District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Two Alligator Guides Charged in Louisiana for Illegally Hunting AlligatorsRead the Press Release
WASHINGTON—Two individuals were charged today in a nine count indictment returned by a federal grand jury in Baton Rouge, La., for illegally hunting threatened species of alligators, the Justice Department announced.
The indictment charges Clint P. Martinez, 43, and Michael A. Martinez, 47, both of Plaquemine, La., with nine violations of the Lacey Act, the federal wildlife statute that makes it illegal to transport, sell, receive, acquire or purchase illegally taken wildlife.
According to the indictment, Clint Martinez, a licensed alligator hunter, and Michael Martinez, a licensed alligator helper, were paid guides who took clients of an outfitter on sport alligator hunts. The indictment alleges nine instances in 2005, 2006 and 2009, that both Clint and Michael Martinez, while engaged in conduct involving the sale and purchase of wildlife, transported, sold, received and acquired American alligators, knowing that the wildlife was taken, possessed, transported and sold in violation of the laws and regulations of the United States. The indictment alleges transactions that were worth nearly $44,000.
An indictment is merely an accusation, and the individuals charged are presumed innocent unless and until proven guilty in a court of law.
In addition to being listed as a threatened species on the United States’ list of Threatened and Endangered Species, the American alligator also is listed as a crocodilian species on Appendix II of the Convention on International Trade in Endangered Species (CITES). To better regulate trade in crocodilian species, the parties to CITES agreed to a program of requiring a uniquely numbered tag to be inserted into the skin of each animal immediately after it is killed. The tag is to remain with the skin as it travels in interstate or international commerce until it is manufactured into a final consumer product. The Secretary of the Interior issued special rules for American alligators that implement the CITES tagging program and regulate the harvest of alligators within the United States.
The maximum penalty for each count of the indictment is five years in prison and a $250,000 fine.
This case was investigated by the Louisiana Department of Wildlife and Fisheries and the U.S. Fish and Wildlife Service. It is being prosecuted by the Justice Department’s Environmental Crimes Section with assistance from the U.S. Attorney’s Office for the Middle District of Louisiana.
Salt Lake City Escort Service Operator <br /> Found Guilty of Income Tax EvasionRead the Press Release
WASHINGTON – Jodi Hoskins, the operator of an escort service in Salt Lake City, Utah, has been found guilty of one count of tax evasion, the Justice Department and Internal Revenue Service (IRS) announced. Judge Dee Benson issued his factual and legal determinations on Tuesday following a January 2010 non-jury trial.
According to the court’s findings, Hoskins was actively involved in the management and operation of Companions, an adult entertainment agency or call-out escort service doing business in Salt Lake City, from its inception in 2000. Additionally, Hoskins was aware of all financial matters associated with Companions. Furthermore, it was understood by phone girls and escorts that they ultimately answered to Hoskins as their boss.
According to the court’s findings, Hoskins lived a lavish lifestyle in 2002. She filed a joint income tax return with her husband, Roy Hoskins, in which she intentionally under reported the gross receipts of Companions by $1,204,354. The total tax due and owing resulting from the tax evasion for 2002 is $485,443.
Jodi Hoskins faces a maximum sentence of five years in prison and a maximum fine of $250,000. Judge Benson has not yet set a date for her sentencing. Roy Hoskins, the owner of Companions, previously pleaded guilty to two counts of tax evasion in May 2009. His sentencing is scheduled for April 15, 2010.
John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division, commended the special agents from IRS Criminal Investigation Division who investigated the case as well as Tax Division attorneys Monica Edelstein and Leigh Kessler who prosecuted the case. Acting Assistant Attorney General DiCicco also thanked the U.S. Attorney’s Office for the District of Utah for their assistance in this matter.
Nexus Technologies Inc. and Three Employees<br /> Plead Guilty to Paying Bribes to Vietnamese OfficialsRead the Press Release
Nexus Technologies Inc., a Philadelphia-based export company, pleaded guilty today in connection with a conspiracy to bribe officials of the Vietnamese government in exchange for lucrative contracts to supply equipment and technology to Vietnamese government agencies, in violation of the Foreign Corrupt Practices Act (FCPA), announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Michael L. Levy for the Eastern District of Pennsylvania and Janice K. Fedarcyk, Special Agent in Charge of the FBI’s Philadelphia Field Office. The president and owner of the company, Nam Nguyen, and his siblings and fellow Nexus personnel, Kim Nguyen and An Nguyen, also pleaded guilty today before U.S. District Court Judge Timothy J. Savage in connection with the conspiracy.
Nexus; Nam Nguyen, 54, of Houston and Vietnam; Kim Nguyen, 41, of Philadelphia; and An Nguyen, 34, of Philadelphia, were charged in a superseding indictment on Oct. 30, 2009, with conspiracy, violations of the FCPA, violations of the Travel Act in connection with commercial bribes and money laundering. Nexus pleaded guilty today to all the charges filed against the company in the superseding indictment. Nam and An Nguyen each pleaded guilty to conspiracy, a substantive FCPA violation, a violation of the Travel Act and money laundering. Kim Nguyen pleaded guilty to conspiracy, a substantive FCPA violation and money laundering. Former Nexus partner Joseph T. Lukas pleaded guilty on June 29, 2009, to conspiracy and to violating the FCPA.
According to court documents, Nexus was a privately-owned export company that identified U.S. vendors for contracts opened for bid by the Vietnamese government and other companies operating in Vietnam. The contracts allowed for the purchase of a wide variety of equipment and technology, including underwater mapping equipment, bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems. According to court documents, Nam Nguyen negotiated the contracts and bribes with the Vietnamese government agencies and employees. Kim Nguyen, vice president of Nexus, oversaw the U.S. operations and handled company finances. An Nguyen identified U.S. vendors to supply the goods needed to fulfill the contracts.
In connection with the guilty pleas, Nexus and the Nguyens admitted that from 1999 to 2008 they agreed to pay, and knowingly paid, bribes in excess of $250,000 to Vietnamese government officials in exchange for contracts with the agencies and companies for which the bribe recipients worked. The defendants admitted that the bribes were falsely described as "commissions" in the company’s records. In pleading guilty, Nexus also acknowledged that, as a company, it operated primarily through criminal means and agreed to cease operations as a condition of the guilty plea.
At sentencing, scheduled for July 13, 2010, Nexus faces a maximum fine of $27 million. Nam and An Nguyen each face a maximum sentence of 35 years in prison. Kim Nguyen faces a maximum sentence of 30 years in prison.
The case was prosecuted by Trial Attorney Kathleen M Hamann of the Fraud Section and Assistant U.S. Attorney Jennifer Arbittier Williams for the Eastern District of Pennsylvania. The case was investigated by the Philadelphia and New Jersey field offices of the FBI and the U.S. Department of Commerce, Office of Export Enforcement.
Justice Department Sues to Block Alleged $15 Million Dollar<br /> Tax Fraud Scheme Operating in Southern CaliforniaRead the Press Release
WASHINGTON - The United States has sued a father and two sons, all of Huntington Beach, Calif., seeking to bar them and their business from preparing federal tax returns for others, the Justice Department announced today. According to the government complaint, Alexander Adams and his two sons, Garrett and Brandon Adams, operate Adams Beach Income Tax in Huntington Beach. The suit alleges that the Adamses have attempted to siphon over $15 million in fraudulent refunds from the U.S. Treasury for customers and for themselves.
The complaint says the defendants prepare federal income tax returns claiming massive fraudulent tax refunds based on fabricated income tax withholdings. According to the complaint, Alexander and Garrett Adams requested two fraudulent refunds for $2.5 million a piece – one for Garrett Adams himself, and the other for a customer. Alexander Adams also requested a bogus refund for himself in the amount of $361,147, the suit alleges.
According to the government complaint, Alexander and Garrett Adams falsify Internal Revenue Service (IRS) documents, including IRS 1099-OID Forms with fictitious tax withholdings to claim the bogus refunds. Brandon Adams allegedly seeks new business by promoting the tax fraud scheme through live seminars, Web sites, conference calls, CDs and one-on-one instruction. The complaint says the defendants’ scheme is part of a growing trend of filing frivolous federal tax returns and forms to steal from the U.S. Treasury.
Last week, a federal judge in Sacramento found that tax preparer Teresa Marty had been using the same scheme to seek bogus refunds for her customers, and permanently barred her from preparing tax returns for others.
"Taxpayers thinking of participating in the illegal scheme described in this lawsuit should consider that, in addition to risking criminal prosecution, they also risk incurring civil penalties of as much as 20% of the amount of their bogus refund claim," said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division. "For false claims on the scale described in this case, the 20% penalty could result in scheme customers losing their savings and their homes."
In the past decade, the Justice Department’s Tax Division has obtained more than 455 injunctions against tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s Web Site.
Georgia Man Pleads Guilty to Production of Child Pornography Using Hidden Videos in Store BathroomsRead the Press Release
Jeffrey Alan Wasley of Kennesaw, Ga., pleaded guilty today to production of child pornography related to surreptitiously videotaping young boys using public restrooms in Atlanta-area establishments, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the Northern District of Georgia Sally Quillian Yates.
Wasley, 38, pleaded guilty before U.S. District Judge Clarence Cooper to producing child pornography. According to court documents and information presented at today’s plea hearing, Wasley was a church youth counselor and former performing magician who stalked young boys in retail stores and children’s attractions. When Wasley observed young boys entering a restroom unaccompanied by an adult, he admitted he would also enter and secretly videotape the boys.
In July 2008, Wasley victimized five and seven year-old brothers in the men’s restroom of a store in Kennesaw, according to information filed with the court and discussed at the plea hearing. These boys reported Wasley’s conduct to their mother, who in turn notified store security. According to court documents, store security and Cobb County police were able to identify a likely suspect from store surveillance footage. When store security observed this same individual in the store several days later, they followed him to his car and noted his car’s tag number, which was linked to Wasley. A subsequent search of Wasley’s home yielded a computer containing six videos Wasley admitted he produced of boys in public restrooms, along with thousands of additional images of child pornography that Wasley had downloaded from the Internet.
Sentencing has been scheduled for June 10, 2010. At sentencing, Wasley faces a minimum mandatory prison term of 15 years, a maximum term of 30 years, a fine of up to $250,000 and the possibility of a lifetime period of supervised release.
This case was investigated by the U.S. Secret Service and the Cobb County Police Department. This case was prosecuted by Assistant U.S. Attorneys Robert McBurney and Francey Hakes of the U.S. Attorney’s Office for the Northern District of Georgia and Trial Attorney Andrew McCormack of the Criminal Division’s Child Exploitation and Obscenity Section.
Former Purchasing Official at a New York City Hospital Pleads Guilty to Bid Rigging and FraudRead the Press Release
WASHINGTON — A former New York Presbyterian Hospital (NYPH) purchasing official pleaded guilty today in U.S. District Court in Manhattan to conspiring to rig bids on re-insulation services contracts, the Department of Justice announced.
According to the charges, Salvatore Scotto-DiVetta, who held various supervisory positions at NYPH, participated in a conspiracy that took place from as early as 2000 until at least March 2005. The department said that Scotto-DiVetta conspired with others to create the appearance that contracts for re-insulation services at NYPH were awarded in accordance with NYPH’s competitive bidding policy, when, in fact, they were not. To create the illusion of a competitive bidding process, Scotto-DiVetta’s co-conspirators would submit high, noncompetitive bids. In exchange for awarding the contracts to the designated bidder, Scotto-DiVetta received approximately $25,000 in kickbacks in the form of cash and gift cards from his co-conspirators.
In addition, from at least as early as May 2001 until at least August 2005, Scotto-DiVetta conspired with others by creating a company with a co-conspirator in which he had an undisclosed interest in order to purchase equipment parts on behalf of NYPH at fraudulently inflated prices. Scotto-DiVetta, in his supervisory position, caused NYPH to purchase equipment parts at fraudulently inflated prices from his company, rather than directly from the wholesalers and manufacturers from which NYPH had previously purchased the parts. Scotto-DiVetta made approximately $74,000 in profits from this scheme.
Scotto-DiVetta is charged with bid rigging, a violation of the Sherman Act, which 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 victim of the crime, if either of those amounts is greater than the statutory maximum fine.
Scotto-DiVetta is also charged with fraud, which carries a maximum penalty 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.
These charges arose from an ongoing federal antitrust investigation of fraud, bribery, tax-related offenses and bidding irregularities relating to contracts administered by the Facilities Operations Department and Engineering Department at NYPH and the Engineering Department at Mount Sinai Medical Center. To date, eight individuals and three companies have pleaded guilty to charges arising out of the same investigation. The investigation is being conducted by the Antitrust Division’s New York Field Office, the FBI and the Internal Revenue Service Criminal Investigation’s New York Field Office.
Anyone with information concerning bid rigging, bribery, tax offenses or fraud related to contracts administered by the Facilities Operations Department at NYPH, the Engineering Department at NYPH or the Engineering Department at Mount Sinai Medical Center should contact the New York Field Office of the Antitrust Division at 212-264-9308 or visit http://www.justice.gov/atr/contact/newcase.htm, or the New York Division of the FBI at 212-384-1000.
Alpharma to Pay $42.5 Million to Resolve False Claims Act Allegations in Connection with Promotion of Drug KadianRead the Press Release
WASHINGTON – American pharmaceutical manufacturer Alpharma Inc. has agreed to pay $42.5 million to resolve False Claims Act allegations in connection with the marketing of the morphine-based drug, Kadian, the Justice Department announced today. The settlement resolves allegations that, between January 1, 2000 and December 29, 2008, Alpharma paid health care providers to induce them to promote or prescribe Kadian, and made misrepresentations about the safety and efficacy of the drug, which is used to treat chronic moderate to severe pain. Alpharma is now a wholly-owned subsidiary of Bristol, Tenn.-based King Pharmaceuticals Inc.
Under the agreement announced today, the proceeds from the settlement will be split between the federal government and various states, with the United States receiving roughly $33.6 million to resolve the federal claims and the states receiving approximately $8.9 million to settle their respective claims.
"Illegal marketing of pharmaceutical drugs jeopardizes the public’s confidence in our health care system," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "All consumers have the right to know that their health care provider’s judgment about drugs they should take has not been undermined by misinformation or kickbacks from pharmaceutical manufacturers."
The settlement resolves a lawsuit brought by a whistleblower, Debra Parks, in 2006 under the qui tam or whistleblower provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. Under the civil settlement announced today, Ms. Parks will receive $5.33 million out of the federal share of the recovery.
"Health care decisions must be based solely upon what is best for the individual patient and not on which pharmaceutical company is paying the doctor the biggest kickback," said Rod J. Rosenstein, U.S. Attorney for the District of Maryland.
Assistant Attorney General West and U.S. Attorney Rosenstein noted that today’s settlement is the result of collaboration between the Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Maryland, with assistance from the National Association of Medicaid Fraud Control Units; the Department of Health and Human Services, Office of Inspector General; the Defense Criminal Investigative Service; the Office of Personnel Management, Office of Inspector General; and the Federal Bureau of Investigation.
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 $2.2 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 $3 billion.
Third Former Employee of Financial Products and Services Firm Pleads Guilty for Role in Bid-Rigging and Fraud Conspiracies Involving Proceeds of Municipal BondsRead the Press Release
WASHINGTON — A third former employee of Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products (CDR), pleaded guilty today for his participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other related municipal finance contracts, the Department of Justice announced. CDR is a Beverly Hills, Calif.-based financial products and services firm.
According to the charges filed today in the U.S. District Court in Manhattan, Douglas Alan Goldberg of Chatsworth, Calif., engaged in separate bid-rigging and fraud conspiracies with companies that provide a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Goldberg also pleaded guilty to one count of wire fraud. According to the plea agreement, Goldberg has agreed to cooperate with the ongoing investigation.
The department said in court documents that CDR was hired by public entities that issue municipal bonds to act as their broker and conduct what was supposed to be a competitive bidding process primarily for contracts for the investment of municipal bonds proceeds. Competitive bidding for those contracts 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.
Goldberg admitted that, as a part of the bid-rigging conspiracy, from at least as early as 1998 until at least November 2006, he and other co-conspirators designated in advance which co-conspirator providers would be the winning bidder for certain investment agreements and submitted or caused to be submitted to CDR intentionally losing bids. According to the court documents, kickbacks in the form of fees that were inflated or unearned were paid to CDR in exchange for assistance from Goldberg and other CDR co-conspirators in controlling the bidding process and ensuring that certain co-conspirator providers won the bids they were allocated.
As a part of the fraud conspiracy, from as early as August 2001 until at least November 2006, Goldberg and others gave a co-conspirator provider 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. As a result of the information, the co-conspirator provider won contracts at artificially determined price levels. In exchange for giving the provider information, CDR requested and received kickbacks from the provider and relied on the provider to submit intentionally losing bids when requested on other contracts.
This is the third 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 Internal Revenue Service Criminal Investigation. On Feb. 23, 2010, Daniel Moshe Naeh, also known as Dani Naeh, a former CDR employee, pleaded guilty to bid-rigging and fraud conspiracies and to one count of wire fraud. On March 11, 2010, Matthew Adam Rothman, also a former CDR employee, pleaded guilty to bid-rigging and fraud conspiracies and to one count of wire fraud. 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.
On Oct. 29, 2009, CDR along with its owner and president, David Rubin; its former chief financial officer and managing director, Zevi Wolmark, also known as Stewart Wolmark; and its vice president Evan Andrew Zarefsky, were indicted and charged with participating in bid-rigging and fraud conspiracies. The trial for CDR, Rubin, Wolmark and Zarefsky is scheduled to begin on Feb. 7, 2011.
The bid-rigging conspiracy with which Goldberg is charged carries a maximum penalty of 10 years in prison and a $1 million fine. The fraud conspiracy with which Goldberg is charged carries a maximum penalty of five years in prison and a $250,000 fine. The wire fraud charge with which Goldberg is charged 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.
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 http://www.justice.gov/atr/contact/newcase.htm, or the FBI at 212-384-5000.
Leader of Casino-Cheating Criminal Enterprise Sentenced to 70 Months in Prison for Targeting Casinos Across the United StatesRead the Press Release
Phuong Quoc Truong was sentenced today in San Diego for his role in a scheme by the "Tran Organization" to cheat casinos across the United States, Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Karen P. Hewitt for the Southern District of California announced. In his plea agreement, Truong admitted that he and his co-conspirators unlawfully obtained up to $7 million during card cheats.
Truong was sentenced to 70 months in prison and three years of supervised release by U.S. District Court Judge John A. Houston in San Diego. The court also ordered him to forfeit $2,791,146 and to pay $5,753,416 in restitution, payable to several casinos. The court ordered the forfeiture of Truong’s interests in various assets, including two houses in the San Diego area, two properties in Vietnam, a 2001 Porsche Carrera, a Rolex presidential watch and a diamond-encrusted pendant.
