District Not Recorded

WASHINGTON — A Detroit federal grand jury returned an indictment today against three former executives from Panasonic Corporation, a Whirlpool Corporation subsidiary and a Tecumseh Products Company subsidiary for their role in an international conspiracy to fix the prices of refrigerant compressors, which are used in refrigerators and freezers in homes and businesses, the Department of Justice announced.  

 

The indictment, returned today in U.S. District Court in Detroit, charges Ernesto Heinzelmann, former president and chief executive officer of Empresa Brasileira de Compressores S.A. (Embraco), a division of Whirlpool S.A.; Gerson Veríssimo, former president of Tecumseh do Brasil Ltda., a subsidiary of Tecumseh Products Company; and Naoki Adachi, general manager of global sales & SE group, refrigeration devices division at Panasonic Corporation, with conspiring to suppress and eliminate competition by coordinating price increases for refrigerant compressors to customers in the United States and elsewhere.  Heinzelmann and Veríssimo are charged with participating in the conspiracy from at least as early as Oct.14, 2004, until on or about Dec. 31, 2007.  Adachi is charged with participating in the conspiracy from at least as early as May 10, 2006, until on or about Dec. 31, 2007.  Heinzelmann, Veríssimo and Adachi are the first executives charged in the ongoing investigation into the worldwide refrigerant compressors market. 

 

Refrigerant compressors take in low-pressure refrigerant, compress it and then pump out a high-pressure vapor, which condenses and subsequently cools devices such as refrigerators and freezers.

 

“Cracking down on international price fixing cartels has been and will continue to be among the most significant priorities for the Antitrust Division,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “Our investigation into the refrigerant compressors industry has already resulted in two companies – Panasonic and Embraco North America – pleading guilty and paying a total of $140.9 million in criminal fines.  Our investigation is continuing.”

 

According to the indictment, Heinzelmann, Veríssimo and Adachi carried out the conspiracy by participating in or directing the participation of subordinate employees in meetings and conversations to coordinate price increases of refrigerant compressors in the United States and elsewhere.  As part of the conspiracy, Heinzelmann, Veríssimo, Adachi and co-conspirators sold and accepted payments for the compressors at collusive and non-competitive prices.  

 

Heinzelmann, Veríssimo and Adachi are charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of 10 years in prison and a $1 million fine for individuals.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

 

On Nov. 15, 2010, Panasonic Corporation pleaded guilty and was sentenced to pay a $49.1 million criminal fine, and on Dec.16, 2010, Embraco North America Inc. pleaded guilty and was sentenced to pay a $91.8 million criminal fine.

 

Today’s charge is the result of a joint investigation into the worldwide refrigerant compressors industry being conducted by the Antitrust Division’s Cleveland Field Office and the FBI’s Detroit Field Office, Ann Arbor, Resident Agency.  Anyone with information concerning price fixing or other anticompetitive conduct in the refrigerant compressor industry is urged to call the Antitrust Division’s Cleveland Field Office at 216-687-8400 or visit www.justice.gov/atr/contact/newcase.htm. 

WASHINGTON – Attorney General Eric Holder today convened the second meeting of thefederal interagency Reentry Council to address ways to ensure those returning from prison become productive, law-abiding citizens. Among the topics discussed were $83 million in Fiscal Year 2011 funding the Department of Justice will award for Second Chance Act grants and other reentry programs as well as the latest in a series of “Reentry Myth Busters,” fact sheets intended to educate employers and others about the impact of federal laws on those who are formerly incarcerated and seeking jobs, housing and federal assistance or benefits.

 

Today’s federal Reentry Council meeting was attended by Department of Labor Secretary Hilda Solis, Department of Health and Human Services Secretary Kathleen Sebelius, Department of Housing and Urban Development Secretary Shaun Donovan and Director of the White House Domestic Policy Council Melody Barnes. In addition to those agencies, the Federal Reentry Council, which meets semi-annually, also includes representatives from the Department of Interior, Department of Agriculture, Department of Education, the Department of Veterans Affairs, the Office of National Drug Control Policy and several other federal agencies. Its mission is to reduce recidivism and victimization; assist those returning from prison, jail or juvenile facilities to become productive citizens; and save taxpayer dollars by lowering the direct and collateral costs of incarceration. 

 

“ We must use every tool at our disposal to tear down the unnecessary barriers to economic opportunities and independence so that formerly incarcerated individuals can serve as productive members of their communities,” said Attorney General Holder. “The Department of Justice today announced it is providing funding to local organizations whose critical work will reduce recidivism and victimization.  At the same time, the council is ensuring these individuals and their families have the facts about federal policies and resources governing employment issues, veterans’ benefits and voting rights as they return home.”

 

The council also released several new “Reentry Myth Busters,” fact sheets designed to clarify existing federal policies that affect formerly incarcerated individuals and their families in areas such as public housing, employment issues, access to benefits, parental rights, and more.  The new Myth Busters focus on veterans’ benefits, voting rights, criminal background checks, taxes and Medicaid eligibility.

 

Laurie O. Robinson, Assistant Attorney General in the Department’s Office of Justice Programs (OJP), also announced that 131 grants were recently awarded with the $83 million appropriated by Congress in Fiscal Year 2011 for the Second Chance Act and other reentry programs. 

 

“The fact that we received more than 1,000 applications for Second Chance funding this year shows that states and communities around the country are working together on reentry issues and community safety,” explained Assistant Attorney General Robinson.

 

OJP’s Bureau of Justice Assistance (BJA) and Office of Juvenile Justice and Delinquency Prevention (OJJDP) will oversee the grants that will support reentry planning and demonstration projects for adults and juveniles; state, local, and tribal reentry courts; family-based substance abuse treatment programs; reentry programs for adults with co-occurring substance abuse and mental health disorders; mentoring programs; and technology career training projects for incarcerated individuals.

 

 “Here at BJA, we are committed to promoting partnerships among reentry stakeholders and to supporting a coordinated approach to evidence-based reentry programs. We will be collecting data from these grantees so we can learn more about effective reentry programs and, ultimately, quantify the costs and benefits of reentry programs,” said BJA Director Denise E. O’Donnell.

 

“Formerly incarcerated youth are at high risk for recidivism and need mentoring and other transitional support services,” said Jeff Slowikowski, Acting Administrator of OJJDP.  “We are working closely with our partners as they develop and implement evidence-based reentry strategies that can strengthen public safety in their communities and make a difference in the futures of their youth.”

 

OJP’s National Institute of Justice (NIJ) awarded funding to researchers Alfred Blumstein and Kiminori Nakamura to continue previously funded NIJ research which looked at the “point of redemption" – when a prior arrest no longer distinguishes a person’s risk of future criminal arrests compared to a similar person in the general population.

 

 NIJ’s reentry research portfolio also supports the evaluation of innovative reentry programs, particularly statewide reentry initiatives, and research that examines the process of reentering society within the context of the community, neighborhood and family into which the former offenders return.

 

To access these studies and NIJ’s entire reentry research portfolio visit www.nij.gov/nij/topics/corrections/reentry/welcome.htm

 

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

 

Reentry Myth Busters are available at www.nationalreentryresourcecenter.org/documents/0000/1090/REENTRY_MYTHBUSTERS.pdf . 

 

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

WASHINGTON – The Justice Department announced today that the developer and designers of an apartment complex in Washington Township, Mich., have agreed to settle a lawsuit alleging that they violated the Fair Housing Act when they designed and constructed a 200 unit apartment complex with steps to the front door and other barriers that make it inaccessible to persons with disabilities.

 

Under the agreement, which must still be approved by the court, developer, Enclave Development LLC, will make extensive modifications to the complex over the next three years to improve accessibility, and Enclave Development and the other defendants will pay $30,000 to compensate persons who have been harmed by the inaccessible design and construction. The case was investigated and brought jointly by the U.S. Attorney’s Office for the Eastern District of Michigan and the Civil Rights Division of the Department of Justice.

 

“Our federal laws guarantee that persons with disabilities have choices about where they live,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “Enforcement actions like this one illustrate the department’s commitment to removing barriers so that housing is accessible and available for persons with disabilities.”

 

“The law requires access to housing for people with disabilities, including returning veterans and others with impaired mobility,” said Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan. “This case is important so that our disabled citizens are not excluded from housing opportunities, which affect every other aspect of life, such as access to transportation, schools and jobs.”

 

The proposed consent order would settle a lawsuit filed by the department on Jan.12, 2009. Under the settlement, the defendants will:

• Make retrofits to all 200 units in the complex to make them more accessible;
• Ensure that future or ongoing construction meets the accessibility requirements of the Fair Housing Act; and
• Establish a $30,000 fund to pay individuals who were harmed by the lack of accessible features at the properties.

The lawsuit arose after the Fair Housing Center of Metropolitan Detroit conducted accessibility testing at the Enclave Apartments and provided the testing results to the U.S. Attorney’s Office for the Eastern District of Michigan. Defendants include the developer, The Enclave Development LLC; the architects who designed the complexes, Robert Lipka P.C., and Chester Stempien and Associates; and the civil engineer, MCS Associates Inc.

 

The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. Among other things, the act requires all multifamily housing constructed after March 12, 1991 to have basic accessibility features, including accessible routes without steps to all ground floor units. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt . Individuals who believe that they may have been victims of housing discrimination at the Enclave Apartments should call the Housing Discrimination Tip Line at 1-800-896-7743, mailbox number 95, or the U.S. Attorney’s Office civil rights hotline at 313-226-9151, or email the Justice Department at [email protected] . Individuals who believe they may have been victims of housing discrimination may also contact Department of Housing and Urban Development at 1-800-669-9777.

WASHINGTON – Guidant LLC, a wholly owned subsidiary of Boston Scientific Corp. of Natick, Mass., has agreed to pay the United States $9.25 million to resolve False Claims Act allegations, the Justice Department announced today. The government alleges that the company inflated the cost of replacement pacemakers and defibrillators to federal health care programs by knowingly failing to grant warranty credits and rebates to hospitals for pacemakers and defibrillators that were explanted while covered under a product warranty or another credit program.

 

The settlement resolves allegations that Guidant actively promoted the longevity and reliability of its pacemakers and defibrillators to physicians in an effort to convince them to purchase Guidant products over competing devices. Guidant reinforced these claims by touting the generous credits available should a device need to be replaced while covered under warranty.

At the same time, Guidant allegedly was fully aware that it failed to grant an appropriate credit to the purchaser of the device in a large number of cases where a product failed while still under warranty. As a result, the United States contends that Guidant submitted invoices to Department of Veterans Affairs hospitals and Department of Defense facilities that overstated the cost for a replacement pacemaker or defibrillator. In addition, Guidant’s alleged submission of inflated invoices for pacemakers and defibrillators to private hospitals caused these hospitals to overstate the cost of these devices on hospital cost reports, resulting in Medicare paying more for pacemakers and defibrillators than it otherwise should have.

“Overcharging for lifesaving medical devices wastes taxpayer dollars,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “As we all look for ways to reduce public expenditures, settlements like this one – which recapture funds that were spent due to fraud – help support important public health care programs that so many people depend on.”

“Protecting the taxpayers’ interest by vigorously enforcing the False Claims Act is a top priority for this office,” said Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee. “Corporations and individuals who bill Medicare and Medicaid should know that the U.S. Attorneys’ Office for the Middle District of Tennessee now has one of largest units in the country devoted to litigating false claims cases, and we will aggressively pursue fraud and abuse.”

The civil settlement resolves allegations contained in a whistleblower lawsuit filed in federal court in the Middle District of Tennessee under the qui tam provisions of the False Claims Act, which allow for private citizens to bring civil actions on behalf of the United States and share in any recovery. As part of today’s resolution, the whistleblower – Robert A. Fry – will receive payments totaling more than $2.3 million from the settlement amount.

“Major device manufacturers will be held accountable for improper marketing strategies,” said Derrick L. Jackson, the Special Agent in Charge of the Department of Health and Human Services Office of Inspector General in Atlanta, “This settlement sends the clear message that defrauding federal health care programs is a losing business proposition.”

This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover more than $5. 9 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 $ 7.6 billion.

The settlement was the result of an investigation by the U.S. Attorney’s Office for the Middle District of Tennessee, the Justice Department’s Civil Division, and the Offices of Inspector General at the U.S. Department of Defense, Health and Human Services, and Veterans Affairs.

WASHINGTON - A Bloods gang member was sentenced today in Nashville, Tenn., to eight years in prison for participating in racketeering activity related to his membership in the Bloods criminal enterprise, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Jerry E. Martin for the Middle District of Tennessee.

 

Antonio Washington, 22, aka “T.O.,” of Nashville, also was ordered by U.S. District Judge Aleta Trauger to serve five years of supervised release following his prison term. Washington pleaded guilty on June 21, 2011, to the racketeering conspiracy.

 

According to court documents, Washington and other Bloods gang members and associates agreed to commit multiple acts of robbery, narcotics trafficking and bribery on behalf of the Bloods gang. Washington and numerous Bloods gang members met on a regular basis at various locations throughout the Middle District of Tennessee, including Shelby Park, Cedar Hill Park and the Galaxy Star Drug Awareness and Gang Prevention Center in Nashville, to report on gang-related business, collect dues, commit disciplinary actions against fellow gang members, discuss acts of violence against rival gang members, and initiate or “jump in” new members by beating them for a period of time, among other things.

 

Washington admitted that on March 28, 2010, during a Bloods gang meeting at Galaxy Star Drug Awareness and Gang Prevention Center, he and numerous other Bloods gang members voted to punish Bloods member Joedon Bradley. Following the vote, the Bloods gang members exited the building and formed a large circle in the backyard behind a wooden fence, where several groups of Bloods gang members violently assaulted Bradley.

 

According to court documents, on April 14, 2010, Washington and other known Bloods gang members and associates agreed to rob an individual of approximately 30 pounds of marijuana. Washington admitted that, armed with a pistol, he rode in a vehicle with several known Bloods gang members to commit the robbery. However, when Washington and the other Bloods gang members arrived at the location, they were unable to commit the robbery because of the presence of law enforcement in the area.

 

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Metropolitan Nashville Police Department; and the Gallatin, Tenn., Police Department. The U.S. Marshals Service and the Davidson County, Tenn., District Attorney’s Office also provided assistance.

 

The case is being prosecuted by Assistant U.S. Attorney Scarlett M. Singleton for the Middle District of Tennessee and Trial Attorney Cody L. Skipper of the Criminal Division’s Organized Crime and Gang Section.

WASHINGTON – A Las Vegas woman pleaded guilty today for her role in a scheme to fraudulently gain control of condominium homeowners’ associations (HOA) in the Las Vegas area so that the HOAs would direct business to a certain law firm and construction company, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, Special Agent in Charge Kevin Favreau of the FBI Las Vegas Field Office, Sheriff Doug Gillespie of the Las Vegas Metropolitan Police Department and Special Agent in Charge Paul Camacho of the Internal Revenue Service-Criminal Investigation (IRS-CI).

 

Deborah Genato, 41, pleaded guilty before U.S. District Judge Lloyd D. George in the District of Nevada to one count of conspiracy to commit mail and wire fraud.  Genato is the fourth person to plead guilty in connection with the scheme to defraud HOAs in the Las Vegas area.

 

According to the plea agreement, Genato was the property manager for three condominium complexes in the Las Vegas area, Vistana, Park Avenue and Chateau Nouveau.  Genato admitted that from at least as early as February 2007 until at least approximately February 2009, she participated in a scheme to control various HOA boards of directors so that the HOA boards would award the handling of construction-related lawsuits and remedial construction contracts to a law firm and construction company designated by Genato’s co-conspirators.

 

According to plea documents, in order to accomplish the scheme, co-conspirators used straw purchasers to obtain mortgage loans for units within HOA communities.  According to plea documents, Genato’s co-conspirators managed and operated the payments associated with maintaining straw properties owned and controlled by co-conspirators by running a so-called “Bill Pay Program,” by which co-conspirators funded the properties through several limited liability companies at the direction of a co-conspirator.  Many of the payments were wired from California to Nevada.  Co-conspirators also transferred an interest in some of the units to other co-conspirators to make it appear as if the co-conspirator was a bona fide homeowner. 

 

Court documents indicate that the straw purchasers and those who acquired transferred interest in a unit agreed to run for election to the respective HOA boards.  These co-conspirators were paid in cash, check or promised things of value for their participation, all of which resulted in a personal financial benefit to the co-conspirators.

 

Genato admitted that to ensure that her co-conspirators would win the elections, she and others employed deceitful tactics, such as creating false phone surveys to gather information about homeowners’ voting intentions, using mailing lists to vote on behalf of out-of-town homeowners unlikely to participate in the elections, and submitting fake and forged ballots.  Co-conspirators also hired private investigators to find “dirt” on the bona fide candidates in order to create smear campaigns.  Genato admitted that she used her position as property manager at Vistana, Park Avenue and Chateau Nouveau to provide mailing lists, labels and other voting materials to create fake election ballots.  Genato also admitted that she allowed co-conspirators to gain access to the election ballots that had been mailed into the property management company by the bona fide homeowners prior to the election date.

 

According to plea documents, another tactic the co-conspirators used to rig certain HOA board elections was to prepare forged ballots for out-of-town homeowners and either cause them to be transported or mailed to California and thereafter to have the ballots mailed back to Las Vegas from various locations around California to make the forged votes for out-of-town homeowners appear to be legitimate.

