District Not Recorded
The source did not name an office we could identify. These records remain unassigned rather than guessed.
Attorney General Holder, Secretary Sebelius Convene National Summit on Health Care Fraud, <br /> Unveil Historic Commitment to Fighting Fraud in President’s FY 2011 BudgetRead the Press Release
Attorney General Eric Holder and U.S. Department of Health and Human Services Secretary Kathleen Sebelius today joined private sector leaders, law enforcement personnel and health care experts for a landmark National Summit on Health Care Fraud. The summit is the first national gathering on health care fraud between law enforcement and the private and public sectors and is part of the Obama Administration’s coordinated effort to fight health care fraud.
"Health care fraud affects all Americans and demands a coordinated, national response," said Attorney General Holder. "HEAT (the Health Care Fraud Prevention & Enforcement Action Team) has proven that better collaboration is the key to combating these crimes, recovering stolen resources, and protecting essential Medicare and Medicaid dollars. We welcome the private sector’s participation in this work – together, I’m confident we can make great strides in identifying, preventing, and punishing health care fraud."
"The Obama Administration has zero tolerance for health care fraud and abuse," said Secretary Sebelius. "Building on the work we have accomplished through HEAT, I am pleased to announce here at the National Summit on Health Care Fraud that the President’s FY 2011 Budget being unveiled next week will include historic support for anti-fraud efforts that will save billions over 10 years. He will call for increased investments in programs that have a proven record of preventing fraud, reducing payment errors and returning funds to the Trust Funds."
The National Summit features discussions of innovative ways to eliminate fraud and abuse in the U.S. health care system. The morning program includes remarks from Attorney General Holder, Secretary Sebelius, Congressman Ron Klein and James Roosevelt Jr. CEO of Tufts Health Care, who will address the important role of the private sector in fighting fraud. Later, officials from the Departments of Justice and Health and Human Services will participate in a panel discussion about methods being used to prevent and crack down on health care fraud.
In the afternoon, workgroups will focus on the:
- Use of technology to prevent and detect health care fraud and improper payments.
- Role of states in preventing health care fraud.
- Development of effective prevention policies and methods for insurers, providers and beneficiaries.
- Effective law enforcement strategies.
- Measuring health care fraud, assessing recoveries and determining resource needs.
Summaries of the workgroup discussions will be compiled in a publicly available report that will help strengthen the federal government and private sector’s work to deter health care fraud.
"Health care fraud isn’t just a government problem. Criminals don’t discriminate and they are stealing from Medicare, Medicaid and private companies at an unacceptable rate," said Sebelius. "We have a shared interest in stopping these crimes and today’s summit brought us together to discuss how we can all work together to fight fraud."
The National Summit is the latest initiative of HEAT, which was announced by Attorney General Holder and Secretary Sebelius in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid fraud through enhanced cooperation. Expansion of the Medicare Fraud Strike Force operations is a key component of the HEAT taskforce. Strike Force Teams initially began in Miami in 2007 and expanded to Los Angeles in 2008. Since the formation of HEAT, the Strike Force has expanded to Detroit; Houston; Brooklyn, N.Y.; Baton Rouge, La. and Tampa, Fla..
To date, Strike Force Teams have obtained indictments of more than 500 individuals and organizations that collectively have falsely billed the Medicare program for more than one billion dollars.
For more information on the National Summit, visit www.healthcarefraudsummit.com.
Associate Attorney General Perrelli, Senators Announce Passage of Teen Dating Violence Awareness Month ResolutionRead the Press Release
Associate Attorney General Tom Perrelli joined Senators Mike Crapo (R-Idaho), Sheldon Whitehouse (D-R.I.) and Joseph Lieberman (I-Conn.) today to announce the Senate’s passage of Resolution 373, which designates February 2010 as "National Teen Dating Violence Awareness and Prevention Month."
Since 2004, Congress has designated the first full week in February as "National Teen Dating Violence Awareness and Prevention Week." However, this year the Justice Department worked with the Senate to designate the entire month of February as "National Teen Dating Violence Awareness and Prevention Month." This provides parity to the three other crimes included in the Violence Against Women Act (VAWA) – sexual assault, domestic violence and stalking, each of which has a designated month for public education and awareness activities.
"For the first time, this crime is being commemorated as ‘National Teen Dating Violence Awareness and Prevention Month,’ instead of a week. This is no small feat, and I commend the Senate for its unanimous passage," said Associate Attorney General Perrelli. "The department will continue to raise awareness regarding teen dating violence, and will use federal resources to assist schools and communities in stopping such violence."
This year marks t he 15 year anniversary of President Bill Clinton signing VAWA into law and the creation of the Office on Violence Against Women (OVW). Today’s event is another installment in the department’s year-long effort to raise public awareness, build stronger coalitions among federal, state, local and tribal communities, and redouble efforts to end domestic and teen dating violence, sexual assault and stalking for men, women and children across the country.
Sewerage & Water Board of New Orleans Agrees to Reinstate Program to Improve Sewage System Damaged by Hurricane KatrinaRead the Press Release
WASHINGTON—The Sewerage & Water Board of New Orleans has agreed to reinstate its comprehensive program – stalled for several years in the aftermath of Hurricane Katrina – to make extensive improvements to reduce or eliminate sewage overflows into the Mississippi River, Lake Pontchartrain and its storm drainage canal system, the Justice Department and U.S. Environmental Protection Agency announced today.
According to a Clean Water Act settlement filed today that modifies a 1998-agreement, the Sewerage & Water Board, which operates the publicly owned treatment works that serves the citizens of New Orleans, has agreed to continue to repair its antiquated sewage collection system. Prior to 1998, the system had been overwhelmed causing overflows of raw sewage into waterways and streets of New Orleans. Those efforts were put on hold for several years due to Hurricane Katrina in 2005.
"For many years, until Hurricane Katrina, the Sewerage & Water Board was making great strides in repairing its outdated collection system in compliance with the 1998 agreement," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "We are pleased that, despite the devastating effects of the hurricane, the board has agreed to continue its aggressive remediation program in order to protect the public health and make the waterways safe for the people of New Orleans."
"We have agreed on an aggressive plan which will greatly help New Orleans’ system deliver better service to residents while it protects the environment," said EPA Regional Administrator Al Armendariz. "Protecting America’s waters is a priority at EPA. We are pleased the Sewage & Water Board shares our strong commitment to clean water."
As part of its ongoing remediation program, estimated to cost more than $400 million from its inception in 1998, the board has agreed to repair all of its 62 pump stations damaged by the hurricane, as well as any other hurricane damage in the portions of the collection system served by those pump stations. By no later than July 2015, the board will complete additional studies required by EPA and make all necessary repairs and upgrades to its collection system, including measures designed to provide dependable electrical services at its treatment plant in the event of a future catastrophic event.
The board will also design and implement a new preventive maintenance plan to inspect and clean its sewer lines and pump stations to prevent sewage overflows, and will continue efforts under its sewage overflow action plan designed to minimize the impact of such overflows on the environment.
In addition, now that the system serves only about 60 percent of people that it served before Katrina hit, the board has agreed to report each year on population changes and to evaluate any need for increased capacity for its pump stations, force mains and treatment plant.
The 1998 agreement resolved a 1993 lawsuit brought by the United States alleging violations of the Clean Water Act including effluent overflows at the East Bank treatment plant and unauthorized discharges from the East Bank Collection System. A coalition of citizens groups under the direction of the Tulane Law Clinic has joined the government in the action and is part of the modified settlement. The state of Louisiana also has participated in this settlement.
The modified consent decree, lodged today in the U.S. District Court for the Eastern District of Louisiana, is subject to 30-day public comment period and approval by the court. A copy of the consent decree is available on the Justice Department web site at http://www.justice.gov/enrd/Consent_Decrees.html.
Los Angeles Business Owner Pleads Guilty to Submitting Nearly <br /> $1 Million in False and Fraudulent Claims to MedicareRead the Press Release
The owner and operator of a Los Angeles durable medical equipment (DME) company pleaded guilty today to submitting nearly $1 million in false claims to Medicare, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and Acting U.S. Attorney George S. Cardona for the Central District of California.
Ajibola Adekeunle Sadiqr, 51, pleaded guilty today before U.S. District Court Judge John F. Walter in the Central District of California. Sadiqr, the owner of Cooper Medical Supply, admitted that between January 2006 and September 2009, he conspired with Leonard Nwafor, the owner of another DME supply company who was convicted of Medicare fraud in September 2008, and others to purchase fraudulent prescriptions and medical documents. Sadiqr then used those documents to submit false claims to Medicare for expensive power wheelchairs and DME. Sadiqr admitted that he knew the beneficiaries did not need the DME. Sadiqr also admitted that he knew the doctor and beneficiary information contained in the fraudulent prescriptions and medical documents came from fraudulent medical clinics and marketers. As a result of this scheme, Sadiqr admitted that he submitted or caused the submission of approximately $950,000 in false and fraudulent claims to Medicare through Cooper Medical Supply.
At sentencing, scheduled for April 12, 2010, Sadiqr faces a maximum penalty of 10 years in prison and a $250,000 fine for defrauding Medicare.
The case is being prosecuted by Trial Attorney Jonathan T. Baum of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Kerry C. O’Neill of the Central District of California. The case is being investigated by the California Department of Justice. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.
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, the U.S. Department of Health and Human Services’ (HHS) Centers for Medicare and Medicaid Services, working in conjunction with the HHS Office of the Inspector General are taking steps to increase accountability and decrease the presence of fraudulent providers.
To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT) , go to: www.stopmedicarefraud.gov
Justice Department Settlement with Nashville, Tennessee, Public Schools Will Improve Security on School Buses for Students with DisabilitiesRead the Press Release
WASHINGTON – The Justice Department today announced that it has entered into a settlement agreement with the Metropolitan Government of Nashville, Tenn., and Davidson County, Tenn., to enhance the security of students with disabilities on public school buses. The settlement is the result of a lawsuit stemming from episodes of peer-on-peer sexual harassment on buses designated for students with disabilities.
The United States intervened in this lawsuit, Lopez & U.S. v. Metropolitan Government of Nashville and Davidson County, et al., to address systemic deficiencies that resulted in episodes of sexual assault and harassment of students with disabilities on special education buses operated by the school district. These acts of harassment violated Title IX of the Education Amendments of 1972, which prohibits discrimination and harassment based on sex.
The agreement, in the form of a consent decree and subject to approval by Judge Robert Echols, obligates the Nashville Public School District to take substantial steps to enhance the security of students with disabilities on its public school transportation system. These steps include staffing bus monitors to assist drivers on all special education buses; implementing comprehensive screening procedures to ensure that students with disabilities are not assigned to buses where they would be at risk of harassment; expediting the investigation of suspected acts of sexual harassment involving students with disabilities; and ensuring open lines of communication between transportation officials and school-based personnel.
As part of this settlement, $1.475 million will be paid to a nine-year old autistic child who was assaulted on an unmonitored special education school bus and compelled to perform oral sex on a nineteen-year old student with known proclivities for sexually predatory behavior. The victim developed severe post-traumatic stress disorder in the aftermath of the assault and was subsequently institutionalized.
"While all victims of sexual assault suffer emotionally and psychologically, sexual assault can have a particularly devastating impact on children with disabilities," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "We will act decisively to enforce federal anti-discrimination laws against school districts that are deliberately indifferent to circumstances that threaten the safety and security of students with disabilities."
"This case is a sad reminder that children with disabilities need the protection of their governments from harassment, assault and maltreatment by others. The Justice Department and this U.S. Attorney’s Office will deal strictly with those who fail to protect the vulnerable members of our society and will make every effort to prevent such disgusting incidents from occurring in the future," said Edward M. Yarbrough, U.S. Attorney for the Middle District of Tennessee.
The enforcement of Title IX in school districts is a top priority of the Justice Department’s Civil Rights Division. Additional information about the Civil Rights Division of the Justice Department is available on its Web site at http://www.justice.gov/crt.
Houston-Area Patient Recruiter Convicted of Health Care FraudRead the Press Release
Sylvia Smith, 64, a retired nurse, was convicted today of conspiracy to commit health care fraud and health care fraud, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Tim Johnson of the Southern District of Texas; and Special Agent-in-Charge Mike Fields of the Dallas Regional Office of the Department of Health and Human Services, Office of the Inspector General (HHS-OIG).
At trial, Noel Jhagroo, owner of Trucare Medical Equipment Services (Trucare), a Houston-area durable medical equipment company, testified that he entered into a kickback arrangement with Smith, whereby he agreed to pay her 10 percent of what Medicare paid Trucare for each patient Smith referred. Jhagroo and Smith submitted claims to Medicare for enteral nutrition supplies and for bundles of orthotics, referred to as "artho kits." Jhagroo also testified that he paid Smith a kickback of $300 per patient in this scheme. In total, Jhagroo and Smith submitted $747,258 in phony claims to Medicare.
In order to bill Medicare for enteral nutrition supplies, Medicare regulations require that a beneficiary have a feeding tube. The forms supplied by Smith indicated that the beneficiaries she referred had such a feeding tube. The evidence at trial, however, showed that none of the patients referred by Smith had a feeding tube. The evidence also showed that Smith provided Jhagroo with high-dollar Medicare codes for specialized enteral food supplements. In fact, Smith and Jhagroo supplied patients with over-the-counter supplements, one of which stated on the bottle that it was "not for tube feeding."
The evidence at trial showed that Smith also provided Jhagroo with a product list of inexpensive, soft, over-the-counter supplements to be included in the artho kit. The evidence showed that Smith provided Jhagroo with Medicare codes to be used for billing purposes that were actually for expensive, rigid, high-end orthotics, in contrast to the inexpensive products that were actually delivered. After refusing the inexpensive artho kits initially, two Medicare beneficiaries testified that Smith offered them $100 if they would agree to accept the kits.
In addition to referring patients, the evidence at trial showed that Smith supplied Jhagroo with phony certificates of medical necessity signed by a Houston-area physician, so that Trucare could submit claims to Medicare. A Medicare beneficiary testified at trial that she had never heard of the physician who signed the form supplied by Smith to Trucare.
Smith’s sentencing is scheduled for May 12, 1010. Smith faces a maximum prison sentence of 10 years for the conspiracy count, as well as 10 years in prison for each of the six counts of health care fraud for which she was convicted. Smith also faces a maximum fine of $250,000 per count. 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. Jhagroo pleaded guilty on Nov. 2, 2009, to conspiracy to commit health care fraud for his role in the scheme.
The case was prosecuted by Assistant Chief John S. (Jay) Darden and Trial Attorneys Katherine Houston and Jennifer L. Saulino of the Criminal Division’s Fraud Section, and was investigated by the FBI, HHS-OIG and the Railroad Retirement Board.
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 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
Businessman Convicted for Evading $1.9 Million in Taxes on Sales of Ozone-Depleting Greenhouse GasesRead the Press Release
WASHINGTON— Dov Shellef, a businessman from Great Neck, N.Y., was convicted today on 86 counts, following a five-week jury trial, for conspiring to defraud the Internal Revenue Service in the collection of approximately $1.9 million in excise taxes due on sales of the ozone-depleting greenhouse gas known as CFC-113, the Justice Department announced.
The jury sitting in Central Islip, N.Y., also convicted Shellef for subscribing to false corporate tax returns, wire fraud and money laundering.
According to facts presented at trial, Shellef represented to manufacturers that he was purchasing CFC-113 for export, allowing manufacturers to sell it to him tax-free. He then sold the product in the domestic market without notifying the manufacturers or paying the excise tax.
As of 1996, the Clean Air Act banned the importation and production of CFCs in the United States, but allowed manufacturers to sell and export CFCs that had been stockpiled prior to the ban. CFCs, used primarily as refrigerants and industrial solvents, migrate upon release into the upper atmosphere and destroy ozone, thus permitting more harmful ultraviolet radiation to reach the earth.
In addition, CFC-113 is a significant contributor to climate change. These chemicals are subject to a substantial excise tax imposed to discourage their use and to promote the transition to more ozone-friendly products. This excise tax applied to domestic sales of stockpiled CFCs, but not to sales for export.
Shellef faces a maximum prison sentence of five years for the conspiracy, three years for the false corporate tax return, 20 years for the wire fraud convictions and 20 years for the money laundering convictions. He faces a fine of up to $250,000 for conspiracy, false tax return and wire fraud, and a fine of $500,000 or twice the property involved in the offenses for money laundering. Shellef also faces forfeiture of more than $1 million involved in the money laundering offenses.
Shellef and his business partner, William Rubenstein, were previously convicted by a jury in July 2005 on 130 counts, including conspiracy to defeat the excise taxes on ozone-depleting chemicals, money laundering, wire fraud and a variety of tax violations. These convictions were reversed by the U.S. court of appeals in March 2008 on grounds that some of them should have been tried separately. Prior to the start of the second trial, Rubenstein pleaded guilty to the conspiracy violation but has not yet been sentenced.
The government’s case was prosecuted by the Justice Department’s Environment and Natural Resources Division and the Tax Division. The case was investigated by special agents of the Internal Revenue Service, with assistance from the Environmental Protection Agency.
United States Transfers Guantanamo Bay Detainee to SwitzerlandRead the Press Release
The Department of Justice today announced that a detainee has been transferred from the detention facility at Guantanamo Bay to the Government of Switzerland for resettlement in Switzerland. The Swiss Government, with the support of the Canton of Geneva, accepted an Uzbek national for resettlement and his transfer was carried out according to arrangements between the governments of the United States and Switzerland.
As directed by the President’s Jan. 22, 2009, Executive Order, the interagency Guantanamo Review Task Force conducted a comprehensive review of the case. As a result of that review, which examined a number of factors, including security issues, the detainee was approved for transfer by unanimous consent among all the agencies involved in the Task Force. In accordance with congressionally-mandated reporting requirements, the Administration informed Congress of its intent to transfer the detainee at least 15 days before his transfer.
The identity of the individual is being withheld at the request of the Swiss government, in the interest of protecting the individual’s privacy and facilitating his transition to life in Switzerland. The United States is grateful to the Government of Switzerland and the Canton of Geneva for their willingness to support U.S. efforts to close the Guantanamo Bay detention facility.
Since 2002, more than 570 detainees have departed Guantanamo Bay for other destinations, including Albania, Algeria, Afghanistan, Australia, Bangladesh, Bahrain, Belgium, Bermuda, Chad, Denmark, Egypt, France, Hungary, Iran, Iraq, Ireland, Italy, Jordan, Kuwait, Libya, Maldives, Mauritania, Morocco, Pakistan, Palau, Portugal, Russia, Saudi Arabia, Somalia, Spain, Sweden, Switzerland, Sudan, Tajikistan, Turkey, Uganda, United Kingdom and Yemen.
Today, 192 detainees remain at Guantanamo Bay.
Six Members of MS-13 Gang Convicted of Racketeering, Murder, Drug and Firearms ChargesRead the Press Release
Six members of a racketeering enterprise, called La Mara Salvatrucha, or MS-13, were convicted today by a jury in U.S. District Court in Charlotte, N.C., of criminal charges that include racketeering, murder, attempted murder, assault, cocaine trafficking and numerous related federal firearms offenses, the Department of Justice announced. The jury convicted the defendants after two weeks of trial and five hours of deliberations. The six defendants were members and leaders of the MS-13 gang, a national and international criminal enterprise, who were originally charged along with 20 additional defendants in the first indictment.
"Today, law and justice have prevailed. As we saw from this trial, the MS-13 gang is violent and dangerous. It brings lawlessness and fear into far too many communities in this country and across our borders. But with the kind of international cooperation demonstrated by this case, we will continue to identify, prosecute, and bring to justice the leaders and organizers of this violent gang," said Assistant Attorney General Lanny A. Breuer of the Criminal Division. "Each and every day, the Criminal Division’s Gang Unit and U.S. Attorneys’ Offices throughout the United States are working to take violent offenders off the streets and out of our neighborhoods."
U.S. Attorney Edward R. Ryan for the Western District of North Carolina said of today’s verdict, "Our community is a wonderful place to live, raise a family and seek a peaceful and prosperous life. These defendants and their gang clearly had criminal designs to rule this community through fear and violence for their own unjust benefit. A coalition of federal, state, local and international law enforcement joined together to meet this threat. We are very pleased with the victory that today’s verdict represents."
