District Not Recorded

WASHINGTON – Cynthia Peters was sentenced to 27 months in prison based on her plea of guilty to one count of willfully aiding and assisting in the preparation and filing of a false income tax return, the Justice Department and Internal Revenue Service (IRS) announced today. The court also ordered Peters to serve a one-year term of supervised release following her prison term and to pay restitution to the IRS in the amount of $76,908. The case arises out of a March 31, 2010, indictment filed in the Middle District of Louisiana.

 

According to her plea agreement, Peters, who worked at Jasmine and Melissa’s Tax Service in Baton Rouge, prepared fraudulent tax returns for 23 clients that reported falsely inflated telephone excise tax refund (TETR) credits in the total amount of $92,932. The TETR credit was a one-time credit available to taxpayers for the 2006 year. The sentencing court found that the tax loss, including all relevant conduct, was approximately $501,376

 

John A. DiCicco, Principal Deputy Assistant Attorney General for the Department of Justice Tax Division, commended the IRS Special Agents who investigated this case and Tax Division Trial Attorneys Kevin C. Lombardi and Matthew J. Mueller and Assistant U.S. Attorney Rene Salomon of the Middle District of Louisiana, who prosecuted the case.

 

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

WASHINGTON – Two Miami-area medical assistants and a physician assistant were sentenced to prison today for their roles in a $23 million Medicare fraud scheme involving HIV infusion therapy, announced the Departments of Justice and Health and Human Services.

Jose Diaz, a 62-year old physician assistant, Lisandra Aguilera, a 40-year old medical assistant, and Estrella Rodriguez, a 43-year old medical assistant, were sentenced by U.S. District Judge Joan A. Lenard to 54 months, 70 months and 57 months in prison, respectively. The defendants each previously pleaded guilty to one count of conspiracy to commit health care fraud for their roles in an HIV infusion fraud scheme.

 

According to court documents, Diaz, Aguilera and Rodriguez each worked at Metro Med of Hialeah Corp. (Metro Med). In 2003, Metro Med began operating as an HIV infusion clinic that purportedly provided injection and infusion therapies to HIV positive Medicare beneficiaries. In fact, the injection and infusion therapies were medically unnecessary and not provided. Metro Med paid cash kickback payments to Medicare beneficiaries in exchange for those beneficiaries allowing Metro Med to use their Medicare numbers to bill Medicare.

 

According to court documents, Diaz worked at Metro Med as a physician assistant and instructed Damaris Oliva, the owner of Metro Med, which medications and in what amounts to bill Medicare. Diaz provided these instructions to Oliva to ensure that Metro Med received the maximum reimbursement from Medicare, even though the injection and infusion drugs Metro Med billed to Medicare were not actually provided to the patients. Aguilera was hired by Oliva and worked at Metro Med as an infusionist. Rodriguez also worked at Metro Med as a medical assistant.

 

While at Metro Med, Diaz, Aguilera and Rodriguez falsified patient files to indicate that injection and infusion treatments were medically necessary, when, in fact, they were not. According to court documents, Aguilera and Rodriguez signed medical records indicating that injection and infusion treatments were provided to Metro Med patients, when, in fact, they were not. Aguilera and Rodriguez also fabricated medical records to show that Metro Med patients had received specific dosages of medications, when the patients had not actually received the treatments or medications reflected on those documents. Aguilera manipulated patient blood samples to make it appear that unnecessary injection and infusion treatments were medically necessary. Diaz, Aguilera and Rodriguez also were aware that beneficiaries who attended the clinic were being paid kickbacks in exchange for allowing Metro Med to bill Medicare under their Medicare numbers for injection and infusion treatments.

 

From approximately April 2003 through October 2005, Metro Med submitted approximately $23 million in claims to the Medicare program for injection and infusion treatments for Medicare beneficiaries that were not medically necessary, and not provided. The Medicare program paid approximately $11.7 million in claims.

 

Diaz, Aguilera and Rodriguez were charged in a July 2010 indictment, along with Oliva and Dr. Rene De Los Rios. All five defendants now have pleaded guilty or been convicted at trial. Oliva was sentenced in December 2010 to 82 months in prison.

 

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

 

This case is being prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Miami.

 

Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants and organizations that collectively have billed the Medicare program for more than $2.3 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 – Wajdi Waked, 25, of Las Vegas, pleaded guilty today before Judge Philip M. Pro of the U.S. District Court in Nevada, to one count of violating the Clean Air Act by falsifying emissions test results.

A grand jury in Las Vegas indicted Waked in January of 2010. Waked was one of nine other defendants, all at 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 hired a contractor to build a vehicle identification database to find possible emissions testing fraud. NDMV discovered that in 2008 alone, there were over 4,000 false vehicle emissions certificates issued in Las Vegas. The database allows investigators to check the vehicle identification number that the emissions tester enters against the vehicle actually tested. Las Vegas and surrounding Clark County is required by the EPA to have emissions testing because the area is in non-attainment for carbon monoxide and ozone.

All of the other nine defendants pleaded guilty. Two in addition to Waked remain scheduled for sentencing. Judge Pro set Waked’s sentencing for Aug. 1, 2011.

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 ofthe District of Nevada and Senior Trial Attorney J. Ronald Sutcliffe of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.

WASHINGTON - Richard Rosaire Routhier of Lake Worth, Fla., pleaded guilty to a one-count information charging him with conspiring to defraud the Internal Revenue Service (IRS), the Justice Department and the IRS announced today. According to the information, Routhier and others conspired to defraud the United States and unlawfully enrich themselves by paying employees in cash and not withholding and paying over employment taxes to the U.S. Treasury.

 

According to court documents, Routhier owned and operated Drymension Inc., a custom drywall installation and framing contracting company in Lake Worth. From 2002 through 2008, the defendant caused Drymension checks to be issued to several shell corporations. These entities, while purporting to be legitimate subcontractors, existed only on paper and did not do any work for Drymension. The checks written to shell corporations totaled approximately $9,132,516. The checks were cashed at local check cashing stores that were aware of the scheme and Routhier used the cash to pay Drymension employees. Routhier neither withheld from the cash wages nor paid over to the IRS the employment and income taxes as required by law.

 

The court scheduled sentencing for June 2, 1011. The defendant faces a maximum of five years in prison and a fine of $250,000.

 

Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and John A. DiCicco, Principal Deputy Assistant Attorney General for the Department of Justice, Tax Division, thanked the IRS Special Agents who investigated this case and Tax Division Trial Attorneys Matthew J. Mueller, Jason H. Poole and Assistant Chief Gregory E. Tortella who are prosecuting the case.

WASHINGTON - A New York stock broker has pleaded guilty in federal court in Detroit to conspiracy to commit securities fraud and wire fraud in connection with the Alan Ralsky spamming organization’s stock pump-and-dump scheme, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer and U.S. Attorney Barbara McQuade for the Eastern District of Michigan.

 

Gregg M. S. Berger, 47, of New York City, pleaded guilty yesterday before U.S. District Judge Marianne O. Battani. A federal grand jury in the Eastern District of Michigan indicted Berger in December 2010, charging him in a wide-ranging fraud scheme to illegally pump-and-dump thinly traded Chinese and Israeli stocks.

 

“Like so many other financial fraudsters we have prosecuted, Gregg Berger knew better,” said Assistant Attorney General Breuer. “He traded on his position as a stockbroker to defraud hundreds of investors out of their hard-earned savings. Now that he has pleaded guilty for his crimes, he faces serious and deserved punishment.”

 

Under the terms of the plea agreement, Berger faces up to 51 months in prison, a possible fine of up to $75,000, as well as restitution and a five-year term of supervised release. Sentencing is scheduled for Aug. 23, 2011.

 

According to the indictment, Berger conspired with Ralsky, Francis Tribble, How Wai John Hui, Scott Bradley and others to carry out a sophisticated stock fraud scheme from January 2005 through December 2007. Ralsky, Tribble, Hui and Bradley have all been convicted and sentenced for their roles in the case.

 

The charges arose after a multi-year investigation, led by agents from the FBI, with assistance from the U.S. Postal Inspection Service and the Internal Revenue Service, revealed a sophisticated and extensive operation that largely focused on running a pump-and-dump scheme, whereby the defendants sent spam touting thinly traded Chinese penny stocks, drove up their stock price, and reaped profits by selling the stock at artificially inflated prices.

 

In pleading guilty, Berger acknowledged that he established brokerage accounts at the direction of Hui and Tribble, and communicated with Ralsky and Bradley during the conspiracy. Berger’s roles in the scheme included trading the stocks that were illegally promoted by spam email campaigns; arranging for shares of the stocks to be transferred into the brokerage accounts he established; executing stock trades at the direction of Tribble rather than the direction of the named account holders; causing funds that resulted from the stock trades to be transferred to bank accounts beneficially controlled by Hui and other co-conspirators; and providing confidential account information, including trade amounts, prices, cash balances and wire transfer details to Tribble, Bradley and others involved in the scheme who were not entitled to such information, without authorization from the actual named account holders.

 

The stocks pumped-and-dumped by conspirators included China World Trade Corporation (CWTD), Pingchuan Pharmaceutical Inc. (PGCN), China Digital Media Corporation (CDGT), World Wide Biotech and Pharmaceutical Co. (WWBP), China Mobility Solutions (CHMS) and m-Wise (MWIS).

 

The indictment alleged that during the course of the scheme Berger caused the sale of approximately 30 million shares of stock, generating approximately $30 million for the co-conspirators and more than $600,000 in commissions for himself. The plea agreement stipulates that Berger may litigate at sentencing the amount he actually earned as a result of his participation in the conspiracy.

 

The case is being prosecuted by Assistant U.S. Attorney Terrence Berg for the Eastern District of Michigan and Senior Counsel Thomas Dukes of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division.

WASHINGTON – A Las Vegas man was arrested yesterday on charges that he defrauded distressed homeowners in Las Vegas who were attempting to refinance or adjust their home mortgages, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Daniel G. Bogden for the District of Nevada.

Alex P. Soria, 64, is charged in an indictment in U.S. District Court in Nevada with six counts of wire fraud, three counts of mail fraud, one count of concealment of information from the Social Security Administration and one count of theft of government funds. Soria was arrested yesterday in Las Vegas, and made an initial appearance before a federal magistrate judge.

 

According to the indictment, Soria worked in the mortgage lending industry since approximately 1970. From approximately May 2008 to January 2010, Soria allegedly devised a scheme to defraud distressed homeowners who were trying to refinance or adjust their home mortgages. The indictment alleges that Soria solicited the homeowners through advertisements and word of mouth to hire him as a mortgage agent to assist them with their mortgages. Soria allegedly falsely told the homeowners he was a loan officer with Amwest Capital and that he could help them obtain relief with their mortgages through two federal programs, Hope for Homeowners and the Troubled Asset Relief Program (TARP). Soria also falsely told the homeowners that he had helped other homeowners obtain financing. According to the indictment, Soria’s Nevada mortgage agent license had expired in April 2008 and he lacked licensing or status to help the homeowners obtain financing through the federal programs.

 

The indictment also alleges that in order to make the homeowners think they were going to receive assistance with their home mortgages, Soria provided false information to the homeowners, such as letters and emails, stating that they had prequalified for refinancing and were on track to receive help or that the government was to blame for loans not closing. In fact, Soria did not obtain government assistance for any of the victims identified in the indictment, even though he fraudulently collected approximately $17,000 from 15 homeowners through the alleged scheme.

 

Soria is also charged with unlawfully collecting Social Security disability benefits for approximately 20 years, from January 1990 to December 2010, when he was actually working in and profiting from the mortgage industry.

 

If convicted, Soria faces up to 20 years in prison for each fraud count, up to five years in prison on the concealment count, up to 10 years in prison on the theft count, and a fine of up to $250,000 on each count.

 

The case was investigated by the Office of the Inspector General for U.S. Housing and Urban Development and the Office of the Inspector General for the Social Security Administration. It is being prosecuted by Brian R. Young, Trial Attorney with the Fraud Section in the Justice Department’s Criminal Division.

 

An indictment contains only charges and is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

 

This law enforcement action is part efforts underway by the interagency Financial Fraud Enforcement Task Force. President Obama established the interagency 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 - The United States has settled a whistleblower lawsuit against DynCorp International LLC and The Sandi Group (TSG), the Justice Department announced today. The lawsuit, filed in the U.S. District Court for the District of Columbia, alleges that DynCorp and its subcontractor TSG submitted or caused to be submitted false claims for payment under DynCorp’s contract with the Department of State to provide civilian police training in Iraq.

 

DynCorp has agreed to pay the United States $7.7 million to resolve allegations that it submitted inflated claims for the construction of container camps at various locations in Iraq. TSG agreed to pay $1.01 million to resolve allegations that it sought reimbursement for danger pay that it falsely claimed to have paid its U.S. expatriate employees working in Iraq.

 

The lawsuit was initially filed by two former TSG employees under the qui tam or whistleblower provisions of the federal False Claims Act, which permit private individuals, called “relators” to bring lawsuits on behalf of the United States and receive a portion of the proceeds of a settlement or judgment awarded against a defendant. As a result of the settlement, the two, Drew Halldorson and Brian Evancho, will receive up to $481,710 as their share of the government’s recovery.

“The hard work of stabilizing Iraq is challenging enough without contractors and subcontractors inflating the cost of rebuilding by making false claims at taxpayers’ expense,” said Tony West, Assistant Attorney General for the Civil Division. “This case demonstrates that the Department of Justice will pursue these cases that undermine the integrity of our public contracting process.” 

 

"This settlement demonstrates our commitment to aggressively investigating wartime profiteering that corrupts the integrity of our government contracting process,” said U.S. Attorney Ronald C. Machen Jr. “This office worked hand-in-hand with the relators and federal investigators to uncover these fraudulent claims and recover inflated costs that were illegitimately billed to the American taxpayers.”

 

“We’re pleased with the successful resolution of this case, and I commend the dedication of our Office of Inspector General (OIG) criminal investigators,” said Harold Geisel, Deputy Inspector General for the Department of State. “Our efforts should reinforce to American taxpayers that oversight of their tax dollars is taken seriously.”

“False claims filed by contractors have been a problem in Iraq,” said Stuart W. Bowen Jr., Special Inspector General for Iraq Reconstruction (SIGIR). “While SIGIR continues to pursue a number of allegations in this regard, I am pleased to see that today one of those cases has come to just resolution. I commend the Department of Justice prosecutors, the Department of State investigators and my SIGIR team for working together to achieve this important victory on behalf of the U.S. taxpayers.”

Assistant Attorney General West and U.S. Attorney Machen thanked the joint investigation team, which includes special agents with the Department of State-OIG and the SIGIR, for their efforts in the investigation of this matter.

WASHINGTON – Eric Bernard Caldwell, a resident of Montgomery County, Ala., pleaded guilty to conspiring to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today. The guilty plea took place before U.S. Magistrate Judge Charles S. Coody in the U.S. District Court in Montgomery, Ala.

According to the indictment and other court documents, Caldwell was part of a conspiracy to file false federal tax returns using stolen identities. Caldwell would provide identity information to co-conspirator Ora Mae Adamson, who would file the returns, in exchange for a portion of the illicit refunds generated by the false tax returns. In all, the conspiracy defrauded the United States of $621,738.

 

Adamson pleaded guilty to conspiracy and identity theft charges and was sentenced to 46 months in prison on March 10, 2011. Another co-conspirator, Jeffrey Leon Ceaser, also pleaded guilty to conspiracy and identity theft charges and was sentenced to 36 months in prison on March 2, 2011.

 

The case was investigated by Special Agents of the IRS – Criminal Investigation. Trial attorneys Jason H. Poole and Michael Boteler of the Justice Department’s Tax Division are prosecuting the case.

 

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

WASHINGTON – An Alabama businessman pleaded guilty today before U.S. Magistrate Judge Wallace Capel Jr. to his role in conspiring to bribe legislators in exchange for their favorable votes on pro-gambling legislation, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and Special Agent in Charge Lewis M. Chapman of the FBI’s Mobile Field Office.  