 

Court documents indicate that the c o-conspirators also attempted to create the appearance that the elections were legitimate by hiring independent attorneys to run the HOA board elections.  The homeowners were led to believe that these “special election masters” were supposed to handle tasks including contacting the bona fide homeowners to inform them of the election, mailing the bona fide homeowners election ballots and voting instructions, collecting and securing the election ballots, and presiding over the HOA board election, including supervising the counting of ballots.  However, the “special election masters” too, were paid in cash, check and promised things of value, by or on behalf of Genato’s co-conspirators for their assistance in rigging the elections.

 

According to plea documents, once elected, the co-conspirator board members would meet with other co-conspirators in order to manipulate board votes, including the selection of property managers, contractors and general counsel for the HOA and attorneys to represent the HOA.  Also, the co-conspirators created and submitted fake bids for “competitors” to make the process appear to be legitimate while ensuring co-conspirators were awarded the contract. 

 

Genato admitted that once hired, she and her co-conspirator property manage rs breached their fiduciary duties by receiving and accepting cash, check or things of value for using their positions to gain inside information and recommend that the HOA board hire certain co-conspirators for remediation and construction defect repairs and for construction defect litigation, and concealing their relationship with the co-conspirators from the bona fide homeowners.  According to plea documents, this process created the appearance of legitimacy since bona fide homeowners believed the elected board members and property managers were, as fiduciaries, acting in their best interest rather than to advance the financial interests of co-conspirators.  Genato admitted that she and her co-conspirators were paid or received things of value for their assistance in purchasing the properties, obtaining HOA membership status, rigging elections, using their positions to manipulate the HOA’s business and to further the goals of the conspiracy and enrich the co-conspirators at the expense of the HOA and the bona fide homeowners

 

Genato’s sentencing is scheduled for Jan. 6, 2012.  The maximum sentence for conspiracy to commit mail fraud and wire fraud is 30 years in prison. 

 

The case is being prosecuted by Deputy Chief Charles La Bella, Assistant Chief Michael Bresnick and Trial Attorneys Nicole H. Sprinzen and Mary Ann McCarthy of the Criminal Division' s Fraud Section. The case is being investigated by the FBI; the Las Vegas Metropolitan Police Department, Criminal Intelligence Section; and the IRS-CI.

 

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

WASHINGTON – Four alleged members and associates of the New England La Cosa Nostra (LCN), including an alleged Rhode Island leader, have been arrested and charged in a second superseding indictment returned yesterday in federal court in Providence, R.I., with crimes involving racketeering and extortion.

 

The charges and arrests were announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Peter F. Neronha for the District of Rhode Island; John T. Foley, Assistant Special Agent in Charge (ASAC) of the FBI’s Boston Field Office; Colonel Steven G. O’Donnell, Superintendent of the Rhode Island State Police; and Steven M. Pare, Providence Public Safety Commissioner.

 

“Relying on violence and intimidation to carry out their illegal activities, organized criminal groups often act as though if they operate in the shadows, they will escape punishment,” said Assistant Attorney General Breuer.  “As today’s arrests show, they couldn’t be more wrong.  Our law enforcement operations over the past nine months should make clear that we are zeroing in on La Cosa Nostra and other organized criminal groups, and that we will not rest until our work is done.” 

 

“As Attorney General Holder said in New York last January, battling all forms of organized crime, including La Cosa Nostra, remains a priority for the Department of Justice,” said U.S. Attorney Neronha.  “It remains a priority because history has demonstrated that, unchecked, it extends its tentacles into our citizens’ everyday lives.  Let no one doubt the commitment of law enforcement to keeping this threat off balance and on the run.”

‪ “The methodical nature of this investigation is a credit to the diligence and professionalism of our task force which is composed of the Rhode Island State Police, Providence Police, Internal Revenue Service and the U.S. Attorney’s Office,” said FBI ASAC Foley.  “Since its inception, the task force’s combined decades of investigative experience and knowledge of La Cosa Nostra’s criminal schemes has been a blueprint for the extraordinary success that is readily apparent today.  In simple terms, the FBI’s Task Force has shattered Omerta, the New England LCN’s code of silence, severely disrupting their criminal activity.”

‪Charges were unsealed today against Edward Lato, 64, aka “Eddy”; Alfred Scivola, 70, aka “Chippy”; Raymond R. Jenkins, 47, aka “Scarface”; and Albino Folcarelli, 53, aka “Albie” related to their alleged participation in the New England LCN.  Lato is charged with racketeering conspiracy, two counts of extortion conspiracy and two counts of travel in aid of racketeering.  Scivola is charged with racketeering conspiracy and extortion conspiracy.  Folcarelli is charged with extortion conspiracy, and Jenkins is charged with extortion conspiracy and extortion.  

‪Lato, Scivola, Jenkins and Folcarelli were arrested yesterday and today, and made initial appearances in U.S. District Court in Providence today.  At the government’s request, all four defendants were detained by U.S. Magistrate Judge David L. Martin.

‪Previously charged were longtime New England LCN boss Luigi Manocchio and associates Thomas Iafrate, Richard Bonafiglia and Theodore Cardillo.  The second superseding indictment contains new allegations regarding Manocchio’s alleged involvement in the extortion of additional businesses and efforts to conceal his unexplained wealth.  Iafrate pleaded guilty in July 2011 to racketeering conspiracy.  ‪The department announced charges against 127 individuals, including 91 alleged leaders, members and associates – including Manocchio and Iafrate – of LCN families in four districts on Jan. 20, 2011, as part of a coordinated enforcement action against the LCN.

The second superseding indictment alleges that since the mid-1980s, the defendants and other New England LCN members and associates used threatened or implied force, violence and fear, to extort monthly cash payments from the owners and operators of the Cadillac Lounge, the Satin Doll, the Foxy Lady, Desire and other adult entertainment businesses in Providence and elsewhere.

‪According to court documents, the New England LCN family operates in Providence, among other places, and routinely engages in violence and threatens violence to promote a climate of fear, preserve its power, and enrich its members and associates through extortion.  The New England LCN has a hierarchical structure, with an administration comprised of a boss, underboss and capos at the top overseeing crews of criminals, including members and associates who commit crimes and serve to insulate the leadership of the enterprise from criminal exposure.

‪The second superseding indictment alleges that as a capo, Lato was responsible for the Rhode Island New England LCN members and their activities.  The indictment also alleges that he received monthly protection payments, in cash, from the owners and operators of certain adult entertainment businesses in Providence, including the Satin Doll and the Cadillac Lounge.  At various times, the monthly payments from each of the clubs ranged from $2,000 to $6,000.  According to the indictment, after Iafrate and Manocchio were arrested in January 2011, Lato met with another individual in February 2011 to discuss the continuation of the extortion of the Cadillac Lounge, as well as the extortion of other adult entertainment clubs. 

 

According to the indictment, Scivola received a portion of the various extortion payments made to the New England LCN by certain adult entertainment businesses, and he assisted Lato and others in carrying out the extortion scheme.  The indictment also alleges that Jenkins and Folcarelli were associates of the New England LCN and that, together with Lato, they extorted $25,000 from an individual by using implied threats of violence, including a visit to the individual’s place of employment.

 

Each charge of racketeering conspiracy, extortion conspiracy and extortion carries a maximum penalty of 20 years in prison and a $250,000 fine.  The charge of travel in aid of racketeering carries a maximum penalty of five years in prison and a $250,000 fine.  The charges announced today are merely allegations, and defendants are presumed innocent unless proven guilty in a court of law.

 

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

WASHINGTON – Matthew David Howard Smith, 23, of Raleigh, N.C., pleaded guilty today for his role in founding a website that provided millions of users with the ability to illegally download copyright-protected movies and television programs.

 

The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.

 

Smith pleaded guilty before U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia to conspiracy and criminal copyright infringement.  At sentencing, scheduled for Dec. 16, 2011, Smith faces a maximum penalty of five years in prison on each count.

 

According to the court documents, Smith was one of the founders of NinjaVideo, which operated from February 2008 until it was shut down by law enforcement in June 2010.  He admitted that he designed many of the operational elements of the website that enabled millions of visitors to illegally download infringing copies of movies and television programs in high-quality formats.  Many of the movies offered on the website were still playing in theaters, while others had not yet been released.  While visitors to the website were permitted to download infringing copies for free, they were invited to make donations, which provided them access to private forum boards that contained a wider range of infringing material.  A premium member obtained the rights to request specific infringing content, which the NinjaVideo administrators would then seek to fulfill.

 

Smith admitted that he made agreements with online advertising entities to generate income for the website, and he and his co-conspirators collected more than $500,000 during the website’s two-and-a-half years of operation. 

 

On Sept. 9, 2011, Smith was indicted along with four other alleged co-conspirators associated with NinjaVideo. The remaining defendants are scheduled for a jury trial on Jan. 20, 2011.      

 

The case is being prosecuted by Trial Attorney Glenn Alexander of the Criminal Division’s Computer Crime & Intellectual Property Section and Assistant U.S. Attorneys Jay V. Prabhu and Lindsay A. Kelly.

 

The investigation was conducted by ICE’s Homeland Security Investigations-led National Intellectual Property Rights Coordination Center (IPR Center).  This IPR Center is one of the U.S. government's key weapons in the fight against criminal counterfeiting and piracy.  As a task force, the IPR Center uses the expertise of its 19 member agencies to share information, develop initiatives, coordinate enforcement actions, and conduct investigations related to IP theft.  Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and the war fighters.

 

To report IP theft or to learn more about the IPR Center, visit www.IPRCenter.gov.

 

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

WASHINGTON –A former captain in the U.S. Army Reserve stationed in Afghanistan was sentenced today to 120 months in prison for soliciting $1.3 million in bribes from contractors involved in U.S.-funded reconstruction efforts and participating in a conspiracy to traffic heroin from Southeast Asia.

 

The sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.

 

Sidharth Handa, 32, was sentenced by U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia. Handa was also ordered to pay $315,000 in restitution. Handa, of Charlotte, N.C., pleaded guilty on June 21, 2011, to soliciting and accepting bribes while serving as a public official and to conspiring to distribute a kilogram of heroin.

 

“Mr. Handa used his official position assisting the United States’ reconstruction efforts in Afghanistan to line his pockets,” said Assistant Attorney General Breuer. “He promised multi-million dollar contracts to Afghan businessmen in exchange for cash. He was so meticulous about collecting his bribes that he kept track of them on a spreadsheet. We will not tolerate this kind of fraud and abuse. Today’s sentence reflects the disgracefulness of Mr. Handa’s conduct.”

 

“This case is the largest bribery prosecution to date from our mission in Afghanistan,” said U.S. Attorney MacBride. “From the day he stepped foot in Afghanistan, Mr. Handa negotiated a staggering amount of bribes from contractors in a blatant breach of the trust our military put in him. His actions brought shame to our mission, harmed our reconstruction efforts, and defrauded American taxpayers who funded the contracts he looted.”

 

According to court records, Handa was stationed in Afghanistan from March through November 2008 and served as the liaison to the local governor and engineers on the Kunar Province Reconstruction Team (PRT). In that position, Handa assisted in awarding reconstruction project contracts funded by the U.S. government to local contractors through a competitive bidding process. Handa admitted that almost immediately upon his arrival in Afghanistan, he became engaged in a scheme to secure bribes from contractors who sought to secure large PRT construction projects. With the help of an Afghan interpreter, Handa typically solicited bribes equal to 10 percent of the overall contract value, though the actual bribe payment was negotiated based on the contractor’s ability to pay. The total value of bribes contractors agreed to pay amounted to $1,323,000, and Handa and the interpreter collected $315,000, which they split evenly.

 

Handa admitted that after leaving Afghanistan, he tried to collect over $1 million in bribe money that contractors had pledged to pay. A cooperating witness (CW) offered to help Handa collect the money, and through 2010 and early 2011 Handa provided the CW with details of outstanding bribes and other relevant facts to help secure the promised bribes. During the course of these conversations with the CW, Handa indicated that he knew people in the drug business and he and the CW developed plans to sell kilogram quantities of Southeast Asian heroin to Handa’s drug contacts.

 

According to court documents, on April 7, 2011, Handa met with the CW and an undercover officer in a northern Virginia hotel, where Handa received what he believed was $500,000 in collected bribe payments and acknowledged that he knew the right people to receive the kilogram of heroin the undercover officer showed him. Law enforcement arrested Handa as he was leaving the hotel with the bribe money, a loaded handgun and a spreadsheet detailing specific bribe amounts paid and outstanding.

 

This case was investigated jointly by member agencies of the International Contract Corruption Task Force, including the Special Inspector General for Afghanistan Reconstruction, the FBI’s Washington Field Office and the Defense Criminal Investigative Service, and also by the Drug Enforcement Administration. The case is being prosecuted by Senor Trial Attorney David Bybee of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Kosta Stojilkovic and Dennis Fitzpatrick of the Eastern District of Virginia.

WASHINGTON – A federal court in Los Angeles has permanently barred Mario Placencia from preparing federal tax returns for others, the Justice Department announced today. The civil injunction order, to which Placencia consented, was signed by Judge Dale S. Fischer of the U.S. District Court for the Central District of California. The court also required Placencia to contact customers who have paid him to prepare returns since Jan.1, 2003, and inform them of his consenting to the injunction.

 

According to the government complaint, Placencia, of Alhambra, Calif., conducted business in Montebello, Calif., under the name MP Accounting Services. The government alleged that Placencia prepared federal income tax returns that contained false or inflated expenses on various schedules and fabricated false reports of his customers’ home-mortgage-interest payments.

According to the complaint, in April 2011 Placencia was indicted on 61 counts of aiding and assisting in the preparation and presentation of false income tax returns, as well as one count of corruptly obstructing and impeding the due administration of the internal revenue laws. The complaint states that Placencia entered a guilty plea as to three of the counts in July 2011 and admitted in the plea agreement that, for tax years 2003 through 2009, he caused the government to incur a tax loss of nearly $8 million by intentionally inflating amounts of home mortgage interest on his customers’ returns.

 

Return preparer fraud is identified by the IRS as one of the “Dirty Dozen” tax scams taxpayers are urged to avoid. In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department website.

WASHINGTON – Janika Fernae Bates Millbrook, Ala., was convicted of identity theft, wire fraud, aggravated identity theft and conspiracy to make false claims for tax refunds, the Justice Department and Internal Revenue Service (IRS) announced today.

 

According to evidence introduced at trial, Bates obtained the names and Social Security numbers of student loan borrowers from the databases at her former employer, Electronic Data Systems, and conspired to use the stolen identifying information to steal money from the government. Several victims testified that they did not consent to the use of their names and Social Security numbers on tax returns and testified that they did not receive any money from refunds generated from the false documents filed with the IRS. Evidence also revealed that Bates and her co-conspirator, Keshia Brayboy, who pleaded guilty to filing a false tax return in 2009 and testified at trial, fraudulently obtained refund anticipation loans from the bank HSBC predicated on the fraudulently filed tax returns.

 

Sentencing is scheduled for Dec. 19, 2011. Bates faces a minimum of two years in prison, a maximum of 354 years in prison and a maximum fine of $6,250,000.

This case was investigated by IRS Criminal Investigation and is being prosecuted by Justice Department Tax Division Trial Attorneys Justin Gelfand and Jason Poole. Principal Deputy Assistant Attorney General for the Justice Department’s Tax Division, John A. DiCicco, thanked U.S. Attorney George L. Beck Jr. and his entire office for their assistance.

WASHINGTON – After a two day hearing in federal court in Rochester, N.Y., that ended late yesterday, U.S. District Court Judge Charles J. Siragusa sentenced Keith Gordon-Smith, 54, of Rochester, to six years in prison for knowingly violating the Clean Air Act and making false statements to a federal inspector. Gordon-Smith was also sentenced to serve a three year term of supervised release to follow his prison term and was ordered to pay a $1,100 special assessment. Gordon Smith’s now defunct company was sentenced to pay a special assessment of $4,400.

In November 2010, a jury convicted Gordon-Smith and his company, Gordon-Smith Contracting Inc. (GSCI) of two counts of causing GSCI workers to violate Clean Air Act asbestos work practice standards at the west wing of the Genesee Hospital complex located in Rochester. The west wing was demolished in the summer of 2009.

The first violations took place between January and May 2007, when Gordon-Smith ordered GSCI workers to tear out copper pipes, ceiling tiles and scrap metal from the west wing, a six-story structure that contained more than 70,000 square feet of asbestos. Gordon-Smith had a contract that allowed him to recover 50 percent of the salvage value of all copper pipe and scrap metal.

“The court’s sentence properly punishes Gordon-Smith and his company for the egregious crimes that placed workers and their families at risk and for his complete disregard of the environmental laws that protect human health and the environment,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “The court’s sentence should send a strong message to asbestos abatement contractors that they will be held accountable to the fullest extent of the law.”

“The highly dangerous actions of Keith Gordon-Smith exposed both workers and the public to hazardous materials,” said William J. Hochul Jr., U.S. Attorney for the Western District of New York. “Those in the asbestos removal industry are well compensated for their work, but in return are under legal and moral obligation to perform the job correctly. When a company cuts corners - or worse - intentionally exposes workers and the public to harm - our office will act quickly and decisively.”

“Ensuring Clean Air Act work practice standards for asbestos are followed when renovating or razing a building is critical to protecting workers and the public,” said Cynthia Giles, Assistant Administrator for Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance. “This sentence shows that when employers fail to adhere to the requirements of the law to make a profit, the consequences are serious.”

Gordon-Smith hired workers who had little formal education or English comprehension. A number of the workers had no training in asbestos removal and did not know they were being exposed to the asbestos while removing the copper pipes. Evidence at sentencing showed that when workers questioned Gordon-Smith, he lied and told them the areas did not contain asbestos. Gordon-Smith ultimately lied to an Occupational Safety and Health Administration (OSHA) inspector who came to the site in September and October 2007 to investigate allegations of illegal asbestos removal.

