District Not Recorded

WASHINGTON – A Raleigh, N.C., real estate speculator pleaded guilty to conspiring to rig bids for public real estate foreclosure auctions held in multiple counties in eastern North Carolina, the Department of Justice announced today.

 

Christopher J. Deans pleaded guilty today in U.S. District Court in Greenville, N.C., for participating in a conspiracy to rig bids during the real estate foreclosure auction process in eastern North Carolina from at least as early as April 2003 until at least April 2005. The primary purpose of the conspiracy was to suppress and eliminate competitive bidding on foreclosed properties and obtain selected real estate offered at public foreclosure auctions at non-competitive prices.

 

According to the charge, which was filed on July 29, 2010, Deans, an owner of Raleigh-based real estate investment companies, and co-conspirators agreed not to bid against each other during public real estate foreclosure auctions in eastern North Carolina. As part of the conspiracy, Deans and co-conspirators paid one another not to bid on foreclosed properties and received economic benefits from the rental and sale of real estate purchased through the rigged foreclosure auction process. The conspiracy resulted in the suppression of competitive bidding on foreclosed properties which caused foreclosing lienholders and certain homeowners to receive a lower price for properties sold through foreclosure actions, the department said.

 

The bid rigging violation with which Deans is charged carries a maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

 

The charge against Deans is the first to arise in an ongoing federal antitrust investigation of fraud and bidding irregularities in certain real estate auctions in the Eastern District of North Carolina. The investigation is being conducted by the Antitrust Division’s Atlanta Field Office and the FBI.

 

Anyone with information concerning bid rigging or fraud related to real estate foreclosure auctions should contact the Antitrust Division’s Atlanta Field Office at 404-331-7100 or visit www.justice.gov/atr/contact/newcase.htm.

WASHINGTON – The Justice Department today announced that it has reached an agreement with Wisconsin officials to help ensure that military service members and U.S. citizens living overseas have an opportunity to participate fully in the Nov. 2, 2010, federal general election.

 

The agreement, which was filed at the same time as a lawsuit by the Civil Rights Division, provides additional time – until Nov. 19, 2010 – for receipt of absentee ballots to ensure eligible military and overseas voters have sufficient time to cast and return their votes and to have them counted. The agreement also requires Wisconsin officials to take certain steps to ensure that all local election offices in the state send absentee ballots to military and overseas voters by no later than Oct. 1, 2010, by the means requested by the voter: i.e., by mail, email or fax.

Under the agreement, Wisconsin will provide a 49-day window for military and overseas voters to receive, mark and submit their ballots to ensure sufficient time to have their ballots counted.  To accomplish this, the agreement requires Wisconsin to both accelerate the date by which they will send ballots out to military and overseas voters to Oct. 1, 2010, and to add additional time -- until Nov. 19, 2010 -- for receipt of their absentee ballots.  Absent the agreement, military and overseas voters would have had much less time to receive and return their ballots. 

The lawsuit was brought under the Uniformed and Overseas Citizens Absentee Voting Act of 1986 (UOCAVA), as amended by the Military and Overseas Voter Empowerment Act of 2009 (MOVE Act). UOCAVA requires states to allow uniformed services voters (serving both overseas and within the United States) and overseas citizens to register to vote and to vote absentee for all elections for federal office.

“The department is fully committed to vigorously enforcing the MOVE Act, which is designed to remove barriers and give members of the uniformed services, their families and our citizens living overseas the opportunity for full participation in the elections of our nation’s leaders,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “I am extremely pleased that Wisconsin’s officials have worked cooperatively with the department and have agreed to measures that will afford immediate relief to ensure that the state’s military and overseas voters, many of whom are members of our armed forces and their families bravely serving our country around the world, will have the opportunity to have their votes counted in the upcoming election.”

 

The agreement, which still must be approved by the federal district court in Madison, Wis., resolved the department’s claims regarding compliance with UOCAVA in the Nov. 2, 2010, election. The agreement also commits the state to take steps to ensure compliance with UOCAVA in future federal elections and provide a report to the Department of Justice on those efforts.

 

In 2009, Congress enacted the MOVE Act, which made broad amendments to UOCAVA. Among those changes was a requirement that states transmit absentee ballots to voters covered under UOCAVA no later than 45 days before federal elections. Under the new law, states can apply to the Department of Defense for a hardship waiver of this requirement for a particular Federal election if the state’s primary election date prohibited it from sending ballots by the 45th day before the election; if a legal contest causes a delay in generating ballots; or if the state’ s constitution prohibits compliance. To obtain a waiver, states must 1) establish that one or more of these circumstances creates an undue hardship, and 2) present a comprehensive plan that provides UOCAVA voters sufficient time to receive and submit marked absentee ballots in time to have them counted in that election. Waiver determinations are made by the Department of Defense, after consulting with the Department of Justice.

 

Wisconsin sought a hardship waiver on grounds that its Sept. 14, 2010, primary date prohibited it from complying with the 45-day deadline specified by the MOVE Act. On Aug. 27, 2010, the Department of Defense denied Wisconsin’s request for a waiver, finding that under the MOVE Act although the state had shown an undue hardship for the Nov. 2, 2010, election, its proposed comprehensive plan did not afford sufficient time for UOCAVA voters to receive and submit absentee ballots in time to have them counted. Immediately following denial of the waiver application, the Department of Justice advised Wisconsin officials that the department had authorized litigation to enforce UOCAVA. Discussions with the state were initiated to resolve the matter, which led to the agreement filed today.

 

More information about UOCAVA and other federal voting laws is available on the Department of Justice web site at www.usdoj.gov/crt/voting/misc/activ_uoc.htm . Complaints may be reported to the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.

HONOLULU – The county of Kauai, Hawaii, has entered into a plea agreement to resolve alleged violations of the Endangered Species Act (ESA) and Migratory Bird Treaty Act (MBTA), the Justice Department announced today. The county today entered a plea of guilty to violating the MBTA by taking, that is killing or wounding, more than 18 migratory birds, specifically Newell’s shearwaters (known in the Hawaiian language as ‘a’o).

According to the court documents, the Newell’s shearwater (Puffinus auricularis newelli) is a seabird native to the Hawaiian Islands. The majority of the world’s population of Newell’s shearwaters nest on the island of Kauai, specifically in burrows on inland mountains. Young shearwaters leave these inland mountain nests and make their first flight to the sea in September through December each year, typically at night. The young birds use mountain air currents or physical drop offs to become airborne. If a young shearwater falls to the ground in a location without conditions such as those that occur in the inland mountains or at sea, it usually will be unable to regain flight.

The Newell’s shearwater is a threatened species protected under the ESA, and a migratory bird protected under the MBTA. The species is identified as endangered on the International Union for Conservation of Nature red list.

According to the information, it has been publicly documented since at least 1979 that fledgling Newell’s shearwaters are attracted to bright lights which often causes them to circle the lights and fly more passes across any nearby obstacles. This attraction may cause the birds to fly into the light or other obstacles near the light and thereby become killed or injured, or to fly around the lights until they fall to the ground exhausted where the bird may be killed by a car, predator or starvation. On approximately Aug. 3, 2005 and Sept. 16, 2005, as well as on various other dates thereafter, the county was notified by the U.S. Fish and Wildlife Service that its facilities, particularly the lighting at its facilities, were taking protected seabirds, including threatened Newell’s shearwaters. The county was advised that these takings violate both the MBTA and the ESA. The county was informed that it could prepare and submit an Habitat Conservation Plan (HCP) to apply for a permit that would authorize certain takings incidental to the operation of its facilities, and was given advice over a number of years that it could minimize takings by, among other things, shielding its lights.

As of Aug. 30, 2010, the county of Kauai had not shielded any of its lights, prepared an HCP or applied for a permit authorizing takings of any protected seabirds. Only on Aug. 31, 2010, did the county apply to participate in an island-wide HCP plan currently being developed with regard to seabirds.

The information specifies that during each of the past five years some Newell’s shearwaters have been killed, or otherwise taken, by lighting at facilities operated by the county, including but not limited to, the taking of at least one protected Newell’s shearwater on each of the following dates: Oct. 14, 19 and 28, 2005; Oct. 18, 20 and 21, 2006; Oct. 18 and 19, 2007; and Oct. 23, 2009.

Under the terms of the plea, the parties recommend the maximum statutory fine of $15,000 for the single count charged, and a period of probation of 30 months with specific conditions of probation intended to avoid additional violations during the period of probation. One set of conditions relate specifically to the use of lights at the county’s football stadiums and a second set relate to lights at all other county facilities, each covering a period of three fallout seasons (that is, Sept. 15 to Dec. 15 of 2010-2012).

For the football facilities, for 2010 the county agrees that night football games will not be played for all but four specific games within the fallout seasons this year. For the four identified games, they may play them at night with certain lighting restrictions, to include shielding the lights and monitoring. In this first year if shielding is not accomplished, the games may still be played provided that the county creates an escrow fund of $60,000, from which $10,000 per killed or seriously injured bird would be transferred to an account for use to benefit seabirds on Kauai. However, once six takings are reached, any remaining games of the four cannot be played at night. Starting with the 2011 football season for any night games all lights must be shielded and a similar escrow account funded. Once four takings that involve the downing of birds are reached, any remaining games cannot be played at night.

For all other facilities, the lights must be inventoried and measures must be taken to minimize and monitor for takings, all on a specific schedule. As of 2011, if such facility lights are to be used at night during the fallout season (Sept. 15 until Dec. 15), an escrow account of $100,000 must be funded, with an option to add additional funds in increments. Again, transfers would be made related to any takings that occur, from the escrow account to one for use to benefit seabirds on Kauai. If and when the fund is exhausted lights at facilities with takings cannot be turned on at night for the duration of the fallout season.

The plea also provides that the county will make a payment of $180,000 to partially repair the harm of past takings to an account to be established at the National Fish and Wildlife Foundation for use to benefit protected seabirds on Kauai, and a payment of $30,000 to reduce the harm from anticipated future takings within the period of probation and prior to the county acquiring an incidental take permit, to the Kauai Humane Society to augment its Save Our Shearwater program.

"The Department of Justice views the taking of protected wildlife as a serious violation of the law, and we are pleased that the county of Kauai is taking action to reduce the risk of harm to this threatened seabird," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "The county’s action will enable residents to continue to use county facilities, while protecting this native species that is part of Hawaii’s cultural and natural heritage."

The county faced a potential maximum sentence of five years probation and statutory maximum fines of $15,000 to $25,000 for each MBTA or ESA violation – more than $720,000 in total – for which it might have been found guilty after trial. In addition, mandatory conditions of any sentence of probation require that no further violations of law be committed during the period of probation.

The Endangered Species Act prohibits the unauthorized taking, including harming and harassing, of species listed as threatened or endangered. The Migratory Bird Treaty Act prohibits the unauthorized taking, including wounding or killing, of bird species listed as migratory.

Assistant Attorney General Moreno credited special agents from the U.S. Fish and Wildlife Service for the investigation of the case culminating in the information and agreement.

The case is being prosecuted by the Environmental Crime Section, Environment and Natural Resources Division, U.S. Department of Justice.

RICHMOND , Va. – Three principals of a group of businesses that acquired and marketed life settlements to investors were arrested and charged in an 18-count indictment for their alleged roles in a $100 million fraud scheme with more than 800 victims across the United States and Canada.

The charges were announced today by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Criminal Division.

An indictment unsealed today in U.S. District Court for the Eastern District of Virginia charges Christian M. Allmendinger, 39; Adley H. Abdulwahab, 35; and David C. White, 40, with one count of conspiracy to commit mail fraud, six counts of mail fraud, one count of conspiracy to commit money laundering, six counts of money laundering and four counts of securities fraud. The indictment also seeks forfeiture of approximately $103 million from all three defendants.

“Today’s announcement is another example of how allegations in a national financial fraud case can directly harm everyday people on Main Street,” said U.S. Attorney MacBride. “The alleged victims in this case are not banks or professional investors taking a calculated risk. Instead, this case involves elderly retirees and others who gave most – and in some cases, all – of their life savings and have seen it all disappear.”

“These defendants allegedly defrauded unsuspecting investors of more than $100 million, often for their own personal enrichment,” said Assistant Attorney General Breuer. “As a result of their alleged scheme, more than 800 victims across the United States and Canada were cheated out of their savings and deceived.  Through the Financial Fraud Enforcement Task Force we are continuing to root out financial fraud in all its forms.” 

According to the indictment, Allmendinger, Abdulwahab, White and their co-conspirators were principals with A&O Resource Management Ltd., and various related entities, which sold life settlement investments. The defendants allegedly engaged in a scheme to defraud investors by making misrepresentations about such things as A&O’s prior success, its size and office locations, its number of employees, the risks of its investment offerings, and its safekeeping and use of investor funds. The indictment further alleges that when state regulators began to scrutinize A&O’s investment products, Abdulwahab and his co-conspirators manufactured a pair of sham transactions in which A&O was “sold” to a shell corporate entity named Blue Dymond and later to another shell corporate entity named Physician’s Trust. It is alleged that following these sham transactions, White became the figurehead president of A&O and Physician’s Trust, but that A&O was still secretly controlled by Abdulwahab and other co-conspirators. The indictment also alleges that Allmendinger, Abdulwahab and their co-conspirators routinely used investor funds for personal enrichment.

If convicted of all the charges in the indictment, Allmendinger, Abdulwahab and White face up to 20 years in prison on each count except the four securities fraud counts, on which they face up to 5 years in prison per count.

In addition to Allmendinger, Abdulwahab and White, four other individuals have been charged with criminal offenses in connection with the A&O fraud scheme. Brent Oncale, 36, of Houston, was charged in a two-count criminal information with conspiracy to commit mail fraud and conspiracy to commit money laundering for his role as vice president of A&O. Russell E. Mackert, 51, of Spring, Texas, was charged in a two-count criminal information with conspiracy to commit mail fraud and bulk cash smuggling for his role as an attorney in the A&O scheme. Eric M. Kurz, 46, of The Woodlands, Texas, was charged in a one-count criminal information with conspiracy to commit mail fraud and money laundering for his actions as a wholesaler of A&O investment products. Tomme Bromseth, 68, of Blackstone, Va., was charged in a two-count criminal information with mail fraud and structuring financial transactions to evade reporting requirements for his role as an A&O sales agent in the Richmond area. In addition to the charging documents, signed plea agreements for Mackert, Oncale, Kurz and Bromseth were filed in U.S. District Court for the Eastern District of Virginia. Related court hearings have yet to be scheduled.

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

An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless and until convicted through due process of law.

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

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

WASHINGTON – Una residente del área de Miami que era propietaria de una clínica de infusiones para el VIH y la operaba se declaró culpable hoy por su participación en un ardid de fraude contra Medicare de $23 millones de dólares asociado a infusiones para el VIH, anunciaron hoy el Departamento de Justicia y el Departamento de Salud y Servicios Humanos [Health and Human Services (HHS)].

Flor Crisólogo, 58, se declaró culpable ante el Juez Magistrado Barry L. Garber en el Tribunal Federal de Distrito en Miami de un cargo de conspirar para cometer fraude de servicios médicos. Crisólogo fue acusada originalmente en una acusación formal de mayo de 2010.

Según los documentos de declaración de culpabilidad, Crisólogo era propietaria y operadora de J & F Community Medical Center Inc. Crisólogo admitió haber presentado aproximadamente $23 millones de dólares en reclamos falsos y fraudulentos a Medicare por servicios de inyecciones e infusiones de VIH supuestamente brindados a través de J & F. Según el expediente judicial, Crisólogo contrató a un médico en J & F y conspiró con el médico y terceros para solicitar pruebas innecesarias, firmar análisis médicos y formularios de diagnóstico falsos y autorizar tratamientos para que pareciera que los pacientes, que eran beneficiarios de Medicare, estaban recibiendo servicios médicos. Los servicios incluían terapias médicamente innecesarias de inyecciones e infusiones. Crisólogo admitió que ella y sus conspiradores les pagaron comisiones ilícitas a beneficiarios de Medicare para inducirlos a declarar que habían recibido servicios legítimos en la clínica cuando, en realidad, los servicios de infusión para el VIH no eran provistos o no eran médicamente necesarios.

La sentencia máxima por conspirar para cometer fraude de servicios médicos es de 10 años de prisión. Crisólogo también enfrenta multas y la confiscación de cualquier propiedad o ganancias derivadas de sus actividades criminales. La lectura de la sentencia está programada para el 23 de noviembre de 2010.

La declaración de culpabilidad de hoy fue anunciada por el Secretario de Justicia Auxiliar Lanny A. Breuer de la División Criminal; el Fiscal Federal Wifredo A. Ferrer del Distrito Sur de Florida; John V. Gillies, Agente Especial a Cargo de la Oficina Local de Miami del Buró Federal de Investigaciones [Federal Bureau of Investigation (FBI)]; y el Agente Especial a Cargo Christopher Dennis de la Oficina de Investigaciones de Miami de la Oficina del Inspector General [Office of the Inspector General (OIG)] del HHS.

Está a cargo de la acusación en el caso el Abogado Litigante Joseph S. Beemsterboer de la Sección de Fraude de la División Criminal. El caso fue investigado por el FBI y la Oficina del Inspector General del Departamento de Salud y Servicios Humanos (HHS-OIG).

Desde su creación en marzo de 2007, las operaciones de la Fuerza de Ataque de Fraude contra Medicare en siete distritos lograron la acusación formal de 810 personas que, en conjunto, facturaron fraudulentamente al programa Medicare más de $1.85 billones de dólares. Además, los Centros para Servicios de Medicare y Medicaid del HHS, en trabajo conjunto con la HHS-OIG, están tomando medidas para lograr una mayor responsabilización y una menor presencia de proveedores fraudulentos.

Para obtener màs información sobre el Equipo de Acción, Prevención y Control de Fraude de Servicios Médicos [Healthcare Fraud Prevention and Enforcement Action Team (HEAT)], visite: www.stopmedicarefraud.gov.

WASHINGTON – A Miami-area resident who owned and operated an HIV infusion clinic pleaded guilty today for her participation in a $23 million HIV infusion Medicare fraud scheme, the Departments of Justice and Health and Human Services announced today.

Flor Crisologo, 58, pleaded guilty before Magistrate Judge Barry L. Garber in U.S. District Court in Miami to one count of conspiracy to commit health care fraud. Crisologo was originally charged in a May 2010 indictment.

According to the plea documents, Crisologo was the owner and operator of J & F Community Medical Center Inc. Crisologo admitted that she submitted approximately $23 million in false and fraudulent claims to Medicare for HIV injection and infusion services purportedly provided through J & F. According to court documents, Crisologo hired a physician at J & F and conspired with the physician and others to order unnecessary tests, sign false medical analyses and diagnosis forms, and authorize treatments to make it appear that medical services were being provided to patients who were Medicare beneficiaries. The services included medically unnecessary injection and infusion therapies. Crisologo admitted that she and her conspirators paid Medicare beneficiaries kickbacks to induce the beneficiaries to claim they received legitimate services at the clinic when in fact the HIV infusion services were either not provided or were not medically necessary.

The maximum sentence for conspiracy to commit health care fraud is 10 years in prison. Crisologo also faces fines and forfeiture of any property or proceeds derived from her criminal activities. Sentencing is scheduled for Nov. 23, 2010.

Today’s guilty plea 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 (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.

Since their inception in March 2007, Medicare Fraud Strike Force operations in seven districts have obtained indictments of more than 810 individuals who collectively have falsely billed the Medicare program for more than $1.85 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 – The Justice Department today announced a comprehensive settlement agreement with McNeese State University and the Board of Supervisors of the University of Louisiana System under the Americans with Disabilities Act (ADA).