Ronald E. Gilley, 46, of Enterprise, Ala., pleaded guilty in U.S. District Court for the Middle District of Alabama to one count of conspiracy to commit federal program bribery, six counts of federal program bribery and four counts of money laundering.  Gilley and 10 co-defendants were charged in a 39-count indictment returned by a federal grand jury on Oct. 1, 2010, with a variety of criminal offenses for their alleged roles in the bribery scheme.  Jarrod Massey, 39, of Montgomery, Ala., a lobbyist for Gilley, pleaded guilty on Dec. 20, 2010, for his role in the conspiracy. His sentencing is scheduled for Nov. 15, 2011. The remaining nine defendants include two current Alabama state legislators, two former Alabama state legislators, two lobbyists, one business owner, an employee of Gilley and an employee of the Alabama legislature.

 

“Ronald Gilley thought votes could be bought and sold in Alabama,” said Assistant Attorney General Breuer.  “He participated in an audacious scheme to bribe state legislators into supporting a law that would fatten his wallet.  But he, like his co-conspirators, was stopped in his tracks.  Now, Mr. Gilley must face the consequences of his corruption.”

 

“Mr. Gilley’s plea demonstrates the FBI’s commitment to investigate violations of the public’s trust,” said FBI Special Agent in Charge Chapman. “His plea should further serve as a way to repair the public’s trust in local officials and demonstrates how people can and will be held accountable for their actions.” Chapman also stated, “The public is encouraged to continue to disclose information regarding corrupt activities by persons in positions of trust to the FBI. Investigations involving violations of the public’s trust represents one of the highest priorities of the FBI. ”

 

According to information contained in court documents and presented during the plea hearing, Gilley owned a controlling interest in Country Crossing, an entertainment and gambling development in Houston County, Ala., which also sought to offer electronic bingo gambling machines to the public.  Milton E. McGregor owned a controlling interest in Macon County Greyhound Park Inc., also known as Victoryland, in Macon County, Ala., and Jefferson County Racing Association in Jefferson County, Ala. He also had an ownership interest in other entertainment and gambling facilities in Alabama, including Country Crossing, which offered or sought to offer electronic bingo gambling machines to the public.  

 

According to court documents, during the 2009 and 2010 Alabama state legislative sessions, Gilley and McGregor, along with others, allegedly promoted the passage of pro-gambling legislation that would have been favorable to the business interests of individuals operating electronic bingo facilities in Alabama, including themselves.

 

Gilley admitted, among other things, his involvement in offering things of value worth millions of dollars to members of the Alabama legislature, in exchange for legislators’ votes. Gilley also admitted directing lobbyists who worked for him, including Massey and Jennifer D. Pouncy, to offer legislators bribes for their votes. Pouncy, 34, of Montgomery, Ala., pleaded guilty on Sept. 28, 2010, for her role in the bribery conspiracy, and is scheduled to be sentenced on Aug. 11, 2011.

 

According to court documents, Gilley and others attempted to conceal the true nature, source and control of the payments made to members of the Alabama legislature in return for their favorable votes by, among other ways, engaging in financial transactions and disguising illicit payments through political action committees and using conduit contributors.

 

Gilley faces a maximum penalty of five years in prison and a $250,000 fine on the conspiracy charge.  Each count of federal program bribery carries a maximum penalty of 10 years in prison and a $250,000 fine. Each count of money laundering carries a maximum penalty of 20 years in prison and a $500,000 fine. In connection with the money laundering charges, Gilley agreed to forfeit $200,000. A sentencing date has not been set.

 

Trial for the remaining nine defendants is scheduled to begin on June 6, 2011, before U.S. District Judge Myron H. Thompson.  The defendants are presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.

 

The case is being prosecuted by Deputy Chief Justin V. Shur, Trial Attorneys Edward T. Kang, Eric G. Olshan, Barak Cohen and E. Rae Woods of the Criminal Division’s Public Integrity Section; Senior Litigation Counsel Brenda K. Morris of the Criminal Division; and Assistant U.S. Attorneys Louis V. Franklin and Steve P. Feaga of the Middle District of Alabama.  The case is being supervised by the Criminal Division’s Public Integrity Section and is being investigated by the FBI.

WASHINGTON – One individual and his company in New York and two others and their company in California were indicted today in the District of Columbia on charges of illegally exporting millions of dollars worth of computer-related equipment from the United States to Iran via the United Arab Emirates (UAE).

 

The two indictments were announced by Todd Hinnen, Acting Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); and David W. Mills, Assistant Secretary of Export Enforcement, U.S. Department of Commerce.

 

Jeng “Jay” Shih, 53, a U.S. citizen, and his Queens, N.Y. company, Sunrise Technologies and Trading Company, were indicted in the District of Columbia on 27 counts relating to the illegal export of computer-related equipment to Iran without first having obtained the required license from the Department of Treasury. The indictment charges Shih and his company with one count of conspiracy; 13 counts of violating the International Emergency Economic Powers Act (IEEPA); 13 counts of making or causing to be made false statements to the United States; and one allegation for criminal forfeiture of property and proceeds derived from these offenses.   Shih was arrested on a criminal complaint in New York on April 6, 2011, and had his initial appearance in court in New York on April 7, 2011.   If convicted, he faces a maximum sentence of 20 years in prison and a $1 million fine for each of the IEEPA counts and five years for each false statement count.

 

Massoud Habibion, 48, aka “Matt Habibion” and “Matt Habi,” and Mohsen Motamedian, 43, aka “Max Motamedian” and “Max Ehsan,” both U.S. citizens, and their Costa Mesa, Calif., company, Online Micro LLC, were indicted in the District of Columbia on 32 counts relating to the illegal export of computer-related equipment to Iran without the required license from the Department of Treasury.  Habibion was charged with one count of conspiracy, 14 counts of violating IEEPA, 14 counts of making or causing false statements to the United States and four counts of obstruction of justice.  Motamedian was charged with one count of conspiracy, 14 counts of violating IEEPA, 14 counts of making or causing false statements to the United States and one count of obstruction of justice.  Habibion and Motamedian were arrested on a criminal complaint in California on April 7, 2011, and had their initial appearance in court in the Central District of California on April 7, 2011.   If convicted, both defendants face a maximum sentence of 20 years in prison and $1 million fine for each of the IEEPA counts, and five years for each false statement and 20 years for each obstruction of justice count.

 

According to the affidavit filed in support of the Shih criminal complaint, in 2006, Commerce Department agents conducted an outreach visit to Shih’s business in New York where they met Shih and informed him about U.S. laws governing the export of goods from the United States to other countries, particularly embargoed countries like Iran.  In April 2010, ICE-Homeland Security Investigations (HSI) agents seized hundreds of laptop computers that originated from Sunrise and were destined for Dubai, UAE.  Communications related to these shipments indicated that the purchasers were located in Iran, according to the affidavit.

 

The affidavit alleges that agents subsequently identified a company in Dubai that was purchasing millions of dollars of computers from U.S. companies for export to Iran, through Dubai.  ICE-HSI agents arrested one of the company’s agents, who pleaded guilty in December 2010 and began cooperating with the government. In interviews with agents, this individual indicated that he and his company in Dubai had purchased millions worth of laptops from Shih in recent years for shipment to Iran, averaging $700,000 worth of computers each month.  The affidavit alleges that agents also obtained documents indicating that more than 1,000 computers had been shipped by Shih’s company to Dubai and later to Iran, between April 9, 2010, and May 28, 2010, alone.

 

In February 2011, the cooperating individual met with Shih in New York.  In recorded conversations, Shih allegedly told the individual he was aware of the U.S. embargo against Iran and U.S. export control laws.  According to the affidavit, Shih also told the cooperating individual how to avoid detection when shipping goods to Iran by using fake invoices and indicated that he treated the seizure of some of his shipments as a “loss” when reporting business income and loses on his U.S. taxes.

 

The affidavit filed in support of the complaint against Habibion and Motamedian alleges that a company in Dubai, referenced above, purchased millions of dollars worth of laptop computers from Online Micro and that these computers were subsequently shipped to Iran.  According to the affidavit, the agent for the Dubai company, who was arrested, pleaded guilty and began cooperating with the government, told federal agents that Habibion and Motamedian sold roughly $300,000 worth of computers to the Dubai company each month and that Habibion and Motamedian fully understood that the computers were destined for Iran.

 

In December 2010, the cooperating individual met with Habibion and Motamedian, wherein these defendants allegedly instructed the cooperating individual to make fake invoices to conceal that Iran was the destination of the shipments and to indicate that the end-users were in Dubai.   In addition, the affidavit alleges that in a Jan. 5, 2011, meeting, Habibion told the cooperating individual to lie to federal agents about conducting business in Iran, stating, “If they ask you, for instance, ‘Do you do business in Tehran?’ ‘No, I don't have any business in Tehran. I go there to visit my family, but I have no business there.’ They will ask such questions, it is part of their routine.”

 

This investigation is being conducted by the ICE-HSI field offices in San Diego and New York and the Department of Commerce Office of Export Enforcement field offices in New York and Los Angeles, with assistance from ICE-HSI offices in Chicago, Newark, N.J., Los Angeles and Orange County, Calif.  The Department of Homeland Security's U.S. Customs and Border Protection also assisted in the investigation.  

 

The prosecution is being handled by Assistant U.S. Attorneys Anthony Asuncion and T. Patrick Martin, from the U.S. Attorney's Office for the District of Columbia, and Trial Attorney Jonathan C. Poling from the Counterespionage Section of the Justice Department’s National Security Division.  The U.S. Attorney’s Offices for the Central District of California and Eastern District of New York also provided assistance.  

The public is reminded that an indictment and criminal complaint contain mere allegations and that defendants are presumed innocent unless and until proven guilty.

WASHINGTON – Cardinal Health Inc. has agreed to pay the United States $8 million to resolve claims that it violated the False Claims Act by making payments to induce referral orders for its prescription drugs in violation of the Anti-Kickback Statute, the Justice Department announced today.

 

Today’s settlement with the Dublin, Ohio-based pharmaceutical distributor resolves a lawsuit filed by former pharmacy owner R. Daniel Saleaumua and pharmacy consultant Kevin Rinne under the qui tam, or whistleblower provisions, of the False Claims Act. Mr. Saleaumua alleged that Cardinal paid him $440,000 in exchange for an agreement that he purchase from Cardinal prescription drugs for his pharmacies. Under the False Claims Act, private citizens can bring suit on behalf of the United States and share in any recovery. Together, Saleaumua and Rinne will receive $760,000 as their share of the government’s recovery.

 

“Kickback schemes subvert the health care marketplace and undermine the integrity of the choices made by consumers and providers of health care,” said Assistant Attorney General for the Civil Division Tony West. “We will continue to hold accountable those who we allege are misusing our public health care programs at the expense of taxpayers.” 

 

“American taxpayers are the victims of illegal kickback schemes that result in Medicare and Medicaid paying millions of dollars more than they should for prescription drugs,” said Beth Phillips, U.S. Attorney for the Western District of Missouri. “Today’s $8 million settlement underscores our commitment to combating health care fraud and protecting taxpayers.”

 

“Financial kickbacks -- as the government alleges were paid by Cardinal Health -- weaken Medicare and Medicaid by steering taxpayer dollars into provider pockets, rather than into sound patient care,” said Les W. Hollie, Special Agent in Charge of the Kansas City Regional Office, U.S. Department of Health & Human Services, Office of Inspector General (OIG). “Working in close coordination with our law enforcement partners -- such as the U.S. Attorney for the Western District of Missouri -- OIG will carefully scrutinize financial arrangements and bring offenders to justice.”

 

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 $5.5 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 has exceeded $7.1 billion.

WASHINGTON – Under an unprecedented agreement announced today by the Natural Resource Trustees for the Deepwater Horizon oil spill, BP has agreed to provide $1 billion toward early restoration projects in the Gulf of Mexico to address injuries to natural re sources caused by the spill. The Trustees involved are Alabama; Florida; Louisiana; Mississippi; Texas; the Department of the Interior (DOI); and the National Oceanic and Atmospheric Administration (NOAA). The Department of Justice provided assistance in reaching the agreement.

 

This early restoration agreement, the largest of its kind ever reached, represents a first step toward fulfilling BP’s obligation to fund the complete restoration of injured public resources, including the loss of use of those resources by the people living, working and visiting the area. The Trustees will use the money to fund projects such as the rebuilding of coastal marshes, replenishment of damaged beaches, conservation of sensitive areas for ocean habitat for injured wildlife, and restoration of barrier islands and wetlands that provide natural protection from storms.

 

The agreement in no way affects the ultimate liability of BP or any other entity for natural resource damages or other liabilities, but provides an opportunity to help restoration get started sooner. The selection of early restoration projects will follow a public process, and will be overseen by the Trustees.

 

The full natural resource damage assessment process will continue until the Trustees have determined the full extent of damages caused by the Deepwater Horizon oil spill. At the end of the damage assessment process, the Trustees will take into account any benefits that were realized from these early restoration projects. In addition to funding early restoration projects, BP will continue to fund the damage assessment and, together with the other responsible parties, will ultimately be obligated to compensate the public for the entire injury. BP is providing the early restoration funds voluntarily, and is not required to do so at this stage of the damage assessment process. The agreement will speed needed resources to the Gulf Coast in advance of the completion of the assessment process.

 

To read the agreement, click here.

 

“This milestone agreement will allow us to jump-start restoration projects that will bring Gulf Coast marshes, wetlands, and wildlife habitat back to health after the damage they suffered as a result of the Deepwater Horizon spill,” said Secretary of the Interior Ken Salazar. “This agreement accelerates our work on Gulf Coast restoration and in no way limits the ability of all the Natural Resource Trustees from seeking full damages from those who are responsible as the NRDA process moves forward.”

 

“One year after the largest oil spill in our history, we take a major step forward in the recovery of the Gulf of Mexico, for the environment and the people who depend on it for their livelihood and enjoyment. Today's agreement is a down payment on our promise to protect and restore the Gulf,” s aid Jane Lubchenco, Ph.D., Under Secretary of Commerce for Oceans and Atmosphere and NOAA administrator.

 

“This agreement is a great first step toward restoring our natural resources destroyed by the BP oil spill,” said Louisiana Governor Bobby Jindal. “We are eager to continue working with public, state and federal co-trustees and BP to quickly convert this downpayment into projects to restore our damaged coast and replace our lost wildlife. We encourage BP to continue to address the damages from this spill through early restoration efforts.”

 

“Alabama’s natural resources are environmentally diverse and an economic engine for our state and nation. Ecosystem restoration is vital to the economic vitality of the Alabama Gulf Coast,” said Alabama Governor Robert Bentley. “Obtaining funding for these restoration projects is a major step forward in addressing the oil spill’s damage to our precious natural resources. I have the utmost confidence that the Alabama trustees will consider and identify projects and use these funds toward restoring our natural resources.”

 

“Since the day of the oil spill, our goals have been to make Mississippi whole and to assure that our coastal areas completely recover. Today’s unprecedented agreement is an important first step but it is only the first step. Mississippi will continue this work and will count on our many interested citizens to contribute their ideas and input as we all work to define the scope of these early projects and develop other restoration projects. Our goals have not changed. We will remain actively engaged in these and other projects until the Gulf is restored and our state is made whole,” said Trudy D. Fisher, Mississippi Trustee, Executive Director, Mississippi Department of Environmental Quality.

 

“I’m pleased that after a year of uncertainty and concerns about environmental damages which occurred as a result of the Deepwater Horizon explosion, Florida will be able to use this early restoration money to initiate greatly needed environmental restoration projects,” said Florida Department of Environmental Protection Secretary Herschel Vinyard. “Because we have worked diligently to assess the environmental damage resulting from the spill, we are well positioned to be able to quickly begin performing important restoration projects and use Florida's share of the early restoration funds to assist our coastal communities with their continued recovery from the spill.”

 

“While the Texas coast was not as visibly impacted by this spill, our wetlands, bays, beaches and coastal waters were affected, and it makes sense to invest in places that can help jumpstart and maximize recovery of the entire Gulf,” said Carter Smith, Texas Parks and Wildlife Department executive director. “There will be a public process in Texas and throughout the Gulf to consider and identify projects that make the best use of these funds for our coastal habitats and the fish, wildlife and people who depend upon them.”

 

The $1 billion in early restoration projects will be selected and implemented as follows:

 

Each state – Florida, Alabama, Mississippi, Louisiana and Texas - will select and implement $100 million in projects;

 

The Federal Resource Trustees, NOAA and DOI, will each select and implement $100 million in projects;

 

The remaining $300 million will be used for projects selected by NOAA and DOI from proposals submitted by the State Trustees.

