients because Depakote was not subject to certain provisions of the Omnibus Budget Reconciliation Act of 1987 (OBRA) and its implementing regulations designed to prevent the use of unnecessary medications in nursing homes. Exploiting the fact that certain OBRA provisions did not yet apply to Depakote, Abbott sales representatives stated that by using Depakote, nursing homes could avoid the administrative burdens and costs of complying with OBRA.

 

Abbott’s off-label promotion of Depakote was multifaceted. The company entered into contracts that provided long-term care pharmacy providers with payments of rebates based on increases in the use of Depakote in nursing homes serviced by the providers. In addition to using its sales force to promote the drug to health care providers and employees of nursing homes, Abbott created programs and materials to train the pharmacy providers’ consultant pharmacists about the off-label use of Depakote to encourage them to recommend the drug for this unapproved use. Under these contracts, Abbott paid millions of dollars in rebates to the pharmacy providers.

 

“Not only did Abbott engage in off-label promotion, but it targeted elderly dementia patients and downplayed the risks apparent from its own clinical studies,” said Acting Associate Attorney General Tony West.  “As this criminal and civil resolution demonstrates, those who put profits ahead of patients will pay a hefty price.”

 

Illegal Off-Label Promotion of Depakote for Schizophrenia

 

In the agreed statement of facts, Abbott also admitted that from 2001 through 2006, the Company misbranded Depakote by marketing the drug to treat schizophrenia.  Abbott funded two studies of the use of Depakote to treat schizophrenia, and both failed to meet the main goals established for the study.  When the second study failed to show a statistically significant treatment difference between antipsychotic drugs used in combination with Depakote and antipsychotic drugs alone, Abbott waited nearly two years to notify its own sales force about the study results and another two years to publish those results.  During this time, Abbott continued to promote Depakote off-label to treat schizophrenia.

 

“ Today’s settlement demonstrates our continued scrutiny of the sales and marketing practices of pharmaceutical companies that put profits ahead of patient health,” said U.S. Food and Drug Administration Commissioner Margaret Hamburg, M.D. “The FDA will continue its due diligence and hold pharmaceutical companies accountable for marketing practices that undermine the drug approval process.”

 

Criminal Plea

 

Today’s global resolution has criminal, civil and administrative components. First, Abbott has pleaded guilty to a criminal misdemeanor for misbranding Depakote in violation of the FDCA. Under the plea agreement, Abbott will pay a criminal fine of $500 million, forfeit assets of $198.5 million, and submit to a term of probation for five years. In addition, Abbott will also pay $1.5 million to the Virginia Medicaid Fraud Control Unit. As a condition of probation, Abbott will report any probable FDCA violations to the probation office, its CEO will certify compliance with this reporting requirement, and its board will report annually on the effectiveness of the company’s compliance program. In addition, Abbott agrees that during the term of probation, the company will not compensate sales representatives for off-label sales, will ensure that continuing medical education grant-making decisions are not controlled by sales and marketing, will require that letters communicating medical information to healthcare providers be accurate and unbiased, and will have policies designed to ensure that clinical trials are approved by the company’s medical or scientific organizations and published in a consistent and transparent manner. Abbott’s guilty plea and sentence are not final until accepted by the U.S. District Court for the Western District of Virginia.

 

“As the agreed statement of facts filed in court today demonstrates, Abbott promoted Depakote to control behaviors in elderly dementia and schizophrenia patients without significant evidence of its effectiveness for that use, and even after clinical data established that it was not effective,” said Timothy Heaphy, U.S. Attorney for the Western District of Virginia. “The resolution announced today includes a self-policing mechanism by which Abbott’s board of directors will monitor compliance with the law and report any violations, as well as a period of probation and court supervision. We credit Abbott’s acceptance of responsibility and encourage other pharmaceutical companies to impose the similar mechanisms to prevent off-label marketing, which damages health care consumers.”

 

Civil Settlement

 

Under the civil settlement, Abbott has agreed to pay $800 million to the federal government ($560,851,357) and the states ($239,148,643) that opt to participate in the agreement to resolve claims that its unlawful marketing and illegal remuneration practices caused false claims to be submitted to government health care programs such as Medicare, Medicaid, TRICARE and to the Federal Employees Health Benefit Program, the Department of Veterans’ Affairs and the Department of Labor’s Office of Workers’ Compensation Programs.

 

The civil settlement addresses broader allegations by the United States that from 1998 through 2008, Abbott unlawfully promoted Depakote for unapproved uses, including behavioral disturbances in dementia patients, psychiatric conditions in children and adolescents, schizophrenia, depression, anxiety, conduct disorders, obsessive-compulsive disorder, post-traumatic stress disorder, alcohol and drug withdrawal, attention deficit disorder and autism. . Some of these unapproved uses were not medically accepted indications for which the United States and state Medicaid programs provided coverage for Depakote.  The United States contends that this promotion included, in part, making false and misleading statements about the safety, efficacy, dosing and cost-effectiveness of Depakote for some of these unapproved uses, and claiming use of Depakote to control behavioral disturbances in dementia patients would help nursing homes avoid the administrative burdens and costs of complying with OBRA regulatory restrictions applicable to antipsychotics.

 

The civil settlement also covers allegations that Abbott offered and paid illegal remuneration to health care professionals and long term care pharmacy providers to induce them to promote and/or prescribe Depakote and to improperly and unduly influence the content of company sponsored Continuing Medical Education programs, in violation of the Federal Anti-Kickback Statute. The claims settled by the civil agreement are allegations only and there has been no determination of liability, except to the extent that Abbott has admitted facts in the civil settlement agreement or in the criminal plea and agreed statement of facts filed in the criminal action.

 

The civil settlement resolves four lawsuits pending in federal court in the Western District of Virginia 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. As part of today’s resolution, the whistleblowers will receive $84 million from the federal share of the settlement amount.

 

Corporate Integrity Agreement

 

In addition to the criminal and civil resolutions, Abbott has also executed a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). The five-year CIA requires, among other things, that Abbott's board of directors review the effectiveness of the company's compliance program, that high-level executives certify to compliance, that Abbott maintain standardized risk assessment and mitigation processes, and that the company post on its website information about payments to doctors. Abbott is subject to exclusion from federal health care programs, including Medicare and Medicaid, for a material breach of the CIA and subject to monetary penalties for less significant breaches.

 

“As a result of OIG’s joint investigation with our federal and state partners, Abbott Laboratories will enter one of the pharmaceutical industry’s largest settlements and pay $1.5 billion for unlawfully promoting its drug Depakote, including to nursing home patients with dementia,” said HHS Inspector General Daniel R. Levinson.  “Our integrity agreement will hold Abbott accountable for preventing future violations of federal health care laws and FDA requirements, which will protect federal programs, taxpayers and our most vulnerable patients.”

 

A Multilateral Effort

 

The criminal case is being prosecuted by the U.S. Attorney’s Office for the Western District of Virginia and the Civil Division’s Consumer Protection Branch. The civil settlement was reached by the U.S. Attorney’s Office for the Western District of Virginia and the Civil Division’s Commercial Litigation Branch. Assistance w as provided by representatives of the HHS Office of Counsel to the Inspector General; the Center for Medicare and Medicaid Services (CMS) and Office of the General Counsel, CMS Division; FDA’s Office of Chief Counsel; and the National Association of Medicaid Fraud Control Units.

 

“Crimes involving the misbranding of drugs for financial gain will not be tolerated,” stated Richard Weber, Chief IRS Criminal Investigation.  “The special agents of IRS Criminal Investigation will use all their investigative tools, including the use of asset forfeiture statutes, to combat financial crimes and hold corporations accountable for their actions.”

 

This matter was investigated by the Virginia Attorney General’s Medicaid Fraud Control Unit; the Internal Revenue Service - Criminal Investigation; the FDA - Office of Criminal Investigation; the Defense Criminal Investigative Service; the Health and Human Services - Office of Inspector General; the West Virginia State Police; the Office of Personnel Management - Office of Inspector General; the Department of Veterans’ Affairs Office of Inspector General; the Department of Labor - Office of Inspector General; and TRICARE Program Integrity.

 

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. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $7.4 billion since January 2009 in cases involving fraud against federal health care programs. With the settlement announced today, the Justice Department's total recoveries in False Claims Act cases since January 2009 will exceed $10.2 billion. During this same time, the department has secured $3.9 billion in criminal fines, forfeiture, disgorgement, and restitution relating to violations of the FDCA.

Related Materials:

Court Documents Related to Settlement with Abbott Laboratories
Remarks By Deputy Attorney James M. Cole Regarding Settlement with Abbott Laboratories
Remarks By Acting Associate Attorney General Tony West Regarding Settlement with Abbott Laboratories
Press Conference Photo Gallery

Barbara Murry, Douglas Murry, Douglas Murry III, Yolanda Moses, Lee Moses, Veronica Temple, Jeffrey Temple, Almetta Johnson and Courtney Johnson were charged in an indictment by a federal grand jury in the Middle District of Alabama on a variety of counts stemming from an identity theft and tax fraud scheme, the Justice Department and the Internal Revenue Service (IRS) announced today. The 33-count indictment charges all nine with conspiring to defraud the United States and to commit theft of public funds and with theft of public funds. Barbara Murry, Yolanda Moses and Veronica Temple are also charged with aggravated identity theft. The indictment was unsealed today.

According to the indictment, all of the defendants are related to each other. Barbara Murry owned and operated B & B Weaving Shop, located in Montgomery, Ala. B& B Weaving Shop was located in the same building as B & B Tax Service. Barbara Murry’s daughter, Yolanda Moses, owned and operated B & B Tax Service. Between 2006 and 2012, Barbara Murry, Yolanda Moses and Veronica Temple allegedly filed false federal income tax returns with stolen identities and had refunds directly deposited into the bank accounts of the defendants and others. The bank accounts received at least $1.3 million in false tax refunds.

An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, all the defendants face terms of five years in prison for the conspiracy charge and 10 years for each theft of government funds count. Barbara Murry, Veronica Temple and Yolanda Moses face mandatory 2-year sentences for the aggravated identity theft counts. All the defendants are also subject to fines and mandatory restitution if convicted.

 

Assistant Attorney General Kathryn Keneally of the Justice Department’s Tax Division and U.S. Attorney George L. Beck, Jr. commended the efforts of special agents of the IRS - Criminal Investigation, who investigated the case, and Trial Attorneys Jason H. Poole and Michael Boteler of the Tax Division, and Assistant U.S. Attorney Jared Morris, who are prosecuting the case.