The settlement agreement resolves a compliance review initiated by the United States in 2008. The United States initiated an investigation of the university after the state attorney general’s office took the position – in private ADA litigation against the campus – that it was not required to have an accessible toilet room in its primary student union building. Under the agreement, McNeese, a public university located in Lake Charles, La., will continue its efforts to come into compliance with the access provisions of Title II of the ADA. The university will take a number of steps to improve access for students, visitors and employees with disabilities including:

• Bring all newly constructed facilities into compliance with the ADA Standards for Accessible Design;
• Develop and implement a campus wide Physical Access Plan to bring all covered facilities into compliance with the terms of this agreement and Title II of the ADA. The Physical Access Plan will include specific remedial actions and time tables to ensure that the university’s programs, services and activities afford program access by no later than Sept. 1, 2016;
• Display information on its website about disability access and create and/or update its campus-wide emergency evacuation, sheltering, and shelter-in-place plans for individuals with disabilities; and
• Designate an ADA coordinator, to ensure that the university meets the terms of this Agreement and the requirements of the ADA.

In addition to the specific remedial work required by this agreement, the board of supervisors (in conjunction with the Louisiana Division of Administration/Office of Facility Planning) has commenced procedural changes to emphasize ADA accessibility rules and regulations for capital outlay projects for the University of Louisiana System.

"Full access to all programs and services is a civil right enjoyed by all, including individuals with disabilities. We are pleased that McNeese is taking steps to ensure that individuals with disabilities are guaranteed full access to its programs, services and activities, and we applaud the board of supervisors for taking steps to ensure access at all of the University of Louisiana campuses," said Thomas Perez, Assistant Attorney General for the Civil Rights Division.

"This a positive move by McNeese and the board of supervisors.  Their efforts reflect a commitment to ensuring that all individuals with disabilities have full access to the university," said Stephanie A. Finley, U.S. Attorney for the Western District of Louisiana."

It is a top priority of the U.S. Attorney’s Office to enforce the laws that guarantee that persons with disabilities have equal opportunity to pursue their education."

The ADA protects individuals with disabilities from discrimination in all activities of state and local government entities, including those activities housed in public schools and universities. For more information about the ADA call the department’s toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD), or access the ADA website at www.ada.gov

A former employee of a national bank pleaded guilty today for his participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.

According to plea proceedings today in the U.S. District Court in New York City, Douglas Lee Campbell engaged in separate bid-rigging and fraud conspiracies related to the provision of a type of contract, known as an investment agreement, to public entities throughout the United States, such as state, county and local governments and agencies. Campbell also pleaded guilty to one count of wire fraud. According to the plea agreement, Campbell has agreed to cooperate with the ongoing investigation.

According to court documents, the bank that employed Campbell was a provider of investment agreements and other municipal finance contracts, such as swaps, to public entities. Public entities seek to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issued, to raise money for, among other things, public projects. Public entities typically hire a broker to conduct a competitive bidding process for the award of the investment agreements to invest such money. Competitive bidding for these agreements is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds

The department said in court documents that Campbell worked in the bank’s municipal derivatives group as senior vice president and a marketer of investment agreements and other municipal finance contracts. According to the court documents, Campbell engaged in a bid-rigging conspiracy from at least as early as 1998 until approximately September 2005. As a part of the bid-rigging conspiracy, Campbell and co-conspirators designated in advance which co-conspirator provider would be the winning bidder for certain investment agreements and other municipal finance contracts brokered by Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products. CDR is a Beverly Hills, Calif.-based financial products and services firm. Campbell also agreed to submit intentionally losing bids to CDR on investment agreements or other municipal finance contracts that were steered to other providers, giving the false appearance that these deals had been bid competitively in accordance with relevant Treasury regulations.

As a part of the bid-rigging conspiracy, kickbacks in the form of inflated or unearned fees were paid by Campbell’s employer to CDR in exchange for assistance in controlling the bidding process and ensuring that certain co-conspirator providers won the bids they were allocated.

According to the court documents, Campbell also participated in a fraud conspiracy with CDR from at least as early as 1998 until approximately September 2005. As part of this conspiracy, CDR gave Campbell information about the prices, price levels or conditions in competitors’ bids, a practice known as a “last look,” which is explicitly prohibited by U.S. Treasury regulations. In exchange for the information, Campbell’s employer paid kickbacks to CDR. Campbell also submitted intentionally losing bids to CDR for certain investment agreements to make it appear that his employer had competed for those agreement s or contracts, when in fact, it had not. As a result of the bid manipulation, Campbell’s employer won investment agreements and other municipal finance contracts at artificially determined price levels, which deprived municipal issuers of money and property.

The court documents also charge that Campbell and co-conspirators misrepresented to municipal issuers or their bond counsel that the bidding process was in compliance with U.S. Treasury regulations. This caused the municipal issuers to award investment agreements and other municipal finance contracts to providers that otherwise would not have been awarded the contracts if the issuers had true and accurate information regarding the bidding process. Such conduct caused municipal issuers to file inaccurate reports with the Internal Revenue Service (IRS) and thus placed the tax-exempt status of the underlying bonds in jeopardy.

The bid-rigging conspiracy for which Campbell is charged carries a maximum penalty of 10 years in prison and a $1 million fine. The fraud conspiracy for which Campbell is charged carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge carries a maximum penalty of 20 years in prison and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

This is the seventh guilty plea to arise from an ongoing investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI and IRS Criminal Investigation. The department is coordinating its investigation with the Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

Three former employees of CDR have pleaded guilty to bid-rigging and fraud conspiracies in relation to the ongoing investigation. Three other individuals have pleaded guilty to charges related to the ongoing investigation. In addition, three former financial services executives were indicted on July 27, 2010, for participating in fraud schemes and conspiracies related to the bidding for investment agreements. In October 2009, CDR, two of its employees and one former employee were charged for participating in bid-rigging and fraud conspiracies and related crimes. The CDR trial is scheduled to begin Sept. 12, 2011.

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

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-264-0390 or visit www.justice.gov/atr/contact/newcase.htm , or the FBI at 212-384-5000.

WASHINGTON - A federal inmate was sentenced today in Kansas City, Mo., to 96 months in prison for obstructing justice by making false statements and creating false evidence in connection with another criminal case in which the inmate was charged, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.

U.S. District Court Judge Dean Whipple also sentenced Margie P. Shephard, 46, to three years of supervised release following the prison term.  In the underlying identity theft case in which she was charged, Shephard was sentenced to 24 months in prison to run consecutive to the obstruction sentence, 60 months in prison to run concurrent with the obstruction sentence and three years of supervised release.

Shephard pleaded guilty on Feb. 23, 2010, in the Western District of Missouri to one count of endeavoring to obstruct the administration of justice in connection with the identity theft prosecution of her.  Shephard previously pleaded guilty to one count of conspiracy to commit identity theft and one count of aggravated identity theft.  At the time of the obstruction offense, Shephard was in federal custody and awaiting trial on the identity theft charges, which were brought by the U.S. Attorney’s Office for the Western District of Missouri. 

According to court documents, Shephard admitted that from June 29, 2007, to Aug. 7, 2007, she operated a scheme to manufacture counterfeit payroll checks in the names of identity theft victims, and pass the checks in order to obtain money.  According to the plea agreement, Shephard admitted that from approximately April 2009 to January 2010, she gave false statements and provided physical evidence to the Department of Justice Office of the Inspector General (DOJ-OIG), falsely alleging that a federal government employee was engaged in an identity theft scheme.  Shephard admitted she provided this false evidence to the DOJ-OIG in an attempt to persuade the U.S. Attorney’s Office to request a reduction in her prison sentence in the pending conspiracy and identity theft case.

Shephard’s actions caused the recusal of the U.S. Attorney’s Office from the investigation of her false allegations, the continuance of the underlying criminal case against her while the allegations were investigated, and the use of substantial OIG resources in investigating her claims.  Shephard admitted she continued to provide false statements and physical evidence that she knew was being provided to a grand jury and to the court, as well as attempted to convince others to manufacture false evidence to support her allegations.  Ultimately, the government determined that her allegations about an identity theft scheme involving a federal government employee were not true.

The obstruction case was prosecuted by Senior Trial Attorney Richard C. Pilger of the Criminal Division’s Public Integrity Section, and was investigated by the DOJ-OIG.  The underlying conspiracy and identity theft case is being prosecuted by Assistant U.S. Attorney Daniel M. Nelson of the Western District of Missouri, and was investigated by the U.S. Postal Inspection Service and local law enforcement authorities. 

SACRAMENTO, Calif. – Eric Clawson, 28, of San Francisco, was sentenced today by U.S. District Court Judge Morrison C. England, Jr., for depriving the civil rights of an African-American man when he assaulted the victim in a bar. During the same proceeding, Clawson pleaded guilty in an unrelated case to one count of mail fraud. Judge England sentenced the defendant to a combined term of 37 months imprisonment and three years of supervised release. The defendant was also ordered to pay restitution in the amount of $92,804 for the mail fraud conviction.

On March 24, 2010, following a three-day trial, a federal jury convicted Clawson of the federal hate crime charge. The evidence at trial showed that on the evening of July 6, 2008, Clawson entered Riley’s Bar & Grill in Chico, Calif., and used a racially-derogatory term to object to the presence of the victim, who was a complete stranger to the defendant. Clawson repeated this slur several times before approaching the victim and punching him in the face without any provocation. The assault rendered the victim unconscious and inflicted injuries to his face and mouth. A second defendant and associate of Clawson, Joe Grivette, who was with Clawson when the assault took place, previously pleaded guilty on March 15, 2010, to a related charge of misprision of a felony.

"Racial violence is offensive to our nation’s fundamental values," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Justice Department is committed to vigorously prosecuting the federal laws prohibiting violent acts motivated by hate."

With respect to the mail fraud charge, Clawson fraudulently purchased two properties in Chico in 2007. Clawson knowingly signed loan applications that contained false employment histories and inflated income. He also falsely claimed he would occupy the second property as his primary residence. Falsified documents were submitted to lenders in order to obtain the loans.

"The defendant’s unprovoked racial attack on a fellow citizen who was patronizing a commercial establishment is precisely the sort of crime that the federal civil rights laws were intended to cover," said U.S. Attorney for the Eastern District of California Benjamin B. Wagner. "Prosecuting hate crimes and mortgage fraud are two priorities of this U.S. Attorney’s Office. That we were able, in a single proceeding, to hold a defendant accountable for both types of offenses indicates that our focus on these crimes is yielding results."

This case was prosecuted by Assistant U.S. Attorney Russell Carlberg of the U.S. Attorney’s Office for the Eastern District of California and Trial Attorney Edward Chung of the Civil Rights Division. The case was investigated by FBI Special Agent Mark Roberts and officers of the Butte County Sheriff’s Department and the Chico Police Department.

WASHINGTON - Jason Jewell, 31, of Frankfort, Ind., was sentenced today to six years in prison and a lifetime of supervised release for possession and transportation of child pornography, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Timothy M. Morrison of the Southern District of Indiana.

Jewell was sentenced by U.S. District Court Judge William T. Lawrence in the Southern District of Indiana. Before being sentenced by the court, Jewell entered a guilty plea to a two-count criminal information charging him with transportation and possession of child pornography.

According to court documents, in June 2009, an undercover agent using a peer to peer file sharing program was able to download child pornography images and videos directly from Jewell’s computer. A search warrant was subsequently executed and thousands of child pornography images and hundreds of child pornography video files were found on Jewell’s computer. Jewell admitted to law enforcement officers that he actively distributed and received the files using the peer to peer program.

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

The case was prosecuted by Trial Attorney Mi Yung Park of CEOS and Assistant U.S. Attorney Steven D. DeBrota of the Southern District of Indiana. The case was investigated by the FBI.

A former agent of a financial products and services company pleaded guilty today for his participation in fraud conspiracies related to contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.

According to plea proceedings today in U.S. District Court in New York City, Adrian Scott-Jones, a resident of Morriston, Fla., pleaded guilty to participating in two separate fraud conspiracies with companies that provide a type of contract, known as an investment agreement, to public entities throughout the United States, such as state, county and local governments and agencies. These public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they issued to raise money for, among other things, public projects. Scott-Jones also pleaded guilty to one count of wire fraud. According to the plea agreement, Scott-Jones has agreed to cooperate with the ongoing investigation.

The department said in court documents that Scott-Jones’ former company, located in North Palm Beach and Ocala, Fla., marketed financial products and services, including services as a broker or advisor to various public entities that issue municipal bonds. Public entities typically hire a broker to conduct a competitive bidding process for the award of investment agreements. Major financial institutions, including banks, investment banks, insurance companies and financial services companies, are among the providers of investment agreements and other related municipal finance contracts. Competitive bidding for these agreements is the subject of regulations issued by the U.S. Department of the Treasury and is related to the tax-exempt status of the bonds.

According to court documents, Scott-Jones participated in one fraud conspiracy from as early as September 2001 until at least November 2006, and in a second fraud conspiracy from as early as August 1999 until at least November 2006. In each conspiracy, Scott-Jones gave co-conspirator providers information about the prices, price levels or conditions in competitors’ bids, a practice known as a "last look," which is explicitly prohibited by U.S. Treasury regulations. Scott-Jones also solicited and received intentionally losing bids for certain investment agreements and other municipal finance contracts. As a result of the bid manipulation, the co-conspirator providers won contracts at artificially determined price levels, which deprived municipal issuers of money and property.

The court documents also charge that Scott-Jones and co-conspirators misrepresented to municipal issuers or their bond counsel that the bidding process was in compliance with U.S. Treasury regulations. This caused the municipal issuers to award investment agreements and other municipal finance contracts to providers that otherwise would not have been awarded the contracts if the issuers had true and accurate information regarding the bidding process. Such conduct caused municipal issuers to file inaccurate reports with the Internal Revenue Service (IRS) and thus placed the tax-exempt status of the underlying bonds in jeopardy.

Each of the fraud conspiracies for which Scott-Jones is charged carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge carries a maximum penalty of 20 years in prison and a $250,000 fine. The maximum fines for each of these offenses may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

This is the sixth guilty plea to arise from an ongoing investigation into the municipal bonds industry, which is being conducted by the Antitrust Division’s New York Field Office, the FBI and IRS Criminal Investigation. The department is coordinating its investigation with the Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

Three former employees of Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products, a Beverly Hills, Calif.-based financial products and services firm that acted as a broker of investment agreements and other municipal finance agreements, have pleaded guilty to bid-rigging and fraud conspiracies in relation to the ongoing investigation. Two other individuals have also pleaded guilty to charges related to the ongoing investigation.

As a result of the ongoing investigation, three former financial services executives were indicted on July 27, 2010, for participating in fraud schemes and conspiracies related to the bidding for investment agreements. In addition, CDR, two of its employees and one former employee were charged in October 2009 for participating in bid-rigging and fraud conspiracies and related crimes. The CDR trial is scheduled to begin on Sept. 12, 2011.

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

Anyone with information concerning bid rigging and related offenses in any financial markets should contact the Antitrust Division’s New York Field Office at 212-264-0390 or visit www.justice.gov/atr/contact/newcase.htm, or the FBI at 212-384-5000.

WASHINGTON – The Justice Department today announced that the Housing Authority for the city of Eastman, Ga., (EHA) has agreed to pay up to $320,000 to resolve allegations that it engaged in a pattern or practice of discriminating against applicants for housing and tenants based on race. The EHA is a public housing authority that provides housing for persons of low income in Dodge County, Ga. The EHA owns and maintains eight housing complexes in the city of Eastman and the neighboring town of Rhine, Ga.

The settlement was filed today in the U.S. District Court in Dublin, Ga., in conjunction with a complaint made by the Justice Department under the Fair Housing Act. The complaint alleges that the EHA maintained racially segregated housing by assigning applicants to vacant units based on race, rather than in order of their placement on the EHA’s waiting list. The complaint also alleges that the EHA subjected African-American tenants to inferior terms and conditions of rental.

"Our nation’s laws have long prohibited housing discrimination based on race. Individuals who seek public housing assistance have the right to know that they will not be treated to in a discriminatory fashion when they do so," said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. "The department will continue its vigorous enforcement of the Fair Housing Act."

"Every citizen’s fundamental right to access to fair housing is one of the cornerstones of American society" said U.S. Attorney for the Southern District of Georgia Edward J. Tarver.  "Public housing officials must ensure that all citizens are treated in a fair and equitable manner without regard to race or any other prohibited factor."

Upon court approval, the settlement, which is in the form of a consent decree, will require the EHA to implement nondiscriminatory policies and procedures to ensure compliance with the Fair Housing Act and to ensure that EHA housing units are made available for rent on an equal basis and on the same terms and conditions for all persons, irrespective of race. The EHA will also provide training to employees responsible for making housing decisions on the nondiscriminatory policies and procedures, the consent decree, and the Fair Housing Act.

In addition, the EHA will establish a $320,000 fund to compensate individuals who suffered damages as a result of the EHA’s conduct.

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

WASHINGTON -- Cisco Systems and Westcon Group North America (formerly d.b.a. Comstor) have agreed to pay the United States $48 million to settle claims that they made misrepresentations to the General Services Administration (GSA) and other federal agencies in violation of the False Claims Act, the Justice Department announced today.

Today's civil settlement resolves the United States' assertions that Cisco and Westcon knowingly provided incomplete information to GSA contracting officers during negotiations in regard to Westcon's contract with the GSA, which resulted in defective pricing of Cisco products and submission of false claims to the United States.

"Contractors that do business with the United States must deal fairly with federal agencies," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "When contractors provide incomplete and untruthful information to the government, we will take action to restore the integrity of the procurement process and protect taxpayer dollars."

"This district has been aggressively pursuing cases involving defective pricing by contractors," said Jane W. Duke, U.S. Attorney for the Eastern District of Arkansas. "The prices paid by government agencies for commercial products are ultimately borne by the taxpayers, and the producers and sellers of those products must be held accountable for any questionable practices."

As a part of this settlement, the United States has agreed to dismiss a whistleblower lawsuit filed in 2004 in the United States District Court for the Eastern District of Arkansas, United States ex rel. Rille. v. Cisco Systems, Inc.

"Overcharging the government results in waste of taxpayer dollars," said Brian D. Miller, GSA Inspector General. "Our auditors and special agents keep vigilant watch to ensure contractors stay honest."

The investigation and settlement of this matter were jointly handled by the Justice Department's Civil Division and the Office of the U.S. Attorney for the Eastern District of Arkansas, with assistance from the GSA's Office of Inspector General, the Department of Energy's Office of Inspector General, the Defense Criminal Investigative Service and the Defense Contract Audit Agency.

WASHINGTON – The Justice Department announced that a federal grand jury in Honolulu indicted Mordechai Orian, an Israeli national; Pranee Tubchumpol, Shane Germann and Sam Wongsesanit of Global Horizons Manpower Inc., located in Los Angeles; and Thai labor recruiters Ratawan Chunharutai and Podjanee Sinchai for engaging in a conspiracy to commit forced labor and document servitude. The charges arise from the defendants’ alleged scheme to coerce the labor and services of approximately 400 Thai nationals brought by the defendants to the United States from Thailand from May 2004 through September 2005 to work on farms across the country under the U.S. federal agricultural guest worker program. Orian, Tubchumpol and Chunharutai are also charged with three substantive counts of compelling the labor of three Thai guest workers.

If convicted, Orian and Tubchumpol each face maximum sentences of 70 years in prison, Chunharutai faces a maximum sentence of 65 years in prison, Germann and Wongsesanit each face a maximum sentence of 10 years in prison, and Sinchai, who was recently charged in Thailand with multiple counts of recruitment fraud, faces a maximum sentence of five years in prison if convicted in the United States.

The indictment alleges that the defendants conspired and devised a scheme to obtain the labor of approximately 400 Thai nationals by enticing them to come to the United States with false promises of lucrative jobs, and then maintaining their labor at farms in Washington and Hawaii through threats of serious economic harm. The defendants arranged for the Thai workers to pay high recruitment fees, which were financed by debts secured with the workers’ family property and homes. Significant portions of these fees went to the defendants themselves. After arrival in the United States, the defendants confiscated the Thai nationals’ passports and failed to honor the employment contracts. The defendants maintained the Thai nationals’ labor by threatening to send them back to Thailand, knowing they would face serious economic harms created by the debts.

