District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Two Owners and Two Employees of Miami Home Health Company Plead Guilty in $20 Million Health Care Fraud SchemeRead the Press Release
WASHINGTON – Two owners and two employees of a Miami home health care agency pleaded guilty for their participation in a $20 million Medicare fraud scheme involving false billings for home health care services, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Ariel Rodriguez, 41, Reynaldo Navarro, 37, and Ysel Salado, 26, each pleaded guilty today before U.S. District Judge Marcia G. Cooke to one count of conspiracy to commit health care fraud, and Melissa Rodriguez, 24, pleaded guilty on March 28, 2012, before Judge Cooke to the same charge.
According to court documents, Ariel Rodriguez and Reynaldo Navarro were the owners of Serendipity Home Health Inc., a Florida home health agency that purported to provide home health care and physical therapy services to eligible Medicare beneficiaries. Melissa Rodriguez and Ysel Salado were employees at Serendipity Home Health.According to plea documents, Ariel Rodriguez, Navarro and their co-conspirators paid kickbacks and bribes to patient recruiters. In return, the recruiters provided patients to Serendipity, as well as prescriptions, plans of care (POCs) and certifications for medically unnecessary therapy and home health services. Ariel Rodriguez and Navarro used the prescriptions, POCs and medical certifications to fraudulently bill the Medicare program, which Ariel Rodriguez and Navarro knew was in violation of federal criminal laws.
Melissa Rodriguez and Salado admitted that they cashed checks from Serendipity and provided the cash to Ariel Rodriguez and Navarro to use for the kickback payments.
According to plea documents, Serendipity nurses and office staff falsified patient files for Medicare beneficiaries to make it appear that the beneficiaries qualified for home health care and therapy services. In fact, the beneficiaries did not actually qualify for and did not receive such services. Ariel Rodriguez and Navarro admitted that they knew files were falsified so that Medicare could be billed for medically unnecessary services.
From approximately April 2007 through March 2009, Ariel Rodriguez, Navarro and their co-conspirators submitted approximately $20 million in false and fraudulent claims to Medicare. Medicare paid approximately $14 million on those claims.
The pleas were announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
This case is being prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since their inception in March 2007, Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants who collectively have falsely billed the Medicare program for more than $3.6 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.
New Hampshire and Massachusetts Residents Convicted for Promoting and Using Tax Defier SchemesRead the Press Release
A federal jury in Worcester, Mass., convicted William Scott Dion and Catherine Floyd, both of Sanbornville, N.H., and Charles Adams of Norwood, Mass., for conspiracies to defraud the United States through the promotion and use of multiple tax fraud schemes, the Justice Department and the Internal Revenue Service (IRS) announced today.
Dion and Floyd were released on electronic monitoring bracelets pending sentencing and Adams was released on call in/voice recognition pending sentencing. Dion’s sentencing is scheduled for June 21, 2012, Floyd’s sentencing is scheduled for June 26, 2012 and Adams’s sentencing is scheduled on June 27, 2012, all before U.S. District Judge F. Dennis Saylor.
Dion, Floyd and Adams were convicted of conspiracy to defraud the IRS by promoting an “under the table” payroll scheme. Dion and Floyd were also convicted for conspiracy to defraud the IRS through the use of an “underground warehouse banking” scheme designed to conceal customer income and assets from the IRS. Floyd and Dion were also convicted separately for corruptly endeavoring to obstruct the IRS’s ability to determine their own income. Adams was separately convicted of tax evasion.
According to the evidence presented at trial, Dion, Floyd and Adams ran a payroll tax scheme in order to pay employees “under the table” without properly accounting for, withholding and paying over to the IRS the payroll taxes required by law. The three promoted the payroll scheme to employers and individuals who wanted to avoid payment of employer payroll taxes and individual payroll taxes. The three ran the payroll scheme under three different names: Contract America, Talent Management and New Way Enterprises. Approximately 150 individuals subscribed to the payroll scheme and in excess of $2.5 million in unreported wages and compensation were paid through the system.
The evidence at trial also proved that Dion and Floyd conspired to defraud the United States by promoting and operating an “underground warehouse banking” scheme which helped subscribers conceal income and assets from the IRS. According to the evidence, the warehouse scheme operated under three different names: Your Virtual Office, Office Services and Calico Management. As part of the warehouse banking scheme, the defendants maintained accounts at several banks and used the accounts to deposit and commingle business receipts and other funds received from subscribers in order to mask the true ownership of the funds. According to evidence presented at trial, more than $28 million in deposits were made into the various bank accounts used in the scheme.
In August 2009, the three defendants were indicted with four other individuals relating to the promotion and use of these schemes. On Dec. 9, 2011, prior to trial, Gail and Myron Thorick of West Warwick, R.I., pleaded guilty to conspiring to defraud the United States by helping operate the “warehouse banking” scheme and for filing false tax returns. On that same date, Gary Alcock pleaded guilty to conspiracy by using the payroll scheme, as well as to tax evasion and willful failure to file tax returns. OnJan. 24, 2012, Kenneth Scott Alcock pleaded guilty to conspiracy relating to the payroll scheme and to multiple counts of tax evasion. All four defendants are awaiting sentencing.
The defendants face up to five years in prison on each count of conspiracy to defraud the United States and tax evasion, together with fines of up to $250,000 or twice the financial gain to the defendant or loss to the IRS, to be followed by three years of supervised release. The charges for obstructing the IRS carry maximum penalties of three years in prison, fines of $250,000 and one year of supervised release.
The U.S. Attorney and the Principal Deputy Assistant Attorney General of the Tax Division jointly announced the verdict.
The case was investigated by Special Agents of the IRS-Criminal Investigation. It is being prosecuted jointly by the U.S. Attorney’s Office in Boston, and the Tax Division of the U.S. Department of Justice in Washington DC. Assistant U.S. Attorney Victor A. Wild, and Assistant Chief John N. Kane and Trial Attorney Jeffrey L. Shih of the Justice Department’s Tax Division prosecuted the case.
More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
Michigan Man Arrested on Tax ChargesRead the Press Release
Steven Kern of Marine City, Mich., was arrested today following his indictment on March 27, 2012, on eight counts of failing to file his individual tax returns and eight counts of filing false corporate tax returns, the Justice Department and Internal Revenue Service (IRS) announced today.
The indictment alleges that Kern failed to file individual tax returns for tax years 2003 to 2010, despite earning more $1.2 million in gross income during that time period. The indictment further alleges that Kern filed false corporate tax returns on the behalf of Kern Chiropractic Center, failing to report cash and check payments diverted from the center by Kern from 2003 to 2010.
According to the indictment, Kern has not submitted a tax return to the IRS since tax year 2002. The indictment alleges that Kern used funds diverted from the Kern Chiropractic Center to pay for his own personal expense.
An indictment is merely a formal charge by the grand jury. Kern is presumed innocent unless and until proven guilty in U.S. District Court. If convicted of all charges, Kern faces a maximum potential sentence of 32 years in prison and maximum fines of up to $2.8 million.
The case was investigated by the IRS Criminal Investigation Division and is being prosecuted by Trial Attorneys Mark McDonald and Jeff Bender of the Justice Department’s Tax Division.
Justice Department to Monitor Election in WisconsinRead the Press Release
WASHINGTON – The Justice Department announced today that the Civil Rights Division will monitor the election on April 3, 2012, in Milwaukee. The monitoring will ensure compliance with the Voting Rights Act of 1965 and other federal voting rights statutes. 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.
Justice Department Alleges GFI Mortgage Bankers Engaged in Illegal Lending DiscriminationRead the Press Release
WASHINGTON – The Department of Justice and the U.S. Attorney’s Office for the Southern District of New York filed a lawsuit alleging that GFI Mortgage Bankers Inc., a mortgage banker with operations in seven states, violated federal fair lending laws by charging African-American and Hispanic borrowers higher interest rates and fees on home mortgage loans because of their race or national origin, not based on their creditworthiness.
The complaint, filed today in the Southern District of New York under the federal Fair Housing Act and Equal Credit Opportunity Act, alleges that GFI engaged in a pattern or practice of discrimination on the basis of race and national origin by charging African-American and Hispanic borrowers higher interest rates and fees on home mortgage loans compared to similarly-situated white borrowers. The Department of Justice and the U.S. Attorney’s Office for the Southern District of New York investigated and filed the lawsuit jointly.
“Charging people more for home loans simply because of their race or national origin – as we have alleged in our complaint against GFI – is illegal. The Justice Department will act aggressively to ensure that all people have equal access to credit and a level playing field ,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “For that reason, vigorous enforcement of fair lending laws remains a top priority.”
U.S. Attorney for the Southern District of New York Preet Bharara said, “As the lawsuit we filed today alleges, discrimination still exists in certain quarters and it has profound consequences for the victims. At a time when so many American homeowners of all races and nationalities are struggling to make their mortgage payments, it is unacceptable that, as we allege, the impact of GFI Mortgage’s business practices resulted in its African-American and Hispanic customers paying higher fees and interest rates for their residential mortgages. As today’s suit demonstrates, this type of discriminatory action will not be tolerated. We will continue to work to ensure that fair lending laws are enforced throughout the district.”
“HUD and the Justice Department work together to end lending discrimination in America. This case and others nationwide demonstrate our commitment to pursue lenders if they violate the Fair Housing Act and seek relief for discrimination victims,” said Department of Housing and Urban Development (HUD) Assistant Secretary for Fair Housing and Equal Opportunity John Trasviña.
From 2005 through at least 2009, GFI charged higher loan prices to African-American and Hispanic borrowers than it charged to similarly-situated white borrowers by charging higher interest rates and fees for home mortgage loans. For example, an African-American borrower who took out a home mortgage loan in 2007 paid on average approximately $7,500 more over the first four years of the loan than a similarly-situated white borrower. For a Hispanic borrower, the difference was approximately $5,600 more over the first four years of the loan than a similarly-situated white borrower. The disparities, based on race or national origin, are statistically significant, and are unrelated to credit risk or loan characteristic.
During the period when the discrimination occurred, GFI had a policy or practice of allowing and encouraging its loan officers in New York and New Jersey to promote loan products, price loans and charge fees in a manner that was unrelated to credit risk or loan characteristics. GFI knew that its loan officers priced loans in ways unrelated to a borrower’s creditworthiness, resulting in thousands of dollars in overcharges for African-American and Hispanic borrowers based on their race or national origin. By providing its loan officers a substantial percentage of the profits generated on each loan, GFI’s compensation scheme provided strong financial incentives to loan officers to price their loan products in a discriminatory manner. Moreover, GFI failed to supervise, train, or adequately monitor its loan officers to ensure that they were pricing loans in a non-discriminatory manner.
During the period when the discrimination occurred, the number of home mortgage loans issued by GFI increased from 974 in 2005 to 2,270 in 2009. At the same time, GFI’s revenue from its home mortgage loan services increased from $305 million in 2005 to $768 million in 2009.
This case resulted from a referral by HUD to the Justice Department’s Civil Rights Division in 2010.
The Civil Rights Division and other agencies involved in this matter are part of 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. For more information on the task force, visit www.StopFraud.gov.
African-American and Hispanic borrowers who received GFI loans since 2005, former employees of GFI or any other individuals with information relevant to this lawsuit are encouraged to contact the U.S. Department of Justice at 1-800-896-7743, mailbox 9992, or at:
Chief, Civil Rights Unit
U.S. Attorney’s Office, S.D.N.Y.
86 Chambers Street, 3rd Floor
New York, NY 10007A copy of the complaint, as well as additional information about fair lending enforcement by the Justice Department, can be obtained from the Justice Department website at www.justice.gov/fairhousing. Fighting illegal housing discrimination is a top priority of the Justice Department. More information about the Civil Rights Division and the laws it enforces is available at http://www.usdoj.gov/crt.
Former Civilian Contractor Pleads Guilty in North Carolina for Role in Scheme to Steal and Sell Military Equipment in IraqRead the Press Release
WASHINGTON – A former U.S. civilian contractor pleaded guilty today in the Eastern District of North Carolina to conspiring to steal military generators in Iraq in 2011 and selling them on the black market, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Thomas G. Walker for the Eastern District of North Carolina.
David John Welch, 36, of Hope Mills, N.C., pleaded guilty before U.S. District Judge W. Earl Britt to a criminal information charging him with one count of conspiracy to steal property under the control of a government contractor.
According to court documents, in 2011, Welch was the operations and maintenance manager of a U.S. government contractor on Victory Base Complex in Baghdad. In this capacity, Welch had the ability to influence the distribution and movement of military equipment as well as U.S. government equipment. In addition, Welch was in charge of overseeing the movement of generators from the compound to the Defense Reutilization & Marketing Office (DRMO). In October 2011, Welch and a co-conspirator entered into a scheme to steal and later sell approximately 38 generators on the black market in Iraq to unknown co-conspirators by diverting these generators from the DRMO to an undisclosed location off-base in Iraq.
After the generators were stolen from the compound, Welch’s co-conspirator provided him with four stacks of $100 bills, totaling approximately $38,600.
At sentencing, scheduled for July 9, 2012, Welch faces a maximum penalty of five years in prison, a $250,000 fine and three years of supervised release following his prison term. As part of his guilty plea, Welch agreed to pay $160,000 in restitution to the United States.
This case is being prosecuted by Special Trial Attorney Mark Grider of the Criminal Division’s Fraud Section, on detail from the Special Inspector General for Iraq Reconstruction (SIGIR), and by Assistant U.S. Attorney Banumathi Rangarajan of the U.S. Attorney’s Office for the Eastern District of North Carolina. The case is being investigated by the FBI, SIGIR and the Major Procurement Fraud Unit of the U.S. Army Criminal Investigative Command.
Attorney General Holder Recognizes Six Cities for Youth Violence Prevention EffortsRead the Press Release
WASHINGTON – Attorney General Eric Holder today recognized six cities for their progress in preventing youth violence at the second annual summit of the National Forum on Youth Violence Prevention held in Washington, D.C. The Attorney General was joined by Secretary of Education Arne Duncan, Secretary of Health and Human Services Kathleen Sebelius, Secretary of Housing and Urban Development Shaun Donovan, White House Senior Advisor Valerie Jarrett and Office of National Drug Control Policy Director R. Gil Kerlikowske at the two-day summit.
In his remarks before summit participants today, the Attorney General announced preliminary plans to expand the forum to four additional cities through a competitive application process. The Attorney General also announced the launch of an online toolkit that will be available to the public and will provide resources on how to gather and use data on youth violence, identify community assets, develop measurable objectives and create and implement plans.
“Our goal is to expand the national conversation about youth violence and its impact on our homes and communities,” said Attorney General Holder. “The department is committed to working with our partners to create and sustain strategies to prevent this violence and keep our youth and communities safe.”
Launched in 2010 at the direction of President Obama, the forum is a network of communities and federal agencies working together to share information and build local capacity to prevent and reduce youth violence. Participating cities include Boston, Chicago, Detroit, Memphis, Tenn., Salinas, Calif., and San Jose, Calif. An interim independent assessment of the forum’s work in the six participating cities, conducted by John Jay College of Criminal Justice and Temple University’s Department of Criminal Justice recently, indicated promising results and progress to date.