 

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

WASHINGTON – Mohammad Hassan Khalid, 18, a Pakistani citizen and U.S. lawful permanent resident who resided in Maryland, pleaded guilty today to conspiracy to provide material support to terrorists, stemming from his participation in a scheme to support, recruit and coordinate members of a conspiracy in their plan to wage violent jihad in and around Europe.

The guilty plea before U.S. District Judge Petrese B. Tucker in the Eastern District of Pennsylvania was announced by Lisa Monaco, Assistant Attorney General for National Security; Zane David Memeger, U.S. Attorney for the Eastern District of Pennsylvania; and George C. Venizelos, Special Agent in Charge of the Philadelphia Division of the FBI.

Khalid, aka “Abdul Ba’aree ‘Abd Al-Rahman Al-Hassan Al-Afghani Al-Junoobi W’at-Emiratee,” was charged with one count of conspiracy to provide material support to terrorists in a superseding indictment returned on Oct. 20, 2011.  Khalid faces a potential sentence of 15 years in prison and a $250,000 fine at sentencing.

Khalid’s co-defendant, Ali Charaf Damache, aka “Theblackflag,” 46, an Algerian man who resided in Ireland, was charged with one count of conspiracy to provide material support to terrorists and one count of attempted identity theft to facilitate an act of international terrorism.  Damache is in custody in Ireland and is being prosecuted there on an unrelated criminal charge.

“Today’s plea, which involved a radicalized teen in Maryland who connected with like-minded individuals around the globe via the Internet, underscores the evolving nature of violent extremism today,” said Assistant Attorney General Monaco.  “I thank the many agents, analysts and prosecutors who helped bring about this case.”

“This case has demonstrated that age is not a limiter to threats to our nation’s security,” said U.S. Attorney Memeger.  “Regardless of a defendant's age or background, we are committed to keeping our communities and our country safe through the investigation and prosecution of violent extremist activity.”

“This investigation and the guilty plea announced today underscores the continuing threat we face from violent extremism and radicalism, both from within our country and from across the world,” said FBI Special Agent in Charge Venizelos.  “These threats can emerge from anywhere and from anyone, from individuals and groups in the farthest reaches of the globe or from those in the United States sitting in the perceived safety of their own homes.”

According to the plea memorandum, indictment and other court documents filed in the case, from about 2008 through July 2011, Khalid and Damache conspired with Colleen R. LaRose, Jamie Paulin Ramirez and others to provide material support and resources, including logistical support, recruitment services, financial support, identification documents and personnel, to a conspiracy to kill overseas.

LaRose, aka “Fatima LaRose,” aka “JihadJane,” pleaded guilty in February 2011 in the Eastern District of Pennsylvania to conspiracy to provide material support to terrorists, conspiracy to kill in a foreign country, false statements and attempted identity theft.  Ramirez pleaded guilty in the Eastern District of Pennsylvania in March 2011 to conspiracy to provide material support to terrorists.

Khalid, Damache and others devised and coordinated a violent jihad organization consisting of men and women from Europe and the United States divided into a planning team, a research team, an action team, a recruitment team and a finance team; some of whom would travel to South Asia for explosives training and return to Europe to wage violent jihad. 

As part of the conspiracy, Khalid, Damache, LaRose and others recruited men online to wage violent jihad in South Asia and Europe.  In addition, Khalid, Damache, LaRose and others allegedly recruited women who had passports and the ability to travel to and around Europe in support of violent jihad.  LaRose, Paulin-Ramirez and others traveled to and around Europe to participate in and support violent jihad.  In addition, Khalid, LaRose and others also solicited funds online for terrorists.

For example, in July 2009, Khalid posted or caused to be posted an online solicitation for funds to support terrorism on behalf of LaRose and later sent electronic communications to multiple online forums requesting the deletion of all posts by LaRose after she was questioned by the FBI.  In August 2009, Khalid sent a questionnaire to LaRose in which he asked another potential female recruit about her beliefs and intentions with regard to violent jihad.  In addition, Khalid received from LaRose and concealed the location of a U.S. passport that she had stolen from another individual.

The Khalid case was investigated by the FBI Field Division in Baltimore, in conjunction with the FBI’s Joint Terrorism Task Force in Philadelphia and the FBI Field Divisions in New York and Washington, D.C.  Authorities in Ireland also provided assistance in this matter.

The case is being prosecuted by Assistant U.S. Attorney Jennifer Arbittier Williams, in the Eastern District of Pennsylvania, and Matthew F. Blue, Trial Attorney from the Counterterrorism Section of the Justice Department’s National Security Division.  The Office of International Affairs in the Justice Department’s Criminal Division also provided assistance.

Lawrence Etsitty, 30, a former police officer with the Navajo Police Department, pleaded guilty today in federal court to two charges related to the sexual abuse of a woman who was in his custody on Jan. 25, 2009. Etsitty pleaded guilty to violating the civil rights of the victim when he touched and kissed her against her will, while she was handcuffed. Etsitty also pleaded guilty to making false statements to the FBI in connection with the sexual assault. Etsitty did not enter a plea to the portion of the indictment that alleged the offense included kidnapping.

 

According to court documents, on Jan. 25, 2009, at approximately 2:40 a.m., Lawrence Etsitty, while working in his capacity as an officer of the Navajo Police Department, arrested the victim outside of the Fire Rock Casino in Churchrock, N.M. Etsitty then handcuffed the victim and placed her in the back of his patrol vehicle. However, Etsitty then radioed in to dispatch that he did not have evidence for an arrest and that he was going to release the victim.

Rather than releasing the victim and under the auspices of driving her home, Etsitty pulled off onto an isolated road in the desert, choosing this location because of its isolation and because there were no other vehicles or people nearby. He then opened the back door of his patrol car where the handcuffed victim was sitting, and forcibly pulled her toward him and out of the car. Etsitty then began touching the victim while she struggled to get free and pleaded with Etsitty to take her home. Ultimately, Etsitty dropped the victim off in a parking lot near her home, at which point the victim ran away. On Jan. 27, 2009, Etsitty voluntarily spoke to the FBI and made false statements in which he denied any sexually assaultive conduct.

“Any law enforcement officer who uses his official authority as a means of preying upon and sexually abusing a person in his custody undermines the trust between citizens and police officers that is crucial to our justice system,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Department of Justice and the Civil Rights Division commends the victim who came forward to report this reprehensible conduct and will vigorously prosecute sexual assaults by law enforcement officers.”

Etsitty faces a maximum sentence of up to six years in prison. A sentencing date has not yet been scheduled.

 

This case was investigated by the Albuquerque Division of the FBI and is being prosecuted by Trial Attorney Fara Gold of the Civil Rights Division of the U.S. Department of Justice.

WASHINGTON – The Department of Justice and Ohio Attorney General have reached a proposed settlement of claims for injuries to natural resources caused by past releases and discharges of hazardous substances into the lower Ashtabula River and Harbor in northeast Ohio.  The consent decree, valued at approximately $5.5 million, was filed today in the U.S. District Court for the Northern District of Ohio on behalf of the designated natural resource trustees, including the Department of the Interior, National Oceanic and Atmospheric Administration and Ohio Environmental Protection Agency. 

“This agreement will compensate the public for precious natural resources that were damaged by hazardous pollutants released into the Ashtabula watershed over more than half a century,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice.  “The settlement also fosters the restoration of wildlife habitat and recreational resources along the Ashtabula that the people of Ohio will be able to enjoy for many years to come.”
           
“Completion of these negotiations marks a major milestone in our collective efforts to restore the Ashtabula River,” said Ohio Attorney General Mike DeWine.  “Careful stewardship of our waterways and natural resources will ensure that they can be enjoyed by our kids and grandkids.  The federal and state trustees are to be commended for their diligent efforts.”

“This settlement is the result of close coordination among the natural resource trustees, local community stakeholders, and the responsible parties,” said U. S. Fish and Wildlife Service Midwest Regional Director Tom Melius.  “This successful collaboration has resulted in a win-win proposition for the Ashtabula River basin community, enabling community enjoyment of the outdoors and wildlife while promoting a healthy community economy.”

The agreement provides for the acquisition of several ecologically-valuable properties along the Ashtabula River, implementation of habitat restoration projects and land use restrictions to protect restoration properties and reimbursement of natural resource damage assessment costs incurred by the natural resource trustees.

“It is important to maintain recreational and economic vitality along the Ashtabula  River,” said Ohio EPA Director Scott Nally.  “Our Agency will continue to work to restore and protect this great resource that is an essential part of these Northeast Ohio communities.”

Complaints filed by the United States and state of Ohio allege that at various times since the 1940s, numerous industrial facilities in Ashtabula released hazardous pollutants to the river including polychlorinated biphenyls, polycyclic aromatic hydrocarbons, chlorinated solvents and low-level radioactive materials.  The released hazardous substances injured natural resources in the Ashtabula River and Harbor, resulting in fish consumption advisories and impaired navigational use of the river.  To compensate the public for the value of impaired or lost natural resources, the complainants sought damages from parties that allegedly owned or operated (either directly or through predecessors) facilities where hazardous substances were released and from parties that allegedly arranged for disposal of hazardous substances at one or more of the facilities.  Eighteen companies are participating in the settlement.   Several federal agencies are also responsible for making payments totaling approximately $768,800.

Dredging projects carried out under the Great Lakes Legacy Act and the Water Resources Development Act removed almost 600,000 cubic yards of contaminated sediments from the lower Ashtabula River between 2006 and 2008.  The responsible parties previously contributed approximately $23 million toward the cost of the sediment cleanup, and many of the parties also participated in a cleanup of the Fields Brook superfund site, an alleged source of contamination in the lower Ashtabula River.

With contamination already dredged from the river, the proposed settlement targets habitat enhancement and protection.  Under the consent decree, restoration projects approved by the natural resource trustees will be implemented by two groups of responsible parties – a group of four railroad companies and a separate group of 14 companies known as the Ashtabula River Cooperating Group II (ARCG II).
           
The railroads will implement a restoration project on a 6.4 acre riparian parcel known as the 5½ Slip peninsula, which abuts a fish habitat enhancement project previously constructed as part of the Great Lakes Legacy Act sediment cleanup project.  The restoration project will include replacing invasive plant species with a diverse array of native plants; excavating a channel across the peninsula to establish a hydrologic connection between the 5½ Slip and main channel of the Ashtabula River; and establishing an area of emergent wetland habitat along the newly constructed channel.  Land use restrictions will be established on the 5 ½ Slip peninsula to protect the character of the restored property.