The indictment also alleges that the defendants confined a group of Thai guest workers at Maui Pineapple Farm and demanded an additional fee of $3,750 to keep their jobs with Global Horizons. Those workers who refused to pay the additional fee were sent back home to Thailand with unpaid debts, subjecting them to the high risk of losing their family homes and land.

This case has been investigated by the Honolulu Division of the FBI. This case is being prosecuted by trial attorneys Susan French and Kevonne Small of the Criminal Section of the Civil Rights Division and Susan Cushman of the U.S. Attorney’s Office in the District of Hawaii. Services to victims have been provided by the Thai Community Development Center in Los Angeles.

The charges, in a five-count indictment, are merely accusations, and the defendants are presumed innocent unless and until proven guilty. 

WASHINGTON — Polar Air Cargo LLC has agreed to plead guilty and to pay a $17.4 million criminal fine for its role in a conspiracy to fix prices in the air transportation industry, the Department of Justice announced today.

According to a one-count felony charge filed today in U.S. District Court for the District of Columbia, Polar Air Cargo LLC’s co-conspirators engaged in a conspiracy to fix the cargo rates charged to certain customers for international air cargo shipments between the United States and Australia from at least as early as Jan. 1, 2000, and continuing until at least Feb. 14, 2006. Polar Air Cargo LLC, an American airline based in Long Beach, Calif., joined and participated in the conspiracy from at least as early as Jan. 1, 2000, until April 30, 2003. Under the plea agreement, which is subject to court approval, Polar Air Cargo LLC has agreed to cooperate with the department’s ongoing antitrust investigation.

Air cargo carriers transport a variety of cargo shipments, such as heavy equipment, perishable commodities and consumer goods, on scheduled international flights.

According to the charge, Polar Air Cargo LLC carried out the conspiracy by agreeing during meetings, conversations and communications on certain components of cargo rates for shipments between the United States and Australia and by levying cargo rates in accordance with the agreements reached. As a part of the conspiracy, Polar Air Cargo LLC monitored and enforced adherence to the agreed-upon rates.

Polar Air Cargo LLC is charged with price fixing in violation of the Sherman Act, which carries a maximum fine of $10 million for corporations for offenses committed before June 22, 2004. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Including today’s charge, as a result of this investigation, a total of 17 airlines have been charged in the Justice Department’s ongoing investigation into price fixing in the air transportation industry. To date, more than $1.6 billion in criminal fines have been imposed and four executives have been sentenced to serve prison time. Charges are pending against three other executives.

The airlines that have pleaded guilty, as a result of the department’s investigation into the air transportation industry are: British Airways Plc, Korean Air Lines Co. Ltd., Qantas Airways Limited, Japan Airlines International Co. Ltd., Martinair Holland N.V., Cathay Pacific Airways Limited, SAS Cargo Group A/S, Société Air France, Koninklijke Luchtvaart Maatschappij N.V. (KLM Royal Dutch Airlines), EL AL Israel Airlines Ltd., LAN Cargo S.A., Aerolinhas Brasileiras S.A., Cargolux Airlines International S.A., Nippon Cargo Airlines Co. Ltd., Northwest Airlines LLC and Asiana Airlines Inc. Airline executives who have pleaded guilty as a result of the investigation are Bruce McCaffrey of Qantas, Keith Packer of British Airways, Franciscus Johannes de Jong of Martinair and Timothy Pfeil of SAS. On Aug. 12, 2009, Jan Lillieborg, a citizen and resident of Sweden and former vice president of global sales for SAS Cargo, was indicted for participating in a conspiracy to suppress and eliminate competition by allocating customers and coordinating surcharge increases for international air shipments to and from the United States. On Aug. 26, 2010, Joo Ahn Kang, former president of Asiana, and Chung Sik Kwak, former vice president of the Americas region of Asiana, both citizens and residents of the Republic of Korea, were indicted for participating in a conspiracy to suppress and eliminate competition by fixing passenger airfares for travel between the United States and Korea.

Today’s charge is the result of a joint investigation into the air transportation industry being conducted by the Antitrust Division’s National Criminal Enforcement Section, the FBI’s Washington Field Office, the Department of Transportation’s Office of Inspector General and the U.S. Postal Service’s Office of Inspector General. Anyone with information concerning price fixing or other anticompetitive conduct in the air transportation industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694 or visit www.justice.gov/atr/contact/newcase.htm or call the FBI’s Washington Field Office at 202-278-2000.

WASHINGTON - El Juez Federal de Distrito Alexander Williams Jr. sentenció hoy a Andrés Echevarria, alias "B-Boy" y "King B-Boy," 23, de Brooklyn, N.Y., a 228 meses de prisión, seguidos de cinco años de libertad bajo supervisión, por conspirar para participar en una empresa de delincuencia organizada en conexión con sus actividades pandilleras como miembro de la pandilla "Nación Todopoderosa de Reyes y Reinas Latinos".

El 27 de agosto de 2010, Miguel Castillo, 23, de Rockville, Md., otro miembro de los Reyes Latinos, se declaró culpable de su papel en la empresa de delincuencia organizada, que incluyó el robo a mano armada a un narcotraficante y usar bombas explosivas en una residencia.

La sentencia y declaración de culpabilidad fueron anunciadas por el Secretario de Justicia Auxiliar Lanny A. Breuer de la División Criminal; el Fiscal Federal para el Distrito de Maryland Rod J. Rosenstein; la Agente Especial a Cargo Theresa Stoop de la División Local en Baltimore del Buró de Alcohol, Tabaco, Armas de Fuego y Explosivos [Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF)]; el Jefe J. Thomas Manger del Departamento de Policía del Condado de Montgomery, Md.; el Fiscal Estatal del Condado de Montgomery John McCarthy; el Jefe Roberto L. Hylton del Departamento de Policía del Condado de Prince George; el Fiscal Estatal del Condado de Prince George Glenn F. Ivey; y el Comisionado de Policía de la Ciudad de Nueva York Raymond W. Kelly. 

"La violencia coordinada y organizada es una de las características distintivas de las pandillas contra las que luchamos", dijo el Fiscal Federal Auxiliar Lanny A. Breuer de la División Criminal. "Cócteles molotov, robos a mano armada y otros medios violentos de intimidación y coerción son el modus operandi de estas pandillas, y Andrés Echevarria y sus codemandados tomaron un camino violento que los terminó llevando a prisión. A través de nuestra labor coordinada con la Fiscalía Federal y nuestros asociados de las fuerzas del orden público, estamos recuperando nuestros vecindarios de manos de estas pandillas".

"Este caso perturbador demuestra que ser miembro de una pandilla lleva a ardides criminales organizados y actos de violencia sin sentido", dijo el Fiscal Federal Rod J. Rosenstein. "La Fuerza de Tarea Regional de Control Antipandillas [Regional Anti-Gang Enforcement (RAGE)] liderada por la ATF ha probado ser muy valiosa en la lucha contra pandillas violentas".

Según los acuerdos de declaración de culpabilidad de Echevarria y Castillo, Reyes Latinos es una pandilla callejera violenta con miles de miembros en todos los Estados Unidos y el extranjero.  Los Reyes Latinos tienen una estructura organizativa detallada y uniforme que se detalla – junto con diversas "oraciones", códigos de conducta y rituales – en un "manifiesto" escrito distribuido comúnmente a miembros de todo el país. Los miembros de los Reyes Latinos también reciben tradicionalmente "nombres de King" o "nombres de Queen", que son nombres distintos a sus nombres legales por los cuales son conocidos por otros miembros de la pandilla y terceros en la calle.  A nivel local, los grupos de Reyes Latinos se organizan en "tribus", entre ellas Royal Lion Tribe, MOG, Sun Tribe y UTL.

Según su acuerdo de declaración de culpabilidad, Echevarria se convirtió en miembro de la Tribu Tiger en Brooklyn en la primavera de 2008 y luego pasó a ser miembro de las tribus Murda Maya y TBF en Brooklyn y también la Tribu MOG en Maryland. Echevarria admitió haber tenido puestos de liderazgo en los Reyes Latinos, entre ellos el puesto de Tercera Corona/ejecutor en la tribu MOG en el otoño de 2008 y en la tribu Murda Maya a fines del verano de 2009.

Echevarria admitió que como parte de sus actividades pandilleras, intentó asesinar a una persona en Wheaton, Md., el 1 de noviembre de 2008 después de que la persona hiciera un comentario despectivo sobre los Reyes Latinos en una fiesta en la que estaban presentes muchos miembros y asociados de los Reyes Latinos. Además, el 23 de mayo de 2009, Echevarria y otros miembros de Reyes Latinos se pelearon con miembros de una pandilla rival en Brooklyn y luego Echevarria le disparó con un arma a uno de los miembros de pandillas rivales. La bala no impactó a esa persona, sino a otra, y le provocó una abrasión en la espalda.

Según la declaración de los hechos, durante el verano de 2009, Echevarria y otros miembros de la pandilla planearon robar a un titular federal de armas de fuego [federal firearms licensee (FFL)] en Frederick, Md., después de enterarse de que el FFL estaba recibiendo una gran cantidad de armas de fuego. Echevarria y los demás miembros de la pandilla planeaban robar las armas y venderlas para obtener ganancias, pero cuando se estaban preparando para robar al FFL, vieron a una importante cantidad de personal militar cerca del FFL y abortaron su misión. Además, también según la declaración de los hechos, en el verano de 2009, Echevarria y otros miembros de Reyes Latinos llevaron a cabo el robo armado de un narcotraficante en los condados de Frederick y Montgomery, Md., en la cual Echevarria le apuntó con un arma a la cabeza del narcotraficante.

Según su acuerdo de declaración de culpabilidad, en 2007, Castillo se unió a la Tribu Royal Lion de los Reyes Latinos. A fines del verano o el otoño de 2007, Castillo y otros miembros de los Reyes Latinos, entre ellos Francisco Ortiz, planificaron y llevaron a cabo el robo a mano armada a un narcotraficante en los condominios Marylander en Langley Park, Md., dirigidos por el Inca/Primera Corona. Castillo admitió que, después de que uno de los Reyes Latinos llamó a la puerta, él, Ortiz y otro asociado de los Reyes Latinos entraron al apartamento por la fuerza, todos portando armas. Una vez que entraron, el narcotraficante y su hija pequeña fueron retenidos en el dormitorio amenazados a punta de pistola mientras los demás Reyes Latinos registraban la residencia y robaban algunas bolsas de cocaína en polvo.

Castillo también admitió que el 8 de enero de 2008, siguiendo las indicaciones del Inca/Primera Corona, él y dos otras personas planificaron y llevaron a cabo el uso de bombas explosivas contra una residencia en el Condado de Montgomery. Castillo y sus codemandados armaron dos cócteles molotov y condujeron hasta la residencia en la cuadra 13000 de Parkland Drive en el área de Rockville - Aspen Hill, Md. Esperaron del otro lado de la calle hasta que los residentes que se encontraban en el interior de la casa apagaran las luces y aproximadamente a las 4 a.m., encendieron y lanzaron las bombas molotov a la casa. Al menos una de ellas estalló contra la casa y se prendió fuego. Las víctimas en el interior de la casa se despertaron con la explosión, vieron un incendio en el exterior de la residencia y llamaron al 911. Los cócteles molotov se apagaron solos y nadie resultó herido. El 10 de octubre de 2008, Castillo se declaró culpable de posesión de dispositivos destructivos (los cócteles molotov).

Castillo enfrenta una sentencia máxima de cadena perpetua. La lectura de la sentencia está programada para el 17 de noviembre de 2010 a las 9:30 a.m. Castillo permanece detenido.

Los codemandados Miguel Cruz, alias "Skibee" y "King Skibee", 45, de Bronx, N.Y., uno de los fundadores de la tribu Maryland de los Reyes Latinos; Nelson Santos, alias "Nelly" y "King Nelly", 27, de Silver Spring, Md.; y Francisco Ortiz, alias "Francis Gabriel Ortiz", "Pone" y "King Pone", 26, de Rockville, se declararon culpables con anterioridad a conspiración para cometer delincuencia organizada en conexión con sus actividades pandilleras y serán sentenciados el 16 de septiembre de 2010, el 22 de octubre de 2010 y el 1 de diciembre de 2010 respectivamente, todos a las 9:30 a.m.

Los casos están siendo investigados por la División Local en Baltimore del ATF; el Departamento de Policía del Condado de Montgomery; la Fiscalía Estatal del Condado de Montgomery; el Departamento de Policía del Condado de Prince George; la Fiscalía Estatal del Condado de Prince George; y el Departamento de Policía de la Ciudad de Nueva York. Se recibió asistencia adicional por parte del Departamento de Policía de Gaithersburg, Md.; la Oficina del Alguacil del Condado de Montgomery; la Policía de Parques Nacionales de Maryland de la División del Condado de Prince George; la Policía Estatal de Maryland; el Servicio Secreto de los EE.UU.; la División de Investigaciones Criminales de Servicios de Impuestos Internos; y el Servicio de Inmigración y Control de Aduanas de los EE.UU.

Están a cargo de la acusación en los casos los Fiscales Federales Auxiliares Emily Glatfelter y David Salem, y la Abogada Litigante Lara M. Peirce de la Unidad Antipandillas de la División Criminal.

WASHINGTON - U.S. District Court Judge Alexander Williams Jr. sentenced Andres Echevarria, aka "B-Boy" and "King B-Boy," 23, of Brooklyn, N.Y., today to 228 months in prison, followed by five years of supervised release, for conspiracy to participate in a racketeering enterprise, in connection with his gang activities as a member of the Almighty Latin King and Queen Nation (Latin Kings).

On Aug. 27, 2010, Miguel Castillo, 23, of Rockville, Md., another member of the Latin Kings, pleaded guilty to his role in the racketeering enterprise, including the armed robbery of a drug dealer and the firebombing of a residence.

The sentence and guilty plea were announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Theresa Stoop of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) - Baltimore Field Division; Chief J. Thomas Manger of the Montgomery County, Md., Police Department; Montgomery County State’s Attorney John McCarthy; Chief Roberto L. Hylton of the Prince George’s County, Md., Police Department; Prince George’s County State’s Attorney Glenn Ivey; and New York City Police Commissioner Raymond W. Kelly.         

"Coordinated, organized violence is a hallmark of the gangs we are fighting," said Assistant Attorney General Lanny A. Breuer of the Criminal Division.  "Molotov cocktails, armed robberies, and other violent means of intimidation and coercion are how these gangs operate, and Andres Echevarria and his co-defendants scorched a violent path that has ultimately led to prison.  Through our coordinated work with the U.S. Attorney’s Office and our law enforcement partners, we are taking back our neighborhoods from these gangs."

"This disturbing case demonstrates that gang membership leads to both organized criminal schemes and senseless acts of violence," said U.S. Attorney Rod J. Rosenstein. "The ATF-led RAGE task force has proven its value in pursuing violent gangs."

According to Echevarria and Castillo’s plea agreements, the Latin Kings is a violent street gang with thousands of members across the country and overseas.  The Latin Kings have a detailed and uniform organizational structure, which is outlined – along with various "prayers," codes of behavior and rituals – in a written "manifesto" widely distributed to members throughout the country.  Members of the Latin Kings are also traditionally given "King Names" or "Queen Names," which are names other than their legal names by which they are known to members of the gang and to others on the street.  At the local level, groups of Latin Kings are organized into "tribes," including the Royal Lion Tribe, MOG, Sun Tribe and UTL.

According to Echevarria’s plea agreement, he became a member of the Tiger Tribe in Brooklyn in the spring of 2008 and later became a member of the Murda Maya and TBF Tribes in Brooklyn as well as the MOG Tribe in Maryland.  Echevarria admitted that he held leadership positions in the Latin Kings, including the Third Crown/enforcer position for the MOG Tribe in the fall of 2008, and for the Murda Maya Tribe at the end of the summer of 2009.

Echevarria admitted that as part of his gang activities, he attempted to murder an individual in Wheaton, Md., on Nov. 1, 2008, after that individual made a disparaging remark about the Latin Kings while attending a party at which many Latin King members and associates were present.  In addition, on May 23, 2009, after Echevarria and other Latin King members got into an argument with members of a rival gang in Brooklyn, Echevarria fired a gun at one of the rival gang members.  The bullet missed the rival gang member, but hit another person, causing an abrasion on that person’s back. 

According to the statement of facts, during the summer of 2009, Echevarria and other gang members also planned to rob a federal firearms licensee (FFL) in Frederick, Md., after learning that the FFL was receiving a large quantity of firearms.  Echevarria and the other gang members planned to steal the guns and sell them for a profit, but as they were preparing to rob the FFL, they saw a significant number of military personnel near the FFL and abandoned the mission.  Also according to the statement of facts, in the summer of 2009, Echevarria and other Latin King members carried out the armed robbery of a drug dealer in Frederick and Montgomery Counties, during which Echevarria pointed a gun at the drug dealer’s head.

According to Castillo’s plea agreement, in 2007, Castillo joined the Royal Lion Tribe of the Latin Kings.  In the late summer or fall of 2007, Castillo and other Latin King members, including Francisco Ortiz, planned and carried out the armed robbery of a drug dealer at the Marylander Condominiums in Langley Park, Md., at the direction of the Inca/First Crown.  Castillo admitted that, after one of the Latin Kings knocked on the door, he, Ortiz and another Latin King associate forced their way into the apartment, each carrying a gun.  Once inside, the dealer and his young daughter were held at gunpoint in the bedroom while the Latin Kings searched the residence, eventually stealing a few bags of powder cocaine.

Castillo also admitted that on Jan. 8, 2008, at the direction of the Inca/First Crown, he and two others planned and carried out the firebombing of a residence in Montgomery County.  Castillo and his co-defendants assembled two Molotov cocktails and drove to the residence in the 13000 block of Parkland Drive in the Rockville - Aspen Hill, Md., area.  They waited across the street until the residents inside the house turned off the lights and at approximately 4:00 a.m., the two Molotov cocktails were lit and thrown at house.  At least one struck the house and caught fire.  The victims in the house were awakened by the explosion, saw a fire outside the house and called 911.  The Molotov cocktails self-extinguished and no one was injured.  On Oct. 10, 2008, Castillo pleaded guilty to possession of destructive devices (the Molotov cocktails.)

Castillo faces a maximum sentence of life in prison.  Sentencing is scheduled for Nov. 17, 2010, at 9:30 a.m. Castillo remains detained.

Co-defendants Miguel Cruz, aka "Skibee" and "King Skibee," 45, of Bronx, N.Y., one of the founders of the Maryland Tribe of the Latin Kings; Nelson Santos, aka "Nelly" and "King Nelly," 27, of Silver Spring, Md.; and Francisco Ortiz, aka "Francis Gabriel Ortis," "Pone," and "King Pone," 26, of Rockville, previously pleaded guilty to the racketeering conspiracy in connection with their gang activities and are scheduled to be sentenced on Sept. 16, 2010, Oct. 22, 2010, and Dec. 1, 2010, respectively, all at 9:30 a.m.  All remain in federal custody.

The cases are being investigated by the ATF - Baltimore Field Division; Montgomery County Police Department; Montgomery County State’s Attorney’s Office; Prince George’s County Police Department; Prince George’s County State’s Attorney’s Office; and New York City Police Department.  Additional assistance was provided by the Gaithersburg, Md., Police Department; the Montgomery County Sheriff’s Office, the Maryland National Capital Park Police - Prince George’s County Division; the Maryland State Police; the U.S. Secret Service; the Internal Revenue Service - Criminal Investigation; and U.S. Immigration and Customs Enforcement.