When the workers removed the pipes and scrap metal, they were repeatedly exposed to asbestos, and described that the asbestos fell on them “like snow.” The workers were not provided with any protective clothing or respirators while tearing out the asbestos-contaminated pipes and wore their asbestos-contaminated clothing back to their homes and families after work.

The jury also convicted Gordon-Smith and his company of causing GSCI workers to illegally remove and dispose of asbestos during the actual asbestos abatement at the west wing, from May 2007 until February 2009. The asbestos was allowed to flow from upper floors through drains and holes in containment. Large amounts of asbestos were left hidden in the west wing. Gordon-Smith was fired from the site in February 2009. The building was subsequently cleaned of asbestos before it was demolished in September 2010.

The jury also convicted Gordon-Smith and his company of six counts of failing to provide required notices to EPA prior to commencing asbestos abatement projects at six different sites in the Rochester area, between 2005 and June 2008. The sites included the west wing of the Genesee Hospital Complex, Cobbles Elementary School in Penfield, N.Y., Bloomfield Elementary School in East Bloomfield, N.Y., the Al Sigl Center in Rochester, and the Hillside Children’s Center in Varick, N.Y.

Asbestos work practice standards under the Clean Air Act require that all asbestos must be removed from any structure where it may be disturbed, such as the west wing where Gordon-Smith ordered the workers to remove pipes contaminated with asbestos. While asbestos is removed during abatement, it must be wetted and kept adequately wet at all times and disposed of as soon as practical at an EPA-approved site.

The case was prosecuted by the U.S. Attorney’s Office for the Western District of New York with the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice. The case was investigated by the U.S. EPA Criminal Investigation Division and the U.S. Department of Labor Office of the Inspector General. Criminal investigators were assisted by OSHA and the New York Department of Labor Asbestos Control Bureau.

WASHINGTON – A member and an associate of the Barrio Azteca (BA) gang each pleaded guilty today to participating in a racketeering conspiracy involving, among other things, the March 13, 2010, murders in Juarez, Mexico, of a U.S. Consulate employee, her husband and the husband of another U.S. Consulate employee, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney John E. Murphy for the Western District of Texas, FBI Assistant Director of the Criminal Investigative Division Kevin Perkins and Administrator Michele Leonhart of the U.S. Drug Enforcement Administration (DEA).

 

Jesus Espino, 43, of El Paso, Texas, and Lorenzo Espino, 51, aka “Lencho,” and “Oso,” of El Paso, each pleaded guilty today before U.S. Magistrate Judge Norbert Garney in the Western District of Texas, El Paso Division, to participating in a racketeering conspiracy. 

 

  In addition, on Aug. 2, 2011, Roberto Angel Cardona, 33, aka “Little Angelillo,” of El Paso, and his wife, Desiree Gamboa Cardona, 30, of El Paso, pleaded guilty before U.S. District Judge Kathleen Cardone in El Paso.  Roberto Cardona pleaded guilty to participating in a racketeering conspiracy and Desiree Cardona pleaded guilty to conspiracy to commit money laundering.

 

According to court documents, the defendants are members or associates of BA, which began in the late 1980s as a violent prison gang and which has since expanded into a transnational criminal organization.  The BA is based primarily in west Texas, Juarez and throughout state and federal prisons in the United States and Mexico.  The gang has a military-like command structure – including captains, lieutenants, sergeants and soldiers – for the purpose of maintaining power and enriching its members and associates through drug trafficking, money laundering, extortion, intimidation, violence, threats of violence and murder.

 

According to court documents, since Jan. 1, 2003, members and associates of the BA have engaged in a host of criminal activities, including drug trafficking, extortion, money laundering, kidnapping and murder, and including the March 13, 2010, murders in Juarez of U.S. Consulate employee Leslie Ann Enriquez Catton, her husband Arthur Redelf and Jorge Alberto Salcido Ceniceros, the husband of a U.S. Consulate employee.

 

According to court documents, the BA profits by importing heroin, cocaine and marijuana into the United States from Mexico.  BA members and associates also allegedly charge a “street tax” or “cuota” on businesses and criminals operating in their turf.  These profits are used to support BA members in prison by funneling the money into prison commissary accounts of gang leaders and to pay for defense lawyers or fines.  The “cuota” profits are also allegedly reinvested into the organization to purchase drugs, guns, and ammunition.

 

Based on the terms of the plea agreement, Jesus Espino will receive a 30 year prison term at sentencing.   Lorenzo Espino and Roberto Cardono face a maximum penalty of life in prison for racketeering conspiracy, while Desiree Cardona faces a maximum prison sentence of 20 years in prison on the money laundering charge.  Roberto and Desiree Cardona are scheduled to be sentenced on Dec. 16, 2011, at 9:30 a.m., before U.S. District Judge Cardone.  A sentencing date for Jesus and Lorenzo Espino has not yet been set by the court.

 

Thirty-five members and associates of the BA gang, including the four defendants who have pleaded guilty, were charged in a third superseding indictment unsealed in March 2011 that included various counts of racketeering, murder, drug offenses, money laundering and obstruction of justice.

 

The case is being prosecuted by Trial Attorney Joseph A. Cooley of the Criminal Division’s Organized Crime and Gang Section, Trial Attorney Brian Skaret of the Criminal Division’s Human Rights and Special Prosecutions Section and the U.S. Attorney’s Office of the Western District of Texas - El Paso Division.  The U.S. Attorney’s Office for the District of New Mexico provided significant assistance in this case, including Assistant U.S. Attorney Sarah Davenport.  Valuable assistance was also provided by the Criminal Division’s Offices of International Affairs and Enforcement Operations.

 

The case was investigated by the FBI.  Special assistance was provided by the DEA; the Bureau of Alcohol, Tobacco, Firearms and Explosives; Immigration and Customs Enforcement; the U.S. Marshals Service; U.S. Customs and Border Protection; Federal Bureau of Prisons; U.S. Diplomatic Security Service; the Texas Department of Public Safety; the Texas Department of Criminal Justice; El Paso Police Department; El Paso County Sheriff’s Office; El Paso Independent School District Police Department; Texas Alcohol and Beverage Commission; New Mexico State Police; Dona Ana County, N.M., Sheriff’s Office; Las Cruces, N.M., Police Department; Southern New Mexico Correctional Facility; and Otero County Prison Facility New Mexico.

WASHINGTON – Paul W. Miller, of Denham Springs, La., was convicted late yesterday of two counts of producing and one count of possessing child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Donald J. Cazayoux Jr. of the Middle District of Louisiana. 

 

Miller, 44, was convicted by a federal jury following a two-day trial.  U.S. District Judge James J. Brady presided over the trial.

 

Evidence presented at trial showed that from October 2007 to May 2008, Miller sexually abused a 12-year-old girl and an 11-year-old girl and produced numerous photographs of the abuse.  According to trial evidence, forensic examination of Miller’s computer revealed that Miller had used his computer to print and possess numerous images of child pornography, including both the images of child pornography he had produced and images of other child victims.

           

Miller faces a maximum statutory sentence of 30 years in prison for each count of production of child pornography and 10 years in prison for the possession of child pornography count.

 

The case is being prosecuted by Trial Attorney Alecia Riewerts Wolak of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Richard L. Bourgeois Jr. of the Middle District of Louisiana.  The investigation was conducted by the FBI, the Denham Springs Police Department and the Louisiana Attorney General’s Office.

WASHINGTON – The United States has asked a federal court in Detroit to bar Damian Jackson and his wife, Holly Jackson, from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint, the civil injunction lawsuit also seeks to bar the Jacksons, of Sterling Heights, Mich., and a third defendant, Tammy Daniels, an attorney from Farmington Hills, Mich., from promoting an alleged tax-fraud scheme.

 

According to the complaint, the Jacksons and their business, Diamond & Associates Enterprises LLC, along with Daniels, operate “Diamond Tax Services” and promote a scheme involving the preparation of fraudulent federal income tax returns for customers seeking large tax refunds based on a frivolous theory called “redemption” or “commercial redemption.” The complaint alleges that Damian Jackson, a minister at the Perfecting Church in Detroit, prepares tax returns that claim huge fraudulent refunds based on fabricated income-tax withholding reported on false Internal Revenue Service (IRS) Forms 1099-OID. The complaint further alleges that Holly Jackson transmits the false forms to the IRS. Damian Jackson allegedly became acquainted with a significant percentage of his customers, which include a fellow minister, through the Perfecting Church.

 

According to the complaint, the IRS catches most frivolous refund requests before refunds are issued, but the defendants’ scheme has caused the IRS to issue at least $1.6 million in erroneous refunds to the defendants’ customers. Federal tax returns prepared under the auspices of Diamond Tax Services have allegedly sought more than $29 million in fraudulent refunds for more than 180 customers, and the Jacksons allegedly requested $2.5 million in bogus refunds on their personal tax returns, according to the complaint.

 

In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department website .

WASHINGTON-  The Justice Department announced today that it has resolved claims made by U.S. Army Reserve member Kyle A. Sharp against ServiceMaster 24-Hour and Gregory Tullar, ServiceMaster’s owner and operator, alleging that they violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).  The department alleged in its complaint that ServiceMaster and Tullar violated Sharp’s rights under USERRA when they failed to reemploy him following his return from active military duty in November 2010. 

 

Subject to certain limitations, USERRA requires that individuals who leave their civilian jobs to serve in the military be reemployed promptly by their civilian employers in the same positions, or in positions comparable to the positions, they would have held had their employment not been interrupted by military service. 

 

According to the department’s complaint, filed today along with a consent decree in the U.S. District Court for the District of Arizona, ServiceMaster and Tullar violated USERRA by not reemploying Sharp in his pre-service position as a crew chief for ServiceMaster in and around Scottsdale, Ariz.  Sharp was ordered to report for active military training in the United States Army in May 2010 and notified Tullar of his upcoming military service.  Upon his release from active military training, Sharp notified Tullar that he wanted to return to his job as a full-time employee with ServiceMaster.  Tullar informed Sharp that a new crew chief had replaced him in his absence and would be continuing in that position and did not reemploy Sharp.  Sharp filed a USERRA complaint with the Labor Department’s Veterans’ Employment and Training Service, which investigated and attempted to resolve the complaint before referring it to the Justice Department.  Under the terms of the consent decree, ServiceMaster and Tullar will pay Sharp $15,000 in back pay to resolve Sharp’s USERRA claims.

 

“Employers have a legal obligation to reemploy our uniformed service members after they return from military duty,” said Thomas Perez, Assistant Attorney General for the Civil Rights Division.  “The Department of Justice is committed to vigorously enforcing the federal laws that protect the rights of our service members who sacrifice so much to serve our country.”

 

“Our military service men and women sacrifice tremendously to serve our country,” said Acting U.S. Attorney Ann Birmingham Scheel.  “At the very least, this agreement should give military personnel the peace of mind to know that they will not lose their job while they bravely serve.  Additionally, it is a reminder to employers that they have an obligation to do their part.”

 

The Justice Department’s Civil Rights Division has made the enforcement of service members’ rights under USERRA a high priority.  Additional information about USERRA can be found on the Justice Department website: www.servicemembers.gov  and www.justice.gov/crt/emp, as well as on the Labor Department’s website at www.dol.gov/vets/programs/userra/main.htm.

WASHINGTON – Alan James Watson, 46, of Clinton Township, Mich., pleaded guilty today to fraudulently soliciting and accepting $40 million from more than 750 members of his investment club and losing nearly all of it through non-disclosed, high-risk investments. Victims were located in Virginia and nationwide.

 

The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and James W. McJunkin, Assistant Director in Charge (ADIC) of the FBI’s Washington Field Office.

 

Watson pleaded guilty before U.S. District Judge Gerald Bruce Lee in the Eastern District of Virginia to one count of wire fraud. He faces a maximum penalty of 20 years in prison when he is sentenced on Dec. 9, 2011.

 

“Without the consent of his clients, Mr. Watson gambled away investors’ funds on risky ventures that led to millions of dollars in losses,” said Assistant Attorney General Breuer. “He used his investment club to cheat people who trusted him out of their savings. The Justice Department will continue to be aggressive in our pursuit of financial fraudsters – whether they are on Wall Street or Main Street.”

 

“A.J. Watson took huge risks with others’ money and lost big,” said U.S. Attorney MacBride. “He covered up his massive losses through lies and deceit to members of his investment club, many of whom would never have joined his club and have now lost everything.”

 

“More than 750 unwitting victims thought they had done their homework and calculated their investment wisely; instead, they were met with false documentation that yielded no return on their investment,” said FBI ADIC McJunkin. “Schemes like this are why the FBI investigates white collar crimes, determined to protect potential victims.”

 

According to a statement of facts filed with his plea agreement, Watson created an investment club in 2004 and served as the club’s chief executive officer. From 2006 to 2009, Watson received almost $40 million from investors. Watson purported that the money would be invested through an equities-trading system developed by an expert consultant, Company A, with a promised return on investment of 10 percent per month. In reality, Watson admitted that only $6 million of the $40 million was ever invested in Company A, while the remaining $34 million was secretly invested in miscellaneous, high-risk ventures without the consent of investment club members. These high-risk investments resulted in a near complete loss of the $34 million.

 

According to court documents, despite the losses for the investors, Watson continued to create false monthly account statements showing net gains from their investments. In addition, Watson included “bonus” items on the account statements that appeared as trading profits, the result of a Ponzi scheme he orchestrated to use new investor funds to pay off earlier investors.

 

In March of 2009, Watson ceased investing in Company A and re-deposited those funds in separate unauthorized ventures. In 2010, nearly a year after he had fully withdrawn finances from Company A, Watson informed investment club members that he had not invested their money as promised, and that none of the reported returns had ever materialized. This resulted in a combined $40 million loss for investment club members.

 

The Commodity Futures Trading Commission (CFTC) has filed a related civil case in the Eastern District of Michigan.

 

This case was investigated by the FBI’s Washington Field Office, the CFTC and the Securities and Exchange Commission. The department thanks these agencies for their substantial assistance in this matter.

 

Trial Attorney Kevin B. Muhlendorf of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark D. Lytle are prosecuting the case on behalf of the United States.

 

The investigation has been coordinated by the Virginia Financial and Securities Fraud Task Force, an unprecedented partnership between criminal investigators and civil regulators to investigate and prosecute complex financial fraud cases in the nation and in Virginia. The task force is an investigative arm of the President’s Financial Fraud Enforcement Task Force, an interagency national task force.

 

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

WASHINGTON – A former project manager of a construction company that had substantial business at Fort Bliss, a U.S. Army installation in El Paso, Texas, pleaded guilty today to soliciting and accepting kickbacks from subcontractors on a federal contract with the U.S. Army, the Department of Justice announced.

 

According to a three-count felony charge filed on Sept. 9, 2011, in U.S. District Court in El Paso, Juventino Rosas solicited and accepted three separate kickbacks from subcontractors from in or about November 2008 until in or about May 2009.  The department said that Rosas in exchange promised favorable treatment to those subcontractors in connection with a prime contract held by his former employer.  According to the court document, the kickbacks included an air-conditioning system installed at his home valued at $14,000, and floor tile valued at $3,000 and painting work valued at $2,300, both installed at a bar Rosas partially owned. 

 

Rosas is charged with soliciting and accepting kickbacks, which carries a maximum sentence of 10 years in prison and a $250,000 criminal fine.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine. 

 

Today’s plea arises from an ongoing investigation relating to federal contracts at Fort Bliss.  This investigation is being conducted jointly by the Antitrust Division’s Chicago Field Office, the U.S. Army Criminal Investigation Command and the Defense Criminal Investigative Service, with the assistance of the U.S. Attorney’s Office in El Paso.

 

Anyone with information concerning suspicious activity relating to federal contracts at Fort Bliss or other military bases should contact the Antitrust Division’s Chicago Field Office at 312-353-7530 or visit www.justice.gov/atr/contact/newcase.htm.

WASHINGTON – A former member of the U.S. Army employed by a private security firm was arrested at Miami International Airport today on charges of bribery, fraud and theft of government funds, in connection with the award of a contract to provide services to a U.S. government provincial reconstruction team in Farah, Afghanistan.

 

The arrest and charges were announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Steven J Trent, Acting Special Inspector General for Afghanistan Reconstruction (SIGAR); Special Agent in Charge Richard D. Zott of the Defense Criminal Investigative Service (DCIS) Central Field Office; and Brigadier General Colleen McGuire, Provost Marshal General of the Army and Commanding General of the U.S. Army Criminal Investigation Command. 

 

Raul Borcuta was arrested in Miami today when he tried to enter the United States from Europe.  Upon Borcuta’s arrest, the U.S. District Court for the Northern District of Illinois unsealed a nine-count indictment charging Borcuta and his co-conspirators, Zachery Taylor and Jared Close, with mail fraud, wire fraud, conspiracy, bribery and theft of government funds.   

 

According to the indictment, Borcuta, 32, defrauded the U.S. government in connection with a contract to provide two up-armored sport utility vehicles to be used by an official in the government of Farah Province, Afghanistan, who had received death threats from insurgent groups.  The indictment alleges that Borcuta bribed U.S. Army contracting officials Taylor, 40, and Close, 40, with $10,000 each to award him the contract and to make full payment to Borcuta before the vehicles were delivered.  Taylor and Close, formerly U.S. Army staff sergeants assigned to the provincial reconstruction team in Farah, allegedly authorized a payment of approximately $200,000 in U.S. government funds to Borcuta. According to the indictment, Borcuta received the payment and never delivered the vehicles required by the contract.