 

All projects must meet the other requirements of the Framework Agreement and be approved by the Trustee Council comprised of all the natural resource trustees.

WASHINGTON – Rogelio Hackett Jr., 26, of Lithonia, Ga., pleaded guilty today before U.S. District Judge Anthony J. Trenga in Alexandria, Va., to trafficking in counterfeit credit cards and aggravated identity theft, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.

 

According to court documents, U.S. Secret Service special agents executing a search warrant in 2009 at Hackett’s home found more than 675,000 stolen credit card numbers and related information in his computers and email accounts. Hackett admitted in a court filing that since at least 2002, he has been trafficking in credit card information he obtained either by hacking into business computer networks and downloading credit card databases, or purchasing the information from others using the Internet through various “carding forums.” These forums are online discussion groups used by “carders” to traffic in credit card and other personal identifying information.

 

Hackett also admitted that he sold credit card information, manufactured and sold counterfeit plastic cards, and used the credit card information to acquire gift cards and merchandise. According to court documents, credit card companies have identified tens of thousands of fraudulent transactions using the card numbers found in Hackett’s possession, totaling more than $36 million.

 

At sentencing, scheduled for July 22, 2011, Hackett will face maximum penalties of 10 years in prison and a $250,000 fine, or twice the gross gain or loss, on the access device fraud charge, and an additional mandatory two years in prison and a $250,000 fine on the identity theft charge.

 

The case was investigated by the U.S. Secret Service and prosecuted by Michael J. Stawasz, a Senior Counsel for the Criminal Division’s Computer Crime and Intellectual Property Section and a Special Assistant U.S. Attorney for the Eastern District of Virginia.

WASHINGTON - Andrew Lastinger, 43, of Moultrie, Ga., was sentenced today to 25 years in prison followed by 50 years of supervised release for production of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Michael J. Moore of the Middle District of Georgia.

On May 6, 2010, Lastinger pleaded guilty before U.S. District Court Judge W. Louis Sands to a one-count information charging him with producing child pornography. This investigation was initiated as a result of complaints received by the National Center for Missing and Exploited Children regarding a significant number of child pornography images uploaded to a social networking Internet site from an email address registered to Lastinger. FBI special agents executed a search warrant at Lastinger’s residence and seized numerous items of electronic evidence. During the execution of the warrant, Lastinger admitted to uploading the child pornography images as well as to molesting and producing child pornography images of a minor boy, and attempting to produce child pornography of another minor boy. Subsequent forensic examinations of computers and other electronic media seized from Lastinger’s residence confirmed the existence of over 100,000 images of child pornography, child pornography images of the minor boy produced by Lastinger, and of Lastinger attempting to take a sexually explicit video of the other minor boy. 

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

 

The case was prosecuted by Assistant U.S. Attorney Jim Crane of the Middle District of Georgia and Trial Attorney Mi Yung Park of the Criminal Division’s CEOS. The case was investigated by the FBI; the Colquitt County, Ga., Sheriff’s Office Criminal Investigations Divisions; and CEOS’s High Technology Investigative Unit.

WASHINGTON – A former Bexar County Sherriff’s Office Deputy was sentenced today by U.S. District Judge Orlando Garcia to 27 months in prison for depriving a man of his constitutional right to be free from excessive force and for obstructing justice, the Department of Justice announced today. Daniel Melgoza was also sentenced to two years supervised release and a $200 special assessment.

 

Melgoza, 54, of San Antonio, Texas, was convicted by a jury in San Antonio on Dec. 16, 2010. Evidence at trial showed that on Dec. 8, 2004, Melgoza kicked a compliant inmate in the head several times with pointed cowboy boots. The evidence also showed that Melgoza wrote false reports to conceal his misconduct.

 

“Correctional officers are entrusted with a great deal of power in order to carry out their critical public safety duties. But they must not be permitted to abuse that power by violating the rights of inmates under their supervision,” said Assistant Attorney General Thomas E. Perez. “ We will not hesitate to prosecute officers who cross the line and injure those they are sworn to protect."

 

The investigation was conducted by FBI Special Agent Mirella Rodriguez. Civil Rights Division Trial Attorneys Roy Conn and Christopher Lomax prosecuted this case for the United States.

WASHINGTON – A seven-count federal indictment was unsealed today in U.S. District Court for the District of Columbia charging a Washington, D.C., criminal defense attorney and two criminal investigators for their alleged roles in a scheme to obstruct an ongoing criminal case, including, among other things, manufacturing evidence and tampering with a witness, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division.

 

Attorney Charles F. Daum, 64, of Arnold, Md., and investigators Daaiyah Pasha, 60, of Washington, D.C., and Iman Pasha, 31, of Springfield, Va., each were charged with one count of conspiring to corruptly influence a juror.  Daum was also charged with three counts of influencing a juror, one count of tampering with a witness and two counts of inducing perjury.

 

According to the indictment, the charges resulted from Daum’s representation of Delante White, who was indicted in March 2008 by the U.S. Attorney’s Office for the District of Columbia on federal drug trafficking charges following the execution of a search warrant on Feb. 23, 2008, at the home of White’s grandmother.  The indictment alleges that after entering his notice of appearance in the case, Daum allegedly devised a plan to obtain and produce false evidence designed to convince the jury that the drugs seized by the police on Feb. 23, 2008, did not belong to White.

 

According to the indictment, Daum enlisted the help of Daaiyah and Iman Pasha, whom Daum had hired as investigators, and others to help carry out his scheme.  Following Daum’s directions, the co-conspirators allegedly obtained duplicates of several items that were seized as evidence during the execution of the search warrant, including a digital scale, a razor blade, plates, an Adidas shoe box and a pair of Gucci boots.  Once those items were obtained, Daaiyah and Iman Pasha allegedly made arrangements to take staged photographs of White’s brother depicted with the items, while apparently “cutting” “rock cocaine” in order to make it appear as though the seized drugs actually belonged to the brother.  The indictment alleges that Daum later submitted the staged photographs, as well as other fabricated items, as evidence during White’s criminal trial. 

 

The indictment also alleges that Daum attempted to prevent a government witness from appearing at the trial, as well as solicited and presented the perjured testimony of two witnesses, in order to further obstruct and impede the administration of justice.

 

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

 

The defendants face a maximum penalty of five years in prison and a $250,000 fine on the conspiracy charge.   Daum faces an additional maximum penalty of 20 years in prison and a $250,000 fine for each count of influencing a juror and tampering with a witness. Daum face a maximum penalty of five years in prison and a $250,000 fine for each charge of subornation of perjury.

 

The case is being prosecuted by Trial Attorneys Robert A. Spelke and Donnell Turner of the Criminal Division’s Narcotic and Dangerous Drug Section.  The case was investigated by the Washington, D.C., Metropolitan Police Department.

WASHINGTON - A federal grand jury in the Eastern District of Washington has returned a superseding indictment charging Kevin Harpham, 36, of Colville, Wash., with federal hate crime and weapons violations arising out of the attempted bombing of the Martin Luther King Jr. Unity March in Spokane, Wash., on Jan. 17, 2011, the Justice Department announced today.

The superseding indictment alleges that Kevin Harpham planted and attempted to use an improvised explosive device on the corner of Main and Washington Streets in Spokane during the march, because of the actual or perceived race, color or national origin of participants. On March 9, 2011, Harpham was arrested and charged with attempting to use a weapon of mass destruction and possessing an unregistered destructive device.

If convicted, Harpham faces a sentence up to life in prison. The details contained in the indictment are allegations. The defendant is presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

This case is being investigated by the FBI and prosecuted by the U.S. Attorney’s Office for the Eastern District of Washington, the Justice Department’s Civil Rights Division and the National Security Division.

WASHINGTON – Attorney General Eric Holder today announced the formation of a Financial Fraud Enforcement Task Force Working Group to focus specifically on fraud in the energy markets. The Oil and Gas Price Fraud Working Group will monitor oil and gas markets for potential violations of criminal or civil laws to safeguard against unlawful consumer harm.

 

The working group will include representatives from the Department of Justice, the National Association of Attorneys General, the Commodity Futures Trading Commission, the Federal Trade Commission, the Department of the Treasury, the Federal Reserve Board, the Securities and Exchange Commission, as well as the Departments of Agriculture and Energy.

 

“Rapidly rising gasoline prices are pinching the pockets of consumers across the country,” said Attorney General Holder. “We will be vigilant in monitoring the oil and gas markets for any wrongdoing so that consumers can be confident they are not paying higher prices as a result of illegal activity. If illegal conduct is responsible for increasing gas prices, state and federal authorities should take swift action.”

 

In March 2011, President Obama asked the Attorney General to work with federal and state agencies to monitor oil and gas markets for potential wrongdoing. In response to the President’s call for action, Department of Justice leadership consulted with federal agencies and state attorneys general and discussed pending inquiries in some states, the most effective legal tools and areas that require additional exploration. As a result of this examination and to further the central mission of the Financial Fraud Enforcement Task Force, the Attorney General formed the Oil and Gas Price Fraud Working Group.

 

The Oil and Gas Price Fraud Working Group will explore whether there is any evidence of manipulation of oil and gas prices, collusion, fraud, or misrepresentations at the retail or wholesale levels that violates state or federal laws and harms consumers or the federal government as a purchaser of oil and gas. The Working Group will also evaluate developments in commodities markets and examine investor practices, supply and demand factors and the role of speculators and index traders in oil futures markets.

 

The Financial Fraud Enforcement Task Force was established by President Obama to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes and other laws prohibiting financial fraud. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement agencies 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.

 

Related Documents:

Attorney General’s Memo to the Financial Fraud Enforcement Task Force on Gas Prices

WASHINGTON – A Michigan woman pleaded guilty today to selling more than $400,000 worth of counterfeit computer software, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer and U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan,

 

Jacinda Jones, 31, of Ypsilanti, Mich., pleaded guilty to one count of willful copyright infringement before U.S. District Judge David M. Lawson in Detroit. According to court documents, between July 2008 and January 2010, Jones earned more than $400,000 by selling over 7,000 copies of pirated business software at discounted prices through the website www.cheapdl.com . The software had a retail value of more than $2 million and was owned by several companies, including Microsoft, Adobe, Intuit and Symantec. According to court documents, Jones’ activities came to the attention of U.S. Immigration and Customs Enforcement (ICE) agents, who made several undercover purchases of the pirated business and utility software.

 

At sentencing, Jones faces maximum penalties of five years in prison, a $250,000 fine and three years of supervised release. During her guilty plea hearing, Jones also agreed to forfeit any illegal proceeds from her criminal activity and pay restitution to the victims. Sentencing has been scheduled for Aug. 15, 2011, at 9 a.m.

The case is being prosecuted by Assistant U.S. Attorney Terrence Berg of the U.S. Attorney’s Office for the Eastern District of Michigan and Trial Attorney Thomas Dougherty of the Criminal Division’s Computer Crime and Intellectual Property Section. The investigation was conducted by the Field Support Unit of the National Intellectual Property Rights Coordination Center (IPR Center) and by ICE’s Office of Homeland Security Investigations in Detroit.

 

The enforcement action 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/ .

WASHINGTON— A Los Angeles-area man pleaded guilty today to establishing fraudulent medical clinics and using stolen identities of physicians to defraud Medicare of up to $13.6 million, the Departments of Justice and Health and Human Services (HHS) announced.

 

Eduard Aslanyan, 37, of Sherman Oaks, Calif., pleaded guilty before U.S. District Judge Consuelo B. Marshall in the Central District of California. Aslanyan admitted that between March 2007 and September 2008, he established a series of fraudulent medical clinics in and around Los Angeles to defraud Medicare. Carolyn Vasquez, who pleaded guilty previously to conspiring with Aslanyan to defraud Medicare, recruited physicians to serve as the medical directors of Aslanyan’s fraudulent medical clinics, and helped them negotiate management agreements with Multiple Trading Inc., a shell company Aslanyan owned, which permitted Multiple Trading to manage the day-to-day operations of the clinics. In return for Multiple Trading’s management services, the physicians agreed to pay Multiple Trading 75 percent of all the revenue the physicians received from Medicare for the services that the clinics billed to Medicare. These services were not performed by the physicians, who were rarely at Aslanyan’s fraudulent medical clinics, but by physician assistants who were hired by Aslanyan and Vasquez and were complicit in the fraud scheme at the clinics.

 

According to court documents, Aslanyan hired patient recruiters to find Medicare beneficiaries who were willing to provide their Medicare billing information in exchange for expensive, high-end power wheelchairs and other medical equipment that the patient recruiters told the beneficiaries they could receive for free. Often, the Medicare beneficiaries who were solicited by the patient recruiters did not have a legitimate medical need for the power wheelchairs and equipment. The patient recruiters then provided the beneficiaries’ Medicare billing information to Aslanyan or brought the beneficiaries to Aslanyan’s fraudulent medical clinics. In exchange for recruiting the Medicare beneficiaries, Aslanyan paid the patient recruiters cash kickbacks.

 

In court documents, Aslanyan admitted that he and Vasquez instructed and paid the physician assistants who worked at his fraudulent medical clinics to prescribe medically-unnecessary power wheelchairs and medical equipment, and order medically-unnecessary diagnostic tests for the Medicare beneficiaries. Aslanyan also admitted that physician assistants who prescribed the wheelchairs, equipment and diagnostic tests did so using the stolen identities of physicians who either did not supervise the physician assistants or work at Aslanyan’s fraudulent medical clinics. In one instance, Aslanyan admitted that he and his co-conspirators went so far as to print prescription pads and medical documents with the name of a physician who applied for, but did not accept, a job at one of Aslanyan’s fraudulent medical clinics. Two physician assistants at Aslanyan’s clinics then used the prescription pads and medical documents to prescribe medically-unnecessary power wheelchairs and medical equipment, and to order medically-unnecessary diagnostic tests without the physician’s knowledge or consent.

 

Aslanyan admitted that one way he profited from the fraud scheme at his clinics was by allowing fraudulent diagnostic testing facilities to use the Medicare billing information he purchased from the patient recruiters to submit false claims to Medicare for the fraudulent diagnostic tests which physician assistants ordered at the clinics. In exchange, the fraudulent diagnostic testing facilities paid Aslanyan cash kickbacks which they disguised as rent payments to Aslanyan.

 

In addition, Aslanyan profited from the fraud scheme by selling the fraudulent power wheelchair and medical equipment prescriptions and documents generated at his clinics to the owners and operators of fraudulent durable medical equipment (DME) supply companies, which used the prescriptions and documents to submit false claims to Medicare. Aslanyan also used the fraudulent prescriptions and documents to submit false claims to Medicare through his own fraudulent DME supply companies, Vila Medical Supply Inc. and Blanc Medical Supplies. The straw owner of Blanc Medical Supplies, Gabriel Djanunts, pleaded guilty previously to Medicare fraud. Aslanyan admitted that as a result of his conduct, he and his co-conspirators defrauded Medicare of up to $13.6 million.

 

At sentencing, scheduled for Oct. 17, 2011, Aslanyan faces a maximum penalty of 10 years in prison and a $250,000 fine. Currently, Aslanyan is serving a three-year state sentence for assault. Vasquez’s sentencing is scheduled for July 11, 2011.

 

The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney André Birotte Jr. for the Central District of California; Tony Sidley, Assistant Chief of the California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse; Glenn R. Ferry, Special Agent-in-Charge for the Los Angeles Region of the HHS Office of Inspector General (HHS-OIG); and Steven Martinez, Assistant Director in Charge of the FBI’s Los Angeles Field Office.

 

The case is being prosecuted by Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section. Former Special Trial Attorney Joseph Hudzik participated in the prosecution. The case is being investigated by the FBI.

 

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

 

Since their inception in March 2007, strike force operations in nine districts have charged 1,000 defendants who collectively have falsely billed the Medicare program for more than $2.3 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 HEAT, go to: www.stopmedicarefraud.gov .

WASHINGTON – The Justice Department announced that it has reached an agreement with Jefferson County, Texas, Drainage District Number Seven on the terms of a consent decree filed today in the U.S. District Court for the District of Columbia. If approved by the court, the decree will allow for the district’s bailout from its status as a “covered jurisdiction” under the Voting Rights Act, and thereby exempt the district from the preclearance requirements of Section 5 of the act.