The cases are being prosecuted by Assistant U.S. Attorneys Emily Glatfelter and David Salem, and Trial Attorney Lara M. Peirce of the Criminal Division’s Gang Unit.

WASHINGTON – The Justice Department filed a lawsuit today against the Maricopa County Sheriff’s Office (MCSO), Maricopa County, and Maricopa County Sheriff Joe Arpaio for refusing full cooperation with the department’s investigation of alleged national origin discrimination in violation of Title VI of the Civil Rights Act of 1964.  Title VI prohibits discrimination in programs that receive federal funds, and also requires grant recipients to cooperate with investigations of discrimination by providing access to documents, facilities and staff.  MCSO signed contractual assurance agreements as a condition of receiving federal funds, and promised that it would cooperate with investigations of alleged discrimination. 

The department filed today’s lawsuit after exhausting all cooperative measures to gain access to MCSO’s documents and facilities, as part of the department’s investigation of alleged discrimination in MCSO’s police practices and jail operations.  Since March 2009, the department has attempted to secure voluntary compliance with the department’s investigation.  MCSO’s refusal to cooperate with the investigation makes it an extreme outlier and the department is unaware of any other police department or sheriff’s office that has refused to cooperate in the last 30 years. 

“The actions of the sheriff's office are unprecedented.  It is unfortunate that the department was forced to resort to litigation to gain access to public documents and facilities,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.

The department’s investigation of MCSO concerns alleged discrimination against Hispanics, in violation of the prohibition on national origin discrimination in Title VI; the pattern or practice provisions of the Omnibus Crime Control and Safe Streets Act of 1968; and the pattern or practice provisions of the Violent Crime Control and Law Enforcement Act of 1994.  Title VI prohibits discrimination in federally assisted programs on the ground of race, color, or national origin.

The department’s investigation remains open and ongoing.  For more information on the Justice Department’s Civil Rights Division, please visit www.justice.gov/crt.

United States of America v. Maricopa County, Arizona (PDF)

WASHINGTON – Willoughby Farr, 46, de West Palm Beach, Fla., ha sido sentenciado a 262 meses de prisión y tres años de libertad bajo supervisión por perpetrar un “ardid de cargos no autorizados” creado para facturar cargos por llamadas de cobro revertido no realizadas en las facturas telefónicas de los clientes, anunciaron hoy el Departamento de Justicia y la Oficina Local en Miami del Inspector Postal Federal.

Según el expediente judicial, entre abril de 2003 y diciembre de 2005, Farr empleó tres empresas de West Palm Beach – Nationwide Connections Inc., Access One Communications Inc., and Connect One Communications Inc. – para defraudar a los consumidores. Mediante estas empresas, Farr logró que las empresas telefónicas facturaran cargos falsos por un total de aproximadamente $35 millones de dólares a los consumidores por llamadas con cobro revertido. Como los cargos generalmente aparecían en la última página de las facturas telefónica de los clientes, muchos los pagaban.

Farr se declaró culpable en mayo de 2010 de dos cargos de fraude postal relacionados con el ardid. Al declararse culpable, Farr admitió haber cometido los delitos mientras estaba encarcelado en la Cárcel del Condado de West Palm Beach. Por consiguiente, ocultó que era propietario de las tres empresas. También ocultó ser el propietario porque otras empresas le habían cortado la capacidad de facturar llamadas por reclamos de clientes y reguladores estatales lo habían demandado por facturación ilegítima.

“Cuando personas inescrupulosas y deshonestas se forren los bolsillos con dinero que es producto del trabajo de los clientes, los haremos responsables”, dijo Tony West, Secretario de Justicia Auxiliar de la División Civil del Departamento de Justicia. “Como demuestra esta sentencia, el Departamento de Justicia ha fijado como prioridad proteger al público de ardides fraudulentos. Este caso también debe servir como recordatorio para los clientes de revisar con detenimiento sus facturas telefónicas en busca de cargos no autorizados”.

En febrero de 2006, la Comisión Federal de Comercio [Federal Trade Commission (FTC)] entabló una demanda por cargos no autorizados contra distintas empresas y personas, entre ellas Farr.  La demanda generó un fallo civil de $34,547,140 dólares contra Farr.

“El Servicio de Inspección Postal realizó una tarea excepcional en la investigación de este caso”, dijo Wifredo A. Ferrer, Fiscal Federal para el Distrito Sur de Florida.  “La FTC descubrió este ardid y se lo señaló al Departamento de Justicia. El caso demuestra la eficacia de las iniciativas cooperativas de aplicación legal, que pueden poner fin a ardides fraudulentos y luego llevar a los delincuentes a la justicia”.

“Las personas como Farr se dedican a publicar cargos falsos en las cuentas de los clientes”, dijo el Inspector a Cargo Henry Gutiérrez. “El Servicio de Inspección Postal trabajará sin descanso con sus asociados de las fuerzas del orden público para impedir el uso fraudulento del servicio postal y proteger a los consumidores estadounidenses”. 

La sentencia anunciada hoy fue resultado del trabajo en colaboración de la División Civil del Departamento de Justicia, la Fiscalía Federal del Distrito Sur de Florida, el Servicio de Inspección Postal de los EE.UU. y la Comisión Federal de Comercio.

WASHINGTON — A former U.S. Army contracting official based at Fort Carson, Colo., pleaded guilty to submitting a false statement to the U.S. Army, the Department of Justice announced today. 

According to a one-count felony charge filed on July 15, 2010, in the U.S. District Court in Denver, William T. Armstrong, former chief of the construction division of the Fort Carson Directorate of Contracting, made a false statement in connection with a matter involving the U.S. Army Contracting Agency, an agency within the executive branch of the United States.  The department said that Armstrong provided a false statement when he denied receiving reportable gifts on an annual confidential financial disclosure report submitted to the U.S. Army Contracting Agency.

According to court documents, on or about Jan. 24, 2008, Armstrong provided false information on the report, which  he was required to submit yearly due to his position.  Armstrong indicated on the form that he had not received any reportable gifts in the previous year when, in fact, Armstrong had received several thousand dollars worth of gifts from a construction contractor that had substantial business with the Fort Carson Directorate of Contracting, the department said.

Armstrong faces a maximum sentence of five years in prison and a $250,000 fine.  The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

Today’s plea is the first to arise from an ongoing investigation related to the award of construction contracts at Fort Carson, Colo.  This investigation is being jointly conducted by the Department of Justice Antitrust Division’s Chicago Field Office, the U.S. Army Criminal Investigation Command and the Defense Criminal Investigative Service, with the assistance of  the U.S. Attorney’s Office in Denver.                        

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

Armstrong Information

WASHINGTON— Harold Hutcheson, a former captain at the Northwest Correctional Complex (NCC), in Tiptonville, Tenn., and Joshua Ryan Jones and Roger Forrester, former officers at NCC, were sentenced today in federal court in Jackson, Tenn., for violating the civil rights of an inmate and then lying about it during the state and federal investigations. Hutcheson was sentenced to serve eight months in prison and two years of supervised release; Jones was sentenced to serve 10 months in prison and two years of supervised release; and Forrester was sentenced to serve 10 months in prison and two years of supervised release.

During their guilty plea, Hutcheson and Jones admitted that on April 15, 2008, while working as at NCC, they used unreasonable force when they repeatedly kicked a handcuffed inmate without provocation. Hutcheson and Jones agreed that their assault violated the inmate’s constitutional right to be free from cruel and unusual punishment by law enforcement officers. Additionally, Hutcheson and Jones admitted that they obstructed justice when he provided false information about the incident to federal investigators.

 

In his guilty plea, Forrester admitted that he used unreasonable force when he repeatedly punched a handcuffed inmate without provocation. Forrester agreed that his assault violated the inmate’s constitutional right to be free from cruel and unusual punishment by law enforcement officers. Additionally, Forrester admitted that he obstructed justice when he provided false information about the incident during the investigation by the Tennessee Department of Corrections.

 

“The power granted to correctional officers so that they can perform their critical public safety duties does not give them free rein to abuse the civil and constitutional rights of inmates under their supervision,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division. “Those officers who abuse their power and the public trust in this way will be prosecuted to the fullest extent of the law.”

Today’s plea resulted from the investigative work of the FBI and the Department of Justice’s Civil Rights Division, Criminal Section. The case is being prosecuted by Civil Rights Division Trial Attorneys Jared Fishman and Chris Lomax.

WASHINGTON - A former senior employee of a U.S. military contractor pleaded guilty today to conspiracy to pay $360,000 in bribes to U.S. Army contracting officials stationed at a U.S. military base in Kuwait, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.

According to court documents filed today in U.S. District Court for the Southern District of Texas, Dorothy Ellis, 53, of Texas City, Texas, was employed by former U.S. military contractor Terry Hall.  As Hall’s most senior employee, Ellis’s responsibilities included serving as the liaison between Hall and U.S. Army contracting officials stationed at Camp Arifjan, a U.S. military base in Kuwait.
                                       
From the spring of 2004 through November 2007, Hall operated and had an interest in several companies, including Freedom Consulting and Catering Co. (FCC) and Total Government Allegiance (TGA).  At various times during this period, these companies provided goods and services to the U.S. Department of Defense (DoD) and its components based on a blanket purchase agreement (BPA) to deliver bottled water and a contract to construct a security fence in Kuwait and elsewhere.

A BPA is a type of contract by which the DoD agrees to pay a contractor a specified price for a particular good or service.  Based on the BPA, the DoD orders the supplies on an as-needed basis.  The contractor is then obligated to deliver the supplies ordered at the price agreed upon in the BPA.  The term for such an order by the DoD is a “call.”

According to court documents, Hall obtained the calls made under the bottled water BPA and fence contract by bribing certain U.S. Army contracting officers, including former Majors James Momon and Christopher Murray.  Hall, assisted by Ellis and Hall’s business partner, paid Momon approximately $330,000 and paid Murray approximately $30,000.  In exchange for these bribe payments, from January 2006 through May 2006, Momon arranged for the DoD to pay Hall’s companies more than $6.4 million through the bottled water BPA, and Murray assisted in the award of the security fence contract.

Ellis admitted that she participated in the bribery scheme by providing Momon and Murray access to secret bank accounts established on their behalf in the Philippines, which enabled Hall and others to transfer bribe payments to them.  Ellis also admitted that she obtained confidential Army contract pricing information from Momon that was designed to give Hall an unlawful advantage in the bidding process for an ice contract from the DoD.  In exchange for her assistance in the bribery scheme, Ellis received a $100,000 “bonus” from Hall in August 2006.

The charge of bribery conspiracy carries a maximum prison sentence of five years and a $250,000 fine.  Under the plea agreement, Ellis agreed to forfeit $360,000 to the government.  Sentencing has been scheduled for Dec. 1, 2010, before U.S. District Court Judge David Hittner.

The case against Ellis arose out of an investigation into corruption at the Kuwait contracting office at Camp Arifjan, which has led to charges against 15 individuals, to date.  Of those 15 defendants, 13 have pleaded guilty, with some already serving prison sentences.  For example, on Dec. 2, 2009, former U.S. Army Major John Cockerham was sentenced to 210 months in prison and ordered to pay $9.6 million in restitution.  On Aug. 13, 2009, Momon pleaded guilty to receiving approximately $1.6 million in bribes and agreed to pay $5.7 million in restitution.  On Dec. 17, 2009, Murray was sentenced to 57 months in prison and ordered to pay $245,000 in restitution. 

On Aug. 11, 2010, Wajdi Birjas, a former DoD contract employee, pleaded guilty to bribery conspiracy in connection with his payment of tens of thousands of dollars worth of bribes to Army contracting officers, including Murray, Momon and a senior procurement non-commissioned officer.  Birjas also pleaded guilty to money laundering conspiracy arising out of his participation in a scheme to transport $250,000 of Momon’s bribe proceeds from Kuwait to the United States.  His sentencing is scheduled for Jan. 7, 2011.

On Feb. 18, 2010, Hall pleaded guilty to bribery conspiracy and money laundering conspiracy and agreed to forfeit $15.7 million to the U.S. government in connection with his payment of more than $3 million in bribes to Cockerham, Momon, Murray and former U.S. Army Major Eddie Pressley.  The case against Hall’s co-defendants, Eddie Pressley and his wife Eurica Pressley, is scheduled for trial Jan. 24, 2011, in Decatur, Ala.

The case is being prosecuted by Trial Attorneys Edward J. Loya, Jr. and Peter C. Sprung of the Criminal Division’s Public Integrity Section.  The case is being investigated by special agents of the Defense Criminal Investigative Service, the Army Criminal Investigation Command Division, the FBI and the Special Inspector General for Iraq Reconstruction.

Today’s plea represents the Department of Justice’s commitment to protect U.S. taxpayers from procurement fraud through its creation of the National Procurement Fraud Task Force.  The National Procurement Fraud Initiative announced in October 2006, is designed to promote early detection, identification, prevention and prosecution of procurement fraud associated with the increase in contracting activity for national security and other government programs.  The investigation is ongoing.

WASHINGTON – Willoughby Farr, 46, of West Palm Beach, Fla., has been sentenced to 262 months in prison and three years of supervised release for perpetrating a “cramming scheme,” which was designed to place charges on consumers’ telephone bills for collect calls that were not made, the Justice Department and the U.S. Postal Inspector’s Miami Field Office announced today.

 

According to court documents, from April 2003 to December 2005, Farr used three West Palm Beach companies – Nationwide Connections Inc., Access One Communications Inc., and Connect One Communications Inc. – to defraud consumers. Through these companies, Farr arranged for telephone companies to falsely bill consumers for approximately $35 million in collect calls. Because the charges typically appeared on the last page of consumers’ telephone bills, many paid the charges.

 

Farr pleaded guilty in May 2010 to two counts of mail fraud related to the scheme. In pleading guilty, Farr admitted that he committed the crimes while he was incarcerated in the West Palm Beach County Jail. He therefore hid his ownership of the three firms. He also hid his ownership because other firms had cut off his ability to bill for calls due to consumer complaints and the fact that state regulators had sued him for illegitimate billing.

 

“When the unscrupulous and the dishonest line their pockets with consumers’ hard-earned money, we will hold them accountable,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “As this sentence demonstrates, the Justice Department has put a priority on protecting the public from fraudulent schemes. This case should also remind consumers to carefully review their telephone bills for unauthorized charges.”

 

In February 2006, the Federal Trade Commission (FTC) brought a cramming suit against several firms and individuals, including Farr. That suit resulted in a $34,547,140 civil judgment against Farr.

 

“The Postal Inspection Service did a superb job investigating this case,” said Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida. “The FTC first uncovered this scheme and brought it to the Justice Department’s attention. The case demonstrates the effectiveness of cooperative law enforcement efforts which can put an end to fraudulent schemes, and then bring wrongdoers to justice.”

 

“Crammers like Farr are eager to post bogus charges to consumers’ accounts,” said Inspector in Charge Henry Gutierrez. “The Postal Inspection Service will work tirelessly with its law enforcement partners to deter fraudulent use of the mails and to protect the American consumer.” 

 

The sentence announced today was the result of the collaborative efforts of the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Southern District of Florida, the U.S. Postal Inspection Service, and the Federal Trade Commission.

WASHINGTON – Hoy el Departamento de Justicia entabló una demanda contra la Oficina del Alguacil del Condado de Maricopa [Maricopa County Sheriff’s Office (MCSO)], el Condado de Maricopa y el Alguacil del Condado de Maricopa Joe Arpaio por negarse a cooperar plenamente con la investigación del Departamento de una supuesta discriminación por origen nacional en violación al Título VI de la Ley de Derechos Civiles de 1964. El Título VI prohíbe la discriminación en programas que reciben fondos federales y, además, exige que los destinatarios de subsidios cooperen con investigaciones de discriminación brindando acceso a documentos, instalaciones y al personal. La MCSO firmó acuerdos de garantía contractual como condición para recibir fondos federales y prometió cooperar con investigaciones de alegatos de discriminación.

El Departamento entabló la demanda de hoy después de agotar todas las medidas de cooperación para acceder a los documentos y las instalaciones de la MCSO, como parte de la investigación realizada por el Departamento de la supuesta discriminación en las prácticas policiales y operaciones carcelarias de la MCSO. Desde marzo de 2009, el Departamento ha intentado lograr la cooperación voluntaria con su investigación. La negativa de la MCSO a cooperar con la investigación la convierte en un caso atípico extremo, ya que el Departamento no conoce ningún otro departamento de policía u oficina del alguacil que se haya negado a cooperar en los últimos 30 años.

“Las acciones de la oficina del alguacil no tienen precedentes. Es lamentable que el Departamento haya sido forzado a recurrir a un litigio para acceder a documentos e instalaciones públicas”, dijo Thomas E. Pérez, Secretario de Justicia Auxiliar de la División de Derechos Civiles.

La investigación realizada por el Departamento sobre la MCSO está relacionada con alegatos de discriminación contra Hispanos, lo que viola la prohibición establecida en el Título VI de discriminación por origen nacional; las disposiciones contra patrones o prácticas de discriminación de la Ley Ómnibus de Control de Delitos y Calles Seguras de 1968; y las disposiciones contra patrones o prácticas de discriminación de la Ley de Control de Delitos Violentos y Aplicación Legal de 1994. El Título VI prohíbe la discriminación en programas con asistencia federal con base en la raza, el color o el origen nacional.

La investigación del Departamento sigue abierta y en curso. Para obtener más información sobre la División de Derechos Civiles del Departamento de Justicia, visite www.justice.gov/crt.

Los Estados Unidos de América contra el Condado de Maricopa, Arizona (PDF)

WASHINGTON – Hakimullah Mehsud, the self-proclaimed emir of the Pakistani Taliban, has been charged by criminal complaint for his alleged involvement in the murder of seven American citizens on Dec. 30, 2009 at a U.S. military base in Afghanistan, the Justice Department announced today.

The two-count criminal complaint, filed in U.S. District Court for the District of Columbia on Aug. 20, 2010 and unsealed today, charges Hakimullah Mehsud, aka Hakimullah Mahsud, with conspiracy to murder U.S. citizens abroad and conspiracy to use a weapon of mass destruction (explosives) against U.S. citizens abroad. 

According to an affidavit filed in support of the criminal complaint, Hakimullah Mehsud, a resident of the Federally Administered Tribal Area (FATA) in Pakistan, is the leader of the Tehrik-e Taliban Pakistan (TTP), or what is more commonly known as the Pakistani Taliban.  The TTP’s primary purpose is to force withdrawal of Pakistani troops from the FATA of Pakistan, which is located along the Pakistan-Afghanistan border; to unite against NATO forces in Afghanistan and to establish Sharia – or Islamic law – in the tribal territories. 

The affidavit alleges that the TTP has had alleged roles in, or claimed responsibility for, a number of acts of violence, including the December 2007 assassination of Benazir Bhutto, the September 2009 suicide attack on the Bannu, Pakistan, police station and numerous attacks on NATO supply lines throughout the FATA.  These attacks are often coordinated with other insurgents or terrorist groups, including the Taliban and al-Qaeda. 

Today, the State Department designated the TTP as a Foreign Terrorist Organization and also designated Hakimullah Mehsud and another Taliban leader, Wali Ur Rehman, as Specially Designated Global Terrorists.  The State Department’s Rewards for Justice program is offering a reward of up to $5 million each for information leading to their location.

Hakimullah Mehsud inherited the role as the leader of the TTP after its former leader and founder, Baitullah Mehsud, was killed in August 2009, according to the affidavit.  Hakimullah Mehsud remains the commander of TTP, which continues to plan and carry out attacks against the interests of the United States from the FATA.  The TTP has recently claimed responsibility for the May 1, 2010 failed bombing of Times Square in New York and also claimed responsibility for the Dec. 30, 2009 suicide bombing in Afghanistan that is charged in the criminal complaint unsealed today.