On the first day of the two-day summit, mayors from the six cities presented their successes and challenges in addressing youth violence in their communities. Thirteen youth from various cities also led discussions and provided recommendations on how to prevent youth violence in their communities and Grammy-nominated hip hop artist Lecrae Moore shared his experiences with violence and gave a special performance. Tomorrow, representatives from the Department of Labor will announce jobs available for youth in the forum’s cities as part of the administration’s Summer Jobs+ initiative to support joint interagency youth violence prevention efforts.
Other forum speakers included Congressman Robert C. Scott, forum Mayors Dennis Donohue (Salinas), Rahm Emanuel (Chicago), Chuck Reed (San Jose), A C Wharton (Memphis) as well as Mayors Michael Nutter (Philadelphia) and Antonio Villaraigosa (Los Angeles), and representatives from Target Corporation, Casey Family Programs, and other business, faith and philanthropic leaders.
On Wednesday, April 4, 2012, following the forum, the White House will recognize 12 forum representatives as “Champions of Change” at a special awards ceremony to be held at the White House. The 12 will be honored as local leaders who have made a difference in their communities through their youth violence prevention efforts.
The Departments of Justice, Education, Health and Human Services, Housing and Urban Development and Labor and the White House Office of National Drug Control Policy are the forum’s federal partners. Participating cities are selected based on need, geographic diversity and willingness and capacity to undertake comprehensive efforts that are the hallmark of the forum. More details about the forum’s goals and city plans, the toolkit and the assessment are available at: www.findyouthinfo.gov.
Alabama Woman Indicted for Tax FraudRead the Press Release
A federal grand jury in Montgomery, Ala., returned an indictment on March 28, 2012, charging Wanda Davis with filing false federal income tax returns, the Justice Department and the Internal Revenue Service (IRS) announced today. The indictment was unsealed today following Davis’s initial appearance.
Davis is charged with 23 counts of filing false tax returns for clients. According to the indictment, from 2007 to 2011, Davis prepared 23 false tax returns while working at Davis Fast Tax and later her own business, Davis Tax Service. The tax returns claimed false deductions and business, resulting in inflated tax refunds.
An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Davis faces a maximum of three years in federal prison for each of the 23 false tax return counts. Davis is also subject to fines if convicted.
This case was investigated by IRS – Criminal Investigation special agents. U.S. Department of Justice Tax Division Trial Attorneys Michael Boteler and Chad Spraker are prosecuting the case with the assistance of the U.S. Attorney’s Office in the Middle District of Alabama.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.justice.gov/tax .
West Memphis, Ark., Police Department Officer Convicted of Criminal Civil Rights ViolationRead the Press Release
WASHINGTON – A federal jury convicted West Memphis, Ark., Police Department (WMPD) Officer Scott McCall, 39, of West Memphis, Ark., of one misdemeanor count of Deprivation of Rights under Color of Law.
According to the evidence presented at trial, on June 14, 2010, McCall, while in the lobby of the WMPD, choked an arrestee who was handcuffed behind his back. Two WMPD dispatchers physically removed McCall from the man he was choking.
“This officer pledged to protect and serve, not to abuse and victimize those who are in his custody,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Justice Department is committed to holding officers who engage in such conduct accountable.”
West Memphis Police Department Director of Internal Affairs Lester Ditto, 56, was also charged with three counts of witness tampering for his role in the same incident. Ditto is scheduled to go to trial later this year.
A misdemeanor count of deprivation of rights under color of law carries a possible punishment of up to one year in prison and a fine of up to $100,000.
The investigation was conducted by the FBI. The case was prosecuted by Department of Justice Civil Rights Division Trial Attorneys Chiraag Bains and Henry Leventis, and Assistant U.S. Attorney Julie Peters from the Eastern District of Arkansas.
Virginia Man Sentenced to 24 Months for Scheme to Conceal Pakistan Government Funding for His U.S. Lobbying EffortsRead the Press Release
WASHINGTON – Syed Ghulam Nabi Fai, 62, a U.S. citizen and resident of Fairfax, Va., was sentenced today to 24 months in prison, followed by three years of supervised release, for conspiracy and tax violations in connection with a decades-long scheme to conceal the transfer of at least $3.5 million from the government of Pakistan to fund his lobbying efforts in America related to Kashmir.
The sentencing was announced by Neil MacBride, U.S. Attorney for the Eastern District of Virginia; Lisa Monaco, Assistant Attorney General for National Security; John DiCicco, Acting Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division; James McJunkin, Assistant Director in Charge of the FBI Washington Field Office; and Eric Hylton, Special Agent in Charge of the Internal Revenue Service (IRS) Criminal Investigation’s Washington, D.C., Field Office, after sentencing by U.S. District Court Judge Liam O’Grady in the Eastern District of Virginia.
On Dec. 7, 2011, Fai pleaded guilty to a two-count criminal information. Count one of the information charged Fai with conspiracy to: 1) falsify, conceal and cover up material facts he had a duty to disclose in matters within the jurisdiction of executive branch agencies of the U.S. government; and to 2) defraud the Treasury Department by impeding the lawful functions of the IRS in the collection of revenue. Count two of the information charged Fai with endeavoring to impede the administration of tax laws.
According to court documents filed with his plea agreement, Fai served as the director of the Kashmiri American Council (KAC), a non-governmental organization in Washington, D.C., that held itself out to be run by Kashmiris, financed by Americans, and dedicated to raising the level of knowledge in the United States about the struggle of the Kashmiri people for self-determination. But according to court documents, the KAC was secretly funded by officials employed by the government of Pakistan, including the Inter-Services Intelligence Directorate (ISI).
“Mr. Fai spent 20 years operating the Kashmiri American Council as a front for Pakistani intelligence,” said U.S. Attorney MacBride. “He lied to the Justice Department, the IRS and many political leaders throughout the United States as he pushed the ISI’s propaganda on Kashmir.”
“Syed Fai is today being held accountable for his role in a decades-long scheme to conceal the fact that the government of Pakistan was secretly funding his efforts to influence U.S. policy on Kashmir,” said Assistant Attorney General Monaco.
“Today’s sentence sends a strong message that using the tax-exempt status of charitable entities to promote or conceal federal crimes carries heavy consequences,” said Acting Principal Deputy Assistant Attorney General DiCiccio.
“Mr. Fai had a duty to inform the U.S. government of the finances which he received from Pakistan to fund lobbying efforts,” said FBI Assistant Director in Charge McJunkin. “Concealed foreign affiliations can be a significant threat to our democracy, and those who engage in hiding these associations will be brought to justice.”
“Today’s sentencing further shows that IRS-Criminal Investigation is working vigorously to stop the misuse and abuse of charities in promoting or concealing federal crimes,” said IRS Special Agent in Charge Hylton. “The message is clear that those who engage in this type of activity will face stiff criminal penalties.”
The Scheme
Fai admitted in court that, from 1990 until about July 18, 2011, he conspired with others to obtain money from officials employed by the government of Pakistan, including the ISI, for the operation of the KAC in the United States, and that he did so outside the knowledge of the U.S. government and without attracting the attention of law enforcement and regulatory authorities.
To prevent the Justice Department, FBI, Department of Treasury and the IRS from learning the source of the money he received from officials employed by the government of Pakistan and the ISI, Fai made a series of false statements and representations, according to court documents. For example, Fai told FBI agents in March 2007 that he had never met anyone who identified himself as being affiliated with the ISI and, in May 2009, he falsely denied to the IRS on a tax return for the KAC that the KAC had received any money from foreign sources in 2008.
In addition, according to court documents, Fai sent a letter in April 2010 to the Justice Department falsely asserting that the KAC was not funded by the government of Pakistan. Later that year, Fai falsely denied to the IRS that the KAC had received any money from foreign sources in 2009. In July 2011, Fai falsely denied to FBI agents that he or the KAC received money from the ISI or government of Pakistan.
In fact, Fai repeatedly submitted annual KAC strategy reports and budgetary requirements to Pakistani government officials for approval. For instance, in 2009, Fai sent the ISI a document entitled “Plan of Action of KAC / Kashmir Centre, Washington, D.C., for the Fiscal Year 2010,” which itemized KAC’s 2010 budget request of $658,000 and listed Fai’s plans to secure U.S. congressional support for U.S. action in support of Kashmiri self-determination.
Fai also admitted that, from 1990 until about July 18, 2011, he corruptly endeavored to obstruct and impede the due administration of the internal revenue laws by arranging for the transfer of at least $3.5 million to the KAC from employees of the government of Pakistan and the ISI.
According to court documents, Fai accepted the transfer of such money to the KAC from the ISI and the government of Pakistan through his co-defendant Zaheer Ahmad and middlemen (straw donors), who received reimbursement from Ahmad for their purported “donations” to the KAC. Fai provided letters from the KAC to the straw donors documenting that their purported “donations” to the KAC were tax deductible and encouraged these donors to deduct the transfers as “charitable” deductions on their personal tax returns. Fai concealed from the IRS that the straw donors’ purported KAC “donations” were reimbursed by Ahmad, using funds received from officials employed by the ISI and the government of Pakistan.
This investigation is being conducted by the FBI’s Washington Field Office and the IRS Criminal Investigation’s Washington Field Office.
The prosecution is being handled by Assistant U.S. Attorneys Gordon Kromberg and Daniel Grooms of the U.S. Attorney's Office for the Eastern District of Virginia; Trial Attorney John Gibbs of the Counterterrorism Section of the Justice Department’s National Security Division; and Special Assistant U.S. Attorney Allison Ickovic from the Justice Department’s Tax Division.
Miami-Area Resident Pleads Guilty to Participating in $200 Million Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Miami-area resident pleaded guilty today for his role in structuring monetary transactions to provide cash for the furtherance of a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Lazaro Acosta, 41, pleaded guilty before U.S. District Judge Patricia A. Seitz in Miami to one count of currency structuring to avoid reporting requirements. Acosta admitted that he structured currency transactions to avoid reporting requirements so he could provide $2.4 million in cash to the owners and operators of American Therapeutic Corporation (ATC); its management company, Medlink Professional Management Group Inc.; and the American Sleep Institute (ASI).
On March 21, 2012, Acosta’s co-defendant, Leyanes Placeres, 31, pleaded guilty before U.S. Magistrate Judge Andrea Simonton in Miami to one count of conspiracy to commit health care fraud and one count of conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. Placeres admitted that she participated in the fraud scheme orchestrated by the ATC, Medlink and ASI owners and operators. Placeres and Acosta were both charged in an indictment unsealed on Feb. 15, 2011, in the Southern District of Florida.
ATC, Medlink and ASI were Florida corporations headquartered in Miami. ATC operated purported partial hospitalization programs (PHPs) in seven different locations throughout South Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness. ASI purported to provide diagnostic sleep disorder testing.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries to attend illegitimate treatment programs so that ATC and ASI could bill Medicare for medically unnecessary services. According to court filings, to obtain the cash used to pay the kickbacks, the co-conspirators laundered millions of dollars of payments from Medicare and structured their transactions to avoid detection by bank officials and the authorities.
In pleading guilty, Acosta admitted that he worked with Lawrence Duran, one of the owners and operators of ATC, Medlink and ASI, to use fake identities and create fake Medlink employees. Those fake identities were used to cash thousands of dollars of checks each week through a check cashing business co-owned by Acosta, South Dade Trade Interprises.Placeres admitted that she served as a driver who worked with patient brokers to provide patients to ATC and ASI in exchange for kickbacks in the form of checks and cash. Placeres drove all of the patients provided by the brokers who worked with her, and she admitted to passing on kickback payments to the brokers. The amount of the kickback was based on the number of days each patient spent at ATC.
According to the plea agreements, Acosta’s structuring amounted to more than $2.4 million in structured funds, and Placeres’s participation in the ATC fraud resulted in $6.5 million in fraudulent billings to the Medicare program.Sentencing for Acosta is scheduled for June 28, 2012. Acosta faces a maximum penalty of 10 years in prison, and he has agreed to forfeit $162,000 to the federal government. Sentencing for Placeres is scheduled for June 11, 2012. Placeres faces a maximum penalty of 15 years in prison and a $250,000 fine.
ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and 12 other individual defendants have pleaded guilty or have been convicted at trial. Seven other defendants are scheduled for trial April 9, 2012, before Judge Seitz, and one defendant’s trial has been deferred until after June 2012. A defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.
The guilty pleas were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami Field Office; and Special Agent-in-Charge Christopher Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami Office.
The criminal case is being prosecuted by Trial Attorneys Jennifer L. Saulino, Steven Kim and Robert Zink of the Criminal Division's Fraud Section. A related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division and Assistant U.S. Attorney Ted L. Radway of the Southern District of Florida. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 defendants that collectively have billed the Medicare program for more than $3.6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.Justice Department Reaches Americans with Disabilities Act Settlement with Trinity Health Systems in IowaRead the Press Release
WASHINGTON - The Justice Department announced today a settlement under the Americans with Disabilities Act (ADA) with Trinity Health Systems to ensure that Trinity Regional Medical Center in Fort Dodge, Iowa, provides effective communication to individuals who are deaf or hard of hearing. The settlement resolves a lawsuit that alleged that Trinity failed to provide deaf individuals with sign language interpreters that were needed to communicate effectively with health care providers. The lawsuit also alleged that Trinity relied on a seven-year-old girl to serve as a sign language interpreter for her deaf mother. As a result of the failure to provide effective communication, deaf patients could not understand medical instructions, were confused about medical procedures and were forced to wait long periods of time without being able to communicate with medical staff, according to the complaint.
The Justice Department’s lawsuit, which was filed today along with the settlement in the U.S. District Court for the Northern District of Iowa, alleged that Trinity Health Systems violated the ADA by failing to provide appropriate auxiliary aids and services, including sign language interpreter services, to deaf individuals at Trinity Regional Medical Center. The parties will ask the court to retain jurisdiction over the case to enforce the terms of the settlement.
“The Justice Department is committed to protecting the rights of those who are deaf or hard of hearing and to ensure that they are provided an equal opportunity to benefit from goods and services,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Effective communication with individuals who are deaf is especially critical in a hospital setting where confusion and uncertainty can lead to serious consequences.”
“This settlement is a demonstration that Trinity and the Department of Justice are working towards the same goal – to make sure that deaf and hard of hearing individuals can communicate effectively throughout their medical care,” said Stephanie M. Rose, U.S. Attorney for the Northern District of Iowa.
The settlement requires Trinity to pay $198,000 to aggrieved individuals and a $20,000 civil penalty; provide training to hospital staff on the requirements of the ADA; and adopt specific policies and procedures to ensure that auxiliary aids and services are promptly provided to patients or companions who are deaf or hard of hearing.
The ADA prohibits discrimination against individuals with disabilities by hospitals. Among other things, the ADA requires doctors, hospitals and other health care providers to provide equal access for patients and companions who are deaf or hard of hearing. When medical services involve important, lengthy or complex oral communications with patients or companions, hospitals are generally required to provide qualified sign language interpreters and other auxiliary aids, free of charge, to individuals who are deaf, are hard of hearing or have speech disabilities. The appropriate auxiliary aid to be provided depends on a variety of factors including the nature, length and importance of the communication; the communication skills and knowledge of the individual who is deaf or hard of hearing; and the individual’s stated need for a particular type of auxiliary aid.