ARCG II has agreed to develop and implement various restoration projects identified in the consent decree.  One of the restoration properties, known as the former CDM property, is a 28-acre riverfront parcel along the northern boundary of Indian Trails Park.  The restoration project will include enhancing a six-acre wetland area through invasive species control; planting a diverse array of native vegetation; and installing other improvements, including a canoe launch, boardwalk and small parking area to facilitate public use of the property.  

Five other ARCG II restoration properties identified in the decree contain high natural resource value, including rare fen habitat, old growth forest and areas that provide ideal habitat and foraging for various threatened or endangered species.  These properties occupy more than 200 acres and include 3.4 miles of river frontage.  Some adjoin or are close to park areas held by the Ashtabula Township Park Commission.  Collectively, these properties will preserve a natural corridor along an urbanized stretch of river.
           
In addition to restoration properties already acquired by ARCG II, the proposed settlement allows trustees to identify additional properties for possible acquisition and restoration.  ARCG II agreed to spend up to $1.45 million to acquire and restore additional properties.

The trustees will approve all restoration work. The restoration properties will ultimately be transferred to park districts, non-profit organizations or other institutions acceptable to the trustees.  The properties also will be subject to environmental covenants that establish land use restrictions designed to preserve the natural resource value of the properties. 

The proposed settlement is subject to approval by the district court following a 30 day public comment period. A copy of the consent decree will be available at www.justice.gov/enrd/Consent_Decrees.html.

For more information on Ashtabula River restoration efforts visit www.fws.gov/midwest/es/ec/nrda/ashtabularivernrda/.

WASHINGTON – The Justice Department has returned approximately $44 million to victims of a securities fraud scheme related to Qwest Communications International Inc., Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney John F. Walsh for the District of Colorado and Special Agent in Charge James F. Yacone of the FBI’s Denver Division announced today. 

The $44 million in funds were forfeited to the United States as a result of the 2007 federal conviction of Qwest’s chief executive officer, Joseph P. Nacchio, for securities fraud.  The forfeited funds are being returned to 112,210 victims who incurred losses on Qwest securities purchased during the fraud scheme. 

Between 1999 and 2002, Nacchio publicly announced unrealistic revenue projections for Qwest and then caused Qwest to issue false and misleading statements to the public about the company’s financial condition, as part of his scheme to commit securities fraud.  After the irregularities were discovered, Qwest stock, which had traded as high as $60 per share, plummeted to about $1 per share.

Following his conviction, Nacchio was sentenced to 70 months in prison and was ordered to forfeit $44 million in funds, the net proceeds he received from the fraud scheme.  Nacchio was also ordered to pay a $19 million fine, which, by law, was paid to a fund for victims of crime. 

“Securities fraud is a particularly insidious crime because it undermines public confidence in the financial markets,” said U.S. Attorney Walsh.  “I am pleased that we were able to recover more than $44 million in criminal proceeds and return it to innocent Qwest investors.”

“Following his conviction for securities fraud, Mr. Nacchio was ordered to forfeit $44 million,” said Assistant Attorney General Breuer.  “Today, we are fulfilling a central objective of the Criminal Division’s Victim Asset Recovery Program and returning those funds to the victims of Mr. Nacchio’s crime.”

“In addition to seeking criminal prosecutions to protect our financial markets, seizing and forfeiting ill-gotten gains is a priority for the FBI,” said FBI Special Agent in Charge Yacone.  “We are hopeful the money being returned will remedy some of the damage caused by Nacchio.”   

The criminal case against Joseph Nacchio was prosecuted by the U.S. Attorney’s Office for the District of Colorado and the Justice Department’s Criminal Division.  The case was investigated by the FBI. 

The distribution of funds to victims was authorized and overseen by the Department of Justice’s Victim Asset Recovery Program in the Criminal Division’s Asset Forfeiture and Money Laundering Section.  The Victim Asset Recovery Program is comprised of a team of experienced professionals, including attorneys, accountants, auditors and claims analysts, who work with federal prosecutors, regulatory agencies, financial investigators, claims administrators and the private bar to recover assets from financial crimes and return them to the victims.  In hundreds of cases, the program has successfully utilized its specialized expertise to efficiently convert forfeited assets into victim recoveries.

Persons with questions about the Qwest distribution should contact the Remission Administrator at 1-877-268-3001, or visit the website at www.gilardi.com/qwestremission.

WASHINGTON – An executive of South Korean-based Hyosung Corporation has agreed to plead guilty and to serve time in a U.S. prison for obstruction of justice charges in connection with an automated teller machine (ATM) merger investigation conducted by the Antitrust Division, the Department of Justice announced today.  

 
According to a two-count felony charge filed today in the U.S. District Court in Washington, D.C., Kyoungwon Pyo, in his role as senior vice president for corporate strategy of Hyosung Corporation, an affiliate of Nautilus Hyosung Holdings Inc. (NHI), altered and directed subordinates to alter numerous existing corporate documents before they were submitted to the Department of Justice and the Federal Trade Commission (FTC) in conjunction with mandatory premerger filings. The department said that Pyo’s actions took place in or about July and August 2008.  At the time, the department was investigating Korea-based NHI’s proposed acquisition of Triton Systems of Delaware Inc.  NHI abandoned the proposed acquisition of competitor Triton Systems before the Antitrust Division reached a decision determining whether to challenge the transaction.

 
On Oct. 20, 2011, NHI pleaded guilty and paid a $200,000 criminal fine for its role in the obstruction of justice charges. According to the plea agreement, which is subject to court approval, Pyo has agreed to serve five months in prison.

“Maintaining the integrity of the merger review and investigation process is one of our highest priorities,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “Senior corporate executives should understand that anyone who attempts to corrupt the process by falsifying materials submitted to the U.S. government will be held accountable for their actions.”

After receiving the premerger filings, the Antitrust Division opened a civil merger investigation of the proposed acquisition. The department said that in or about August and September 2008, Pyo falsified additional documents in response to a document request from the Antitrust Division with the intention of impairing their integrity and availability for use in an official proceeding. The department said that, among other things, the alterations misrepresented and minimized the competitive impact of the proposed acquisition.

The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, requires companies contemplating mergers and acquisitions valued above certain thresholds to make filings with the Department of Justice and the FTC. The federal antitrust agencies have authority to investigate and challenge such proposed transactions under Section 7 of the Clayton Act, if the transactions may substantially lessen competition.

NHI was previously charged with obstruction of justice, which carries a maximum criminal fine for a corporation of $500,000 per count.  NHI’s agreed-upon criminal fine of $100,000 per count takes into consideration the nature and extent of the company’s disclosure of wrongdoing and its cooperation in the department’s investigation.

Pyo is charged with obstruction of justice, which carries a maximum penalty of 20 years in prison and a criminal fine of $250,000 for individuals.

The investigation that led to these charges was conducted by the Antitrust Division’s National Criminal Enforcement Section. Anyone with information concerning anticompetitive conduct or obstruction of justice in antitrust matters is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or visit www.justice.gov/atr/contact/newcase.htm.

A federal court in Dallas has permanently barred Joseph Rivas of DeSoto, Texas, from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Rivas consented without admitting the allegations against him, was signed by Judge Sidney Fitzwater of the U.S. District Court for the Northern District of Texas.

The government complaint in the case alleged that Rivas claimed fake mortgage-interest deductions, illegally deducted Social Security taxes as state and local taxes, and fabricated employee business expenses, among other fraudulent items, on his customers’ tax returns. According to the complaint, the harm to the United States from Rivas’s misconduct could be $7.8 million or more.

The court also ordered Rivas to provide the government with a list of all persons for whom he has prepared federal tax returns since Jan. 1, 2010.

The IRS lists return preparer fraud as one of the “Dirty Dozen” tax scams for 2012. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department website.

Related Documents:

United States v. Joseph Rivas, etc., Rivas Injunction

Final Judgment of Permanent Injunction (PDF)

Beau Michael Guidry of Baton Rouge, La., pleaded guilty today in the U.S. District Court for the Middle District of Louisiana to three counts of odometer tampering.

 

Guidry, owner of Affordable Imports in Denham Springs, La., purchased high-mileage motor vehicles both online, through eBay, as well as from wholesale automobile auctions in Louisiana, Mississippi and Texas. The vehicles’ odometers were then rolled back as much as 147,000 miles. Guidry subsequently resold the vehicles at his lot in Denham Springs or through eBay to unsuspecting purchasers.

 

Many vehicles were more than 10 years old when Guidry sold them. Because of the age of the cars, Guidry was not required to sign a disclosure certifying as accurate the mileage on the vehicles that were more than 10 years old. However, each time he altered an odometer with intent to change the mileage on the odometer, he violated federal law.

 

“Just because a car dealer does not have to certify the mileage on cars he sells, that does not give him a license to roll back odometers,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division. “It is equally fraudulent to roll back a so-called ‘exempt’ vehicle as rolling back a non-exempt vehicle. With cars remaining in service longer, people rely on vehicles older than 10 years for basic transportation. These citizens are not fair game for crooked car dealers.”

 

“The odometer tampering statutes were put in place to protect consumers who pay more for used cars, and suffer other financial and potential mechanical harm when odometers on cars are rolled back,” said U.S. Attorney Donald J. Cazayoux, Jr. of the Middle District of Louisiana. “The Department of Justice is committed to putting in prison those who steal from consumers and put them in danger by selling cars with rolled back odometers.”

 

The National Highway Traffic Safety Administration Office of Odometer Fraud

Investigation (NHTSA) investigated this case. The case was prosecuted by Justice Department trial attorney David Sullivan of the Civil Division’s Consumer Protection Branch.

 

Ways to Help Avoid Being Victimized by Odometer Fraud

• Have a mechanic you trust check out the car. This will cost money, but it can save much more.
• Look for loose screws or scratch marks around the dashboard. This is pertinent primarily to mechanical odometers which can be manipulated with tools.
• Also on mechanical odometers, check to make sure that the digits in the odometer are lined up straight--particularly the 10,000 digit.
• Test drive the car and see if the speedometer sticks.
• Check for service stickers inside the door or under the hood that may give the actual mileage. Odometer tamperers try to find these as well, but sometimes miss one.
• Look in the owner’s manual to see if maintenance was listed, or if pages that might have shown high mileage were removed.
• Ask the dealer whether a computer warranty check has been run on the car.
• Use a commercially available computer search program that checks for mileage alterations. Some car dealers will give you one of these for free if you ask for it. While this is an important step to take, it is not foolproof by any means because not all high mileages are recorded on paperwork that makes its way to these databases.
• Ask to see the title documents and look to see if the mileage reading on the documents has been altered.
• Look to see if the steering wheel was worn smooth. Look for other signs of excessive wear on the arm-rest, the floor mats, the pedals for the brakes and gas, and the area around the ignition. If these items were recently replaced, that could also indicate efforts to hide the car's true use and mileage.
• Don’t assume that mileage is accurate just because the vehicle has an electronic odometer.