Truong pleaded guilty on April 2, 2008, to conspiracy to participate in the affairs of a racketeering enterprise. Truong was also sentenced on a separate indictment to which he pleaded guilty after agreeing to transfer the charges to San Diego from the Western District of Washington. The indictment related to card-cheating activity at Emerald Queen Casino, which is an Indian gaming establishment in Washington state.
In his plea agreement, Truong admitted that in approximately August 2002, he, with his co-conspirators, created a criminal enterprise defined in the indictment as the "Tran Organization," based in San Diego and elsewhere, for the purpose of participating in gambling cheats at casinos across the United States.
A three-count indictment was returned May 22, 2007, and unsealed in the Southern District of California on May 24, 2007, charging Truong and 13 others each with one count of conspiracy to participate in the affairs of a racketeering enterprise; one count of conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos; and one count of conspiracy to commit money laundering. The indictment also charged five separate individuals each with one count of conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos; and one count of conspiracy to commit money laundering.
There have been two subsequent indictments in connection with the Tran Organization’s alleged casino-cheating conspiracy, issued in 2008 and 2009, charging 19 additional defendants. The charges contained in the indictments are merely accusations and defendants are presumed innocent until proven guilty beyond a reasonable doubt.
According to the three indictments, the defendants and others executed a "false shuffle" cheating scheme at casinos in the United States and Canada during blackjack and mini-baccarat games. The indictments allege that members of the criminal organization bribed casino card dealers and supervisors to perform false shuffles during card games, thereby creating "slugs" or groups of unshuffled cards. The indictments also allege that after tracking the order of cards dealt in a card game, a member of the organization would signal to the card dealer to perform a "false shuffle," and members of the group would then bet on the known order of cards when the slug appeared on the table. By doing so, members of the conspiracy allegedly repeatedly won thousands of dollars during card games, including winning several hundred thousand dollars on one occasion.
The indictments also allege that the members of the organization used sophisticated mechanisms for tracking the order of cards during games, including hidden transmitter devices and specially created software that would predict the order in which cards would reappear during blackjack games.
To date, 37 defendants have pleaded guilty to charges relating to the casino-cheating conspiracy including: Phuong Quoc Truong, Tai Khiem Tran, Anh Phuong Tran, Phat Ngoc Tran, Martin Lee Aronson, Liem Thanh Lam, George Michael Lee, Tien Duc Vu, Son Hong Johnson, Barry Wellford, John Tran, Willy Tran, Tuan Mong Le, Duc Cong Nguyen, Han Truong Nguyen, Roderick Vang Thor, Sisouvanh Mounlasy, Navin Nith, Renee Cuc Quang, Ui Suk Weller, Phally Ly, Khunsela Prom, Hop Nguyen, Hogan Ho, Darrell Saicocie, Bryan Arce, Qua Le, Outtama Keovongsa, Leap Kong, Thang Viet Huynh, Don Man Duong, Dan Thich, Jimmy Ha, Eric Isbell, Brandon Pete Landry, James Root and Jesus Rodriguez. These defendants admitted to targeting, with the aid of co-conspirators, a combined total of approximately 27 casinos in the United States and Canada during the course of the conspiracy, including:
1) Beau Rivage Casino in Biloxi, Miss.;
2) Casino Rama, in Orillia, Ontario, Canada;
3) Foxwoods Resort Casino in Ledyard, Conn.;
4) Gold Strike Casino in Tunica, Miss.;
5) Horseshoe Casino in Bossier City, La.;
6) Horseshoe Casino and Hotel in Tunica, Miss.;
7) Isle of Capri Casino in Westlake, La.;
8) Majestic Star Casino in Gary, Ind.;
9) Mohegan Sun Resort Casino in Uncasville, Conn.;
10) Palace Station Casino in Las Vegas;
11) Resorts East Chicago Hotel and Casino in East Chicago, Ind.;
12) Sycuan Casino in El Cajon, Calif.
13) Cache Creek Indian Bingo and Casino in Brooks, Calif.;
14) Emerald Queen Casino in Tacoma, Wash.;
15) Imperial Palace Casino in Biloxi, Miss.;
16) Argosy Casino in Baton Rouge, La.;
17) Trump 29 Casino in Coachella, Calif.;
18) Isle of Capri Casino in Bossier City, La.;
19) Agua Caliente Casino in Rancho Mirage, Calif.;
20) Spa Resort Casino in Palm Springs, Calif.;
21) Pechanga Resort and Casino in Temecula, Calif.;
22) L'Auberge du Lac Casino in Lake Charles, La.;
23) Nooksack River Casino in Deming, Wash.;
24) Barona Valley Ranch Casino and Resort in Lakeside, Calif.;
25) Caesars Indiana Hotel and Casino in Elizabeth, Ind.;
26) Monte Carlo Resort and Casino in Las Vegas; and
27) Harrah’s Casino in Lake Charles, La.
Two other defendants, Ha Thuy Giang and Tammie Huynh, pleaded guilty to tax offenses stemming from the investigation, and Khai Hong Tran admitted to the offenses alleged in the 2007 U.S. indictment when he pleaded guilty to casino-cheating offenses in Canada.
The case is being investigated by the FBI’s San Diego Field Office, the Internal Revenue Service-Criminal Investigation, the San Diego Sheriff’s Department and the California Department of Justice’s Bureau of Gambling Control. The investigation has received assistance from federal, state, tribal and foreign authorities, including: the Ontario, Canada Provincial Police; the National Indian Gaming Commission; the U.S. Attorney’s Office for the Western District of Washington; FBI Resident Agencies in Gulfport, Miss., Tacoma, Wash., and Toledo, Ohio; the Indiana State Police; the Rumsey Rancheria Tribal Gaming Agency; the Sycuan Gaming Commission; the Barona Gaming Commission; the Mississippi Gaming Commission; and the Washington State Gambling Commission.
The prosecution of the case is led by the Criminal Division’s Organized Crime and Racketeering Section (OCRS). OCRS Trial Attorneys Joseph K. Wheatley and Robert S. Tully are prosecuting the case in San Diego. Assistant U.S. Attorney J. Tate London, of the U.S. Attorney’s Office for the Western District of Washington, is prosecuting the case in Seattle relating to alleged cheating at the Emerald Queen Casino.
Virginia Man Sentenced to 40 Months in Prison<br /> for Participating in Scheme to Steal Fuel from U.S. Army in IraqRead the Press Release
Michel Jamil, 60, was sentenced today to 40 months in prison for his participation in a scheme to steal approximately 10 million gallons of fuel from the U.S. Army in Iraq, announced Assistant Attorney General of the Criminal Division Lanny A. Breuer and U.S. Attorney for the Eastern District of Virginia Neil H. MacBride.
Jamil, of Annandale, Va., was sentenced by U.S. District Court Judge Claude M. Hilton in the Eastern District of Virginia. He pleaded guilty on Aug. 11, 2009, to a one-count information charging him with conspiracy to steal government property.
In his guilty plea, Jamil admitted that in March 2007, he and two of his co-conspirators arranged for the creation of a false memorandum for record (MFR) authorizing individuals, purportedly on behalf of a company serving as a contractor to the U.S. government, to draw fuel from the Victory Bulk Fuel Point (VBFP), Camp Liberty, Iraq, which was owned and operated by the United States. The VBFP supplies aviation and diesel fuel to both military units and U.S. government contractors operating in and around the Victory Base Complex. Jamil admitted that he and his co-conspirators used this false MFR and others to steal large quantities of fuel from the U.S. Army for subsequent sale on the black market. Jamil admitted that he escorted the trucks to retrieve fuel from the VBFP using a false MFR on approximately 10 to 15 occasions. As a result of the scheme, Jamil received between $75,000 and $87,500 in personal profits.
In related cases, Robert Jeffery was convicted on Aug. 11, 2009, after a two-day jury trial of one count of conspiracy and one count of theft of government property for his role in the fuel theft. Evidence at trial established that Jeffery served as an escort for the fuel trucks and illegally retrieved hundreds of thousands of gallons of fuel from the VBFP. On Dec. 11, 2009, Jeffery was sentenced to four years in prison.
Robert Young pleaded guilty on July 24, 2009, to participating in the same scheme. In his plea, Young admitted that he and his co-conspirators employed several individuals to serve as drivers and escorts of the trucks containing the stolen fuel. Young admitted that he received approximately $1 million in personal profits from the scheme. On Nov. 6, 2009, Young was sentenced to 97 months in prison.
Lee William Dubois pleaded guilty on Oct. 7, 2008, to participating in the same scheme. In his plea, Dubois admitted that he obtained government-issued common access cards for the drivers and escorts of the trucks and also presented false documents to the VBFP authorizing his co-conspirators to draw fuel. Dubois admitted that he received at least $450,000 in personal profits from the scheme. On Aug. 25, 2009, Dubois was sentenced to three years in prison.
The case was prosecuted by Special Assistant U.S. Attorney Steve Linick, Deputy Chief of the Criminal Division’s Fraud Section, and Fraud Section Trial Attorneys Andrew Gentin and Brigham Cannon. The investigation of this case was conducted by the U.S. Army Criminal Investigation Command, the Defense Criminal Investigative Service, the FBI, and members of the National Procurement Fraud Task Force and the International Contract Corruption Task Force (ICCTF).
The National Procurement Fraud Task Force, created in October 2006 by the Department of Justice, was designed to promote the early detection, identification, prevention and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The ICCTF is a joint law enforcement agency task force that seeks to detect, investigate and dismantle corruption and contract fraud resulting from U.S. Overseas Contingency Operations, including in Afghanistan, Iraq and Kuwait.
Securities Attorney Sentenced to 33 Months in Prison <br /> for Role in Pump-and-Dump SchemesRead the Press Release
A securities attorney was sentenced today to 33 months in prison for defrauding investors in stock manipulation schemes involving 19 publicly traded companies, Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia announced today.
David B. Stocker, of Phoenix, pleaded guilty on March 11, 2009, in U.S. District Court in Alexandria, Va., for his participation in a stock manipulation conspiracy known as a "pump-and-dump" scheme. Along with the prison sentence, U.S. District Judge Liam O’Grady today ordered Stocker to pay jointly and severally $6,360,191 in restitution and to forfeit $2,175,993 in a money judgment as well as other property and assets.
"Mr. Stocker used his expertise to exploit unsuspecting investors," said Assistant Attorney General Lanny A. Breuer. "Our financial markets must be fair and open to all, and those who illegally manipulate those markets will be caught and prosecuted."
"David Stocker used his expertise as a securities lawyer to help others steal millions of dollars from thousands of innocent investors around the country," said U.S. Attorney MacBride. "Today’s sentence sends a strong message to securities professionals that schemes to defraud the public will not be tolerated."
Stocker admitted that he participated in a conspiracy to commit securities fraud involving 19 publicly traded companies including: eDollars Inc; Emerging Holdings Inc.; MassClick Inc.; China Score Inc.; American Television and Film Company Inc.; Auction Mills Inc.; Custom-Designed Compressor Systems Inc.; Ecogate Inc.; Media International Concepts Inc.; Vanquish Productions Inc.; AVL Global Inc.; Motion DNA Corp.; PokerBook Gaming Corp.; TKO Holding Ltd; Body Scan Inc.; Integrity Messenger Corp.; Beverly Hills Film Studios; IFINIX Inc.; and V3 Global Inc.
According to court records, the stock manipulation scheme employed by Stocker and his co-conspirators followed a common pattern. Stocker admitted that he acted as securities counsel for companies, and he and others fraudulently caused the companies to issue millions of "free-trading" shares to co-conspirators in transactions that had not been registered with the SEC. As Stocker acknowledged in his ple a, after the unregistered and free-trading shares had been issued, co-conspirators began to manipulate, or "pump," the trading value of the companies’ stock through a number of deceptive and manipulative means to entice members of the investing public to invest in the stock. For example, according to court documents, members of the conspiracy engaged in coordinated trades to manipulate the price of the stock.
Stocker also admitted that co-conspirators falsely manipulated the price and volume of some of the companies’ stock by making materially false and misleading statements in press releases and in spam e-mails distributed by co-conspirator Justin Medlin and other spammers to tens of millions of e-mail addresses throughout the United States in an effort to create artificial demand for the companies’ stock. After fraudulently "pumping" the market price and demand for the companies’ stock, co-conspirators "dumped" millions of shares by selling them for large profits to the general investing public in the over-the-counter market through listings on Pink Sheets, an inter-dealer electronic quotation and trading system. These shares were purchased by unsuspecting investors, including investors in the Eastern District of Virginia, and were often rendered virtually worthless.
Ten other defendants have pleaded guilty and eight of them have been sentenced in federal court in Alexandria, Va., for their roles in related stock manipulation schemes, including Michael R. Saquella who was sentenced to 10 years in prison; Justin Medlin who was sentenced to six years in prison; and Steven P. Luscko and Gregory A. Neu who were each sentenced to five years in prison.
Stocker’s sentence reflected his cooperation and testimony in the trial of Phillip Windom Offill Jr., of Dallas, a former SEC attorney who was convicted by a federal jury on Jan. 28, 2010, of one count of conspiracy to commit registration violations, securities fraud and nine counts of wire fraud. Offill is scheduled to be sentenced on April 23, 2010.
The case, which was referred by the Market Regulation Department of Financial Industry Regulatory Authority (FINRA), was investigated by the FBI and the U.S. Postal Inspection Service, with assistance from FINRA’s Criminal Prosecution Advisory Group. The case was prosecuted by Fraud Section Deputy Chief Patrick Stokes and Assistant U.S. Attorney Ed Power of the Eastern District of Virginia. The Department of Justice acknowledges the substantial assistance of FINRA and the SEC in its investigation. It would also like to thank the Virginia State Corporation Commission, Division of Securities and Retail Franchising, for its assistance.
Former Haitian Government Official Pleads Guilty to Conspiracy to Commit <br /> Money Laundering in Foreign Bribery SchemeRead the Press Release
A former official of the Republic of Haiti’s state-owned national telecommunications company pleaded guilty today to a money laundering conspiracy in connection with a foreign bribery scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U. S. Attorney Jeffrey H. Sloman of the Southern District of Florida; and Daniel W. Auer, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI) Miami Field Office.
"Today’s guilty plea represents another important milestone in our ongoing effort to tackle overseas corruption," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "The message here is simple: Whether you are located in the United States or elsewhere, we will not allow U.S. financial institutions to be used as a vehicle for laundering illicit proceeds."
"Today’s conviction should be a warning to corrupt government officials everywhere that neither they nor their money will find any safe haven in the United States," said U. S. Attorney Jeffrey H. Sloman.
"The IRS is committed to enforcing the anti-money laundering laws and will continue to work with our international partners to investigate violations worldwide," said Special Agent in Charge Daniel W. Auer. "Haitian law enforcement should be commended for their commitment and professionalism throughout this investigation."
According to the indictment filed on Dec. 4, 2009, Robert Antoine, 62, of Miami and Haiti, was the director of international affairs for Haiti’s state-owned national telecommunications company, Telecommunications D’Haiti (Haiti Teleco) from May 2001 to April 2003. In that position, Antoine had primary responsibility for the relationships between U.S. telecommunications companies and Haiti Teleco. Antoine admitted during his guilty plea that he accepted bribes from three U.S. telecommunications companies and thereby defrauded Haiti Teleco. To disguise the origin of these funds, Antoine admitted he laundered them through intermediary companies, including J.D. Locator Services. Juan Diaz, the president of J.D. Locator, pleaded guilty on May 15, 2009, to conspiracy to commit violations of the Foreign Corrupt Practices Act (FCPA) and money laundering. Antoine admitted that a portion of the J.D. Locator funds were also laundered by Jean Fourcand of Fourcand Enterprises, who pleaded guilty on Feb. 19, 2010, to money laundering.
Antoine admitted during his guilty plea that $800,000 of these bribes were intended to be given to him by a U.S. telecommunications company for which Joel Esquenazi was the president and director, Carlos Rodriguez was the executive vice president, and Antonio Perez was, at times, the controller. Perez pleaded guilty on Apr. 27, 2009, to conspiring to commit FCPA violations and money laundering.
Esquenazi and Rodriguez, as well as Jean Rene Duperval, who was director of international relations of Haiti Teleco from June 2003 to April 2004, and Duperval’s sister, Marguerite Grandison, were indicted along with Antoine on Dec. 4, 2009.
An indictment is merely an accusation, and defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Antoine faces a maximum penalty of 20 years in prison and a fine of the greater of $250,000 or twice the value of the property involved in the transaction. Antoine also agreed to a forfeiture order of $1,580,771. Sentencing is scheduled for May 27, 2010.
The Department of Justice is grateful to the government of Haiti for providing substantial assistance in gathering evidence during this investigation. In particular, Haiti’s financial intelligence unit, the Unité Centrale de Renseignements Financiers (UCREF), the Bureau des Affaires Financières et Economiques (BAFE), which is a specialized component of the Haitian National Police, and the Ministry of Justice and Public Security provided significant cooperation and coordination in this ongoing investigation.
The case was prosecuted by Trial Attorney Nicola J. Mrazek of the Criminal Division’s Fraud Section, Trial Attorney Kevin Gerrity of the Criminal Division’s Asset Forfeiture and Money Laundering Section, and Assistant U.S. Attorney Aurora Fagan of the U.S. Attorney’s Office for the Southern District of Florida. The Criminal Division’s Office of International Affairs also provided assistance in this matter. The case was investigated by the IRS-CI Miami Field Office.
Father and Son Plead Guilty to Selling Counterfeit Software Worth $1 MillionRead the Press Release
A father and son have pleaded guilty to selling $1 million worth of counterfeit computer software through the Internet, in violation of criminal copyright infringement laws, Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Neil H. MacBride for the Eastern District of Virginia and John Morton, Assistant Secretary of Homeland Security for U.S. Immigration and Customs Enforcement announced today. The guilty pleas are part of the Department of Justice’s initiative to combat online piracy.
Robert D. Cook, 56, and his son, Todd A. Cook, 23, both of Wichita Falls, Texas, pleaded guilty late yesterday to criminal copyright infringement and conspiracy to commit criminal copyright infringement before U.S. District Court Judge T.S. Ellis III, in Alexandria, Va.
According to court documents, from July 2006 through May 2008, the Cooks operated several Web sites that sold large volumes of counterfeit software with a combined retail value of approximately $1 million.
The defendants admitted that they used these Web sites to sell downloadable counterfeit software without authorization from the copyright owners. The defendants also admitted that they promoted their illicit scheme by purchasing advertising for their Web sites from major Internet search engines.
Both defendants face up to five years in prison, a fine of $250,000 and three years of supervised release. Sentencing has been scheduled for June 18, 2010.