On Dec. 30, 2009, the affidavit alleges, Humam Khalil Abu Mulal al-Balawi, also known as Abu Dujanah al-Khorasani (al-Balawi), a Jordanian physician, entered a U.S. military base near the town of Khost, Afghanistan, for a pre-planned meeting.  Shortly after entering the base, al-Balawi detonated a suicide device concealed beneath his clothing, killing himself and seven U.S. citizens.  Six other U.S. citizens were injured.

Soon after the attack, the affidavit alleges, the media arm of the TTP released a video depicting Hakimullah Mehsud and al-Balawi seated together, in which they explain in detail their motivation for launching a suicide attack against the Americans.  In the video, Hakimullah Mehsud introduces al-Balawi, states al-Balawi’s reasons for becoming a suicide bomber and describes Americans as the enemy of the mujahideen. 

According to the affidavit, Hakimullah Mehsud and al-Balawi both claim responsibility for an upcoming attack in the video, stating together, “And we arranged this attack to let the Americans understand that the belief of Allah, the iman [faith] that we hold, the taqwa [piety] that we strive for cannot be exchanged for all the wealth in the world.”  In the video, Hakimullah Mehsud then explains that the motive for the attack against the Americans is revenge for the death of the former emir of the TTP, Baitullah Mehsud.  Today, Hakimullah Mehsud is a fugitive believed to be residing in the FATA.

“Today’s charges underscore our continuing commitment to seek justice for Americans who are murdered or victimized by overseas terrorist attacks,” said David Kris, Assistant Attorney General for National Security.  “I applaud the many agents, analysts and prosecutors who helped bring about this prosecution.”

“We have no higher priority than bringing to justice terrorists who kill Americans serving and working abroad,” said Ronald C. Machen, Jr., U.S. Attorney for the District of Columbia.  “We will continue to use every tool at our disposal to seek justice for the victims of this heinous terrorist attack.  I am proud of the efforts of our agents, analysts and prosecutors who have worked so hard on this case.”

“The FBI is committed to bringing to justice those responsible for this horrific crime and, equally important, to provide answers and closure to family and friends of those killed,” said Shawn Henry, Assistant Director in Charge of the FBI’s Washington Field Office.

The investigation into this matter was conducted by the FBI’s Washington Field Office.  The prosecutors handling the case are Trial Attorneys Sharon Lever and Jeffrey Groharing of the Counterterrorism Section in the Justice Department’s National Security Division, and Assistant U.S. Attorneys Rachel Carlson Lieber and Michael C. DiLorenzo of the U.S. Attorney’s Office for the District of Columbia.

If convicted of the charges unsealed today, Hakimullah Mehsud faces a maximum sentence of life in prison.  A criminal complaint is merely a formal charge that a defendant violated a criminal law.  All defendants are presumed innocent until and unless proven guilty.

WASHINGTON – Juan Javier Cardenas of Miami pleaded guilty today to one count of conspiracy to traffic in and  possess unauthorized credit card numbers with intent to defraud, and one count of trafficking in unauthorized credit card numbers, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Wifredo A. Ferrer for the Southern District of Florida; Special Agent in Charge Michael K. Fithen of the U.S. Secret Service, Miami Field Office; and Special Agent in Charge Kenneth T. Jenkins Jr., of the U.S. Secret Service, Criminal Investigative Division.

At his plea hearing before U.S. District Court Judge K. Michael Moore, Cardenas, 45, admitted that from February 2008 through May 2009, he purchased stolen credit card information from a co-conspirator using the Internet.  Cardenas resold that information, also using the Internet, to others who used it to make fraudulent credit card purchases.  On May 27, 2009, when U.S. Secret Service agents searched his house, Cardenas had 26,669 credit card numbers stored on his computer. 

Cardenas faces maximum prison sentences of five years on the conspiracy charge and 10 years on the charge of trafficking in unauthorized credit card numbers.  Cardenas also faces fines and terms of supervised release on both counts, as well as forfeiture of any property or proceeds derived from his criminal activities.  Sentencing is scheduled for Nov. 18, 2010.

This case is being prosecuted by Assistant U.S. Attorney Marc Osborne of the U.S. Attorney’s Office for the Southern District of Florida and Trial Attorney Joseph E. Springsteen of the Criminal Division’s Computer Crime and Intellectual Property Section.  The case is being investigated by the U.S. Secret Service.

WASHINGTON — The Justice Department announced today a settlement with Cuyahoga County, Ohio, to protect the rights of Spanish-speaking Puerto Rican voters under Section 4(e) of the Voting Rights Act.  Today’s agreement is intended to resolve concerns that limited English proficient Puerto Rican voters were being denied their full voting rights because of inadequate language assistance. 

Under the agreement, the parties agreed to phase in additional bilingual poll workers and new bilingual sample ballots for the county’s primary election on Sept. 7, 2010.  The agreement also provides for bilingual ballots in targeted precincts for the Nov. 2, 2010, general election, and bilingual ballots county-wide thereafter.  In addition, the agreement includes the creation of a community-based Spanish-language advisory committee, which will include participation and feedback from the local Puerto Rican community.   The parties have also agreed that federal observers may monitor Election Day activities in polling places in Cuyahoga County.  The department will provide ongoing information to the county’s board of elections.  Their settlement agreement will be filed in federal court and is subject to the approval of the court.       

“The right to vote is the foundation of our democracy,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.  “Today’s agreement requiring bilingual ballots will ensure that Spanish-speaking voters receive the help they need to cast their votes effectively, with complete understanding of the ballot.” 

“I’d like to thank those officials in Cuyahoga County whose dedication and commitment to voting rights has made this resolution possible,” U.S. Attorney for the Northern District of Ohio Steven M. Dettelbach said.  “Protecting the voting rights of our citizens is part of the core mission of the Department of Justice as well as this U.S. Attorney’s Office.”

Section 4(e) of the Voting Rights Act requires that jurisdictions with significant Puerto Rican populations cannot deny an individual’s voting rights based on their ability to read, write, understand or interpret any election matter in English.  The 2000 Census found that more than 30,000 persons of Puerto Rican descent resided in Cuyahoga County and that more than 6,000 were voting age and limited-English proficient.      

To file complaints about discriminatory voting practices, voters may call the Voting Section of the Civil Rights Division at 1-800-253-3931. More information about the Voting Rights Act and other federal voting rights laws is available on the Justice Department website at www.justice.gov/crt/voting/index.htm.

WASHINGTON – Juan Javier Càrdenas de Miami se declaró culpable hoy de un cargo de conspirar para traficar y poseer números no autorizados de tarjetas de crédito con la intención de defraudar y un cargo de traficar números no autorizados de tarjetas de crédito, anunciaron el Secretario de Justicia Auxiliar Lanny A. Breuer de la División Criminal; el Fiscal Federal Wifredo A. Ferrer del Distrito Sur de Florida; el Agente Especial a Cargo Michael K. Fithen de la Oficina Local de Miami del Servicio Secreto de EE.UU., y el Agente Especial a Cargo Kenneth T. Jenkins Jr. de la División de Investigaciones Criminales del Servicio Secreto de EE.UU..

En su audiencia de declaración de culpabilidad ante el Juez Federal de Distrito K. Michael Moore, Càrdenas, 45, admitió que entre febrero de 2008 y mayo de 2009, compró información robada de tarjetas de crédito a un coconspirador a través del Internet. Càrdenas revendió la información, también a través del Internet, a terceros que la usaron para realizar compras fraudulentas con las tarjetas de crédito. El 27 de mayo de 2009, cuando agentes del Servicio Secreto de los EE.UU. allanaron su casa, Càrdenas tenía almacenados en su computadora 26,669 números de tarjeta de crédito.

Càrdenas enfrenta sentencias máximas de prisión de cinco años por el cargo de conspiración y 10 años por el cargo de traficar números no autorizados de tarjetas de crédito. Càrdenas también enfrenta multas y condenas a libertad bajo supervisión por ambos cargos, así como también la confiscación de cualquier propiedad o ganancias derivadas de sus actividades criminales. La lectura de la sentencia está programada para el 18 de noviembre de 2010.

Están a cargo de la acusación en el caso el Fiscal Federal Auxiliar Marc Osborne de la Fiscalía Federal para el Distrito Sur de Florida y el Abogado Litigante Joseph E. Springsteen de la Sección de Delitos de Informática y Propiedad Intelectual de la División Criminal. El caso está siendo investigado por el Servicio Secreto de los EE.UU.

WASHINGTON — Hoy el Departamento de Justicia anunció un acuerdo conciliatorio con el Condado de Cuyahoga, Ohio para proteger los derechos de votantes Puertorriqueños de habla Hispana bajo la Sección 4(e) de la Ley de Derechos Electorales. El acuerdo de hoy tiene como objetivo resolver inquietudes respecto de la posibilidad de que los votantes Puertorriqueños con conocimientos limitados del inglés no gocen de plenos derechos electorales debido a la falta de asistencia idiomática adecuada.

Bajo el acuerdo, las partes aceptaron incorporar paulatinamente más empleados electorales bilingües y nuevas papeletas de muestra bilingües para las elecciones primarias del condado a realizarse el 7 de septiembre de 2010. El acuerdo también establece la existencia de papeletas bilingües en precintos específicos en las elecciones generales del 2 de noviembre de 2010 y papeletas bilingües en todo el país de ahí en adelante. Además, el acuerdo incluye la creación de un comité asesor comunitario en Español, que incluirá participación y comentarios de la comunidad Puertorriqueña local. Las partes también han acordado que observadores federales pueden observar actividades del día de elecciones en lugares de votación en el Condado de Cuyahoga. El Departamento brindará información constante al consejo electoral del condado. El acuerdo conciliatorio será presentado en un tribunal federal y está sujeto a la aprobación del tribunal.

“El derecho a votar es la base de nuestra democracia”, dijo Thomas E. Pérez, Secretario de Justicia Auxiliar de la División de Derechos Civiles.  “El acuerdo de hoy, que exige papeletas bilingües, garantizará que los votantes de habla Hispana reciban la ayuda que necesitan para votar eficazmente, con una comprensión cabal de la papeleta”. 

“Quiero agradecer a los funcionarios del Condado de Cuyahoga, ya que gracias a su dedicación y compromiso con los derechos electorales fue posible esta resolución”, dijo el Fiscal Federal para el Distrito Norte de Ohio Steven M. Dettelbach.  “Proteger los derechos electorales de nuestros ciudadanos forma parte de la misión principal del Departamento de Justicia, así como también de esta Fiscalía Federal”.

La Sección 4(e) de la Ley de Derechos Electorales establece que las jurisdicciones con poblaciones significativas de Puertorriqueños no pueden privar a una persona de sus derechos electorales basándose en su capacidad de leer, escribir, comprender o interpretar cualquier asunto electoral en inglés. El Censo del 2000 determinó que más de 30,000 personas de descendencia Puertorriqueña residían en el Condado de Cuyahoga y que más de 6,000 estaban en edad de votar y tenían conocimientos limitados de inglés.

Para entablar demandas sobre prácticas electorales discriminatorias, los electores pueden llamar a la Sección Electoral de la División de Derechos Civiles al (800) 253-3931. Para obtener más información sobre la Ley de Derechos Electorales y otras leyes federales electorales, visite el portal del Departamento de Justicia en www.justice.gov/crt/voting/index.htm

WASHINGTON - Hieu Phan, 36, of New Market, Ontario, Canada, was sentenced today to 10 years in prison for his role in the Benjamin Ton drug trafficking organization, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer, U.S. Attorney Zane David Memeger for the Eastern District of Pennsylvania and Special Agent-in-Charge John Bryfonski of the Drug Enforcement Administration (DEA) Philadelphia Field Office. Phan was also ordered by U.S. District Court Judge Paul S. Diamond to pay a $2,500 fine.

According to court documents, between 2002 and 2004, the Benjamin Ton drug trafficking organization imported more than 10,000 kilograms of marijuana and 300,000 ecstasy pills into the United States from various Asian organized crime groups in Canada.  Hieu Phan acted as the Ton organization’s representative in Toronto.  Phan admitted that he negotiated prices and terms of delivery with the drug trafficking organizations in Canada that manufactured the drugs.  In addition, Phan ensured that these drug trafficking organizations were paid promptly for the massive amounts of drugs the Ton organization was purchasing.  During the course of the conspiracy, the Ton organization smuggled approximately $25 million in U.S. currency to Canada to pay for these drugs.  On one occasion, Phan arranged to smuggle a firearm into the United States concealed in a vehicle, along with a shipment of 55,000 ecstasy pills.  In November 2004, DEA special agents stopped the vehicle in Ft. Washington, Penn., and seized the drugs and the firearm.

On Feb. 21, 2007, Hieu Phan pleaded guilty to conspiracy to import and conspiracy to distribute marijuana and ecstasy, conspiracy to launder monetary instruments, possession of methamphetamine and ecstasy with the intent to distribute, and importation of a firearm.

For the past several years, the Criminal Division’s Organized Crime and Racketeering Section and the U.S. Attorney’s Office in the Eastern District of Pennsylvania have been working closely with the DEA, Immigrations and Customs Enforcement (ICE), and various Canadian law enforcement agencies, to crack down on these Asian organized crime groups that smuggle billions of dollars worth of drugs into the United States from Canada each year.                        

The case was prosecuted by Assistant U.S. Attorney David E. Fritchey and Trial Attorneys Marty Woelfle and Robert J. Livermore of the Criminal Division’s Organized Crime and Racketeering Section.  The case was investigated by DEA special agents and law enforcement officers from the Royal Canadian Mounted Police Criminal Organization Marihuana Enforcement Team.

The investigation also received assistance from ICE, the Philadelphia Police Department, the Pennsylvania State Police, U.S. Customs and Border Protection, the Ontario Provincial Police Department and the Toronto Metropolitan Police Department.

WASHINGTON – La empresa farmacéutica estadounidense Allergan Inc. ha aceptado declararse culpable y pagar $600 millones de dólares para resolver su responsabilidad criminal y civil surgida de la promoción ilegal realizada por la empresa de su producto biológico, Botox® Therapeutic, para usos no aprobados por la Administración de Medicamentos y Alimentos de los EE.UU. [Food and Drug Administration (FDA)], anunció hoy el Departamento de Justicia. La resolución incluye una multa criminal y una confiscación por un total de $375 millones de dólares y un acuerdo conciliatorio civil con el gobierno federal y los estados de $225 millones de dólares.

Bajo la Ley Federal de Alimentos, Medicamentos y Cosméticos [Food, Drug and Cosmetic Act (FDCA)], en su solicitud a la FDA, las empresas deben especificar cada uso previsto de un producto biológico. Después de que la FDA aprueba un producto como seguro y eficaz para un uso especificado, cualquier promoción del fabricante para otros usos – conocida como usos "no aprobados" – hace que el producto esté mal rotulado.

Tony West, Secretario de Justicia Auxiliar de la División Civil del Departamento de Justicia y Sally Quillian Yates, Fiscal Federal para el Distrito Norte de Georgia, anunciaron hoy la presentación de una acusación criminal contra Allergan por promover Botox® para dolores de cabeza, dolores generales, espasticidad y parálisis cerebral juvenil: nada de lo cual está aprobado por la FDA. Según la acusación criminal, Allergan fijó como una de sus principales prioridades corporativas maximizar las ventas de Botox® para tales usos no aprobados.

En 1989, la FDA aprobó Botox®, un producto biológico de venta bajo receta que contiene la toxina botulínica tipo A, una neurotoxina purificada, para tratar el estrabismo (ojos bizcos) y el blefaroespasmo (la contracción involuntaria del músculo del párpado). En 2000 y 2004, fue aprobado para tratar la distonía cervical (la contracción involuntaria del músculo del cuello) y la hiperhidrosis axilar primaria (transpiración excesiva en las axilas), respectivamente. En 2010, fue aprobado para tratar la espasticidad en las extremidades superiores en adultos.

La acusación criminal alega que Allegan explotó su indicación aprobada para tratar la distonía cervical (CD) para hacer crecer ventas no aprobadas para dolores generales y de cabeza (HA). En 2003, Allegan desarrolló la "Iniciativa CD/HA" como "estrategia de rescate" en caso de que sus pruebas clínicas tuvieran resultados negativos con el objetivo de garantizar una expansión sostenida en los mercados de dolores generales y de cabeza. Como parte de esta iniciativa, Allergan alegó que la distonía cervical estaba "subdiagnosticada" y que los médicos podían diagnosticarla basándose en síntomas de dolor general y dolor de cabeza, aun cuando "no observaran distonía cervical".

Las tácticas de comercialización de usos no aprobados de Allergan también incluían el uso de médicos que generalmente tratan a pacientes con afecciones no aprobadas. En 2003, Allergan duplicó el tamaño de su equipo de reembolsos para ayudar a los médicos a obtener el pago de inyecciones de Botox® no aprobadas. Allergan realizaba talleres para enseñarles a los médicos y su personal administrativo cómo facturar usos no aprobados, llevaba a cabo auditorías detalladas de los registros de facturación de los médicos para demostrar cómo podían ganar dinero inyectando Botox® y operaba la Línea Directa de Reembolsos por Botox®, que brindaba una amplia gama de servicios gratuitos a pedido a médicos por usos no aprobados. Allergan también hizo trabajos de cabildeo a favor de programas gubernamentales de servicios médicos que expandieran la cobertura para usos no aprobados, dirigió talleres y cenas para médicos enfocados en usos no aprobados, les pagó a médicos para que asistieran a “consejos asesores” que promovían usos no aprobados y creó una organización en línea supuestamente independiente de educación sobre neurotoxinas para estimular un mayor uso de Botox® para indicaciones no aprobadas.

“La Ley Federal de Alimentos, Medicamentos y Cosméticos protege al público contra medicamentos y productos biológicos cuya seguridad y eficacia no están comprobadas. Cuando las empresas farmacéuticas realizan declaraciones infundadas y engañosas sobre sus productos, debilitan la protección de la salud pública que hace la Ley”, dijo Tony West, Secretario de Justicia Auxiliar de la División Civil del Departamento de Justicia. “Seguiremos enjuiciando a las empresas farmacéuticas que violen la Ley para su propio beneficio financiero”.

“La FDA había aprobado usos terapéuticos del Botox solo para cuatro afecciones poco usuales, pero Allergan fijó como una de sus principales prioridades corporativas maximizar las ventas de usos no aprobados mucho más lucrativos no aprobados por la FDA”, dijo Sally Yates, Fiscal Federal para el Distrito Norte de Georgia. “Allergan exigió un crecimiento tremendo de estas ventas no aprobadas año tras año, aun cuando existía escasa evidencia clínica de la efectividad de estos usos. El proceso de aprobación de la FDA se asegura de que las empresas farmacéuticas comercialicen sus medicamentos para usos con seguridad y eficacia comprobadas, y este caso demuestra que las empresas que no cumplen estas normas enfrentan un enjuiciamiento criminal y fuertes multas”.

Allergan ha aceptado declararse culpable de un delito menor criminal por uso indebido de Botox® en violación a la FDCA. Bajo el acuerdo de declaración de culpabilidad, la empresa pagará una multa criminal de $375 millones de dólares, lo que incluye la confiscación de bienes por un valor de $25 millones de dólares. La declaración de culpabilidad y sentencia de Allergan no son finales hasta que sean aceptadas por el Tribunal Federal de Distrito.

“La FDA existe para garantizar que los medicamentos comercializados al pueblo estadounidense sean seguros y efectivos", dijo la Dra. Margaret Hamburg, Comisionada, Administración de Medicamentos y Alimentos de los EE.UU. “La promoción ‘no aprobada’ de medicamentos amenaza la salud pública y el papel de la FDA, que ha servido correctamente a nuestro país y protegido a los estadounidenses de medicamentos inseguros e ineficaces”.