WASHINGTON – An Austin, Texas, man was sentenced today in the Western District of Texas to 61 months in prison and was ordered to forfeit $84,010 for his role in operating a foreclosure-rescue scam in Southern California and elsewhere that charged distressed homeowners fees in exchange for fraudulently delaying foreclosure sales.

The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Andre Birotte Jr. of the Central District of California, U.S. Attorney Robert Pitman of the Western District of Texas, Assistant Director in Charge Steven Martinez of the FBI’s Los Angeles Field Office and Christy Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP).

Frederic Alan Gladle, 53, was sentenced by U.S. District Judge Lee Yeakel.  Gladle pleaded guilty on Jan. 6, 2012, to one count of bankruptcy fraud and one count of aggravated identity theft.  He was originally charged on Dec. 9, 2011.  In addition to the $84,010, Gladle was ordered to forfeit 63 prepaid, reloadable debit cards that he used to further his scheme.

“Mr. Gladle concocted an elaborate fraud scheme to use the financial crisis to his criminal advantage,” said Assistant Attorney General Breuer.  “He preyed upon vulnerable homeowners facing foreclosure, just as the housing bubble began to burst and stood in the way of financial institutions attempting to collect on their debts.  We will continue to pursue scam artists like Mr. Gladle and ensure that they are held accountable for their crimes.”

“Foreclosure-rescue scams are designed to victimize people in extreme financial distress,” said U.S. Attorney André Birotte Jr.  “Financial predators like Mr. Gladle need to be held accountable for the harm they cause and today’s sentence does just that, sending the message to scam artists like Mr. Gladle that the final outcome for their criminal schemes is a long stay in federal prison.”

“Gladle preyed on struggling homeowners with promises to delay their foreclosures for a fee,” said Christy Romero, Special Inspector General at SIGTARP.  “To forestall the foreclosures, Gladle deeded away a portion of their homes to unsuspecting debtors in bankruptcy, stealing the debtors’ identities and forging their signatures.  Gladle exploited homeowners, the debtors whose identities he stole, and multiple banks, including TARP banks.  The exploitation of TARP will not be tolerated, and SIGTARP and our partners will hold individuals accountable for their actions.”

“This scheme was particularly insidious in that Mr. Gladle exploited victims who were already in financial straits,” said FBI Assistant Director Martinez.  “This sentence should send a message to those contemplating similar fraud targeting vulnerable individuals or the banking system and, in addition, should encourage those trying to salvage their homes to beware of fraudulent rescue offers.”

Gladle admitted that beginning in October 2007 and continuing until October 2011, he operated a foreclosure-rescue fraud scheme that netted him more than $1.6 million in fees from distressed homeowners.  According to court documents, Gladle used five aliases to avoid detection, including stealing the identity of at least one person and setting up a mobile phone account in that victim’s name.

Gladle admitted that he recruited homeowners whose properties were in danger of imminent foreclosure and falsely promised to delay the foreclosures for up to six months, in exchange for a fee of approximately $750 per month.  Gladle, directly or through salespersons, directed homeowners to sign deeds granting fractional interest in their properties to debtors in bankruptcy proceedings whose names Gladle found by searching bankruptcy records.  The debtors were unaware that their names and bankruptcy cases were being stolen by Gladle in his scheme.  Gladle then sent the unsuspecting debtors’ bankruptcy petitions, and the deeds that transferred fractional interests to the debtors, to the homeowners’ lenders to stop foreclosure proceedings.

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

A defendant charged in the Northern and Central Districts of California for a separate similar foreclosure rescue scheme, Glen Alan Ward, was arrested in Canada last month.  Ward has been a fugitive sought by U.S. federal authorities since 2000.  According to court documents, Ward, who also goes by the name Brandon Michaels, is alleged to have worked with and taught Gladle the scheme.  Ward is currently being detained in Canada pending his extradition to the United States.

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

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.

WASHINGTON – A Vidor, Texas, man was sentenced today to life in prison for his role in a homicide that took place in Atascosa County, Texas, in May 2008, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Robert Pitman for the Western District of Texas.
 
Michael Dewayne Smith, 31, aka “Bucky,” was sentenced by U.S. District Judge Xavier Rodriguez in the Western District of Texas.  Smith admitted that he participated in the murder of Mark Davis Byrd Sr.

According to information presented in court, Smith was a member of the Aryan Brotherhood of Texas (ABT), a powerful race-based, statewide organization that operates inside and outside of state and federal prisons throughout Texas and the United States.  The ABT enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault, robbery and threats against those who violate the rules or pose a threat to the enterprise.  Members, and oftentimes associates, are required to follow the orders of higher-ranking members, often referred to as “direct orders.” 

According to court documents, Byrd, an ABT prospect member, was murdered by Smith and Jim Flint McIntyre, 44, aka “Q-Ball,” of Houston, for allegedly stealing drugs he was ordered to deliver to a customer on behalf of the ABT.  According to court documents, Byrd was murdered as a result of a “discipline” ordered by Frank Lavelle Urbish, aka, “Thumper.”  Byrd’s body was discovered in Atascosa County on May 4, 2008.

On June 2, 2011, Urbish, an ABT member, pleaded guilty to murder and conspiracy to commit murder in the racketeering-related death of Byrd.  Sentencing for Urbish will occur before the end of the calendar year.  Fellow ABT gang member McIntyre pleaded guilty to the same charges in February 2011 and was sentenced to life in prison on Oct. 19, 2011.

This case is being investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Texas Rangers; the Texas Department of Public Safety; the Atascosa County Sheriff’s Department; and the Beaumont, Texas, Police Department.
 
The case is being prosecuted by Trial Attorney David Karpel of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney David Shearer for the Western District of Texas, in full cooperation with the Atascosa County District Attorney’s Office.

A federal grand jury sitting in Montgomery, Ala., has returned an indictment charging David Marrero, formerly a resident of Florida, with corruptly endeavoring to obstruct the Internal Revenue Service (IRS) and filing false claims, the Justice Department and IRS announced today.   

According to the indictment, while Marrero was serving a federal sentence in the custody of the Federal Bureau of Prisons in Montgomery County, Ala., he began sending various false documents to the IRS and to the federal judge who had presided over his case. Among the documents he is alleged to have sent were false money orders and false tax returns making claims for refunds, which were based upon false IRS Forms 1099-OID that Marrero had prepared. Marrero also allegedly used financial documents he had obtained from other people, without their knowledge or consent, as supporting documentation for his fraudulent claims.

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Marrero faces a potential maximum of three years in prison on the obstruction count and five years in prison on each false claims count, well as up to $1 million in fines.

 

The case was investigated by Special Agents of the IRS - Criminal Investigation. Trial attorneys Jason H. Poole and Justin K. Gelfand of the Justice Department’s Tax Division are prosecuting the case.

 

Form 1099-OID schemes are one of the IRS’s “Dirty Dozen” tax scams for 2012. Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.

Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced today that a nationwide takedown by Medicare Fraud Strike Force operations in seven cities has resulted in charges against 107 individuals, including doctors, nurses and other licensed medical professionals, for their alleged participation in Medicare fraud schemes involving approximately $452 million in false billing.  

Attorney General Holder and Secretary Sebelius were joined in the announcement by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, FBI Deputy Director Sean Joyce, Deputy Inspector General for Investigations Gary Cantrell of the HHS Office of Inspector General (HHS-OIG) and Dr. Peter Budetti, Deputy Administrator for Program Integrity of the Centers for Medicare and Medicaid Services (CMS).  

This coordinated takedown involved the highest amount of false Medicare billings in a single takedown in strike force history.

HHS also suspended or took other administrative action against 52 providers following a data-driven analysis and credible allegations of fraud.  The new health care law, the Affordable Care Act, significantly increased HHS’s ability to suspend payments until an investigation is complete.

The joint Department of Justice and HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques.   More than 500 law enforcement agents from the FBI, HHS-Office of Inspector General (HHS-OIG), multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies participated in the takedown.   In addition to making arrests, agents also executed 20 search warrants in connection with ongoing strike force investigations.  

“The results we are announcing today are at the heart of an Administration-wide commitment to protecting American taxpayers from health care fraud, which can drive up costs and threaten the strength and integrity of our health care system,” said Attorney General Holder.   “We are determined to bring to justice those who violate our laws and defraud the Medicare program for personal gain.   As today’s takedown reflects, our ongoing fight against health care fraud has never been more coordinated and effective.”

“Today’s arrests send a strong message to criminals that the consequences of committing Medicare fraud are serious,” said HHS Secretary Sebelius.  “In addition to these arrests, we used new authority from the health care law to stop all future payments to 52 health care providers suspected of fraud before they are ever made.  Today’s actions are another example of how the Affordable Care Act is helping the Obama Administration fight fraud and strengthen the Medicare program.”

The defendants charged are accused of various health care fraud-related crimes, including conspiracy to commit health care fraud, health care fraud, violations of the anti-kickback statutes and money laundering.   The charges are based on a variety of alleged fraud schemes involving various medical treatments and services such as home health care, mental health services, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and ambulance services.   

According to court documents, the defendants allegedly participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes never provided.   In many cases, court documents allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could submit fraudulent billing to Medicare for services that were medically unnecessary or never provided.  Collectively, the doctors, nurses, licensed medical professionals, health care company owners and others charged are accused of conspiring to submit a total of approximately $452 million in fraudulent billing.

“As charged in the indictments, these fraud schemes were committed by people up and down the chain of healthcare providers,” said Assistant Attorney General Breuer.   “Today’s operations mark the fourth in a series of historic Medicare fraud takedowns over the past two years.   These indictments remind us that Medicare is an attractive target for criminals.   But it should also remind those criminals that they risk prosecution and prison time every time they submit a false claim.” 