The convictions of Robert and Todd Cook are the latest in an investigation out of Wichita Falls, in which four other men have been convicted for operating Web sites engaged in the sale of pirated software. Thomas C. Rushing III, William Lance Partridge and Brian C. Rue all pleaded guilty to criminal copyright infringement in U.S. District Court in Austin, Texas, on Aug. 22, 2008. Timothy K. Dunaway pleaded guilty to criminal copyright infringement on Oct. 20, 2008, in U.S. District Court in Wichita Falls. Combined, the counterfeit software sold by these individuals had a retail value of more than $10 million.
This case is part of the Department of Justice’s ongoing initiative to combat online auction piracy.
Including the guilty pleas announced today, the Department has obtained 46 convictions involving online auction and commercial distribution of counterfeit software. The Department’s initiative to combat online auction piracy is just one of several steps being undertaken to address the losses caused by intellectual property theft and hold responsible those engaged in criminal copyright infringement.DOJ and USDA Hold First-ever Workshop on Competition Issues in AgricultureRead the Press Release
The Department of Justice (DOJ) and U.S. Department of Agriculture (USDA) today held the first-ever joint public workshop on competition and regulatory issues in the agriculture industry. The workshop, led by U.S. Agriculture Secretary Tom Vilsack and U.S. Attorney General Eric Holder, featured panel discussions on a variety of topics important to America’s farmers and ranchers, including competitive dynamics in the seed industry, trends in contracting, transparency and buyer power, and concluded with public testimony.
"Today’s workshop provided the Department with an important opportunity to hear from a variety of perspectives and individuals about competition in the agriculture sector," said Attorney General Eric Holder. "We appreciate the importance of this industry to our economy and are committed to enforcing the antitrust laws effectively to ensure fair and open competition that protects both consumers and farmers."
"In my travels across the country, I hear a consistent theme: producers are worried whether there is a future for them or their children in agriculture, and a viable market is an important factor in what that future looks like," said Vilsack. "These issues are difficult and complex, which is why this workshop today is so important and long overdue."
Today’s meeting was the first in a series of workshops that will be held over the next several months, the first joint DOJ/USDA workshops ever to be held to discuss competition and regulatory issues in the agriculture industry. The goals of the workshops are to promote dialogue and foster learning, as well as to listen to and learn from people involved in agriculture. Additional information about the workshops can be found at http://www.justice.gov/atr/public/workshops/ag2010/index.htm.
A six-person panel of farmers presented their views on competition and regulatory issues. Other workshop panels examined the competitive dynamics of the seed industry; trends in contracting issues, marketplace transparency and buyer power; and agriculture enforcement and cooperation at the federal and state levels. Following the panels, officials received public testimony.
The workshop was held at the FFA Enrichment Center at Des Moines Area Community College (DMACC) and was attended by several key federal and state leaders, including Iowa Senator Chuck Grassley, Congressmen Leonard Boswell, Assistant Attorney General for the Justice Department’s Antitrust Division Christine Varney, Iowa Lt. Gov. Patty Judge, Iowa Attorney General Tom Miller and Iowa Agriculture Secretary Bill Northey, Montana Attorney General Steve Bullock, Ohio Attorney General Richard Cordray and Missouri Attorney General Chris Koster.
Transcripts from today’s workshop will be available for review at a later date on the Antitrust Division’s Web site. Individuals seeking more information on the workshops should contact [email protected] .
DOJ and USDA Hold First-Ever Workshop on Competition Issues in AgricultureRead the Press Release
WASHINGTON — The Department of Justice (DOJ) and U.S. Department of Agriculture (USDA) today held the first-ever joint public workshop on competition and regulatory issues in the agriculture industry. The workshop, led by U.S. Agriculture Secretary Tom Vilsack and U.S. Attorney General Eric Holder, featured panel discussions on a variety of topics important to America's farmers and ranchers, including competitive dynamics in the seed industry, trends in contracting, transparency and buyer power, and concluded with public testimony.
"Today's workshop provided the Department with an important opportunity to hear from a variety of perspectives and individuals about competition in the agriculture sector," said Attorney General Eric Holder. "We appreciate the importance of this industry to our economy and are committed to enforcing the antitrust laws effectively to ensure fair and open competition that protects both consumers and farmers."
"In my travels across the country, I hear a consistent theme: producers are worried whether there is a future for them or their children in agriculture, and a viable market is an important factor in what that future looks like," said Vilsack. "These issues are difficult and complex, which is why this workshop today is so important and long overdue."
Today's meeting was the first in a series of workshops that will be held over the next several months, the first joint DOJ/USDA workshops ever to be held to discuss competition and regulatory issues in the agriculture industry. The goals of the workshops are to promote dialogue and foster learning, as well as to listen to and learn from people involved in agriculture. Additional information about the workshops can be found at http://www.justice.gov/atr/public/workshops/ag2010/index.htm.
A six-person panel of farmers presented their views on competition and regulatory issues. Other workshop panels examined the competitive dynamics of the seed industry; trends in contracting issues, marketplace transparency and buyer power; and agriculture enforcement and cooperation at the Federal and state levels. Following the panels officials received public testimony.
The workshop was held at the FFA Enrichment Center at Des Moines Area Community College (DMACC) and was attended by several key federal and state leaders, including Iowa Senator Chuck Grassley, Congressmen Leonard Boswell, Assistant Attorney General for the Justice Department's Antitrust Division Christine Varney, Iowa Lt. Gov. Patty Judge, Iowa Attorney General Tom Miller and Iowa Agriculture Secretary Bill Northey, Montana Attorney General Steve Bullock, Ohio Attorney General Richard Cordray and Missouri Attorney General Chris Koster.
Transcripts from today's workshop will be available for review at a later date on the Antitrust Division's Web site. Individuals seeking more information on the workshops should contact [email protected].
Taiwanese Couple Pleads Guilty to Illegally Trading Protected Black CoralRead the Press Release
Two Taiwanese nationals pleaded guilty today in federal court in the U.S. Virgin Islands for conspiracy to ship internationally protected black coral into the United States in violation of federal wildlife statutes, the Department of Justice announced.
Gloria Chu and Ivan Chu of Taipei, Taiwan, each pleaded guilty to nine counts including conspiracy, false statements, and violations of both the Endangered Species Act and the Lacey Act. The Lacey Act makes it a felony to falsely label wildlife that is intended for international commerce. The Endangered Species Act is the U.S. domestic law that implements the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Each of the species of black coral is listed in Appendix II of CITES and is subject to strict trade regulations.
Black coral is one of the several types of precious corals that can be polished to a high sheen, worked into artistic sculptures and used in inlaid jewelry. Use of black coral in artistry has existed for centuries in the Indo-Pacific and Mediterranean. Black coral is typically found in deep waters, and many species have long life spans and are slow-growing. One specimen was reported by scientists to be more than 4,200 years old with a growth rate of only 5 micrometers (one millionth of meter) per year. Additionally, using deep sea submersibles, scientists have observed that fish and invertebrates tend to accumulate around the black coral colonies. In the last few decades, pressures from overharvesting, due in part to the wider availability of scuba gear and invasive species, have threatened this group of coral.
According to plea agreements filed with the court, the Chus ran a business named Peng Chia Enterprise Co. Ltd. that supplied materials including black coral to customers outside of Taiwan for jewelry design and manufacture. At times prior to 2007, the Chus were issued CITES export permits by the Taiwanese government in order to ship black coral overseas. Since 2007, however, they have been unable to obtain permits because they are unable to produce a legitimate certificate of origin.
Both Chus admitted that in order to supply a company based in the Virgin Islands with black coral, they would falsely label shipments in order to conceal the coral from U.S. Customs and Border Protection officers. The conspiracy included travel to a warehouse in mainland China to choose coral from a Chinese supplier and the use of an intermediary to ship the black coral from Hong Kong to Company X in St. Thomas. The scheme took place for at least two years prior to the customs seizure of an August 2009 shipment destined for Company X.
On Aug. 19, 2009, Peng Chia sent a shipment comprised of 10 boxes of black coral that were labeled "plastic of craft work." A U.S. Customs’ Contraband Enforcement Team flagged the shipment as suspicious and contacted U.S. Fish and Wildlife (USFWS) from San Juan, Puerto Rico. As a result, USFWS, National Oceanic and Atmospheric Administration and Immigration and Customs Enforcement opened a joint investigation, "Operation Black Gold," that led to the arrest of the Chus in January 2010. Analysis by the U.S. Fish and Wildlife Service’s National Forensics Laboratory in Ashland, Ore., revealed that shipment from the Chus contained internationally- protected black coral. Today, the Chus admitted that from 2007 to 2009, they sent more than $194,000 worth of black coral to Company X.
"Trafficking in protected species like black coral violates international and domestic law and threatens the existence of that important resource," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "We will continue to enforce environmental and natural resource laws so that future generations can continue to enjoy these important marine resources."
"This should send a strong and clear message to those individuals foreign and domestic, who deliberately break our environmental laws, that their conduct will not be tolerated. Those who illegally plunder nature’s resources in favor of profits will be brought to justice," said James Gale, Special Agent in Charge of the Fish and Wildlife Services’s Southeast Region. "The cooperative efforts show the commitment of all agencies involved to protect coral and the natural resources against the illegal international trade, we are all stewards."
"Stopping the illicit trade and depletion of protected species such as black coral is critical to preserving a healthy and viable marine environment," said U.S. Attorney Ronald W. Sharpe for the District of the U.S. Virgin Islands. "The U.S. Attorney’s Office will continue to work closely with its domestic and international law enforcement partners to detect, investigate and prosecute those who plunder and traffic in endangered species for their selfish gain."
According to the plea agreements, Ivan Chu has agreed to serve 30 months in prison and pay a $12,500 fine. Gloria Chu has agreed to serve 20 months in prison and pay a $12,500 fine. Both defendants would also be prohibited from shipping coral and other wildlife products to the United States for a three-year period after their release from prison. A sentencing date has been set for June 23, 2010.
The case was investigated by agents of the U.S. Fish and Wildlife Service and the National Oceanic and Atmospheric Administration with support from Immigration and Customs Enforcement and U.S. Customs and Border Protection. The case is being prosecuted by the Justice Department’s Environmental Crimes Section and the U.S. Attorney’s Office for the District of the Virgin Islands.
Second Former Employee of Financial Products and Services Firm Pleads Guilty <br /> for Role in Bid-rigging and Fraud Conspiracies Involving Proceeds of Municipal BondsRead the Press Release
A second former employee of Rubin/Chambers, Dunhill Insurance Services Inc., also known as CDR Financial Products (CDR), pleaded guilty today for his participation in bid-rigging and fraud conspiracies related to contracts for the investment of municipal bond proceeds and other related municipal finance contracts, the Department of Justice announced. CDR is a Beverly Hills, Calif.-based financial products and services firm.
According to the charges filed today in the U.S. District Court in Manhattan, Matthew Adam Rothman of Los Angeles engaged in separate bid-rigging and fraud conspiracies with companies that provide a type of contract, known as an investment agreement, to state, county and local governments and agencies throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Rothman also pleaded guilty to one count of wire fraud. According to the plea agreement, Rothman has agreed to cooperate with the ongoing investigation.
The department said in court documents that CDR was hired by public entities that issue municipal bonds to act as their broker and conduct what was supposed to be a competitive bidding process primarily for contracts for the investment of municipal bonds proceeds. Competitive bidding for those contracts 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.
Rothman admitted that, as a part of the bid-rigging conspiracy, from at least as early 2001 until at least November 2006, he and other co-conspirators designated in advance which co-conspirator providers would be the winning bidder for certain investment agreements and submitted or caused to be submitted to CDR intentionally losing bids. According to the court documents, kickbacks in the form of fees that were inflated or unearned were paid to CDR in exchange for assistance from Rothman and other CDR co-conspirators in controlling the bidding process and ensuring that certain co-conspirator providers won the bids they were allocated.
As a part of the fraud conspiracy, from as early as August 2001 until at least November 2006, Rothman and others gave a co-conspirator provider 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. As a result of the information, the co-conspirator provider won contracts at artificially determined price levels. In exchange for giving the provider information, CDR requested and received kickbacks from the provider and relied on the provider to submit intentionally losing bids when requested on other contracts.
The bid-rigging conspiracy with which Rothman is charged carries a maximum penalty of 10 years in prison and a $1 million fine. The fraud conspiracy with which Rothman 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 second 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. On Feb. 23, 2010, Daniel Moshe Naeh, also known as Dani Naeh, a former CDR employee, pleaded guilty for his role in the same bid-rigging and fraud conspiracies as Rothman and to one count of wire fraud. 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.
On Oct. 29, 2009, CDR, along with its owner and president, David Rubin; its former chief financial officer and managing director, Zevi Wolmark, also known as Stewart Wolmark; and its vice president Evan Andrew Zarefsky, were indicted and charged with participating in bid-rigging and fraud conspiracies. The trial for CDR, Rubin, Wolmark and Zarefsky is scheduled to begin on Feb. 7, 2011.
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 http://www.justice.gov/atr/contact/newcase.htm, or the FBI at 212-384-5000.
Former New Orleans Police Detective Pleads Guilty; Confirms Danziger Cover-upRead the Press Release
A second former New Orleans Police Department (NOPD) officer has pleaded guilty to covering up a deadly police shooting in the days after Hurricane Katrina, the Justice Department today announced.
Jeffrey Lehrmann, a former NOPD detective who currently works as a special agent for Immigration and Customs Enforcement, pleaded guilty to misprision of a felony (a charge for concealing a known felony), for failing to report a conspiracy to obstruct justice in the investigation of a police-involved shooting on the Danziger Bridge in New Orleans. The Sept. 4, 2005, shooting left two civilians dead and four others seriously injured.
On Sept. 4, 2005, days after Hurricane Katrina, two police-involved shootings occurred on the Danziger Bridge. The east side shooting resulted in the death of one civilian and the wounding of four others. A second shooting on the west side resulted in the death of Ronald Madison, a 40-year-old severely disabled man. Madison’s brother, Lance, was arrested on eight counts of attempting to kill police officers, only to be later released without indictment. The police maintained that they fired at the civilians in self-defense, after the civilians fired at police. However, last month, former NOPD Lieutenant Michael Lohman pleaded guilty in federal court to conspiring with other officers to cover up what he had determined was a “bad shoot” on the bridge. Today, defendant Lehrmann admitted that he also knew of and participated in a conspiracy to obstruct justice in the investigation of the shooting.
Lehrmann, of Anthem, Ariz., entered his plea in federal court in New Orleans today before U. S. District Court Judge Lance M. Africk. The defendant faces a possible maximum sentence of three years in prison and a fine of $250,000. Sentencing is scheduled for June 10, 2010.
“We should all be able to trust that our law enforcement officers will protect us from harm in times of crisis. But amid the devastation that followed in the wake of Hurricane Katrina, officers involved in covering up this deadly police shooting committed a disgraceful violation of the public trust,” said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. “We will continue to aggressively investigate the events that occurred on the Danziger Bridge.”
U. S. Attorney Jim Letten added, “This morning in court, a former New Orleans police officer pleaded guilty, admitting to concealing a conspiracy among a group of officers to obstruct justice in the investigation of the police shooting on the Danziger Bridge in New Orleans which left two civilians dead and four other seriously injured. Although today’s guilty plea marks the second conviction in this important, ongoing investigation, it is important to note that this officer was the first to enter into an agreement with the United States and provide cooperation. The citizens we serve must know that as this investigation continues, our U. S. Attorney’s Office, along with the FBI and the Department of Justice Civil Rights Division, will do everything in our power to bring to justice all of the individuals responsible for the injustices which occurred on the bridge on Sept. 4, 2005.”
FBI Special Agent in Charge David Welker stated, “The FBI is uniquely tasked to investigate potential violations of the civil rights of the citizens of the United States. Today’s guilty plea is a clear message that the intensity of the investigation is increasing. The FBI, U.S. Attorney’s Office and DOJ’s Civil Rights Division will continue to aggressively pursue the evidence wherever it leads.”
According to court documents, Lehrmann learned from an NOPD supervisor (referred to in court documents as “the investigator”) that an officer on the bridge had “shot an innocent man.” Upon hearing that comment, Lehrmann concluded that the shooting on the bridge was a “bad shoot,” meaning that it was legally unjustified. Lehrmann admitted that he participated with his supervisors in the creation of a report that included false statements by the officers involved in the shooting; false claims about a gun that had in fact been planted by the investigator; and fabricated statements from witnesses who did not really exist. Lehrmann also admitted that the report of the Danziger Bridge investigation included false statements alleged to have been given by two of the victims of the police shooting.
According to the factual basis produced at the time of the plea, Lehrmann admitted that the report of the incident contained a false claim that the investigator had returned to the bridge the day after the shooting and had found a gun in the grass below where a family had been shot. In fact, according to Lehrmann, that story was “a lie.” According to Lehrmann, sometime after the shooting, he and two sergeants drove with the investigator to the investigator’s home, where the investigator retrieved a bag from his garage. When the investigator was asked what was in the bag, he responded, “a ham sandwich.” Lehrmann then looked in the bag and saw a gun that would be used in the Danziger Bridge investigation. Once the investigator assured Lehrmann and the sergeants that the gun was “clean,” meaning that it could not be traced to another crime, they all went along with the plan to plant the gun.
This case, which is ongoing, is being investigated by the New Orleans Field Office of the FBI, and is being prosecuted by Deputy Chief Bobbi Bernstein and Trial Attorney Forrest Christian of the Justice Department’s Civil Rights Division, along with Assistant U.S. Attorney Julia K. Evans of the Eastern District of Louisiana.
Former Acting Executive Director of Nonprofit Organization <br /> in American Samoa Pleads Guilty to Theft of Federal Grant FundsRead the Press Release
The former acting executive director of U’una’i Legal Services Corporation (ULSC) pleaded guilty today to stealing $31,292 from the federally-funded organization in American Samoa, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; Jeffrey Schanz, Inspector General of the Legal Services Corporation, Office of Inspector General (LSC OIG); and Elise Chawaga, Special Agent in Charge of the Fraud Detection Office at the Department of Justice Office of the Inspector General (DOJ OIG).
David Wagner, 47, of Maryland Heights, Mo., pleaded guilty before U.S. District Judge Carol E. Jackson in the Eastern District of Missouri to a one-count criminal information charging him with theft of federal grant funds.
According to court documents, from approximately 1998 through 2007, ULSC was a nonprofit organization operating in American Samoa. During this period, ULSC was the only nonprofit organization in American Samoa dedicated to providing free legal services to victims of domestic violence, dating violence, stalking and sexual abuse. ULSC relied on various sources of federal grant funding, including funding from the Legal Services Corporation and the Department of Justice’s Office of Violence Against Women (OVW).
In pleading guilty, Wagner admitted that from approximately November 2005 through December 2006, he stole $31,292 in federal grant funds from ULSC and OVW.