Those interested in finding out more about this settlement or hospitals’ effective communication obligations under the ADA may call the Justice Department’s toll-free ADA information line at 800-514-0301 or 800-514-0383 (TDD), or access its ADA website at www.ada.gov. ADA complaints may be filed by email to [email protected].
Justice Department Files Lawsuit Alleging Retaliation by the City of Selma, Texas, Fire DepartmentRead the Press Release
WASHINGTON – The Department of Justice announced today the filing of a civil suit against the city of Selma, Texas, alleging that the city discriminated against firefighter Adam Sadler in violation of Title VII of the Civil Rights Act of 1964. The complaint alleges that the city violated Title VII by retaliating against Mr. Sadler because he engaged in activity protected under the act. The suit was filed in the U.S. District Court for the Western District of Texas.
According to the Justice Department’s complaint, in 2009, the fire chief sought and received permission from the city administrator to demote Sadler from lieutenant to firefighter because Sadler complained of the fire chief’s use of ethnic slurs in the workplace. The complaint alleges that the demotion occurred less than one month after Sadler submitted a complaint to the city regarding the fire chief’s use of the discriminatory comments.
“Title VII protects an employee from retaliation when he or she opposes employment discrimination. The Department of Justice is committed to enforcing Title VII’s anti-retaliation provisions,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “A person cannot be demoted from his position because he complains to his employer about the use of discriminatory comments in the workplace.”
The San Antonio Field Office of the Equal Employment Opportunity Commission (EEOC) investigated and attempted to resolve Sadler’s charge of discrimination before referring it to the Department of Justice for litigation. More information about the EEOC is available on its website at www.eeoc.gov.
The enforcement of Title VII is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division is available on its website at www.justice.gov/crt.
Former Senate Office Manager Sentenced to 20 Months in Prison<br /> for Wire Fraud and Theft of Government PropertyRead the Press Release
WASHINGTON – A former office manager in the U.S. Senate was sentenced today to 20 months in prison for wire fraud and theft of government property, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.
Ngozi Pole, of Waldorf, Md., also was sentenced by U.S. District Judge Emmet G. Sullivan in the District of Columbia to serve three years of supervised release and 500 hours of community service following his prison term and ordered to pay $77,608.86 in restitution. Pole was found guilty at trial on Feb. 1, 2011, of five counts of wire fraud and one count of theft of government property.
According to evidence presented at trial, beginning in at least 2003 and continuing until January 2007, Pole repeatedly submitted paperwork causing the Senate to pay him larger bonus payments than had been approved by either the chief of staff or former U.S. Senator Edward M. Kennedy. According to the evidence presented at trial, these unauthorized bonus payments totaled more than $75,000. Pole hid the existence of these unauthorized payments by repeatedly transmitting information to the chief of staff that falsely showed that he received only those payments that had been authorized.
This sentencing was handled by Trial Attorney Tracee Plowell of the Criminal Division’s Public Integrity Section. The case was investigated by the FBI’s Washington Field Office. Former Senator Kennedy’s office cooperated fully with the investigation.
Former Corrections Officer at Shiprock, N.M., Detention Center Charged for Sexually Abusing a Female InmateRead the Press Release
WASHINGTON - A federal grand jury in Albuquerque indicted Sylvester Bruce, 44, a former corrections officer with Navajo Nation’s Shiprock, N.M., Detention Center, on charges related to the sexual abuse of an inmate during the summer and fall of 2010. The indictment was returned on March 28, 2012, and was publicly posted earlier today.
Bruce is charged with one count of violating the civil rights of the victim by engaging in sexual contact with the victim and depriving her of her right to bodily integrity. The defendant is also charged with abusive sexual contact of the victim without her consent. Bruce is also charged with two counts of making false statements to the FBI, for denying that he had sexual contact with the inmate and for further denying that he took pictures of inmates inside the cells of the Shiprock Detention Center.
Bruce faces a maximum penalty of two years in prison for abusive sexual contact, one year in prison for the civil rights violation and 10 years in prison for the charges related to false statements.
An indictment is merely an accusation, and the defendant is presumed innocent unless proven guilty.
This case is being investigated by the Farmington, N.M., Resident Agency of the Albuquerque Division of the FBI and is being prosecuted by Assistant U.S. Attorney Mark Baker for the District of New Mexico and Fara Gold of the Civil Rights Division of the U.S. Department of Justice.
Florida Woman Pleads Guilty to Obstruction of Justice in Relation to Her Husband’s DisappearanceRead the Press Release
Abby Beard Hogan, 50, pleaded guilty yesterday in the Northern District of Florida for her role in the obstruction of a multinational investigation into the disappearance of her husband, James Hogan, then an employee in the U.S. Consulate in Curacao, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Pamela Cothran Marsh for the Northern District of Florida, U.S. Department of State Assistant Secretary for Diplomatic Security Eric J. Boswell and John V. Gillies, Special Agent in Charge of the FBI’s Miami Field Office.
Abby Hogan pleaded guilty before U.S. Magistrate Judge Gary R. Jones to one count of obstruction of justice.
According to court documents, on the night of Sept. 24, 2009, James Hogan, an employee at the U.S. Consulate in Curacao, a Caribbean island that was part of the Netherlands Antilles, left his home on foot and subsequently disappeared. In the early hours of Sept. 25, 2009, James Hogan called his wife and spoke for approximately three minutes. The next day, when James Hogan failed to report to work, the U.S. government and Dutch and Antillean law enforcement launched an island-wide search and opened an investigation into Hogan’s disappearance. On Sept. 25, 2009, a diver located James Hogan’s blood-stained clothing on a local beach.
Abby Hogan admitted that during the course of the investigation, she repeatedly provided false information to U.S. law enforcement about the time period before James Hogan’s disappearance and withheld relevant information. Abby Hogan initially told investigators that, before his disappearance, she and her husband had an argument. She subsequently modified that statement and claimed that there had been no argument, just a minor disagreement over her husband’s next assignment for the State Department. Abby Hogan further told U.S. law enforcement agents that James Hogan had been in a “good mood” prior to leaving for his walk on the evening of his disappearance. She repeatedly denied that there had been any marital problems or that her husband had been upset, depressed or suicidal in any way. Abby Hogan further stated that she could not remember the full three-minute conversation before her husband disappeared because she was sound asleep when her husband called. She claimed she fell back asleep after the call, and did not awake until the following morning.
According to court documents, after law enforcement interviews, between Sept. 30, 2009, and Jan. 15, 2010, Abby Hogan deleted more than 300 emails from her Internet email account. These emails contained information that Abby Hogan knew was relevant to specific questions she had been asked by U.S. law enforcement. The emails also contained information that she had either previously misrepresented or knowingly omitted during her interviews with law enforcement, including that she was engaged in an extramarital affair; the night James Hogan disappeared, the couple had argued, and he left the house angry and upset; and that she did not want law enforcement to know what had happened that evening.
Abby Hogan faces a maximum of 20 years in prison for obstruction of justice.
The case was prosecuted by Senior Trial Attorney Teresa Wallbaum of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Frank Williams for the Northern District of Florida. The Criminal Division’s Office of International Affairs provided assistance. The case was investigated by the U.S. Department of State, Diplomatic Security Service and the FBI’s Miami Field Office and Legal Attaché Office in Bridgetown, Barbados. Assistance was also provided by Curacao law enforcement authorities.
Attorney General Eric Holder Welcomes Confirmation of Kathryn Keneally and Michael E. HorowitzRead the Press Release
WASHINGTON – Attorney General Eric Holder today welcomed the confirmation of Kathryn Keneally as Assistant Attorney General for the Tax Division and Michael E. Horowitz as Inspector General for the Justice Department. Keneally and Horowitz were confirmed yesterday by the U.S. Senate.
“I'm confident Kathryn and Michael will provide strong leadership to the department, and will play an instrumental role in fulfilling our critical mission of protecting the American people,” said Attorney General Holder. “Kathryn will be integral to our efforts to enforce our nation's tax laws fully and fairly, and Michael will promote integrity, financial austerity and effectiveness in Department of Justice operations. They are both welcome additions to our senior leadership team."
Keneally most recently worked as a partner at Fulbright & Jaworski LLP in New York. For over 25 years, Keneally represented clients in tax controversies and defended against allegations of tax, securities and bank fraud, money laundering, currency transaction reporting, false statements and other financial crime.
Since 1994, Keneally has chaired numerous committees for the American Bar Association (ABA) Taxation Section. Most recently, she served vice chair for Committee Operations for the ABA Taxation Section and as co-chair of the ABA National Institute on Criminal Tax Fraud and Tax Controversy. She previously served as chair of the ABA Civil and Criminal Tax Penalties Committee, the ABA Standards of Tax Practice Committee and the ABA Subcommittee on Department of Justice Procedures.
From 1993 to 2008, Keneally served on the U.S. Sentencing Commission Practitioner’s Advisory Group.
Keneally began her legal career in 1982 as the law clerk for U.S. District Judge for the Eastern District of New York Edward R. Neaher. She received her J.D. from Fordham Law School, her LL.M in Taxation from New York University and her B.S. from Cornell University.
Most recently, Horowitz worked as a partner at Cadwalader, Wickersham, & Taft LLP, where he focused on white collar defense, internal investigations and regulatory compliance.
From 2003 to 2009, Horowitz served as a commissioner for the U.S. Sentencing Commission. As commissioner, Horowitz was instrumental in rewriting guidelines for fraud, antitrust, intellectual property and money laundering offenses and corporate compliance programs.
Horowitz previously worked for the Justice Department in the Criminal Division from 1999 to 2002, when he served as Deputy Assistant Attorney General and then Chief of Staff.
Prior to joining the Criminal Division, Horowitz served as an Assistant U.S. Attorney for the Southern District of New York from 1991 to 1999. From 1997 to 1999, he was chief of the Public Corruption Unit for the Southern District of New York. In 1995, he was awarded the Attorney General’s Award for Distinguished Service for his work on a five-year corruption investigation.Before joining the department, Horowitz was an associate at Debevoise & Plimpton and clerked for Judge John G. Davies of the U.S. District Court for the Central District of California.
Horowitz is a board member of the Ethics Resource Center, the Society of Corporate Compliance and Ethics and the Lawyers Committee for Civil Rights Under Law. He earned his J.D. from Harvard Law School and his B.A. from Brandeis University.
Six Arraigned on Tax Conspiracy in a Corporate Bonus Scheme Based in Western New YorkRead the Press Release
Six officials of an Upstate New York firm were arraigned yesterday before Magistrate Judge Leslie G. Foschio. On March 21, a federal grand jury in the Western District of New York indicted the six defendants, Philip R. DeLuca, Alfred R. LaGreca, Frank A. Fracassi, Michael A. Elia, Laurence A Elia and Richard A. Elia, on tax charges, including conspiring to defraud the Internal Revenue Service (IRS).
According to the superseding indictment, between the late 1990s and at least April 2007, the defendants were officers of Sevenson Environmental Services Inc., a Subchapter S corporation (a corporation treated like a partnership for tax purposes) located in Niagara Falls, N.Y., that was involved in remediation of sites contaminated with hazardous waste. During that time, the defendants allegedly conspired to defraud the IRS by developing and managing a scheme whereby they and other Sevenson employees received bonus compensation that was not reported to the IRS.
The superseding indictment also alleges that this compensation permitted certain Sevenson employees to obtain goods and services that were paid for by the corporation, but not reported to the IRS. In order to facilitate Sevenson’s payment for these goods and services, it is alleged that the defendants caused documents to be fabricated, invoices to be falsified and false individual income tax returns to be filed. From the late 1990s through at least April 2007, Sevenson awarded at least 23 employees a total of approximately $1 million in unreported, non-cash bonuses.
If convicted, each defendant faces a potential maximum of five years in prison and a maximum fine of $250,000 on the conspiracy charge.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
This case was investigated by the IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Shawn Noud, Robert Kennedy, and Erin Pulice.
New Orleans Man Sentenced for Shooting Two Hispanic MenRead the Press Release
WASHINGTON – Mark Gautreau, 50, was sentenced today in federal court in New Orleans to 72 months in prison for shooting two Hispanic men on the Bonnet Carre Spillway in St. Charles Parish, La., on Aug. 20, 2006.
In November 2011, Gautreau pleaded guilty to one count of assault with a dangerous weapon within the maritime and territorial jurisdiction of the United States.
In the factual basis supporting his plea, Gautreau admitted he was in a parking lot in the spillway when he told a bystander that he intended to “shoot some Mexicans.” Gautreau admitted that he then loaded ammunition into his 12-gauge shotgun and drove off toward the area where four Hispanic men were fishing. Once he reached them, Gautreau got out of his truck and fired his shotgun one time. The shotgun blast hit two of the Hispanic men, who suffered injuries that required hospitalization. Gautreau admitted that the four Hispanic men did not shoot at him or threaten him in any way that would require him to defend himself.
“Justice has been met for the two Hispanic men who were the victims of a random act of violence,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The department is committed to vigorously enforcing our nation’s civil rights laws.”
“Together with our partners in the Civil Rights Division, who led this important prosecution, and the FBI, we will remain true to our commitment to fiercely protect the rights of all within our borders to be free from abuse and violence,” said James Letten, U.S. Attorney for the Eastern District of Louisiana.
This case was investigated by the New Orleans office of the FBI. The case was prosecuted by Trial Attorney Angie Cha of the Civil Rights Division and Assistant U.S. Attorney Emily Greenfield of the U.S. Attorney’s Office for the Eastern District of Louisiana.
Justice Department Asks Federal Court to Bar Indiana Firm from Preparing Tax ReturnsRead the Press Release
The United States has asked a federal court to bar a tax preparation firm and its owner, John Newlin, from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint in the civil injunction suit, Newlin’s business, Quick Sam Tax Refund of Gary, Ind., has repeatedly prepared federal income tax returns that unlawfully understate customers’ income tax liabilities by fabricating expenses, creating false losses, and claiming bogus dependents.
According to the complaint, Quick Sam guarantees its customers that they will receive the largest refund by getting their taxes prepared at Quick Sam. In order to deliver on this promise, the complaint alleges that Quick Sam employees fabricate business expenses, claim improper tax credits and report fictitious dependents to increase customers’ tax refunds illegally. Newlin and Quick Sam allegedly give bonuses to employees for engaging in these fraudulent practices.
According to the complaint, over 96 percent of the Quick Sam returns examined by the Internal Revenue Service (IRS) contained deficiencies requiring IRS adjustments. The complaint alleges that the total harm to the government caused by the illegal conduct could exceed $35 million.
The complaint also states that Charles Standifer, Rhonda Murphy, Chanel Bandy and Brittaney Walker-Lipsey, all former Quick Sam return preparers, have recently pleaded guilty to tax-related crimes.
Claiming bogus tax refunds is one of the IRS’s “Dirty Dozen” tax scams for 2012 . In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website .
Related Documents:
United States v. John Newlin, et al. Complaint for Permanent Injunction and Other Relief (PDF)Georgia Tax Preparer Charged with Tax Fraud and Identity TheftRead the Press Release
Willie C. Grant, a Bibb County, Ga., tax return preparer who owned and operated “Grant Income Tax Bookkeeping and Check Cash,” was indicted on March 15, 2012, by a federal grand jury with 23 counts of making false claims for tax refunds, four counts of theft of government money and four counts of aggravated identity theft, the Justice Department and Internal Revenue Service (IRS) announced today. The indictment was unsealed yesterday.