 

Under Section 5 of the Voting Rights Act, certain covered jurisdictions, determined according to Section 4 of the Act, are required to seek preclearance for any changes in voting qualifications, standards, practices or procedures from the U.S. District Court in Washington, D.C., or from the U.S. Attorney General, prior to their implementation. Section 4 of the act provides that a covered jurisdiction may seek to “bailout,” or remove itself from such coverage, and therefore be exempted from the preclearance requirements, by seeking a declaratory judgment before a three-judge panel in U.S. District Court in Washington, D.C. Such a bailout judgment can be issued only if the court determines that the jurisdiction meets certain eligibility requirements for bailout contained in the statute, including a 10-year record of nondiscrimination in voting-related actions. The act also provides that the attorney general can consent to entry of a judgment of bailout if, based upon investigation, the attorney general is satisfied that the jurisdiction meets the eligibility requirements.

 

Jefferson County Drainage District Number Seven filed its bailout action in U.S. District Court in Washington, D.C. on March 2, 2011. District officials had contacted the attorney general prior to filing its action, indicating that the district was interested in seeking bailout. The district provided the Justice Department with substantial information, and the department conducted an investigation to determine the district’s eligibility. Based on that investigation, the department is satisfied that the district meets the Voting Rights Act’s requirements for bailout.

 

“In this case, the department worked closely with Jefferson County Drainage District Number Seven, carefully evaluated the information the district provided to us, and conducted our own investigation, which has satisfied us that the district is eligible for a bailout,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I appreciate the cooperation of district officials in providing the department with information that we have requested, and in moving toward a resolution of this matter in the way envisioned by the Voting Rights Act.”

 

The consent decree, filed in court today, details the legal and factual basis for a bailout determination and, if approved, will grant the district’s request. The court will retain jurisdiction of the action for 10 years and can reopen the action upon the motion of the attorney general or any aggrieved person alleging conduct by the district that would have originally precluded the district from bailing out if it had occurred during the 10 year period preceding entry of the consent decree.

 

Information about bailout, the Voting Rights Act, and other federal voting laws is available on the Department of Justice web site at www.usdoj.gov/crt/voting/. Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.

WASHINGTON – The Department of Justice and the Environmental Protection Agency (EPA) announced today that P4 Production LLC, a mining and phosphorus processing company wholly-owned by Monsanto and operating near Soda Springs in southeast Idaho, has agreed to pay a $1.4 million civil penalty for alleged Clean Water Act violations at its South Rasmussen Mine. In addition to the penalty, P4 will spend an estimated $875,000 on monitoring and to prevent pollutants from entering local waters.

“The Justice Department and the EPA are committed to enforcing the Clean Water Act to reduce pollution from mining and mineral processing operations,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “Clean water is essential for human health, as well as for healthy livestock, fish and wildlife. Today’s settlement agreement will make Idaho’s waters cleaner by preventing selenium and other hazardous pollutants generated by P4’s mining operations from entering local creeks and wetlands.”

“Today’s settlement resolves a long-standing hazard to fish, wildlife and the environment in southeast Idaho,” said Edward Kowalski, director for EPA's Seattle Office of Enforcement and Compliance. “Selenium pollution is a serious problem in this part Idaho, and this enforcement action by EPA is one part of the long-term effort to clean up the phosphate patch.”

According to the complaint, P4 allegedly discharged wastewater containing high concentrations of selenium and heavy metals from a waste rock dump at the mine without a required permit. Further, P4’s unpermitted discharges - which contained selenium levels far above Idaho’s state water quality standards – allegedly polluted a nearby wetland and an unnamed tributary of Sheep Creek, as well as downstream waters that drain to the Snake River.

Phosphate mines in the area, including the South Rasmussen Mine, are known to contain high levels of selenium in their waste rock. Rainwater and weathering allow the selenium to leach from the waste rock piles and enter nearby surface water. Sheep, horse and cattle deaths in southeast Idaho have been linked to selenium contamination of plants. Selenium in high concentrations can be toxic to a variety of fish and wildlife and is also known to bio-accumulate, and affect organisms in the aquatic food chain. Monsanto uses phosphate from the South Rasmussen Mine to manufacture Roundup.

Under the terms of the consent decree, P4 will pay the U.S. $1.4 million and it agrees to:

Continue collecting selenium-contaminated leachate from the waste rock pile and prevent leachate from entering nearby creeks and wetlands until such time as the company either obtains an National Pollution Discharge Elimination System permit, or it undertakes a restoration of the waste rock dump under another state or federal order.

Perform downstream monitoring for a period of five years to ensure that selenium-contaminated water is no longer leaving the site.

The settlement is part of EPA’s enforcement initiative to reduce pollution from mining and mineral processing operations. Mining and mineral processing facilities generate more toxic and hazardous waste than any other industrial sector, waste that when not properly managed, can impact surrounding communities and pose a serious risk to public health and the environment. To reduce these risks, EPA is working to ensure mining and mineral processing industry compliance with environmental laws.

The settlement was lodged today in the U.S. District Court of Idaho. There will be a 30-day public comment period during which the United States will accept comments on the settlements before it is presented to the court for entry.

WASHINGTON – A federal court has barred Eddie Madrigal of San Antonio and his business, Madrigal Tax Express Inc., from preparing federal tax returns for others, the Justice Department announced today. The permanent injunction order, to which Madrigal consented, was entered by Chief Judge Fred Biery of the U.S. District Court for the Western District of Texas.

 

The government complaint alleged that Madrigal and his firm prepared tax returns for their customers that claimed false and exaggerated business deductions, false earned income tax credits and improper miscellaneous itemized deductions. According to the complaint, Madrigal and his business, which has three locations in San Antonio, prepared approximately 28,000 returns from 2005 to 2007. The government further alleged that Madrigal Tax Express prepared approximately 9,000 returns in 2007 and that, of the returns that were audited by the Internal Revenue Service for that year, more than 93 percent understated the customers’ tax liabilities.

 

In the last decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax-fraud promoters and unscrupulous tax-return preparers. Information about these cases is available on the Justice Department website.

WASHINGTON – The Department of Justice announced today that in order to proceed with the first phase of their acquisition of certain patents and patent applications from Novell Inc., CPTN Holdings LLC and its owners have altered their original agreements to address the department’s antitrust concerns.  The department said that, as originally proposed, the deal would jeopardize the ability of open source software, such as Linux, to continue to innovate and compete in the development and distribution of server, desktop, and mobile operating systems, middleware, and virtualization products.  Although the department will allow the transaction to proceed, it will continue investigating the distribution of the Novell patents to the CPTN owners.

 

The department said that CPTN, a holding company owned in equal measure by Microsoft Inc., Oracle Corp., Apple Inc. and EMC Corp., and its owners sought to acquire the patents in a two-stage transaction in conjunction with Novell’s planned merger with Attachmate Corporation.  In the first phase, CPTN would acquire the patents and applications.  In the second phase, the patents would be allocated and distributed to each of the four owners.  In light of the department’s competition concerns, CPTN and its owners made revisions to their formation agreements to acquire approximately 882 patents and patent applications from Novell.  The department said that these changes were necessary to protect competition and innovation in the open source software community. 

                                                                                   

“The parties’ actions address the immediate competitive concerns resulting from the transfer of Novell’s patents.  To promote innovation and competition, it is critical to balance antitrust enforcement with allowing appropriate patent transfers and exercise of patent rights,” said Sharis A. Pozen, Deputy Assistant Attorney General of the Justice Department’s Antitrust Division.  “Although we recognize that the various changes to the agreement recently made by the parties are helpful, the department will continue to investigate the distribution of patents to ensure continued competition.”

           

In order to address competition concerns of the department, CPTN and its owners have revised their agreements to provide that:

 

·          Microsoft will sell back to Attachmate all of the Novell patents that Microsoft would have otherwise acquired, but will continue to receive a license for the use of those patents, the patents acquired by the other three participants and any patents retained by Novell;

·          EMC will not acquire 33 Novell patents and patent applications that have been identified as related to virtualization software;

·          All of the Novell patents will be acquired subject to the GNU General Public License, Version 2, a widely adopted open-source license, and the Open Invention Network (OIN) License, a significant license for the Linux System;

·          CPTN does not have the right to limit which of the patents, if any, are available under the OIN license; and

·          Neither CPTN nor its owners will make any statement or take any action with the purpose of influencing or encouraging either Novell or Attachmate to modify which of the patents are available under the OIN license. 

                                                                       

During the course of their investigations, the Department of Justice and Germany’s Federal Cartel Office (Das Bundeskartellamt) cooperated closely with each other, aided by waivers from the parties.  This permitted the agencies to share information and assessments of likely competitive effects and coordinate on potential revisions to the parties’ agreements.

 

“The Department of Justice and the Federal Cartel Office worked together very closely throughout this investigation,” said Deputy Assistant Attorney General Pozen.  “This was an excellent example of international cooperation between our two agencies.”

 

Novell Inc. is a Delaware corporation with its principal place of business in Waltham, Mass.  Its 2010 revenues were approximately $812 million.  Attachmate Corp. is a privately held corporation based in Seattle.  Its revenues are not public.  CPTN Holdings LLC is a recently created consortium created by Microsoft, Oracle, Apple and EMC for the purpose of acquiring the Novell patents.  It has no sales or revenues.  Microsoft Inc. is a Washington corporation with its principal place of business in Redmond, Wash.  Its 2010 revenues were approximately $62.5 billion.  Oracle Corp. is a Delaware corporation with its principal place of business in Redwood City, Calif.  In fiscal year 2010, it had revenues of nearly $27 billion.  Apple Inc., a California corporation with its principal place of business in Cupertino, Calif., had 2010 revenues of more than $65 billion.  EMC Corp., a Massachusetts corporation with its principal place of business in Hopkinton, Mass., had 2010 revenues of approximately $17 billion.

WASHINGTON - Attorney General Eric Holder met today with commissioners of the African Union (AU) in an effort to underscore the U.S. government’s commitment to Africa, particularly efforts to promote rule of law and to combat transnational crime.  This meeting is part of the second high-level dialogue between commissioners of the AU and senior U.S. officials in Washington, D.C., the first of which took place in April 2010.

 

“We are continuing to solidify law enforcement cooperation between the United States and the African Union, especially in the areas of counternarcotics, and the combating of terrorism, piracy, and organized crime,” said Attorney General Holder.  “I look forward to maintaining these regularized dialogues, drawing on our strengths to realize our mutual law enforcement objectives.”

 

The AU is an intergovernmental organization comprised of 53 African countries with the stated objective of political and economic integration throughout Africa.  The AU Commission, based in Addis Ababa, Ethiopia, is responsible for the day-to-day administration and coordination of the AU’s activities and meetings.  The commission is composed of the chairperson, the deputy chairperson, and eight commissioners who oversee distinct portfolios: peace and security, political affairs, infrastructure and energy, social affairs, human resources, science and technology, trade and industry, rural economy and agriculture, and economic affairs.

 

Attorney General Holder met with Commission Chairperson Jean Ping and the Commissioner for Peace and Security Ramtane Lamamra.  Also present was AU Ambassador to the United States Amina Salum Ali, AU Ambassador to the United Nations Tete Antonio and U.S. Ambassador to the African Union Mission Michael Battle Jr.     

 

Previously, Attorney General Holder also addressed the AU Summit Meeting in Kampala, Uganda, in July 2010, which focused on anti-corruption, rule of law, and training opportunities as tools to combat terrorism and to promote freedom and development.  

WASHINGTON – An additional alleged member of the Almighty Latin Kings and Queen Nation (Latin Kings) has been indicted for his alleged role in a racketeering conspiracy in Hammond, Ind., and elsewhere, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana.

 

The second superseding indictment, returned yesterday by the federal grand jury in Hammond charges Ivan Quiroz, aka “Captain Kirk,” 29, of Posen, Ill., with conspiracy to engage in racketeering activity. Previously charged in the conspiracy are: Alexander Vargas, aka “Pacman,” 33, of Highland, Ind.; Sisto Bernal, aka “Cisco,” aka “Shug,” 44, of Chicago; Jason Ortiz, aka “Creeper,” 27, of Chicago; Brandon Clay, aka “Cheddar,” aka “Swiss,” aka “Slick,” 23, of Chicago; and Martin Anaya, aka “Lefty,” 40, of Chicago. In addition, the second superseding indictment also charges all of the defendants with conspiracy to possess with the intent to distribute five kilograms or more of cocaine and 1,000 kilograms or more of marijuana. 

 

Quiroz is charged also in the second superseding indictment with two counts of murder and two counts of using and carrying a firearm to commit murder during and in relation to a crime of violence.

 

As previously charged in the superseding indictment, the southeast region of the Latin Kings is allegedly responsible for at least 15 murders. The second superseding indictment specifically alleges that Quiroz participated with Vargas, Ortiz, Clay and other Latin King members in the murder of rival gang members James Walsh and Gonzalo Diaz outside of a bar in Griffith, Ind., in the early morning of Feb. 25, 2007. As previously charged in the superseding indictment, in addition to the violent crimes, the Latin Kings also distributed more than 150 kilograms of cocaine and 1,000 kilograms of marijuana.

 

According to the second superseding indictment, the Latin Kings is a nationwide gang that originated in Chicago and has branches throughout the United States. The Latin Kings is a well organized street gang comprised of regions that include multiple chapters. The Latin Kings enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, conspiracy to murder, assault, and threats against those who violate the rules or pose a threat to the Latin Kings. Members are required to follow the orders of higher-ranking members, including taking on assignments often referred to as “missions.”

 

The racketeering and drug conspiracy charges each carry a maximum penalty of life in prison. The murder-related charges carry maximum penalties of life in prison or the death penalty.

 

This case is being investigated by the FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; Immigration, Customs and Enforcement-Homeland Security Investigations; the National Gang Targeting, Enforcement & Coordination Center; the National Gang Intelligence Center; the Chicago Police Department, the Griffith Police Department; the Highland, Ind., Police Department; the Hammond Police Department; and the Houston Police Department.

 

The case is being prosecuted by Trial Attorney Joseph A. Cooley of the Criminal Division’s Gang Unit and Assistant U.S. Attorney David Nozick of the U.S. Attorney’s Office for the Northern District of Indiana.

 

The indictment is not evidence of guilt. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

WASHINGTON – Terra Industries Inc., one of the nation’s largest producers of nitric acid and nitrogen fertilizers, has agreed to pay $625,000 in civil penalties to settle alleged violations of the federal Clean Air Act at nine of its plants in Iowa, Mississippi and Oklahoma, the U.S. Department of Justice and the U.S. Environmental Protection Agency (EPA) announced today.

As part of the settlement, Terra will also spend an estimated $17 million to install and implement new controls and technologies that are expected to reduce harmful nitrogen oxide emissions at its facilities by at least 1,200 tons per year.

“This agreement will require Terra Industries to make important improvements in pollution control technology at nine acid-producing facilities that will result in cleaner and healthier air for the benefit of communities in Iowa, Mississippi and Oklahoma,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “This is a notable achievement in our efforts, alongside the Environmental Protection Agency, to address the largest sources of harmful air pollution and bring about company-wide compliance with the Clean Air Act.”

“Illegal air pollution from the production of nitric acid can leave the public vulnerable to long-term health problems such as respiratory illness and asthma,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Bringing Terra into compliance with the Clean Air Act will protect the public health of communities across Iowa, Mississippi and Oklahoma.”

Terra is a major U.S. producer of nitrogen fertilizers, including anhydrous ammonia, urea, ammonia nitrate,and urea-ammonium nitrate (UAN). The company also produces nitric acid, a key intermediate in the manufacture of ammonium nitrate and UAN.

The production of nitric acid results in the emission of nitrogen oxides, which can cause lung damage, worsen respiratory diseases, contribute to acid rain and lead to the formation of smog.

Terra, headquartered in Sioux City, Iowa, will pay $325,000 to the United States and $100,000 each to Iowa, Mississippi and the Oklahoma Department of Environmental Quality – co-plaintiffs in the action filed today in U.S. District Court in Sioux City.

Terra’s nine plants covered by the settlement include four nitric acid plants at Yazoo City, Miss.; two each at Sergeant Bluff, Iowa, and Verdigris, Okla.; and one at Woodward, Okla.