 

The defendants face a maximum penalty of 20 years in prison for each mail fraud count, 20 years in prison for each wire fraud count, 30 years in prison for each conspiracy count, 15 years in prison for each bribery count and 10 years in prison for each theft of government funds count.

 

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

 

This case was investigated by SIGAR, DCIS, the U.S. Army Criminal Investigation Command and the FBI.  The case is being prosecuted by Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section.  The U.S. Attorney’s Office for the Northern District of Illinois provided assistance in this investigation. 

WASHINGTON – The Justice Department, at the request of the Food and Drug Administration (FDA), today filed a complaint and a consent decree in the U.S. District Court for the Middle District of Florida against Hill Dermaceuticals Inc., Hill Labs Inc., Jerry S. Roth and Rosario G. Ramirez. The complaint and consent decree are being filed today in accordance with an agreement with the defendants resolving numerous allegations of violations of the Food, Drug, and Cosmetic Act.

 

The defendants manufacture and distribute prescription drug products, including scalp oil, body oil, eardrops, skin cream and medicated shampoo used in the treatment of dermatitis, otitis and other skin conditions. Hill Labs manufactures drug products and sells them to Hill Dermaceuticals, which markets and distributes them. Roth is the president of both corporations, and Ramirez is quality assurance manager.

 

The government’s action today is the culmination of a series of inspections by the FDA of Hill’s Sanford, Fla., facility various times from 2004 to 2010. In the course of these inspections, the FDA documented numerous deficiencies in Hill’s current good manufacturing practices (CGMPs). CGMPs provide for systems that assure proper design monitoring, and control of manufacturing processes and facilities. This includes establishing strong quality management systems, obtaining appropriate raw quality materials, establishing robust operating procedures, detecting and investigating product quality deviations, and maintaining reliable testing laboratories. This formal system of controls not only helps to prevent instances of contamination, mix-ups, deviations, failures and errors, but ensures that drug products, such as those produced by Hill, meet their quality standards. Hill’s alleged CGMP violations concerned various aspects of their manufacturing processes, their testing methods, and their quality control procedures, in addition to their facilities and equipment.

 

In addition, the defendants allegedly submitted falsified data in support of at least two new drug applications. The complaint alleges that Hill’s wrongful acts raise significant questions regarding reliability of any data that originated at Hill’s Sanford facility.

 

Under the consent decree, an expert must certify that defendants are in compliance with the law before their products are manufactured or distributed. In addition, the defendants are also required to retain an expert to review and correct the data integrity and reliability problems that the FDA documented.

 

“When companies report false data to the FDA and fail to meet important manufacturing standards, they undermine the accountability process Congress put in place to protect public health,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Today’s consent decree will ensure that Hill engages the experts, processes and procedures necessary for sustained compliance and safe products.”

 

The resolution of this matter was handled by Trial Attorney Drake Cutini of the Justice Department’s Consumer Protection Branch and Michael Helbing, Assistant Chief Counsel, Food and Drug Administration.

 

WASHINGTON - CH2M Hill Hanford Group Inc., a wholly-owned subsidiary of Colorado-based CH2M Hill Companies Ltd., has agreed to pay the United States $1.5 million to resolve allegations that it knowingly submitted false claims and paid kickbacks relating to a contract to operate and manage mixed radioactive waste at the Department of Energy’s (DOE) Hanford Nuclear Site in the state of Washington, the Department of Justice announced today. 

 

Between 2003 and 2005, the engineering and construction firm employed two individuals whose responsibilities included purchasing supplies for use by CH2M on its DOE contract.  The government alleges that, during that period, these two individuals improperly made more than 200 purchases from companies owned and run by their spouses and charged the cost to DOE.   At the time, CH2M was a DOE prime contractor responsible for management, maintenance and cleanup of the Hanford “Tank Farms,” which consist of more than 170 underground tanks storing mixed radioactive and hazardous waste at DOE's Hanford Nuclear Site. 

           

As early as 2002, and again in 2003, 2004, and 2005, internal audits conducted by CH2M alerted it to weaknesses in its purchase card controls, weaknesses exploited by these schemes.  Nonetheless, CH2M failed to address these weaknesses, allowing these schemes to go undetected for years. 

 

“Companies that do business with the government must ensure that their employees are acting fairly, not lining their own pockets,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “Kickback schemes undermine the integrity of the public contracting process and leave taxpayers footing the bill.”

           

One of the involved individuals, Gregory Detloff, allegedly accomplished his scheme by routing his purchases through a company known as Kennewick Industrial and Electric Supply (KIE), through an agreement with KIE salesman Martin Perez.  Both Detloff Industrial, the company owned by Detloff and his wife, and KIE substantially marked up the cost of these goods, leading the government to pay more than twice what the goods were worth.  The other CH2M employee used a company known as AMG Marketing and owned by the CH2M employee and his wife to charge DOE for goods.  Unlike Detloff Industrial, AMG Marketing did not provide any goods to the government for these fraudulent purchases.

 

Four individuals have been indicted on fraud charges for their participation in the fraudulent schemes.  Three, including Detloff and Perez, have pleaded guilty, with the fourth awaiting trial. 

 

“Government contractor fraud at Hanford simply will not be tolerated,” said Michael C. Ormsby, U.S. Attorney for the Eastern District of Washington.  “This resolution demonstrates that corporations will be held accountable when they turn a blind eye to fraud and self-dealing.”

 

“ The settlement with CH2M Hill is the culmination of hard work by DOJ Attorneys and IG Special Agents,” said Gregory H. Friedman, the Department of Energy Inspector General. “Settlements like this send a strong message of deterrence to those who may be inclined to violate the public trust by attempting to defraud the Department of Energy.”   

 

This agreement is the third civil settlement in a series of related cases stemming from government purchase card fraud at DOE’s Hanford Site.  In June 2011, Fluor Hanford Inc., another DOE Hanford Site contractor, agreed to pay $4 million to resolve its liability for the KIE and AMG Marketing schemes as well as two additional fraudulent schemes.  In July 2011, KIE agreed to pay $515,000 to resolve its liability. 

 

The government’s investigation was conducted by the Civil Division of the U.S. Department of Justice, the U.S. Attorney’s Office for the Eastern District of Washington, and the DOE Office of Inspector General.

 

Since January 2009, the Department of Justice’s total recoveries have exceeded $7.6 billion.

WASHINGTON – The owner of two Petersburg, Va., retail stores was arrested today on charges related to his alleged sale of counterfeit goods, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.

 

Belal Amin Alsaidi, 30, of Petersburg, was charged in an indictment returned by a federal grand jury yesterday in Richmond, Va., with one count of conspiracy and three counts of trafficking in counterfeit goods. According to the indictment, between May 2007 and April 2009, Alsaidi allegedly purchased apparel and shoes that he knew were counterfeit from an individual in New York and then sold this merchandise at his two stores in Petersburg.  The indictment alleges that he sold goods bearing fake trademarks for companies such as Nike, NFL, Lacoste, True Religion and Coogi.

 

Alsaidi was arrested in Buffalo, N.Y., and is scheduled to make his initial appearance tomorrow at 2:00 p.m. in the Western District of New York.  His arraignment in the Eastern District of Virginia will be scheduled for a future date.   

 

The conspiracy charge carries a maximum penalty of five years in prison and a $250,000 fine. Each count of trafficking in counterfeit goods carries a maximum penalty of 10 years in prison and a $2 million fine. The indictment also seeks forfeiture of profits from illicit trafficking in counterfeit goods as well as the seizure of the goods.

 

Criminal indictments are only charges and are not evidence of guilt. A defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

 

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

The case is being prosecuted by Assistant U.S. Attorney David T. Maguire and Trial Attorney Kendra R. Ervin of the Criminal Division’s Computer Crime & Intellectual Property Section. The investigation was conducted by the FBI’s Richmond Division.       

WASHINGTON – Ten Miami-area residents pleaded guilty today and yesterday in U.S. District Court in Miami for their participation in a $25 million home health Medicare fraud scheme, announced the Department of Justice, the Department of Health and Human Services (HHS) and the FBI.

 

Each defendant pleaded guilty before U.S. District Judge Joan A. Lenard to one count of conspiracy to commit health care fraud.  According to plea documents, the defendants included an administrator, nurses and patient recruiters for two related Miami home health care agencies, ABC Home Health Inc. and Florida Home Health Providers Inc.  ABC and Florida Home Health purported to provide home health and therapy services to Medicare beneficiaries.  However, according to court documents, the agencies only existed to defraud Medicare. 

 

The 10 defendants each admitted that they participated in a fraud scheme to bill the Medicare Program for expensive physical therapy and home health care services that were prescribed by doctors but were medically unnecessary and never provided. 

 

According to court documents, beginning in approximately January 2006, and continuing until approximately March 2009:

•  Licet Diaz, 49, worked at ABC and Florida Home Health as an administrator.  As a result of Diaz’s participation in the illegal scheme, Medicare was billed approximately $7.8 million.
• Fidel Castro, 48, worked at ABC as a patient recruiter.  As a result of Castro’s participation in the illegal scheme, Medicare was billed approximately $550,000.
• Jose Ros, 71, worked for both ABC and Florida Home Health as a patient recruiter.  As a result of Ros’ participation in the illegal scheme, Medicare was billed approximately $395,000.
• Eneida Fry, 46, worked for ABC and Florida Home Health as a registered nurse and a patient recruiter.  As a result of Fry’s participation in the illegal scheme, Medicare was billed approximately $395,000.
• Oscar Martinez, 54, worked for Florida Home Health as a patient recruiter.  As a result of Martinez’s participation in the illegal scheme, Medicare was billed approximately $390,000.
• Juana Rivas, 46, worked at Florida Home Health as a patient recruiter.  As a result of Rivas’ participation in the illegal scheme, Medicare was billed approximately $250,000.
• Lesder Casanova, 40, worked at ABC as a patient recruiter.  As a result of Casanova’s participation in the illegal scheme, Medicare was billed approximately $195,000.
• Ignacio Angulo, 48, worked at Florida Home Health as a licensed practical nurse and a patient recruiter.  As a result of Angulo’s participation in the illegal scheme, Medicare was billed approximately $190,000.
• Raul Alvarez, 48, worked at Florida Home Health as a patient recruiter.  As a result of Alvarez’s participation in the illegal scheme, Medicare was billed approximately $118,000.
• Barbara Gonzalez, 38, worked at ABC as a patient recruiter. As a result of Gonzalez’s participation in the illegal scheme, Medicare was billed approximately $40,000. 

According to court documents, Fry and Angulo, along with their co-defendant nurses, falsified patient files for Medicare beneficiaries to make it appear that the beneficiaries qualified for home health care and therapy services.  Fry and Angulo admitted that they knew the beneficiaries did not qualify for and did not receive the services.  Fry, Angulo, and their co-defendant nurses described in nursing notes and patient files non-existent symptoms such as tremors, impaired vision, weak grip and inability to walk without assistance.  Defendants included these symptoms to make it appear that the patients were unable to self-inject insulin and were homebound, thus appearing to qualify for home health care benefits under Medicare.  The files were falsified so that Medicare could be billed for medically unnecessary therapy and home health related services.

 

According to plea documents, Diaz distributed kickback payments to the patient recruiters on behalf of the owners of ABC and Florida Home Health.  Diaz worked in the offices of ABC and Florida Home Health and was aware that office staff manipulated the patient files and nursing notes for patients at ABC and Florida Home Health.  Specifically, Diaz was aware that office staff manipulated the nursing notes by adding patient conditions, such as shortness of breath, hand tremors and poor vision, which were non-existent. The patient files and nursing notes were fabricated to make it appear that the patients qualified for the services. 

 

Nine of the defendants admitted to recruiting Medicare beneficiaries who would allow ABC and Florida Home Health to bill Medicare for home health care and therapy services that were medically unnecessary and/or never provided.  In doing so, the defendants solicited and received kickbacks and bribes from the owners and operators of the home health agencies in return for allowing the companies to bill the Medicare program on behalf of the recruited patients.  The defendants knew that the patients they recruited did not qualify for the services billed to Medicare.  In addition, the defendants knew that the patient files for their recruited patients were falsified in order to make it appear that the patients qualified for the services. 

 

The defendants were originally charged in a February 2011 indictment.  Five other co-conspirators have pleaded guilty for their roles in the fraud scheme: Jose Nunez, M.D., Lisandra Alonso, Luisa Morciego, Vicente Guerra and Farah Maria Perez. 

 

Sentencings have been scheduled for various dates in October, November and December 2011.

 

The charge of conspiracy to commit health care fraud carries a maximum prison sentence of 10 years.  The defendants also face fines and terms of supervised release, as well as forfeiture of any property or proceeds derived from their criminal activities.

 

The pleas were announced by Assistant Attorney General Lanny A. Breuer of the 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 and Acting Assistant Chief Benjamin D. Singer 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 Miami.

 

Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,140 individuals who collectively have falsely billed the Medicare program for more than $2.9 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 .

WASHINGTON – Haroon Amin of Upland, Calif., was sentenced to 30 months in prison today for conspiracy to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced. U.S. District Judge Robert H. Whaley presided at the sentencing hearing. Judge Whaley also sentenced Amin to three years of supervised released following his prison term and ordered Amin to pay $258,594 in restitution to the U.S. Treasury. Amin was remanded into custody today.

 

In December 2008, Amin and Ather Ali of Diamond Bar, Calif., were indicted by a federal grand jury in Riverside, Calif., on charges of engaging in a scheme to file false returns with the IRS using the names and Social Security numbers of deceased individuals. Amin pleaded guilty on Jan. 25, 2010. Ali subsequently pleaded guilty on Feb. 12, 2010.

According to the indictment, in 2002 and 2003, Amin and Ali filed at least 250 fraudulent returns, falsely stating that these deceased individuals earned wages from which income tax was withheld. These false returns claimed more than $2 million in income tax refunds. Although the IRS rejected the bulk of these refund claims, a number of refund checks were issued and delivered to addresses controlled by Amin, Ali and their co-conspirators, including various mailboxes opened by Ali. Most of these refund checks then were delivered overseas to be deposited in bank accounts in Armenia and Pakistan.

 

Amin admitted at his guilty plea hearing that he was a knowing participant in this scheme. According to the indictment and statements made at the plea hearing, Amin and his co-conspirators prepared various false tax returns using deceased people’s Social Security numbers and other identification information obtained from the Internet. The returns filed as part of the scheme had fictitious Form W-2 wage and tax statements as attachments, falsely stating that the deceased people earned income from various employers. Amin and his co-conspirators created fake W-2 Forms using employer identification numbers that they had obtained from an acquaintance of Amin’s, who was a certified public accountant. At his own plea hearing, Ali admitted using fake forms of identification to open mailboxes in the names of deceased people, from which the conspirators collected a number of these fraudulently obtained tax refund checks.

 

Ali was previously sentenced on Dec. 17, 2010, and is serving a 37-month prison term.

 

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

WASHINGTON – Professional duck hunter and guide Jeffrey B. Foiles was sentenced today by a federal judge in Springfield, Ill., to 13 months in prison, the Department of Justice’s Environment and Natural Resources Division announced. 

Foiles, 54, of Pleasant Hill, Ill., pleaded guilty in June 2011 to one misdemeanor count of unlawful sale of wildlife in violation of the Lacey Act, as well as one misdemeanor count of unlawfully taking migratory game birds in violation of the Migratory Bird Treaty Act.  At the same time, the company that operated Foiles’ hunting club, the Fallin’ Skies Strait Meat Duck Club LLC, located in Pike County, Ill., pleaded guilty to an information charging it with one felony count of unlawful sale of wildlife in violation of the Lacey Act and one felony count of making false writings in a matter within the jurisdiction of the U.S. Fish and Wildlife Service.

According to those plea agreements, between 2003 and 2007, Foiles sold and guided waterfowl hunts at the club for the purpose of illegally hunting ducks and geese in excess of hunters’ individual daily bag limits.  Guided hunters paid $250 per day for hunts at the club.  Foiles and others at the club also falsified hunting records in order to conceal the excesses.

In accordance with Foiles’ plea agreement filed in June and accepted by the court today, U.S. Magistrate Judge Byron G. Cudmore sentenced Foiles to 13 months in prison, to be followed by one year of supervised release during which time he may not hunt or guide hunters, and to pay a $100,000 fine.  As a further term of his plea agreement, Foiles has also agreed to one additional year, following completion of his term of supervised release, during which he will not hunt or guide.  Foiles was ordered to self report to begin serving his sentence on November 21, 2011.

A separate sentencing hearing for Fallin’ Skies Strait Meat Duck Club LLC is scheduled for Dec. 20, 2011, before U.S. District Judge Richard Mills.

Foiles pleaded guilty to separate hunting-related wildlife charges in Canada on Sept. 14, 2011. The Canadian court has taken the plea under advisement and is expected to decide soon whether to impose the fines and three-year hunting ban jointly recommended by the defense and Canadian prosecutors.

The case was investigated by the U.S. Fish & Wildlife Service, in cooperation with the Illinois Department of Natural Resources, the Iowa Department of Natural Resources, and the government of Canada.  The case is being prosecuted by the U.S. Attorney’s Office for the Central District of Illinois and the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.

WASHINGTON – A Philadelphia woman was convicted yesterday for her participation in a fraud scheme to provide out-of-state residents with Pennsylvania driver’s licenses and Pennsylvania commercial driver’s licenses (CDL), announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Zane David Memeger of the Eastern District of Pennsylvania, Special Agent in Charge George Venizelos of the FBI and Special Agent in Charge Douglas Shoemaker of the U.S. Department of Transportation-Office of the Inspector General (DOT-OIG).