"Gangs are poisonous to our communities–they feed on weakness and force people to live in fear. These convictions prove gang members can’t operate in hiding and escape getting caught," said Owen D. Harris, Special Agent in Charge of the FBI’s Charlotte Division. "The FBI Safe Streets Gang Task Force will not stop dismantling the hierarchy of MS-13, even if they try to rebuild. We can’t afford to let them eat away at our society–and we won’t let them."
ATF Special Agent in Charge, Zebedee T. Graham, stated, "ATF simply will not tolerate violent crime. The message with this verdict is clear: if you use a gun to further your criminal activity or terrorize our communities, we will go after you with all of our resources and law enforcement partners."
Julio Cesar Rosales Lopez, 24, of Guilford County, N.C.; and, Juan Gilberto Villalobos, 42; Elvin Pastor Fernandez Gradis, 34; Carlos Roberto Figeroa-Pineda, 26; Johnny Elias Gonzalez, 21; and Santos Anibal Caballero Fernandez, 24, all of Charlotte, were all convicted of conspiring to engage in a racketeering enterprise in the Western District of North Carolina, El Salvador and elsewhere, beginning at least in January 2003 and continuing through July 27, 2009. The evidence at trial proved that the MS-13 enterprise planned and committed various criminal acts, including robbery and extortion, obstruction of justice, tampering with witnesses, conspiring to distribute and possessing cocaine and marijuana, distributing and possessing with intent to distribute cocaine, illegally using communication facilities and conspiring to commit murder. Testimony and evidence introduced during the trial showed that the enterprise also communicated with its leadership in El Salvador, protected its territory, enforced discipline among members, and collected debts through a pattern of racketeering activities that included the murders of four people, attempted murder, assaults and threats of violence.
Fernandez-Gradis was convicted of two charges involving the shooting and killing of Ulisses Mayo-De La Torre in South Charlotte, N.C., on April 12, 2008. Evidence at trial showed that Fernandez-Gradis killed Mayo-De La Torre over a red shirt worn by a relative of the victim. Eyewitnesses to the murder testified that there were other incidents involving the defendant and people wearing red that day, before the murder. Caballero Fernandez, who the evidence at trial showed was present at the shooting, was convicted of being an accessory after the fact to the murder. The evidence at trial showed that Caballero Fernandez helped Fernandez-Gradis escape and took the murder weapon the next day. Caballero Fernandez was found with the murder weapon approximately one month after the murder. Both Fernandez-Gradis and Caballero Fernandez were also convicted of unlawful possession of a firearm by an illegal alien, as well as other charges.
Rosales Lopez, one of the gang’s leaders whom the evidence showed was sent by MS-13 leaders in El Salvador to run what members called "The Program" in the Charlotte area, was convicted of robbing a victim whom he suspected of dealing drugs in a Charlotte nightclub controlled by MS-13. Rosales Lopez was also convicted of being an accessory after the fact to a double homicide perpetrated by another MS-13 member in a restaurant in Greensboro, N.C., in 2007. In addition, Rosales Lopez was convicted of conspiracy to commit extortion.
Villalobos, whom the evidence at trial showed was the keeper of some of the gang’s guns, was convicted of a variety of drug and gun crimes in connection with his MS-13 membership, as well as conspiracy to commit extortion. The evidence at trial showed that Villalobos "controlled" the Mi Cabana and El Vaquero nightclubs in Charlotte on behalf of MS-13.
Gonzalez was convicted of a RICO conspiracy. In connection with that charge, the jury found that Gonzalez participated in what the evidence at trial showed was a robbery-murder of Yonni Alexander Morales Maradiaga, who was shot and killed by another MS-13 member during the robbery in East Charlotte in early August 2005. Finally, Figueroa Pineda was convicted of a RICO conspiracy, drug conspiracy, two different counts of possession with intent to distribute marijuana and possessing a gun during one of those drug crimes.
The defendants face a variety of possible sentences based on their convictions, including for some, life in prison. The defendants have been in federal custody since their arrests on the original indictment in June 2008.
Evidence presented at trial also showed that the long-term investigation of the four murders was initiated by the FBI’s "Safe Streets" Gang Task Force from North Carolina when a witness came forward and explained how the killings were part of the violent operation of a single MS-13 cell operating out of the Charlotte area. The Task Force is composed of the FBI, the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), U.S. Immigration and Customs Enforcement (ICE), the Charlotte-Mecklenburg Police Department, and the Gastonia, N.C., Police Department. The FBI’s MS-13 National Gang Task Force played a significant role in coordinating the international aspects of the investigation, and additional critical assistance was provided by the Transnational Anti-Gang (TAG) Center. Additional law enforcement investigative support was provided by the North Carolina State Bureau of Investigation, as well as the Greensboro Police Department and the Durham Police Department. Substantial assistance has been afforded by the U.S. Marshals Service for the Western District of North Carolina, especially with regard to security during the two-week jury trial. The investigation of the wide-sweeping enterprise led to the prosecution of 26 alleged MS-13 members. In addition to the six defendants convicted today, 19 other co-defendants have pleaded guilty to the racketeering charges in the indictment. One defendant remains in custody in El Salvador. No sentencing dates have been set by the court at this time.
The case was prosecuted by Assistant U.S. Attorneys Kevin Zolot, Jill Rose and Adam Morris from the U.S. Attorney’s Office for the Western District of North Carolina, and Trial Attorney Sam Nazzaro from the Criminal Division’s Gang Unit.
Alejandro Enrique Ramirez Umana, also known as "Wizard," 25, currently awaits trial for the murder of Ruben Garcia Salinas on Dec. 8, 2007, in Guilford County, on the charge of aid of the enterprise engaged in racketeering activity. The capital trial is currently set for April 2010 in U.S. District Court in Charlotte.
Oklahoma Man Pleads Guilty to Aiding and Abetting the Solicitation of a Kickback in Connection with a Government Contract in AfghanistanRead the Press Release
WASHINGTON — An Oklahoma man pleaded guilty today for his role in a scheme to solicit a kickback in connection with the award of a private security services subcontract to protect U.S. government personnel and contractors in Afghanistan, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, Assistant Attorney General Christine Varney of the Antitrust Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.
Ryan Scott McMonigle, 38, of Ponca City, Okla., pleaded guilty today before U.S. District Court Judge T.S. Ellis III, in the Eastern District of Virginia to one count of aiding and abetting the solicitation of a kickback.
According to court documents, the U.S. Agency for International Development (USAID) is the principal federal U.S. agency that extends assistance to countries recovering from disaster, trying to escape poverty and engaging in democratic reforms. The agency works to support long-term and equitable economic growth and to advance U.S. foreign policy objectives.
In August 2006, USAID awarded a $1.4 billion contract known as the Afghanistan Infrastructure Rehabilitation Project (the AIRP contract). The AIRP contract required the award of numerous subcontracts, including for the provision of security services to protect AIRP workers. According to court documents, from approximately February 2009 through May 2009, McMonigle was employed in Kabul, Afghanistan, by Civilian Police International, a Virginia-based company that provides law enforcement training internationally. McMonigle admitted that he assisted others in the solicitation of a kickback from a private security vendor in return for favorable treatment for this potential bidder in connection with the award of one or more subcontracts. According to court documents, the subcontracts provided for private security services to protect USAID personnel and contractors in Afghanistan operating under the AIRP contract.
The charge of aiding and abetting the solicitation of a kickback carries a maximum penalty of 10 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. McMonigle is scheduled to be sentenced on Nov. 5, 2010.
Bryan Lee Borrows, who was also employed in Kabul by Civilian Police International, pleaded guilty on Sept. 2, 2009, to conspiring with others to solicit kickbacks from private security vendors in return for favorable treatment for those potential bidders in connection with the award of one or more subcontracts. Burrows was sentenced on Dec. 19, 2009, to 12 months and one day in prison for his role in the scheme.
In addition, Scott Anthony Walker, of Australia, pleaded guilty on Nov. 16, 2009, to one count of conspiracy to solicit a kickback, related to his role in the scheme. Walker was arrested in the United States on Nov. 11, 2009, and is scheduled to be sentenced on Feb. 5, 2010.
The case is being prosecuted by Trial Attorney Bradford Geyer of the Criminal Division’s Fraud Section, Trial Attorneys Kimberly A. Justice and Joseph Muoio of the Antitrust Division’s Philadelphia Field Office and Assistant U.S. Attorney Timothy D. Belevetz of the U.S. Attorney’s Office for the Eastern District of Virginia. The investigation is being conducted by USAID’s Office of Inspector General as well as 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.
Californian Pleads Guilty to False Tax Refund ConspiracyRead the Press Release
WASHINGTON – Haroon Amin of Upland, Calif., pleaded guilty Monday to conspiracy to defraud the United States, the Justice Department and Internal Revenue Service (IRS) announced today.
In December 2008, Amin and Ather Ali of Diamond Bar, Calif., were indicted by a federal grand jury in Riverside, Calif., on charges of engaging in a scheme to file false returns with the IRS using the names and Social Security numbers of deceased individuals. Ali is scheduled to begin trial on March 2, 2010. According to the indictment, in 2002 and 2003 Amin and Ali filed at least 250 fraudulent tax returns, falsely stating that the deceased individuals earned wages from which income tax was withheld. These false returns claimed more than $2 million in income tax refunds. Although the IRS rejected the bulk of these refund claims, a number of refund checks were issued and delivered to addresses controlled by Amin, Ali and their co-conspirators, including to various mailboxes opened by Ali using false forms of identification. Most of these refund checks were then delivered overseas to be deposited in bank accounts in Armenia and Pakistan.
Amin admitted that he was a knowing participant in this scheme. According to the indictment and statements made at the plea hearing, Amin and his co-conspirators obtained deceased individuals’ Social Security numbers and other identification information from the Internet. The returns filed as part of the scheme had fictitious Form W-2 wage and tax statements as attachments. Amin created fake W-2 Forms using employer identification numbers that he had obtained from an acquaintance who was a certified public accountant.
Judge Robert H. Whaley scheduled Amin’s sentencing for June 22, 2010. Amin faces a maximum sentence of five years in prison and a maximum fine of $250,000.
John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division commended the efforts of agents from the IRS Criminal Investigation Division in Laguna Niguel, Calif, as well as Assistant U.S. Attorney Charles E. Pell and Tax Division trial attorney Joseph A. Rillotta, who are prosecuting the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax.
Westar Energy to Spend Approximately $500 Millionto Settle Clean Air Act ViolationsRead the Press Release
WASHINGTON—Westar Energy has agreed to spend approximately $500 million to significantly reduce harmful air pollution from a Kansas power plant and pay a $3 million civil penalty, under a settlement to resolve violations of the Clean Air Act, the Justice Department and the U.S. Environmental Protection Agency (EPA) announced today. As part of the settlement, Westar will also spend $6 million on environmental mitigation projects.
The agreement, filed in federal court in Kansas, resolves violations of the Clean Air Act’s New Source Review requirements at the company’s Jeffrey Energy Center, a coal-fired power plant near St. Marys, Kan.
"This settlement will lower harmful sulfur dioxide and nitrogen oxide emissions by thousands of tons each year, and will benefit air quality in Kansas and downwind areas," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "The Justice Department will continue to vigorously enforce violations of the Clean Air Act’s New Source Review provisions at coal-fired power plants and other sources of excess emissions across the country."
"Today’s settlement sets the most stringent limit for sulfur dioxide emissions ever imposed on a coal-fired power plant in a federal settlement," said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. "EPA is committed to protecting clean air for communities by making sure coal-fired power plants comply with the law."
Under the settlement, Westar will install and operate pollution control equipment at the Jeffrey Energy Center that is expected to reduce combined emissions of sulfur dioxide and nitrogen oxides by roughly 78,600 tons per year, which is 85 percent below 2007 emissions. In addition, Westar will surrender surplus sulfur dioxide allowances. These allowances cannot be used again resulting in their permanent removal from the environment. Westar will also rebuild and optimize controls to reduce particulate matter emissions.
The settlement also requires Westar to spend $6 million on projects to benefit the environment and mitigate the adverse effects of the alleged violations including:
- Retrofitting diesel engines on vehicles owned by or operated for public entities in Kansas with emission control equipment;
- Installing new wind turbines that will result in the reduction of criteria pollutants and greenhouse gases, and provide electricity for the benefit of a school or nonprofit;
- Installing advanced truck stop electrification to reduce harmful emissions from idling trucks;
- Installing plug-in hybrid infrastructure to facilitate the use of plug-in hybrid vehicles; and
- Converting vehicles in Westar’s fleet to reduce pollution by retrofitting diesel vehicles and purchasing hybrid vehicles.
In the complaint filed in February 2009, the government alleged that Westar modified all three units at the Jeffrey Energy Center, its largest coal-fired electric generating station, without installing required pollution control equipment or complying with applicable emission limits in violation of the Clean Air Act. The government discovered the violations through an information request submitted to Westar.
The settlement is part of the EPA’s enforcement initiative to control harmful emissions from coal-fired power plants under the Clean Air Act’s New Source Review requirements. The total combined sulfur dioxide and nitrogen oxide emission reductions secured from these settlements is more than 2 million tons each year once all the required pollution controls are installed and implemented.
Sulfur dioxide and nitrogen oxides can cause severe harm to human health and the environment. After being emitted from power plants, they are converted to fine particles of particulate matter that can lodge deep in the lungs, causing a variety of health impacts including premature death. Sulfur dioxides and nitrogen oxides are also significant contributors to acid rain, smog, and haze. Air pollution from power plants can drift significant distances downwind and degrade air quality in nearby areas.
Westar Energy, based in Topeka, Kan., generates and distributes electricity to more than 684,000 customers in Kansas. It owns and operates three coal-fired electrical generating stations in Kansas. This settlement applies to all three units at the Jeffrey Energy Center, which comprise 2,160 mega-watts, or 73 percent, of Westar’s coal fleet.
The state of Kansas recently intervened in the case and joined the federal government in the settlement.
The proposed settlement was lodged today in the U.S. District Court for the District of Kansas and is subject to a 30-day public comment period and final court 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.
More information: http://www.epa.gov/compliance/resources/cases/civil/caa/coal/index.html
United States Transfers Three Guantanamo Bay Detainees to SlovakiaRead the Press Release
The Department of Justice today announced that three detainees have been transferred from the detention facility at Guantanamo Bay to the Government of Slovakia.
As directed by the President’s Jan. 22, 2009, Executive Order, the interagency Guantanamo Review Task Force conducted a comprehensive review of each of these cases. As a result of that review, which examined a number of factors, including security issues, the detainees were approved for transfer by unanimous consent among all the agencies involved in the Task Force. In accordance with Congressionally-mandated reporting requirements, the Administration informed Congress of its intent to transfer the detainees at least 15 days before their transfer.
Yesterday, the three detainees were transferred to the Government of Slovakia. The identities of these three individuals are being withheld at the request of the Government of Slovakia for security and privacy reasons. The United States is grateful to the Government of Slovakia for its willingness to support U.S. efforts to close the Guantanamo Bay detention facility.
These transfers were carried out under individual arrangements between the United States and the Government of Slovakia. The United States coordinated with the government of Slovakia to ensure the transfers took place under appropriate security measures and consultations regarding these individuals will continue.
Since 2002, more than 570 detainees have departed Guantanamo Bay for other destinations, including Albania, Algeria, Afghanistan, Australia, Bangladesh, Bahrain, Belgium, Bermuda, Chad, Denmark, Egypt, France, Hungary, Iran, Iraq, Ireland, Italy, Jordan, Kuwait, Libya, Maldives, Mauritania, Morocco, Pakistan, Palau, Portugal, Russia, Saudi Arabia, Somalia, Spain, Sweden, Sudan, Tajikistan, Turkey, Uganda, United Kingdom and Yemen.
Physical Therapist Pleads Guilty in Connection with Detroit <br /> Home Health Care Fraud SchemeRead the Press Release
Detroit-area resident Jessica Vigil pleaded guilty today for her role in a Detroit-area home health care 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 the Inspector General’s (HHS-OIG) Chicago Region.
Vigil, 34, pleaded guilty today to one count of conspiracy to commit health care fraud before U.S. District Court Judge Denise Page Hood of the Eastern District of Michigan. At sentencing, scheduled for May 27, 2010, Vigil faces a maximum sentence of 10 years in prison and a $250,000 fine.
According to plea documents, Vigil, a licensed physical therapist, admitted that she began working in approximately September 2008 as a therapist at All American Home Care Inc., and associated entities (All American). All American purported to provide home health services to Medicare beneficiaries in the Detroit area, including physical and occupational therapy services. Vigil admitted that she and other co-conspirators 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.
Vigil admitted that her role in the conspiracy was to sign documents, including start of care packages, recertification forms and discharge papers that facilitated All American’s ability to bill Medicare for home health visits. These documents allowed All American to commence, continue or conclude the purported treatment of patients and the Medicare billing cycle. Vigil admitted that she was paid between $80 and $100 by the owners of All American for each form she signed. In total, Vigil was paid more than $127,000 for signing the forms. In the course of the scheme charged in the indictment, Vigil signed documents used to justify approximately $2.375 million in home health claims paid by Medicare to All American for patients Vigil either never saw or for whom home health services were medically unnecessary. Vigil admitted that she knew the files she helped falsify were used to justify fraudulent billings to Medicare.
This case is being prosecuted by Senior Trial Attorney John K. Neal and Trial Attorney Gejaa T. Gobena of the Criminal Division’s Fraud Section. The case is being investigated by the FBI and the HHS Office of the Inspector General (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
Justice Department Requires Ticketmaster Entertainment Inc. to Make Significant Changes to Its Merger with Live Nation Inc.Read the Press Release
WASHINGTON – The Department of Justice announced today that it will require Ticketmaster Entertainment Inc. to license its ticketing software, divest ticketing assets and subject itself to anti-retaliation provisions in order to proceed with its proposed merger with Live Nation Inc. The department said that the proposed settlement will protect competition for primary ticketing, which will in turn maintain incentives for innovation and discounting. The department said that the merger, as originally proposed, would have substantially lessened competition for primary ticketing in the United States, resulting in higher prices and less innovation for consumers.
The Department of Justice’s Antitrust Division, along with 17 state attorneys general, filed a civil antitrust lawsuit today in the U.S. District Court in Washington, D.C., to block the proposed transaction. At the same time, the department and the states’ Attorneys General filed a proposed settlement that, if approved by the court, would resolve the competitive concerns in the lawsuit. The state attorneys general offices are: Arizona; Arkansas; California; Florida; Illinois; Iowa; Louisiana; Massachusetts; Nebraska; Nevada; Ohio; Oregon; Pennsylvania; Rhode Island; Tennessee; Texas; and Wisconsin.
The Department of Justice cooperated closely with the Canadian Competition Bureau throughout the course of its investigation, and the two agencies worked together to obtain the same remedy that preserves competition in both the United States and Canada.
Under the proposed settlement, Ticketmaster must license ticket software and divest ticketing assets to two different companies —Anschutz Entertainment Group (AEG) and either Comcast-Spectacor or another buyer suitable to the department, respectively —allowing both companies to compete head-to-head with Ticketmaster. Ticketmaster will also subject itself to court-ordered restrictions on its behavior.
"The Department of Justice’s proposed remedy promotes robust competition for primary ticketing services and preserves incentives for competitors to innovate and discount, which will benefit consumers," said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. "The proposed settlement allows for strong competitors to Ticketmaster, allowing concert venues to have more and better choices for their ticketing needs, and provides for anti-retaliation provisions, which will keep the merged company in check."
As part of the proposed settlement, Ticketmaster must license a copy of its primary ticketing software to AEG, the nation’s second-largest concert promoter and operator of some of the most important concert venues in the country. With a copy of the Ticketmaster software, AEG will be able to market a ticketing system that is an attractive choice to venues. AEG will have incentives similar to Live Nation to provide better services at lower prices. Within five years, AEG can purchase the Ticketmaster ticketing software, decide to create its own software, or partner with a ticketing company other than Ticketmaster. The department said that this remedy enhances short and long term competition in the primary ticketing market.