“Health care fraud is not a victimless crime,” said FBI Deputy Director Joyce.  “Every person who pays for health care benefits, every business that pays higher insurance costs to cover their employees, every taxpayer who funds Medicare—all are victims.  The FBI will continue to work closely with our federal, state and local law enforcement partners to address health care vulnerabilities, fraud and abuse.  We will use every tool we have to ensure our health care dollars are used to care for the sick—not to line the pockets of criminals.”

“Today over 200 OIG Special Agents, Forensic Examiners and Analysts have deployed throughout the country to ensure that those responsible for committing Medicare fraud are held accountable,” said HHS-OIG Deputy Inspector General Cantrell.  “OIG is committed to the strike force model and will continue to use advanced data analytics along with traditional investigative methods to root out those who steal from our Medicare program.”

In Miami, a total of 59 defendants, including three nurses and two therapists, were charged today and yesterday for their participation in various fraud schemes involving a total of $137 million in false billings for home health care, mental health services, occupational and physical therapy, DME and HIV infusion.   Two of these 59 defendants were originally charged in April 2012 but were indicted on additional charges today.   In one case, 10 defendants were charged for participating in a fraud scheme at Health Care Solutions Network, which led to approximately $63 million in fraudulent billing for community mental health center (CMHC) services.   Court documents allege that therapists at Health Care Solutions Network were instructed to alter notes and other medical documents to justify CMHC services for beneficiaries who did not need the services.  

Seven individuals were charged today in Baton Rouge, La., for participating in a fraud scheme involving $225 million in false claims for CMHC services.   The case represents the largest CMHC-related scheme ever prosecuted by the Medicare Fraud Strike Force.   According to court documents, the defendants recruited beneficiaries from nursing homes and homeless shelters, some of whom were drug addicted or mentally ill, and provided them with no services or medically inappropriate services.

In Houston, nine individuals, including one doctor and one nurse, were charged today with fraud schemes involving a total of $16.4 million in false billings for home health care and ambulance services.   According to court documents, the owners and operators of four different ambulance companies billed Medicare for ambulance rides that were medically unnecessary.

Eight defendants, including two doctors, were charged in Los Angeles for their roles in schemes to defraud Medicare of approximately $14 million.  In one case, two individuals allegedly billed Medicare for more than $8 million in fraudulent billing for DME.

In Detroit, 22 defendants, including four licensed social workers, were charged for their roles in fraud schemes involving approximately $58 million in false claims for medically unnecessary services, including home health, psychotherapy and infusion therapy.  

In Tampa, Fla., a pharmacist was charged with illegal diversion of controlled substances.   One defendant was charged last week in Chicago for his alleged role in a scheme to submit approximately $1 million in false billing to Medicare for psychotherapy services.

The Medicare Fraud Strike Force operations are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), a joint initiative announced in May 2009 between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.

Since their inception in March 2007, 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, the HHS 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.

The cases announced today are being prosecuted and investigated by Medicare Fraud Strike Force teams comprised of attorneys from the Fraud Section of the Justice Department’s Criminal Division and from the U.S. Attorneys’ Offices for the Southern District of Florida, the Eastern District of Michigan, the Southern District of Texas, the Central District of California, the Middle District of Louisiana, the Northern District of Illinois, and the Middle District of Florida, and agents from the FBI, HHS-OIG and state Medicaid Fraud Control Units.

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

 

Related Materials:

Court Documents
Remarks by Assistant Attorney General for the Criminal Division Lanny A. Breuer
Remarks by Attorney General Eric Holder

WASHINGTON – A former state magistrate in Portsmouth, Va., pleaded guilty today in the Eastern District of Virginia to accepting bribes from a bail bondsman in exchange for giving him favorable treatment in setting bonds for criminal defendants who had been arrested, Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia announced today.

Deborah Clark, 52, of Portsmouth, Va., pleaded guilty before U.S. District Judge Henry C. Morgan Jr. 

Clark was charged in a criminal information filed on April 16, 2012.  She faces a maximum penalty of 10 years in prison and a fine of $250,000 when she is sentenced on Oct. 3, 2012. 

According to a statement of facts filed with her plea agreement, Clark was a state magistrate in Portsmouth from January 1993 to April 2012.  She was authorized to issue arrest and search warrants, and to set bail or order the detention of arrestees.  From 2009 through February 2012, she accepted cash and gifts from a bondsman in exchange for referring arrestees to the bondsman as prospective clients and seeking and accepting his advice on the amount of bond to set in particular cases.  In addition to regular cash payments, Clark admitted receiving payments for gas, meals and expense money for trips.

Clark is subject to prosecution for bribery under a federal statute because, as a magistrate, she was an agent of the Commonwealth of Virginia, which receives annual benefits in excess of $10,000 under federal programs involving grants and other forms of assistance.

This case was investigated by the FBI.  Trial Attorneys Peter Mason and Monique Abrishami of the Public Integrity Section in the Justice Department’s Criminal Division and Assistant U.S. Attorney Alan M. Salsbury and Special Assistant U.S. Attorney Amy E. Cross of the Eastern District of Virginia are prosecuting the case.

Suzanne Land, a Cincinnati attorney, pleaded guilty today to obstructing and impeding the Internal Revenue Service (IRS) while representing the estates of two deceased clients, the Justice Department and IRS announced. District Court Judge Herman J. Weber presided over the guilty plea hearing.

 

Land, who until recently was a partner at a Cincinnati law firmadmitted in court documents that from January 2010 through July 2010 she actively obstructed and impeded the IRS during two separate civil audits her clients’ estate tax returns.

 

According to the plea agreement and statements made in court, to conceal from the IRS the deficiencies in the documents that she drafted for her wealthy clients, Land forged the posthumous signatures of both her deceased clients and their living children on amendments to the documents. Land also misled an appraiser as to the value of the estates, created fake legal invoices that reflected work she never performed, and lied to the IRS about the circumstances surrounding the creation of the amendments. According to the terms of the plea agreement, Land admitted that the “relevant and foreseeable” tax loss that could have resulted from her obstruction was approximately $1,140,636.

Judge Weber set sentencing for Aug. 7, 2012 in Cincinnati. The maximum potential sentence for obstructing and impeding the IRS is up to three years in prison.

 

The case was investigated by IRS-Criminal Investigation. Trial Attorneys Jorge Almonte and Andrew P. Young of the Justice Department’s Tax Division handled the prosecution.

The Justice Department announced that it had reached a settlement of alleged violations of the Servicemembers Civil Relief Act (SCRA) providing damages and credit repair to 26 servicemembers whose cars were towed and sold while they were on active duty without obtaining court orders as SCRA requires. The settlement resolves allegations that B.C. Enterprises Inc., d/b/a Aristocrat Towing and Aristocrat Towing Inc. (collectively “Aristocrat Towing”), violated the SCRA when it towed and sold these servicemembers’ vehicles without obtaining court orders. The case began with a referral from the U.S. Navy to the Justice Department after Navy Lieutenant Yahya Jaboori returned from deployment in Iraq to find that Aristocrat Towing had towed and sold his vehicle without a court order while he was deployed.

 

The SCRA protects the rights of servicemembers while on active duty in the military by suspending or modifying certain civil obligations. Under the terms of the settlement, which must be approved by a federal court in Virginia, Aristocrat Towing must pay a total of $75,000 in damages and repair the credit of the identified aggrieved servicemembers.

 

“Servicemembers make great personal sacrifices. We will ensure that the rights of the brave men and women who serve and protect us are protected at home,” said Assistant Attorney General for the Civil Rights Division Thomas E. Perez. “This settlement sends a strong message to businesses nationwide that the Justice Department will enforce the SCRA to protect against the taking of servicemembers’ property without first seeking court orders as is required by law.”

 

“No member of the military should come home from deployment to find their car has been towed and sold,” said U.S. Attorney for the Eastern District of Virginia Neil MacBride. “Businesses should be aware of the many rights that SCRA gives to servicemembers and their families, and businesses should also be certain that we’ll work tirelessly to ensure that those rights are protected.”

 

This lawsuit, filed in 2008, was the first filed by the Civil Rights Division under the SCRA. The Civil Rights Division received enforcement authority under the SCRA in 2006, and has since filed suit and entered into a number of settlements with defendants ranging from local landlords to the nation’s five largest mortgage servicers.

 

Servicemembers and their dependents who believe that their SCRA rights have been violated should contact the nearest Armed Forces Legal Assistance Program office. Please consult the military legal assistance office locator at http://legalassistance.law.af.mil/content/locator.php . Additional information on the Justice Department’s enforcement of the SCRA and other laws protecting servicemembers is available at www.servicemembers.gov .

Related Materials:

Consent Order

The Department of Justice today announced a series of investigations stemming from allegations of sexual assault and sexual harassment at the University of Montana and in the greater Missoula, Mont., community. These investigations will seek to determine whether gender discrimination affected the prevention, investigation and prosecution of sexual assaults and sexual harassment in Missoula.

 

The department has opened a Title IX compliance review and Title IV investigation regarding the University of Montana’s response to sexual assaults and sexual harassment of students.  Title IX of the Education Amendments of 1972 and Title IV of the Civil Rights Act of 1964 each prohibit sex discrimination, including sexual assault and sexual harassment, in education programs.  There have been at least 11 reported sexual assaults involving university students in an 18-month period.  The department will also coordinate with the Department of Education on a related sexual harassment complaint received by that department.

 

The Justice Department also announced today that it has opened a civil pattern or practice investigation into the University of Montana’s Office of Public Safety (OPS), the Missoula Police Department (MPD) and the Missoula County Attorney’s Office.  This investigation will focus on allegations that OPS, MPD and the Missoula County Attorney’s Office are failing to adequately investigate and prosecute alleged sexual assaults against women in Missoula, due to gender discrimination in violation of the Violent Crime Control and Law Enforcement Act of 1994 and the anti-discrimination provisions of the Omnibus Crime Control and Safe Streets Act of 1968.  There have been at least 80 alleged rapes in Missoula in the past three years.  The investigation will look at assaults against all women in Missoula, not just university students.

 

Department officials met with city, police and university officials, who pledged their full cooperation with the investigations.

  

“The allegations that the University of Montana, the local police department and the County Attorney’s Office failed to adequately address sexual assaults are very disturbing,” said Attorney General Eric Holder. “The department's pattern or practice authority enables us to ensure that law enforcement agencies are doing what is necessary to combat this despicable crime without discrimination, and we take that responsibility seriously.”