 

After a five-day trial, a federal jury in the Eastern District of Pennsylvania found Irina Rakhman, 54, guilty of conspiracy to produce fraudulent identification documents. To date, eight co-defendants have pleaded guilty for their roles in the scheme: Vitaliy and Tatyana Kroshnev, Mikhail Aminov, Irina Peterson, Khrystyna Davyda, Leonid Vilchik, Tair Rustamov and Irina Starovoyt. Vitaliy Kroshnev also pleaded guilty to making a material false statement.

 

According to evidence presented at trial, Rakhman and her co-defendants used a company owned by the Kroshnevs, International Training Academy (ITA), to arrange for hundreds of non-residents of Pennsylvania to fraudulently obtain Pennsylvania driver’s licenses and CDLs from 2006 to 2010. The defendants provided applicants with false Pennsylvania residency documents, as well as foreign language interpreters who, under the guise of providing translations, gave CDL applicants the answers to the written CDL permit test. The evidence at trial also established that the Kroshnevs paid members of the conspiracy, including Rakhman, for allowing their home addresses to be used by ITA clients who resided out-of-state to submit to the Pennsylvania Department of Transportation as false proof of Pennsylvania residency.

 

All defendants face a maximum possible sentence of 15 years in prison and a $250,000 fine on the conspiracy charge. Sentencings for all defendants are scheduled for November and December 2011.

 

The case was investigated by the FBI and DOT-OIG and was prosecuted by Trial Attorney Margaret Vierbuchen of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Frank Labor and Michelle Morgan of the Eastern District of Pennsylvania.

WASHINGTON - Lydia Demski, the owner of Deerpath Corp., has agreed to pay the United States $800,000 to resolve allegations that she and her companies, including Deerpath Corp., Scope Services Inc. and American Nuclear Resources Inc. knowingly caused false claims to be submitted relating to a contract to provide re-furbishment of equipment at the National Aeronautics and Space Administration’s (NASA) Plumbrook facility in Sandusky, Ohio, the Justice Department announced today.

 

The re-furbishment contract at Plumbrook was set aside by NASA to be performed by a Service-Disabled Veteran-Owned Small Business (SDVOSB). Under that set-aside program, one or more service-disabled veterans must own and control the small business. The United States alleged that Demski, who is not a service-disabled veteran, organized and controlled a business called Deerpath International in order to capture SDVOSB set-aside contracts and funnel the work to her St. Joseph., Mich.-based company, Deerpath Corp.

“The department will pursue government contractors who game the system to take opportunities away from our Nation’s disabled veterans,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice.  “Settlements like this one help ensure that our men and women in uniform who have sacrificed so much have the support they need to start small businesses.”

 

The government’s investigation of Deerpath International was initiated by a lawsuit, U.S. ex rel. Fones v. Deerpath International, et al., No. 07-CV-3802 (N.D. OH), filed under the False Claims Act’s qui tam, or whistleblower, provisions, which permit private parties to sue for false claims on behalf of the United States and to share in any recovery. The whistleblower in this case, Greg Fones, will receive $140,000 of the settlement.

 

“I can think of few things more egregious than taking advantage of a program designed to help those who were wounded or injured defending our nation,” said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio.

 

The government’s investigation was conducted by the Civil Division of the U.S. Department of Justice, the U.S. Attorney’s Office for the Northern District of Ohio and the NASA Office of Inspector General.

WASHINGTON – Anthony St. Laurent Sr., 70, was sentenced today to 84 months in prison for his role in an attempted murder-for-hire, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Peter F. Neronha for the District of Rhode Island and Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office.

 

St. Laurent Sr. also was ordered by U.S. District Judge William E. Smith in federal court in Providence, R.I., to serve three years of supervised release following his prison term. St. Laurent Sr. previously acknowledged in a written plea agreement his participation in an extortion conspiracy outlined in a criminal complaint in which he, his wife Dorothy St. Laurent, his son Anthony St. Laurent Jr. and others extorted protection money from bookmakers in the Taunton, Mass.-area under the threat of violence. St. Laurent Sr. acknowledged in his plea agreement that he is a “made” member of the New England branch of the La Cosa Nostra (NELCN).

 

According to information presented in court, in 2006 and 2007, St. Laurent Sr. offered money to individuals, including some known to be violent criminals, to murder Robert “Bobby” DeLuca, another “made” member of the NELCN, in retaliation for Deluca having publicly accused St. Laurent Sr. of being a government informant.  According to information presented in court, St. Laurent Sr. phoned an individual in Massachusetts to set up a meeting in Rhode Island on April 12, 2006, at which he solicited the individual to kill DeLuca.

Anthony St. Laurent Jr. was sentenced in December 2010 to 78 months in prison, followed by three years of supervised release, to include 500 hours of community service each year during the term of supervised release for his role in the extortion conspiracy. Dorothy St. Laurent was sentenced in December 2010 to three years of probation, the first six months of which were served in home confinement. She also was ordered to perform 500 hours of community service per year during the term of supervised release.

 

The case was prosecuted by Trial Attorney Sam Nazzaro of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney William J. Ferland for the District of Rhode Island.

       

The matter was investigated by the FBI, with the assistance of the Rhode Island State Police and the Providence Police Department.

WASHINGTON – William Joseph McCown, 49, of Las Vegas, was sentenced today before District Judge Lloyd D. George of the U.S. District Court for the District of Nevada. McCown was arrested in Las Vegas in June of 2010. McCown previously entered a plea of guilty in February of this year to one count of violating the Clean Air Act (CAA) by falsifying emissions testing results, announced the Environment and Natural Resources Division of the Department of Justice, the U.S. Attorney’s Office for the District of Nevada and the U.S. Environmental Protection Agency (EPA).

A grand jury in Las Vegas indicted McCown in January 2010 along with nine other defendants, all from different testing locations, accused of similarly submitting false tests to the Nevada Department of Motor Vehicles (NDMV). The cases came to the attention of Nevada authorities in 2008 when the NDMV’s in-house Information Technology Division built a vehicle identification database to find possible emissions testing fraud. NDMV discovered that in 2008 alone, there were more than 4,000 false vehicle emissions certificates issued in Las Vegas.

“The emissions testing program required by the EPA and implemented by the state of Nevada is critical for the reduction of harmful pollutants in our air,” said U.S. Attorney Daniel G. Bogden. “As these cases demonstrate, persons who try to circumvent the testing laws by submitting false documents and committing fraud will be prosecuted and face the possibility of prison time and fines.”

“Complete and accurate tests of vehicle emissions are necessary to protect the public from harmful air pollutants,” said Nick Torres, Special Agent in Charge of EPA’s criminal enforcement program in Nevada. “This defendant is the last of ten emissions inspectors who were convicted of knowingly falsifying emissions documents. EPA will continue working with its law enforcement partners to protect the public and the environment.”

EPA requires, under the CAA, that the state of Nevada conduct vehicle emissions testing in Carson County (Las Vegas) because the area is in serious nonattainment for carbon monoxide and ozone. The NDMV developed the Nevada Emissions Control Program to implement the vehicle emission inspection program required by EPA, and EPA approved the program as part of Nevada’s State Implementation Plan. The emission control program authorizes second generation on-board diagnostics emission tests (OBDII) for 1996 and newer gasoline-powered vehicles at more than 400 licensed inspection stations. New vehicles are exempt from testing for the first and second registration cycle.

To obtain a registration renewal, vehicle owners bring the vehicle to a licensed inspection station and pay up to a $46.00 fee, depending on the vehicle, for testing. State licensed emissions inspectors perform the OBDII inspections using an emissions analyzer purchased from a state contractor. The analyzer downloads data from the vehicle's computer via the OBDII connection, analyzes the data and provides a “pass” or “fail” result. The pass or fail result and vehicle identification data are reported on the Vehicle Inspection Report. In addition to recording the pass or fail result, the analyzer also logs, as part of the inspection report, the electronic vehicle identification number (E-VIN) from the vehicle’s computer. The E-VIN and the VIN affixed to the dash-plate on the vehicle should be the same.

By analyzing data Nevada DMV was able to detect so-called “clean-scanning,” a process whereby emissions inspectors enter identifying data for a vehicle that they want to pass the inspection and then connect the analyzer to a different vehicle that they know will pass the test. The analyzer and database both record a pass result for the inspection report under the VIN provided by the emissions inspector, but will show a mismatch between the reported VIN and the E-VIN downloaded directly from the vehicle.

Ultimately, 10 inspectors were targeted for prosecution based upon the number of clean-scans performed. Nine of these inspectors had more than 200 falsifications with one inspector reaching more than 750. Investigators included only “hard” as opposed to “soft” mismatches for prosecution. Soft mismatches are those where the vehicle used to clean-scan is the same manufacturer as the vehicle that cannot pass the test. Because the VIN numbers may appear similar, it could be argued that there is a transposition or database error. Hard mismatches occur where the two vehicles are of different makes and models. Testing a Toyota and giving a testing pass result to a Ford could never be attributed to a transpositional error.

All 10 defendants eventually pleaded guilty to CAA felonies. The sentences ranged from straight probation (three years for most, five years in one instance) to eight months of home confinement.

Mr. McCown conducted the most falsifications (758). Judge George sentenced McCown to four years of probation, a $4,000 fine and a $100 special assessment.

The case was investigated by the U.S. Environmental Protection Agency and the Nevada Division of Motor Vehicles. The case was prosecuted by Assistant U.S. Attorney, Roger Yang from the District of Nevada and Senior Trial Attorney J. Ronald Sutcliffe of the Environmental Crimes Section of the Justice Department’s Environment and Natural Resources Division.

WASHINGTON – The Justice Department today announced a $95,000 settlement to resolve a lawsuit alleging that the former manager of Park Towers Apartments in Waterloo, Iowa, sexually harassed female tenants at the complex.

 

The lawsuit alleges that Michael Nieman, the former on-site manager of Park Towers, sexually harassed female tenants in violation of the Fair Housing Act. The lawsuit further alleges that Elders Inc., which owned the building, and J.S. Property Management L.C., which managed the property, were liable for Nieman’s actions. Since the lawsuit was filed in 2010, in the U.S. District Court for the Northern District of Iowa, all of the defendants have ceased to work in the residential rental business.

 

The consent decree, pending approval by the court, will require the defendants to pay $80,000 to 10 victims and $15,000 to the United States as a civil penalty. The consent decree also prohibits the defendants from engaging in discrimination and contains a provision preventing Nieman from returning to work in the management, rental or maintenance of rental housing.

 

“Sexual harassment by a landlord or property manager violates a woman’s right to feel safe and secure in her home,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “This settlement sends the message that such harassment will not be tolerated, and that the Civil Rights Division will aggressively pursue landlords who engage in it.”

 

“This order ensures that Mr. Nieman will never again be in a position to harass and mistreat Iowans in need of housing,” said U.S. Attorney for the Northern District of Iowa Stephanie Rose. “It also serves as a warning to other landlords that they will be held accountable if they engage in or enable others to engage in acts of sexual harassment against tenants.”

 

This lawsuit arose as a result of complaints filed with the U.S. Department of Housing and Urban Development (HUD) by two former tenants. After investigating the complaints, HUD issued a charge of discrimination and referred the case to the Department of Justice.

 

“Harassment victims are not alone in the fight to protect their housing rights. HUD and the Department of Justice work vigorously to protect women and enforce their right to live free from discrimination,” said John Trasviña, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity.

 

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

WASHINGTON Late yesterday, the Justice Department sent to Congress a package of legislative proposals that will significantly enhance the department’s ability to protect the rights of members of the military and their families. The package contains three titles, with proposed amendments to each of the three servicemember civil rights statutes that the Civil Rights Division enforces. Each of these laws was enacted by Congress with broad, bipartisan support, and the proposals offered by the department will make the protections they provide even stronger. 

 

“Our men and women in uniform and their families make sacrifices every single day for this country, and we have an obligation to take every possible measure to lessen burdens in their lives,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “These legislative proposals will give the department the tools to better protect the rights of servicemembers in the housing, lending, voting and employment contexts.  We believe that this bill, if enacted, will improve the lives of those who have served so honorably to protect our freedom, our families and our nation.” 

 

Title I of the proposal would amend the Servicemembers Civil Relief Act (SCRA).  The SCRA suspends certain financial obligations of active duty servicemembers so that they can focus full attention on their military responsibilities without adverse consequences for themselves and their families. The relief authorized under the SCRA includes civil protections and the temporary suspension of legal proceedings in areas such as mortgage interest rate payments and foreclosure, rental agreements, and credit card and auto loans. This year the department reached its largest settlement ever under the SCRA, under which Bank of America/Countrywide will pay $20 million to resolve allegations that they illegally foreclosed upon servicemembers without court orders. The proposed legislation would further strengthen the department’s ability to enforce the SCRA by, for example, doubling the amount of civil penalties for those who violate servicemembers’ rights and permitting the Attorney General to issue civil investigative demands to obtain documents.

 

Title II would amend the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA).  In 2009, Congress amended UOCAVA by passing the Military and Overseas Voter Empowerment Act (MOVE Act), which established new voter registration and absentee ballot procedures that states must follow in all federal elections to make sure that servicemembers and overseas voters have the opportunity to vote and to have their votes counted.  During the 2010 general election, the Justice Department aggressively enforced the MOVE Act, ensuring thousands of military and overseas voters had the opportunity to cast their ballots despite the failure of some election officials to send out ballots on time.  These activities constituted the largest enforcement effort by the Voting Section under any single statute in any federal election cycle.

 

To better address the delays in sending absentee ballots to military and overseas voters that occurred in the 2010 election cycle, and improve implementation of the MOVE Act’s new procedures, the Justice Department’s proposed amendments would, among other things, require states to submit pre-election reports on the status of ballot transmission to military and overseas voters; eliminate the waiver provision in favor of a uniform, nationwide standard that equally protects all military and overseas voters; require states that miss a deadline to mail ballots by express delivery; authorize civil penalties; and establish an express private right of action for individuals aggrieved under the act.

 

Title III would amend the Uniformed Services Employment and Reemployment Rights Act (USERRA). USERRA entitles servicemembers to return to their civilian employment upon completion of their military service with the seniority, status and rate of pay that they would have obtained had they remained continuously employed by their civilian employer.  In ad dition, USERRA protects servicemembers from discrimination in the workplace based on their military service or affiliation.  The Civil Rights Division has ramped up enforcement of USERRA in the last two and half years, filing 33 cases, which exceeds the number of cases filed in the previous four years. The department’s proposals would further strengthen protection of servicemembers’ employment rights by, for example, authorizing the department to investigate and bring suit to stop a pattern or practice of USERRA violations, and allowing the United States to serve as a named plaintiff in all suits filed by the department, as opposed to only those suits filed against state employers.

 

For more information about the department’s work on behalf of servicemembers, please visit www.servicemembers.gov.

WASHINGTON – The Justice Department today filed a lawsuit against a Charleston, S.C.-area landlord for violating the Fair Housing Act by discriminating against families with children.

 

The lawsuit, filed in the U.S. District Court for the District of South Carolina, charges that John Wingard Altman, through published advertisements and statements to testers, maintains a policy or practice of discouraging families with children from living in the apartment complex he owns, located at 1211 Central Avenue, in Summerville, S.C. The allegations are based on evidence generated by the department’s Fair Housing Testing Program, in which individuals pose as renters to gather information about possible discriminatory practices.

 

“Housing discrimination against families with children has been illegal for more than 20 years, but it remains a persistent problem,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “The Justice Department will continue its vigorous enforcement of fair housing laws that protect the rights of families with children.”

 

“Housing is one of those fundamental needs and we simply will not tolerate unlawful discrimination in any form,” said William M. Nettles, U.S. Attorney for the District of South Carolina.

 

The lawsuit seeks a court order prohibiting future discrimination by the defendant, monetary damages for those harmed by the defendant’s actions and a civil penalty.

 

Individuals who may have information related to this lawsuit should contact the Justice Department toll-free at 1-800-896-7743, mailbox number 9998, or e-mail the Justice Department at [email protected] . The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt .

 

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

SAN ANTONIO – A former Bexar County, Texas, Sheriff’s Office deputy pleaded guilty today in federal court in San Antonio to civil rights charges related to the use of excessive force against a detainee, the Justice Department announced.

 

Raymond Quintero, 33, pleaded guilty to willfully depriving a detainee of his constitutional right to be free from excessive force amounting to punishment.

 

“A law enforcement uniform does not give an officer the right to violate the civil rights of those under his supervision,” said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division. “The Department of Justice will aggressively prosecute those law enforcement officials who violate the law and the public trust.”

 

During his guilty plea, Quintero, admitted that on Oct. 8, 2007, he was working as a detention officer at the Bexar County Adult Detention Center and was responsible for the custody, control, care and safety of inmates. On that date, Quintero threw a detainee against a closet wall. Quintero admitted that his conduct constituted excessive force and violated the detainee’s civil rights.

 

Sentencing has been scheduled for Dec. 29, 2011. Quintero faces up to 10 years in prison and a maximum fine of $250,000.

 

This case was investigated by Special Agent Mirella Rodriguez of the San Antonio Division of the FBI with assistance from the Bexar County Sheriff’s Office, and is being prosecuted by Assistant U.S. Attorney Bill Baumann of the Western District of Texas and Civil Rights Division Trial Attorney Christopher Lomax.