According to the indictment, Grant knowingly used the names and Social Security numbers of individuals to steal tax refunds from the IRS without lawful authority. The indictment further alleges that Grant directed the IRS to pay tax refunds intended for other people into his bank account.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Grant faces a minimum of two years in federal prison for aggravated identity theft, a potential maximum of five years in federal prison and a $250,000 fine for each false claims count, and a maximum of ten years in federal prison and a $250,000 fine for each theft of government money count.
An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.
This case was investigated by the IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Justin Gelfand and Charles Edgar Jr.
More information about the Department of Justice Tax Division and its enforcement efforts can be found at www.justice.gov/tax .
Federal Court Permanently Bars San Diego Accountant from Preparing Tax Returns That Understate IncomeRead the Press Release
A federal court has permanently barred Robert Jensen, a certified public accountant from San Diego, from providing tax advice or preparing federal tax returns that illegally attempt to reduce customers’ taxable income, the Justice Department announced today.
The civil injunction order, to which Jensen agreed without admitting the government’s allegations, prevents Jensen from preparing tax returns that improperly deduct the personal expenses of customers or that attempt to reduce a customer’s taxable income through the unlawful use of pension plans, stock ownership plans or retirement plans. The order also bars Jensen from providing tax advice to, or preparing the federal tax returns of, any individual or entity that Jensen knows is a customer of co-defendant Scott Waage.
The government complaint in the case alleged that Jensen worked with Waage, a San Diego tax lawyer, to help clients evade income taxes and illegally circumvent pension plan rules. According to the civil injunction suit, Waage promoted schemes that helped customers evade taxes through the use of bogus deductions, while Jensen prepared the customers’ tax returns claiming the bogus deductions. The government alleged that the IRS audited more than1,000 tax returns as a result of the pair’s alleged tax schemes, and it estimated that the harm to the U.S. Treasury from the schemes exceeded $10.8 million. The civil injunction case against Waage remains pending.
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:
Stipulated Order and Judgment of Permanent Injunction (Robert O. Jensen) (PDF)Detroit Medical Clinic Owner Pleads Guilty to Medicare Fraud SchemeRead the Press Release
WASHINGTON – The owner of a Detroit medical clinic pleaded guilty today for his participation in a Medicare fraud scheme, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Juan Villa, 29, of Miami, pleaded guilty before U.S. District Judge Arthur J. Tarnow in the Eastern District of Michigan to one count of conspiracy to commit health care fraud. At sentencing, Villa faces a maximum penalty of 10 years in prison and a $250,000 fine.
According to the plea documents, Villa owned Blessed Medical Clinic in Livonia, Mich. Villa admitted that he hired patient recruiters who paid cash bribes to Medicare beneficiaries to attend the clinic and provide their Medicare numbers and other information. Villa admitted that he used the beneficiary information to bill for medically unnecessary diagnostic tests and treatments. According to court documents, Blessed Medical Clinic fraudulently billed Medicare $2.4 million during the course of the scheme.
Today’s guilty plea was 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 is being prosecuted by Assistant U.S. Attorneys Frances Lee Carlson and Philip A. Ross of the Eastern District of Michigan, with assistance from Assistant Chief Gejaa T. Gobena of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,190 individuals who collectively have falsely billed the Medicare program for more than $3.6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Shipbuilder and Ship Engine Manufacturer Agree to Pay Civil Penalty and Perform Environmental Project to Resolve Clean Air Act ViolationsRead the Press Release
WASHINGTON – Coltec Industries Inc. and National Steel and Shipbuilding Company (NASSCO) have agreed to pay a civil penalty of $280,000 and spend approximately $500,000 on an environmental project to resolve alleged violations of the Clean Air Act (CAA) and EPA’s marine diesel engine air rules, the Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today. The project will significantly reduce nitrogen oxide emissions from a testing stack at Coltec’s Beloit, Wis., engine manufacturing facility, improving air quality for residents. Coltec and NASSCO also agreed to attach the required EPA engine labels to 40 ship engines that were previously unlabeled or improperly labeled.
“This is the first time a settlement addresses Clean Air Act violations in the marine engine manufacturing and ship building industries. Under the settlement, Coltec and NASSCO will pay a just penalty and achieve compliance with the nation’s Clean Air Act and EPA’s emissions control regulations,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division. “Compliance with the Clean Air Act by all industries is essential to preventing harmful pollutants from being released into the environment, whether on land or at sea.”
“EPA is committed to enforcing the Clean Air Act’s standards for engines, including ship engines,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “By ensuring that engines meet requirements and encouraging environmental projects that benefit nearby communities, we are making the air cleaner and healthier for the residents of southern Wisconsin.”The CAA prohibits marine diesel engines from being sold in the U.S. unless the engines are covered by a certificate of conformity and have an EPA label indicating that the engine meets applicable emission standards. Engines that are not certified may be operating without proper emissions controls and emitting excess carbon monoxide and nitrogen oxides. These excess emissions can cause respiratory illnesses, aggravate asthma and contribute to the formation of ground level ozone or smog.
On Sep. 30, 2010, the United States filed a complaint which alleged that Coltec violated the CAA by manufacturing and selling 32 marine diesel engines that were not covered by an EPA-issued certificate of conformity and that NASSCO violated the CAA by installing those engines in ships that NASSCO built and sold to the U.S. Navy. The complaint also alleged that the 32 uncertified Coltec engines, plus eight more certified engines Coltec sold to NASSCO, had missing or improper emissions compliance labels required by EPA’s regulations. Finally, the complaint alleged that NASSCO further violated the CAA by manufacturing and selling ships containing an additional six uncertified engines.
The settlement also includes a supplemental environmental project in which Coltec and NASSCO will install a nitrogen oxide (NOx) control system to an engine test stand exhaust stack connected to Coltec’s Beloit engine manufacturing facility. The engine test stand is used for testing large marine diesel engines that are manufactured and sold by Coltec for use in U.S. Navy ships. The NOx controls required by the settlement are estimated to reduce levels of NOx by at least 85 percent, from approximately 102 pounds emitted per hour to approximately 16 pounds per hour. The estimated cost to implement the project is $500,000 and will benefit the city of Beloit by improving air quality near the facility, particularly in the adjacent Merrill neighborhood.
Coltec is a subsidiary of EnPro Industries Inc. and operates Fairbanks Morse Engine (FME), which supplies marine propulsion and ship service systems to the U.S. Navy and U.S. Coast Guard.
NASSCO is a subsidiary of General Dynamics. NASSCO designs and builds support ships, oil tankers and dry cargo carriers for the U.S. Navy and commercial markets.
The consent decree, lodged in the U.S. District Court for the District of Columbia, is subject to a 30-day public comment period and court approval.
For more information on the settlement, visit: www.epa.gov/compliance/resources/cases/civil/caa/coltec.html.
Residential Youth Treatment Facility for Medicaid Recipients in Marion, Virginia Agrees to Resolve False Claims Act AllegationsRead the Press Release
Universal Health Services Inc. (UHS) and two subsidiaries have reached a settlement in a False Claims Act lawsuit with the United States and the Commonwealth of Virginia, the Justice Department announced today. Under the settlement, UHS and its subsidiaries, Keystone Education and Youth Services LLC and Keystone Marion LLC, which did business as the Keystone Marion Youth Center, a residential facility in Marion, Va., agreed to pay $6.85 million to the United States and the commonwealth to settle allegations that they provided substandard psychiatric counseling and treatment to adolescents in violation of Medicaid requirements, falsified records and submitted false claims to the Medicaid program. UHS closed the Marion facility earlier this year.
This settlement resolves a whistleblower lawsuit filed by Megan Johnson, Leslie Webb and Kimberly Stafford-Payne, former therapists at the closed facility. UHS and its subsidiaries have paid an additional amount under the terms of the agreement to the former therapists to settle their separate discrimination and attorney’s fees claims. The United States and the Commonwealth of Virginia had intervened in the lawsuit on Nov. 4, 2009.
Under the False Claims Act, an entity that submits false or fraudulent claims to the government is liable for three times the government’s damages, plus a civil penalty for each false claim. The claims settled by this agreement are allegations only; there has been no determination of liability.
“The Justice Department is committed to investigating cases in which health care providers have put patients at risk by failing to meet the appropriate standards of care,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “Today’s settlement demonstrates our commitment to protecting the integrity of the Medicaid program and making sure that patients who rely on federal health programs receive the care they deserve.”
“This settlement resolves disturbing allegations that Universal Health Services Inc. and its subsidiaries in Virginia made false records and presented false claims to Virginia Medicaid in connection with sub-standard care to emotionally troubled youth at a residential treatment facility in Marion, Virginia,” said Timothy J. Heaphy, U.S. Attorney for the Western District of Virginia. “This result, which provides substantial reimbursement to the Virginia Medicaid program, demonstrates our strong partnership with the Virginia Attorney General’s Medicaid Fraud Control Unit and our commitment to use all available means, including civil remedies under the False Claims Act, to combat health care fraud.”
“Any organization providing substandard health services then sending inflated bills to taxpayers, as UHS is alleged to have done, can expect intense scrutiny by government investigators,” said Daniel R. Levinson, Inspector General of the Department of Health and Human Services. “Those intent on defrauding our programs should know that we will continue to work closely with State law enforcement agencies to fight Medicaid fraud.”
“This settlement, which returns a substantial sum to the Virginia Medicaid program, is a testament to the strength of such a collaborative partnership,” said Ken Cuccinelli, Virginia Attorney General. “This case sends a clear message that fraud and exploitation of our most vulnerable citizens will not be tolerated in the commonwealth.”
Acting Assistant Attorney General Delery acknowledged the efforts made by the U.S. Attorney’s Office for the Western District of Virginia, the Virginia Attorney General’s office, the Civil Division of the Justice Department, the Department of Health and Human Services’ Office of the Inspector General and the Commonwealth of Virginia’s Medicaid Fraud Control Unit.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $6.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are more than $9 billion.
Mississippi Pharmaceutical Firm and CEO to Pay $2.8 Million to Resolve Allegations of Illegal Marketing of Unapproved DrugsRead the Press Release
Mississippi-based Cypress Pharmaceutical Inc., its subsidiary Hawthorn Pharmaceuticals Inc. and its CEO, Max Draughn, have agreed to pay $2.8 million to resolve civil allegations under the False Claims Act, the Justice Department announced today. The government alleged that between 2003 and 2009, Cypress, Hawthorn and Draughn were responsible for marketing three pharmaceutical products that were not approved as safe and effective by the Food and Drug Administration (FDA). The products were Hylira, a gel used for the treatment of dry skin, Zaclir, an acne treatment and Zacare, another acne treatment.
The government alleged that although the drugs lacked the “safe and effective” designation, Hawthorn’s sale representatives promoted the products to physicians and state Medicaid officials using that designation. This caused TRICARE, the military’s health care program, and state Medicaid programs to improperly pay for the three products. The government also alleged that Cypress, Hawthorn and Draughn caused the submission to the Centers for Medicare and Medicaid Services (CMS) of false quarterly reports that misrepresented these products’ regulatory status and failed to advise CMS that the drugs did not qualify as outpatient drugs that were covered for payment.
Medicaid is partially funded by the federal government. The federal portion of today’s settlement, including payments due to the TRICARE program, is $1,615,783. The state Medicaid share of the settlement is $1,184,217.
The settlement resolves a False Claims Act lawsuit filed in the Eastern District of Texas by Robert Heiden, a former district sales manager for Hawthorn. The whistleblower, or qui tam, provisions of the False Claims Act permit the relator to obtain a portion of the proceeds obtained by the federal government. As part of today’s resolution, Heiden will receive more than $300,000.
“The marketing and promotion of unapproved new drugs undermines the FDA’s important role in protecting the American public,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division. “This civil settlement demonstrates our continued commitment to protecting the integrity of the FDA’s regulatory process and ensuring that taxpayer dollars are spent appropriately.”
“Today’s settlement strips the defendants of money they should not have been paid and helps reimburse state and federal health care programs,” said John M. Bales, U.S. Attorney for the Eastern District of Texas.
“This settlement sends a strong message to those who seek to put the health of American patients at risk by marketing and promoting drugs which have not been approved by the FDA,” said Ilisa Bernstein, Acting Director of the Office of Compliance in FDA’s Center for Drug Evaluation and Research.
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover nearly $6.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $9 billion.
The claims settled by this agreement are allegations only; there has been no determination of liability.
Justice Department Sues National Tax Preparation Firm and Franchisees to Stop Alleged Pervasive Tax FraudRead the Press Release
The United States has filed civil injunction lawsuits in five cities seeking to shut down both the company that operates Instant Tax Service (ITS) as well as five owners of ITS franchises, the Justice Department announced today. According to government complaints filed in the cases, the franchising company ITS Financial LLC, headquartered in Dayton, operates what it claims is the nation’s fourth-largest tax-preparation business. In the complaints, the Justice Department accuses ITS Financial and its owner, Fesum Ogbazion, of deliberately ignoring systemic and pervasive fraud by ITS franchisees.
The complaints allege that ITS franchisees across the country intentionally prepare and file fraudulent tax returns to maximize their customers’ refunds. They do so, according to the complaints, so that ITS Financial and its franchisees can extract large tax preparation fees, as well as various charges that Ogbazion refers to as “junk fees,” directly from their customers’ refund checks. The government claims these fees are outrageously high – for example, up to $1,000 for preparing tax returns in as little as 15 minutes – and are often not disclosed to customers.
The franchisees named in the complaints allegedly invent phony businesses, fabricate deductions, falsify filing statuses, claim bogus dependents and disregard rules for claiming the earned income tax credit. The Justice Department alleges that ITS employees at these franchises have little tax preparation experience and that the franchise owners encourage them to prepare fraudulent tax returns or are aware that the employees do so. For example, one complaint alleges that David Franklin, who operates multiple ITS stores in Indianapolis, held a two-week training course in 2010 in which his employees were explicitly instructed to prepare fraudulent tax returns.
The complaint against ITS Financial states that the estimated tax losses from allegedly fraudulent return preparation in 2011 at ITS locations in St. Louis, Kansas City, Chicago, Indianapolis and Las Vegas exceed $16 million.
One of the government’s court filings quotes Ogbazion as allegedly saying that he intentionally does not track complaints of fraud made against his ITS franchisees because he “wouldn’t be able to sleep” at night.
“Hard-working Americans deserve to rest assured that their tax return preparers are not ripping them off,” said John A. DiCicco, Principal Deputy Assistant Attorney General of the Justice Department’s Tax Division. “Throughout this filing season, Justice Department attorneys and Internal Revenue Service agents have been tirelessly investigating cases of return preparer fraud. We will not hesitate to seek civil court orders and – where appropriate – criminal prosecution to halt and punish this type of wrongdoing.”
“It’s critical for the nation’s taxpayers to have full confidence in the tax professionals helping them. The IRS is committed to working with the Justice Department to protect taxpayers from unscrupulous tax preparers,” said Steven T. Miller, Internal Revenue Service (IRS) Deputy Commissioner of Services and Enforcement. “As the tax deadline approaches, the IRS reminds taxpayers to be on the lookout for dubious deals promising big refunds.”