Ticketmaster must divest Paciolan Inc., a ticketing company that it currently owns, within 60 days to either Comcast-Spectacor, which has already signed a letter of intent to purchase the assets, or some other buyer suitable to the department. Comcast-Spectacor is a sports and entertainment company with management relationships with a number of concert venues and ticketing experience with its New Era Tickets company. Paciolan is used by hundreds of venues to sell tickets including major concert venues around the country. Venues that contract with Paciolan have greater flexibility to lower the ticket service fees that are charged to consumers who buy tickets. The department said that divesting Paciolan to Comcast-Spectacor, or another suitable buyer, in conjunction with the AEG license, will replace the competitive pressure on Ticketmaster lost as a result of the merger.
Under the settlement, the merged firm will be forbidden from retaliating against any venue owner that chooses to use another company’s ticketing services or another company’s promotional services, including restrictions on anticompetitive bundling. The merged firm must also allow any client that leaves and chooses to use another primary ticketing service to take a copy of the ticketing data related to that client’s sales. The settlement also sets up firewalls that protect confidential and valuable competitor data by preventing the merged firm from using information gleaned from its ticketing business in its day-to-day operations of its promotions or artist management business. Additionally, the merged firm must provide notice of any other acquisitions of a ticketing company so that the department may investigate the competitive effect of such an acquisition.
Together, these remedies will preserve the competition that Ticketmaster faced from Live Nation, a new ticketing entrant, the department said. Prior to its proposed merger with Ticketmaster, Live Nation had established incentives to reduce service fees to sell more tickets. Today’s settlement offers a new competitor comparable incentives to ensure ticket sales are maximized for the benefit of consumers, the department said.
Ticketmaster is a Delaware corporation headquartered in West Hollywood, Calif. Ticketmaster is the world’s largest ticketing company. In 2008, Ticketmaster sold more than 141 million tickets valued at more than $8.9 billion on behalf of more than 10,000 clients worldwide and earned approximately $1.4 billion in gross revenues.
Live Nation is a Delaware corporation headquartered in Beverly Hills, Calif. It is the world’s largest promoter of live concerts, with 2008 worldwide gross revenues of $4 billion. Live Nation also owns or operates more than 75 concert venues of various sizes in the United States.
AEG, headquartered in Los Angeles, is one of the leading sports and entertainment presenters in the world. AEG, a wholly owned subsidiary of the Anschutz Company, owns or controls a collection of venues, such as the Staples Center (Los Angeles), Prudential Center (Newark, N.J.), Sprint Center (Kansas City, Mo.) and Citizen’s Business Bank Arena (Ontario, Canada). The company’s live entertainment division, AEG Live, is one of the world’s leading concert promotion and touring companies with 15 regional offices that has recently promoted national tours on behalf of artists such as Prince, Usher, Kenny Chesney, Rod Stewart, Paul McCartney, Yanni, The Eagles, George Strait, Justin Timberlake, Christina Aguilera, Dixie Chicks, Hannah Montana and American Idol. AEG is also a 50 percent owner of Wright Entertainment Group, which manages major artists such as the Jonas Brothers, Justin Timberlake, Janet Jackson and ‘N Sync.
Comcast-Spectacor, headquartered in Philadelphia, has more than $1 billion in annual sales. It is a joint venture between a private investor and Comcast Corp., a leading provider of cable, Internet and phone services in the United States. Comcast-Spectacor owns a national ticketing services company, owns and operates major venues and sport franchises, manages approximately 90 public assembly facilities, and runs a major North American food and beverage concessions company.
As required by the Tunney Act, the proposed 10-year 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 a 60-day comment period to John R. Read, Chief, Litigation III Section, 450 Fifth Street, N.W., Suite 4000, 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.
Former Los Angeles Medical Center Owners Agree to $10 Million Consent Judgment for Medicare and Medi-Cal Fraud SchemeRead the Press Release
WASHINGTON – The United States has obtained a $10 million consent judgment against Los Angeles businessman Robert Bourseau and Dr. Rudra Sabaratnam for a Medicare and Medi-Cal fraud scheme arising from their former ownership of the Los Angeles City of Angels Medical Center, the Justice Department announced today. The consent judgment, in which the state of California also joined, resolves a civil lawsuit filed against Bourseau and Sabaratnam by the United States and California in the U.S. District Court for the Central District of California.
The government’s complaint alleged that Bourseau and Sabaratnam directed a scheme in which City of Angels paid "recruiters" employed at homeless shelters in the skid row area of the city to deliver their homeless clients by ambulance to the hospital for medical treatment regardless of whether their clients in fact needed or requested such treatment. The City of Angels would then bill the Medicare and Medi-Cal programs for a variety of medical services allegedly rendered to the homeless patients, many of which were not medically necessary. This scheme violated the False Claims Act.
The government further alleged that payments City of Angels made to its recruiters constituted illegal inducements, or kickbacks, in violation of the federal Anti-Kickback Statute, which prohibits certain types of remuneration intended to induce the referral of patients for health services paid for by the federal government. In its complaint, the government maintained that prohibitions against illegal kickbacks are important to insure that financial motives do not undermine the integrity of the medical judgment of physicians and other health care workers.
"Performing unnecessary medical procedures just to take money from taxpayers’ pockets is bad enough, but to prey on homeless people struggling to survive day to day is particularly reprehensible," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "We won’t tolerate illegal conduct and we will continue to hold companies, institutions and individuals accountable for health care fraud."
In addition to the civil judgment, both Bourseau and Sabaratnam have pleaded guilty to criminal charges for violating the Anti-Kickback Statute. Each defendant is awaiting sentencing. A former senior executive of City of Angels, as well as two of the medical center’s recruiters, have also pleaded guilty to similar charges in connection with the scheme.
Assistant Attorney General West applauded the cooperation between federal and state officials that resulted in the judgment against Bourseau and Sabaratnam. The Justice Department’s Civil Division, the U.S. Attorney’s Office for the Central District of California, the California Attorney General’s Office, and the Office of Inspector General of the Department of Health and Human Services together handled the investigation and civil lawsuit.
The consent judgment in this matter is the most recent example 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 Department of Justice 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.
United States Transfers Two Guantanamo Bay Detainees to AlgeriaRead the Press Release
Two Algerian detainees, Hasan Zemiri and Adil Hadi al Jazairi Bin Hamlili, have been transferred from the detention facility at Guantanamo Bay to the custody and control of the Government of Algeria.
As directed by the President’s Jan. 22, 2009 Executive Order, the interagency Guantanamo Review Task Force conducted a comprehensive review of these cases. As a result of that review, which examined a number of factors, including the potential threat posed by each individual and the receiving country’s demonstrated capabilities to mitigate potential threats posed by the individuals in their home country, each detainee was approved for transfer. The transfers were approved by unanimous consent among all the agencies involved in the review -- including the Office of the Director of National Intelligence, the Joint Chiefs of Staff, as well as the Departments of Defense, State, Justice and Homeland Security.
In accordance with Congressionally-mandated reporting requirements, the Administration informed Congress of its intent to transfer these detainees at least 15 days before their transfer. These transfers were carried out under an arrangement between the United States and the Government of Algeria. The United States coordinated with the Government of Algeria to ensure the transfers took place under appropriate security measures.
Since 2002, more than 570 detainees have departed Guantanamo Bay for other destinations, including Albania, Algeria, Afghanistan, Australia, Bangladesh, Bahrain, Belgium, Bermuda, Chad, Denmark, Egypt, France, Hungary, Iran, Iraq, Ireland, Italy, Jordan, Kuwait, Libya, Maldives, Mauritania, Morocco, Pakistan, Palau, Portugal, Russia, Saudi Arabia, Somalia, Spain, Sweden, Sudan, Tajikistan, Turkey, Uganda, United Kingdom and Yemen.
Eight detainees were transferred from Guantanamo Bay to Algeria under the previous Administration. Today, 196 detainees remain at Guantanamo Bay.
U.S. Citizen Pleads Guilty in Connection with Costa Rica-Based<br /> Business Opportunity Fraud SchemeRead the Press Release
WASHINGTON – Stephen Schultz entered a guilty plea in federal district court in Miami to 12 counts of an indictment pending against him, the Justice Department and the U.S. Postal Inspection Service announced today. Schultz pleaded guilty Thursday to one count of conspiracy to commit mail and wire fraud, eight counts of mail fraud, and three counts of wire fraud. The actions against Schultz are part of the government’s continued nationwide crackdown on business opportunity fraud.
Schultz was arrested on Dec. 12, 2008, in Costa Rica following his indictment by a federal grand jury in Miami on Nov. 20, 2008. According to the charges against him, Schultz and a co-conspirator, Jeffrey Pearson, purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining, and operating such businesses. Following his arrest in Costa Rica, Schultz was extradited to the United States.
Schultz worked for USA Beverages Inc., Twin Peaks Gourmet Coffee Inc. and Cards-R-Us Inc. Beginning in 2005, USA Beverages sold business opportunities to own and operate coffee beverage display racks. USA Beverages rented office space in Las Cruces, N.M., and otherwise made it appear to potential purchasers that USA Beverages’ operations were fully within the United States. However, USA Beverages actually operated from Costa Rica.
After USA Beverages, Schultz worked for Twin Peaks, which was a Florida and Colorado corporation. Twin Peaks sold business opportunities to own and operate coffee beverage sale display racks. Twin Peaks rented office space in Fort Collins, Colo., to make it appear to potential purchasers that its operations were fully within the United States. In truth, Twin Peaks also operated from Costa Rica.
Schultz next worked for Cards-R-Us, which was a Nevada corporation that sold business opportunities to own and operate greeting card sale display racks. Cards-R-Us rented office space in Reno, Nev., to make it appear to potential purchasers that Cards-R-Us’ operations were fully within the United States. Like USA Beverages and Twin Peaks, Cards-R-Us actually operated out of Costa Rica.
Schultz and his co-conspirators made, and caused others to make, numerous false statements to fraudulently induce the purchase of business opportunities. Potential purchasers were falsely told that the companies were established years earlier, had a significant number of distributors across the country, and had a track record of success. Potential purchasers were referred to references who told false tales of their success as business opportunity owners. Through these and other misrepresentations, purchasers of the business opportunities were led to believe that they would likely earn substantial profits.
"Business opportunity fraud targets Americans who are working hard to start a business and earn an honest living. While these fraud schemes may sometimes operate beyond our borders, they aren’t beyond the reach of United States law," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "The Justice Department is committed to prosecuting those who steal through false promises of financial success."
In pleading guilty, Schultz admitted that his role in the conspiracy resulted in between $2.5 million and $7 million in losses to investors and harmed more than 250 victims. Schultz faces a maximum sentence of 10 years in prison on the conspiracy count, and 25 years on each of the mail and wire fraud counts. He also faces a possible fine and mandatory restitution.
Assistant Attorney General West commended the investigative efforts of the agencies involved in this matter, the Postal Inspection Service and the Federal Trade Commission, which previously brought a related civil suit and made a criminal referral. The Justice Department’s Civil Division is handling the criminal prosecution.
Louisiana Man Convicted of Civil Rights Violationin Connection with Cross-burningRead the Press Release
WASHINGTON – Daniel Earl Danforth of Minden, La., was convicted yesterday by a jury in Shreveport, La., of a civil rights conspiracy, use of fire in the commission of a federal felony, and obstruction of justice in connection with a cross-burning near the home of an interracial couple in Athens, La., the Justice Department announced.
Sentencing has been set for April 14, 2010. At sentencing, Danforth, 31, faces a maximum penalty of 10 years for the civil rights conspiracy; 20 years for obstruction of justice; and an additional 10 years for use of fire.
At trial, evidence revealed that on Oct. 23 or 24, 2008, Danforth agreed with his two cousins to build, erect, and burn a cross near the homes of a cousin and her African American boyfriend (now husband), and other relatives who approved of their interracial relationship. Danforth and his co-conspirators built the cross using two pine trees, wire or cable, and a large nail. One of Danforth’s cousins then went to get diesel fuel to use to burn the cross. Meanwhile, Danforth and his other cousin transported the cross to an area adjacent to the victims’ homes where, using chainsaw gas, they set the cross on fire in order to intimidate the victims. On Oct. 26, 2008, Danforth telephoned a relative who was living with the victims and directed her to the location of the burned cross.
The evidence also showed that several days later, after the defendant and his co-conspirators learned that the FBI was investigating this crime as a potential civil rights violation, Danforth, his cousin who helped transport and burn the cross, and the cousin’s girlfriend formed a plan to get rid of the burned cross to prevent the FBI from discovering it and using it as evidence. Danforth’s cousin then drove Danforth to the woods behind the victims’ homes, where Danforth removed the cross, disassembled it and hid it in the woods in an effort to thwart the FBI investigation.
"The defendant and his co-conspirators, driven by hatred, threatened a family with violence simply because they associated with persons of another race. Incidents of this kind have no place in this country, but they are regrettably all too common," said Assistant Attorney General Thomas E. Perez of the Justice Department’s Civil Rights Division.
"Burning a cross near someone's home to threaten or strike fear and terror in the hearts of other human beings is a criminal act deserving vigorous investigation and punishment. This office will continue to aggressively direct federal law enforcement resources toward investigating and prosecuting those criminals who infringe and violate the civil rights of others," said William J. Flanagan, Acting U. S. Attorney for the Western District of Louisiana.
This case was investigated by the FBI. The case is being prosecuted by Assistant U.S. Attorney Mary J. Mudrick for the Western District of Louisiana and Trial Attorney Erin Aslan from the Justice Department’s Civil Rights Division.
Justice Department to Monitor Election in TexasRead the Press Release
WASHINGTON – The Justice Department today announced that it will monitor the Jan. 23, 2010, special municipal election in the city of Hondo, Texas, to ensure compliance with the anti-discrimination and minority language requirements of the Voting Rights Act of 1965. The Act prohibits discrimination in the election process on the basis of race, color or membership in a minority language group. It also requires certain covered jurisdictions, such as Hondo, to provide language assistance in Spanish.
Under the Act, the Justice Department is authorized to ask the U.S. Office of Personnel Management (OPM) to send federal observers to areas that are certified by the Attorney General or by a federal court order. Federal observers will be assigned to monitor polling place activities in Hondo based on the Attorney General’s certification of Medina County, Texas. The observers will watch and record activities during voting hours at the polling location in Hondo and a Civil Rights Division attorney will coordinate the federal activities and maintain contact with local election officials.
Each year, the Justice Department deploys hundreds of federal observers from OPM, as well as departmental staff, to monitor elections across the country. To file complaints about discriminatory voting practices, including acts of harassment or intimidation, voters may call the Voting Section of the Justice Department’s Civil Rights Division at 1-800-253-3931.
Visit http://www.usdoj.gov/crt/voting/index.htm for more information about the Voting Rights Act and other federal voting laws.
Justice Department Files Antitrust Lawsuit Against Dean Foods CompanyRead the Press Release
WASHINGTON — The Department of Justice filed a civil antitrust lawsuit today against Dean Foods Company challenging its April 2009 acquisition of Foremost Farms USA’s Consumer Products Division. The department said that the merger eliminates substantial competition between the two companies in the sale of milk to schools, grocery stores, convenience stores and other retailers in Illinois, Michigan and Wisconsin.
The Department of Justice’s Antitrust Division, along with state attorneys general from Illinois, Michigan and Wisconsin, filed a lawsuit today in U.S. District Court in Milwaukee, seeking to require Dean Foods to sell the dairy processing plants it acquired from Foremost Farms.
Dairy processors, such as Dean Foods and Foremost Farms, purchase raw milk from dairy farms and agricultural cooperatives to pasteurize and package the milk. The processors then distribute and sell the milk to school districts, supermarkets, grocery stores and other commercial customers.
"The purpose of the department’s lawsuit is to restore competition so that schools, grocery stores and other retailers in Illinois, Michigan and Wisconsin, will pay lower prices for their milk," said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
The department’s lawsuit not only seeks to undo the 2009 deal but also requires Dean Foods to notify the department at least 30 days prior to any future acquisition involving a milk processing operation.
Dean Foods’ acquisition of Foremost Farms’ two dairy processing plants in De Pere and Waukesha, Wis., eliminated an aggressive competitor against Dean Foods, the department said. Dean Foods and Foremost Farms were the first and fourth largest milk processors in northeastern Illinois, the Upper Peninsula of Michigan (the UP) and Wisconsin, respectively. Dean Foods now has approximately 57 percent of the market for processed milk in northeastern Illinois, the UP and Wisconsin.
The department’s complaint alleges that the transaction reduced competition substantially in the sale of milk to school districts in the UP and Wisconsin. Dean Foods and Foremost Farms were the two best-situated processors from which to purchase milk for numerous school districts in the UP and Wisconsin. After Dean Foods’ acquisition of Foremost Farms’ Consumer Products Division, these districts have been left with a monopoly provider. There are also a substantial number of school districts in the region for which Dean Foods and Foremost Farms were two of only three recent or likely future bidders. These school districts have been left with only two choices after the acquisition.
The department also alleges that the acquisition reduced competition substantially in the sale of milk to supermarkets, grocery stores, and other commercial customers throughout northeastern Illinois, the UP and Wisconsin. Dean Foods’ acquisition deprived these retailers of the benefits of substantial head-to-head competition between Dean Foods and Foremost Farms. Further, the department said that with Foremost Farms eliminated as a competitor, it would be easier for Dean Foods to coordinate with the remaining milk processors, whose competitive decision-making Dean Foods has described as "more predictable" and "rational."
The April 2009 transaction between Dean Foods and Foremost Farms was not required to be reported under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, which requires companies to notify and provide information to the department and the Federal Trade Commission before consummating certain acquisitions. The purchase price of the transaction was less than the minimum reporting threshold.
Dean Foods is a Delaware corporation with its principal place of business in Dallas. It is one of the largest food and beverage producers in the United States, with revenues of $12.5 billion in 2008. Dean Foods’ Dairy Group is the country’s largest processor and distributor of milk and other dairy products.
Foremost Farms is a Wisconsin member-owned business association headquartered in Baraboo, Wis., the members of which are dairy farmers. In 2008, its Consumer Products Division had net sales of $233.7 million. Prior to Dean Foods’ acquisition of its Consumer Products Division, Foremost Farms processed its members’ raw milk at its plants in DePere and Waukesha, Wis., as well as at other facilities.
Justice Department Announces Release of New InformationOnline as Part of President’s Open Government InitiativeRead the Press Release
As part of the Obama Administration’s Open Government Initiative, and in compliance with the Open Government Directive issued by the Office of Management and Budget (OMB), Associate Attorney General Tom Perrelli today announced the online publication of three high-value sets of data not previously made available by the Department of Justice. The new data sets include statistics on crime victimizations, information about compensation for radiation victims, and final reports from federal bankruptcy trustees.
This information is being posted on the department’s Web site and is also available on www.Data.gov . A number of other department components are in the process of identifying and publishing newly available data in machine-readable format, the department said.
The department is releasing information not previously available online to increase accountability and responsiveness; improve public knowledge of the department’s operations; create economic opportunity; and respond to need and demand as identified through public consultation.
"We are committed to achieving the President’s goal of making this the most transparent Administration in history," Perrelli said. "The information we are making available today represents another step in our ongoing commitment toward becoming a more open and accessible Justice Department to the public, the media, academia and others interested in what we do every day."
The three data sets posted today are:
Bureau of Justice Statistics Criminal Victimization (data for 2008)
The survey enables the Bureau of Justice Statistics (BJS) to estimate the likelihood of victimization by rape, sexual assault, robbery, assault, theft, household burglary and motor vehicle theft for the population as a whole, as well as for different segments of the population, such as women, the elderly, members of various racial groups, city dwellers or others.
The report is based on the National Criminal Victimization Survey, the nation’s primary source of information on criminal victimization. Each year, data are obtained from a nationally representative sample of 76,000 households comprising nearly 135,300 persons on the frequency, characteristics and consequences of criminal victimization in the United States.