WASHINGTON – A federal court in Fort Lauderdale, Fla., has permanently barred Danesa Webb from preparing federal tax returns for others, the Justice Department announced today. In the civil injunction order issued by Judge William P. Dimitrouleas, the court found that Webb, of Broward County, Fla., prepared returns for her customers that falsely claimed several tax credits and reported false income and expenses. Webb did not contest the government’s allegations.

The court found that many of Webb’s customers were homeless and had no income, and that she “targeted and victimized unsuspecting distressed individuals with the promise of quick and easy cash.” According to the court’s order, Webb or her agents falsely told individuals that they were eligible for special credits or funds offered by the federal government, prepared tax returns for them with fabricated information and took a sizable portion of the tax refunds as a fee.

 

The court’s order states that one of the falsely-claimed tax credits was the first-time-homebuyer credit, which Congress enacted in 2008 to strengthen the real estate market and help the economy. Persons who had not owned a home in the previous three years could claim a credit of up to $8,000 against their federal income taxes if they bought a home after April 8, 2008. Congress later expanded the program to allow current homeowners to claim the credit for a purchase of a new home, under certain conditions. The credit has since expired.

According to the court’s order, Webb claimed the first-time-homebuyer credit on her customers’ tax returns even though she knew the customers had not bought new homes. The order also states that Webb claimed fabricated business deductions and education credits on some customers’ returns, and on other returns she failed to report the proper amounts of her customers’ incomes. At times, according to the order, Webb prepared returns for persons without those persons’ knowledge.

 

Return preparer fraud is identified by the Internal Revenue Service as one of the “Dirty Dozen” tax scams taxpayers are urged to avoid. In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Departmentwebsite .

WASHINGTON – Future Research Corp., located in Huntsville, Ala., and its president, Jesse Nunn, have agreed to pay the United States $200,000 to settle claims that they inappropriately obtained contracts from the Navy, the Justice Department announced today. The contracts had been set aside for companies that qualified for the Small Business Administration’s (SBA) Historically Underutilized Business Zone (HUBZone) program. Future Research Corp. bid on and received the Navy contracts even though it was not qualified for the HUBZone program at that time.

 

Under the HUBZone program, companies that maintain their principal office in a designated HUBZone and employ 35 percent of their workforce from a HUBZone, among other requirements, can apply to the SBA for certification as a HUBZone small business company. HUBZone companies can then use this certification when bidding on government contracts. In certain cases, government agencies will restrict competition for a contract to HUBZone-certified companies.

 

The United States alleged that Future Research Corp. did not actually maintain its principal office in a designated HUBZone location in Huntsville at the time it bid on and received certain Navy contracts, but elsewhere in Huntsville in a location that was not designated as a HUBZone. Despite not properly qualifying for the HUBZone program, Future Research Corp. was awarded Navy contracts that had been set aside for qualified HUBZone companies based upon the false certifications the company and Nunn made to the Navy.

 

“HUBZone contracts should be used for their intended purpose: to support small business owners who are creating jobs in economically disadvantaged communities,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “When non-qualified companies inappropriately obtain these contracts, we will take action.” 

“The HUBZone program should provide capital to economically disadvantaged areas, increasing job creation and community development. Contractors obtaining these set-aside contracts with false statements take a vital opportunity away from targeted small businesses. The SBA Office of the Inspector General will continue to partner with the Department of Justice to aggressively pursue criminal and civil cases,” said SBA Inspector General Peggy E. Gustafson.

 

“This case represents the cooperative effort of SBA’s Offices of the General Counsel and the Inspector General and the Department of Justice to uncover and remedy fraud in our procurement programs,” said SBA General Counsel Sara Lipscomb.

 

Assistant Attorney General West thanked the Justice Department’s Civil Division, the SBA Office of General Counsel, the SBA Office of Inspector General and the Department of the Navy for the collaboration that resulted in the settlement announced today.

BRUSSELS – Attorney General Eric Holder today joined Belgian Minister of Justice Stefaan De Clerck and Minister of Interior Annemie Turtelboom to sign an agreement on Preventing and Combating Serious Crime (PCSC), which will allow for the exchange of biometric and biographic data of suspected criminals between the United States and Belgium to bolster counterterrorism and law enforcement efforts while protecting individual privacy.

 

Under the agreement, Belgium and the United States will leverage state-of-the-art technology to share law enforcement data, including fingerprints, to better identify known terrorist and criminals during investigations and other law enforcement activities.  The agreement authorizes the use of specific mechanisms for sharing vital information to help prevent serious threats to public security, and requires measures to ensure the protection and privacy of citizens in both countries.  In fact, the PCSC contains numerous provisions pertaining to the handling, sharing, and retention of relevant data, all designed to ensure privacy and data protection.

 

Belgium is the 20th country with which the United States has signed an agreement to prevent and combat serious crime.  Among the other international partners who have concluded similar agreements with the United States are Germany, the Netherlands, Finland, Spain, Estonia, Greece and South Korea.  These agreements – negotiated by the Departments of Homeland Security, Justice and State – prevent individuals who commit serious crimes in one signatory country from continuing illicit acts in another, and reaffirm the strong commitment of the United States to reciprocal partnerships that advance the safety and security of the United States and its allies.

WASHINGTON – Stanley R. MacKinnon, 66, of Haverhill, Mass., was sentenced today to 60 months in prison and 10 years of supervised release for his receipt, attempted receipt and possession of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Carmen M. Ortiz for the District of Massachusetts and Robert Bethel, Inspector in Charge of the U.S. Postal Inspection Service (USPIS).

MacKinnon was sentenced by U.S. District Judge Rya W. Zobel in Boston. On March 24, 2011, MacKinnon pleaded guilty to five counts of receipt and attempted receipt of child pornography and one count of possession of child pornography. The charges against him were the result of an ongoing national investigation by USPIS of individuals who purchase child pornography via U.S. mail. In pleading guilty, MacKinnon admitted to ordering and purchasing child pornography movies depicting prepubescent minors, and receiving the movies via U.S. mail. MacKinnon also admitted to possessing images of child pornography that he had produced approximately 30 years ago.

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

 

The case against MacKinnon was prosecuted by Assistant U.S. Attorney Michael I. Yoon of the District of Massachusetts and CEOS Trial Attorney Bonnie L. Kane of the Criminal Division. The case was investigated by USPIS and the Haverhill Police Department.

WASHINGTON – The United States has sued Crystal Ireland and her business, Master Mind Preparation, to bar them from preparing tax returns for others, the Justice Department announced today. According to the government complaint in the civil injunction suit, Ireland, who resides in Detroit, allegedly fails to comply with due-diligence requirements imposed by federal law on tax return preparers who claim the earned-income tax credit (EITC) on their customers’ tax returns. The suit also alleges that Ireland falsified her customers’ income in order to claim the maximum EITC for them.

 

The EITC is a refundable tax credit available to certain low-income individuals. Due to the method used to calculate the EITC, individuals with higher annual incomes may be entitled to larger credits, up to a certain point. According to the complaint, Ireland fabricated businesses and reported fake business income on her customers’ returns to obtain larger credit amounts.

 

The complaint alleges that the Internal Revenue Service (IRS) previously penalized Ireland for failing to comply with the due-diligence requirements, yet a follow-up investigation revealed continuing failures and fraudulent claims. The complaint also alleges that, of the returns prepared by Ireland and claiming the EITC for tax years 2007 through 2009 that the IRS examined, the IRS reduced or disallowed the EITC claim on 93 percent of those returns.

 

In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions against preparers of false tax returns and tax fraud promoters. Information about these cases is available on the Justice Department website .

WASHINGTON –Former Milwaukee Police Officer Ladmarald Cates, 43, was indicted today by a federal grand jury for sexually assaulting a woman while he was on duty, announced the Justice Department.

On July 16, 2010, the victim called 911 to report a crime and request police assistance at her home. Cates was one of the officers who responded to her call. It is alleged that during the time Cates was to be investigating the victim’s complaint, he isolated the victim and sexually assaulted her while his partner and her family members were outside. Cates was also charged with using and carrying a firearm during and in relation to the sexual assault and possessing a firearm in further of the crime.

If convicted, the defendant faces a maximum penalty of life in prison and a fine of not more than $250,000.

 

An indictment is a formal accusation of criminal conduct, not evidence of guilt. The defendants are presumed innocent unless and until proven guilty.

This case was investigated by the FBI and the Milwaukee Police Department, and is being prosecuted by Assistant U.S. Attorney Mel Johnson of the Eastern District of Wisconsin and Civil Rights Division Trial Attorney Saeed Mody.

WASHINGTON – The former chief financial officer of CSK Auto Corp. was sentenced late yesterday to 24 months in prison for his role in a scheme to manipulate CSK’s earnings and double-bill CSK’s customers, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; Special Agent in Charge James L. Turgal of the FBI’s Phoenix Field Office; Special Agent in Charge Dawn Mertz of the Internal Revenue Service-Criminal Investigation (IRS-CI) Phoenix office; and Inspector in Charge Pete Zegarac of the U.S. Postal Inspection Service (USPIS) for the Phoenix Division.

 

Don W. Watson, 55, of Gilbert, Ariz., was sentenced by U.S. District Judge Susan R. Bolton in the District of Arizona in Phoenix. In addition to his prison term, Watson was sentenced to three years of supervised release. Restitution will be determined by the court at a later date.

 

Watson pleaded guilty on May 13, 2011, to one count of conspiracy to commit securities and mail fraud. Watson admitted in his plea that, from 2001 to 2006, he and others conspired to misstate CSK’s income by concealing that the company had tens of millions of dollars in rebates from vendors that CSK had claimed as income that were never collected. As a result of the fraud scheme, CSK reported millions of dollars more in pre-tax income than it in fact earned. In addition, Watson admitted in his plea that he and others intentionally caused CSK to double-bill vendors millions of dollars that CSK was not owed.

 

According to court documents, CSK operated under the brand names Checker Auto Parts, Schucks Auto Supply and Kragen Auto Parts. During the time of the conspiracy, CSK was the largest specialty retailer of auto parts and accessories in the western United States and one of the largest such retailers in the entire United States.

 

According to court documents, CSK purchased hundreds of millions of dollars worth of auto parts every year. Its vendors gave CSK allowances, or rebates, for products CSK purchased in exchange for CSK using the allowances for marketing of the vendors’ products for sale in its stores. By reducing the cost to CSK of the products it purchased from vendors, the allowances increased CSK’s income. Watson admitted that, instead of writing off allowances that CSK had claimed but could not collect, he and others concealed the uncollectible amounts by causing vendor allowances from later years to be moved to cover the shortfalls in prior years and by causing vendors to be billed for allowances CSK was not owed.

 

As a result of the scheme, CSK misstated its receivables and pre-tax income in its annual reports (Forms 10-K) in fiscal years 2002, 2003 and 2004 by approximately $10 million, $23 million and $19 million, respectively.

 

In related actions, Edward W. O’Brien III, the former controller of CSK, and Gary M. Opper, the former director of credits and receivables at CSK, pleaded guilty to obstruction of justice in April 2009. Sentencings for O’Brien and Opper are scheduled for Nov. 7, 2011, before Judge Bolton. CSK recently entered into a non-prosecution agreement with the Department of Justice, in which it agreed to pay a penalty of $20.9 million and abide by conditions of the agreement for a period of two years. The U.S. Securities and Exchange Commission (SEC) conducted its own investigation, which resulted in a filed action against CSK and pending actions against Watson, O’Brien and Opper.  The SEC also referred the conduct to the department.

 

The case was prosecuted by Deputy Chief Patrick Stokes and Trial Attorneys Jennifer R. Taylor and Andrew H. Warren of the Criminal Division’s Fraud Section. The case was investigated by the FBI, IRS-CI and the USPIS. The department thanks those agencies, as well as the SEC, for their substantial assistance in this matter.

WASHINGTON – The Board of Immigration Appeals (BIA) has dismissed the appeal of John (Ivan) Kalymon of Troy, Mich., who was ordered removed from the United States earlier this year because of his participation in lethal acts of Nazi-sponsored persecution of Jews during World War II, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Immigration and Customs Enforcement (ICE) Director John Morton.

The BIA upheld a Detroit immigration judge’s Jan. 31, 2011, decision that Kalymon was removable for shooting Jews while serving voluntarily as an armed member of the Nazi-sponsored Ukrainian Auxiliary Police (UAP) in German-occupied L’viv, Ukraine.

 

“John Kalymon and his Ukrainian Police accomplices were indispensable participants in Nazi Germany’s campaign to exterminate the Jews of Europe during World War II,” said Assistant Attorney General Breuer. “Their actions ensured that tens of thousands of Jewish men, women and children were murdered in L’viv or rounded up and shipped to the Nazi death camp in Belzec or Nazi forced labor camps.  The Justice Department remains steadfast in our resolve to ensure that Holocaust perpetrators are not granted safe haven in this country.”

 

“We hope upholding this removal order helps bring justice to the families who were victimized by the reprehensible acts that this man committed,” said ICE Director Morton. “The U.S. government will work tirelessly to identify and arrest those who have committed crimes against humanity so that they may not seek to gain safe haven in the United States.”

 

In January 2011, U.S. Immigration Judge Elizabeth Hacker ordered Kalymon removed from the United States. Kalymon, 90, immigrated to the United States from Germany in 1949 and became a U.S. citizen in 1955. In 2004, the Department of Justice filed a lawsuit in U.S. District Court in Detroit seeking revocation of his U.S. citizenship. Following trial, a federal judge granted that request in 2007, finding that Kalymon had participated in the rounding up and shooting of Jews during his voluntary 1941-44 service in the UAP. The judge further found that Kalymon concealed his UAP service when applying for his U.S. immigrant visa. The evidence included a seized Aug. 14, 1942, report, handwritten by Kalymon, in which he informed his UAP superiors that he had personally shot to death one Jew and had wounded another “during the Jewish operation” that day. The evidence also included other reports from Kalymon’s commander that Kalymon had fired his weapon during forcible round-ups of Jews, in the course of which Jews were killed and wounded. Judge Hacker ordered Kalymon deported to Germany, Ukraine, Poland or any other country that will admit him.

 

The BIA reviewed Judge Hacker’s decision and ruled that it agreed with the decision that “clear and convincing evidence” proffered by the Government “establishes the facts alleged” in the charging document.

 

“Ivan Kalymon was an integral part of the Nazi machinery of annihilation that ended the lives of more than 100,000 innocent men, women and children in L’viv,” said Eli M. Rosenbaum, Director of Human Rights Enforcement Strategy and Policy for the Criminal Division’s Human Rights and Special Prosecution Section (HRSP). “This case is one of more than a hundred cases successfully prosecuted by the Department of Justice against wartime Nazi perpetrators, and it reflects the government’s continuing commitment to pursuing justice on behalf of the victims of the Holocaust and other human rights crimes.”

 

The Department of Justice’s Criminal Division announced the formation of HRSP on March 30, 2010, as part of the U.S. government’s efforts to bring human rights violators to justice and deny those violators safe haven in the United States. The new section represents a merger of the Criminal Division’s former Domestic Security Section (DSS) and Office of Special Investigations (OSI).

This case is a result of the Justice Department’s ongoing efforts to identify, investigate and take legal action against former participants in Nazi persecution who reside in the United States. Since the inception of this program in 1979, the department has won cases against 107 individuals who assisted in Nazi persecution. In addition, 180 suspected Axis persecutors who sought to enter the United States have been blocked from doing so as a result of the department’s “watchlist” program, enforced in cooperation with the Department of Homeland Security. The removal case against Kalymon was litigated by HRSP Senior Trial Attorney William H. Kenety V, with assistance from Frank Ledda, Senior Chief Counsel in the Detroit Office of U.S. Immigration and Customs Enforcement (ICE).

Additional information about the Justice Department’s human rights enforcement efforts can be found at www.justice.gov/criminal/hrsp .

WASHINGTON – John Walter Kaber, a resident of Bloomfield, Mich., was sentenced to 37 months in prison for tax evasion, the Justice Department and Internal Revenue Service (IRS) announced today.

 

According to the plea agreement, Kaber was the owner of Merchant Processing, a business that installed credit card processing systems. Despite earning substantial income from Merchant Processing and incurring a tax liability on that income, Kaber failed to file timely U.S. Individual Income Tax Returns (IRS Forms 1040) for the 1991 and 2005 tax years. Kaber filed Forms 1040 for the 1992-1996 and 2000-2004 tax years that reflected a tax due and owing, but failed to pay the taxes due. Kaber also failed to pay a portion of the employment taxes that were due to the IRS during the 2000-2003 tax years.

 

Kaber’s total tax due and owing to the United States for the 1991-1996 and 2000-2005 tax years, including both income taxes and employment taxes, is $868,319.70. In addition to the prison term, the court ordered Kaber to serve two years of supervised release and ordered Kaber to pay $868,319.70 in restitution to the IRS.

 

According to the plea agreement, in order to carry out his tax evasion scheme and to conceal his income and assets from the IRS, Kaber, among other things, used his wife’s name to purchase and refinance two parcels of real property and to purchase a boat, boat slip and vehicle. Kaber also sought to prevent the IRS from collecting unpaid taxes from his bank accounts by, among other things, cashing checks rather than depositing them in the bank, depositing business receipts into his wife’s checking account, and removing his name from a joint bank account after it became subject to an IRS levy.

 

According to court documents, Kaber has an extensive criminal history that includes multiple convictions in Michigan for fraud-related offenses. Kaber was also the subject of a civil lawsuit in 2007, in which the United States District Court for the Eastern District of Michigan entered a judgment against him for his unpaid 1991-1996 federal income taxes.