Como parte del acuerdo conciliatorio civil, Allergan ha aceptado pagar $225 millones de dólares adicionales al gobierno federal y los estados para resolver reclamos de que sus prácticas ilegales de comercialización hicieron que se presentaran reclamos falsos a programas gubernamentales de servicios médicos como Medicare, Medicaid, TRICARE y el Programa Federal de Beneficios Médicos para Empleados, el Departamento de Asuntos de Veteranos y los Programas de la Oficina de Compensación del Trabajador del Departamento de Trabajo. El acuerdo conciliatorio civil trata alegatos de que desde el 2001 hasta el 2008 como mínimo, Allergan promovió el Botox para indicaciones no aprobadas que no estaban aceptadas médicamente y que, por consiguiente, no estaban cubiertas por programas federales de servicios médicos, realizó declaraciones infundadas y engañosas sobre la seguridad y eficacia de Botox® para indicaciones no aprobadas, instruyó a los médicos sobre cómo utilizar códigos indebidos en reclamos por Botox® para indicaciones no cubiertas usando códigos inadecuados de diagnóstico para garantizar el pago por parte de programas gubernamentales de servicios médicos y entregó incentivos a médicos para que inyectaran más Botox®. La parte federal de la cifra del acuerdo conciliatorio civil es de $210,250,000 dólares y Allergan pagará hasta $14,750,000 dólares a los estados que elijan participar en el acuerdo.

El acuerdo conciliatorio civil resuelve tres demandas presentadas en el tribunal federal en el Distrito Norte de Georgia bajo las disposiciones qui tam, o de denunciante, de la Ley de Reclamos Falsos, que permiten que los ciudadanos privados entablen acciones civiles de parte de los Estados Unidos y participen de cualquier recuperación lograda. Como parte de la resolución de hoy, los denunciantes – la Dra. Amy Lang, Charles Rushin, Cher Beilfuss, Kathleen O'Conner-Masse y Edward Hallivis – recibirán $37.8 millones de dólares de la parte del gobierno federal de la cifra del acuerdo conciliatorio.    

Allergan también ha ejecutado un Acuerdo de Integridad Corporativa [Corporate Integrity Agreement (CIA)] con la Oficina del Inspector General del Departamento de Salud y Servicios Humanos de los EE.UU. [Department of Health and Human Services, Office of Inspector General (HHS-OIG)]. El CIA de 5 años exige, entre otras cosas, que el directorio (o un comité del directorio) revise anualmente el programa de cumplimiento de la empresa y apruebe una resolución de que ha implementado un programa de cumplimiento eficaz; que determinados altos ejecutivos certifiquen anualmente que sus departamentos o áreas funcionales cumplen con los requisitos de los programas federales de servicios médicos; que Allergan les envíe a los médicos una carta notificándoles sobre el acuerdo conciliatorio; y que la empresa publique en su portal información sobre pagos a médicos, como honorarios, viajes o alojamiento. Allergan está sujeta a exclusión de programas federales de servicios médicos, entre ellos Medicare y Medicaid, por incumplimiento grave del CIA y a multas monetarias por incumplimientos de menor gravedad.

“La comercialización fraudulenta de medicamentos a través de la promoción de usos no aprobados o comisiones ilícitas a médicos que recetan los medicamentos debilita las protecciones brindadas por el proceso de aprobación de medicamentos y la toma de decisiones médicas. No se tolerará esta conducta”, dijo Daniel R. Levinson, Inspector General del Departamento de Salud y Servicios Humanos. “Como resultado de este acuerdo conciliatorio, la OIG supervisará un Acuerdo de Integridad Corporativa con Allergan que incrementa la transparencia de las interacciones de Allergan con los médicos y contribuye a asegurar el cumplimiento y la responsabilidad de la empresa en el futuro”.

“Esta fue una investigación compleja muy demandante en cuanto a los recursos necesarios para realizar las numerosas entrevistas y documentar revisiones necesarias para que llegáramos al punto en que estamos hoy”, dijo Brian D. Lamkin, Agente Especial a Cargo de la oficina del Buró Federal de Investigaciones [Federal Bureau of Investigation (FBI)] en Atlanta. “El FBI, gracias a su vasta experiencia en la investigación de fraude en los servicios médicos, no solo puede brindar dichos recursos, sino que también puede reconocer qué circunstancias son las que más necesitan esos recursos. Las tácticas de comercialización de usos no aprobados de Allergan eran una de esas circunstancias mencionadas anteriormente”.

Allergan comercializa el Botox® para su uso cosmético aprobado bajo la marca comercial Botox® Cosmetic. Botox® Cosmetic posee su propio rótulo y código farmacéutico aprobado por la FDA. La resolución anunciada hoy no está relacionada con Botox® Cosmetic.

Están a cargo de la acusación del caso criminal la Oficina de Litigios de Consumidores de la División Civil y la Fiscalía Federal del Distrito Norte de Georgia. El acuerdo conciliatorio civil fue concretado por la División de Litigios Comerciales de la División Civil y la Fiscalía Federal. La Oficina del Consejero del Inspector General del HHS, el Centro de Servicios de Medicare y Medicaid, la Oficina del Consejero Principal de la FDA y la Asociación Nacional de Unidades de Control de Fraude contra Medicaid brindaron asistencia en el caso.

Estuvieron a cargo de la investigación en el caso el FBI, la Oficina de Investigación Criminal de la FDA y la HHS-OIG. La Oficina de Administración de Personal de la Oficina del Inspector General, Integridad del Programa TRICARE, la Oficina del Inspector General del Departamento de Asuntos de Veteranos y la Oficina del Inspector General del Departamento de Trabajo brindaron asistencia a la investigación.

“Los empleados federales y también los contribuyentes estadounidenses merecen proveedores de servicios médicos, entre ellos fabricantes de medicamentos, que cumplan con los estándares más altos de conducta ética y profesional”, dijo Patrick E. McFarland, Inspector General de la Oficina de Administración de Personal de los EE.UU. “El acuerdo conciliatorio de hoy hace recordar a la industria farmacéutica que debe cumplir con esos estándares y refleja el compromiso de las organizaciones federales de aplicación legal de enjuiciar conducta incorrecta e ilegal que pone en riesgo a quienes reciben servicios médicos”.

Este acuerdo conciliatorio forma parte del enfoque del gobierno en la lucha contra el fraude de servicios médicos. Una de las herramientas más poderosas en dicha iniciativa es la Ley de Reclamos Falsos, utilizada por el Departamento de Justicia para recuperar aproximadamente $3.1 billones de dólares desde enero de 2009 en casos asociados al fraude contra los programas federales de servicios médicos. Las recuperaciones totales del Departamento de Justicia en casos asociados a la Ley de Reclamos Falsos desde enero de 2009 superan los $4 billones de dólares.

Denuncia Belifuss O'Connor-Masse (PDF)

Denuncia Hallivis (PDF)

Denuncia Lang-Rushin (PDF)

WASHINGTON – American pharmaceutical manufacturer Allergan Inc. has agreed to plead guilty and pay $600 million to resolve its criminal and civil liability arising from the company’s unlawful promotion of its biological product, Botox® Therapeutic, for uses not approved as safe and effective by the Food and Drug Administration (FDA), the Justice Department announced today.  The resolution includes a criminal fine and forfeiture totaling $375 million and a civil settlement with the federal government and the states of $225 million.

Under the Food, Drug and Cosmetic Act (FDCA), a company in its application to the FDA must specify each intended use of a biological product.  After the FDA approves the product as safe and effective for a specified use, any promotion by the manufacturer for other uses – known as “off-label” uses – renders the product misbranded.

Tony West, Assistant Attorney General for the Civil Division of the Department of Justice, and Sally Quillian Yates, U.S. Attorney for the Northern District of Georgia, today announced the filing of a criminal information against Allergan for promoting Botox® for headache, pain, spasticity and juvenile cerebral palsy – none of which were approved by the FDA.  According to the criminal information, Allergan made it a top corporate priority to maximize sales of Botox® for such off-label uses.

In 1989, the FDA approved Botox®, a prescription biological product containing botulinum toxin type A, a purified neurotoxin, to treat strabismus (crossed eyes) and blepharospasm (involuntary eyelid muscle contraction).  In 2000 and 2004, approval was given to treat cervical dystonia (involuntary neck muscle contraction) and primary axillary hyperhidrosis (excessive underarm sweating), respectively.  In 2010, approval was given to treat adult upper-limb spasticity.

The criminal information alleges that Allergan exploited its on-label cervical dystonia (CD) indication to grow off-label pain and headache (HA) sales.  In 2003, Allergan developed the “CD/HA Initiative” as a “rescue strategy” in the event of negative results from its clinical trials to ensure continued expansion into the pain and headache markets.  As part of this initiative, Allergan claimed that cervical dystonia was “underdiagnosed” and that doctors could diagnose cervical dystonia based on headache and pain symptoms, even when the doctor “doesn’t see any cervical dystonia.”

Allergan’s off-label marketing tactics also included calling on doctors who typically treat patients with off-label conditions.  In 2003, Allergan doubled the size of its reimbursement team to assist doctors in obtaining payment for off-label Botox® injections.  Allergan held workshops to teach doctors and their office staffs how to bill for off-label uses, conducted detailed audits of doctors’ billing records to demonstrate how they could make money by injecting Botox®, and operated the Botox® Reimbursement Hotline, which provided a wide array of free on-demand services to doctors for off-label uses.  Allergan also lobbied government health care programs to expand coverage for off-label uses, directed physician workshops and dinners focused on off-label uses, paid doctors to attend “advisory boards” promoting off-label uses, and created a purportedly independent online neurotoxin education organization to stimulate increased use of Botox® for off-label indications.

“The Food, Drug and Cosmetic Act protects the public from drugs and biologic products that are not proven to be safe and effective.  When drug companies make unsubstantiated and misleading statements about their products, they undermine the Act’s protection of public health,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice.  “We will continue to pursue drug companies that violate the Act for their own financial gain.”

“The FDA had approved therapeutic uses of Botox for only four rare conditions, yet Allergan made it a top corporate priority to maximize sales of far more lucrative off-label uses that were not approved by FDA,” said Sally Yates, U.S. Attorney for the Northern District of Georgia.  “Allergan further demanded tremendous growth in these off-label sales year after year, even when there was little clinical evidence that these uses were effective.  The FDA approval process ensures that pharmaceutical companies market their medications for uses that are proven to be safe and effective, and this case demonstrates that companies that fail to comply with these rules face criminal prosecution and stiff penalties.”

Allergan has agreed to plead guilty to a criminal misdemeanor for misbranding Botox® in violation of the FDCA.  Under the plea agreement, the company will pay a criminal fine of $375 million, which includes forfeiting assets of $25 million.  Allergan’s guilty plea and sentence is not final until accepted by the U.S. District Court.

“The FDA exists to assure that drugs marketed to the American people are safe and effective” said Dr. Margaret Hamburg, Commissioner, Food and Drug Administration. “The ‘off-label’ promotion of drugs threatens public health and the role of the FDA, which has served our country well and has protected Americans from unsafe and ineffective drugs.”

As part of the civil settlement, Allergan has agreed to pay an additional $225 million to the federal government and the states to resolve claims that its unlawful marketing practices caused false claims to be submitted to government health care programs such as Medicare, Medicaid, TRICARE, and to the Federal Employees Health Benefit Program, the Department of Veterans’ Affairs, and the Department of Labor’s Office of Workers’ Compensation Programs.   The civil settlement addresses allegations that from 2001 through at least 2008, Allergan promoted Botox for off-label indications that were not medically accepted and therefore not covered by federal health care programs, made unsubstantiated and misleading statements about the safety and efficacy of Botox® for off-label indications, instructed doctors to miscode Botox® claims for uncovered indications using inappropriate diagnosis codes to ensure payment by government health care programs, and provided inducements to doctors to inject more Botox®.   The federal share of the civil settlement amount is $210,250,000, and Allergan will pay up to $14,750,000 to states that opt to participate in the agreement.

The civil settlement resolves three lawsuits filed in federal court in the Northern District of Georgia under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery.  As part of today’s resolution, the whistleblowers – Dr. Amy Lang, Charles Rushin, Cher Beilfuss, Kathleen O'Conner-Masse, and Edward Hallivis – will receive $37.8 million from the federal share of the settlement amount.    

Allergan has also executed a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General (HHS-OIG).  The 5-year CIA requires, among other things, that the board of directors (or a committee of the board) annually review the company’s compliance program and pass a resolution that it has implemented an effective compliance program; that certain senior executives annually certify that their departments or functional areas are compliant with federal health care program requirements; that Allergan send doctors a letter notifying them about the settlement; and that the company post on its website information about payments to doctors, such as honoraria, travel, or lodging.  Allergan is subject to exclusion from federal health care programs, including Medicare and Medicaid, for a material breach of the CIA and subject to monetary penalties for less significant breaches.

“Fraudulent marketing of drugs through off-label promotion or kickbacks to prescribers undermines the protections afforded by the drug approval process and medical decision-making.  This conduct will not be tolerated,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services.  “As a result of this settlement, OIG will oversee a Corporate Integrity Agreement with Allergan that increases the transparency of Allergan’s interactions with physicians and helps to ensure the company’s future compliance and accountability.”

“This was a complex investigation that required much in terms of investigative resources in order to conduct the many interviews and document reviews needed to get us where we are today,” said Brian D. Lamkin, Special Agent in Charge, FBI Atlanta.  “The FBI, through its vast experience investigating health care fraud, is not only able to provide such resources, but is also able to recognize which circumstances need those resources the most.  The off-label marketing tactics employed by Allergen was one of those aforementioned circumstances.”

Allergan markets Botox® for its approved cosmetic use under the trade name Botox® Cosmetic.  Botox® Cosmetic has its own FDA-approved label and drug code.  The resolution announced today does not address Botox® Cosmetic.

The criminal case is being prosecuted by the Civil Division’s Office of Consumer Litigation and the U.S. Attorney’s Office for the Northern District of Georgia.  The civil settlement was reached by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office.  The HHS Office of Counsel to the Inspector General, the Center for Medicare and Medicaid Services, FDA’s Office of Chief Counsel, and the National Association of Medicaid Fraud Control Units provided assistance.

This matter was investigated by the FBI, the FDA’s Office of Criminal Investigation, and the HHS-OIG.  The Office of Personnel Management Office of Inspector General, TRICARE Program Integrity, the Department of Veterans’ Affairs Office of Inspector General, and the Department of Labor Office of Inspector General provided investigative assistance. 

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

This settlement is part of the government’s emphasis on combating health care fraud.  One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover approximately $3.1 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 have topped $4 billion.

Belifuss O'Connor-Masse Complaint (PDF)

Hallivis Complaint (PDF)

Lang-Rushin Complaint (PDF)

WASHINGTON – John McQueen, 33, a former sergeant and supervisor at the Lexington-Fayette County, Ky., Detention Center (FCDC), and Clarence McCoy, 31, a former corporal at FCDC, were sentenced today in federal court in Lexington, Ky., for their roles in the systematic abuse of detainees at FCDC, the Justice Department announced.  Federal Judge Karen K. Caldwell sentenced McQueen and McCoy to each serve 10 years in prison and two years of supervised release.

McQueen and McCoy were convicted by a federal jury on May 13, 2010.  Evidence at the trial established that the defendants and other FCDC officers conspired to deprive detainees of their constitutional rights by physically abusing them and by authoring false and misleading incident reports in order to conceal the abuse.  The conspiracy charge, for which both defendants were convicted, identified multiple incidents of abuse that occurred between Jan. 1, 2006, and Oct. 1, 2006.  The other charges related to specific incidents of abuse and specific acts of obstruction of justice.

“The power granted to correctional officers so that they can perform their critical public safety duties does not give them free rein to abuse the civil and constitutional rights of inmates under their supervision,” said Thomas E. Perez, Assistant Attorney General for the Justice Department’s Civil Rights Division.  “Those officers who abuse their power and the public trust in this way will be prosecuted to the fullest extent of the law.”

“Everyone is entitled to the protection of their civil rights,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky.  “This case is proof that the Department of Justice will actively pursue and prosecute anyone who violates another person’s civil rights no matter their position of authority.”

Before trial began, three additional co-defendants, all former employees of FCDC, pleaded guilty to federal charges connected to this case.  Former Lieutenant Christine LaFoe pleaded guilty to conspiring to obstruct justice; Sergeant Anthony Estep pleaded guilty to a civil rights charge and an obstruction charge for failing to intervene in the abuse of inmates; and former Corporal Scott Tyree pleaded guilty to a civil rights conspiracy charge.

This case was investigated by the Louisville field office of the FBI, and it was prosecuted by Trial Attorneys Jared Fishman and Benjamin Hawk of the Civil Rights Division of the Justice Department, with the assistance of Assistant U.S. Attorney James Arehart for the Eastern District of Kentucky.

WASHINGTON - A Natick, Mass., man was charged today in federal court in Boston with engaging in a scheme to conceal from the Federal Election Commission (FEC) and from the public illegal campaign contributions made to federal campaign committees, and with witness tampering, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Carmen M. Ortiz for the District of Massachusetts; and Richard DesLauriers, Special Agent in Charge of the FBI in New England.  Martin Raffol, 54, was charged today in a two-count criminal information with one count of engaging in a scheme to conceal material information from a federal agency and with witness tampering.

According to the court document, Raffol served as executive vice-president for a company that provided management services to a portfolio of real estate holdings, including several publically-subsidized housing communities in the Dorchester and Roxbury neighborhoods of Boston.  Executives from the company and its parent company actively solicited campaign contributions from various individuals and entities for candidates running for federal, state and local office throughout the years, as part of its business.  According to the court document, these executives did so primarily to advance the business interests of the company, including obtaining support for public financing of a large-scale development project within the city of Boston.

As part of an effort to increase the amount of campaign contributions to candidates who supported the company’s projects or who might support these projects in the future, executives and senior management allegedly directed Raffol to solicit campaign contributions from vendors who regularly did work for the company

Raffol in turn allegedly engaged in an ongoing scheme whereby he caused these vendors to be reimbursed for substantial campaign contributions solicited from them.  This included vendors who provided general contracting services, energy services and security services.  As a result of Raffol’s alleged scheme, the true source of these vendors’ campaign contributions was disguised from the FEC, similar state authorities, campaign committees, and ultimately, the public.  In total, Raffol caused more than $12,000 in illegal campaign contributions to be made to candidates running for federal office, including candidates for the U.S. House of Representatives.  He also caused more than $30,000 in illegal contributions to be made to candidates running for state and local office, including candidates for governor, lieutenant governor, secretary of the commonwealth, state senate, state house of representatives, district attorney, mayor of the city of Boston and Boston City Council.  This alleged scheme caused numerous reports, which falsely indicated the source of these contributions, to be unwittingly filed by the relevant political committees with the FEC and similar authorities. There is no evidence that the federal campaign committees had knowledge of Raffol’s alleged reimbursement scheme.

The court document also alleges that Raffol engaged in witness tampering to conceal the illegal campaign contribution scheme and to prevent law enforcement from learning of the scheme.  Specifically, Raffol allegedly instructed a witness to lie to authorities if they questioned him about the alleged campaign contribution scheme. 

If convicted on these charges, Raffol faces up to five years in prison and a $250,000 fine for the false statement charge, and 20 years in prison and a $250,000 fine for the witness tampering charge.

The case was investigated by the FBI.  It is being prosecuted by Assistant U.S. Attorney James Dowden of the U.S. Attorney’s Office for the District of Massachusetts and Senior Litigation Counsel William M. Welch II of the Criminal Division.

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

WASHINGTON - Kexue Huang, aka John, 45, has been arrested and charged in a 17-count indictment with economic espionage intended to benefit a foreign government and instrumentalities, and interstate and foreign transportation of stolen property, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Timothy M. Morrison for the Southern District of Indiana.