According to the government complaints, the defendants in the injunction lawsuits lure their mostly low-income customers by offering loans that the government asserts are false and deceptive. The defendants allegedly encourage their customers to apply for loans knowing that certain customers do not meet the undisclosed criteria to qualify. The complaints state that when customers apply for these loans – usually before the tax filing season even begins – ITS prepares “estimate” returns based on the customers’ last paycheck stubs. Although customers allegedly believe they are merely applying for loans, the government asserts that ITS franchisees and return preparers routinely file tax returns without having customers’ Forms W-2 and without the customers’ authorization. The complaint against ITS Financial alleges that it encourages its franchisees to lie to the IRS about the company’s practice of filing returns without Forms W-2.
All of these actions, the government asserts, allow ITS Financial and its franchisees to extract exorbitant fees from customers’ tax refunds. The complaint against ITS Financial cites recent news reports from Indianapolis and Kansas City, among other cities, in which customers are reported to have complained that Instant Tax Service filed their tax returns without their permission and took out large, hidden fees from their refunds.
Over the past few years, the Justice Department has successfully criminally prosecuted four individual tax return preparers affiliated with ITS franchises in Ohio and Missouri.
The injunction lawsuits name the following individuals and companies as defendants:
1) Dayton: Fesum Ogbazion, TCA Financial LLC, ITS Financial LLC and Tax Tree LLC
According to the complaint, Ogbazion is the sole owner of TCA Financial , which is a holding company for ITS Financial and Tax Tree. ITS Financial is allegedly the franchisor of ITS franchises nationwide. The government alleges that Tax Tree finances false and deceptive loan products to ITS customers nationwide.
2) Chicago: Emanuel Ghebremichael and ERG Financial Corporation (dba Instant Tax Service)
According to the complaint, Ghebremichael is the sole shareholder of ERG Financial, which owns 16 ITS stores and kiosks in the Chicago area.
3) Indianapolis: David Ray Franklin Jr., Rachel Wiggins, William Brown and Instant Tax Refund Service (dba Instant Tax Service)
According to the complaint, Franklin and Wiggins are the president and chief financial officer, respectively, of Instant Tax Refund Service, and Brown manages one of the busiest of Franklin’s 22 ITS stores and kiosks in the Indianapolis area.
4) Las Vegas: Benyam Tewolde, Yordanos Kidane and Koraggio LLC (dba Instant Tax Service)
According to the complaint, Tewolde and Kidane are the husband-and-wife owners of Koraggio, which owns multiple ITS stores that prepared over 5,000 tax returns in 2011.
5) Kansas City, Kan.: Semere Tsehaye, Ahferom Goitom, A&S Tax Services LLC and ERI Enterprises LLC (dba Instant Tax Service)
According to the complaint, Tsehaye, the owner of A&S Tax Service and ERI Enterprises, operates one ITS store in Kansas City, Kan., and five stores in Kansas City, Mo., through A&S Tax Services. He also allegedly operates 14 ITS stores in St. Louis and East St. Louis, Ill., through ERI Enterprises. The complaint states that Goitom, who is Tsehaye’s brother, is the manager of one of Tsehaye’s ITS stores in Kansas City, Kan.
The IRS lists return preparer fraud as one of its “Dirty Dozen” tax scams for 2012. The IRS also offers tips to taxpayers for selecting a tax return preparer.
In the past 10 years, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax-fraud schemes and the preparation of fraudulent tax returns. Information about these cases is available on the Justice Department website.
United States v. David Ray Franklin, et al. Complaint for Permanent Injunction and Other Relief (PDF)
United States v. Benyam Tewolde, et al. Complaint for Permanent Injunction and Other Relief (PDF)
United States v. Emanuel R. Ghebremichael, et al. Complaint for Permanent Injunction and Other Relief (PDF)
United States v. Semere Tsehaye, et al. Complaint for Permanent Injunction and Other Relief (PDF)
United States v. Fesum Ogbazion, et al. Complaint for Permanent Injunction and Other Relief (PDF)
Justice Department Seeks to Shut Down Texas Tax Return PreparerRead the Press Release
The United States has sued tax preparer Joseph Rivas, seeking to bar him from preparing any federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Rivas of DeSoto, Texas, claimed fraudulent deductions and expenses on his customers’ tax returns.
Rivas allegedly 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’ returns. According to the complaint, the harm to the United States from Rivas’s misconduct could be $7.8 million or more.
The government is also seeking a court order requiring Rivas to provide a list of all persons for whom he has prepared federal tax returns since Jan. 1, 2010.
The Internal Revenue Service 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 .
Complaint for Permanent Injunction and Other Relief (PDF)
Justice Department Resolves Allegations of Discrimination with Onward Healthcare in ConnecticutRead the Press Release
WASHINGTON – The Justice Department reached a settlement agreement today with Onward Healthcare, a healthcare staffing company based in Wilton, Conn., resolving allegations that the company posted discriminatory job advertisements on its home page and third party websites that limited its jobs to U.S. citizens.
According to the department’s investigation, over a one year period, thousands of Onward Healthcare’s job postings impermissibly limited applications to U.S. citizens, even though work-authorized immigrants, such as lawful permanent residents, asylees and refugees, should have been allowed to apply as well. The Immigration and Nationality Act (INA) generally prohibits employers from discriminating on the basis of citizenship status unless required by law, regulation or government contract. The department determined that the company had no legal basis for its stated citizenship preference.
“Federal law protects people who are authorized to work in the United States from facing discriminatory barriers when they are seeking employment,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Employers should ensure that their online job postings do not violate the anti-discrimination provision of Immigration and Nationality Act.”Under the terms of the settlement agreement, the company has agreed to pay $100,000 in civil penalties, to change its internal policies and manuals to reflect the INA’s protections, and to be subject to reporting and compliance monitory requirements for a period of three years. This case was handled by Justice Department Attorney Liza Zamd.
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) is responsible for enforcing the anti-discrimination provisions of the INA, which protect U.S. citizens and certain work-authorized individuals from citizenship status discrimination. The INA also protects work-authorized individuals from national origin discrimination, over-documentation in the employment eligibility verification process and retaliation.For more information about protections against employment discrimination under the immigration laws, 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), sign up for a no-cost webinar at www.justice.gov/crt/about/osc/webinars.php, email [email protected] or visit the website at www.justice.gov/crt/about/osc/.
Honolulu Firearms Business Owner Sentenced to 51 Months in Prison for Federal Tax OffensesRead the Press Release
Arthur Lee Ong of Honolulu was sentenced Tuesday to 51 months in prison and ordered to pay $1 million in restitution to the Internal Revenue Service (IRS) by District Court Judge Leslie Kobayashi today, the Justice Department and IRS announced today. On Nov. 7, 2001, a federal jury in Honolulu convicted Ong of conspiracy to defraud the United States and six counts of tax evasion.
According to evidence introduced at trial, Ong, the owner and operator of Thunder Bug Inc., doing business in the state of Hawaii as Magnum Firearms, failed to report to the IRS millions of dollars of income he earned from the sale of firearms and related products to federal, state, county and military agencies, as well as to the general public. Ong, with the assistance of a Hawaiian attorney, created multiple sham trusts in 1990 for the purpose of hiding his income and assets. He stopped filing personal income tax returns beginning in 1994 and also filed false tax returns on behalf of the sham trusts that fraudulently reported to the IRS that the income from his businesses was attributable to these trusts and not to him.
The evidence at trial showed that Ong evaded more than $600,000 in federal income taxes from 2000 to 2006. In sentencing Ong, Judge Kobayashi found that Ong had attempted to evade more than $973,300 in federal and state income taxes from 1994 to 2009.
“There are some responsibilities that come with living in this great country, such as paying the federal income taxes that you legally owe,” said Kenneth J. Hines, the IRS Special Agent in Charge in Hawaii. “With Tax Dayright around the corner, this sentence sends a clear warning to anyone contemplating a tax crime.”
The case resulted from an investigation by IRS - Criminal Investigation and was prosecuted by Trial Attorneys Timothy J. Stockwell and Todd P. Kostyshak of the Justice Department’s Tax Division.
Four Additional Defendants Charged for Assaulting Practitioners of the Amish Religion in ClevelandRead the Press Release
WASHINGTON – The Justice Department announced today that a federal grand jury in Cleveland returned a 10-count superseding indictment in United States v. Mullet, et al. The superseding indictment charges 10 men and six women, all residents of Ohio, with federal crimes arising out of a series of religiously-motivated assaults on practitioners of the Amish religion.
The superseding indictment addresses five separate assaults that occurred between September and November of 2011, and obstructive conduct related to those assaults. In each assault, defendants forcibly removed beard and head hair from practitioners of the Amish faith with whom they had ongoing religious disputes. As set forth in the superseding indictment, the manner in which Amish men wear their beards and Amish women wear their hair are symbols of their faith. The superseding indictment adds four defendants, Lovina Miller, Kathryn Miller, Emma Miller and Elizabeth Miller, who had not previously been charged. The indictment also adds charges against some of the defendants for the concealment and destruction of evidence, including a disposable camera, shears and a bag of hair from victims of the attacks, as well as a charge against Samuel Mullet Sr., for false statements he allegedly made to federal agents during the investigation.
This case is being investigated by the Cleveland Division of the FBI and is being prosecuted by Assistant U.S. Attorneys Thomas Getz and Bridget M. Brennan of the U.S. Attorney’s Office for the Northern District of Ohio and Deputy Chief Kristy Parker of the Civil Rights Division’s Criminal Section. For more information on the 12 defendants previously charged in this case, please visit www.justice.gov/opa/pr/2011/December/11-crt-1683.html.
An indictment is merely an accusation. All defendants are presumed innocent of the charges until proven guilty beyond a reasonable doubt in court.
Former Grant Administrator and Legal Assistant of American Samoa Non-profit Legal Aid Corporation Sentenced for Stealing Nearly $160,000 in Federal Grant FundsRead the Press Release
WASHINGTON – Julie Matau, 49, and her daughter, Andrea Matau, 28, each were sentenced yesterday in Oakland, Calif., for their participation in the theft of nearly $160,000 in federal grant funds from a now-defunct nonprofit American Samoa legal services corporation, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.
U.S. District Judge Claudia Wilken for the Northern District of California sentenced Julie Matau to 12 months and one day in prison. Julie Matau also was ordered to serve three years of supervised release, including eight hours a week of community service throughout the three-year term. Judge Wilken sentenced Andrea Matau to serve 12 months of probation, including six months of home detention. Andrea Matau also was ordered to provide eight hours a week of community service for the entire 12 months of probation. Judge Wilken ordered Julie and Andrea Matau to pay $159,763 in restitution, to be paid jointly and severally. In addition, Judge Wilken ordered that $31,292 of the $159,763 be paid jointly and severally with David Wagner, another individual who has pleaded guilty for his role in the scheme, if he is ordered to pay restitution in that amount. Wagner’s sentencing is scheduled for April 2, 2012, in St. Louis before U.S. District Judge Carol E. Jackson for the Eastern District of Missouri.
On Dec. 21, 2011, Julie Matau pleaded guilty to wire fraud and Andrea Matau pleaded guilty to misdemeanor theft of federal funds. A federal grand jury in the Northern District of California returned an indictment against Julie and Andrea Matau on Dec. 16, 2010. Wagner pleaded guilty on March 11, 2010, in the Eastern District of Missouri for his role in the theft of federal funds.
The case arose from allegations of theft and fraud at a now-defunct nonprofit legal services corporation in American Samoa called the U’una’i Legal Services Corporation (ULSC). According to court documents, between 1998 and 2007, ULSC was the only nonprofit organization in American Samoa that was dedicated to providing free legal services to victims of domestic violence, dating violence, stalking and sexual abuse.
Between August 2005 and September 2007, ULSC received more than $1.2 million in federal grant funds from the U.S. Department of Justice’s Office of Violence Against Women and the Legal Services Corporation.
According to court documents, between May 2005 and September 2007, Wagner served as ULSC’s acting executive director and Julie Matau served as ULSC’s office manager and grant administrator. Julie Matau, together with Wagner, was responsible for submitting applications for federal grant funding, managing ULSC’s federal funds and issuing employee payroll checks. Wagner and Julie Matau exercised joint signatory authority over ULSC’s bank accounts. Andrea Matau worked as one of ULSC’s legal assistants and reported directly to Julie Matau.
According to court documents, between September 2005 and September 2007, Julie Matau and Wagner arranged for themselves, Andrea Matau, and Julie and Andrea Matau’s relatives to receive unlawful payments from the federal grant funds. According to court documents, Julie Matau unlawfully received $65,649 in federal grant funds; Andrea Matau unlawfully received $24,634 in federal grant funds; Wagner unlawfully received $31,292 in federal grant funds; and the Mataus’ relatives received $38,188 in federal grant funds.
In her guilty plea, Julie Matau admitted that she knew that they had no legal entitlement to receive these federal grant funds and that their receipt of the federal funds violated the terms and conditions of the grants. Julie Matau also admitted that she had no intention of repaying the money to ULSC or the federal government, or of requiring others to repay the money. In her guilty plea, Andrea Matau admitted that she participated in the theft by personally receiving $24,634 in unlawful payments and by permitting Julie Matau to deposit additional unlawful payments in Andrea Matau’s personal bank account and in their joint bank account.
In his guilty plea, Wagner admitted that, with Julie Matau’s assistance, he received a number of unlawful “salary advances.” Wagner also admitted that he signed blank ULSC checks for Julie Matau’s use in exchange for the unlawful payments that she provided to him.
The case is being prosecuted by Trial Attorneys Edward J. Loya Jr. and Monique T. Abrishami of the Criminal Division’s Public Integrity Section. Senior Trial Attorney Mary K. Butler and Trial Attorney Maria N. Lerner, also of the Public Integrity Section, participated in the investigation of this matter. The case is being investigated by special agents of the Department of Justice’s Office of the Inspector General and the Legal Services Corporation’s Office of Inspector General, with assistance from special agents of the FBI-Honolulu Division, American Samoa Resident Agency.
Antitrust Division Issues 2012 Edition of Its Annual NewsletterRead the Press Release
The Department of Justice’s Antitrust Division today issued the 2012 edition of its annual newsletter on its website. The newsletter highlights recent activities and successes on civil and criminal enforcement, international cooperation and competition advocacy of the Antitrust Division for the general public as well as the legal and business communities.
The newsletter includes a message from Acting Assistant Attorney General Sharis A. Pozen as well as articles about the Antitrust Division’s enforcement actions in civil and criminal enforcement, international cooperation and competition advocacy over the past year. The newsletter highlights the division’s accomplishments, including the ongoing auto parts investigation, which thus far has resulted in nearly $750 million in criminal fines and several executives agreeing to serve significant prison sentences. Additional highlights include the division's success in preventing anticompetitive mergers in the technology and telecommunications industries and in preserving competition in a variety of important industries, including health care and agriculture by requiring the right remedy for each matter.
The newsletter also features articles about the leadership of the Economic Analysis Group, the Directors of Enforcement, enhanced litigation capabilities and the Attorney General’s Honors Program.
The newsletter can be found at www.justice.gov/atr/public/division-update/2012. Within each article, hyperlinks are provided so that the reader can easily access relevant documents such as press releases, court filings and speeches.