 

“Sexual assault and sexual harassment are intolerable; they undermine women’s basic rights and, when perpetrated against students, can negatively impact their ability to learn and continue their education,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “As we approach the 40th anniversary of Title IX this year, incidents of sexual assault on our college campuses remind us of the continuing critical importance of the law to reduce barriers in education. Our goal is to determine whether there are violations of federal law and if we find a problem, work cooperatively with the University of Montana and local law enforcement to ensure that all students and Missoula residents feel safe in their communities, regardless of sex. We salute President Engstrom’s commitment to address these serious problems.”

 

“Colleges and universities have an obligation to stop and prevent sexual violence against their students, and law enforcement has a fundamental duty to ensure it is properly investigating and prosecuting crimes of sexual assault, whether they occur at the university or in the wider Missoula community,” said Michael W. Cotter , U.S. Attorney for the District of Montana.  “We look forward to working with the University of Montana and local law enforcement to ensure these vital obligations are met.” 

 

The department previously found a pattern or practice of gender discrimination in the New Orleans Police Department. Similarly, the department found problems of significant concern involving the handling of sex crimes in both the Puerto Rico Police Department and the Maricopa County, Ariz., Sheriff’s Office. 

 

Attorneys from the Educational Opportunities Section and the Special Litigation Section of the Department of Justice’s Civil Rights Division and the U.S. Attorney’s Office for the District of Montana are jointly conducting this investigation. People with information related to the sexual assaults or sexual harassment in Missoula are encouraged to contact the Department of Justice at 1-855-307-6103 or at [email protected] .

 

The enforcement of Title IV, Title IX, the Violent Crime Control and Law Enforcement Act and the Safe Streets Act are top priorities of the Justice Department’s Civil Rights Division and U.S. Attorneys’ Offices.  Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt . Additional information about the U.S. Attorney’s Office for the District of Montana is available on its website at www.justice.gov/usao/mt .

Related Materials:

Notification Letter - Investigation of the Missoula County Attorney's Office.
Notification Letter - Investigation of the Missoula Police Department
Notification Letter - Investigation of University of Montana, Office of Public Safety
Notification Letter - Investigation of University of Montana

The Justice Department announced today that former Bryan County, Okla., Sheriff’s Office Lieutenant Kevin Bennett Holt, 48, from Achille, Okla., pleaded guilty in federal court to using a Taser to assault a detainee inside of the Bryan County Jail in Durant, Okla., thereby depriving the detainee of his civil rights.

During the plea hearing and in the plea documents, Holt admitted that he intentionally used unreasonable force on a detainee when he electronically shocked the detainee by using a Taser device while the detainee was strapped into a restraint chair.  The defendant also admitted that his unlawful Taser deployment injured the victim.   

  

“Today the defendant was held accountable for abusing his authority and assaulting the victim,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “Such conduct cannot be tolerated in a civilized society.”

 

When Holt is sentenced, he faces a maximum penalty of up to 10 years imprisonment and a maximum fine of $250,000 for this crime.

 

This case was investigated by the FBI.  The case was prosecuted by Trial Attorney Nicole Lee Ndumele of the Civil Rights Division and Assistant U.S. Attorney Gregory Dean Burris from the U.S. Attorney' s Office for the Eastern District of Oklahoma.

Curtis Morris, 43, of Elizabeth, Colo., and Richard Kellogg Armstrong, 77, of Prescott, Ariz., were found guilty on April 30, 2012, by a jury for mail fraud, filing false claims against the United States and conspiracy to file false claims against the United States, announced the Justice Department’s Tax Division, the U.S. Attorney’s Office for the District of Colorado and IRS-Criminal Investigation.  In addition to these counts, Armstrong was also found guilty of engaging in monetary transactions in property derived from the mail fraud. The guilty verdicts were the result of a three week trial before U.S. District Court Judge Robert E. Blackburn.  Morris and Armstrong are scheduled to be sentenced on Aug. 10, 2012.

 

Morris and Armstrong were indicted by a federal grand jury in Denver on June 8, 2010 and were subsequently charged in a superseding indictment on Feb. 15, 2011. The superseding indictment charged a total of twenty-eight counts as well as forfeiture allegations and included, as a defendant, the late Larry Hall. The jury returned guilty verdicts against Morris and Armstrong on all counts with which they were respectively charged. Morris was found guilty of three counts of mail fraud, seventeen counts of filing false claims against the United States and one count of conspiracy to defraud the United States. Armstrong was found guilty of one count of mail fraud, eight counts of filing false claims against the United States, three counts of engaging in monetary transactions in property derived from mail fraud and one count for conspiracy to defraud the United States.

 

According to the testimony at trial, the scheme involved Hall and Morris working with others to solicit individuals to file tax returns claiming large tax refunds based upon fictitious federal income tax withholdings taken from bogus Forms 1099-OID. Morris was the scheme tax preparer. He prepared over fifty fraudulent tax returns for at least twenty clients claiming illegal refunds of approximately $22 million. Original issue discount (OID) income is a form of interest income typically realized on debt instruments issued at a discount to, or purchased at less than, the ultimate redemption value of the debt instrument. This type of income is reported to the IRS on a Form 1099-OID and can be subject to federal income tax withholding in certain exceptional circumstances that didn’t apply in this case.  As part of this scheme, Morris and others fabricated IRS Forms 1099-OID claiming large amounts of bogus federal income tax withholding to make it appear that these forms had been issued by legitimate financial institutions. Morris then used these bogus forms to prepare false tax returns for clients such as Armstrong. He used the federal income tax withholding amounts reported on the bogus Forms 1099-OID to offset and exceed his clients’ calculated income tax liabilities often resulting in hundreds of thousands of dollars in claimed refunds per client per year.

 

Armstrong was one of the clients who successfully secured a refund through the filing of tax returns prepared by Morris and subsequently served as a promoter and recruiter for the scheme. Armstrong received over $1.6 million and, according to the testimony at trial, quickly moved most of this money into accounts in the names of shell entities and offshore bank accounts. The government seized and is seeking forfeiture of Armstrong’s private plane and two pieces of real property purchased with the fraud proceeds, one of which is a house in Brighton purchased through Larry Hall by a nominee land trust.

         

“Those who defy the tax laws by preparing or filing false and frivolous tax returns risk criminal prosecution resulting in conviction, substantial penalties and time in prison, as well as being required to pay their taxes, interest and penalties,” said Assistant Attorney General for the Tax Division Kathryn Keneally. “The Tax Division remains committed to prosecuting tax defier conduct.”

 

“The guilty verdicts are a tribute to the hard work of the trial team,” said U.S. Attorney for the District of Colorado John Walsh. “The defendants have been held accountable for their fraudulent scheme thanks to the prosecutors and IRS-Criminal Investigation.  Tax preparers should take note that if they attempt to defraud the IRS they will be caught and held accountable.”

 

“This verdict should send a clear message that promoting or participating in a fraudulent tax scheme will not be tolerated; rest assured those who do will be brought to justice,” said Sean Sowards, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.

 

Mail fraud carries a penalty of not more than 20 years in prison and up to a $250,000 fine, per count.  Filing false claims against the United States carries a penalty of not more than 5 years imprisonment and a fine of up to $250,000 per count.  Engaging in monetary transactions in property derived from mail fraud carries a penalty of not more than 10 years imprisonment and a fine of up to $250,000 per count.  Conspiracy to defraud the United States carries a penalty of not more than 10 years imprisonment and a fine of up to $250,000 per count. 

 

The case was investigated by special agents with IRS-criminal investigation.  It was prosecuted by Assistant U.S. Attorney Kenneth Harmon and Special Assistant U.S. Attorney Kevin Sweeney. Kevin Sweeney is a trial attorney from the Justice Department’s Tax Division, currently on detail to the U.S. Attorney’s Office.

BROOKLYN, N.Y. – Earlier today, following a four-week trial, Adis Medunjanin, 28, a Queens, N.Y., resident who joined al-Qaeda and plotted to commit a suicide terrorist attack, was found guilty of multiple federal terrorism offenses.  The defendant and his accomplices came within days of executing a plot to conduct coordinated suicide bombings in the New York City subway system in September 2009, as directed by senior al-Qaeda leaders in Pakistan.  When the plot was foiled, the defendant attempted to commit a terrorist attack by crashing his car on the Whitestone Expressway in New York in an effort to kill himself and others.

The guilty verdict was announced by Loretta E. Lynch, U.S. Attorney for the Eastern District of New York, and Lisa Monaco, Assistant Attorney General for National Security.

The government’s evidence in this and related cases established that in 2008, Medunjanin and his co-plotters, Najibullah Zazi and Zarein Ahmedzay, agreed to travel to Afghanistan to join the Taliban and kill U.S. military personnel abroad.  They arrived in Peshawar, Pakistan, in late August 2008, but Medunjanin and Ahmedzay were turned back at the Afghanistan border.  Within days, Medunjanin, Zazi and Ahmedzay met with an al-Qaeda facilitator in Peshawar and agreed to travel to Waziristan for terrorist training.  There, they met with al-Qaeda leaders Saleh al-Somali, then the head of al-Qaeda external operations, and Rashid Rauf, a high-ranking al-Qaeda operative, who explained that the three would be more useful to al-Qaeda and the jihad by returning to New York and conducting terrorist attacks.

In Waziristan, Medunjanin, Zazi and Ahmedzay received al-Qaeda training on how to use various types of high-powered weapons, including the AK-47, PK machine gun and rocket-propelled grenade launcher.  During the training, al-Qaeda leaders continued to encourage Medunjanin and his fellow plotters to return to the United States to conduct “martyrdom” operations and emphasized the need to hit well-known targets and maximize the number of casualties.  Medunjanin, Zazi and Ahmedzay agreed and discussed the timing of the attacks and possible target locations in Manhattan, including the subway system, Grand Central Station, the New York Stock Exchange, Times Square and movie theaters.

Upon their return to the United States, Medunjanin, Zazi and Ahmedzay met and agreed to carry out suicide bombings during the Muslim holiday of Ramadan, which fell in late August and September 2009.  Zazi would prepare the explosives, and all three would conduct coordinated suicide bombings.  In July and August 2009, Zazi purchased large quantities of component chemicals necessary to produce the explosive TATP (Triacetone Triperoxide) and twice checked into a hotel room near Denver to mix the chemicals.  Federal investigators later found bomb-making residue in the hotel room.