Huang was arrested on July 13, 2010, in Westborough, Mass., by FBI agents, and today made his initial appearance in U.S. District Court for the Southern District of Indiana. According to the indictment, Huang is a Chinese national who was granted legal permanent resident status in the United States. The indictment alleges that Huang, formerly of Carmel, Ind., misappropriated and transported trade secrets and property to the People’s Republic of China (PRC) while working as a research scientist at Dow AgroSciences LLC (Dow). While he was employed at Dow, he then directed university researchers in the PRC to further develop the Dow trade secrets. He also allegedly applied for and obtained grant funding that was used to develop the stolen trade secrets.

"Economic espionage robs our businesses and inventors of hard-earned, protected research, and is particularly harmful when the theft of these ideas is meant to benefit a foreign government," said Assistant Attorney General Lanny A. Breuer of the Criminal Division.  "The protection of trade secrets and all intellectual property is vital to the economic success of our country, and our leadership in innovation.  We will continue to bring charges under the Economic Espionage Act wherever supported by the evidence."

"Complex cases like this one, where the challenge of highly technical evidence is compounded by geography, require extraordinary cooperation and flexibility between all components of the investigation," said U.S. Attorney Timothy M. Morrison.  "We had that here."

According to the indictment, Dow is a leading agricultural company that provides agrochemical and biotechnology products. Since approximately 1989, Dow has made substantial investments in research and development to produce a class of organic insect control and management products. A proprietary fermentation process has been used to develop these organic insecticides.

According to the indictment, Huang was employed as a Dow research scientist from early 2003 until Feb. 29, 2008. As a Dow employee, Huang signed an agreement that outlined his obligations in handling confidential information, including trade secrets, and prohibited him from disclosing any confidential information without Dow’s consent. Dow employed several layers of security to preserve and maintain confidentiality and to prevent unauthorized use or disclosure of its trade secrets.

In December 2008, Huang allegedly published an article without Dow’s authorization through Hunan Normal University (HNU) in the PRC, which contained Dow trade secrets. The article allegedly was based on work supported by grants from the National Natural Science Foundation of China (NSFC), a foreign instrumentality of the PRC. Huang also allegedly directed individuals associated with HNU to conduct research at their laboratories on Dow trade secrets. The indictment also alleges that beginning in March 2008, after leaving Dow, Huang applied for and ultimately received grants from NSFC which he used to develop Dow trade secrets.

The indictment also alleges that beginning as early as September 2007, Huang directed research in the PRC on Dow confidential information, including trade secrets, which he was assigned to research in the course of his Dow employment. In addition, the indictment alleges that Huang sought information about manufacturing facilities in the PRC that would allow him and others to compete in the same market as Dow.

Huang faces a maximum of 15 years in prison and a $500,000 fine on each of the 12 counts of economic espionage. He faces 10 years in prison and a $250,000 fine on each of the five counts of transportation of stolen property.

The case is being prosecuted by Assistant U.S. Attorney Cynthia J. Ridgeway of the U.S. Attorney’s Office for the Southern District of Indiana as well as Assistant U.S. Attorney Mark L. Krotoski and Trial Attorney Evan C. Williams of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS). The National Security Division provided assistance in this matter. The investigation is being conducted by the FBI. Significant assistance in the case has also been provided by the CCIPS Cybercrime Lab.

The charges contained in the indictment are merely allegations, and the defendant is presumed innocent until proven guilty.

WASHINGTON – A medical doctor, a clinic owner and four nurses, all South Florida residents, pleaded guilty today before U.S. District Judge Adalberto Jordan in U.S. District Court in Miami for their participation in a fraudulent Medicare home health care scheme, the Departments of Justice and Health and Human Services (HHS) announced.  Another nurse pleaded guilty on Aug. 25, 2010, to charges for her role in the scheme.  The individuals were originally charged in a December 2009 indictment. 

Dr. Fred Dweck pleaded guilty to one count of conspiracy to commit health care fraud and one count of making false statements in patient files.  According to plea documents, Dr. Dweck admitted to referring 858 Medicare recipients for unnecessary home health care services.  Specifically, Dr. Dweck admitted to signing prescriptions, plans of care and medical certifications for these patients, making it appear that they qualified for home health care services, when in fact they did not qualify for the services.  The services included therapy and skilled nursing visits for purported diabetic insulin injections.  As a result of Dr. Dweck’s referrals, Miami-area home health care agencies billed the Medicare program for more than $37 million in false and fraudulent claims.  Medicare paid more than $22 million of the fraudulent claims.

Dr. Dweck’s co-defendant, Yudel Cayro, pleaded guilty to one count of conspiracy to commit health care fraud.  According to plea documents, Cayro admitted to being an owner and operator of Courtesy Medical Group Inc., a Miami-area clinic that employed Dr. Dweck.  Cayro admitted that he received kickbacks and bribes from people who recruited Medicare recipients into the scheme and from the owners and operators of Miami-area home health agencies in return for having Dr. Dweck issue prescriptions, plans of care and medical certifications for unnecessary home health care and therapy services.  Cayro admitted that approximately 344 Medicare recipients were referred for such unnecessary services through his clinic, resulting in more than $16 million of fraudulent billing to the Medicare program by home health agencies.  Medicare paid approximately $9.8 million for medically unnecessary home health care and therapy services.

Nurses Teresita Leal, Armando Sanchez, Lissbet Diaz, Marlenys Fernandez and Silvio Ruiz each pleaded guilty to one count of conspiracy to commit health care fraud and one count of making false statements in patient files.  According to court documents, each of the nurses worked at various times for ABC Home Health Care Inc. and/or Florida Home Health Care Providers Inc., two Miami-area home health care agencies.  The nurses admitted to falsifying patient files for Medicare beneficiaries to make it appear that the beneficiaries qualified for home health care and therapy services.  The nurses admitted that they did so in agreement with their co-conspirators so that the Medicare program could be billed for medically unnecessary services.  The owners and operators of ABC and Florida Home Health pleaded guilty last year in a separate case for their roles in the scheme.  According to court documents, each nurse accepted responsibility for the billings to the Medicare program for certain patients each nurse purported to treat through ABC and/or Florida Home Health. 

At sentencing, set for December 2010, each defendant faces a maximum of 10 years in prison for each conspiracy to commit health care fraud count and five years in prison for each false statement count.

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 cases are being prosecuted by Trial Attorneys N. Nathan Dimock, Sam Sheldon and Henry Van Dyck, with assistance from Trial Attorneys Sarah Hall and Joe Beemsterboer of the Criminal Division’s Fraud Section.  The case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.  

Since its inception in March 2007, the Medicare Fraud Strike Force operations in seven districts have obtained indictments of more than 810 individuals and organizations that collectively have billed the Medicare program for more than $1.85 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 – Un médico, el propietario de una clínica y cuatro enfermeros, todos residentes del sur de la Florida, se declararon culpables hoy ante el Juez Federal de Distrito Adalberto Jordàn en el Tribunal Federal de Distrito en Miami por su participación en un ardid fraudulento de servicios médicos a domicilio de Medicare, anunciaron los Departamentos de Justicia y Salud y Servicios Humanos [Health and Human Services (HHS)]. Otra enfermera se declaró culpable el 25 de agosto de 2010 de cargos por su papel en el ardid. Los cargos originales a los demandados se presentaron en una acusación formal de diciembre de 2009.

El Dr. Fred Dweck se declaró culpable de un cargo de conspirar para cometer fraude de servicios médicos y un cargo de realizar declaraciones falsas en expedientes de pacientes. Según los documentos de declaración de culpabilidad, el Dr. Dweck admitió referir a 858 pacientes de Medicare por servicios innecesarios de servicios médicos a domicilio. Específicamente, el Dr. Dweck admitió firmar recetas, planes de servicios y certificados médicos para estos pacientes en que simulaba que calificaban para servicios médicos a domicilio, cuando en realidad no era así. Los servicios incluían terapia y visitas de enfermeros calificados para supuestas inyecciones de insulina para diabéticos. Como resultado de los referidos del Dr. Dweck, agencias de servicios médicos a domicilio del área de Miami facturaron más de $37 millones de dólares en reclamos falsos y fraudulentos al programa Medicare. Medicare pagó más de $22 millones de dólares de los reclamos fraudulentos.

El codemandado del Dr. Dweck, Yudel Cayro, se declaró culpable de un cargo de conspirar para cometer fraude de servicios médicos. Según los documentos de declaración de culpabilidad, Cayro admitió ser propietario y operador de Courtesy Medical Group Inc., una clínica del área de Miami que empleaba al Dr. Dweck. Cayro admitió haber recibido comisiones ilícitas y sobornos de personas que reclutaban a beneficiarios de Medicare para el ardid y de los propietarios y operadores de agencias de servicios médicos a domicilio del área de Miami a cambio de hacer que el Dr. Dweck recetara medicamentos, planes de servicios y certificados médicos para tales servicios innecesarios a través de su clínica, lo que generó más de $16 millones de dólares de facturaciones fraudulentas al programa Medicare por parte de agencias de servicios médicos a domicilio. Medicare pagó aproximadamente $9.8 millones de dólares por servicios a domicilio y terapias médicamente innecesarias.

Los enfermeros Teresita Leal, Armando Sànchez, Lissbet Díaz, Marlenys Fernàndez y Silvio Ruiz se declararon culpables de un cargo cada uno de cometer fraude de servicios a domicilio y un cargo cada uno de hacer declaraciones falsas en expedientes de pacientes. Según el expediente judicial, cada uno de los enfermeros trabajó en diferentes momentos para ABC Home Health Care Inc. y/o Florida Home Health Care Providers Inc., dos agencias de servicios médicos a domicilio del área de Miami. Los enfermeros admitieron haber falsificado expedientes de pacientes para beneficiarios de Medicare para que pareciera que calificaban para servicios médicos a domicilio y servicios de terapias. Además, admitieron haberlo hecho en acuerdo con sus coconspiradores para poder facturar servicios médicamente innecesarios al programa de Medicare. Los propietarios y operadores de ABC y Florida Home Health se declararon culpables el año pasado en un caso aparte por sus papeles en el ardid. Según el expediente judicial, cada enfermero aceptó su responsabilidad por las facturaciones realizadas al programa Medicare por determinados pacientes que cada enfermero alegó tratar a través de ABC y/o Florida Home Health. 

En la lectura de la sentencia, programada para diciembre de 2010, cada demandado enfrenta un máximo de 10 años de prisión por cada cargo de conspirar para cometer fraude de servicios médicos y cinco años de prisión por cada cargo de declaraciones falsas.

Las declaraciones de culpabilidad fueron anunciadas por el Secretario de Justicia Auxiliar Lanny A. Breuer de la División Criminal; el Fiscal Federal Wifredo A. Ferrer del Distrito Sur de Florida; John V. Gillies, Agente Especial a Cargo de la Oficina Local de Miami del Buró Federal de Investigaciones [Federal Bureau of Investigation (FBI)]; y el Agente Especial a Cargo Christopher Dennis de la Oficina de Investigaciones de Miami de la Oficina del Inspector General del Departamento de Salud y Servicios Humanos [Health and Human Services, Office of the Inspector General (OIG)].

Están a cargo de la acusación en los casos los Abogados Litigantes N. Nathan Dimock, Sam Sheldon y Henry Van Dyck, con asistencia de los Abogados Litigantes Sarah Hall y Joe Beemsterboer de la Sección de Fraude de la División Criminal. El caso fue investigado por el FBI y la HHS-OIG y surgió como parte de la Fuerza de Ataque de Fraude contra Medicare, supervisada por la Sección de Fraude de la División Criminal, y la Fiscalía Federal para el Distrito Sur de Florida.  

Desde su creación en marzo de 2007, las operaciones de las Fuerzas de Ataque de Fraude contra Medicare en siete distritos obtuvieron las acusaciones formales de más de 810 individuos y organizaciones que, en conjunto, facturaron de manera fraudulenta al programa Medicare más de $1.85 billones de dólares. Además, los Centros para Servicios de Medicare y Medicaid del HHS, trabajando en conjunto con la HHS-OIG, están tomando medidas para aumentar la responsabilización y reducir la presencia de proveedores fraudulentos.

Para obtener màs información sobre el Equipo de Acción, Prevención y Control de Fraude de Servicios Médicos [Healthcare Fraud Prevention and Enforcement Action Team (HEAT)], visite: www.stopmedicarefraud.gov.

WASHINGTON – The United States has asked a federal court to permanently bar a Birmingham, Ala., man from preparing federal tax returns for customers, the Justice Department announced today.  The suit, filed in U.S. District Court in Birmingham, alleges that Douglas E. Dent fabricates large tax withholdings that result in large bogus refund claims on customers’ tax returns.  

According to the complaint, each of the 47 federal tax returns prepared by Dent since 2008 has requested a fraudulent refund, often in amounts exceeding $100,000.  The total amount of bogus refunds Dent has sought for customers exceeds $14 million.  The government alleges that Dent often uses false Internal Revenue Service (IRS) Forms 1099-OID to report both fictitious interest income and tax withholdings.   

Return preparer fraud and bogus refund claims based on false 1099-OID forms are identified by the IRS as two of the 2010 “Dirty Dozen” tax scams.  Since 2001, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns.  Information about these cases is available on the Justice Department website.

WASHINGTON – The Justice Department today filed a lawsuit against the Maricopa County Community College District, alleging that it engaged in a pattern or practice of discrimination by imposing unnecessary and discriminatory hurdles to employment for work authorized non-citizens.  The Community College District, known as Maricopa Community Colleges, is located in Maricopa County, Ariz. 

The department’s investigation revealed that Maricopa Community Colleges required all newly hired non-citizens to present additional work authorization documents beyond those required by law, but did not require U.S. citizens to do so.  The Immigration and Nationality Act (INA) requires employers to treat authorized workers in the same manner during the hiring process, regardless of their citizenship status.  Yet, Maricopa Community Colleges imposed different and greater documentary requirements on at least 247 non-U.S. citizens, and did not end this practice until January 2010, well after the Justice Department initiated its investigation.

“The INA’s anti-discrimination provision makes it unlawful to treat authorized workers differently during the hiring process based on their citizenship status,” said Thomas E. Perez, the Assistant Attorney General in charge of the Civil Rights Division.  “Our Office of Special Counsel for Immigration Related Unfair Employment Practices (OSC) is acting now to remedy this pattern or practice of discrimination.”

The lawsuit charging Maricopa Community Colleges was filed before the Office of the Chief Administrative Hearing Officer within the Executive Office for Immigration Review, another component of the Department of Justice. 

OSC is responsible for enforcing the anti-discrimination provision of the INA, which protects work authorized individuals against employment discrimination on the basis of citizenship status or national origin discrimination, including discrimination in hiring and the employment eligibility verification (Form I-9) process.  For more information about protections against employment discrimination under the immigration laws, call 1-800-255-7688 (OSC’s worker hotline) (1-800-237-2525, TDD for hearing impaired), 1-800-255-8255 (OSC’s employer hotline) (1-800-362-2735, TDD for hearing impaired), or 202-616-5594; email [email protected]; or visit OSC’s website at www.justice.gov/crt/osc.

WASHINGTON – Hewlett-Packard Co. (HP) has agreed to pay the United States $55 million to settle claims that the company defrauded the General Services Administration (GSA) and other federal agencies, the Justice Department announced today.  This settlement resolves allegations under the False Claims Act that HP knowingly paid kickbacks, or “influencer fees,” to systems integrator companies in return for recommendations that federal agencies purchase HP’s products.  The settlement also resolves claims that HP’s 2002 contract with the GSA was defectively priced because HP provided incomplete information to GSA contracting officers during contract negotiations.  
 
“Contractors must deal fairly with the government when doing business with federal agencies,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice.  “As this case demonstrates, we will take action against those who seek to taint the government procurement process with illegal kickbacks.” 
 
The allegations that HP improperly paid kickbacks were first made in a lawsuit that whistleblowers Norman Rille and Neal Roberts filed in the U.S. District Court for the Eastern District of Arkansas in 2004.  Under the qui tam provisions of the False Claims Act, private citizens may file actions for fraud on behalf of the United States and share in any recovery.
 
“In this district, we are committed to aggressively pursuing any actions in which the government has been defrauded.” said Jane W. Duke, U.S. Attorney for the Eastern District of Arkansas.  “Ultimately, it is the taxpayers’ money at issue and our office works to protect the citizens of the United States.”
 
HP disclosed the defective pricing allegations resolved by today’s settlement to GSA contracting officials.  In 2002, HP entered into a contract with GSA to sell computer equipment and software to federal agencies.  Under applicable regulations and contract provisions, HP was required to tell GSA how it conducted business in the commercial marketplace so that GSA could use that information to negotiate a fair price for government customers using the GSA contract to purchase HP products.  HP informed GSA contracting officials in 2007 that it might not have complied with all applicable provisions of the GSA contract.  This disclosure led to an audit by the GSA Office of Inspector General (GSA-OIG), which concluded that the contract had been defectively priced. 

“Americans deserve the best deal possible when their hard-earned tax dollars are used,” said GSA Inspector General Brian D. Miller.  “We will aggressively pursue companies that overcharge the government.”
 
The United States has settled kickback allegations similar to those made in this case in matters involving IBM for $2.9 million, Computer Sciences Corporation for $1.37 million, and PWC for $2.3 million.  In addition, these same allegations were a part of a settlement with EMC Corporation which totaled $87.5 million.  The EMC settlement also settled defective pricing claims found through an audit by the GSA OIG.
 
The civil investigation and resulting settlement were jointly handled by the Justice Department’s Civil Division and the Office of the U.S. Attorney for the Eastern District of Arkansas, with assistance from the GSA-OIG, the Office of Inspector General of the Department of Energy, and the Defense Criminal Investigative Service.
 
The qui tam action is entitled United States ex rel. Rille. v. Hewlett-Packard, Inc., Civil No. 4-04 cv 0988(E.D. Ark.).
 

WASHINGTON- Four promoters of a Florida-based business that sold illegal tax defiance schemes, American Rights Litigators/Guiding Light of God Ministries (ARL), were sentenced today by U.S. District Judge Royce C. Lamberth, the Justice Department and Internal Revenue Service (IRS) announced today.  All four defendants were convicted in May 2010 following a one-month jury trial. 

Eddie Ray Kahn, formerly of Sorrento, Fla., was sentenced to 20 years in prison for conspiracy to defraud the United States and to commit mail fraud and one count of mail fraud.  Stephen C. Hunter, formerly of Candler, Fla., and Danny True, of Deltona, Fla., were sentenced to 10 years in prison for conspiracy to defraud the United States and three counts of mail fraud.  Allan J. Tanguay, of Flagler Beach, Fla., was sentenced to 10 years in prison for conspiracy to defraud the United States and to commit mail fraud and one count of mail fraud.

The evidence at trial showed that Kahn founded and ran ARL from 1996 through 2004.  During that time, ARL enrolled more than 4,000 customers from all 50 states and the District of Columbia.  Defendants Hunter, True and Tanguay worked at ARL with Kahn to develop and sell tax defiance schemes based on deliberate misrepresentations of the legal foundation of the tax system.

The evidence at trial showed that the purpose of the tax defiance schemes promoted by the four men was to thwart the IRS in its attempts to assess and collect taxes by various means.  These schemes included manufacturing and selling more than one thousand worthless “bills of exchange” supposedly drawn on the U.S. Treasury for customers to use in purported payment of their taxes, as well as producing false and harassing complaints against IRS employees that were sent to the Treasury Inspector General for Tax Administration (TIGTA) in Washington, D.C.

The Justice Department filed a lawsuit against ARL which resulted in a December 2003 preliminary injunction ordering ARL to cease selling its schemes.  The evidence at trial showed that the defendants continued to prepare fraudulent and obstructive correspondence to the IRS on behalf of ARL customers, even after the entry of that order.

“This is precisely the type of conduct the Tax Division is committed to stopping under the National Tax Defier Initiative,” said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. “Those who promote illegal tax defiance face prosecution and lengthy prison terms.”                      