The Civil Division’s Radiation Exposure Compensation Program
The Radiation Exposure Compensation Program (RECA) will make available three new reports not currently publicly available on line:
- RECA claims as of Jan. 13, 2010 by state/country. The data reflect the number of claims filed, pending, denied, approved, and compensation awarded, by state or country.
- Outreach log since FY 2006. Each time RECA staff attempt to reach an individual, that action is recorded as an "outreach event," with numbers of staff and hours detailed.
- RECA Summary Report FY 1992-2010, containing two charts; one a count of claims received and the second reflecting the number of claims awarded and denied, with award amounts for each fiscal year since 1992.
RECA was passed by Congress in 1990 to provide partial restitution for individuals who developed serious illnesses after exposure to radiation released during atmospheric nuclear tests or after employment in the uranium industry. The program enables claimants to use existing records so that their claims can be resolved in a reliable, objective and non-adversarial manner, with little administrative cost to the person filing the claim.
The U.S. Trustee Program
The U.S. Trustee Program (USTP) is making available certain final reports filed by trustees after a Chapter 7 case with assets is closed. These reports contain the disposition of assets, distribution of funds to creditors, and administrative expenses for the calendar years 2000 to 2008. For privacy reasons, the files will not identify case numbers or the names of debtors or trustees. The USTP is also releasing information on instances where interpreter services were used.
USTP oversees the administration of federal bankruptcy cases, including oversight of approximately 1,100 private trustees who administer Chapter 7 cases. Chapter 7 trustees collect and liquidate non-exempt assets and distribute funds to creditors in accordance with the Bankruptcy Code. In FY 2008, Chapter 7 trustees administered approximately 69,000 Chapter 7 asset cases that generated more than $3 billion in funds.
In addition to the above data sets, other department components have identified and will publish additional high-value data sets including:
Community Oriented Policing Services (COPS) will publish FY 2009 grant award data for the Secure Our Schools (SOS), including number of applicants, number of awards and list of successful applicants with award amount, schools served and items requested. COPS anticipates posting the new data within a few days.
The Federal Bureau of Prisons (BOP) will post the following new statistical graphs and table: graphs showing for each year and month the count and rate of incidents of assault on both staff and other inmates. The graphs are updated monthly and cover each month for the previous five years. BOP will also provide a table showing the count of inmates who have court-imposed financial responsibilities and their current status in meeting them; updated monthly.
BJS is also releasing three additional data files:
- National Corrections Reporting Program 2004; the program annually collects administrative information on adults admitted to and released from prison, and on parole entries and discharges, in participating jurisdictions.
- Census of Jails 2006; the census of jails is conducted every five to seven years, and provides information on one-day counts plus average daily populations, staffing and programs of individual jails
- Annual Survey of Jails 2007; the annual survey of jails collects data from a nationally representative sample of local jails on jail inmate populations, jail capacity and other related information. The 2007 data set marks the first release of facility-level data.
USTP will release next month summary statistical tables on civil enforcement activity, which provide comparison data for the Fiscal Years 2004 to 2009.
Jury Convicts Detroit Area Doctor of Health Care Fraud ConspiracyRead the Press Release
Troy, Mich., physician Toe Myint was convicted today by a Detroit jury of conspiracy to commit health care fraud in a $4.2 million Medicare Fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan; Special-Agent-in-Charge Andrew G. Arena of the FBI’s Detroit Field Office; and Daniel R. Levinson, Inspector General of the Department of Health and Human Services (HHS).
After a week-long trial in Detroit, the jury convicted Dr. Myint of one count of conspiracy to commit health care fraud. The conspiracy count carries a maximum prison sentence of 10 years. Dr. Myint was acquitted on charges of filing three specific false claims. Prior to trial, 10 of Dr. Myint’s co-conspirator defendants pleaded guilty to a variety of Medicare fraud related charges.
Evidence at trial showed that Dr. Myint was the physician at Sacred Hope Center, a Southfield, Mich., clinic that purported to specialize in providing infusion therapy to Medicare beneficiaries. Evidence established that Dr. Myint ordered medications for patients that he knew were not needed. Specifically, Dr. Myint signed patient files ordering infusions and injections of corticosteroids and other medications, despite being aware that the patients did not need the drugs and that Medicare was being billed for the drugs.
Trial evidence established that patients were not referred to Sacred Hope Center or Dr. Myint by their real physicians for any legitimate purpose, but rather were recruited to come to the clinic through the payment of kickbacks. In the six months between September 2006 and March 2007, Dr. Myint and his co-conspirators caused approximately $4.2 million to be submitted to the Medicare program for services that were unnecessary and never provided.
The case was prosecuted by Senior Trial Attorney John K. Neal and Trial Attorney Benjamin D. Singer of the Criminal Division’s Fraud Section. The FBI and the HHS Office of Inspector General (HHS-OIG) conducted the investigation. The case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.
Since their inception in March 2007, Strike Force operations in seven districts have obtained indictments of 508 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 HEAT team, go to: www.stopmedicarefraud.gov.
Former U.S. Army Officer Sentenced to 42 Months in Prison for<br /> Bribery and Weapons ConspiracyRead the Press Release
Michael Wheeler, a former lieutenant colonel in the U.S. Army Reserves, was sentenced late yesterday to 42 months in prison for his participation in a wide-ranging bribery conspiracy involving the U.S. government, the Republic of Iraq and the Coalition Provisional Authority - South Central Region (CPA-SC) in Al-Hillah, Iraq, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division. Wheeler was also sentenced by U.S. District Court Judge Mary L. Cooper for the District of New Jersey - Trenton Division to serve three years of supervised release following his prison term and to pay $1,200 in restitution.
Wheeler, 50, of Amherst Junction, Wis., was charged in a 25-count indictment unsealed on Feb. 7, 2007, along with former U.S. Army Colonel Curtis G. Whiteford, former Lt. Col. Debra M. Harrison, and civilians William Driver and Seymour Morris Jr., with various crimes related to a scheme to defraud the CPA-SC. Wheeler was an adviser and project officer for CPA reconstruction projects.
According to testimony at trial, Wheeler, along with Whiteford and Harrison, conspired from December 2003 to December 2005 with at least three others—Robert Stein, at the time the comptroller and funding officer for the CPA-SC; Philip H. Bloom, a U.S. citizen who owned and operated several companies in Iraq and Romania; and former U.S. Army Lt. Col. Bruce D. Hopfengardner—to rig the bids on contracts being awarded by the CPA-SC so that more than 20 contracts were awarded to Bloom. In total, Bloom received approximately $8 million in rigged contracts. Testimony revealed that Bloom, in return, provided Whiteford, Harrison, Wheeler, Stein, Hopfengardner and others with more than $1 million in cash, SUVs, sports cars, a motorcycle, jewelry, computers, business class airline tickets, liquor, promise of future employment with Bloom and other items of value.
Bloom admitted he laundered more than $2 million in currency that Whiteford, Harrison, Wheeler, Hopfengardner, Stein and others stole from the CPA-SC that had been designated for the reconstruction of Iraq. Bloom then used his foreign bank accounts in Iraq, Romania and Switzerland to send some of the stolen money to Harrison, Stein, Hopfengardner and other Army officials in return for them awarding contracts to Bloom and his companies.
"These defendants betrayed the trust and confidence placed in them by both the U.S. government and the people of Iraq," said Assistant Attorney General Lanny A. Breuer. "By using their positions to line their own pockets, they made it more difficult for others to carry out the legitimate goals of rebuilding and reconstruction. We will continue to vigorously investigate and prosecute this kind of corruption, wherever it occurs and no matter who commits it."
At trial, Wheeler was convicted of conspiracy to commit bribery, honest services wire fraud, the interstate transport of stolen property (ITSP) and the possession of unregistered firearms. Whiteford was convicted at trial of conspiracy to commit bribery and ITSP, and Driver pleaded guilty to money laundering on Aug. 5, 2009. Morris was acquitted.
"This sentence illustrates that even military officers are not above the law and will be brought to justice for their participation in defrauding efforts to support Iraqi reconstruction, no matter how complex the fraud scheme," said Acting Assistant Director in Charge John G. Perren of the FBI’s Washington Field Office.
"The sentencing of Michael Wheeler marks the culmination of SIGIR’s lengthy investigation into a wide-ranging bribery, contract fraud, and kickback scheme that occurred in Hilla, Iraq, during 2003-2004" said Stuart W. Bowen Jr., the Special Inspector General for Iraq Reconstruction (SIGIR). "In concert with our partner law enforcement agencies, SIGIR will continue to pursue vigorously its many other ongoing cases to hold accountable those who took advantage of the Iraq reconstruction program to criminally enrich themselves."
"Wheeler and the others abused their positions of trust to line their own pockets," said Homeland Security Assistant Secretary for Immigration and Customs Enforcement (ICE) John Morton. "We hope these sentences deter others from attempting to scheme the government for their own advantage ."
"As a project officer of government contracts, Mr. Wheeler was entrusted to oversee contractors and ensure taxpayer money was spent wisely," said Victor S.O. Song, Chief, Internal Revenue Service Criminal Investigation. "He broke that trust to enrich himself at the expense of the American taxpayers. IRS Criminal Investigation is committed to exposing public corruption at any level by following the money from the crime to the criminal."
On Jan. 29, 2007, co-conspirator Stein was sentenced to nine years in prison for related charges of conspiracy, bribery and money laundering, as well as weapons possession charges, for his role in the same scheme. Stein was also ordered to forfeit $3.6 million for his role in the bribery and money laundering scheme.
On Feb. 16, 2007, co-conspirator Bloom was sentenced to 46 months in prison for related charges of conspiracy, bribery and money laundering for his role in the scheme. Bloom was also ordered to forfeit $3.6 million for his role in the bribery and money laundering scheme.
On June 25, 2007, Hopfengardner was sentenced to 21 months in prison for conspiracy and money laundering related to this scheme. Hopfengardner was also ordered to forfeit $144,500.
On Dec. 8, 2009, Whiteford was sentenced to 60 months in prison for conspiring to commit bribery and ITSP. He was also ordered to forfeit the things of value he received from Stein and others, including a Breitling watch, a Toshiba laptop computer and $10,000 in cash.
On June 4, 2009, Harrison was sentenced to 30 months in prison and ordered to pay $366, 640 in restitution. Harrison pleaded guilty on July 28, 2008, admitting that she took more than $300,000 from the CPA-SC while she was deployed there and that she used some of the stolen money to make improvements at her home. Harrison also admitted that she received a Cadillac Escalade from Bloom and that she helped to move unregistered firearms from a hotel in North Carolina to Stein’s home.
On Dec. 10, 2009, Driver was sentenced to six months home confinement and ordered to pay $36,000 in restitution for his role in laundering portions of stolen CPA money brought from Iraq back into the United States by Harrison, his wife.
These cases are being prosecuted by Trial Attorneys John P. Pearson and Kevin Driscoll of the Criminal Division’s Public Integrity Section, as well as Trial Attorney Ann C. Brickley. The cases are being investigated by the IRS Criminal Investigation; the Special Inspector General for Iraq Reconstruction; ICE; and the FBI-Washington Field Office.
Defense Department Official Sentenced to 36 Months for Espionage, False Statement ChargesRead the Press Release
James Wilbur Fondren Jr. was sentenced today to 36 months in prison, followed by two years of supervised release, for charges involving espionage and making false statements to the FBI.
David Kris, Assistant Attorney General for National Security; Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia; and John Perren, Acting Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement.
Fondren, 62, worked at the Pentagon and, from August 2001 through Feb. 11, 2008, was the Deputy Director, Washington Liaison Office, U.S. Pacific Command (PACOM). He held a top secret security clearance, worked in a Sensitive Compartmentalized Information Facility (SCIF) and had a classified and unclassified computer at his cubicle.
On Sept. 25, 2009, Fondren was convicted by a jury of unlawful communication of classified information by a government employee and two counts of making false statements. According to court documents and evidence at trial, Fondren provided certain classified Defense Department documents and other information to Tai Shen Kuo, a naturalized U.S. citizen from Taiwan from approximately November 2004, to Feb. 11, 2008. Fondren was aware that Kuo had maintained a close relationship with an official of the People’s Republic of China (PRC), to whom Kuo introduced Fondren during a trip the two took to the PRC in March 1999. As Kuo well knew, this individual was an official of the PRC government. Fondren and the PRC official exchanged more than 40 e-mail messages between March 1999 and November 2000.
Fondren was found to have provided classified information through Kuo, under the guise of consulting services, using a business that had Kuo as its sole customer. Fondren would incorporate this information into "opinion papers" that he sold to Kuo. He would also provide Kuo with sensitive, but unclassified Defense Department publications.
The jury also found Fondren guilty of falsely representing to the FBI that everything he wrote to Kuo in his opinion papers was based on information from press and media reports and from his experience and that he had not given Kuo a draft copy of an unclassified document on military strategy.
This investigation was conducted by the FBI. The Air Force Office of Special Investigations (OSI) provided substantial assistance and cooperation throughout the course of the investigation.
The prosecution is being handled by Assistant U.S. Attorneys Neil Hammerstrom and James P. Gillis from the U.S. Attorney’s Office for the Eastern District of Virginia and Trial Attorney Ryan Fayhee from the Counterespionage Section of the Justice Department’s National Security Division.
Attorney General Announces $11 Million from Zylon Settlement Set Aside for Bulletproof VestsRead the Press Release
Today at the National Sheriffs’ Association Winter Conference, Attorney General Eric Holder announced that the Department of Justice will set aside $11 million from settlements with companies that produced Zylon vests to help purchase approximately 26,000 additional bullet-resistant vests through the Bulletproof Vest Partnership (BVP) Program.
“There is nothing more basic, or more important, to our work than keeping our law enforcement officers safe,” Attorney General Holder said. “We are dedicating millions of dollars to the Bulletproof Vest Partnership Program because it’s vital that we protect the people protecting us every day.”
Since 2007, the body armor industry has paid the United States more than $54 million to resolve allegations that it violated the False Claims Act by knowingly manufacturing and selling defective Zylon bulletproof vests. Of this amount, $11 million will be returned to the BVP Program to help purchase approximately 26,000 additional bullet-resistant vests, based on an average price of $800 per vest.
The BVP Program, administered by the Office of Justice Programs’ (OJP) Bureau of Justice Assistance (BJA), protects the lives of law enforcement officers by helping state, local, and tribal governments equip their law enforcement officers with bullet-resistant vests. Since 1999, over 13,100 jurisdictions have participated in the BVP Program, with more than $277.6 million in federal funds used to support the purchase of more than 805,000 vests.
BVP funding covers 50 percent of total vest costs for rural law enforcement agencies with community populations of fewer than 100,000 residents. For larger jurisdictions, the program provides up to 50 percent of funding, depending on the annual appropriation from Congress and the amount of funds requested by the rural jurisdictions that apply.
BVP funds may be used to purchase only vests that meet the minimum performance standards established by OJP’s National Institute of Justice (NIJ) Ballistic Resistance of Body Armor Standard. The NIJ Standard, updated in July 2008, establishes minimum performance requirements and test methods for the ballistic resistance of personal body armor designed to protect the torso against gunfire.
According to the International Association of Chiefs of Police/DuPont Kevlar Survivors' Club, since 1987 there have been over 3,000 recorded cases where individuals working in law enforcement have survived both ballistic and non-ballistic incidents because they were wearing body armor.
For additional information about the BVP Program and the NIJ Ballistic Resistance of Body Armor Standard visit: http://www.ojp.usdoj.gov/bvpbasi/ .
Wyoming Used Car Dealer Convicted in Federal Court for Odometer TamperingRead the Press Release
WASHINGTON – After a two-week trial, a federal jury in Cheyenne, Wyo., today convicted Randy Lee (aka Jimmy Lee) on eleven of fourteen felony counts with which he was charged, the Justice Department announced. The jury convicted Lee of conspiracy, five counts of odometer tampering, and five counts of securities fraud related to fraudulent motor vehicle titles. The jury acquitted the Cheyenne resident of two counts of providing false odometer certifications and one count of mail fraud. According to the charges and the evidence presented at trial, from as early as 2002 and through at least 2006, the defendant defrauded buyers of used motor vehicles by misrepresenting the mileage of the vehicles when sold.
On July 23, 2009, a Casper, Wyo., grand jury returned an indictment charging Lee and a co-defendant, Jay Lee, in a 28-count indictment alleging the above offenses, all of which related to an odometer tampering scheme. Jay Lee remains at large. Anyone with information on his whereabouts is asked to contact the law enforcement officials identified below. Sentencing for Randy Lee has been scheduled for April 2, 2010.
The indictment alleged that the defendants, who bought and sold vehicles on behalf of a Cheyenne used-auto dealership, purchased pickup trucks in Wyoming and surrounding states, rolled back the odometers to false, lower mileages, obtained fraudulent Wyoming titles, and then resold the trucks to auto dealers and consumers in Wyoming and Colorado. The odometers were often rolled back over 100,000 miles. While some of the vehicles were sold with notice of an odometer discrepancy, none were sold with information about the size of the discrepancy.
"For most people, a car is one of the biggest investments they own, aside from their home. Dishonest dealers who hide a vehicle’s high mileage cheat consumers out of their hard-earned money, impede intelligent buying choices and raise safety concerns by misrepresenting the true condition of the vehicles they sell," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "This sort of financial fraud strikes hard at those who can least afford it, and we will continue vigorously to prosecute those engaging in these illegal practices."
Assistant Attorney General West thanked the agencies which worked collaboratively to achieve this result. The underlying investigation was conducted by the Wyoming Department of Transportation’s Office of Compliance and Investigation and the U.S. Department of Transportation’s National Highway Traffic Safety Administration in Denver. The case was prosecuted by the Department of Justice’s Office of Consumer Litigation.
United States Announces Two Major Clean Air Act New Source Review Settlements at 28 Industrial Plants NationwideRead the Press Release
WASHINGTON—The United States today filed two major Clean Air Act settlements to reduce air emissions from container glass and Portland cement plants throughout the country, announced Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division and Cynthia Giles, Assistant Administrator for the U.S. Environmental Protection Agency’s (EPA) Office of Enforcement and Compliance Assurance.
The settlements cover 15 U.S. plants owned by Saint-Gobain Containers Inc., the nation’s second largest container glass manufacturer, and all 13 U.S. plants owned by the Lafarge Company and two subsidiaries, the nation’s second largest manufacturer of Portland cement. These settlements are the first system-wide settlements for these sectors under the Clean Air Act and require pollution control upgrades, acceptance of enforceable emission limits and payment of civil penalties.
The facilities are estimated to reduce a combined 41,000 tons of sulfur dioxide (SO2), nitrogen oxides (NOx), and particulate matter (PM) each year. SO2, NOx and PM can trigger respiratory difficulties and asthma, and environmental harms such as acid rain, visibility impairments and water quality impacts.
"These two settlements are excellent examples of businesses working with government to achieve compliance at their facilities around the country, which will benefit the health of local communities and the environment," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "Enforcing the Clean Air Act's new source review program is a priority, not just in the coal-fired power plant industry, but also in industries like cement and glass manufacturing that have been identified as major sources of air pollution. Companies in these industries should strongly consider the benefits of these types of settlements as we intend to aggressively enforce compliance with the law."
"Consistent with Administrator Lisa P. Jackson’s seven priorities, these settlements call for tough new controls and innovative technologies to cut down on harmful air emissions that threaten the health of millions of Americans," said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. "I am also pleased that 17 states and two local governments have joined as signatories to these actions."
These settlements are part of the federal government’s focus on improving compliance among industries that emit significant amounts of air pollution, including cement manufacturing, glass manufacturing, acid production and coal-fired power. The settlements also reflect the seven key themes EPA Administrator Lisa P. Jackson outlined last week to guide EPA’s work. Installing tough new controls and technology at these facilities will greatly reduce air pollution in the communities that are downwind of the facilities covered by the settlements. The settlements also build on strong state partnerships as 17 states and two local air control agencies are joining in the settlements.
Saint-Gobain Containers
Saint-Gobain Containers Inc. of Muncie, Ind., has agreed, in a consent decree filed today in federal court in Seattle, to install pollution control equipment at an estimated cost of $112 million to reduce emissions of NOx, SO2 and PM by approximately 6,000 tons each year. The settlement covers 15 plants in 13 states. Two of the 15 plants have been closed by Saint-Gobain for independent business reasons.