According to the consent decree, Terra allegedly constructed, modified and operated its facilities without obtaining appropriate pre-construction and operating permits, and without installing best available control technology for controlling air pollution. Terra also allegedly violated the Clean Air Act by failing to comply with applicable air emission limits and ongoing requirements for emissions monitoring, recordkeeping and reporting at some of its facilities.

Reducing air pollution from the largest sources of emissions, including acid facilities, is one of EPA’s National Enforcement Initiatives for 2011-2013. The initiative continues EPA’s focus on improving compliance with the new source review provisions of the Clean Air Act among industries that have the potential to cause significant amounts of air pollution. In fiscal year 2010, EPA’s enforcement actions in the cement manufacturing, coal-fired power plant, glass and acid sectors led to approximately 370 million pounds of pollution reduced or treated, $1.4 billion in estimated pollution controls and $14 million in civil penalties.

The consent decree, which is subject to a 30-day public comment period and final court approval, is available at: www.justice.gov/enrd/

Learn more about EPA’s civil enforcement of the Clean Air Act: www.epa.gov/compliance/civil/caa/index.html

WASHINGTON – The United States has asked a federal court to bar Dennis Giroud of Victorville, Calif., from preparing federal tax returns for others, the Justice Department announced today. The civil injunction suit alleges that Giroud and his business, Refunds R Us, prepare fraudulent tax returns for their customers that claim large tax refunds based on a frivolous theory called “redemption” or “commercial redemption,” which has been rejected by numerous courts.

 

According to the government complaint, Giroud prepares tax returns that claim fraudulent refunds based on fabricated income tax withholding reported on false forms submitted with the returns. The complaint alleges that the Internal Revenue Service (IRS) catches most of the frivolous refund requests before refunds are issued, but that Giroud’s scheme has caused the IRS to issue at least $1.2 million in erroneous refunds to his customers. Giroud has allegedly sought more than $19 million in fraudulent refunds for more than 100 customers using returns based on the frivolous “redemption” theory and has also allegedly requested more than $1.3 million in bogus refunds for himself.

 

Filing false tax forms, including false withholding claims, is one of the IRS’s“Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website .

WASHINGTON – Lee Bentley Farkas, the former chairman of a private mortgage lending company, Taylor, Bean & Whitaker (TBW), was convicted today for his role in a more than $2.9 billion fraud scheme that contributed to the failures of Colonial Bank, one of the 25 largest banks in the United States in 2009, and TBW, one of the largest privately held mortgage lending companies in the United States in 2009.

 

The conviction was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Neil H. MacBride for the Eastern District of Virginia; Acting Special Inspector General Christy Romero for the Troubled Asset Relief Program (SIGTARP); Assistant Director in Charge James W. McJunkin of the FBI’s Washington Field Office; Michael P. Stephens, Acting Inspector General of the Department of Housing and Urban Development (HUD-OIG); Jon T. Rymer, Inspector General of the Federal Deposit Insurance Corporation (FDIC-OIG) ; Steve A. Linick, Inspector General of the Federal Housing Finance Agency (FHFA-OIG); and Victor F. O. Song, Chief of the Internal Revenue Service Criminal Investigation (IRS-CI).

 

After a 10-day trial, a federal jury in the Eastern District of Virginia found Farkas guilty of one count of conspiracy to commit bank, wire and securities fraud; six counts of bank fraud; four counts of wire fraud; and three counts of securities fraud. At sentencing, scheduled for July 1, 2011, Farkas faces a maximum prison term of 30 years for the conspiracy charge and for each count of bank fraud, 20 years for each count of wire fraud related to TARP, 30 years for each count of wire fraud affecting a financial institution and 25 years for each securities fraud count. Farkas was remanded into custody.

 

According to court documents and evidence presented at trial, Farkas and his co-conspirators engaged in a scheme that misappropriated more than $1.4 billion from Colonial Bank’s Mortgage Warehouse Lending Division in Orlando, Fla., and approximately $1.5 billion from Ocala Funding, a mortgage lending facility controlled by TBW. Farkas and his co-conspirators misappropriated this money to, among other things, cover TBW’s operating expenses. The fraud scheme contributed to the failures of Colonial Bank and TBW.

 

Six individuals have pleaded guilty for their roles in the fraud scheme, including: Paul Allen, former chief executive officer of TBW; Raymond Bowman, former president of TBW; Desiree Brown, former treasurer of TBW; Catherine Kissick, former senior vice president of Colonial Bank and head of its Mortgage Warehouse Lending Division (MWLD); Teresa Kelly, former operations supervisor for Colonial Bank’s MWLD; and Sean Ragland, a former senior financial analyst at TBW.

 

“Lee Farkas, the former chairman of TBW, masterminded one of the largest bank fraud schemes in history,” said Assistant Attorney General Breuer.  “His shockingly brazen scheme poured fuel on the fire of the financial crisis.  It not only led to the downfall of TBW, one of the largest private mortgage lending companies in the United States, but also contributed to the failure of one of the country’s largest commercial banks.  Mr. Farkas may have thought he could steal nearly $3 billion from investors and taxpayers and sail into the sunset.  But now a jury has told him otherwise, and he must face the severe consequences.”

 

“Today a jury convicted Lee Farkas of orchestrating one of the longest and largest bank fraud schemes in the country,” said U.S. Attorney Neil H. MacBride. “In 2008, Lee Farkas boasted that he ‘could rob a bank with a pencil.’ And he did just that. His staggering greed led him to steal nearly $3 billion from Colonial Bank and other investors. Farkas’s mammoth fraud contributed to the toppling of a financial institution and the ripple effects were felt from Wall Street to Main Street. Now he’s being held responsible for the financial ruin he left in his wake.”

 

“This investigation required thousands of hours of work by investigators, forensic accountants and analysts to sort through complex mortgage and lending documents,” said Assistant Director in Charge McJunkin. “I’d like to thank the many other agencies who worked with FBI personnel to build a strong investigative team; a team still out there working today to protect federal funds and innocent victims.”

 

“Today’s verdict ensures that Farkas will pay for his crime – an unprecedented scheme to defraud regulators during the height of the financial crisis and to steal over $550 million from the American taxpayers through TARP,” said Acting Special Inspector General Romero for SIGTARP . “SIGTARP and its partners in the Financial Fraud Enforcement Task Force stopped the scheme dead in its tracks and will continue to bring to justice those criminals who seek to profit by exploiting TARP through fraud.”

 

According to court documents and evidence presented at trial, the fraud scheme began in 2002, when Farkas and his co-conspirators ran overdrafts in TBW bank accounts at Colonial Bank in order to cover TBW’s cash shortfalls. Farkas and his co-conspirators at TBW and Colonial Bank transferred money between accounts at Colonial Bank to hide the overdrafts. Evidence presented at trial showed that after the overdrafts grew to more than $100 million, Farkas and his co-conspirators covered up the overdrafts and operating losses by causing Colonial Bank to purchase from TBW over time more than $1.5 billion in what amounted to worthless mortgage loan assets, including loans that TBW had already sold to other investors and fake pools of loans supposedly being formed into mortgage-backed securities. Farkas and his co-conspirators caused Colonial Bank to report these assets on its books at face value when in fact the mortgage loan assets were worthless. By August 2009, approximately $500 million in fake pools of loans remained on Colonial Bank’s books.

 

According to court documents and evidence presented at trial, Farkas and his co-conspirators at TBW also misappropriated more than $1.5 billion from Ocala Funding. Ocala Funding sold asset-backed commercial paper to financial institution investors, including Deutsche Bank and BNP Paribas Bank. Ocala Funding, in turn, was required to maintain collateral in the form of cash and/or mortgage loans at least equal to the value of outstanding commercial paper.

 

Evidence presented at trial established that Farkas and his co-conspirators diverted cash from Ocala Funding to TBW to cover its operating losses, and as a result, created significant deficits in the amount of collateral Ocala Funding possessed to back the outstanding commercial paper. To cover up the diversions, the conspirators sent false information to Deutsche Bank, BNP Paribas Bank and other financial institution investors and led them to falsely believe that they had sufficient collateral backing the commercial paper they had purchased. When TBW failed in August 2009, the banks were unable to redeem their commercial paper for full value. Farkas and his co-conspirators also caused approximately $900 million in loans to be held on Colonial Bank’s books when in fact the loans had already been sold to Freddie Mac and other investors.

 

According to court documents and evidence at trial, in the fall of 2008, Colonial Bank’s holding company, Colonial BancGroup Inc., applied for $570 million in taxpayer funding through the Capital Purchase Program (CPP), a sub-program of the U.S. Treasury Department’s Troubled Asset Relief Program (TARP). In connection with the application, Colonial BancGroup submitted financial data and filings that included materially false information related to mortgage loans and securities held by Colonial Bank as a result of the fraudulent scheme perpetrated by Farkas and his co-conspirators. Colonial BancGroup’s TARP application was conditionally approved for $553 million contingent on the bank raising $300 million in private capital.

 

Evidence at trial established that Farkas and his co-conspirators falsely informed Colonial BancGroup that they had identified sufficient investors to satisfy the TARP capital contingency. Farkas and his TBW co-conspirators diverted $25 million from Ocala Funding into an escrow account and falsely represented that the money was on behalf of capital raise investors. Farkas and his TBW co-conspirators caused Colonial BancGroup to issue a false and misleading financial statement to the Securities and Exchange Commission (SEC) and press release announcing the success of the capital raise. Ultimately, Colonial BancGroup did not receive any TARP funds.

 

Evidence at trial also established that Farkas and his co-conspirators caused Colonial BancGroup to file materially false financial data with the SEC regarding its assets in annual reports contained in Forms 10-K and quarterly filings contained in Forms 10-Q. Colonial BancGroup’s materially false financial data included overstated assets for mortgage loans that had little to no value that Farkas and his co-conspirators caused Colonial Bank to purchase. Farkas and his co-conspirators also caused TBW to submit materially false financial data to the Government National Mortgage Association (Ginnie Mae) in order to extend TBW’s authority to issue Ginnie Mae mortgage-backed securities.

 

According to court documents and evidence presented at trial, Farkas also personally misappropriated more than $20 million from TBW and Colonial Bank to finance his lifestyle, including purchasing multiple homes, scores of cars, a jet and sea plane, and restaurants and bars.

 

In August 2009, the Alabama State Banking Department, Colonial Bank’s regulator, seized the bank and appointed the FDIC as receiver. Colonial BancGroup also filed for bankruptcy in August 2009.

 

“The successful prosecution of Farkas and his associates highlights the commitment and combined efforts of DOJ and federal law enforcement to hold those responsible from all levels of a mortgage company,” said Acting Inspector General Stephens for HUD-OIG. “Efforts to protect FHA and Ginnie Mae are strengthened by this verdict.”

 

“Today’s verdict confirms that the former chairman of one of the leading mortgage lending firms in the Southeast engaged in criminal conduct during the mid-2000s,” said Inspector General Rymer of FDIC-OIG. “We are proud to work with our partners at the Justice Department’s Criminal Division and in the U.S. Attorney’s Office for the Eastern District of Virginia to bring to justice individuals whose fraud contributed significantly to the financial crisis and the failure of a major financial institution.”

 

“This conviction represents a victory for Freddie Mac and American taxpayers, who have invested $64.2 billion in Freddie Mac to date,” said Inspector General Linick of the FHFA-OIG. “ The fraud that Farkas perpetrated on Freddie Mac directly affected its bottom line and, in turn, American taxpayers.  FHFA-OIG looks forward to future cooperative efforts with law enforcement partners to combat fraud against Freddie Mac, Fannie Mae, and the Federal Home Loan Banks.”

 

The case was prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia.  This case was investigated by the FBI’s Washington Field Office, SIGTARP, FDIC-OIG, HUD-OIG, FHFA-OIG, and the IRS Criminal Investigation.  The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury also provided support in the investigation. The Department of Justice would like to thank the SEC for their assistance.

 

 

This conviction is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency 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 federal court has barred a Philadelphia tax preparation firm and its owner from preparing federal tax returns claiming first-time-homebuyer tax credits and tax deductions for certain expenses, the Justice Department announced today. The court’s preliminary injunction order against Friday James of Landsdowne, Pa., who does business as Frika Tax Services, will remain in effect while the government’s lawsuit seeking a permanent injunction proceeds in court.

 

Following a court hearing at which the government presented evidence against James, including testimony from several of his customers, the court found that James “negligently or willfully understated tax liability on many of the federal income tax returns he prepared for his clients.” The court found that James claimed the first-time-homebuyer credit for customers who did not qualify for the credit and claimed deductions for business and miscellaneous expenses that were “erroneous, unrealistic or unreasonable.”

 

The court also stated that, absent an injunction, many of James’s customers would be likely to “underpay their tax liabilities and bear financial harm by having to pay overdue taxes, interest, and possible penalties.” The court required James to provide a copy of the injunction order to all persons for whom he has prepared any federal income tax returns.

 

Return preparer fraud is one of the Internal Revenue Service’s “Dirty Dozen” tax scams for 2011. In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website.

WASHINGTON – The Justice Department announced today that Vincent Johnson of Brick, N.J., was sentenced to 50 months in prison and three years supervised release for sending a series of threatening email communications to employees of five civil rights organizations that work to improve opportunities for, and challenge discrimination against, Latinos in the United States. Johnson was also ordered to pay a fine of $10,000.

Johnson, 61, who went by the internet pseudonym “Devilfish,” pleaded guilty on Oct. 20, 2010, to 10 counts related to threatening conduct towards the victims, who included employees of the LatinoJustice Puerto Rican Legal Defense and Education Fund; the Mexican American Legal Defense and Educational Fund; the National Council of La Raza; the League of United Latin American Citizens; and the National Coalition of Latino Clergy and Christian Leaders.

Johnson admitted that between November 2006 and February 2009, he emailed numerous threats to the victims to prevent them from aiding and encouraging Latinos to participate, without discrimination, in various protected activities, such as accessing the court system, voting, attending public schools, and applying for employment.  Johnson admitted that his threats were motivated by race and national origin. 

Examples of Johnson’s threatening language include: “Do you have a last will and testament? If not, better get one real soon.”; “If the idiots in the organizations which this e-mail is being copied to can't fathom the serious nature of their actions, then they will be on the hit list just like any illegal alien...actually, they are already on the list”; “I am giving you fair warning that your presence and position is being tracked...you are dead meat...along with anyone else in your organization”; “So be warned or we may find you in the obits”; “Get into the American groove or we will destroy your sorry [expletive]”; “My preference would be to buy more ammunition to deal with the growing chaos created by the pro-illegal alien groups. RIP [names of the victims] who are not the friends of our democracy.”; “After reading the article below can you give me simply one good reason why someone should not put a bullet between your eyes for your actions that are promoting lawlessness in this country?”; and “[Y]ou are putting yourself and your staff at great risk . . . and by virtue of the network that I operate under information about your malevolent ways is broadly disseminated. . . And you could very well find yourself belly up 6 feet under.” Throughout his emails, Johnson also made offensive and disparaging remarks about Latinos, including comments such as, “[t]here can be absolutely no argument against the fact that Mexicans are scum as all they know how to do is [expletive] and kill.”   

“The defendant engaged in a hate-fueled campaign of fear to intimidate and terrorize the victims,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “Racially-charged threats of violence have no place in a civilized society, and the Department of Justice will vigorously prosecute those who engage in such reprehensible conduct.”

“Johnson admitted that he sent threatening emails to individuals and groups because of who they are and what they believe,” said Paul Fishman, U.S. Attorney for the District of New Jersey .  “Violence or threats of violence based on race, religion, national origin, gender or sexual orientation are an intolerable violation of our most basic civil rights.  Hiding behind the perceived anonymity of a computer screen to make hateful threats will provide no protection from prosecution.”

“Vincent Johnson’s intent was crystal clear: he wanted to strike fear in the hearts of Latino and Hispanic activists in hopes of dissuading their activity,” said Michael B. Ward, Special Agent in Charge of the FBI’s Newark Field Office.  “Such conduct was, and will always, be met with swift response by the FBI.  There is zero tolerance for this type of criminal activity impacting people’s civil rights.”

  The case was investigated by the Washington, D.C., and Newark, N.J., field offices of the FBI. The case is being prosecuted by Trial Attorney Benjamin J. Hawk of the Justice Department’s Civil Rights Division and Assistant U.S. Attorney Thomas Eicher of the U.S. Attorney’s Office for the District of New Jersey.