On Sept. 8, 2009, Zazi drove from Denver to New York, carrying operational detonator explosives and other materials necessary to build bombs.  However, shortly after arriving in New York, he learned that law enforcement was investigating the plotters’ activities.  The men discarded the explosives and other bomb-making materials, and Zazi traveled back to Denver, where he was arrested on Sept. 19, 2009.

On Jan. 7, 2010, law enforcement agents executed a search warrant at Medunjanin’s residence.  Shortly thereafter, Medunjanin left his apartment and attempted to turn his car into a weapon of terror by crashing it into another car at high speed on the Whitestone Expressway.  Moments before impact, Medunjanin called 9-1-1, identified himself and left his message of martyrdom, shouting an al-Qaeda slogan:  “We love death more than you love your life.”
         
Today, Medunjanin was convicted of conspiring to use weapons of mass destruction, conspiring to commit murder of U.S. military personnel abroad, providing and conspiring to provide material support to al-Qaeda, receiving military training from al-Qaeda, conspiring and attempting to commit an act of terrorism transcending national boundaries, and using firearms and destructive devices in relation to these offenses.  When sentenced by U.S. District Judge John Gleeson on Sept. 7, 2012, Medunjanin faces a mandatory sentence of life in prison.  To date, seven defendants, including Medunjanin, Zazi and Ahmedzay, have been convicted in connection with the al-Qaeda New York City bombing plot and related charges.

“Adis Medunjanin was an active and willing participant in one of the most serious terrorist plots against the homeland since 9/11.  Were it not for the combined efforts of the law enforcement and intelligence communities, the suicide bomb attacks that he and others planned would have been devastating,” said Assistant Attorney General Monaco.  “I thank the many agents, analysts and prosecutors who helped bring about today’s result.  I also thank our counterparts in the United Kingdom for their assistance in this investigation and prosecution.”

“Justice was served today in Brooklyn, as a jury of New Yorkers convicted an al-Qaeda operative bent on terrorism, mass murder and destruction in the New York City subways,” said U.S. Attorney Lynch.  “Adis Medunjanin’s journey of radicalization led him from Flushing, Queens, to Peshawar, Pakistan, to the brink of a terrorist attack in New York City – and soon to a lifetime in federal prison.  As this case has proved, working against sophisticated terrorist organizations and against the clock, our law enforcement and intelligence agencies can detect, disrupt and destroy terrorist cells before they strike, saving countless innocent lives.”

U.S. Attorney Lynch expressed her gratitude and appreciation to the FBI Joint Terrorism Task Force in New York and each of the federal, state and local law enforcement personnel who took part in the investigation, as well as to the law enforcement authorities in the United Kingdom and Norway who assisted with the case.
     
The government’s case was prosecuted by Assistant U.S. Attorneys David Bitkower, James P. Loonam and Berit W. Berger of the U.S. Attorney’s Office for the Eastern District of New York, with assistance provided by the Counterterrorism Section of the Justice Department’s National Security Division.

WASHINGTON – The president of a Costa Rican company that sold reinsurance bonds to life settlement companies was found guilty by a federal jury in Richmond, Va., today for carrying out a half-billion-dollar fraud scheme that affected more than 2,000 victims throughout the United States and abroad.

U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Criminal Division made the announcement following the jury’s verdict.  

“Mr. Vargas lied to investors across the globe to sell almost half a billion dollars worth of ‘guaranteed’ bonds, which turned out to be worthless,” said U.S. Attorney MacBride.  “His fraud affected thousands of victims around the world, many of whom invested their life savings with life settlement companies because of the worthless guarantees PCI made.  Mr. Vargas may have thought he was safe operating his scheme from overseas, but his conviction is yet another example to global fraudsters: You can run, but you can’t hide.  This verdict demonstrates our ability to pursue justice on behalf of U.S. victims regardless of where the fraudsters may be hiding.”

“Mr. Vargas reaped millions in profit from a sprawling scheme to defraud investors seeking to hedge their risk in the life settlements market,” said Assistant Attorney General Breuer.  “He used his ill-gotten gains to fund a soccer team and to provide financial comfort for his family and for himself.  Today, a Virginia jury told Mr. Vargas that he would be held accountable, hopefully bringing some measure of peace to the investors he defrauded.”
 
Minor Vargas Calvo, 60, a citizen and resident of Costa Rica, is the present and majority owner of Provident Capital Indemnity (PCI) Ltd., an insurance and reinsurance company registered in the Commonwealth of Dominica and doing business in Costa Rica.  He was convicted of one count of conspiracy to commit mail and wire fraud, three counts of mail fraud, three counts of wire fraud and three counts of money laundering.  He faces a maximum penalty of 20 years in prison on each fraud count and up to 10 years in prison on each money-laundering count when he is sentenced on Oct. 23, 2012.

According to court records and evidence at trial, PCI sold financial guarantee bonds to companies selling life settlements, or securities backed by life settlements, to investors.  These bonds were marketed to PCI’s clients as a way to alleviate the risk of insured beneficiaries living beyond their life expectancy.  The clients, in turn, typically explained to their investors that the financial guarantee bonds ensured that the investors would receive their expected return on investment irrespective of whether the insured on the underlying life settlement lived beyond his or her life expectancy.

Evidence at trial showed that Calvo and PCI’s purported independent auditor for PCI, Jorge Castillo, 56, of New Jersey, used lies and omissions to mislead PCI’s clients and investors regarding its ability to pay claims when due on the financial guarantee bonds that PCI issued.  Calvo caused Castillo to prepare audited financial statements that falsely claimed that PCI had entered into reinsurance contracts with major reinsurance companies.  These false claims, which were supported by a letter from Castillo stating that he conducted an audit of PCI’s financial records, were used to assure PCI’s clients that the reinsurance companies were backstopping the majority of the risk that PCI had insured through its financial guarantee bonds.  The fraudulent financial statements PCI distributed showed significant assets and relatively small liabilities.

From 2004 through 2010, PCI sold at least $485 million of bonds to life settlement investment companies located in various countries, including the United States, the Netherlands, Germany, Canada and elsewhere.  PCI’s clients, in turn, sold investment offerings backed by PCI’s bonds to thousands of investors around the world.  Purchasers of PCI’s bonds were required to pay up-front payments of six to 11 percent of the underlying settlement as “premium” payments to PCI before the company would issue the bonds.

Evidence at trial showed that Vargas sent more than $23 million of his ill-gotten gains to fund his professional soccer team in Costa Rica, to his unrelated companies, to his family and to himself.  Due, in part, to these expenditures, when it came time to make good on PCI’s promises to pay bond holders, Vargas resorted to yet more lies to justify PCI’s inability to do so. 

Castillo, who was a PCI employee prior to becoming PCI’s “outside auditor,” pleaded guilty on Nov. 21, 2011, to conspiring to commit mail and wire fraud, which carries a maximum penalty of 20 years in prison.  Castillo is scheduled to be sentenced on May 22, 2012.  In addition, the corporation, PCI, pleaded guilty on April 18, 2012, to conspiring to commit mail and wire fraud, which carries a maximum term of five years’ probation.

This continuing investigation is being conducted by the U.S. Postal Inspection Service, Internal Revenue Service and FBI, with assistance from the Virginia State Corporation Commission, the Texas State Securities Board and the New Jersey Bureau of Securities.  This case is being prosecuted by Assistant U.S. Attorneys Michael S. Dry and Jessica Aber Brumberg of the Eastern District of Virginia and Trial Attorney Albert B. Stieglitz Jr. of the Criminal Division’s Fraud Section.

The U.S. Securities and Exchange Commission (SEC) conducted a parallel investigation and in January 2011 filed a parallel civil enforcement action against PCI, Vargas and Castillo.   The department thanks the SEC for its assistance in this matter.
 
The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia specifically.  The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.
 
President Obama established the 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.

WASHINGTON – In order to resolve antitrust concerns, National Express Corporation and Petermann Partners Inc. will divest several school bus contracts and associated assets in the states of Washington and Texas in order to proceed with their proposed merger, the Department of Justice announced today.  National Express and Petermann contract with school districts throughout the United States to provide school bus services.

The parties have agreed to sell eight school bus transportation contracts in the states of Texas and Washington to Student Transportation of America Inc. (STA).  The divested assets include transportation contracts in the school districts of Battle Ground and Hockinson in Washington and the school districts of Bastrop, Boyd, Eagle Mountain-Saginaw, Leander, Manor and Terrell, as well as Dallas-based KIPP Truth Academy, in Texas.

“The sale of the assets will help ensure continued competition for school bus contracts, which will benefit taxpayers in Texas and Washington,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division.

The parties have committed to completing the divestitures within 30 days, or to have a court monitor the divestitures at that time.  The school boards and entities whose contracts are being divested are in the process of approving the transfer of the contracts.

The Antitrust Division conducted its investigation working closely with the Washington and Texas State Attorney Generals’ offices, which simultaneously conducted their own investigations. 

National Express Corporation, a subsidiary of National Express Group PLC of the United Kingdom, is based in Warrenville, Ill.  It has revenues of more than $700 million.  Petermann Partners, headquartered in Cincinnati, has revenues of approximately $150 million.

The Department of Justice announced today that it has settled its lawsuit against the Mortgage Guaranty Insurance Corporation (MGIC) for discriminating against women on maternity leave in violation of the Fair Housing Act. This settlement is the department’s first involving discrimination against women and families in mortgage insurance.

 

The lawsuit, filed on July 5, 2011, in the U.S. District Court for the Western District of Pennsylvania, alleged that MGIC required women on maternity leave to return to work before the company would insure their mortgages even for women who had a guaranteed right to return to work after the leave. Most mortgage lenders require applicants seeking to borrow more than 80 percent of their home’s value to obtain mortgage insurance.

 

The settlement, which was approved by the court today, establishes a $511,250 fund to compensate 70 individuals whom the United States identified as aggrieved by the alleged discriminatory treatment between 2007 and 2010. The settlement also requires MGIC to pay a $38,750 civil penalty to the United States. The Department of Justice identified the aggrieved individuals based on its extensive review of MGIC’s mortgage application records. MGIC cooperated with the United States in turning over records during the course of settlement negotiations.

 

The settlement also requires MGIC to follow a number of detailed nondiscriminatory provisions in its future review of mortgage insurance applications involving women or men who are on, or have returned from, paid or unpaid leave related to the birth, adoption or foster care placement of a child. The settlement also requires MGIC to monitor its treatment of applicants on leave to care for a new child, to train its employees on the requirements of the fair housing laws, and to provide nondiscrimination notices to mortgage applicants.