“Today, justice is served, and these four individuals are being held accountable for their criminal actions. The manufacturing of worthless ‘bills of exchange’ was nothing more than a sham to disguise their intent to evade the payment of taxes,” said Victor S.O. Song, Chief, IRS Criminal Investigation. “IRS special agents work diligently to identify and bring to prosecution both those who evade their taxes, and those who assist others in evading their tax obligations – it’s a matter of maintaining public confidence in our system of taxation.”

Acting Assistant Attorney General DiCicco commended the IRS and TIGTA agents who investigated the case, as well as Tax Division Trial Attorneys Jeffrey McLellan, Tino Lisella, and Melissa Siskind, who prosecuted the case.

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

Kahn’s previous sentence in the Wesley Snipes case: www.justice.gov/tax/usaopress/2008/txdv08343.htm.

ARL injunction: www.justice.gov/tax/prtax/txdv03730.htm.

WASHINGTON – A federal court has issued a permanent injunction barring Chris Elmer of Sacramento, Calif., from preparing federal tax returns for others after Oct. 14, 2010, the Justice Department announced today. U.S. District Court Judge John A. Mendez entered the order and judgment. The permanent injunction also bars Elmer’s tax-preparation company, Associated Tax Planners Inc. (ATP), and its principals (Elmer’s sons and son-in-law) from promoting a variety of improper tax schemes, and requires Elmer to divest himself of his interest in ATP.  Elmer and his co-defendants consented to the entry of the permanent injunction.

The government’s complaint alleged that ATP repeatedly claimed false or inflated business deductions, many of which were allegedly claimed as purported business expenses of sham partnerships. The complaint also alleged that in many instances the defendants claimed purported partnership business losses on customers’ individual tax returns regardless of whether the customers actually had a partnership or other business enterprise.  In addition, the government asserted that the defendants often did not file a corresponding partnership return when their customers reported partnership losses on their individual returns, or fabricated phony Internal Revenue Service (IRS) tax identification numbers for the partnerships to conceal their sham nature.       

The terms of the court’s order also require that any of the remaining defendants (other than Chris Elmer) who wish to continue to prepare tax returns for others must pass the IRS’s enrolled agent’s examination within three years.  And the injunction provides for the appointment of a neutral monitor to evaluate whether ATP in the future is abiding by the terms of the injunction.       

John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Justice Department trial attorney Brian H. Corcoran for handling the case, and also thanked Revenue Agent Dennis Brown of the IRS’s Small Business/Self-Employed unit in Sacramento.       

In the past decade, the Justice Department’s Tax Division has obtained more than 470 injunctions to stop tax fraud promoters and tax return preparers.  Information about these cases is available on the Justice Department website.

WASHINGTON — The Department of Justice announced today that in light of the agreement by United Airlines Inc. and Continental Airlines Inc. to transfer takeoff and landing rights (slots) and other assets at Newark Liberty Airport to Southwest Airlines Co., the department has closed its investigation into the proposed merger of UAL Corporation, the parent of United, and Continental. United and Continental entered into the arrangement with Southwest in response to the department’s principal concerns regarding the competitive effects of the proposed United/Continental merger.

The department conducted a thorough investigation. The proposed merger would combine the airlines’ largely complementary networks, which would result in overlap on a limited number of routes where United and Continental offer competing nonstop service. The largest such routes are between United’s hub airports and Continental’s hub at Newark airport, where Continental has a high share of service and where there is limited availability of slots, making entry by other airlines particularly difficult.  The transfer of slots and other assets at Newark to Southwest, a low cost carrier that currently has only limited service in the New York metropolitan area and no Newark service, resolves the department’s principal competition concerns and will likely significantly benefit consumers on overlap routes as well as on many other routes. The slot transfer is through a lease that permanently conveys to Southwest all of Continental’s rights in the assets, in compliance with FAA rules.

Led by the office of the Ohio Attorney General, the offices of the attorneys general from California, Ohio, Texas, Virginia, Pennsylvania, North Dakota, New Jersey, Hawaii and the District of Columbia have also been investigating the proposed merger. The department is supportive of the states’ efforts to have any of their additional concerns about the proposed merger addressed.

United Airlines, based in Chicago, is the third largest carrier in the United States by revenue. In 2009, it collected $16.3 billion in revenue carrying approximately 80 million passengers. United and its regional affiliates offer service to more than 230 destinations in the United States and 30 other countries throughout the world.

Continental Airlines, based in Houston, is the fourth largest carrier in the United States by revenue. In 2009, it collected $12.6 billion in revenue carrying approximately 67 million passengers. Continental and its regional affiliates offer service to 265 destinations in the United States and over 50 other countries throughout the world.

Southwest Airlines, based in Dallas, is the sixth largest carrier in the United States by revenue. In 2009, it collected $10.4 billion in revenue carrying approximately 86 million passengers. Southwest serves 69 cities in the United States.

The Antitrust Division provides this information under its policy of issuing announcements related to the closing of investigations in appropriate cases. This announcement is limited by the division’s obligation to protect the confidentiality of certain information obtained in its investigations. As in most of its investigations, the division’s evaluation has been highly fact-specific, and many of the relevant underlying facts are not public. Consequently, readers should not draw overly broad conclusions regarding how the division is likely in the future to analyze other collaborations or activities, or transactions involving particular firms. Enforcement decisions are made on a case-by-case basis, and the analysis and conclusions discussed in this statement do not bind the division in any future enforcement actions. Guidance on the division’s policy regarding announcements related to the closing of investigations is available at www.usdoj.gov/atr/public/guidelines/201888.htm.

WASHINGTON - A federal grand jury in the District of Columbia has returned an indictment charging Stephen Jin-Woo Kim with unlawfully disclosing national defense information to a reporter for a national news organization and making false statements to the FBI.

The indictment, which was unsealed today, was announced by David S. Kris, Assistant Attorney General for the National Security Division; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; and Shawn Henry, Assistant Director in Charge of the FBI Washington Field Office.

Kim, age 43, was an employee of a federal contractor who was on detail to the State Department at the time of the alleged disclosure. Kim made his initial appearance today in court in the District of Columbia. If convicted, he faces up to 10 years in prison for the unlawful disclosure of national defense information and up to five years in prison for the making of false statements.

According to the indictment, in June 2009, Kim knowingly and willfully disclosed information contained in an intelligence report classified Top Secret/Sensitive Compartmented Information (TS/SCI) to a reporter for a national news organization who was not entitled to receive it. The classified information related to the national defense, specifically, intelligence sources and methods and intelligence concerning the military capabilities and preparedness of a particular foreign nation.

The indictment further alleges that, in September 2009, Kim made false statements to the FBI when he denied having had any contact with the reporter for a national news organization since meeting the reporter in March 2009, when in fact, Kim had had repeated contact with the reporter in the months following that meeting.

"The willful disclosure of classified information to those not entitled to it is a serious crime. Today’s indictment should serve as a warning to anyone who is entrusted with sensitive national security information and would consider compromising it," said Assistant Attorney General Kris. "I applaud the many agents, analysts and prosecutors who helped bring about today’s charges."

"The U.S. Attorney’s Office is committed to protecting our nation’s secrets and bringing to justice those who betray the confidence placed in them by the American people. I want to thank the dedicated career prosecutors, investigators, and members of the intelligence community who worked tirelessly to uncover Mr. Kim’s wrongdoing and bring it before the court," said U.S. Attorney Machen.

"National defense information disclosed illegally to any person or organization is a crime and serves only those who wish to harm the United States and its citizens," said FBI Assistant Director in Charge Henry.

This investigation was conducted by the FBI’s Washington Field Office. The prosecution is being handled by Assistant U.S. Attorneys G. Michael Harvey and Jonathan M. Malis of the U.S. Attorney’s Office for the District of Columbia, and Trial Attorney Patrick T. Murphy of the Counterespionage Section of the Justice Department’s National Security Division.

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

WASHINGTON - The owner of a Detroit-area medical clinic, Juan De Oleo, and a doctor who helped falsify files at the clinic, Dr. Rosa Genao, were convicted today by a federal jury in Detroit for their roles in a $2.3 million Medicare fraud scheme.

According to evidence presented during the two-week trial, Juan De Oleo owned a company called Xpress Center, Inc. (XPC), which was based in Livonia, Mich.  Evidence showed that De Oleo and others established XPC for the sole purpose of defrauding Medicare.  XPC was an outpatient clinic that purported to specialize in infusion and injection therapy.  According to the evidence at trial, De Oleo and his co-conspirators imported the concept of "infusion" clinic fraud from South Florida to Detroit after increased law enforcement scrutiny in Florida.  De Oleo enlisted his wife, Dr. Rosa Genao to help falsify medical files at XPC to make it appear that the clinic’s patients actually needed the medications being billed to Medicare.  According to the evidence presented at trial, Genao wrote down fictitious symptoms in the patient charts maintained by the clinic in order to justify expensive and exotic medications that the clinic billed to Medicare.  One of the exotic drugs, called octreotide, is used primarily in the treatment of acromegaly and severe diarrhea, and was billed by the clinic at several thousand dollars per dose.

As the evidence at trial showed, between approximately November 2006 and March 2007, the defendants submitted approximately $2.3 million in claims to Medicare for injection therapy services that were never provided and were not medically necessary.  Medicare paid approximately $1.7 million of those claims.

Evidence at trial showed that XPC purchased only a small fraction of the medications that the clinic billed the Medicare program for providing.  Patients were prescribed medications at the clinic based not on medical need, but rather on what medications were likely to generate the highest Medicare reimbursements. 

Evidence at trial showed that Medicare beneficiaries were not referred to XPC by their primary care physicians, or for any other legitimate medical purpose, but rather were recruited to come to the clinic through the payment of kickbacks.  In exchange for those kickbacks, evidence showed that the Medicare beneficiaries would visit the clinic and sign documents indicating that they had received the services billed to Medicare.  Kickbacks came in the form of cash payments. 

De Oleo was convicted of one count of conspiracy to commit health care fraud, five counts of health care fraud and two counts of money laundering.  Dr. Rosa Genao was convicted of one count of conspiracy to commit health care fraud, five counts of health care fraud and one count of destruction or alteration of records.  The health care fraud and money laundering counts carry a maximum penalty of 10 years in prison and a $250,000 fine while the destruction of records count carries a maximum penalty of 20 years in prison and a $250,000 fine.  A sentencing date has not yet been scheduled by the court.

Deirdre Teagan, a medical assistant who worked at XPC, was acquitted of one count of conspiracy to commit health care fraud and five counts of health care fraud.  The jury was unable to reach a verdict on the destruction of records count, and the court declared a mistrial on that count.

Including today’s guilty verdicts, seven individuals related to XPC have been convicted for their roles in Medicare fraud schemes.

Today’s verdict was announced by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the HHS Office of Inspector General’s (HHS-OIG) Chicago Regional Office.

The case was prosecuted by Trial Attorneys Benjamin D. Singer and Gejaa T. Gobena of the Criminal Division’s Fraud Section.  The FBI and HHS-OIG conducted the investigation.

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 Eastern District of Michigan. 

Since their inception in March 2007, Medicare Fraud Strike Force operations in seven districts have obtained indictments of more than 810 individuals who collectively have falsely billed the Medicare program for more than $1.85 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 HEAT team, go to: www.stopmedicarefraud.gov.

WASHINGTON — The Department of Justice and the U.S. Department of Agriculture (USDA) today held the fourth of five joint public workshops to explore the appropriate role for antitrust and regulatory enforcement in American agriculture. The workshop, led by Agriculture Secretary Tom Vilsack and U.S. Attorney General Eric Holder, examined competition in the livestock industry and featured panel discussions on trends in the livestock industry, market consolidation and market transparency. The workshop also included opportunities for public comments.

Today’s meeting was the fourth in a series of workshops intended to promote dialogue among interested parties and foster learning with a diverse group of stakeholders regarding competition and regulatory issues in the agricultural marketplace. These workshops are the first-ever to be held by the Department of Justice and the USDA to discuss competition and regulatory issues in the agriculture industry. Additional information about the workshops can be found at www.justice.gov/atr/public/workshops/ag2010/index.htm#overview.

 

“Ultimately, today’s conversation is about much more than simply last year’s trends or this year’s challenges. It’s about livelihoods, families, this region’s economy and our centuries-old American way of life,” said Attorney General Holder. “We’ve made these workshops a cabinet-level priority so that we can most effectively and efficiently determine how to ensure a fairer, more competitive marketplace for producers and consumers alike.”

“Given the consolidation that has taken place in the livestock industry over the past decades, it is critical to ensure a fair market still exists to give all players an honest chance at success,” said Secretary Vilsack. “A fair and competitive marketplace is important not only for producers, but also for consumers, and today’s open and transparent dialogue with ranchers, farmers, academics and other industry stakeholders will provide us with a understanding of the complex issues in this important industry.”

 

Secretary Vilsack and Attorney General Holder began the workshop with opening remarks before leading a roundtable discussion, in which Christine Varney, Assistant Attorney General for the Antitrust Division, participated with other federal and state officials, on competition issues in agriculture and the livestock industry. After the roundtable discussion, a panel of producers and feeders from throughout the country shared their first-hand experiences and perspectives on the industry. USDA and Justice Department officials then listened to public testimony from audience members.

In the afternoon, another panel will discuss trends in the livestock industry, including issues associated with contracting, price transparency and the effects of concentration. The final panel of various market participants will discuss market structure issues in the livestock industry. There will be an opportunity for more public testimony after the final panel.

The workshop was held in Fort Collins, Colo., at the Lory Student Center on the Colorado State University campus and was attended by several key federal and state leaders, including Governor Bill Ritter, U.S. Rep. Betsy Markey, Colorado Attorney General John Suthers, Colorado Commissioner of Agriculture John Stulp and Montana Attorney General Steve Bullock.

 

Videos and transcripts from today’s workshop will be available for review at a later date on the Antitrust Division’s website at www.justice.gov/atr/public/workshops/ag2010/index.htm#dates.  Individuals seeking more information on the workshops should contact [email protected].

 

 

WASHINGTON - A Fremont, Calif., man made his initial appearance in federal court today on charges that include distribution of child pornography, possession of child pornography and attempted extortion, announced Assistant Attorney General Lanny A. Breuer of the U.S. Department of Justice Criminal Division and U.S. Attorney for the Northern District of California Melinda Haag.

According to an indictment dated June 24, 2010, and unsealed today, James Dale Brown, 27, is alleged to have used the Internet social networking website Facebook to communicate with a minor female identified as Jane Doe.  Operating under the username "Bob Lewis," Brown is alleged to have demanded that Jane Doe send him a video of herself engaging in sexually explicit conduct.  Brown is also alleged to have possessed and distributed child pornography. 

Brown was arrested in Fremont on Aug. 26, 2010, and made his initial appearance in federal court in Oakland, Calif., on Aug. 27, 2010. He is currently being held in North County Jail in Oakland. The defendant’s next scheduled appearance is at 9 a.m. on Sept. 3, 2010, for a detention hearing before Magistrate Judge Laurel Beeler.

The mandatory penalty for distribution of child pornography is at least five years in prison and up to 20 years.  The maximum penalty for possession of child pornography is 10 years in prison and the maximum statutory penalty for attempted extortion is 20 years in prison.  Brown also faces maximum fines of $250,000 on each charged count, plus restitution if appropriate.

The case is being prosecuted by Assistant U.S. Attorney Joshua Hill and Department of Justice Criminal Division Trial Attorney Mi Yung Park of the Child Exploitation and Obscenity Section, with the assistance of Jeanne Carstensen.  The prosecution is the result of a one-year investigation by the FBI.

Please note: An indictment contains only allegations against an individual and, as with all defendants, Brown must be presumed innocent unless and until proven guilty.

WASHINGTON – Michael Bealonis and Kenneth Stiffey, Jr., of Robinson, Penn., and Michael Bracken, of Bolivar, Penn., were indicted this week by a federal grand jury on charges stemming from a cross burning in the yard of an African-American juvenile in November 2009.

In the three-count indictment, Bealonis, Stiffey and Bracken were charged with one count of conspiracy to interfere with the housing rights of another, one count of interfering with the housing rights of another, and one count of using fire in the commission of a felony.

If convicted, Bealonis, Stiffey and Bracken face a maximum punishment of 30 years in prison and a $750,000 fine.

The case was investigated by the FBI, together with the Pennsylvania State Police. The case will be prosecuted by Trial Attorney Patricia A. Sumner from the Civil Rights Division of the U.S. Department of Justice and Assistant U.S. Attorney Soo C. Song from the U.S. Attorney’s Office for the Western District of Pennsylvania.

The charges set forth in an indictment are merely accusations and the defendant is presumed innocent until proven guilty.

WASHINGTON – Air Products LLC has agreed to pay $1.485 million in civil penalties to resolve hazardous waste mismanagement violations at its Pasadena, Texas, chemical manufacturing facility, the Justice Department, the Environmental Protection Agency (EPA) and the state of Texas announced today. The settlement resolves Air Products’ Resource Conservation and Recovery Act (RCRA) violations in transferring spent acid to the neighboring Agrifos Fertilizer Inc. manufacturing plant.

As part of the settlement, Air Products has agreed to continue to manage the spent acid on-site and not ship it to Agrifos or any other facility not authorized to accept it. Air Products is currently in compliance with the RCRA requirements specified in the settlement. Air Products has agreed to notify EPA and the Texas Commission on Environmental Quality in the event that the spent acid is either disposed of or sent off site.

"This settlement eliminates the disposal of spent-acid waste from the Air Products facility into the environment," said Ignacia S. Moreno, Assistant Attorney General of the Justice Department’s Environment and Natural Resources Division. "By stopping this source of pollution, this settlement will reduce risks to human health and the environment."

Air Products, a manufacturer of chemicals used in the manufacture of polyurethane and hydrogen gas, operates its facility on a 105-acre tract of property adjacent to the Agrifos fertilizer plant. For many years, the company purchased sulfuric acid from Agrifos and returned a spent acid stream that Air Products had generated in its operations. In April 2006, inspectors from EPA observed that the return acid stream was a spent acid that was being used in part to make land-applied fertilizer. Agrifos is not authorized to accept hazardous waste from other facilities.

"We are concerned that wastes from mineral processing and associated fertilizer production can pose a serious risk to our nation’s drinking water and the health of families," said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. "And we’re just as concerned when contaminated wastes from other facilities find their way to these operations. EPA is working to minimize or eliminate risks to communities and the environment from illegal hazardous waste operations at phosphoric acid and other high risk facilities."

Air Products instituted modifications that will reduce the levels of contamination in the spent acid, and the construction of a $60 million regeneration plant that will stop the acid waste stream altogether. The regeneration plant construction was part of operational changes that were initiated prior to settlement negotiations and became effective as negotiations progressed.

This case is part of EPA’s National Enforcement Initiative for Mining and Mineral Processing. Although Air Products does not conduct mining or mineral processing, it sent the spent acid stream to a facility that does – the Agrifos fertilizer plant. Mining and mineral processing facilities generate more toxic and hazardous waste than any other industrial sector, based on EPA’s Toxic Release Inventory. If not properly managed, these facilities pose a high risk to human health and the environment. Since 2003, EPA has been investigating 20 phosphoric acid facilities in seven states.

In a national enforcement effort, EPA has focused on compliance in the phosphoric acid industry because of the high risk of releases of acidic wastewaters at these facilities, which can cause groundwater contamination and fish kills. A 2007 incident at the Agrifos phosphoric acid facility in Houston released 50 million gallons of acidic hazardous wastewater into the Houston Ship Channel. Another example is the 65 million gallon release of acidic wastewaters from the Mosaic Riverview facility into Tampa Bay, which led to a massive local fish kill.

The proposed settlement agreement, lodged in the U.S. District Court for the Southern District of Texas, is subject to a 30-day public comment period and approval by the federal court.