WASHINGTON – The Justice Department’s National Security Division today announced the launch of a system for the electronic filing of registration statements and supplements with the Justice Department under the Foreign Agents Registration Act (FARA). Called FARA eFile, the system enables FARA registrants to electronically file documents with the FARA Registration Unit, which is part of the Counterespionage Section of the Justice Department’s National Security Division.

 

Under FARA, which was amended by the Honest Leadership and Open Government Act of 2007, FARA registrants shall file registration statements and supplements in electronic form. FARA eFile is an intuitive online shopping cart process that allows registrants to register and pay the required registration fees online, 24 hours a day, seven days a week, demonstrating another enhancement to the department’s FARA website. FARA eFile will result in more timely public disclosure and transparency while promoting more efficient practices.

 

Passed by Congress in 1938, FARA is a public disclosure statute that requires all persons acting as agents of foreign principals in a political or quasi-political capacity to make periodic public disclosure of their relationship with the foreign principal, as well as activities, receipts and disbursements in support of those activities.

 

The purpose of FARA is to protect the national defense, internal security and foreign

relations of the United States by requiring public disclosure by persons engaged in certain activities on behalf of foreign principals to ensure the American public and its lawmakers know the source of the information intended to sway public opinion, policy and laws. The law facilitates evaluation by the government and the American people of the statements and activities of such persons in light of their associations.

 

FARA eFile can be accessed at www.fara.gov and is linked through the home page of the National Security Division at www.usdoj.gov/nsd/ . Additional information about FARA eFile can also be found at www.fara.gov/efile-faq.html.

WASHINGTON – CVS Pharmacy Inc., the retail pharmacy division of CVS Caremark Corporation that operates more than 7,000 retail pharmacies in 41 states and the District of Columbia, has agreed to pay the United States and 10 states $17.5 million to resolve False Claims Act allegations, the Justice Department announced today.

 

The settlement resolves allegations that CVS submitted inflated prescription claims to the government by billing the Medicaid programs in Alabama, California, Florida, Indiana, Massachusetts, Michigan, Minnesota, New Hampshire, Nevada and Rhode Island for more than what CVS was owed for prescription drugs dispensed to Medicaid beneficiaries who were also eligible for benefits under a primary third party insurance plan (excluding Medicare as the primary payor). The United States alleged that rather than billing the government for what the insured would have been obligated to pay had the claims been submitted solely to the third party insurer (typically the co-pay), CVS billed and was paid a higher amount by Medicaid.

 

Under the terms of the agreement with the United States and the 10 states, CVS will pay the United States $7,993,615.55 and the states $9,506,384.45 plus interest. CVS has also executed an amendment to a Corporate Integrity Agreement (CIA) with the Department of Human Services, Office of Inspector General (HHS-OIG), that was executed on March 14, 2008, in connection with a separate investigation and settlement. The amendment to the CIA, which will be in effect for three years, will monitor CVS’s implementation of correct billing procedures and the training and education of employees. In addition, an independent review organization will conduct regular audits and issue reports on CVS’s compliance with the terms of the amendment to the CIA.

 

The allegations were brought to the government by Stephani LeFlore, a CVS pharmacist in St. Paul, Minn., in a whistleblower action filed under the qui tam, or whistleblower, provisions of the False Claims Act and state False Claims Act statutes. Ms. LeFlore will receive a total of $2,595,460: $1,278,978 of the United States’ recovery and $1,316,482 of the state proceeds from California, Florida, Indiana, Massachusetts, Michigan, New Hampshire, Nevada and Rhode Island. Alabama and Minnesota do not have state False Claims Act statutes.

 

“This case is an example of the government’s strong commitment to pursue companies that overcharge our federal health programs by submitting false claims,” said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. 

 

“We will not tolerate pharmacies that take advantage of taxpayer funds by billing Medicaid more for drugs than they should have received,” said John William Vaudreuil, U.S. Attorney for the Western District of Wisconsin.

 

This case was investigated jointly by the U.S. Attorney’s Office for the Western District of Wisconsin, the Commercial Litigation Branch of the Justice Department’s Civil Division, the National Association of Medicaid Fraud Control Units and the HHS-OIG.

 

“Medicaid covers the poorest, most vulnerable people in American society. Overcharging this needed government program for prescriptions is a disservice to everyone, and won’t be tolerated,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health & Human Services. “OIG will work vigilantly with law enforcement partners at all levels of government to safeguard this vital program.”

 

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 $5.5 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

$7.1 billion.

WASHINGTON – A federal court in Los Angeles has permanently barred William Alexander of Pasadena, Calif., and his two companies, Retirement Plan Services Inc. and Lyons Pensions Inc., from selling or administering pension plans or employee welfare-benefit plans, the Justice Department announced today. The court’s order, to which Alexander and his companies consented, also prohibits Alexander from preparing federal tax returns for others for a fee or representing others before the Internal Revenue Service (IRS).

 

In August 2010, the Justice Department sued Alexander, alleging that he promoted tax fraud schemes involving sham pension plans and welfare-benefit plans. According to the government complaint, Alexander helped small business owners create bogus pension plans so they could re-characterize their salaries as pension-plan contributions. Alexander then allegedly caused the sham contributions to be refunded to his customers through fake loans from the plans. According to the complaint, Alexander advised his customers that they could deduct the purported contributions in order to reduce or eliminate their federal income taxes. The complaint also alleged that Alexander fraudulently misrepresented his customers’ non-deductible personal expenses as deductible pension-plan contributions. The government alleged that Alexander’s promotion of these schemes cost the government at least $30 million.

 

The civil injunction order also requires Alexander to provide copies of the court’s order to anyone to whom he provided tax advice since Jan. 1, 2005, and for whom he has or can readily obtain a mail or e-mail address.

 

In the last decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax fraud promoters and unscrupulous tax return preparers. Information about these cases is available on the Justice Department website .

WASHINGTON – Two Miami-area residents and owners of a mental health care corporation, American Therapeutic Corporation (ATC), pleaded guilty today in U.S. District Court in Miami for orchestrating a fraud scheme that resulted in the submission of more than $200 million in fraudulent claims to Medicare, the Departments of Justice and Health and Human Services (HHS) announced.

 

Lawrence S. Duran, 49, and Marianella Valera, 40, pleaded guilty at an arraignment hearing before Magistrate Judge Barry L. Garber to all counts charged in a superseding indictment, which was unsealed on Feb. 15, 2011. The superseding indictment charges 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. The court must hold a hearing scheduled for a later date to accept and enter the guilty pleas.

 

“Lawrence Duran and Marianella Valera masterminded a complex Medicare fraud scheme,” said Assistant Attorney General Lanny A. Breuer of the Criminal Division.  “They reaped millions in illegal profits by operating a sham mental health care company that provided unnecessary and illegitimate treatments to patients, many of whom were recruited through bribes and kickbacks, and then they laundered the proceeds.  In carrying out their elaborate scheme, Duran and Valera and their co-conspirators billed Medicare for more than $200 million – a staggering sum.  Having now pleaded guilty to their crimes, they must face the consequences.”

 

“Community mental health centers are an essential part of the Nation’s health care system and serve vulnerable populations,” said Daniel R. Levinson, HHS Inspector General.  “Today’s guilty pleas emphasize that OIG, along with our law enforcement partners, will not tolerate kickbacks and other crimes committed against the Medicare program.”

 

“These defendants billed Medicare for mental health services that were illegitimate or never provided,” said U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida.  “In this way, these defendants engaged in an eight-year scheme that defrauded Medicare out of more than $200 million in payments for purported community mental health services.  We will continue to aggressively prosecute all types of Medicare fraud and all levels of fraudsters, up and down the organizational chain, to help preserve our scarce Medicare dollars for those who really need it, the sick and the elderly.”      

 

“Health care fraud robs from the elderly and disabled,” said Special Agent in Charge John V. Gillies of the FBI’s Miami Field Office. “Today’s pleas should be a warning to illegitimate providers who abuse their position of trust within the medical community. No matter what the scheme or how elaborately disguised, the FBI and our law enforcement partners will investigate and prosecute such fraud to the fullest extent of the law.”

 

In pleading guilty, Duran and Valera admitted that they masterminded 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 the superseding indictment, Duran, Valera and others paid bribes and kickbacks to recruit Medicare beneficiaries to attend ATC and ASI.  The superseding indictment charges that Duran, Valera and others 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 kickback scheme through an extensive money laundering scheme that aimed to conceal the illicit conversion of Medicare payments into cash.  The defendants and their co-conspirators also engaged in sophisticated measures to conceal their fraudulent activities from Medicare and from law enforcement. 

 

Specifically, according to court filings, 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 this kickback 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 $200 million in medically unnecessary services.

 

The superseding indictment charges that Duran, Valera and others caused the alteration of patient files and therapist notes for the purpose of making it appear, falsely, 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.  The superseding indictment also charges that Duran, Valera and co-conspirators caused doctors to refer ATC patients to ASI even though the patients did not qualify for sleep studies.  

 

The defendants are also charged with engaging 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 Professional Management Group 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.  The superseding indictment charges that 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.

 

Duran and Valera have been in federal custody since their arrests in October 2010, under orders of detention issued by Magistrate Judge Andrea Simonton and U.S. District Court Judge James Lawrence King. Sentencing is scheduled for July 13 at 9:30 a.m. Duran and Valera each face a maximum of 10 years in prison for each count of conspiracy to commit health care fraud and each count of health care fraud; five years in prison for each count of conspiracy to pay and receive health care kickbacks; 20 years in prison for each count of conspiracy to commit money laundering; 10 to 20 years in prison for each count of money laundering; and 10 years in prison for each count of structuring to avoid reporting requirements. The defendants’ assets were frozen at the time of their arrests through civil forfeiture proceedings.

 

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 guilty 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. 

 

The criminal case is being prosecuted by Trial Attorneys Jennifer L. Saulino and Joseph S. Beemsterboer of the Criminal Division’s Fraud Section.  The related civil action is being handled by Vanessa I. Reed and Carolyn B. Tapie of the Civil Division and Assistant U.S. Attorney Ted L. Radway of the Southern District of Florida. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.

 

Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants that collectively have billed the Medicare program for more than $2.3 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 – Two former Washington, D.C., tax preparers have been indicted on tax charges, the Justice Department and Internal Revenue Service (IRS) announced today. Onuoha “Iggy” Nwokoro, a former D.C. tax return preparer, made his initial appearance in federal district court on tax charges. On April 12, 2011, a grand jury returned a sealed indictment charging Nwokoro with 18 counts of aiding and assisting in the preparation of false income tax returns. The indictment was unsealed on April 13, 2011, following Nwokoro’s arrest in Washington, D.C. A trial date has not been scheduled.

 

According to the indictment, from prior to January 2005 through April 2007, Nwokoro operated BBC Tax Services, also known as BBC Tax and Medical Billing Services, a tax preparation business in Washington, D.C. For tax years 2004, 2005 and 2006, Nwokoro prepared and electronically filed tax returns for his clients that included fictitious business income and expenses for what purported to be a computer systems business. The indictment alleges that 15 of the returns collectively report more than $1.2 million in fraudulent business losses.

 

According to the indictment, Nwokoro’s own 2004, 2005 and 2006, personal tax returns were also false in that they under-reported his income. If convicted, Nwokoro faces a maximum sentence of 54 years in prison and a maximum fine of $250,000.

 

The case was investigated by IRS-Criminal Investigation and is being prosecuted by Department of Justice Tax Division Trial Attorneys Jorge Almonte and Jeffrey B. Bender. The case is CR-11-104.

 

In a related matter, the Justice Department and IRS announced that John T. Hoang, a former D.C. tax return preparer, made his initial appearance today in D.C. federal district court on tax charges. On April 12, 2011, a grand jury returned a sealed indictment charging Hoang with six counts of aiding and assisting in the preparation of false income tax returns. The indictment was unsealed on today, following Hoang’s arrest in Maryland. A trial date has not been scheduled.

 

According to the indictment, from prior to January 2005 through at least April 2005, Hoang operated “John T. Hoang CPA,” a tax preparation business in Washington. For tax year 2004, Hoang prepared and electronically filed for his clients tax returns that included fictitious business income and expenses for what purported to be a technology licensing business. The indictment alleges that six returns collectively report more than $400,000 in fraudulent business losses.

 

The Hoang case was investigated by IRS-Criminal Investigation and is being prosecuted by Department of Justice Tax Division Trial Attorneys Jorge Almonte and Jeffrey B. Bender. The case is CR-11-103.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt

 

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

WASHINGTON - Karl B. Rodney, the chief executive officer of the Carib News Foundation and publisher of Carib News, pleaded guilty today in U.S. District Court for the District of Columbia to making a false statement to the U.S. House of Representatives, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.

 

According to court documents, through the Carib News foundation and Carib News, Rodney has organized an annual conference for more than a decade in the Caribbean called the Annual Caribbean Multi-National Business Conference. Many of the conferences have been attended by members of Congress.

 

In 2007, the House of Representatives modified its travel rules to require, among other things, that all privately-funded travel by members of Congress be pre-approved by the House of Representatives Committee on Standards of Official Conduct (Ethics Committee.) The pre-approval process required the private sponsor to submit a Private Sponsor Travel Certification Form disclosing, among other things, the source of funding for the member’s trip, including transportation, lodging and meals.

 

In pleading guilty today, Rodney admitted that he made false statements on the Private Sponsor Travel Certification Form submitted to the Ethics Committee in connection with the 12th Annual Caribbean Multi-National Business Conference held in Antigua and Barbuda from November 8-11, 2007. 

 

According to court documents, in connection with the 2007 conference, Rodney provided round-trip airfare, hotels and meals for the members attending the conference using money and in-kind support provided by the foreign host country and a private corporation.  Under the House of Representatives’ travel rules, Rodney was required to disclose on the Private Sponsor Travel Certification Form any entity contributing funds or in-kind support towards the members’ trip.  Instead of listing the foreign host country and private corporation on the certification form that he submitted, Rodney falsely stated that Carib News Foundation was the only entity that paid for the members’ travel and that the foundation had not accepted funds from any other source earmarked for that purpose.

 

Rodney faces a maximum of five years in prison and a $250,000 fine on the false statement charge.  Sentencing is scheduled for July 22, 2011, at 2:30 p.m. before U.S. District Judge Emmet G. Sullivan.

 

This case is being prosecuted by Trial Attorneys Kate Albrecht and Justin Shur of the Criminal Division’s Public Integrity Section.  The case was investigated by the FBI’s Washington Field Office and the Office of the Special Inspector General for the Troubled Asset Relief Program.

WASHINGTON – Miami-area physician Rene De Los Rios was convicted of five felony counts today by a federal jury for his role in a $23 million dollar HIV injection and infusion Medicare fraud scheme, the Departments of Justice and Health and Human Services (HHS) announced.

 

After a three-week trial, the jury convicted De Los Rios of one count of conspiracy to commit health care fraud and four counts of submission of false claims to the Medicare program. The conspiracy charge carries a maximum penalty of 10 years in prison and a $250,000 fine; each false claims count carries a maximum penalty of five years in prison . Sentencing has been scheduled for June 27, 2011.

Evidence at trial established that Damaris Oliva was the owner and operator of Metro Med of Hialeah Corp. In 2003, Metro Med began operating as an HIV infusion clinic that purportedly provided injection and infusion therapies to HIV positive Medicare beneficiaries. In fact, the injection and infusion therapies were medically unnecessary and not provided. Metro Med paid cash kickback payments to patients at the Metro Med clinic in exchange for those patients allowing Metro Med to use their Medicare numbers to bill the Medicare program.

 

Evidence at trial established that as part of the scheme, Oliva hired the De Los Rios to order unnecessary tests, sign medical analysis and diagnosis forms, and authorize treatments to make it appear that legitimate medical services, including injection and infusion therapies, were being provided to patients who were Medicare beneficiaries. The defendant also signed patient charts, often without seeing the patient, indicating that injection and infusion treatments were medically necessary, when, in fact, he knew they were not. Evidence at trial also established that the defendant diagnosed almost all of the patients at Metro Med with the same rare blood disorders, which the patients did not in fact have, in order to ensure maximum reimbursement from Medicare. Moreover, the evidence at trial showed that the defendant prescribed expensive medications, including Winrho, Procrit and Neupogen, to patients for the sole purpose of receiving reimbursement from the Medicare program. The evidence showed that Oliva paid the defendant $3,000 per week for his involvement in the HIV infusion scheme.