This is the federal government’s first nationwide Clean Air Act settlement with a glass manufacturer that covers all of a company’s plants. The states of Illinois, Indiana, Louisiana, Commonwealth of Massachusetts, Missouri, North Carolina, Oklahoma, Commonwealth of Pennsylvania, Washington and Wisconsin, as well as the Puget Sound Clean Air Agency and the San Joaquin Valley Unified Air Pollution Control District, joined in today’s settlement.
In addition, as part of the settlement, Saint-Gobain has agreed to pay a $2.25 million civil penalty to resolve its alleged violations of the Clean Air Act’s new source review regulations. Of the $2.25 million civil penalty, Saint-Gobain will pay $1.15 million to the United States and $1.1 million to the 10 states and two local regulatory agencies that joined the case.
The settlement covers the following 15 facilities located in the following cities: Burlington, Wis. (two furnaces); Carteret, N.J. (one furnace) (closed); Dolton, Ill. (three furnaces); Dunkirk, Ind. (two furnaces); Henderson, N.C. (two furnaces); Lincoln, Ill. (one furnace); Madera, Calif. (one furnace); Milford, Mass. (two furnaces); Pevely, Mo. (two furnaces); Port Allegany, Pa.(three furnaces) (one closed); Ruston, La. (two furnaces); Sapulpa, Okla.(three furnaces); Seattle (four furnaces); Waxahachie, Texas (one furnace) (closed); and Wilson, N.C. (two furnaces).
Saint-Gobain has agreed to implement pollution controls, including the installation of the first-ever selective catalytic reduction (SCR) system at a container glass plant in the U.S. Saint-Gobain will also install continuous emission monitoring systems (CEMS) at all of their glass plants.
In the complaint filed concurrently with today’s settlement, the federal government and the 10 state and two local governments alleged that the company constructed new glass furnaces or modified existing ones over the course of two decades without first obtaining pre-construction permits and installing required pollution control equipment. The alleged violations were discovered after an EPA investigation that included inspections, file reviews, information requests, and the review and analysis of data obtained from the company. The Clean Air Act requires major sources of air pollution to obtain such permits before making changes that would result in a significant increase in emissions of any pollutant.
The consent decree, lodged today in the U.S. District Court for the Western District of Washington, is subject to a 30-day public comment period and approval by the federal court.
Lafarge North America
Lafarge North America Inc., based in Herndon, Va., and two of its subsidiaries have agreed in a consent decree filed in federal court in Benton, Ill., to install and implement control technologies at an expected cost of up to $170 million to reduce emissions of NOx by more than 9,000 tons each year and SO2 by more than 26,000 tons per year at their cement plants
The states of Alabama, Illinois, Iowa, Kansas, Michigan, Missouri, New York, Ohio and the Commonwealth of Pennsylvania Department of Environmental Protection, the South Carolina Department of Health and Environmental Control, the Washington State Department of Ecology, the Oklahoma Department of Environmental Quality, and the Puget Sound Clean Air Agency are joining the settlement.
In addition, as part of the settlement, Lafarge has agreed to pay a $5 million civil penalty to resolve alleged violations of the Clean Air Act’s new source review regulations. Of the $5 million civil penalty, Lafarge will pay $3.4 million to the United States and $1.7 million to the 13 participating states and agencies. The facilities included in the settlement are located in or near: Whitehall, Pa.; Ravena, N.Y.; Calera, Ala.; Atlanta; Harleyville, S.C.; Paulding, Ohio; Alpena, Mich.; Tulsa, Okla.; Sugar Creek, Mo.; Buffalo, Iowa; Fredonia, Kan.; Grand Chain, Ill. and Seattle.
Lafarge has agreed to install the first-ever SCR system at a cement plant in the United States. In addition, Lafarge has also agreed to install seven selective non-catalytic reduction (SNCR) systems at long dry cement kilns. This is among the first application of this technology to this type of kiln in the United States. Lafarge will also install CEMS at all of their cement kilns.
In the complaint filed concurrently with today’s settlement, the United States alleged that Lafarge and its subsidiaries, or their predecessors, modified one or more of each of their facilities without first obtaining pre-construction permits and installing required pollution control equipment as required by the Clean Air Act. These violations were discovered as a result of EPA investigations and review of company submitted data. The states and agencies joining in the settlement have made similar allegations in their complaint, which is filed separately.
The consent decree, lodged today in the U.S. District Court for the Southern District of Illinois, is subject to a 30-day public comment period and approval by the federal court.
Nitrogen oxides are one of the main ingredients involved in the formation of ground-level ozone, which can trigger serious respiratory problems. They react to form nitrate particles, acid aerosols, as well as nitrogen dioxides (NO2), which also cause respiratory problems. They also contribute to formation of acid rain, nutrient overload that deteriorates water quality, the creation of atmospheric particles that cause visibility impairment most noticeable in national parks, react to form toxic chemicals and contribute to climate change.
Exposure to SO2 can aggravate asthma, cause respiratory difficulties, and result in emergency room visits and hospitalization. People with asthma, children and the elderly are especially vulnerable to SO2’s effects. Exposure to particulate matter is also linked to respiratory problems like asthma and other adverse health effects.
Copies of the consent decrees are available on the Justice Department Web site at http://www.justice.gov/enrd/Consent_Decrees.html.
State Department Employee Sentenced<br /> for Illegally Accessing Confidential Passport FilesRead the Press Release
A State Department employee was sentenced today to 12 months of probation for illegally accessing 70 confidential passport application files, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division. Susan Holloman, 58, of Washington, D.C., was also ordered by U.S. Magistrate Judge Alan Kay in the District of Columbia to perform 75 hours of community service. On Nov. 9, 2009, Holloman pleaded guilty to a one-count criminal information charging her with unauthorized computer access.
According to court documents, Holloman has worked full-time for the State Department since November 1980, as a file assistant within the Bureau of Consular Affairs. In pleading guilty, Holloman admitted that she had access to official State Department computer databases in the regular course of her employment, including the Passport Information Electronic Records System (PIERS), which contains all imaged passport applications dating back to 1994. The imaged passport applications on PIERS contain, among other things, a photograph of the passport applicant as well as certain personal information including the applicant’s full name, date and place of birth, current address, telephone numbers, parent information, spouse’s name and emergency contact information. These confidential files are protected by the Privacy Act of 1974, and access by State Department employees is strictly limited to official government duties.
In pleading guilty, Holloman admitted that between Feb. 13 and Dec. 5, 2007, she logged onto the PIERS database and repeatedly searched for and viewed the passport applications of 70 celebrities and their families, actors, professional athletes, musicians and other individuals identified in the press. Holloman admitted that she had no official government reason to access and view these passport applications, but that her sole purpose in accessing and viewing these passport applications was idle curiosity.
To date, nine current or former State Department employees or contractors, including Holloman, have pleaded guilty in this continuing investigation. On Sept. 22, 2008, Lawrence C. Yontz, a former Foreign Service Officer and intelligence analyst, pleaded guilty to unlawfully accessing nearly 200 confidential passport files. Yontz was sentenced on Dec. 19, 2008, to 12 months of probation and ordered to perform 50 hours of community service. On Jan. 14, 2009, Dwayne F. Cross, a former administrative assistant and contract specialist, pleaded guilty to unlawfully accessing more than 150 confidential passport files. Cross was sentenced on March 23, 2009, to 12 months of probation and ordered to perform 100 hours of community service. On Jan. 27, 2009, Gerald R. Lueders, a former Foreign Service Officer, watch officer and recruitment coordinator, pleaded guilty to unlawfully accessing more than 50 confidential passport files. Lueders was sentenced on July 8, 2009, to 12 months of probation and ordered to pay a $5,000 fine.
In addition, on July 10, 2009, William A. Celey, a file assistant, pleaded guilty to unlawfully accessing more than 75 confidential passport files. Celey was sentenced on Oct. 23, 2009, to 12 months of probation and ordered to perform 50 hours of community service. On Aug. 26, 2009, Karal Busch, a former citizens services specialist, pleaded guilty to unlawfully accessing more than 65 confidential passport files. Busch was sentenced on Dec. 15, 2009, to 24 months of probation and ordered to perform 25 hours of community service. On Aug. 17, 2009, Kevin M. Young, a contact representative, pleaded guilty to unlawfully accessing more than 125 confidential passport files. Young was sentenced on Dec. 9, 2009, to 12 months of probation and ordered to perform 100 hours of community service. On Oct. 28, 2009, Yvette M. Burrison, a passport specialist, pleaded guilty to unlawfully accessing nearly 100 confidential passport files. A sentencing date has not yet been scheduled for Burrison. On Dec. 11, 2009, Debra Sue Brown, a file assistant, pleaded guilty to unlawfully accessing more than 60 confidential passport files. Brown is scheduled to be sentenced on Mar. 23, 2010.
These cases are being prosecuted by Trial Attorney Armando O. Bonilla of the Criminal Division's Public Integrity Section. The cases are being investigated by the State Department Office of Inspector General.
Smithfield Foods and Premium Standard Farms Charged with Illegal Premerger CoordinationRead the Press Release
WASHINGTON – The Department of Justice today announced a settlement with Smithfield Foods Inc. and Premium Standard Farms LLC that requires the companies to pay a total of $900,000 in civil penalties for violating premerger waiting period requirements.
The Department’s Antitrust Division today filed a civil antitrust lawsuit in U.S. District Court for the District of Columbia, along with the proposed settlement that, if approved by the court, would resolve the lawsuit.
According to the complaint, after Smithfield and Premium Standard announced their proposed merger in September 2006, Smithfield exercised operational control over a significant segment of Premium Standard’s business without observing the premerger waiting period requirement in violation of federal antitrust law. Such conduct, commonly known as "gun jumping" violates the Hart-Scott-Rodino (HSR) Act of 1976.
After entering into the merger agreement, Premium Standard stopped exercising its independent business judgment with respect to hog procurement. Instead, Premium Standard sought Smithfield’s consent for all of the hog procurement contracts that arose during the waiting period, providing Smithfield with the contract terms, including price, quantity and duration. The hog procurement contracts were necessary to Premium Standard’s ongoing business and were entered into in the ordinary course. Requiring a buyer’s approval of the seller’s ordinary course contracts can prematurely transfer operational control, violating premerger notification requirements, the Department said.
"Merging companies must remain independent in their ordinary business operations, including purchasing decisions, until the end of the premerger waiting period," said Christine Varney, Assistant Attorney General in charge of the Department’s Antitrust Division. "Observing the waiting period ensures that the marketplace remains competitive which ultimately benefits consumers."
The HSR Act requires companies planning mergers or acquisitions that meet certain threshold requirements to file premerger notifications with the Department of Justice and Federal Trade Commission. The Act gives the federal antitrust agencies an opportunity before the parties merge to investigate the proposed transactions and determine whether they would violate the antitrust laws. When the HSR Act applies, it requires that companies observe a waiting period before the acquisition occurs. A purpose of the waiting period is to preserve the companies as independent companies in case the proposed merger or acquisition is blocked so that the competition that the antitrust laws protect does not suffer.
Federal courts can assess civil penalties for premerger notification or waiting period violations under the HSR Act in lawsuits brought by the Department of Justice. During the time period relevant to this case, the maximum civil penalty for a party in violation of the HSR Act is $11,000 for each day it is in violation. The Department’s complaint does not challenge the underlying merger, which the companies announced they had closed on May 7, 2007.
Smithfield is headquartered in Smithfield, Va. Premium Standard, now a subsidiary of Smithfield, maintains its principal offices in Princeton, Mo.
Northern Virginia Business Owner Pleads Guilty<br /> to Failure to File Tax ReturnRead the Press Release
WASHINGTON - Dallas S. Hale of Reston, Va., pleaded guilty today to willful failure to file a tax return, the Justice Department and Internal Revenue Service (IRS) announced. Hale appeared before U.S. Magistrate Judge Theresa C. Buchanan in Alexandria, Va.
According to court documents and statements made at the change of plea hearing, Hale owns and operates Dalcorp Advisory Group, a consulting business that helps private businesses secure contracts with the government. Although Hale received $328,440 in income during 2004 as a result of services he rendered through Dalcorp, he failed to timely file a federal income tax return for tax year 2004. The tax loss associated with the charge to which Hale pleaded guilty is $42,770.
Judge Buchanan scheduled Hale’s sentencing for April 27, 2010. Hale faces a maximum sentence of one year in prison and a maximum fine of $100,000.
Acting Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division thanked the U.S. Attorney’s Office for the Eastern District of Virginia for their assistance in the prosecution of the case. Acting Assistant Attorney General DiCicco commended the investigative efforts of the IRS agents involved in the case, as well as Assistant U.S. Attorney Gene Rossi and Tax Division Trial Attorney Tracy Gostyla who are prosecuting the case.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.
Columbus Accountant and Realtor Plead Guilty<br /> to Mortgage Fraud & Obstruction of Justice ConspiraciesRead the Press Release
WASHINGTON – Dennis G. Sartain of Hilliard, Ohio; and Bonnie Helt, of Columbus, Ohio, pleaded guilty today to conspiring to commit mortgage fraud, money laundering and obstruction of justice, the Justice Department and Internal Revenue Service (IRS) announced. Sartain, the accountant for co-defendant Thomas Parenteau, pleaded guilty to one count of conspiring to defraud the United States by impeding and impairing the IRS, one count of conspiring to commit money laundering and one count of conspiring to obstruct justice. Helt, a real estate agent for co-defendant Parenteau, pleaded guilty to one count of conspiring to commit bank and wire fraud and one count of conspiring to obstruct justice. Parenteau is scheduled to begin trial on March 8, 2010.
In April 2009, Sartain, Helt and Parenteau were charged with tax fraud, bank and wire fraud, money laundering, and obstruction of justice in a superseding indictment. According to the indictment and statements made at the plea hearing, Sartain conspired with Parenteau and others to file false individual income tax returns for Pamela McCarty with the IRS for the tax years 2000 through 2003. These four tax returns falsely reported substantial losses and generated tax refunds from the IRS and state of Ohio of over $800,000 in total. McCarty, who was Parenteau’s mistress, gave a substantial portion of the fraudulent tax refunds to Parenteau or his nominees.
According to the indictment and statements made at the plea hearing, Sartain conspired with Parenteau, McCarty and others to prepare a $4.5 million fictitious loan application to refinance to improve a 30,000 square foot home. As a result of the fraudulent loan documents, McCarty obtained nearly $4.5 million from one bank and an additional $1.5 million from a second bank, and she transferred the money to Parenteau. From March 2004 through September 2006, Parenteau and Sartain dispersed in excess of $1 million of the loan proceeds back to McCarty by disguising the payments as payroll checks from Your Home Source (YHS) and JSS Investments, rental payments and consulting payments from YHS and other miscellaneous payments. On Jan. 31, 2007, Parenteau and his wife refinanced the 30,000 square foot property and received a $12 million loan, which was used in part to pay off McCarty's existing obligations at the two banks.
According to the indictment and statements made at the plea hearing, Helt admitted that from 2005 through 2007, she, Parenteau, and others negotiated and participated in real estate deals in which they sold luxury homes for a falsely inflated purchase price from the builder in exchange for an undisclosed or disguised kickback. In many of the transactions, the buyers misrepresented their income and assets in order to obtain financing of the inflated purchase price. The buyers and sellers in the transactions attempted to justify the inflated purchase prices by creating false work change orders and addendums which created the appearance that the inflated price represented additional substantial work to be completed on the homes. No such agreement was actually intended by any party. Further, those documents were not disclosed to the lenders. The object of each transaction was to use the loan proceeds in excess of the actual purchase price in order to fund hundreds of thousands of dollars in kickback payments to the buyers. The loans associated with several of the real estate purchases have gone into default.
According to the indictment and statements made at the plea hearing, both Sartain and Helt admitted to conspiring with Parenteau and others to obstruct the IRS criminal investigations of Sartain, Parenteau and others. Sartain and Helt admitted to altering or destroying records as well as lying to federal and local law enforcement agents.
The U.S. District Court Judge Michael H. Watson has not scheduled sentencing date. Sartain faces a maximum sentence of 30 years in prison and a maximum fine of $1 million or twice the monetary loss or gain from the offense. Helt faces a maximum sentence of 35 years in prison and a maximum fine of $1.25 million or twice the monetary loss or gain from the offense.
John DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, commended the special agents of the IRS Criminal Investigation for the investigation, as well as Tax Division trial attorneys Richard Rolwing, Sean O’Connell and Jessica Nuzzelillo who are prosecuting the case.
Southern California Pipeline Firm to Pay $1.3 Million to Resolve Pyramid Lake Oil DischargesRead the Press Release
WASHINGTON—Pacific Pipeline Systems LLP, a Long Beach, Calif.-based oil transport company, has agreed to pay a $1.3 million civil penalty and discontinue the use of a section of pipeline through an unstable section of mountains to resolve a Clean Water Act violation, the Justice Department and U.S. Environmental Protection Agency (EPA) announced today.
"The United States brought this case to protect an important body of water, Pyramid Lake," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "Through this Clean Water Act settlement, we are protecting Pyramid Lake from future oil spills and receiving a significant civil penalty from Pacific Pipeline."
"Californians expect, deserve and are entitled to clean water. When these environmental laws are violated, EPA will always be vigilant," said Jared Blumenfeld, Regional Administrator of EPA’s Pacific Southwest region. "Today’s successful enforcement settlement addresses multiple flaws in Pacific Pipeline’s system and also provides for a substantial penalty."
The agreement resolves a complaint filed in federal court in Los Angeles for the discharge of crude oil into Pyramid Lake, located about 60 miles northwest of downtown Los Angeles. In March 2005, a landslide caused a portion of Pacific Pipeline Systems’ Line 63, an underground pipeline that runs from Bakersfield, Calif., to Los Angeles to fail.
The resulting pipeline break discharged approximately 3,393 barrels of oil, much of which flowed into Pyramid Lake, which is part of the California Aqueduct and is a potential drinking water supply. Water served through the public water system was not impaired by the discharge.
As part of the agreement, Pacific Pipeline Systems will discontinue use of approximately 70 miles of the Line 63 pipeline that travels through the Tehachapi Mountains, portions of which are geologically unstable. The agreement does allow for the reuse of the pipeline. Prior to that, Pacific Pipeline must perform specific actions to relocate the pipeline into more geologically stable areas or improve its resistance to earth movement.
The consent decree, lodged in the U.S. District Court for the Central District of California, is subject to a 30-day public comment period and approval by the federal court. A copy of the consent decree is available on the Justice Department Web site at http://www.justice.gov/enrd/Consent_Decrees.html.
National Dental Management Company Pays $24 Million to Resolve Fraud AllegationsRead the Press Release
WASHINGTON - The United States today announced that it has settled False Claims Act allegations against FORBA Holdings LLC, a dental management company that provides business management and administrative services to 69 clinics nationwide known as "Small Smiles Centers." Under the agreement, FORBA will pay the United States and participating states $24 million, plus interest, to resolve allegations that it caused bills to be submitted to state Medicaid programs for medically unnecessary dental services performed on children insured by Medicaid, which is funded jointly by the federal and state governments. FORBA has further agreed to put in place various remedial measures designed to prevent similar unlawful conduct from occurring in the future. The government’s investigation of individual dentists is ongoing, and FORBA is cooperating with that investigation by providing information about dentists who may have violated professional standards.
The United States alleged that FORBA was liable for causing the submission of claims for reimbursement for a wide range of dental services provided to low-income children that were either medically unnecessary or performed in a manner that failed to meet professionally-recognized standards of care. These services included performing pulpotomies (baby root canals), placing crowns, administering anesthesia (including nitrous oxide), performing extractions, and providing fillings and/or sealants.
"We have zero tolerance for those who break the law to exploit needy children," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "Illegal conduct like this endangers a child’s well-being, distorts the judgments of health care professionals, and puts corporate profits ahead of patient safety."