 

“No company involved in lending should force a parent to give up her or his legal right to take time off from work to care for a new child in order to obtain a mortgage loan,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “Today’s settlement, coming at the close of fair housing month, protects that important right and clearly demonstrates the department will not hesitate to take action against companies who discriminate against women and families.”

 

“In bringing justice to these 70 victims, this office confirms our resolve to protect the civil rights of citizens of the Western District of Pennsylvania from illegal discriminatory practices,” said David J. Hickton, U.S. Attorney of the Western District of Pennsylvania. “Discrimination in lending has profound and widespread consequences that will not be tolerated.”

 

“Mortgage insurance is essential in order for many people to buy a home,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “Borrowers should not be denied mortgage insurance for the very reason they often buy a home: to provide a decent home for an expanding family. HUD will continue to work with the Justice Department to take appropriate action against insurers and lenders who violate the Fair Housing Act.”

 

This lawsuit arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development (HUD) by a Wexford, Penn., loan applicant. After investigating the complaint, HUD issued a charge of discrimination and referred the case to the Department of Justice after the parties were unable to settle their dispute and the complainant elected to have the case heard in federal court. The Department of Justice also filed the case under the attorney general’s authority to seek redress for housing discrimination that raises an issue of general public importance. The HUD complainant will receive $42,500 from the settlement fund, to address her specific pain and suffering and compensate her for leave that she forfeited in response to MGIC’s requirement that she return to work.

 

Individuals compensated as part of the settlement will remain eligible to receive compensation from the separate private class action lawsuit brought by the HUD complainant. MGIC has entered into a preliminary settlement of the class action lawsuit, which remains subject to court approval, allowing victims of MGIC’s alleged maternity leave discrimination to submit claims for extraordinary damages above the amount covered by the compensation provided through MGIC’s settlement with the United States.

 

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

WASHINGTON – An executive of Korean-based Hitachi-LG Data Storage Inc. (HLDS) has agreed to plead guilty and to serve time in a U.S. prison for his participation in a series of conspiracies to rig bids for the sale of optical disk drives, the Department of Justice announced today.

 

According to the four-count felony charge filed today in the U.S. District Court for the Northern District of California in San Francisco, Senior Sales Manager Woo Jin Yang, also known as Eugene Yang, conspired with others to suppress and eliminate competition by rigging bids for optical disk drives sold to Hewlett-Packard Co. (HP). Yang participated in the conspiracies at various times between approximately August 2006 and June 2009. Under the plea agreement, which is subject to court approval, Yang has agreed to serve six months in prison, to pay a $25,000 criminal fine and to cooperate with the department’s ongoing investigation. HLDS is a joint venture between Hitachi Ltd, a Japanese corporation, and LG Electronics Inc., a Republic of Korea corporation.

 

“Today’s charges demonstrate the Antitrust Division’s commitment to prosecute and deter conduct that harms American businesses and consumers,” said Acting Assistant Attorney General Joseph Wayland in charge of the Department of Justice’s Antitrust Division. “The division will continue to pursue those who participated in these bid-rigging and price-fixing conspiracies so they are held accountable for their actions.”

 

Optical disk drives are devices such as CD-ROMs, CD-RWs (ReWritable), DVD-ROMs and DVD-RWs (ReWritable) that use laser light or electromagnetic waves to read and/or write data and are often incorporated into personal computers and gaming consoles.

 

According to the charges, from approximately August 2006 until February 2009, HP hosted optical disk drive procurement events in which participants would be awarded varying amounts of optical disk drive supply depending on where their pricing ranked. According to court documents, Yang and co-conspirators participated in a series of conspiracies involving meetings and discussions to predetermine bidding strategies and prices of optical disk drives, resulting in the submission of collusive and noncompetitive bids for HP’s procurement events. Yang and co-conspirators also exchanged information on sales, market share and the pricing of optical disk drives to monitor and enforce adherence to the agreements.

 

Including Yang, the department has charged four individuals and one company as a result of its ongoing investigation into the optical disk drive industry. On Nov. 8, 2011, HLDS pleaded guilty in the U.S. District Court for the Northern District of California in San Francisco to 14 counts of violating the federal antitrust laws between approximately June 2004 and September 2009. HLDS also pleaded guilty to one count of participating in a scheme to defraud in connection with an April 2009 procurement event. On the same day, HLDS was sentenced to pay a $21.1 million criminal fine and agreed to assist the department in its ongoing investigation into the optical disk drive industry.

 

HLDS executives Y.K. Park, S.H. Kim and Sik Hur pleaded guilty to multiple violations of the Sherman Act on March 27, 2012, April 17, 2012 and April 10, 2012 respectively. Park, Kim and Hur are currently awaiting sentencing.

 

Yang is charged with violating the Sherman Act. Each count carries a maximum fine of $1 million and up to 10 years in prison. The maximum fine 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.

 

This case is part of an ongoing joint investigation by the Department of Justice Antitrust Division’s San Francisco Office and the FBI in San Francisco and Houston. Anyone with information concerning illegal or anticompetitive conduct in the optical disk drive industry is urged to call the Antitrust Division’s San Francisco Field Office at 415-436-6660 or visit www.justice.gov/atr/contact/newcase.htm.

WASHINGTON – An Arizona man was sentenced today in Los Angeles to seven years in prison and 15 years of supervised release for conspiracy to distribute child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney André Birotte Jr. of the Central District of California and Assistant Director in Charge Steve Martinez of the FBI’s Los Angeles Field Office. 

Joseph Hines of Tempe, Ariz., was sentenced by U.S. District Judge Virginia A. Phillips. In December 2010, Hines, 24, pleaded guilty to one count of conspiracy to solicit child pornography.

Today’s sentencing is the result of an international investigation into the “Lost Boy” online bulletin board.  The Lost Boy bulletin board, according to court documents and proceedings, was dedicated to men who have a sexual interest in young boys and was established to provide a forum to trade child pornography.

Federal authorities, working in conjunction with a coalition of international law enforcement agencies, shut down the Lost Boy bulletin board approximately three years ago.  As a result of the investigation, 16 named defendants were charged in the United States and arrested for their roles in the bulletin board.  To date, 15 defendants, including Hines, have pleaded guilty or have been convicted at trial and one defendant died in custody.  Approximately six more men have been charged with child molestation as a result of the investigation.  The investigation also led to the identification of 27 domestic victims of child abuse, some of whom were portrayed in images posted to the Lost Boy bulletin board.

According to court documents and proceedings, law enforcement authorities discovered the Lost Boy bulletin board after receiving information from Eurojust, the judicial cooperation arm of the European Union.  Eurojust provided U.S. law enforcement with leads obtained from Norwegian and Italian authorities indicating that a North Hollywood, Calif., man was communicating with an Italian national about child pornography and how to engage in child sex tourism in Romania.  Acting on the information from Europe, the FBI executed search warrants that led to the discovery of the Lost Boy network.  Further investigation revealed that Lost Boy had 35 members, 16 of whom were U.S. nationals.  Other members of the network were located in countries around the world, including Belgium, Brazil, Canada, France, Germany, New Zealand and the United Kingdom. 

According to court documents, Lost Boy had a thorough vetting process for new members, who were required to post child pornography to join the organization.  Once accepted, members were required to continue posting child pornography to remain in good standing and to avoid removal from the board.  According to court documents, Lost Boy members advised each other on techniques to evade detection by law enforcement, which included using screen names to mask identities and encrypting computer data.

International law enforcement efforts involving European law enforcement, the Brazilian Federal Police and other agencies have identified child molestation suspects in South America, Europe and New Zealand.  Three suspects in Romania, one in France, and another in Brazil have been charged, and offenders have been convicted in Norway and the United Kingdom.  Law enforcement efforts have also identified dozens of child victims located in Norway, Romania, Brazil and other nations.

The investigation into the Lost Boy bulletin board was led by the FBI and the U.S. Postal Inspection Service, in conjunction with the Los Angeles-based Sexual Assault Felony Enforcement (SAFE) Team.  The High Technology Investigative Unit of the Child Exploitation and Obscenity Section (CEOS) in the Justice Department’s Criminal Division, along with Eurojust, have provided invaluable assistance during the investigation. 

The case is being prosecuted by Assistant U.S. Attorneys Joey L. Blanch and Yvonne Garcia of the Central District of California and CEOS Trial Attorney Andrew McCormack.

Richard Jaensch, 54, of Annandale, Va., was sentenced today to 36 months in prison by U.S. District Judge Gerald Bruce Lee, the Justice Department and Internal Revenue Service (IRS) announced. Jaensch had been found guilty on Dec. 7, 2011, by a federal jury sitting in Alexandria, Va., of corruptly endeavoring to impede the IRS, filing a false claim for a refund and four counts of failing to file tax returns for 2004 through 2007. Judge Lee also sentenced Jaensch to three years supervised release and ordered him to pay $197,984 in restitution to the IRS.

 

According to evidence introduced at trial, Richard Jaensch, a self-employed plumber, failed to file personal income tax returns for many years, beginning in 2002, despite the fact that he was required to do so by law because of income he made from his business and from stock trading. The first tax return he filed after 2002 was a false 2008 tax return claiming a $774,052 refund based on false Forms 1099-OID that the defendant submitted to the IRS.

 

Over the years, Jaensch also obstructed and impeded the IRS by, among other acts: filing numerous documents and pleadings in Fairfax County, Va., claiming, that he and his wife, a federal employee, were not persons required to file federal income tax returns; that his wife was not a party to the Constitution of the “united States of America” and that she was not a taxpayer; and providing false information to the IRS. In addition, Jaensch caused his wife to present letters to her employer directing them to stop withholding federal income taxes from her salary. The IRS began levying his wife's paycheck and bank accounts to satisfy her outstanding tax liability and Jaensch continued his obstructive conduct by filing or causing his wife to file correspondence with the IRS claiming that the IRS could not instruct her employer to withhold taxes from her paycheck.

 

Jaensch’s wife, Janet, was a former high-level civilian employee in the Department of the Navy during the time that she was not filing tax returns at Richard Jaensch´s direction. She pleaded guilty to willfully failing to file a tax return and was sentenced on Dec. 13, 2011, to three years of probation and order to pay more than $137,000 in restitution to the IRS.

 

This case was investigated by Special Agents of IRS - Criminal Investigation and prosecuted by Trial Attorneys Jason Poole and Caryn Finley of the Justice Department´s Tax Division and Assistant U.S. Attorney Gene Rossi.

 

More information about the Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/ .