"Sadly, there are still far too many incidents of violence against women today. Victims in American Samoa were victimized yet again when funds intended to help provide free legal services to them were stolen by this defendant," said Assistant Attorney General Lanny A. Breuer. "The Department of Justice is committed to working toward a future where domestic abuse, sexual assault, stalking and teen dating violence are eradicated – and to prosecuting those who defraud programs meant to help achieve this goal."
"Today’s event represents a joint effort by the Criminal Division, the LSC OIG and the DOJ OIG in protecting funds that serve the legal needs of the poor," said Jeffrey Schanz, Inspector General of the LSC OIG.
"The Department of Justice Office of the Inspector General is committed to holding grantees accountable who betray the trust placed in them by using federal grant funds for personal gain rather than to assist victims of crime," said Elise Chawaga, Special Agent in Charge of the Fraud Detection Office at the DOJ OIG.
Wagner faces a maximum sentence of 10 years in prison, a $250,000 fine and payment of $31,292 in restitution. Sentencing is scheduled for July 12, 2010.
The case is being prosecuted by Trial Attorney Edward J. Loya Jr., of the Criminal Division’s Public Integrity Section. The case is being investigated by special agents of LSC OIG and DOJ OIG.
Federal Court Permanently Shuts Down Northern California Tax PreparerRead the Press Release
A federal judge in Sacramento, Calif., has permanently barred Teresa Marty, of Pollock Pines, Calif, and her Placerville, Calif.-based business, Advanced Financial Services LLC, from acting as federal tax return preparers, the Justice Department announced today. U.S. District Court Judge Frank C. Damrell, Jr. of the Eastern District of California entered the permanent injunction order, which adopted a 25-page recommendation of U.S. Magistrate Judge Edmund F. Brennan. The permanent injunction follows a preliminary injunction that was entered in September 2009. Marty claims to be a Certified Wealth Preservation Planner and Certified Asset Protection Planner, as well as an Enrolled Agent licensed with the State of California.
The court found that in 2008 and 2009 Marty prepared and filed fraudulent tax returns falsely reporting large fabricated amounts of federal taxes withheld. This false reporting of tax withheld led to fraudulent refund claims in amounts as large as $2.7 million per customer. The court also found that to support those fraudulent refund claims, Marty prepared and submitted false IRS 1099-OID forms on behalf of customers, showing the fabricated withholding.
The court stated that the Internal Revenue Service (IRS) had identified approximately 110 returns that Marty prepared and filed that use false 1099 forms to make fraudulent refund claims. The court noted that Marty’s "scheme lacks any support under the Internal Revenue Code, case law, or any other authority."
In addition to barring Marty from preparing federal tax returns, the court ordered her to give the Justice Department her complete customer list and to notify her customers of the injunction. More information about the case is available in an earlier Justice Department press release .
John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Tax Division trial attorney John Monroe, who handled the case, and Shauna Henline, of the IRS’ Small Business/Self Employed Division, who conducted the investigation.
In the past decade the Justice Department has obtained injunctions against more than 455 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.
Detroit-Area Doctor Convicted in Medicare Fraud SchemeRead the Press Release
Farmington Hills, Mich., physician Jose Castro-Ramirez was convicted today by a Detroit federal jury on all 13 charged counts in connection with his role in an $18.3 million Medicare fraud scheme, announced Assistant Attorney General Lanny 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 U.S. Department of Health and Human Services, Office of Inspector General’s (HHS-OIG), Chicago Regional Office.
After a three-week trial, the jury convicted Castro-Ramirez of one count of conspiracy to commit health care fraud, 11 substantive counts of health care fraud, and one count of conspiracy to launder the proceeds of the fraudulent scheme.
Evidence at trial established that beginning in late 2003, the defendant, a physician licensed in the state of Michigan, entered into an agreement with co-conspirator Suresh Chand to defraud the Medicare program. Chand owned and controlled several companies operating in Warren, Mich., including Continental Rehab Services Inc. (CRS) and Pacific Management Services Inc. (PM), which purported to provide physical and occupational therapy services to Medicare beneficiaries. In reality, as the evidence showed, Chand and his associates at CRS and PM created fictitious therapy files, appearing to document physical and occupational therapy services provided to Medicare beneficiaries, when in fact no such services had taken place. The fictitious services reflected in the files were billed to Medicare through sham Medicare providers controlled by Chand and his co-conspirators.
Evidence introduced at trial established that in order to create the fictitious files, Chand and his co-conspirators paid cash kickbacks and other inducements to Medicare beneficiaries, in exchange for the beneficiaries’ Medicare numbers and signatures on documents falsely indicating that they had received therapy services. Evidence also showed that Chand paid licensed physical and occupational therapists to sign fictitious "progress notes" and other documents that appeared to reflect that physical and occupational therapy services had been provided to the beneficiaries, when in fact they had not. Castro-Ramirez signed therapy prescriptions and other documents in the files falsely indicating that he had evaluated the Medicare beneficiaries and certified the need for physical and occupational therapy services. In fact, the evidence at trial established that Castro-Ramirez had not overseen any treatment provided to the patients and was fully aware that his signatures were part of a fraudulent scheme. According to evidence presented at trial, in many instances Castro-Ramirez had never seen the beneficiaries.
One of the inducements that Chand and his co-conspirators used to recruit Medicare beneficiaries into the scheme was the provision of prescriptions for controlled substances and other drugs, including Vicodin and Xanax. Evidence presented at trial showed that Chand provided Castro-Ramirez with lists of the controlled substances or drugs the beneficiaries preferred, and that Castro-Ramirez wrote prescriptions for the substances without ever seeing the patients. The evidence established that between January 2003 and March 2007, Castro-Ramirez wrote thousands of prescriptions for a variety of drugs for patients that he had never seen. The evidence also showed that Castro-Ramirez was fully aware that the purpose of the prescriptions was to induce beneficiaries into the scheme.
Evidence introduced at trial demonstrated that Castro-Ramirez profited from his participation in the scheme in several ways. Castro-Ramirez’s largest source of fraudulent proceeds came from his own billings to Medicare for "home visits" that he purportedly made to Medicare beneficiaries whom Chand recruited into the scheme. In fact, Castro-Ramirez never conducted "home visits" with the vast majority of these patients, and never discussed or ordered therapy services for the few he did see. The evidence showed that Chand and other co-conspirators also distributed proceeds of the fraud directly to Castro-Ramirez on occasion, and did so through transactions designed to disguise the nature, source, ownership, control and location of the tainted funds. The evidence showed that Castro-Ramirez knew that the cash and checks he received from Chand were structured so as to conceal the fact that they were proceeds of Medicare fraud.
Between approximately January 2003 and June 2007, Chand and his co-conspirators submitted claims to the Medicare program totaling $18,379,300 for physical and occupational therapy services that were supposedly ordered and supervised by Castro-Ramirez, but were in fact never rendered. Medicare paid $8,562,688 on those claims. In addition, Castro-Ramirez submitted approximately $1.4 million in claims to the Medicare program for "home visits" supposedly provided to beneficiaries recruited into the scheme by Chand and his co-conspirators. Medicare paid approximately $929,000 on those claims.
Chand pleaded guilty on Sept. 28, 2009, before U.S. District Judge Sean F. Cox to one count of conspiracy to commit health care fraud and one count of conspiracy to launder money.
At sentencing, scheduled for June 29, 2010, Castro-Ramirez faces a maximum penalty of 10 years in prison and a $250,000 fine on the health care fraud conspiracy and substantive health care fraud counts. He faces a maximum penalty of 20 years in prison and a $250,000 fine on the money laundering conspiracy count.
The case was prosecuted by Senior Trial Attorney John K. Neal of the Criminal Division’s Fraud Section and Special Assistant U.S. Attorney Thomas W. Beimers of the U.S. Attorney’s Office for the Eastern District of Michigan.
The case was investigated by the FBI and HHS-OIG. 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, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for more than $1 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
Three South Florida Men Charged <br /> in Obstruction of Justice and Money Laundering OperationRead the Press Release
Three Florida men were arrested today on charges including obstruction of justice and money laundering as part of a joint U.S. and Italian law enforcement action, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Jeffrey H. Sloman for the Southern District of Florida and John V. Gillies, Special Agent in Charge of the FBI’s Miami Field Office.
Roberto Settineri, 41, of Miami Beach, Fla., and Daniel Dromerhauser, 39, of Miami were arrested this morning on charges contained in a superseding indictment unsealed today. Enrique Ros, 33, of Pembroke Pines, Fla., was also charged in the superseding indictment, but remains at large. The defendants are charged with one count of conspiracy to obstruct, two counts of obstruction and attempting to obstruct federal proceedings, one count of conspiracy to launder money and five counts of substantive money laundering. If convicted, the defendants face up to 20 years in prison on each of the nine charged counts.
The charges filed in the Southern District of Florida against Settineri, Ros and Dromerhauser stem from an undercover operation in which, according to the indictment, the men allegedly agreed to destroy documents represented to be subject to a grand jury investigation. The indictment also alleges the three defendants agreed to launder funds and conceal assets represented to be the proceeds of a large-scale mail and wire fraud.
Antonio Tricamo, 37, of Miami, was arrested today on charges contained in a separate indictment, including four counts of money laundering, six counts of trafficking in contraband cigarettes and one count of marriage fraud. If convicted, Tricamo faces up to 20 years in prison on each of the money laundering charges and five years in prison on each the cigarette smuggling charges and the marriage fraud charge.
The charges filed against Tricamo stem from a separate undercover operation in which Tricamo allegedly assisted in laundering nearly $1 million in funds represented to be drug proceeds. Additionally, the indictment alleges Tricamo purchased more than 250,000 cigarettes, none of which contained tax stamps showing payment of applicable state cigarette taxes. Tricamo also allegedly entered into a false marriage in an attempt to gain lawful status into the United States.
The defendants made their initial appearances today before U.S. Magistrate Judge Robin Rosenbaum in U.S. District Court in Fort Lauderdale, Fla.
In a coordinated arrest action, Gaetano Napoli Sr., Thomas Napoli and Gaetano Napoli Jr., were arrested today on charges filed in the Eastern District of New York, including obstruction of justice, extortion and concealment of assets in bankruptcy. According to documents filed in federal district court in Brooklyn, Gaetano Napoli Sr., is a member of the Gambino organized crime family and a close associate of Settineri.
As part of this coordinated enforcement action, prosecutors in Palermo, Italy, today charged Settineri and 20 co-defendants in Sicily with extortion, drug trafficking, attempted homicide and other crimes arising from their alleged affiliation with Santa Maria di Gesù, a Sicilian mafia family. Italian authorities executed arrests on those charges in and around Palermo earlier this morning.
"Today’s arrests and the charging of more than 20 individuals on two continents is a tribute to what can be achieved in cooperation with our international partners," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "In a world where crime knows no boundaries, robust law enforcement cooperation is essential to detecting and prosecuting alleged criminal activity."
"This case demonstrates the success of national and international law enforcement cooperation to transcend parochial boundaries and jurisdictional limits," said U.S. Attorney U.S. Jeffrey H. Sloman for the Southern District of Florida. "Together, we can fight crime from different perspectives and hold accountable those accused of trying to pervert and obstruct our system of justice."
"The age of global threats has propelled the FBI into an age of global partnerships," said John V. Gillies, Special Agent in Charge of the FBI’s Miami Office. "These charges prove that our criminal investigative efforts remain unchanged and undeterred. The cooperation between the FBI, the U.S. Attorney’s Office, the Italian National Police, the Miami-Dade Police Department and the Broward Sheriff’s Office were instrumental to the successful outcome of this case."
These cases are being investigated by the FBI; the Broward County, Fla., Sheriff’s Office; the Miami-Dade Police Department; the Italian Ministries of the Interior and Justice; and the Italian National Police. The Miami cases are being prosecuted by Assistant U.S. Attorney Cynthia Stone of the Southern District of Florida and Trial Attorney Margaret Honrath of the Organized Crime and Racketeering Section. The Brooklyn case is being prosecuted by the U.S. Attorney’s Office for the Eastern District of New York. The Criminal Division’s Office of International Affairs and the FBI Legal Attaché Office in Rome provided assistance in these cases.
An indictment is merely an accusation and the defendants are presumed innocent until proven guilty.
Justice Department Sues to Shut Down Kansas Tax PreparerRead the Press Release
The United States has sued a Garden City, Kan., tax preparer, Jose Lares, seeking to permanently bar him from the tax-preparation business, the Justice Department announced today. The civil injunction suit, filed with the U.S. District Court for the District of Kansas, alleges that Lares prepares returns through Dinero Rapido Tax Service, formerly known as Income Tax Dinero Rapido, in Garden City.
According to the government’s complaint, Lares claims false dependent exemptions and false filing statuses on customers’ returns. The complaint alleges that Internal Revenue Service (IRS) audits of customers of Lares’s former company resulted in clients owing over $2 million. The complaint further states that IRS audits of customers of Lares’s current business, Dinero Rapido Tax Services, has revealed an average tax loss of over $6,000 per return.
Since 2001, the Justice Department’s Tax Division has obtained more than 455 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 Web site.
Department of Justice and USDA Announce Updated Schedule forAgriculture Workshop on March 12 in IowaRead the Press Release
The Department of Justice and the U.S. Department of Agriculture (USDA) announced today an updated schedule and panelists for the first joint public workshop, which will be held on March 12, 2010, in Ankeny, Iowa, to explore competition and regulatory issues in the agriculture industry. The workshop will be held at the FFA Enrichment Center at Des Moines Area Community College (DMACC).
The workshops, which were first announced by Attorney General Eric Holder and Agriculture Secretary Tom Vilsack on Aug. 5, 2009, are the first joint Department of Justice/USDA workshops ever to be held to discuss competition and regulatory issues in the agriculture industry. The goals of the workshops are to promote dialogue among interested parties and foster learning with respect to the appropriate legal and economic analyses of these issues, as well as to listen to and learn from parties with experience in the agriculture sector. Attendance at the workshops is free and open to the public. The general public and media interested in attending the initial workshop should register at https://go.dmacc.edu/ffa/agworkshop .
U.S. Attorney General Eric Holder, U.S. Agriculture Secretary Tom Vilsack and Assistant Attorney General for the Justice Department’s Antitrust Division Christine Varney will participate in the workshop and will be joined by Iowa Lt. Gov. Patty Judge, Iowa Attorney General Tom Miller and Iowa Agriculture Secretary Bill Northey. They will participate in a roundtable discussion with presentations on current issues affecting farmers. Testimony and roundtable discussion by a panel of farmers will follow. The workshop will also feature two panels focusing on the competitive dynamics in the seed industry and trends in contracting, transparency and buyer power. The first day of the workshops will end with an enforcer roundtable and public testimony.
The workshop schedule follows:
Opening Remarks (9:30 a.m. CST - 9:45 a.m. CST)
Tom Vilsack, Secretary of Agriculture, U.S. Department of Agriculture
Eric Holder, Attorney General, U.S. Department of Justice
Roundtable Discussion and Presentation of Issues (9:45 a.m. CST - 10:45 a.m. CST)
Tom Vilsack, Secretary of Agriculture, U.S. Department of Agriculture
Eric Holder, Attorney General, U.S. Department of Justice
Christine Varney, Assistant Attorney General for Antitrust, U.S. Department of Justice
Patty Judge, Lt. Governor, State of Iowa
Tom Miller, Attorney General, State of Iowa
Bill Northey, Secretary of Agriculture, State of Iowa
Tom Harkin, Senator, U.S. Senate (tentative)
Chuck Grassley, Senator, U.S. Senate (tentative)
Leonard Boswell, Congressman, U.S. House of Representatives (tentative)
Invited:
Bruce Braley, Congressman, U.S. House of Representatives
Steve King, Congressman, U.S. House of Representatives
Tom Latham, Congressman, U.S. House of Representatives
Dave Loebsack, Congressman, U.S. House of Representatives
Coffee Break (10:45 a.m. CST - 11:15 a.m. CST)
Farmer Testimony and Roundtable Discussion (11:15 a.m. CST - 12:15 p.m. CST)
Tom Vilsack, Secretary of Agriculture, U.S. Department of Agriculture
Christine Varney, Assistant Attorney General for Antitrust, U.S. Department of Justice
Ken Fawcett, independent crop farmer, Eastern Iowa
Jim Foster, hog producer, Montgomery City, Missouri
Pam Johnson, farmer, Floyd, Iowa
Eric Nelson, grain and cattle farmer, Moville, Iowa
Todd Wiley, hog producer, Walker, Iowa
Eddie Wise, hog and produce farmer, Whitakers, North Carolina
Lunch (12:15 p.m. CST - 1:15 p.m. CST)
Seed Competitive Dynamics Panel (1:15 p.m. CST - 2:15 p.m. CST)
Moderator:
James MacDonald, Chief, Agricultural Structure and Productivity Branch, Economic Research Service, U.S. Department of Agriculture
Panelists:
Ray Gaesser, Soybean and Corn Farmer, Corning, Iowa; Vice President, American Soybean Association; Former President, Iowa Soybean Association
Neil E. Harl, Charles F. Curtiss Distinguished Professor in Agriculture and Emeritus Professor of Economics, Iowa State University; Member of the Iowa Bar
Dermot Hayes, Professor of Economics and Finance, Pioneer Chair in Agribusiness, Iowa State University
Diana Moss, Vice President & Senior Fellow, American Antitrust Institute
Jim Tobin, Vice President, Industry Affairs, Monsanto Company
Agricultural Trends Panel (2:15 p.m. CST - 3:15 p.m. CST)
Moderator:
Phil Weiser, Deputy Assistant Attorney General, U.S. Department of Justice
Panelists:
Brian Buhr, Professor and Head of Department, Applied Economics, University of Minnesota
Rachael Goodhue, Associate Professor, Department of Agriculture and Resource Economics, University of California, Davis
Mary Hendrickson, Extension Associate Professor of Rural Sociology, University of Missouri
John Lawrence, Professor of Economics, Iowa State University
Chuck Wirtz, pork producer, Whittemore, Iowa
Patrick Woodall, Research Director, Food & Water Watch
Coffee Break (3:15 p.m. CST - 3:30 p.m. CST)
Enforcer Roundtable Discussion Panel (3:30 p.m. CST - 4:30 p.m. CST)
Moderator:
Mark Tobey, Special Counsel for State Relations and Agriculture, U.S. Department of Justice
Panelists:
Steve Bullock, Attorney General, State of Montana
Richard Cordray, Attorney General, State of Ohio
Chris Koster, Attorney General, State of Missouri
John Ferrell, Deputy Under Secretary for Marketing and Regulatory Programs, U.S. Department of Agriculture
Stephen Obie, Director, Division of Enforcement, Commodity Futures Trading Commission
William Stallings, Assistant Section Chief, Transportation, Energy and Agriculture Section, Antitrust Division, U.S. Department of Justice
Public Testimony (4:30 p.m. CST - 5:30 p.m. CST)
This is an opportunity for those in the audience to make comments in an open forum.