Assistant Attorney General West praised the collaborative efforts of the federal and state agencies that made this result possible. The Justice Department’s Civil Division and the U.S. Attorneys’ Offices for the District of Maryland, the Western District of Virginia, the District of South Carolina, and the District of Colorado handled these cases. The Civil Division led the nationwide investigation, which was conducted by the Office of Inspector General for the Department of Health and Human Services, the Federal Bureau of Investigation, and the National Association of Medicaid Fraud Control Units.
To resolve the allegations against it, FORBA will pay $24 million, plus interest. The federal share of the civil settlement is $14,285,645, and the states’ Medicaid share is $9,714,355.25. In addition, as part of the settlement, FORBA has agreed to enter into an expansive five-year Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services. The agreement provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that which gave rise to this matter. Specifically, FORBA must engage external reviewers to monitor its quality of care and reimbursement processes. In addition, the chief dental officer must develop and implement policies and procedures to ensure that the Small Smiles clinics provide services consistent with professionally recognized standards of care. FORBA has also agreed to cooperate in the government’s continuing investigation of individual dentists.
"We will not tolerate Medicaid providers who prey on vulnerable children and seek unjust enrichment at taxpayers’ expense," said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. "This settlement reaffirms our commitment to protect the health and well-being of Medicaid beneficiaries and to ensure the integrity of this essential health care program."
"Health care providers must be held accountable when they mistreat patients and overcharge insurers," said Rod J. Rosenstein, U.S. Attorney for the District of Maryland. "We are committed to using our affirmative civil enforcement authority to protect patients from inadequate care and protect governmental health coverage programs from fraudulent charges."
The government’s investigation was initiated by three lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens to sue on behalf of the United States and share in any recovery. These actions are pending in the U.S. District Courts for the District of Maryland, the Western District of Virginia, and the District of South Carolina. As part of today’s resolution, the three whistleblowers will receive payments totaling more than $2.4 million from the federal share of the settlement.
"In this case, FORBA put greed and profits before the well-being of children," said Timothy J. Heaphy, U.S. Attorney for the Western District of Virginia. "It endangered the health and safety of innocent children and defrauded the taxpayer of millions of dollars. Today’s settlement addresses these egregious acts and sends a clear message that Medicaid fraud will be expeditiously addressed by this Department."
This settlement with FORBA 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 Department of Justice 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.
Justice Department Reaches Settlement with Daily Gazette Company and MediaNews Group Inc.Read the Press Release
WASHINGTON – The Department of Justice announced today that it has reached a proposed settlement with the Daily Gazette Company and MediaNews Group Inc. (now known as Affiliated Media Inc.), that requires the companies to restructure their newspaper joint operating arrangement and take other steps to remedy the anticompetitive effects of the 2004 transaction, which was originally challenged by the department in May 2007.
In May 2007, the department filed a civil antitrust lawsuit alleging that the transaction violated the Clayton and Sherman Acts by consolidating ownership and control of the only two local daily newspapers in Charleston, W.Va., under the Daily Gazette Company and eliminating competition between them. Previously, the two newspapers had been separately owned and controlled, while operating within a newspaper joint operating agreement under the Newspaper Preservation Act. The department alleged that the transaction was part of a plan by the Daily Gazette Company to terminate publication of the Charleston Daily Mail and leave Charleston with a single daily newspaper, the Charleston Gazette.
The proposed settlement requires the companies to restructure their 2004 transaction to address the department’s competitive concerns. Upon settling and restructuring their arrangement, MediaNews Group (Affiliated Media Inc.) will regain independent control over the operations of the Charleston Daily Mail and economic incentives to grow the newspaper. Additionally, the settlement requires the companies to offer substantial discounts of the Charleston Daily Mail in order to rebuild its subscriber base and prohibits the Daily Gazette Company from discriminating against the Charleston Daily Mail in circulation, advertising sales, and other key joint activities. The settlement also requires the companies to continue publishing the Charleston Daily Mail as long as it has not failed financially.
"Today’s settlement resolves the department’s antitrust concerns and allows readers to continue to have a choice between two independent local daily newspapers –the Charleston Gazette and the Charleston Daily Mail," said Christine Varney, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.
The department today filed its proposed settlement in U.S. District Court in Charleston, W.Va. If approved by the court, the proposed settlement would resolve the department’s antitrust concerns.
The proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments regarding the proposed final judgment within 60 days of its publication to John R. Read, Chief, Litigation III Section, Antitrust Division, U.S. Department of Justice, 450 5th Street, N.W., Suite 4000, Washington, D.C. 20530 (Tel: 202-307-0468). At the conclusion of the 60-day comment period, the court may enter the proposed final judgment upon a finding that it serves the public interest.
General Reinsurance Corporation Enters into Agreement Resolving Its Role in Fraudulent Reinsurance Transaction with AIGRead the Press Release
WASHINGTON – General Reinsurance Corporation (General Re), a Connecticut–based corporation, has entered into an agreement with the Department of Justice related to its role in a fraudulent scheme from 2000 through 2004 to manipulate AIG’s financial statements, the Justice Department announced. General Re is a subsidiary of Berkshire Hathaway Inc., a company incorporated in Delaware with its principal place of business in Omaha, Neb.
Also as part of the agreement announced today, General Re has agreed to pay $19.5 million to the U.S. Postal Inspection Service Consumer Fraud Fund. General Re previously contributed $5 million to the fund as forfeiture of the illicit $5 million accommodation fee it received from AIG. General Re has agreed to pay $60.5 million through a civil class action settlement to AIG’s injured shareholders. In addition, the U.S. Securities and Exchange Commission (SEC) announced today that General Re has agreed to pay $12.2 million to settle the SEC’s charges related in part to this scheme
As part of its resolution with the Justice Department, General Re has admitted that its most senior management engaged in a scheme to falsely inflate AIG’s reported loss reserves, a key indicator of financial health to insurance industry analysts and investors. According to the statement of facts, the fraud was carried out through the use of two sham reinsurance transactions between subsidiaries of AIG and General Re in response to analysts’ criticism of a $59 million decrease in AIG’s loss reserves for the third quarter of 2000.
According to the statement of facts, the two sham transactions increased AIG’s loss reserves by $250 million in the fourth quarter of 2000 and $250 million in the first quarter of 2001, masking a declining trend in loss reserves in the face of premium growth. AIG restated the transactions in filings with the SEC in May 2005. Evidence presented at the related federal criminal trial of four former General Re officers and one former AIG officer established that when the investigation was disclosed to investors by AIG and through various media outlets between Feb. 14 and March 14, 2005, shares of AIG stock dropped from $73.12 to $61.92. Subsequently, on Oct. 31, 2008, the U.S. District Court presiding over the trial found that AIG’s shareholders lost between $544 million and $597 million as a consequence of the fraudulent scheme.
General Re has admitted that its senior management who were involved in the scheme knew that the true purpose of the transactions was to permit AIG to falsely report increasing loss reserves in its statements to analysts, investors and in its SEC filings. As part of the agreement, General Re admitted its senior management participated in structuring a sham reinsurance transaction and creating a phony paper trail to make it appear as though General Re’s subsidiary, Cologne Re Dublin, had solicited reinsurance from AIG when the evidence demonstrated that the parties knew AIG wanted the transaction to manipulate its financial statements. Additionally, General Re entered into a secret side deal whereby AIG would never have to pay any losses under the contracts; AIG would return to General Re’s subsidiary the $10 million in premiums General Re’s subsidiary paid to AIG and AIG paid General Re an illicit accommodation $5 million fee for entering into the transaction.
The agreement announced today requires General Re, for a term of three years, to maintain significant internal corporate remediation provisions it has already implemented, including: (1) appointment of an independent member to General Re’s Board of Directors, who will also be a member of the Audit Committee; (2) the attendance of General Re’s Audit Committee meetings by representatives of Berkshire Hathaway Inc.; (3) the creation of a Complex Transaction Committee, consisting of senior managers that, among other responsibilities, will review relevant actuarial protocols for reinsurance contracts and will review on a quarterly basis certain reinsurance transactions to ensure that they are not designed to assist other parties in falsifying, manipulating and/or window-dressing its financial statements; (4) to enhance the review and reporting roles of its Internal Audit Group; (5) to establish a Risk Committee charged with examining risk exposure in underwriting transactions; (6) to implement enhanced underwriting rules for reinsurance and deposit transactions; (7) to ensure proper training and ethical compliance in risk-transfer protocols applicable to reinsurance contracts; and (8) to dissolve its subsidiary, Cologne Re Dublin, that had helped to structure the sham transaction.
In addition, the agreement requires General Re to acknowledge its obligation toward restitution to AIG’s shareholders who were injured as a consequence of General Re’s and AIG’s conduct. As part of the agreement, the Justice Department acknowledged that General Re has agreed to contribute $60.5 million, exclusive of attorneys’ fees and expenses, toward a civil settlement with AIG’s injured shareholders, which, when combined with payments contributed or agreed to be contributed by other third-parties involved in the fraudulent scheme, will satisfy the loss amount determined by the U.S. District Court in the related criminal proceedings.
The agreement recognizes General Re’s willingness to conduct an internal investigation; its ongoing cooperation with the Justice Department and the SEC; its disclosure to the Justice Department and the SEC of other unrelated finite reinsurance transactions of concern; its willingness to accept responsibility for the conduct of its senior officers; its agreement to undertake remedial measures; and its demonstration of future compliance with the federal securities laws and Generally Accepted Accounting Principles. These factors contributed to the Department’s agreement not to prosecute General Re for this conduct, provided that General Re satisfies its ongoing obligations under the agreement.
The prosecution of General Re was conducted by Principal Deputy Chief Paul E. Pelletier and Assistant Chief Adam Safwat of the Criminal Division’s Fraud Section. The U.S. Postal Inspection Service participated in the investigation with the Justice Department. The prosecution of the individuals from General Re and AIG was conducted jointly by the Fraud Section, the U.S. Attorney’s Office for the Eastern District of Virginia and the U.S. Attorney’s Office for the District of Connecticut. The Justice Department also acknowledges and expresses its appreciation for the significant assistance provided by the SEC’s Enforcement Division.
Agreement
Agreement Statement of Facts
CEO of Seafood Importer Pleads Guilty to Importing and Selling Falsely Labeled Fish from VietnamRead the Press Release
WASHINGTON—The chief executive officer of Sterling Seafood Corporation located in Cresskill, N.J., pleaded guilty today to importing falsely labeled fish from Vietnam and evading over $60 million in federal tariffs, as well as selling over $500,000 in similarly misbranded fish purchased from another importer in the United States, the Justice Department announced.
Thomas George, 61, of Old Tappan, N.J., made his first appearance in federal court and pleaded guilty before U.S. Magistrate Judge Patty Shwartz for the District of New Jersey to a two-count information charging him with one count of importing falsely labeled goods into the United States and one of selling falsely labeled fish in the United States with the intent to defraud. Sentencing is scheduled for April 28, 2010, before U.S. District Judge Faith S. Hochberg.
"This case is an example of effective coordination among federal law enforcement agencies to investigate illegal activity that hurts economic markets, defrauds consumers and masks the depletion of fishery resources by substituting a lower value farmed species for one being depleted in the wild," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division.
"Today’s plea reflects this office’s commitment to enforcing customs duties and prosecuting consumer fraud," said Paul J. Fishman, U.S. Attorney for the District of New Jersey. "This office will continue to protect fair competition in the marketplace and consumers’ right to know what they are purchasing."
"ICE will use its global law enforcement experience, expertise and proficiency to investigate, disrupt and dismantle organizations that engage in grand scale consumer fraud, "said Peter T. Edge, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Office of Investigations in Newark. "While the monetary loss to the U.S. government in this case was significant, American consumers have a right to be protected from improperly labeled seafood."
An investigation by special agents with ICE revealed that from January 2003 to June 2006, George maintained a business relationship through Sterling Seafood with a seafood distribution company located in Vietnam. As part of that business relationship, Sterling Seafood regularly purchased a type of fish, specifically Pagasius hypophthalmus, sometimes referred to as Vietnamese catfish. Sterling Seafood would then resell the product in the United States.
In the interest of fairly regulating commerce in the United States, the U.S. Department of Commerce establishes antidumping duties or tariffs on certain imported products. In January 2003, an anti-dumping duty or tariff was placed on all imports of Vietnamese catfish into the United States because the Vietnamese catfish was being marketed at a significantly lower price than was market rate at the time. That initial anti-dumping order imposed a duty of up to 63.88 percent on fish subject to the order which was adjusted at various later dates based on market conditions.
At his plea hearing, George admitted that from 2004 to 2006, he agreed with the Vietnamese distribution company to engage in a scheme to falsely identify and declare the purchase and importation of the Vietnamese catfish in order to evade the applicable anti-dumping duties. George stated he specifically instructed the Vietnamese company to fraudulently identify the Vietnamese catfish as "grouper" on commercial contracts, purchase orders, and other documents because grouper fish was not subject to any anti-dumping duties. George further admitted that, based upon these false statements and fraudulent documents, he, through Sterling Seafood, avoided over $60 million in anti-dumping duties.
Additionally, George admitted that from 2004 to 2005 he purchased over $500,000 of similarly misbranded fish that was imported by a Virginia corporation from Vietnam and then sold that misbranded fish throughout the United States.
The charge of importing of falsely labeled goods into the United States carries a maximum statutory sentence of two years in prison and a $250,000 fine, or twice the monetary gain derived from the offense. The second count, which charges selling misbranded fish in the United States, carries a maximum statutory sentence of three years in prison and a $250,000 fine, or twice the monetary gain derived from the offense.
In addition, George has agreed to make a $50,000 community service payment to the National Fish and Wildlife Foundation to be expressly designated for research into the identification of fish and other marine organisms.
The case was investigated by special agents with ICE, NOAA Fisheries Office of Law Enforcement, FDA Office of Criminal Investigations. The case is being prosecuted by the U.S. Attorney’s office for the District of New Jersey and the Justice Department’s Environmental Crimes Section in Washington, D.C.
Twenty-Two Executives and Employees of Military and Law Enforcement Products Companies Charged in Foreign Bribery SchemeRead the Press Release
Update: On December 22, 2011, defendant Giordanella was acquitted of the charge pending against him, and on January 30, 2012, defendants Caldwell and Godsey were acquitted of the charges pending against them. On February 23, 2012, U.S. District Court Judge Richard J. Leon of the District of Columbia granted the government’s motion to dismiss all then-pending charges against the remaining defendants in this matter, and on March 30, 2012, Judge Leon granted the government’s motions to vacate the guilty pleas of, and to dismiss all charges against, defendants Alvirez, Geri, and Spiller.
Twenty-two executives and employees of companies in the military and law enforcement products industry have been indicted for engaging in schemes to bribe foreign government officials to obtain and retain business, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney Channing Phillips for the District of Columbia; and Assistant Director Kevin Perkins of the FBI’s Criminal Investigative Division Twenty-one defendants were arrested in Las Vegas yesterday. One defendant was arrested in Miami. The indictments stem from an FBI undercover operation that focused on allegations of foreign bribery in the military and law enforcement products industry.
The 16 indictments unsealed today represent the largest single investigation and prosecution against individuals in the history of DOJ’s enforcement of the Foreign Corrupt Practices Act (FCPA), a law that prohibits U.S. persons and companies, and foreign persons and companies acting in the United States, from bribing foreign government officials for the purpose of obtaining or retaining business. The indictments unsealed today were returned on Dec. 11, 2009, by a grand jury in Washington, D.C.
In connection with these indictments, approximately 150 FBI agents executed 14 search warrants in locations across the country, including Bull Shoals, Ark.; San Francisco; Miami; Ponte Vedra Beach, Fla.; Sarasota, Fla.; St. Petersburg, Fla.; Sunrise, Fla.; University Park, Fla.; Decatur, Ga.; Stearns, Ky.; Upper Darby, Penn.; and Woodbridge, Va. Additionally, the United Kingdom’s City of London Police executed seven search warrants in connection with their own investigations into companies involved in the foreign bribery conduct that formed the basis for the indictments.
"This ongoing investigation is the first large-scale use of undercover law enforcement techniques to uncover FCPA violations and the largest action ever undertaken by the Justice Department against individuals for FCPA violations," said Assistant Attorney General Lanny A. Breuer. "The fight to erase foreign bribery from the corporate playbook will not be won overnight, but these actions are a turning point. From now on, would-be FCPA violators should stop and ponder whether the person they are trying to bribe might really be a federal agent."
"Corrupt payments to foreign officials to obtain or retain business erode public confidence in our free market system and threaten to undermine foreign governments," said U.S. Attorney Channing Phillips. "These indictments set forth serious allegations and reflect the Department's commitment to aggressively investigate and prosecute those who try to advance their businesses through foreign bribery."
"Investigating corruption at all levels is the number one priority of the FBI’s Criminal Division," said Assistant Director Kevin Perkins of the FBI’s Criminal Investigative Division. "In this era of global commerce, the FBI is committed to curbing corruption at home or overseas. Companies should prosper through honest business practices, not the practice of back room deals and bribery."
The indictments allege that the defendants engaged in a scheme to pay bribes to the minister of defense for a country in Africa. In fact, the scheme was part of the undercover operation, with no actual involvement from any minister of defense. As part of the undercover operation, the defendants allegedly agreed to pay a 20 percent "commission" to a sales agent who the defendants believed represented the minister of defense for a country in Africa in order to win a portion of a $15 million deal to outfit the country’s presidential guard. In reality, the "sales agent" was an undercover FBI agent. The defendants were told that half of that "commission" would be paid directly to the minister of defense. The defendants allegedly agreed to create two price quotations in connection with the deals, with one quote representing the true cost of the goods and the second quote representing the true cost, plus the 20 percent "commission." The defendants also allegedly agreed to engage in a small "test" deal to show the minister of defense that he would personally receive the 10 percent bribe.
The indictments charge the following executives and employees of the various companies in the military and law enforcement product industries:
- Daniel Alvirez, 32, and Lee Allen Tolleson, 25, the president and director of acquisitions and logistics at a company in Bull Shoals, Ark., that manufactures and sells law enforcement and military equipment;
- Helmie Ashiblie, 44, the vice president and founder of a company in Woodbridge, Va., that supplies tactical bags and other security-related articles for law enforcement agencies and governments worldwide;
- Andrew Bigelow, 40, the managing partner and director of government programs for a Sarasota, Fla., company that sells machine guns, grenade launchers and other small arms and accessories;
- R. Patrick Caldwell, 61, and Stephen Gerard Giordanella, 50, the current and former chief executive officers of a Sunrise, Fla., company that designs and manufactures concealable and tactical body armor;
- Yochanan R. Cohen, aka Yochi Cohen, 47, the chief executive officer of a San Francisco company that manufactures security equipment, including body armor and ballistic plates;
- Haim Geri, 50, the president of a North Miami Beach, Fla., company that serves as a sales agent for companies in the law enforcement and military products industries;
- Amaro Goncalves, 49, the vice president of sales for a Springfield, Mass., company that designs and manufactures firearms, firearm safety/security products, rifles, firearms systems and accessories;
- John Gregory Godsey, aka Greg Godsey, 37, and Mark Frederick Morales, 37, the owner and agent of a Decatur, Ga., company that sells ammunition and other law enforcement and military equipment;
- Saul Mishkin, 38, the owner and chief executive officer of an Aventura, Fla., company that sells law enforcement and military equipment;
- John M. Mushriqui, 28, and Jeana Mushriqui, 30, the director of international development and general counsel/U.S. manager of an Upper Darby, Penn., company that manufactures and exports bulletproof vests and other law enforcement and military equipment;
- David R. Painter, 56, and Lee M. Wares, 43, the chairman and director of a United Kingdom company that markets armored vehicles;
- Pankesh Patel, 43, the managing director of a United Kingdom company that acts as sales agent for companies in the law enforcement and military products industries;
- Ofer Paz, 50, the president and chief executive officer of an Israeli company that acts as sales agent for companies in the law enforcement and military products industries;
- Jonathan M. Spiller, 58, the owner and president of a Ponte Vedra Beach, Fla., company that markets and sells law enforcement and military equipment;
- Israel Weisler, aka Wayne Weisler, 63, and Michael Sacks, 66, owners and co-chief executive officers of a Stearns, Ky., company that designs, manufactures and sells armor products, including body armor;
- John Benson Wier III, 46, the president of a St. Petersburg, Fla., company that sells tactical and ballistic equipment.