 

This case was investigated by IRS-Criminal Investigation and was prosecuted by Tax Division Trial Attorney Melissa S. Siskind.

 

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

WASHINGTON – Attorney General Eric Holder today issued the following statement on the release of the 2010 Uniform Crime Report, which showed a decline in violent crime across the United States for the second straight year: 

“Safe communities are the foundation of our nation’s prosperity and I have made it a priority of this Department of Justice to protect the American public by aggressively fighting violent crime. The results of the 2010 Uniform Crime Report show that for the second straight year, our federal law enforcement agents continue to make progress on one of our core objectives -- fighting violent crime across this country.

“Working with our state, local and tribal partners, federal prosecutors and agents have increased community participation in our shared efforts to hold accountable those whose illegal actions bring fear into neighborhoods.  We’ve targeted gang leadership in communities from Florida to New York, and from Tennessee to North Carolina.  We’ve renewed our commitment to fighting organized crime, whether it is traditional La Cosa Nostra or Mexican drug cartels.  

“Ensuring that law enforcement has the necessary resources is critical to continuing our aggressive fight against violent crime.  We also recognize that enforcement alone will not prevent every future crime, which is why we’ve launched initiatives in communities across this country to fight recidivism and support reentry programs.   

“Each crime that is solved, each victim that is helped and each criminal act that is prevented before it even occurs - all combine to create better law enforcement and most importantly, safer communities.”

Information about the 2010 Uniform Crime Report can be found at: www.fbi.gov/news/stories/2011/september/crime_091911/crime_091911

SAN FRANCISCO – Federal, state and Bay-area officials announced a comprehensive civil settlement with the owners and operators of the M/V Cosco Busan, resolving all natural resource damages, penalties and response costs that resulted from the ship striking the San Francisco-Oakland Bay Bridge in 2007, and subsequent oil spill in the San Francisco Bay.  The event killed thousands of birds, impacted a significant portion of the Bay’s 2008 herring spawn, spoiled miles of shoreline habitat and closed the bay and area beaches to recreation and fishing.

The U.S. Department of Justice, the state of California, the city and county of San Francisco and the city of Richmond, Calif., signed and lodged a consent decree that requires Regal Stone Limited and  Fleet Management Ltd., the owners and operators of the M/V Cosco Busan, to pay $44.4 million for natural resource damages and penalties and to reimburse the governmental entities for response costs incurred as a result of the 53,000 gallon oil spill that occurred when the vessel struck the bridge on Nov. 7, 2007.

Officials announced the agreement at a press conference today on Treasure Island, overlooking the site of the 2007 crash.

U.S. Secretary of the Interior Ken Salazar was joined by Assistant Attorney General Ignacia S. Moreno, head of the Justice Department’s Environment and Natural Resources Division; California Attorney General Kamala D. Harris; Natural Resources Secretary John Laird; National Oceanic and Atmospheric Administration (NOAA) Chief of Staff Margaret Spring; San Francisco City Attorney Dennis Herrer; and representatives of the California Department of Fish and Game, State Lands Commission; state and regional water boards; and the East Bay Regional Park District, among others.

“This settlement is great news for the Bay Area and for all who enjoy these lands and waters rich in beauty, wildlife, and recreational opportunities,” said Secretary Salazar.  “With this settlement, we are seeing to it that those responsible for the spill are held accountable and that they pay their share for restoring and improving our precious natural resources and public lands.”

“The Cosco Busan oil spill had a major impact in the San Francisco Bay and beyond, oiling over 100 miles of shoreline,” said Assistant Attorney General Moreno. “This comprehensive settlement achieves full compensation for the significant natural resources that were injured as result of the Cosco Busan oil spill.  It also forms the foundation for the complete restoration of precious lost natural resources, park system resources, and compensates for lost recreation uses for the benefit and enjoyment of the people of the San Francisco Bay Area and for all Americans.”

The federal and state natural resource trustees estimate that the spill killed 6,849 birds, impacted 14 to 29 percent of the herring spawn that winter, oiled 3,367 acres of shoreline habitat and resulted in the loss of more than one million recreational user-days.  A result of a multi-governmental effort by federal and state agencies, and municipal governments, the settlement is expected to fully compensate (in addition to previously reimbursed costs) for the natural resources and other damages and costs resulting from the spill.

The portion of the settlement for lost human uses of the shoreline and the bay, $18.8 million, constitutes one of the largest human use recoveries for any oil spill in the United States.  Of this, the National Park Service is receiving approximately $9.75 million to improve coastal access and facilities in the bayside, coastal and estuarine areas of Golden Gate National Recreation Area, San Francisco Maritime National Historical Park and Point Reyes National Seashore.

The remaining $9 million will be disbursed either directly to local government as part of the consent decree or through a grant program to fund shoreline recreational projects throughout the impacted spill areas.

On Nov. 30, 2007, just 23 days after the spill, the United States filed a lawsuit in federal court against Regal Stone Limited, Fleet Management Ltd. and John J. Cota seeking damages for resource injuries caused by the spill and for costs incurred cleaning up the spill.  The U.S. asserted claims under the Oil Pollution Act, the National Marine Sanctuaries Act, the Park System Resource Protection Act and the Clean Water Act. 

On Dec. 10, 2007, the city and county of San Francisco filed, and the city of Richmond later joined, an action in the Superior Court of California seeking damages and injunctive relief under state law and common law. 

After investigating many of the impacts from the spill, on Jan. 7, 2009, the California Department of Fish and Game, State Lands Commission, and the Regional Water Quality Control Board – San Francisco Bay Region, filed a complaint in the Superior Court that included causes of action for natural resource damages under the Lempert-Keene-Seastrand Oil Spill Prevention and Response Act, the Oil Pollution Act various other state law provisions and common law.  California asserted claims for civil liability and penalties and state costs incurred responding to the spill.  Each of these actions is resolved by the settlement, which is subject to a 30-day public comment period that begins with the posting of a notice in the Federal Register. The consent decree will be available for viewing at www.justice.gov/enrd/Consent_Decrees.html.

“The Cosco Busan oil spill polluted the bay, killed wildlife and cost Bay Area residents millions of dol lars in economic opportunity,” said California Attorney General Harris. “ This settlement properly compensates the public affected by the oil spill and will fund the environmental restoration and recreational projects necessary to undo the damage done by the spill.”

“This settlement takes California a big step closer to healing the serious injuries the San Francisco Bay ecosystem suffered as a result of the spill,” said California Natural Resources Secretary Laird. “ For years to come, the restoration projects funded through this settlement will help recover habitat for wildlife and improve opportunities for visitors to enjoy the natural beauty of the Bay Area.”

“This consent decree represents a just conclusion to the sustained and unrelenting efforts by the various government attorneys, including the San Francisco City Attorney's Office, to recover full compensation for the costs this oil spill imposed on our taxpayers and the damage it did to recreational opportunities at our beaches and in the Bay,” said San Francisco City Attorney Dennis Herrera.

“Numerous NOAA scientists and experts worked on this oil spill – playing a critical role before, during, after this incident. Thanks to the hard work we have all done as federal, state and local partners, today we stand together in declaring the importance of maintaining a safe and efficient marine transportation system both for protection of our oceans and the economy,” said Margaret Spring, NOAA chief of staff. “In tough economic times we must remember that 69 million jobs are associated with healthy oceans and coasts. This settlement today once again emphatically states the importance of these jobs.”

In conjunction with the consent decree, the federal and state trustees will publish a separate notice in the Federal Register seeking comments on the Draft M/V COSCO BUSAN Damage Assessment and Restoration Plan (DARP).  After considering comments from the public, the trustees will produce a final DARP selecting projects that will be funded with approximately $32 million from this settlement.   About $5 million will be used to fund bird restoration, $4 million for habitat restoration, $2.5 million for fish and eelgrass restoration and $18.8 million for recreational use improvements.  An additional $2 million will fund restoration planning, administration and oversight, with any unused funds to be spent toward more restoration.  The draft plan will be available shortly for public comment. Two public meetings will be held to allow for a brief overview of the restoration plan and public comments to be made.  Copies of the draft DARP, including injury assessment and restoration project details, are available at www.dfg.ca.gov/ospr/Science/cosco_busan_spill.aspx.

“This settlement marks an excellent collaboration of agencies at all levels to restore and preserve San Francisco Bay,” said Bruce Wolfe, the Executive Officer of the San Francisco Regional Water Quality Control Board.  “But it also reminds us that the amount of oil spilled in this incident is the equivalent of what automobile traffic deposits in the bay every year. All of us, as stewards of the Bay, must be diligent in doing all we can to protect it.”

The settlement follows earlier criminal indictments brought by the Environmental Crimes Section of the Environment and Natural Resources Division of the U.S. Department of Justice and the U.S. Attorney’s Office for the Northern District of California.  John J. Cota, the pilot of the Cosco Busan, and Fleet Management were criminally prosecuted.  Cota pleaded guilty in 2009 and was sentenced to 10 months in prison for negligently causing the discharge and killing migratory birds.  Fleet was sentenced in 2010 after pleading guilty in the criminal case to negligently causing the discharge and obstructing justice.  Fleet was ordered to pay $10 million in criminal penalties, including $2 million for local environmental projects, for its role negligently causing the Cosco Busan oil discharge and obstruction of justice charges for a subsequent cover-up in which it falsified ship records after the crash.  For more information: www.justice.gov/opa/pr/2009/July/09-enrd-698.html.

“The Northern District of California contains some of the most picturesque waterways in the country.  Ship owners and operators cannot be allowed to take them for granted,” said U.S. Attorney Melinda Haag of the Northern District of California.  “This settlement and the criminal cases we brought in 2008 against Fleet Management and Mr. Cota should send a strong message that the federal, state and local governments here will take action against anyone causing environmental harm to the San Francisco Bay.”

For more information and photos of the spill and response efforts, visit: www.dfg.ca.gov/ospr/Science/cosco_busan_spill.aspx and www.darp.noaa.gov.

WASHINGTON – Miami resident Marianella Valera, the owner of a mental health care company, American Therapeutic Corporation (ATC), was sentenced today to 35 years in prison for orchestrating a $205 million Medicare fraud scheme, announced the Department of Justice, the Department of Health and Human Services (HHS) and the FBI.

 

Valera, 40, was sentenced by U.S. District Judge James Lawrence King in the Southern District of Florida. Judge King ordered Valera to pay more than $87 million in restitution, jointly and severally with her co-defendants. Valera was also sentenced to three years of supervised release following her prison term. Lawrence Duran, another owner of ATC, was sentenced on Sept. 16, 2011, to 50 years in prison for his role in the fraud scheme. Duran’s sentence is the longest prison sentence ever imposed in a Medicare Fraud Strike Force case.

 

On April 14, 2011, Valera and Duran pleaded guilty to all counts charged in a superseding indictment, which was unsealed on Feb. 15, 2011. The superseding indictment charged Valera with 21 felony counts and Duran with 38 felony counts, including conspiracy to commit health care fraud, health care fraud, conspiracy to pay and receive illegal health care kickbacks, conspiracy to commit money laundering, money laundering and structuring to avoid reporting requirements. Valera and Duran were remanded to the custody of the U.S. Marshals Service after their arrest on Oct. 21, 2010, and have been detained since that time. Their assets were restrained at the time of their arrests through civil proceedings.

 

In pleading guilty, Duran and Valera admitted that they orchestrated and executed a scheme to defraud Medicare beginning in 2002 and continuing until they were arrested in October 2010. Duran and Valera submitted false and fraudulent claims to Medicare through ATC, a Florida corporation headquartered in Miami that 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. Duran and Valera also used a related company, American Sleep Institute (ASI), to submit fraudulent Medicare claims.

 

According to court documents, Duran, Valera and others paid bribes and kickbacks to recruit Medicare beneficiaries to attend ATC and ASI and billed Medicare for treatments purportedly provided to these recruited patients. According to court documents, the treatments were medically unnecessary or never provided at all. Duran and Valera supported the kickbacks through an extensive money laundering scheme that aimed to conceal the illicit conversion of Medicare payments to cash. The defendants and their co-conspirators used sophisticated measures to conceal their fraudulent activities from Medicare and from law enforcement.

 

As part of the fraud scheme, Duran, Valera and others paid kickbacks to owners and operators of assisted living facilities (ALFs) 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. The defendants and their co-conspirators actively recruited ALF and halfway house owners and operators and patient brokers to participate in the scheme. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries, who did not qualify for PHP services, to attend treatment programs that were not legitimate PHP programs so that ATC and ASI could bill Medicare for more than $205 million in medically unnecessary services.

 

According to the superseding indictment to which they pleaded guilty, Duran, Valera and others caused the alteration of patient files and therapist notes for the purpose of making it falsely appear that patients being treated by ATC qualified for PHP treatments. According to court documents, Duran and Valera also instructed employees and doctors to alter diagnoses and medication types and levels to make it falsely appear that ATC patients qualified for PHP services. Duran, Valera and co-conspirators caused doctors to refer ATC patients to ASI even though the patients did not qualify for sleep studies.

 

According to the superseding indictment to which they pleaded guilty, the defendants also engaged in a money laundering conspiracy to enrich themselves and to provide cash for the millions of dollars in kickbacks paid to recruit Medicare beneficiaries. According to court documents, Duran and Valera used another company they owned and operated, Medlink Professional Management Inc., to conceal the health care fraud and kickbacks from Medicare and law enforcement. Once Medicare paid ATC and ASI for the fraudulently billed services, Duran, Valera and others transferred millions of dollars to Medlink. They and others opened phony corporations to receive checks and wire transfers from both ATC and Medlink to convert that money into cash for their personal enrichment and for the payment of kickbacks. According to court documents, Duran, Valera and others cashed checks at different bank branches and different locations to conceal the true purpose of their activities and to evade reporting requirements.

 

On Aug. 23, 2011, a jury found co-conspirator Judith Negron, the third owner and operator of ATC, guilty of all 24 felony counts charged in the February 2011 superseding indictment. Co-conspirator Margarita Acevedo, also charged in the February 2011 superseding indictment, pleaded guilty on April 7, 2011, for her role in the fraud scheme.  Today, Judge King sentenced Acevedo to 91 months in prison and three years of supervised release following her prison term.  Avecedo was also sentenced to pay more than $72 million in restitution, jointly and severally with her co-defendants. 

 

ATC and Medlink pleaded guilty in May 2011 to conspiracy to commit health care fraud. ATC also pleaded guilty to conspiracy to defraud the United States and to pay and receive illegal health care kickbacks. On Sept. 16, 2011, the two corporations were sentenced to five years of probation per count and ordered to pay restitution of $87 million. Both corporations have been defunct since their owners were arrested in October 2010.

 

Today’s sentence was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Special Agent-in-Charge John V. Gillies 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 case was prosecuted by Trial Attorney Jennifer Saulino 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 its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants that collectively have billed the Medicare program for more than $2.9 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.

WASHINGTON – The former president and administrator of a fraudulent physical therapy company in Lakeland, Fla., was sentenced today to 24 months in prison for his role in a scheme to defraud Medicare, announced the Department of Justice, the Department of Health and Human Services (HHS) and the FBI.

 

Miami-area resident Adrian Chalarca, 24, also was sentenced by U.S. District Judge James D. Whittemore of the Middle District of Florida to serve three years of supervised release following his prison term and ordered to pay $82,765 in restitution, jointly and severally with his co-defendants.  Chalarca pleaded guilty on June 10, 2011, before U.S. Magistrate Judge Mark A. Pizzo in Tampa, Fla., to one count of conspiracy to commit health care fraud.

 

According to court documents, Chalarca and his co-conspirators purchased Dynamic from its prior owners and transformed it into a fraudulent enterprise.  Under Chalarca and others, Dynamic purported to provide physical therapy services to Medicare beneficiaries. 

 

According to court documents, from fall 2009 to summer 2010, Chalarca submitted and caused the submission of $757,654 in fraudulent claims by Dynamic to the Medicare program.  Chalarca admitted that he paid and caused the payment of kickbacks and bribes to Medicare beneficiaries in order to obtain their Medicare billing information and used it to submit claims to Medicare for physical therapy services that were never provided.  Chalarca admitted that he knew the Medicare beneficiaries, on whose behalf claims were submitted to Medicare, never received the services. 

 

All five defendants charged for their roles in the scheme at Dynamic have pleaded guilty.  On Aug. 29, 2011, co-defendant Andres Cespedes was sentenced to 21 months in prison for his participation in the fraud scheme. 

 

Today’s sentencing was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Robert E. O’Neill of the Middle District of Florida; Steven E. Ibison, Special Agent-in-Charge of the FBI’s Tampa Division; and Christopher Dennis, Special Agent-in-Charge of the HHS Office of Inspector General (HHS-OIG), Office of Investigations’ Miami Office.

 

This case was prosecuted by Acting Assistant Chief Benjamin D. Singer of the Criminal Division’s Fraud Section and Special Assistant U.S. Attorney Christina M. Burden of the Middle District of Florida.  The case was investigated by the HHS-OIG, Defense Criminal Investigative Service and FBI, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Middle District of Florida.

 

Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants that collectively have billed the Medicare program for more than $2.9 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.

WASHINGTON - A former employee of the U.S. Army Corps of Engineers stationed in Baghdad, Iraq, pleaded guilty today to conspiring to receive bribes from Iraqi contractors involved in the U.S.-funded reconstruction efforts, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office.

 

Thomas Aram Manok, 50, of Chantilly, Va., pleaded guilty before U.S. District Judge Anthony J. Trenga in the Eastern District of Virginia. Sentencing has been scheduled for Dec. 9, 2011. Manok faces a maximum penalty of five years in prison.