Closing Remarks (5:30 p.m. CST)
Phil Weiser, Deputy Assistant Attorney General, U.S. Department of Justice
John Ferrell, Deputy Under Secretary for Marketing and Regulatory Programs, U.S. Department of Agriculture
Additional updates and information will be posted on the Antitrust Division’s agriculture workshop Web site at http://www.justice.gov/atr/public/workshops/ag2010/index.htm . While no streaming Web cast will be available, transcripts will be available for review at a later date on the Antitrust Division’s Web site. Individuals seeking more information on the workshops should contact [email protected] .
Three Former Owners and Employees of Two Video Relay Service Companies Plead Guilty to Defrauding FCC ProgramRead the Press Release
Three former owners and employees of two different video relay service companies pleaded guilty today to conspiring to defraud the Federal Communications Commission’s (FCC) Video Relay Service (VRS) program of more than $2.5 million, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
The following defendants each pleaded guilty before U.S. District Court Judge Joel A. Pisano in Trenton, N.J., to one count of conspiracy to commit mail fraud:
- Yosbel Buscaron, 25, a co-owner of Florida-based Innovative Communication Services for the Deaf (ICSD);
- Lazaro Fernandez, 35, a co-owner of ICSD; and
- Natan Zfati, 32, a former video interpreter (VI) for New York and New Jersey-based Deaf and Hard of Hearing Interpreting Services, Inc. (DHIS).
Buscaron, Fernandez and Zfati were charged with engaging in schemes to steal millions of dollars from the FCC’s VRS program, along with 23 other people and one company, in six indictments unsealed on Nov. 19, 2009. According to the indictments, VRS is an online video translation service that allows people with hearing disabilities to communicate with hearing individuals through the use of interpreters and web cameras. A person with a hearing disability who wants to communicate with a hearing person can do so by contacting a VRS provider through an audio and video Internet connection. The VRS provider, in turn, employs a video interpreter to view and interpret the hearing disabled person’s signed conversation and relay the signed conversation orally to a hearing person.
VRS is funded by fees assessed by telecommunications providers to telephone customers, and is provided at no cost to VRS users. The FCC reimburses VRS providers at a rate of approximately $6.50 per minute, which amounts to approximately $390 per hour.
In pleading guilty, the three defendants admitted that they conspired with others to pay individuals to make fraudulent VRS phone calls and to process fraudulent VRS phone calls that were billed to the FCC through VRS provider Viable Communications Inc. Each defendant admitted to generating or processing thousands of illegitimate VRS hours that were billed to the FCC. According to information contained in the plea documents, Buscaron, Fernandez and Zfati each admitted that their role in defrauding the FCC’s VRS program led to a total loss of between $2.5 and $7 million.
At sentencing, the defendants each face a maximum sentence of 20 years in prison, a fine of $250,000, as well as mandatory restitution and forfeiture. Sentencing is scheduled for June 29, 2010.
To date, 11 individuals have pleaded guilty to their roles in defrauding the FCC. Co-defendants Joshua Finkle and Irma Azrelyant, co-owners of DHIS, pleaded guilty on Feb. 18, 2010, for their roles in the scheme and are scheduled to be sentenced on June 29, 2010. Co-defendant Alfia Iskandarova, a DHIS VI, pleaded guilty on March 4, 2010, and is scheduled to be sentenced on June 28, 2010.
The indictments charge owners and employees of the following six companies with engaging in a scheme to defraud the FCC’s VRS program:
- Viable Communications Inc., of Rockville, Md.;
- Master Communications LLC of Las Vegas;
- KL Communications LLC of Phoenix;
- Mascom LLC of Austin, Texas;
- Innovative Communication Services for the Deaf Corp. (ICSD) of Miami Lakes, Fla.; and
- Deaf Studio 29 of Huntington Beach, Calif.
An indictment is merely an accusation, and defendants are presumed innocent until and unless proven guilty at trial beyond a reasonable doubt.
These cases are being prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Brigham Cannon of the Criminal Division’s Fraud Section. The cases are being investigated by FBI’s Washington Field Office, the U.S. Postal Inspection Service and the FCC Office of Inspector General.
Pennsylvania Woman Indicted in Plot to Recruit Violent Jihadist Fighters and <br /> to Commit Murder OverseasRead the Press Release
David Kris, Assistant Attorney General for National Security, and Michael L. Levy, U.S. Attorney for the Eastern District of Pennsylvania, together with Janice K. Fedarcyk, Special Agent-in-Charge of the FBI in Philadelphia, today announced the unsealing of an indictment charging Colleen R. LaRose, aka "Fatima LaRose," aka "Jihad Jane," with conspiracy to provide material support to terrorists, conspiracy to kill in a foreign country, making false statements to a government official and attempted identity theft.
The indictment charges that LaRose (an American citizen born in 1963 who resides in Montgomery County, Pa.) and five unindicted co-conspirators (located in South Asia, Eastern Europe, Western Europe and the United States) recruited men on the Internet to wage violent jihad in South Asia and Europe, and recruited women on the Internet who had passports and the ability to travel to and around Europe in support of violent jihad.
The indictment further charges that LaRose and her unindicted co-conspirators used the Internet to establish relationships with one another and to communicate regarding their plans, which included martyring themselves, soliciting funds for terrorists, soliciting passports and avoiding travel restrictions (through the collection of passports and through marriage) in order to wage violent jihad. The indictment further charges that LaRose stole another individual’s U.S. passport and transferred or attempted to transfer it in an effort to facilitate an act of international terrorism.
In addition, according to the indictment, LaRose received a direct order to kill a citizen and resident of Sweden, and to do so in a way that would frighten "the whole Kufar [non-believer] world." The indictment further charges that LaRose agreed to carry out her murder assignment, and that she and her co-conspirators discussed that her appearance and American citizenship would help her blend in while carrying out her plans. According to the indictment, LaRose traveled to Europe and tracked the intended target online in an effort to complete her task.
"Today’s indictment, which alleges that a woman from suburban America agreed to carry out murder overseas and to provide material support to terrorists, underscores the evolving nature of the threat we face," said David Kris, Assistant Attorney General for the National Security Division. "I applaud the many agents, analysts and prosecutors who worked on this important investigation."
"This case shows the use terrorists can and do make of the Internet," said U.S. Attorney Michael L. Levy. "Colleen LaRose and five other individuals scattered across the globe are alleged to have used the Internet to form a conspiracy to provide material support to terrorism, culminating in a direct order to LaRose to commit murder overseas. LaRose – an American citizen whose appearance was considered to be an asset because it allowed her to blend in – is charged with using the Internet to recruit violent jihadist fighters and supporters, and to solicit passports and funding. It demonstrates yet another very real danger lurking on the Internet. This case also demonstrates that terrorists are looking for Americans to join them in their cause, and it shatters any lingering thought that we can spot a terrorist based on appearance."
"This case demonstrates that the FBI and our partners in the law enforcement and intelligence communities must continue to remain vigilant in the face of the threats that America faces, in whatever form those threats may present themselves or no matter how creative those who threaten us try to be," said Special Agent-in-Charge Janice K. Fedarcyk of the Philadelphia Division of the FBI. "We must use all available technologies and techniques to root out potential threats and stop those who intend to harm us."
If convicted of the charges against her, LaRose faces a potential sentence of life in prison and a $1 million fine.
This case was investigated by the FBI’s Joint Terrorism Task Force. It is being prosecuted by Jennifer Arbittier Williams, Assistant U.S. Attorney from the Eastern District of Pennsylvania, and Matthew F. Blue, Trial Attorney from the Counterterrorism Section in the Justice Department’s National Security Division.
The public is reminded that an indictment is an accusation and a defendant is presumed innocent unless and until proven guilty.
Justice Department Files for Immediate Relief Regarding Conditions <br /> at Conway Human Development Center, in Conway, ArkansasRead the Press Release
The Justice Department today asked the Federal District Court for the Eastern District of Arkansas to take immediate action to prevent children from being admitted to the Conway Human Development Center (CHDC) in Conway, Ark. The department’s motion for preliminary injunction aims to prevent the segregation of children with developmental disabilities in dangerous conditions and to address accusations of imminent and serious threats to the safety of the facility’s more than 500 current residents.
In January 2009, the Justice Department filed a complaint against the State of Arkansas to enforce the federal requirement that individuals with disabilities be served in the most integrated settings appropriate, and to remedy unconstitutional conditions at CHDC. Information collected through discovery since the filing of the complaint has led the department to conclude that residents face increasing and grave risk of harm with each day that deficiencies are ignored, and that Arkansas fails to serve individuals in the most integrated setting appropriate to the residents’ needs.
The United States has concluded that children at the facility are particularly vulnerable given allegations that CHDC residents are subjected to dangerous medication mismanagement and harmful, unnecessary restraints. In recent years, at least three CHDC residents have died, suffered possible permanent organ damage or been at risk of hemorrhaging to death because of psychotropic medication mismanagement. CHDC also continues to utilize 41 different forms of mechanical restraints on both children and adults, including straitjackets, restraint chairs and papoose boards - practices that have been largely barred from other facilities for years.
"The State has a responsibility to ensure the safety of individuals who reside in state-run facilities, and we must act swiftly when the state does not live up to that responsibility," said Thomas E. Perez, Assistant Attorney General in charge of the Civil Rights Division. "Individuals with developmental disabilities have the right to live in the most integrated setting appropriate to their needs, and states must take swift action to ensure that all individuals are accorded these basic rights."
In addition to barring inappropriate restraints and requiring safeguards to prevent dangerous medication practices, the motion seeks to require that the state remove barriers to the provision of supports and services in the community, so that individuals with disabilities, including the approximately 50 children at CHDC, are not forced to choose between an unsafe institution and the denial of necessary services in a more integrated setting.
Between June 1, 2007, and Oct. 1, 2009, a CHDC resident was more likely to die than be discharged to a more integrated setting. On average, CHDC residents die at the age of 46.5 years, compared with the average age of 72 years for other individuals with developmental disabilities living in institutional settings. The number of individuals with developmental disabilities who are waiting to receive community-based services is on the rise in Arkansas, with over 1,300 currently waiting to receive services through the Centers for Medicaid and Medicare Services Alternative Community Services waiver program, with an average wait time of approximately two and a half years.
The Civil Rights Division is authorized to conduct investigations under the Civil Rights of Institutionalized Persons Act (CRIPA) and the Americans with Disabilities Act of 1990 (ADA). CRIPA authorizes the Attorney General to investigate conditions of confinement in certain institutions owned or operated by, or on behalf of, state and local governments. In addition to residential facilities serving persons with developmental disabilities, these institutions include psychiatric hospitals, nursing homes, jails, prisons and juvenile correctional facilities. The ADA authorizes the Attorney General to investigate whether a state is serving individuals in the most integrated settings appropriate to their needs. Please visit http://www.justice.gov/crt to learn more about CRIPA, the ADA and other laws enforced by the Justice Department’s Civil Rights Division.
Federal Court in Los Angeles Shuts Down Tax Firm<br /> for Requesting $23 Million in Bogus Tax RefundsRead the Press Release
A federal court in Los Angeles has permanently barred Nyla McIntyre of Covina, Calif. and her business, Approved Financial Services, Inc., from preparing tax returns for others, the Justice Department announced today. U.S. District Judge George H. King found that McIntyre requested more than $23 million in fraudulent income tax refunds for customers using "a tax fraud scheme that involves filing fraudulent federal income tax returns and other documents, including Forms 1099-OID and Forms Schedule B, with the IRS...." McIntyre "advised a number of clients that they could file fraudulent IRS Forms 1099-OID in order to secure refunds that would help pay off mortgage and/or credit card debts," according to the court.
The court found that McIntyre requested at least 62 fraudulent refunds using her tax scheme, which "is based in part on McIntyre’s apparent belief that secret accounts exist that can be accessed to pay these bogus refund claims." For example, court papers filed in the case showed that McIntyre requested a $2.7 million dollar fraudulent refund for a married couple residing in La Quinta, California, and a $1.1 million dollar bogus refund for a couple from Pine Grove, California. The court permanently barred McIntyre from preparing returns because "her continued work as a professional tax preparer will permit her to perpetuate this fraudulent scheme and succeed with respect to a fraction of the submissions."
On January 4, 2010, an Idaho court shut down tax preparer Penny Lea Jones for using the same OID scheme to claim $93 million in bogus refunds for customers. On September 9, 2009, a Sacramento court found that preparer Teresa Marty had been using the same scheme to generate bogus refunds for her customers, and permanently barred her from preparing tax returns for others.
John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, thanked Grayson Hoffman, the Justice Department trial attorney who handled the case, and Shauna Henline, the IRS senior technical advisor who conducted the investigation.
In the past decade, the Justice Department’s Tax Division has obtained more than 455 injunctions against tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department’s Web Site.
Chicago Hospital to Pay More Than $1.5 Million<br /> to Resolve Medicare False Claims Act AllegationsRead the Press Release
Rush University Medical Center has agreed to pay $1,547,200 plus interest to resolve allegations that the facility violated the False Claims Act, the Justice Department announced today. Rush is alleged to have submitted false claims to Medicare during the period 2000 through 2007 by entering into certain leasing arrangements for office space with two individual physicians and three physician practice groups that violated the Stark Law.
The Stark Law prohibits a hospital from profiting from patient referrals made by a physician with whom the hospital has an improper financial arrangement. A leasing arrangement is improper under the Stark Law absent a written lease, signed by the parties, that specifies the premises covered by the lease. Leasing arrangements must also be commercially reasonable and consistent with "fair market value" for the premises. The Stark Law is intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and are based solely on the best interests of the patient.
"The Justice Department is committed to investigating cases that threaten the integrity of the Medicare program," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division." The department will continue to protect patients by pursuing hospitals that have improper financial relationships with physicians."
Rush is one of several defendants in a suit brought in 2004 by two individuals under the whistleblower provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring a lawsuit on behalf of the United States and to share in any recovery. The lawsuit, in part, involves allegations that Rush entered into prohibited financial relationships with certain physicians. Under the civil settlement announced today, the whistleblowers, Dr. Robert Goldberg and June Beecham, will receive $270,760.
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 $2.3 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 $3 billion.
The settlement announced today was the result of a coordinated effort among the Commercial Litigation Branch of the Justice Department’s Civil Division; the Department of Health and Human Services, Office of Inspector General; and the Illinois Attorney General’s Office.
Railroad Company to Pay $4 Million Penalty for 2005 Chlorine Spill That Resulted in Nine Deaths in Graniteville, South CarolinaRead the Press Release
WASHINGTON—Norfolk Southern Railway Company has agreed to pay a $4 million penalty to resolve alleged violations of the Clean Water Act (CWA) and hazardous materials laws for a 2005 chlorine spill in Graniteville, S.C., the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
Under the settlement filed in federal court in Columbia, S.C., Norfolk Southern will be required to pay a civil penalty of $3,967,500 for the alleged CWA violations, to be deposited in the federal Oil Spill Liability Trust Fund. The alleged CWA violations, included in an amended complaint filed in March 2009, are for the discharge of tons of chlorine, a hazardous substance, from a derailed train tank car and thousands of gallons of diesel fuel from ruptured locomotive engine fuel tanks. For the alleged Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) violation for failure to immediately notify the National Response Center of the chlorine release, Norfolk Southern will also pay a penalty of $32,500, to be deposited in the Hazardous Substance Superfund.
The settlement addresses the Jan. 6, 2005, Norfolk Southern train derailment in Graniteville, S.C. During the derailment, one of the train’s tank cars was punctured and released chlorine gas. Nine people died as a result of chlorine exposure and hundreds of people sought medical care due to respiratory distress. The incident resulted in the evacuation of more than 5,000 people living and working within a 1-mile radius of the release area. A cloud of the gas settled over nearby Horse Creek and its tributaries and was absorbed into the water in sufficient quantity to kill hundreds of fish. Two of the engines involved in the crash leaked diesel fuel, a portion of which reached Horse Creek.
"This agreement includes a significant civil penalty for the catastrophic chlorine spill, which resulted in loss of human life and damage to the environment, and ensures that those responsible are held accountable under the law," said Bob Dreher, Principal Deputy Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"This settlement reflects the agency’s commitment to ensure compliance with our nation’s environmental laws," said Stan Meiburg, EPA Acting Regional Administrator in Atlanta. "Companies have a responsibility to workers, emergency responders and the community to make sure a serious accident doesn’t become a senseless tragedy."
Under the terms of the agreement, Norfolk Southern will provide incident command system training to environmental and transportation personnel; stock nearby Langley Pond with at least 3,000 fish to replace fish killed by the chlorine spill; and post the telephone number for the National Response Center to facilitate spill reporting. Further, the settlement includes a supplemental environmental project valued at $100,000 to plant vegetation along the banks of Horse Creek to decrease erosion and sedimentation, thereby improving water quality in Horse Creek.
Chlorine is defined as a "hazardous substance" under CERCLA and CWA, and can cause significant harm to human health and the environment. In humans, chlorine corrodes the respiratory tract and can cause severe eye and skin burns, lung collapse and death. Chlorine is also toxic to marine life and vegetation. Chlorine reacts with water to form a strongly oxidizing solution that can damage the gills of fish and other organisms, inhibiting their ability to absorb oxygen.
The consent decree was filed today in the U.S. District Court for the District of South Carolina and is subject to a 30-day public comment period and court review and approval. A copy of the consent decree will be available on the Department of Justice Web site at http://www.justice.gov/enrd/Consent_Decrees.html.
New Justice Department Outreach Effort to Victims<br /> of Radiation Exposure AnnouncedRead the Press Release
WASHINGTON – The Justice Department today announced a new internship program that will employ students part-time to conduct intensive outreach efforts with Native Americans and their families whose work in the uranium industry during the Cold War benefitted the United States but exposed them to radiation and may entitle them to compensation under the Radiation Exposure Compensation Act (RECA). The internship will be based in the Four Corners region (Utah, Colorado, New Mexico and Arizona) and include a two-week training program in Washington, D.C., where college and graduate students will learn about the RECA Program, a compensation system established by Congress in 1990 and administered by the Civil Division of the Department of Justice.
RECA seeks to compensate individuals who contracted certain cancers or other serious diseases after being exposed to radiation through nuclear weapons tests or work in the uranium mining industry between 1942 and 1971. Although the program has awarded compensation to individuals residing in every state, most applications are filed by people living in the Four Corners region. Culture, tradition and custom sometimes present special concerns for Native American claimants that may make successful claims more difficult when compared with the general population of RECA claimants. Students will be recruited from tribal communities in the Four Corners region and will receive instruction in federal law, government service and community outreach.