All of the defendants except Giordanella were arrested yesterday by FBI agents in Las Vegas. Giordanella was arrested in Miami, also by FBI agents.
Each of the indictments allege that the defendants conspired to violate the FCPA, conspired to engage in money laundering, and engaged in substantive violations of the FCPA. The indictments also seek criminal forfeiture of the defendants’ ill gotten gains.
The maximum prison sentence for the conspiracy count and for each FCPA count is five years. The maximum sentence for the money laundering conspiracy charge is 20 years in prison.
These cases are being prosecuted by Assistant Chief Hank Bond Walther and Trial Attorney Laura N. Perkins of the Criminal Division’s Fraud Section, and Matthew C. Solomon of the U.S. Attorney’s Office for the District of Columbia. The cases were investigated by the FBI Washington Field Office squad that specializes in investigations into FCPA violations.
Daniel Alvirez And Lee Allen Tolleson - Indictment
Helmie Ashiblie - Indictment
Ofer Paz - Indictment
Andrew Bigelow Indictment
R. Patrick Caldwell And Stephen Gerard Giordanella - Indictment
Haim Geri Indictment
Saul Mishkin - Indictment
John M. Mushriqui And Jeana Mushriqui - Indictment
Jonathan M. Spiller - Indictment
John Benson Wier III - Indictment
Amaro Goncalves - Indictment
David R. Painter and Lee M. Wares - Indictment
Israel Weisler - Indictment
Pankesh Patel - Indictment
John Gregory Godsey - Indictment
Yochanan R.Cohen - Indictment
Justice Department Settles Lawsuit Alleging HIV Discrimination by RV Resort in AlabamaRead the Press Release
WASHINGTON – The Justice Department today announced the settlement of an Americans with Disabilities Act (ADA) discrimination lawsuit against Wales West LLC, owner and operator of Wales West RV Resort and Train and Garden Lovers Family Park in Silverhill, Ala. The settlement, embodied in a consent decree, was approved today by Judge Callie V.S. Granade in U.S. District Court for the Southern District of Alabama.
In its complaint, the Justice Department alleged that Wales West LLC violated Title III of the ADA when it unlawfully denied full and equal services to a child and his family because the child has HIV. Specifically, the complaint alleged that Wales West LLC, upon learning that a guest family’s two-year-old child has HIV, banned the family from using the common areas of the RV resort, such as the swimming pool and showers. The child’s parents had planned a month-long stay at the family-themed RV resort while the father commuted to nearby Mobile, Ala., for ongoing cancer treatment. After Wales West LLC denied them full use of the facilities, the family left early the next morning.
Under the terms of the consent decree, Wales West LLC will establish policies, procedures and training practices to ensure that patrons and their families are not discriminated against on the basis of disability. Wales West LLC will pay a $10,000 civil penalty to the United States and $36,000 in damages to the affected family.
"Ensuring that individuals with disabilities are not subjected to discriminatory, stigmatizing treatment based on unfounded fears and stereotypes is critically important. The ADA protects individuals with HIV and other disabilities from this kind of discrimination," said Thomas E. Perez, Assistant Attorney General for the Civil Rights Division.
"Our office is dedicated to providing equal protection of the laws by ensuring equal access to accommodations for those with impairments or disabilities," said Kenyen R. Brown, U. S. Attorney for the Southern District of Alabama. "Whether it is discrimination against families in a mobile home park, improper lending practices at a bank or other issues regarding fairness, we fully intend to bring cases each time we learn of wrongful discrimination."
Title III of the ADA prohibits public accommodations, such as Wales West LLC, from excluding people with disabilities, including people with HIV, from enjoying the services, goods, and accommodations provided by the public accommodation. Those interested in finding out more about federal disability rights statutes can call the Justice Department’s toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TTY), or access the ADA Web site at www.ada.gov.
Justice Department Settles Lawsuit Against Milwaukee to Enforce the Employment Rights of Air National Guard MemberRead the Press Release
WASHINGTON — The Justice Department announced today that it has reached a settlement in its lawsuit against the city of Milwaukee on behalf of Michael Crivello, a detective in the Milwaukee Police Department, alleging the city violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). The settlement, embodied in a consent decree that the parties have submitted to the court for approval, calls for Milwaukee to provide Crivello with a retroactive promotion date in the rank of detective, as well as $21,190 in backpay, retroactive seniority and other benefits that flow from the date adjustment.
The complaint, filed in U.S. District Court in Milwaukee in July 2009, alleges that the city violated USERRA when it did not provide Crivello, while he was a police officer, with the opportunity to take a make-up examination for promotion to detective that he missed while on active duty military service, thereby denying him the seniority, status and compensation he would have received but for his active duty service in the military. The city subsequently promoted Crivello to detective after he passed the next scheduled administration of the examination, but the delay still resulted in his loss of pay, seniority and other benefits, including eligibility for future promotions.
Because his delay in promotion to detective also delayed his eligibility to take subsequent promotional examinations, Crivello may also qualify for additional relief if the city administers a lieutenant of detectives promotional examination within one year from the entry of the decree.
"No member of our armed services should be disadvantaged in the workplace because he or she answered a call to duty," said Thomas Perez, Assistant Attorney General for the Civil Rights Division. "I am pleased the city of Milwaukee cooperated in working towards a resolution that restores Mr. Crivello’s rights without the need for protracted litigation that would unnecessarily expend the resources of two public bodies."
The lawsuit was filed after the Labor Department’s Veterans’ Employment and Training Service referred a complaint filed by Crivello under USERRA to the Justice Department’s Civil Rights Division upon completion of its investigation and unresolved settlement efforts.
Additional information about USERRA can be found on the Justice Department Web site at www.servicemembers.gov and www.usdoj.gov/crt/emp, as well as on the Labor Department’s Web site at www.dol.gov/vets/programs/userra/main.htm.
Former Owner of New Hampshire Direct Mail Advertising Printing Company Agrees to Plead Guilty to Tax ConspiracyRead the Press Release
WASHINGTON — A former owner of a New Hampshire printing company specializing in direct mail advertisements has agreed to plead guilty to a charge relating to his role in a tax conspiracy, the Department of Justice announced today.
According to the one-count felony charge filed today in the U.S. District Court in Boston, Ronald Boyarsky of Apollo, Fla., was the president and part-owner of a direct mail advertising printing company located in Pembroke, N.H. As a part of the tax conspiracy, Boyarsky assisted in paying approximately $2.6 million in commissions earned by a printing services broker to third parties, so that the broker and his companies could avoid paying taxes on the income they earned.
The department said in a court document that from 1999 through at least 2004, Boyarsky directed his company to pay the commissions to family, friends and associates of the broker. Many of the third parties typically cashed checks written to them, and then passed the cash back to the broker. As part of this scheme, the printing company paid some of the commissions directly to businesses from which the broker procured personal goods and services.
Direct mail advertising is the process by which companies specifically target potential customers and contact them with custom tailored offers, promotional materials or advertisements using the U.S. mail.
The tax conspiracy charge carries a maximum sentence of five years in prison and a maximum fine of $250,000. The maximum fine for the offense may be increased to twice the gain derived from the offense or twice the loss suffered by the victims of the offense, if either of those amounts is greater than the statutory maximum fine.
Today’s charge arose from an ongoing investigation into the direct mail printing services industry. The investigation is being conducted by the Antitrust Division’s New York Field Office, with the assistance of the Internal Revenue Service (IRS) Criminal Investigation in Springfield, Mass.
Anyone with information concerning antitrust, fraud or tax offenses relating to the direct mail printing services industry should contact the Antitrust Division’s New York Field Office at 212-264-9308 or the IRS Criminal Investigation’s Springfield Office at 413-785-0090.
Statement by Attorney General Eric Holder on Martin Luther King DayRead the Press Release
Attorney General Eric Holder released the following statement today in recognition of Martin Luther King Day:
"Each year, Martin Luther King Day provides an opportunity for all Americans to rededicate ourselves to Dr. King’s dream of racial, social, and economic justice. Today is also a reminder of the power and importance of service to others. Dr. King’s example, and his enduring legacy, offer proof that the contributions of a single person can help to improve and inspire an entire nation.
"Without question, there are great needs to be met in America and beyond. Just this week, with the catastrophic earthquake in Haiti, we have been reminded that the work of helping others often extends beyond our borders. In the aftermath of this disaster, the outpouring of compassion, resources, and relief-delivery efforts from across our country are evidence that, even during tough economic times, the American spirit of giving remains strong.
"One of the most meaningful ways we can give life to Dr. King’s dreams is by seeking out opportunities to serve and empower others. Today, I am volunteering with DC’s Youth Service Opportunities Project to prepare and serve breakfast to the homeless. I encourage everyone who has a holiday from work or class to help make sure that Martin Luther King Day is not simply a ‘day off.’, it is truly a ‘day on.’ Together, we can ensure it becomes a day of national service and an occasion to carry on Dr. King’s work today and into the future."
To search for local volunteer opportunities, please visit: Serve.gov/mlkday.
U.S. Files Suit Against Johnson & Johnson for Paying Kickbacks<br /> to Nation’s Largest Nursing Home PharmacyRead the Press Release
WASHINGTON — The United States has filed a civil False Claims Act complaint against drug manufacturer Johnson & Johnson (J&J) of New Brunswick, N.J., and two of its subsidiaries, Ortho-McNeil-Janssen Pharmaceuticals Inc. and Johnson & Johnson Health Care Systems Inc., the Justice Department announced today. The complaint alleges that these companies paid millions of dollars in kickbacks to Omnicare Inc., the nation’s largest pharmacy that specializes in dispensing drugs to nursing home patients. In November 2009, the United States, numerous states, and Omnicare entered into a $98 million settlement agreement that, among other things, resolved Omnicare’s civil liability under the False Claims Act for taking kickbacks from J&J.
In its complaint against J&J, the United States alleges that the company paid kickbacks to Omnicare to induce the nursing home pharmacy company to purchase and recommend J&J drugs, including the anti-psychotic drug Risperdal, for use in nursing homes. According to the complaint, J&J understood that Omnicare’s pharmacists reviewed nursing home patients’ charts at least monthly and made recommendations to physicians on what drugs should be prescribed for those patients. The government further alleges that J&J knew that physicians accepted the Omnicare pharmacists’ recommendations more than 80 percent of the time, and that J&J viewed such pharmacists as an "extension of [J&J’s] sales force."
The United States alleges that, in order to induce Omnicare and its pharmacists to recommend J&J drugs, the company paid kickbacks to Omnicare in numerous ways. First, the complaint alleges that J&J entered into agreements with Omnicare by which Omnicare was entitled to increasing levels of rebates from Johnson & Johnson so long as Omnicare implemented specific programs to increase the prescriptions of J&J drugs. Second, the complaint alleges that J&J paid Omnicare millions of dollars for "data," much of which Omnicare never provided. According to the complaint, the true purpose of these payments was to induce Omnicare to recommend J&J drugs. Third, the complaint alleges that J&J made various other substantial kickback payments to Omnicare, calling the payments "grants" and "educational funding," even though their true purpose was to induce Omnicare to recommend J&J drugs.
"We will pursue those who break the law to take advantage of the elderly and the poor," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "Kickbacks such as those alleged here distort the judgments of health care professionals and put profits ahead of sound medical treatment."
The United States filed its complaint in two consolidated whistleblower lawsuits presently on file in the District of Massachusetts.
Assistant Attorney General West thanked the collaborative efforts of the Justice Department’s Civil Division, the U.S. Attorney for the District of Massachusetts, the Office of Inspector General of the Department of Health and Human Services, the Food and Drug Administration Office of Criminal Investigations and the Federal Bureau of Investigation .
General Manager of Houston Medical Supply Company<br /> Pleads Guilty to Conspiracy to Commit Health Care FraudRead the Press Release
Manual Deluna has pleaded guilty to one count of conspiracy to commit health care fraud.
Deluna, 48, pleaded guilty on Jan. 14, 2010, before U.S. District Court Judge Ewing Werlein Jr., in connection with Deluna’s role in Memorial Medical Supply, a Houston durable medical equipment company. Deluna was the general manager of Memorial Medical Supply, and began his association with the company in approximately October 2007. Deluna, along with co-defendants Sunny Robinson, Lisa Jones and Shirley A. Chavis, was originally indicted on July 22, 2009.
In connection with his plea, Deluna admitted that he and others illegally obtained protected Medicare beneficiary health information including names, dates of birth, medical histories, and Medicare and Social Security numbers from individuals and home health agencies. Deluna admitted that this health information was used to submit false and fraudulent claims to Medicare for reimbursement for equipment such as "Arthritis Kits," power wheelchairs, and diabetic and incontinence supplies. Deluna admitted that the Medicare beneficiaries in many instances did not order or even need the medical equipment, nor did a physician actually prescribe these items. Deluna admitted that in several instances, Memorial Medical Supply also submitted false claims to Medicare in the names of Medicare beneficiaries who were deceased. Deluna admitted that from May 2006 through January 2009, Memorial Medical Supply submitted claims to Medicare in excess of $4.3 million.
Deluna remains on bond pending sentence, which is currently scheduled for April 9, 2010. Robinson, Jones and Chavis remain on bond pending trial.
This case is being prosecuted by Special Assistant U.S. Attorney Justin Blan, and was investigated by agents of the HHS-OIG, the Office of Personnel Management, the FBI and the Texas Attorney General’s Office - Medicaid Fraud Control Unit. This prosecution is the latest in the Medicare Fraud Strike Force’s efforts in the Houston area. The Strike Force is supervised by the U.S. Attorney’s Office for the Southern District of Texas and the Criminal Division’s Fraud Section.
Since the inception of Strike Force operations in March 2007 - Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three), Houston (Phase Four), Brooklyn (Phase Five), Tampa (Phase Six) and Baton Rouge (Phase Seven) - the Strike Force has obtained indictments of more than 475 individuals and organizations that collectively have 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
Andrew Goldsmith Appointed as National Coordinator of Criminal Discovery InitiativesRead the Press Release
The Department of Justice today announced the appointment of Andrew Goldsmith as the new national coordinator for its criminal discovery initiatives.
The position was established as part of the Department’s ongoing efforts, initiated last year at the direction of the Attorney General, to review and improve its criminal discovery and case management policies and procedures.
"Andrew brings a wealth of knowledge and experience in this field, and I am pleased he is taking on this crucial role," said Deputy Attorney General David W. Ogden. "He will be instrumental in overseeing our efforts to ensure all of our prosecutors and law enforcement agents have the necessary training and tools to achieve fair and just results in the nation’s courts."
As the national coordinator, Goldsmith will oversee the implementation of a number of initiatives designed to provide prosecutors with the training and resources they need to meet discovery obligations in criminal cases. These efforts include:
- Creating an online directory of resources on discovery issues available to all prosecutors at their desktop;
- Producing a Handbook on Discovery and Case Management similar to the Grand Jury Manual so that prosecutors will have an accessible and comprehensive resource on discovery obligations;
- Implementing a training curriculum and a mandatory training program for paralegals and law enforcement agents;
- Revitalizing the Computer Forensics Working Group to ensure the proper cataloguing of electronically stored information recovered as part of federal investigations; and
- Creating a pilot case management project to fully explore the available case management software and possible new practices to better catalogue law enforcement investigative files and to ensure that all the information is transmitted in the most useful way to federal prosecutors.
Goldsmith will also act as the primary liaison to all of the United States Attorneys’ Offices and Department components on these issues, as well as issues relating to electronic evidence in criminal cases.
As part of the Department-wide initiative, Deputy Attorney General Ogden issued three memoranda earlier this month regarding criminal discovery practices including a memorandum to all prosecutors containing guidance on criminal discovery obligations.
The guidance to prosecutors, United States Attorneys’ Offices and the heads of all litigating components followed a review of the Department’s policies, practices, and training related to criminal case management and discovery ordered by the Attorney General. That review determined that incidents of discovery failures were rare in comparison to the number of cases prosecuted. However, the Department has instituted a number of steps intended to further ensure the Department complies with its discovery obligations.
Goldsmith serves as the First Assistant Chief of the Environment and Natural Resources Division’s Environmental Crimes Section, where he supervises environmental prosecutions and develops training on worker endangerment, environmental terrorism, and laboratory fraud, as well as electronic discovery. He served as Chief of the Environmental Crimes Unit of the New York Attorney General's Office and was an Assistant United States Attorney for the District of New Jersey. He previously worked as an Assistant District Attorney in the Manhattan District Attorney’s Office and in private practice.
Goldsmith has received the Attorney General’s John Marshall award as well as the Justice Department’s Distinguished Service Award. He earned his law degree from Albany Law School and his undergraduate degree from Cornell University.
Two Brothers Plead Guilty in Conspiracy to Hold Thai Workers in Forced Labor in HawaiiRead the Press Release
WASHINGTON – Defendants Alec Sou and Mike Sou, co-owners of Aloun Farm, pleaded guilty on Jan.13, 2010, in federal district court in Honolulu, to conspiring to commit forced labor. The two defendants, who are brothers, each face up to five years in prison for their respective roles in a labor trafficking scheme that held Thai agricultural workers in service at Aloun Farm through a scheme of debts, threats and restraint.
During their respective plea hearings, the defendants acknowledged that they conspired with one another and with others to hold 44 Thai men in forced labor on a farm operated by the defendants, using a scheme of physical restraint and threats of serious harm to intimidate the workers and hold them in fear of attempting to leave the defendants’ service.
"Holding other human beings in servitude against their will is a violation of individual rights that is intolerable in a free society," stated Thomas E. Perez, Assistant Attorney General for the Civil Rights Division. "This prosecution demonstrates our commitment to combating human trafficking in all its forms, vindicating the rights of trafficking victims, and bringing human traffickers to justice."
"Labor traffickers prey on vulnerable victims and their dreams of a better life. Those who conspire to hold workers in forced labor undermine this country's promise of liberty and opportunity," said Florence T. Nakakuni, U.S. Attorney for the District of Hawaii. "We will continue to hold accountable those who seek to enrich themselves at the expense of the freedom, rights and dignity of others."
In the past fiscal year, the Civil Rights Division, in partnership with U.S. Attorney’s Offices, brought a record number of human trafficking cases, including the highest number of labor trafficking cases ever brought in a single year.
The government’s case is being prosecuted by trial attorneys Susan French and Kevonne Small of the Criminal Section of the Civil Rights Division and its Human Trafficking Prosecution Unit and by Assistant U.S. Attorney Susan Cushman.
This case was investigated by FBI Special Agents Gary Brown in Honolulu and Tricia Whitehill in Los Angeles, with support from ICE Special Agents Frank Kalepa and Daniel Kenney.
Thirteen Detroit-Area Individuals Arrested and Charged for $14.5 Million Medicare FraudRead the Press Release
Thirteen Detroit-area residents were arrested today by federal agents from the Department of Health and Human Services, Office of the Inspector General (HHS-OIG) and FBI in connection with an alleged home health care scheme to defraud the Medicare program of more than $14.5 million.
In a six-count indictment returned on Jan. 12, 2009, and unsealed today, the 13 individuals are alleged to have participated in a Medicare fraud scheme operated out of Patient Choice Home Healthcare (Patient Choice) and All American Home Care (All American), two Oakland County, Mich., home health agencies that purported to provide in-home health services. Muhammad Shahab, 50; Christopher Collins, 38; Hassan Akhtar, 26; Curtis Mallory, 35; Mohammed El-Fallal, 55; Jessica Vigil, 34; Tariq Chaudhary, 36; Faisal Chaudry, 31; and Visnhu Meda, 29, were all indicted for conspiracy to commit health care fraud. In addition, Shahab; Pramod Raval, M.D., 56; Guy Ross, 48; Lura Barrett, 61; and Stephen Cartier, 50, were charged with conspiracy to violate the Anti-Kickback Statute. Shahab and Akhtar were also each charged with two counts of money laundering. The indictment seeks the forfeiture of assets from all the defendants.