 

From approximately April 2003 through October 2005, Metro Med submitted approximately $23 million in claims to the Medicare program for injection and infusion treatments for Medicare beneficiaries that were not medically necessary, and were not provided. The Medicare program paid approximately $11.7 million in claims. Damaris Oliva and three other individuals have each previously pleaded guilty to conspiracy to commit health care fraud in connection with the scheme.

 

Today’s verdict was 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.

 

The case was prosecuted by Trial Attorney Joseph S. Beemsterboer of the Criminal Division’s Fraud Section and Robert J. Luck, Assistant U.S. Attorney for the Southern District of Florida. The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.

 

Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,000 defendants and organizations that collectively have billed the Medicare program for more than $2.3 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 –Michael Jacques, 26, of Springfield, Mass., was found guilty by a federal jury of three crimes related to the burning of a predominantly African-American church in Springfield on the morning after Barack Obama was elected as the first African-American President of the United States, the Justice Department announced today.

 

Evidence at trial established that in the early morning hours of Nov. 5, 2008, within hours of Obama being elected president, Jacques and his co-conspirators agreed to burn and succeeded in burning the newly-constructed Macedonia Church of God in Christ’s building where religious services were to be held. The building was nearly completed at the time of the fire, which destroyed the entire structure, leaving only the metal superstructure and a small portion of the front corner intact. Investigators determined the fire to be incendiary in nature and caused by an unknown quantity of gasoline applied to the exterior and interior of the building.

 

Prior to the Nov. 4, 2008 presidential election, Jacques and his co-conspirators used racial slurs against African-Americans and expressed anger about the possible election of Obama as the first African-American President. On Nov. 4, 2008, Jacques and his co-conspirators agreed to retaliate against the election by burning the new church because the church members, congregation and bishop were African-American.

 

Jacques was convicted of damaging religious property and obstructing the free exercise of religion because of the race, color or ethnic characteristics of any individual associated with that religious property. Jacques was also convicted of conspiring to injure, oppress, threaten and intimidate the parishioners of the church in the free exercise or enjoyment of the right to hold and use real property, a right which is secured by the Constitution and laws of the United States, and for using fire in the course of a federal felony.

 

“Hateful acts of violence of this kind will not be tolerated in our country,” said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division. “The department will continue to vigorously prosecute hate crimes against all individuals.”

 

“This was a very serious case that affected the lives of hundreds of parishioners at the Macedonia Church of God in Christ.  When I met with Bishop Bryant Robinson it was clear to me how much damage was inflicted on his community by this horrible act.  It was not necessarily about the physical structure that was burned, it was about symbolic and personal nature of the crime”, said U.S. Attorney for the District of Massachusetts Carmen M. Ortiz.  “We are very pleased with the jury’s verdict and want to reaffirm our commitment to defend our most fundamental rights, stemming the tide of hatred and discrimination.”

 

Sentencing is scheduled for Sept. 15, 2011.

 

Two other co-conspirators, Thomas Gleason and Benjamin Haskell, have previously pleaded guilty for their role in the offenses. Haskell was sentenced to nine years in prison and three years of supervised release.

 

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives; FBI; Massachusetts State Police; Hampden County District Attorney’s Office and the Springfield Police Department. It was prosecuted by Assistant U.S. Attorneys Paul H. Smyth and Kevin O’Regan and Nicole Lee Ndumele, Trial Attorney in the Department of Justice’s Civil Rights Division.

WASHINGTON—Larry Dees Sr., 66, and Larry Dees Jr., 37, both of Maringuoin, La., each pleaded guilty today in U.S. District Court in Baton Rouge, La., to two violations of the Lacey Act for leading sport hunters to unauthorized areas to hunt American alligators in violation of the federal Endangered Species Act and Louisiana law, the Justice Department announced.

According to statements made in court, on Sep. 10, 2009, and on September 24-25, 2009, Dees Sr. and Dees Jr., licensed alligator helpers, guided out-of-state alligator sport hunters to unapproved areas, that is, areas for which they did not have appropriate state authorization to hunt. On Sep. 10, the sport hunter killed a 9'4" trophy-sized alligator.

In plea agreements filed in court, the United States and Larry Dees Sr. and Larry Dees Jr. recommend, in addition to the sentence imposed by the court, that the Dees serve a three year term of probation during which they will be prohibited from hunting as follows: for one year of the probation they will be prohibited from engaging worldwide in all hunting activities, including guiding, with any kind of weapon; for the remaining two years of probation they will be prohibited from engaging worldwide in all commercial alligator hunting activities, including guiding, with any kind of weapon. The plea agreements are subject to approval by the court. Larry Dees Sr. has been licensed since 1992. Larry Dees Jr. has been licensed since 2002.

In the 1960s alligators were classified as endangered due to over harvesting. In order to save this important natural and economic resource, Louisiana imposed strict regulations on alligator hunting in the wild. As a result, the alligator population rebounded. The law requires that licensed alligator helpers must have hide, or CITES (Convention on International Trade in Endangered Species), tags for the property on which they are hunting and must affix a tag to an alligator after the kill. Each tag is specific to a particular parcel of land. Annually, state biologists review alligator population data and decide where alligators may be hunted in order to preserve the species. Tags are issued for only those properties. Licensed helpers must hunt on tag-specific land. It is illegal to kill an alligator in an area for which the licensed helper does not have appropriate tags.

The American alligator is listed as a threatened species on the U.S. list of Threatened and Endangered Species. It also is listed as a crocodilian species on Appendix II of the CITES. To better regulate trade in crocodilian species, the parties to CITES agreed to a program of requiring a uniquely numbered tag to be inserted into the skin of each alligator immediately after it is killed. The tag is to remain with the skin as it travels in interstate or international commerce until it is manufactured into a final consumer product. The U.S. Secretary of the Interior promulgated special rules for American alligators that implement the CITES tagging program and regulate the harvest of alligators within the United States, including the requirement that American alligators must be taken in compliance with state law.

Larry Dees Sr. and Larry Dees Jr. each face a maximum sentence of one year in prison and a $200,000 fine.

The case is being prosecuted by Claire Whitney of the Environmental Crimes Section of the Department of Justice. The case was investigated by the Law Enforcement Division of the Louisiana Department of Wildlife and Fisheries and the U. S. Fish and Wildlife Service’s Office of Law Enforcement.

WASHINGTON – The Justice Department today filed a lawsuit in federal court in San Juan, Puerto Rico, charging the Puerto Rico Department of Justice (PRDOJ) with employment discrimination for failing to provide a reasonable accommodation to an employee with a disability, as required by the Americans with Disabilities Act (ADA).

 

The complaint alleges that the PRDOJ knowingly relocated an employee who uses a wheelchair to an office building that was not accessible to her. As a result, the employee could not park her vehicle and enter the building without the assistance of others, and could not use the restroom during her work day. After the employee filed a complaint with the Equal Employment Opportunity Commission, the PRDOJ eventually relocated the employee to a more accessible office building, but continues to require her to attend long meetings on a regular basis at an inaccessible facility.

 

“The Americans with Disabilities Act protects an employee’s right to work in an environment that is free of unnecessary barriers to access,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “The Civil Rights Division is committed to protecting the employment rights of individuals with disabilities, who should not be relegated to working in locations that result in unequal and, in this case, unsafe and undignified working conditions.”

 

Title I of the ADA prohibits employers, such as the PRDOJ, from discriminating against a qualified individual on the basis of disability in regard to job application procedures, hiring, advancement, discharge, employee compensation, job training and other terms, conditions and privileges of employment. In addition, an employer is required to make a reasonable accommodation to the known disability of an employee if it would not impose an “undue hardship” on the operation of the employer’s business. Reasonable accommodations are adjustments or modifications provided by an employer to enable people with disabilities to enjoy equal employment opportunities.

 

Those interested in finding out more about the ADA may call the Justice Department’s toll-free ADA Information Line at 800-514-0301 or 800-514-0383 (TDD), or access the department’s ADA website at www.ada.gov .

WASHINGTON – An attorney who formerly worked for a major pharmaceutical company was re-indicted on charges of obstruction and making false statements, the Justice Department announced today. The new indictment identifies GlaxoSmithKline (GSK) as Lauren Stevens’ employer at the time of the alleged obstruction and false statements. GSK has not been charged with a crime.

Stevens, a resident of Durham, N.C., is charged with one count of obstructing an official proceeding, one count of concealing and falsifying documents to influence a federal agency and four counts of making false statements to the Food and Drug Administration.

The indictment returned late Wednesday in the District of Maryland contains essentially the same charges that were brought against Stevens in November 2010. On March 23, 2011, the original indictment was dismissed by the District Court Judge Roger W. Titus. Judge Titus has scheduled a status conference for April 15, 2011, and set a tentative trial date of April 26, 2011.

Charges contained in the indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty it is to determine guilt or innocence.

SAN FRANCISCO – W. Scott Harkonen, M.D., the former chief executive office (CEO) of InterMune Inc., was sentenced Wednesday before U.S. District Court Judge Marilyn Hall Patel for wire fraud relating to the dissemination of false and misleading statements about the results of a clinical trial of InterMune’s drug Actimmune. Judge Patel sentenced Harkonen to three years’ probation, with six months of home confinement. He was ordered to pay a $20,000 fine and to perform 200 hours of community service. In September 2009, after a seven-week trial, a jury convicted Harkonen of wire fraud for the creation and dissemination of false and misleading information about the efficacy of Actimmune (Interferon gamma-1b) as a treatment for idiopathic pulmonary fibrosis (IPF).

 

Evidence at trial showed that Harkonen was the CEO of InterMune from February 1998 through June 30, 2003 and a member of InterMune’s board of directors. Under Harkonen’s direction, InterMune marketed and sold Actimmune to treat the fatal disease IPF despite the fact that Actimmune was not approved by the Food and Drug Administration (FDA) as a safe and effective treatment. The cost of Actimmune for one IPF patient for one year was approximately $50,000 and the vast majority of the sales of Actimmune were for the unapproved, off-label use of treating IPF.

 

Evidence at trial further showed that Harkonen caused InterMune to issue a false and misleading press release publicly announcing the results of a clinical trial of Actimmune for the treatment of IPF on Aug. 28, 2002. Although the clinical trial had failed, InterMune’s press release falsely stated that the results of the clinical trial established that Actimmune helped IPF patients live longer. The headline of the press release read, “InterMune Announces Phase III Data Demonstrating Survival Benefit of Actimmune in IPF,” with the subheading “Reduces Mortality by 70% in Patients With Mild to Moderate Disease.”

 

In October 2006, InterMune agreed to enter into a deferred prosecution agreement and to pay nearly $37 million to resolve criminal charges and civil liability in connection with the illegal promotion and marketing of its drug Actimmune. InterMune also entered into a five-year Corporate Integrity Agreement with the Office of Inspector General for the Department of Health and Human Services.

 

“The Department of Justice is firmly committed to holding accountable corporate executives who promote drugs using false or fraudulent information,” said Acting Deputy Assistant Attorney General for the Office of Consumer Protection Litigation, Maame Ewusi-Mensah Frimpong. “Executives like Dr. Harkonen, who—without regard for patient health or safety—engage in criminal conduct on behalf of their companies, will not be permitted to carry out this conduct with impunity.”

This case is being prosecuted by Assistant U.S. Attorney Kyle Waldinger of the Northern District of California and Trial Attorney Allan Gordus of the Office of Consumer Protection Litigation with the Department of Justice in Washington, D.C. The prosecution is the result of a multi-year investigation by the FBI; the FDA’s Office of Criminal Investigations; the U.S. Department of Veterans Affairs, Office of Inspector General; and the Office of Personnel Management, Office of the Inspector General.

WASHINGTON - Janet Jaensch, a federal employee, pleaded guilty in U.S. District Court in Alexandria, Va., to one count of failure to file a 2008 federal income tax return, the Justice Department and the Internal Revenue Service (IRS) announced today.

 

According to court documents, between 2001 and 2011, Jaensch was employed by the federal government and was married to Richard Jaensch. Between 2001 and 2008, Janet Jaensch did not timely file U.S. Individual Income Tax Returns, Form 1040, with the IRS, despite the fact that she was required to do so. Specifically, in 2008, Jaensch admitted that she received $152,725 in gross income, yet she did not timely file a federal income tax return nor did she timely pay any income tax to the IRS. She further admitted that between 2002 and 2009, she failed to timely pay approximately $226,685 in taxes to the IRS.

 

In addition, according to the statement of facts, Jaensch admitted that beginning in 2002, and continuing each year through approximately 2009, at the direction of her husband, she presented a letter to her payroll department directing her employer to stop withholding federal income taxes from her salary. Jaensch further admitted that between 2002 and 2009, at her husband’s direction, she willfully committed the following acts: sending a document to the IRS claiming that she was not a person required to file federal income tax returns; recording in Fairfax County, Va., a “Declaration of Independence by Public Notice” claiming that she was “not a party to the Constitution of the united States of America”; sending correspondence to the IRS claiming they could not instruct her employer to withhold taxes from her paycheck; and sending certified letters to the Defense Finance and Accounting Service (DFAS) and IRS advising that she is not a taxpayer.

 

The defendant faces a maximum potential sentence of one year in prison. Sentencing has been scheduled for Aug. 16, 2011.

 

Janet Jaensch’s husband, Richard Jaensch, was indicted in March 2011 by an Alexandria federal grand jury with one count of corruptly endeavoring to impede the IRS, one count of filing a false claim for a refund and four counts of failing to file a tax return for 2004 through 2007. His trial is scheduled for July 20, 2011.

 

This case was investigated by IRS-Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Gene Rossi and the Department of Justice’s Tax Division Trial Attorney Caryn Finley.

 

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

DALLAS – A federal court in Dallas has barred Arthur Piner Grider III from operating businesses under any name, the Justice Department announced today. The final judgment and permanent injunction order, to which Grider agreed, finds him liable for more than $100 million in unpaid federal employment taxes, unemployment taxes and related penalties associated with numerous business entities, including Asgard Avionics Corp. of Florida, Talent Force Services LLC and NAG Financial LLC.

 

The court’s order also makes final a preliminary injunction entered against Grider in November 2010 that prohibited Grider and his employee leasing companies from, among other things, transferring funds to themselves or others before paying their current federal employment tax liabilities. The government’s complaint alleged that Grider and his business entities had a long history of “pyramiding” employment taxes.

 

According to the court’s orders, Grider and his wife agreed to allow the government to sell their Houston residence as a partial payment of his tax debts. The court also appointed a receiver to locate, preserve and distribute to creditors the assets of Grider’s businesses, including 69 company bank accounts and 14 antique automobiles manufactured between 1929 and 1970. The court also ordered the receiver to sell Grider’s interest in Pacific Aerospace Resources & Technologies LLC of Victorville, Calif., and to apply the sale proceeds to his tax debts.

WASHINGTON – Two officers with the New Orleans Police Department (NOPD) have been convicted of civil rights and obstruction of justice crimes in connection with the beating death of civilian Raymond Robair in July 2005, and a subsequent cover-up.

 

Officer Melvin Williams was convicted of violating Robair’s constitutional rights by beating him on July 30, 2005. Evidence at trial established that Williams approached Robair on the street in Robair’s neighborhood. Several neighbors testified that they saw Williams kick Robair in the side and beat him repeatedly with a baton. After the beating, Williams and Moore placed Robair, who was unconscious, into their police car and drove him to Charity Hospital, where, according to witnesses at trial, they falsely informed the hospital staff that they had found Robair under a bridge in this condition, and that all they knew was that Robair was a drug user. Based upon that information, the hospital treated Robair for a drug overdose rather than for blunt force trauma. Robair, who suffered fractured ribs and a ruptured spleen as a result of the beating, was pronounced dead within a few hours.

Williams was also convicted, along with Officer Matthew Dean Moore, of obstructing justice by writing and submitting a false and inaccurate incident report regarding their interactions with Robair. Moore was also convicted of one additional felony count for making false statements regarding the incident to FBI agents in March 2010.

 

“Every community relies upon their police officers to protect and serve, but these officers abused their power, violating the law and the public trust,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I am hopeful that today’s verdict brings a measure of justice to the victim’s family and the entire community.”