"The RECA program is an important part of the Attorney General’s commitment to this administration’s work in strengthening the nation-to-nation relationship with tribal governments," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. "We want to ensure that all eligible applicants have access to the RECA program, which is why we’re continually seeking to improve our outreach efforts. In addition to helping us reach those Cold War Patriots who are suffering and are entitled to compensation, this internship program will provide much needed summer jobs to bright students looking for an opportunity to serve."
Under RECA, people in the following claimant categories may receive payments: uranium miners, millers and ore transporters; people who were present at nuclear weapons tests; and people who lived in certain areas "downwind" of the Nevada Nuclear Test Site. The law also requires sensitivity toward "established law, tradition and custom of the particular affected
Indian tribe." The outreach efforts are intended to inform people about the program and help eligible claimants apply for payments.
Assistant Attorney General West will speak to students at Northern Arizona University in Flagstaff, Ariz., about the RECA Internship on March 29, 2010. He will also speak to students at the University of New Mexico in Gallup, N.M., on March 30 and at Diné College in Shiprock, N.M., on March 31.
The RECA Internship will cover all travel costs as well as room and board for interns and pay a small stipend to cover incidental expenses. While the RECA program will sponsor the internships, a contractor, not the U.S. government, will employ the selected students.
In order to be eligible for the RECA Internship, applicants must be students in good standing. Two Washington, D.C., training sessions will be offered: June 7 to 18, 2010, and July 26 to August 6, 2010. The deadline for applicants for the June training session is April 15, 2010. The deadline for the July training session is May 1, 2010. Applications will be available online at www.justice.gov/civil/Employment.htm on March 10, 2010, or interested students may contact RECA staff at (202) 616-4304 or [email protected] to have an application mailed to them.
Today's announcement is part of the Justice Department's ongoing initiative to increase engagement, coordination and action on public safety in tribal communities.
Justice Department Requires Key Divestiture in Election Systems & Software/Premier Election Solutions MergerRead the Press Release
WASHINGTON — The Department of Justice announced today that it will require Election Systems & Software (ES&S) to divest voting equipment systems assets it purchased in September 2009 from Premier Election Solutions Inc. in order to restore competition. The assets to be divested include the means to produce all versions of Premier’s hardware, software and firmware used to record, tabulate, transmit or report votes, including the Assure 1.2 system, and a license to better serve disabled voters. The department said that today’s settlement will restore competition in voting equipment systems in the United States and that, without the divestiture, the acquisition would result in higher prices, lower quality and a reduced incentive to innovate.
The Department of Justice’s Antitrust Division, along with nine state attorneys general, filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C., alleging that the transaction harmed competition. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the department’s competitive concerns. The state attorney general offices are: Arizona, Colorado, Florida, Maine, Maryland, Massachusetts, New Mexico, Tennessee and Washington.
"The proposed settlement will restore competition, provide a greater range of choices and create incentives to provide secure, accurate and reliable voting equipment systems now and in the future," said Molly S. Boast, Deputy Assistant Attorney General for the Department of Justice’s Antitrust Division.
According to the complaint, the acquisition substantially reduced competition as it combined the two largest providers of systems used to tally votes in federal, state and local elections in the United States. ES&S’s acquisition of Premier made ES&S the provider of more than 70 percent of the voting equipment systems in the United States. The department said that because the cash value of the deal between ES&S and Premier was $5 million, far below the mandatory reporting threshold for mergers under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the department’s investigation of the transaction did not begin until the companies had combined their assets and dismantled many of Premier’s operating divisions. The department said that today’s settlement provides quick, effective relief that resolves the department’s competitive concerns, and enables local and state jurisdictions to obtain competitive bids for their immediate voting equipment systems needs.
Under the terms of the settlement, ES&S must divest all of the intellectual property associated with all versions –past, present and in development –of the Premier voting equipment systems to another company. ES&S also must divest all Premier tooling and fixed assets, as well as inventory of parts and components. In order to allow the divestiture buyer to better serve disabled voters, ES&S must also grant a fully paid-up, irrevocable, perpetual license to use the AutoMARK, ES&S’s ballot marking device for which Premier had a limited license prior to the acquisition. The buyer of the divestiture assets will have the right to modify and improve both Premier products and the AutoMARK.
ES&S must sell the divestiture assets to a buyer approved by the department. The settlement prohibits ES&S from bidding on new voting equipment system contracts using the Premier equipment. The department also required that ES&S grant the divestiture buyer an opportunity to compete to provide services to Premier customers currently under contract with ES&S, giving customers the option to switch to the divestiture buyer or to remain with ES&S. The department said that this option addresses customer concerns that an outright divestiture of service contracts would disrupt the administration of upcoming primaries and general elections. ES&S also must provide access to knowledgeable Premier employees and agree to offer a supply agreement to allow the divestiture buyer time to establish its own manufacturing of voting equipment systems.
The proposed settlement, if approved by the court, would be in effect for 10 years. The proposed settlement requires ES&S to complete the divestiture within 60 days, or five days after the entry of the proposed settlement by the court, whichever is later. The department may agree to the extension of this time period by no more than 60 days. If ES&S does not complete the divestiture within this time period, a trustee selected by the department and approved by the court will be appointed by the court to complete the divestiture.
ES&S is a Delaware corporation with its headquarters in Omaha, Neb. Prior to its acquisition of Premier, ES&S was already the largest provider of voting equipment systems in the United States, had systems installed in at least 41 states, and collected revenue of $149.4 million in 2008.
Premier, prior to its acquisition, was a subsidiary of Diebold Inc. and was incorporated in Delaware with its headquarters in Allen, Texas. Premier was the second largest provider of voting equipment systems in the United States, had equipment installed in 33 states, and collected revenue of approximately $88.3 million in 2008.
As required by the Tunney Act, the proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed settlement during the 60-day comment period to Maribeth Petrizzi, 450 Fifth Street, N.W., Suite 8700, Washington, D.C., 20530. At the conclusion of the 60-day comment period, the U.S. District Court for the District of Columbia may enter the proposed settlement upon finding that it is in the public interest.
Houston Independent School District Agrees to Settle<br /> False Claims Allegations Involving the E-rate ProgramRead the Press Release
WASHINGTON – The Houston Independent School District has agreed to relinquish millions of dollars in requests for federal funds and to pay a total of $850,000 as part of a civil settlement relating to allegations that the school district violated the False Claims Act in connection with the Federal Communications Commission’s (FCC) E-Rate program, the Justice Department announced today.
The E-Rate program, which Congress created in the Telecommunications Act of 1996, provides funding for needy schools and libraries to connect to and utilize the Internet. Under the program, which is funded by fees collected from telephone users, schools apply for funds to pay for hardware and monthly connectivity service fees. The FCC oversees the E-Rate program.
The United States contended that the Houston Independent School District provided false information to the E-Rate program and otherwise violated the program’s requirements by engaging in non-competitive bidding practices for E-Rate contracts. The United States further alleged that school district officials received gratuities from technology vendors, including trips, meals and loans.
"The E-Rate Program provides critical support for Internet access and wiring to the most under-served schools in the country," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "We are committed to protecting the integrity of this important program that benefits our neediest children."
Assistant Attorney General West noted that the resolution announced today resulted from an ongoing federal investigation of possible fraud and anti-competitive conduct in the E-Rate program in Texas. The investigation is a collaborative effort involving the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Northern District of Texas, and the FCC Office of the Inspector General.
This settlement with the Houston Independent School District is part of the government’s aggressive efforts to combat fraud through the use of powerful enforcement tools such as the False Claims Act. Since January 2009, the Justice Department’s total recoveries in False Claims Act cases have topped $3 billion.
Blue Cross Blue Shield of Michigan and Physicians Health Plan of Mid-Michigan Abandon Merger PlansRead the Press Release
WASHINGTON — Blue Cross Blue Shield of Michigan’s (Blue Cross-Michigan) subsidiary, Blue Care Networks of Michigan, abandoned its attempt to purchase Physicians Health Plan of Mid-Michigan (PHP) after the Department of Justice informed the companies that it would file an antitrust lawsuit to block the acquisition. The department said that, had the acquisition gone forward, it would have given Blue Cross-Michigan control of nearly 90 percent of the commercial health insurance market in the Lansing, Mich., area, which would have resulted in higher prices, fewer choices, and a reduction in the quality of commercial health insurance plans purchased by Lansing area residents and their employers. The acquisition also would have given Blue Cross-Michigan the ability to control physician reimbursement rates in a manner that could harm the quality of health care delivered to consumers.
Blue Cross-Michigan and PHP are the two largest providers of commercial health insurance in the Lansing area. Blue Cross-Michigan has almost a 70 percent market share in Lansing, and PHP is its largest competitor with approximately a 20 percent market share. PHP is owned by Sparrow Health Systems Inc., the largest hospital system in Lansing. Competition between the two companies has led them to offer lower prices, better service, and more innovative products to employers and their employees.
"We welcome the decision by Blue Cross-Michigan and Physicians Health Plan of Mid-Michigan to abandon their deal, which will preserve competition among health insurance companies in Lansing," said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "The merger would have likely led to higher prices, lower levels of service and decreased quality of health care for consumers."
The Justice Department worked closely with the Michigan Attorney General’s office in its investigation of the proposed Blue Cross-Michigan-PHP merger.
Blue Cross Blue Shield of Michigan Inc., is a Michigan nonprofit corporation headquartered in Detroit, and is the largest health insurer in Michigan. In 2008, Blue Cross-Michigan reported revenues of approximately $21 billion.
Physicians Health Plan of Mid-Michigan is a nonprofit corporation headquartered in Lansing and is owned by Sparrow Health Systems Inc., the largest hospital system in Lansing. PHP is the second largest health insurer in Lansing and in 2008, reported revenues of approximately $250 million.
Sparrow Health System is a Michigan nonprofit corporation headquartered in Lansing. Sparrow owns and operates PHP, as well as Edward W. Sparrow Hospital, the largest hospital in the Lansing area.
Four Former Owners and Employees of Three Video Relay Service Companies Plead Guilty to Defrauding FCC ProgramRead the Press Release
Four former owners and employees of three different video relay service companies pleaded guilty today and yesterday to engaging in conspiracies to defraud the Federal Communications Commission’s (FCC) Video Relay Service (VRS) program of more than $2.5 million, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division.
The following defendants each pleaded guilty before U.S. District Court Judge Joel A. Pisano in Trenton, N.J., to one count of conspiracy to commit mail fraud:
- Kim E. Hawkins, 46, an owner of Nevada-based Master Communications, Arizona-based KL Communications and Texas-based Mascom LLC;
- Larry Berke, 62, Hawkins’s partner in KL Communications and employee of Master Communications;
- Alfia Iskandarova, 29, a former video interpreter (VI) for New York and New Jersey-based Deaf and Hard of Hearing Interpreting Services, Inc. (DHIS); and
- Robert Z. Rubeck, 34, of Surprise, Ariz.
Hawkins, Berke, Iskandarova and Rubeck were charged with engaging in schemes to steal millions of dollars from the FCC’s VRS program, along with 22 other people and one company, in six indictments unsealed on Nov. 19, 2009. According to the indictments, VRS is an online video translation service that allows people with hearing disabilities to communicate with hearing individuals through the use of interpreters and web cameras. A person with a hearing disability who wants to communicate with a hearing person can do so by contacting a VRS provider through an audio and video Internet connection. The VRS provider, in turn, employs a video interpreter to view and interpret the hearing disabled person’s signed conversation and relay the signed conversation orally to a hearing person.
VRS is funded by fees assessed by telecommunications providers to telephone customers, and is provided at no cost to VRS users. The FCC reimburses VRS providers at a rate of approximately $6.50 per minute, which amounts to approximately $390 per hour.
In pleading guilty, the four defendants admitted that they conspired with others to pay individuals to make fraudulent VRS phone calls and to process fraudulent VRS phone calls that were billed to the FCC through VRS provider Viable Communications Inc. Each defendant admitted to generating or processing thousands of illegitimate VRS minutes that were billed to the FCC. According to information contained in the plea documents, Hawkins, Berke and Iskandarova admitted that their role in defrauding the FCC’s VRS program led to a total loss of between $2.5 and $7 million. Rubeck admitted that his role in defrauding the FCC’s VRS program led to a total loss of between $1 and $2.5 million.
At sentencing, the defendants each face a maximum sentence of 20 years in prison, a fine of $250,000, as well as mandatory restitution and forfeiture. Sentencing is scheduled for June 28, 2010.
Hawkins and Berke were indicted along with Lisa Goetz and Dary Berke, employees of KL Communications; and David Simmons, an employee of Mascom LLC. Iskandarova was indicted along with Joshua Finkle and Irma Azrelyant, co-owners of DHIS; Oksana Strusa, DHIS bookkeeper and VI; and Natan Zfati and Hennadii Holovkin, both DHIS VIs. Rubeck was indicted along with Benjamin Pena, a consultant for Maryland-based Viable Communications Inc.; and Tamara Frankel, an employee of Pena. Finkle and Azrelyant pleaded guilty on Feb. 18, 2010, for their roles in the scheme and are scheduled to be sentenced on June 29, 2010.
The indictments charge owners and employees of the following six companies with engaging in a scheme to defraud the FCC’s VRS program:
- Viable Communications Inc., of Rockville, Md.;
- Master Communications LLC, of Las Vegas;
- KL Communications LLC, of Phoenix;
- Mascom LLC of Austin, Texas;
- Innovative Communication Services for the Deaf Corp. (ICSD), of Miami Lakes, Fla.; and
- Deaf Studio 29 of Huntington Beach, Calif.
An indictment is merely an accusation, and defendants are presumed innocent until proven guilty at trial beyond a reasonable doubt.
These cases are being prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Brigham Cannon of the Criminal Division’s Fraud Section. The cases are being investigated by FBI’s Washington Field Office, the U.S. Postal Inspection Service and the FCC Office of Inspector General.
Assistant Attorney General Ignacia S. Moreno Announces Environment and Natural Resources Division’s Senior LeadershipRead the Press Release
WASHINGTON—Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division (ENRD), today announced the members of the division’s senior leadership. The announcement came on the same day that Assistant Attorney General Moreno was officially installed by Attorney General Eric Holder as the division’s head.
"I am pleased to welcome this team of outstanding and committed professionals who will join the hard working and talented civil servants who make up the Environment and Natural Resources Division. They hail from environmental groups, academia, government and private practice, and will put this experience to good use in vigorously enforcing our nation’s environmental laws and defending agency actions and environmental statutes," said Assistant Attorney General Moreno.
The leadership team includes:
Natalia Sorgente, Chief of Staff and Counsel
Sorgente returns to ENRD to serve as counsel and chief of staff after a brief departure from the division. Sorgente served in the Environmental Defense Section as a trial attorney where she defended the United States’ environmental regulations, determinations and past practices in federal district and appellate courts. She has broad environmental law experience, including representing the United States in cases brought under all the major pollution control statutes. In her five years with the division, she received multiple awards in recognition of her outstanding work. Preceding her return to ENRD, she was a senior legal fellow at Alliance for Justice working with the Judicial Selection Project. After clerking for U.S. Judge Norma L. Shapiro, she began her career at Paul, Weiss, Rifkind, Wharton and Garrison in New York litigating high-profile civil and criminal matters. Sorgente holds degrees from New York University School of Law and Harvard College with honors.
Robert Dreher, Principal Deputy Assistant Attorney General
As a seasoned environmental lawyer, Dreher has extensive experience in conservation policy, environmental law and natural resources management. He has represented environmental organizations, federal agencies, tribes and businesses in a variety of environmental matters. Dreher previously served as senior vice president for Climate Change and Conservation Law and General Counsel of Defenders of Wildlife. Prior to this, he served as Deputy Executive Director of the Georgetown Environmental Law & Policy Institute at Georgetown University Law Center, and as deputy general counsel of the U.S. Environmental Protection Agency (EPA). Earlier in his career, he was a staff and co-managing attorney of the Washington, D.C. office of the Sierra Club Legal Defense Fund (now Earthjustice). Representing tribes, government agencies, businesses and environmental groups in solo private practice, he served as counsel to the law firm Troutman Sanders LLC and as an associate at the Boston firm Hill & Barlow. He has taught federal natural resources law at The George Washington University Law School and at Georgetown University Law Center. Dreher received his J.D. from Yale Law School, a Masters in American Civilization from Brown University, and his undergraduate degree from Harvard College.
Dreher will oversee the Natural Resources and Wildlife and Marine Resources sections.
John Cruden, Deputy Assistant Attorney General
Cruden has served as a career Deputy Assistant Attorney General for ENRD since 1995. Prior to his role as deputy, he served as chief of the division’s environmental enforcement section and as special counsel to the Assistant Attorney General for the Civil Division. Cruden has extensive personal experience litigating complex environmental cases and has served as Acting Assistant Attorney General on multiple occasions. Before attending law school, he served in airborne, ranger and special forces units in Germany and Vietnam. After receiving his law degree, he clerked for the California Supreme Court and then attended the Army’s Judge Advocate General’s Graduate Course where he was named the outstanding graduate. Subsequent military assignments included criminal prosecutor in Germany; chief of litigation branch, Europe; general counsel, Defense Nuclear Agency; and chief of administrative and civil law, Judge Advocate General’s School. His last assignment in the Pentagon was chief legislative counsel for the Army. Cruden is a graduate of the U.S. Military Academy, University of Santa Clara summa cum laude and University of Virginia with honors.
Cruden will oversee the Environmental Enforcement and Environmental Crimes sections.
Ethan G. Shenkman, Deputy Assistant Attorney General
Shenkman returns to the Justice Department where he had previously served for nine years. Most recently, Shenkman was a partner at the WilmerHale law firm, which he joined in 2004. He was a member of the Government and Regulatory Litigation Practice Group and worked closely with the Appellate and International Arbitration Practice Groups. His practice focused on a wide range of complex litigation, including international disputes, investment treaty arbitration, appellate advocacy, environmental law and Indian law. He began with the Justice Department as a Bristow Fellow in the Office of the Solicitor General in 1995. He then joined the ENRD Appellate Section through the Attorney General’s Honor Graduate program and served as counsel to then-Assistant Attorney General Lois Schiffer. From 2001 to 2004 he was a member of ENRD’s Law and Policy Section. Prior to joining the Justice Department, he clerked for U.S. Judge Paul V. Niemeyer in the U.S. Court of Appeals for the Fourth Circuit. Ethan earned his J.D. from the University of Virginia, School of Law, where he was Order of the Coif and Editor-in-Chief of the Virginia Law Review, and his B.A. from Yale University, summa cum laude.
Shenkman will oversee the Appellate and Indian Resources sections.