According to the indictment, Shahab, Akhtar and Collins owned and operated Patient Choice and All American. The home health agencies purported to provide home health therapy services to Medicare beneficiaries. The indictment alleges that Patient Choice and All American billed for home health therapy services that were unnecessary and were never performed. In addition, it alleges that Collins and Mallory recruited patients and paid them kickbacks for their Medicare information and signatures on documents. These false documents were then used to bill Medicare for home health services that were not rendered. The indictment also alleges that El-Fallal used the identity of a licensed physician to sign physician referrals for home health therapy services that were medically unnecessary and not performed. The indictment charges Vigil, Chaudhary, Chaudry and Meda with falsifying medical records to make it appear that home health therapy services were provided.
In addition, the indictment alleges that Shahab, Dr. Raval, Ross, Barrett and Cartier engaged in a conspiracy where Shahab would pay kickbacks to the others in exchange for patient referrals and access to Medicare beneficiaries under Dr. Raval, Ross, Barrett and Cartier’s care.
The indictment alleges that Medicare paid Patient Choice and All American more than $14.5 million for services that were medically unnecessary and not provided between August 2007 and September 2009. The charge of health care fraud conspiracy carries a maximum penalty of 10 years in prison and a $250,000 fine. The charge of violating the Anti-Kickback Statute carries a maximum prison sentence of five years and a fine of up to $25,000. Each violation of 18 USC 1956 (money laundering) carries a maximum prison sentence of 20 years and a maximum fine of $500,000. Each violation of 18 USC 1957 (money laundering) carries a maximum prison sentence of 10 years in prison and a maximum fine of $250,000.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.
The case is being prosecuted by Deputy Chief Kirk Ogrosky, Senior Trial Attorney John Neal and Trial Attorney Gejaa Gobena of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG. This prosecution is the latest in the Medicare Fraud Strike Force’s efforts in the Detroit area. The Strike Force is supervised by the Criminal Division’s Fraud Section and U.S. Attorney’s Office for the Eastern District of Michigan.
Since the inception of Strike Force operations in March 2007 - Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three), Houston (Phase Four), Brooklyn (Phase Five), Tampa (Phase Six) and Baton Rouge (Phase Seven) - the Strike Force has obtained indictments of more than 475 individuals and organizations that collectively have 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.
Indictment
Tahawwur Rana and David Headley Indicted for Alleged Roles <br /> in India and Denmark Terrorism ConspiraciesRead the Press Release
A federal grand jury today returned a superseding indictment adding three defendants, including Tahawwur Rana, to charges filed last month against David Coleman Headley, alleging that they and others participated in conspiracies involving a planned terrorist attack against a Danish newspaper and the November 2008 terrorist attacks in Mumbai, India, that killed approximately 164 people, including six Americans.
The 12-count superseding indictment contains the identical charges that were filed against Headley on Dec. 7, 2009, while adding Rana as a defendant in three of the counts charging material support of the terrorism plots in Denmark and India, as well as in support of the designated foreign terrorist organization Lashkar e Tayyiba. Also indicted were Ilyas Kashmiri, an allegedly influential terrorist organization leader in Pakistan who is alleged to be in regular contact with leaders of al Qaeda, and Abdur Rehman Hashim Syed (Abdur Rehman), a retired major in the Pakistani military, both of whom were charged in two conspiracy counts relating to the Denmark terrorism plot.
Both Rana and Abdur Rehman were charged separately in previous court filings, but today’s indictment charges Kashmiri for the first time, although he was identified by name in the charges filed previously against Rana, Abdur Rehman and Headley.
Rana, 49, a Canadian citizen, Chicago resident and native of Pakistan, has remained in federal custody in Chicago since he was arrested on Oct. 18, 2009, in connection with the planned attack in Denmark. He was indicted today on three counts of providing material support to terrorism or a terrorist organization — one count of providing material support in preparation for and in carrying out the Mumbai attacks; one count of providing material support to the Denmark terrorism plot; and one count of providing material support to Lashkar e Tayyiba (Lashkar.) Translated as the "Army of the Good," Lashkar operated in Pakistan for the principal purpose of fighting to separate from India portions of the Indian state of Jammu and Kashmir. Lashkar was designated as a foreign terrorist organization by the United States in December 2001.
No date has been set yet for Rana to be arraigned in federal court in Chicago. The case is assigned to U.S. District Judge Harry D. Leinenweber.
Kashmiri and Abdur Rehman, also known as "Major Abdur Rehman" and "Pasha," were each charged with one count of conspiracy to murder and maim persons in Denmark, and one count of providing material support to the Danish terrorism plot. Neither man is in U.S. custody.
Headley, 49, a U.S. citizen and Chicago resident, faces the same 12 counts that were filed against him last month — six counts of conspiracy involving bombing public places in India, murdering and maiming persons in India and Denmark, providing material support to foreign terrorist plots, and providing material support to Lashkar, and six counts of aiding and abetting the murder of U.S. citizens in India. Headley has remained in federal custody in Chicago since he was arrested in Chicago on Oct. 3, 2009. He has pleaded not guilty to the charges but previously authorized the Justice Department to disclose that he is cooperating in the ongoing investigation.
In 2002 and 2003, Headley allegedly attended terrorism training camps in Pakistan maintained by Lashkar, and conspired with its members and others, including Rana, Kashmiri and Abdur Rehman, in planning and executing the attacks in Denmark and India. He allegedly conducted extensive surveillance of targets in Mumbai for more than two years preceding the November 2008 attacks that killed approximately 164 people and left hundreds more injured.
Mumbai Terror Attacks
According to the charges, unnamed Lashkar Member A, who served as a "handler" for Headley and another person associated with Lashkar, advised Headley in late 2005 that Headley would be traveling to India to perform surveillance of potential targets for Lashkar. Headley changed his given name of Daood Gilani on Feb. 15, 2006, in Philadelphia, enabling him to present himself in India as an American who was neither Muslim nor Pakistani. In the spring of 2006, Lashkar Member A and a Lashkar associate discussed with Headley the idea that he could open an immigration office in Mumbai as a cover for his surveillance activities.
In approximately June 2006, Headley allegedly traveled to Chicago, advised Rana of his assignment to scout potential targets in India, and obtained approval from Rana, who owned First World Immigration Services in Chicago and elsewhere, to open a First World office in Mumbai as cover for his activities. Rana allegedly directed an individual associated with First World to prepare documents supporting Headley’s cover story of opening a First World office in Mumbai, and advised Headley how to obtain a visa for travel to India. Headley misrepresented his birth name, his father’s true name and the purpose of his travel in his visa application, the indictment alleges.
In July 2006, unnamed Person A in Pakistan gave Headley approximately $25,000 to establish and operate the Mumbai office of First World and to pay for living expenses while Headley carried out his assignment for Lashkar, the charges add.
Headley later made five extended trips to Mumbai — in September 2006, February and September 2007, and April and July 2008 — each time taking photographs and making videotapes of various potential targets, including those attacked in November 2008, and using his association with First World as cover for his travels. Before each trip, Lashkar members and associates allegedly instructed Headley regarding specific locations where he was to conduct surveillance, and Headley traveled to Pakistan after each trip to meet with Lashkar members and associates, report on the results of his surveillance, and provide the surveillance photos and videos.
During his meetings with Lashkar members and associates in Pakistan after the September 2007 surveillance trip to Mumbai, Lashkar Member A showed Headley a styrofoam mockup of the Taj Mahal hotel, and Person A provided Headley with approximately $2,000 worth of Indian currency for expenses, according to the indictment. Before the April 2008 surveillance trip, Lashkar Member A provided Headley with an additional $1,000 worth of Indian currency. In addition, Lashkar Members A and B provided Headley with a global positioning system device and showed him how to use it to record the locations of possible landing sites and potential targets in Mumbai, which Headley then used during his surveillance trips in April and July 2008, the charges state.
Before the July 2008 visit, Person A provided an additional $1,500 worth of Indian currency to Headley to keep the First World office open, but approved closing that office in the future and opening a new business in Delhi, India, to be used as cover for future activities. During Headley’s July 2008 surveillance mission, Person A communicated with Headley by passing messages to him through Rana, the indictment alleges.
Starting Nov. 26, 2008, and continuing through Nov. 28, 2008, 10 attackers trained by Lashkar carried out multiple assaults with firearms, grenades and improvised explosive devices against multiple targets in Mumbai, including the Taj Mahal and Oberoi hotels, the Leopold Café, the Chabad House and the Chhatrapati Shivaji Terminus train station, each of which Headley allegedly had scouted in advance, killing approximately 164 victims.
The six Americans killed during the three-day siege are identified in the charges as Ben Zion Chroman, Gavriel Holtzberg, Sandeep Jeswani, Alan Scherr, his daughter Naomi Scherr and Aryeh Leibish Teitelbaum.
Denmark Terror Plot
Regarding the Denmark terror plot, Headley allegedly conspired between October 2008, and Oct. 3, 2009, with Kashmiri, Abdur Rehman and others to plan and carry out terrorist attacks, including murder and maiming, against the facilities of the Morgenavisen Jyllands-Posten, a Danish newspaper, and two of its employees, Editor A and Cartoonist A. In 2005, the newspaper had published 12 cartoons, some of which depicted the Prophet Mohammed, setting off protests throughout the Muslim world. In early 2008, the Jyllands-Posten and other Danish newspapers republished one of the cartoons which had drawn particularly strong criticism.
Today’s indictment alleges that Headley met with Lashkar Member A in Pakistan in October 2008 and discussed the prospect of an attack on the newspaper, including extensive surveillance work that Headley would perform. Lashkar Member A allegedly provided Headley with a thumb drive containing information about Denmark, the city of Copenhagen, and the newspaper. In late December 2008 and early January 2009, after reviewing with Rana how he had performed surveillance of the targets attacked in Mumbai, Headley advised Rana of the planned attack on the Danish newspaper and his intended travel to Denmark to conduct surveillance of its facilities. Headley allegedly obtained Rana’s approval and assistance to identify himself as a representative of First World and gain access to the newspaper’s offices by falsely expressing interest in placing advertising for First World in the newspaper. At the same time, while in Chicago, Headley exchanged emails with Abdur Rehman to continue planning for the attack and to coordinate his travel to Denmark to conduct surveillance. Before departing Chicago, Headley and Rana caused business cards to be made that identified Headley as a representative of the Immigration Law Center, the business name of First World, according to the charges.
Headley allegedly traveled in January 2009, from Chicago to Copenhagen, Denmark, to conduct surveillance of the Jyllands-Posten newspaper offices in Copenhagen and Aarhus and to videotape the surrounding areas. On Jan. 29, 2009, Rana, posing as Headley, allegedly sent an email to the Jyllands-Posten pretending to be interested in placing an advertisement in the newspaper on behalf of First World.
In late January 2009, Headley traveled to Pakistan and met separately to discuss the planning with Abdur Rehman and Lashkar Member A. In February 2009, Abdur Rehman allegedly took Headley to meet with Kashmiri in the Waziristan region of Pakistan. During the meeting, Kashmiri allegedly indicated that he had reviewed the surveillance videos made by Headley and suggested using a truck bomb in the operation. Kashmiri further indicated that he could provide manpower for the operation and that Lashkar’s participation was not necessary, the indictment alleges. Subsequently, in March 2009, Lashkar Member A advised Headley that Lashkar put the newspaper attack on hold because of pressure in the aftermath of the Mumbai attacks, according to the charges.
In May 2009, Headley and Abdur Rehman met again with Kashmiri in Waziristan and Kashmiri allegedly directed Headley to meet with his European contacts who could provide Headley with money, weapons and manpower for the newspaper attack. In late July and early August 2009, Headley traveled from Chicago to various places in Europe, including Copenhagen, attempting to obtain assistance from Kashmiri’s contacts and, while there, made approximately 13 additional surveillance videos, according to the charges.
In September 2009, Headley and Rana allegedly spoke about reports that Kashmiri had been killed in a drone attack and the implications of his possible death for the plan to attack the newspaper. Later that month, Abdur Rehman, from Pakistan, allegedly called Headley to report that Kashmiri was not killed and was anxious to move forward with attacking the newspaper. In the late summer of 2009, Rana and Headley allegedly agreed that funds that had been provided to Rana could be used to fund Headley’s work in Denmark.
On Oct. 3, 2009, Headley was arrested at O’Hare International Airport in Chicago, intending ultimately to travel to Pakistan to meet with and deliver the approximately 13 surveillance videos to Abdur Rehman and Kashmiri, the indictment alleges.
The charges identify Kashmiri as an influential leader of Harakat-ul Jihad Islami (HUJI), an organization that trained terrorists and executed attacks in the state of Jammu and Kashmir under Indian control and other areas. Kashmiri based his operations from the Federally Administered Tribal Areas (FATA) of western Pakistan, an area which served as a haven for terrorist organizations, including al Qaeda. Kashmiri allegedly was in regular contact with al Qaeda and in particular with an al Qaeda leader, Mustafa Abu al Yazid, also known as "Sheik Said al Masri."
According to the indictment, in June 2008, al Qaeda, through its media wing known as "As Sahab Media," took credit for an attack on the Danish Embassy in Islamabad, Pakistan, and called for further attacks against Danish interests to avenge the publication of the cartoons depicting the Prophet Mohamed first published in the Jyllands-Posten in 2005. In August 2008, al Qaeda released a video through As Sahab Media calling for further attacks in retaliation for the publication of the cartoons, and Mustafa Abu al Yazid, among others, appeared in the video. The indictment alleges that in July 2009, Headley provided the al Qaeda video to Rana in Chicago.
The counts against Headley charging conspiracy to bomb public places in India that resulted in deaths and aiding and abetting the murders of U.S. nationals each carry a maximum statutory penalty of life imprisonment or death. All of the other counts against Headley carry a maximum of life imprisonment, except providing material support to the Denmark terror plot — against all four defendants — carries a maximum prison term of 15 years.
The other two material support counts against Rana, and the conspiracy to murder and maim people in Denmark against Kashmiri and Abdur Rehman, also carry a maximum of life in prison.
The government is being represented by Assistant U.S. Attorneys Daniel Collins and Victoria J. Peters, as well as Assistant U.S. Attorneys Christopher Grigg and Janet Hudson of the Los Angeles U.S. Attorney’s Office, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division.
The public is reminded that an indictment contains mere allegations and is not evidence of guilt. The defendants are presumed innocent and are entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
German National Sentenced for Smuggling Coral from the PhilippinesRead the Press Release
WASHINGTON—Gunther Wenzek, a German national, was sentenced today to serve three years on probation and pay a criminal penalty of over $35,000 by Judge Anna J. Brown of the U.S. District Court for the District of Oregon for smuggling coral into the Port of Portland, Ore., the Justice Department announced.
The penalty included a criminal fine of $16,510, nearly $10,000 in restitution to the National Oceanic and Atmospheric Administration, and a community service payment of $8,890.
Wenzek owns a company named CoraPet, based in Essen, Germany, that sells various coral products to retailers in the United States. The investigation was launched in 2007 after Wenzek tried to ship a container loaded with fragments of endangered coral from reefs off the Philippine coast to Portland. After this initial shipment, agents subsequently seized two full containers of endangered coral shipped by Wenzek to a customer in Portland. These two shipments made up a total of over 40 tonsof coral.
A grand jury indicted Wenzek in July of 2008. He pleaded guilty on Oct. 14, 2009, to a smuggling charge for illegally importing merchandise contrary to law. Wenzek admitted that he knowingly failed to declare the coral as wildlife. Wildlife declarations for imports are essential to ensuring that endangered and threatened species are not being illegally imported into the United States.
The corals seized have been identified as corals from the scientific order Scleractinia, genera Porites, Acropora, and Pocillopora, common to Philippine reefs. Due to the threat of extinction, stony corals, such as those seized in this case are protected by international law. Philippine law specifically forbids exports of all coral. Moreover, the Convention on International Trade in Endangered Species bars importation of the coral Wenzek tried to import to customers in the United States, without a permit.
"Protection of coral reefs both domestically and internationally is critically important for the health of our marine environment," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "We will continue to use law enforcement resources at our disposal to investigate and prosecute those who smuggle endangered species like coral."
"Reefs are essential resources for maintaining fisheries, for biodiversity, for habitat and for addressing climate change. Importers need to know that we will defend these resources and prosecute criminal violators, and we stand ready to pursue these cases worldwide," said Kent Robinson, Acting U.S. Attorney for the District of Oregon. "The assistance of the Philippine government was absolutely critical to the success of this case, and we thank the government and people of the Philippines for their vital help in protecting marine resources."
"With many of the world’s coral reefs increasingly threatened by climate change, stopping the illegal harvest and trade of coral is more important than ever," said Paul Chang, Special Agent in Charge of Law Enforcement for the U.S. Fish and Wildlife Service's Pacific Region, based in Portland, Ore. "The cooperation of law enforcement agents in this case sends a message to would-be smugglers that this assault on a precious resource will not be tolerated."
The case was investigated by the U.S. Fish and Wildlife Service, U.S. Immigration and Customs Enforcement and the National Marine Fisheries Service. The case was prosecuted by U.S. Attorney’s Office for the District of Oregon and the Justice Department’s Environmental Crimes Section.
British Citizen Pleads Guilty in Connection with Costa Rica-Based Business Opportunity Fraud VenturesRead the Press Release
WASHINGTON – On Jan. 13, 2010, Dilraj Mathaudaentered a guilty plea in federal district court in Miami to one count of an indictment pending against him, charging conspiracy to commit mail and wire fraud, the Justice Department and the U.S. Postal Inspection Service announced today.
Mathauda was arrested following his indictment by a Miami federal grand jury on June 9, 2009, based on charges that he and his co-conspirators purported to sell beverage and greeting card business opportunities, including assistance in establishing, maintaining and operating such businesses. The charges form part of the government’s continued nationwide crackdown on business opportunity fraud.
Mathauda worked for USA Beverages Inc. and Omega Business Systems Incorporated. Beginning in 2005, USA Beverages sold business opportunities to own and operate coffee beverage display racks. USA Beverages rented office space in Las Cruces, N.M., and otherwise made it appear to potential purchasers that USA Beverages’ operations were fully within the United States. However, USA Beverages actually operated from Costa Rica. Omega was a Wisconsin and Florida corporation.
In 2007 and early 2008, Omega sold business opportunities to own and operate greeting card display racks. Omega rented office space in Madison, Wis., and otherwise made it appear to potential purchasers that Omega’s operations were fully within the United States. However, Omega actually operated from Costa Rica.
To fraudulently induce others to purchase the business opportunities, Dilraj Mathauda and his co-conspirators made, and caused others to make, numerous false statements to potential purchasers of the business opportunities. Potential purchasers were falsely told that the companies were established years earlier, had a significant number of distributors across the country, and had a track record of success. Potential purchasers were referred to references who told false tales of their success as business opportunity owners. Through these and other misrepresentations, purchasers of the business opportunities were led to believe that they would likely earn substantial profits.
"Business opportunity fraud causes significant financial hardship for victims who are trying to start a business and earn a living," said Tony West, Assistant Attorney General for the Department of Justice’s Civil Division. "The Justice Department is committed to uncovering and vigorously prosecuting business opportunity fraud."
Mathauda faces a maximum sentence of 25 years in prison, a possible fine and mandatory restitution.
"This guilty plea demonstrates that individuals living outside of the United States will not be allowed to use technology to commit fraud on the American public. This investigation illustrates our resolve to protect American consumers from business scams, wherever they occur," said U.S. Postal Inspector in Charge, Henry Gutierrez, based in Miami.
"The Postal Inspection Service remains vigilant in investigating and rooting out business opportunity fraud. Consumers must be aware that false references and empty promises of assistance locating display racks and merchandise are extremely common in this type of scam," said U.S. Postal Inspector in Charge Pete Zegarac, based in Phoenix. "These companies took over the corporate identities of businesses established long ago – so even claims of being in business for many years must be viewed with caution."
Assistant Attorney General West commended the investigative efforts of the Postal Inspection Service, as well as the Federal Trade Commission, which previously brought a related civil suit and made a criminal referral. This matter is being prosecuted by trial attorneys in the Justice Department’s Office of Consumer Litigation.