Witness in Identity Theft and Tax Trial Convicted of Perjury and Lying to a Federal AgentRead the Press Release
A federal jury in Montgomery, Ala., convicted Nacretia Lewis today of perjury and lying to a federal agent, the Justice Department and the Internal Revenue Service (IRS) announced.
According to the indictment and evidence introduced at trial, Lewis testified falsely in September 2011 in a tax fraud trial in the Middle District of Alabama. The defense in the tax fraud trial presented an alibi defense regarding the whereabouts of the defendant on trial on Jan. 20, 2011. Lewis was convicted of lying about being with Janika Fernae Bates at a place other than NCO Financial Systems Inc., their workplace, at precisely the same time witnesses at trial placed Bates at NCO. The evidence showed that after her testimony, Lewis met with federal agents and again lied about her whereabouts and Bates’ whereabouts on January 20, 2011. After a five-day trial, Bates was convicted of thirteen felony counts and sentenced to 94 months in federal prison.
Lewis faces a potential maximum sentence of ten years in federal prison and a fine of up to $500,000.
The case was investigated by Special Agents of the IRS-Criminal Investigation. Trial Attorneys Justin Gelfand and Jason Poole of the Justice Department’s Tax Division are prosecuting this case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.
New York Financial Investor Pleads Guilty to Bid Rigging at Municipal Tax Lien Auctions in New JerseyRead the Press Release
A financial investor who purchased municipal tax liens at auctions in New Jersey pleaded guilty today for his role in a conspiracy to rig bids for the sale of tax liens auctioned by municipalities throughout the state, the Department of Justice announced.
A felony charge was filed today in the U.S. District Court for the District of New Jersey in Newark, N.J., against Robert E. Rothman of New York. Under the plea agreement, which is subject to court approval, Rothman has agreed to cooperate with the department’s ongoing investigation.
According to the felony charge, from in or about the spring of 2000 until approximately February 2009, Rothman participated in a conspiracy to rig bids at auctions for the sale of municipal tax liens in New Jersey by agreeing to allocate among certain bidders on which liens to bid. The department said that Rothman proceeded to submit bids in accordance with his agreement and purchased tax liens at collusive and non-competitive interest rates.
“The Antitrust Division’s investigation into municipal tax lien auctions is ongoing and active,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “The division will not tolerate this kind of illegal conduct that harms distressed homeowners.”
The department said that the primary purpose of the conspiracy was to suppress and restrain competition to obtain selected municipal tax liens offered at public auctions at non-competitive interest rates. When the owner of real property fails to pay taxes on that property, the municipality in which the property is located may attach a lien for the amount of the unpaid taxes. If the taxes remain unpaid after a waiting period, the lien may be sold at auction. State law requires that investors bid on the interest rate delinquent homeowners will pay upon redemption. By law, the bid opens at 18 percent interest and, through a competitive bidding process, can be driven down to zero percent. If a lien remains unpaid after a certain period of time, the investor who purchased the lien may begin foreclosure proceedings against the property to which the lien is attached.
According to the court documents, Rothman conspired with others not to bid against one another at municipal tax lien auctions in New Jersey. Since the conspiracy permitted the conspirators to purchase tax liens with limited competition, each conspirator was able to obtain liens which earned a higher interest rate. Property owners were therefore made to pay higher interest on their tax debts than they would have paid had their liens been purchased in open and honest competition.
A violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. The maximum fine for a Sherman Act violation may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the statutory maximum.
Rothman is the sixth individual to plead guilty as a result of the ongoing investigation into bid rigging or fraud related to municipal tax lien auctions. On Aug. 24, 2011, Isadore H. May, Richard J. Pisciotta Jr. and William A. Collins each pleaded guilty to one count of bid rigging in connection with their participation in a conspiracy to allocate liens at New Jersey auctions. On Feb. 23, 2012, Robert W. Stein and David M. Farber each pleaded guilty to one count of bid rigging in connection with their participation in this conspiracy.
Today’s charge is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency FFETF to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.
The ongoing investigation is being conducted by the Antitrust Division’s New York Field Office and the FBI’s Atlantic City, N.J., office. Anyone with information concerning bid rigging or fraud related to municipal tax lien auctions should contact the Antitrust Division’s New York Field Office at 212-335-8000, visit www.justice.gov/atr/contact/newcase.htm or contact the FBI’s Atlantic City Resident Agency at 609-677-6400.
Justice Department Requires Divestitures in Humana Inc.'s Acquisition of Arcadian Management Services Inc.Read the Press Release
WASHINGTON — The Department of Justice today announced that it will require Humana Inc. and Arcadian Management Services Inc. to divest assets relating to Arcadian’s Medicare Advantage business in parts of five states in order for Humana to proceed with its acquisition of Arcadian. The department is requiring divestitures of health plans in 51 counties and parishes in Arizona, Arkansas, Louisiana, Oklahoma and Texas. The department said that the transaction, as originally proposed, would likely have resulted in higher prices, fewer choices and lower quality Medicare Advantage plans purchased by Medicare beneficiaries.
The department’s Antitrust Division filed a civil lawsuit today in the U.S. District Court in Washington, D.C., to block the proposed acquisition. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the lawsuit and the department’s competitive concerns.
“Protecting competition in health care has been and continues to be a top priority of the Antitrust Division,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “These divestitures preserve competition so that Medicare beneficiaries, primarily senior citizens, in Arizona, Arkansas, Louisiana, Oklahoma and Texas, benefit from lower prices, better quality services and more innovative products for their health care needs.”
Individuals eligible for Medicare, primarily senior citizens, may elect to enroll in a privately provided Medicare Advantage plan instead of traditional Medicare. In establishing the Medicare Advantage program, Congress intended that vigorous competition among private Medicare Advantage insurers would lead insurers to offer seniors a rich set of affordable benefits, provide a wide array of health-insurance choices, and be responsive to the demands of seniors. Approximately 71,000 people are enrolled in Medicare Advantage plans in these 51 counties and parishes, accounting for more than $700 million in annual commerce.
According to the complaint, the original transaction would have eliminated competition between Humana and Arcadian, two of the few significant sellers of Medicare Advantage plans in 45 of the counties and parishes, allowing Humana to increase prices and reduce the quality of Medicare Advantage plans sold to seniors there . The original deal would have created a combined company controlling between 40 and 100 percent of the Medicare Advantage health insurance market in these counties and parishes.
Under the proposed settlement, Humana must promptly divest the Medicare Advantage plans in the 51 counties and parishes to one or more acquirers approved by the department that has the intent and capability to be an effective competitor. The department is requiring divestitures of health plans in five additional counties and one additional parish to facilitate the divesture of the plans in the other 45 counties and parishes and make those plans more administrable. Under the terms of the proposed settlement, current enrollees of Humana and Arcadian’s Medicare Advantage plans will continue to have substantially the same access to providers, including doctors, hospitals and other medical services, after the divestitures as before the divestitures were required. The proposed settlement contains provisions that ensure the buyers of the divested Medicare Advantage plans will have contracts with substantially all of the health care providers included in the Humana and Arcadian plans at substantially the same rates. The department said the requirements are important because to compete effectively, a health insurer needs a network of health care providers at competitive rates.
Humana Inc., a leading health insurer in the United States, is a Delaware corporation headquartered in Louisville, Ky. In 2010, Humana reported revenues of approximately $33.6 billion.
Arcadian Management Services Inc., with approximately 62,000 Medicare Advantage members in 15 states, is a Delaware corporation headquartered in Oakland, Calif. In 2010, Arcadian had revenues of $622 million.
The proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Joshua H. Soven, Chief, Litigation I Section, Antitrust Division, U.S. Department of Justice, 450 Fifth St., N.W., Suite 4100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the settlement upon a finding that it is in the public interest.
Justice Department Intervenes in Lawsuit Involving New Hampshire’s Mental Health SystemRead the Press Release
WASHINGTON – The Justice Department today moved to intervene in Lynn E. v. Lynch, a recently-filed lawsuit alleging that the state of New Hampshire fails to provide mental health services to people with disabilities in community settings in violation of the Americans with Disabilities Act (ADA) and Section 504 of the Rehabilitation Act of 1973. As a result of the state’s failures, people with mental illness who need state mental health services are forced to go to segregated institutions like the New Hampshire Hospital in Concord, N.H., and the Glencliff Home in Benton, N.H.
Under the ADA, a state cannot require people with disabilities to enter segregated facilities unnecessarily in order to get services. In April of last year, the Department of Justice notified the state that it is violating the ADA by unnecessarily institutionalizing persons with mental illness and by failing to provide necessary community-based services and supports, like crisis services and housing supports. Leadership within the state of New Hampshire has recognized that the state’s mental health system is deficient. According to a top state official, “NH’s mental health system is failing, and the consequence of these failures is being realized across the community. The impacts of the broken system are seen in the stress it is putting on local law enforcement, hospital emergency rooms, the court system and county jails, and, most importantly, in the harm under-treated mental health conditions cause NH citizens and their families.”
The state adopted a 10-year plan for improving its system, however, the state failed to implement important pieces of its plan and to put in place needed reforms to meet the needs of people with mental illness. The New Hampshire Community Mental Health Centers association recently concluded that the state had failed to meet important benchmarks within its 10-year plan and informed federal officials that the New Hampshire community system “has less capacity in January of 2012 than it had in August of 2008 when the ‘Ten-Year Plan’ called for additional investment.”
“States are obligated by the ADA to provide services to people with disabilities in appropriate, integrated settings, so that they can live and work in the community, just like people who do not have disabilities,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “People with mental illnesses in New Hampshire are currently denied this right and are instead forced to receive costly services in inappropriate settings, like state institutions, as well as local hospital emergency rooms, rather than in more therapeutic and less expensive community settings. With our efforts today to intervene, we hope to vindicate the rights of people with disabilities and prompt the state to take the necessary steps to meet their needs in more appropriate community settings.”“Individuals with mental illness who experience a crisis in New Hampshire often spend days in local emergency rooms that are ill-equipped to address their needs, at great expense, and are then transported to the state’s psychiatric hospital, sometimes by the police,” said John P. Kacavas, U.S. Attorney for the District of New Hampshire. “This costly and traumatic process could be avoided if New Hampshire offered proven and effective services in the community to prevent and deescalate crises, help people maintain safe housing and assist them in finding and holding employment.”
For several months last year, the department engaged in talks with the state in an attempt to resolve the violations the department had identified. However, the parties were ultimately unable to come to an agreement. In order to vindicate the rights of people with disabilities under the ADA, the United States now seeks to participate in this lawsuit. The plaintiffs in the case are represented by the Bazelon Center for Mental Health Law, the Center for Public Representation and the New Hampshire Disabilities Rights Center.
The United States’ intervention papers and proposed complaint can be found at www.justice.gov/crt/about/spl/findsettle.php#Complaints.
For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt.
Greek Shipping Company Sentenced in New Orleans to Pay $2 Million for Intentional Cover-Up of Oil Pollution and Obstruction of JusticeRead the Press Release
WASHINGTON – Ilios Shipping Company S.A. was sentenced today in federal court in New Orleans for violating the Act to Prevent Pollution from Ships (APPS) and obstruction of justice, announced Assistant Attorney General Ignacia S. Moreno and Jim Letten, U.S. Attorney for the Eastern District of Louisiana.
Ilios operated the M/V Agios Emilianos, a 738 foot, 36,573 ton bulk carrier cargo ship that hauled grain from New Orleans to various ports around the world. According to the plea agreement, from April 2009 until April 2011, oily bilge waste and sludge was routinely discharged from the vessel directly into the sea without the use of required pollution prevention equipment. During that time, the crew intentionally covered up the illegal discharges of oil waste by falsifying the vessel’s oil record book. The master of the vessel, Valentino Mislang, previously pleaded guilty to and was sentenced for conspiracy to obstruct justice for his role in destroying evidence and instructing crewmembers to lie to the Coast Guard during an inspection of the vessel in April 2011. According to Mislang, a senior manager of Ilios directed the destruction of computer records and ordered Mislang to tell crewmembers to lie to the Coast Guard.
The chief engineer of the vessel, Romulo Esperas, previously pleaded guilty to and was sentenced for conspiracy to obstruct justice for his role in falsifying the vessel’s oil record book and directing the discharge of oily bilge waste and sludge directly into the sea. According to Esperas, a senior manager of Ilios directed him to discharge the vessel’s oily waste into the sea and refused to provide funding for the proper discharge of the oily waste to shore-side facilities. Both Mislang and Esperas were sentenced to three years of unsupervised release and are not permitted to re-enter the United States during that time.
“The Department of Justice will continue to prosecute shipping companies who break the laws that protect our oceans,” said Assistant Attorney General Moreno. “The penalty imposed by this sentence holds Ilios fully accountable for violating the Act to Prevent Pollution from Ships, and a part of the penalty will fund projects that will help restore precious marine and aquatic resources in Louisiana.”
“We owe a debt of gratitude to the men and women of the U.S. Coast Guard, their partners in the Environmental Protection Agency and our brethren in the U. S. Department of Justice Environment and Natural Resources Division, along with our own U.S. Attorney’s Office professionals, for their continued vigilance in this and other cases protecting our precious environment, coastline and water resources from those unscrupulous companies and individuals who clandestinely and wantonly discharge oily waste into our waters,” said U.S. Attorney Letten. “We will not falter in our commitment to do everything within our power to apprehend and punish these violators in defense of our environment.”
“Unfortunately, we continue to see many environmental crimes cases involving ocean-going commercial vessels. The Coast Guard will continue to hold non-compliant companies and operators accountable when they break the law and endanger the marine environment or public health. I applaud the efforts of Coast Guard Sector New Orleans, the Coast Guard Investigative Service, our Eighth District legal staff and the Department of Justice for their tireless efforts in investigating and prosecuting this case,” said Rear Admiral Roy A. Nash, Eighth Coast Guard District Commander.
All discharges of sludge or oily bilge waste from a vessel are required to be recorded in the vessel’s oil record book. However, none of the illegal discharges were recorded in the oil record book for the M/V Agios Emilianos.
The court ordered Ilios to pay an overall criminal penalty of $2 million. The National Fish and Wildlife Foundation will receive $250,000 to fund projects aimed at the restoration of marine and aquatic resources in the Eastern District of Louisiana.
As a condition of probation, Ilios is required to implement an environmental compliance plan which will ensure that any ship operated by Ilios complies with all maritime environmental requirements established under applicable international, flag state and port state laws. The plan ensures that Ilios’s employees and the crew of any vessel operated by Ilios are properly trained in preventing maritime pollution. An independent monitor will report to the court about Ilios’s compliance with its obligations during the period of probation.
This case was investigated by the U.S. Coast Guard and the Environmental Protection Agency. The case was prosecuted by Emily Greenfield and Dorothy Manning Taylor from the U.S. Attorney's Office of the Eastern District of Louisiana and by Ken Nelson in the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice.
Former Caesars Palace Nightclub Owner, Head Doorman Plead Guilty to Tax CrimesRead the Press Release
Steve Davidovici, formerly a part-owner and manager of the Pure Nightclub located within the Caesars Palace Hotel and Casino in Las Vegas pleaded guilty in federal court to one count of filing a false federal income tax return for the 2006 tax year, the Justice Department and Internal Revenue Service, Criminal Investigation (IRS-CI) announced today. The Justice Department and IRS-CI also announced that Mikel Hasen, the former head doorman at the Pure Nightclub, likewise pleaded guilty to one count of filing a false federal income tax return for the 2006 tax year. U.S. District Court Judge Kent Dawson presided over both plea hearings.