Patrice Simms, Deputy Assistant Attorney General
Simms joins ENRD as an accomplished environmental attorney most recently serving on the law faculty at Howard University School of Law in Washington, D.C. Prior to this, Mr. Simms served as a government attorney and as an environmental advocate in many high-profile environmental cases, and other matters involving important legal, technical and policy issues. His experience includes more than five years as a staff attorney in EPA’s Office of General Counsel, and stints as a legal counsel to the EPA’s Environmental Appeals Board and as a senior attorney with the Natural Resources Defense Council. His career has focused on issues regarding the implementation and enforcement of the Clean Air Act and issues related to clean water, solid waste, public health, climate change and environmental justice. Mr. Simms has received many professional awards, including the EPA Office of General Counsel Award for Excellence. In 2009, he was elected to serve on the Steering Committee for the D.C. Bar’s Energy, Environment and Natural Resources Section. Mr. Simms is a graduate of Howard University School of Law.
Simms will oversee the Land Acquisition and Environmental Defense Sections.
Crystal Brown, Counsel to the Assistant Attorney General
Brown comes to ENRD after recently serving at the White House as deputy associate counsel for presidential personnel. Prior to this, she served as an associate at the law firm of Bryan Cave LLP where her practice focused on a range of commercial litigation and white collar defense and investigation matters. Earlier in her career, she served as a judicial law clerk to U.S. Judge Clifford Scott Green in the U.S. District Court for the Eastern District of Pennsylvania. In 2008, Brown was inducted into Temple University’s Gallery of Success as an alumna of the Beasley School of Law. She received her J.D. from Temple University Beasley School of Law, where she was symposium editor of its Political and Civil Rights Law Review. Brown received a Bachelor of Arts degree from Duke University.
Jeffrey Prieto, Counsel to the Assistant Attorney General
For ten years, Mr. Prieto has served as a trial attorney with ENRD’s Environmental Enforcement Section, prosecuting civil actions on behalf of federal agencies under all major federal environmental laws. He has served as co-counsel on major Clean Air Act civil enforcement cases including coal-fired power plant litigation. He also has served as lead attorney of a litigation team in Superfund enforcement cases, representing multiple federal agencies. Prieto’s positions have included attorney-advisor for the Environmental Protection Agency, White House Fellow and environmental planner. Mr. Prieto received his J.D. from the University of California, Los Angeles and a Master’s of Public Affairs/Urban and Regional Planning from the Woodrow Wilson School of Public and International Affairs at Princeton University.
Paulo Palugod, Special Assistant to the Assistant Attorney General
Palugod joins the department from American University, Washington College of Law, where he will receive his J.D. in May. He received a B.A. in Economics from Bucknell University, cum laude.
John P. Fitzgerald Appointed Acting U.S. Trustee for Massachusetts, New Hampshire, Maine, Rhode IslandRead the Press Release
WASHINGTON – John P. Fitzgerald has been appointed Acting U.S. Trustee for Massachusetts, New Hampshire, Maine and Rhode Island (Region 1), the Executive Office for United States Trustees announced today. Mr.Fitzgerald replaces Phoebe Morse, who resigned after serving as U.S. Trustee for Region 1 since April 2004.
Mr. Fitzgerald joined the U.S. Trustee Program (USTP) in 1990, serving first as a trial attorney and then as the Assistant U.S. Trustee in the Portland, Maine, office. In 1992, he was appointed as the Assistant U.S. Trustee in the Boston office. Prior to joining the USTP, Mr.Fitzgerald was a trial attorney in the Department of Justice’s Tax Division, Criminal Section, for 10 years. Mr.Fitzgerald currently serves as the chair of the USTP’s Creditor Abuse Working Group, which assists USTP field offices in the investigation and litigation of cases involving abusive conduct by creditors.
The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. The USTP has 21 regions and 95 field offices. Region1 is headquartered in Boston, with additional offices in Worcester, Mass.; Manchester, N.H.; Portland, Maine; and Providence, R.I.
Contact:Jane Limprecht, Public Information Officer
Monday, July 15, 2013 3:10 PM
Executive Office for U.S. Trustees
(202) 305-7411Government Sues to Close South Carolina Tax Return PreparerRead the Press Release
WASHINGTON – The United States has asked a federal court in Columbia, S.C., to permanently bar Dorothy Anderson, d/b/a DL Anderson Tax Service, from preparing federal income tax returns for others, the Justice Department announced today. According to the government complaint, Dorothy Anderson of Hopkins, S.C., has operated a business called "DL Anderson Tax Service," which prepares federal income tax returns for taxpayers that unlawfully understate income tax liabilities.
The government complaint alleges that Anderson fraudulently prepared and electronically filed tax returns using individuals’ names and social security numbers without their knowledge or authorization. Anderson’s preparation of false and fraudulent tax returns caused the United States to issue to the taxpayers substantial tax refunds to which they were not legally entitled. According to the complaint, the Internal Revenue Service has determined that Anderson filed tax returns that generated over $290,000 in refunds that were directly deposited into bank accounts she controlled.
Over the past decade, the Justice Department’s Tax Division has obtained more than 435 injunctions to stop tax fraud promoters and dishonest tax return preparers. Information about these cases is available on the Justice Department Web site.
Financial Fraud Enforcement Task Force Announces Settlement with AIG Subsidiaries to Resolve Allegations of Lending DiscriminationRead the Press Release
WASHINGTON – Two subsidiaries of American International Group Inc. have agreed to pay a minimum of $6.1 million to resolve allegations that they engaged in a pattern or practice of discrimination against African American borrowers, representatives of President Obama’s Financial Fraud Enforcement Task Force (FFETF) announced today.
The settlement was filed today in conjunction with a complaint made by the Justice Department in U.S. District Court in Delaware. Brought under the federal Fair Housing and Equal Credit Opportunity Acts, the complaint alleges African American borrowers nationwide were charged higher fees on wholesale loans made by AIG Federal Savings Bank (FSB) and Wilmington Finance Inc. (WFI), an affiliated mortgage lending company.
"Discriminatory practices by lenders, brokers, and other players in the mortgage market contributed to our nation’s housing crisis and economic meltdown. Lenders who looked the other way and ignored the discriminatory practices of brokers must be held accountable," said Thomas E. Perez, Assistant Attorney General in charge of the Justice Department’s Civil Rights Division. "We will continue to pursue cases attacking a wide range of abuses that have destroyed communities and transformed the American dream of home ownership into a nightmare."
AIG FSB and WFI contracted with mortgage brokers to obtain mortgage applications that were underwritten and funded by the defendants. The complaint alleges that AIG FSB and WFI failed to supervise or monitor brokers in setting broker fees. This practice had a disparate impact on African American borrowers, who were charged higher broker fees than white, non-Hispanic borrowers on thousands of such loans from July 2003 until May 2006, a period of time before the federal government obtained an ownership interest in American International Group Inc.
"Today’s settlement is significant because it marks the first time the Justice Department has held a lender responsible for failing to monitor its brokers to ensure that borrowers are not charged higher fees because of their race. If necessary, it will not be the last time," Perez said.
According to the settlement, which is subject to court approval, AIG FSB and WFI will pay up to $6.1 million to African American customers who were charged higher broker fees than similarly-situated, non-Hispanic white customers, and will invest at least $1 million in consumer financial education efforts. AIG FSB and WFI will also be prohibited from discriminating on the basis of race or color in any aspect of wholesale home mortgage lending.
"Today’s settlement serves as a reminder for why President Obama established the Financial Fraud Enforcement Task Force and as an example of what you can expect to see in the future," said Executive Director of the FFETF Robb Adkins. "The type of interagency communication that spurred this case and the subsequent hard work of dedicated law enforcement professionals will be the foundation for the task force’s achievements on behalf of the American people. Moving forward, the American people should expect to see more cases, public outreach and concrete results as an outcome of our new cooperation."
This case resulted from a referral by the Treasury Department’s Office of Thrift Supervision to the Justice Department’s Civil Rights Division in 2007, when this type of communication between agencies was too often the exception to the rule, said Adkins. In November 2009, President Barack Obama established the FFETF to make such cross-agency coordination the standard.
The task force is waging an aggressive, coordinated and proactive effort to investigate and prosecute financial crimesand remedy other abuses in the financial markets. 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.
"Today’s settlement should serve as a warning shot to potential fraudsters and those who would discriminate against borrowers – we are redoubling our fight, we are strengthening cooperation and we are using all our resources to combat these crimes," said Executive Director Adkins.
AIG FSB and WFI are not currently engaged in the business of wholesale home mortgage lending, but the settlement provides that if either defendant re-enters that business, the lender will implement specific, nonracial standards for broker fees and monitor all fees charged on the mortgage loans they fund to ensure that all customers are treated equally.
A copy of the complaint, as well as additional information about fair-lending enforcement by the Justice Department, can be obtained from the Justice Department Web site at http://www.justice.gov/fairhousing. On March 4, 2009, American International Group Inc. issued stock to a trust established in favor of the United States Treasury.
The enforcement of federal fair-lending laws is a priority of the Justice Department's Civil Rights Division.
Oregon Man Charged with Operating Illegal Money Transmitting Business That Moved More Than $172 Million Through Shell Corporations in the United StatesRead the Press Release
Victor Kaganov, who emigrated from Russia and set up numerous shell corporations in Oregon on behalf of Russian clients, was arrested today on charges of operating an unlicensed money transmitting business, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Dwight C. Holton for the District of Oregon. The shell corporations allegedly were used to move more than $172 million into the United States and out to more than 50 countries.
Kaganov, a naturalized U.S. citizen living in Tigard, Ore., was indicted by a federal grand jury on one count of operating an unlicensed money transmitting business after more than 4,200 wire transactions had been made. The defendant appeared today before U.S. Magistrate Judge Donald C. Ashmankas in the District of Oregon.
The indictment alleges that Kaganov emigrated from Russia to the United States in 1998. In order to move money in and out of the United States, Kaganov allegedly created various shell corporations under Oregon law, and then opened bank accounts, including accounts at Wells Fargo, Key Bank, Bank of America and Bank of the West, which he used to deposit money he received from his Russian clients. Kaganov allegedly would then wire the money out of the accounts based on wire instructions he received from his clients.
The indictment also alleges that Kaganov did not comply with Oregon laws requiring him to obtain a license to operate the money transmitting business and that Kaganov failed to register his money transmitting operation with the U.S. Department of Treasury, as required by federal statutes and regulations.
The charged count carries a maximum penalty of five years in prison, a $250,000 fine and three years of supervised release following the prison term.
In January 2009, a federal grand jury indicted Marina Chernova, Vadim Piskunov and Maria Ivanov on charges of mail and wire fraud. Chernova and Piskunov were also charged with aggravated identity theft. Each of these indictments alleges that the defendants established Oregon shell corporations to facilitate and disguise illegal activities. These cases are being prosecuted by the U.S. Attorney’s Office for the District of Oregon.
The charges contained in the indictment are merely accusations and the defendant is presumed innocent until proven guilty at trial beyond a reasonable doubt.
The case was investigated by the FBI and the U.S. Postal Inspection Service. It is being prosecuted by Assistant U. S. Attorney and Senior Litigation Counsel Allan M. Garten for the District of Oregon and Trial Attorney Robert Livermore of the Criminal Division’s Organized Crime and Racketeering Section.
Justice Department Files Lawsuit Alleging Racial Discrimination at Ann Arbor, Michigan, Apartment ComplexRead the Press Release
WASHINGTON – The Justice Department today filed a lawsuit against the owner and property manager of a 48-unit apartment complex in Ann Arbor, Mich., alleging that the defendants discriminated on the basis of race or color in the rental of apartments, the Justice Department’s Civil Rights Division and the U.S. Attorney’s Office for the Eastern District of Michigan announced.
"Housing is a basic human need, and no individual should be subjected to indignity of discrimination as they look for a home for their family," said Thomas E. Perez, Assistant Attorney General of the Civil Rights Division. "This lawsuit demonstrates that the Justice Department will not tolerate violations of our nation’s fair housing laws."
"Discrimination in housing goes to the very core of American values," said Barbara L. McQuade, U.S. Attorney for the Eastern District of Michigan. "The ability to choose where to live affects every other aspect of life – access to schools, jobs and transportation – and we will not ignore violations of this fundamental right."
The lawsuit, filed in federal court in Detroit, alleges that Acme Investments Inc., d/b/a Ivanhoe House Apartments and Laurie Courtney, the apartment complex’s property manager, engaged in a pattern or practice of discriminating against African American prospective renters. The allegations in the lawsuit are based on evidence generated by a series of fair housing tests conducted at Ivanhoe House Apartments by the Fair Housing Center of Southeastern Michigan, a private non-profit organization located in Ann Arbor. Testers are individuals who pose as applicants for housing and report on their interactions with housing providers to determine the providers’ compliance with fair housing laws.
The Fair Housing Center of Southeastern Michigan filed a lawsuit against the defendants on July 16, 2009, based on the results of the fair housing tests. That lawsuit is currently pending in federal court before the Honorable Sean F. Cox.
The United States’ complaint seeks a court order prohibiting future discrimination by the defendants, monetary damages for those harmed by the defendants’ actions and a civil penalty.
Individuals who may have information related to this lawsuit should contact the Justice Department toll-free at 1-800-896-7743, mail box number 91, the U.S. Attorney’s Office for the Eastern District of Michigan at 313-226-9727, or email the Justice Department at [email protected].
Fighting illegal housing discrimination is a top priority of the Justice Department. 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.justice.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.
The complaint is an allegation of unlawful conduct. The allegations must be proven in federal court.
U.S. Files Complaint Against Virginia Medicaid ProvidersRead the Press Release
WASHINGTON – The United States and the Commonwealth of Virginia have filed a False Claims Act complaint in the Western District of Virginia against Medicaid providers Universal Health Services Inc., Keystone Marion LLC and Keystone Education and Youth Services LLC, the Justice Department announced today These entities did business as the Keystone Marion Youth Center, a residential facility in Marion, Va., which receives Medicaid funds to provide psychiatric counseling and treatment for boys ages 11-17. The United States’ and the Commonwealth of Virginia’s complaint alleges that the defendants billed Medicaid for inpatient psychiatric care that was not provided, in violation of federal and state Medicaid requirements, and falsified records to cover up their serious violations.
According to the complaint, the defendants’ actions violated the False Claims Act. Under the act, a health care provider that submits false or fraudulent claims to a federal health care program is liable for three times the government’s damages, plus a civil penalty for each false claim. The United States and the Commonwealth of Virginia earlier intervened in this whistleblower suit filed by several former therapists who worked at the Marion residential facility.
"The Justice Department is committed to ensuring that scarce Medicaid resources are devoted to their intended use – the appropriate care and treatment of some of our nation’s neediest and most vulnerable patients," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "We must protect Medicaid from fraudulent practices that deprive beneficiaries of the quality health care they deserve."
Assistant Attorney General West acknowledged the collaborative efforts made by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Western District of Virginia, the Virginia Attorney General’s Office, the Department of Health and Human Services’ Office of Inspector General and the Commonwealth of Virginia’s Medicaid Fraud Control Unit.
"We intend to prove that these defendants billed Medicaid for providing troubled children with much needed psychiatric medical care when, in fact, they provided no such service," said Timothy J. Heaphy, United States Attorney for the Western District of Virginia. "We will not sit idly by and allow healthcare providers to take advantage of troubled children in order to feed their own desire for wealth. The Medicaid system was designed to help the most vulnerable among us, not to line the pockets of fraudsters."
"The Office of Inspector General has an obligation not only to protect Medicaid from fraudulent billing but also to protect mentally ill children from substandard care," said Nick DiGiulio, Special Agent in Charge for the Philadelphia Region of the Office of Inspector General of the Department of Health of Human Services said,
The United States’ and the Commonwealth of Virginia’s complaint 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 $2.3 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 $3 billion.
Ohio Business Owner Pleads Guilty to Mail and Wire FraudRead the Press Release
WASHINGTON - Robert E. Alick, the operator of used medical equipment sales business and resident of Chagrin Falls, Ohio, pleaded guilty today to five counts of mail fraud, one count of wire fraud, and one count of corruptly endeavoring to obstruct the administration of the Internal Revenue laws, the Department of Justice and Internal Revenue Service (IRS) announced.
According to the indictment and the plea agreement, Alick operated his used medical equipment sales business in Beachwood, Ohio, through the following entities: Healthcare Imaging Solutions Corporation, ECT Medical Systems Inc., ECT Corporation, Second Source Medical Equipment Corporation and Computer Remarketing Credit Corporation d/b/a DECT Imaging. Alick also admitted that he used this series of corporations both as part of his fraudulent scheme (described below) and to avoid paying taxes.
According to the indictment and the plea agreement, Alick admitted that in connection to the mail and wire fraud counts, from July 2002 through April 2006, he engaged in a scheme to defraud the hospitals that were his customers through various means, including by taking substantial deposits that were supposed to be used to purchase medical equipment and failing to use such funds for the purchase of the equipment and failing to deliver the equipment, instead using the money on other things. Alick further admitted that he defrauded the following six hospitals: Toledo Hospital (Toledo, Ohio), Greene County Medical Center (Jefferson, Iowa), Canyon Surgery Center (Phoenix), North Suburban Surgery Center (Thorton, Colo.), Clarion Hospital (Clarion, Penn.) and Hugh Chatham Hospital (Elkin, N.C.).
According to the indictment and the plea agreement, Alick admitted that in connection with the tax crime, in addition to operating his business through a series of corporations, he engaged in an array of other activities to obstruct and impede the IRS. For instance, he admitted that although he caused his corporations to file quarterly employment tax returns from 2000 through part of 2003, he failed to cause them to file such returns from the end of 2003 through 2006. In addition, he admitted that during both periods, he caused these corporations not to pay over the employment taxes that they owed. Alick also admitted that he collected employment taxes from some employees, but not others.
According to the indictment and the plea agreement, Alick further admitted that he took various actions to deceive the IRS and to impede its efforts to collect these and other taxes from 2000 through 2006. He also admitted that he caused his corporations to fail to file corporate income tax returns from 2001 through 2006. Finally, Alick admitted that he made extensive use of cash to avoid making accurate records of his income, used nominee bank accounts to conceal his and his corporations’ income and assets from the IRS, and cashed checks from his business accounts in various ways to hide his financial activity from the IRS.
The sentencing has been scheduled for June 3, 2010. Alick faces a maximum potential sentence of 20 years in prison followed by up to three years of supervised release, and a fine of $250,000, for each of the mail and wire fraud counts. In addition, Alick faces a maximum potential sentence of three years in prison followed by one year of supervised release and a fine of $250,000, for the tax crime.
Acting Assistant Attorney General John A. DiCicco and United States Attorney for the Northen District of Ohio Steven M. Dettelbach thanked Assistant United States Attorneys Michael L. Collyer and Christian Stickan and Tax Division trial attorney Patrick J. Murray, who are prosecuting the case. They also thanked the agents of the FBI and the IRS whose assistance was essential to the successful investigation and prosecution of the case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.