 

According to court documents, Manok admitted to using his official position to conspire with Iraqi contractors to accept cash bribes in exchange for recommending that the Army Corps of Engineers approve contracts and other requests for payment submitted by the contractors to the U.S. government. According to court documents, in March and April 2010, Manok agreed to receive a $10,000 payment from one such contractor who had been involved in constructing a kindergarten and girls’ school in the Abu Ghraib neighborhood of Baghdad and had sought Manok’s influence in having requests for payment approved by the Corps of Engineers. According to court documents, Manok was to receive an additional bribe payment from the contractor once the contractor’s claim had been approved. Manok also admitted that he intended to conceal the payments from authorities by transferring them, via associates, from Iraq to Armenia.

 

This case was investigated by the FBI’s Washington Field Office, the Department of Defense Office of the Inspector General, the Army Criminal Investigation Command and the Defense Criminal Investigative Service, as participants in the International Contract Corruption Task Force. The case is being prosecuted by Assistant U.S. Attorney Paul J. Nathanson of the Eastern District of Virginia and Trial Attorney Mary Ann McCarthy of the Criminal Division’s Fraud Section.

WASHINGTON – Saudi Arabia-based Tamimi Global Company Ltd (TAFGA) has agreed to pay the United States $13 million to resolve criminal and civil allegations that the company paid kickbacks to a Kellogg Brown & Root Inc. (KBR) employee and illegal gratuities to a former U.S. Army sergeant, in connection with contracts in support of the Army’s operations in Iraq and Kuwait. The civil matter was handled by the Justice Department’s Civil Division, and the criminal matter was handled by the U.S. Attorney’s Office for the Central District of Illinois.

 

The U.S. alleges that employees of TAFGA paid kickbacks to KBR to obtain subcontracts awarded under LOGCAP (Logistics Civil Augmentation Program) III – KBR’s prime contract with the U.S. Army to provide logistical support to the military in conflicts abroad, including Iraq and Afghanistan. LOGCAP III is the third generation of contracts under the program.  KBR performs its obligations under the contract largely through subcontractors such as TAFGA.

 

The U.S. also alleges that employees of TAFGA paid illegal gratuities to Army Sergeant Ray Chase. Chase was responsible for Army food services at camps Doha and Arifjan (Zone 1) in Kuwait in 2002 and 2003. As alleged in the information, Chase received regular payments from TAFGA employees on account of official acts that he took while he served in Kuwait in 2002 and 2003.  TAFGA has now admitted that its employees entered into a conspiracy to pay illegal gratuities to Chase.

 

TAFGA appeared today before Senior Judge Michael M. Mihm in the U.S. District Court for the Central District of Illinois in Peoria, Ill., on consideration of a deferred prosecution agreement (DPA) between TAFGA and the U.S. Attorney’s Office.  Under the terms of that agreement, TAFGA will pay the United States $5.6 million as part of a deferred prosecution and institute a strict compliance program to ensure that the company and its employees will abide by the legal and ethical standards required for government contracts.  If TAFGA meets its obligations under the agreement without violation for 18 months, the United States will dismiss the criminal charges.

 

As part of the criminal agreement, TAFGA admitted conspiring to pay kickbacks to former KBR subcontract manager Steven Lowell Seamans in return for favorable treatment in the award and performance of a subcontract to provide dining services at Camp Arifjan in Kuwait.  The conspiracy lasted from October 2002 to March 2006.  In related proceedings in March 2006, Seamans pleaded guilty to accepting $60,500 in kickbacks from TAFGA’s former director of operations in Kuwait, Mohammad Shabbir Khan, for the award of the Camp Arifjan subcontract.  In June 2006, Khan pleaded guilty to paying Seamans $133,000 in kickbacks for the award of this and another subcontract.  Both were sentenced to prison and ordered to pay restitution.  In the DPA unsealed today, TAFGA also admitted that as part of the conspiracy charged its then employees made false statements to federal investigators about a phantom business deal to cover up wire transfers to Seamans transmitting the kickbacks.  As alleged, this transaction also involved another former TAFGA operations director, Zubair Khan. Khan has been indicted in the Central District of Illinois, and that case is still pending.

 

With respect to the conspiracy involving Chase, TAFGA admitted that it is responsible for the misconduct of its employees who agreed to provide Chase illegal gratuities and in furtherance of that conspiracy provided Chase money and use of an apartment in Kuwait.  All of these illegal gratuities were paid to Chase on account of official acts he performed, or was going to perform, at Camps Doha and Arifjan in Kuwait in relation to the war effort.  In 2010, Chase pled guilty and was sentenced to prison for accepting approximately $1.4 million in illegal gratuities from various contractors, including TAFGA.  Chase was prosecuted in the Central District of Illinois.

           

In a separate civil settlement agreement, TAFGA agreed to pay the United States an additional $7.4 million to resolve civil allegations that TAFGA paid kickbacks in return for favorable treatment in the award and performance of the Camp Arifjan subcontract, a subcontract for dining facilities at the Baghdad Palace in Iraq, and five smaller subcontracts for dining services and other logistical support in Iraq, including temporary personal services and installation of tent pads and a shower/laundry unit.  The United States alleged that TAFGA’s conduct violated the False Claims Act and the Anti-Kickback Act.

 

“Kickbacks and collusion in military contracting corrode the process of supplying our men and women in uniform with the quality supplies they need and deserve,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. “When we believe companies are engaging in wartime profiteering, we will not hesitate to act.”

 

TAFGA is the 13th defendant criminally charged by the LOGCAP Working Group, based in the Central District of Illinois and led by the U.S. Attorney’s Office.  This district is also home to the Rock Island Arsenal in Rock Island, Ill., where LOGCAP III is administered by the Army Sustainment Command, giving the district jurisdiction over these cases.

 

“Our district was one of the first in the country to take on the challenge of prosecuting war zone cases involving fraud, bribes, and kickbacks that took place during the military conflict in Southwest Asia,” said U.S. Attorney Jim Lewis, Central District of Illinois.  “Our commitment to prosecute these cases is rivaled only by our commitment to the men and women who serve in our armed forces.  The agreements announced today will return $13 million to the American taxpayer and serve as an example of our long-term commitment to root out public corruption in every form, especially corruption perpetrated in war zones.”

 

The compliance program agreed to under the deferred prosecution agreement requires TAFGA to establish a new Kuwait management team as well as an ethics and compliance team with oversight over U.S. government contracts and subcontracts, to strengthen its code of business conduct, to modernize its standard operating procedures for financial and accounting functions, to institute a compliance hotline, and to retain a contract and compliance consultant to evaluate and monitor its compliance program.     

 

These settlements are a direct result of the efforts of the interagency Financial Fraud Enforcement Task Force.  The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  It includes representatives from a broad range of federal agencies, including 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, 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.

           

The criminal case was prosecuted by Assistant U.S. Attorney Matthew J. Cannon and former Assistant U.S. Attorney Jeffrey B. Lang, the current and former lead prosecutors for the LOGCAP Working Group.  Former Department of Justice Senior Trial Attorney Joseph Capone in the Fraud Section of the Criminal Division also worked on the case.  The civil case was prosecuted by Assistant Director Judith Rabinowitz, Senior Trial Counsel John A. Kolar and Trial Attorney Kelley C. Hauser in the Justice Department’s Commercial Litigation Branch of the Civil Division.

 

Investigative agencies that participated in the investigations include the Internal Revenue Service Criminal Investigation Division, Chicago Field Office; the Defense Criminal Investigative Service, Central Field Office, Rock Island Post of Duty; U.S. Army Criminal Investigation Command, Major Procurement Fraud Unit, located at Rock Island Arsenal and the FBI, Springfield Division.

 

WASHINGTON – Miami resident Lawrence Duran, the owner of a mental health care company, American Therapeutic Corporation (ATC), was sentenced today to 50 years in prison for orchestrating a $205 million Medicare fraud scheme, announced the Department of Justice, the Department of Health and Human Services (HHS) and the FBI.

 

Duran, 49, was sentenced by U.S. District Judge James Lawrence King in the Southern District of Florida.  Judge King ordered Duran to pay more than $87 million in restitution, jointly and severally with his co-defendants.  Duran was also sentenced to three years of supervised release following his prison term.  The sentencing hearing for Marianella Valera, the other owner of ATC, is scheduled for Sept. 19, 2011. 

 

Two of the corporations that Duran and Valera used to commit the fraud scheme, ATC and Medlink Professional Management Group Inc., were sentenced today to five years of probation per count and ordered to pay restitution of $87 million.  Both corporations have been defunct since their owners were arrested in October 2010.

 

On April 14, 2011, Duran and Valera pleaded guilty to all counts charged in a superseding indictment, which was unsealed on Feb. 15, 2011.   The superseding indictment charged Duran with 38 felony counts and Valera with 21 felony counts, including conspiracy to commit health care fraud, health care fraud, conspiracy to pay and receive illegal health care kickbacks, conspiracy to commit money laundering, money laundering and structuring to avoid reporting requirements.  Duran and Valera were remanded to the custody of the U.S. Marshals Service after their arrest on Oct.  21, 2010, and have been detained since that time.  Their assets were frozen at the time of their arrests through civil forfeiture proceedings.  ATC and Medlink pleaded guilty in May 2011 to conspiracy to commit health care fraud.  ATC also pleaded guilty to conspiracy to defraud the United States and to pay and receive illegal health care kickbacks.

 

“For years, Mr. Duran stole millions of taxpayer dollars by defrauding Medicare and preying upon vulnerable citizens suffering from Alzheimer’s disease, dementia and substance abuse,” said Assistant Attorney General Lanny A. Breuer of the Criminal Division.  “Instead of providing patients with the treatment they needed, Mr. Duran and his co-conspirators used them as props to fill their fraudulent mental health centers.  As a further insult, Mr. Duran created an organization to lobby Congress for additional funds to support the mental health services his fraud scheme purported to provide.  Today’s sentence – the longest ever imposed in a Medicare Fraud Strike Force case - reflects the reprehensibility of the defendant’s conduct, and is a powerful warning sign to others inclined to cheat the Medicare program.”

 

“For eight years, the defendant billed Medicare for hundreds of millions of dollars in mental health services that were not necessary or never provided,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.  “We will not allow our scar ce Medicare dollars to be diverted from the sick and the elderly into the pockets of greedy fraudsters.”

 

“Today’s sentencing demonstrates to those who defraud taxpayers of millions of dollars through health care fraud schemes that the FBI and our partners remain committed to investigating and prosecuting such fraud to the fullest extent of the law,” said FBI Miami Division acting Special Agent in Charge Xanthie Mangum.

 

“Today’s sentencing is therapeutic for Americans fed up with those whose business plan is to steal from taxpayers,” said Christopher Dennis, Special Agent in Charge of the HHS Office of Inspector General’s region that covers Florida.  “Mr. Duran thought he could enrich himself and beat the law.  He will now have years and years behind bars to reflect on that mistake.”    

 

In pleading guilty, Duran and Valera admitted that they orchestrated and executed a scheme to defraud Medicare beginning in 2002 and continuing until they were arrested in October 2010.  Duran and Valera submitted false and fraudulent claims to Medicare through ATC, a Florida corporation headquartered in Miami that 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.  Duran and Valera also used a related company, American Sleep Institute (ASI), to submit fraudulent Medicare claims.

 

According to court documents, Duran, Valera and others paid bribes and kickbacks to recruit Medicare beneficiaries to attend ATC and ASI and billed Medicare for treatments purportedly provided to these recruited patients.  According to court documents, the treatments were medically unnecessary or never provided at all.  Duran and Valera supported the kickbacks through an extensive money laundering scheme that aimed to conceal the illicit conversion of Medicare payments to cash.  The defendants and their co-conspirators used sophisticated measures to conceal their fraudulent activities from Medicare and from law enforcement. 

 

As part of the fraud scheme, Duran, Valera and others paid kickbacks to owners and operators of assisted living facilities (ALFs) 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.  The defendants and their co-conspirators actively recruited ALF and halfway house owners and operators and patient brokers to participate in the scheme.  Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries, who did not qualify for PHP services, to attend treatment programs that were not legitimate PHP programs so that ATC and ASI could bill Medicare for more than $205 million in medically unnecessary services.

 

According to the superseding indictment to which they pleaded guilty, Duran, Valera and others caused the alteration of patient files and therapist notes for the purpose of making it falsely appear that patients being treated by ATC qualified for PHP treatments.  According to court documents, Duran and Valera also instructed employees and doctors to alter diagnoses and medication types and levels to make it falsely appear that ATC patients qualified for PHP services.  Duran, Valera and co-conspirators caused doctors to refer ATC patients to ASI even though the patients did not qualify for sleep studies. 

 

According to the superseding indictment to which they pleaded guilty, the defendants also engaged in a money laundering conspiracy to enrich themselves and to provide cash for the millions of dollars in kickbacks paid to recruit Medicare beneficiaries.  According to court documents, they used another company they owned and operated, Medlink, to conceal the health care fraud and kickbacks from Medicare and law enforcement.  Once Medicare paid ATC and ASI for the fraudulently billed services, Duran, Valera and others transferred millions of dollars to Medlink.  They and others opened phony corporations to receive checks and wire transfers from both ATC and Medlink to convert that money into cash for their personal enrichment and for the payment of kickbacks.  According to court documents, Duran, Valera and others cashed checks at different bank branches and different locations to conceal the true purpose of their activities and to evade reporting requirements.

 

On Aug. 23, 2011, a jury found co-conspirator Judith Negron, the third owner and operator of ATC, guilty of all 24 felony counts charged in the February 2011 superseding indictment.  Co-conspirator Margarita Acevedo, also charged in the February 2011 superseding indictment, pleaded guilty on April 7, 2011, for her role in the fraud scheme.

 

Today’s sentences were announced by Assistant Attorney General Breuer of the Justice Department’s Criminal Division; U.S. Attorney Ferrer of the Southern District of Florida; Special Agent-in-Charge Gillies of the FBI’s Miami Field Office; and Special Agent-in-Charge Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.

 

The case was prosecuted by Trial Attorney Jennifer Saulino 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 its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants that collectively have billed the Medicare program for more than $2.9 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. 

WASHINGTON – Six current and former members of the U.S. military have been charged a 41-count indictment in San Antonio for allegedly defrauding various U.S. military components and their contractor of approximately $127,000 by fraudulently obtaining recruiting bonuses, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

 

Xavier Aves, 40, of San Antonio; Christopher Castro, 30, of San Antonio; Grant E. Bibb, 40, of Eagle Pass, Texas; Jesus Torres-Alvarez, 31, of El Paso, Texas; Paul Escobar, 31, of San Antonio; and Richard Garcia, 28, of San Antonio, were charged with one count of conspiracy in the indictment unsealed yesterday as to all the defendants. In addition, Aves is charged with 30 counts of wire fraud and 10 counts of aggravated identity theft. Castro, Bibb, Escobar and Garcia each are charged with five counts of wire fraud and two counts of aggravated identity theft. According to information presented in court, Aves, Bibb, Torres-Alvarez and Garcia are currently serving in the U.S. military while Castro and Escobar are former members of the military. The charges stem from an alleged scheme in which the defendants fraudulently obtained recruiting bonuses for soldiers whom they did not actually recruit.

 

The defendants were arrested on Sept. 14, and Sept. 15, 2011, by U.S. Army Criminal Investigation Command (CID) agents and made their initial appearances in U.S. District Court for the Western District of Texas. Aves, Castro, Escobar and Garcia appeared before U.S. Magistrate Judge John W. Primomo in federal court in San Antonio. Torres-Alvarez appeared before U.S. Magistrate Judge Robert Castaneda in El Paso and Bibb appeared before U.S. Magistrate Judge Victor Roberto Garcia in Del Rio, Texas.

According to the indictment, between 2005 and 2008, the U.S. Army, the U.S. Army Reserves and the National Guard Bureau entered into contracts with Document and Packaging Broker Inc. to administer recruiting bonus programs designed to offer monetary incentives to soldiers who recruited others to serve in the U.S. military. In addition, the Army managed its own recruiting bonus programs, which offered referral bonuses to soldiers who recruited other individuals to serve in the Army or Army Reserves.

 

Through these recruiting programs, a participating soldier could receive up to $2,000 in bonus payments for every person he recruited to serve in the U.S. military. Based on certain milestones achieved by the referred soldier, a participating soldier would receive the recruiting bonus payments in the form of direct deposits and pre-paid debit card payments.

 

According to the indictment, between February 2006 and February 2011, Aves, Castro, Bibb, Escobar and Garcia paid military recruiters, including Torres-Alvarez, for the names and social security numbers of potential future soldiers. Aves, Castro, Bibb, Escobar and Garcia allegedly created online accounts in their respective names and, using the information they obtained from military recruiters, claimed they were responsible for recruiting certain new soldiers to join the military, when in fact they did not recruit any of th ose people. As a result, Aves, Castro, Bibb, Escobar and Garcia allegedly received a total of approximately $127,000 in fraudulent recruiting bonuses. The indictment alleges that the defendants split the bonuses among themselves and recruited other soldiers to participate in the fraud scheme. According to the indictment, a portion of the bonuses were sent to the personal bank accounts of Aves’s girlfriend.

 

An indictment is merely a charge and defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

 

If convicted, the defendants face up to five years in prison on the conspiracy charge. Each wire fraud count carries a maximum penalty of 20 years in prison. For each count of aggravated identity theft, the defendants face a mandatory minimum sentence of two years in prison. Each charged count carries a maximum fine of up to $250,000, or twice the gross gain.

 

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