According to information disclosed at the plea hearings, during the years 2005, 2006 and 2007, in addition to fees charged for admission to the nightclub, some of Pure’s patrons made cash payments to Pure door personnel and “VIP hosts” to bypass the general admissions line and to obtain more desirable seating. This money was collected, pooled and generally distributed on a weekly basis to the door personnel and VIP hosts, as well as to managers of Pure such as Davidovici and Hasen. In Hasen’s case, distributions from this “tip pool” comprised the bulk of his compensation during the time he worked at Pure. Davidovici and Hasen each concealed large amounts of this income from the IRS.
Davidovici’s and Hasen’s sentencings are set for June 27, 2012, at 9 a.m.
“With the April 15 tax deadline looming, it is important for people to have confidence that when they pay their taxes, their neighbors and competitors will do the same,” said Paul Camacho, Special Agent in Charge of the IRS-Criminal Investigation, Las Vegas Field Office.
Two VIP hosts under Davidovici’s supervision, Ali (Sean) Olyaie and Richard Chu, have also pleaded guilty to tax crimes for failing to report income earned at Pure. At their respective plea hearings, Olyaie and Chu likewise admitted filing false federal income tax returns for 2006. Olyaie and Chu are also awaiting sentencing.
This case is being investigated by IRS Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Christopher J. Maietta and Joseph A. Rillotta.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax/.
Detroit Podiatrist Sentenced to One Year in Prison for Medicare Fraud SchemeRead the Press Release
WASHINGTON – A Detroit-area doctor of podiatric medicine was sentenced today to one year in prison for a fraud scheme involving false billings to Medicare, announced the Department of Justice, the FBI and the Department of Health and Human Services (HHS).
Dr. Errol Sherman was sentenced by U.S. District Judge Gerald E. Rosen in Detroit. In addition to his prison term, Sherman was sentenced to three years of supervised release and ordered to pay $300,000 in restitution. Sherman pleaded guilty on Nov. 22, 2011, to one count of health care fraud.
According to the plea documents, Sherman is a doctor of podiatric medicine licensed in the state of Michigan. Between January 2003 and December 2006, Sherman billed Medicare and Blue Cross Blue Shield of Michigan for a procedure known as an avulsion of the nail plate or nail avulsion procedure. Sherman billed for this procedure thousands of times, claiming that he had performed this procedure on hundreds of beneficiaries from 2003 through 2006. In fact, he had not performed the procedures billed.
Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, 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 (HHS-OIG), Office of Investigation.
This case was prosecuted by Trial Attorney Catherine K. Dick of the Criminal Division’s Fraud Section and Assistant U.S. Attorney John K. Neal of the U.S. Attorney’s Office for the Eastern District of Michigan. The case was investigated jointly by the FBI and HHS-OIG, as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Eastern District of Michigan and the Criminal Division’s Fraud Section.
Since their inception in March 2007, the strike force operations in nine locations have charged more than 1,190 individuals who collectively have falsely billed the Medicare program for more than $3.6 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.
Aryan Brotherhood of Texas Member Sentenced to 20 Years in Prison for Role in 2009 ShootingRead the Press Release
WASHINGTON – A member of the Aryan Brotherhood of Texas (ABT) was sentenced today to 20 years in prison for his role in the 2009 shooting of a man in Jefferson County, Texas, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney John M. Bales of the Eastern District of Texas.
Joshua Mark Bodine, 32, aka “Desperado,” of Vidor, Texas, also was ordered by U.S. District Court Judge Marcia A. Crone to serve three years of supervised release following his prison term. Bodine pleaded guilty on Oct. 11, 2011, to assault with a dangerous weapon in aid of racketeering activity.
Co-defendant John Oliver Manning, 52, aka “Fish,” of Pasadena, Texas, was convicted on Dec. 1, 2011, of racketeering and firearms charges. Bodine has been in custody since his arrest on Feb. 24, 2011, and Manning has been in custody since his arrest on Sept. 9, 2009. A sentencing date for Manning has not yet been set by the court.
According to the indictment, the ABT is a race-based, state-wide organization that operates inside and outside of state and federal prisons throughout the United States. The ABT was established in the early 1980s within the Texas prison system. It modeled itself after and adopted many of the teachings and writings of the Aryan Brotherhood, a California-based prison gang that was formed in the California prison system during the 1960s. According to the indictment, the ABT was primarily concerned with the protection of white inmates and white supremacy/separatism. Over time, the ABT expanded its criminal enterprise to include illegal activities for profit.
The evidence presented at Manning’s trial also showed that 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.
The evidence at trial established that on Sept. 7, 2009, Manning shot and wounded ABT associate Matthew Fails in Nederland, Texas, on the orders of Bodine. Specifically, Manning approached Fails with a firearm and a pair of handcuffs in an attempt to collect a debt on Bodine’s behalf and ultimately shot Fails. Fails was declared brain-dead, but later regained consciousness after emergency surgery. A surgeon testified that the wound Fails received caused “agonizing pain” and that Fails “would not ever be the same.”
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosive; the Nederland Police Department; Orange County, Texas, Constable’s Office, Precinct 2; Jefferson County, Texas, Sheriff’s Office; Williamson County, Texas, Sheriff’s Office; Chambers County, Texas, Sheriff’s Office; Alvin, Texas, Police Department; Mont Belvieu, Texas, Police Department; and the Texas Department of Criminal Justice. The case was prosecuted by Special Assistant U.S. Attorney Baylor Wortham of the Eastern District of Texas and Trial Attorney Cody L. Skipper of the Criminal Division’s Organized Crime and Gang Section.
Washington State Man Sentenced to 41 Months in Prison for Filing False Liens Against Government OfficialsRead the Press Release
Ronald James Davenport of Chewelah, Wash., was sentenced to 41 months in prison today for filing more than $20 billion in false liens against four federal government officials, the Justice Department and the Treasury Inspector General for Tax Administration (TIGTA) announced today. In addition, Judge Garr M. King, U.S. District Judge for the District of Oregon, sitting by designation, ordered Davenport to serve three years of supervised release.
Davenport’s convictions date from last November when, following a two-day trial, a federal jury in the Eastern District of Washington returned guilty verdicts against Davenport on four counts of filing retaliatory liens against government officials. According to the evidence presented at trial, in December 2009, Davenport filed false liens against the property interests of the U.S. Attorney and the Clerk of Court for the Eastern District of Washington, as well as an Assistant U.S. Attorney and an Internal Revenue Service Revenue officer.
The liens were filed in the county auditor records of Spokane and Whatcom Counties, Wash. Each lien claimed that the victim owed Davenport $5,184,000,000. It also purported to attach all of the victim’s real and personal property as security for this debt. As proved at trial, the defendant chose these four victims because of their involvement in an effort to collect from Davenport more than $250,000 in back taxes.
The case was investigated by TIGTA and prosecuted by the Justice Department’s Tax Division. Both the U.S. Attorney’s Office and the District Court for the Eastern District of Washington were recused from the case.
U.S. and Mexican Officials Sign Letter of Intent to Share $6 Million in Forfeited Assets to Combat Financial Infrastructure of Organized CrimeRead the Press Release
WASHINGTON – U.S. Attorney General Eric Holder and Mexican Attorney General Marisela Morales Ibáñez today signed a letter of intent for the United States to share approximately $6 million in forfeited funds with the Office of the Attorney General of the Republic of Mexico (PGR) to support Mexican efforts to combat the financial infrastructure of organized criminal groups and to enhance bilateral cooperation between the two countries in forfeiture matters.
The letter of intent and anticipated fund sharing recognizes the PGR’s valuable cooperation in the investigation and resolution of the U.S. government’s case against Sigue Corporation for violations of the Bank Secrecy Act. In January 2008, Sigue entered into a deferred prosecution agreement with the Department of Justice on charges of failing to maintain an effective anti-money laundering program. As a result, Sigue forfeited $15 million to the United States and agreed to commit an additional $9.7 million to improving its anti-money laundering program.
“The Department of Justice and the Mexican PGR have built strong and collaborative working relationships in order to combat transnational organized criminal groups,” said Attorney General Holder. “Our intention to share approximately $6 million in forfeited assets with our Mexican counterparts reflects another step forward in our successful crime prevention and public safety efforts. In an era where crime is not limited by physical boundaries, our international partnerships are more critical than ever in the work of bringing criminals to justice.”
As outlined in the letter of intent, the PGR and the Department of Justice, through the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS), will negotiate the specific terms of the Sigue case sharing agreement and establish respective Executive Sharing Committees designed to negotiate and oversee the sharing, delivery, transfer and disbursement of the forfeited funds.
The shared assets will be used to strengthen and support the PGR’s capacity to investigate and prosecute domestic and bilateral money laundering crimes, as well as Mexico’s ability to forfeit the proceeds of crime. This initiative is designed to complement ongoing bilateral efforts to increase pressure on the economic resources of the criminal organizations that operate in Mexico and along the U.S./Mexico border.
The case, filed in the Eastern District of Missouri, arose out of transactions conducted by Sigue and its authorized agents from November 2003 through March 2005. During this time, more than $24.7 million in suspicious transactions were conducted through registered agents of Sigue, including transactions conducted by undercover U.S. law enforcement agents using funds represented to be proceeds of drug trafficking. Sigue did not identify broader patterns of money laundering activity, failed to prevent the unlawful activity from continuing and did not create systems and procedures to identify suspicious financial transactions being conducted by related senders and beneficiaries.
The Sigue forfeiture resulted from a case prosecuted by AFMLS and was investigated by the Drug Enforcement Administration and Internal Revenue Service.
Third Medical Device Company Resolves Foreign Corrupt Practices Act InvestigationRead the Press Release
WASHINGTON – Biomet Inc. has entered into a deferred prosecution agreement with the Department of Justice to resolve improper payments by the company and its subsidiaries in violation of the Foreign Corrupt Practices Act (FCPA), announced the Justice Department’s Criminal Division.
The matter is part of an investigation into bribery by medical device companies of health care providers and administrators employed by government institutions. Previously, Johnson & Johnson and Smith & Nephew Inc. have agreed to pay criminal penalties and entered into deferred prosecution agreements related to the ongoing investigation.
Biomet, headquartered in Warsaw, Ind., manufactures and sells medical devices worldwide and is listed on the NASDAQ. According to the criminal information filed today in U.S. District Court in the District of Columbia in connection with the agreement, Biomet, its subsidiaries, employees and agents made various improper payments from approximately 2000 to 2008 to publicly-employed health care providers in Argentina, Brazil and China to secure lucrative business with hospitals. During this time, more than $1.5 million in direct and indirect corrupt payments were made. In addition, at the end of each fiscal year, Biomet, its executives, employees and agents falsely recorded the payments on its books and records as “commissions,” “royalties,” “consulting fees” and “scientific incentives” to conceal the true nature of the payments.
As part of the agreement, Biomet will pay a $17.28 million criminal penalty and is required to implement rigorous internal controls, cooperate fully with the department and retain a compliance monitor for 18 months. The agreement recognizes Biomet’s cooperation with the department’s investigation; thorough and wide-reaching self-investigation of the underlying conduct; and the remedial efforts and compliance improvements undertaken by the company. In addition, Biomet received a reduction in its penalty as a result of its cooperation in the ongoing investigation of other companies and individuals.
In a related matter, Biomet reached a settlement today with the U.S. Securities and Exchange Commission (SEC), under which Biomet agreed to pay $5.4 million in disgorgement of profits, including pre-judgment interest.
This case is being prosecuted by Trial Attorney Kathleen M Hamann of the Criminal Division’s Fraud Section and was investigated by the FBI’s Washington Field Office’s dedicated FCPA squad.
The Justice Department acknowledges and expresses its appreciation for the significant coordination with and assistance by the staff of the SEC’s Division of Enforcement.
DENSO Corporation Executive Agrees to Plead Guilty to Price Fixing and Bid Rigging on Auto Parts Installed in U.S. CarsRead the Press Release
WASHINGTON – An executive of Japan-based DENSO Corporation, has agreed to plead guilty and to serve time in prison for his role in a conspiracy to fix prices and rig bids for heater control panels (HCPs) installed in U.S. cars, the Department of Justice announced today.
According to a one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Norihiro Imai, a Japanese national, along with co-conspirators, engaged in a conspiracy to rig bids for and to fix, stabilize and maintain the prices of HCPs sold to customers in the United States and elsewhere. According to the charge, Imai’s involvement in the conspiracy lasted from at least as early as August 2006 until at least June 2009. According to the plea agreement, which is subject to court approval, Imai has agreed to serve one year and one day in a U.S. prison, to pay a $20,000 criminal fine and to cooperate with the department’s ongoing investigation.
“Today’s guilty plea demonstrates the Antitrust Division’s commitment to hold executives accountable for engaging in illegal conduct that leads to higher prices for American businesses and consumers,” said Acting Assistant Attorney General Sharis A. Pozen in charge of the Department of Justice’s Antitrust Division. “Criminal antitrust enforcement is a top priority, and the division will continue to work with its law enforcement partners in the ongoing investigation in the auto parts industry.”
DENSO manufactures and sells a variety of automotive electrical parts, including HCPs. HCPs are located in the center console of an automobile and control the temperature of the interior environment of a vehicle. According to the charge, Imai and his co-conspirators carried out the conspiracy by, among other things, agreeing during meetings and discussions to coordinate bids submitted to, and price adjustments requested by, automobile manufacturers.
Including Imai, eight individuals and three companies have been charged in the government’s ongoing investigation into price fixing and bid rigging in the auto parts industry. DENSO pleaded guilty on March 5, 2012, and was sentenced to pay a $78 million criminal fine. Yazaki Corporation, another Japanese automotive electrical component supplier, pleaded guilty on March 1, 2012, and was sentenced to pay a $470 million criminal fine. Additionally, four Yazaki executives were charged on Jan. 30, 2012, and have agreed to plead guilty. On Nov. 14, 2011, Furukawa Electric Co. Ltd. pleaded guilty and was sentenced to pay a $200 million fine. Three of Furukawa’s executives also pleaded guilty and were sentenced to serve prison sentences in the United States ranging from a year and a day to 18 months.
Imai is charged with price fixing in violation of the Sherman Act, which carries a maximum sentence of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine for an individual may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
The current prosecution arose from an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the automotive parts industry, which is being conducted by the Antitrust Division’s National Criminal Enforcement Section and the FBI’s Detroit Field Office with the assistance of the FBI headquarters’ International Corruption Unit. Anyone with information concerning the focus of this investigation is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694, visit www.justice.gov/atr/contact/newcase.htm or call the FBI’s Detroit Field Office at 313-965-2323.
United States Settles False Claims Act Allegations Against Illinois-Based Lifewatch ServicesRead the Press Release
WASHINGTON - LifeWatch Services Inc., a Rosemont, Ill.-based company, has agreed to pay the United States $18.5 million to resolve allegations that the company submitted false claims to federal health care programs, the Justice Department announced today. The settlement resolves two lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act.