KV Pharmaceutical Subsidiary Pleads Guilty to Two Felonies Regarding Oversized DrugsRead the Press Release
WASHINGTON – Ethex Corporation, a wholly owned subsidiary of St. Louis-based drug manufacturer, KV Pharmaceutical Company, pleaded guilty to two felonies and was sentenced today in connection with the manufacturing of oversized prescription drug tablets, the Justice Department announced today. The government had charged that, despite having knowledge that the two drugs did not meet required specifications, Ethex violated the law by intentionally withholding this information from the Food and Drug Administration (FDA). Given the seriousness of Ethex’s conduct and the risk it posed to consumers of its drugs, the Justice Department pursued felony charges.
According to charges presented in U.S. District Court in St. Louis today, Ethex failed to submit required "field alert reports" to the FDA in 2008 concerning two drugs, propafenone and dextroamphetamine sulfate. Following the recommendations of a plea agreement that was filed today, Judge E. Richard Webber sentenced Ethex to pay a fine of more than $23.4 million, pay approximately $2.3 million in restitution to Medicare and Medicaid for their approximate losses, and forfeit nearly $1.8 million to the United States.
Under the Food, Drug and Cosmetic Act, a drug manufacturer must thoroughly investigate why a drug fails to meet specifications, whether or not the drug has been distributed into interstate commerce. Moreover, when a manufacturer receives information concerning a significant chemical change in a distributed drug or a failure of a distributed drug batch to meet specifications, it is required to promptly file a field alert report with the FDA. A manufacturer’s failure to file such a report, if done with the intent to defraud or mislead, is punishable by a term of up to five years’ probation and a fine of $500,000 or twice the gross amount gained from the offense.
The government had alleged that in May 2008, KV and Ethex received complaints from a pharmacy in California and a distributor in Canada of oversized morphine sulfate pills, a pain-relief medication which had been manufactured by KV and distributed by Ethex. In response to the complaints, KV recalled specific lots of morphine sulfate in June 2008 and filed a field alert report regarding the oversized tablets with the FDA.
According to the charges, a KV internal investigation that began in May 2008 discovered sporadic instances of various oversized KV-manufactured drugs, including morphine sulfate, propafenone and dextroamphetamine sulfate. Propafenone is an anti-arrhythmia drug that is used to treat some kinds of heart disease. Dextroamphetamine sulfate is used to treat attention deficit disorder in children. The charges alleged that despite the fact that KV’s internal investigation uncovered evidence of various oversized propafenone and dextroamphetamine sulfate tablets, Ethex did not file the required field alert reports with the FDA.
"Even though they were aware of serious manufacturing problems concerning their oversized drugs, Ethex failed to notify the FDA as required by law," said Assistant Attorney General Tony West, who heads the Justice Department’s Civil Division. "The Justice Department will vigorously prosecute those who pursue profits at the expense of consumer safety."The case was investigated by the FDA’s Office of Criminal Investigations and is being prosecuted by the U.S. Attorney’s Office for the Eastern District of Missouri and the Civil Division’s Office of Consumer Litigation at the Justice Department. Additional assistance is being provided by the FDA’s Office of Chief Counsel.
Justice Department Settlement with Goodyear Tire & Rubber Co. Secures $40,000 for Oklahoma Army ReservistRead the Press Release
WASHINGTON - The Justice Department today announced that it has reached a settlement, in the form of a consent decree, with the Goodyear Tire & Rubber Company that, if approved by the U.S. District Court in Oklahoma City, will resolve its lawsuit filed on behalf of Michael J. Ellis, a major in the U.S. Army Reserve.
The Justice Department’s lawsuit, filed in May 2009, alleged that Goodyear violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) by failing to promptly reemploy Ellis following his military service. Subject to certain limitations, USERRA requires employers to reemploy a returning service member in the position the employee would have held had his or her employment not been interrupted by military service.
Ellis was on leave from Goodyear due to a previous service-related injury and awaiting reassignment to a new position with Goodyear consistent with his physical abilities when he was called to active duty in September 2005. According to the complaint, when Ellis sought reemployment with Goodyear after his discharge in 2007, the company took no steps to identify the position Ellis would have received had he not been activated, and it failed to reemploy him for nearly a year. Under the terms of the consent decree, Goodyear must pay Ellis $40,000 in back wages and other damages. Goodyear also must supplement its policies at its Lawton, Okla., plant to ensure that returning service members are promptly reemployed in accordance with USERRA, and must submit to a period of monitoring by the Justice Department to ensure Goodyear’s compliance with USERRA.
"Every day, our men and women in uniform risk their lives to protect our rights," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "The Department of Justice will work diligently to ensure that service members’ rights are protected, too."
The Civil Rights Division of the Department of Justice remains committed to the vigorous enforcement of USERRA. Additional information about USERRA can be found on the Department of Justice Web site at www.servicemembers.gov and www.justice.gov/crt/emp and on the Department of Labor Web site at www.dol.gov/vets/programs/userra/main.htm.
Florida Man Sentenced to 20 Years in Prison for Traveling to the Philippines in Sex Tourism CaseRead the Press Release
WASHINGTON - Donald Mathias of Davie, Fla., was sentenced today to 20 years in prison for engaging in sex tourism in the Philippines, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney for the Southern District of Florida Jeffrey H. Sloman and U.S. Immigration and Customs Enforcement (ICE) Assistant Secretary John Morton
Mathias, 64, was also sentenced by U.S. District Court Judge William Peter Dimitrouleas to serve five years of supervised release following his prison term and to pay $200,000 in restitution to his victims. The funds will be transferred to a trust fund established for their benefit. The court also ordered Mathias to forfeit real property in order to satisfy the restitution amount. Mathias pleaded guilty in U.S. District Court in Ft. Lauderdale, Fla., on Dec. 22, 2009, to four counts of traveling in foreign commerce and engaging in illicit sexual conduct. He was indicted on those charges on Oct. 27, 2009.
As part of his plea agreement, Mathias admitted that from 2005 until December 2008, he communicated and arranged with the mother of two minor females to travel to the Philippines, where they were located, and engage in sexual conduct with the minors. During this time, Mathias and the mother exchanged hundreds of e-mails regarding sexual activity between Mathias and the minors.
Mathias admitted that he traveled to the Philippines in April 2007 and again in December 2007, engaged in sexual conduct with the minors on those trips and recorded those acts with a video camera. Mathias also admitted that he made the minors sign a contract in December 2007, requiring the minors to be his sex slaves. According to court documents, money transfer and e-mail records showed that Mathias sent thousands of dollars to the mother between 2005 and December 2008. Mathias also admitted that he traveled to the Philippines in December 2008 to engage in sexual conduct with the minors again. However, Filipino law enforcement officials detained Mathias and he was not successful in meeting the minors. On Oct. 14, 2009, Mathias was arrested by U.S. law enforcement officers in Miami.
The mother of the minors is in custody in the Philippines and is being prosecuted by Filipino authorities.
This case was prosecuted by Trial Attorney Anitha Ibrahim of the Criminal Division’s Child Exploitation and Obscenity Section and Assistant U.S. Attorney Marlene Rodriguez of the U.S. Attorney’s Office for the Southern District of Florida. The Criminal Division’s Office of International Affairs provided assistance in the case. This case was investigated by ICE’s Office of Investigations in Miami and the U.S. Postal Inspection Service, with assistance from the Philippines Department of Justice.
Cincinnati Packaged-Ice Manufacturer Sentenced to Pay $9 Million<br /> for Its Role in a Customer and Territory Allocation ConspiracyRead the Press Release
WASHINGTON — A Cincinnati packaged-ice manufacturer was sentenced today to pay a $9 million criminal fine for its participation in a conspiracy to allocate packaged-ice customers and territories, the Department of Justice announced today.
The Home City Ice Company pleaded guilty on June 17, 2008, to a one-count charge of conspiring to suppress and eliminate competition by allocating packaged-ice customers and territories in the Detroit metropolitan area and southeastern Michigan. The conspiracy began at least as early as Jan. 1, 2001, and continued until on or about July 17, 2007.
Packaged ice is marketed as high-grade ice for consumption and is sold in varying size bags and blocks. Home City Ice is a manufacturer of packaged ice with multiple locations throughout the United States.
Today’s sentencing is a result of an ongoing investigation by the Antitrust Division’s Cleveland Field Office and FBI offices in Ann Arbor, Mich.; Indianapolis; Toledo, Ohio; and Cincinnati. As a part of the same investigation, Arctic Glacier International Inc., a packaged-ice company headquartered in St. Paul, Minn., and three of its former executives pleaded guilty in October 2009 to allocating customers in the Detroit metropolitan area and southeastern Michigan. On Feb. 11, 2010, Arctic Glacier was sentenced to pay a $9 million criminal fine.
Anyone with information concerning customer or territorial allocation agreements, or other anticompetitive conduct in the packaged-ice industry, should contact the Antitrust Division’s Cleveland Field Office at 216-687-8400 or visit http://www.justice.gov/atr/contact/newcase.htm.
Two Former Executives of Medical Manager Found Guilty in Securities Fraud SchemeRead the Press Release
Two former executives of Medical Manager Health Systems Inc., (Medical Manager), a subsidiary of WebMD Corporation from 2000 to 2005, were convicted today by a federal jury in Charleston, S.C., with participating in a conspiracy to fraudulently inflate the reported earnings of Medical Manager by more than $16.8 million between 1997 and 2003, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division ; Kevin F. McDonald, Acting U.S. Attorney for the District of South Carolina; David A. Thomas, Special Agent in Charge of the FBI’s Columbia Division; and Jeannine Hammett, Special Agent in Charge of the Charlotte, N.C., Field Office of the Internal Revenue Service (IRS) Criminal Investigation.
Former Medical Manager president John H. Kang, 46, of Trabuco Canyon, Calif., and former vice president and chief operating officer John P. Sessions, 67, of Myrtle Beach, S.C., were convicted of conspiracy to commit mail, wire and securities fraud. Kang and Sessions were charged in a second superseding indictment on Feb. 27, 2007, along with other executives of Medical Manager, for their roles in the fraudulent scheme.
"As the president and vice-president of their company, these defendants were supposed to lead their company with honor and integrity – instead, they orchestrated an elaborate accounting scheme meant to defraud investors about the financial success of their company," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "Corporate executives cannot decide to play by their own set of rules. The message is simple – obey the laws or face prosecution for your crimes."
"This case will serve as a wake-up call to corporate executives who scheme to profit at the expense of shareholders and the investing public," said Acting U.S. Attorney Kevin F. McDonald. "I am extremely proud of the dedication of the agents and attorneys who investigated and prosecuted this case."
"The FBI is committed to rooting out securities fraud," said FBI Special Agent in Charge David A. Thomas. "We will continue working with our partners to identify and stop those who line their own pockets at the expense of others."
"Corporate fraud has crippling consequences for the American economy," said IRS Special Agent in Charge Jeannine A. Hammett. "This verdict reflects the commitment of the law enforcement community to investigate and pursue allegations of wrongdoing, wherever they may occur, whether it be on our city streets or in our corporate suites."
Kang and Sessions were convicted of conspiring to engage in fraudulent accounting practices intended to artificially inflate the quarterly revenues of Medical Manager in order to meet and exceed the expectations of financial analysts, and thus to fraudulently inflate the market price of Medical Manager stock and, after its acquisition by WebMD, that company’s stock. According to evidence presented during the nearly two-month trial, the conspiracy involved a number of fraudulent practices, including inflating the company’s revenue by engaging in "round-trip" sales with software dealers that Medical Manager was acquiring. Evidence at trial proved that the defendants participated in a scheme to inflate the purchase price for the companies that Medical Manager was acquiring in order to compensate these companies for the simultaneous purchase of Medical Manager software that Medical Manager compelled them to purchase as part of their acquisition.
Evidence presented at trial proved that the defendants also inflated Medical Manager’s revenue by causing companies acquired by Medical Manager to reclassify revenue they had already recognized - and thus already included in their earnings - as "deferred revenue," which was not included in earnings. Once the books of the acquired companies were combined with those of Medical Manager, the conspirators recognized the deferred revenue again, thereby fraudulently increasing Medical Manager’s revenue and earnings. Kang and Sessions were also found guilty of causing companies Medical Manager was acquiring to fraudulently inflate their accrued liability accounts and reserves for various expenses before the financial statements of the target companies were combined with those of Medical Manager. Once the financial statements were combined, the conspirators caused Medical Manager to reverse those accrued liability accounts and reserves into earnings for Medical Manager.
Chief U.S. District Judge David C. Norton presided over the trial and will sentence the defendants at a later date. The maximum penalty for the conspiracy charge is five years in prison and a fine of $250,000, or twice the amount of pecuniary gain or loss resulting from the conduct.
Previously, in related cases, former Medical Manager executives Robert Davids, Kevin M. Kennedy, Glenn S. Moss, Patrick Sedlacek, William Kottage and Henry Holbrook each pleaded guilty for their roles in the scheme. Kennedy and Kottage also pleaded guilty to tax evasion. Also, on Jan. 11, 2010, Michael A. Singer, the former chief executive officer of Medical Manager, entered into a deferred prosecution agreement and agreed to forfeit $2.5 million.
Former corporate controller Charles L. Hutchinson, a/k/a Charlie Hutchinson, 41, of Tampa, Fla., and former associate general counsel Franklyn M. Krieger, a/k/a Frank Krieger, 46, of Tampa are both awaiting trial in this case. Hutchinson is scheduled for trial on May 17, 2010, and Krieger is scheduled to stand trial on Aug. 2, 2010. These cases were transferred from Charleston to Tampa by order of the court.
The case was prosecuted by Assistant U.S. Attorney Eric J. Klumb of the U.S. Attorney’s Office for the District of South Carolina, Assistant U.S. Attorney Jason H. Cowley of the U.S. Attorney’s Office for the Eastern District of North Carolina and Trial Attorney Jennifer R. Taylor of the Criminal Division’s Fraud Section. The case was investigated by agents of the FBI and the IRS.
Three Houston Defendants Plead Guilty<br /> in Connection with “Arthritis Kit” Fraud SchemeRead the Press Release
Bassey Monday Idiong, Linda Eteimo Ere Kendabie and Modupe Babanumi each pleaded guilty today in connection with their roles in an "arthritis kit" Medicare fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney José Angel Moreno of the Southern District of Texas; Richard C. Powers, Special Agent-in-Charge of the FBI’s Houston office; and Special Agent-in-Charge Mike Fields of the Dallas Regional Office of the Department of Health and Human Services (HHS), Office of Inspector General (OIG), Office of Investigations.
Idiong, 30, was the owner of B.I. Medical Supply LLC, a Houston-area durable medical equipment (DME) company. Kendabie, 27, was an administrative assistant at B.I. Medical and Babanumi, 42, was a patient recruiter. Kendabie and Babnumi each pleaded guilty to conspiracy to commit health care fraud. Idiong pleaded guilty to conspiracy to commit health care fraud and to five counts of health care fraud.
The defendants admitted that B.I. Medical billed Medicare for expensive, rigid orthotics and braces that were packaged together and referred to as an "arthritis kit," at a cost of approximately $4,000 per kit, when in fact, they were supplied with different, less expensive products. The defendants also admitted that the equipment supplied was not medically necessary. In one instance, according to the plea agreements, B.I. Medical billed Medicare for an arthritis kit that included two knee braces for a beneficiary who had only one leg. In total, B.I. Medical submitted approximately $846,000 in fraudulent claims to Medicare.
U.S. District Court Judge Vanessa Gilmore of the Southern District of Texas accepted the defendants’ guilty pleas and scheduled sentencing for June 14, 2010. The defendants each face a maximum penalty of 10 years in prison and a $250,000 fine, per count.
The case was prosecuted by Assistant Chief John S. (Jay) Darden and Trial Attorneys Jennifer L. Saulino, John Cunningham and Katherine Houston of the Criminal Division’s Fraud Section, and was investigated by the FBI, HHS-OIG and the Railroad Retirement Board, OIG.
The case was brought as part of the Medicare Fraud Strike Force, supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section. Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of more than 500 individuals who collectively have falsely billed the Medicare program for more than $1.1 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
San Diego Tax Return Preparer Sentenced to Prison for Tax FraudRead the Press Release
WASHINGTON – Fe S. Garrett, a resident of National City, Calif., was sentenced today to 65 months in prison and ordered to pay $377,468 in restitution by U.S. Judge M. James Lorenz in San Diego, the Justice Department and Internal Revenue Service (IRS) announced. In August 2009, Garrett was convicted of filing false individual tax returns, failure to pay taxes, and multiple counts of aiding and assisting in the preparation of false tax returns following a nine-day trial.
According to the evidence presented at trial, for tax years 2001 and 2002, Garrett prepared at least 18 federal income tax returns for her clients that were false as to material matters in that the tax returns claimed fraudulent itemized deductions, child care expenses and Schedule E real estate rental expenses in amounts that she knew her clients were not entitled to claim.
Additionally, according to the documents filed in the case and evidence presented at trial, Garrett was a licensed tax return preparer and licensed real estate broker who operated a tax return preparation and bookkeeping business and a real estate financing business. These businesses operated under multiple names, including Fe's Tax Service, Garrett's Tax Service and Garrett's Realty and Mortgage. Garrett failed to report over $300,000 of her business gross receipts from those businesses on her federal income tax returns for tax years 2001, 2002, 2004 and 2005.
Additionally, the evidence at trial showed that Garrett willfully failed to pay approximately $279,000 in federal income taxes that she owed for tax years 2001 through 2006. Despite filing tax returns for 2001 and 2006 on which she admitted owing tax each year, Garrett spent hundreds of thousands of dollars at local casinos, wired over $100,000 to the Philippines, and did not respond to numerous attempts by the IRS to contact her.
According to the evidence presented at trial, Garrett prepared a false tax return for an undercover IRS agent that included false items similar to those on her client’s returns. In a recording presented at trial, Garrett was heard describing her "style" of preparing tax returns using "loopholes" for claiming deductions on income tax returns.
"During tax filing season, return preparers and taxpayers should be aware of the serious consequences facing those who aid or assist in the filing of fraudulent tax returns," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department's Tax Division. "Those who fly in the face of the tax laws face investigation, prosecution, and if convicted, significant prison sentences and substantial fines."
"Today's sentence sends a strong message to unscrupulous return preparers who think they can get away with tampering with our nation's tax system," said Victor S. O.Song, Chief, Criminal Investigation, Internal Revenue Service. "Return preparer fraud is a crime that can and does result in jail time."
Acting Assistant Attorney General DiCicco commended the IRS-Criminal Investigation special agents who investigated the case, as well as Tax Division trial attorneys Christopher S. Strauss and Elizabeth C. Hadden, who prosecuted the case. Acting Assistant Attorney General DiCicco also thanked the U.S. Attorney’s Office in San Diego for their assistance in successfully prosecuting this matter.