“As we recognize Victims’ Rights this week, today’s verdict is evidence that we, and our partners in the Department of Justice Civil Rights Division and FBI, are absolutely committed to bring those who have violated the sacred rights of our citizens to justice, in the hope that our pursuit will give the people of New Orleans confidence in the protection of honest and professional law enforcement,” said Jim Letten, U.S. Attorney for the Eastern District of Louisiana.

 

Williams faces a possible maximum sentence of life in prison. Moore faces a possible maximum sentence of 25 years in prison.

 

This case was investigated by the New Orleans Field Office of the FBI, and was prosecuted by Special Litigation Counsel Forrest Christian and Trial Attorney Jared Fishman of the Justice Department’s Civil Rights Division, and Assistant U.S. Attorney Jordan Ginsberg of the Eastern District of Louisiana.

WASHINGTON– The Justice Department has filed a lawsuit against the Berkeley County, S.C., Sheriff’s Office and Sheriff Wayne DeWitt for violating the First Amendment and the Religious Land Use and Institutionalized Persons Act (RLUIPA). The Berkeley County Detention Center, a component of the sheriff’s office, enforces policies that prohibit inmates from receiving virtually all expressive material and substantially burden the rights of inmates to practice their faith.

By filing the complaint, the Justice Department seeks to participate in a recently filed lawsuit challenging the detention center’s restrictive mail policies. These policies prohibit inmates from receiving any books, magazines, newspapers, religious texts or other expressive materials through the mail, in violation of the Speech Clause of the First Amendment. Further, by denying religious texts to inmates, the sheriff’s office substantially burdens religious practice in contravention of RLUIPA. Finally, the prison violates the First Amendment’s Establishment Clause by making copies of the Bible readily available to inmates, while erecting barriers to inmates seeking access to texts used in other religious traditions.

 

“The freedom to practice one’s faith is among our most cherished rights, and the Justice Department is committed to defending that right.  RLUIPA has proven to be a powerful tool in combating religious discrimination and ensuring religious freedom for all individuals,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. 

 

“The county’s religious intolerance tramples our freedom of religion which is a cornerstone of the United States Constitution,”   said William N. Nettles, U.S. Attorney for the District of South Carolina. “We look forward to the privilege of defending the religious freedom afforded to all people in the United States by the Constitution.”

 

The Justice Department filed its lawsuit to enforce the sheriff’s office’s compliance with the First Amendment and RLUIPA. The First Amendment protects the right of prisoners to receive a reasonable amount of expressive material, and forbids government institutions from favoring certain religions over others. RLUIPA protects the religious freedom of persons confined to institutions such as prisons, mental health facilities and state-run nursing homes.  RLUIPA was enacted by both houses of Congress unanimously and signed into law on September 22, 2000.   The law also addresses religious discrimination in land use. In the 10 years since its passage, RLUIPA has helped secure the ability of thousands of individuals and institutions to practice their faiths freely and without discrimination.

 

More information on the Civil Rights Division’s efforts to combat religious discrimination may be found at www.justice.gov/crt . 

WASHINGTON - Today the Department of Justice and FBI announced the filing of a civil complaint, the execution of criminal seizure warrants, and the issuance of a temporary restraining order as part of the most complete and comprehensive enforcement action ever taken by U.S authorities to disable an international botnet.  

 

The botnet is a network of hundreds of thousands of computers infected with a malicious software program known as Coreflood, which installs itself by exploiting a vulnerability in computers running Windows operating systems.  Coreflood allows infected computers to be controlled remotely for the purpose of stealing private personal and financial information from unsuspecting computer users, including users on corporate computer networks, and using that information to steal funds. 

 

The Department of Justice strongly encourages computer users to ensure they are using security software on their computers and that users regularly update their security and routinely scan their computers for viruses. To learn more about what you can do to protect your computer, including how to download and receive updates on security vulnerabilities, the public may go to the following sites operated by U.S. Computer Emergency Readiness Team (CERT) and the Federal Trade Commission, respectively: us-cert.gov/nav/nt01 and onguardonline.gov/topics/malware.aspx . 

 

The U.S. Attorney’s Office for the District of Connecticut has filed a civil complaint against 13 “John Doe” defendants, alleging that the defendants engaged in wire fraud, bank fraud and illegal interception of electronic communications.  In addition, search warrants were obtained for computer servers throughout the country , and a seizure warrant was obtained in U.S. District Court for the District of Connecticut for 29 domain names.  Finally, the government obtained a temporary restraining order (TRO), authorizing the government to respond to signals sent from infected computers in the United States in order to stop the Coreflood software from running, thereby preventing further harm to hundreds of thousands of unsuspecting users of infected computers in the United States.

 

“The seizure of the Coreflood servers and Internet domain names is expected to prevent criminals from using Coreflood or computers infected by Coreflood for their nefarious purposes,” said U.S. Attorney David B. Fein for the District of Connecticut.  “I want to commend our industry partners for their collaboration with law enforcement to achieve this great result.”

 

“The actions announced today are part of a comprehensive effort by the department to disable an international botnet, while at the same time giving consumers the ability to take necessary steps to protect themselves from this harmful malware,” said Assistant Attorney General Lanny A. Breuer of the Criminal Division.  “Law enforcement will continue to use innovative and responsible actions in our fight against cyber criminals and at the same time, we urge consumers to ensure they are continually taking prudent measures to guard against harm, including routinely updating anti-virus security protection.”

 

“Botnets and the cyber criminals who deploy them jeopardize the economic security of the United States and the dependability of the nation's information infrastructure,” said Shawn Henry, Executive Assistant Director of the FBI’s Criminal, Cyber, Response and Services Branch. “These actions to mitigate the threat posed by the Coreflood botnet are the first of their kind in the United States and reflect our commitment to being creative and proactive in making the Internet more secure.”

           

According to court filings, Coreflood is a particularly harmful type of malicious software that records keystrokes and private communications on a computer.  Once a computer is infected with Coreflood, it can be controlled remotely from another computer, known as a command and control (C & C) server.  A computer infected by Coreflood and subject to remote control is referred to as a “bot,” short for “robot.”  According to information contained in court filings, the group of all computers infected with Coreflood is known as the Coreflood botnet, which is believed to have been operating for nearly a decade and to have infected more than two million computers worldwide.

 

Coreflood steals usernames, passwords and other private personal and financial information allegedly used by the defendants for a variety of criminal purposes, including stealing funds from the compromised accounts.  In one example described in court filings, through the illegal monitoring of Internet communications between the user and the user’s bank, Coreflood was used to take over an online banking session and caused the fraudulent transfer of funds to a foreign account. 

 

In the enforcement actions announced today, five C & C servers that remotely controlled hundreds of thousands of infected computers were seized, as were 29 domain names used by the Coreflood botnet to communicate with the C & C servers.  As authorized by the TRO, the government replaced the illegal C & C servers with substitute servers to prevent Coreflood from causing further injury to the owners and users of infected computers and other third parties.

 

The Coreflood malware on a victim’s computer is programmed to request directions and commands from C & C servers on a routine basis.  New versions of the malware are introduced using the C & C servers on a regular basis, in an effort to stay ahead of security software and other virus updates.  If the C & C servers do not respond, the existing Coreflood malware continues to run on the victim’s computer, collecting personal and financial information.  The TRO authorizes the government to respond to these requests from infected computers in the United States with a command that temporarily stops the malware from running on the infected computer.  During that time, the defendants will not be able to introduce different versions of the Coreflood malware onto the infected computers.  By limiting the defendants ability to control the botnet, computer security providers will be given time to update their virus signatures and malicious software removal tools so that all victims can have a reliable tool available to them that removes the latest version of the malware from an infected computer.

 

The Department of Justice and FBI, working with Internet service providers around the country, is committed to identifying and notifying as many innocent victims as possible who have been infected with Coreflood, in order to avoid or minimize future fraud losses and identity theft resulting from Coreflood.  Identified owners of infected computers will also be told how to “opt out” from the TRO, if for some reason they want to keep Coreflood running on their computers.  At no time will law enforcement authorities access any information that may be stored on an infected computer.

 

While this enforcement action completely disabled the existing Coreflood botnet by seizing control from the criminals who ran it, this does not mean that Coreflood malware or similar forms of malware have been removed from the Internet entirely. Nor does it mean that criminals will not attempt to build another botnet using a different version of the Coreflood malware or other malware.  The best defense against such malware, and botnets in general, is for users to ensure their computers are protected by regularly-updated anti-virus security software.

 

The law enforcement actions announced today are the result of an ongoing criminal investigation by the FBI’s New Haven Division, in coordination with the U.S. Marshals Service.  Additional assistance was provided by Microsoft, the Internet Systems Consortium and other private industry partners.  The matter is being prosecuted by the U.S. Attorney’s Office for the District of Connecticut, led by Assistant U.S. Attorney Edward Chang, and attorneys from the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division.    

WASHINGTON – A U.S. Army contractor pleaded guilty to assault today in relation to stabbing another individual with a knife at Kandahar Airfield in Afghanistan, announced 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 of the FBI’s Washington Field Office.

 

Sean T. Brehm, 44, of Capetown, South Africa, pleaded guilty before U.S. District Judge Anthony J. Trenga to assault resulting in serious bodily injury.  At sentencing, scheduled for July 8, 2011, Brehm faces a maximum sentence of 10 years in prison.

 

According to court documents, the stabbing took place on Nov. 25, 2010.  At the time of the stabbing, Brehm was working as a contractor for DynCorp International LLC, a U.S. Army contractor in Afghanistan.  According to court documents, the stabbing resulted in serious bodily injury to the victim and the victim underwent emergency surgery immediately following the incident.

 

The defendant was charged under the Military Extraterritorial Jurisdiction Act (MEJA), a statute that gives U.S. courts jurisdiction to prosecute crimes committed outside the United States by, among others, contractors or subcontractors of the Department of Defense.

 

The case is being prosecuted by Senior Trial Attorney James S. Yoon of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Ronald L. Walutes Jr. for the Eastern District of Virginia.  The Criminal Division’s Office of International Affairs provided assistance.

 

The case was investigated by the FBI’s Washington Field Office.  The U.S. Army Criminal Investigation Division and the International Security Assistance Force Military Police conducted the military investigation.  The Office of Military Justice for Regional Command - South and 10th Mountain Division, and the Office of the Staff Judge Advocate for Regional Command - South provided invaluable assistance.

WASHINGTON – Four corporations involved in owning and operating a fleet of vessels regularly visiting New Orleans pleaded guilty today and agreed to pay a $1 million penalty and be banned from doing business in the United States for the next five years under the terms of a proposed plea agreement.

Stanships Inc. (Marshall Islands), Stanships Inc. (New York), Standard Shipping Inc. and Calmore Maritime Ltd., collectively the owners and operator of the M/V Americana, a Panamanian registered cargo vessel, each pleaded guilty today in New Orleans before U.S. District Judge Carl J. Barbier to a total of 32 felony counts for violations of the Act to Prevent Pollution from Ships, Ports and Waterways Safety Act and obstruction of justice.

According to the plea agreement, subject to approval by the court, the four corporations will be prohibited from further business in the United States during the maximum five year period of probation. The plea terms also require personal banning of the owner of the companies who is also a corporate officer in some of the companies owning or technically managing vessels during the probationary period. Of the $1 million penalty, $250,000 will be devoted to community service payments to help conservation, protection, restoration and management projects to benefit fish and wildlife habitats and resources in the Eastern District of Louisiana.

The government’s investigation of the M/V Americana started when a crew member told the U.S. Coast Guard during an inspection of the ship on Nov. 29, 2010, that the ship was illegally dumping sludge and oily waste overboard using a so-called “magic pipe” to bypass required pollution prevention equipment. The crew member provided the Coast Guard with cell phone photos taken at sea showing the use of the bypass. According to an agreed upon factual statement filed in court, the defendants have admitted the following:

• Sludge and oily waste from the vessel’s engines was transferred to a fuel tank and then deliberately pumped overboard.
• The ship had an unreported leak between a ballast and fuel tank that led to overboard discharges of oil contaminated waste from both tanks.
• A black “comet streak” stain of apparent oil was visible on the outside of the ship in the immediate vicinity of the overboard valve when the ship was in New Orleans in December 2010.
•  The metal bypass pipe used to dump oily waste overboard was hidden from view when the ship was in port.
• A false Oil Record Book was created to conceal the illegal discharges. Ships are required to keep an Oil Record Book in which internal transfers and overboard discharges are fully recorded. The log is regularly inspected by the Coast Guard to assure compliance with U.S. and international law and to make sure ships are not a threat to U.S. ports and waters.

The defendants also were charged with violating the Ports and Waterways Safety Act because they failed to report a hazardous situation that threatened U.S. ports and waters, involving the failure of the ship’s generators. After a voyage in which the ship had lost power for several days at sea, the ship arrived at the Southwest Pass, La. The master, who opposed proceeding to port until the problem was corrected, was directed by a shore-side manager to write an email indicating that the ship had two generators. This was communicated to the Coast Guard which then allowed the ship to enter the Mississippi River. However, the agency was not told that neither of the two generators was fully operational or able to power the ship, and that there was no backup since a third generator was completely inoperable. Because of the hazardous situation, the master ordered tug boats to guide the ship into port.

Stanships Inc. (Marshall Islands) is a repeat offender. It committed new crimes after it was sentenced on Sep. 29, 2010, for deliberate discharges in U.S. waters and concealing illegal pollution in falsified ship records from the M/V Doric Glory. In that case, U.S. District Judge Helen G. Berrigan ordered the defendant to implement a comprehensive environmental compliance plan and pay $700,000 in criminal fines and an additional $125,000 as community service payments. In pleading guilty, Stanships Inc. (Marshall Islands) admitted that it violated the terms of its probation. The M/V Doric Glory prosecution was also initiated by crew members. The court issued an award to the two whistleblowers under the Act to Prevent Pollution from Ships which provides that up to one-half of a criminal fine can be awarded to those providing information that leads to conviction.

“Together with our partners at the Coast Guard, Environmental Protection Agency, and United States Attorney’s Office, we are sending the message that we will vigorously prosecute deliberate violations of environmental and safety laws,” said Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice. “As a consequence of their violations of the law, Stanships’ vessels and related corporations will pay a substantial fine and be barred from doing business in the United States for the next five years.”

“The endangerment of our environment and quality of life resulting from repeat offenders is simply unacceptable and will not be tolerated. We will work aggressively with our partners in the U.S. Department of Justice Environment and Natural Resources Division, U. S. Coast Guard and EPA Criminal Investigative Division to ensure that our water, our rivers and wetlands remain safe for our citizens and for future generations,” said Jim Letten, U.S. Attorney for the Eastern District of Louisiana. 

“The outcome of this case clearly demonstrates the Coast Guard's commitment to work with our interagency partners to aggressively enforce all maritime anti-pollution laws. These federal laws are in place to protect the marine environment and America's waterways. It is especially disappointing to see a repeat offender violate these laws. This case is a testament to the dedication of all persons who were involved in resolving this matter including my legal staff, Coast Guard Investigative Service, Coast Guard Sector New Orleans, the U.S Department of Justice Environmental Crimes Section and U.S. Attorney's Office for the Eastern District of Louisiana,” said Rear Adm. Mary E. Landry, Eighth District Coast Guard commander.

“Today’s action demonstrates that neither the government nor the public will tolerate the flagrant and repeated violation of U.S. laws,” said Ivan J. Vikin, Special Agent in Charge of EPA’s criminal enforcement program in Louisiana.  “The government contends that the defendant not only failed to carry out the terms of its probation, it knowingly released oil into our oceans after the sentence was passed.  The oceans must be protected from shipping companies that look to cut corners by dumping waste improperly.”

“No matter how vast they seem, aquatic resources are still finite and the Coast Guard Investigative Service remains committed to their preservation,” said Damon Rodriguez, Coast Guard Investigative Service Gulf Region special agent in charge.

This case was investigated criminally by the U.S. Coast Guard Criminal Investigative Services and the EPA Criminal Investigation Division, with assistance from Sector New Orleans, Eight Coast Guard District Office of the Judge Advocate. The case was prosecuted by Assistant U.S. Attorneys Emily K. Greenfield and Dorothy Manning Taylor, and Senior Trial Attorney Richard A. Udell of the Environmental Crimes Section of Department of Justice Environment and Natural Resources Division.