The two complaints allege that LifeWatch improperly billed Medicare for ambulatory cardiac telemetry (ACT) services. ACT services are a form of cardiac event monitoring that use cell phone technology to record cardiac events in real time without patient intervention. Traditional event monitoring requires the patient to press a button when he or she notices a cardiac event to record the cardiac rhythms. Medicare reimbursed ACT services at between $750 and $1200 and traditional event monitoring services at roughly $250 during the relevant time period.
According to the complaints, LifeWatch was aware that ACT services were not eligible for Medicare reimbursement for patients who had experienced only mild or moderate palpitations. The complaints allege that LifeWatch nonetheless submitted claims to Medicare for ACT services for such patients using a false diagnostic code in order to have the claims paid. In addition, according to the complaints, LifeWatch improperly induced Medicare claims for monitoring services by providing valuable services in the form of full-time employees to several
hospitals and medical practices, without charge. The relators (whistleblowers) in their lawsuits alleged that these services amounted to kickbacks.
“False claims on federal health care programs drive up the costs of health care for all of us,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. “Today’s settlement furthers the Department of Justice’s commitment to making sure that those who benefit from Medicare play by the rules.”
Ryan Sims, a former LifeWatch sales representative, filed a lawsuit in the U.S. District Court for the Western District of Washington in December 2009. In May 2011, Sara Collins, another former LifeWatch sales representative, filed a complaint in the U.S. District Court for the Southern District of Ohio.
Under provisions of the False Claims Act, individuals can bring a lawsuit on behalf of the government and receive a portion of the proceeds of any settlement or judgment that may result. Sims and Collins together will receive approximately $3.4 million plus interest as their share of the settlement proceeds.
“The False Claims Act is a critical tool for weeding out fraud and protecting the taxpayers,” said U.S. Attorney Jenny A. Durkan, of the Western District of Washington. “We must ensure tax dollars go to intended programs, not to line the pockets of those who seek to cheat the programs.”
“The settlement underscores the need for physicians to be able to make care decisions without undue influence,” said Carter M. Stewart, U.S. Attorney for the Southern District of Ohio. “The settlement is also the result of close cooperation between our office, the Justice Department’s Civil Division and U.S. Attorney Durkan’s office.”
In addition to the monetary settlement, LifeWatch has entered into a comprehensive Corporate Integrity Agreement (CIA) with the Office of Inspector General of the U.S. Department of Health and Human Services to ensure its continued compliance with federal health care benefit program requirements.
“The chief executive officer at LifeWatch as well as other corporate executives will be required to personally certify compliance with our five-year CIA, which includes provisions to monitor LifeWatch’s claim submission process, sales force activities and relationships with some types of business referrals,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. “LifeWatch allegedly tried to boost profits at taxpayer expense, and, ultimately, paid $18.5 million back to the government.”
The claims resolved by the settlement are only alleg ations and do not constitute a determination of liability.
In addition to the efforts of attorneys from the U.S. Attorney’s Offices for the Western District of Washington and Southern District of Ohio and the Commercial Litigation Branch of the Civil Division of the Department of Justice in Washington, D.C., investigators from the Office of Inspector General of the Department of Health and Human Services, Defense Criminal Investigative Service and Office of Inspector General for the Office of Personnel Management assisted the government’s investigation of the whistleblowers’ allegations.
This resolution is part of the government's emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover nearly $6.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 are over $8.9 billion.
Two Bloods Gang Members in Tennessee Convicted for Roles in Three Murders, Racketeering Conspiracy and Firearms OffensesRead the Press Release
WASHINGTON – A federal jury in Nashville, Tenn., has convicted two Bloods gang members for their roles in the murder of three individuals, a racketeering conspiracy and committing firearms offenses, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Jerry E. Martin for the Middle District of Tennessee and Special Agent in Charge Glenn N. Anderson for the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Nashville Field Division.
Keairus Wilson, 22, aka “Key-Thang,” of Nashville, and Rondarius Williamson, 21, also of Nashville, were convicted yesterday in U.S. District Court in Nashville.
Wilson was found guilty on eight counts, including the murders of Michael Goins and Alexandra Franklin. He also was convicted of racketeering conspiracy, using and carrying firearms during and in relation to crimes of violence, and conspiracy to use and carry firearms during and in relation to crimes of violence.
Williamson was found guilty on seven counts, including the murder of Andreus Taylor. He also was convicted of racketeering conspiracy, using and carrying firearms during and in relation to crimes of violence, and conspiracy to use and carry firearms during and in relation to crimes of violence.
“This Nashville jury has convicted two dangerous members of the Bloods gang for acts of murder and other violent crimes,” said Assistant Attorney General Breuer. “The evidence showed, among other things, that Mr. Wilson shot and killed two people and Mr. Williamson shot and killed another person. For their terrorizing conduct, they now each face mandatory life prison terms. To date, 37 individuals have pleaded guilty or been convicted at trial in Nashville for their involvement with the Bloods. Through coordinated investigations and prosecutions of the Bloods, Crips, Aryan Brotherhood, Latin Kings, MS-13 and other violent gangs across the country, this Justice Department is working hard to make our communities safer.”
“The verdicts in this case demonstrate the unwavering commitment of the law enforcement agencies and the prosecution team to hold those accountable who insist on creating an atmosphere of violence and sustaining fear in our neighborhoods,” said U.S. Attorney Martin. “We will continue to vigorously pursue those who engage in such activity and bring them to justice.”
“Jurors in Nashville have sent a loud and clear message with regard to Kearius Wilson and Rondarius Williamson,” said ATF Special Agent In Charge Anderson. “A lifelong sentence to the Bureau of Prisons could be on the horizon for both of these individuals. Criminal activity involving senseless acts of murder, gun crimes and other gang-related activity to promote their lifestyle will always be a concern of the law enforcement officers who have worked relentlessly in this long term investigation. Other gang members in Nashville and across the United States could face similar consequences as cases like these are presented in court. Today, our neighborhoods are a safer place as this case continues to unfold through the investigative work of all the law enforcement agencies involved.”
According to evidence presented at trial, Wilson and Williamson were both members of the Bloods, a violent street gang that originated in Los Angeles in the 1970s and ultimately migrated to cities throughout the United States, including Nashville. Specifically, Wilson was a member of the Eastside Skyline Piru set of the Bloods, and Williamson was a member of the Tree Top Piru set of the Bloods. The Bloods gang has a hierarchal structure and a long-term and often lethal rivalry with the Crips gang.
From approximately 2006 until December 2011, Bloods gang members committed and conspired to commit acts of murder, attempted murder, robbery and drug trafficking. Evidence at trial showed that the Bloods gang members met regularly to plan and agree upon the crimes to commit, including murder; maintained and circulated a collection of firearms for use in criminal activity by Bloods members; distributed cocaine, cocaine base, marijuana and hydromorphone; and used the proceeds of those drug transactions to help finance the gang’s illegal activities. Bloods gang members committed murder and other acts of violence against rival gang members and others during the course of the conspiracy.
According to evidence presented at trial, Wilson and Williamson committed or conspired to commit numerous racketeering acts, including shooting at three different individuals and possessing and selling drugs. In addition, evidence specifically showed that Wilson shot and killed Goins on June 14, 2008, and shot and killed Franklin on July 19, 2008. Evidence also showed that Williamson shot and killed Taylor on May 18, 2009, and robbed and carjacked an individual on Oct. 31, 2009.
Wilson and Williamson face mandatory penalties of life in prison. U.S. District Judge Aleta Trauger scheduled sentencing for July 5, 2012.
Thirty-five individuals have pleaded guilty in the Middle District of Tennessee to various crimes related to their involvement in the Bloods gang. Kenneth Gaddie, aka “K.G.,” remains a fugitive.
Lonnie Greenlee, co-founder of the Galaxy Star Drug Awareness and Gang Prevention Center in Nashville and father of lead defendant Lonnie Newsome, allowed Bloods gang members to use the facility to conduct gang meetings. According to evidence presented at trial, Greenlee provided numerous Bloods gang members with fraudulent documentation of court-ordered community service hours in exchange for money. Greenlee pleaded guilty in May 2011 to one count of racketeering conspiracy. His sentencing is scheduled for April 2, 2012.
The investigation was a joint operation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Metropolitan Nashville Police Department; U.S. Marshals Service; the LaVergne, Tenn., Police Department; and the Davidson County, Tenn., Sheriff’s Office. The case was prosecuted by Trial Attorney Cody L. Skipper of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Scarlett M. Singleton for the Middle District of Tennessee.
Pennsylvania- Based Eusa Pharma (USA) Inc. to Pay U.S. $180,000 for Allegedly Submitting Inflated Claims to MedicareRead the Press Release
WASHINGTON – EUSA Pharma (USA) Inc. has agreed to pay the United States $180,000 to resolve claims that it violated the False Claims Act by allegedly encouraging doctors to submit inflated claims to Medicare for imaging scans, the Justice Department announced today. EUSA Pharma (USA) is headquartered in Langhorne, Pa.
The United States alleged that EUSA Pharma, which makes and sells ProstaScint, a radiopharmaceutical, advised health care providers to submit multiple claims for certain imaging scans performed following use of ProstaScint, after the Society of Nuclear Medicine informed the company that only one claim should be submitted for these scans.
“Today’s settlement demonstrates our commitment to ensuring that the Medicare Trust Fund is used to pay for necessary medical care and is not depleted as a result of marketing schemes intended to increase sales by inflating government reimbursements,” said Stuart F. Delery, Acting Assistant Attorney General of the Justice Department’s Civil Division. “We will continue to hold accountable those who abuse public health care programs at the expense of taxpayers.”
Today’s settlement resolves a lawsuit filed by former EUSA Pharma employee Ann-Marie Williams under the qui tam, or whistleblower provisions, of the False Claims Act. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. Ms. Williams will receive $30,600 as her share of the government’s recovery.
This resolution is part of the government's emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover nearly $6.7 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department's total recoveries in False Claims Act cases since January 2009 are over $8.9 billion.
The investigating agencies were the FBI’s Washington Field Office and the Office of Criminal Investigations of the U.S. Food and Drug Administration.
Lockheed Martin Corporation Reaches $15.85 Million Settlement<br /> with U.S. to Resolve False Claims Act AllegationsRead the Press Release
WASHINGTON – Lockheed Martin Corporation has agreed to pay $15,850,000 to settle allegations that it mischarged perishable tools used on numerous government contracts, the Department of Justice announced today. Lockheed Martin, headquartered in Bethesda, Md., is one of the world’s largest defense contractors.
Today’s settlement resolves allegations that the government was overcharged as a result
of a seven-year pricing scheme by Tools & Metals Inc. (TMI), a subcontractor that sold perishable tools to Lockheed Martin for use on military aircraft, including the F-22 and the F-35 fighter jets. Specifically, the government alleged that TMI inflated the costs of these tools between 1998 and 2005, and that Lockheed Martin passed these costs on to the United States under its various contracts with the government. On Dec. 8, 2005, Todd B. Loftis, a former president of TMI, pleaded guilty and was sentenced to seven years in prison in connection with his role in TMI’s scheme.The United States subsequently brought civil claims against Lockheed Martin under the False Claims Act, alleging that Lockheed Martin contributed to the inflated amounts paid by the United States in connection with TMI’s pricing scheme. Specifically, the government alleged that Lockheed Martin acted recklessly by failing to adequately oversee TMI’s charging practices and by mishandling information revealing these practices. These allegations are the subject of today’s settlement between the United States and Lockheed Martin.
“It is troubling that a large defense contractor with long-established contractual ties with the United States failed to undertake appropriate measures to ensure the integrity and validity of the costs it submitted to the United States,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.
“This settlement demonstrates the government’s commitment to devoting the necessary resources to protect taxpayer funds from the most complex mischarging schemes,” stated Sarah R. Saldaña, U.S. Attorney for the Northern District of Texas.
Today’s settlement also settles two qui tam, or whistleblower, actions brought under the whistleblower provisions of the False Claims Act and consolidated in the U.S. District Court in Dallas. The case is captioned U.S. ex rel. Becker, et al. v. Tools & Metals, Inc., et al., Civil Action No. 3:05-CV-0627-L.
Under the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of the recovery. The whistleblowers in the two cases resolved by the settlement, Robert Spencer and John Becker, will split a $2 million share of the government’s recovery.
This matter was jointly handled by the Defense Criminal Investigative Service, the Air Force Office of Special Investigations, the Defense Contract Audit Agency, the Contract Integrity Offices of the Departments of the Air Force and the Navy, the Defense Contract Management Agency, the Department of Justice's Civil Division and the U.S. Attorney's Office for the Northern District of Texas.
Justice Department Announces Agreement to Protect Rights of Military and Overseas Voters in WisconsinRead the Press Release
WASHINGTON – The Justice Department announced today that it has reached an agreement with Wisconsin officials to help ensure that military servicemembers, their family members and U.S. citizens living overseas have the opportunity to participate fully in Wisconsin’s April 3, 2012, federal presidential primary election.
The agreement was filed at the same time as a lawsuit brought under the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA) and signed today by the federal district court in Madison, Wis. The suit alleges that the state failed to send absentee ballots to over 200 of Wisconsin’s eligible military and overseas voters for the April 3, 2012, presidential primary election in sufficient time for those voters to receive, cast and return their ballots. The agreement provides additional time for receipt of absentee ballots to ensure eligible military and overseas voters, who requested ballots from one of the Wisconsin municipalities (at least 65) that sent ballots late, will have sufficient time to vote. Under the agreement, affected voters who have not yet received their ballots will also be offered the opportunity to receive their ballots electronically.“As this agreement demonstrates, we will remain steadfast in our efforts to ensure that members of our armed forces, their families and overseas citizens are offered a full and meaningful opportunity to vote in our nation’s elections,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I commend the Wisconsin Government Accountability Board and its executive director for working cooperatively with the department and agreeing to measures that will ensure Wisconsin’s military and overseas voters will have a full opportunity to have their votes counted in the upcoming presidential primary election as well as in future federal elections.”
“Servicemembers make tremendous sacrifices for our nation,” said John W. Vaudreuil, U.S. Attorney for the Western District of Wisconsin. “We are committed to seeing that Wisconsin meets its obligations to ensure that military voters, as well as U.S. citizens who are overseas, are given the opportunity to cast a meaningful vote.”
UOCAVA requires states to allow uniformed service voters (serving both overseas and within the United States) and their families and overseas citizens to register to vote and to vote absentee for all elections for federal office. In 2009, Congress enacted the MOVE Act, which made broad amendments to UOCAVA. Among those changes was a requirement that states must transmit absentee ballots to voters covered under UOCAVA, by mail or electronically at the voter’s option, no later than 45 days before federal elections.
The agreement, which has been approved by the federal district court in Madison, also commits Wisconsin to closely monitor its municipalities’ UOCAVA compliance, provide assistance to its municipalities when necessary and report back to the United States about its UOCAVA compliance during the 2012 federal election cycle. In addition, the agreement requires Wisconsin to take steps to ensure compliance with UOCAVA in future federal elections and provide a report to the Department of Justice on those efforts.
More information about UOCAVA and other federal voting laws is available on the Department of Justice website at http://www.justice.gov/crt/about/vot/misc/activ_uoc.php. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.